Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

16 September 2003 / le 16 septembre 2003

Submitted by/Soumis par : Kent Kirkpatrick, General Manager/Directeur général,

Corporate Services/Services généraux

Contact/Personne ressource: D. H. McCaslin, Manager, Real Estate Services/

Gestionnaire, Services immobiliers

580-2424, ext. 22595, Douglas.McCaslin@ottawa.ca

Ref N°: ACS2003-CRS-RPR-0068

SUBJECT:	SALE OF PROPERTY - 580 TERRY FOX DRIVE

OBJET :	VENTE DE PROPRIÉTÉ : 580, PROMENADE TERRY-FOX

REPORT RECOMMENDATION

That the Corporate Services and Economic Development Committee recommend Council approve the sale of land and building at 580 Terry Fox Drive, described as Part of Lot 1, Concession 2, Ottawa Front, geographic Township of March, City of Ottawa, designated as Parts 1, 2, and 3 on Plan 4R-7282, save and except Parts 1 and 23 on Plan 4R-11260 to R.O.I. Properties Inc. (in trust) for $3,105,000 plus GST, subject to any easements that may be required and pursuant to an Agreement of Purchase and Sale that has been received.

RECOMMENDATION DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil municipal d’approuver la vente du terrain et de l’édifice, située à l'adresse municipale du 580 promenade Terry-Fox, faisant partie du lot 1, concession 2, canton géographique de March, représentée par les parties 1, 2 et 3, plan 4R-7282, à l'exception de la parties 1 et 23, plan 4R-11260, à R.O.I. Properties Inc., in trust, pour la somme de 3 105 000 $, TPS en sus, sous réserve de toute servitude nécessaire et en vertu d’une convention d’achat et de vente reçue.

BACKGROUND

At its meeting of 14 May 2003, Council declared four (4) properties surplus to City requirements, in direct relationship to the Corporate Accommodation Master Plan (CAMP) program. Council also authorized staff to market and sell these properties immediately following approval of the CAMP report by Council. The land and building at 580 Terry Fox Drive, the former Kanata City Hall, was one of these properties.

DISCUSSION

The subject property is a four-storey, 40,165 square foot, Class “A” office building constructed in 1990 as part of a three-phase development known as the Kanata Corporate Business Park. The building is situated on a 0.8519 hectare parcel of land at the intersection of Terry Fox and Palladium Drives, in the Terry Fox Business Park of the former City of Kanata. The building provides a net leasable area of approximately 37,914 square feet. The property includes approximately 126 surface and 10 indoor parking spaces. The property is zoned M1A – 3 – Select Light, Industrial. The conveyance will be subject to existing sewer and bell telephone easements on the property and any other easements that may be required. It is also subject to a Cost Sharing Agreement between several area property owners for an internal road and ancillary utilities.

A City of Ottawa Client Service Centre, as well as part of the Ward Councillor's office, currently occupies approximately 8,000 square feet of floor space on the ground floor of this building. The Ward Councillor’s office also occupies approximately 324 square feet on the third floor. To provide continuing services to area residents, it is the City’s intent to lease back the entire ground floor of the building. This will allow the Client Service Centre to remain in its present location and will provide sufficient floor space to accommodate the relocation of the Ward Councillor’s office to the ground floor.

All City employees presently occupying the facility, other than those with the Client Service Centre, will be relocated to other City facilities as contemplated by the CAMP consolidation project.

A for sale sign was placed on the property on 15 May 2003, the day after Council approval. Fact sheets were distributed to all interested parties. The fact sheets included an asking price of $3,000,000. Several showings of the building were undertaken and expressions of interest were discussed. Prospective purchasers were given till 20 June 2003 to submit offers. Multiple offers were received and these prospective purchasers were given the opportunity to submit their final offers by 15 August 2003.

This resulted in five (5) offers being received. They are as follows:

Purchaser

R.O.I. Properties Inc.

(in trust)

Price

$3,105,000

Terms

· Deposit of $50,000 with offer;

· Additional $200,000 after Council approval;

· 45 day “due diligence period” for delivery of pertinent documents, soils investigation, building condition and environmental audit;

· Additional 20 days to arrange for suitable financing;

· City option to lease approximately 8,000 ft² at $10.00/ft² for a term of 5 years with two 5 year renewal terms;

· Closing 1 December 2004.

Westeinde Developments Ltd. (in trust)

$3,051,000

· Misc. chattels included;

· Deposit of $50,000 with offer;

· Additional $200,000 after Council approval;

· 45 day “due diligence period” for delivery of pertinent documents, soils investigation, building condition, environmental audit and to arrange suitable financing;

· City option to lease approximately 8,000 ft² at $11.75/ft² for a term of 5 years with two 5 year renewal terms;

· Closing 31 December 2004.

561121 Ontario Inc.

(in trust)

$2,910,000

· All Chattels, equipment, furniture, furnishings, fixtures and tools included;

· Deposit of $50,000 with offer;

· Additional $200,000 after waiving of all conditions;

· 35 day “due diligence period” for delivery of pertinent documents, soils investigation, building condition, etc;

· Warranties by the City concerning environmental contamination;

· City option to lease approximately 8,000 ft² at $10.50/ft² for a term of 5 years with two 5 year renewal terms;

Closing 31 December 2004.

Pergola International Holdings Corporation,

(in trust)

$2,350,000

minus real estate commission of $23,250 and GST of $164,500.

Net revenue $2,162,250

· All office furniture and fixtures included;

· Deposit of $50,000 with offer;

· Additional $200,000 upon Council approval and waiving of all conditions;

· Delivery of pertinent documents by 28 August 2003;

· Warranties by the City concerning environmental contamination;

· City option to lease approximately 8,000 ft² at $13.00/ft² for a term of 5 years with two 5 year renewal terms;

· Closing 30 November 2004.

Taggart Realty Management Inc.

$2,200,000

· All chattels excluding office furniture included;

· Deposit of $50,000 with offer;

· Additional $200,000 upon acceptance;

· 45 days “due diligence period” for the delivery of pertinent documents, performing an environmental audit and arranging suitable financing;

· Warranties by the City concerning building condition and environmental contamination;

· City option to lease approximately 8,000 ft² at $10.50/ft² for a term of 5 years with two 5 year renewal terms;

· Closing 31 December 2004.

Two (2) independent fee appraisal firms appraised the property. The recommended offer is in accordance with the market values established by the appraisals.

The recommended offer is not conditional upon a rezoning of the property.

The offers have been reviewed and it is hereby recommended that Committee and Council approve the sale to R.O.I. Properties Inc, in trust, for the amount of $3,105,000, plus GST.

ENVIRONMENTAL IMPLICATIONS

The Agreement of Purchase and Sale is conditional upon the parties undertaking satisfactory completion of environment and soil investigations.

CONSULTATION

No public consultation was undertaken. Council waived City policy pertaining to the internal and external circulation of surplus properties and authorized staff to market and sell the property immediately. A for sale sign was erected on the property 15 May 2003. Fact sheets were distributed to interested parties and several showings were undertaken. The ward councillor is aware of staff's recommendation and has not expressed any objections.

FINANCIAL IMPLICATIONS

This transaction represents revenue of $3,105,000 to the Corporation and will be credited to Internal Order 902625-509752 (CAMP fit-up and moves).

SUPPORTING DOCUMENTATION

A sketch showing the subject property is attached as Annex "A".

DISPOSITION

Corporate Services Department

- Real Estate Services Division to finalize an Agreement of Purchase and Sale

- Legal Services Branch to finalize this transaction.