Untendered deal in works for False Creek Flats lots
The last two open lots on a prime False Creek Flats development site owned by four B.C. universities have been offered in a confidential untendered sale to several Vancouver developers, in a deal that must be approved by the B.C. government.
According to information reviewed by Postmedia News, the confidential sale proposal by the Great Northern Way Trust — a land-development group involving BCIT, SFU, UBC and Emily Carr University — came together in May. Circumstances of the deal, which must be approved by the Ministry of Finance and Ministry of Advanced Education, seem to underline the high stakes at play in B.C.’s new uncertain political terrain.
Emily Kaplun, project manager for Great Northern Way Trust, confirmed the trust’s board has recommended the untendered sale of two lots adjacent to the new Emily Carr University building to PCI Developments Corp. and to Low Tide Properties, the development company of Vancouver yoga clothing entrepreneur Chip Wilson. However, Kaplun said she could not confirm certain details.
“I have to recognize the confidential nature of the purchase contract and that we’re still in the midst of negotiations on this transaction,” Kaplun said. “Other than the sale of Lots 6 and 7, GNW Trust has used a competitive process where lots have been sold to the private sector.”
The two lots are offered on an 18.6-acre former industrial site that was given to the four B.C. universities in 2001. GNW Trust is seeking to develop a mixed-use, live, work and retail village centred on Emily Carr University, and a proposed new SkyTrain station to be built as part of the proposed Broadway extension. The area is considered by industry experts as the final frontier of high-density real estate development in Vancouver, and primed to boom.
Of the two lots offered, the largest, Lot 7, would have the new SkyTrain line running right through it. Lot 7 was offered for $1 in the deal — apparently because of restrictions due to the expected SkyTrain — according to information reviewed by Postmedia.
As of a year ago, May 2016, the appraised value of Lot 6 was $12.3 million. PCI and Low Tide offered $24 million for Lots 6 and 7, and would spend up to $5 million to build a daycare centre on the site. This would fulfil a City of Vancouver development obligation for GNW, giving GNW final proceeds of about $19 million from the proposed sale.
In an interview Tuesday, Kaplun said GNW judged that an untendered sale process was warranted for Lots 6 and 7, because of the complexity of developing the site. PCI had already bought adjacent Lots 9 and 8 in an open bid process, Kaplun said. PCI’s plans on Lot 8 are expected to seek additional density that will warrant the building of the daycare, according to deal information. As PCI’s plans on Lot 8 became clear,
Kaplan said, and PCI came forward with an unsolicited offer for Lots 6 and 7, GNW judged that having PCI and Low Tide develop all of these lots in an integrated way made the most sense.
GNW’s board conducted due diligence and “are now satisfied that the value realized is the best that could be achieved in the market,” for Lots 6 and 7, Kaplun said.
According to proposed terms, GNW Trust could be paid future proceeds for the sale of Lots 6 and 7 if PCI gets a rezoning for high residential density, Postmedia has confirmed. But Kaplun said she could not disclose how this process would work, for confidentiality reasons.
A person with knowledge of the deal said the four universities that are shareholders of GNW must approve the deal before June 15 so it can be put forward for government approval.
The person said they wonder about the deal’s value, as some comparably sized Vancouver development lots, although with different zoning scenarios, have reportedly sold for between $70 million and $90 million. Another question is whether the proposed SkyTrain extension will become a reality, the person said.
Another source with knowledge of the deal questioned why a May 2016 appraised value of $12.3 million was used to value Lot 6 in the deal.
All the universities involved were contacted by Postmedia and those that responded declined to comment on the deal.
On Tuesday, Premier Christy Clark said she expects her government to fail in a confidence vote in June, and for the NDP and Greens to seek to form a new government.
Before that announcement, Kaplun was asked if the uncertain condition of B.C.’s government would affect GNW’s timeline and plans for submitting a request for approval.
“That is a good question,” Kaplun said. “We have a close working relationship with staff workers at both ministries, so I don’t see this as an issue.”
Postmedia News informed NDP MLA David Eby of the proposed deal and he said he would be concerned if the deal was rushed through for approval. He said an NDP-Green government might want to see Lots 6 and 7 used for ideas from their election platforms, such as promotion of affordable housing or technology development.
“I’m really unhappy that a major land deal might go forward untendered, when the province has a gap between two governments,” Eby said. “And if this deal allegedly involves big B.C. Liberal donors, I don’t think it is appropriate.”
Rodney Porter, a Ministry of Advanced Education spokesman, said the ministry has not yet received the trust’s request for approval on the proposed sale. Porter was asked if the government has rules outlining whether land sales of a certain value must be put on the open market. But he did not answer the question directly.
“The Great Northern Way Trust is answerable to its shareholders — BCIT, SFU, UBC and ECUAD,” Porter said in an emailed response. “The ministry expects that the sale of any property by a post-secondary institution would be at fair market value. However, it is common that conditions are attached to a sale that could impact a decision.”
Deal information reviewed by Postmedia suggests that more than 150,000 square feet of build density is available on Lots 6 and 7 under current zoning.
Jake Luft, a senior associate with Avison Young in Vancouver, said that since the City of Vancouver approved a new False Creek Flats development plan in mid-May, “the area is no doubt in high demand. Developers are looking to unlock development potential.”
Luft said it is difficult to judge the value of the lots surrounding the Emily Carr University site.
“We’re unable to comment on the value of this land as there are too many unknown variables,” Luft said.
A search of provincial donation records shows PCI companies have donated approximately $265,000 to B.C. political parties since 2005. Of that total, $2,000 was donated to the NDP and the rest went to the Liberals. Chip Wilson has donated $150,000 to the B.C. Liberals personally, and he has donated $57,500 to the party through his Low Tide Properties company, records show.
Jo Delesalle, the chief financial officer of developer Dayhu, sits on the GNW Trust Board that has recommended the deal. Delesalle is also a member of the Emily Carr University board, appointed in July 2015, according to the university’s website. Dayhu has donated approximately $340,000 to the B.C. Liberals, records show.
Postmedia contacted Delesalle, PCI management, and Low Tide management for comment on this story Tuesday, but did not immediately receive responses.