Real Property Policies and Procedures

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Real Property Acquisition Policy

Approved By: City Council
Category: General Administration
Approval Date: April 3, 2007
Effective Date: April 3, 2007
Revision Date: October 29, 2019

Policy statement

The City of Ottawa acquires real property rights as required, for a municipal need consistent with City-mandated programs, projects and policies. The general direction for this Policy is outlined in Section 5.2.1.4: Acquisition and Holding of Land, of the City of Ottawa Official Plan (as amended and in force from time to time) and associated City Growth Management Plans.

Purpose

The purpose of this Policy is to ensure that a consistent and equitable framework is followed in acquiring real property interests which support Council-approved projects, programs and policies.

Application

This Policy applies where real property rights are acquired by the City of Ottawa and includes any right, interest or benefit in land, but is not limited to, fee simple acquisitions, easements, rights-of-way and other limited interests such as joint-use agreements, temporary working occupancies, consents to enter and licences.

This Policy applies to all City of Ottawa employees, any agents or assigns acting on behalf of the City and consultants authorized to acquire real property on behalf of the City. Real property such as road dedications and easements that are acquired through the planning/subdivision processes will continue to be dealt with as part of that process and in accordance with the Planning Act and any regulations therein.

In addition, the following municipal and provincial legislations provide the City of Ottawa with the authority to acquire land:

  • Municipal Act, 2001, s. 6
  • Expropriations Act, 1990
  • City of Ottawa Act, 1999, s.12.3 (1) and s.12.5 (1)
  • Housing Development Act, 1990, c. H.18, s. 17
  • Heritage Act, 1990, s. 22, 36, 37 and 45

Policy requirements

The City’s Corporate Real Estate Office (CREO) shall undertake the acquisition of real property interests in adherence with this Policy, unless otherwise directed by the City Manager or City Council.

Departmental needs assessment

Prior to initiating an acquisition, other than lands required for infrastructure, acquisition of environmental/waterfront lands and pursuant to the Planning Act, the client department will prepare on its behalf, or on behalf of a partner agency, a project charter or similar document such as a business case that sets out the justification and rationale for the proposed acquisition. All assessments shall be vetted through CREO, in collaboration with the client department to determine whether the City’s existing real property inventory, or any capital works initiatives, may fulfill the client’s requirements. This process could include an asset rationalization. Should it be determined that the client’s needs cannot be met through the existing inventory, CREO will initiate the acquisition.

Council approval

City Council approval of a capital project requiring property interests shall include authority for the appropriate person(s) or body to initiate and undertake legal surveys, appraisals, negotiations, expropriations, legal and other such related activities, as required.

A budget item must be approved for the program or project, including the costs of acquiring real property and operational budget impacts, both of which are to be provided by the client prior to CREO being engaged to acquire property.

Funding

Funding for the acquisition of real property must be identified through a Council- approved budget item, specific to the program, project or policy defining the need, or allocated from an approved departmental budget, with approval of the General Manager of the client department.

Methods of acquisition

Negotiation

Negotiation is the preferred method of obtaining real property rights. Negotiation is a process by which the City and the property owner (Vendor) reach a mutually acceptable agreement which complies with the requirements of this Policy.

Expropriation

Expropriation through the statutory process required by the Expropriations Act will be used only where a negotiated acquisition or Section 30 Agreement is not reasonably possible. The City of Ottawa has the authority to expropriate land in accordance with the provisions of the Expropriations Act, R.S.O 1990 c. E26, as amended from time to time.

Where property has been acquired by expropriation, the City shall pay compensation, including Market Value for the expropriated property interest(s) and any other statutory entitlements required by the Expropriations Act, in an amount negotiated between the City and the expropriated party and approved by Council, delegated authority or in an amount ordered by the Local Planning Appeal Tribunal (LPAT) following an arbitration pursuant to the Expropriations Act.

Where necessary, client departments shall allow for a minimum of 18 months lead time following finalization of detailed design in their project planning, in anticipation that real property acquisition by expropriation may be required.

Section 30 Agreements

Where project requirements must be met in a timely manner or where negotiation is unsuccessful or not possible, the voluntary acquisition of lands through the use of a Section 30 Agreement pursuant to the Expropriations Act may be considered.

Charitable donations

The City may acquire real property through gifts or donations, subject to Council approval, or that of its delegated authority. Before acceptance or rejection of a gift of real property; an analysis to determine the conditions of the gift, existing restrictions of encumbrances, locating a suitable client department for stewardship, assumption of liabilities or any tax implications, shall be carried out. A charitable donation receipt may be issued in the amount of the appraised market value of the donated real property. An independent appraisal shall determine the market value of any donated real property. A satisfactory Phase I Environmental Site Assessment (ESA) will be required and if warranted a Phase II ESA. Any costs associated with the above will be borne by the donor or the client department.

Development approval process

The Planning, Infrastructure and Economic Development Department deals with land requirements such as parkland, road widening through conditions of final approval for subdivisions, site plans or other development approvals under delegated authority. Where delegated authority has been removed by the Ward Councillor, such matters are submitted to either the Planning Committee or the Agriculture and Rural Affairs Committee and City Council for approval.

Land exchange

When an acquisition is contemplated in support of a City initiative and it is deemed that an exchange of City-owned surplus real property is in the best interests of the City, negotiation and compensation shall be based on the market value of the respective real properties, pursuant to the Disposal of Real Property Policy.

Public–private partnerships (P3)

As per the Public-Private Partnerships Policy and Procedures, the City may acquire or dispose of an interest in real property as part of a P3 to provide infrastructure, community facilities and related services that would benefit the municipality, the private sector and City residents.

Other agencies

The City of Ottawa may acquire real property as the result of a transfer of jurisdiction from one level of government to another, such as transfer of highways, boat launches or other uses.

Appraisal

All real property acquisitions shall be supported with a market value estimate or appraisal. Such a value estimate or appraisal will be completed by an independent real estate professional or by a qualified City staff appraiser.

Where the estimated market value is $750,000 or greater, a second appraisal will be required. At least one appraisal must be undertaken by an independent real estate professional. Appraisal reports are to be based on the estimated “Highest and Best Use” of the property and will be prepared by a qualified real estate professional or by a qualified City staff appraiser, in accordance with current standards of practice within the real estate appraisal industry.

Acquisition at market value

Real property shall be acquired on the basis of market value, unless other considerations are included in the transaction and approved by City Council or its Delegated Authority.

Where there is a variance between the appraised value and the acquisition price that variance shall be explained in an approval report.

Administrative settlements can be used where the value of the acquisition does not exceed $500.

