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HomeMy WebLinkAboutFND-011-01 ~ ~ ~ ., Clw:i!Jgron REPORT FINANCE DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Resolution #:r;;P(t-~(;D-O I Date: MONDAY, DECEMBER 3, 2001 [07 FND-011-01 File#: By-Law #: Report #: Subject: ESTABLISHMENT OF CLARINGTON BEECH CENTRE BOARD Re<<ommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report FND-011-01 be received; 2. THAT Council approve a By-Law to provide for the establishment, maintenance and operations of the Beech Centre as a community recreation centre pursuant to the Community Recreation Centres Act and that the appropriate By-Law be passed (to be forwarded directly to Council); 3. THAT Council appoint Donald Welsh, Viola Ashton, Maurice Richards, Janice Williams and Jack Eilbeck, as members of the committee of management of the Beech Centre Community Recreation Centre; 4. THAT the Municipality continue to be responsible for Capital Improvements through the annual Capital Budget process and maintenance of the building enveiope and the Clarington Beech Centre Hall Board be responsible for the operation of the Centre pursuant to the Memorandum of Understanding; 5. THAT Council approve the acceptance by the Municipality of the surrender of the lease between the Corporation of the Municipality of Clarington and the Clarington Older Adult Association (COM) dated October 1, 1998, and pass the appropriate By-Law (to be forwarded directly to Council); 6. THAT Council approve the execution of a Memorandum of Understanding between the Municipality of Clarington and Clarington Older Adult Association, containing terms consistent with the principles set out in Section 8.0 of this report, as well as such other terms, as are considered necessary by the Chief Administrative Officer, to protect the Municipality's interests and that the attached By-Law authorizing the Mayor and the Municipal Clerk to execute the REPORT NO.: FND-011-01 PAGE 2 Memorandum on behalf of the Municipality, be passed (to be forwarded directly to Council); and 7 . THAT a copy of this report be sent to: . Clarington Older Adult Association: The Lions Club of Bowmanville; The BowmanviUe Tennis Club; and Durham Region Community Care Association. . . . Submitted by: Reviewed bY:O ~--.I~ Franklin Wu Chief Administrative Officer NT/DH/hjl , . REPORT NO.: FND-011-01 PAGE 3 BACKGROUND 1.0 Purchase of Beech Centre from the Lions Club of Bowmanville 1.1 The property on which the Beech Centre is located was acquired by the Municipality from the Lions Club of Bowmanville ("Lions Club") in early 1998, The title transferred to the Municipality was encumbered, among other things, by a lease which the Lions Club had made to the Bowmanville Tennis Club in 1988 ("Tennis Courts Lease"), This lease was of the tennis courts and the area enclosed by the immediately surrounding fence. The term of the Tennis Courts Lease expires on January 1, 2008, however, it may be terminated earlier, by either party on one year's notice. Rent is payable yearly, The amount of the rent on January 1, 1992 was $1,000. The rent is to be adjusted annually by reference to the Consumer Price Index (all items). 1.2 Subsequent to the completion of the purchase from the Lions Club, the Municipality proceeded to renovate and add to the then existing building to make it suitable for use as the Older Adult Centre, as provided for in the 1997 Capital Budget. 1.3 As a result of insurance considerations from the Municipality's insurance provider at the time, as well as considerations relating to Ministry of Municipal Affairs and Housing, the Clarington Older Adult Association (COAA) was formally incorporated as a non-profit company and undertook to operate the facility and programs, on behalf of the Municipality. This was formalized through the establishment of a lease with COAA, which included the parameters under which they would provide this service to the residents of Clarington. 1.4 The solicitor has advised that it would be prudent at this time to clarify the position of the Clarington Beech Centre by establishing it as a Community Recreation Centre, under the Community Recreation Centres Act. It would be maintained and operated by a committee of management ("hall board"), appointed by Council. This change would require the surrender of the lease by Clarington Older Adult Association. The Association would obtain occupancy permits from the hall board, to allow the Association to occupy portions of the Beech Centre. This would resolve the assessment status respecting the portion of the Beech Centre leased to the Association. Properties which are owned and occupied by the Municipality or a local board of the Municipality are exempt from assessment and municipal, regional and education taxation. The community recreation centre board of management of the Beech Centre would be a local board of the Municipality. 