1.     LEASE RENEWAL – 580 Terry Fox Drive and 600 Terry Fox Drive, OWNED BY 1457722 ONTARIO INC. AND 969111 ONTARIO LIMITED, RESPECTIVELY

 

RENouvellement de bail  580, promenade TERRY-FOX et 600, promenade TERRY-FOX, appartenant respectivement à 1457722 ONTARIO INC. et 969111 ONTARIO LIMITED

 

 

 

COMMITTEE RECOMMENDATIONS

 

That Council approve:

 

1.   A lease renewal for the existing lease for the 10,228 square feet of rentable area of ground floor and second floor office space occupied by the Kanata Client Service Center at 580 Terry Fox Drive, Kanata, within a building owned by 1457722 Ontario Inc., for a term of twenty-nine (29) months commencing 1 December 2009 at a total rent of $593,224 plus GST;

 

2.   A sub-lease renewal to the Ontario Realty Corporation of 2,349 square feet of rentable area of the above space within the building at 580 Terry Fox Drive, Kanata, for a term of twenty-nine (29) months commencing 1 December 2009 at a total revenue to the City of $136,242 plus GST;

 

3.   A lease renewal for the existing lease for the 1,479 square feet of rentable area of ground floor office space occupied by the Kanata South Ward Councillor at 600 Terry Fox Drive, Kanata, within a building owned by 969111 Ontario Limited for a term of twenty-nine (29) months commencing 1 December 2009 at a total rent of $85,782 plus GST; and

 

4.      A sub-lease renewal to the Ontario Realty Corporation of 740 square feet of rentable area of the above space within the building at 600 Terry Fox Drive, Kanata, for a term of twenty-nine (29) months commencing 1 December 2009 at a total revenue to the City of $42,920 plus GST.

 

 

RECOMMANDATIONS DU COMITÉ

 

Que le Conseil approuve :

 

1.   le renouvellement du bail de location d'espaces à bureaux, d'une superficie de 10 228 pieds carrés, occupés par le Centre du service à la clientèle de Kanata au rez-de-chaussée et à l'étage de l'immeuble situé au 580, promenade Terry-Fox, à Kanata, et appartenant à 1457722 Ontario Inc., pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total de 593 224 $, plus TPS;

 

2.   le renouvellement du sous-bail de location accordé à la Société immobilière de l'Ontario des espaces mentionnés ci-dessus de 2 349 pieds carrés dans l'immeuble situé au 580, promenade Terry-Fox, à Kanata, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total pour la Ville de 136 242 $, plus TPS;

 

3.   le renouvellement du bail de location d'espaces à bureaux, d'une superficie de 1 479 pieds carrés, occupés par la conseillère du quartier de Kanata-Sud au rez-de-chaussée de l'immeuble situé au 600, promenade Terry-Fox, à Kanata, et appartenant à 969111 Ontario Limited, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total de 85 782 $, plus TPS; et

 

4.      le renouvellement du sous-bail de location accordé à la Société immobilière de l'Ontario des espaces mentionnés ci-dessus de 740 pieds carrés dans l'immeuble situé au 600, promenade Terry-Fox, à Kanata, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total pour la Ville de 42 920 $, plus TPS.

 

 

 

DOCUMENTATION

 

1.      City Manager’s report dated 14 April 2009 (ACS2008-CMR-CPO-0020).
Report to/Rapport au :

 

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

 

and Council / et au Conseil

 

14 April 2009 / le 14 avril 2009

 

Submitted by/Soumis par : Kent Kirkpatrick,
City Manager/Directeur des services municipaux

 

Contact Person/Personne ressource : Gordon MacNair, Manager, Realty Services

Real Estate Partnerships and Development Office / gestionnaire, Services immobiliers,

Bureau de développement et partenariats immobiliers

(613) 580-2424 x21217, Gordon.MacNair@Ottawa.ca

 

Kanata South (23)

Ref N°: ACS2009-CMR-CPO-0020

 

 

SUBJECT:

