Report to/Rapport au :

 

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

 

and / et

 

Health, Recreation and Social Services Committee

Comité de la santé, des loisirs et des services sociaux

 

and Council / et au Conseil

 

2 September 2003 / le 2 septembre 2003

 

Submitted by/Soumis par : Steve Kanellakos, Acting City Manager/

Intérimaire directeur général des services municipaux,

City Manager's Office/Bureau du directeur des services municipaux

and / et

Jocelyne St Jean, General Manager/Directrice générale,

People Services/Services aux citoyens 

 

Contact Persons/Personnes ressource : Réjean Chartrand, Director

Strategic Delivery Unit/ Directeur, Unité d’exécution stratégique

(613) 580-2424 ext./ poste 21696, Rejean.Chartrand@ottawa.ca

and Colleen Hendrick, Director, Innovation, Development and Partnerships/ Directrice de l’Innovation, development, et partenariat,

(613 )724-4122, ext./ poste 24366, Colleen.Hendrick@ottawa.ca

 

Ref N°: ACS2003-CMR-OCM-0012

 

 

SUBJECT:

PUBLIC PRIVATE PARTNERSHIP- DOMED /

INDOOR PLAYING FACILITY

 

 

OBJET :

PARTENARIATS ENTRE LES SECTEURS PUBLIC ET PRIVÉ - INSTALLATION DE JEU INTÉRIEURE À DÔME

 

 

REPORT RECOMMENDATIONS

 

That the Corporate Services and Economic Development Committee and the Health, Recreation and Social Services Committee recommend Council:

 

1. Authorize the General Manager of the People Services Department to finalize the negotiations and conclude and execute all necessary agreements with Thunderbird Management Services Inc. (TMSI) for the provision of a domed playing facility at Hornet’s Nest in accordance with the proposal submitted by TMSI as amended through negotiations, the terms and conditions of the Request for Proposal, and the framework contained in this report;

 

2. Designate 1660 Bearbrook Road, a City-owned property – “Hornet’s Nest” - as a Municipal Capital Facility as permitted under section 110 of the Municipal Act and  Ontario Regulation 46/94 and that this designation be implemented by way of an Agreement, as set out in recommendation 1, between the City and TMSI, and by presenting to Council for enactment a by-law in accordance with the requirements of the Municipal Act and this report;

 

3. Declare that the Municipal Capital Facility at 1660 Bearbrook Road is for the purposes of the municipality and is for public use;

 

4. Establish a capital project in the amount of $1.1M for site preparation, installation of artificial turf, power upgrading, parking lot improvements, and the extension of municipal water and sewer services to the Hornet’s Nest site;

 

5. Approve $1.1M in new debenture authority to finance the capital expenditures; and

 

6. Approve the repayment by TMSI of this investment over a 25-year period in accordance with the rental arrangement contained in this report.

 

RECOMMENDATIONS DU RAPPORT

 

Que le Comité des services organisationnels et du développement économique et le Comité de la santé, des loisirs et des services sociaux recommandent au Conseil municipal de :

 

1. Autoriser le directeur général des Services aux citoyens à achever les négociations et à conclure et signer tous les accords jugés pertinents avec la Thunderbird Management Services Inc. (TMSI) en vue de la construction, à Hornet’s Nest, d’une installation de jeu intérieure à dôme conformément à la proposition soumise par la TMSI et aux modifications qui y ont été apportées dans le cours des négociations, aux modalités et conditions énoncées dans la demande de propositions et au cadre de travail défini dans le présent rapport.

 

2. Désigner le 1660 du chemin Bearbrook, une propriété municipale – « Hornet’s Nest » -  à titre d’immobilisation municipale à usage public de la Ville en vertu de l’article 110 de la Loi sur les municipalités et  le règlement 46/94 de l’Ontario et veiller à ce que cette désignation soit établie, dans le cadre d’un accord, selon la recommendation 1, entre la Ville et la TMSI, et par l’intermédiaire d’un règlement soumis pour promulgation au Conseil municipal conformément aux dispositions de la Loi sur les municipalités et aux exigences énoncées dans le présent rapport.

 

3. Déclarer que le 1660 du chemin Bearbrook constitue une immobilisation municipale à usage public de la Ville.

 

4. Élaborer un projet d’immobilisations, au montant de 1,1 million de dollars, intégrant la préparation de l’emplacement, l’installation de gazon synthétique, la mise à niveau du réseau de distribution d’énergie électrique, l’amélioration des aires de stationnement et l’allongement du réseau municipal d’aqueduc et d’égout jusqu'à l’emplacement de Hornet’s Nest.

