Staff Report to Council: Renewal of Lease Agreement with the Victoria Conservatory of Music

EXECUTIVE SUMMARY:

The City currently leases commercial space within the Langford Aquatics Centre to the Victoria Conservatory of Music (VCM), which operates a music school and programming from unit 210. The previous lease has expired, and VCM wishes to renew the tenancy with minimal changes to the existing terms.

The purpose of this report is for Council to authorize the execution of the new lease on the terms described. Notice under the Community Charter shall be provided prior to execution of the lease.

BACKGROUND:

The City became the landlord of the lease upon purchasing the Langford Aquatics Centre from Westhills Land Corporation in 2025. VCM has occupied unit 210 since 2016 for the purpose of teaching, studying, and performing music and music therapy. The lease expired February 1, 2026, and VCM remains in the premises as a month-to-month tenant under the lease’s overholding provision. VCM has now confirmed its wish to remain in the space under a renewed agreement.

COMMENTARY:

The new lease maintains the majority of the prior terms, including the permitted use, insurance requirements, net-lease structure, and shared responsibilities. Two substantive updates are included:

• Base Rent: The new lease proposes a starting base rent of $24.00 in the first year of the term, with annual increases of $0.50 thereafter. This represents a continuation of the rent level in the final year of the expired lease and an accurate reflection of current fair market value based on a comparison with the other aquatic facility leases. Proposed annual base rent for the remainder of the term is as follows:

Lease Year Rates

Base rent for the renewal term will be set at the then-current fair market rental rates.

• Tenant’s early termination right: At VCM’s request, the lease includes a provision allowing VCM to terminate the agreement at any time during the term with six (6) months’ written notice. This provides flexibility to VCM as they continue to grow and assess future space needs.

Aside from the above two updates, the remaining key terms of the initial lease remain unchanged:

• Term: Five years, commencing March 1, 2026, with one optional five-year extension at VCM’s discretion.
• Permitted Use: Teaching, studying, and performing music and music therapy; hosting associate performances and fundraising events, and related ancillary uses.
• Net Lease: A net lease with base rent at fair market value. VCM will pay any applicable taxes, operating costs, and maintenance and repairs relating to the leased premises unless stated otherwise under the lease.
• Insurance requirements: VCM will obtain and maintain insurance, including:
  • $5M commercial general liability insurance (with the City added as additional insured),
  • All risks property insurance
  • Glass coverage
  • Boiler and machinery coverage
  • Tenant’s legal liability coverage
  • 18-month business interruption coverage
• Indemnity: VCM indemnifies the City for all claims arising from its use and occupation of the leased premises.

FINANCIAL IMPLICATIONS:

The fixed annual rent increases are consistent with other City leases in the Langford Aquatics Centre. As with the other tenants in the facility, operating expenses associated with the leased premises are recoverable under the net lease structure, with VCM paying its proportionate share based on its rentable area.

LEGAL IMPLICATIONS:

Approval of the lease will commit the City to a 5-year term, with the possibility of an additional 5-year extension, at the discretion of VCM. As a lease is a form of disposition of an interest in land, notices, as required by the Community Charter, will be placed prior to execution.

STRATEGIC PLAN ALIGNMENT:

Strategic Priority Three: Economic Development.

Strategic Priority Six: Quality of Life

• 6d: Support the Efforts of Community Organization to Expand Services to Youth, Seniors, and Other Underrepresented and Marginalized Groups.

OPTIONS:

Option 1

THAT Council approve the lease agreement with the Victoria Conservatory of Music on the terms attached with such minor amendments as may be required;

AND

THAT Council authorize the Mayor and Chief Administrative Officer, or Corporate Officer, to execute the agreement once notice has been provided under the Community Charter.

OR Option 2

THAT Council decline to enter into the lease agreement with the Victoria Conservatory of Music at this time.

SUBMITTED BY:

Sam Prette, Manager of Contracts and Agreements

Concurrence:

• Melisa Miles, Manager of Legislative Services
• Donna Petrie, Senior Manager of Communications & Economic Development
• Yari Nielsen, Director of Parks, Recreation and Facilities
• Leah Stohmann, RPP, MCIP, Director of Community Planning and Development
• Katelyn Balzer, P.Eng., Director of Engineering and Public Works
• Michael Dillabaugh, CPA, CA, Director of Finance
• Marie Watmough, Director of Legislative & Protective Services
• Braden Hutchins, Deputy Chief Administrative Officer
• Darren Kiedyk, Chief Administrative Officer

Attachment 1: CON25-0308 – Lease Agreement – Victoria Conservatory of Music