The District of North Vancouver is on the hook for more than $1.5-million after a B.C. Supreme Court judge found the municipality short-changed a property owner when expropriating their land for the Lower Lynn Improvement Project.
In 2015, developer RSV Ventures purchased nine residential lots on St. Denis Avenue, Forsman Avenue and East Keith Road for $10.6 million or roughly $163 per buildable square foot. In 2016, in RSV flipped the contract to developer Spera Lynn Creek Holdings for $15.2 million. The company intended to build townhomes on the properties.
In December 2018, however, the district delivered notices of expropriation for four of the lots, making up 80,929 square feet, or 42.2 per cent of the land, as the space was needed for the highway expansion project.
“As a result of the expropriation, Spera’s plans for redevelopment of the lands were no longer feasible as originally conceived by it,” the court ruling released on Aug. 1 states.
Under the Expropriation Act, an owner must be compensated for the market value of their property, plus reasonable damages.
The district’s hired appraiser valued the lands at $5.76 million to $6.59 million, which averaged out to $225 per buildable square foot. Ultimately, the district paid Spera $6.65 million or $243 per buildable square foot.
Spera took the matter to court, arguing the district should have paid $11.35 million or $415 per buildable square foot.
In their analysis for the court, the district’s appraiser looked at the sale prices of other properties in the immediate Lynnmour neighbourhood and factored in a 15-per cent yearly increase in prices from early-2014 to June 2018.
Spera’s chose six comparable properties, all of which were in Moodyville, about two kilometres east in the City of North Vancouver, one of which shot up 120 per cent in value between 2016 and 2018.
It fell to B.C. Supreme Court Justice Shelley Fitzpatrick to determine who had the better methodology, which she acknowledged “even by qualified appraisers, is an art, not a science.”
For the most part, Fitzpatrick sided with the district.
“The two neighbourhoods have quite marked differences in market appeal, based on access to public transit, public amenities, shopping, proximity to town centres, travel time to Vancouver, attractive views or settings, and overall desirability,” Fitzpatrick wrote. “Moodyville’s close proximity to all of these aspects is apparent. Not so with Lynnmour which, although clearly moving to higher density development, lacked these more attractive aspects.”
Fitzpatrick also acknowledged the political climate and development philosophy of the two different North Vancouver municipal councils and how it might impact sales prices.
In 2016, the City of North Vancouver council agreed to pre-zone almost all of Moodyville for townhouses as part of its lengthy official community plan update.
“Pre-zoning of Moodyville properties meant that a developer would avoid the delay of preparing an application for rezoning and waiting for the rezoning to be approved, being a substantial financial benefit to the developer,” the ruling states. “There is no guarantee that a rezoning application in the district would be approved, creating an additional risk to a developer seeking to start a project in the district, likely resulting in a discount for the price of land to account for that additional risk.”
Still, the district’s purchase price did not adequately consider the price that Spera paid in their own purchase of the properties in 2016, before expropriation.
The district’s appraiser argued that it was on the “high” side, making it less relevant as a comparable, however Fitzpatrick disagreed.
“I agree with Spera that this statement has less force when the lone sale is in fact a sale of the subject property,” she wrote.
Ultimately, Fitzpatrick pegged the overall value of the lands at $8.2 million – or $300 per buildable square foot. She also ordered the district to pay interest on the $1.55-million difference between the original expropriation price and the final value, plus Spera’s legal costs in the court dispute.
It’s the second time the courts have ordered the district to pay up for a low-balled expropriation related to the highway project. In 2022, the district was ordered to pay a former Forsman Avenue property owner more than $900,000 after the court found the district’s appraisal of her expropriated home wasn’t a fair market value.
