Brant County O.P.P. Detachment Committee Report

To: From: Date: June 7, 2016 Subject: Purpose: Brant County O.P.P. Detachment Committee Report To the Chair and Members of the Brant County O.P.P Detachment Committee Robin Hewitt, General Manager of Corporate Services DET-16-03 O.P.P. Detachment Options For approval Recommendation That the County of Brant proceed with Option 2 ( a Base ing of the O.P.P. Detachment) on the lands previously purchased by the County, at the north-east corner of Bethel Road and Rest Acres Road and have the Province undertake the leasehold improvements at their expense; That the O.P.P. Detachment Committee be directed to submit a proposal to Infrastructure Ontario outlining the said proposal for approval; And that staff work with the O.P.P. and Infrastructure Ontario to issue a Request for Proposals for a design of the facility capable of housing the O.P.P. Detachment that fully meets the requirements of the O.P.P. and preparation of the construction RFP documents. Key Strategic Priority 4.2 To ensure our community is healthy, safe and progressive. Financial Considerations Financial analyses of the options discussed in this report are included in Appendix 1. Background On May 16, 2016 the O.P.P. Detachment Committee met to discuss the various options for the new detachment. The meeting resulted in the request for additional analyses, including costs for site servicing, lease estimates and debt financing projections. As a result, a more detailed analysis is being provided by way of this report. The analysis includes specific costs and revenues for the three options: 1. County (Turnkey) 2. Shared 3. Provincial/O.P.P. Donation of land by County

Report There are numerous variables that effect the financial implications of each option. Not all costs and revenues can be determined with certainty at this point, therefore some numbers are based on staff projections. Mechanic Street The financial implications for all three options are effected by the decision on whether or not to sell the existing O.P.P. Station located on Mechanic Street in Paris. Selling the Mechanic Street location would reduce the amount of financing required and create revenue through assessment and taxation. Retaining Mechanic Street and renting it out, based on current local comparable rental rates, would create rental income. All of these factors are included in the attached analysis. Site Servicing Site servicing, which is the responsibility of the County in all three options, is cause for concern because currently there are no services that extend that far down Rest Acres Road. In 2015, GM Blueplan Engineering did a servicing concepts exercise for the TCA lands in anticipation of developing the business park. Based on this exercise, it has been determined that extension of the municipal water supply to the site from the Bethel Water Treatment Plant could be done by directionally boring a 300 mm water service line. This line would further be adequate to service the remainder of the TCA site at some future time. The alternate to this option would be to install a deep well, fire pump and above ground storage tank for fire flows. Although specific costs for this option are not known at this time, it is estimated that the costs to do that would undoubtedly exceed the cost of providing the water service line. The installation of a force main from the southwest corner of the TCA site to the Folsetter Drive sewage pumping station is currently being costed and may become a feasible option in conjunction with the development of the TCA site. In the meantime, the more conservative approach would be to include costs for a septic system as a base assumption. If, down the road, the force main is installed, the option for a septic system can be removed from the project. Storm water management on site should be adequately captured in the existing cost per square foot. It is estimated that these costs would be nominal. Should the development of the TCA lands proceed, storm water could be addressed by connecting it to the storm service. Depending on the timing of the project as compared to the timing of the development of the TCA site, some of the costs may be shifted onto either development charges or the project budget for the TCA lands. Leasing The portion of the new 18,969.87 square foot detachment that can be attributed to the Provincial Policing piece is 27.7%. As a result, the County can collect lease revenue from the O.P.P. The lease rate for the shared build is $20 to $25 per square foot, as provided by Infrastructure Ontario. The lease rate for the County build would be $35 to $40 per square foot for 10 years, to incorporate the costs of the leasehold improvements ($2,845,481). After 10 years, the lease rate would be reduced to market rate (currently $20 to $25 per square foot). Should the Province/O.P.P. build the entire building, the County would be required to DET-16-03 Page 2 of 6

pay a lease for the local O.P.P. share of the building, which is 72.3% of 18,969.87 square feet. Although not confirmed at the time of writing this report, it is assumed the rate would be market rate, with a reduction attributable to the land donation. Financing For the purpose of this report, financing rates were obtained from Infrastructure Ontario and all estimates were based on the current days rate (May 18, 2016) which was 3.29%. The amortization period used for the calculations was 25 years. The amount to be financed was offset by $320,000 in development charges that have been collected. Interdepartmental Considerations Attachments 1. Appendix 1 Cost Analysis 2. Appendix 2 Proposed O.P.P. Detachment Concept Location of building on the site Copy to File # DET-16-03 In adopting this report, is a bylaw or agreement required? If so, it should be referenced in the recommendation section. By-law required (No) Agreement(s) or other documents to be signed by Mayor and /or Clerk (No) Is the necessary by-law or agreement being sent concurrently to Council? (No) DET-16-03 Page 3 of 6

