HomeMy WebLinkAboutJune 5, 2017 - Special
Special Council Agenda
Monday, June 5 2017
Council Chambers
Immediately Following The Executive
Committee Meeting Council Chambers
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4. That staff be directed to continue their ongoing dialogue with two other
multinational manufacturing businesses and a group of investors that have
expressed interest in purchasing some of the lands for their own business
operations, and that the option referred to in Recommendation 2 above be
used, subject to further Council approval, to provide lands for those business
operations;·
5. That the Chief Administrative Officer be authorized to execute the above-noted
Agreements of Purchase and Sale, in forms satisfactory to the Director,
Corporate Services & City Solicitor, provided that such Agreements are
conditional upon the subsequent approval of Council;
6. That Council provide pre-2018 Capital Budget approval for land acquisition
costs including associated fees (land transfer tax & HST) as well as front
ending and development servicing costs as referenced in Recommendation 1;
for a cost not to exceed $6.0 million;
7. That the Director, Finance & Treasurer be authorized to finance the land
acquisition cost, associated fees and front ending and development servicing
costs in the amount of $6.0 million as follows:
a) that the sum of $6.0 million be financed at the discretion of the
Treasurer; either through future land sales, an internal loan or by the
issue of debentures by the Regional Municipality of Durham, for a period
not to exceed 15 years at a rate to be determined;
b) that annual repayment charges in the amount of approximately $535,000
be included in the annual Current Budget for the City of Pickering
commencing in 2018 if required, and continuing thereafter until the
debenture is repaid, and that any financing costs be paid out of the
Current Budget;
8. That Council confirm that business attraction is a top priority for Council and
that staff be directed to pursue business opportunities that include domestic
and multinational organizations and also pursue high-end manufacturers for the
purpose of strengthening Pickering's local economy and enhancing Pickerihg's
property tax base;
9. That the appropriate City of Pickering officials be authorized to take the
necessary actions as indicated in this Report.
IV) Confirmation By-law
V) Adjournment
CAO 02-17 June 5, 2017
Subject: Pickering Innovation Corridor-Seaton Page 2
a) that the sum of $6.0 million be financed at the discretion of the Treasurer, either
through future land sales, an internal loan or by the issue of debentures by the
Regional Municipality of Durham, for a period not to exceed 15 years at a rate to be
determined; ·
b) that annual repayment charges in the amount of approximately $535,000 be included
in the annual Current Budget for the City of Pickering commencing in 2018 if required,
and continuing thereafter until the debenture is repaid, and that any financing costs be
paid out of the Current Budget;
8. That Council confirm that business attraction is a top priority for Council and that staff be
directed to pursue business opportunities that include domestic and multinational
organizations and also pursue high-end manufacturers for the purpose of strengthening
Pickering's local e·conomy and enhancing Pickering's property tax base;
· 9. That the appropriate City of Pickering officials be authorized to take the necessary actions as
indicated in this Report.
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Executive Summary: Pickering's Innovation Corridor lies within the Seaton employment
lands, which are designated for prestige employment uses under the City's Official Plan. These
lands are shown on Attachment 1, and have been setaside for industrial/commercial office uses.
As reported in January of this year, City staff are actively pursuing the relocation of a major
manufacturing operation to the Innovation Corridor, which could result in the creation of 700 well-
paying new jobs in Pickering, with the possibility of future expansion and 800 additional
jobs. Since February, two additional multinational manufacturers and a group of investors have
approached the City with interest in purchasing land in the Innovation Corridor. In the aggregate,
the facilities proposed by all four interested parties could generate up to 3,000 jobs.
In an effort to accommodate the various interested parties, the City needs to revise its offer to
purchase land from the Province. Adoption of the recommendations in this report will eriable staff
to proceed with a revised Agreement of Purchase and Sale providing for the acquisition of a 28 ·
acre portion of the employment lands to accommodate one of the interested manufacturers, with
an option to purchase the balance of Block 6 for the purpose of making them available on
acceptable terms to the other interested investors and manufacturers. Costs associated with the
City's purchase and ownership of the required lands will be passed on to the manufacturers,
developers and investors who ultimately buy the lands.
The manUfacturers interested in acquiring land within the Innovation Corridor each plan to set up
manufacturing and assembly operations there. One of the interested investors plans to establish a
research and development business park. These are exactly the kind of high quality industrial
uses contemplated by the City's Official Plan policies. These uses will generate substantial
property tax revenues for the City. Staff expect that these uses will also serve as a catalyst for
more commercial/industrial development in Pickering.
