Hopeless? Or one last chance?

Opinions elicited by Richmond staff from a City-hired lawyer and by Canada Lands from a federal Treasury Board bureaucrat illustrate how the Garden City lands issue is in a mega-mess.

Disappearing contingency rights

If you have time to download 2 MB of PDF file, have a look at the agenda for the Sept. 17, 2007, 4 p.m. special meeting of Richmond Council. The 43 pages are too much to analyze here, so let’s focus on page 5, part of the lawyer’s opinion, which seems to have been provided to be helpful when an outside opinion would have taken too long. It alludes to Section 4.6(c) in the Agreement of Purchase and Sale:

Nothing contained in this Agreement will invalidate the provisions of Sections 1(22), 1(23) or 2(1) of the MOU [Memorandum of Understanding, the initial Garden City lands agreement], which will continue to be binding upon the parties to the MOU, including the parties to this Agreement.

Those sections in the MOU, under the headings “Contingencies” and “Dispute Resolution,” are obviously designed to resolve anything that goes wrong with core aspects of the agreement. Get a quick sense of the entirety of 1(22) first. (Note: In this blog, square brackets [like these] are used around words that are added to quotations for clarity.)

In the event that the City does not:
a) recommend that the Joint Venture Lands [Musqueam-CLC lands] be removed from the ALR;
b) approve a rezoning for the Joint Venture Lands that is consistent with this MOU;
c) approve FAR that is greater than 2.0 on the Development Lands; or
d) approve an OCP amendment that will apply to the Joint Venture Lands that is consistent with the understandings set out in this MOU;

Musqueam CLC and the City will meet to discuss the renegotiations of the understandings, arrangements or agreements between them with respect to the Garden City Property in order to give effect to the spirit of this MOU, to the extent possible, in the changed circumstances. If Musqueam and CLC are not satisfied with the outcome of the negotiations, Musqueam and CLC will have the option of terminating this MOU and, as appropriate, the JVA [joint venture]. However, before any of the understandings in this MOU are terminated, the Parties will utilize the dispute resolution process described below. If any misunderstandings in this MOU are terminated, all costs incurred to that stage of the process will be equitably shared by the Parties where applicable, and in accordance with Attachment 1, and the Parties will cooperate in making whatever arrangements are necessary to restore each Party to the position it was in prior to entering into this MOU.

That seems clear enough. However, this is what the lawyer writes on page 5:

In our view, the obligation to renegotiate under these Sections [1(22) and the similar 1(23)] only arises when the City has refused to act in rezoning, increasing the FAR or approving the OCP.

Where the PSA [the lawyer’s new term for the agreements] is terminated as a result of the failure to have the Lands removed from the ALR because of the actions of the ALC, Sections 1(22) and 1(23) are not relevant and the MOU is expired.

Well, maybe the words “does not” in “In the event the City does not” mean “refuses to” in some dialect of Legalese, but “does not” certainly does not mean that in English. (It doesn’t even refuse to mean that.) In fact, the English words “does” and “does not” tend to be remarkably free of connotations.

On the basis of the Legalese-dialect meaning of MOU 1(22), it seems that the City has to refuse to follow the MOU agreement in order to retain its rights under the agreement. However, refusing to co-operate in the spirit of the agreement would be acting in bad faith. Predictably, the City would lose its rights for acting in bad faith, and there are even provisions in the Agreement of Purchase and Sale that are fairly explicit about that. Whatever the City does or doesn’t do, it loses its rights. Or so it seems so far.

(An aside: Did the City really sign an agreement that ensured that its apparent rights in this crucial matter would actually not exist. And, if so, what were people thinking of?)

Or maybe not disappearing?

People who are merely expert in English, rather than in dialects of Legalese, would think something like this:

If the lands are not removed from the ALR, the City will have no reason to proceed with rezoning, a FAR increase, and an OCP amendment and will therefore not proceed. In that event, Contingency 1(22) will apply, and the City will meet with the Musqueam and CLC to see if they can together find a way to still give effect to the spirit of the MOU despite the major change in circumstances. Ultimately, if any of the understandings or all of them (the whole agreement) are terminated, the four original parties (including the federal government) go back to their pre-MOU positions.

Actually, the lawyer may see that too. The lawyer’s opinion goes on like this:

We do not, at this point, have an opinion on how a court would decide this issue if there was ever a challenge of this interpretation.

The MOU is drafted in such a way that there are different positions possible.

