Report for Community Services Committee May 5 ... - Edmonton



Space for Non-Profit Organizations

(K. Leibovici/S. Mandel)

[pic]

|Recommendation: |

|That the April 15, 2008, Community Services Department report |

|2008CSS003 be received for information. |

Report Summary

This report provides a response to an Administrative Inquiry regarding the need for space for non-profit organizations.

Previous Council/Committee Action

At the March 12, 2008, City Council meeting, Councillor K. Leibovici and Mayor S. Mandel made the following inquiry:

We are aware of many non-profit organizations such as Dogs with Wings, and the Canadian Paraplegic Association (Alberta) that are in need of space in order to continue their activities.

Can Administration provide a report detailing:

1. How many groups are actively looking for space and assess the space needs of these groups.

2. The number of existing school buildings that could be converted for use by these groups as well as surplus school sites.

3. Any City land/buildings that could be utilized.

4. Feasibility of a centre, such as the Kahanoff Centre in Calgary.

5. Recommend an approach to address the growing problem and the space deficiency for not-for-profit groups for administration, meeting and educational space.

The report should return to Community Services Committee.

Report

Background

• Community Services Department works with non-profit organizations addressing space challenges and explores options based on space available. Once the decision has been made to accommodate a group, Asset Management and Public Works Department (AMPW) assumes the role of landlord, which they have for the majority of City properties. However, Community Services Department has retained a few leases containing an operating or management component. Community Services Department also continues to license space to non-profit organizations that are located in Community Services facilities or ones that are found on parkland. Currently, 92 leases and 103 licenses with non-profit organizations are administered by the City of Edmonton.

• On March 16, 1999, City Council approved the Non-Profit Leasing Guidelines for city owned buildings. (Attachment 1). These guidelines were prepared after extensive consultation with the non-profit community.

• According to the Edmonton Chamber of Voluntary Organizations, there are more than 8,000 non-profit groups in the Edmonton region, of which approximately 4,500 are registered as societies or non-profit organizations.

1. Number of groups looking for Space

• In accordance with the Non-Profit Leasing Guidelines, Asset Management and Public Works Department maintains a list of non-profit groups that are looking for space in city owned buildings; there are currently over 90 groups on this waiting list. Administration is aware of other groups that would also like space if it were available, and that demand significantly exceeds the limited supply of available space. Growth and demand in Edmonton, coupled with rising land and operating costs make it increasingly difficult for non-profit organizations that do not have financial resources to compete in this robust market.

• Space needs among these groups range from 100 sq.ft. to 30,000 sq.ft. They most typically require space for: offices, storage, board/meeting rooms, classroom, arts (dance and theatre), warehouse, childcare/daycare and gymnasium use.

2. Potential School Space

• The School Boards in Edmonton operate in a similar fashion as the City, in that they make space that is surplus to Board requirements available for lease to the non-profit sector. While school buildings represent opportunities for many non-profit groups, the difficulty with using old schools is that surplus buildings have generally outlasted their economic life. By the time surplus school sites are offered for sale to the City, there is usually a requirement for a significant capital investment in order to render buildings leasable. This investment is over and above any costs incurred to purchase the land (Attachment 2).

• When surplus schools are made available for sale to the City, engineering assessments must be carried out to determine the capital costs that could be incurred over the short and long term. In most cases, even though the property can be purchased for land value only (even with a discount to carry out demolition), the required capital costs to make the building leasable generally make major renovations not financially viable. The City is currently carrying out an engineering assessment of Wellington School (under lease from the Public School Board until February of 2011) in order to determine the magnitude of maintenance needs over the next ten year period.

• As illustrated in Attachment 3, there are 28 other closed schools that could potentially be surplused.

3. Available City Land and Buildings

• The Connaught Armoury in Old Strathcona is currently being offered for lease or sale to the non-profit sector by way of a Request for Proposals, however, as a historic building, there is a significant capital investment required in addition to the fitting up of the space for the specific needs of the prospective tenant (or owner).