2,0 Head Lease to Clarington Older Adult Association 2.1 A lease ("Head Lease") was made by the Municipality to the Clarington Older Adult Association, effective as of October 1, 1998. The premises that were leased included interior areas of the buiiding and exterior areas of the property shown on plans attached to the Lease, The leased premises excluded the structure of the building, exterior walls, bearing walls, fenestration and doors, as well as mechanical systems, the heating and ventilation system, and electrical and plumbing systems. The Head Lease is subject to the outstanding Tennis Courts Lease to the Bowmanville Tennis Club. '" REPORT NO.: FND-011-01 PAGE 4 2,2 The Head Lease provides that: . the term of the lease is ten years commencing on October 1, 1998, The tenant has the option to renew for a further five years on two occasions, for a total of an additional ten years; . the premises are to be used for the purposes of a social and activity centre for older adults who are residents of the Municipality; however the tenant can license any person to use the "social facilities" whether or not the licensees are older adults, for a fee; . the Municipality is not responsible for any of the tenant's costs, etc, in respect of persons employed under employment contracts made by the tenant; . the "basic rent" is $2,00 for the term of the lease and renewals; however, "additional rent" including municipal, regional and education taxes, if any, and utilities are the tenant's responsibility and if not paid by the tenant, are payable to the Municipality as rent so that non-payment of any of them can result in the termination of the lease; . the Municipality has the duty to repair the premises while the tenant is responsible for heating, keeping the premises in a clean condition, snow removal, maintenance of the gardens and waste removal; . the tenant must obtain and maintain contents and generai liability insurance at its cost; . sub-leases of the premises and an assignment of the lease require the prior consent of the Municipality which may be unreasonably withheld; . sub-leases and licenses of portions of the premises to the Durham Region Community Care Association ("Durham Community Care") and the Lions Club to be made by the tenant are consented to by the Municipality up-front in the lease; . the Tennis Courts Lease is assigned to the Clarington Older Adult Association, with the result that the rent to be paid under that lease is paid to the Association for its use; and . the lease aiso contains extensive provisions respecting the financial affairs of the tenant, and reports, including an auditor's report, which are required to be made to the Municipality at specified times. 3.0 Sub-Leasees at Beech Centre 3.1 Staff have met with a representative of Durham Community Care, the Lions Club and the Bowmanville Tennis Club. They have been updated as to their potential assessment status for 2002, They have also been advised that if they are a registered eligible charity, there is a rebate program established under Section 442.1 (1) of the Municipal REPORT NO.: FND-011-01 PAGE 5 Act and Region of Durham By-Law #46-2001, Registered charities in any of the industrial or commercial property tax classes are eligible for a property tax rebate equal to 40% of the property taxes paid. The groups have been provided with copies of the application forms, 3.2 Sub-lease and License to Lions Club The sub-lease and license by the Clarington Older Adult Association to the Lions Club, which the Municipal consented to in the Head Lease, was made as of October 1, 1998. The premises sub-leased to the Lions Club comprise of the Day Nursery Facilities and a storage room on the second floor of the building. The license to the Lions Club includes the non-exclusive use of the Billiard Room on specified days and certain other portions of the building, for not more than twenty-four dinner meetings of the members of the Lions Club plus twelve meetings of the directors of the Club and ten meetings of the Executive Committee of the Lioness members of the Club. This license includes the right to use the kitchen facilities and equipment. 