So the bottom line is that it’s anybody’s guess.

Disappearing right of first refusal 

Before leaving the lawyer’s opinion, we might also look at the end of page 3 and top of page 4:

If it is determined that the lands will not be removed from the ALR, it is entirely possible that at that time CLC could sell the lands to MIB [Musqueam Indian Band]. . . .

That’s odd. The City has a seemingly clear right of first refusal if Canada Lands decides to sell any part of the land during the course of the agreements. It is stated in the Agreement of Purchase and Sale, Terms of Instrument – Part 2, it’s in Section 1.2, Right of First Refusal:

(a)   If, at any time from time to time after the Effective Date [Dec. 15, 2005] and prior to the Discharge Date [the end of the agreements], CLC proposes to sell or convey any interest in any portion of the Lands (an “Offered Interest”), CLC shall, prior to offering or agreeing to sell an Offered Interest to any other party, provide to the City written notice (an “Offering Notice”) of CLC’s intention to sell the Offered interest. [Section 1.2 goes on to explain the details, which appear to describe a strong right of first refusal.]

It’s important to be aware that the “Discharge Date” definition in the document indicates that discharge can be hastened by “breaches” or “failure” by the City. However, if things get held up by an ALC decision, that doesn’t seem to result in an immediate discharge, so one would expect there to be a period between the ALC decision and the deadline for ALR-removal in which Canada Lands could offer the land for sale and the City could exercise its right of first refusal. Is that right meaningless too? It’s hard to know, since it’s not addressed in the lawyer’s opinion.

(An aside: If the right of first refusal is meaningless, again one has to wonder who was looking out for the rights of the City and its people when the Agreement of Purchase and Sale was entered into.) 

Disappearing federal responsibility?

Finally, right after the lawyer’s opinion, at the bottom of page 5 of the PDF, there is this note:

In addition, recent information in the form of a letter from the Treasury Board of Canada Secretariat clarifying its policy position regarding the future of the Garden City Lands site has been attached (Attachment 3). The Secretariat noted that, if the Agricultural Land Reserve (ALR) exclusion is unsuccessful “the lands are owned by Canada Lands Company (CLC), not the Federal Government, so it will be up to the CLC to develop appropriate management and/or disposal strategies. There is no automatic reversion of these lands to the Federal Government.”

However, it is evident from the bureaucrat’s letter that it was written after a discussion with  Canada Lands, which would naturally want to be able to retain ownership of the lands so as to make money from them. There is no indication whatsoever of any discussion of the federal government’s obligation under the MOU. One would infer that the bureaucrat was unaware of that obligation. Although there is not exactly an “automatic reversion” under the MOU, there is (in the English interpretation) a requirement for the federal government, along with the other three parties, to “cooperate in making whatever arrangements are necessary to restore each Party to the position it was in prior to entering into this MOU.”

(Again, who’s watching out for the rights of the City and people of Richmond?)

Other aspects

The following are just three of the many other points that could be addressed: 

  • The resolution to use the Garden City lands to enhance and showcase community wellness, healthy lifestyles, and urban agriculture is commendable.
  • Major misconceptions are still being promoted. The most obvious example is that the City is still acting as though it would get half the Garden City lands, whereas in fact it would split 30% of its 50% with the venture partners. The effect would be that the Venture Partners would get 57.5%, with the City getting 42.5%.
  • Another major point that continues to be ignored is new schools. At least two elementary schools would be needed on the Garden City lands, and that could  increase to three elementary and one secondary if the recent school enrolment decline is only temporary. Either the school board would have to buy land from the venture partners at mega-density-residential prices or the City would need to provide it from its 42.5% of the lands.

Any way out of the quicksand?

Suggestions: 

  • In view of the mega-mess, there are actually some benefits for the City if Canada Lands extends the deadline for the ALR-removal Condition Precedent.
  • We need someone with the skills of an ombudsman to take a month or so to clear up the mess, salvaging whatever rights can be salvaged for the City.
  • It is important to know the salvage results before the City gives further consideration to giving up its bargaining chip, its crucial role in the proposed application to the Agricultural Land Commission (if the deadline for ALR-removal gets extended).
  • If the development agreements go ahead, the good effects of salvaging whatever can be salvaged will also be very helpful for all future councils and residents of Richmond.
  • While the Garden City lands should be kept in the ALR, that must be accompanied by the City raising its performance to the level of Canada Lands and the Musqueam.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s