Tuesday, June 26, 2007

River Landing Parcel “Y” mess in Saskatoon continues; EOI attracts just 2 proposals, Mayor Don Atchison says no special tax breaks…again

“For the life of me, I can’t believe we would take federal, provincial or municipal dollars on a site where the private sector has been knocking at the door.”
– Mayor Don Atchison, StarPhoenix, January 16, 2004

“In all of Canada, and even internationally, this site is becoming very well-known as one of the premiere locations.”
– Mayor Don Atchison, StarPhoenix, March 8, 2007
Saskatoon city council concluded its rush through the latest Expressions of Interest (EOI) for Parcel “Y” at River Landing Phase I on June 25, 2007, when it gave the go-ahead to two developers to proceed to the Request for Proposals (RFP) phase. This current EOI process took about a month less than it did for the first one in 2004-05 when the city received four proposals. This time it received only two.

In April, a month after developer Remai Ventures cancelled its plans for spa hotel, the StarPhoenix reported that Mayor Don Atchison and administrators had “received inquiries from at least 16 people from all over Canada and as far away as Asia.”

Calgary-based Lake Placid Investments and a partnership of Edmonton-based WAM Group and Concorde Group Corp. of Saskatoon will compete for the right to own 2.43 acres (Parcel “Y”) south of 19th Street west of Third Avenue South.

The city has fixed the price of the property at $4.765 million or approximately $45 per square foot.

On December 12, 2005, city council had approved a purchase price of $1.6 million with Remai Ventures or approximately $15.12 per square foot. The appraised value of the land at the time was $2.9 million. Remai had also received a total of $3.1 million in tax incentives from the city over the course of the spa hotel’s construction and its first four years of operation.

In the April 11, 2007, StarPhoenix the mayor said he does not foresee any tax incentives being available this time around aside from those for condominiums because the city has a policy for waiving property taxes for five years on condominiums built in downtown. Atchison made a similar vow two years but Remai ended up getting them anyway.

It is interesting to note that Remai Ventures continues to own the former Royal Canadian Legion property located directly north of Parcel “Y”. The property is comprised of two parcels of land totaling 0.25 acres. According to Information Services Corporation of Saskatchewan (ISC) the parcels are valued at $500,000 each. Remai Ventures reportedly paid the Legion $1-million for the land. Its value at the time was $250,400.

It appears that Remai paid a whopping $91.83 per square foot for the property. The details for the former Legion property from the ISC database are as follows:

Surface Parcel Number: 136212779
LLD: (Parcel Y) Plan 71S24965 Ext 1
Area: 0.016 hectares (0.04 acres)
Owners: Remai Ventures Inc.
Parcel Value: $500,000.00

Surface Parcel Number: 144927333
LLD: Lot 0-Block 145 Plan C195 Ext. 5
Area: 0.085 hectares (0.21 acres)
Owners: Remai Ventures Inc.
Parcel Value: $500,000.00

Located across the street from Parcel “Y” is the Persephone Theatre site. The minutes from the December 7, 2005, city council meeting show that the purchase price for that land was $30.00 per square foot. The estimated total is $888,600.00.

In the December 8, 2005, SP Mayor Don Atchison said that was the appraised value of the land, not a reduced price.

What Atchison did not mention, however, was that the land was originally valued at $32.50 per square foot.

On December 5, 2005, the City advised Persephone that it had obtained a fresh appraisal that differentiated between the values of the north half and the south half of the River Landing cultural block. The north half was valued at $30 and the south half, being closer to the river, was valued at $36. Accordingly, the City reduced Persephone’s cost to $30 per square foot, and that was the price reflected in Persephone’s purchase agreement.