• Another property being considered for use by the non-profit sector is Argyll School, purchased by the City in September 2007. This building requires substantial ($2.5 million+) repair, hazardous materials removal and upgrading in order to make it useable.

• The City also makes surplus lands and developed lots available to the non-profit sector, such as was done for the cultural centres in McArthur Industrial Park and in Ellerslie Industrial Park, however, this option is only of value to groups that have the financial resources to construct new buildings.

4. Calgary Kahanoff Centre

• The Kahanoff Centre is a multi-tenant non-profit centre that provides central, cost effective office and meeting space for non-profit organizations. The Centre was developed and financed by the Kahanoff Foundation.

• This is a feasible model used in many cities in the United States and Canada. These centres usually provide space to non-profit groups below market rates and in most cases the revenue from space rental covers operating costs. If the building is paid for through private or public funds, long term sustainability increases.

5. Next Steps

• Administration will develop an integrated approach in 2008 that will clarify current municipal commitments, roles and responsibilities of other orders of government and of other key city building partners (e.g. Edmonton Chamber of Voluntary Organizations, Capital Health Authority, Edmonton School Boards, and the Capital Region Housing Corporation).

• This work will be incorporated into the Community Services Department work plan in conjunction with Asset Management and Public Works Department and will also include and consider:

- cross Canada research on municipal approaches to dealing with this issue;

- a detailed inventory, appraisal and current status of City managed leases and licenses;

- consultation with key stakeholders;

- a continuum of options for Council consideration; and

- alignment with the Joint Use Agreement.

Policy

This report is consistent with the Non-Profit Leasing Guidelines.

Focus Area

• Vibrant Communities - encourages recreational, cultural, artistic and entertainment opportunities for all residents.

• Business Positive Urban Environment - builds effective relationships with key city-building partners (Capital Health, Edmonton Public Schools, Edmonton Catholic Schools, post-secondary institutions and others) to develop a welcoming and compelling business environment.

Attachments

1. Non-Profit Leasing Guidelines – Approved by City Council

March 16, 1999

2. Surplus School Site Acquisitions

3. Closed and Resolved School List

4. Multi-tenant Non profit Centres

Others Approving this Report

W. D. Burn, General Manager,

Asset Management and Public Works Department

Non-Profit Leasing Guidelines - Approved by City Council March 16, 1999

Statement of Intent

The purpose of these Guidelines is to formalize a process for providing less than market rent leases of City-owned property to qualified non-profit organizations.

Principles

1. The City is responsible to hold public lands in trust and ensure public accessability.

2. The City has an obligation to the taxpayers to prudently manage its land holdings.

3. The City acknowledges a need to provide qualified non-profit organizations with leases of City property at less than market rent.

• The City recognizes the contributions of non-profit organizations towards the improvement of the quality of life in Edmonton. Contributions are made in the form of:

1. the donation of volunteer time, money and commitment,

2. the provision of services and programming that would otherwise be an expense to the City or not be provided, and

3. maintaining or increasing the asset value of the property occupied through upkeep, maintenance and capital improvements.

• It is recognized the City of Edmonton contributes to the strength of the non-profit sector through a variety of means including grants, less than market rents and tax exemptions. Boards or committees making recommendations of support will consider the receipt of all forms of City assistance.

4. Non-profit organizations provide a useful caretaking function when leasing properties that are not suitable for civic or commercial use, or that are highly specialized or unique. However, it should be noted that the City would not necessarily operate such facilities or provide the services offered by the non-profit community.

Guideline Exclusions and Exceptions

The following will be excluded from these Guidelines:

1. Community Services Department Enterprise Facilities

These facilities were mandated by City Council under the City '97 Initiatives to operate as one management entity. The facilities are the Muttart Conservatory, the Valley Zoo, Kinsmen Sports Centre, Commonwealth Stadium, Clarke Park, Fort Edmonton Park, Municipal Golf Courses, and the John Janzen Nature Centre.

