Report to/Rapport au :
04 March 2011 / le 04 mars 2011
Submitted by/Soumis par : Nancy Schepers, Deputy City Manager, Directrice municipale adjointe, Infrastructure Services and Community Sustainability, Services d'infrastructure et Viabilité des collectivités
Contact Person/Personne ressource : John L. Moser, General Manager/Directeur général, Planning and Growth Management/Urbanisme et Gestion de la croissance
(613) 580-2424 x 28869, John.Moser@ottawa.ca
REPORT RECOMMENDATION
That Council receive this report for information.
RECOMMANDATION DU RAPPORT
Que le Conseil prenne connaissance du présent rapport.
BACKGROUND
On November 16 2010, Planning Committee recommended City Council approve a rezoning request for the property located at 90 and 114 Richmond Road and 380 Leighton Terrace, which would allow a mixed-use development on the property and the adaptive reuse of the existing convent on the site. As part of the rezoning approval, Planning Committee passed the following provisions relating to the possible acquisition of land by the community through a special levy. The imposition of a special levy for the purchasing of parkland is something that the City has never done before. The lands are approximately 80 344 square feet in area and can be seen in Document 1 as outlined by a thick black line. These provisions are presented below and were carried by City Council on November 19, 2010.
1. That the zoning be amended to provide the following conditions to the holding zone:
a. No development shall be permitted on the lands outlined in black on Document 1 (Map A), until Council has considered a report to impose a special rate to permit the acquisition of such land, less land taken as parkland under the Planning Act, section 42;
b. If Council has not approved the acquisition of the lands outlined in black , less lands to be acquired under section 42, and a special rate to permit the acquisition by 31 March 2011 this provision will be deemed to be void and of no effect;
c. If Council has approved the acquisition of the lands outlined in black, less lands to be acquired under section 42, and the special rate by 31 March 2011, this provision shall remain in effect until 31 March 2014;
2. The determination of the special rate take into account the possibility of using funds from amounts contributed in Kitchissippi Ward to cash-in-lieu of Parkland, other than funds directed towards City Wide purposes.
3. The City take Parkland, and not cash-in-lieu of parkland, in respect of this development and that such parkland be adjacent to the Byron Linear Strip.
Following the adoption of the above recommendations, Real Estate and Partnerships Development Office, and Legal Services staff have worked with the assistance of outside appraisers, the Altus Group, to establish an estimated value of the lands proposed to be acquired pursuant to the recommendations. Using these estimations, staff in Financial Services has provided an estimated cost calculation for a special rate. Staff in Planning and Growth Management have liaised with internal staff and the Councillor and have supported her, along with the other Departments, in her public consultations on this matter.
To aid Council in its decision, this report will provide information related to the valuation of the lands and special rate scenarios. Public consultations in the Ward are to be completed after the release of this report. A summary of the consultations will be issued separately.
DISCUSSION
Property acquisition
Site context
When determining the value of the property, this is done so in terms of its optimum or highest and best use. The optimum use estimate is a critical element in the valuation process, as the highest value may not always be reflected in the existing use. The following valuation is predicated upon the highest and best use of the entire lands subject to development, as determined by the proposed zoning in support of the mixed use development proposed by the property Owner. The entire parcel of land is approximately 5.46 acres in size. It is primarily rectangular in shape and has frontage on Richmond Road, Leighton Terrace, Byron Avenue and Shannon Street. The site was purchased by the current Owner between October 2009 and February 2010 as an assembly of three properties, at a total cost of $14,025,000.
In making a determination of the value of the land to be acquired, the Altus Group is of the opinion that this acquisition would not only eliminate the units planned for the area identified in the Council motion but it would also deny the property Owner the ability to develop the development concept originally proposed for the site. This determination is based upon the fact that the remainder lands (excluding the Richmond Road component to the north of the convent) would not be sufficient to provide the development envisioned by the property owner. In addition, the remaining land would no longer have a southern access point nor would there be room for surface access from the northern portion, due to the location of the Convent structure. The Altus Group’s conclusion was that the entire southern development plan would no longer be feasible, resulting in a sterilization of the southern site area.