3.3 This sub-lease and license also provides for: . a term of five years from October 1, 1998; . an option to renew for a further term of one year on the same terms and conditions provided that the sub-landlord has not first given notice to the sub-tenant that the sub-lease and license will expire at the end of the 5 year term; . rent of $20,000.00 for each of the first three years and $20,500.00 for each of the last two years of the term. The rent accrues to the benefit of the Clarington Older Adult Association as sub-landlord; . the Lions Club is to pay all municipal, regional and education taxes, as well as telephone charges, which are "additional rent" as in the case of the Head Lease; . if either the premises or the sub-tenant are exempt from municipal taxes, the sub-tenant is to pay the sub-landlord the amount that would have been paid but for the exemption; . the sub-landlord is responsible for the repair of the premises and licensed area, the cost of heating the premises and the cost of providing electricity and water services; and . the sub-tenant is responsible for the maintenance of the premises, 4,0 Sub-lease and License to Durham Region Community Care Association 4.1 The sub-lease and license by the Clarington Older Adult Association to Durham Community Care was also made as of October 1, 1998. The premises sub-leased comprise 1,386 square feet of office space on the first floor of the building, Also, Durham '. REPORT NO.: FND-011-01 PAGE 6 Community Care has the license to use the Board Room and certain other areas and facilities of the Beech Centre on a non-exclusive basis. 4.2 This sub-lease and license provides for: . a term of ten years with recognition that the sub-landlord and/or sub-tenant may negotiate a renewal for a further term; . the basic rent is $15,000,00 each year which includes expenses for heat, electricity, water, taxes and snow removal, which are the responsibility of the sub-landlord. Increases in charges for water and electricity are to be paid by the sub-tenant; . the basic rent is to be adjusted annually by reference to the Consumer Price Index for Metropolitan Toronto (all items); and . the sub-tenant is responsible for telephone charges. 5.0 Recommended Revised Financial Arrangements 5.1 As a result of the surrender of the Clarington Older Adult Association Head Lease to the Municipality, rent from the sub-leases and licenses and the Tennis Court lease will no longer accrue to the benefit of the Clarington Older Adult Association. This would necessitate certain changes to the financial arrangements between the Municipality and the Association. 5.2 In order to ensure all parties are in the same financial position, some revised financial arrangements are proposed. 5.3 The funds from the long-term sub-leases and licenses referred to in Section 4.0 which wiJi be payable to the Municipality. They wiJi be used to offset a contract for management services (approximately $12,000) and to cover the utilities of the Beech Centre, The funds from the fees for occupancy permits will cover all the expenses for maintenance and repairs and telephone costs, accrued to the Clarington Beech Centre Board. All other revenues payable to the Clarington Older Adult Association will pay the balance of the wages and all other expenses incurred at the Beech Centre, that are primarily of a programming and fund raising nature. The above revised financial arrangements would continue while the sub-leases and licenses remain in place. No commitment is being made by the Municipality in the event that a sub-lease and license terminates. In those circumstances the hall board would have to address the shortfall in funding either through their own means or via a request to the Council at that time. 5.4 Furniture and Fixtures Any assets purchased at the time of construction, as part of the construction costs should be transferred to the Clarington Beech Centre hall board. Any assets purchased by the Clarington Older Adult Association since their inception would remain reflected on the Association's financial statements, REPORT NO.: FND-011-01 PAGE 7 6.0 Insurance Issues 6.1 The Municipality participates in the Durham Municipal Insurance Pool. Under the current policy, the Clarington Beech Centre Board is automatically covered under the Municipality's Master policy as a board of the Municipality, As the Clarington Older Adult Association will continue to do fundraising and programming functions, the question was raised as to whether the Municipality's insurance coverage could be extended to incorporate the entire Clarington Older Adult Association. This will require discussion and approval of the Board of Durham Municipal Insurance Pool, The next Pool meeting is several weeks away, Staff will continue to investigate this option and notify the Clarington Older Adult Association subsequent to the next meeting of the Durham Municipal Insurance Pool. 7,0 Recommended Revised Legal Arrangements 7.1 The recommended revisions to the legal arrangements are the following: . the Head Lease by the Municipality to the Clarington Older Adult Association will be surrendered with the result that the sub-leases and licenses, referred to in Section 4.0, will become, in effect, direct leases from the Municipality to the Lions Club and Durham Community Care, respectively; . the obligations and rights of the Clarington Older Adult Association under the sub-leases and licenses including the right to receive rent, will become the obligations and rights