LEASE RENEWAL – 580 Terry Fox Drive and 600 Terry Fox Drive, OWNED BY 1457722 ONTARIO INC. AND 969111 ONTARIO LIMITED, RESPECTIVELY

 

 

OBJET :

RENouvellement de bail  580, promenade TERRY-FOX et 600, promenade TERRY-FOX, appartenant respectivement à 1457722 ONTARIO INC. et 969111 ONTARIO LIMITED

 

 

REPORT RECOMMENDATIONS

 

That the Corporate Services and Economic Development Committee recommend Council approve:

 

1.         A lease renewal for the existing lease for the 10,228 square feet of rentable area of ground floor and second floor office space occupied by the Kanata Client Service Center at 580 Terry Fox Drive, Kanata, within a building owned by 1457722 Ontario Inc., for a term of twenty-nine (29) months commencing 1 December 2009 at a total rent of $593,224 plus GST;

 

2.         A sub-lease renewal to the Ontario Realty Corporation of 2,349 square feet of rentable area of the above space within the building at 580 Terry Fox Drive, Kanata, for a term of twenty-nine (29) months commencing 1 December 2009 at a total revenue to the City of $136,242 plus GST;

 

3.         A lease renewal for the existing lease for the 1,479 square feet of rentable area of ground floor office space occupied by the Kanata South Ward Councillor at 600 Terry Fox Drive, Kanata, within a building owned by 969111 Ontario Limited for a term of twenty-nine (29) months commencing 1 December 2009 at a total rent of $85,782 plus GST; and

 

4.         A sub-lease renewal to the Ontario Realty Corporation of 740 square feet of rentable area of the above space within the building at 600 Terry Fox Drive, Kanata, for a term of twenty-nine (29) months commencing 1 December 2009 at a total revenue to the City of $42,920 plus GST.

 

 

RECOMMANDATIONS DU RAPPORT

 

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver :

 

1.         le renouvellement du bail de location d'espaces à bureaux, d'une superficie de 10 228 pieds carrés, occupés par le Centre du service à la clientèle de Kanata au rez-de-chaussée et à l'étage de l'immeuble situé au 580, promenade Terry-Fox, à Kanata, et appartenant à 1457722 Ontario Inc., pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total de 593 224 $, plus TPS;

 

2.         le renouvellement du sous-bail de location accordé à la Société immobilière de l'Ontario des espaces mentionnés ci-dessus de 2 349 pieds carrés dans l'immeuble situé au 580, promenade Terry-Fox, à Kanata, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total pour la Ville de 136 242 $, plus TPS;

 

3.         le renouvellement du bail de location d'espaces à bureaux, d'une superficie de 1 479 pieds carrés, occupés par la conseillère du quartier de Kanata-Sud au rez-de-chaussée de l'immeuble situé au 600, promenade Terry-Fox, à Kanata, et appartenant à 969111 Ontario Limited, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total de 85 782 $, plus TPS; et

 

4.         le renouvellement du sous-bail de location accordé à la Société immobilière de l'Ontario des espaces mentionnés ci-dessus de 740 pieds carrés dans l'immeuble situé au 600, promenade Terry-Fox, à Kanata, pour une durée de vingt-neuf (29) mois à partir du 1er décembre 2009 et un loyer total pour la Ville de 42 920 $, plus TPS.

 

 

BACKGROUND

 

In the spring of 2004, City staff began working in partnership with the Province of Ontario (the Province) and the Government of Canada on an initiative called the Ottawa Counters Project. The vision of Phase I of this project was to create a multi-jurisdictional flagship walk-in centre in downtown Ottawa that was streamlined, cost-effective, and responsive to customers’ changing needs.

 

On 9 June 2005, City Council approved continued discussions with the provincial and federal governments on the Ottawa Counters Project. It authorized the City Manager, in collaboration with the City Solicitor and City representatives, to finalize negotiations and conclude and execute all necessary agreements. This included the Memorandum of Understanding with applicable Federal and Provincial counterparts and any related projects within the ServiceOntario mandate.

