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8. ACQUISITION - 25 ESQUIMAULT avenue Acquisition - 25, AVENUE ESQUIMAULT |
Committee RecommendationS
That Council:
1. Approve the
acquisition of 25 Esquimault Avenue, described as part of Lot 70, all of Lot 71
and Block A, Plan 479669, former City of Nepean, now City of Ottawa (PIN
#046960138) shown as Parcel ‘A’ on Document 1, for the amount of $2,500,000.00
plus GST from 770 Holdings Ltd. pursuant to an Agreement of Purchase and Sale
that has been received;
2. Approve the
demolition of the existing structure and remediation of the site and an interim
solution for the replacement of the Community Centre estimated at a cost of
$1,305,000.00; and
3. Direct staff to
prepare a redevelopment proposal for the lands, which is to include a Community
Centre and residential development, as outlined in this report, and report back
to Council in 2008 – 09.
RecommandationS du comité
Que le Conseil :
1. approuve l’acquisition de la propriété située au 25,
avenue Esquimault, décrite comme une portion du lot 70 et tout le lot 71 et
bloc A, plan 479669 , de l’ancienne Ville de Nepean, maintenant de la Ville
d’Ottawa (NIP no 046960138)
illustré par la parcelle « A » dans le document 1, au montant de
2 500 000 $, TPS en sus, du 770 Holdings Ltd., conformément à
une convention d’achat et de vente reçue;
2.
approuve la démolition la
structure existante et de remettre en état le site et d'établir une solution
intérimaire pour le remplacement du centre communautaire au coût estimé de 1
305 000 $; et
3.
demande au personnel de
préparer une proposition de réaménagement des terrains, qui comprendra un
Centre communautaire et un lotissement résidentiel,
comme il est expliqué dans le présent rapport, et de faire rapport au Conseil en 2008-2009.
Documentation
1. Executive
Director’s (Business Transformation Services) report dated 3 April 2008
(ACS2008-BTS-RPM-0016).
2. Extract
of Draft Minutes, 15 April 2008.
Report to/Rapport au :
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
Submitted by/Soumis par : Stephen Finnamore, Executive Director,
Business Transformation Services / Directeur exécutif, Services de
transformation des activités
Contact Person/Personne
ressource : Gordon MacNair, Manager, Real Estate Services
Real Property Asset Management/Gestion des
actifs des biens immobiliers
(613) 580-2424 x21217,
gordon.macnair@ottawa.ca
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SUBJECT: |
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OBJET : |
REPORT RECOMMENDATIONS
That the Corporate Services and
Economic Development Committee recommend Council approve:
1. The acquisition of 25 Esquimault Avenue, described as part of Lot
70, all of Lot 71 and Block A, Plan 479669, former City of Nepean, now City of
Ottawa (PIN #046960138) shown as Parcel ‘A’ on Document 1, for the amount of
$2,500,000.00 plus GST from 770 Holdings Ltd. pursuant to an Agreement of
Purchase and Sale that has been received;
2. Demolition of the existing structure and remediation of the site and
an interim solution for the replacement of the Community Centre estimated at a
cost of $1,305,000.00; and
3. Direct staff to prepare a redevelopment proposal for the lands, which
is to include a Community Centre and residential development, as outlined in
this report, and report back to Council in 2008 – 09.
RECOMMANDATIONS DU
RAPPORT
Que le Comité des services organisationnels et du
développement économique recommande au Conseil :
1.
d’approuver l’acquisition de la propriété située au 25, avenue
Esquimault, décrite comme une portion du lot 70 et tout le lot 71 et bloc A,
plan 479669 , de l’ancienne Ville de Nepean, maintenant de la Ville d’Ottawa
(NIP no 046960138) illustré par la
parcelle « A » dans le document 1, au montant de
2 500 000 $, TPS en sus, du 770 Holdings Ltd., conformément à
une convention d’achat et de vente reçue;
2. de démolir
la structure existante et de remettre en état le site et d'établir une solution
intérimaire pour le remplacement du centre communautaire au coût estimé de 1
305 000 $; et
3.
de demander au personnel de préparer une proposition de réaménagement des
terrains, qui comprendra un Centre communautaire et un lotissement résidentiel, comme il est expliqué
dans le présent rapport, et de faire rapport au Conseil en
2008-2009.