Environmental due diligence

The City of Ottawa shall complete environmental pre-screening on all real property to be acquired to identify potential contamination issues associated with real property. The pre-screening will include a search of the Environmental Remediation Unit’s records, a Historical Land Use Inventory (HLUI) search, a review of the City’s Drawing Information Centre on GeoOttawa for any relevant historical environmental reports, and a review of available aerial photographs to evaluate development history and property use in the area.

The acquisition of the fee simple interest of an entire parcel of land, Property Identification Number (PIN), shall require a Phase I Environmental Site Assessment (ESA) unless sufficient, reliable and recent environmental information is available from the pre-screening to reasonably alleviate potential environmental liability associated with the property acquisition. The decision to waive a Phase I ESA will be authorized in writing by the Program Manager, Environmental Remediation, along with a summary of the information that was considered to support the decision.

Should the acquisition be of a lesser interest, the Program Manager, Environmental Remediation, may require a Phase 1 ESA be completed.

All such ESAs shall be completed in accordance with the Canadian Standards Association (CSA) or to the standard of Ontario Regulation 153/04, as amended, depending on the purpose of the acquisition.

First nations consultation

When acquiring or encumbering federal or provincial lands within the Algonquin Ontario Land Claim area, it is recognized that the federal and provincial governments have a duty to consult with the First Nations. Further, the federal and provincial governments cannot delegate to the purchaser the obligation to consult. As the beneficiary of a (pending) land transfer and the party at risk (if consultation is absent or inadequate), the City will monitor the consultation process.

Heritage properties

The City of Ottawa Official Plan provides the policy direction with respect to the acquisition of properties of heritage interest, through Sections 2.5.5.15 and 4.6.1.5.

Consideration will also be given to the City’s Arts and Heritage Plan, which states, “Give priority to the adaptive re-use of City-owned Heritage Buildings, to meet the City’s accommodation needs before constructing or leasing new buildings.”

When acquiring real property that may have a heritage designation or historical value, a comprehensive analysis of that property shall be conducted involving CREO and appropriate City departments. The analysis will include:

  • Identification of the heritage designation or historical value of the real property;
  • Confirmation of the City of Ottawa program(s) to be implemented at this heritage property;
  • Identification of the heritage value of the real property;
  • Identification of the desired long-term use or protection of the real property;
  • Assessment of the impact of the operational costs of the real property on the City; and
  • Development of an asset management plan, which forecasts the capital renewal and re-investment requirements, to preserve the heritage property.

Prior to the acquisition of a heritage property, CREO requires confirmation that the client department and/or City Council have provided the funding and approval for the acquisition.

Ottawa green spaces and the greenspace network

The City of Ottawa may acquire real property to ensure the sustainability of its green space values, as outlined in Section 5.2.1 of the Official Plan. Direction is provided through specific designations that currently mandate acquisition in Natural Environment Areas, Urban Natural Features and Major Open Space.

Responsibilities

City council

City Council approval is required for projects necessitating the acquisition of real property, including any limited interest therein except where the total cost of the acquisition does not exceed the threshold of delegated authority.

Delegated authority

The General Manager, Planning, Infrastructure and Economic Development, Director of Corporate Real Estate Office, Manager of Realty Services, Manager of Realty Initiatives and Development, and/or the Program Managers of CREO, by way of a Delegated Authority Approval Report and in accordance with the provisions of the Delegation of Authority By-law 2019-280, as may be amended from time to time, have the authority to approve the acquisition of real property in accordance with the provisions of that By-law.

Client department

The client department is responsible for reviewing, in collaboration with CREO through its Realty Services and Realty Initiatives and Development branches, the existing real property inventory and other acquisition initiatives, to determine if real property needs can be met through current inventory or initiatives, prior to the initiation of an acquisition. The client department is directly involved in the asset rationalization effort and confirms that the acquisition requirement satisfies its City-mandated program. The client department is responsible for carrying the Capital Budget in support of the real property acquisition and for notifying the Ward Councillor of any proposed acquisitions at the early initiation of the project process. CREO will be responsible for notifying the Ward Councillor of any pending Council-approved or Delegated Authority Reports moving forward for approval of any acquisition.

Legal services

Legal Services acts as legal counsel to departments and advises the City on real property transactions. The City Solicitor has authority to undertake all legal proceedings required to complete an acquisition transaction, including expropriation proceedings.

Monitoring/contraventions

The Corporate Real Estate Office will monitor the application of this Policy to ensure that all policy requirements are met.

References

  • Disposal of Real Property Policy
  • Public-Private Partnerships Policy
  • Public-Private Partnerships Procedures
  • CREO Leasing Policy

Legislative and administrative authorities

City of Ottawa Arts and Heritage Plan, 2003
City of Ottawa Arts, Heritage and Culture Plan, Renewed Action Plan (2013-2018)
City of Ottawa Delegation of Authority By-law 2007, Revision 2013
City of Ottawa Delegation of Authority By-law 2018-397
City of Ottawa Capital Budget
City of Ottawa 20/20 Official Plan, 2003
City of Ottawa Green space Master Plan, 2006
City of Ottawa Official Plan, as amended from time to time
City of Ottawa Real Property Disposal Policy 2007, Revision 2014
City of Ottawa Act, 1999Expropriations Act, 1990
Environmental Assessment Act, 1990
Heritage Act, 1990
Housing Development Act, 1990
Municipal Act, 2001
Municipal Tax Sales Act, 1990
Local Planning Appeal Tribunal Act, 2017
Planning Act, 1990
Municipal Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. M. 56

Definitions

Administrative Settlement – In situations where minor property rights are required, an amount paid to the property owner in excess of the appraised value.

Appraisal – the act or process of developing an opinion of value (CUSPAP 2018).

Asset Rationalization – a process to support decision-making related to the acquisition, remediation or disposal of real property, in a cost effective manner, while assuring that essential program and service delivery objectives are not compromised.

Capital Projects – have funding or budgets in place and are included in the City’s Capital Budget.

City Mandated Programs – support City of Ottawa initiatives, as reflected in the Ottawa Official Plan or Capital Program.

Client Department – a City department that is a client of CREO and requires an interest in real property for an approved program or project.

Council Approval Report – a report to Council recommending approval of an acquisition by the City of Ottawa.

Delegated Authority – authority to approve pursuant to the Delegation of Authority By-law 2018-397, as amended.

Delegated Authority Approval Report – a report to the General Manager, Planning, Infrastructure and Economic Development, Director of CREO, Manager of Realty Services, Manager of Realty Initiatives and Development, and/or the Program Managers of the CREO office, recommending the approval of an acquisition of real property in accordance with the provisions of the Delegation of Authority By-law 2018-397, as amended from time to time.

Departmental Needs Assessment – a client department’s report documenting the need for and purpose of acquiring real property.

