Purchase of Surplus Density from City-Owned Land

by Symphony Square Ltd. - 29 Lorraine Drive

The Corporate Services Committee recommends the adoption of the Recommendations of the North York Community Council, embodied in the following communication (July 2, 1998) from the City Clerk, North York Community Council:

Recommendation:

The North York Community Council on June 24, 1998, recommended to the Corporate Services Committee, and Council, that:

(1)the "Offer to Purchase" from Symphony Square Ltd. to purchase 19,660 square feet of density for the sum of $400,000.00 be accepted and the Chief Financial Officer and Treasurer and the City Clerk be authorized to execute same;

(2)proceeds from the sale be credited to Account No. 007-435-000-8340;

(3)the sale be subject to all applicable levies;

(4)the appropriate City officials be authorized to take all actions necessary to finalize this matter.

The North York Community Council also requested that the Chief Financial Officer and Treasurer provide a supplementary report to City Council when this matter is before it for final approval on what levies would be applicable to the additional density in the event that either a rezoning application or a Committee of Adjustment application is received.

Background:

The North York Community Council on June 24, 1998 had before it a report (June 15, 1998) from the Commissioner of Corporate Services recommending that the City accept the "Agreement of Purchase and Sale" from Symphony Square Ltd., the owners of 15-27 Lorraine Drive, for the purchase of surplus density from City-owned land at 29 Lorraine Drive.

(Report dated June 15, 1998, from the Commissioner of Corporate Services addressed to the North York Community Council, entitled "29 Lorraine Drive, Purchase of Surplus Density from City-owned Land at 29 Lorraine Drive by Symphony Square Ltd.(Ward 10 - North York Centre".)

Purpose:

To recommend that the City accept the "Agreement of Purchase and Sale" from Symphony Square Ltd., the owners of 15-27 Lorraine Drive, for the purchase of surplus density from City owned land at 29 Lorraine Drive. (See maps attached).

Financial Implications and Impact Statement:

The purchase price of $400,000.00 provides cash flow in the 1998 fiscal year in support of the City's initiative to enhance revenue generation through the sale of density surplus to the municipality's needs.

Recommendations:

It is recommended that North York Community Council recommend to Corporate Services Committee that:

(1)the "Offer to Purchase" from Symphony Square Ltd. to purchase 19,660 square feet of density for the sum of $400,000.00 be accepted and the Treasurer and the City Clerk be authorized to execute same;

(2)proceeds from the sale be credited to account No. 007-435-000-8340; and

(3)the appropriate City officials be authorized to take all actions necessary to finalize this matter.

Background:

The City of North York purchased 29 Lorraine Drive on October 6, 1997, as part of a Parkland Acquisition Strategy, at a price of $300,000.00. A further $15,000.00 was paid for disturbance allowance, and an additional $9,000.00 for moving costs, legal fees, Land Transfer Tax on replacement property and legal fees on replacement property. The site has an area of 7,562 square feet and the floor space index is 2.6 allowing a total gross floor area of 19,660 square feet. The total acquisition cost of $324,000.00 reflects a rate of $16.48 per square foot of gross floor area.

The owner of 15-27 Lorraine Drive approached staff in order to purchase all of the density from the City's property and transfer it to the proposed apartment building development. The project has been approved to a maximum height of 20 storeys, with a maximum of 304 dwelling units and a maximum total density of 313,886 square meters. The transfer of density from public land is permitted by the Official Plan (Part D3, Sections 3.3 and 3.4). The original proposal submitted by the owner to acquire this density for the sum of $294,900.00 was submitted to Council at its meeting on May 13 and 14, 1998. Council struck out and referred the Clause to the North York Community Council for consideration and report thereon to City Council through the Corporate Services Committee.

Comments:

The owner of 15-27 Lorraine Drive was contacted and advised of City Council's action and requested to increase his offer for the purchase of the density. Although he was of the opinion his initial offer was representative of market value when compared to other density transfer opportunities, he has now advised after protracted negotiations, he is prepared to increase his offer to $400,000.00. The owner has executed a revised offer with August 11, 1998, as the irrevocable date. The potential purchaser is presently constructing the building at 15-27 Lorraine Drive and requires an early decision by Council.

Parks Department Comments:

The Parks and Recreation Department fully supports the sale. The density assigned to the property is not required for the park use. Since it was always the City's intention to sell the density, this sale is a timely opportunity to recover in excess of the original acquisition cost.

City Solicitor's Comments:

The City's approved Uptown Secondary Plan and the City's new City Centre Plan (OPA 447), which has not yet been approved by the Minister of Municipal Affairs, both contain provisions permitting and even encouraging the transfer of density from City owned parcels so that:

"to the greatest extent possible, new developments pay for the costs of infrastructure and facilities, needed to support or serve new development and that the general tax rate not be used to support development.

Accordingly, when the City or Metropolitan Toronto has purchased land for public purposes, the gross floor area attributable to the land may be transferred by the City or Metropolitan Toronto subsequent to that purchase." (OPA 447, clause 3.4.2 (b))

The sale of this density will enable the City to acquire more than 7,500 square feet of parkland at no cost. This proposal is in conformity with the approved and adopted Official Plans for this area.

Summary of Agreement of Purchase and Sale:

Purchaser:Symphony Square Ltd.

Donor Site:29 Lorraine Drive

Receiving Site:15-27 Lorraine Drive

Net Density:19,669 square feet

Purchase Price:$400,000.00

(based on a net density of 19,660 square feet at a purchase price of $20.34per square foot of gross floor area)

Deposit:$73,725.00

Balance:Due on closing

Irrevocable Date:August 11, 1998

Closing Date:30 days after zoning by-law allowing net density to be transferred to the development site is in full force and effect

Conditions:Receiving an appropriate zoning by-law amendment, allowing the net density to be transferred to the development site;

Density transfer shall be implemented by rezoning the donor site and the development site, as required by the Official Plan;

If the above two conditions are not met within six months, then the Purchaser has the right to extend the closing date for a further six months.

Schedules:Schedule "A" - Map of "Donor Site"

Schedule "B" - Map of "Development Site"

Schedule "C" - Subscribed form of "Letter of Credit"

Discussion:

The offer from Symphony Square Ltd. provides the City with an opportunity to divest itself of the density associated with 29 Lorraine Avenue at a purchase price of $20.34 per square foot of gross floor area. I am recommending the sale for the following reasons:

(1)the density assigned to the property is not required for parks use and the City will maintain the fee in the land for zero net cost;

(2)the purchase price is higher than other density transfer opportunities and is within the value range of other development site acquisitions; and

(3)there are no other parties interested in the acquisition of this density at this time. Recent marketing reports tend to indicate the condo market is softening and it may be some time before interest in this density is shown. The City should not forego this opportunity to recover in excess of the original acquisition cost.

Conclusion:

I recommend the City accept of the "Agreement of Purchase and Sale" in the amount of $400,000.00.

Contact Name:

Doug Stewart

Telephone:392-7202

Fax:392-1880

E-Mail:dstewart@city.toronto.on.ca (nyc98096.wpd

(A copy of the map 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.)