Report to/Rapport au:
Corporate Services and Economic
Development Committee/
Comité des services organisationnels et du développement économique
15 February 2001 / 15 février 2001
Submitted by/Soumis par: Kent Kirkpatrick General
Manager/Directeur général,
Corporate Services Department/Services généraux
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Ref N°: ACS2001-CRS-RPR- 0007 |
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SUBJECT: OBJET : |
LEASE
PROPOSAL, 2339 OGILVIE ROAD PROPOSITION DE
BAIL, 2339, CHEMIN OGILVIE
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REPORT
RECOMMENDATION(S)
1.
That the Corporate Services
and Economic Development Committee recommend Council approve the lease for
34,814 square feet of office space at 2339 Ogilvie Road with Metcalfe Realty
Company Limited for 10 years from June 1, 2001 to May 31, 2011 at an annual
cost of $ 852,943 plus GST.
2.
That the Corporate Services
and Economic Development Committee recommend Council pre approve 2001 capital
costs of $1,668,490 plus GST for the complete initial fit-up.
Regional Council at its meeting of June 14, 2000
received a confidential report dealing with the strategy for Social Services
Delivery Sites. A subsequent report approved by Council on August 9, 2000 dealt
with the recommendation for the Central District office at 370 Catherine. The
Department’s strategic direction as stated in the June report was to create
Social Service Centres located on or near the Transitway across the region,
incorporating both Financial Assistance Programs and Employment Support
Services. Where possible and
appropriate, there would be partnerships with service organizations such as
Human Resources Development Canada or other community agencies.
This strategic direction was supported by the
Transition Board in the approval of the new service delivery structure for
People Services. The proposed service delivery model which recommends
restructuring from 9 sites to 4 sites over a three year period is critical in
achieving the amalgamation savings identified by the Employment and Financial
Assistance (EFA) branch of People Services. The
Employment and Financial Assistance (EFA) is a branch of People Services, which
has responsibility for the delivery of financial, and employment services. These services have historically been
delivered in separate sites. The vision
of the Employment and Financial Assistance (EFA) branch of the People Services
of the City of Ottawa is to develop a fully integrated employment focused
service delivery model offering a range of employment and financial support
services. The branch would offer
one-stop employment and financial services in a consistent manner and would
conveniently be located in the East, West, South or Central area of the
City. This report deals with the
implementation of this strategic direction for the East District office.
This project would support the co-location and
integration of the Employment Resource Centre located at 1400 St. Laurent and
the Financial Assistance office currently located at 5310 Canotek Road. Both
leases expire in June 2001. Although the present space occupied by the District
Office at 5310 Canotek Road (19,700 sq. ft.) and 1400 St. Laurent Boulevard
(6,486 sq. ft.) is presently 26,186 square feet, the new lease is requesting
34,814 square feet, an increase of 8,628 square feet for the following reasons:
1.
Inadequate Space at the current Canotek Road Location
·
The
present space at Office F is extremely overcrowded for staff who do not have
adequate work space.
·
As
Office F was established 10 years ago, there is currently a severe lack of
adequate space to support the technological requirements for staff.
·
There
are an insufficient number of interview rooms available for the public. This
creates a poor quality of client service by extending waiting times for
clients.
·
The
existing waiting rooms cannot accommodate the volume of public, which could
cause potentially dangerous situations for staff and clients.
·
There
are insufficient washroom cubicles (5) for a predominantly female workforce
(100).
2. New Provincial Requirements
·
The
Province has recently introduced a mandatory information session or Employment
Information Session (EIS) for all Ontario Works applicants. This requires the
allocation of a dedicated room to accommodate groups of 10 to 20 participants
(twice daily). Presently the EIS are conducted in an area that was previously
designated for interview space.
·
In
the fall a new initiative will be introduced for literacy assessment and
testing. The Provincial recommendation is that this is best done on site with
the various community partners. Additional space will have to be allocated for
this initiative.