Expropriation – acquiring real property without the consent of the owner, by an expropriating authority in the exercise of its statutory powers.

Fee Simple – An absolute ownership unencumbered by any other interest or estate subject only to the limitations imposed by governmental powers of taxation, expropriation, police power and escheat.

Market Value – the amount that land and improvements might be expected to realize, if sold in the open market by a willing seller to a willing buyer.

Property Identification Number (PIN) - Every Ontario property has been assigned a unique 9-digit electronic identification number for unique numerical indexing of legal description-based property identification.

Public–Private Partnerships (P3) – legal agreements between government and private sector entities, for the purpose of providing public infrastructure, community facilities and related municipal services.

Real Estate Professional – an individual or firm qualified to provide, in accordance with the City’s current standing offer(s), appraisal and/or real estate consulting services.

Section 30 Agreement – an agreement between the City and the owner of a property, or a legal right or interest in property, which is made pursuant to the statutory authority of section 30 of the Expropriations Act, R.S.O. 1990 c. E.26, as amended from time to time, wherein the said owner consents to the acquisition of the subject property in exchange for a payment or other consideration to the said owner, and wherein said consideration is acknowledged to be without prejudice to an application by the said owner to the Local Planning Appeal Tribunal for determination of the compensation (in whole or in part) to which the owner would be entitled by the Expropriations Act if the land had been expropriated, subject to any conditions agreed upon between the parties in the said agreement.

Inquiries
For more information on this Policy, contact:
Manager, Realty Services
Corporate Real Estate Office
Tel: 613-580-2424, ext. 21549

Disposal of Real Property Policy

Approved By: City Council
Category: General Administration
Approval Date: November 14, 2001
Effective Date: November 14, 2001
Revision Approved By: City Council
Revision Date: February 26, 2018

Policy Statement

The City of Ottawa shall dispose of Surplus Real Property in an open and transparent manner that maximizes its social, economic, environmental and cultural return to the City. 

Purpose

The purpose of this Policy is to ensure that transparent and accountable processes are followed in the Disposal of all Real Property and to ensure that returns are fair, reasonable and in the best interests of the City.

Application

This Policy applies where Real Property is disposed of by the City of Ottawa. The City’s Corporate Real Estate Office (CREO) shall undertake the Disposal of Real Property in accordance with this Policy and the Disposal of Real Property Procedures, unless waived by City Council. This Policy applies to all City of Ottawa employees, and any agents or assigns authorized to dispose of real property on behalf of the City.

Land transferred to the City through the Surplus Federal Real Property for Homelessness Initiative (SFRPHI) is exempt from this Policy.

Policy Requirements

1. General

1.1 Where Real Property is proposed to be disposed of, it shall first be determined to be viable or non-viable by the Director, CREO.

1.2 Subject to Section 1.3, real property shall be disposed of at current Market Value.

1.3 Notwithstanding Section 1.2, City Council may, unless prohibited by the Municipal Act, authorize the Disposal of Real Property at less than Market Value if, in its opinion, it is in the best interests of the City to do so.

1.4 All City-owned Real Property is a corporate asset and not an asset of any individual department. Monies received from the Disposal of any Real Property shall be deposited to the City’s Sale of Surplus Land Account, unless otherwise directed by City Council or as stipulated by the Affordable Housing Land and Funding Policy.

1.5 This Policy shall not apply to the Disposal of Real Property that is the subject of an agreement entered into by the City for the provision of municipal capital facilities pursuant to section 110 of the Municipal Act.

1.6 The Disposal of a surplus road allowance to be constructed as a future road and the Disposal of surplus road widening requirements shall be carried out in accordance with the Council-approved Policy Statements on the Disposal of Road Allowances. The Disposal of a surplus subdivision block no longer required for a future road shall be carried out in accordance with the Council approved Policy Statements on Disposal of Road Allowances. All other surplus closed road allowances shall be disposed of in the same manner as any Surplus Real Property, in accordance with this Policy.

2. Conditions for the Disposal of Real Property

Unless otherwise stated in this Policy, the following conditions must be met before the Disposal of any Viable or Non-Viable Real Property:

2.1 The real property shall be declared surplus to current or future program or operational requirements of the City.

2.2 At least one (1) Appraisal of the real property shall be obtained.

2.3 Notice of the proposed Viable Real Property Disposal shall be provided to the public to solicit offers as detailed in the Disposal of Real Property Procedures. Sole sourcing is not permitted for Viable Real Property.

2.4 Notice of the proposed Non-Viable Real Property Disposal shall be provided to the Abutting Landowners as detailed in the Disposal of Real Property Procedures.

3. Authority to Declare Surplus

3.1 All Viable Real Property shall be declared surplus by the Finance and Economic Development Committee (FEDCO).

3.2 Non-Viable Real Property shall be declared surplus by the Director, CREO provided that:

  • The Ward Councillor concurs with such declaration. 
  • An Appraisal is obtained for the Non-Viable Real Property. 
  • The Disposal of the Non-Viable Real Property is at Market Value.

4. Appraisals

4.1 At least one (1) Appraisal estimating the current Market Value of the Real Property shall be obtained. Two (2) Appraisals of the Real Property shall be obtained if the value of the Real Property exceeds one million dollars ($1,000,000). Appraisal reports shall remain confidential until the Disposal is completed.

4.2 Notwithstanding Section 4.1, the requirement to obtain an Appraisal shall not apply to the Disposal of Real Property 0.3 metres or less in width, acquired in connection with an approval or decision under the Planning Act.

5. Notice of Proposed Disposal

5.1 Prior to the Disposal of any Viable Real Property, notice of the proposed Disposal shall be provided to the public by one or more of the following methods:

  • Posting a sign on the Real Property for a period of not less than ten (10) days.
  • Posting on the City’s website.

Responsibilities

City Council approval is required for the Disposal of Real Property where the total revenue exceeds the maximum amount pursuant to the Delegation of Authority By-law, as amended.

Finance and Economic Development Committee (FEDCO) approval is required to: declare Viable Real Property surplus and to declare Non-Viable Real Property surplus when the Ward Councillor does not concur with a declaration of surplus being made by the Director, CREO.

Ward Councillor concurrence is required for the Director, CREO to declare Non-Viable Real Property surplus.

Director, CREO, with the concurrence of the ward Councillor, may declare Non-Viable Real Property surplus. The Director shall report on the exercise of this authority to FEDCO on a semi-annual basis.

Manager of the Realty Services Branch or Manager of the Realty Initiatives and Development Branch shall ensure that an Appraisal is obtained and public notice is given, in accordance with this Policy.

Legal Services is responsible for providing legal services and advice on Real Property transactions and has authority to undertake all legal proceedings required to complete a Disposal of Real Property.

