Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

03 April 2007 / le 03 avril 2007

Submitted by/Soumis par : Greg Geddes, Chief Corporate Services Officer/

Chef des Services généraux

Contact Person/Personne ressource : Gordon MacNair, Manager, Real Estate Services

Real Property Asset Management/ Gestionnaire, Services immobiliers, Gestion des actifs des biens immobiliers (613) 580-2424 x 21217, Gordon.MacNair@ottawa.ca

City Wide

Ref N°: ACS2007-CRS-RPM-0015

SUBJECT:

CORPORATE Policy - ACQUISITION OF REAL Property

OBJET :

des politiques municipaux – l’acquisition de biens rÉélS

REPORT RECOMMENDATION

That the Corporate Services and Economic Development Committee recommend that Council adopt the policies and procedures for the Acquisition of Real Property by the City of Ottawa as described in Annex “A” attached to this report.

RECOMMANDATION DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil municipal d’adopter les politiques et procédures en qui concerne l’acquisition de biens réels par la Ville d’Ottawa, telles qu’elles sont décrites dans Annexe “A”.

BACKGROUND

The City Corporate Plan under the Accountability Agenda, states that a Property Acquisition Policy will be developed in 2006, which will strengthen the management of City resources and infrastructure. As well, the Office of the Auditor General undertook an audit of the activities of the Real Estate Services Division (RESD), within the Real Property Asset Management Branch (RPAM) in 2005. One of the Audit recommendations was “That Management ensure appropriate policies and procedures are put in place for Acquisitions, Leasing, Appraisals and Remediation to ensure a consistent and effective approach that reflects best practices is maintained”.

Management responded with a commitment to develop an Acquisition Policy, to be submitted to Council for approval.

The purpose of this report is for Council to adopt the policies and procedures for the Acquisition of Real Property as described in Annex “A” attached to this report.

DISCUSSION

The City of Ottawa takes its authority to acquire Real Property from the Municipal Act when Real Property is required for municipal need. While there is no specific section in the Municipal Act authorizing the City to acquire land, Section 8 of the Municipal Act states, “A municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act”. A “natural person” can acquire land and the City of Ottawa can therefore acquire land for municipal purposes, coming within the spheres of jurisdiction listed in Section 11. Section 6 of the Act also provides that, “The power of a municipality to acquire land under this or any other Act includes the power to Expropriate in accordance with the Expropriations Act”. The City of Ottawa Act provides authority to acquire land for public parks in Section 12.3 (1) and for Commercial/Institutional Uses, etc., under Section 12.5 (1). The City of Ottawa is also authorized to acquire land for affordable housing pursuant to Section 17 of the Ontario Housing Development Act. The Ontario Heritage Act provides authority to acquire property pursuant to Section 36 (2) and Section 45.

The following are the methods of Acquisition outlined in the attached Acquisition Policy:

1. Negotiation

2. Expropriation

3. Charitable Donations

4. Development Approval Process

5. Tax Sales – Vesting in Municipality

6. Land Exchange

7. Public-Private Partnerships (P3)

8. Transfer by Other Agencies

The Acquisition Policy will apply to all City employees, any agents or assigns acting on behalf of the City and consultants authorized to acquire Real Property interests on behalf of the City. Real Property interests such as road dedications and easements that are acquired through the planning/subdivision processes will continue to be dealt with as part of that process and in accordance with the Planning Act and any regulations therein.

RESD is responsible for responding to requests for Real Property transactions, on behalf of other City departments and occasionally other agencies. Currently, property acquisitions are carried out pursuant to policy/guidelines from the former Region of Ottawa-Carleton. While the Division does adhere to industry best practices, the lack of formal policies and procedures places excessive reliance on the knowledge and expertise of existing staff to consistently and appropriately undertake these activities. Council’s approval of the attached Policy will ensure that consistent, transparent and equitable processes are followed for the Acquisition of Real Property interests, and define the procedure and authority for acquiring Real Property interests, keeping in mind City objectives as well as protecting the rights and entitlements of the public at large.

