At the Feb. 16 District of Squamish committee of the whole meeting, the Squamish Oceanfront Development Corporation (SODC) will present updates and amendments needed as a condition of the Purchase and Sale Agreement of the Oceanfront Lands.
The Squamish Chief posed some questions to District of Squamish Councillor Doug Race about the agreements. The questions and answers have been edited for clarity.
Q: First of all, what exactly is the deal?
A: The district will receive $15 million cash and in addition will receive a 25 per cent interest in the limited partnership. [Newport Beach Developments Limited Partnership is the general partner and the limited partner is the district.] The limited partnership interest will be valued at
$5 million and that will be the district’s deemed initial contribution to the limited partnership. That designation is important when setting up the limited partnership capital accounts. The district will have an opening capital account of $5 million as a result of that designation.
Q: The Limited Partnership Agreement states, “The general partner may for any purpose assign his interest.” Does this mean the general partner could turn around and sell the property? And would whoever bought it then become the district’s partner?
A: It is possible for a different general partner to take over the development and the limited partnership interest would continue on the same terms. Not an unusual provision, in my experience.
Q: Some of the other clauses in the Limited Partnership Agreement seem to favour the developer. For example, in one section, it says if the district calls a meeting and the developer doesn’t show up, then the meeting is automatically cancelled. But if the district doesn’t show up two times in a row, then the meeting happens anyway, without the district.
A: Generally, the management and affairs of the limited partner are run by the general partner. The limited partner has very limited ability to make any decisions. That is consistent with limited partnerships generally. They are different from a conventional partnership relationship. If the limited partner does involve itself in management functions, it could lose its limited status and become responsible for partnership debts. That is general partnership law in British Columbia.
Q: It appears that after the first phase of the development, the park, is complete, the general partner could buy the district out. But shouldn’t the purchase price be at minimum the $5 million? The district’s percentage interest and not just market value?
A: There is a risk that the value of the project could go down and not up and so the value of the limited partnership interest would also decrease. At that point, however, the district would have a park. The estimated value of constructing the park to the extent noted is about
$5 million. The district has, of course, also received the initial $15 million.
On July 31, the District of Squamish and the SODC agreed to terms with Texas-based company Matthews Southwest and Squamish’s Bethel Lands Corporation on the Purchase and Sale Agreement and the Limited Partnership Agreement. Many of the conditions related to the sale have a March 31 deadline.
In addition to the Committee of the Whole meeting targeted for Feb. 16, the district will also be holding a developer-stakeholder meeting in mid-February, but the date for this meeting has not yet been set.