Monitoring/Contraventions

CREO shall monitor the application of this Policy to ensure that all policy requirements are met.

References

Affordable Housing Land and Funding Policy

Disposal of Real Property Procedures

Housing First Policy

Legislative and Administrative Authorities

City of Ottawa Delegation of Authority By-law

City of Ottawa Official Plan

Expropriations Act

Municipal Act

Ontario Heritage Act

Planning Act

Definitions

Abutting Landowner – in the case of the disposal of a closed road or highway, an abutting owner refers to an owner of property that is immediately to the side of the road or highway, but does not include an owner whose property touches either end of the road or highway. With respect to any other real property disposal, an abutting owner is any owner whose real property touches the City’s real property.

Appraisal – a written estimate of current Market Value prepared by qualified staff of the City of Ottawa or an independent qualified appraiser.

Disposal – the sale or exchange for other Real Property of any of the City’s real property that has been declared surplus, but does not include the leasing of City-owned property or the granting of an easement or right-of-way.

Market Value – the highest price a willing buyer would pay and a willing seller would accept, both parties being fully informed, and the real property being marketed for a reasonable period of time.

Non-Viable Real Property – Real Property for which a building permit cannot be granted because either it is landlocked, or because it is of insufficient size and shape to permit development unless developed in conjunction with abutting land.Real Property – land and/or buildings and all improvements thereon.

Surplus Federal Real Property for Homelessness Initiative (SFRPHI) – a funding stream of the Homelessness Partnering Strategy (HPS), which is a community-based program aimed at preventing and reducing homelessness by providing direct support and funding to designated communities across Canada. It makes surplus federal Real Properties available to eligible recipients for projects to help prevent and reduce homelessness.

Surplus Real Property – Real Property that is not required to meet the current or future program or operational requirements of the City and that has been declared surplus by City Council or its delegated authority.Viable Real Property – Real Property for which a building permit can be granted.

Keyword Search

Appraisal
Circulation
Disposal
Environmental site assessment
Market Value
Notice Surplus

Enquiries

For more information on this Policy, contact:

Director
Corporate Real Estate Office
Corporate Services Department
110 Laurier Avenue West
Ottawa, Ontario
Tel: 613-580-2424, ext. 21217

Revision History

Revision History - Disposal of Real Property Policy

DateApprovalDescriptions of Changes

September 18, 2001TabledCorporate Services and Economic Development Committee tabled report ACS2001-CRS-RPR-0048 recommending adoption of by-law

January 23, 2002By-Law AdoptedBy-law 2002-38 establishes procedures, including the giving of notice to the public, governing the sale of real property owned by the City of Ottawa

March 28, 2012Policy & Procedure ApprovedBy-law 2002-38 repealed, replaced by Disposal of Real Property Policy and Procedures

February 26, 2018Revised Policy and ProcedurePolicy revised to remove subsection 5.2 to 5.5 as per Municipal Act update, enhance definition of Market Value as per Delegation of Authority By-law update

Disposal of Real Property Procedures

Approved By: City Council
Category: General Administration
Approval Date: November 14, 2001
Effective Date: November 14, 2001
Revision Approved By: City Council
Revision Date: February 26, 2018

Application

These Procedures apply where Real Property is disposed of by the City of Ottawa.

The City’s Corporate Real Estate Office (CREO) undertakes the Disposal of Real Property in accordance with the Disposal of Real Property Policy and these Procedures, unless otherwise directed by City Council.

These Procedures apply to all City of Ottawa employees, and any agents or assigns authorized to dispose of Real Property on behalf of the City.

Procedure Description

1. Inventory Review

The Realty Initiative and Development Branch of CREO conducts regular reviews of the City’s Real Property inventory in order to ensure that properties are inventoried, managed effectively and, where appropriate, identified as potentially surplus.

2. Sub-Search of Title

Where real property has been identified as potentially surplus, the parcel register shall be obtained from the Land Registry Office to determine if there are any legal impediments to the Disposal of the Real Property.

3. Internal and Utility Circulation

3.1 Prior to identifying real property as potentially surplus, CREO undertakes a circulation to City departments, the ward Councillor, and utility agencies to identify any requirement for the Real Property in order to ensure that the following factors are considered:

  • Identification of any City-mandated requirements that could be achieved by the use of the Real Property.
  • Co-ordination of the City’s broad corporate objectives including Strategic and Official Plans.
  • Development initiatives by the Ottawa Community Lands Development Corporation (OCLDC) that target environmental, cultural, social or economic strategic objectives.
  • That housing is a City-mandated program and as such, the Housing Services Branch of the Community and Social Services Department is given the opportunity to utilize the property for housing purposes, in accordance with the Affordable Housing Land and Funding Policy. Non-profit and co-operative housing groups within the City may be afforded the opportunity to acquire the Real Property at current Market Value.  
  • That waterfront recreational access is protected in accordance with “A Strategy to Recognize and Protect the Public Waterfront Recreational Access Function of Selected Road Allowances on the Ottawa and Rideau Rivers”.
  • That significant natural features are considered and, if required, restrictive covenants or other measures are formulated to establish appropriate protection of such natural features.
  • The Disposal of Real Property designated under Parts IV or V of the Heritage Act may be considered. CREO may include recommendations to retain an independent consultant to confirm the heritage significance of the Real Property as well as opportunities for restoration or adaptive re-use. The Local Architectural Conservation Advisory Committee is notified of any heritage property being considered for Disposal.
  • That easement requirements are identified and protected as part of the Disposal of the Real Property.

3.2 City departments shall have twenty (20) working days to provide written requirements or comments in response to an internal circulation.

3.3 Should a requirement be identified by a City department to retain the Real Property in support of a City-mandated program, the City department shall have three (3) months to demonstrate the fiscal and operational viability of the use or modification of the Real Property in support of a defined program or service delivery need and the availability of funding in that department’s Long Range Financial Plan.

3.4 Where an interest is expressed by two or more City departments or agencies to retain the Real Property, the departments or agencies shall comply with Section 3.3 and the Director of CREO shall convene an ad-hoc committee made up of representatives from each client department, chaired by CREO, to determine the best use for the property.

4. External Circulation – Viable Real Property Only

If no requirement to retain the Real Property is expressed by a City department, an external circulation is completed to allow twenty (20) working days for written expressions of interest to acquire the property. The parties to be circulated to include, but are not limited to, the federal and provincial governments, school boards and conservation authorities.

5. Expropriations Act - Former Owner’s Rights

For properties that were expropriated, Disposal shall be in accordance with the provisions of Section 42 of the Expropriations Act. Any waiver by the City of the former owner’s rights must be approved by City Council.

