Wellington Basin Sector Montreal, Quebec, Canada January 27, 2017 Presented by: The Schulich Real Property Alumni Association and Brookfield Centre in Real Estate & Infrastructure at the Schulich School of Business DISCLAIMER: This case written solely as the basis for the Developers' Den student competition sponsored by the Schulich School of Business, York University, Toronto, Canada. As such, this is a hypothetical case where a number of assumptions were made for the benefit of the case competition. Therefore, the case material is not intended to serve as endorsements, sources of primary data, or illustrative of what future development on the designated lands may look like. This case may not be used, digitized, photocopied, or otherwise reproduced, posted, or transmitted without the prior written permission of the Schulich School of Business, York University.
THE OPPORTUNITY Canada Lands Company CLC Limited (CLC) is the owner of a 5.6 hectare (14.1 acre) site within the Wellington Basin Sector of the new Harbourfront district in the City of Montreal in Quebec, Canada. The Wellington Basin Sector site is strategically located at the entrance of the Lachine Canal, adjacent to the historic Old Port of Montreal, and is in close proximity to the downtown core. The site has over 300 metres frontage on the Peel Basin, which connects the Lachine Canal system to the wider Montreal waterfront. In addition, a new public transit station was recently announced nearby, which will enhance the site's connectivity to the rest of the city. Coincidently, 2017 is also Montreal's 375th anniversary, so the timing of this RFP is particularly exciting and meaningful. Some key assumptions about the property: CLC began the pre-development process for this site several years ago by engaging with the local community and key stakeholders to establish the overall vision and general principles to guide the development of this property, which is now complete. CLC has also successfully completed a re-zoning of the property to allow a maximum of two (2) million square feet of high-density, mixed-use development on the site, including residential, retail, office, commercial, recreational, cultural and/or community uses. However, there is a height restriction on the site that is limited to the height of Mount Royal (233 metres/764 feet) situated in the heart of Montreal. An environmental assessment of the site indicates there is soil contamination in the areas used to infill old canal infrastructure - approximately 30% of the site. However, current Ministry regulations will allow contaminated soils to remain 'in-situ' if separated from any redevelopment with impervious materials. There are also two historically-designated artifacts on the site including: the Wellington Basin (circa 1870s) which is only 10% visible today, and the Tate Dry Dock (circa 1850s) which is no longer visible and only indicated by a commemorative plaque. CLC now wishes to move into the development phase of the project by finding a development partner through this RFP process to undertake an innovative redevelopment of the site that will consider the strategic importance of this property within the new Harbourfront district, while contributing to Montreal's continued growth, cultural renaissance and international reputation. Key assumptions and detailed information on the Wellington Basin Sector are provided in Appendix A, including a site plan, maps, community engagement highlights and reference materials. Page 2
DELIVERABLES Your development team is asked to prepare an RFP submission that proposes a redevelopment plan for the lands within the Wellington Basin Sector site currently owned by CLC, including preliminary massing, architectural inspirations, proposed uses and/or users, detailed business plan (including a proforma) and the proposed role of CLC as land owner. Note: In preparing your RFP submission, when in doubt, include your team's assumption(s) within your submission. Also, for the purpose of this case competition, the information and/or assumptions contained in this case RFP should be assumed to supersede any conflicting information that may be found through the research process. EVALUATION CRITERIA Proponent RFP submissions will be evaluated based on five (5) key criteria: 1. Overall development vision for the property, as an expression of the guiding principles established through the community engagement process. 2. Overall architectural massing (no renderings) and design inspiration images 3. Quality of community benefits and treatment of heritage aspects. 4. Strength of the business plan, including phasing strategy, financial feasibility, market feasibility and proposed land value. 5. The role identified for CLC as the land owner. Evaluation scores will be weighted as follows: Criteria 1 20% Criteria 2 10% Criteria 3 10% Criteria 4 50% Criteria 5 10% FORMAT The RFP should be prepared in PowerPoint format with a maximum of 12 slides as follows: ten (10) sides to present your development scheme and business plan; one (1) slide as a Title slide; and one (1) slide for an Executive Summary. Page 3
Supplemental materials that support information already provided in the RFP submission may also be provided in an Appendix. The Appendix is limited to a maximum of five (5) slides, and the supplemental information contained therein may or may not be reviewed in the judging process. Any additional slides submitted beyond the stated limits will not be considered, but rather discarded. SUBMISSION DEADLINE AND PROCESS Proponents must submit their RFP submission in PDF format (no animations or videos permitted) via email to developersden@schulich.yorku.ca no later than 11:59 pm Eastern Standard Time (EST) on February 7, 2017. Any questions are due by January 31, 2017 at 11:59 pm EST, and should be sent to developersden@schulich.yorku.ca. Answers will be summarized and circulated to all teams within 48 hours. The subject line of any email must contain the team's assigned team number. Each team may submit up to three (3) questions. Not all questions may be answered. RFP submissions will be short-listed to 12 semi-finalists, to be announced on February 17, 2017. Semi-finalists will then be required to present their submissions in person to the Vendor on March 10, 2017 in Toronto. However, the semi-final round will include a change in conditions underlying Phase 1 of the case competition (this RFP), and all semi-finalists will be given four (4) hours to revise their RFP submission to reflect the change in conditions. The final judging will be based on how well the updated RFP submission addresses the case situation under the revised set of conditions, following which a winning proponent will be announced. ABOUT THE VENDOR AND TERMS Canada Lands Company CLC Limited is an arm's-length, self-financing Crown corporation owned by the Government of Canada. CLC purchases federal properties at fair market value that are no longer required by the federal government, then improves and sells these properties in order to optimize their financial and community value. As land owner, CLC is open to any form of involvement in the proposal that will optimize the ultimate financial value of the property. Page 4
