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1. LAND ACQUISITION – 2500 ST. LAURENT BOULEVARD
Acquisition de terrains – 2500, boulevard St-Laurent
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COMMITTEE RECOMMENDATIONS
That Council approve:
1. The acquisition of 1.1615 ha (2.87 acres) of vacant land in the Ottawa Business Park, shown as Parts 15 and 16 on Plan 5R-11934, save and except Part 3 on Plan 5R-11198 lying within Part 16 on Plan 5R-11934 from Loblaw Properties Limited, in the event it fails to meet the commence construction date of 31 March 2012, for a purchase price of $765,000 plus HST in accordance with restrictive covenants registered on title. The acquisition of the property to be funded from the Business Park Properties Buy Back Program (905673); and
2. The waiving of requirement in the City’s Acquisition Policy for the completion of a Phase I Environmental Study as outlined in the Environmental Due Diligence Section of that Policy.
RECOMMANDATIONS DU COMITÉ
Que le Conseil approuve:
1. L’acquisition d’un terrain vague d’une superficie de 1,1615 ha (2,87 acres) dans le parc d’affaires d’Ottawa, illustré sous la partie 15 et 16 du Plan 5R-11934, sauf la partie 3 du Plan 5R-11198 qui est situeé dans la partie 16 du Plan 5R11934, de Loblaw Properties Limited, au cas où la date de début de la construction fixée au 31 mars 2012 ne pourrait être respectée. pour la somme de 765 000$, TVH en sus, moins les frais juridiques et administratifs raisonnables. L’acquisition de la propriété qui sera financés au moyen des fonds provenant du Programme de rachat de terrains de parcs d'affaires (905673); et
2. La renonciation de l’exigence, en vertu de la Politique d’acquisition de la Ville, voulant qu’une étude environnementale de Phase 1 soit effectuée, comme l’explique la section sur la diligence raisonnable en matière d’environnement de cette même politique.
1. City Manager’s report dated 21 October 2011 (ACS2011-CMR-REP-0032).
2. Extract of Finance and Economic Development Committee Minutes of 1 November 2011.
3. Extract of Finance and Economic Development Committee Minutes of 6 December 2011.
Report to/Rapport au :
Finance and Economic Development Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
21 October 2011 / le 21 octobre 2011
Submitted by/Soumis par : Kent Kirkpatrick, City Manager/Directeur municipal
Contact Person/Personne ressource : Robin Souchen, Manager, Realty Services
Real Estate Partnerships and Development Office/Bureau des partenaires immobiliers et du développement
(613) 580-2424 x 21549, robin.souchen@ottawa.ca
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Ref N°: ACS2011-CMR-REP-0032 |
SUBJECT: |
LAND ACQUISITION – 2500 ST. LAURENT BOULEVARD |
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OBJET : |
REPORT RECOMMENDATIONS
That the Finance and Economic Development Committee recommend Council approve:
1. The acquisition of 1.1615 ha (2.87 acres) of vacant land in the Ottawa Business Park, shown as Parts 15 and 16 on Plan 5R-11934, save and except Part 3 on Plan 5R-11198 lying within Part 16 on Plan 5R-11934 from Loblaw Properties Limited, in the event it fails to meet the commence construction date of 31 March 2012, for a purchase price of $765,000 plus HST in accordance with restrictive covenants registered on title. The acquisition of the property to be funded from the Business Park Properties Buy Back Program (905673); and
2. The waiving of requirement in the City’s Acquisition Policy for the completion of a Phase I Environmental Study as outlined in the Environmental Due Diligence Section of that Policy.
RECOMMANDATIONS DU RAPPORT
Que le Comité des finances et du développement économique recommande au Conseil d’approuver :
1. L’acquisition d’un terrain vague d’une superficie de 1,1615 ha (2,87 acres) dans le parc d’affaires d’Ottawa, illustré sous la partie 15 et 16 du Plan 5R-11934, sauf la partie 3 du Plan 5R-11198 qui est situeé dans la partie 16 du Plan 5R11934, de Loblaw Properties Limited, au cas où la date de début de la construction fixée au 31 mars 2012 ne pourrait être respectée. pour la somme de 765 000$, TVH en sus, moins les frais juridiques et administratifs raisonnables. L’acquisition de la propriété qui sera financés au moyen des fonds provenant du Programme de rachat de terrains de parcs d'affaires (905673); et
2. La renonciation de l’exigence, en vertu de la Politique d’acquisition de la Ville, voulant qu’une étude environnementale de Phase 1 soit effectuée, comme l’explique la section sur la diligence raisonnable en matière d’environnement de cette même politique.
