Fair market value

A Richmond Review article titled “Steves finally has his day” expresses some sensible ideas about renegotiating under the Garden City Lands memorandum of understanding (MOU) to obtain all 136 acres of the Lands for agricultural and ecological uses for the benefit of the Richmond community.

For a start, the article reflects Coun. Harold Steves views in stating that “Richmond would buy its share of the land for $4.77 million.” That is in keeping with the MOU. In describing what the MOU seeks to address, the document lists “the interest of the federal Crown that it obtain fair market value for the Garden City Property” and then expresses the total value of the property as $13.54 million, with the value of the “Public Lands” half (the City lands)naturally set at $4.77 million. That works out to around $70,000 an acre.

In keeping with provisions in the MOU, the City and Canada Lands Company CLC, along with its Musqueam Indian Band venture partner, are currently beginning renegotiations “to give effect to the spirit of the MOU, to the extent possible, in the changed circumstances.” If CLC-Musqueam reciprocates the good faith and goodwill that the City has shown, there should be no question that the City’s purchase price for half the Lands should be the stipulated $4.77 million.

With regard to the other half of the property, both CLC and the Band have indicated that they have no interest in farming the land. They could choose to leave it as it is, and that sounds fine as long as the land is properly looked after. Actually there is City-owned green space all around the perimeter, and the City could construct a trail there to enable everyone to enjoy those lands. That would be a good deal for Richmond, since CLC-Musqueam would still have to pay taxes to the City.

If CLC and the Band decide to sell any of that other half of the property, then the MOU specifically promises the City the right of first offer. The citizens would expect the City to negotiate a fair price with CLC and its venture partner, which should be at least the $4.77 “fair market value” under the MOU. In the Richmond Review article, Coun. Steves indicates, “Probably that’s the value of the other property. At least that’s where we start.”

Some people argue that the price should be $6.85 million, which is the current assessed value for property tax purposes. Others respond to that with the observation that property values are declining and are likely to continue to decline and then bottom out for several years.

There have also been suggestions about expropriating the property, which seems heavy handed as long as CLC and its joint venture partner negotiate within the MOU in the spirit of the agreements to give effect to the MOU to the extent possible in the changed circumstances. The spirit of the MOU is to provide park space for the city and to split profits (from ALR exclusion and rezoning, if possible) between CLC and the Musqueam, and both of those aims will be achieved in the changed circumstances as long as there is sufficient goodwill. Whatever the “extent possible” may be, those two partners should not lose any money as a result of the deal. In these economic times, managing to preserve their capital would be a kind of win.

It may be that the Musqueam should receive further compensation, but I suggest that the federal government should take care of that. That is one reason why it would be good for the City, CLC, and Musqueam to bring the federal government (through our MPs) to the table at the renegotiation stage, even though that party to the MOU is not required to be brought in until the final stage of the renegotiation-arbitration-restoration process.

In any case, what we do not need is councillors publicly suggesting an inflated price, as happened with a couple of councillors at the Dec. 8 meeting that brought an end to the plans for high-density development of the Lands. That pair of councillors suggested offering the price of Alexandra-area land across Alderbridge Way to the north. Because of rezoning, the per-acre value of that land would be something like $3 million an acre, and it makes absolutely no sense to offer that amount for ALR land.

Those comments may have caused unreasonable expectations that would be very much to the detriment of the Richmond taxpayers and could ultimately prevent Richmond from obtaining the Lands. Nevertheless, Coun. Steves and other “Save Garden City” councillors have overcome obstacles before. No doubt we are all optimistic that they will overcome that totally unnecessary one, along with the various other obstacles to ultimate success.

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