WFN LEASES Barry M. Porrelli Lawyer WFN LANDS CONFERENCE NOVEMBER 5, 2013
WESTBANK FIRST NATION LEASES 1. INTRODUCTION 2. WESTBANK FIRST NATION 3. UNDERSTANDING LEASES 4. SECURE WFN LEASES 5. TITLE INSURANCE 6. CMHC 7. PROPERTY TRANSFER TAX
1. INTRODUCTION Reserve land development and conveyancing represents much of our practice Our firm is located on the WFN Reserve (IR #9) Member and past chairman of WFN Economic Development Commission
Projects I have been involved in include: Royal Heights, a 33 lot subdivision in West Kelowna Estates in the early 90 s many manufactured home parks Sierra s Westside MHP Westpoint MHP
More recently (for developer or CP Holder): Aria, 175 unit condo development on 2 Eagles golf course Home Depot/Canadian Tire development in Westbank Anthem s Superstore development in Westbank Sunrise Estates, 100 homes (single family) Sage Creek, 270 unit modular home development Carrington Business Park, 8 acre business park on Hwy 97 Vintage View, a commercial/hotel development Big box development on the Adams Lake Band Copper Sky, 536 unit condo development
Tesoro Arca, 85 unit townhouse development Snyatan, Winners/Future Shop mall in Westbank Governor s Landing and Governor s Market in Westbank commercial/retail West Harbour, 200 home lakefront development Cottages at Osoyoos Lake (284 homes) Westside Landing (commercial) Sears Home Centre Lakeview Lodge, 100 bed Interior Health Care facility Many other developments on Westbank First Nation and other reserves in B.C., in various stages of development
2. WESTBANK FIRST NATION Development on this Reserve exploded few years ago Tax assessed value of properties in 2012 was $1.3 billion Building Permits average about $50 million a year The recent explosion of commercial growth started with the Hub Centre big box development with Home Depot as the anchor Followed by other large multinational and national operators such as Walmart, Canadian Tire, Superstore, London Drugs, Winners, etc. Okanagan Lake Shopping Centre beside the Band Office (8 cinema landmark movie theatre, Shoppers Drug Mart, TD and Royal Bank, etc.)
WFN is fortunate: sound, stable, progressive Self-Government nationally recognized leader in Chief Robert Louie membership that, for the most part, favours development large amount of urban, prime land, adjacent to or intersected by a highway, access to services, often highway or waterfront, or lakeview an Economic Development Commission (first Band in Canada with an EDC) About 10,000 non-natives living on WFN lands Growth has far outstripped that of surrounding areas and most of B.C.
3. UNDERSTANDING LEASES Reserve lands are generally held in the name of Her Majesty The Queen (the Crown ) for the benefit of the particular First Nation There is no concept of Fee Simple or Freehold and most Reserve lands are not registered in any Provincial Land Title system Generally there are 2 types of interests in WFN lands: 1. Community lands which are general Band lands not allotted to a specific Member (eg. proposed new Wellness Centre) 2. CP or Certificate of Possession lands being lands where individual Band Members have been allotted rights of possession Has characteristics of freehold except cannot be freely transferred
Majority of WFN lands are CP lands held by individual Band Members The Indian Act is a very paternalistic piece of legislation which prevents most First Nations from freely dealing with their lands A CP can only be transferred to the Band or another Band Member So generally the way a non-native obtains an interest on Reserve is through a Lease
Approximately 630 First Nations in Canada, about 200 in British Columbia Most Bands in Canada are administered by Aboriginal Affairs and Northern Development Canada ( AANDC ) in accordance with the Indian Act For most Bands, things such as land management and development must go through AANDC (Vancouver for B.C. First Nations)
A handful of Bands (18 in Canada, 5 in B.C.) have achieved a form of Self-Government Self-government is the ability of a First Nation to govern itself (within the framework of the Canadian Constitution) Often includes the ability to manage its own land and resources at the local level On average takes about 15 years of negotiation for a First Nation to achieve
WFN Quite a distinction between the WFN and most other Bands in Canada because the WFN achieved Self-Government in 2005 For most First Nations the leasing process is managed by AANDC very cumbersome process where it can take years to get a Lease Prior to 2005, all Leases on this reserve were with the Crown as Lessor All subdivisions done before 2005 have a Lease between Her Majesty the Queen and the developer (e.g. Sun Village, Bayview, Sonoma Pines, etc.)