 

5. Autoriser l’émission de nouvelles obligations pour le financement des dépenses en immobilisations de 1,1 million de dollars.

 

6. Approuver le remboursement par la TMSI sur une période de vingt-cinq ans, suivant l’entente de location figurant dans le présent rapport, de l’investisssement de 1,1 million de dollars effectué par la Ville.

 

 

BACKGROUND

 

In October 2002 City Council approved that a number of projects be implemented on a priority basis under public-private partnerships (P3s), including the provision of domed indoor playing facilities.

 

A Request for Proposal (RFP) for Domed/ Indoor Playing Facilities was issued by the Supply Management Division on 4 April 2003 and was advertised on MERX.  The RFP invited respondents to submit proposals for the construction and operation of an air supported seasonal domed playing facility on two City locations – Hornet’s Nest on Bearbrook Road and Minto Field at the Nepean Sportsplex. The RFP closed on 8 May 2003 and two proposals were received. 

 

In order to assess incoming proposals, an evaluation team was established including representatives from the People Services Department, RPAM, Development Services, the Strategic Delivery Unit, and an external representative. 

 

After evaluating the two proposals, it was deemed that both proposals were non-responsive to the City’s requirements as defined in the RFP and the RFP process came to an end.  Discussions were held internally leading to the decision that the City would consider a year round structure subject to the project being implemented at no net cost to the City.  The two respondents were invited to resubmit proposals based on these parameters.  Proposals were received from both respondents at the end of June 2003.

 

Limited interest was expressed in the development of the Minto Field due the very short operating season, and as a result the City decided to proceed only with development at Hornet’s Nest.

 

Based on established evaluation criteria, the evaluation committee recommended that Thunderbird Management Services Inc. (TMSI) be selected as the preferred respondent and that staff be authorized to initiate negotiations with TMSI to develop a partnership for the provision of a domed facility.  Corporate Services and Economic Development Committee approval was received on 26 August 2003.

 

This report forms the next step in the P3 process in that it outlines the negotiated framework for an agreement between the City and TMSI.  This report recommends the partnership agreement with TMSI be finalized and executed based on this framework.

 

 

DISCUSSION

 

Given the significant growth in the east district of the City and the corresponding demand for recreational services, TMSI is proposing the following plans for the Hornet’s Nest site:

 

·      Provision of a state of the art, year round, air supported playing facility on field #12 at Hornet’s Nest for a variety of recreational uses

·      Provision of a seasonal tunnel to the existing field house at Hornet’s Nest during winter months

·      Improvements to change room and washroom facilities through an expansion of the existing field house

·      Improvements to parking lot, including enhanced lighting

·      Replacement of natural turf to artificial field turf

·      Extension of municipal services (water and sanitary) along Bearbrook Road to service the site

 

The provision of a domed playing facility, the conversion to artificial turf, and the extension of municipal services form part of the proposed partnership agreement between the City and TMSI.  The major terms of this agreement have been negotiated and are as follows:

 

Design and Construction

 

TMSI will be responsible for the design and construction of the whole project including the provision of an air supported structure (estimated at $1.5M), extension of municipal services, addition to the field house, and improvements to the parking area (estimated at $1.1M).  The quality of work and final costs will be certified by a professional engineer, and will be executed to the satisfaction of the City.

 

The Hornet’s Nest site is currently City owned land, and will remain as such during the term of the agreement.  TMSI will operate under a Municipal Capital Facilities Agreement with the City for a period of 25 years, with a possible five-year extension at the end of the term.  This is described in further detail below under Financial Framework.

 

Operations and Services

 

TMSI will be solely responsible for the management and operations of the dome, including the development, marketing, and delivery of programs.  TMSI will also have discretion to set and collect user fees according to market rates.

 

The City will not be purchasing blocks of time at the facility; users will purchase directly from TMSI at market rates.

 

TMSI will be responsible for the maintenance of the air-supported structure.  The City will provide winter operations for the parking lot and the fire route.

 

Financial Framework

 

Upon finalization of negotiations, TMSI and the City will enter into a 25 year agreement for the provision of a year round air supported playing structure at Hornet’s Nest.  At the end of the term, the dome will transfer to the City for a nominal fee, and at that time the City may require TMSI to dismantle and remove the dome at TMSI’s cost.

