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INVESTIGATION: Did the city make the right move acquiring four schools in 2009?

You might be surprised to learn how it turned out financially; Coun. Tim Lauer said the deal is about more than dollars and cents

As the sun set on 2009, Orillia Mayor Ron Stevens and city council made what, at the time, was a controversial decision.

The municipal brain trust voted to spend $2,221,493 to purchase four school properties that the Simcoe County District School Board (SCDSB) had deemed surplus.

“Council decided it was in the best interests” of the city to make the deal, Stevens said at the time. “We felt it was important, if for no other reason, so that we could dictate the future uses of these properties. These are important sites; they’re not just buildings.”

While some may still question the concept, an OrilliaMatters investigation reveals the city actually turned a profit on the transaction - $885,109 to be exact.

It has taken almost 10 years, but the numbers are – finally – all in. And if you look at it from a strictly financial perspective, it’s a net gain.

However, Coun. Tim Lauer, who was on the council that decided to purchase the properties, and is on council today, said there is much more to consider than dollars and cents.

“The decision, in my opinion, was a good, sound decision.” Lauer told OrilliaMatters this week. “It was not just about the bottom line. I would do it again in a heartbeat.”

Lauer said his goal, from the outset, in terms of finances, was to see a revenue-neutral deal. “The big perception for quite a while was that this was a big waste of money and was costing the city all kinds of money,” he said. “I knew that wasn’t the case. It wasn’t a big risk, financially. And I knew there were some abstract plusses, in my opinion, that would never show up in dollar value.”

First, let’s break it down, financially.

Central School
The city purchased Central School (26 Coldwater Road) for $476,000, taking possession of the heritage gem built in 1882, on Sept. 1, 2010. OrilliaMatters learned the selling price, late last year, was $1,054,704; that means a new profit of $578,704. But you have to factor in an injection of $277,343 in capital improvements during the time the city owned it. However, parking at the former school more than offset that, generating revenue of almost $482,000.  

Mount Slaven
The city paid $626,382 for Mount Slaven (50 Westmount Dr.), a building they formally took possession of on Nov. 1, 2011. On Jan. 30, 2017, the city sold the property to a private developer for $586,287 – a loss of more than $40,000. Add to that the $7,854 the city spent on an archeological study and that number worsens. It is the only component of the deal that didn’t work out financially in the short-term.

Hillcrest
The former Hillcrest Public School (255 Matchedash St. N.) site was purchased for $626,484. That property was retained by the city to create a new park. Factoring in a little over $300,000 to pay for the demolition of the old school (opened in 1931) and $868,000 to design and build the park and the price tag hits $1,172,075.

That, however, Lauer points out, was more than offset by an oft-forgotten other component of this deal that saw the city sell the former Lions Oval baseball field to the SCDSB for $1.5 million. On that site, the board constructed Lions Oval Public School - the replacement school for Hillcrest.

David H. Church
The city purchased David H. Church School, located at 28 James St. E., for $1,119,111 on Dec. 16, 2009. This was a key property in the transaction as it provided, at the time, a backup site for the city’s proposed recreation centre. However, that plan was scrapped and, in August of 2017, the prime piece of property was sold to Landen Homes for $2,017,035.

The $897,924 profit was offset by $194,979 spent by the city: $50,000 for geotechnical assessments and almost $145,000 in demolition costs.

Not factored into those numbers (for each property) is maintenance and utility costs; they were not broken down by the city on a school-by-school basis. However, $202,290 was spent on maintenance costs for the four properties; that includes lawn cutting, vandalism repair and graffiti removal. In addition, $355,778 was spent on heating, gas and electricity for the buildings over the last nine years.

The bottom line is an $885,000 profit. But Lauer said he doesn’t want to “hang (his) hat” on the bottom line; that is only part of the equation.

“You have to remember the school board had come to us and said they wanted to purchase Lions Oval,” recalled Lauer. “We were thinking that, even though it had sat for years with a snow fence around it, it’s a green space. So, let’s balance that by buying Hillcrest – that was the idea and the focus of the deal.”

Bigger plans

The school board had bigger plans – to build new schools and divest itself of “prohibitive-to-repair” facilities; the deal took on larger proportions and, eventually, grew to include the four sites.

“We were able to get a premium price for Lions Oval ($1.5 million) and, basically, we put that into a park at Hillcrest … it’s a great spot with a modern playground, splashpad, sports court, gazebo and an ice rink in the winter,” said Lauer. “That worked out well.”

He said many forget, now that the new recreation centre is rising from the ground at 255 West Street, the importance of the David H. Church site in the deal.

“That was very important at the time,” said Lauer, who noted the city was bogged down trying to get a certificate of use for the contaminated site; it didn’t look good. “If that doesn’t work, where are you going? You lose the whole concept of building in the core and end up in a greenfield outside of town like every other place in Ontario. That was an important part of it.”

It certainly has not worked out exactly as envisioned. Losing money on Mount Slaven is a frustration, said Lauer, but he said, over time, when the property is developed, the city will benefit through taxes paid by the owner – just as it will similarly, forever, from those other properties.

He used the David H. Church site as an example. “The profit is nice, but the bigger thing is there’s going to be some quality housing built there by a quality builder from Orillia, who is going to employ people from Orillia,” said Lauer. “But think of the tax dollars to be generated there.”

He said the planned 68 executive townhome development, dubbed Churchlea Mews, would likely generate more than $250,000 in property taxes annually. “And that’s just one site,” he said. “Don’t forget, school boards don’t pay taxes, so we never received taxes from those properties. That’s assessment you and I don’t have to pay.”

Lauer is also not thrilled the city did not hang on to Central School. Purchasing that building was a “protection effort,” he said. “Originally, it was about saving one of our heritage assets.”

Despite various efforts and plans, the city eventually designed a unique request-for-proposals initiative for the school, won by Horizon General Contractors, owned by Steve and Jim Mirkopolous. That’s the same family that transformed the old Tudhope Building, which was literally falling down, into the restored landmark that now houses city hall, Lakehead University’s downtown campus, condos and other entities.

“I am disappointed the city wasn’t able to keep more control (of Central School),” said Lauer. “I would have retained it and worked myself into a partnership with them.”

Despite that, he said the Mirkopolous plan could work out well in the end. “They have a proven track record as really good developers and if they’re successful, I’ll shut up,” he said.

Overall, the decision to purchase the school properties, which played out over three different terms of council, has worked out well, Lauer said.

“Even if the deal lost money, it would have been offset by abstract values: the options it presented us, the ability it gave us to protect an historical asset,” said Lauer. “I personally would not hang my hat on that number (profit) because I think there are other costs and factors involved. The whole thing was probably close to revenue neutral, but when you look at what we were able to do, the value we got out of it, the development we were able to dictate, the spinoffs … it was a good strategy that paid off and will pay off for many years to come."


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Dave Dawson

About the Author: Dave Dawson

Dave Dawson is community editor of OrilliaMatters.com
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