City gets big discount to buy federal land in Little Italy

The city's plan to buy a prime tract of Little Italy property is nearly a done deal after a council committee voted unanimously on Tuesday to approve the $2.87-million purchase, a price that's a fraction of the land's estimated commercial value.

Feds gave $22M in discounts to help build public amenities in affordable housing community

The finance and economic development committee voted in favour Tuesday of purchasing a prime tract of land at 1010 Somerset St. from the federal government for a heavily discounted price. (Kate Porter/CBC)

The city's plan to buy a prime tract of Little Italy property is nearly a done deal after a council committee unanimously approved the purchase late Tuesday at a price that's a fraction of the land's estimated commercial value.

The $2.87-million acquisition could be a game-changer for the inner-city neighbourhood, which is starved for green space, since the property is largely earmarked for a large new park and a recreation centre expansion.

The 2.55 hectares of land at 1010 Somerset St. is bounded by Somerset Street W. to the north, the Trillium Line tracks to the west, Oak Street to the south and Plant Recreation Centre and the adjacent Plouffe Park to the east.

It's part of a former federal warehouse complex, originally built in the 1940s as a munitions and equipment depot. The warehouse was demolished in 2015 and the federal government declared the land surplus.

The southern part of the warehouse land — a tract known as 933 Gladstone Ave. — was sold in 2019 to Ottawa Community Housing, the city's social housing agency, for $7 million, as the planned site of a mixed-income community dubbed Gladstone Village. 

It will combine affordable and subsidized housing with market-value housing.

The city was able to negotiation a deal to purchase 2.55 hectares of land next to Plant Recreation Centre and Plouffe Park to extend public amenities to the future Gladstone Village to the south. (Leah Hansen/CBC)

Now, Public Services and Procurement Canada (PSPC) is selling the city the adjacent northern portion at a cut-rate price so it can be integrated into the Gladstone Village concept.

How city got a $22M discount 

PSPC originally set the purchase price at $25 million, based on market appraisals and assuming the land, near a future LRT Phase 2 station, was going to be used only for a straight-ahead residential development.

But the federal government offers discounts if the land's future use aligns with its policy priorities.

In this case, the government ended up applying seven price adjustments. They covered everything from the fact that most of the land would go to public uses  — including a one-hectare public park and a community centre expansion — to the environmentally sustainable development plan.

The discounted price also credited the city's plan to address reconciliation by involving the Algonquins of Ontario, who will help provide Indigenous employment and economic development opportunities, as well as space for Algonquin artists.

As well, the city saved $2 million by buying the land "as is," meaning the municipality is responsible for any future soil clean-up.

All in all, PSPC knocked $14 million off the price, leaving the city with a price tag of $11 million. 

The Plant Recreation Centre is one of the city's most over-subscribed facilities. The new land will allow the rec centre to be expanded. (Francis Ferland/CBC)

That left the city needing to convince Canada Mortgage and Housing Corp. that the land qualified for future discounts under a program that encourages using surplus federal property for affordable housing.

The land itself isn't earmarked for housing, but the city convinced CMHC that it would be used to support the affordable housing in Gladstone Village.

In the end, CMHC agreed, but the city had to commit to also build 300 residential units at 1010 Somerset St. by 2038, half of them affordable. The combination was enough to shave another $8.25 million off the purchase price, in the form of a "forgivable mortgage" from CMHC.

Taking various taxes and fees into account, that leaves the city $2.87 million to pay. It will use $1.82 million from the city-wide park fund and $1 million from the Somerset ward park fund, with the rest from the municipality's real estate office budget.

Full council and the federal Treasury Board must still approve the sale.

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