Loading...
HomeMy WebLinkAboutFinance & Admin - 1998-01-26FAC\1998-01-26 JAN UARY 26, 1998 FINANCE & ADMINISTRATION COMMITTEE MINUTES CITY OF KITCHENER The Finance and Administration Committee met this date under the Chairmanship of Councillor J. Ziegler with the following members present: Mayor C. Zehr, Councillors K. Taylor-Harrison, M. Yantzi, Jake Smola, B. Vrbanovic, J. Haalboom, T. Galloway, G. Lorentz and C. Weylie. Councillor John Smola was in attendance for part of the meeting. Others present: Ms. R. Upfold, Mrs. J. Koppeser, Ms. L. Pasternak, Ms. D. Arnold, Ms. S. Frenette, Messrs. J. Gazzola, O. den Ouden, T. McCabe, L. F. Parkhouse, R. Arnot, J. Shivas, J. Witmer, D. D. Snow, J. McBride and G. Sosnoski. 1. LEASE RENEGOTIATION - TRANSFERS RESTAURANT The Committee was in receipt of a report from D. Arnold dated January 20, 1998 recommending execution of the attached draft lease agreement dated January 1, 1998. They were also in receipt of a written submission from Mr. Stephen Grant, Madorin-Snyder, dated January 21, 1998 in respect to lease negotiations. Mr. Stephen Grant was in attendance this date on behalf of, and along with, the owner of Transfers Restaurant, Mr. John Savvidis. Mr. Grant advised that major renovations are planned for a Transfers Restaurant and that agreement has been reached on all of the terms of the new lease save and except the base rent. He suggested that contrary to staff opinion, it is misleading to suggest that the City would be losing approximately $11,500.00 if it agreed to freeze the $10.00 per square foot per year base rent for the entire ten year term of the contract. He offered the opinion that such a conclusion assumes market rents will increase and that the Consumer Price Index (CPI) will also increase by 2 per cent per year. Mr. Grant also quoted base rents for other Downtown restaurants, suggesting that his client is prepared to pay the higher $10.00 per square foot rate provided this can be extended over the term of the lease. He recommended accepting the draft lease with the base rent of $10.00 per square foot and with no increase in this amount over the ten year term. Councillor K. Taylor-Harrison asked whether Mr. Grant was aware of the other terms and conditions associated with the leases of the premises whose lower base rents he had quoted and he replied that he was unsure as to the other terms. Ms. Arnold clarified that to the best of her knowledge the William's Coffee Pub lease began at $10.00 per square foot with provision for an annual increase of between 50 cents and $1.00 to reflect inflation. Mr. Grant clarified that the $10.00 per square foot figure was suggested by the owner of Transfers Restaurant on the basis that amortizing this amount over a ten year period will allow him to cover expenses and service debt associated with the renovations. Mayor Zehr cautioned against making absolute comparisons in regard to base rents and noted that it is reasonable, regardless of rates, to assume that rent will go either up or down over a ten year period. Mr. Grant acknowledged that rates have fluctuated, but recent experience does not suggest an increase. He also pointed that the renovations costs are being paid entirely by the owner, who will be carrying debt in this regard, and the City will benefit from these. In response to a question from Councillor Galloway, Mr. Grant suggested that one form of compromise may involved provision for a CPI increase in some of the years of the lease. Ms. Arnold pointed that the renovation estimates are $100,000.00 and not $150,000.00, and that the City will see an actual decrease in revenue of approximately $5,000.00 irregardless of the rate of inflation. She cautioned the Committee to consider carefully the comments of Mr. Grant as to the rents for other Downtown restaurants, noting that Mr. Anderson recently completed a survey and found that the $10.00 per square foot rate is reasonable. On a motion by Mayor C. Zehr, it was resolved: "That Legal Department staff resume lease negotiations with the owner of Transfers Restaurant Inc. and finalize same by the February 2, 1998 Council meeting; specifically, an arrangement whereby there is no increase in the base rent for the facility over a period of time, following which an adjustment is made by incorporating all or part of an amount comparable to the Consumer Price Index in any given year." FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 -18- CITY OF KITCHENER 1. LEASE RENEGOTIATION - TRANSFERS RESTAURANT - CONT'D Councillor Ziegler also asked for a more accurate indication of the renovations costs for Transfers Restaurant. Mr. Shawn Miller appeared concerning how the new vendor licence fees relate to his seasonal flower and produce business. The Committee was in receipt of a written submission from Mr. Miller