 

TMSI will invest approximately $1.5M to purchase and erect a year round air-supported dome, and a seasonal link to the existing field house.  TMSI will also undertake the future expansion of the field house.

 

The City will advance the capital financing required to prepare the site, install the artificial turf, upgrade the power and improve the parking lot, and extend municipal services to the site.  These capital investments result in a total estimated cost of $1.1M.

 

In order to repay the $1.1M capital investment made by the City, TMSI will pay an annual rent. The rent will be $55K for the first three years of operation, and approximately $94K during subsequent years of operation (based on a 6% cost of borrowing).  The rent will be based on actual construction costs, and will be paid monthly.

 

Contingent on the condition of the original turf, the City will pay the full replacement cost of the turf at the end of its lifecycle, which is anticipated to occur in approximately year 12 of the agreement.  This investment is estimated at $360K in 2003 dollars.

 

Municipal Capital Facilities Agreement

 

Under section 110 of the Municipal Act, a municipality is permitted to enter into a Municipal Capital Facilities Agreement where the facility is established for the purposes of the municipality or for public use.

 

In order to provide property tax relief for the site, and exemption from applicable municipal fees and charges, the City and TMSI will enter into a Municipal Capital Facilities Agreement.  This will exempt the facility from both the municipal and education portions of the property tax, as well as building permit fees and development charges.

 

The value of these exemptions as a result of a Municipal Capital Facilities Agreement with TMSI is discussed below under Financial Implications.

 

Agreement Between TMSI and Gloucester Soccer Association (GSA)

 

As a precondition to this agreement, TMSI will enter into a written agreement with the GSA for the use of the existing field house, use of the field at preferred rates, and for the provision of food and beverage services.  The agreement will also contain a dispute resolution mechanism.

 

Staff will review the agreement between TMSI and GSA to ensure that the terms of the agreement are acceptable to the City.

 

 

 

 

Risk Distribution

 

Under this P3 project, TMSI assumes the design and construction risk for the provision of an air supported playing structure at Hornet’s Nest.  TMSI is also responsible for the performance and revenue risk associated with the operation and management of the facility.

 

The City is responsible for $1.1M in capital investments to prepare the site for the year round air-supported structure.  The City’s risk is associated with the ability of TMSI to pay the annual rent to offset the City’s capital investment.

 

Since the City’s investment pertains to the extension of municipal services to the site, the improvement to the parking lot and the installation of artificial field turf, all of which would remain with the City in the case of default, the City’s risk associated with this partnership agreement is minimal, and will result in significant benefits to the community.

 

P3 Benefits to the Community

 

As a result of this P3 project, benefits accrue to the community through increased programming and services, and the addition of much needed space for indoor recreational purposes.  There are currently no indoor air supported structures within the east end of the City to facilitate indoor soccer, golf, ultimate frisbee or similar activities during the winter months.  This facility will act in this capacity to serve the east district, as well as residents throughout the City.

 

 

RURAL IMPLICATIONS

 

The facility will be available to users from across the City, including rural residents who will have access to the new facility.

 

 

CONSULTATION

 

On 25 August 2003 a public meeting was held at the Blackburn Community Hall on Glen Park Drive to discuss the possibility of a year round air supported playing structure at Hornet’s Nest with the community.  Feedback was very positive, as residents expressed concern over the lack of such facilities in the east end of the City.

 

 

FINANCIAL IMPLICATIONS

 

The City will finance the servicing of the site and the installation of the artificial field turf, valued at $1.1M, which will be fully recovered over the term of the agreement through annual rental payments from TMSI. 

 

In approximately 12 years, the City will be responsible for the replacement of the artificial turf within the facility, at an estimated cost of $360K (2003 dollars). This commitment will be tracked under our debt authority reporting and will be funded at the appropriate time, as per the conditions of the agreement.

 

Under the Municipal Capital Facilities Agreement, the City will forgo revenues from property taxes, development charges, and building permit fees that would be charged to the site.  At a commercial tax rate, the property taxes for this facility are estimated at $42,341 annually.  The development charges to be waived are estimated at $350K.  The building permit fee to be waived is estimated at $16.5K.

 

 

SUPPORTING DOCUMENTATION

 

No supporting documentation attached.

 

 

DISPOSITION

 

The Strategic Delivery Unit and the People Services Department, in consultation with the Legal Services Branch, will immediately finalize and arrange for execution of the necessary agreements to implement this public-private partnership with TMSI.