BACKGROUND
The former City of Nepean occupied space at 25 Esquimault Avenue for programming and community use purposes since 1988, with the new City of Ottawa assuming Nepean’s obligations at the time of amalgamation.
In 1995, the City of Nepean entered into a 20-year lease for part of this facility. However, as a result of environmental issues and the City’s requirement to obtain a non-disturbance clause in that initial lease agreement, a subsequent interim lease arrangement was necessary pending resolution of these issues. However, no rent has been paid since 2001, due to a dispute between the former first mortgagee and the Canada Revenue Agency, whose claim has recently been foreclosed. The property title is now clear of any mortgages or other liens. The outstanding rent owing is $126,000.00.
During construction of an addition to the school, which was built by the former City of Nepean for community use purposes as part of the lease arrangement, furnace oil was discovered in the soil, which had an adverse impact on the soil and groundwater. The City of Nepean was required to address the soil and groundwater contamination issue at the site by an Order of the Environmental Appeal Board dated 12 August 1997, and the new City has continued the required environmental work. There are currently no public health risks associated with this contamination.
On 23 October 2002 (Report No. ACS2002-CRS-RPR-0033) Council approved a staff recommendation for the environmental cleanup of 25 Esquimault Avenue in accordance with an Order of the Environmental Appeal Board. Council also approved the continued use of a portion of the leased premises for programming and community use purposes at this location.
The current risk management approach includes
operation of a pump and treat system, quarterly groundwater monitoring as well
as drinking water and indoor air monitoring in the school. No impacts to drinking water or indoor air
quality have been identified through the monitoring program. However, the life expectancy of the current
approach to reduce the mass balance of the residual petroleum hydrocarbons to
the MOE site-specific criterion of 50,000 ug/L is estimated at 25 years. The current cost to implement this risk
management program is approximately $100,000.00 annually.
It now appears that the original school building on
the site has reached a state of repair that makes its retention uneconomical
and demolition of the building and sale of the property in the near future is
likely. In that event, the sale of the
property will continue to require full environmental remediation by the City
because of the MOE order. Also, there
would be no guarantee that the current owner will not seek further damages from
the City or that a new owner will cooperate with the City in providing a
replacement Community Centre.
The purpose of this report, therefore, is to outline
an alternative to the ongoing risk management approach, which has not resolved
the contamination issue at this site.
As a result, staff is recommending the acquisition of this property to
bring resolution to the ongoing environmental liability. The acquisition option also provides a
potential long-term opportunity for the residents of Qualicum – Graham Park
with the development of a new Community Centre.
DISCUSSION
As noted in the 23 October 2002 report to Council,
there were a number of issues surrounding the question of who was responsible
for the clean up of this site. Ultimately,
after some litigation and negotiation, an Order of the Environmental Appeal
Board dated 12 August 1997 established that Ecole Maimonides was to supervise
and manage the clean-up of the subject site and
abutting properties and the City of Nepean was to pay for the clean-up,
without prejudice to its right to pursue the recovery of costs from any other
party in the future.
It is important to note that this is a privately
owned property, which consists of a building that is approximately 31,000 sq. ft.
including the City’s community space of approximately 3,000 sq. ft.
Since the discovery of contamination, the former
City of Nepean and City of Ottawa have attempted a series of remediation
options, which have not resulted in satisfactory outcomes. The challenge is that the majority of
contamination is located beneath the building.
There is no prospect of
recovery of costs from any other party (Ecole Maimonides went into default on
its mortgage, and was foreclosed by an assignee of the first mortgagee, 770
Holdings Ltd). A default judgment was obtained against Ecole Maimonides for
clean up costs, but it is a shell, with no assets.