6. Appraisal

6.1 An Appraisal report estimating the Real Property’s current Market Value is completed in support of each Disposal, unless otherwise specified in the Disposal of Real Property Policy.

6.2 Where the estimated Market Value is one million dollars ($1,000,000) or greater, a second Appraisal report is required. In this instance, an independent Appraisal firm prepares at least one of the reports. Appraisal reports are based on the “Highest and Best Use” of the asset and are prepared by an accredited appraiser in accordance with the current Standards of the Appraisal Institute of Canada.

7. Environmental Site Assessment

CREO staff complete a review to determine whether an independent environmental site assessment is warranted prior to the Disposal of any Real Property.

8. Methods of Disposal

The Disposal method and negotiation process utilized ensures that transparent and accountable processes are followed in the Disposal of Real Property. The method of Disposal is determined based on maximizing the social, economic, environmental and cultural return to the City and takes into consideration factors such as viability, interest expressed from the external circulation, market conditions and availability of resources.

8.1 Any transfer of Real Property to the Ottawa Community Lands Development Corporation must be approved by City Council.8.2 Subject to Section 8.1, unless otherwise directed by City Council, the method of Disposal from the list below is determined by the Director, CREO:

  • Direct sales for non-viable properties, land exchanges or Disposals to government/quasi-government agencies
  • Marketing by CREO
  • Listing Agreement with licensed real estate brokers
  • Request for Offers
  • Public Auction

9. Notice of Proposed Disposal

9.1 Prior to the Disposal of any Real Property, notice of the proposed Disposal is given to the public in accordance with the Disposal of Real Property Policy.

9.2 Notice of the disposal of any Non-Viable Real Property shall be provided to any Abutting Landowner.

Monitoring/Contraventions

CREO is responsible for monitoring the application of these Procedures and ensures that the requirements of the Disposal of Real Property Policy are met.

References

Affordable Housing Land and Funding Policy

Disposal of Real Property Policy

Housing First Policy

Legislative and Administrative Authorities

A Strategy to Recognize and Protect the Public Waterfront Recreational Access Function of Selected Road Allowances on the Ottawa and Rideau Rivers

City of Ottawa Delegation of Authority By-law – 2014-435

City of Ottawa Official Plan

Expropriations Act

Municipal Act

Ontario Heritage Act

Planning Act

Policy Statements on the Disposal of Road Allowances

Definitions

Abutting Landowner – in the case of the disposal of a closed road or highway, an abutting owner refers to an owner of property that is immediately to the side of the road or highway, but does not include an owner whose property touches either end of the road or highway. With respect to any other real property disposal, an abutting owner is any owner whose real property touches the City’s real property.

Appraisal – a written estimate of current Market Value prepared by qualified staff of the City of Ottawa or an independent qualified appraiser.

Disposal – the sale or exchange for other Real Property of any of the City’s Real Property that has been declared surplus, but does not include the leasing of City-owned property or the granting of an easement or right-of-way.

Market Value – the highest price a willing buyer would pay and a willing seller would accept, both parties being fully informed, and the Real Property being marketed for a reasonable period of time.

Non-Viable Real Property – Real Property for which a building permit cannot be granted because either it is landlocked, or because it is of insufficient size and shape to permit development unless development in conjunction with abutting land.

Surplus Federal Real Property for Homelessness Initiative (SFRPHI) – a funding stream of the Homelessness Partnering Strategy (HPS), which is a community-based program aimed at preventing and reducing homelessness by providing direct support and funding to designated communities across Canada. It makes surplus federal Real Properties available to eligible recipients for projects to help prevent and reduce homelessness.

Surplus Real Property – Real Property that is not required to meet the current or future program or operational requirements of the City and that has been declared to be surplus by City Council or its delegated authority.Real Property – Land and/or buildings and all improvements thereon.

Viable Real Property – Real property for which a building permit can be obtained.

Keyword Search

Appraisal
Circulation
Disposal
Environmental site assessment
Market Value
Notice Surplus

Inquiries

For more information on these Procedures, contact:

Director
Corporate Real Estate Office
Corporate Services Department
110 Laurier Avenue West
Ottawa, Ontario
Tel: 613-580-2424 ext. 21217

Revision History

Revision History - Disposal of Real Property Procedures

DateApprovalDescriptions of Changes

September 18, 2001TabledCorporate Services and Economic Development Committee tabled report ACS2001-CRS-RPR-0048 recommending adoption of by-law

January 23, 2002By-Law AdoptedBy-law 2002-38 establishes procedures, including the giving of notice to the public, governing the sale of real property owned by the City of Ottawa

March 28, 2012Policies and Procedures approvedBy-law 2002-38 repealed, replaced by Disposal of Real Property Policy and Procedures

February 26, 2018RevisedProcedures revised to update org chart references, expand notice of proposed disposal for non-viable real property

City of Ottawa Leasing Policy

Approved by: City Council
Approval Date: July 6, 2022
Effective Date: July 6, 2022

Policy Statement:

The purpose of this Policy is to establish the framework for the approval and execution of Agreements related to the acquisition and disposal of temporary Real Property rights of the City of Ottawa (hereby known as the City) to ensure that such agreements are fair, reasonable and in the best interest of the City.

Purpose:

The purpose of this Policy is to ensure that transparent and accountable processes are followed in the acquisition and disposal of temporary Real Property rights and to ensure that costs and revenues are fair, reasonable and in the best interests of the City.

Application:

This Policy will apply to all City employees (City Client Departments) engaging in Agreements that require approval by City Council or a delegated authority. This Policy does not apply to City Client Departments allocating daily or hourly use of City owned facilities for specific events or programs.

The Corporate Real Estate Office (CREO) shall act as the corporate landowner and is responsible and accountable for applying the principles contained in this policy when entering into Agreements.

Policy Requirements:

Policy statements will be supported by a procedures manual for implementation.

Revenue Lease Agreements at Market Rent:

Unless permitted by law and authorized by Council, or as permitted under this policy, CREO, as the City’s corporate landowner, is obligated to temporarily dispose of City owned or Leased Real Property at Market Rent. This requirement is set out in Section 106 (1) of the Municipal Act, 2001.

Market Rent is the rate that a City owned Real Property would most likely command on the open market, as evidenced by current rent being paid or charged for comparable property and a similar use.

Market Rent is normally determined by one of the following methods:

  • A survey of Market Rents for comparable Real Property
  • The highest rents tendered in response to an advertisement
  • The rent contained in the best proposal rated against predetermined selection criteria
  • The fixed rent plus the percentage of gross sales revenue that is normal for the industry as determined by a survey
  • The appraised business value of the Lease
  • Any other practice that is typical of the market for a comparable Lease or
  • Alternative uses that may not be considered the highest and best market use but serve as an interim or beneficial City purpose in which a secondary market may exist (Value-In-Use e.g. vacant development land used for farming, alternative commercial uses, storage/warehouse, parking, program space).

