Woodward's Redevelopment - Tunnels & Areaways Decommissioning

ADMINISTRATIVE REPORT

Date: February 21, 2001
Author: M.G. Thomson

Local: 7328

CC File No.5807

RTS No. 01832
P&E: March 8, 2001

TO:

Standing Committee on Planning & Environment

FROM:

General Manager of Engineering Services in Consultation with the Director of Legal Services

SUBJECT:

Woodward's Redevelopment - Tunnel and Areaways Decommissioning

CONSIDERATION

A. THAT Council authorize the Director of Legal Services to enter into an agreement with the owner of the "Woodward's Building"(the "Woodward's Owner") at 101 West Hastings Street, such agreement being titled the "Areaways and Tunnel Contract" (the "Contract") on the following general terms and conditions:

1. The City forego annual fees due and owing for "cavities under the sidewalk and lane being situated on the south side of Cordova Street, the west side of Abbott Street, the north side of Hastings Street and in the lane running south from Cordova Street, having a total of 6,693 square feet" (the "Areaways") for the years 1996 and following to the "Deadline" (hereinafter defined);

2. The City forego annual fees due and owing for the use of "a tunnel under and across Cordova Street, west of Abbott Street occupying a total of 1,518 square feet" (the "Tunnel") for the years 1996 and following to the Deadline;
3. The City forego all annual fees due and owing ($4,000.00 per year) for use of the "Loading Area" in the City-owned Parkade from November 27, 1995 (the date of the purchase of the Parkade by the City) forward, as such Loading Area has not been used, provided that prior to finalization of the Contract, setting out the City's agreement to forego the annual fees referred to in paragraphs 1 and 2 above, the Woodward's Owner releases the City from:

(i) all obligations contained in Loading Easement, registered under No's. BJ381025 to BJ381030 on title to the City-owned Parkade, and

(ii) all obligations contained in a related agreement, the Loading Area Agreement dated November 27, 1995 between the City and Fama Holdings Ltd., which agreement further defines the "Loading Area".

4. "Deadline" to mean November 30, 2005, provided that if the City requires either the Areaways Work or the Tunnel Work as defined in the Contract or both to be done before that date for any valid City purpose as determined by the City Engineer in his sole discretion, then the City will have the right to advance the deadline by giving Fama six (6) months written notice of same, but the City may not give such notice until on or after November 30, 2001;

5. That the Woodward's Owner decommission the Areaways and Tunnel prior to the Deadline. All costs to decommission the Areaways and Tunnel and repairs to the street and sidewalk replacement are to be the responsibility of the Woodward's Owner. All work to be to the satisfaction of the City Engineer;

6. If the Woodward's Owner does not decommission the Areaways by the Deadline, the Woodward's Owner must pay to the City the aggregate of all annual fees then due and owing by the Woodward's Owner to the City pursuant to the Areaways Easement (as defined in the Contract) and the Encroachment By-Law. For greater certainty, the annual fees which would then be due and owing to the City would be the amount of $19,729.00 in 1996 and $19,744.00 in each of 1997, 1998, 1999 and 2000, for a total of $98,705.00 in the years 1996 to2000 inclusive, together with all annual fees owing in the years 2001 to the Deadline calculated in accordance with the Encroachment By-Law;

7. If the Woodward's Owner does not decommission the Tunnel by the Deadline, the Woodward's Owner must pay to the City the aggregate of all annual fees due and owing by the Woodward's Owner to the City pursuant to the Tunnel Easement (as defined in the Contract) and the Encroachment By-Law. For greater certainty, the annual fees which would then be due and owing to the City would be the amount of $4,204.00 in 1996 and $4,219.00 in each of 1997, 1998, 1999 and 2000, for a total of $21,080.00 in the years 1996 to 2000 inclusive, together with all annual fees owing in the years 2001 to the Deadline calculated in accordance with the Encroachment By-Law;

8. Such other terms and conditions as deemed necessary and appropriate by the Director of Legal Services and the General Manager of Engineering Services.

RECOMMENDATION

B. THAT the Woodward's Owner pay $50,000.00 (inclusive of all taxes if applicable) as a payment in lieu to satisfy its obligations in respect of repairs to the City-owned lands on the north side of Cordova Street (the "Parkade")

C. THAT all annual rentals and/or annual fees for a "pedestrian overpass and merchandising area over Cordova Street", comprising an area of approximately 9,460 square feet (the "Overpass") be forgiven for the years 1996, 1997 and 1998 (a total of $84,120.00) upon payment of the $50,000.00 as described in Recommendation "B".