The Altus Group also identified a series of consequences that would result from the possible community land acquisition. As the potential purchase of the irregular southeast half of the site eliminates developable area, this land cannot be used in the calculation parkland dedication, so the overall parkland provided is reduced. Therefore, an additional cost would be incurred to acquire that portion of the land that could no longer be taken as parkland, if the lot were larger. Furthermore, the possible acquisition would eliminate an area for underground parking, necessitating an increase in the costs associated with the underground parking garage for the mixed-use building north of the convent. With the possible acquisition of the land an additional level of below grade parking would be required under this mixed-use building.
Valuation
The independent appraisal report concluded the financial cost based upon the direct loss of land and the resulting indirect loss of development potential. The value conclusion was $9,025,000. Two additional costs were also included. The first was an additional $1,020,000, which was attributed to the relocation of parking that would have occurred under the lands to be purchased. The second amount was $1,070,000 and represented the cost of purchasing land that would no longer be dedicated to the City as parkland. In other words, if the Owner’s development proposal went forward, the parkland dedication would be determined on the entire property. If the community acquired the subject parcel of land, the Owner’s parkland dedication would be based on his residual lands, which are smaller than the entire parcel. The amount above represents the payment for purchasing the difference in parkland dedications. The total cost attributed to the acquisition of the lands as per the Council direction is estimated at $11,500,000. This price also includes expected closing costs, such as survey costs, due diligence, land transfer tax and legal costs.
It should be mentioned that the possible acquisition of the subject lands would be a process of negotiation. The property owner is not obliged to sell the land to the community for that amount or to sell it at all. If there was to be an agreement for purchase and sale, the selling price and corresponding community levy could be higher. The value of $11,500,000 represents a minimum amount for the community to consider in determining whether they would accept a levy and to help gauge what a minimum levy would be.
Levy Consideration
As part of the Council approved motion, it is mentioned that consideration could be given to using the funds currently contained in the Kitchissippi parkland fund. Currently, there is approximately $1,400,000 in the Cash-in-Lieu of Parkland Fund for Kitchissippi Ward. If all the money currently in the Kitchissippi Parkland account was used to purchase this land, it would represent only a modest reduction to the overall levy amount. In applying these funds to purchasing the parkland, consideration should be given to the opportunity lost to using them for other initiatives in the Ward, both present and in the foreseeable future.
To help the community determine if they would accept a levy, based on the assessed value of $11,500,000, if the entire Ward was taken as the levy area, the resulting levy would be approximately $97 per household paid annually for the next 10 years. This value does not take into consideration the money in the Kitchissippi Ward cash-in-lieu of parkland fund and is based on an average residential property in the ward of $380,000. To further explain, if a residential property is assessed at a value greater than $380,000 the levy would be greater for that residential property and if a residential property was assessed at a value less than $380,000, the levy would be smaller. By comparison, if the levy was applied to a smaller area, such as the land located between Churchill Avenue, Scott Street, Holland Avenue and the Queensway, the levy would be approximately $335 per year for the average household, paid annually over 10 years. As mentioned, these values would likely represent minimums and once a levy is imposed on a specific geographical area, there is no option for anyone in the geographical area to opt out of paying the special levy. The timeframe used to calculate the approximate levy is 10 years which coincides with the timeframe under which the City borrows money..
COST RECOVERY
The recommendation adopted on November 19, 2010 anticipated the use of a special rate under the Municipal Act to recover the cost of the acquisition as well as the possible use of funds available from the Kitchissippi Ward cash-in-lieu account. Nevertheless, members of the community have inquired about alternative means to acquire the funds for the possible purchase. These included:
- The use of Development Charges;
- Use the General Parkland Levy Funds;
- Lien on Future Kitchissippi Parkland Funds;
- Tax Incremental Financing; and
- Money from Capital Projects.
None of these alternatives are applicable in this instance for the following reasons.
Development Charges
The use of Development Charges for the purchase of parkland is contrary to the Development Charges Act.
General Parkland Funds
The money contained in the General Parkland fund is already allotted to pay for determined parkland expenses across the city for projects of a city-wide nature.
Lien on Future Kitchissippi Parkland Funds
This money would have to be borrowed with interest. The community would still have to pay for the money being borrowed, with the results being similar to that of a levy. As with the use of money already in the Kitchissippi Parkland fund, if money raised through future cash-in-lieu of parkland dedications was put towards the purchase of the subject lands, it could not be used for other initiatives in the Ward.
