May 6, 1999

To:Corporate Services Committee

From:Commissioner of Corporate Services

Subject:Sale of Surplus Spadina Project Property at

205 Ava Road - Supplementary Report (No. 2)

(Ward 28 - York Eglinton)

Purpose:

To provide a further supplementary report with respect to the sale of 205 Ava Road.

Funding Sources, Financial Implications and Impact Statement:

As set out in my April 16, 1999 report to the Corporate Services Committee.

Recommendations:

It is recommended that:

(1)the report (April 6, 1999) from the Commissioner of Corporate Services entitled "Sale of Surplus Spadina Project Property at 205 Ava Road (Ward 28 - York Eglinton)" be amended by deleting recommendation (2) set out therein and substituting therefor the following:

"(2)authority be granted for either of the Commissioner of Corporate Services or the Executive Director of Facilities and Real Estate to sign back and submit a counter-offer to Ms. Cooper at a sale price of $330,000.00, which counter-offer shall be irrevocable by the City until June 21, 1999 but otherwise on the same terms and conditions as the offer made by Ms. Cooper, save and except that:

(a)the condition related to financing shall be struck out;

(b)a condition be included that Ms. Cooper provide on or before June 28, 1999 an acknowledgement, agreement and release (in a form satisfactory to and provided by the City Solicitor), recognizing that the City is entitled to restore the fence at the rear of the property to its proper lot line as shown as Part 3 on Plan 64R-15564, and quitting claim as of the closing date to any right, title or interest she may have in any lands adjoining or adjacent to Part 3 on Plan 64-15564; and

(c)the closing date be amended to July 21, 1999."

(2)the report (April 16, 1999) from the Commissioner of Corporate Services entitled "Sale of Surplus Spadina Project Property at 205 Ava Road Supplementary Report (Ward 28 - York Eglinton)" be received; and

(3)the appropriate City officials be authorized and directed to give effect to the foregoing.

Council Reference/Background/History:

My reports entitled "Sale of Surplus Spadina Property at 205 Ava Road (Ward 28 - York Eglinton)" and "Sale of Surplus Spadina Project Property at 205 Ava Road Supplementary Report (Ward 28 - York Eglinton)" are currently before your Committee. At your Committee's meeting of April 19, 1999, these reports were deferred to the next meeting of this Committee and staff were requested to report on the purchaser's submission that the structural condition of the house was not taken into consideration when establishing value. In her written decision, the arbitrator, Ms. Patricia Dunn made reference to two documents provided by the tenant at the arbitration hearing, namely, a proposal from Basement Systems Canada Inc. for the installation of waterguard and related basement repair work for a quoted fee of $8,074.22, and a home inspection report prepared by Carson and Dunlop which outlines approximately $39,000.00 worth of repair work which could be done to the dwelling. Ms. Dunn noted that when the City's appraiser was questioned whether mechanical and electrical deficiencies were taken into account, he replied that they were but he was not aware of any significant problem other than those resulting from deterioration over time. Ms. Dunn also noted that the City's appraiser acknowledged that an awareness of structural defects in the Property might have influenced his appraisal. It was indicated by Ms. Dunn that the Carson and Dunlup report noted both the original quality of the construction and the current condition of the home as "typical". The tenant's solicitor, Mr. Bram Zinman took the position that a purchaser faced with a report such as the Carson and Dunlop report would probably attempt to negotiate an abatement of purchase price and suggested that $14,175.00 would be reasonable. He also proposed that an abatement in the purchase price in the amount of $8,000.00 should be made based on the quotation obtained from Basement Systems Canada Inc.

In her recommendations, Ms. Dunn stated that while the City's appraisal at $345,000.00 more accurately reflects market value, she found Mr. Zinman's arguments for an abatement based on the findings of the home inspection report to be compelling and noted that is seems very unlikely that a potential purchaser would go beyond a home inspection report. Ms. Dunn also noted that the Carson and Dunlop report does cover the basement leakage problem and noted that therefore, it is her opinion that a Purchase Price of $330,000.00 would be reasonable in the circumstance.

It is noted that due to the deferral of this report, it is necessary to amend Recommendation No. 2 in my April 16, 1999 report to adjust the acceptance date in the counter offer and Recommendation No. 2 has also been amended to recognize a fence line adjustment which has been determined since the original report was submitted.

Conclusion:

The structural condition of the house was taken into account when establishing value, and it is therefore fair and reasonable that the process for the sale of 205 Ava Road set out in my report dated April 16, 1999, subject to the amendments recommended in this report, be approved.

Contact Name:

Ms. Sheryl Badin, Real Estate Services, (416)392-8142, Fax No.: (416)392-4828, E-Mail Address: sheryl_badin@metrodesk.metrotor.on.ca,(cs99068.wpd)

Margaret Rodrigues

Commissioner of Corporate Services

SAB/ps