VPD lease of former London Drugs property means tax revenue loss for City of Vancouver

A lease agreement between the city, its police department and a private developer is raising questions as to whether it’s in the best interest of the public.

The Vancouver Police Department’s new training academy in the Woodward’s development on Hastings Street will likely save the building’s owner more than $170,000 a year in property taxes, CTV News has learned.

The city has confirmed that its lease on the former London Drugs site requires it to pay property taxes, a standard practice for commercial leases in Vancouver.

The fact that the tenant is a taxpayer-funded municipal department, however, means that the tax bill for the site is essentially waived.

This arrangement is raising questions for land-use experts and a city councillor around whether it’s the best use of public funds.

Council approves $1.2 million

In February, city council approved $1.2 million to be allocated towards the VPD Training Academy.

Coun. Rebecca Bligh, who is also running as a mayoral candidate with Vote Vancouver, voted against the motion, which was tabled by ABC Coun. Brian Montague.

“What the city really needs is leadership that can both support a police approach to crime and criminal activity and that element of public safety, but also be able to address the other components that result in a perception and feeling and very real experience of not feeling safe by the public,” she said. “And that’s really what the gap is here and what needs to be talked about.”

The city’s decision comes amidst a freeze on property tax increases, and numerous city festivals on the brink of cancellation.

Bligh questioned whether it’s the right move for the city, arguing the property taxes Vancouver could collect from a different tenant could be used to support some of the public events currently under financial strain.

“I think that it’s fair to say that there is an element of fiscal responsibility when it comes to whether or not this is the right use of taxpayer funding, not only to pay market rent, but also to lose close to $200,000 in property taxes at a time when we are facing extraordinary budget reductions. “

‘It’ll be within our budget’

At a news conference announcing the creation of the VPD Training Academy last month, Chief Const. Steve Rai said the $1.2 million allocated by council for “capital improvements, equipment, and related setup costs” would include the cost of leasing the property.

“That will cover heating, lighting, taxes, cleaning and we’re not skirting paying property taxes,” he said at the time. “It’ll be within our budget.”

Related: VPD forges ahead with training academy despite lack of provincial approval

The remark about paying property taxes is notable for a few reasons. For one, the VPD doesn’t own the building. It’s a tenant. For another, as a city department, the VPD gets the vast majority of its budget from property taxes. Using money that was already collected as property taxes to pay a property tax bill is functionally the same as exempting the property from taxation.

Under the Vancouver Charter, city-owned property is exempt from taxation. Private property leased by the city, however, is not.

Asked for clarification of Rai’s remarks, a city spokesperson confirmed the arrangement.

“The property is being leased to the VPD in the same way the city leases other third-party office space,” the spokesperson said, in an email to CTV News.

“The lease between the city and the owner/landlord would include the city paying a proportionate share of the building operating costs and property taxes, as is the case in most third-party commercial leases.”

According to the city, there are 30 such third-party leases in which the City of Vancouver is a tenant. The spokesperson declined to provide a list of those leases.

“For confidentiality reasons, we cannot provide a list of leases as this may contain private third-party information as well as sensitive information related to staff safety, operational requirements and contractual terms,” the spokesperson said.

Commercial leases in Vancouver typically operate on a “triple net” basis, requiring the tenant to pay base rent, utilities and maintenance, and property taxes.

Whether or not London Drugs’ lease followed this model, when the company moved out of the space in January, the property tax burden for space would have fallen to its owner: 101 West Hastings Holding Ltd., a subsidiary of the developer Westbank, which redeveloped the Woodward’s site.

By renting the space and agreeing to assume the responsibility for property taxes, the VPD has alleviated Westbank’s tax burden for the property.

The exact amount of taxes Westbank would have owed on the property in 2026 is unclear, but publicly available information allows for a rough estimate.

BC Assessment lists the former London Drugs site at 351 Abbot St. as a 54,520-square-foot retail store, though the VPD has said that its training academy space is about 27,000 square feet, suggesting the lease is for only a portion of the total property subject to taxation.

The assessed value of the full space for 2026 is $33,466,000. At the city’s published 2025 property tax rate for “Class 6 – business and other” of $11.13426 per $1,000 of assessed value, the tax payable on $33,466,000 would be approximately $372,619.

If the VPD were responsible for only half of that total, the amount of tax avoided by Westbank—and lost as City of Vancouver revenue—would be more than $186,000. Site plan documents indicate the London Drugs space was approximately 47.5 per cent of the total area, which would make the VPD’s share of the tax bill slightly less than $177,000.

In a municipal budget of more than $2.3 billion, the lost revenue is vanishingly small, but experts CTV News spoke to still questioned the city’s decision.

Ron Usher, who taught property law at Simon Fraser University, said if an independent tenant leased the space from Westbank, revenue from the property would flow to the city.

“The overall tax base of the city is diminished by the value of the city’s interest in this land,” he said.

Usher added the city is an ideal tenant for many developers.

“They’ve got good credit,” he said. “They’re not going to run away. They’re not going to go bankrupt.”

‘Best bang for our buck?’

The VPD have become a growing presence at the Woodward’s building with the Gastown-Hastings Crossing Community Policing Centre, and the newly opened headquarters for District Five.

Andy Yan, director of the the City Program at SFU, said the move speaks to how tenancy has shifted in the historic building over the years.

“Are we getting the best bang for our buck?” he said. “I think that this is really part of the kind of dilemma that is now being put forward in this empty space in the Woodward’s project. The overall project in the area really goes into these issues around economic development and who makes the decisions.”

Yan said the city’s strategy also raises questions as to what is achieved in terms of public interest.

“What’s the business strategy, and for how long?” he said. “Really, the kind of questions that really go into, I think, are effective governance as opposed to, I think, a bailout of a developer.”

In February, CTV News reported that sources revealed the mayor’s chief of staff Trevor Ford told local Business Improvement Associations that Westbank could face foreclosure if the space wasn’t tenanted.

Westbank has not provided comment.

The mayor’s office has previously stated that a recent meeting between it, the VPD and stakeholders “included a factual overview of the challenges facing the property after the loss of London Drugs, as well as the potential benefits and implications of a training facility.”

“At no point were individuals asked or required to take a side,” the statement added. “The meeting was part of a broader engagement process to share information and hear perspectives.”

In a statement Friday, Mayor Ken Sim said he’s incredibly excited about the new VPD training academy.

“This academy is a step forward for public safety in our city and will increase Vancouver’s annual officer training capacity,” he added.