The details for the Persephone Theatre property from the ISC database are as follows:

Surface Parcel Number: 161971195
LLD: (Parcel: XXX) Plan 101906636
Area: 0.213 hectares (0.53 acres)
Owners: Persephone Theatre
Parcel Value: $687,168.00

In December 2003 and January 2004, city council led people to believe that there was no money available to spend on the former Gathercole site. To date more than $60-million has been spent or committed by federal, provincial and municipal governments and the Meewasin Valley Authority to the River Landing development. Of that amount approximately $25-million is for the former Gathercole land.

Below are excerpts of StarPhoenix articles since March 8, 2007, involving Parcel “Y” when it was first reported that Remai Ventures had cancelled its spa hotel development plans.

Remai backs out: Investor pulls plug on hotel, spa project (SP March 8, 2007):

The only private-sector investor involved with Saskatoon's River Landing is pulling out of the project.

Remai Ventures Inc. will not build what was seen as the cornerstone of the long awaited development project in the city's south downtown -- a $40-million hotel and mineral spa.

"The rising cost of construction and difficulty in obtaining skilled labour has made this project cost prohibitive," wrote Ellen Remai, president and CEO of Remai Ventures Inc., in a letter to the city administrator responsible for River Landing.

In her letter dated Feb. 26, Remai also raised concerns about the costs and risks of developing the spa.

"Based on these factors, it is no longer economically viable to proceed with this project at this time," she wrote.

While Mayor Don Atchison was surprised to read Remai's letter, which will be received at Monday's city council meeting, he continues to be optimistic about the future of River Landing.

"We'll go out to the private sector once again and, hopefully, we'll be able to have someone build us a wonderful facility there," he said in an interview.

"Each person has a different idea and thought process of what costs are incurred along the way and what type of return on investment one can expect to have as well."

Atchison expects council will direct its administration to follow a previous consultant's recommendation that a hotel complex be built rather than offices.

"Condominiums would be very nice there as well. We're certainly looking for something where people are coming and going all the time."

Atchison believes it will be easier to entice private-sector investment now because of the other development that is proceeding in the area.

He points to the new riverbank park, Persephone Theatre, Saskatoon Farmers' Market and Village Square as well as Cineplex Galaxy Theatre -- all projects either under construction or already completed.

"In all of Canada, and even internationally, this site is becoming very well-known as one of the premiere locations," said Atchison.

River Landing hotel viable: mayor (SP March 9, 2007):

It doesn't look like a money-maker to Remai Ventures anymore, but Mayor Don Atchison and some city councillors insist Saskatoon could still end up with a new landmark hotel at River Landing someday.

"There's still a strong viability, I believe, for a hotel here. We'll find out what the market actually says," Atchison told reporters at a press conference Thursday, in the wake of the local developing company's announcement that it has abandoned plans for a luxury hotel and mineral spa on prime land in the south downtown.

In a written statement issued to local media outlets Thursday, company president Ellen Remai said the estimated cost of the project has doubled during the past two years, from $40 million to $80 million, due to rising construction costs and a shortage of skilled labour.

"At an average room rate of $100 per night, the numbers just no longer work," Remai wrote.

The company's decision to abandon the hotel and spa project leaves River Landing without private-sector investors.

That doesn't make it a white elephant, Atchison emphasized.

"I think the land is very developable. The question is what's developed on it, and that's what we're trying to do. We want to make sure that we get the best possible project for the area and for the city of Saskatoon. So if you were to ask me if the land could be sold tomorrow and something built on it, absolutely."

Critics who suggest Remai scuttled its plans because the city's expectations for the hotel's architectural design were too high are basing their arguments on "innuendo," Atchison told reporters.

"That's not what the letter (addressed to the city) said."

City council will have to study the matter before making any decisions about whether to relax the architectural controls and other zoning requirements on the property in order to attract another hotel developer, Atchison said. The current zoning would allow for condominiums, but only as part of a mixture that would include retail outlets or some other form of attraction, he added.

"We want people to be coming and going. We just don't want it to be sterile from five o'clock in the afternoon on, for example like an office tower."

It's unlikely the city will drop its asking price below the $1.6 million Remai paid for the land in 2005, Atchison said.

