HomeMy WebLinkAboutCSD-09-030 - Sportsworld Arena Property PurchaseJ
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Community Services
Report To: Mayor Zehr and Members of Council
Date of Meeting: April 6, 2009
Submitted By: Pauline Houston, General Manager, Community Services
Prepared By: Pauline Houston, General Manager, Community Services
Ward(s) Involved: N/A
Date of Report: April 3, 2009
Report No.: CSD-09-030
Subject: Sportsworld Arena Property Purchase
RECOMMENDATION:
THAT the Mayor and Clerk be authorized to execute the necessary agreements with the
registered owner for the purchase of the Sportsworld Twin Pad Arena property at 100
Sportsworld Drive, including:
o an Agreement of Purchase and Sale for the purchase of the building and 3 acres of land,
for the purchase price of $7,800,000;
o lease and maintenance agreement for 2 acres of shared parking at an annual cost of
$50,000, to be adjusted annually by the consumer price index; and
o aright of way agreement for the maintenance and replacement of the City's share of the
site roadway network at an annual cost of $25,000, to be adjusted annually by the
consumer price index;
said agreements to be to the satisfaction of the City Solicitor.
THAT $8,000,000 of the Investing in Ontario Act grant be allocated to this project for the
purchase price plus closing costs, and
THAT Capital Upgrades for the Sportsworld arena estimated at $900,000 be submitted to the
federal and provincial governments under the Infrastructure Stimulus Fund program as the
City's highest priority for Federal Recreational Canada Fund projects, with the previous project
priorities already approved for this program following next in priority.
BACKGROUND:
Currently, the City residents have access to ten ice surfaces in the City of Kitchener for ice
related sports. The Leisure Facilities Master Plan and the Ice Demand Study of 2005 identified
the need for the replacement of two older existing arenas and a long term plan for two additional
twin pads (Activa Sports Complex and another in 2016 in South end of the City} to address the
needs of growth and the increased popularity of hockey for girls and adults. The Sportsworld
twin pad arena was constructed and opened in 2004 under the ownership of Terastar Realty
Corporation. The City entered into an ice rental agreement with Sportsworld with the intent of
securing long term rental of ice time in order that the aging facilities at Queensmount Arena and
Pat Doherty Arena could be decomissioned. The rental arrangement allowed the City to avoid a
major capital outlay for a new replacement facility and also allowed us to focus our resources on
minor sport ice usage in this facility, while providing greater access for adult usage through
Sportsworld. The ownership of the property has since changed and the current owner, GPM
Managed Investments who is developing the overall Sportsworld Crossing site for commercial
and retail use. As a result, the agent of the property owner approached the City to consider
purchasing the property. Although, in the past, the City has indicated that our preferred
scenario was a long term ice rental arrangement, rather than ownership, there is a serious
concern in terms of loss of ice available to the public, with the potential impact of the site being
redeveloped for some other use. In addition, it is critical for user planning purposes to have a
long term, secure ice use arrangement.
REPORT:
Based on our real estate appraisals completed by CB Richard Ellis Limited along with the
engineering services review completed by MTE Consultants, staff entered into property
purchase negotiations with the agent for the property owner. The staff team included Dan
Chapman, General Manager of Financial Services, Kim Kugler, Interim Director of Enterprise,
Lesley MacDonald, City Solicitor, Hans Gross, Director of Project Administration and Pauline
Houston, General Manager of Community Services.
Details of the purchase include:
1. purchase of the Sportsworld twin pad arena building including 3 acres of land for a price
of $7,800,000.
2. long term lease of approximately 2 acres of shared parking including parking lot
maintenance and winter maintenance for $50,000 per year
3. common area maintenance and replacement cost agreement related to the internal site
roadway network of $25,000 per year
In order to maintain our level of service for the provision of ice to our community, staff
considered the long term cost/benefit analysis of three options:
o recommission Queensmount Arena at a cost of approximately $1.9 million, which would
extend its useful life for 10 years, after which time, another twin ice pad, in addition to the
twin pad already in the City's 10 year capital forecast would be constructed in 2018, for an
approximately cost of $16 million (2009 $}. During this first 10 year time period, ice
availability to the public, particularly adult users would be reduced by the equivalent of one
ice pad.
o purchase the Sportsworld twin pad arena. In addition to the purchase price, staff have
identified a list of capital upgrades that will be required over time, including HVAC building
controls, upgrading ventilation, upgrades to rubber flooring and change rooms. The overall
estimate for these upgrades is approximately $900,000.
o Do nothing. Although some users may be able to access some ice time at facilities in
surrounding municipalities, the implications of this approach would be to reduce significantly
(20%} the ice availability to the public for minor sport groups and adult users by two ice
pads. It is also anticipated that this option will necessitate an acceleration in the building of
additional ice pads in the future.
The 30 year net present value financial analysis of the options, including both operating and
capital costs, indicates that Option 2 is a more cost effective option for the City that ensures a
continuation of the current level of service for our customers. Option 3, although has no short
term cost, it is staff's opinion that the resultant reduction in level of service would be
unacceptable to our users.
FINANCIAL IMPLICATIONS
The purchase of this property will be funded by allocating $8,000,000 from the Investing in
Ontario Act Grant, $7,800,000 for the purchase price plus $200,000 for closing costs. In
addition, since there is currently no provision or capacity in the 10 year capital forecast for
capital upgrades to this facility, it is recommended that this project be submitted under the
Infrastructure Stimulus Fund program as the City's highest priority for Federal Recreational
Canada Fund projects, with the previous project priorities already approved for this program
following next in priority (i.e. McLennan Park Development $3 million, Bridgeport Community
Centre $2.1 million and Aquatic Facility Upgrades $5 million}. The net operating impact of this
purchase is within the range of the rental budget allocation already provided for this facility.
COMMUNICATIONS
A media release has been prepared, which will also be posted on the City's website.
CONCLUSION
The Sportsworld facility has become an integral component to the City's long term plan for the
delivery of ice for our users. The site is close to the 401 for out of town visitors and easily
accessible for our residents via Highway 8. The purchase of this property is a cost effective,
long term investment for the City and ensures long term stability and reliability in the provision of
ice facilities/capacity for our residents.
Pauline Houston
General Manager, Community Services
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