In addition to establishing a Market Rent for Real Property, the following criteria should also be considered:

  • The treatment of Operating Costs within the established Market Rent in consideration of the Lease Structure
  • The transfer or recovery of City Operating Costs (in-kind contributions / offsets to Operating Costs or program costs that would otherwise be expenses to the City)
  • Other benefits to the City or
  • Vested Improvements.

These criteria are factors which together may affect a determination of financial offsets and adjustments to arrive at Market Rent. See Appendix A and Appendix C for additional details and considerations.

A Consent to Enter, which provides an individual/entity temporary access to City property does not require Market Rent consideration but an administrative fee and/or cost recovery and security deposit may be levied as applicable.

Revenue Lease Agreements at less than Market Rent (Community Licenses):

The concept of Market Rent may not always be appropriate in the context of delivering public services and programming that are in the public interest, and in achieving the City’s wider objectives overall. The City is entitled under Section 107 of the Municipal Act, 2001 to allow persons (including corporations), that are not manufacturing businesses or other industrial or commercial enterprises, to use/Lease City-owned Real Property at less than Market Rent if it is considered to be in the interest of the Municipality. The City may want to provide financial incentives in the form of an offset in a Community License. Such an offset may include favorable terms and conditions and/or a reduction from Market Rent, but not less than Operating Cost recovery rent.

The extent of such offsets must be justifiable to attain the desired outcome in support of the objectives and program mandates of the City or the Client Department. It is necessary to estimate and/or quantify the value of these offsets against Market Rent in accordance with this Policy. Refer to Appendix B: Guidelines for Not-for-Profit organizations and Community Licences. Appendix C provides Guidelines for transitioning below-Market Rent tenants to an Operating Cost recovery level of rent.

Revenue:

All City-owned Real Property is a corporate asset and not an asset of any individual City Client Department. Revenues from Agreements shall be directed to appropriate City Client Departments.

Municipal Taxes:

A Lease and/or License is subject to property taxes if it is occupied by an individual or organization that would otherwise be taxable, as determined by the Municipal Property Assessment Corporation, unless designated by Council as a Municipal Capital Facility. The City will provide Agreements to MPAC to determine the appropriate tax class. The City will recover the Tenant’s proportionate share of property taxes through the Lease and/or License.

Tenants with registered charitable status are responsible for paying property taxes and making application for tax rebates as applicable.

Insurance and Indemnification:

The City requires that any individual(s) or organisation(s) (Tenants) occupying City lands through an Agreement or Consent to Enter must carry insurance, including but not limited to property and General Commercial liability coverage in amounts deemed appropriate for their business and any potential damage they may cause to City Real Property. The Tenant’s certificate of insurance shall name the City as an additional insured.

Additionally, the City will require appropriate indemnification within Agreements.

Notice of Surplus Real Property Available for Lease at Market Rent:

When surplus Real Property becomes available for Lease, notice of the available space shall be provided to the public by one or more of the following methods:

  • Posting a sign on the Real Property for a period of not less than 10 days; and/or
  • Posting a notice on the City’s website for a period of not less than 10 days.

Method of Securing a Tenant at Market Rent:

The leasing and negotiation methods utilized must ensure transparent and accountable processes are followed when entering into Agreements.

CREO, along with the Client City Department, will determine the appropriate method of securing a Tenant, which may include:

  • a public call for bids via tender or proposal;
  • marketing by CREO;
  • using a realtor; or
  • negotiating directly with an existing Tenant who is in good standing with the City.

Priority:

Availability of Real Property is limited and therefore priority may be given to service groups or clubs affiliated with the City, in consultation with the appropriate City Client Department.

In considering which groups to recommend, consideration may be given to the following factors:

  • Support from a City Client Department
  • Alignment between Client Department mandate and potential client
  • Number of years in operation
  • Program area in which the group provides services
  • Scope, magnitude and type of service offered
  • An assessment of the group’s ability to operate without financial assistance from the City, both in the short and long term
  • Total costs and benefits (both pecuniary and non-pecuniary/ in-kind benefits) to the City in assisting the group and
  • The degree to which the group is or was in good standing in other Agreements with the City.

Responsibilities:

CREO:

  • Acquire leased property for a City Client Department.
  • Act as the City’s corporate landowner and as official leasing agent for occupancies of the City’s Real Property.
  • Offer City Property Rights for Lease, renew Agreements and terminate Lease Agreements when appropriate.
  • Establish factors to consider when deciding the availability of property including, without restriction, future City requirements, marketability, suitability, and appropriateness for the intended use.
  • Act as the primary point of contact for all Tenants with responsibility for Agreement administration and consult with Client Departments as required.
  • Generate and oversee the Corporate Leasing Policy and establish procedures for its implementation and administration.
  • Determine if a proposed occupation of City property should be administered as a Lease, Licence or Consent to Enter.
  • Liaise with Legal Services, Financial Services and other City Departments in the application of the Corporate Leasing Policy and procedures.
  • Negotiate Agreements and prepare reports to Council or its delegated authority recommending terms and conditions.
  • Provide Agreement templates for Client Departments to use exclusively; any changes to approved Agreement templates must be approved by CREO;
  • Enter into an Agreement whenever the City’s Real Property is occupied.
  • Administer Agreements, conduct annual reconciliation of rents/fees, and maintain records in appropriate software applications and/or in hard copy.
  • Maintain responsibility for agreements where more that one client department impacted
  • Coordinate with Revenue Services to submit Agreements to MPAC

Accommodations Branch:

  • Maintains a current listing of City facilities and ensures all required facility attributes such as “gross floor area” is entered in the Corporate SAP Real Estate Module.
  • Review the availability of City Facilities prior to entering into an Acquisition Lease.

Facility Operations Service (Recreation Cultural and Facility Services (RCFS):

  • Provides Operating Costs for City Real Property to support expense reconciliation for Agreements.
  • Provides, on an annual basis, the average Operating Cost per square foot for City-owned facilities within the RCFS portfolio. The Operating Costs will be shared with CREO and all City Client Departments to ensure that all or some portion of Operating Costs are being recovered through Agreements.

