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HomeMy WebLinkAboutCAO-06-059 - Budd Park Land Aquisition1 1!~t--~ Economic Development Report To: Council Date of Meeting: September 25, 2006 Submitted By: Rod Regier Prepared By: Rod Regier Ann Pappert Hans Gross Lesley MacDonald Ward(s) Involved: All Date of Report: September 19, 2006 Report No.: CAO-06-059 Subject: BUDD PARK LAND ACQUISITION RECOMMENDATION: That the Mayor and Clerk be authorized to execute an Agreement of Purchase and Sale, satisfactory to the City Solicitor, with ThyssenKrupp Budd Canada Inc. for the acquisition of those lands described as Part of Lot 31 Registrar's Complied Plan 1489, depicted as Area 1 and 3 on the sketch attached to Report CAO-06-059, to be set out on a reference plan to be deposited, at a purchase price of $1,250,000.00 plus incidental costs of both Vendor and Purchaser to facilitate this transaction, said costs collectively not to exceed a total of $50,000, and further, That the Mayor and Clerk be authorized to execute any documentation in this regard, required by and to the satisfaction of the City Solicitor. BACKGROUND: Budd Park consists of approximately 44 acres of land fronting on Homer Watson Blvd. The property consists of three parcels of land: Area 1 - 17 acres owned by Budd leased by the City, expiring December 1, 2006 Area 2 - 3.7 acres owned by the City of Kitchener, with right-of-way to Homer Watson Area 3 - 23.3 acres owned by Budd leased by the City, expiring August 31, 2077 Area 1 contains four tournament-class soccer fields. Area 3 hosts two baseball fields, two outdoor soccer fields, tennis courts and an indoor soccer facility. REPORT: In late 2005, Budd Canada Inc. gave the City of Kitchener's Community Services Department notice that it intended to terminate the City's lease on Area 1 of Budd Park (17 acres) effective December 1, 2006. Through subsequent discussions between Budd and City staff, we have been able to reach an agreement on the terms of a potential purchase of Area 1 and Area 3. In the course of our discussions City staff have conducted proper due diligence in reviewing the property. The agreement staff have reached with Budd Canada Inc. would have the City purchase both parcels of land (Area 1 and 3) at a cost of $1,250,000 plus incidental transaction costs for an approximate per acre cost of $31,000. The agreement would also ensure that the City would continue to use the land for the next 10 years for recreational purposes only. The purchase price represents a substantial discount to account for the 10 year moratorium on alternative uses. Staff believes that by purchasing both parcels of land at this time we can: • gain ownership, control and flexibility of the entire property at a reasonable cost to taxpayers; • ensure the site continues as a recreational destination (soccer, baseball, lacrosse) over the next 10 years with no immediate interruptions, and; • maximize flexibility in terms of the long-term use for the property and potential financial pay back to the City, depending on future decisions of Council. Short Term Benefits to Recreational Use: In the short term, the purchase of the land will ensure that we can continue to operate the soccer fields without interruption. If the City does not purchase Area 1, Budd could sell the land to another purchaser forcing the City to move its soccer fields as of December 1, 2006. The development of new soccer fields in another location would require an investment by the City of a minimum of $600,000 in construction costs. At this time the City has no land that could accommodate the construction of four new fields on one site. All four of the new soccer fields would have to be developed at separate locations, severely limiting the City's ability to host major soccer and lacrosse tournaments in the future and having a direct impact on soccer programming. Long Term Flexibility Benefits City's Economic and Recreational Health: The proposed agreement with Budd also gives the City maximum flexibility in terms of how the entire site might be used in the long-term depending on future decisions of Council. By purchasing the land now, at a later date (ie. after the 10 year moratorium has been lifted) the City will have the ability to make a decision on the best overall use for the site based on what is the in the best economic and recreational interests of the community at that time. For example, we already know that industrial land in Kitchener is limited. As our last remaining industrial land fills up there will be a need to find additional land to ensure our local economy continues to thrive. Once the 10 year moratorium on the use of Areas 1 and 3 has been lifted, the City may chose, through a future decision of Council to redevelop the entire site into an industrial use with the revenues generated from the sale of that property going into the construction of a superior recreational facility that could replace Budd Park in the long-term -resulting in a win-win for our local industrial base and for our recreational users. Under current zoning, redeveloping the entire site into a new industrial park and reselling the property for industrial uses could create space for 800 jobs and bring in approximately $400,000 per year in increased tax revenue for the City. The 10 year moratorium on Areas 1 and 3 would provide City staff with the time and certainty needed to look at alternative sites to ensure any new recreational facilities fit in with the growth of the community and with the City's fifteen year Leisure Facilities Master Plan. If the decision is made not to purchase the land now, in particular Area 1, we will need to make a number of quick decisions to replace the outdoor soccer facilities at Budd Park in the very near term given the potential sale of the land to another purchaser. In the end, there is much more work and research for staff to complete before any recommendations can be made in terms of the long-term use of Budd Park. However, by purchasing the entire property now, City Council will keep all of the City's options open and ensure maximum flexibility over the long-term. CONCLUSION: The offer to sell Budd Park to the City at a price less than the current market price for industrial land in South Kitchener is a gesture of good corporate citizenship on the part of T.K. Budd. It allows the city to secure recreation facilities on the site in the short-term and manage the lands in the public interest over the long-term. Rod Regier Ann Pappert Executive Director, Economic Development General Manager, Community Services Hans Gross Director, Project Administration and Economic Investment