Mount Pleasant businesses fearful as SkyTrain expansion brings rising property taxes

Open this photo in gallery:

The junction where Kingsway and Main Street converge is the historic and cultural heart of Mount Pleasant, just north of Broadway. It’s also one of the most walkable areas in Vancouver, filled with independent boutique shops and cafés, but without Yaletown’s high prices and lapdog-carrying clientele.

Mount Pleasant has always had a gritty edge and community vibe, filled with skateboard and bicycle shops, vegetarian restaurants and used-book stores. It’s one of the city’s few remaining old shopping hubs, with a village atmosphere, because of the affordable rental apartments, historic architecture and independent businesses.

But the neighbourhood is quickly transforming because of the coming Millennium Line SkyTrain extension that will include a new station at Broadway and Main, smack in the middle of the neighbourhood. That’s good news for transit and bad news for anyone who’s paying taxes on escalating property values. Independent shop owners are fearful, said Michael Wiebe, owner of eight ½ restaurant lounge on East 8th Avenue, off Main.

Open this photo in gallery:

Mr. Wiebe is also a director on the Mount Pleasant Business Improvement Association, and he sits on the Vancouver park board and is running for city council. He lists a dozen shops that are in buildings that have been sold, some of which have already left. Others are holding on, waiting to hear how long they can stay. He said it’s also a problem of rezoning and tax increases. The hip, little village is getting squeezed from all sides.

“A couple of [property] owners are refusing to budge … but some of the new rezoning that’s happened is really hurting,” he said, seated at the back of his restaurant. He mentions the new tech-oriented industrial area called Mount Pixel, nearby, and the effect it’s had on property taxes.

“We need to recognize that triple net [increased tax, rent and maintenance costs] is being passed down to small tenants, like an antique shop, and those are all going to be redeveloped, so we are seeing a loss.

“But we also understand we want more density, and we understand we will have new mass transit in the area, so we are trying to balance it all.”

Mr. Wiebe is lobbying the city to support existing businesses and renters in the area, to protect historic buildings, like the one in which his restaurant is located, and to protect the unique character of their historic village. He’s looking into forming a co-op with one of the property owners who refuses to sell, as a way to keep store spaces affordable.

He said he’s also discussed the issue with the city’s general manager of planning, urban design and sustainability, Gil Kelley, who told him the city’s new Development Contribution Expectation (DCE) will make affordable rentals and public amenities a requirement in rezoning proposals. The city adopted the new policy in June, as a way to curb speculation along the Broadway corridor, which has become popular with condo developers. At Broadway and Kingsway, Rize Alliance’s controversial high-rise tower, the Independent, has had some construction setbacks, but is scheduled for completion by October or November, according to the developer.

Mr. Kelley has said in previous interviews that the retention of existing rental housing is a top priority for the city. In the past year, during which SkyTrain extension from Clark Drive to Arbutus Street went from talk to reality, developers went on a buying spree along Broadway.

“I told him that pretty much over 50 per cent of the properties have already been sold in the last six months in this area,” Mr. Wiebe said.

Ronan Pigott puts it this way: “People have been bullish on Main Street for a long time.

“The talk about the future SkyTrain extension has been going on for a number of years now, and as it’s progressively got closer to ratified, we’ve seen the value being realized in transactions already.”

Mr. Pigott is vice-president for Avison Young, and does commercial leasing and sales for downtown and the Broadway corridor. He said the biggest problem for small businesses in the area is that property taxes are based on the highest and best use. In other words, if your property is zoned for three stories of mixed-use market condos and retail, you’re taxed accordingly, even if currently it’s a one-storey building being leased by a used bookstore. That means the used-book store no longer makes sense, especially when the taxes have tripled and are no longer affordable for the owner or tenant.

“When you look at the area on Main that is north of Broadway, they are impacted greatly, because if you look at the buildings that we have there, in a lot of cases they are somewhat dilapidated buildings, where it’s hard to justify the value of paying those operating costs and taxes, when they are at such a high level,” Mr. Pigott said. “Unless you realize the potential, the viability to house a retailer doesn’t make a lot of sense. The value is in the land, not in the existing structure. And you are taxed on the potential, not what exists currently.”

A city staff report from June indicates that the city has a policy to “recognize and strengthen the unique character of the area,” although it’s not clear from the report how that will happen.