2. Management/Operating Agreements

The organization is operating the facility on behalf of the City and, in some cases, may obtain an operating subsidy. Examples include the Snow Valley Ski Hill, the Edmonton Ski Club, and the Mill Woods Golf Course.

3. Permits, concessions and contracts in Community Services Department facilities

These agreements are not leases and are normally tendered for bids through Materials Management of the Corporate Services Department.

4. Licenses

These agreements are for temporary, non-exclusive use of property.

5. Leases held by the Edmonton Public Library Board

The Library operates under an independent board and is not considered a City department.

6. Leases to Community Leagues

These leases are currently under review.

7. Leases to non-profit organizations where the property is used for commercial, semi-commercial, or religious assembly purposes.

8. Residential/Social Housing

These uses are currently operating under City Policy C437.

9. Leases of Tax Recovery Properties

Tax Recovery properties are required by law to be leased at market value.

5. Leases where the non-profit organization alone or in partnership with the City proposes to construct or has constructed a facility of a unique or complex nature, will be dealt with on an individual basis by City Council. Examples include the Citadel Theatre, Winspear Centre, Kinsmen Twin Ice Arenas, and the Edmonton Indoor Soccer Centres.

Definitions

For the purposes of these Guidelines the following are defined but not limited to:

1. Operating Costs – costs and/or pro-rated costs for common areas associated with the day-to-day running and upkeep of a property:

a) utilities - electricity, water, sewer, natural or propane gas, telephone;

b) repair and maintenance – heating, ventilating, air conditioning, electrical, structural, roof, plumbing, fire, life or safety systems, painting, decorating, drywall, flooring, other maintenance;

c) cleaning – janitorial, materials, garbage and waste removal;

d) roads and grounds – maintenance, repair landscaping;

e) security – wages or contract fees;

f) taxes, licenses and license fees, insurance;

g) administration costs - supplies, wages and salaries; and

h) accounting - advertising and promotional costs.

2. Capital Replacement Costs – costs associated with the replacement of major building components:

a) structural – roof, foundation, paving;

b) mechanical - heating, air conditioning and ventilating systems; and

c) electrical – change of service or complete replacement of all wiring, fire alarm or security systems.

3. Tenant improvements – those that benefit only the non-profit organization and its uses, such as flooring coverings, interior painting, interior partitions and doors, window coverings, stages, seating, fixtures, etc.

4. Long Term Leases – leases where the term is more than five years, but no greater than 10 years.

5. Short Term Leases – leases where the term is five years or less.

6. General Manager – the General Manager of Asset Management and Public Works and, where the property is held in the inventory of Community Services Department, also includes the General Manager of Community Services.

Restrictions on Property Availability

• The General Manager has the right to determine the availability of properties for lease to non-profit organizations.

• Factors determining the availability of property include, without restriction, future civic requirements, marketability, suitability, and appropriateness for the intended use.

General Terms and Conditions for Less than Market Rent Leases

6. Less than market leases to qualified non-profit organizations will be at an annual rent of $1.00.

7. The General Manager shall determine the length of lease available for any property.

8. Long Term Leases will require the non-profit organization to be responsible for all costs associated with the use of the property including, but not limited to, operating costs, capital replacement costs, subdivision, servicing, and redistricting.

9. Short Term Leases which include multi-tenant properties, will have the City responsible for capital replacement costs. All operating costs associated with the use of the property will be borne by the non-profit organization. Further, the City and the non-profit organization will have the right to terminate the lease should the capital replacement cost of a major building component exceed the expected economic life of the building. Short term tenants will have the option of undertaking a capital replacement at their own expense or vacating the building.

10. Any lease wherein the non-profit organization has constructed the building, undertaken major capital improvements, or was previously under long term lease; all costs including operating and capital costs associated with the use of the property, will continue to be the responsibility of the tenant regardless of the number of years of the lease term.

• All non-profit organizations will be responsible for payment of all operating costs attributable to their leased property, either directly or as additional rent.

• Leases with operating costs billed by the City as additional rent may have those costs reviewed annually. Operating costs may be adjusted as required to account for inflation or other increased costs.

