6. 3259 Carling Avenue – nepean
sailing club - REVENUE LEASE
RENEWAL 3259, avenue
carling – nepean sailing club – renouvellement du bail
COMMITTEE
RECOMMENDATION
That Council approve the Lease between the Nepean Sailing Club and the City of Ottawa for the property municipally known as 3259 Carling Avenue for a term of fourteen (14) years and six (6) months commencing on 1 January 2009 and ending 30 June 2023.
RECOMMANDATION DU
COMITÉ
Que le Conseil approuve le bail
entre le Nepean Sailing Club et la Ville d’Ottawa en ce qui concerne la
propriété dont la désignation est le 325, avenue Carling pour une période de
quatorze (14) années et six (6) mois, débutant le 1er janvier 2009
et se terminant le 30 juin 2023.
DOCUMENTATION
1. City Manager’s report dated 4 May 2010
(ACS2010-CMR-REP-0005).
2. Extract
of Draft Minute, 4 May 2010.
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
Submitted by/Soumis par : Kent Kirkpatrick, City
Manager/Directeur des services municipaux
Contact Person/Personne ressource : Gordon MacNair, Director
Real
Estate Partnerships and Development Office/Directeur, Partenariats et
Développement en
immobilier
(613)
580-2424 x21217, Gordon.MacNair@ottawa.ca
SUBJECT:
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3259
Carling Avenue – nepean sailing club - REVENUE LEASE RENEWAL |
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OBJET :
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3259, avenue carling – nepean sailing club – renouvellement du bail |
That the Corporate Services and Economic Development Committee recommend that Council approve the Lease between the Nepean Sailing Club and the City of Ottawa for the property municipally known as 3259 Carling Avenue for a term of fourteen (14) years and six (6) months commencing on 1 January 2009 and ending 30 June 2023.
Que le Comité des services organisationnels et
du développement économique recommande au Conseil d'approuver le bail entre le
Nepean Sailing Club et la Ville d’Ottawa en ce qui concerne la propriété dont
la désignation est le 325, avenue Carling pour une période de quatorze (14)
années et six (6) mois, débutant le 1er janvier 2009 et se terminant
le 30 juin 2023.
The original lease agreement evolved from a request made by the
Nepean Sailing Club (NSC) to the former City of Nepean’s Park Planning and
Development Department to permit NSC to have exclusive use of the harbour and grounds
as well as to occupy a new building. Discussion between the parties resulted in
the use of lands and the water lot, as well as the construction of a new
pavilion, which is used by NSC with accessibility and use by the general
public.
As a result of those discussions, in April 1990, the Nepean
Sailing Club (the “NSC”) entered into a lease agreement (the “Original Lease”)
with the former City of Nepean, now the City of Ottawa, to occupy the property
municipally known as 3259 Carling Avenue (the “Property”) in order to operate a
sailing club (the “Club”).
The original lease term was for 15 years with three consecutive
options to renew for five years each.
The initial term ended on 1 April 2005. The Club had the option to renew
the lease for another three consecutive five-year terms to expire in 2020, on
the same terms and conditions, except for the rental rate.
The parties have been negotiating a lease renewal in good faith
for the past five years. Discussions
resulted in a significant difference of opinion with regard to the property’s
rental value as well as the general relationship between the City as Landlord
and the NSC as Tenant, and the commercial terms to be included in the lease
renewal.
The original lease was ambiguous on many points and required
constant review and interpretation, creating lease and financial management
issues for both parties.
After many months of extensive negotiation by City staff, the
parties were unable to reach a consensus on the main issue of a rental value
and the commercial terms of the lease renewal. As a result, in May 2008, the
arbitration clause within the original lease was invoked. Prior to the arbitration hearing, the parties
agreed to attend mediation to have a neutral third party assist in reaching
a consensus on a fair rental value.
A full day of mediation took place in February 2009 and was
successful in bringing the parties to an agreement on the issue of the
property’s rental value. Negotiations continued with the City and NSC with respect
to the remaining management issues and a new lease template was drafted under a
standard City template.
The NSC is currently paying an annual rent of $63,424 plus GST. The
City and the NSC have a separate Loan Agreement (for repayment of funds to the
City in relation to the dock infrastructure).