dated January 19, 1998 suggesting that the new rates will pose an unreasonable financial burden given the number of locations and asked that the City consider a comprehensive annual licence fee for all of his vendor locations. In response to a question from Councillor Ziegler, Mr. Miller indicated that he operates from eight locations and in 1997 paid a $500.00 Transient Trader fee, from which business taxes were deducted. Mrs. Koppeser clarified that in prior years the fee was deposited as a credit against business taxes, any amount of which remaining after five years is returned to the applicant. She explained that the present arrangements, following removal of the business occupancy tax by the Province, allows for a $290.00 licence per location per day to a maximum of $1000.00 per year per applicant, subject to each location being approved by Zoning and the property owner. Mr. Miller suggested that the by-law indicates a maximum $1000.00 per location for a temporary vendor, and that he has no problem with a $1000.00 comprehensive licence fee for all locations in each of the vendor categories. Ms. Koppeser confirmed that the stands in questions would come under the $1000.00 maximum fee provided they are operated less than 250 days out of the year, noting that there is currently a problem with one of the locations. On a motion by Councillor G. Lorentz, it was resolved: "That the Manager of Licensing meet with Mr. Shawn Miller concerning the increased licence fees for his flower and produce vending business, and in the event the concern cannot be addressed at the staff level, a report be submitted to a future Finance and Administration Committee meeting for consideration." MUNICIPAL COMMITMENT - THEATRE COMPLEX DEVELOPMENT (CORA GROUP/AMC THEATRES) Council was in receipt of Planning and Development Department report PD98/10 recommending various commitments by the municipality in regard to the proposed development of a 24 screen theatre complex on the lands formerly occupied by the Downtown Eaton's store. Ms. Audrey Wilson, General Manager, and Mr. Adrian Conrad, Vice President, Cora Group were in attendance and circulated a brochure outlining plans for the theatre complex and associated retail businesses. Mr. McCabe advised that a corporate team, under the guidance of Mr. Gazzola, worked on the matter and that the Cora Group is asking the City to advance the construction of a new Downtown parking garage from 2001/2002 to 1999/2000. Mr. McCabe suggested that there would be minimal revenue loss in regard to the request for a parking fee reduction after 6:00 p.m. He also circulated samples of the proposed marquee signs for which the Cora Group is asking Council to approve a variance to its Sign By-law. Ms. Frenette referred to the recommendations outlined in the PD98/10, noting that the proposal is a very important catalyst in the development of the east end of City and involves the demolition of the present Eaton's building. She noted that all of the recommendations put forward are conditional upon AMC Theatres proposal going ahead. Ms. Frenette requested three minor changes to the staff recommendations; namely, that the parking charge after 6:00 p.m. read $1.00 per "entrance" rather than "exit"; additional wording to the effect that reasonable increases in this parking rate could be considered after the initial three year period; and, that reference to the Parking Demand Study include a Traffic Impact Study. MUNICIPAL COMMITMENT - THEATRE COMPLEX DEVELOPMENT (CORA GROUP/AMC THEATRES) - CONT'D FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 -19- CITY OF KITCHENER Ms. Frenette then reviewed each of the individual recommendations involving parking, the construction of a new parking garage, transit changes, applications for Downtown financial incentives and an exemption to the Sign By-law to permit electronic billboards and illuminated marquees. Councillor Jake Smola enquired as to why the Capital Forecast currently indicates $4 million for a parking garage, yet $6.2 million is being suggested. Ms. Frenette replied that this relates to the larger capacity of the parking structure, and Mr. McCabe noted that this expenditure increase came at the suggestion of Traffic and Parking staff and is not being driven by the Cora/AMC proposal. He clarified that the Cora Group is only requesting that construction of the facility be moved forward in the Capital Forecast. Mr. McBride suggested that in constructing a new garage, the number of spaces can be maximized at 400 rather than the 270 required by this particular development and in so doing the City will be making more efficient use of the site. He also stressed the need for a Market Demand and Traffic Impact Study in regard to the garage. Councillor Vrbanovic enquired whether a cost benefit analysis had