• In all leases, the non-profit organization will be fully responsible for all tenant improvements and the associated costs.

11. Unless exempted, all non-profit organizations shall be subject to property assessment and taxation for the leased property.

12. The non-profit organization must be in good standing and not be in default of any provision of their current lease with the City, in order to qualify for a less than market rent lease.

13. Leases will not allow for a change in use, assignment, or sub-letting, without the consent of the General Manager, and such consent may be unreasonably and arbitrarily withheld.

14. Capital replacement projects which are the responsibility of the City, will be undertaken as budget funds are available.

15. All leases shall be acceptable as to content by the General Manager and be acceptable as to form by the Law Branch of Corporate Services Department.

16. These Guidelines are subject to:

1. all City approved policies, procedures, and bylaws, except for City Policies C187 and C423;

2. all applicable federal and provincial statutes and regulations; and

3. all current agreements between the City and other parties such as school boards or governmental authorities.

• The City Manager is delegated the authority to approve and to sign all documents relating to leases of City-owned property to non-profit organizations, for a term not to exceed 10 years in accordance with the Non-Profit Leasing Guidelines. The City Manager will provide a listing of the approved non-profit leases on an annual basis.

Treatment of Existing Leases

17. The Non-Profit Leasing Guidelines will be effective January 1, 1999.

18. Existing leases to non-profit organizations will be treated as follows:

1. Non-profit organizations paying rent in excess of the Guidelines may apply to have their leases amended, effective January 1, 1999.

2. Non-profit organizations paying rent less than the Guidelines will comply with the Guidelines on renewal of the lease or upon entering into a new lease.

Criteria for Qualifying Non-Profit Organizations

• The criteria previously approved by City Council as a measurement of benefit to the community for use in determining property tax exemption will be used to qualify non-profit organizations wishing to lease City property at less than market rents (as outlined on Page 7 of Attachment 1).

• In addition, non-profit organizations must meet criteria established by Administration which are as follows:

1. The intended use of the property by the non-profit organizations must be considered suitable, appropriate, and meet the needs and requirements of the community as determined by the General Manager of the Community Services Department and the General Manager of the Asset Management and Public Works Department.

2. The organization has demonstrated that it has the experience, financial capability, and resources to carry out its proposed major renovations to, or construction on, City-owned property as determined by the General Manager of the Asset Management and Public Works Department the General Manager of the Community Services Department.

• If a non-profit organization was previously granted a property tax exemption, the non-profit organization will be deemed to qualify for a less than market lease, provided the additional criteria established by Administration are met.

• Non-profit organizations currently leasing City property that have not previously been granted a property tax exemption will be required to apply and qualify for a property tax exemption from the Assessment and Taxation Branch of the Corporate Services Department, before becoming eligible for a less than market lease.

• In the event of disagreement on a qualification issue, between a non-profit organization and Administration, the Peer Review Panel, which was established by City Council authority to make recommendations on property tax exemptions, shall review the qualifications and provide recommendations to Administration.

• In exceptional circumstances, should a non-profit organization not qualify for a property tax exemption but be considered a desirable tenant by the General Manager, the Community Services Department or the Asset Management and Public Works Department or both shall prepare a report and bring it forward to the appropriate Committee for consideration and determination.

In order to qualify for a lease at less than market rent, a non-profit organization would need to meet the following fundamental principles:

|Fundamental | |

|Principles |Description |

|Community Benefit |Organizations are of community benefit if they provide programs or services in the following areas: |

| |*charitable and benevolent activity |

| |*neighborhood community association or community league activity |

| |*arts/cultural activity |

| |*multicultural/ethnocultural activities |

| |*youth or senior citizen associations |

| |*amateur sports and recreation organizations |

| |*museums and interpretative exhibits |

| |*non commercial child care |

| |*aid to the disabled & handicapped, or |

| |The programs and services provided by the organization are deemed of public benefit to citizens of Edmonton |

