Nanaimo politicians have given Cracey Holdings a five-year leeway to revamp or tear down the old city hall annex.
Nanaimo city council will allow Cracey Holdings Inc. an extension to seismically upgrade or demolish the old city hall annex on Franklyn Street instead of exercising its right to buy back the property.
This time, however, the city has not included a performance payment.
The decision was made during a closed meeting in October last year.
The city announced the dollar sale of the old annex to Tectonica Management Inc., in 2012, with the condition the seismically-unsafe building is upgraded or torn down within two years from the date of possession. It also agreed to pay the company $40,000, or the equivalent to two years' worth of taxes if company completed the required work within the first two years.
Tectonica officially took over the property in January 2014 and later Cracey Holding won a development permit for a five-storey mixed-use building, with condominiums, commercial units and a restaurant. Cracey Holdings is a different company, but has the same owners as Tectonica, which had planned to demolish the former civic building by the end of 2015 if the market activity was right.
The market conditions, however, haven't been conducive to redoing the building, according to Mayor Bill McKay, whose council granted a five-year extension to 2021. It would have been different if there were different economic climate conditions or it had been another location, he said, adding council also has faith in the company.
The city will not offer to pay any money in lieu of taxes in this five-year extension, but a covenant now registered on the property has reduced the value of the land and building to $2.
“We could have forced them to tear it down and they would have, but why not just work with the business. They had a very compelling case,” he said.
McKay also made it clear council doesn't want to buy back the building. “Hell no,” he said, calling it a liability because of the land value versus potential demolition costs.
Bill Corsan, the city's manager of real estate, said in an e-mail that the land was valued at $509,000 in 2011 while demolition costs are estimated at around $500,000.
Darren Moss, a director with Cracey Holdings, said they will continue to do interior demolition of the building, including removal of hazardous material.
“We’re going to be $300,000 into that project for demolition so far, so I mean it’s a lot of our money hanging out there,” said Moss. “We want it to happen as bad as anybody does.”