The latest B.C. assessment of a downtown piece of real estate is raising questions about a Vancouver land swap deal.
The Yaletown property at 508 Helmcken Street, which was badly in need of repairs, was once owned by the City of Vancouver and was the site of social housing.
Developer Brenhill approached the city in 2011 and asked to swap properties, offering its piece of land across the street and brand new social housing in exchange for the city’s property where it would build a 35-storey tower.
Councillor George Affleck voted against the deal.
“In Yaletown we don’t get very many people angry about developments,” he said. “In this case, we had so many people angry. So when that happens in a neighbourhood that doesn’t usually get angry, my ears perk up and I go, ‘OK, maybe this isn’t the best deal for the city.'”
The City valued its land at $15 million before the swap, in exchange for Brenhill’s land, which was valued at $8.4 million. Brenhill also agreed to a Community Amenity Contribution of $24 million to be put towards the construction of social housing.
The properties switched title last August and the land now in Brenhill’s hands is assessed at $130 million.
The city acknowledged this week that it did not hire a third-party appraiser before the deal to determine the actual value of its land.
“I believe there were a series of factors that were taken into account,” city manager Sadhu Johnston said. “I don’t believe there was an appraisal at the time.”
No other developers were offered the chance to make a proposal. Real estate consultant Michael Geller says without any competition, there was no way to ensure a fair deal.
“It’s like putting your house on the market,” he said. “At least if a realtor has told you what the price is and then offers come in, you can make a decision. But if somebody comes along to you before you’ve even listed the house, do you really know whether that’s the right price? And that’s what appears to have happened in this case.”
The city also didn’t value its land according to the potential rezoning value.
“Typically the way you would value a parcel like this, because the structure doesn’t have any value, would be based on the buildable square footage,” appraiser Jason Upton said.
The terms of the land exchange contract made it clear that the deal was contingent on Brenhill securing 365,000 square feet of buildable space. That square footage would enable it to build a tower with three times more density than anything in the area.
According to several appraisers and real estate analysts contacted by Global News, the average price per buildable square foot downtown in 2012 was $200, putting the potential value of the city’s land at $73 million.
The city said it could not achieve that full potential because the land was leased to the 127 Society, which operated the Jubilee House. The Society had a 40-year lease.
“It’s always easy to look back and say five years ago, we should have done something different. Had we known the value was going to change in the way it did across Vancouver, we might have had a different arrangement,” Johnston said.
“Council and staff looked at all the factors and made the decision that we felt was best for the tenants that were in that property and for taxpayers in the city. What we got was an amazing building that is protecting housing for folks that were living in a place full of mould.”
The New Jubilee House, completed by Brenhill in 2016, offers 107 units of subsidized housing, 20 more than the original building. It also includes 55 units at the low end of market rentals.