May 11, 1998
To:Corporate Services Committee
From:Commissioner of Corporate Services
Subject:Expediting the Disposal of Property and Reduction of Leased Space
Purpose:
To describe the various programs underway to expedite the disposal of land and reduction
of leases.
Recommendations:
It is recommended that:
(1)the programs described in this report be endorsed;
(2)the Commissioner of Corporate Services report to the Corporate Services Committee
every six months on the implementation of the programs; and
(3)this report be referred to the Budget Committee for information.
Funding Sources, Financial Implications and Impact Statement:
No additional funding is required. A target of $60 million for the sale of properties is
proposed for 1998.
Council Reference/Background/History:
The Budget Committee, at its meeting of March 3, 1998, requested a series of reports on the
disposition of properties both leased and owned, and on the establishment of a disposal unit
to expedite the disposal and on the work to be done by external consultants and by staff. The
March 25, 1998 report from the Commissioner of Corporate Services to the Budget
Committee outlined programs to date. This report provides an update and sets out a
framework for expediting the sale of surplus assets.
Comments:
In 1997, the former municipalities received over $30 million in revenue from the sale of
surplus properties. So far in 1998, the sales for 18 properties have closed, with a revenue of
$9.86 million. There are 23 sales in progress, which will produce an additional $11.66
million, bringing the revenue for 1998 to $21.52 million. The properties in these two
categories are listed in Appendix A.
(1)Financial targets for 1998
A target of $60 million for revenues is proposed for 1998. The distribution of the revenue,
in millions, is estimated as set out in the table below.
|
|
to date in 1998 |
3rd Quarter |
4th Quarter |
Total |
Sales
completed
or in
progress |
|
$9.86 |
$10.64 |
$21.4 |
$41.9 |
Potential
sales |
|
- |
$2.2 |
$15.9 |
$18.1 |
Tota1 |
|
$9.86 |
$12.84 |
$37.3 |
$60.0 |
(2)The 1998 program consists of 7 components, described below.
(a)Disposing of asset already declared surplus:
There are now 161 properties already declared surplus by the former Councils, which could
bring in up to $20 million in revenue. The properties, also listed in Appendix A to this
report, include:
- Spadina Expressway houses - One hundred and twenty properties along the
proposed expressway route were declared surplus, including 100 residential
buildings. The former Metro Council carried out a program to sell the houses, with
the existing tenants given first opportunity to purchase the buildings. In 1997, 37
were sold with to existing tenants and 10 vacant houses were sold through the
MLS. Of the remaining houses 59 are tenanted and 14 are vacant. Also surplus are
parts of 19 lots acquired for the Spadina Expressway. These could be offered back
to the original owners, but this would be costly and time consuming to undertake,
and should not be considered a priority at this time.
.
- Scarborough Expressway houses - Twenty houses have been declared surplus.
- Vacant land - The 45 parcels are being evaluated for potential revenue and offered
for sale, with priority given to those with the highest value and where there is
interest in purchasing.
- Other - These include industrial and commercial properties, mainly acquired
though tax sales. Priority should be given to the sale of those with the highest
potential return and those where there is expressed interest.
(b) Sale of Cityhome "property houses":
These properties acquired for parks purposes in the former City of Toronto but leased to
Cityhome for residential use. There are 60 properties with 105 units. As a result of the
direction form the Budget Committee, a report (May 11) from Commissioner of Corporate
Services, "Sale of Property Houses" recommends that 56 houses be declared surplus and
offered for sale. The current value assessment for these houses is over $11 million.
(c)Sale of tax sale properties:
From time to time the City acquires properties for tax arrears. These properties should be
evaluated prior to acquisition and strategies developed to ensure that they are marketed as
soon as possible if not required for a municipal purpose. Tax sale properties are included in
the list of surplus properties in Appendix A of this report.
(d)Properties that are to be sold as part of major corporate initiatives:
One example is the 78 acre parcel on the east side of the Allen Road which includes the
Downsview Subway Station, originally acquired from the Federal Government for a subway
yard. Planning staff will be reporting in May to the Urban Development and Environment
Committee on a the Downsview area, and consideration has been given to rezoning the area
for mixed uses and residential purposes. The disposal strategy is being developed in this
context. There much interest in the purchase of this property.
Another example is the potential sale of large parcels of land acquired for the Scarborough
Expressway. Planning staff are working on completing studies which will rezone the City
owned properties, resulting in potentially increased revenues once the land is marketed.
(e)Properties that will be freed up though space rationalization:
Facilities& Real Estate staff, in conjunction with the program areas, are reviewing future
space needs following the current downsizing. Both office space and yard rationalization
studies are underway. The results of these studies should be available in the fall, but it may
be possible to report in declaring some properties surplus before that. Staff are currently
determining whether all office staff will be able to be accommodated in existing space and
that the space equal to that in Metro Hall may no longer be needed. There are potential
purchasers for some yards and office space. In addition, the purchase of new properties is
being delayed to ensure that existing property is used wherever possible. For example, the
Chair of the Budget Committee has asked that alternative City owned property be explored
for the location of the new 51 Division Police Station.
(f)Properties that appear to be suitable and will be subject of reports to recommend that
they be declared surplus and sold.
