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Regular Council Meeting Agenda
Westwind Amending and Extension Agreement - Walker
Economic & Business Development
Strategic Vision Element:
Where People Choose to Grow a Business - A strong, diversified regional business centre
Spruce Grove has a robust, growing economic base that generates increased revenues to support the City’s high standards for services and programs.
Request for Decision Summary
The Westwind Options to Purchase Agreement between the City of Spruce Grove and Westwind Developments Ltd. is set to expire on November 13, 2020. Westwind Developments through Beaverbrook Developments Inc. has requested an extension of the Agreement along with several amendments.
That the Westwind Amending and Extension Agreement between the City of Spruce Grove and Westwind Developments Ltd. be approved.
The City entered an Options to Purchase Agreement with WAM Beaverbrook Spruce Grove JV Ltd. (later amended to Westwind Developments Ltd.) on March 22, 2010. The purpose of the Agreement was to facilitate the development of lands that had been assembled by the City in the Westwind area for commercial and residential use. Over the past 10 years, the developer has taken down and developed approximately 70 acres and there is another 39.7 acres (gross) remaining not including the 5 acre parcel retained by the City to be serviced by the developer at no cost to the City.
Westwind Developments Ltd. through Beaverbrook Developments Inc. submitted a letter to the City on December 11, 2019 requesting a 5-year extension to the Agreement along with several minor amendments. The parties subsequently clarified the expiry date of the existing Agreement as November 13, 2020. Administration brought the renewal request to Council in Closed Session on October 13, 2020 to obtain direction. Several options were presented to Council for consideration and a motion was approved that an "Options Agreement extension be negotiated to include, but not limited to, the terms outlined in Beaverbrook's request of December 11, 2019." Negotiations were undertaken with Beaverbrook to extend the existing Agreement with the following amendments:
The term of the Agreement will be extended 5-years and will expire on November 13, 2025.
The minimum size of "Subsequent Parcels" when purchased by the developer will be reduced from 5 acres to 2.5 acres.
The City will identify the location of its 5-acre retained parcel by December 31, 2021. Further, the developer will within one-year of the City identifying said parcel apply and obtain subdivision for the City's parcel including amendments required to the Area Structure Plan and any other applicable statutory plan, and satisfy any conditions of subdivision approval including the requirement to enter into a Development Agreement with the City for servicing of the City's parcel.
All other terms and conditions of the existing Agreement remain the same. The proposed Extension and Amending Agreement is attached as a schedule to this report.
Administration presented three options to Council in Closed Session at the Council Meeting on October 13, 2020 regarding the Agreement extension request from Beaverbrook. Council provided direction to negotiate an extension to the Options Agreement including, but not limited to, the terms outlined in Beaverbrook's request of December 11, 2019.
The relationship between the developer and City has been very positive over the past 10-years in implementation of the Agreement. As well, the City has worked extensively with the developer in the marketing of Westwind at the regional and national levels.
The negative impact of Covid-19 on the development industry and particularly on the commercial real estate market has been substantial. This will likely continue to weigh on the market over the next 1-2 years. Westwind is well positioned in terms of future recovery including the continued involvement of Beaverbrook Commercial (now rebranded under Cantiro Group) and One Properties Ltd. in the development and marketing of these lands.
Since the start of the Options to Purchase Agreement in 2010, the developer has taken down and developed approximately 70 acres of the Westwind lands. This represents and estimated $170 million in investment - $110 million in residential and $60 million in commercial development. Westwind is Spruce Grove's only commercial presence on the Yellowhead Highway and has been successful in attracting a range of retail, services, restaurants and office tenants. This area has excellent potential for continued development and destination level investment.
The City funded the Westwind land assembly through a $8.9 million debenture taken out in 2010. Land sales to the developer since then have reduced the debenture balance to $451,909. In addition, the developer has paid all interest costs and brokerage fees associated with the debenture and this would continue under the Westwind Amending and Extension Agreement. There is no cost to the City or taxpayers.
Under the amended Agreement, the developer continues to be obligated to service the 5-acre parcel retained by the City at the sole cost of the developer.