The Fraser Valley Heritage Rail Society will be getting a new lease agreement from the City of Surrey with new terms.
FVHRS operates Surrey’s heritage railway out of Cloverdale Station and the restoration car barn just south of Highway 10. The Society runs restored Interurban passenger rail cars on the Southern Railway track from Cloverdale Station to Sullivan Station.
City council passed Corporate Report R033—which recommended several changes from Heritage Rail’s former lease—at their meeting March 6.
It’s not clear what this means for the Heritage Rail Society going forward. The Cloverdale Reporter reached out to FVHRS for comment, but did not hear back by publication time.
The Engineering Department, Finance Department, and Corporate Services Department submitted a report to council recommending they offer a new lease agreement to FVHRS, including changing from a five-year lease with a five-year renewal option to a four-year lease with no renewal.
Corporate Report R033 was submitted with the intention “to negotiate a new lease agreement in order for the annual operational funding of Heritage Rail to be administered by FVHRS for consistency with similar agreements with other not-for-profit leases by the city.”
According to the report, the city has given more than $6 million of financial assistance to FVHRS for things like grants in-lieu of rent, liability insurance, Southern Railway licensing fees, operating costs, and capital projects such as rail car refurbishments, building facility improvements, and spur-line additions.
Heritage Rail’s lease, signed in 2012, expired in 2022. In 2012, the city also entered a multi-year license agreement with B.C. Hydro, who owns the rail corridor, and a three-group agreement between the city, FVHRS, and Southern Railway that covered railway maintenance, operations, safety, upgrades, and indemnity.
“All three agreements related to FVHRS expired following the 2022 season,” the report noted.
In 2014, the city notified Heritage Rail it would not be able to provide any additional funding going forward beyond an annual grant for rent and insurance. According to Corporate Report R033, quoting Corporate Report R145, 2014. “FVHRS will need to receive their operating and capital funding from other sources.”
Now with FVHRS asking to renew their three agreements for 2023, city staff are asking council to “reflect the previous direction from mayor and council” from nine years ago.
But Corporate Report R145, 2014, says nothing about FVHRS providing its own liability insurance, it only talks about further enhancements.
From the report in 2014: “In relation to these and other possible further enhancements, it is recommended that Council instruct staff to advise the Society that the City is not able to expand its role beyond providing the annual grant for rent and insurance. For all future needs the Society will need to receive their funding from other sources.”
Staff also asked council to “be consistent with all other grants in-lieu provided to not-for-profit organizations,” and to “ensure the safety and liability terms are fair and do not pose undue burden on the city.”
Staff recommended council raise the rent (which FVHRS receives a grant to cover the costs). The report cites internal rental valuation for the property at $188,424 per year, up from their current rate of $112,000 per year. But the Report also recommended that Heritage Rail cover insurance for contents and commercial liability.
“Since the 2023 Grants Budget has already been approved, the 2023 lease rate will be $112,000, consistent with 2022, and then $188,424 for the remaining years,” the report notes.
Now that the report passed, five main changes for FVHRS will include: term reduced from five to four years with no renewal option; lease rate increase; maintenance will become the responsibility of FVHRS; utilities will become the responsibility of FVHRS; insurance for buildings will remain with the city, but contents and commercial liability will fall to the responsibility of FVHRS.
Read full Corporate Report on surrey.ca.