The city recently attempted to put the brakes on speculation with the DCE, a measure aimed at protecting affordable rental and job space. The city has also put a moratorium on most new rezoning applications along the Broadway corridor until 2020, in order to better assess the needs of the neighbourhoods. For some businesses, that moratorium may buy them a little time. When contacted, city staff said they were working with the province and Metro Vancouver as a working group that will look at tax and property assessment options to give small businesses a break. The group convenes this fall and then staff will report to council.

Open this photo in gallery:

That probably won’t help Andrew Lee, who purchased a bottle depot on Carolina Street, just off East Broadway. Mr. Lee runs the business with his brother and four part-time employees. On a Tuesday afternoon, the place was busy with regular bottle pickers who were sorting their bottles and cans at counters. Mr. Lee gave up his job as an accountant to start the business. He chose entrepreneurship over home ownership because he thought he’d grow his business first, before buying a home. But his landlord recently sold the bottle depot property to developer PortLiving, along with a 1926 rental apartment block and sushi restaurant at the corner, and a 1903 heritage rental house on East Broadway. PortLiving has purchased several properties in the area, including the new condo/retail building at 585 E. Broadway and the condo/retail building at 630 E. Broadway, which is under construction. Both are around the corner from Mr. Lee. The company also owns a corner lot at Fraser and Broadway, where stores were just demolished for a 35-unit condo development called Midtown Central.

Now, Mr. Lee, who pays $3,500 a month in rent, is desperate to find a new location, which will be a challenge, because bottle depots can only operate within defined territories. As well, he’s looking at leases that are four times as much as he is paying now. Mr. Lee said he has spent $20,000 in improvements on the century-old industrial building and has developed a good relationship with local people who collect bottles and cans. After a period adjusting to his new business, he’s now seeing a 30-per-cent increase in sales, but he fears bankruptcy.

“I have to find something in this location because we have territories, but there’s nothing. There’s nowhere else I can go right now at the moment. I am paying back my loan to do this business, and if I close down, I might have to call bankruptcy.

“It’s the end of the road. If I do get lucky, I’ll meet a good landlord who’s willing to help me out and relocate my business.”

His options are scant. He thinks about moving farther up Main Street, south of King Edward Avenue, but redevelopment is happening there, too.

Mr. Lee said his mother mortgaged her Coquitlam, B.C., home to help him get started. He moved to Vancouver from South Korea when he was in Grade 3, and he’s startled at the changes he’s seen.

“It’s not the Vancouver we used to know any more. I grew up in Metro Vancouver my entire life and everything has changed.

“My mother worked 12 hours to support my younger brother and I. She worked in a seniors' home as a nurse. She worked extra hours to make a living, to keep us going. So she worked really hard. I grew up and I want to contribute to my family, and as the elder son, I need to make my family proud.”

Brad Berry is senior vice-president of PortLiving, and he said they are planning to retain the old house and apartment block, but the bottle depot will have to go. The disruptive nature of development means renters in the buildings will have to relocate and his company is helping them do so, he said.

The future project will “have an artist feel to it,” he said. “I think it would be cool.”

Mr. Berry said they have no immediate redevelopment plan for the Porter building at 2339 Main, which is home to Uptown Barbers and was once home to John’s Jukes, a shop that sold jukeboxes. That owner relocated. But Mr. Berry said that they’ve made efforts to establish a relationship with tenants and keep them in place until the building is redeveloped. In the case of the apartment block at Carolina and Broadway, they are trying to help tenants relocate.

“I hope this doesn’t sound cliché, but we are very community-oriented,” Mr. Berry said. “We are very design forward, and if you look at our projects, everything has a unique design to it. We like to do things that are a little different, that add value, that add architecture. We don’t do typical glass-and-steel-type development.”

Mr. Wiebe’s wish is that when property owners are forced to sell, they sell to other small property owners instead of developers.

“We want small property owners who want to see small businesses [in the space], to pass it on, generation to generation. We lose small business property owners who have good relationships with tenants and who make businesses feel like no matter what, they will be able to stay there.”

His own lease, in one of Vancouver’s oldest buildings, runs out in the next four years. He said when he first took over the lease in 2009, he was offered the chance to purchase the building, but he didn’t, and now he’s kicking himself.

“We have no idea if the building will get sold or not,” he said. “So it makes our stressful situation even more stressful.”