A major B.C. developer has won a long-standing legal dispute against the Vancouver School Board over the cost of rent at its Kingsgate Mall property in a case that could cost the school district tens of millions of dollars.
The case, presided over by B.C. Supreme Court Justice Anita Chan, hinged on how the market value of the land should be calculated in the renewal terms of their lease agreement.
Parcels of land at the mall site were first acquired by the school board and the city in the 1800s. Mount Pleasant school was built on the land in 1892. But by 1962, as the area became a traffic and commercial hub, a new school was built nearby on Guelph Street. The mall was built in the early 1970s.
The school board had originally leased the property to Royal Oak Holdings Ltd. in 1972 before Beedie Development LP took it over in 2005. The site is currently zoned for commercial use and is located in an area that has seen an increase in residential development, including the Rize highrise built across the street from the mall.
In 2017, Beedie wanted to renew its lease but when it couldn’t come to an agreement with the school board over what the rent should be, the dispute was sent to a hearing before a three-member tribunal.
In January 2022, the tribunal concluded the 2017 market value of the property should be calculated at $116.5 million. That was based on a floor space ratio (FSR) of 3.0, which would align with a maximum development density and use for everything from manufacturing to retail and residential units.
The “basic rent” Beedie would pay was then calculated at 8.25 per cent of the market value every time it was renewed.
Based on that calculation, the school board has previously claimed in court filings that Beedie, and its subsidiary Kingsgate Property Ltd., owed a total of about $49 million in past and future rent.
One member of the tribunal disagreed, saying the market value should have been placed at $20 million — in line with a broad range of retail uses with a maximum FSR of 1.0.
In Chan’s decision, handed down Dec. 20, 2024, the judge agreed with the lone dissenting tribunal member. Chan overturned the tribunal’s majority decision, finding Beedie had been ordered to pay rents almost six times higher than should have been applied.
Chan's decision also vacated a July 13, 2023, order requiring Beedie to provide security for the higher rent rate.
The judge ordered the tenant to pay the school board $1.65 million a year, far from $9.6 million a year in rent ordered by the tribunal.
School board spokesperson Jiana Ling said the “significantly lower” new rent calculation applies to the full $49 million previously owed by Beedie. She said there are no other legal proceedings before the courts.
“The VSB is currently evaluating its next steps in response to the ruling,” Ling said.
Glacier Media reached out to Beedie but did not receive a response by the time of publication.
With files from Mike Howell
