Rehabilitation of the McLeod Building – Request for Funds

Recommendation:
  1. That City Council commit to pay $548,000.00 to Five Oaks Inc., the owner of the McLeod Building, provided that Five Oaks Inc. enter into an agreement with the City, acceptable to the General Manager of the Planning and Development Department, accepting the said sum as full and final settlement of any claim by Five Oaks Inc., for compensation under the Historical Resources Act for the designation of the McLeod building as a Municipal Historic Resource.
  2. That the Heritage Reserve Fund be the source of funding for this project.
  3. That the funding to replenish the Heritage Reserve Fund be a priority item in the 2002 and 2003 Budgets.
  4. That City Council authorize the City Clerk to serve a Notice of Intention to Designate an Historic Resource (Attachment 1) on the owner of the property occupied by the McLeod Building in accordance with Section 22 of the Historical Resources Act, R.S.A. 1980, c.H-8, as amended.
  5. That the General Manager of Planning and Development be appointed to implement matters arising from the issuance of the Notice of Intention to Designate the McLeod Building.

Report Summary

  • This report provides a response to a submission from the owner of the McLeod Building requesting financial assistance from the City to rehabilitate the building.

Report

  • The McLeod Building is on the “A” List of the Register of Historic Resources in Edmonton and merits designation as a Municipal Historic Resource under City Policy C-450A, Policy to Encourage the Designation and Rehabilitation of Historic Resources in Edmonton.
  • The McLeod Building is a designated Provincial Historic Resource, which affords it a certain amount of financial support and the highest level of protection by the Provincial Government.
  • The property is currently owned by Five Oaks Inc.
  • In two letters addressed to the City Manager, dated December 6 and December 14, 2000, the owner of the McLeod Building requests a significant amount of financial assistance from the City to rehabilitate the building that has been vacant and undeveloped for several years.
  • The following funding options to rehabilitate the building have been explored:
  • Accessing the Heritage Reserve Fund by designating the building as a Municipal Historic Resource – The McLeod Building merits designation as a Municipal Historic Resource and compensation under the current Policy C-450A, Policy to Encourage the Designation and Rehabilitation of Municipal Historic Resources in Edmonton. However, since the McLeod Building has been granted the highest level of protection through the Provincial Designation Status, the Municipal Designation to protect the building is not necessary. The purpose of the City’s Historic Resources Management Program is to encourage private sector designation and rehabilitation of historic resources by offering a modest financial compensation. The Planning and Development Department has attempted to spread the limited available funding over the large number of buildings and structures.
  • Accessing the Heritage Reserve Fund without designating the building as a Municipal Historic Resource – Under the current practice, the owner of a Designated Municipal Historic Resource is entitled to compensation as per Section 24(4) of the Historical Resources Act. Policy C-450A is the mechanism agreed to by Council, that compensation would be calculated and provided to the building owner. Compensation and Maintenance Agreements are entered into between the City and the owner to ensure clarity for all participants concerning how the funds will be spent. Therefore, accessing the Heritage Resource Fund without the designation of the building and accompanying agreements could create a risky precedent since the City would lose control over the funds.
  • Tax Increment Financing – This would allow a taxing authority to borrow money/issue bonds based on an expected increase in taxes for a property that is to be developed or renovated. The money that is borrowed or raised through the issuance of a bond, is provided to the owner of the property to assist in paying for the development or renovations. The developer would undertake the development or renovations and then simply pay the property taxes on the property which presumably would include some incremental increase or “extra” taxes because of the development or renovations. Law Branch has advised that the Municipal Government Act does not provide a mechanism to allow for this option.
  • Cancel or Reduce Taxes – Law Branch has advised that under Section 347 of the Municipal Government Act, the City could cancel, reduce, refund or defer the collection of a tax. This section provides a mechanism for the tax burden of the developer to be reduced; however it would not provide the developer with a lump sum that could be used to finance rehabilitation.
  • Establishing a program that would allow for a one-time grant to a developer – Such a program, as advised by Law Branch, would have to be provided for in the budget and be designed for the public generally and not for one specific project.
  • Among the various funding options explored, accessing the Heritage Reserve Fund through the municipal designation process is the option consistent with past Council actions. However, given the significant amount of funds being requested by the owner of the McLeod Building, the Heritage Reserve Fund would be significantly depleted. Therefore, if Council approves the compensation for the municipal designation of the building and the associated agreements, an equal amount of funds would have to be allocated back into the Heritage Reserve Fund to accommodate existing commitments.

Budget / Financial Implications

  • The Heritage Reserve Fund is a potential source of funding for this project. This action, however, will result in the fund having to be replenished in order to accommodate existing commitments for the rehabilitation projects identified in the approved 2002 Capital Budget (Project96-17-0306).

Legal Implications

  • Serving a Notice of Intention to Designate an historic resource is the first step required in designating it as a Municipal Historic Resource.

Justification of Recommendation

  1. The McLeod Building was the tallest office building in Edmonton for forty years. It has always been a prominent landmark for Edmontonians and a major asset to the Downtown. The McLeod Building is regarded as Alberta’s best remaining example of an architectural style for commercial buildings known as the “Chicago School”. Due to time constraints to bring forward to City Council the Designation Bylaw and accompanying agreements, FiveOaks Inc. needs a financial commitment from City Council in order to proceed with the project. The Designation Bylaw and associated agreements will be dealt with at a later date.
  2. Accessing the Heritage Reserve Fund by designating the McLeod Building as a Municipal Historic Resource, is the option consistent with the current practice.
  3. In order to fund this project, the Heritage Reserve fund will be significantly depleted. One strategy to minimize the impact on the Reserve would be to make payment of the grant over a two year period.
  4. Issuance of the Notice of Intention to Designate is a statutory requirement of the Historical Resources Act as part of the process for municipal designation.
  5. Council should appoint the General Manager of the Planning and Development Department for the purpose of fulfilling Section 22(6) of the Historical Resources Act. This will allow the General Manager to address any issue arising from the Notice.

Background Information Attached

  1. Notice of Intention to Designate the McLeod Building as a Municipal Historic Resource
  2. Location of the McLeod Building, 10134100 Street
  3. Photograph of the McLeod Building, 10134100 Street
  4. McLeod Building – Architectural and Historical Significance
  5. Letter from Gene Dub on behalf of Five Oaks Inc.

Others Approving this Report

  • Randy Garvey, General Manager, Corporate Services Department

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