Muskoka To-DAILY

Chinese school deal not dead – just delayed – says ‘optimisitc’ Gravenhurst CAO Davies

Mark Clairmont | MuskokaTODAILY.com

GRAVENHURST — Don’t panic. The deal’s not done — as in done-in.

The province has rejected a Town of Gravenhurst offer to buy 70 acres of prime Muskoka Lake real estate and then sell it on to two private partnes for a Chinese bilingual high school. However, town CAO Glen Davies thinks the pricing gap can be overcome and the deal will go ahead at some point.

The province has rejected a Town of Gravenhurst offer to buy 70 acres of prime Muskoka Lake real estate and then sell it on to two private partnes for a Chinese bilingual high school. However, town CAO Glen Davies thinks the pricing gap can be overcome and the deal will go ahead at some point.

A private Chinese bilingual high school at the former Muskoka Centre will still be built — sooner or later.

It’s business as usual. Real estate business.

That’s the word from the Town of Gravenhurst after “we put in an offer,” and the province recently rejected — “declined” to accept it — said CAO Glen Davies.

The town is attempting to broker a deal between the centre’s owner and the two private sector partners in the proposed deal.

Davies said he remains hopeful that a deal can still be worked out — possibly in time for this construction season, either late this spring or into the summer/fall, which would allow it the school to open for the autumn 2018 semester.

A memorandum of understanding was signed this spring for the property by the town and Maple Leaf Educational Systems (the B.C. educators) and Knightstone Capital Management (the school builders). It would be named after Gravenhurst native son and Chinese war hero Dr. Norman Bethune.

Pending provincial approval.

The stumbling block …?

In real estate there are two constants: No. 1 is location, location, location.

With that slam dunk — 70 acres of prime Muskoka waterfront in the greatest real estate market ever in Canada — it comes down to the other.

No. 2 is price, price and price.

That’s where the town and the province are at.

One local realtor well-acquainted with the lake and property estimates that at roughly 3,000 feet of shoreline and at about $3,500 a foot – the price tag could be in the $10.5 million neighbourhood.

But then a new owner could be asked to pay more than $6 million estimated to remove the buildings on the site.

Town CAO Glen Davies describes the setback as a typical real estate negotiation.

Town CAO Glen Davies describes the setback as a typical real estate negotiation.

Wednesday morning, as Davies was on his way into union negotiations with inside workers, he told MuskokaTODAILY.com that on Tuesday “I spent some time last night with council just re-affirming their interest in continuing to pursue the deal. They have.

“So, like any real estate transaction, we’ll now be going back to them with some kind of new offer in the near future.”

Hopefully before the end of May, he said.

“The deal’s not dead. It’s just not being done on the basis of our first offer.”

Davies declined to say what the offer was.

“We’re still in negotiations. I’m not going to talk about the details of it. I don’t think that would be fair.

“All I can say is they didn’t accept our offer, and have a pretty firm idea what they want at the other end.”

So, is it the land cost?

Or is it who pays to take down the decayed five-storey former mental health facility that’s holding up the deal?

“There’s agreement. The province is selling it as is. So they’re pretty clear they’re taking no responsibility and no liability with respect to the buildings.

“And the proponents have been clear all along that they’re prepared to take that on. So that really is not an issue.

“It’s more about the price. We’re dealing with the province and that makes it a little more difficult. It’s not like you and I trying to buy a house around the corner.”

As for the price, Davies said both parties have done evaluations of the property.

“We have — as has the province — as you might imagine.”

Alan Perlis, left, and Howard Balloch, spokespersons for the two partners, gave a 30-minute slide public presentation then went to town hall for the signing of a memorandum of understanding to purchase and build the Chinese boarding school at the former Muskoka Centre site on Lake Muskoka in Gravenhurst earlier this spring.