"I would think that with all the development that's happening there with Persephone Theatre going up, the Cineplex Galaxy that has just gone up, the farmers' market and village square opening up this year…I would think the value of the property has to be equal or greater at this time."

The local hotel industry as a whole may not have particularly low vacancy rates, but "we're in fact short of hotel rooms in the downtown core when we have major conventions here," he said.

Interest high in River Landing site (SP March 14, 2007):

Civic officials have heard from at least 10 potential investors since a local developing company abandoned its plans for a luxury spa hotel at River Landing last week, city council heard Monday.

"What that will translate to, no one knows -- but I think that is a positive sign," said city manager Phil Richards.

He told council he received telephone calls from interested parties last week -- as did Mayor Don Atchison and special projects co-ordinator Chris Dekker -- after Remai Ventures announced its decision to pull out of the project.

He did not name any of the interested companies.

Mayor won't give up on hotel (SP April 11, 2007):

Saskatoon's mayor is still holding out hope for a hotel to be built in the south downtown.

"It might be a boutique hotel. It could be a lot of different things. It may not be a traditional hotel," Mayor Don Atchison said at a news conference Tuesday morning after The StarPhoenix reported construction on a new full-service hotel will begin within a year, kitty-corner from TCU Place.

The development of the south downtown will proceed apart from the new hotel near TCU Place, says Atchison. He and city administrators have received inquiries from at least 16 people from all over Canada and as far away as Asia.

"If you went out and said we'd like to have it all as condominiums, it could be all condominiums tomorrow. It could be all office space tomorrow. It could be a lot of things tomorrow," he said.

Atchison's vision for River Landing includes restaurants, retail outlets, condominiums and hotel rooms.

He doesn't buy the argument that the Saskatoon market for hotel rooms is saturated. With the expansions at TCU Place and Prairieland Park, Saskatoon has the facilities to host up to 98 per cent of all conventions in Canada, says Atchison.

"It seems like every group that comes through says there aren't enough downtown hotel rooms for them."

On Monday at its regular meeting, city council will receive a report from its administration recommending ways to proceed with the development of the River Landing property designated for a hotel. Atchison hopes council calls for expressions of interest from potential investors who are ready to develop the land.

"I don't think council is prepared to put any money into it," said Atchison.

Remai Investments had secured from city council $3.1 million in tax abatements during construction and for the hotel and spa's first four years of operation.

"The tax incentive was for drilling down for a geothermal spa. It was not for the hotel portion, because the spa was supposed to be a fully public-access venue," said Atchison.

The only tax incentives he sees being available are if condominiums are part of the River Landing development. The city has a policy for waiving property taxes for five years on condominiums built in downtown.

Market to shape River Landing (SP April 13, 2007):

The long-held vision of a landmark spa hotel at River Landing is not dead yet, but it could be in line for some life-saving measures.

A report slated to be heard before city council Monday night suggests the city stick to its original concept for the one-hectare parcel of riverfront property it sold to Remai Ventures for hotel development last year, but leave potential investors to decide between a spa and some other kind of public attraction such as a museum or art gallery.

People seem to have latched onto the idea of a large hotel with 150 to 250 rooms anchoring the River Landing site, "and perhaps that's not what it is," Mayor Don Atchison said in an interview Thursday.

"Only the marketplace will tell us in the end."

Civic administrators contacted consultant Gwyn Symmons, the original author of the South Downtown Concept Plan, after Remai's announcement, and he encouraged council to make a further effort to attract a hotel development, according to a report from city manager Phil Richards.

"The rationale for a hotel was the role it could play in bringing activity to the area late into the evening through all the seasons, reinforcing it as a destination," Symmons wrote in a memo to the city on April 3.

The hotel was never meant to stand alone, but the potential for a residential component has not attracted much attention, Atchison said.

"I think somehow the condominium side of it always has been lost, so I think what we need to really focus on is, do we want to have condominiums there or not? And I think basically everyone (on council) is on the same page of yes."