BACKGROUND
The subject property, which is municipally identified as 2500 St. Laurent Boulevard, is a 1.1615 ha parcel of vacant land situated in the Ottawa Business Park at the northwest corner of the intersection of Conroy Road and St. Laurent Boulevard as shown on Document 1.
In September 1988 the City of Ottawa sold the subject property to MDS Aero Support Corporation, In Trust for $347,886. That sale was subject to several restrictive covenants which were registered on title. The covenant which is relevant to this discussion has been paraphrased as follows:
The Transferee covenants and agrees to commence construction of a building with a gross floor area of at least 15% of the lot area not later than 1 April 1989, with substantial completion by 1 April 1990, failing which the property shall revert to the City and the City shall refund the purchase price less reasonable legal and administration costs and a penalty of 15% of the purchase price.
MDS Aero Support Corporation failed to commence construction of a building in accordance with the covenant, and in January 2003 sold the subject property to D.R. Drive Inc. for $900,000. At the time of that sale the City agreed to release the original covenants, and register new covenants on title. Of relevance to this discussion is the “build or buy-back” covenant that was registered on title and which follows verbatim:
The Transferee covenants and agrees to commence construction of a building of a minimum of 12,500 square feet not later than 1 June 2006 and to have substantially completed the building by 15 December 2008. Failing this, the City of Ottawa (the “City”) may, at its option, at any time after either of such dates, require the Transferee to retransfer the Real Property to the City free from encumbrances at a price equal to the purchase price paid by the Transferee for the Real Property less fifteen (15%) percent or the then current market value of the Real Property, whichever is lower. The Transferee shall execute all such transfers and assurances as may be requisite in order to transfer good title to the City within thirty (30) days of having been requested to do so by the City. The Transferee shall also pay to the City, at the time of such retransfer, the reasonable legal and administrative fees of the City including Land Transfer Tax, Goods and Services Tax and registration costs incurred to complete the retransfer.
Later in 2003, D.R. Drive Inc., as Trustee for Loblaw Properties Limited, transferred the subject property to Loblaw Properties Limited. Although the property was still subject to the new covenants which were registered in January 2003, Loblaw Properties did not meet the commence construction date of 1 June 2006.
Further extensions to the covenant were provided as follows:
· In June 2006, the City registered an amendment to the above noted covenant extending the construction start and completion dates to 30 June 2008 and 1 December 2010 respectively;
· In January 2008, the City registered an amendment to the above noted covenant extending the construction start and completion dates to 2 October 2009 and 30 April 2011 respectively;
· In August 2009, the City registered an amendment to the above noted covenant extending the construction start and completion dates to 25 October 2011 and 30 April 2013, respectively.
Loblaw Properties has indicated that it will not meet the commence construction date of 25 October 2011 and has requested a further extension to the above noted covenant.
DISCUSSION
On 14 October 2009, City Council approved a strategy to buy-back business park properties where owners had not complied with covenants which were registered on title to generate development of employment based industries within specified time frames. In order to establish a consistent and fair approach for the strategy, Council directed that notification be provided to all business park property owners who had not complied with the covenants. The notification provided an extended period of six (6) months from the date of notification to commence construction. Council further directed that in the event that the extended construction start date not be complied with, the City could invoke its right to buy-back the properties in order that they could be re-marketed for disposal and development. Flexibility in the construction start date was to be considered where the owner could demonstrate their intention to commence development within a reasonable period of time.
The strategy addressed specific properties in the Taylor Creek, Iber Road and Kanata South Business Parks only as the required research had not been completed regarding the status of covenants in other business parks within the City. However, since approval of the strategy, where staff has become aware of properties in other business parks where the covenants have not been met, the approach set out in the approved strategy has been applied.
In accordance with this buy-back strategy, the subject property owner has been provided with written notification that the City is prepared to grant an extension to 31 March 2012 to commence construction of a building in compliance with the covenants, with completion of the building to be no later than 30 September 2013. The property owner was also advised that staff would be seeking Council’s approval to exercise its right to re-purchase the subject property in accordance with the covenants should construction not commence by 31 March 2012.
The “build or buy-back” covenants were included in the sale of lots in business parks to encourage development and discourage speculation. The subject property was originally sold in 1988, and despite the City granting several extensions to the commence construction date, today the property remains undeveloped. It is therefore recommended that in the event the property owner fails to meet the latest commence construction date of 31 March 2012, the City will exercise its option to repurchase the property. This will allow the City to put this property back on the market to fulfill the original intent of generating employment based industries within the business park. The property will be sold subject to similar covenants in order that the City will retain the option to repurchase should the new purchasers not proceed with development within the prescribed period of time.