CONSULTATION

This report deals with an administrative matter and as such public consultation was not undertaken.

A review of other Municipal Acquisition policies was completed as part of the development of this policy.

All City departments were consulted and any comments received have been taken into account in drafting the Policy document.

FINANCIAL IMPLICATIONS

Council approves all Acquisitions of Real Property interests on a case-by-case basis, either directly or through its Delegation of Authority By-law 2005-503 and any financial implications are brought to Council’s attention at that time.

SUPPORTING DOCUMENTATION

Attached, as Annex "A" is the proposed Corporate Policy - Acquisition of Real Property.

DISPOSITION

Following Council’s approval, the Corporate Services Department will incorporate the Acquisition of Real Property Policy into the Corporate Policy Manual.

Annex A

Corporate Policy

Approved By		Approval Date
Section		Effective Date
Subsection		Revision Date

Policy Statement

It is the policy of the City of Ottawa to acquire Real Property as required, for a municipal need consistent with City Mandated Programs, projects and policies. The general policy direction for the City of Ottawa’s Corporate Policy, on the Acquisition of Real Property is established by Policy 5.2.1.4 Acquisition and Holding of Land, of the City of Ottawa Official Plan (2003), one of the City’s five Growth Management Plans. That policy states that, “The City of Ottawa may acquire or hold land within its boundaries, for the purposes of implementing any policy of the Plan”. More specific direction for the Acquisition of lands is contained in other Growth Management Plans, Council Approved Supporting Plans to the Official Plan, Secondary Plans and other approved plans.

Purpose

The purpose of this Policy is to ensure that a consistent and equitable framework is followed in the Acquisition of Real Property, in support of Council approved projects, programs and policies.

Application

The Acquisition Policy applies where Real Property is acquired by the City of Ottawa and includes any right, interest or benefit in land, but is not limited to, fee simple acquisitions, leases, permanent easements, rights-of-way and other limited interests such as joint-use agreements, temporary working easements, consents to enter, and licences.

This policy applies to all City of Ottawa employees, any agents or assigns acting on behalf of the City and consultants authorized to acquire Real Property on behalf of the City. Real Property such as road dedications and easements that are acquired through the planning/subdivision processes will continue to be dealt with as part of that process and in accordance with the Planning Act and any regulations therein.

Section 8 of the Municipal Act states, “A municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act”. A “natural person” can acquire land and the City of Ottawa can therefore acquire land for municipal purposes, that is, coming within the spheres of jurisdiction listed in Section 11. Section 6 of the Act also provides that, “The power of a municipality to acquire land under this or any other Act, includes the power to Expropriate in accordance with the Expropriations Act”.

The City of Ottawa Act provides authority to acquire land for public parks, forests, etc. in Section 12.3 (1), and for commercial and institutional uses, and related uses in Section 12.5 (1). The City of Ottawa is also authorized to acquire land for affordable housing pursuant to Section 17 of the Ontario Housing Development Act. The Ontario Heritage Act provides authority to acquire property pursuant to Section 36 (2) and Section 45.

Policy Requirements

Lead Department:

The Real Estate Services Division (RESD) of the Real Property Asset Management Branch (RPAM), Corporate Services Department, shall undertake the Acquisition of Real Property interests unless otherwise directed by the City Manager or Council.

Departmental Needs Assessment:

Prior to initiating an Acquisition, (other than lands required for infrastructure, acquisition of environmental/waterfront lands, and pursuant to the Planning Act), the Client Department will prepare on its behalf, or on behalf of a partner agency, a Departmental Needs Assessment that sets out the justification and rationale for the proposed Acquisition. The Departmental Needs Assessment shall then be vetted through the Comprehensive Asset Management Division (CAM) of RPAM, in collaboration with the Client Department to determine whether the City of Ottawa’s existing Real Property inventory, or any capital works initiatives, may fulfill the Client’s Real Property requirements. This process could include an Asset Rationalization as defined in the Integrated Asset Rationalization and Disposal Strategy of Real Property. Should it be determined that Acquisition needs cannot be met by existing inventory, RESD will initiate the Acquisition.

