ADMINISTRATIVE REPORT


                                                     Date: January 25, 1996
                                                      Dept. File No.2940E11

   TO:       Vancouver City Council

   FROM:     Director of Legal Services and 
             General Manager Engineering Services

   SUBJECT:  Renewal of Main Post Office Tunnel Lease



   RECOMMENDATION

        THAT Council approve  a sixty-nine (69)  year extension (ending  on
        December 15, 2055)  of the  initial thirty (30)  year lease to  the
        Canada Post Corporation of the tunnel  from the main CPR station to
        the main Post Office.



   CITY MANAGER'S COMMENTS

        The City Manager RECOMMENDS approval of the foregoing.



   COUNCIL POLICY

   On May 21, 1957 Council approved a thirty (30) year lease to the Federal
   Government  to construct and operate a mail transfer tunnel from the CPR
   station to the  then new Post Office at nominal rent.  At the same time,
   Council approved seeking an amendment to the Vancouver Charter to permit
   Council to  grant leases in excess  of thirty (30) years  to the federal
   government without the approval of the electors.



   PURPOSE

   By this  report Council approval  is sought  for a renewal  of the  Post
   Office  tunnel lease for a  further sixty-nine (69)  years from December
   16, 1986 to December 15, 2055.

   BACKGROUND

   In 1954 the federal Minister of  Public Works applied to the City for  a
   ninety-nine (99) year lease of lands beneath City streets to 
   construct  and operate a mail transfer tunnel  from the main CPR station
   to the newly to be  constructed main Post Office.  At that time the mail
   came to Vancouver  on the CPR  railway.  As  the Vancouver Charter  then
   read, a  lease in excess of thirty (30) years required the assent of the
   electors. 

   Council  approved a  thirty  (30) year  lease  and directed  Corporation
   Counsel to  seek a Charter amendment to grant leases in excess of thirty
   (30) years to the federal government without the assent of the electors.
   The thirty (30) year lease with the federal Minister of Public Works was
   entered into October 10, 1957.

   Shortly after completion of the tunnel, mail began to move by air and so
   the tunnel was never used.

                                     - 2 -

   The year following  the signing of the  lease the Vancouver  Charter was
   changed to allow long term leases  to the federal government without the
   assent of  the electors.   Although  legally problematical,  the expired
   lease does  provide that if  the Vancouver Charter is  amended to permit
   the ninety-nine (99)  year without the assent of  the electors, then the
   City will grant an extension of  the lease for a further sixty-nine (69)
   years at nominal rent. 

   The proposal  is to carry  through on that  commitment and in  any event
   Canada Post Corporation (an agent of the Federal Crown) says it does not
   have the money to restore the tunnel which would cost approximately four
   hundred and forty thousand ($440,000.00) dollars.  


   DISCUSSION

   Some economic  or utility  use  for the  tunnel  may materialize.    The
   Renewal Lease  has the new term  that if a viable  commercial or utility
   use does materialize, the City and  the Post Office will negotiate terms
   and conditions and sharing  benefits of such use.   Nevertheless, Canada
   Post is obliged to restore the street  at the end of the proposed sixty-
   nine (69)  year extension.  Until  that time, Canada Post  must keep the
   tunnel in good  repair to support the streets.  At this time, the tunnel
   is in good condition.


   SUMMARY

   The proposed lease  extension is as the parties originally contemplated.
   It makes good sense to wait and see if an economic or utility use can be
   made of  the tunnel.   Council approval  of the lease  extension is  now
   sought.




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