The reaction from Mayor Rob Ford’s administration: Thank you. Faster please.
Build Toronto has been given control of 40 properties that are worth more than $200 million. Real estate heavyweight Lorne Braithwaite, the chief executive of the city-owned corporation, would like council to quickly hand over enough additional properties to double that value figure — and Councillor Doug Ford, Build’s vice-chair, would like to triple it, Braithwaite said with a chuckle in an interview.
Build was launched under David Miller in 2009 to sell or develop properties the city no longer needs. Right-leaning councillors have complained publicly, and Ford officials privately, that it has not generated income speedily enough — partly, they say, because the city has been too slow in transferring sites.
Now, with a push from the mayor, Build is poised to embark on a significant acceleration that will ease the city’s fiscal woes at least slightly.
“The Ford administration sees us as part of the solution, as opposed to the problem,” Braithwaite said. “Because we’re a net-revenue-generator. So we are getting vibes from the Ford administration that they’d like to expand our mandate.”
The first Build dividend may not protect threatened services in 2012. Both Ford critics and allies say unpredictable windfalls from asset sales should be used to reduce the city's debt load rather than to plug the shortfall in the operating budget.
But reducing debt in turn reduces the debt charges that represent more than $400 million of the operating budget. In future years, then — though not forever — Build will make it easier for council to balance the budget.
In an indication of Build’s potential, the first dividend will exceed $10 million even though it will come from only three or four deals. Braithwaite said he believes at least 200 of the city’s properties, and possibly as many as 2,000, can be considered “underutilized.”
Their total value? “If we have 40 sites now, and they’re worth $250 million, you can figure out the per-site number,” Braithwaite said. “So it’s a big number, a huge number.” Future years’ dividends could be as high as $50 million, he said, depending on market conditions.
The city’s chief corporate officer, Bruce Bowes, declined to endorse any estimate of the number of surplus properties, saying the city is still assessing how many sites are both unneeded and suitable for development. But Bowes said staffers are working with Build to eliminate obstacles to quicker transfers.
Bowes said the city would be picking up the pace regardless of who was mayor — but that Ford has added “additional emphasis,” and that the prevailing political environment would make things easier.
Miller championed Build. Some of his left-leaning allies, however, were uncomfortable with the notion of the city as developer.
Said Bowes: “I think what's happened in the last year or so, because of the city's need to find funds, councillors are being much more receptive to moving properties.”
Indeed, the sale of surplus land — fields, parking lots, former industrial sites — faces no real opposition on council. Ford critics cautioned, however, against a mad rush to sell.
Build was not created merely to plunk properties on the market. Its mandate is to maximize value. In some cases, Braithwaite said, that means retaining a minority stake, trading some up-front money for ongoing leasing revenue. And even where Build sells a property outright, he said, it does extensive presale work to make the land more valuable, such as obtaining zoning approvals.
Councillor Shelley Carroll, budget chief under Miller, said she is worried the Fords will pressure Build into cutting back on lucrative preparatory work in favour of rapid property dumps.
“We need to spend money on some of those properties in order to make them as valuable as everyone says they are. I’m not sure that the mayor and his brother understand the ‘spend money to make money’ principle,” Carroll said.
Braithwaite acknowledged that some councillors have asked him critical questions about how long and how much money it takes to develop a property rather than conduct a basic sale. But his response, he said, “has not been to say, ‘I'm going to fire-sale sites.’”
Build will “never” act as a mere real estate broker, he said. And even skeptics, he said, have come to accept his argument that patience will pay off.
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Source: Toronto Star
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