In return Condo residents on leased land paid monthly charges to the city that could be raised from time to time to market levels. Residents could also pre-pay a fixed amount for the outstanding term of the lease.
Market levels' were about to be massively distorted by the highest amount ever paid for land in the city to that time.
"Richard Cooper woke yesterday to find his payments had jumped from $102 monthly to $785.“I got up this morning and there was a bulletin,” Cooper told 24 hours.
Condo owner George Stratis was among the hardest hit. He wasn’t aware of the increase until he was contacted by 24 hours yesterday. “You’ve got to be kidding me! That’s absurd,” Stratis said, when told his payments had jumped by $1,400 a month. “That’s larger than a mortgage.”
Stratis could now owe the city about $20,000 a year. That’s on top of his regular property taxes.”
One owner has seen their payments raise from $121.50 to $2,000 – An incredible SIXTEEN HUNDRED PERCENT increase! The city claims that these lease rates have been stuck at a low value for thirty years and that todays increase reflects the current value of the land. Leasehold value has been a contentious issue between residents of False Creek and the city of Vancouver for years. Some residents claim this former industrial land is contaminated and overvalued by as much as 40-50 per cent.
“They’re simply boldly making the statement saying this land is worth top dollar and we should be getting as much rent for it as if it were clean,” said Renger, a senior city planner in another jurisdiction. “That’s not what market land value is about.”
In a prophetic comment made earlier this summer Neil Hamilton, Senior Property Advisor with MacDonald Realty, identified the looming catastrophe which was clear to all to see:
“The thing you have to remember is, when you go into a lease, no matter how it’s set up, you have to know how long is left in it. Because once it gets under 10 years, and certainly under 5 years, the property is going to be much less saleable than one that has, say, 35 or 40 left on it. Because, at the end of that lease, nobody knows what’s going to happen to it. It’s like a game of musical chairs—or, in this case, musical buildings. When the music stops playing, you don’t want to be the person left holding the bag."
But with 25 years left in those leases, it's already happening.
So there you have it. 2012 is topped off by ending with -50% below assessed value real estate listings entering the City proper.
Who would have thunk it?
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