On February 3, 2010, the arbitrator in Rogers’ Chocolates Ltd. v. City of Victoria, handed down the first arbitration decision awarding compensation under section 969 of the Local Government Act as a result of a heritage designation bylaw.
Rogers’ Chocolates Ltd. owns an old building at 913 Government Street in Victoria. It has done so since early in the last century.
In 1975, the City designated the outside of the original building at 913 Government Street as heritage property. In response to Rogers’ expressed desire to expand the retail interior, the City adopted a heritage designation bylaw on February 12, 2009 designating the shop’s interior.
The February bylaw prevented Rogers’ from expanding its retail shop. The rear wall of the existing retail space could not be moved further back and none of the cabinets and other fixtures in the retail area could be moved.
On its own initiative, the City sought to mitigate the impact of the February bylaw with another bylaw adopted on November 12, 2009. This new bylaw allowed Rogers’ to create a 4.5 foot doorway in the rear wall, which would permit access to the area behind the wall in order to permit further retail selling. The November bylaw also allowed for the installation of “windows” to replace the wood backing of the upper cabinets on the same rear wall.
Section 967 of the Local Government Act authorizes a heritage designation bylaw to apply to affixed interior building features or fixtures identified in the bylaw.
Section 969(2) of the Local Government Act provides that the owner of a designated property may apply to the local government for compensation for the reduction in the market value of the designated property. The City was always prepared to make such a payment.
However, Rogers argued that compensation by arbitration under section 969 of the Local Government Act was not limited to an amount equal to the reduction in market value of the designated property.
The arbitrator rejected Rogers’ claim that it was entitled to the larger compensation that it sought under the common law. The arbitrator agreed with the City that the compensation award was limited to the reduction in the market value of the designated property.
The arbitrator also rejected Rogers’ claim that only the February bylaw should be considered and agreed with the City that he should consider the mitigating effects of the November amending bylaw as well.
Finally, the arbitrator agreed with the City that the tax savings to Rogers from a tax exemption bylaw, also enacted by the City, should be considered. He had some doubts whether the real estate market would actually recognize the full amount of the reduction in taxes and therefore reduced the award by a portion of the tax savings granted by the exemption bylaw.
The arbitrator also specifically recognized the importance of heritage by stating:
Victoria recognizes the value of preserving old buildings. What is called “heritage” architecture is widely recognized to be worth saving. It is thought by many to improve urban life. Practically speaking, it can also be good for business. Tourists come to Victoria in large numbers, and the ambiance in the older parts of the City undoubtedly attracts many of these visitors.
This decision is significant because it clearly defines the limits of the compensation available in heritage designation arbitrations under the Local Government Act.