Whitehorse city council has moved forward with the first two readings of a bylaw that would set the lease for Alkan Air to use dock space at more than $9,000 a year.
Council voted in favour of first and second reading March 28, a week after Pat Ross, the city’s manager of land and building services, brought forward the recommendation it move ahead following a further review of the proposed lease that was requested by council.
Council had asked for the review after Alkan Air expressed concerns over the lease amount.
As Alkan Air president Wendy Taylor told council, the new lease rate has jumped from about $900 under the former agreement to $9,050 for the new deal. This is based on the new city policy for such agreements, which is based on 10 per cent of the land’s value.
Alkan worked with city staff to bring down the cost, reducing the leased land to 0.168 hectares, but $9,050 was the lowest it could come down to within the policy before bringing it back to council.
Council opted then to send the lease back to administration for a further review of potential options to reduce the proposed lease rate.
Ross explained that staff looked at Alkan’s idea of a seasonal rate, which Alkan proposed as it only uses the site through the summer months.
For a seasonal rate though, Alkan would be required to be off the property and the land vacant by a set end-of season date.
“Vacating the land would include removing all buildings and/or equipment belonging to Alkan,” Ross stated in his report. “As per the previous lease, all of the buildings on-site are considered property of the lessee (Alkan). Allowing private equipment and buildings to remain on city property outside the terms of a lease would be a liability to the city. As confirmed by Alkan, it is not feasible to undertake this work on an annual basis.”
A review of lease rates in other jurisdictions found many areas base their rates on a percentage of land value.
In Yellowknife, commercial use leases are five per cent of the market value plus a $10,000 environmental security fee; while the Yukon government standard lease rate is not less than 10 per cent of market value.
“Based on the review by administration, the City of Whitehorse commercial lease rate of 10 per cent of market value is similar to the rates in other northern jurisdictions,” Ross said.
The report concluded there would be not justification to reduce the lease rate.
“Council may defer the lease and request that administration bring forward draft amendments to the Lease, Encroachment and Property Use Policy that reduce the commercial lease rate and update other sections of the policy,” Ross said. “However, initial research shows that the city’s lease rate is comparable to other jurisdictions. Additionally, this process could cause significant delays in finalizing the lease that may not be desirable to Alkan.”
It was also noted that Alkan had been notified the lease would be calculated at a rate of 10 per cent of the market value, per the city’s policy. Alkan signed the lease with no guarantee that council would reconsider the rate, Ross stated in his report.
During council discussion on the lease, council members confirmed with staff that Alkan submitted the only expression of interest in the lease when it was put out to the public and that there are provisions in the proposed lease that could allow Alkan to sublease the space in the off-season.
At council’s March 28 meeting, Coun. Ted Laking said he still had some concerns with the lease but ultimately decided to vote in favour after raising some questions about the leased area.
Coun. Kirk Cameron also raised questions about the impact lowered water levels in Schwatka Lake to address flood risk could have on float plane operators, with Mayor Laura Cabott noting John Streicker, the territorial minister responsible for the Yukon Energy Corp., had reached out about that and discussions would be upcoming on this topic.
Contact Stephanie Waddell at stephanie.waddell@yukon-news.com