3. Desk Side Interviewing
·
As
recommended by the Province the EFA branch is also developing a desk side
interviewing approach that will create an open, friendly, employment-focused
environment that will dispel some of the perceptions and myths about Ontario
Works sites. Best practices in other municipalities such as Hamilton and Peel
and supported by the provincial government have indicated that this environment
provides clients with a barrier-free, non-intimidating interview space and that
the environment promotes professional and supportive working relationships
between case coordinators and clients.
Interviews are conducted in workstations that can accommodate a case
coordinator and 2 clients with the appropriate space to conduct business in a
professional and respectful manner.
4. Human Resources Development Canada
·
The
Employment and Financial Branch is in negotiations with HRDC and community
partners.Co-location with HRDC would attract Employment Insurance clients as
well as the public at large in the employment resource area, which will
increase the size requirements for the resource area.
5. Savings
·
The
downsizing plan for the EFA branch will reduce the number of sites from 9 to 4.
New lease agreements are required to provide sufficient space to integrate
additional staff. The reduction in the
number of delivery sites will result in savings from a reduced number of rental
(lease) arrangements, a reduction in the administration staff functions
associated with managing a site and other efficiencies generated through a
consolidation of services. It is expected that the annual savings will be
approximately $600,000.
LEASE PROPOSAL
The term for the proposed lease is ten years with an
early termination provision at the end of the sixth year. The rentable area includes approximately
34,814 sq.ft. on the ground floor of the shopping centre. The landlord will be responsible for
completing the base building work and converting this area into office
space.
The landlord also negotiated a conditional
termination agreement with an existing tenant who occupies 23,000 sq.ft. of the
proposed space. The tenant’s lease
expires in 2006 but they are motivated to move by another business opportunity
that is presently available. The
conditional release agreement with this tenant expires on March 6, 2001.
The annual rent is estimated at $ 852,943, which
includes a base rent of $12.50/sq.ft. and operating costs of $12/sq.ft. (the
operating costs will be capped until the end of 2001). The City has the ability to cancel the lease
at the end of six years subject to payment of $628,761.33 for unamoritized
costs. There is also a provision to
continue leasing the space for an additional four years after the sixth
year. In this instance, the base rent
will be increased to $13.50/sq.ft. for the remaining four years. As well, the City also has a further 5-year
renewal option. An independent lease
survey was completed which supports the lease proposal.
The lease proposal does not include leasehold
improvements and furniture. This will
be the responsibility of the City, which is estimated at $ 1,668,490, plus GST. The leasehold improvements require council pre-approval. The
Landlord will be responsible for completing the fit-up through a competitive
pricing tender process.
Risk with not proceeding with this Lease Proposal
If the City does not proceed with this lease
proposal, the Landlord of Beacon Hill Shopping Centre is not in a position to
extend the offer to lease. As mentioned
earlier, the current lease proposal was based on securing a termination agreement
with the current tenant due to another business opportunity. Therefore, the possibility of obtaining a
lease proposal for this space at a later date is at risk. As well, we are in a very active market with
very few lease opportunities. In this
instance, staff have spent over a year to come up with the current lease
proposal. For these reasons, staff is recommending that this lease proposal be
accepted.
This property will be the
Service Delivery Site (Financial Assistance programs and Employment Support
services) for the Eastern Sector and will provide improved integration of
services and cost-effectiveness for the residents of Ottawa-Carleton. It will be the second step in establishing a
strategic direction for service delivery sites, which will see a reduction from
the current 9 sites. The end goal of this strategy is to have four Social
Services OW Centres (Central, East, West and South) plus the administrative
unit location.
The Landlord represents and warrants to the City
that there are no known environmental matters related to the building.
CONSULTATION
A lease search was conducted with realtors and
owners of commercial properties that resulted in this recommendation.
FINANCIAL IMPLICATIONS
People
Services Department has confirmed that funds are available to pay the lease
costs for the balance of the year out of the 2001 operating budget. These net increases in operating costs for
the year 2001 will be approximately $100,00 subject to provincial cost
sharing. Capital costs are also
eligible for cost sharing subject to provincial approval.
DISPOSITION
Corporate Services
Department -Real Property Asset
Management Branch to finalize lease documentation with Legal Services Branch
and to oversee office fit-up.