CORP0227-07/01 revised
GAO 02-17
Subject: Pickering Innovation Corridor-Seaton
June 5, 2017
.Page 3
Financial Implications: The finan~ial plan for these transactions is to have the land purchase
cost, including associated fees, recovered from future land sales. If there is an unanticipated delay
in the sale of City land, the City can finance these transactions either through internal loans or
through the issuance of a debenture. If a land sale in the Seaton Employment lands is concluded
within one year, an internal loan will be undertaken. Otherwise, long-term debt may be
considered.
Projects costs of $6.0 million include the following components: purchase price, HST; Land
Transfer Tax, Provincial Top-up payment shortfall, and front-ending and development servicing
costs. The City may incur front-ending and development servicing costs while it is still the legal
owner of these lands. This is similar to the City's position in Duffin Heights, where it is subject to
"cash calls" to help pay for its share of the Duffin Heights infrastructure. During the period of the
City's ownership of the Seaton employment lands, the City will have the legal responsibility to
meet any development-related cash calls, and the project's budget of $6.0 million has been
calculated to meet those obligations. All of the City's costs will be passed onto the end
buyers/users of the lands initially purchased by the City. . .
With the planned construction of an office and factory facility 'on the initial 28 acre parcel, the
estimated property taxes using 2017 tax rates (City share only) could be in excess of $300,000
per year. The final construction cost of the facility will be a major component in determining the
property's assessment value. In addition to the annual property taxes, the project contemplated
for the initial 28 acre parcel would also pay estimated building permit fees of $400,000 and
development charges (City share only) of $530,000: It must be noted that the building permit and
development charge fees are based on preliminary building drawings.
This project represents an important opportunity for the City as it relates to economic development
and our financial viability. There are always challenges in attracting large businesses and a
significant number of jobs to a community. This first manufacturing operation will initially employ
over 700 people. Together-with the other proposed operations, as many as 3,000 new, well-
paying anc:! highly-skilled jobs could result from the acquisition of these lands by the City.
Discussion: The Pickering Innovation Corridor lands are designated as prestige
employment, and consist of approximately 323 hectares (800 acres) owned by Her Majesty the
Queen in Right of Ontario, as Represented by the Minister of Infrastructure (the "Province"). This
land is shown on Attachment No. 1. The City's Official Plan designates this land as being suitable
for light manufacturing, assembly and processing of goods, research. and development facilities,
business services, graphics and design, data and communications, offices and ancillary retail
uses.
In April of 2016, the City's Economic Development Office was approached by a large multinational
manufacturing business about the opportunity to consolidate its operations and relocate its facility
to the Pickering Innovation Corridor. The proposed facility would initially employ approximately
700 individuals, with room for future expansion and employment of approximately 800 additional
individuals. Since then, the City has been approached by two other major manufacturing firms and
CORP0227-07/01 revised
3
4
CAO 02-17 June 5, 2017
Subject: Pickering Innovation Corridor-Seaton Page 4
a group of investors, interested in acquiring some of the employment lands within the Innovation
Corridor.
The first manufacturer to approach the City wants to locate its facility in Pickering, but its business
plan does not allow for it to purchase the necessary lands. It wants to lease 28 acres of lands
(shown in red on Attachment 1), and reserve an option to lease an adjoining 50 acre parcel
(shown in blue), to accommodate its plans for future expansion. At the same time, a prominent
developer has expressed interest in purchasing those lands, and is willing to lease them to the
manufacturer. The manufacturer and the developer cannot be identified at this time. The identity
and the terms they are negotiating constitute commercial information, and disclosure could
significantly prejudice their respective competitive positions, and interfere with the negotiations.
Since the City was approached by the first manufacturer, others have expressed interest in
locating their business operations within the Innovation Corridor. Two other manufacturers now
wish to set up their operations in the Innovation Corridor, and a group of investors wants to
establish a research and development business park there. These other interested parties want to
purchase separate portions of employment lands within the Innovation Corridor. Discussions are
ongoing with them and, at present, their identity and the terms under negotiation must remain
confidential, to avoid the disclosure of commercially sensitive information.
