Raise the Hammer

On the swing space:

SUBJECT/REPORT NO -- Public Health Services Accommodation – McMaster Health Campus (PED11134(c) / FCS11063(c) / BOH11026(c) / CM11008(c)) (Ward 2)

COMMITTEE DATE: February 27, 2012

SUBJECT: Public Health Services Accommodation – McMaster Health Campus (PED11134(c) / FS11063(c) / BOH11026(c) / CM11008(c)) (Ward 2) --- Page 19 of 23, 20 of 23 and 21 of 23

5.2 What is the City’s Role in Determining the HWDSB’s “swing-space”?

The City of Hamilton is not involved in any way with the agreement of purchase and sale between McMaster and the HWDSB for the 100 Main St. W. property. As part of their negotiations, both parties have a tentative agreement pertaining to these interim “swing-space” costs, which also satisfies any Ministry of Education requirements. As well, the City of Hamilton was never responsible for locating, negotiating or acquiring, temporary “swing-space” for the HWDSB.

Recognizing that McMaster University is responsible for the overall cost of the HWDSB’s “swing-space”, as it adds to McMaster’s overall purchase price for the 100 Main Street West property, City staff actively facilitated discussions with all parties, to assist in meeting the timelines, space requirements, and budget constraints for the required “swing space”.

During the City’s lease negotiations, City staff recognized that the office-space requirements and needs of the City’s PHS were similar in nature to those of the HWDSB. Therefore, City staff started to focus on ways in which the HWDSB could temporarily locate its operations to the exact same location as the anticipated PHS

To be clear though, City staff have consistently expressed to both McMaster University and the HWDSB, that the City of Hamilton has no responsibility for locating, negotiating or acquiring, temporary “swing-space” for the HWDSB.

Further, both the HWDSB and McMaster University understand that even if the lease for the RTB and/or the “sub-lease” to the HWDSB are not approved, the HWDSB could still acquire suitable space on its own, and that this decision does not impact the GIC/Council approval of August 2011 regarding the MHC."

5.3 Sub-Lease to the HWDSB for “swing-space” – Who Pays for What?

Throughout the duration of this “sub-lease”, any and all rental payments, operating costs, and customized capital “Fit-Up” costs, attributed for the entire 52,300 square feet of office space, will be the sole responsibility of the HWDSB. Therefore, throughout the term of the sub-lease, the HWDSB would be responsible for a total cost of $20.35 per square foot, calculated as ($7.00 Base Rent + $13.35 Operating Costs), for a total of $2,128,610 over the two-year period.

As a tenant in a commercial lease arrangement, the HWDSB will also be responsible to pay their full proportionate share of property taxes accruing to the premises, which is already calculated and included as part of the $13.35 in Operating Costs.

From a City perspective, this means that there is no subsidy from Hamilton taxpayers for any or all of the direct costs of the HWDSB’s “swing-space” requirements.

As mentioned in the January 9, 2012 Report, the City’s new long term lease for the RTB will trigger the identified $1,419,901 in one-time “Fit-Up” costs for the purposes of consolidating and accommodating the City’s PHS staff into the 52,300 square feet of space for RTB. This “Fit-Up” design and implementation is led by the City’s PHS, with support from Facility staff, and is focussed solely on the City’s PHS needs.

These one-time “Fit-Up” costs were budgeted for within the 2012 Capital Budget, and were always anticipated to be spent in the first year of occupancy. Staff’s recommendation to “sub-lease” this space to the HWDSB would only mean that the “Fit- Up” costs are incurred prior to the City’s PHS occupying the space.

The HWDSB would be solely responsible for any and all additional “capital customization” costs of this space, beyond what the needs of PHS would be. Further,the HWDSB would also be responsible for any and all costs of returning the space back to its original state as designed and required by PHS.

Lastly, staff’s recommendation is clear that the “sub-lease” has both a fixed commencement, but also a fixed termination date (April 1, 2012-March 31, 2014), meaning the HWDSB is fully responsible to ensure the property is vacated on time.

Comment edited by Mahesh_P_Butani on 2012-02-26 20:14:54