 

On 6 September 2005, the Government Service Centre in City Hall opened to the public and currently provides a full range of government services.

 

In July 2006 Council approved a recommendation that staff continue discussions with the Provincial and Federal government on future service enhancements at the Government Service Centre at City Hall and the other municipal facilities beyond the core of the City. As a result of these discussions both parties agreed to combine ServiceOntario’s program into the City’s West-end (Kanata) Client Service Centre.

 

Effective 1 May 2007 the City re-negotiated its existing lease at 580 Terry Fox Drive adding an additional 1,510 square feet of rentable area plus adding an additional 1,479 square feet of rentable area next door at 600 Terry Fox Drive for a term of thirty-one (31) months expiring 30 November 2009 to accommodate ServiceOntario’s requirements.

 

The leases are currently due for renewal and both parties wish to exercise their first renewal option for a further twenty-nine (29) month term.

 

 

DISCUSSION

 

The City currently leases 10,228 square feet of rentable area at 580 Terry Fox Drive from 1457722 Ontario Inc.  The Communications and Customer Service Branch and the Building Services Branch occupy this space. Additionally, the City leases 1,479 square feet of rentable area at 600 Terry Fox for the local Ward Councillor. The terms of these net leases include a thirty-one month (31) term commencing 1 May 2007 and terminating 30 November 2009. The base rent is $10 per square foot plus additional rent of $13 per square foot.

 

An independent market appraisal was commissioned to determine the market rent for renewal purposes. A market base rent of $10.50 per square foot was determined to reflect current market conditions however after extended negotiations with the Landlord a negotiated base rent of $11 per square foot was agreed to. This was a compromise position that avoided a timely and potentially costly arbitration hearing to have the market rent determined by an independent arbitrator.

 

A Letter of Intent has been signed with each building owner, 1457722 Ontario Inc. and 969111 Ontario Limited respectively, to renew the existing leases at 580 and 600 Terry Fox Drive. Terms of the lease renewal remain the same except for the annual base rent. The commencement date for this lease renewal is 1 December 2009 and runs for a term of twenty-nine (29) months. A base rate of $11 per rentable square foot plus additional rent estimated at $13 per rentable square foot for a total rent of $24 per square foot for the combined rentable area of 11,707 square feet for a total rent of $679,006 plus GST for the twenty-nine month term for both buildings. In addition, the City will have two (2) five year renewal options remaining. The renewal options provide for the same terms and conditions except to rent, which is to be negotiated at then market rent.

 

The Province has exercised its’ option to renew for a further twenty-nine (29) month renewal to sublet 3,089 square feet of the aforementioned combined rentable area from the City to maintain the City/ServiceOntario partnership, split between the two buildings at 580 and 600 Terry Fox Drive.  The terms of the two sub-leases will be the same as the terms in the City’s Head Lease except to the rentable area, whereby ServiceOntario will pay rent based on $11 per rentable square foot plus additional rent estimated at $13 per rentable square foot for a total rent of $24 per the combined rentable are of 3,089 square feet for a total revenue to the City of $179,162 plus GST for the twenty-nine month term for both buildings.

 

These leases and subleases are recommended for approval.

 

 

ENVIRONMENTAL IMPLICATIONS

 

The Landlord warrants to the City that there are no known environmental matters related to either building. As the City was the former owner of the building at 580 Terry Fox Drive and is currently a tenant no further testing is deemed necessary at this time.

 

 

CONSULTATION

 

Public consultation was not undertaken as this lease renewal is an administrative matter. The Ward Councillor is aware of this report.

 

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

There are no legal/risk management impediments to the implementation of this report’s recommendation.

 

 

FINANCIAL IMPLICATIONS

 

Funding is available in the 2009 Operating Budget, REIO 300416, Kanata City Hall (580 Terry Fox) for this lease renewal.

 

 

DISPOSITION

 

Following Council’s approval the Realty Services Division and the Legal Services Branch will finalize this transaction.