January 26, 1999

To:Corporate Services Committee

From:Commissioner of Corporate Services

Subject:Proposed Property Disposal - 71 Milvan Drive

(Ward 8 - North York Spadina)

Purpose:

To authorize the sale of the property municipally known as 71 Milvan Drive to Laura Montini (in trust) at a price of $535,000.00.

Financial Implications:

Revenue of $535,000.00, less closing costs and the usual adjustments will be generated.

Recommendations:

It is recommended that:

1)the Commissioner of Corporate Services be authorized to accept the offer to purchase for the property known as 71 Milvan Drive in the amount of $535,000.00 as detailed herein; and

2)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Background:

71 Milvan Drive is an approximately 2.08 acre parcel located on the east side of Milvan Drive in the Weston Road and Finch Avenue area of the City. The property includes an approximately 23,125 square foot two storey warehouse and office building. The building appears to have been purpose-built for a specific user, as it includes second storey warehouse space, which is uncommon. An attached warehouse addition with an area of about 50,000 square feet was destroyed in an explosion in 1993. The basement, foundation and footing of that warehouse remain, such that the rear of the property includes a large excavation and considerable rubble.

North York acquired this property on August 5, 1997, via a Notice of Vesting for non-payment of taxes. In June of 1997, prior to acquiring the property, North York conducted a tax sale, where tenders were invited from the public. As prescribed in the Municipal Tax Sales Act, the minimum acceptable bid was $855,000.00, the amount of the outstanding taxes, plus penalties, interest, and costs. There were no bidders for the property.

Subsequent to the Notice of Vesting, the former North York permitted the former owners to remain in possession of the property. That situation continues and neither taxes nor rent are being collected from the occupants because the City has no formal agreement with them. The City has a potential liability exposure as a result of someone occupying the City's property without the appropriate formal agreement.

On October 6 1997, City of North York Council declared the property known as 71 Milvan Drive to be surplus to the needs of the City, and authorized staff to proceed with its sale. Public notice was provided in accordance with the former North York Disposal By-law. This notice included advertisements in the Toronto Star, on December 12, 1997.

The market value of the property was estimated by an independent appraiser to be $550,000 in February of 1998. No allowance was made in this appraisal for the rehabilitation required to remove the large amounts of rubble at the rear of the existing building, the cost of filling in the approximately 50,000 square foot excavation, or for the possibility of any soil contamination. The appraisal noted that the normal marketing time of a property such as this would likely be from four to eight months.

Comments:

Both the current occupants of the building and the owner of the abutting property to the south expressed an interest in purchasing the property. The current occupants indicated they wished to continue in business at their present location, and wanted to avoid the expense of relocating to another building. The abutting owner to the south, a banquet facility, indicated they intended to enlarge their parking lot.

Given the interest shown by known parties, the relatively weak market for industrial properties such as this, and the poor impression the property would make on prospective purchasers, both the abutting owner and the current occupants were requested to make binding offers to purchase the property. Their offers, were submitted by an established deadline in sealed envelopes and are as follows:

Prospective PurchaserAmountDepositConditions

Offered

1. 407239 Ontario Ltd.$400,000$10,000 To examine and approve of

(Abutting Owner) any agreements with existing occupants

2. Laura Montini (in trust)$535,000$10,000none

(Current Occupant)

The offer from Laura Montini (in trust) is 97.3% of the appraised value of the property. Were the City to list the property with a real estate broker, commission would likely be 4% of the selling price. Therefore, if the City received an offer at the appraised value, the net amount would be $528,000, less than the amount offered by Ms. Montini. In addition, there would be a further delay of several months while the property was being marketed, with no guarantee that there would be any offers received greater than that received from Ms. Montini. This delay would also extend the potential liability which is present as a result of someone occupying the City's property without a formal agreement.

Acceptance of the offer by Laura Montini (in trust) is recommended as the offer is unconditional and is representative of fair market value.

Conclusion:

Completion of this transaction detailed above is considered fair and reasonable and reflective of market value.

Contact Name:

Warren Poole, Telephone No. (416) 396-7700, Fax No. (416) 396-4241,

poole@city.scarborough.on.ca (cs99008.wpd )

Margaret Rodrigues

Commissioner of Corporate Services