| |serving them either as a geographic community or community of interests; or |

| |The organizations ability to provide those services is either more efficient, effective, accessible, or of a|

| |higher quality than would be provided by the city or the private sector; or |

| |The benefits of the programs and services improve the quality of life of citizens of Edmonton. |

|Incorporation |The organization must be incorporated as a non-profit in accordance with Section 241(f) of the Municipal |

| |Government Act. |

| |The organization must be in good standing under the applicable act of legislation. |

|Mission |The mission or goals of the organization are considered to serve the community. |

|Volunteer |There is volunteer involvement in the organization’s programs, activities or services. |

|Accessible |The organization actively promotes participation of the community in the programs, activities and |

| |facilities. |

| |The programs are not considered elite in nature and freely accessible to members of the community. |

| |The programs, activities and fees do not restrict community access or participation. |

|chief use |Utilized for the most part in a given way or for a given purpose, or more specifically utilized in a given |

| |way or for a given purpose at a level representing approximately 60% of the usage of the property or the |

| |part of the property. |

|Quality Programming |The programs are considered of a quality meritorious to warrant public support. |

|Commercial In Nature |Normally, an organization would be not be considered for tax exemption if it is commercial in nature however|

| |if a non-profit organization is offering a competitive service but only to serve the mission or purpose of |

| |the organization it should be considered. For example, if food is served but as part of an organization's |

| |program to encourage socialization programs it would be deemed tax exempt. |

Surplus School Site Acquisitions

[pic]

Closed and Resolved School List

[pic]

Multi-tenant Non-profit Centres

Kahanoff Centre, Calgary

• The Kahanoff Centre was developed by the Kahanoff Foundation. The Foundation has an objective of assisting nonprofits and charitable groups through offering subsidized rent, etc.

• Located centrally, in downtown Calgary, the Kahanoff Centre provides central, cost-effective office space for non-profit organizations in Calgary. It has 12 floors; approximately 120,000 square feet and plans to expand to 218,500 square feet and 19 floors. There are 19 agencies leasing space with a waiting list of 22. United Way is an anchor tenant, leasing 4 floors in the building. There are no vacancies and no expiring leases until 2011.

• Non-profit organizations sign 5 year leases with escalating rental and operating costs starting at $21.72 per square foot and escalating to $24.22 per square foot. This compares to $43.71 per square foot at market rates for Calgary “A” class building (CB Richards Ellis fourth quarter 2007). The tenants are tax exempt which they have to re-apply every year.

• An on site property manager provides referrals for non profits seeking technical support for capacity building and deals with all property management issues for the foundation.

Percy Page Centre, Edmonton

• The Percy Page Centre is located in Edmonton. It currently houses 67 provincial sport, recreation and arts associations. Developed in 1976 by the provincial government, it was first located in St. Albert and subsequently moved to Edmonton. The province still owns, operates and maintains the building through Alberta Infrastructure. They have identified criteria for acceptance into the building when space is available. Criteria include: registration as a non-profit, in receipt of annual operating funding from either Recreation Parks and Wildlife Foundation or the Foundation of the Arts, having a paid staff person. Non-Profits pay $1/year. Alberta Infrastructure operates the building and a property management company does ongoing physical maintenance. Tenants also receive some coaching/capacity building to support their organizations through Alberta Community Development. In addition to separate organizational office space, organizations in the building have access to free shared meeting space during the day Monday to Friday. There is a charge for the use of meeting rooms evenings and weekends.

La Cité francophone

• Located in the Bonnie Doon community, La Cité francophone is a multi-tenant non profit and cultural centre. It was built in 1996 by the Francophone community on an old school site. They demolished the school and built a new facility. La Cité provides 49,000 sq ft of space to 26 non-profit organizations. It is also home to a theatre, common meeting space, a library, and a café. Non-Profit tenants play less than market rates for their space.

• La Cité has one full time manager who takes care of all administration and accounting for the building and one full time maintenance staff. La Cité broke even after eight years of becoming operational and due to demand for additional space is now embarking on an expansion.

-----------------------

J

1

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download