GENERAL MANAGER'S COMMENTS

The General Manager of Engineering Services presents Item A for consideration and recommends Items B and C.

COUNCIL POLICY

There is no Council policy directly related to this matter.

The Encroachment By-Law establishes fees to be charged for encroachments, and a requirement for cancellation provisions, but does not establish criteria for setting aside fees.

On January 7, 1999, Council approved the recommendations in a report from the General Manager of Engineering Services dated December 1, 1998 in regard to the "Woodward's Redevelopment Encroaching Elements onto Cordova Street, Abbott Street and Hastings Street and Related Fee Matters". Those recommendations are listed in Appendix "A".

PURPOSE

The purpose of this report is to seek Council direction in regard to annual fees for the Areaways, the Tunnel and the Overpass encroaching from the Woodward's Building. Consideration is sought in regard to authorizing the Director of Legal Services to enter into an agreement with the Woodward's Owner to achieve decommissioning of the Areaways and the Tunnel. Council approval of a payment in lieu for repairs to the City Parkade is also sought.

SUMMARY

On January 7, 1999, Council approved a series of Recommendations (see Appendix "A") intended to:

1. Forgive the Woodward's Owner (then Fama Holdings Ltd.) the annual fees for encroaching elements from the Woodward's Building including the Areaways, the Tunnel and the Overpass on certain conditions; and

2. Achieve elimination (decommissioning) of the Areaways, the Tunnel and the Overpass including repairs to the Parkade by November 30, 2000.

The required work has not been completed. Staff have received a request from Fama that seeks to extend the intent of the January 7, 1999 approvals to November 30, 2005. Since receiving this request, we have learned that the Provincial Rental Housing Corporation (the "PRHC") has agreed to purchase the Woodward's Building. They seek the same consideration.

BACKGROUND

On November 27, 1995, the City entered into an agreement with Fama in regard to lands comprising the Woodward's Building at 101 West Hastings Street.

On December 12, 1995, Fama became the owner of the Woodward's Building. (While Fama remains the owner, at the time of preparation of this report, the PRHC has agreed to purchase the Woodward's Building). The site of the Woodward's Building has now been subdivided to form a single parcel being Lot E, Block 4, Old Granville Townsite, Plan LMP 40092. The City, on this same date, became the owner of certain lands on the north side of Cordova Street which formed the former Woodward's Parkade (the "Parkade").

On October 20, 1997, the Development Permit Board approved Development Application DE 217797. The application permitted significant renovations and additions to the former Woodward's Building at 101 West Hastings Street. While the new development has not proceeded resolution of certain conditions placed on the development approval are still desirable. These include:

"A.2.2. Arrangements shall be made to the satisfaction of the General Manager of Engineering Services for:

(b) the demolition of the existing Cordova Street Overpass and repair of the portions of the Cordova Parkade which will be impacted by the Overpass;

(c) the abandonment and filling the voids of the existing Tunnel under Cordova Street and the Areaways along Hastings, Abbott and Cordova Streets."

In 1998, we received a request from Fama asking that they be exempted from any annual rentals relating to "all existing and proposed encroachments" and further, that annual rentals/fees related to the Tunnel, Areaways and the Overpass be forgiven to the date of purchase (December 12, 1995) of the Woodward's Building by Fama.

This led to a report dated December 1, 1998 from the General Manager of Engineering Services in consultation with the Director of Legal Services and the (then) Manager of Real Estate Services that recommended the annual rentals be forgiven subject to certain conditions. The entire set of Recommendations are listed in Appendix "A"; however, the significant conditions for Council were:

a. That the Areaways and the Tunnel be decommissioned (filled and sealed) prior to November 30, 2000;

b. If not all annual fees from December 12, 1995 to November 30, 2000 would be considered due and payable by the Woodward's Owner;

c. Completion of repairs to the City-owned Parkade or payment in lieu to the satisfaction of the General Manager of Engineering Services, the Director of Real Estate Services and the Director of Legal Services.

As of February 21, 2001, the work to fill and seal the Areaways and the Tunnel has not been completed nor has the Woodward's Owner paid the outstanding fees. These would be, in the case of the Areaways, $19,729.00 in 1996 and $19,744.00 in each of 1997, 1998, 1999 and 2000 for a total of $98,705.00 in the years 1996 to 2000. The annual fees for the Areaways accrue on July 1st of each year.

These fees would be, in the case of the Tunnel, $4,204.00 in 1996 and $4,219.00 in each of 1997, 1998, 1999 and 2000 for a total of $21,080.00 in the years 1996 to 2000. The annual fees for the Tunnel accrue on December 1st of each year.