Facilities & Real Estate staff have identified over 160 properties that could be sold in the
near future, many of them vacant land. A detailed list will be submitted to the next
Corporate Services Committee. In the meantime, property disposition reports continue to be
submitted for each agenda of the Corporate Services Committee. In addition, staff are
undertaking a comprehensive review of City properties to ensure they are still needed for the
purpose for which they were acquired, and will report on those recommended to be declared
surplus.
(g) Reduction in lease payments
Facilities & Real Estate staff have reviewed 225 existing lease arrangements, including 69
leases for office space, which generate the greatest costs. The office list forms Appendix B.
To date, ten office leases are in the process of being collapsed, and these will generate
savings of about $2 million in 1999. In addition, options are being explored to either
eliminate or renegotiate the lease for the Metro Housing Corporation at York Mills and
Yonge, which is for $1 million a year. Staff have also been renegotiating other leases to
reduce costs to the City.
While the objective is to relocate functions such as day care, public health and welfare
offices into City owned buildings wherever possible, additional space may be needed
because of the downloading of Provincial programs, such as Provincial Offences and
additional case loads to service sole support parents.
(3)Expediting the sale of properties
(a)Staff teams
Two Facilities & Real Estate staff teams have been established. The first is a staff disposal
unit, focusing on the sale of properties already declared surplus, is headed by a Director of
Real Estate of a former municipality and includes a team of 4 appraiser/negotiators, with
support staff , as well as assigned legal staff. A Manager of Leasing heads the second, a
lease rationalization team. Assistance from other service areas, such as Planning and
Economic Development is being provided as required. The teams will be evaluated after a
year for future needs.
(b)External brokers
To assist in accelerating the disposal program, the report (May 11) from the Commissioner
of Corporate Services to the Corporate Services Committee for its meeting of May 25,
entitled "Acquisition and Disposal of Real Property," recommends that outside brokers be
hired to expedite the sale processes for scattered houses and for large and more complex
properties, such as industrial and high density residential. Staff will coordinate and monitor
the work to be done to ensure the disposal program that meets the needs of the Corporation.
The cost of brokers' services and the commission is normally deducted from the sale price,
so no additional budget is needed.
(c)Portfolio consultants
Additional expertise will be required to assist in the sale of the large complex properties. A
proposal call is currently being prepared to obtain the services of appropriate consultants,
who have special expertise and are too costly to be normally part of real estate groups in
large organizations like the City. Publicly owned land is sometimes difficult to sell as it
contains a wide range of property types, such as public buildings, contaminated properties
acquired from tax sales, and governments are reluctant to be perceived as forcing people to
leave their homes. Therefore special strategies may be needed. Some governments, as well
as private companies, have adopted a bundling approach, whereby attractive properties are
sold in a group with problem properties.
The external search process, now underway to locate potential candidates for the position of
Executive Director of Facilities & Real Estate, will also include the search for a potential
head of a comprehensive disposal unit, dealing with both properties already declared surplus
as well as potential properties.
(d)Clarification of processes
The reports, "Acquisition and Disposal of Real Property" and "Surplus "Spadina Corridor"
and "Scarborough Transportation Corridor " Houses" set out approval processes so that the
sales of properties will occur in the most expeditious way, and also meet corporate
objectives such as supporting affordable housing. Additional reports will be submitted from
time to time as needed to assist with expediting the programs.
(4)Need for a comprehensive process
The processes for the sale of City owned properties is undertaken by primarily by the
Facilities & Real Estate Division, including sales for the TTC and the Police, but other parts
of the organization, such as Toronto Hydro and the Library Board operate separately. In
order to effectively plan for the orderly review and disposal program for all properties, the
Division should take responsibility for coordination, including possibly, in time, doing the
work for all, including the ABC's. Establishment of a senior level staff committee, similar in
function to the former Metro Land Management Committee, and also including
representatives of the ABC's, will ensure that decisions regarding property are coordinated
and strategic. As well, a centralized and shared information system, including a
comprehensive tracking system must be provided to ensure that there is one list of affected
properties, to track their sales and the revenues generated, and where these revenues go. This
facilitates the ability of all involved to effectively plan and coordinate the declaration of
surplus property and disposals.
(5) Progress reports
The Budget Committee has requested reports every six months on progress. The first report
will be submitted to the Budget Committee through the Corporate Services Committee in
October. These reports will ensure that the programs remain high priority, that effective
progress is being made and that issues are being dealt with in expediting disposals.
Conclusions:
This report sets out the framework for a comprehensive approach to the expeditious
disposal of property assets, through processes, program, and teams of staff in the Facilities &
Real Estate Division, working with other parts of the Corporation. The disposals will net
considerable revenue in the longer term.
Contact:
Cathie Macdonald, Interim Lead, Facilities & Real Estate: phone 392-0449, fax 392-0029,
email cmacdona@city.toronto.on.ca (bc98005 / cs98027)
Commissioner of Corporate Services
APPENDIX A
LISTS OF PROPERTIES
Key for Property Type
RS |
Residential |
VL |
Vacant Lot |
CM |
Commercial |
IND |
Industrial |
IO |
Industrial
Office |
OB |
Office Building |
PROPERTIES SOLD AFTER JANUARY 1, 1998
(A copy of appendix 'B' attached to the foregoing report was forwarded to all Members of
Council with the July 20, 1998, agenda of the Corporate Services Committee, and a copy
thereof is also on file in the office of the City Clerk.)