City Client Departments:

  • Secure budget and provide rationale for Acquisition Leases.
  • Monitor and provide property management support for occupancy in City facilities and provide Operating Cost information to CREO as necessary.
  • Act as a sponsoring department for Tenants requesting a Base Rent less than Market Rent.
  • Act as sponsoring department, identifying criteria to support Community Licenses and evaluate and monitor the services provided by the Tenant, as necessary.
  • Advise Accommodations Branch of space that becomes available for Lease within City facilities, which can be added to the inventory of available space.
  • Execute and administer Agreements that have a value of less than fifteen thousand dollars ($15,000) per annum provided that:
    • The Agreement template issued by CREO is used in all instances;
    • A certificate of insurance from the Tenant naming the City as an additional insured is obtained for Revenue Leases; and
    • The Agreement is completed in conformity with this Policy and a copy is forwarded to CREO for entry into SAP and for tracking.
    • The Agreement serves the City Client Department’s interest

City Council:

City Council has authority to approve all Agreements not covered by the Delegation of Authority By-law.

Delegated Authority:

The General Manager, Planning, Infrastructure and Economic Development, Director of the Corporate Real Estate Office, Manager of Realty Services, Manager of Realty Initiatives and Development, and/or the Program Managers of CREO, by way of a Delegated Authority Approval Report and in accordance with the provisions of the Delegation of Authority By-law 2020-360, as may be amended from time to time, have the authority to approve the acquisition and disposal of Real Property in accordance with the provisions of that By-law.

Legal Services:

Legal Services acts as legal counsel to City departments and advises the City on Real Property transactions, including the review and the formation of Agreements. The City Solicitor has authority to undertake all legal proceedings required for Real Property transactions.

Monitoring:

CREO has the authority to administer the application of this Policy and prepare procedures and directives to this effect.

References:

  • Disposal of Real Property Policy
  • Public-Private Partnerships Policy
  • Public-Private Partnerships Procedures
  • Corporate Accounts Receivable Policy

Legislative and Administrative Authorities:

  • Grants and Contribution Policy, effective January 1, 2011 as amended
  • Acquisitions Policy December 23, 2014
  • Delegation of Authority By-Law 2012-109, as amended
  • Admin Fee By-Law 2010-115, as amended
  • City of Ottawa Official Plan, as amended
  • The Municipal Act, Ontario, as amended
  • The Assessment Act, Ontario, 2001, as amended
  • Commercial Tenancies Act, Ontario, 1990 as amended
  • Residential Tenancies Act, Ontario, 2006, as amended
  • Planning Act, Ontario, 1990, as amended
  • Accessibility Policy, effective April 11, 2012 as amended (this refers to adherence to the AODA
  • Community Garden Network Plan
  • Municipal Tax Sales Act, 1990
  • Local Planning Appeal Tribunal Act, 2017
  • Planning Act, 1990
  • Municipal Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. M.56

Definitions:

Acquisition Lease: The Lease or Licence of property that is owned by a third party or individual and is Leased by the City for its use.

Additional Rent: An amount payable by a Tenant to a Landlord in accordance with the Lease Agreement that is in addition to Base Rent for items including, but not limited to, Operating Costs, common area maintenance, property taxes and Landlord’s building and property insurance.

Agreement: Includes acquisition and disposal of temporary Real Property rights by way of a Lease, Licence of Occupation, or Joint Use Agreement.

Base Rent: An amount payable by a Tenant to a Landlord in accordance with a Lease Agreement for the occupation of space. A Base Rent will represent the return on and of the capital asset and does not include Additional Rent.

Client Department: A City department that requires a leased space to carry out its required programming and operations or provides support to CREO in the administration and management of City leased space.

Community Licence: A Lease or Licence Agreement from the City with community organizations at below market rates that delivers services and/or programs in alignment with, or in support of, the City’s services and programs.

Consent to Enter: An agreement between two parties allowing one to have a non- exclusive right to enter the other’s property for a specific low risk use and time frame.

Delegated Authority: Authority to approve a Lease or Licence pursuant to the Delegation of Authority By-law 2020-360, as amended.

Joint Use Agreement: An agreement between two or more parties for the joint construction (if applicable), use and maintenance of a shared facility.

Gross Lease: A Lease structure whereby the Tenant pays an all-inclusive fixed rent, and the responsibility to pay Operating Costs are incurred by the Landlord. The use of this structure depends on market expectations, negotiations, the ability to delineate and quantify Operating Costs.

Lease: A contract whereby the landowner gives the right of possession to a Tenant for a specified time period in return for payment.

Lease Structure: A Lease structure can broadly be defined as a Net Lease, Semi- Gross Lease or Gross Lease, or some other variation.

Licence or Licence of Occupation: A Licence that provides use of space for operational purposes and provides the occupant with additional facility use and resources in exchange for consideration, whether Market Rent or below Market Rent (not below Operating Costs). A Licence does not grant the licensee an interest in the property, but only a limited right to use the property, is revocable at the Landlord’s discretion, and is non-transferable.

Market Rent: The rate that a property would most likely command on the open market, as evidenced by current rentals/fees being paid for comparable property for a similar use.

Net Lease: A Lease structure that is net to the Landlord, whereby the responsibility to pay Operating Costs, is incurred by the Tenant in addition to the Base Rent payments, either as direct or recoverable Operating Costs. The use of this structure depends on market expectations, negotiations, the ability to delineate and quantify Operating Costs.

Operating Costs: Costs and/or pro-rated costs (non-capital related) associated with the day-to-day maintenance and operations of a property, which may include:

  • Utilities: electricity, water, sewer, natural or propane gas, telephone;
  • Repair and maintenance: heating, ventilation, air conditioning, electrical, structural, roof, plumbing, fire, life and safety systems, painting, decorating, drywall, flooring, other maintenance;
  • Cleaning: janitorial, materials, garbage and waste removal;
  • Roads and grounds: maintenance, repair landscaping;
  • Security: wages or contract fees;
  • Taxes, licences and licence fees and insurance; and
  • Administrative costs: supplies, wages, salaries and overhead.

Real Property: The physical land, building, structures, water lots or any portions thereof plus any rights associated with ownership of the property.

Revenue Lease: The Lease or Licence of Real Property owned by the City to a third party or individual. In this case, the City acts as a Landlord.

Semi-Gross Lease: A Lease structure that is a blend of a Net and Gross Lease, whereby the Landlord and Tenant share in the payment of Operating Costs. The use of this structure depends on market expectations, negotiations, the ability to delineate and quantify Operating Costs.

Tenant: A holder of Real Property under a Lease or other Agreement with the right of possession.

Tenant Improvements: Improvements to a leased space that benefit only the Tenant and its uses, such as floor coverings, interior painting, interior partitions and doors, window coverings, stages, seating, fixtures, etc.

Enquiries:

For more information on this Policy, contact: Manager, Realty Initiatives and Development Corporate Real Estate Office

Appendix A
Leasing at Market Value (Revenue Leases) – Additional Considerations

Environment:

The proposed Tenant will assume responsibility for carrying out remediation of contaminated sites. In cases where contamination is a consideration, an adjustment to Market Rent could be made to offset the environmental cleanup and monitoring costs. To this end, the valuation will include an estimate of market value for the site as if clean, with adjustments to the rental rate to reflect the cost of remediation if it is assumed by the Tenant.