been done for the proposal in terms of what revenue gains or losses the City could expect. Ms. Frenette responded that additional tax revenue can be anticipated as a result of the new structure, since the Eaton's building will be demolished in any case; however, the exact figure is not known at this time. Councillor Vrbanovic asked that details of the expected tax revenue increase as well as a costing of the financial impact in regard to parking fees with both to be made available to Council by the February 2 meeting. Councillor John Smola entered the meeting at this time. Councillor Galloway acknowledged that the project proposal is an exciting one; however, it would be easier to make a decision with a comprehensive overview of the pluses and minuses from a cost standpoint. He asked for a breakdown of estimated increase in transit revenues, assessment and parking revenues based on increased use after 6:00 p.m. Mr. Gazzola cautioned that in making a decision, Council should consider not only new assessment revenue from the development but also what additional assessment revenue the City stands to lose in the future as a result of increased vacancies in retail space, as this may well be the case if revitalization does not occur. Mr. Adrian Conrad, Cora Group, introduced the proposed project and advised that his organization is in the final stages of negotiations respecting an AMC Theatres lease. The entire project would cost approximately $30 - $40 million to develop, and large retail operators can be expected in the wake of the AMC development as has been the case in other centres where such theatre complexes have been constructed. He suggested that approximately 1.2 million patrons are expected initially with this amount increasing to between 1.4 and 1.5 million. He advised that the Cora Group fully supports the staff recommendations with the minor changes proposed this date, and noted that at this stage, municipal commitments are critical to the negotiations. Mr. Conrad estimated that over and above the amount to construct the parking garage which is already in the Capital Forecast, the City would face additional costs of approximately $250,000.00 which comprises less than 1 per cent of the overall development cost. He pointed out that in the past Council felt that a new garage in the Downtown would be of general value to the City, and stressed that the increase in the number of parking spaces proposed is driven by City staff as AMC Theatres has a requirement of only 270 parking spaces. Mr. Conrad advised that AMC is committing to a 20 year lease with a renewal option and is looking for parking commitments only at non-peak times, for which the City can anticipate increased revenue. Mr. Conrad confirmed that the Eaton's building will be demolished in any case and the tax revenue for the vacant land will be minimal. He stated that in the view of the Cora Group the AMC Theatre proposal is the highest and best use for the site, and it is anticipated the complex will bring in national tenants and increase tax revenues significantly. He explained that the proposed theatre is not a traditional movie centre, but aims at drawing people into the Downtown for a longer stay than would be required to watch a movie alone. Mr. Conrad referred to floor plans circulated with the brochure distributed this date, and advised that the AMC deal is conditional upon assured parking, Cora leasing 60 percent of the mall to related tenants, and financing. In response to a question from Councillor Haalboom, Mr. Conrad indicated that though he could not prove there would be spinoff benefits for the MUNICIPAL COMMITMENT - THEATRE COMPLEX DEVELOPMENT (CORA GROUP/AMC THEATRES) - CONT'D Downtown generally, the complex would be creating an opportunity to bring large numbers of people into the Downtown and with the appropriate retail mix it is likely that Downtown merchants and services would benefit. He further advised that Cora will know by the end of April how close it FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 - 20 - CITY OF KITCHENER is to the 60 per cent leasing target. Councillor Yantzi suggested that there may be benefit in re-orienting the Farmer's Market in order to restrict it to the lower level alone and expand into Scott Street in order to free up additional retail space in the upper level. Mr. Conrad advised that he would like to retain the Market as a long term tenant and will do whatever he can to accommodate any required changes. Mayor Zehr enquired as to the last date for a City commitment and Mr. Conrad indicated that a response should be forthcoming in the next week or two. Mayor Zehr indicated that it was his assumption the preamble to the recommendation would also include the fact that in addition to repairing the market garage, the upper two levels