Listen Up! Selling the Waterloo building to De Novo was the right decision ~ Opinion

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Hugh Mackenzie
Huntsville Doppler

A good deal for Huntsville taxpayers … 

I posted a comment on Facebook the other day, something I rarely do, about Huntsville Council’s decision to sell the Waterloo building. It was immediately followed by another reader who said one should beware of those who choose to justify council’s decision to sell the Waterloo building to the De Novo Trust Fund, who will operate a drug and alcohol rehabilitation centre on that site. Well, I guess that would include me as, after much thought, I have concluded that Huntsville Council did the right thing.

First, let’s take a look at the history of this issue.  For years, well before the building was there, the University of Waterloo conducted an annual course study related to environmental issues in Huntsville and Algonquin Park, lasting about eight weeks. Students were billeted in local motels. Then, in 2010, the G8 Summit of world leaders was held in Huntsville. In recognition of this, as previous governments had done for earlier G8 summits, significant funds flowed to our community from the Federal Government. This made possible the construction of the Canada Summit Centre, a vastly improved recreational facility, which is a huge asset to Huntsville.

There was also room in the G8 budget for an additional project and Claude Doughty, who was Mayor at the time, had a long held vision for a post secondary institution in our community. He believed it was the perfect opportunity to form a partnership with the University of Waterloo, to significantly expand their presence in Huntsville. While memories are often short, I will remind you that at the time there was a great deal of enthusiasm and public support for the project and so a deal was struck and the Waterloo building became a reality. Sadly, it went down hill from there.

I said at the time, and I continue to believe now, that the lease agreement drawn by Town officials was hardly a lease at all and put little or no onus on Waterloo to follow through on the commitments they made to the Mayor and to council. In a nutshell, they looked after some but not all of the operating expenses and paid no rent other than a bed fee every time a student stayed there. To be blunt about it, Waterloo had very little skin in the game.

As years passed by, the dream of a university campus in Huntsville faded. Although some attempts were made, Waterloo, for one reason or another, did not significantly increase their presence in Huntsville. Our current council did manage to negotiate a better lease with them, but within a year of that Waterloo pulled the plug altogether and they are now gone. Huntsville is left with a white elephant.

Fast forward to 2017.  Our current council inherited this issue. Only one member of this council was around when the original decisions related to the Waterloo building were made. The cost of maintaining the site was substantial. Something had to be done.

The Town went through a series of machinations, including short-term rentals which did little to reduce the operating costs paid by the Town of between $150,000 and $250,000 each and every year, since the inception of the Waterloo building. Initially council put out an RFP in relation to the Waterloo site and received only one proposal. Subsequently, after some unfortunate internal manoeuvring, council announced a second Request for Proposals, and that brings us to the present day.

The Town received five proposals for the Waterloo building.  Three of them were offers to purchase the property and two were for a ten-year lease with an option to purchase. The purchase offers went from a low of $1.25 million to a high of $3.905 million.

One of the proposals was particularly interesting. It was a joint bid from Accelerate Muskoka, who were the only responders to the original RFP, and Muskoka Language International, a very successful exchange program offered by two businessmen with connections to Huntsville. They wanted to lease the property, paying operating and capital costs but no rent. They did offer to share two per cent of the profits of a “seed fund” which they planned to establish.

When all was said and done, however, council opted to accept the De Novo proposal. They did not agree to include the approximately 70 acres of surrounding land the purchaser wanted and they did this without any reduction in the price. On balance, I believe council made the right decision, albeit a difficult one.

Here’s why.

I do not believe the Town should be in the landlord business or own real estate not used for municipal services. That should be left to the private sector.

Huntsville taxpayers did not get what they bargained for when they put up a significant amount of money to support the Waterloo concept. If I remember the numbers correctly, the entire project, including the road and infrastructure required to reach the site, was about $12 million. About $9 million was funded by the Federal Government. Huntsville was on the hook for the remaining $3 million.

Although the Waterloo building itself cost over $9 million to construct, the hard truth is that the building was never worth that much money. Indeed, the actual market value of the building in its present condition is likely much closer to the amount offered by De Novo Trust. This is not just me blowing smoke or twisting the numbers. I confirmed it with a respected professional appraiser, familiar with the Huntsville market who said, “I think the price at (almost) four million dollars is a fair indication of the market value.”

Huntsville Council, in my opinion, chose the option that provided the best value to Huntsville taxpayers. It was also by far the highest bid.  Consequently, the Town will recoup most if not all of its investment. They will no longer have to foot the bill for extensive operating costs and they will significantly reduce their capital asset management responsibilities. It should also add four million dollars in assessment to Huntsville’s tax base; not an amount to sneeze at. In addition, the use of the property as an addiction rehabilitation centre bolsters Huntsville’s position as a key health hub in Muskoka, not to mention the new jobs this will create.