Transfer of City of Ottawa Expenses:

The Tenant should generally assume Operating Costs for their leased space. However, in certain cases, the nature and characteristics of a property may cause it to have higher Operating Costs than other similar properties, making that property less attractive to a prospective Tenant. In such a case, the City may consider leasing the space at a below Market Rent in order to secure a tenant for that space who will, in turn, absorb the Operating Costs. Lease rates below market rate but above operating costs can be facilitated with justification by the client department.

Other Benefits to the City of Ottawa:

An Agreement may contain Tenant obligations which exceed what could be considered as normal in the market when compared to similar competing properties. These additional obligations (that portion of the commitment which is beyond what could be considered as normal in the market) may be allowing the City to meet a wider mandate and may represent a net financial and program benefit to the City. As such, the City may be justified in leasing the property at a less than Market Rent to attract prospective Tenants to the property.

Retail or Commercial:

One Tenant’s overall impact on the balance of a multi-tenant Real Property can cause Market Rents to vary between, for example, anchor Tenants, public program delivery partners as Tenants, and other Tenants who may provide a retail or service mix that is expected to provide an overall advantage by paying full Market Rent. Therefore, distinct Market Rents for different Tenants occupying the same location can occur depending on the Tenant’s contribution to the whole.

Vested Improvements:

Tenant improvements may have a positive, neutral, or negative effect on market value or Market Rent, e.g. improvements that enhance the use of the property will increase

the property’s value for rent; improvements that are removed at the end of the Lease, restoring the property to its original condition will have no effect on the sale or rental value; and improvements that detract from the highest and best use of the property will decrease the property’s rental value.

Appendix B
Guidelines for Not-for-Profit and Community Lease Agreements (Community Licences)

Statement of Intent:

The purpose of these Guidelines is to formalize a process for providing less than Market Rent for a Community License of City-owned Real Property to qualified not-for-profit and community organizations.

Guiding Principles:

  • The City is responsible to hold public lands in trust and ensure public accessibility.
  • The City has an obligation to its taxpayers to prudently manage its land holdings.
  • The City acknowledges a need to provide qualified community organizations with agreements at less than Market Rent.
  • The organization’s ability to provide certain services not being provided by the City and the benefits of the programs and services improve the quality of life for the citizens of Ottawa.
  • Qualified organizations must meet the requirements of Section 107 of the Municipal Act. An adjustment to the Market Rent rate could be made to offset the environmental cleanup and monitoring costs in order to benefit from below Market Rent. The benefit(s) to the City may include:
    • The provision of services and programming that would otherwise be an expense to the City or not be provided.
    • Maintaining or increasing the asset value of the property occupied through upkeep, maintenance and capital improvements, which are quantifiable and demonstrated by the community organization.

Restrictions on Property Availability:

  • Client Departments, in consultation with CREO have the authority to determine the availability of properties for Community Licences.
  • Factors determining the availability of property include, without restriction, future City requirements, marketability, suitability, and appropriateness for the intended use.

General Terms and Conditions for Community Licenses:

  • Community organizations are responsible for payment of all Operating Costs attributable to their licenced space, either directly or as Additional Rent.
  • Licences with Operating Costs billed by the City as Additional Rent may have those costs reviewed annually. Operating Costs may be adjusted as required to account for inflation or other increases in costs.
  • Unless exempted, community organizations shall be subject to property assessment and taxation for the licenced space, if applicable
  • The community organization must be in good standing and not be in default of any provision of their current Community License with the City to qualify and be considered for a below Market Rent Licence.
  • Community Licences will not allow for a change in use, assignment, or sub-letting without the consent of CREO and the Client Departments.
  • The City Client Departments will provide a list of approved Community Licences on a quarterly basis to CREO, including documentation supporting their selection and applicable certificates of insurance.

These Guidelines are subject to:

    • All City approved policies, procedures, and bylaws,
    • All applicable federal and provincial statutes and regulations

 

Appendix C
Transition to Operating Cost Recovery

The City must recover City Operating Costs from the Tenants of City Real Property, including all Agreements.

CREO has worked in partnership with RCFS staff to derive a method for the recovery of City facility Operating Costs. Where City facilities can be categorized as complex facilities or stand-alone facilities, Operating Cost recovery shall be established in the following manner:

Complex facilities (i.e. recreation centres with pools, ice pads; multiple tenants etc.):

These facilities may have elevated Operating Costs as a result of other activities or services that may not be a fair representation of the Operating Cost associated with the Tenant’s occupancy or common use of the facility. RCFS staff will provide at the beginning of each year an appropriate unit cost per square foot, representing the average Operating Costs pertaining to reasonable costs associated with the Tenant’s occupancy or common use of the complex facility. This would not include realty taxes which may be applicable to the Tenant if deemed taxable. Taxes will be recoverable directly from the Tenant.

The REA applies the established average unit cost to the rentable area of the tenanted space to calculate the annual recovery (which may include the Tenant’s proportionate shared use of certain common areas). Operating Costs will increase at the rate of inflation over the term of the agreement. At renewals or new leases, the REA will request an up-to-date unit cost recovery.

Stand alone facilities (non-complex)

This may include facilities such as community centres, rural offices, other facilities where expenses can be quantified or divisible. RCFS staff will provide an annual Operating Cost estimate per square foot for the particular facility. The REA will apply the provided unit cost to the rentable area of the tenanted space to calculate the annual recovery (which may include the tenants proportionate shared use of certain common areas). Operating Costs will increase at the rate of inflation over the term of the agreement. At renewals or new leases, the REA will request an up- to-date unit cost recovery.

Exception: If at all possible, trackable/metered expenses pertaining directly to the tenanted space will be paid directly by the Tenant and deducted from any recoverable cost estimates.

Considerations:

Operating Cost recovery will affect many of the City’s long-standing Tenants of City facilities who have exclusive-use Community Licenses. There may be some concern from groups who have benefited from access to their spaces at below Market Rents and Operating Cost recovery rates.

To aid in the transition to Operating Cost recovery, as these existing Leases and Licences are renewed, the initial rent to be paid will not immediately increase to full Operating Cost recovery. Instead, this directive will be phased in over a period of three to five years following the adoption of this Policy or Q1 of 2023, whichever is the latter. Alternatively, Tenants may benefit from a Base Rent freeze for the first three-year period. In order to benefit from the Base Rent freeze, City Client Departments sponsoring community groups must provide a rationale and have a sign-off from its General Manager.