Council Approval:

Property will be acquired in support of Council approved programs, projects and policies. A budget item must be approved for the program or project, including the costs of acquiring the Real Property and operational budget impacts, before action is taken to acquire property.

City Council approval of a project shall include authority for the appropriate person(s) or body, to initiate and undertake legal surveys, appraisals, negotiations, expropriations; legal and other such related activities as may be required.

Funding:

Funding for the Acquisition of Real Property must be identified through a Council approved budget item, specific to the program, project or policy defining the need, or allocated from an approved Departmental Budget, with approval of the Director of the Client Department.

Methods of Acquisition:

Negotiation

Negotiation is the preferred method of obtaining Real Property interests, with compensation provided as though Acquisition was pursuant to the Expropriations Act.

Expropriation

Where project requirements must be met in a timely manner, or where negotiation is unsuccessful, expropriation may be considered. The City of Ottawa has the authority to expropriate land in accordance with the provisions of the Expropriations Act. Expropriation will be used as a last resort for Acquisition purposes. Where expropriation is necessary, Client Departments shall allow for a minimum of 12 months lead time in their project planning, in anticipation that Real Property Acquisition by Expropriation may be required.

Charitable Donations

The City of Ottawa may acquire Real Property through gifts or donations, subject to Council approval, or that of its Delegated Authority. Before acceptance or rejection of a gift of Real Property, an analysis to determine the conditions of the gift, existing restrictions of encumbrances and assumption of liabilities or any tax implications, shall be carried out. A charitable donation receipt may be issued in the amount of the appraised Market Value of donated Real Property. An independent appraisal shall determine the Market Value of any donated Real Property. A satisfactory Phase I Environmental Site Assessment will also be required. Any costs associated with the above will be borne by the donor or the Client Department.

Development Approval Process

The Planning, Transit and Environment Department deals with land requirements such as parkland, road widening, etc., through conditions of final approval for subdivisions, site plans, or other development approvals under Delegated Authority. Where Delegated Authority has been removed by the Ward Councillor, such matters are submitted to either the Planning and Environment Committee or the Agriculture and Rural Affairs Committee and City Council for approval. This constitutes approval for the City of Ottawa to acquire the necessary lands pursuant to the Planning Act.

Tax Sales – Vesting in Municipality

The municipality may acquire Real Property, pursuant to Part XI of the Municipal Act, 2001 – Sale of Land for Tax Arrears – by registration of a Notice of Vesting – Section 379.

Land Exchange

When an Acquisition is contemplated in support of the Natural Environment Area or Urban Natural Feature Policy, as provided for in the Ottawa Official Plan and the draft Greenspace Master Plan, and it is deemed that an exchange of City owned surplus Real Property is in the best interests of the City of Ottawa, negotiation shall be initiated based on the Market Value of the respective Real Properties, pursuant to the Disposal of Real Property Policy and Procedures, and this policy.

Public-Private Partnerships (P3)

The City of Ottawa may acquire or dispose of an interest in Real Property as part of a P3 partnership to provide infrastructure, community facilities and related services that would benefit the municipality, the private sector and residents.

Other Agencies

The City of Ottawa may acquire Real Property as the result of a transfer of jurisdiction from one level of government to another, e.g. – transfer of highways, boat launches, etc.

Appraisal:

All Acquisitions shall be supported with a current Market Value Appraisal. An Appraisal will be completed by an independent Real Estate Professional or by qualified City staff.

Where the estimated market value is $500,000 or greater, a second Appraisal will be required, one of which will be undertaken by an independent Real Estate Professional.

Appraisal reports will be based on the “Highest and Best Use” of the property and will be prepared by a qualified Real Estate Professional or by qualified City Staff, in accordance with current standards of practice within the real estate industry.

Acquisition at Market Value:

Real Property shall be acquired on the basis of Market Value and entitlements, as defined by the Expropriations Act, unless other considerations are included in the transaction and approved by Council.

Where there is a variance between the appraised value and the Acquisition price, that variance shall be explained in the approval report.