Councillors also appear to support the idea of restaurants, retail and "something that will attract the public as well," Atchison said.

"The question becomes, does it have geothermal or is it going to be a mineral spa or a boutique-type spa?

"Those are things that will have to be discussed."

Atchison noted the direct control district zoning guidelines for the site also allow up to 50,000 square feet of commercial office space -- a feature the city didn't advertise to prospective buyers when it last put the property up for sale.

"The reason we're going to have to have that discussion as well is because if the hotel portion, as the (local) hoteliers say, isn't required (by the market), then how much longer do we keep beating the bushes to do that as well?" he said.

"So I think there will be that type of discussion on Monday night. I think most would (still like) to see a hotel there, but perhaps some would like to see more broadening of what is possible to have there."

Council defers River Landing issue (SP April 17, 2007):

Saskatoon will revive its quest for the perfect private investor to develop a portion of the south downtown -- but not just yet.

Faced with a recommendation to adopt a two-stage process similar to the one it used when it sold the land in 2005 to Remai Developments, city councillors resolved Monday to defer the matter until after they discuss it at their next executive committee meeting.

Administrators have suggested the city stick to its original concept for the one-hectare riverfront parcel, but leave potential investors to come up with ideas for a public destination to draw visitors.

"We believe, based on the research we have, that the initial vision was a good vision," said city manager Phil Richards.

The city's ongoing strategy for the site includes a "mixed-use urban complex" of a hotel, residential housing, one or more restaurants, retail stores and a spa or other attraction. Zoning guidelines for the site also allow up to 50,000 square feet of commercial office space, considered the least desirable use for the site.

Council's previous requirement for a mineral spa is now on the chopping block.

Spa developments can be risky and there's no guarantee the mineral aquifer below the site is actually accessible or of suitable quality, project manager Chris Dekker told council.

City crafts development wish list (SP April 24, 2007):

Developers interested in buying a piece of real estate formerly earmarked for a hotel and spa at River Landing will be rejected outright if their proposals don’t include space for retail stores, restaurants and some kind of public attraction, city councillors decided after a lengthy debate Monday.

Bidders who respond to the city’s upcoming request for expressions of interest (EOI) in Parcel Y will get additional points from city council if they plan to construct a hotel, residential units such as apartments or condos and additional covered parking beyond what’s already required by zoning restrictions for the site, council’s executive committee resolved in a series of votes on each component.

It’s a significant departure from the menu of essential components listed by the city when it last marketed the land about two years ago. Back then, bidders were told their plans for the site had to include a hotel and a spa. In the end, only Remai Developments made an offer. The company returned the land to the city earlier this year after concluding the project was no longer economically viable.

The new priorities approved by councillors Monday should open the door to a variety of ideas for an attraction to draw people to the area, without restricting it to a spa or demanding a hotel, said special projects manager Chris Dekker, who oversees River Landing.

“I think there’s still an excellent mix of uses and we’ll get an excellent quality, and quantity, of interest,” he told reporters.

Potential developers have already been calling the city to inquire about the land, “much more than there was two years ago, when you couldn’t buy a phone call (from them),” Dekker added.

If council isn’t satisfied with any of the proposals it receives over the coming months, it can always keep the property and consider a public use, administrators told the committee.

Council approves priorities for portion of River Landing (SP May 1, 2007):

City council has officially approved new priorities for the future sale of the portion of River Landing formerly slated for a luxury spa and hotel.

An initial call for expressions of interest (EOI) from potential buyers will require proponents to submit ideas for developing the property with street-level retail spaces, one or more restaurants and a public attraction or gathering place. Residential housing, underground or covered parking and hotel space are also considered important to the site and will therefore garner extra points for proponents whose plans include them, although those uses are not mandatory.

The last time the city offered the parcel of land for sale, bidders had to include plans for a hotel and publicly accessible spa in their proposals. The only bidder left at the end of the process was Remai Developments, which returned the land earlier this year after concluding its plans for a spa hotel were out of reach due to rising construction costs.

