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HomeMy WebLinkAboutCAO 01-17 00 Report to PiCKERiNG Council Report Number: CAO 01-17 Date: February 6, 2017 From: Tony Prevedel Chief Administrative Officer Subject: Land Acquisition and Disposition Pickering Innovation Corridor Seaton - File: D-1100-001 Recommendation: 1. That staff be directed to continue to negotiate the terms of: (a) an Agreement of Purchase and Sale of employment lands within the Seaton Development Area (as shown on Attachment No. 2) between Ontario Infrastructure and Land Corporation, as vendor, and the City, as purchaser; and (b) an Agreement of Purchase and Sale of those lands between the City, as vendor, and a major developer, as purchaser; 2. That staff be directed to continue supporting and facilitating the dialogue between the developer and a multinational manufacturing business that has expressed interest in leasing the said lands, for the purpose of having the manufacturer move its business operation to the lands; 3. That the Chief Administrative Officer be authorized to execute the Agreements of Purchase and Sale referred to in Recommendation 1, in a form satisfactory to the Director, Corporate Services & City Solicitor, provided that such Agreements are conditional upon the subsequent approval of Council; 4. That staff be directed to send a copy of this Report to the Minister of Infrastructure, the Minister of Economic Development and Growth and the Region of Durham; and 5. That the appropriate City of Pickering officials be authorized to take the necessary actions as indicated in this Report. Executive Summary: Pickering's Innovation Corridor lies within the Seaton employment lands, which are designated as prestige employment, under the City's Offical Plan. These lands have been set aside for industrial/commercial uses. City staff have been actively pursuing the relocation of a major manufacturing operation to the Innovation Corridor. This could result in the creation of 700 well-paying new jobs in Pickering based on the first phase of the project, with the possibility of future expansion and 800 additional jobs. In addition, this project may generate an additional $300,000 (City Share only) of additional taxation revenue per year based on the first phase of the project. Report CAO 01-17 February 6, 2017 Land Acquisition and Disposition - Pickering Innovation Corridor Seaton 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 to 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 with the 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 will be a major component in determining the property's assessment value. In addition to the annual property taxes, this project would also pay estimated building 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/industrial). The long term goal of City staff is to increase the size of the commercial/industrial 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/industrial. 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 number of jobs to a community. This manufacturing operation will initially employ over 700 people. Furthermore, the City's economic development 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 Innovation Corridor to "jump start" the economic development of these lands.) For many industry-based suppliers and partners, it is important to relocate their facilities in close 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. CORP0227-07/01 revised Report CAO 01-17 February 6, 2017 Land Acquisition and Disposition - Pickering Innovation Corridor Seaton Page 4 agreement to sell the Lands. In such event, the City would retain ownership of the Lands, and could hold the Lands as an investment or sell the Lands to other employers to encourage development in Seaton. At present, the APSs exist only in draft form. Staff seek the direction of Council to negotiate, sign and deliver the APSs, subject to a condition requiring further Council approval. If and when the APSs are signed back, staff will present them to Council in a public meeting, together with a Report setting out the details of the APSs and recommending for or against waiver of the Council approval condition. If Council then deems fit to waive its approval condition, the APSs would become binding obligations on the City, the developer and the manufacturer. In the interim, City staff will continue to facilitate the ongoing negotiations between the developer and the manufacturer regarding the terms of their Lease. The purchase of the Lands by the City, their sale to the developer and their lease to the manufacturer represent an extremely valuable economic development opportunity for the City. A major manufacturing facility 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 of the City's Innovation Corridor. This is significant for the City and also for all of Durham Region. If the manufacturer does not commence operations on the Lands, the purchase of the Lands is still a wise step by the City. The Lands will likely appreciate in value over time, and could be leased or sold to another employer. Attachments: 1. Map of Pickering Innovation Corridor - Seaton Employment Lands 2. Map of Subject Lands P - • , red By: Prepared By: Paul ',i. •ni Stan Karwowski Direr to \C. 'orate Services & City Solicitor Director, Finance &Treasurer Recommended for the consideration of Pickerin. City Council i zJa oon / -di Senior Advisor, Investment Attraction To y Prevedel, P.Eng. Chief Administrative Officer PB:ks • CORP0227-07/01 revised R February 6, 2017 Report CAO 01-17 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 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 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 lease (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 purchasing 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 constitute commercial information, the disclosure of which 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 Province directly. Unfortunately, the Province cannot enter into direct sale negotiations with any private corporation. 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 finalize 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 the 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 operate 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 CORP0227-07101 revised W 4i, —C... 0 0 N • W ? .1!Op .. • W W W ON ? , W /Z Z Z W .N W 0 J _J J Z 71 W I Q O JO L9 U "a •Q Q Q .. o N� v /t J , fryl, .--11■111111! . .L I Q o ,... ...i... c, ild. O Q z J ), ,W �� Q i W z '1aiAL- I �. aFT CON I • -. s - .. W L O • p .. w _Z m G� Q N w Id . . , U d. , J W di a IY AFOU• H CONCES.ION ROAD T• • O ROAD � 4 KW .- Legend ., �r Q El Q=7 0=7 c lmC :";:::.::.::..i:.::::1::. 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