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May 2017

At The End of Their Lease

atheendoftheirlease.jpg‭By Kyle Darbyson

Members at Shaughnessy Golf and Country Club are proud to call the Vancouver course home. But with its lease expiring and unlikely to be extended, how long will they be able to call it that?

It’s no surprise Shaughnessy Golf and Country Club is such a coveted asset; the course is located on a lush 160-acre parcel of waterfront property in one of world’s hottest real estate markets. And for the time being, it remains a national golfing treasure, a four-time host of the Canadian Open and the 15th-ranked course on the country’s top 100 list.

The private facility sits on native land leased to the club until 2032, and the Musqueam band that lays ancestral claim to the land seems determined to unlock its billion-dollar potential. Club officials continue to negotiate a mutually beneficial compromise, but in the face of mounting evidence, they’ve also begun seeking alternatives to ensure the club’s survival.

General manager Jason Sigurdson says this is just the latest in a history of troubles for the century-old club. “This isn’t the first time that the club has moved its physical location,” he notes. It was originally built for the leisure of the executives of the Canadian Pacific Railroad in what was then a distant suburb of Vancouver. That city’s rapid growth soon enveloped the club, choking off any potential expansion.

The club sold that parcel of land and zeroed in on another along the nearby Fraser River. The realities of 1950 Canadian politics meant First Nation’s bands weren’t allowed to sign any leases, so the federal government negotiated on behalf of the Musqueam people. Ultimately, the band surrendered the parcel of land and entered into a 75-year lease that restricted land use exclusively to golfing. It was legal at the time, but planted the seeds for future litigation that would burden Shaughnessy’s bottom line and strain its relationship with the band.

The first legal challenge came in 1984, when the federal government was ordered to pay the band $10 million as compensation for the unfavorable terms of the lease. Then, Shaughnessy began paying its property tax directly to the band—an amount that today approaches $800,000 a year. Lawyers for Musqueam argued the property tax should be paid on the land’s potential value as a residential development, not as a golf facility. With the average detached home in Vancouver now worth more than a million dollars, this reassessment would have been a crippling blow to the club and its 1,700 members.

The case went all the way to the Supreme Court of Canada, where judges ruled in favor of the club. While that put to rest the thorny property tax issue, it also left stakeholders at Shaughnessy with little doubt of Musqueam’s intent once the lease expired in 2032.

“It didn’t take long for the club to realize that it needed strategic options,” Sigurdson recalls. The club surveyed members to ascertain criteria as officials began looking for new parcels of land. Proximity topped the list, but Shaughnessy is hemmed in on all sides by water, untouchable parkland and multi-million estates. “Based upon the survey results, almost all the properties we were looking at were found to be unsuitable in one way or another,” he notes.

Determined to acquire at least one alternative, Shaughnessy purchased Greenacres Golf Club, a small public course, along with an adjacent parcel of farmland in a nearby suburb. The deal is a long shot; strict zoning laws restrict development on the farmland and the cramped golf facility is nowhere near the level Shaughnessy members expect. If the club did move to the new site, Sigurdson says major changes would be needed. “Nothing would likely remain from Greenacres as we know it now.”

While negotiations are ongoing, the club continues to run Greenacres as a daily-fee facility. The course struggles to turn a profit, but Sigurdson says that isn’t necessarily a problem. “The intention was not to have the property as a money-maker but rather as a strategic option.”

All the uncertainty has added a level of complexity to Sigurdson’s job in attracting new members. “Shaughnessy’s reputation and quality of the experience has generally sold memberships in the past,” he says, “but it has certainly made it more difficult as we draw closer to the lease termination.”

Of course, dues-paying members expect a high level of service at the club regardless of this volatility. “The club has always maintained that the ‘Shaughnessy Experience’ at the current site be maintained for the duration of the lease.” This translates into millions of dollars in capital projects and upgrades over the past few seasons, a signal to this commitment.

Sigurdson won’t reveal his hopes for a negotiated settlement allowing Shaughnessy to stay. But he’s certain wherever the third incarnation of Shaughnessy is, it will continue to have a membership roster full of Vancouver’s finest. “It has never been about the greens, fairways or clubhouse,” he explains. “It has always been about the members.”

Kyle Darbyson is a Vancouver-based freelance writer.

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