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City sells old annex for $1
City hall’s old annex is about to get a new life.
City officials announced Monday that it will transfer ownership of the aging, seismically unsound building to Tectonica Management Inc. for $1 to encourage investment in the downtown core.
The city purchased the old annex at 328 Franklyn St. in 1999 for about $500,000 and has since used it to house various city offices, including the city manager’s office and planning departments. Built in 1937, the building consists largely of unreinforced brickwork.
In a report prepared by Herold Engineering three years ago, the old annex is considered a high risk should an earthquake occur, and bringing it up to seismic code would require about $6.2 million, which is in significant excess of the market value of the property.
In April 2012 council directed staff to advertise an expression of interest, which attracted two submissions. In August, in an in camera meeting, council selected Tectonica.
“Today’s announcement is a win-win for the community of Nanaimo,” said Mayor John Ruttan, in a press release. “The sale of the old city annex to Tectonica for $1 solves the challenges of disposing of a property for which there is no financial incentive for a buyer to develop. Having reviewed our options carefully, council believes the agreement with Tectonica forwards our strategic priority for effective asset management while successfully supporting the community’s vision to see continued development of the downtown core.”
Darren Moss, a director at Tectonica, said the company intends to bring the building up to code and convert the lower two floors to a mixture of commercial and residential uses while adding two new storeys of residential space above.
“Our firm is keen to proceed with the project as soon as the local market direction is clear,” said Moss. “We believe the existing building is in a great location and provides a strong base for redevelopment, including both residential and commercial space.”
Under the terms of the agreement, Tectonica will have two years from the date of possession to seismically upgrade the building or demolish it. If it doesn’t meet this window, the city will have the option to reclaim the land and building at no cost.
As part of the sale, the city has agreed to pay Tectonica $40,000, the equivalent of two years worth of property tax.
The city’s new $11.8-million annex is scheduled to be in service next month.