The legacy of the Waterloo building has not been an easy one, but I believe that in the final analysis this council has made the best of an unfortunate situation. They still need to go through a public consultation that must take place before they declare the Waterloo property surplus to the municipality’s requirements, but unless this is used for political posturing it should go smoothly as there is really no municipal need for that building.

In my view, under all the circumstances, this is a good outcome for Huntsville taxpayers. Surely that is the only criterion that matters.

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13 Comments

  1. Council was absolutely right on this one. Now if the money goes to real needs and not wants, then they will be 2 for 2 !

  2. Smart move by council , get it off the books and create new taxable assessment, tax base and create jobs

    Have to build a lot of homes and condos to create $4 M in taxable assessment

  3. Yes the right move by Council. Having a facility that houses drug and alcohol abusers so close to a school will require some close monitoring but all in all a positive move ahead for our town. If this facility is not in addition to the one in Sundridge it will be a blow to that community in taxes but is a close enough commute for workers.

  4. 9 million is spent on a building we didn’t need. Seven years later, in a booming real estate market, it is sold for 4 million, because that is all it’s worth?
    No one is accountable? Nothing to be learned here?

    We need the press to hold politicians accountable, but sadly there is little reporting left.

    • Bonnie Branton on

      One ‘off the record’ local appraiser “familiar with the Huntsville market”
      thinks offer OK! How many 12 million dollar projects have they assessed?Missing are written appraisals from firms with experience at that level.
      (We wouldn’t even sell a home, or obtain a mortgage without a professional appraisal.)
      They would also have contact with appropriate marketers & probable purchasers. We have an extrordinary asset, located in a very special location in our portfolio, that deserves wide exposure pre-sale.

      For a ‘small’ town, you’ve had some very big decisions to wrestle with, and your hard work is very appreciated.
      Please don’t rush this through.

  5. Frances Botham on

    This is a poor business decision. What is going on here? $9.8 million was spent on construction of this beautiful architecturally designed facility. The municipality paid approx $4 million for infrastructure, ready for building 3 similar sized buildings. Situated on prime scenic parkland in the heart of Huntsville. A building that is spacious enough to accommodate meetings of 150 people. Large meeting room, small meeting room, lounge, balcony, business and technology rooms, extraordinary beautiful space. What is the council afraid of by not placing this building for sale in the Barrie and Toronto market? Is this a done deal that some are rushing to push through? Saying that the town is not in the landlord/real estate business is self evident the way this sale of the taxpayers’ propert is being handled. Let’s bring in a couple of respected reputable realtors from Toronto to give us an appraisal. This sale at $3,905,000 is out of line and unacceptable. Besides do we want a drug and alcohol rehab next to the high school and in the centre of our town?

  6. Kathy henderson on

    This is the first that I have heard it will be used as a drug rehabilitation. Not enough info given or I missed it. I don’t have a problem with it being used as a drug rehabilitation as long as the failed attempts go back to their own town and not linger here homeless. I’m pretty sure we need this facility.

  7. In some sense, i like to agree with the article and Council made the right decision. But, there are a few questions left unanswered (at least in my mind). I am never opposed to rehab facilities but do question the proximity to the High School. Further, the rehab centre is not for everyone, rather as stated by Do Novo: We serve unionized construction workers, employers and their families.
    My next question concerns all the various figures regarding cost and value. The costs seem to be the same regardless of the writer, but the value keeps changing. Why can’t there be a simple statement about what is included and what isn’t. Will the town still retain ownership of much of the land surrounding the site? is the value of the site really only $4 million (assuming we know what is sold)?
    Do i have to search for answers or are they forth coming? Before or after the fact? Why is a public meeting being held?

  8. I note Derek Shelley’s comments about the rehabs serving unionized workers etc. What’s that all about?
    Obviously their funding model depends on deep pocket funding to operate.
    Too bad local non unionized folks who need this service can’t get it at this facility after such a huge effective public $ sacrifice / subsidy.
    It doesn’t alter the business case for selling and clearing the decks but it seems a shame that the public investment involved to date won’t serve a public need.
    Life goes on.

    • Elizabeth Rice - Doppler Publisher on

      The De Novo website has this to say about their Sundridge facility –
      “De Novo is an alcohol and drug treatment service operated as a partnership between management and unionized members of Ontario’s construction trades. We serve unionized construction workers, employers and their families.”
      See more at – http://www.denovo.ca/

  9. To all the naysayers on this topic; has anyone noticed the cost of construction and then subsequent real estate price of a government sponsored project? We(the town) got $9 million in funding to construct the building from the federal govt and that started the inflation of price perception.
    The building is about to be someone else’s problem financially. We should light sparklers, dance in the streets and sing from the towers. The town did not lose any substantial amount of money over the 7 years it operated the building and got what it put in to begin with – be happy could have been worse!

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