Submitted by Phil Cox on behalf of Planning & Development
Over the past weeks, personnel changes at the City have affected the pace of the conversation regarding lease options. This week our consultant Lee briefed our new key contact, Daniel Jay, with a walking tour of Sunnyhill. Daniel has been given a mandate to address the lingering question of how best to assign a value to the land for the purpose of setting a lease rate. Three commonly used approaches are: a) capitalization - assessing return on investment after factoring revenue and expenses, but this is not appropriate for a cooperative structure (an ownership model); b) direct comparison - assessing value based on another property with close to identical characteristics, but Sunnyhill is unique in this market; and c) pattern identification from similar leasing scenarios - looking for patterns in institutional land lease examples (airports, hospitals, other housing entities) across Canada. We are agreed that this is the most plausible valuation approach. Daniel will discuss this approach with colleagues in the days ahead. Early indications are that, using this method, it should be possible to come up with a lease rate that will make our housing project viable.
Having the lease rate established is absolutely critical to our progress. Our original plan was to bring the project to the membership and then make it ready for submission to FCM and CMHC by the end of May. Today, Lee confirmed that the funders will not consider our application for funding unless the pro-forma is complete with a clear signal of the City’s intent regarding lease arrangements. The project write up is mostly ready for presentation to Sunnyhill and then, if approved, submission. We just need the land valuation figure. A Sunnyhill membership meeting is tentatively set for the latter part of June. More details on this shortly.
We have asked Lee to update Councilor Farrell’s office and to ask for clarification on transaction project thresholds that would necessitate a decision by Council (as opposed to a sign-off by City administration). Our hope is to avoid having to go to Council. This scenario is now complicated by the upcoming municipal election.