would be replaced. Mr. Conrad confirmed this and the fact that the Cora Group is committed to bringing the garage up to Building Code standards. Mayor Zehr asked that reference in this regard be included in any motion. Councillor B. Vrbanovic put forward a motion to adopt the staff recommendations, with the amendments proposed by Ms. Frenette this date, and the additional clarification suggested by Mayor Zehr in regard to completing repairs of the garage in accordance with an earlier legal agreement. Councillor K. Taylor-Harrison advised that she is supportive not only of the project but of the increased size of the Downtown parking garage as recommended by staff. Councillor Galloway indicated that he has concerns with that portion of the second clause of the staff recommendation which in effect commits Council to increasing the size of the parking garage over and above the $4 million allocation presently in the Capital Forecast. He suggested that the parking facility could be increased incremently. Councillor Galloway also questioned reallocating funds from the financing for business parks and referred to earlier concerns raised by the City Auditor over the unfunded liability for business parks. Mr. Gazzola responded that staff are also concerned about this unfunded liability; however, they saw this as a way of financing the project without affecting other Capital programs. He also commented that early indications suggest that it may not be financially feasible to construct a new parking garage in stages. Councillor B. Vrbanovic accepted, as a friendly amendment, a suggestion by Councillor Jake Smola that the clause in reference to a new Downtown parking structure refer to a minimum of 270 spaces, and Councillor Vrbanovic further amended his motion so as to indicate construction of the new parking garage would be subject to the Parking Demand and Traffic Impact Study. Councillor Jake Smola suggested that the location of the parking garage referred to in the motion should be eliminated at this time, as other locations should be considered, especially in conjunction with a possible relocation of the Market. Councillor J. Haalboom indicated that though she generally supports the project, she is sceptical of the spinoffs for the Downtown and also is concerned over promoting the use of cars as opposed to public transit. Councillor John Smola advised that he would like to investigate staging the construction of the parking garage and a possible reorientation of the Market. Councillor B. Vrbanovic accepted a further friendly amendment from Mayor Zehr in respect to the staff report and information on the financial implications of the assurances requested by the Cora Group this date. Councillor Vrbanovic also suggested that a discussion take place with the President of K-W Oktoberfest Inc. as to the possible incorporation of King Ludwig's Castle as a permanent feature of the new parking garage. Mr. Snow advised that in regard to earlier comments as to the location of the garage, the location recommended was previously identified based on MUNICIPAL COMMITMENT - THEATRE COMPLEX DEVELOPMENT (CORA GROUP/AMC THEATRES) - CONT'D existing demand. The main motion was then voted on, as amended. On a motion by Councillor B. Vrbanovic, it was unanimously resolved: "That subject to A.M.~. Theatres of Canada Inc. legally committing to the development of a twenty-four theatre complex in Market Square by September 1, 1998, and subject to Cora FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 -21 - CITY OF KITCHENER Group commencing repair of the Market Square parking garage in 1998 as defined in the December 3, 1996 agreement between the City and 1178822 Ontario Limited, with said repairs to be completed by December 31, 1999, Council confirm that parking in the following City-owned/leased parking facilities equalling 887 spaces shall be available for public use either free of charge or at a nominal fee not to exceed $1.00 per entrance after 6:00 p.m., seven days a week and for a period not exceeding three years: On-street parking Duke and Ontario parking garage 5 Eby Street North 104 415 177 Lot #21 - Scott and King Streets 14 Lot #23 - King Street East 36 Lot #11 - Charles and Queen Streets 6 Lot #12 - 52 Ontario Street South 48 Lot #15 - Hall's Lane 5 Lot #10 - Dominion Lot 5 Lot # 2 - Queen Street North 36 Lot # 7 - Charles and Queen Streets 41 That funds in the amount of $6.2 million be reallocated in the Capital Forecast from the financing provided for the Business Parks to the construction of the Benton/Charles parking structure in the amounts of $50,000.00 in 1998 and $6,150,000.00 in 2000, with said parking structure to contain 270 parking spaces, be scheduled for completion in the Spring of 2000 and be subject to the results of a Parking Demand and Traffic