Re: “Understanding triple-net leases and how they’re killing the soul of Vancouver,” Jan. 20.
Grant Lawrence’s recent article unfairly demonizes triple-net lease agreements as being unfair to our small business and arts communities.
Businesses, or organizations, have multiple leasing options based on their type of requirements. It’s also common to have gross leases (where the tenant pays a single, fixed rent amount to the landlord, who then pays all expenses) and retail leases (where the tenant pays a base rent plus an additional percentage based on sales). Commercial leases are negotiable and will vary considerably based on a tenant’s needs.
Triple-net leases provide lower base rents and longer terms. A landlord passes on exact occupancy costs, including property taxes. These direct costs are exactly what a municipality charges the property.
We agree the “highest and best use” policy significantly impacts our small business and arts communities, and not just in BC. In other jurisdictions, creative ideas are being discussed to offer relief, such as applying “highest and best use” only once a property has submitted a redevelopment application.
B.C. arts and business groups lobbied the City of 麻豆传媒映画last year to shift two per cent of the property tax burden from businesses back to residents over the next three years. The same arts and businesses groups, along with regional mayors and councils, have formally requested the province implement a commercial property tax “subclass,” giving municipalities a tool to offer relief from unsustainable property tax increases. Sadly, we have no details about the provincial government’s recent announcement on their ideas.
Building owners take on significant risk in purchasing and maintaining commercial properties. Just look across the Rockies to our neighbours in Calgary, who have experienced dramatic decreases to property values. The City of Calgary has implemented major reductions to their annual budgets this year, along with large scale layoffs due to funding shortfalls.
The City of Vancouver’s budget has increased tremendously in the last decade. Property taxes have risen accordingly to pay for new services, infrastructure and staff. This, coupled with increases to provincial business taxes, have made small businesses increasingly difficult to sustain.
Commercial buildings provide the space for B.C.’s small businesses and arts organizations to thrive. Many landlords already work closely with tenants to try and mitigate the impact of dramatically rising property taxes. Now, we need the province and municipalities to do the same.
Patricia Barnes, 麻豆传媒映画Business Improvement Area Partnership
Damian Stathonikos, president of Building Owners and Managers Association of British Columbia