Councillors hammered out the new priorities at a meeting of the executive committee last week and followed through with a vote to make them official Monday.

The hotel aspect should not even be worth extra points this time around, Coun. Bob Pringle argued.

"I don't see how the hotel contributes to a key riverfront destination point," he told council. His motion to remove the extra points available to hotel proponents was defeated.

After a committee compiles a shortlist of the best EOI responses later this spring, the leading proponents will be invited to answer a more detailed request for proposals for the site. Council is expected to develop and review the terms of the requests this summer.

River Landing Phase 2 construction commences (SP June 16, 2007):

Three gold-painted spades dug into a patch of prepared ground on the riverbank Friday afternoon, marking the official start of construction of the second phase of the River Landing development.

Earlier Friday, the final deadline passed for expressions of interest (EOIs) from companies hoping to build on parcel Y, a key piece of the development's first phase near Second Avenue and 19th Street. The land was returned to the city by its previous owner, Remai Developments, when construction costs overwhelmed a plan to build a luxury spa hotel there.

Two developers submitted EOIs prior to Friday's deadline passing, and both proposals will now be reviewed by a civic committee to ensure they meet the terms set out by city council, Chris Dekker, manager of the River Landing project for the city, said in an interview.

The names of the two companies will not be made public until they are presented to city council at its next meeting on June 25. Details of their proposals will not be released for competitive reasons. If both proposals meet the EOI criteria, the companies will be invited to submit more detailed descriptions of their plans through a formal request for proposals (RFP) process.

Dekker said the verbal interest the city heard from developers leading up to the EOI process had led administrators to believe there would be at least three or four submissions, but given the specific development controls requested by city council, and the tight market for contracted labour, two strong proposals is still a satisfactory result.

"If it's good, one (proposal) is enough," he said.

Developers line up (SP June 22, 2007):

Three months after one development plan for a key piece of riverside real estate was scrapped, two companies have lined up to consider buying the city-owned land at triple the price of the original proposal.

The City of Saskatoon made public Thursday the names of two groups interested in potentially paying the $4.8-million asking price for River Landing's linchpin Parcel Y property at the base of Second Avenue.

A developer's agreement with the city two years ago negotiated a sale price of $1.6 million.

Lake Placid Investments Inc. and a partnership between Saskatoon's Concorde Group Corp. and Edmonton-based WAM Group are interested in developing the property.

City council will review the expressions of interest at a meeting Monday. Following that, the short-listed companies will be invited to submit detailed proposals for the property.

Chris Dekker, the city's special projects manager in charge of River Landing's development, said the new price for the land is based on the market.

"The price of land has skyrocketed in Saskatoon," he said, "especially riverfront land, which is so scarce."

Neither company would discuss their plans for River Landing.

Dekker said the normal time period for a company to complete a proposal is between eight and 10 weeks. Once the proposal deadline has passed, the companies' submissions will be made public.

"This is very much a competition," Dekker said.

Developers will create detailed riverbank plans (SP June 26, 2007):

Two developers have received city council's OK to draft detailed plans for the most prominent undeveloped riverbank site in Saskatoon.

Calgary-based Lake Placid Investments and a partnership of Edmonton-based WAM Group and Concorde Group Corp. of Saskatoon will compete for the right to own 2.43 acres south of 19th Street west of Third Avenue South. They were the only developers to submit expressions of interest in the site.

Detailed proposals must include at least one restaurant, retail at street level and some type of attraction or public gathering place. The developers earn extra marks for including housing, a hotel or extra public parking.

The city has set the price for the successful developer at $4.765 million. The city will score the two groups on criteria including the quality, vision and mix of land uses, green initiatives, density, streetscaping and consistency with the River Landing plan. The developers will have eight to 10 weeks to draw up plans, after which they will become public. That may happen as early as September.


Post a Comment

<< Home