Impact Study; and That $20,000.00 be allocated for a Parking Demand and Traffic Impact Study from the Cash-In-Lieu of Parking Reserve Fund; and, That Council further direct staff to monitor the demand for short-term parking in the Downtown and alert Council as to any evident shortages of available space as a result of Downtown development; and, That the direct Transit route that currently operates between the University of Waterloo and Wilfrid Laurier University and the Downtown be marketed specifically to the university community and that scheduling hours of operation and enhanced marketing be made consistent with the operation of the A.M.C. Theatre; and, That Council approve, subject to payment of any taxes, the applications for the following Downtown financial incentives for 25 Frederick Street, otherwise known as Market Square: a) a rehabilitation and redevelopment tax rebate; b) a grant-in-lieu of building permits fees; c) a grant of $45,000.00 through the Facade/Interior Loan Program; and, MUNICIPAL COMMITMENT - THEATRE COMPLEX DEVELOPMENT (CORA GROUP/AMC THEATRES) - CONT'D That Council grant a variance to the Sign By-law to permit electronic billboards and/or illuminated marquees on the facade of the A.M.C. complex; and further, That staff prepare an additional report for consideration at the February 2, 1997 Council meeting comprising an income and cost estimate to include but not be limited to, new assessment revenue as well as any anticipated increases in Transit and Parking revenues as a result of this project." SURPLUS LAND DECLARATION The Committee was in receipt of a report from G. Anderson dated January 20, 1998 recommending that a parcel of land adjacent to the realignment of Pinnacle Drive be declared surplus. FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 - 22 - CITY OF KITCHENER On a motion by Councillor G. Lorentz, it was resolved: "That consideration of the recommendation outlined in PD98/12 concerning a request for a development charge exemption for 295 Connaught Street be deferred and referred to the February 2, 1998 Council meeting pending delivery of a copy of said report to the property owner for review prior to the Council meeting." WAIVING OF DEVELOPMENT CHARGE - 295 CONNAUGHT STREET Council was in receipt of Planning and Development Department report PD98\12 recommending no action on the request of the owner for exemption from the City's portion of development charges pertaining to a recent building addition. Councillor Yantzi suggested the possibility of a grant in this regard to encourage intensification and the more efficient use of buildings. Councillor Zehr agreed there should be some form of accommodation as in his view the amount being charged does no reflect the amount of additional load on City services resulting from this particular development. On a motion by Councillor M. Yantzi, it was resolved: "That consideration of the recommendation outlined in PD98/12 concerning a request for a development charge exemption for 295 Connaught Street be deferred and referred to the February 2, 1998 Council meeting pending delivery of a copy of said report to the property owner for review prior to the Council meeting." 1998 INTERIM TAX LEVY The Committee was in receipt of a report from P. Houston dated January 22, 1998 recommending a 1998 interim mill rate and 1998 tax payment due dates. The effect of the recommendation would be to increase the number of payment dates from three to four. Moved by Councillor T. Galloway, "That the 1998 interim tax mill rates be established at approximately 50 per cent of the 1997 final total mill rates; and further, That the tax payment due dates be set as follows: Interim Instalment No. 1) - March 2; Interim (Instalment No. 2) - May 1; Final (Instalment No. 1) - July 2; Final (Instalment No.2) - September 1 ." 1998 INTERIM TAX LEVY - CONT'D Councillor Ziegler suggested front loading the percentage of the tax payment in 1998 and remaining at three payment dates, and in this regard suggested approximately 35 per cent for each of the two Interim levies. Mr. Gazzola advised that staff may have a problem meeting the June date for instalments given the preparation required. He also noted that legislation limits the City to a 50 per cent interim levy. He added that Finance looked at the cash flow impact in each of the scenarios presented and that the option outlined in the staff recommendation adds flexibility. He also advised that it is the intent of staff that the number of tax instalments be increased to four on an ongoing basis. Councillor Galloway advised that he supports the staff recommendation as the increased number of payments reduces the budgetary impact on residents as less cash is needed for each instalment. He added that he would not support a front end increase in the instalment