Tax Increment Financing
Tax Increment Financing is currently a pilot project offered by the provincial government. The provincial government is currently not accepting applications to be part of this pilot project.
Capital Projects
This money is already approved for and allocated towards specific projects.
Conclusion
Through their motion, Council must decide whether or not there is enough public support to accept a special levy. If Council believes there is enough support, they must also decide on the geographical boundary to which the special levy would apply and if funds in the Kitchissippi Parkland Account would be used to help in the possible purchase the subject land. If Council believes there is enough support, then in accordance with the Council approved motion, the City would take until March 31, 2014 to try and negotiate a final selling price, including all expenses and borrowing costs for the subject land, to determine the final levy that would be applied to the predetermined geographical area. The property owner is under no obligation to even sell the land to the City.
If Council believes there is not enough community support to accept a special levy related to the possible purchase of the land, then this motion is concluded. Through the Site Plan Control process, staff would then work with the property owner to ensure the protection of the maple trees along the eastern edge of the property, as well as other trees and vegetation and to provide free public access to approximately 40% of the site, as originally intended through the development concept for the property.
RURAL IMPLICATIONS
As the November 19, 2010 decision of Council does not permit a City-wide levy, there are no rural implications to the recommendations in this report.
CONSULTATION
The Ward Councillor conducted six Public Meetings across the Ward as follows:
March 1, 2011 – Hintonburg Community Association
March 2, 2011 – Hilson Avenue Public School
March 2, 2011 – Broadview Public School
March 5, 2011 – Churchill Seniors Recreational Centre
March 6, 2011 – Ottawa Civic Hospital Centre
March 6, 2011 – Champlain Park Field House
A summary of the public consultation meetings listed above will be issued separately.
COMMENTS BY THE WARD COUNCILLOR
The issue of the potential acquisition of parkland at 114 Richmond in accordance with the motion approved by the last Council on November 19th, 2010 is a significant issue in Kitchissippi Ward. Although there may be a consensus on the fact that a park would be a valuable addition in this area, there is as yet no consensus on how this would be paid for as the requirement is for the community to pay for it by means of a special levy.
I have a great concern regarding the affect of buying this land on the taxpayers in Kitchissippi. There is a definite need to balance the desire for the acquisition of greenspace against the requirement for the residents of Kitchissippi to pay for it, especially those who can afford it the least.
An additional concern for the taxpayers in Kitchissippi Ward is whether the actual acquisition of this land is possible, given that it is privately owned. If legal action is required to acquire the land, the community would be subject to additional legal costs in the special levy.
At the time of the submitting comments for this report I am in the midst of a series of public meetings that are been carried out throughout the Ward. The meetings have been designed to reach residents in the areas that are not in as close proximity to the property and who may not be as familiar with the issue. The meetings are an opportunity to present the information, and allow residents to ask questions of City Staff and provide their feedback. To date these meetings have been well attended, with residents asking numerous questions. Feedback forms have also been collected. These public meetings combined with the extensive media coverage have also resulted in hundreds of emails and phone calls being received by my office.
Following the remaining public meetings on March 5 and 6, 2011 final deliberations will take place based on all the information gathered since the previous Council’s decision last November 19.
LEGAL/RISK MANAGEMENT IMPLICATIONS
In accordance with the by-law as adopted, the decision on the acquisition on the parkland and the imposition on the special rate must be made by Council prior to the end of March, 2011. In the event that Council determines not to acquire the land or does not impose the special rate, the Zoning By-law will permit the lands to be developed.
CITY STRATEGIC PLAN
Ensuring the City’s policies related to intensification.
FINANCIAL IMPLICATIONS
Special Area charges are applied as levies on the property tax bill. Once the area to benefit from the special service is determined, all taxpayers in that area must be levied that special area charge. If the costs to acquire/deliver the special service were to be higher than $11.5 million, the levy will be higher than indicated in the report. If the size of the special area is less than the entire ward the applicable assessment available to cover the costs of acquiring/delivering the special service would decrease which would increase the amount of the levy for the remaining properties.
SUPPORTING DOCUMENTATION
Document 1 Location Map