The rationale for
recommending the acquisition of 25 Esquimault Avenue is to bring resolution to
the ongoing environmental liability.
This can be completed by demolishing the building and removing the
majority of contamination which is located beneath the building. As well, the acquisition option also
provides a potential long-term opportunity for the residents of Qualicum –
Graham Park with the development of a new Community Centre. There is a risk that the current Community
Centre lease arrangement could be terminated in the foreseeable future.
Two independent appraisals were commissioned to
estimate the market value of this site. The current Zoning is – IS -
Institutional School with a Proposed Zoning – IA2 – Minor Institutional permits
similar institutional uses. While one appraisal considered the highest and best
use of the site to be for a retirement home, which is an institutional type
use, it also recognized that the site had potential for residential development
with a low to medium density. The other
appraisal considered the highest and best use of the site to be a residential
redevelopment likely for a single-family detached development. A reconciliation of both appraisals based on
residential redevelopment results in a market value estimate of $2,500,000.00,
which assumes no environmental contamination.
The cost to demolish the existing structure is
estimated at $650,000.00 while an additional $600,000.00 is required for the
remediation of the site. DST Consulting
Engineers completed a demolition assessment while the remediation estimate is
provided by AMEC Earth & Environmental.
Additional funds of $55,000.00 are required for the development of an
interim solution for the replacement of the Community Centre.
The future redevelopment scenario would envision a portion of the land being retained for a Community Centre with the balance being sold to defray part of the acquisition costs. Until a new community structure is built on site, staff will explore options of providing an interim solution such as providing a portable on site.
Table 1 summarizes
the cost to acquire and develop the site.
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Table 1 |
Acquisition & Redevelopment |
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Acquisition Cost (3.5 acres) |
$ 2,500,000.00 |
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Demolition Cost (bldg is 30,900 sq.ft.) |
$ 650,000.00 |
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Remediation Costs
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$ 600,000.00 |
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Temporary relocation of community centre |
$ 55,000.00 |
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*Construction of New Community Centre (3,000 sq.ft.) |
$ 1,000,000.00 |
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Restore property tax base |
($ 575,000.00) |
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**Potential Resale Value (3.0 acres) |
($2,000,000.00) |
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Outstanding payment of rent |
$ 126,000.00 |
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TOTAL |
$2,356,000.00 |
* This assumes a basic design with details to be finalized through the public consultation process as part of the redevelopment proposal
**This assumes that 0.50 acres of the original 3.5 acres would be retained to offset the requirement for a new Community Centre while the balance of the land would be redeveloped for low / medium density housing.
The acquisition proposal allows the City to have control of the environment liability, avoid potential litigation, build a new Community Centre, and direct the future development of the site.
Legal Services will be providing the legal background and opinion to support the recommendations in this Report by way of a confidential Report.
ENVIRONMENTAL IMPLICATIONS
It is anticipated that once the site is remediated the site could be redeveloped with the concurrence of the MOE.
CONSULTATION
The Ward Councillor and the Qualicum - Graham Park Community Association have been consulted about this matter. Real Property Asset Management (RPAM) also consulted with Parks and Recreation and Legal Services staff for the preparation of this report.
FINANCIAL IMPLICATIONS
Funds for the acquisition and subsequent demolition of the site are available from within the existing capital budget for the Real Property Asset Management, Real Estate Division environmental remediation program.
Any costs associated with the redevelopment of the site will be identified in a future report to City Council.
SUPPORTING DOCUMENTATION
Document 1 – Site Plan illustrating location of 25 Esquimault Avenue
DISPOSITION
Following Council’s approval, the Real Property
Asset Management, Legal Services and Surveys Branches will finalize this
transaction.
RPAM will also make the necessary arrangements to
demolish the structure after closing and will follow up with remediating the
site.
A redevelopment plan will be developed by RPAM in
consultation with the Parks and Recreation Branch along with consultation with
the Qualicum - Graham Park Community Association.