as this will send a confusing message and people will assume that the subsequent tax billings will be of a similar magnitude and therefore assume a substantial tax increase. Councillor Galloway also pointed out that an increase to four instalments will impress upon tax payers the significant changes imposed by the Province. Councillor Ziegler questioned the $186,000.00 cash flow problem referred to by staff in Option #6 and indicated an interest in seeing the calculations in this regard. FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 - 23 - CITY OF KITCHENER The previous motion by Councillor T. Galloway in respect to the 1998 interim tax rates and payment dates was then voted on and Carried. Councillor Weylie noted that with the removal of the business occupancy tax she would like staff to provide background information before she is expected to vote at the Region on related issues. Mr. Gazzola advised that staff will make a recommendation prior to discussion at the Regional level. REDRAFTING OF LICENSING BY-LAWS The Committee was in receipt of a report from J. Koppeser dated January 21, 1998 requesting direction to proceed with redrafting of licensing by-laws pursuant to Bill 26. On a motion by Councillor B. Vrbanovic, it was resolved: "That the Licensing Section of the Corporate Services Department and the Legal Department be directed to review and update all licensing by-laws over the next 2-1/2 years to meet the requirements of Bill 26." 7. WAIVING OF LICENSE FEES - "SEEDY SATURDAY" The Committee was in receipt of a report from J. Koppeser dated January 21, 1998 concerning a request from Doon Heritage Crossroads to waive vendor licence fees for the upcoming event. On a motion by Councillor T. Galloway, it was resolved: "That the City of Kitchener grant the request of Doon Heritage Crossroads to reduce the required licence fee to $10.00 for a show referred to as "Seedy Saturday" to be held on Saturday, February 21, 1998." DELEGATION OF AUTHORITY - NON-PROFIT LOTTERY LICENCE APPROVALS The Committee was in receipt of a report from J. Koppeser dated January 21, 1998 requesting direction as to the possible delegation to Licensing staff of authority for approving lottery licences for non-profit organizations. DELEGATION OF AUTHORITY - NON-PROFIT LOTTERY LICENCE APPROVALS - CONT'D On a motion by Councillor T. Galloway, it was resolved: "That the Manager of Licensing be authorised to approve a Lottery Application for any "non- profit organization" which applied for a previous licence and was approved by Council provided: all Municipal and Provincial regulations were met for the previous licence; the request is the same as the previous application; and, in the opinion of the Manager of Licensing, the "need" for funds, as previously requested, still exists; and further, That if in the opinion of the Manager of Licensing the circumstances have changed, the applications shall be referred to Council or to the Finance and Administration Committee for direction." 9. ADVERTISEMENT - 125TH ANNIVERSARY SOUVENIR PUBLICATION (CONCORDIA CLUB) The Committee was in receipt of a memorandum from Mayor C. Zehr concerning a request from the Club that Kitchener consider purchasing a full page advertisement. Councillor Jake Smola suggested that the City purchase a half page colour advertisement, with staff to determine the appropriate content. Councillor Yantzi advised that he would not support FINANCE & ADMINISTRATION COMMITTEE MINUTES JAN UARY 26, 1998 - 24 - CITY OF KITCHENER 10. 11. 12. such a motion as it would be precedent setting, noting that the City receives other such requests. He also questioned the need for this form of subsidy in light of Oktoberfest revenues. Mayor Zehr advised that he has already sent a letter of congratulations to the Concordia Club on behalf of Council which will appear in the publication. On a motion by Councillor Jake Smola, it was resolved: "That the City of Kitchener purchase a 1/2 page colour advertisement in the 125th Anniversary Publication of the Concordia Club at a cost of approximately $675.00 with staff to determine the appropriate content." DEVELOPMENT COSTS - CASH-IN-LIEU OF LETTER OF CREDIT J. Shivas gave a verbal report in response to an earlier request that the City consider accepting 100 per cent cash for up front development expenses as opposed to letters of credit. He advised that after speaking with the individual who suggested the change, a satisfactory agreement has been reached and it is now possible to pay these expenses either in cash or by letter of credit. NEXT MEETING The next regularly scheduled meeting of the Finance and Administration Committee will be held on Monday, February 9, 1998. ADJOURNMENT On motion, the meeting adjourned at 12:50 p.m. Clerk G. Sosnoski Manager of Corporate Records/Assistant City