2.         LEASE RENEWAL - 2339 OGILVIE ROAD - SOCIAL SERVICES CENTRE EAST

 

RENOUVELLEMENT DU BAIL – 2339, CHEMIN OGILVIE - CENTRE DE SERVICES SOCIAUX EST

 

 

 

COMMITTEE RECOMMENDATION

 

That Council approve the renewal of a Lease between the City of Ottawa (the “City”) as Tenant and Metcalfe Realty Company Limited (“Metcalfe”) as Landlord for approximately 34,857ft2 of office space located at 2339 Ogilvie Road that houses the Social Services Centre East.  The term of the renewal is five (5) years and will commence on the 15th day of July 2011. 

 

 

Recommandation DU Comité

 

Que le Conseil approuve le renouvellement du bail, entre la Ville d’Ottawa (« la Ville »), locataire, et la Metcalfe Realty Company Limited (« Metcalfe »), propriétaire-bailleur, de bureaux d’une surface d’environ 34 857 pi2 situés au 2339, chemin Ogilvie et occupés par le Centre de services sociaux-Est. La durée du bail est de cinq (5) ans, à partir du 15 juillet 2011.

 

 

 

Documentation

 

1.         City Manager’s report dated 11 January 2011 (ACS2011-CMR-REP-0003).

 

Report to/Rapport au :

 

Community and Protective Services Committee

Comité des services communautaires et de protection

and Council / et au Conseil

 

11 January 2011 / le 11 janvier 2011

 

Submitted by/Soumis par : Kent Kirkpatrick, City Manager/Directeur municipal

 

Contact Person/Personne ressource : Gordon MacNair, Director

Real Estate Partnerships and Development Office/ Directeur, Partenariats et

Développement en immobilier

(613) 580-2424 x 21217, Gordon.MacNair@ottawa.ca

 

Beacon Hill - Cyrville (11)

Ref N°: ACS2011-CMR-REP-0003

 

 

SUBJECT:

Lease Renewal - 2339 ogilvie road - social Services Centre East

 

 

OBJET :

renouvellement du bail – 2339, chemin Ogilvie - Centre de services sociaux Est

 

REPORT RECOMMENDATION

 

That the Community and Protective Services Committee recommend Council approve the renewal of a Lease between the City of Ottawa (the “City”) as Tenant and Metcalfe Realty Company Limited (“Metcalfe”) as Landlord for approximately 34,857ft2 of office space located at 2339 Ogilvie Road that houses the Social Services Centre East.  The term of the renewal is five (5) years and will commence on the 15th day of July 2011. 

 

RECOMMANDATION DU RAPPORT

 

Que le Comité des services communautaires et de protection recommande au Conseil d’approuver le renouvellement du bail, entre la Ville d’Ottawa (« la Ville »), locataire, et la Metcalfe Realty Company Limited (« Metcalfe »), propriétaire-bailleur, de bureaux d’une surface d’environ 34 857 pi2 situés au 2339, chemin Ogilvie et occupés par le Centre de services sociaux-Est. La durée du bail est de cinq (5) ans, à partir du 15 juillet 2011.

 

BACKGROUND

 

The City has been leasing this space to house Social Services since July 2001.  As a part of the Community and Social Services Branch, the Social Services Centre-East at 2339 Ogilvie Rd. provides a “One Stop Shopping” of human services for residents in our community.

The Centre administers the Ontario Works Program which includes Employment and Financial Assistance, Child Care, Housing Supports along with other various programs and services for the vulnerable residents in Ottawa who are under-employed or are facing unemployment. 

The Centre also has an Employment Resource Centre that provides all the necessary tools, resources, training, workshops and supports to help assist anyone in the community to prepare, find and keep work.

 

This location is ideal for Social Services Centre-East because of:

 

·         Its proximity to a large population of low income and/or vulnerable clients;

·         Its co-location in a mall with a Community Resource Centre and Service Canada;

·         Its large square footage on one (1) floor;

·         And its access to bus service.

 

Realty Services performed a search for other premises, both City-owned and third party owned, that would be suitable to house this program.  The Building and Technical Support Unit confirmed that no such City-owned facility existed in the East end.  The search for third party owned premises also indicated that no suitable facility was available.

 

With no suitable alternative available and the Landlord offering to renew our current Lease with no increase in base rent the renewal of our Lease proved to be the best option.

 

The Social Services Centre-East asked Realty Services to begin negotiations with the Landlord for a five year renewal.

 

DISCUSSION

 

Negotiations with the Landlord has resulted in a Lease Renewal for a five (5) year term with no increase in base rent from the previous term.

 

A survey of third party rental data for the East end indicates that the base rent of $13.50/ft2 for this Lease Renewal is market rent.

 

The operating rent for Year 1 of $14.78/ft2 is slightly higher than market which can be attributed to the fact that the leased space is located in a shopping mall and that realty taxes are included in the operating rent.  The operating rent for years two (2) to five (5) are estimated, for budget purposes, to include a three percent (3%) increase.

 

The financial terms of the Lease Renewal are shown in the below table:

    Base Rent

     Operating    Rent**

Total Annual

Plus Un-rebated HST (1.76%)

Year 1

 $     470,570

 $       515,535

 $  986,105

 $     1,003,460

Year 2

 $     470,570

 $       531,001

 $1,001,571

 $     1,019,198

Year 3

 $     470,570

 $       546,931

 $1,017,501

 $     1,035,409

Year 4

 $     470,570

 $       563,339

 $1,033,909

 $     1,052,105

Year 5

 $     470,570

 $       580,239

 $1,050,809

 $     1,069,303

 $     5,179,475

**  annual operating rent after Year 1 is based on an estimated 3% increase in costs

 

As part of the negotiations the Landlord agreed to paint the entire premises as well as make various small repairs at their cost.

 

The City has the option to renew this Lease, after this five (5) year term, for a further three (3) year term at market rent to be determined between the parties as well as an Early Termination Provision which allows the City to terminate the Lease anytime after the third (3rd) year of the Renewal Term.  These options provide the City with flexibility with regard to these leased premises. 

 

The Lease Renewal also provides savings to the City by way of avoiding “fit-up” and moving expenses which would be associated with relocating to other premises. 

 

The property is zoned GM - General Mixed-Use zone and permits the City’s use.

 

RURAL IMPLICATIONS

 

There are no rural implications associated with this Lease Renewal.

 

CONSULTATION

 

This is considered an internal administrative matter therefore no public consultation was undertaken.

 

The Valuation and Leasing Unit of the Realty Services Division consulted with Social Services Centre East Unit of the Social Services Operational Branch with regard to this Lease Renewal.

 

COMMENTS BY THE WARD COUNCILLOR(S)

 

Councillor Tim Tierney - Ward 11 - Beacon Hill-Cyrville is aware of this Lease Renewal and has indicated no concerns at this time.

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

There are no legal / risk management impediments to implementing the recommendation of this report.

 

CITY STRATEGIC PLAN

 

This Lease Renewal allows the City to provide Social Services to its citizens in the East end of the City. 

 

TECHNICAL IMPLICATIONS

 

There are no technical implications associated with this Lease Renewal.

 

FINANCIAL IMPLICATIONS

 

This lease renewal represents an estimated cost of $5,179,475 over the five (5) year term which will be funded from the Employment and Financial Assistance operating budget. 

 

SUPPORTING DOCUMENTATION

 

N/A

 

DISPOSITION

 

Upon approval by Council, Realty Services will undertake the execution of the Lease Renewal documentation.