Sale of Surplus Spadina Project Property at

205 Ava Road (Ward 28 - York Eglinton)

The Corporate Services Committee submits, without recommendation, the reports dated April6, 1999, April 16, 1999, and May 6, 1999, from the Commissioner of Corporate Services respecting the Sale of Surplus Spadina Property located at 205 Ava Road.

The Corporate Services Committee submits the following report (April 6, 1999) from the Commissioner of Corporate Services:

Purpose:

To recommend a process for the sale of 205 Ava Road.

Funding Sources, Financial Implications and Impact Statement:

Revenue in the minimum amount of $330,000.00, less closing costs and the usual adjustments, subject to the revenue sharing agreement with the Province pursuant to Clause No. 1 of Report No.25 of the former Metropolitan Corporate Administration Committee, approved on December 4, 1996, will be realized from the sale of this property if the recommendations in this report are approved.

Recommendations:

It is recommended that:

(1)the offer to purchase the property at 205 Ava Road submitted by Ms. Francine-Deena Cooper in the amount of $300,000.00, not be accepted;

(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 May21, 1999 but otherwise on the same terms and conditions as the offer made by Ms.Cooper save and except that the condition related to obtaining financing shall be struck out;

(3)if Ms. Cooper accepts the City's counter-offer, then it is further recommended that:

(a)the requirement embodied in Clause No. 14 of Report No. 27 of the former Metropolitan Management Committee adopted on September 28, 1994 regarding the minimum required deposit of 10 per cent of the purchase price, be waived;

(b)authority be granted to direct a portion of the sale proceeds on closing to fund the outstanding balance of Costing Unit No. OCA700CA2470;

(c)the City Solicitor be authorized and directed to take the appropriate action, in conjunction with Province of Ontario Officials and/or agents, to complete the transaction and he be further authorized to amend the closing date to such earlier or later date as he considers reasonable;

(4)in the event Ms. Cooper does not accept the City's counter-offer, the property be listed for sale through the T.R.E.B. Multiple Listing Service subject to the existing tenancy; and

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

Council Reference/Background/History:

The Province of Ontario is the owner of 205 Ava Road, subject to a ninety-nine year lease in favour of the City of Toronto. By its adoption of Clause No. 1 of Report No. 3 of The Corporate Administration Committee on February 12 and 13, 1997, Metropolitan Council declared the property surplus pursuant to By-law No. 56-95 and authorized its disposal. The procedures with respect to By-law No. 56-95 have been complied with, a utility canvass has been completed and no easement is required.

By its adoption of Clause No. 24 of Report No. 23 of The Corporate Services Committee on October8 and 9, 1997, Metropolitan Council authorized the sale of this property to the then existing tenant (since July 30, 1996), Francine-Deena Cooper, for $290,000.00, conditional for 7 banking days for the arrangement of satisfactory mortgage financing. While several extensions to this 7 day period were granted, on November 6, 1997, Ms. Cooper's solicitor advised that she considered the agreement to be at an end as she could not obtain satisfactory first mortgage financing to complete the transaction. On December 29, 1997, Ms. Cooper executed a full Release and her deposit monies were returned. The Release included within its scope any option or entitlement she may theretofore have had or at the date thereof may have had as a tenant to purchase the property from the Metropolitan Corporation.

By its adoption of Clause No. 4 of Report No. 9 of The Corporate Services Committee on July 8, 9 and 10, 1998, Toronto Council authorized that the properties listed in Schedule "A" to the Clause be sold to sitting tenants at market value determined as at the date of their earlier expression of interest (i.e., in consideration of perceived delays in reaching agreement on the value of the various properties). In light of the fact that agreement had already been reached with Ms. Cooper in 1997, and it was she who subsequently chose not to proceed with the purchase of the property, this property was not considered for inclusion in Schedule A. On August 10, 1998, Ms. Cooper once again indicated that she was interested in pursuing the purchase of the property. Accordingly, in accordance with Council directive to offer properties to tenants on the basis of market value applicable at the time of current negotiations, the tenant was provided with the August 10, 1998 appraisal estimating the fair market value of this property at $345,000.00, together with the approved form of Offer document.

Comments and/or Discussion and/or Justification:

The tenant, Ms. Francine-Deena Cooper, rejected the City's appraised value, and requested that the matter of market value be referred to arbitration in conformance with Council's directive to have a third party arbitrator attempt to bring the parties together. (Clause No. 4 of Report No. 9 of TheCorporate Services Committee adopted as amended by Council at the meeting held on July 8, 9 and 10, 1998). An arbitration hearing was held on February 9, 1999, and in a written decision, the arbitrator, Ms. Patricia Dunn stated that $330,000.00 would be the reasonable market value of the property.

Subsequent to the arbitrator's decision, Ms. Cooper submitted an offer to purchase in the amount of $300,000.00. A summary of the property and the terms and conditions in Ms. Cooper's offer to purchase are as follows:

Property Address:205 Ava Road.

