Monthly Archives: August 2012
Costs of maintaining heritage buildings driving owners to search for alternative revenues
Elizabeth Howell, Ottawa Business Journal
As it secures the necessary permits to construct condo and office buildings on the Christ Church Cathedral property on Sparks Street, Windmill Developments says it is eyeing similar agreements with other local faith-based landowners.
“It’s going to become more of a common element: churches and non-profits are running out of money and there’s a lot of money to be gained in leasing the land,” said Jonathan Westeinde, Windmill’s owner.
Working with a church is a first, he added, but the firm – which specializes in eco-friendly developments and constructed the Great Canadian Theatre Co. building in Hintonburg – commonly pursues projects with municipalities and not-for-profits.
Recent examples include The Bridges, a new “urban village” intended to bring 2,000 to 2,500 residents into the centre of Calgary, and Dockside Green, a waterfront community in Victoria. Each of those developments included heavy participation from the respective cities.
The experience “is why we landed where we did in the church,” he added.
Christ Church representative David Caulfeild said he’s of heard at least one local Presbyterian church considering the same model.
“A lot of churches are looking at this approach because it’s the only avenue left to allow a church to continue without going into serious deficit,” said Mr. Caulfeild, chair of the church’s joint venture development committee, and an engineer whose past projects include the Ottawa International Airport’s redevelopment.
“Heritage properties are expensive to maintain, and with 80 per cent of your annual collection going into bricks and mortar, there is not much left to carry out the mission of the church.”
Windmill is planning to put up a 21-storey residential condominium tower and a 12-storey office building on the 35,000-square-foot complex on Sparks Street, west of Bay Street, that it is leasing from Christ Church.
The office tower was recently endorsed by the city’s planning committee and is slated to go before council later in August.
Precise details of the commercial lease are confidential, but Mr. Westeinde said his firm will make a fixed payment to the church from its lease revenues.
Windmill plans to pre-lease the building prior to starting construction, which Mr. Westeinde said he hopes will commence next year.
The condos, dubbed Cathedral Hill, will go on sale in September with prices ranging between $240,000 and just over $2 million. Construction should be finished next year.
Christ Church will make a prepayment on its 200-year residential lease, but the rest of the revenues will not kick in until the condominium reaches the end of its lifetime. Possible options then would include selling the building or starting a new redevelopment.
The development process began three years ago, when the Anglican diocese and the church – which own different parcels of land in the area – decided the lease approach was the best way to raise money for the 178-year-old building.
“With respect to the office building, there is a tripwire in the lease agreement that says that every 10 years, the rental agreement will be reviewed and compared with current market value for the office space,” Mr. Caulfeild added.
“(If there’s an) escalation in market value, we will receive our proportionate share of that revenue.”
Height: 21 storeys
Size: About 160,000 sq. ft.
Sales price: Between $240,000 and $2 million
Other details: 145 condo units, eight townhomes on Sparks Street, two townhomes on Queen Street
Height: 12 storeys
Size: About 125,000 sq. ft.
Lease value: Undetermined
Other details: Building will be pre-leased before starting construction