Alan Perlis, left, and Howard Balloch, spokespersons for the two partners, gave a 30-minute slide public presentation then went to town hall for the signing of a memorandum of understanding to purchase and build the Chinese boarding school at the former Muskoka Centre site on Lake Muskoka in Gravenhurst earlier this spring. The Bethune school would open in the fall of 2018 if all goes according the plans, with a few hundred students eventually and more than 50 regular teaching and spport staff jobs.

So, what is it guessimated at?

“Again, I don’t want to start talking about numbers. People are a bit confused out there.”

Is it based on a running foot of a few thousand dollars per foot of shorelines or what’s inside the property lines?

“It’s been done by both parties. It’s been done by professional appraisers, they use a combination of typical appraiser tools. Comparisons to similar properties, which is a bit difficult, that there aren’t a whole lot of properties you can to compare it to. But there have been some deals across the province that have been useful comparators.

Does this now open up the entire deal, or is it a matter of tweaking the price?

“I don’t think we’re back to square one. I think the back and forth, at least we’ve moved the yard sticks to a point where the gap is narrower.

“And we just need to find out in the next two to four weeks, I guess, we need to find out how to get something back in front of the province to see if the yardsticks are close enough that we can say we are close to a deal.”

Davies says as far as the proponents are concerned, this has nothing to do with them. The educational and condo concept is clear, even if the final site plan and other related details are done.

He says these negotiations are between the town and province.

But, clearly the town is doing the bidding for the buyer.

A preliminary site plan includes five academic buildings and dorms in the centre, surrounded by parkland on the east (right). CAO Glen Davies says no final site plan has been submitted.

A preliminary site plan includes five academic buildings and dorms in the centre, surrounded by parkland on the east (right). CAO Glen Davies says no final site plan has been submitted.

The province — through its arms-length Infrastructure Ontario properties management agency — has come back to the town and said: Sharpen your pencil.

“Remember, the town is kind of in between this. We’re just trying to facilitate the deal between getting the land from the province to the people who are actually going to develop the property.

“The province was in one place in terms of price; the proponents were in a different place. And we’re trying to broker something that will work.”

So, is there any risk financially or otherwise to the town going ahead or that is different now compared to before the rejection?

“No, no,” said Davies. “Council has been clear. Our original position was no costs and no risks.

“However this thing shakes out, we’re not going to expose the town to any of those things.”

If the deal goes south, midway, will the town be left on the hook?

“No, exactly. And we’ve made it clear; although it’s a great project it won’t come at just any cost. And certainly no cost to the town.”

Howard Balloch, a former Canadian ambassador to China, spoke to an overflow crowd of more than 200 in the Trillium Court at the Opera House, Tueday Feb. 28 in the first public look at the Maple Leaf Chinese boarding school proposal.

Howard Balloch, a former Canadian ambassador to China, spoke to an overflow crowd of more than 200 in the Trillium Court at the Opera House, Tueday Feb. 28 in the first public look at the Maple Leaf Chinese boarding school proposal.

Davies said nearby waterfront residents haven’t made an official stance on the project through the Muskoka Bay Property Owners’ Association.

“As a group they’ve not expressed any official position. They’ve been consulted. We’ve actually had a number of individuals come forward and said they support the concept and offered their assistance.

“I couldn’t say we’ve had any official endorsement or official complaint. They’ve been consulted. They’re aware and they’re waiting for more detail, I guess, would be the fair way to put it.”

Davies, who is in his first year with the town, said he’s aware of the history of the property and of a previous school deal in the 1990s. It was overturned by cabinet when the new sale’s owners tried to flip it from another private high school to housing after paying just some $3- to $4 million.

A great hue and cry was raised locally and across the province about the seemingly small amount the province would earn from that sale about two decades ago.

“I’m not sure which deal you’re referring to,” said Davies.

“I understood there was something that had to do with a resort and then the notion of it being flipped. I know the province got nervous with all of that going on and pulled the plug on it.

“I think the concept is something the province thinks is good. I don’t think we’re concerned about anything of that.”

All of the old buildings from the mental health and TB centres will be torn down, save the gazebo, and will be paid for by the new owners.