As to the Loading Area, the City was to receive $4,000.00 per year for use. As the Loading Area has never been put to use by the Woodward's Building, those fees have not been collected. The City would be forgiving an aggregate of $20,000.00 for the five (5) years, to date.

In regard to the Overpass, it is fully removed but repairs to the Parkade are not complete nor has a payment in lieu been completed. In regard to the Overpass, the unpaid fees for 1996, 1997 and 1998 total $84,120.00. As the annual fees would not apply after the Overpass was removed (in 1998), the only outstanding obligation is the repair to the Parkade or the payment in lieu.

When the matter was raised with Fama in the late summer of 2000, they again sought to have the outstanding fees suspended and asked that the time to complete the work be extended. Fama continues to argue that the encroachments are not being used and therefore they should not have to pay. Staff indicated we would be prepared to work towards an agreement that would secure the obligations in the form of a contract registered on title. Recently, staff have been advised that the PRHC has agreed to purchase the Woodward's Building. The solicitor acting for the PRHC has indicated they are prepared to enter the agreement now being finalized with Fama.

The general terms of the contract are listed in Consideration A. The highlights are:

1. The City forego annual fees due and owing for the Areaways for the years 1996 and following to the "Deadline";

2. The City forego annual fees due and owing for the Tunnel for the years 1996 and following to the "Deadline";

3. The City forego all annual fees for use of the "Loading Area" in exchange for release of obligations in existing registered charges;

4. "Deadline" to mean November 30, 2005, provided that if the City requires either the Areaways Work or the Tunnel Work or both to be done before that date for any valid City purpose as determined by the City Engineer in his sole discretion, then the City will have the right to advance the deadline by giving the Woodward's Owner six (6) months written notice of same, but the City may not give such notice until on or after November 30, 2001;

5. That the Woodward's Owner decommission the Areaways and Tunnel and that repairs to the street and sidewalk replacement are to be the responsibility of the Woodward's Owner;

6. If the Woodward's Owner does not decommission the Areaways by the Deadline, the Woodward's Owner will pay to the City the aggregate of all annual fees then due and owing by the Woodward's Owner to the City pursuant to the Areaways Easement and the Encroachment By-Law;

7. If the Woodward's Owner does not decommission the Tunnel, by the Deadline, the Woodward's Owner will pay to the City the aggregate of all annual fees due and owing by the Woodward's Owner to the City pursuant to the Tunnel Easement and the Encroachment By-Law.

The contract will also contain other terms and conditions including indemnities to the satisfaction of the Director of Legal Services and the General Manager of Engineering Services.

In regard to Recommendations B and C, the Overpass has been gone for some time. The repairs to the Parkade have not been completed as its future is not fully known. Estimates for the repairs have ranged from $50,000.00 up to $60,000.00 depending on the quantity of work to be done.

So as to achieve closure on all the Overpass issues, staff are recommending a payment in lieu of $50,000.00 including any and all applicable taxes to satisfy the Woodward's Owner's obligations. This will result in forgiveness of outstanding annual fees and will allow the existing registered charge to be released.

CONCLUSION

Staff present Item A for consideration only. If Council chooses to support Item A, the result will be that the Woodward's Owner and the City enter into the Areaways and Tunnel Contract generally on the terms and conditions described herein.

If Council chooses to not support Item A, options include:

1. Instructing the Director of Legal Services to issue notice to the Woodward's Owner that the Areaways and the Tunnel are to be filled and sealed in accordance with the present registered agreements (B2872 for the Tunnel and 552716M for the Areaways). The agreements contain immediate termination clauses with the Woodward's Owner having six (6) months to complete the filling and sealing. Further instruct staff to bill for all fees due and payable in accordance with the registered charges, the Encroachment By-Law and the January 7, 1999 approvals.

2. Instructing staff that the Areaways and Tunnel may remain at this time but that all fees are to be billed for and collected in accordance with the January 7, 1999 approvals.

The General Manager of Engineering Services recommends Council approve Items B and C. The result will be to close the file on the issues related to Overpass and to leave the City with the ultimate responsibility to complete the repairs to the Parkade. On payment of the recommended $50,000.00, this is reasonable.

If Council chooses not to support Items B and C, options include:

1. Instructing the Director of Legal Services to issue notice to the Woodward's Owner that the Parkade repairs are to be made, or a payment satisfactory to the General Manager of Engineering Services is to be completed on the terms in the existing registered charge 564873M and, further, that the Director of Legal Services take whatever action is necessary to achieve the repairs.

