Centre Block – Where are we now?

Council has voted in favour of entering into an agreement of purchase and sale with Andrin Investments Limited for the redevelopment of the Centre Block property in downtown Kitchener -- a fair deal that balances the interests of the city and the developer.
 
The Centre Block agreement allows the city to meet its objectives at a reasonable cost to taxpayers; while recognizing that, as a private-sector company, Andrin has the right to expect a return on their investment in the project.
 
The negotiations between the city and Andrin involved two real-estate appraisals and a detailed residual land valuation by a national real-estate valuation firm.
 
The entire process was overseen by the city's fairness advisor, Dr. James McKellar, director of the real property program at York University and a national expert in public-private partnerships. He has overseen a number of projects including the Union Station request for proposals process in Toronto.

Amendments made to draft agreement

Soon after the draft agreement between the city and Andrin was tabled in April, some concerns were raised by downtown interest groups -- primarily around the length of time it would take to redevelop the heritage buildings at King and Young streets.
 
Specific changes to the agreement aimed at advancing the timing of the redevelopment of the heritage buildings include:

• Andrin has agreed to begin to actively seek opportunities to find a partner who would redevelop the heritage properties quickly;
  
  
• Andrin has committed to working with the city, the Downtown Kitchener Business Improvement Association and several local building owners to explore opportunities to redevelop the heritage properties faster;
  
  
• The city will work with Andrin and the downtown business community in a multi-pronged approach to attract investment to the heritage buildings. What this means effectively is that the heritage buildings are no longer the third phase but a separate phase concurrent with the residential and retail elements of Centre Block;

Under the revised agreement, the city will retain the right to withdraw the heritage buildings from the project if it can find a faster solution for the buildings. Also - if Andrin does not redevelop the heritage properties in the timeframe outlined in the agreement, it will forfeit the $700,000 letter of credit it has to pay the city before the Transfer of the Phase 2 lands.
 
All of these measures mean the heritage properties can be redeveloped as soon as a market solution can be found.
 
In addition to the amendments to the terms concerning the heritage properties, the approved agreement states that Andrin must install a project sales office and model suite by a firm date of Aug. 31, 2010.
 
The final amendment to the agreement deals with the need to establish a specific inflation index to control the costs of the city's parking spaces. The revised agreement uses Statistics Canada's Construction Price Index; and no inflation costs will be incurred by the city until Nov. 30, 2010.
 
The city will also be creating a liaison committee, tasked with further exploring these issues. The committee will include representatives from Andrin, the Downtown Kitchener Business Improvement Association and the city. Committee meetings will commence in early July and will continue through the life of the project. The first item of discussion will be to explore expediting the redevelopment of the heritage properties.
 
Execution of this purchase and sale agreement will allow Andrin to proceed with detailed project planning and marketing. City staff will work with the developer and the local business community to find ways to accelerate the redevelopment of the two heritage buildings on Centre Block.