All of the old buildings from the mental health and TB centres will be torn down, save the gazebo, and will be paid for by the new owners.

Davies said it’s mostly down to the evaluation now.

“I think it really is. Although that sounds simple, as you know in real life that getting that last 100 yards can sometimes be the most difficult part.”

On the difference in price, Davies is “optimistic.”

“I think we have reasonable prospects to close the gap. I’m optimistic that we can get this thing done.”

In terms of construction timing, he says: “Although we don’t have official word, I think we’re getting to a critical point where it might put the project off a year.

“But the proponents, even if that happens and they’ll be disappointed — they’ve been clear about that — but even if it happens they’re still interested in pursuing the project. “So, we’ll know pretty soon. Cause you’re right, their timetable has been starting the demolition pretty soon. And unless there’s a way to speed that up, we’re probably coming pretty close to a decision that it’s going to be pushed out a year.”

So, is it up to Infrastructure Minister Bob Chiarelli?

“The minister has been clear that we need to deal with Infrastructure Ontario, which is a Crown corporation that is a private and arms-length agency dealing with land matters. That’s who we’re dealing with and that’s who at the end of the day we’ll have to get a deal from.”

On the topic of the property itself and the concept, Davies said final details have yet to be worked out.

Like pubic access to the west-side beach on Lake Muskoka, which most in the Gravenhurst community want as a community swim park.

But whether a deal with the new Chinese owners would allow swimmers on the property, near where condos are proposed on the western shoreline, is debatable.

At the one large public information centre late this winter at the Opera House, proponent spokespersons Howard Balloch, of the Maple Leaf Schools, and builder CAO Alan Perlis pointed to wetlands on the east as public access trails.

A large cluster of "some" Muskoka-style condo housing is planned for the west shoreline.

A large cluster of “some” Muskoka-style condo housing is planned for the west shoreline.

Could that be revisited?

Davies said: “At this point, the developer is kind of saying until we got a deal they don’t want to start doing any kind of reconfiguration. But their plan is pretty solid in terms of the need for the development as you refer to on the left (west) side vs. the park to the north and east.”

Where to now? Are more talks imminent with IO?

“Imminent might not be entirely accurate. Given that I talked to council last night, we now need to talk to our legal advisers and to consider the form of some kind of new offer to Infrastructure Ontario. And those things don’t happen overnight.

“But I’m hopeful that we will have something back in front of Infrastructure Ontario before, certainly before the end of May.”

Until then, the partners are left sitting on the sidelines awaiting the results.

“That’s an accurate description. We as the town have the authority. The province gave us exclusive rights to negotiate with them — and it is us negotiating with them. And whatever deal we strike will be conditional on us then be able to formulate a deal with the partners to take the land from us.

“We have kind of general terms that were laid out in a memorandum of understanding that were approved. The specifics will then hang on the deal that we make with the province. Because the MOU didn’t talk about the specific costs — it talked about things in general terms. We’ll then have to turn everything into something more specific that council will need to approve for the transfer to the proponents.”

Bottom line, the town expects to go ahead now or next year.

“When people heard the province turned down our offer, I think a lot of people thought, oh, it’s done. But you and I both know that it’s not the way real estate works. It’s just that we all need to reconfigure our thinking, re-strategize and submit a new offer.

“The province is still open to our discussions. So, nothing’s closed.

“I think the way you characterize it is right, we’re hopeful a deal can be struck.

“But it is starting to look like it may get pushed off a year.”

But for now it’s about getting anther offer back to Toronto ASAP.

“To be clear, end of May would be the latest,” said Davies. “I’m hoping earlier, but I think we can have something back to the province toward the end of May.

“In the meantime, everything will all go quiet again. Because we’ll be submitting an offer That kind of stuff will go on behind the scenes, as it ought to.

“And then we can hopefully have a more positive announcement in a month or so.”

Short URL: http://www.muskokatodaily.com/?p=27396

Posted by on Apr 26 2017. Filed under Headlines. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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