The term of the Loan Agreement expires in 2023. The new lease will
extend the term to 30 June 2023 so that the end date of the lease is consistent
with the end date of the Loan Agreement.
The new lease is for a term of fourteen (14) years and six (6)
months, to be computed retroactively from 1 January 2009 to 30 June 2023. The
annual net rental amounts are as
follows:
-
2009 - $85,000.00 plus GST;
-
2010 - $110,000.00 plus GST/HST as
applicable;
-
2011 - $130,000.00 plus HST;
-
2012
- $130,000.00 with annual CPI increase plus HST;
-
2013-2023
– annual CPI increase to previous year’s rent plus HST.
The
original agreement did not address NSC’s request for use of the adjacent
grounds. As a result, it was necessary to create a new License of Occupation to
recognize NSC’s use of approximately six acres of land used for boat storage
and a youth sailing building. The License is for one ($1) dollar recognizing
the Municipal Capital Facility status in place on the property.
To fulfill
the last element of the NSC’s original request, the former City of Nepean
entered into a Lease Agreement with the Crown for the use of the water lot. The
City has assigned the current rights under the agreement with the Crown to NSC
in order to occupy the water lot for mooring purposes. Rent for the water lot
rights is set at 20% of gross revenue generated by the use of the Club.
There
are no environmental implications to implementing the recommendations in this
report.
There
are no rural implications to implementing the recommendations in this report.
Realty
Services Branch has worked with Legal Services; Parks and Recreation; and the
Parks, Buildings, and Grounds Operations and Maintenance Branch.
COMMENTS
BY WARD COUNCILLOR
The Ward Councillor has received the staff report and supports the recommendation.
For the reasons set out below, there are no legal/risk management impediments to implementing any of the recommendations of this report.
This
report supports the key City Strategic Plan Sustainable, Healthy and Active
City Priority; and its objectives for the use of City recreation facilities to
deliver quality programs and services to enhance the quality of life for
citizens and encourage active and healthy lifestyles.
There
are no technical implications to implementing the recommendations in this
report.
The
revenue from this Lease will be deposited to Dick Bell Sailing Park Account
#153173.
N/A
DISPOSITION
Following Council’s approval the Real Estate Partnerships and Development Office and Legal Services Branch will finalize the Agreement.
3259 Carling Avenue – nepean sailing club - REVENUE
LEASE RENEWAL
3259, avenue carling
– nepean sailing club – renouvellement du bail
Chris Jalkotzy, Britannia Yacht Club (BYC), spoke to a written submission that is held on file with the City Clerk. He elaborated that this agreement was important in the sense that the City had been having difficulty crafting a policy for non-profit and recreational clubs in the National Capital area, in particular, Ottawa. Being one of those clubs, they would like to see this policy being advanced and noted that this lease with Nepean was a great starting point for this to happen.
Mr. Jalkotzy highlighted that sailing and recreation is an important part both in business and the economic climate for the National Capital area and noted that sailing in Ottawa is one of the best in the world. BYC is hoping to assist in putting this policy in place in conjunction with Nepean and other clubs within the Ottawa area. He provided documentation relating to the City of Calgary’s Parks and Recreation guide, which offers a sailing program. He would like that the City include the same type of program in the City of Ottawa’ Parks and Recreational guide in order to give an opportunity to youth to participate in the sport that is healthy and environmentally friendly.
Peter Bradley, Nepean Sailing Club (NSC), explained that the club, established over 30 years ago, is a non-profit organization with over 1,700 members. NSC provides active race and social programs, and a large training program. The club signed their first lease with the former City of Nepean in 1990, which ran for 15 years with three renewals. The only issue, which lasted six years, has been the rate of rent. The outcome of that process is outlined in the staff report, and although not in total agreement, this resolution is something NSC agreed to and can live with.
That the Corporate Services and Economic Development Committee recommend that Council approve the Lease between the Nepean Sailing Club and the City of Ottawa for the property municipally known as 3259 Carling Avenue for a term of fourteen (14) years and six (6) months commencing on 1 January 2009 and ending 30 June 2023.
CARRIED