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Strata termination could force sale of Sushi Village, Black's and Mexican Corner for 'nickels on the dollar'

Resort Municipality of Whistler has raised issue with province, but no obvious legislative fix, says mayor

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The termination of a mixed-use strata last summer could force the sale of three longstanding village businesses for well below market value, according to a concerned citizen speaking on behalf of the businesses.

In August, a vote passed the 80-per-cent threshold required to terminate the Sundial strata corporation, a mixed-use Phase 2 and commercial strata. Lot owners Sushi Village, Mexican Corner and Black's Pub opposed terminating the strata, which would trigger the collective sale of 4340 Sundial Crescent.

Developer Concord Pacific owns more than 80-per-cent of the lots in the strata corporation. Prior to changes to the Strata Property Act in 2016, registered owners had to vote unanimously to terminate a strata. (Concord Pacific did not respond to a request for comment by press time.)

"If the threshold facilitates the redevelopment of property, it's harder when the presumption is you need everybody onboard," explained professor of legal history Doug Harris with UBC's Allard School of Law. "When you only need 80 per cent onboard, it's easier. So the question about the voting bloc voting strategically, you would need to gather fewer votes together."

Of particular concern for the three Sundial businesses is the way their properties would be valued through the strata dissolution, which would apportion sale proceeds by an "interest upon destruction schedule."

Through this process, which applies to strata plans filed between August 1974 and 2000, a strata unit's value is determined as a proportion of the relative value of the building as a whole. Based solely on the lot's real estate value, it does not take into account any upgrades that have been made to the space or the value of the commercial enterprise itself.

"In essence, Concord Pacific isn't doing anything illegal at all. There's no complaint about that, but they could get these commercial lots for nickels on the dollar, compared to, if I wanted to buy Black's Pub, I would assume I'm well into eight figures. They might get six figures as their payout," said Craig MacKenzie, a local realtor who is authorized to speak on behalf of the affected businesses.

Harris said the strata termination process was likely designed with residential properties in mind, which make up the majority of strata corporations in B.C.

"The framework that applies for the dissolution of a strata property applies to residential and commercial, and there's nothing that suggests that there's a different treatment for one or the other," he said.

Last month, MacKenzie presented to Whistler mayor and council, who took the issue to the Union of B.C. Municipalities Convention. There, Mayor Jack Crompton met with staff from the B.C. Ministry of Municipal Affairs & Housing, who said they would raise the possibility of reinstating the 100-per-cent approval threshold to wind up a strata with Minister Selina Robinson. Local officials also have a phone call scheduled with Robinson next month.

"At this point, there doesn't seem to be a clear legislative fix, but I won't get ahead of the minister on that," said Crompton, who added that, in his opinion, "this use of the act was not intended. Sushi Village ... and Black's have served our community for decades."

The courts will now review the termination vote to "ensure that nobody is being treated unfairly," among other things, said Harris, who added that, "so long as the valuation of the building has been fairly done, then so far as I read the legislation, the business owners are stuck with their proportion based on the [interest] on destruction schedule."

There is precedent in the courts to reassess a terminated strata lot's property value, however. In 2017, a 30-unit condo complex at 2777 Oak St. in Vancouver was originally valued by BC Assessment at $10.6 million following the strata's wind-up, one of the first to pass in B.C. under the 80-per-cent approval threshold. Ninety-three-per-cent of owners initially approved the sale, but the holdouts (which included MacKenzie's daughter and son-in-law) successfully appealed their individual property assessment. The building was eventually reassessed and sold for $21.5 million, increasing the owners' payouts.

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