Environmental Due Diligence:

The City of Ottawa shall complete a pre-screening on Real Property to be acquired to identify potential contamination issues associated with the property, e.g. Historical Land Use Inventory (HLUI).

When the Acquisition is for the entire fee simple interest (total buyout), or where it is deemed necessary by the appropriate Program Manager. Real Estate Services in the acquisition of a lesser interest, a Phase I Environmental Site Assessment (ESA), together with any additional assessment recommended by the Phase I ESA, if deemed necessary by the appropriate Program Manager, shall be completed. All such ESA’s shall be completed in accordance with the Canadian Standards Association (CSA) standards and site remediation criteria, as set out by provincial regulations. Whenever possible or appropriate, Acquisition agreements may provide for the indemnification of the City of Ottawa by the vendor for environmental conditions.

First Nations Consultation:

When acquiring or encumbering federal or provincial lands within the Algonquin’s of Ontario Land Claim area, it is recognized that the federal and provincial governments have an obligation to consult with the First Nations. Further, the federal and provincial governments cannot delegate to the purchaser that obligation to consult. As the beneficiary of a (pending) land transfer and the party at risk if consultation is absent or inadequate, the City will monitor the consultation process.

Heritage Properties:

The City of Ottawa Official Plan provides the policy direction with respect to the Acquisition of properties of heritage interest, through Sections 2.5.5.11 and 4.6.1.4.

Consideration will also be given to the policy in the Arts and Heritage Plan, which states “Give priority to the adaptive re-use of City-owned Heritage Buildings, to meet the City’s accommodation needs before constructing or leasing new buildings”.

When acquiring Real Property that may have a heritage designation or historical value, a comprehensive analysis of the Real Property shall be conducted involving RPAM and all appropriate departments. The analysis will include:

· Identification of the heritage designation or historical value of the Real Property;

· Confirmation of the City of Ottawa program(s) to be implemented at this heritage property;

· Identification of the heritage value of the Real Property;

· Identification of the desired long-term use or protection of the Real Property;

· Assessment of the impact on the City of Ottawa of the operational costs of the Real Property; and

· Development of an asset management plan, which forecasts the capital renewal and re-investment requirements, to preserve the heritage property.

Prior to the Acquisition of a heritage property, RPAM requires confirmation that the Client Department and/or City Council have provided the funding and approval for the Acquisition.

Ottawa Greenspaces and the Greenspace Network:

The City of Ottawa may acquire Real Property to ensure the sustainability of its greenspace values, as outlined in Section 5.2.1 of the Ottawa Official Plan. Direction is provided through specific designations that currently mandate Acquisition in Natural Environment Areas, Urban Natural Features, and Major Open Space.

Responsibilities

City Council:

City Council approval, by way of a Council Approval Report, is required for projects requiring the Acquisition of Real Property, including any limited interest therein, except where the total cost of the Acquisition is within the threshold of Delegated Authority.

Delegated Authority:

The City Manager, Chief Corporate Services Officer, Director of RPAM, Manager of Real Estate Services and/or the Program Manager of Real Estate Services, by way of a Delegated Authority Approval Report, in accordance with the provisions of the Delegation of Authority By-law 2005-503, as may be amended from time to time, have the authority to approve the Acquisition of Real Property in accordance with the provisions of that By-law.

Client Department:

The Client Department is responsible for reviewing, in collaboration with RPAM through its Real Estate Services and Comprehensive Asset Management Divisions, the existing Real Property inventory and other Acquisition initiatives, to determine if Real Property needs can be met by current inventory or initiatives, prior to the initiation of an Acquisition. The Client Department is directly involved in the Asset Rationalization effort and confirms that the Acquisition requirement satisfies its City Mandated Program. The Client Department is responsible for carrying the Capital Budget in support of the Real Property Acquisition and for notifying the Ward Councillor of any proposed Acquisitions at the early initiation of the project process. RESD will be responsible for notifying the Ward Councillor of any pending Council Approved or Delegated Authority Reports moving forward for approval.