In 2005, the Self-Government Agreement with Canada recognized the validity of all previous Leases but the system changed and became more simplified No longer under the control of Indian Affairs; Band and its Members largely free to deal with their land All Leases going forward are no longer with the Crown; now with WFN (if Band land) or the Band Member (if CP land) All subdivisions done since 2005 and in the future are directly with the Band or a Band Member (e.g. Aria, Sage Creek, Copper Sky, West Harbour, Elkridge, etc.)
The Lease process begins by a developer entering into a longterm Lease with the Band or a Band Member a Headlease Band Referendum needed only if Community Land The many residential and commercial subdivisions on WFN have an underlying long-term Headlease which grants the developer the rights to those lands for the term of the Lease The developer then, as Lessee, develops the lands, either commercially or residentially, then subleases the individual units (homes, apartments, townhouses, commercial units) to buyers (sublessees) Those buyers may then go to their bank or credit union to borrow money to finance their purchase by way of mortgage of sublease
4. SECURE WFN LEASES A. STABLE AND MATURE GOVERNMENT B. LONG-TERM 99-YEAR LEASES On most reserves you need a membership vote of all band members to obtain a Lease of more than 49 years Holds back development for many bands In Westbank, there is no such restriction for CP lands Very streamlined leasing process since Self-Government decisions are made at the local level and AANDC has no input whatsoever AANDC has no say in the form of lease, negotiated between the Lessor and Lessee
C. PRE-PAID LEASES The rent PRE-PAID up front is the most secure all rent owing under the Headlease is fully paid so there can be no termination for failure to pay rent, or rent reviews Historically there are a lot of Headleases on reserves (in manufactured home parks for example) where rent is not prepaid rents are a percentage of revenue and/or reviewed every 5 years this model is no longer very popular Most successful, secure residential leases are fully pre-paid for a 99-year term All residential Leases on WFN land (except MHP s) are prepaid (Sonoma each phase is pre-paid)
D. SECURE LAND REGISTRY Most Bands in Canada use a system of recording in the Indian Lands Registry in Ottawa which is not as secure The federal Registry is generally just an information registry with no priority protection In 2007, the Westbank First Nation passed regulations pursuant to its Self-Government Agreement which: made all registrations mandatory protects all prior interests registered interests will have priority in order of registration WFN uses electronic registration of documents which is quick and efficient most reserves it takes months to register, WFN usually pending registration the same day
Title insurance is commonly used off-reserve to protect buyers and lenders Historically was unavailable on reserve In 2005 we assisted with the Hub Centre/Home Depot development in Westbank First Canadian Title ( FCT ) provided title insurance which was a first in Canada on a Reserve Now title insurance is widely available on reserve from FCT which gives comfort to borrowers and lenders WFN led the way for this
In Canada, anyone with less than a 20% down payment generally requires mortgage loan insurance through CMHC or another provider Then can finance up to 95% of the purchase price Historically has been difficult to obtain on reserve in which case homes are harder to buy and sell and lending limited WFN most residential subdivisions are CMHC insurable (some are not because they are age restricted, etc. Sun Village, Sage Creek, etc.)
Subdivisions where CMHC coverage has been provided include: Bayview Grandview Terrace Tuscany Village Copper Sky Royal Heights Elkridge West Harbour Tesoro Arca Sonoma Pines Sunrise Estates
7. PROPERTY TRANSFER TAX In B.C. there is generally Property Transfer Tax ( PTT ) imposed by the provincial government 1% on the first $200,000.00 and 2% on the balance No Property Transfer Tax generally on reserve (except Lakeridge Park) And owning on reserve does not disqualify you from future PTT first time home-buyer exemption off-reserve
SUMMARY On WFN land generally you can be assured of more secure lease arrangements: protection that the WFN Self Government Agreement, Constitution and Leases provide fully pre-paid 99-year Headleases availability of Title Insurance most CMHC approved efficient Westbank Lands Register which recognizes priority of registered leases and subleases generally no Transfer Tax
Thank You Barry M. Porrelli Phone: 250.768-0717 barry@plaw.ca