2. Further instruct staff to bill for all fees due and payable for the Overpass for 1996, 1997 and 1998 in accordance with the registered charge, the Encroachment By-Law and the January 7, 1999 approvals.

* * * * *

APPENDIX "A"

RECOMMENDATIONS AS PASSED BY COUNCIL
ON JANUARY 7, 1999

RECOMMENDATION

A. THAT the annual fees for use of any volumetric easements to contain the encroaching elements from the "Woodward's Building" (see Appendix "E") onto Cordova Street, Abbott Street and Hastings Street are to be in accordance with those charged for in an agreement prepared pursuant to the Encroachment By-law.

B. THAT the annual fees for the use of "a tunnel under and across Cordova Street, west of Abbott Street occupying a total of 1518 square feet" (the "Tunnel") be forgiven for the years 1996, 1997, 1998, and 1999 (a total of $16,846.00), subject to the following conditions:

1. That the tunnel be decommissioned (filled and sealed), to the satisfaction of the General Manager of Engineering Services prior to November 30th, 2000. If the work is not completed by November 30th, 2000, all fees for 1996, 1997, 1998 and 1999 shall be deemed due and payable by the owner of the Woodward's Building;

2. All costs for the decommissioning of the tunnel and repairs to the street are to be the responsibility of Fama Holdings Limited ("Fama");

3. Registration of a release, to the satisfaction of the Director of Legal Services, of registered Easements BJ 381025 to BJ 381030, inclusive (the "Loading Easement"), from the title to City-owned:

i) 003-144-224 The West 25 feet of Lot 11, Block 5, Old Granville Townsite, Plan 168;

ii) 003-144-305 Lot 11, Except the West 25 feet, Block 5, Old Granville Townsite, Plan 168;

iii) 003-144-330 Lot 12, Block 5, Old Granville Townsite, Plan 168

iv) 003-135-667 Lot 13, Block 5, Old Granville Townsite, Plan 168;

v) 003-144-429 Lot 14, Block 5, Old Granville Townsite, Plan 168;

vi) 003-144-712 Lot 15, Except Parcels A, B & C (Reference Plan 515 and 516), Block 5, Old Granville Townsite, Plan 168; and

4. Execution by Fama of a release of all the City's obligations to Fama contained in the Loading Easement and in an agreement between Fama and the City, dated November 27, 1995, entitled the "Loading Area Agreement".

C. THAT the annual fees for "cavities under the sidewalk and lane being situated on the south side of Cordova Street, the west side of Abbott Street, the north side of Hastings Street and in the lane running south from Cordova Street, having a total area of 6693 square feet" (the "Areaways"),be forgiven for the years 1996, 1997, 1998 and 1999 (a total of $78, 961.00), subject to the following conditions:

1. That the Areaways be decommissioned (excavated to 4 feet below grade, filled and sealed) to the satisfaction of the General Manager of Engineering Services prior to November 30th, 2000. If the work is not completed by November 30th, 2000, all fees for 1996, 1997, 1998 and 1999 shall be deemed due and payable by Fama;

2. All costs for the decommissioning of the Areaways and for repairs and replacement of the sidewalks are to be the responsibility of Fama.

D. THAT all annual rentals and/or annual fees for "a pedestrian overpass and merchandising area over Cordova Street", comprising an area of approximately 9,460 square feet (the "Overpass") be forgiven for the years 1996, 1997 and 1998 (a total of $84,094.00), subject to the following conditions:

1. Removal of the Overpass, with all costs to the account of Fama, to the satisfaction of the General Manager of Engineering Services; and

2. Completion of repairs to the City-owned lands on the north side of Cordova Street (the "Parkade", see Appendix "E"), to which the Overpass connects or payment in lieu to the satisfaction of the General Manager of Engineering Services, the Manager of Real Estate Services and the Director of Legal Services.

E. THAT:

1. Registered charge B 2872 (for the Tunnel) be released from all titles for lands owned by Fama and the City over which it is registered, upon satisfaction of Conditions B1 to B4;

2. Registered Charge 552716M (for the Areaways) be released from all titles for lands owned by Fama over which it is registered, upon satisfaction of conditions C1 and C2; and

3. Registered Charge 564873M (for the Overpass) be released from all titles for lands owned by Fama and the City over which it is registered, upon satisfaction of Conditions D1 and D2.

NOTE FROM CLERK: Appendix B, C and D (site maps) are not available in electronic form - on file in the City Clerk's Office.

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TO:	Standing Committee on Planning & Environment
FROM:	General Manager of Engineering Services in Consultation with the Director of Legal Services
SUBJECT:	Woodward's Redevelopment - Tunnel and Areaways Decommissioning