As set out in report CAO 01-17, the Province is prepared to sell employment lands within the
Innovation Corridor to the City, who will in turn sell portions of the lands for bus·iness and
manufacturing uses. This would be implemented by means of an Agreement of Purchase and
Sale ("APS") between the Province, as vendor, and the City, as purchaser. The APS would
provide for the purchase of the initial 28 acre site together with an option to purchase the balance
of Block 6 within the Innovation Corridor. Additional agreements would be entered into by the City,
as vendor, with the interested manufacturer, developer or investor. Each of these agreements
would specify a price and terms which would fully cover the costs incurred by the City in acquiring
the lands from the Province. Furthermore, the purchasers from the City would assume all
servicing cost sharing obligations associated with the lands. -
Staff seek the approval of Council to negotiate, sign and deliver the APS and the additional
agreements, which will also be subject to a condition requiring further Council approval. If and
when the various agreements are signed back, staff will present them to Council in a public
meeting, together with a Report setting out the details of the agreements and recommending for or
against waiver of the Council approval condition. If Council then deems fit to waive its approval
conditions, the agreements would become binding obligations on the City. In the interim, City staff
will continue the ongoing negotiations with the interested parties.~
With respect to the City's purchase of the initial 28 acre parcel, City staff will pursue contract terms
which assure the City that the ultimate lease of the lands to a major manufacturer will be in place
prior to the City's purchase. In the event that proves impossible, it must be noted that the initial
acquisition of 28 acres is justifiable in any event, because the City can hold those lands as an
investment or sell them to other employers to encourage economic development. Regarding the
option to purchase the balance of Block 6, City staff propose to exercise the option in increments
as agreements are finaitzed with other manufacturers, developers and/or investors.
CORP0227-07/01 revised
GAO 02-17
Subject: Pickering Innovation Corridor-Seaton
June 5, 2017
Page 5
The purchase of the lands by the City and their sale for use as manufacturing facilities represents
an extremely valuable economic development opportunity for the City. Major manufacturing
facilities in Seaton would provide many highly skilled jobs in Seaton, and would be a significant
step towards the job creation vision of the Central Pickering Development Plan. It would also
serve as a catalyst for future development ·ofthe Pickering Innovation Corridor. This is substantial
for the City and for Durham Region as a whole.
The City has received several different types of investment enquiries related to the Innovation
Corridor, however, staff are determined to focus on sector specific manufacturers that will bring
well-paying, high-tech jobs. ln-April2017, the Chief Administrative Officer and the Senior Advisor,
Investment Attraction, were invited to Nanjing, China by a consortium of companies interested in
purchasing a portion of the employment lands in Seaton for a research and development park with
a view to attracting Chinese and North American based companies to Pickering. The main .
purpose of the trip was to meet with company executives, and to tour the existing research and
development business parks within the Nanjing, China district. This trip enabled staff to confirm
that the Chinese consortium could be a high value employer in Pickering's Innovation Corridor.
Staff will continue to participate in sector specific tradeshows and international exhibits to promote
the Pickering Innovation Corridor. Many of the large manufacturers who have already approached
the City with an interest in relocating and/or expanding their operations to Seaton have connected
City staff with their supply chain of businesses, who are also looking into either expanding into the
Canadian market, and/or relocating in close proximity to their key customer base.
Senior staff have expended a great deal of time and effort in our pursuit of investment attraction.
There are many initiatives and opportunities to manage, and in order to achieve success, we·will
continue to require a substantial investment of senior management time. Recommendation 8 asks
Council to support the efforts of staff in the pursuit of domestic, multi-national organizations and
high-end manufacturing and the associated costs (including domestic and international travel).
The economic benefits will be realized as we enhance the commercial and industrial tax base
increasing our financial viability.
Attachments:
1. Map of Innovation Corridor
2. Report to Council CAO 01-17 dated February 6, 2017
CORP0227 -07/01 revised
5
~TIACHMENT#..LTOREPORT# C.V19 O'J--.tl ,......
2
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Report GAO 01-17
Land Acquisition and Disposition
-Pickering Innovation Corridor
Seaton
February 6, 2017
Page 2
To achieve this, the City must arrange for the purchase of some of the Seaton employment lands
from the Province of Ontario. Those lands will be sold in turn to a developer and leased to the
manufacturing operation. City staff seek the authority of Council to negotiate Agreements of
Purchase and Sale for this purpose, subject fo further Council approvaL Once the terms of those
Agreements have been finalized, they will be presented to Council at a future public meeting for
approval:
Financial Implications: Direct financial costs for the City in 2017 will be limited to outside legal
fees and the opportunity cost of lost investment revenue. The City will have to fund the deposit
payments required by" the. Agreement of Purchase and Sale withthe Province until the sale of the
subject lands to a developer is completed. The legal fees are included in the General
Government Section of the 2017 budget. Transaction costs associated with this project will be
passed on to the developer.
With the planned construction of an office and factory facility, the estimated property taxes using
2016 tax rates (City share only) could be in excess of $300,000 per year;. The final construction
cost of the facility w1!1 be a major component in determining the property's assessment value. In
addition to the annual property taxes, this project would also pay estimated but! ding permit fees of
$400,000 and development charges (City Share only) of $630,000. It must be noted that the
building permit and development charge fees are based on preliminary building drawings.
