The Department of National Defence declared the 64-hectare site on Kenaston Boulevard as surplus 11 years ago and it has essentially been tied up in legal disputes since then and deteriorating. (CBC)

Manitoba First Nation leaders say they're pleased to hear that a court battle with the federal government over Kapyong Barracks, a hotly contested piece of real estate in Winnipeg, could soon be over.

During a campaign stop in Winnipeg on Tuesday, Conservative Leader Stephen Harper said the government will not appeal the latest decision from the the Federal Court of Appeal, which upheld an earlier ruling that said Ottawa had failed to consult four First Nations about the future development of the former military site.

"We've met with local First Nations leaders and will continue to do so as we move forward," Harper told reporters Tuesday morning before ending his news conference, which focused on a promise to create 1.3 million jobs by 2020.

Four Manitoba First Nations have been pursuing the 64-hectare property on Kenaston Boulevard for over a decade, in the hopes of converting the property into an urban reserve.

"I believe that we're not that far away from a settlement agreement on Kapyong. I'm optimistic but I think it could happen within a year maybe, or sooner," Chief Dennis Meeches of the Long Plain First Nation told CBC News.

"There's been a lot of work being done…. We've been in the court process for, you know, for a very long time, and we've also been trying to reason with the federal government and negotiate."

The Kapyong land, nestled between the affluent Tuxedo and River Heights neighbourhoods, became vacant in 2004 when the 2nd Battalion, Princess Patricia's Canadian Light Infantry, relocated to CFB Shilo near Brandon, Man.

The Department of National Defence declared the property as surplus. It has essentially been tied up in legal disputes since then and deteriorating.


The Kapyong land is nestled between the affluent Tuxedo and River Heights neighbourhoods. (CBC)

In 2007, the federal Treasury Board decided to sell the site to the Canada Lands Co., a Crown corporation that was to oversee the land's redevelopment and resale.

That plan stalled when a group of Treaty 1 First Nations, which included Long Plain, Peguis, Roseau River and Swan Lake, said they had a right to the land under outstanding Treaty Land Entitlement (TLE) claims and expressed interest in creating an urban reserve.

In September 2009, Justice Douglas Campbell declared the transfer invalid, saying the federal government didn't do enough consultation with First Nations groups, who had outstanding TLE claims.

The government appealed that decision but lost again in December 2012.

The federal government took the case to the Federal Court of Appeal but in a decision issued last month, the court agreed with the earlier rulings.

The government could still appeal the decision to the Supreme Court of Canada, but Harper said that won't happen.

The years of delays have been expensive for a lot of the parties involved, Meeches said.

"Not only us, but the city, the province, the feds — everybody involved, the citizens of Winnipeg. It's cost everybody dearly, the past 10 years," he said.

When it comes to the value of the Kapyong Barracks land, no official numbers have been released to date.

Joe Banfield, a commercial real estate agent with Banfield Office Properties Group, told CBC News on Tuesday that based on some rough calculations — assuming the 64 hectares would be developed as two-thirds retail property and one-third residential — the land could be worth between $65 million and $90 million, subject to zoning and land use.

'Excellent news,' says First Nations' lawyer

Norman Boudreau, the lawyer representing Roseau River and Sandy Bay First Nation, said the fact that Harper is not appealing the decision is "excellent news and a great day" for his clients.​

Boudreau explained that all seven Treaty 1 First Nations were originally involved in the claim, but one pulled out of the court process.

The Federal Court of Appeal recognized the claim of four of the six remaining First Nations, but the government is including all seven in the negotiation process, he added.

Under the decision, the government has a duty to consult, which means an urban reserve is a step closer to becoming a possibility, Boudreau said.

Meeches could not say how much the First Nations would pay for the land. The top priority of an urban reserve, he said, would be to allow for the widening of Kenaston Boulevard.

Mayor Brian Bowman was in meetings on Tuesday, but he released the following statement:

"As mayor, I am very pleased to learn there will be no further appeal to the courts regarding Kapyong Barracks and hope this signals finality for the litigation processes that have tied up these lands from development for years.

"The city is looking forward to learning the outcome of the discussions between the federal government and First Nations as they take those important next steps forward; once crown consultations have completed and in discussions to define how the land will be used are taking place, the city will absolutely collaborate in that process in a supportive way."