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An unusual landlord-tenant arrangement has sparked a major dispute, with some tenants saying a property developer is reneging on an agreement to rent to them at below-market rates indefinitely in a new building on the site of their former home.

Reliance Properties CEO Jon Stovell says that was never the agreement. He says tenants were promised extended subsidies and two years in the new building – which could add up to $60,000 over five years and nothing more.

The dispute has left a sour taste for both sides in Vancouver, where vacancy rates are near zero, rents have skyrocketed and many once-affordable buildings are being emptied for renovations or redevelopment.

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Some of the tenants who went to public hearings when the building was being rezoned say they feel they got burned. They are now being asked to sign the two-year lease for the new building this week or get out.

“We even went to City Hall and advocated on their behalf because of this,” said Karim Saleh, an English-language teacher who is wondering whether he and his wife will be able to stay on in the city at all. Leaving would be a massive disruption for his family because all of their jobs are in the downtown area, as is his son from a previous marriage, who lives with him part-time.

Mr. Saleh and two other sets of tenants had lived in a 10-unit apartment building near English Bay in the West End, now demolished and rebuilt as a “boutique high-rise.” They believed they were going to be able to continue to rent one-bedroom apartments, first in temporary accommodations while the new building was being constructed and then in the new building when finished, for about $1,400 a month for as long as they stayed there.

That’s the kind of tenant-relocation provision that the City of Burnaby is considering for its rental-apartment redevelopments, but it is not the standard in Vancouver.

Mr. Stovell had offered a special incentive because, he said, it was the right thing to do.

He says his company has provided tenants almost three years of below-market rates temporarily in one of its other buildings during construction, but had always said there would be two years only in the new building at a reduced rate, through a fixed-tenancy agreement.

When the province changed the rules on fixed tenancies in 2017, the company dealt with the issue legally by deciding the rents would be set at $2,350 but the tenants would get a subsidy cheque of $1,000 a month for two years.

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But the tenants believed they would have the right, under the changed law, to continue renting at the old rate with only the provincially allowable rent increases, which are pegged to inflation – about 2 per cent a year.

A one-bedroom apartment in that area rents for $1,700 to $3,000, with older buildings at the lower end.

Mr. Stovell said it would cost hundreds of thousands of dollars a unit to subsidize the new units for those tenants indefinitely.

Both sides in the dispute claim city officials have said, at points, their interpretation of the agreement is correct, although tenant Kian Gray acknowledged staff have more recently told him the company has found a legal way to do what it is doing. The city’s communications department said only that staff are “monitoring” the agreement.

The written agreement, which Mr. Gray provided to The Globe and Mail, says only that tenants have the right of first refusal for a similar unit in the new apartment “for the same rent amount during a two (2) years term.”

Mr. Gray and the others say Mr. Stovell’s company has violated the “spirit” of the agreement.

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Mr. Stovell said he’s disappointed that the tenants, handed what he says is the best relocation offer anyone in the city has had, are complaining.

“There’s no requirement to insulate tenants against market rates in perpetuity. This is very irresponsible and self-serving.”

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