Legal Description:Part of Lots 951 and 952, Registered Plan 1870, City of Toronto (formerly City of York), designated as Part 3 on Reference Plan No.64R-15564.

Lot Size:13.11 metres (43 feet) fronting onto Ava Road,

26.36 metres (86.5 feet) depth.

Location:South side of Ava Road, east of Everden Road.

Improvements:Detached, brick 2-storey dwelling.

Occupancy Status:Tenanted.

Date Interest Expressed:August 10, 1998.

Amount of Offer:$300,000.00, conditional for 3 banking days for the arrangement of satisfactory mortgage financing.

Deposit:$15,000.00 (bank draft).

Purchaser:Francine-Deena Cooper.

Closing Date:June 25, 1999.

Terms:Cash on closing, subject to the usual adjustments and registration of an option to purchase.

This offer does not conform with the Council directive of July 29, 30 and 31, 1998, to offer the property to the tenants on the basis of market value applicable at the time of current negotiation. It is therefore recommended that Ms. Cooper's offer not be accepted and that the City submit a signed back counter-offer in the amount of $330,000.00, but otherwise on the same terms and conditions as the offer made by Ms. Cooper except for the financing condition which would not form part of the City's counter-offer; which counter-offer shall be irrevocable until May 21, 1999. In the event that Ms. Cooper does not accept this counter-offer within the time frame specified, the property should then be listed for sale subject to the existing tenancy.

This is a proposed sale to an existing tenant and is based on market value as at August 10, 1998. Council directed that comparable sales data be provided for property sales in the Spadina corridor. Appendix "A" identifies three comparable sales located in the vicinity of the subject.

Conclusion:

The sale of this property at $330,000.00 is considered fair and reasonable, reflecting market value as at August 10, 1998 in accordance with Council directives.

Contact Name:

S. Badin, Valuator-Negotiator, Real Estate Services, (416) 392-8142, Fax No. (416) 392-4828 E-Mail Address: sheryl_badin@metrodesk.metrotor.on.ca.

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Appendix "A"

205 Ava Road - Comparable Sales

The following three addresses represent recent comparable sales of properties that are similar to the residence which forms the subject matter of this report. These three properties consist of brick 2-storey dwellings located in the vicinity of the subject property. The subject property backs on to a park/ravine.

ApproximateBacks on to

AddressLot SizePark/RavineSale PriceDate of Sale

171 Strathearn Road30 x 136No$342,100.00June 4, 1998

183 Glen Cedar30 x 105No$335,018.00August 14, 1998

623 Rushton Road30 x 179.78Yes$376,000.00July 30, 1998

The Corporate Services Committee also submits the following Supplementary report (April16,1999) from the Commissioner of Corporate Services:

Purpose:

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

Funding Sources, Financial Implications and Impact Statement:

As set out in my April 6, 1999 report to the Corporate Services Committee.

Recommendations:

It is recommended that:

(1)the report from Commissioner of Corporate Services dated April 6, 1999 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 May 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; and

(b)a condition be included that Ms. Cooper provide on or before May 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 Plan64R-15564."

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

Council Reference/Background/History:

My report entitled "Sale of Surplus Spadina Project Property at 205 Ava Road (Ward 28-York Eglinton)" is currently before your Committee. In preparation for the eventual transfer of 205 Ava Road, staff have become aware that an existing fence is not on the boundary line of the lands to be conveyed pursuant to the Agreement of Purchase and Sale recommended in the above-noted report. It is considered appropriate and necessary to relocate the fence before finalizing an Agreement of Purchase and Sale with an intended purchaser.

Accordingly, in order to clarify the boundary of the property being sold, it is considered appropriate to include in the counter offer to Ms. Cooper an acknowledgement and agreement that the City will restore the fence at the rear of the property to its proper lot line as shown as Part 3 on Plan64R-15564 and requiring Ms. Cooper to release any right, title or interest she may have in any lands adjoining or adjacent to Part 3 on Plan 64R-15564.

Conclusion:

It is reasonable and fair that the recommended sale by way of counter offer be based upon the rear fence being installed on the lot line.

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.

The Corporate Services Committee also submits the following Supplementary Report No.(2) (May 6, 1999) from the Commissioner of Corporate Services:

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 Plan64-15564; 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.

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The Corporate Services Committee reports, for the information of Council, having also had before it a communication (March26,1999) from Mr. Bram M. Zinman, Barristers and Solicitors, Kronis, Rotsztain, Margles, Cappel and Gertler, requesting an opportunity to appear before the Corporate Services Committee respecting the property located at 205 Ava Road, Toronto.

Mr. Bram M. Zinman, Solicitor acting on behalf of Ms. Francine-Deena Cooper, and Ms.Francine-Deena Cooper appeared before the Corporate Services Committee in connection with the foregoing matter.

(A copy of the map attached to the report (April 6, 1999) from the Commissioner of Corporate Services was forwarded to all Members of Council with the May 20, 1999, agenda of the Corporate Services Committee and a copy thereof is also on file in the office of the City Clerk.)