Pickering's 2016 assessment base consists of 77.3% residential and 22.7%
commercial/industrial. (By contrast, the City of Mississauga assessment base consists of 69.2%
residential and 30.8% commercial/indwstrial). The long term goal of City staff is to increase the
size of the commercial/industria! property tax base in relation to the residential share, resulting in a
shift of property tax liability to the non-residential group. Staff believes that this project could be
the catalyst for a shift of the assessment base from residential to commercial!industrtal. This will
be of great assistance in reducing the tax burden on residential taxpayers. · ·
This project represents an important opportunity for the City as it relates to economic
development There are always challenges in attracting large businesses and a significant riumber
of jobs to a community. This manufacturing operation will initially employ over 700 people.
Furthermore, the City's economic devE:;Iopment staff have been introduced by this manufacturer to
other large suppliers and partners, who have also expressed an interest in investment
opportunities in the City's Innovation Corridor . .(To encourage more business interest in the
Innovation Corridor, the 2017 draft capital budget includes an investment of $175,000, subject to
Grant approval for Broadband connectivity for the ln)lovation Corridor to "jump start" the economic
development of these lands.) For many industry-based suppliers and partners, it is important to
relocate their faciHties in dose proximity to their customers' main offices. Because of this, City
economic development staff are confident that this project can serve as a catalyst that triggers the
development of the Innovation Corridor by attracting other key emerging technology-based
companies.
CORP02Z7-07/0i revised
Repo·rt CAO u1-17 February 6, 2017
Land Acquisition and Disposition
-Pickering ·Innovation Corridor
Seaton Page 3
Discussion: The Seaton employment lands are designated as prestige·employment, and
consist of approximately 323 hectares (800 acres) owned by Her Majesty the Queen in Right of
. Ontario, as Represented by the Minister of Infrastructure (the "Province'} This land is shown on
Attachment No. 1. This .is the City's Innovation Corridor. The City's Official Plan designates this
land as being suitable for light manufacturing, assembly and processing of goods, research and
development facilfties, business services, graphics and design, data and communications, offices
and ancillary retail uses. In April of 2016, the City's Economic Development Office was
approached by a large multinational manufacturing business about the opportunity to consolidate
its operations and relocate its facility to the Pickering Innovation Corridor, !he proposed facility
would initially employ approximately 700 individuals, with room for future expansion and
employment of an additional approximately 800 individuals. ·
While the manufacturer wants to locate its facility in Pickering, its business plan does not allow for
it to purchase the necessary lands. It wants to lease the required lands and buildings, and reserve
an option to lease adjoining lands to accommodate its plans for future expansion. The portion of
. the Innovation Corridor that the manufacturer wants to le<;ise (referred to in this Report as the
· "Lands") consists of approximately 11.3 hectares (28 acres), as shown in Attachment 2. ·
At the same time, a prominent developer has expressed interest in purchas(ng the Lands, and is
willing to lease the Lands to the manufacturer. The developer also wants to obtain an option to
purchase additional adjacent lands. The adjacent lands are also shown on Attachment 2. The
manufacturer and the developer cannot be identified at this time. The identity and the terms they
are negotiating constrtute commercial information, the disclosure ofwhich could significantly
prejudice their respective competitive positions and interfere with the negotiations.
Initially, City staff envisaged a transaction in which the developer would purchase the Lands from
the Provin.ce directly. Unfortunately, the Province cannot enter into direct sale negotiations with
any private corporC?.tion. However, the Province can sell the Lands to the City. The City can then
sell the Lands to a developer. This would be implemented by means of one Agreement of
Purchase and Sale ("APS") between the Province, as vendor, and the City, as purchaser, together
with a separate APS between the City, as vendor, and the developer, as purchaser. Both APSs
would be scheduled to close on the same date and would stipulate the same purchase price. The
purchase price due from the City to the Province would be funded by the City's sale to the
developer. The developer would assume all servicing cost sharing obligations associated with the
Land. ·
The APS between the City and the developer would be conditional on a Lease of the Lands being
signed by the manufacturer. City staff have facilitated discussion and meetings between the
manufacturer and the developer in an effort to finaHze the terms of a Lease between the
developer, as landlord, and the manufacturer, as tenant The Lease will provide for the
construction of a building on the Land to house tf-Je manufacturer's business operations. It must be
noted that until a Lease is signed between the developer and the manufacturer, the City cannot be
assured that the manufacturer will be able to opsrate on the Lands. By making the City's sale of
the Lands to the developer conditional on the Lease, the City preserves the right to terminate its
CORPOZZ7 -07 !01 revised
3
10
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CJ Subject lands (69.6 H?) = Lands to be Purchasedlleased ~;':'~f:.'fl ~.~Vli :: ..... ' (
Location Map_ --at:-1--. Fife: Seaton Employment Lands
PICKERING Applicant:
City Development Property Description:
Department I Date: Feb. 01, 2017
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