'The deal is done' for Coast Guard site
Rejuvenation: Ottawa finally accepts city's offer to buy coveted property
Bobbi-Jean MacKinnon
Telegraph-Journal
Published Saturday March 8th, 2008
Appeared on page B1
SAINT JOHN - The city and federal government have finally reached a deal on the purchase and sale of the former Coast Guard site, says the city manager.
Although there are still some details to work out, such as the closing date, the federal Department of Public Works has accepted the price offered by the city last September, along with other general terms of sale, said Terry Totten. He received written confirmation on Thursday, but it will likely be months before the legal purchase and sale agreement is signed. "Until we get that done, there's no formal acceptance, but the deal is done."
The city first expressed interest to Ottawa in buying the property almost eight years ago.
Totten declined to say how much the city offered, but it's "in the vicinity" of the $3.4 million set aside in the capital budget for land purchase and site preparations.
The city hopes to take ownership of the property by December, but the Department of Fisheries and Oceans still has to find a new home, so that could affect the time line. It's possible the city will take the site over in phases, he suggested.
Meanwhile, negotiations with the Hardman Group over its proposed $75-million development are "progressing along quite well," said Ross Jefferson, on behalf of the Saint John Development Corporation, which is assisting the city.
He expects to have a financial development agreement in place within 12 to 16 weeks. Public input on the development as well as formal design approval, including rezoning, are also expected to be completed during that period, he said.
Construction is still expected to start in 2009, but the previously discussed spring start might be a "bit aggressive," said Jefferson.
Among the issues still being worked out is whether the city will sell or lease the land to Hardman.
"The Development Corporation is open to consider what they think would be in the best interest of the city. We're not sure what that is right now," selling or leasing, said Totten.
The option to sell has "always been on the table," he said.
But it's never been discussed publicly. Up until now, the city has said it planned to buy the property from Ottawa and earn its money back through a lease with Hardman.
"It has not been discussed at the council level, but it was brought to their attention about a year, year-and-a-half ago," said Totten.
"Hardman's preference would be to have clear title to the land," particularly for the condominium portion of the proposed development, which also includes a hotel, townhouses, commercial and retail space, parking and an educational technology complex, he explained.
"We've said that right from the outset," confirmed Colin Whitcomb, Hardman's executive vice-president.
Ideally, the company wants to buy the land in phases, coinciding with development, he said.
The first phase of the development is expected to include a 130-room hotel, a 36-unit condominium tower and an underground pedway connection to Market Square. It is slated to take three years. Once all four phases are completed in about 10 years, it will the biggest development on the waterfront since the Market Square project in the 1980s.
Whitcomb declined to divulge how much Hardman is willing to pay for the six-acre property it describes on its website as being "one of Atlantic Canada's most prestigious waterfront development sites."
"We've talked figures back and forth," he said.
Totten was also tight-lipped about whether the city would try to sell the land at a profit. "We certainly would not want it to cost the city or the citizens of Saint John."
The decision of whether to sell or lease will be based on "straight economics," weighing the pros and cons of having a lump sum of cash, which would likely go toward paying down the city's debt, versus having a steady revenue stream long term, said Totten. It's possible some of the land could be sold and the rest leased, he said.
Selling versus leasing is "not the big issue," stressed Totten. It's how quickly the site can be developed and contribute to the city's coffers through property taxes. He expects that amount will be "significant," not only through the site itself, but also increased value of nearby properties, such as Market Square and City Hall.
The city plans to hire a facilitator next week to help finalize the deal, including what services are required on the site and who should pay, as well as who's responsible for ongoing maintenance.
"We want to ensure we're not subsidizing private development, but encouraging it to occur as quickly as it can," said Totten. "It's a complicated site" because it's little more than a wharf and requires a special foundation to build on, he said. It also has a deteriorating seawall.
In December 2005, when the city announced it was accepting the Hardman Group proposal to renew the site, some officials had optimistically suggested the development could start in the summer of 2006.
"We're progressing along. Not lightening speed, but we are progressing," said Whitcomb. "Projects of this scale take time."
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