Legal Services Branch:

The Legal Services Branch acts as legal counsel to departments and advises the City of Ottawa on Real Property transactions. The City Solicitor has authority to undertake all legal proceedings required to complete the Acquisition transaction, including Expropriation proceedings.

Monitoring/Contraventions

The Real Estate Services Division will monitor the application of the policy to ensure policy requirements are met.

References

Arts and Heritage Plan

City of Ottawa 20/20 Official Plan

Disposal of Real Property – Harmonization of Policy, Procedures and Disposal By-law

Delegation of Authority By-law

Greenspace Master Plan

legislative & administrative authorities

Arts and Heritage Plan

City of Ottawa Act

City of Ottawa By-Law 2002-38

City of Ottawa By-Law 2002-49

City of Ottawa Capital Budget

City of Ottawa 20/20 Official Plan

Disposal of Real Property – Harmonization of Policy, Procedures and Disposal By-law

Delegation of Authority By-law

Expropriations Act

Environmental Assessment Act

Greenspace Master Plan

Municipal Act 2001

Municipal Tax Sales Act 1984

Ontario Municipal Board Act

Ontario Heritage Act

Planning Act

Definitions

Acquisition – a transaction which includes any right, interest or benefit in land, but is not limited to, fee simple acquisitions, leases, permanent easements, rights-of-way and other limited interests such as joint-use agreements, temporary working easements, consents to enter, and licences.

Appraisal – an estimate or opinion of value or the act or process of estimating value. Usually it is a written statement setting forth an opinion of the value of an adequately described property as of a specified date, supported by the presentation and analysis of relevant data.

Asset Rationalization – a process to support decision-making related to the Acquisition, remediation or disposal of Real Property, in a cost effective manner, while assuring that essential program and service delivery objectives are not compromised.

Capital Projects – projects that have funding or budgets in place and are included in the City’s Capital Budget.

City Mandated Programs – programs that support City of Ottawa initiatives, as reflected in the Ottawa Official Plan or Capital Program.

Client Department – the Department that requires the Real Property for an approved program or project.

Council Approval Report – a report to Council recommending approval of an Acquisition by the City of Ottawa.

Delegated Authority – authority to approve pursuant to the Delegation of Authority By-Law 2005-503 as amended.

Delegated Authority Approval Report – a report to the City Manager, Chief Corporate Services Officer, Director of RPAM, Manager of Real Estate Services, and/or the Program Manager of Real Estate Services, recommending the approval of an Acquisition of an interest in Real Property in accordance with the provisions of the Delegation of Authority By-law 2005-503, as amended from time to time.

Departmental Needs Assessment – a report documenting the need for and purpose of the Acquisition, from the Client Department’s perspective.

Expropriation – means acquiring Real Property without the consent of the owner, by an expropriating authority in the exercise of its statutory powers.

Market Value – the amount that the land and improvements might be expected to realize, if sold in the open market by a willing seller to a willing buyer.

Public-Private Partnerships (P3) - legal agreements between government and private sector entities, for the purpose of providing public infrastructure, community facilities and related municipal services.

Real Estate Professional - an individual or firm qualified to provide, in accordance with the City’s current standing offer(s), Appraisal and/or Real Estate Consulting Services.

Real Property – includes any right, interest or benefit in land, but is not limited to, fee simple acquisitions, leases, permanent easements, rights-of-way and other limited interests such as joint-use agreements, temporary working easements, consents to enter, and licences.

Keyword Search

Acquisition

Appraisal

Appraisal Institute of Canada Standards

City of Ottawa Act

City of Ottawa By-Law 2002-38

City of Ottawa By-Law 2002-49

City of Ottawa Capital Budget

Expropriation

Expropriations Act

Environmental Assessment Act

Municipal Act 2001

Municipal Tax Sales Act 1984

Ontario Municipal Board

Ontario Heritage Act

Planning Act

Real Property

Enquiries

For more information on this policy, contact:

Manager, Real Estate Services Division

Real Property Asset Management Branch

Corporate Services Department

City of Ottawa

Tel: (613) 580-2400 ext. 21217

Appendices