Ladner float home tenants see huge cost increase
Ladner leaseholders of water lots on the Fraser River are upset over a sudden lease rate hike of nearly 80 per cent, administered by Port Metro Vancouver.
The riverbed along Ladner Harbour is owned by the province, which means float homes come under their leasing authority. That lease expired Dec. 14, 2011. PMV is working on a new deal with the province to extend the lease, but for now they've only offered an extension to Dec. 31, 2014.
"We're really tenants ourselves, taking instructions from our landlord, the province," said Tom Corsie, vice-president of real estate with PMV.
The local port authority has traditionally leased the foreshore zones from the province, making float homes and marinas subtenants of the province.
This year PMV has sent out letters to tenants offering to extend the term three years retroactive to Dec. 31, 2011, hoping that a long-term deal can be struck with the province during the interim.
That uncertainty is a sticking point among many riverside residents, said Mike Owen, owner of Mike's Marina.
"If you're trying to buy a floating home, or you're trying to buy a waterfront property that requires the water lot, that creates some uncertainty for your bank," he said.
But the biggest issue is the rent increases, which he said has averaged around 79 per cent.
It's not just float homes that are affected by the rate increase, but log storage, recreational boat moorage, and commercial fishing boats as well.
Most leaseholders have simply renewed the three-year lease, but where PMV is having difficulty is among the float home owners.
Water lot rent is influenced by a number of factors, including the rent yield, property value, as well as the last time the rent was reviewed.
"For some of these tenants they haven't had a rent review for five years," said Corsie, adding it's understandable people are upset the increase is coming all at once.
Corsie said rental guidelines for float homes are based on the typical going market rates for water lot zones. The valuation process for those zones are based on upland zone values—basically, the price of the water is tied to the price of the land.
"The reason for that is property values are going up," said Corsie.
He said it makes sense to tie the foreshore zone to the upland properties because in most cases the tenant rents from the owner of the uplands.
"So, you have to ask them, if they rent their property, do they want a market rate for the property, or would they be prepared to accept a submarket rent?"
But Owen said it doesn't make any sense to tie the water lot valuation to the uplands.
"If the water lot at River West is one acre and the water lot at Ladner Reach is one acre, then why aren't they the same rate?"
The water lots have no value if the upland property owner does not want to use them, added Owen.
Owen said there's a contradiction in that when Delta expropriated Wellington Point Park, taxpayers were told the water lots were worthless.
As well, the water lot value can increase simply because a neighbour sold his property, increasing the zonal valuation PMV uses to assess rent.
"The Port may come along and say, look, those three lots over there sold for a million dollars each, so they're all worth a million dollars," said Owen. "Well, they may be at some time in the future, but they're not now."
PMV has tried to soften the rental increase blow already. When they get a valuation for a water lot user, a rent yield rate of four per cent is applied, which is about half of the traditional rate.
Corsie said it's understandable residential water lot tenants are hesitant to sign a three-year extension when they'd rather get 30 years.
Float home owners are going to be reluctant to make financial investments to their property without the certainty of a long-term contract.
Adding to the uncertainty is the fact the province need to consult with First Nation groups prior to signing the new agreement.
Owen said many river residents believed that when Tsawwassen First Nation settled their historic treaty in 2009 that the water lots issue was resolved, but were surprised to hear the Sto:lo, the Musqueum, and other native bands have made claims along the Fraser River that could drag out in consultations with the province for years.
"That's another level of uncertainty."