The City of Vernon and O'Keefe Ranch have been tied at the hip for nearly 50 years.
The two parties have been contractually bound together since a 1977 transfer agreement contract.
In 1975, the ranch was purchased from the O'Keefe family by the Devonian Group of Charitable Foundation in Calgary.
According to historical documents, when the Devonian Foundation purchased historic sites, they do not operate them but instead turn them over to local groups.
After first approaching Spallumcheen, the township passed after feeling that it was "too rich for them to handle."
Thus, the City of Vernon was approached, who had reservations, but ultimately agreed.
In 1977, the official lease agreement was signed, wherein, "the ranch be operated into perpetuity as an educational, historic public park depicting the historic way of life in an area, and that it be operated by a non-profit society."
The non-profit society that would take over ranch operations was called the O'Keefe Ranch and Interior Heritage Society, which still operates the ranch today.
Perpetuity refers to a period beyond certain limits fixed by law. Essentially, the city is technically on the hook for making sure that the ranch can be operated as a historic, public park for as long as the lease exists.
In 1979, the lease was extended until 1997. Then, the lease was further extended, under a 30-year agreement that will expire in 2027.
At the Monday, Sept. 25 council meeting, Vernon's chief administrative officer (CAO) Patti Bridal outlined five options for ways in which the city should proceed with handling the ranch. Council declined to accept any of the options. Instead, they unanimously rejected a funding request from the society for $85,000, while also "accepting the honoured terms of the lease going forward into 2025," which is $10,000 in yearly funding.
According to Ranch representatives, those funds were needed to keep the ranch running until November.
Greg Hurst, a former board member of O'Keefe Ranch, questions the decision by council.
"I did not hear any recognition that the City of Vernon, as the owner of the ranch, has the ultimate responsibility to operate the ranch as a historic site," he said. "How the lease was structured 47 years ago leaves the city with the ultimate responsibility to run the ranch, and I did not hear that recognition by city council or by the CAO."
Since the 1997 lease re-signing, the society has struggled to stay afloat, despite having tangible revenue streams through its restaurant and attractions.
During his time on the board, Hurst mentioned that there were several instances of repairs and other purchases being made through the society, instead of through the city, due to the society being unclear with who was responsible.
"Essentially, the society thought that they owned everything, but they didn't, the city did," Hurst said.
"When you look at the lease agreement, the society is responsible for regular repairs and maintenance, which is characterized essentially as changing the lightbulbs, but it did not extend to repairs from ‘reasonable wear and tear,’" Hurst said. "When you are renting, who pays for repairs to the house? The owner, not the renter. What had happened is that the society was doing all the repairs and the city was ignoring them."
A city liaison has been embedded in the society for years, the current one being Coun. Teresa Durning. Their role is to flow information back from the city to the ranch, but, according to Hurst, no one "had done the deep dive," into who should be funding ranch repairs.
Last week, Durning addressed council to express her disappointment to the treatment she was receiving from being the ranch liaison.
"The letters, the harassment, the emails, media slander and other negative behaviours stemming from the society not getting their requested funds and blaming the liaison will not sway me from continuing on a path that honours my commitment to the City of Vernon and the trust they have placed in me to make solid fiscal decisions and ethically protect their best interests."
Durning followed up with The Morning Star, explaining "I thought I did the best job that I could," with regards to being a liaison.
"I think people at the ranch expected me to be an advocate for the ranch," she said. "We as councillors have a lot on our plate going into the next budget and having to pick and choose what we are doing."
“There was a number of times where they wanted me to fight for money for them but I couldn't, because I have to work with my council. I think they are looking for an advocate and not a liaison."
The ranch pleaded with council for funding in August, with the manager, Sherrilee Franks calling it insolvent, with $77,740 in outstanding debt.
"Several factors have contributed to this situation," Franks told council. "Including the repayment of the $40,000 CEBA loan, the use of operating funds for capital expenses, and the layoff of key staff."
Since 2018, the City of Vernon has given $700,000 to the society, but the Society, in turn, paid $901,494.64 in capital expenses, most of what should have been the responsibility of the city under the lease agreement.
Additionally, a high insurance cost placed on the ranch has led to even more financial instability.
The insurance rate on the ranch was $36,000 yearly, which, for a property valued at $1.2 million, equates to $3 per $100 of coverage.
A typical commercial building's insurance averages are between 50 cents to $1 per $100 of coverage.
"The ranch is six times the highest rate," Hurst said. "If you look at those buildings, those are high risk buildings, but not six times."
The city valued the property at $7.5 million, not the actual $1.2 million valuation from the ranch.
"No one was looking at insurance costs to make sure that it was accurate," Hurst said. "There was a reluctance to deal with the discrepancy from the ranch, and it was never dealt with."
As for a potential selling of the property from the city, since it's locked into a 'perpetuity agreement', selling it would open up a host of legal issues.
"The operational structure from the ranch is broken and it needs to be fixed," Hurst explained. "All the power to fix that rests with the city of Vernon because they own the property and they have the obligation under the transfer agreement."
Further compounding issues is the lack of external power the society has. They are hamstrung in terms of looking for other partners for investment, due to not owning the property. The society is "constantly" seeking donations and grants, but they haven't had access to a host of provincial and federal grants due to never being labelled as a heritage site.
The Devonian Group, which purchased the ranch in 1977, folded in 1984.
"I told my father that I'd commit 15 or 20 years," said Donald Harvie, the son of the Devonian Fund founder, Eric, in a 1984 interview with the Vancouver Sun. "I don't believe that in-perpetuity foundations serve the public well."
The 30-year-lease agreement, signed in 1997, will expire in 2027. For the Monday, Oct. 7 council meeting, O'Keefe Ranch has requested an operating grant of $150,000 for 2025.
Vernon's administration has recommended that council decline the request, and stick to "accepting the honoured terms of the lease going forward into 2025," which is $10,000 in yearly funding.