Attachment #1 County Shared OPP County Shared OPP Includes Sale of Mechanic St. Does not Include Sale of Mechanic St. Project Costs - Capital Expenses Cost of Land (3 of 5 acres) 223,024 223,024 223,024 223,024 223,024 223,024 Base ing 5,235,684 5,235,684-5,235,684 5,235,684 - Leasehold Improvements 2,845,481 - - 2,845,481 - - Municipal Water Supply 221,000 221,000 221,000 221,000 221,000 221,000 Septic System 100,000 100,000 100,000 100,000 100,000 100,000 Total Project Expenses 8,625,189 5,779,708 544,024 8,625,189 5,779,708 544,024 Revenue Sale - Mechanic Street 820,000 820,000 820,000 - - - Total Project Income 820,000 820,000 820,000 - - - Financing Gross amount to be Financed 7,582,165 4,736,684-8,402,165 5,556,684 321,000 DC's Collected - offset 320,000 320,000 320,000 320,000 320,000 Net to be Financed 7,262,165 4,416,684-8,082,165 5,236,684 1,000 Annual Costs - Operating Expenses Annual Financing 426,520 259,400-474,668 307,560 - Operating costs 125,000 125,000 125,000 * 125,000 125,000 125,000 * Rent Paid to Province - - 284,454 - - 284,454 Total Annual Expenses 551,520 384,400 409,454 599,668 432,560 409,454 Revenue Rent Recovered from OPP 197,050 118,230-197,050 118,230 - Rent Recovered from Mechanic St. 83,000 83,000 83,000 Future Tax Revenues Mechanic St. 30,375 30,375 30,375 Taxes, maintenance, insurance (15%) 29,557 17,734-29,557 17,734-256,982 166,339 30,375 309,607 218,964 83,000 Net income/(loss) - Annual Financial Impact - 294,538-218,061-379,079-290,061-213,596-326,454 * Actual costs may vary

Key Assumptions Land cost prorated (3 of 5 acres). Total land cost was $371,707.23. Detachment portion is 60% = $223,024 Square footage of proposed detachment: 18,969.87 Provincial share of building: 27.7%, County share of building is 72.3% Base building square footage costs: $276 Leasehold improvements square footage costs: $150 Project financing based on Infrastructure Ontario Amortizer 25 year loan at 3.29% (rate as at May 18, 2016) Annual maintenance costs as determined by staff Lease Rates > Lease rates provided by Infrastructure Ontario > Base building only: $20.00-25.00 per square foot. The amount of $22.50 was used for this analysis > County build: $35.00-40.00 per square foot. The amount of $37.50 was used for this analysis. The increased rate is to pay for the leasehold improvements and is only payable at that rate for 10 years ($15.00 X 18,969.87 X 10 years = $2,845,481 leasehold cost) > Lease rate for OPP build based on $22.50 per square foot for 72.3% of the building, reduced $1.76 per square foot for recognition of the donation of land Water Servicing > Municipal water supply: Information provided by GM Blueplan Engineering from servicing concepts done for the TCA lands in 2015 Water supply involves boring a 300mm water service line to the site providing all domestic and fire suppression water. It would be adequate to service the remainder of the TCA site at some future time. > The cost to install a deep well, fire pump and above ground storage tank for fire flows would likely exceed the costs bringing in a water service line. > Depending on the timeline, the costs may become DC eligible and we could include the project in the next DC study. Waste Water > The installation of a force main from the S.W. corner of the TCA site to the Folsetter Drive sewage pumping station is currently being costed and may become a feasible option in conjunction with the development of the TCA site. At this point, it would be more prudent to include a septic system until such time as the force main is installed. Storm Water Management >Storm Water Management on site should be adequately captured in the existing cost per square foot as the costs would be nominal. In the event that the TCA lands are developed, storm water could be addressed by connecting it to the storm service. Mechanic Street Sale of 28 and 32 Mechanic Street based on CBRE Valuation, 2012 and may be higher now Future tax revenues based on future assessment of $950,000 Rental rates based on estimate of 8,300 square feet at $10.00 per square foot = $83,000 (based on local market analysis) DET-16-03 Page 5 of 6

Attachment #2 DET-16-03 Page 6 of 6