Pursuant to the covenant, the City may acquire the subject property at a price equal to the purchase price of $900,000 paid by the property owner less fifteen (15%) percent, which would be $765,000 or the market value of the subject property at the time of repurchase by the City; whichever is lower.
A recent appraisal estimates the current market value of the subject property to be approximately $1,300,000. The expectation is that the market value of the subject property at the time of repurchase in March 2012 would not be lower than the current value of $1,300,000. Therefore, the purchase price of the subject property would be $765,000 as it is the lower of the two options.
This property was previously owned by the City of Ottawa and has remained vacant since it was sold in 1988 and there are no historic land uses associated with this property that would indicate a contamination concern. It is for these reasons that staff is recommending that the need to obtain a Phase I, Environmental Site Assessment (ESA) as required by the Acquisition Policy, be waived for this acquisition as noted in Recommendation 2.
ENVIRONMENTAL IMPLICATIONS
The Land Use and Natural Systems unit has not identified any features of interest on the subject property, aside from the trees growing around its perimeter and scattered across the site. It is not part of the City’s Greenspace Network in the Greenspace Master Plan. Aerial photography and available natural heritage information sources do not suggest that the property contains any significant features of the natural heritage system or that it performs any significant ecological functions. It is not located within 120 m of any known feature of the City’s natural heritage system.
The trees on the property are currently protected under the City’s Urban Tree Conservation By-law. Once the land has returned to City ownership, these trees will be protected under the City’s By-law 2006-279 for the protection of trees and natural areas on municipal property. Any naturally-occurring (i.e. non-planted) butternut tree that may be present on or adjacent to the property would continue to be subject to protection under the regulations of the provincial Endangered Species Act, 2007 regardless of changes in property ownership.
RURAL IMPLICATIONS
The subject property is situated in the Urban Area, and within the boundaries of an established business park. Accordingly, there are no rural implications resulting from the purchase of this property.
CONSULTATION
No public consultation was undertaken as this is an administrative matter.
COMMENTS BY THE WARD COUNCILLOR(S)
When the City of Ottawa sold the land at 2500 St. Laurent Boulevard in the Ottawa Business Park to a developer in 1988, the City entered into several restrictive covenants that were registered on title. One covenant required the developer to commence construction of a building on their site no later than 1 April 1989 with substantial completion by 1 April 1990. The developer failed to meet this deadline, sold the land and the City entered into new covenants with the new owner with requirements to construct no later than 1 June 2006 with substantial completion by 15 December 2008.
This developer did not meet the commence work date and further extensions to the covenants were issued in June 2006 by the City of Ottawa with a revised completion date of 2 December 2010. In January 2008, the City of Ottawa registered an amendment, again, to complete by 30 April 2011 and in August 2009 registered an amendment to commence work by 25 October 2011 with a completion date of 30 April 2013. The developer has recently notified the City of Ottawa that it cannot, once again, meet their deadline to commence construction on their site and requested yet another three (3) year extension.
This land has been undeveloped since 1988 and as such the City of Ottawa has seen a considerable loss in property taxes. The land, with no building(s) constructed can only be taxed at a lower “vacant land rate”. The City of Ottawa has been generous to have provided extensions to the developer to date. The developer has had more than ample time to develop their land in accordance with the City covenants.
The current Provincial Policy Statement (PPS) speaks to individual municipalities having the ability to protect employment lands and permit the conversion under certain specific circumstances. Many municipalities are under considerable pressure to process requests to re-zone designated employment lands for uses other than defined by the PPS. The parcel of land in question has good access to the 417 highway. While the parcel is now designated general urban, it has locational characteristics that may recommend its use as employment land.
For the reasons stated above, I am in support of the staff recommendation within this report.
LEGAL IMPLICATIONS
There are no legal impediments to implementing the recommendations in this report.
RISK MANAGEMENT IMPLICATIONS
There are no risk management implications resulting from the purchase of this property.
CITY STRATEGIC PLAN
The purchase of the subject property will have no direct impact on the City’s Strategic Plan.
TECHNOLOGY IMPLICATIONS
There are no technical implications resulting from the purchase of this property.
FINANCIAL IMPLICATIONS
Funds to purchase the property are available in the Business Park Properties Buy Back Program (905673). Future sale proceeds will be credited to the same account.
ACCESSIBILITY IMPACTS
N/A
SUPPORTING DOCUMENTATION
Attached as Document 1 is a sketch showing the subject property.
DISPOSITION
Following approval, and in the event the property owner fails to meet the commence construction date of 31 March 2012, Realty Services Division and Legal Services Branches will finalize the purchase transaction.
DOCUMENT 1