of the Municipality; . Clarington Older Adult Association will assign the lease to the Bowmanville Tennis Ciub to the Municipality together with the right to the rent payable by the tenant under it; . the present Council will state its intention to appoint and for its successors to appoint 5 members to the hall board who are nominated by the board of directors of the Association who are members of the board of directors and 2 members of Council; . the Clarington Older Adult Association will continue to pursue its present purposes which include seeking grants and operating raffles for its charitable purposes. It will continue to employ an executive director and others, provided that they are not employees of the Municipality; and . a Memorandum of Understanding will be executed by the Municipality and Clarington Older Adult Association dealing with the appointment of members of a hall board which is to be established by the Municipality for the Beech Centre, under the Community Recreation Centre Act, and for the revised financial arrangements between the Municipality and the Association, referred to in Section 5,0. The intent is to keep the Association financially whole. REPORT NO.: FND-011-01 PAGE 8 8.0 Principles for Memorandum of Understanding The principles that are to be addressed in a Memorandum of Understanding between the Municipality and Clarington Older Adult Association are the following: . the surrender of the lease by the Association to the Municipality, no later than December 31, 2001; . indemnification by the Association of the Municipality respecting performance of the Association's obligations under the sub-leases and licenses and licenses to the Lions Club and Durham Community Care, respectively; . if possible, insurance coverage to be provided to the Association under the Municipality's policies of property and general liability insurance, as discussed in Section 6,0; . Council will create a community recreation center for the Beech Centre to be managed and operated by a hall board under the Community Recreation Centres Act, of 7 members, of whom 2 are members of Council; . the present Council will state its intention that without fettering a successor Council, so long as the Association continues to provide older adult programming in the Beech Centre acceptable to Council, the non-Councillor members of the hall board will be appointed by Council from the then members of the board of directors of the Association, after consultation with the board of directors of the Association; . the hall board will have supervisory responsibility of the maintenance and operation of the Beech Centre in a manner that is consistent with the rights and responsibilities of the sub-tenants under the sub-leases and licenses to the Lions Club and Durham Community Care, respectively, and to the Bowmanville Tennis Club under the Tennis Court Lease, all as consistent with the Community Recreation Centres Act. Appropriate provisions satisfactory to the Director of FinancelTreasurer respecting financial management, audits and reports will be included in the By-Law establishing the Beech Centre as a community recreation center; . the By-Law is also intended to contain provisions that will allow the hall board to permit the Association to occupy the portion of the Beech Centre now leased to it for purposes under temporary occupancy permits on terms that are as close as is legally possible, in the opinion of the Municipality's solicitor, to the intent of the relevant provisions of the Head Lease of the Beech Centre to the Clarington Older Adult Association; . if the sub-leases and licenses of space to the Lion's Club and/or Durham Community Care are terminated, the Municipality will consult with the Association before deciding whether or not the use of that space should be made available to the Association by the issuance of occupancy permits; REPORT NO.: FND-011-01 PAGE 9 . the Municipality will consult with the Association before deciding to refrain from terminating the Lion's Club sub-lease and license and before deciding to negotiate a renewal of the term of the sub-lease to Durham Community Care; and . revised financial arrangements consistent with Section 5,0, 9.0 The Clarington Older Adult Association concurs with the contents of this report. REPORT NO.: FND-011-01 PAGE 10 Interested party to be advised of Council's decision: Clarington Older Adult Association 26 Beech Avenue Bowmanville, Ontario L1 C 3A2 The Lions Club of Bowmanville C/o The Beech Centre 26 Beech Avenue Bowmanville, Ontario L 1 C 3A2 Durham Region Community Care Association C/o The Beec~ Centre 26 Beech Avenue Bowmanville, Ontario L 1C 3A2 The Bowmanville Tennis Club C/o The Beech Centre 26 Beech Avenue Bowmanville, Ontario L1 C 3A2 CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1 C 3A6 T (905)623-3379 F (905)623-0608