Thursday, July 31, 2014
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First Nations buy provincial properties, extinguish land claims on others

‘Accommodation agreements’ allow governments to free up land without settling treaties

By Jeff Lee, Vancouver Sun

The purchase of two large provincial properties in Burnaby and Vancouver shows the rising economic power of urban First Nations that want to develop long-term income for their communities.

But it also shows how the provincial government has found a way to settle some land claims without settling treaties. The province paid three Metro Vancouver First Nations $24 million to extinguish potential land claims on 27 other properties it wanted to sell.

In the Burnaby deal, the Musqueam and Tsleil-Waututh bands partnered with Aquilini Development and Construction to purchase 16-hectares of provincial land at Willingdon and Canada Way for $58 million. The province also announced it had tentatively sold its four-hectare Liquor Distribution Branch lands in Vancouver to the two bands, along with a third, the Squamish. The Aquilini group, which was not represented at a signing ceremony last week, has since confirmed to The Sun that it bought a one-third stake in the Willingdon partnership.

The $24-million payment from the province to extinguish the land claims stems from a long-held view, backed up by court cases, that the province had a “duty to accommodate” with area First Nations who might want the properties. The province identified nearly three dozen within the shared traditional territories of the three Coast Salish bands. But after looking at them, the bands decided to buy only two and to accept an “accommodation agreement” payment for the rest of them. That ends any future claim the First Nations could have on the properties.

Increasingly the provincial and federal governments are using such accommodation payments as a way of freeing up the sale and development of land that might be subject to a claim.

Last year the federal government made a similar payment to the three bands over the sale of the Canada Post main building in Vancouver. The value of the payment wasn’t released but the sale was worth more than $130 million.

The province said it has signed a total of 10 such payment agreements with First Nations around B.C. involving 120 properties it wanted to sell as part of its Release of Assets for Economic Generation program. It also would not say how much the agreements cost. But this year B.C. sold 55 properties worth $300 million, including the two that went to the Metro Vancouver bands. It expects to sell another $200 million in the next fiscal year.

Musqueam Chief Wayne Sparrow and Tsleil-Waututh Chief Maureen Thomas said their bands’ portions of the $24 million are being invested back into the Willingdon lands as part of commercial economic portfolios that can return income for their rapidly-growing communities. In Musqueam’s case, the on-reserve population of 1,400 is expected to double over the next two decades. For the smaller Tsleil-Waututh, it is a similar story.

“It is not all about the money. We need it for investing in our economic security. But we also need land for our people,” Sparrow said.

Some lands around the reserve in Vancouver may be added to the reserve, but the Willingdon and LDB lands will remain fee-simple. That means any development on the site will be subject to municipal zoning regulations and taxation.

“It just excites me so much to see the potential, and to know we fit into this area the way we should and that we are not beggars in our own territory,” Thomas said of the Willingdon purchase.

David Negrin, the president of Aquilini Development, said his company examined 29 properties worth about $90 million on behalf of the First Nations and concluded seven would not qualify for accommodation agreement payments. Two the bands bought at market value, and the other 20 were either too small or too encumbered to fit within the bands’ economic portfolios.

Aquilini already has working relationships with Tsleil-Waututh, where it is building a 400-unit commercial residential community, and Musqueam, where it built on-reserve housing. It also has a project with the Tsawwassen First Nation building housing on fee-simple lands. But Negrin said the new cooperative arrangement between the three bands on the two purchases illustrates how powerful aboriginal economic development has become.

“This is the most powerful thing I have seen in my 24 years as a developer,” he said. “How does the province turn down two First Nations working together, let alone three? What you are seeing is that First Nations are becoming the strongest developers in the province because they hold title to so much land.”

Sparrow said the province was in such a rush to sell the property, and the purchase price was so large that the two bands and Aquilini had to ask for a temporary vendor buyback agreement. They put down 40 per cent of the purchase price and the government took a short-term six-month mortgage on the property to give the partners time to arrange the rest of the financing. Both Greer and Aquilini vice-president of acquisitions Brennan Cook said such financing arrangements aren’t unusual in large and complex land sales.

Cook said the partners won’t rush development of Willingdon. The province has a three-year leaseback for facilities it owns on about half the site. That will give the group time to consult with Burnaby and develop a master plan for the entire 16 hectares.

Sparrow and Thomas said they are both cognizant that Mayor Derek Corrigan had expressed anger that the province had chosen the First Nations over his city, which had hoped to buy the lands. It was in the middle of doing its due diligence when the province announced the deal. Corrigan later said Burnaby had hoped to designate part of the lands as a new site for the aging Burnaby General Hospital. He was said he was mightily offended by Technology, Innovation and Citizen Services Minister Andrew Wilkinson’s public quip “you snooze, you lose” when talking about Burnaby losing out on the purchase.

“We’re here to generate money for our community, to sustain us for years to come. If we can do it in a good neighbourly way, we will definitely do that,” Thomas said, adding that she could see part of the site being used for a hospital.

“We don’t want to cause problems for us or anyone else. If we go in with the wrong attitude they will just put roadblocks up left and right, and already for First Nations people things have always been 10 times harder for us. We are used to this but we don’t want to keep dwelling on it. We want to be able to move forward,” she said.

Corrigan said on Wednesday that while the city is still smarting over the province’s treatment, it won’t take out its unhappiness on the new owners.

Musqueam has also put assets from other land claims settlements into what is becoming a robust economic portfolio administered by a new asset management corporation, Musqueam Capital Corporation. The corporation, a wholly-owned subsidiary of the band, manages several hundred million dollars of land, businesses and other assets, according to president Steve Lee.

“All of the assets are managed by Musqueam Capital to generate long-term economic sustainability for the band and to optimize the use of the lands,” he said.

For example, when the federal Canada Lands Corp settled title to the so-called Garden City Lands in Richmond, Musqueam acquired title to a 94,000 square foot office building on four acres in Burnaby. The band also owns Milltown Marina in Richmond, the Fraser Arms Hotel in Vancouver, and three golf courses.

It is also starting development on a 22-acre project on the University Endowment Lands that will feature 1,100 units, a 120-room hotel and commercial developments.

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