VANCOUVER -- A senior City of Vancouver staffer has sent a sternly worded letter to a developer whose interpretation of a right of first refusal rental agreement differs markedly from both what the city and tenants understood.

But despite the expressions of disappointment, the city says its hands are tied when it comes to legal options to dispute Reliance Properties' interpretation of the agreement.

"We're feeling abandoned by the city," said Kian Gray, one of five West End tenants who hoped the city would step in and hold the developer to what the tenants and the city believed was an offer to move back to a new building at the same rent for two years.

In a statement sent to CTV News, the real estate company said that "at no time has Reliance reneged on signed agreements."

In 2016, several tenants of an aging 12-unit rental building in the West End signed the agreement with Reliance Properties, which planned to tear down their building and build a larger rental building.

The agreement, which CTV News has reviewed, states that tenants have the "right of first refusal to move back into an equivalent/similar unit in the new building, upon completion, for the same rent amount for a 2-year term."

The tenants understood that to mean that when they moved back, they would sign a lease for the same rent they had been paying before they moved (in Gray's case, $1,091 a month), and after two years, their landlord could raise the rent by the roughly two per cent per year currently allowed by B.C.'s rent laws.

But in December 2019, they received another document from Reliance. This one said the arrangement would actually involve signing a lease at the market rent – for Gray, $2,350 for a one-bedroom – and then getting a monthly rebate from Reliance for the difference between the new rent and what they had been paying ($1,112 in Gray's case). At the end of the two years, Gray and his husband would pay the full market rate of $2,350 – a 90 per cent increase, and a rate that would take up around 50 per cent of their combined income.

Reliance also added the option to sign a lease at 20 per cent off the market rent rate.

The city was holding the occupancy permit for the new building, a 108-unit rental building at 1188 Bidwell Street, while it reviewed the tenant relocation plan. But on Monday, city staff approved the plan.

City councillor Pete Fry, who has been meeting with the tenants, said the city has recently changed requirements for tenant relocation plans to make sure that the terms and conditions are clearly stated, and there is no ambiguity.

"We don't really have an ability to retroactively redo it and we don't have the ability to deny them an occupancy permit based on that alone," Fry said of the dispute between Reliance and the tenants.

But Fry said he wasn't impressed with Reliance's actions in this case.

"Reliance has hundreds of thousands of square feet of real estate development in the city, and stuff that's in the pipeline," he said.

"Do they really want to have an acrimonious relationship with council and staff?"

In a letter to Reliance, the city's general manager of arts, culture and community services, Sandra Singh, writes that, "The Option A right of first refusal in the TRP for 1188 Bidwell St. was approved by staff with the understanding that the units would be offered at the same rent for a term of two years, after which time RTA allowable increases would apply."

Singh goes on to write that the city’s legal department has advised staff that “the manner in which Reliance has structured the right of first refusal does comply with the accepted Tenant Relocation Plan.”

She goes on to write that city staff are "disappointed" with Reliance’s interpretation of the TRP and offers assistance in reaching an agreement between the tenants and the developer.

"This week, the City of Vancouver confirmed in writing that we have complied with our city-approved tenant relocation plan and the housing department has removed its hold on the occupancy permit process for our new Bidwell building," Reliance said in a statement sent to CTV News.

"While we are happy to see the City of Vancouver’s confirmation that we have complied with the jointly approved tenant relocation plan, we are disappointed that city staff and a few tenants have interpreted one part of the agreement differently than intended, namely the part about tenants moving to the new building at their old rent rate for a period of two years."

Reliance has provided rental housing for some of the tenants in another building it owns at 33 Water St. for the past three years at what the company said was below-market rates. Along with the two-year discount on rent at the new building, Reliance said the benefits to tenants total up to $60,000.

Fry said he was confident that city staff will help get a resolution that would be more favourable to the tenants.

But Gray isn't holding his breath. He and the other tenants are now considering legal action.

"(The city) is consistently trying to get us to accept … an offer that is less than what we agreed to and our reply is constantly, we will not," Gray said.

He added that other tenants who have signed tenant relocation plans may now be wondering whether they're "worth the paper they're written on."