APPENDIX A DETAILED INFORMATION WELLINGTON BASIN SECTOR Montreal, Quebec, Canada DISCLAIMER: This case written solely as the basis for the Developers' Den student competition sponsored by the Schulich School of Business, York University, Toronto, Canada. As such, this is a hypothetical case where a number of assumptions were made for the benefit of the case competition. Therefore, the case material is not intended to serve as endorsements, sources of primary data, or illustrative of what future development on the designated lands may look like. This case may not be used, digitized, photocopied, or otherwise reproduced, posted, or transmitted without the prior written permission of the Schulich School of Business, York University. Page 5
KEY ASSUMPTIONS The following key assumptions and resources should be used to prepare your RFP submission: Hard costs: Use the 2017 Altus Construction Cost Guide http://www.altusgroup.com/media/6253/altusgroup_costguide2017_web.pdf Soft costs: Assume at 30% of hard costs. Infrastructure: Assume provision of internal roads, as well as contributions to upgrade water, sewer and road infrastructure, in your RFP submission. Remediation: Assume that CLC will hand over the lands remediated, except those areas where contaminated lands are allowed to remain 'in-situ' if separated from any redevelopment with impervious materials. Zoning and approvals: Assume all zoning and municipal approvals are in place. Density and height: Assume a permitted density to a maximum of two (2) million square feet of development, with a height restriction limited to the height of Mount Royal (233 metres/764 feet). Taxes: For the purpose of this assignment, ignore all taxes. Timing: Target Phase 1 construction start Fall 2018. Title: Assume all titles as free and clear. Units of Measure: Use imperial measures (i.e. square feet) Currency: Use Canadian dollars. For the purpose of this case study, the above Key Assumptions should be assumed to supersede any conflicting information that may be found through research conducted online or other resources. OVERVIEW Montreal is the third oldest city in Canada, founded in 1642, and is currently the second largest city in Canada with a population of 3.8 million in the greater metropolitan area. Key drivers of the local economy include: commerce, aerospace, finance, pharmaceuticals, technology, design, education, culture, tourism, gaming, film and world affairs. The Wellington Basin Sector is one of the few remaining large sites available for redevelopment located within walking distance to the downtown core. The site has over 300 metres of frontage on the Peel Basin, a large body of water that is an integral part of the Lachine Canal. Views of the Page 6
City of Montreal and Mount Royal are some of the most spectacular along the Lachine Canal corridor. The total area of the Wellington Basin Sector is 8.1 hectares (20.5 acres), of which CLC has acquired 5.6 hectares (14.1 acres) of vacant land and public roads. The balance of lands totaling 2.6 hectares (6.4 acres) are currently leased to a flour milling company until 2024, at which time CLC will purchase and redevelop these lands. Therefore, the development proposal in this RFP should focus solely on the lands currently owned by CLC, but knowing that CLC intends to 'complete' the redevelopment of the Wellington Basin Sector starting in 2024. The Wellington Basin Sector is actually one of five (5) sectors targeted for redevelopment as part of the federal government's Montreal New Harbourfront initiative, based on four specific objectives: healthy and prosperous cities and communities; clean-up of contaminated land and sustainable urban redevelopment; respect for all levels of government and the interests of third parties; and economic vitality. Ultimately, the goal of this initiative is to support the on-going efforts of the Old Port of Montreal Corporation Inc. (OPMC) - another Crown corporation that manages the recreational and tourism development of the Old Port of Montréal. The redevelopment of CLC's properties will also contribute to the on-going revitalization throughout Montreal, including, for example, many restoration and renovation efforts in Old Montreal, as well as in its 'faubourgs', the redevelopment of the Old Port waterfront, the reopening of the Lachine Canal to navigation, and the conversion of many industrial properties along its shores. Also worth mentioning are the emergence of the Cité du Multimédia, Quartier International and new mixed-use projects being built and planned for in Griffintown (approximately 12,000 units). The entire sector is also situated within the Lachine Canal National Historic Site of Canada, which is managed by Parks Canada. As such, the Lachine Canal pedestrian path runs along the east portion of the site along the Peel Basin. Although the site is currently under-serviced by public transportation and roads due to its historic industrial uses, by 2020 the Wellington Basin Sector will have a direct connection to the public transportation network with the completion of the Réseau électrique métropolitain (REM) project - a new, integrated 67-km public, electric light transit rail system linking downtown Montreal, South Shore, West Island, North Shore and the airport. In November 2016, three new stations were added to the REM, including a station underneath Peel Basin with a direct exit to Pointe-Saint- Charles at the south-west corner of the Wellington Basin Sector site. Peel Basin station will be just one subway stop from Central Station and two stops from McGill subway station. Page 7
PROPERTY DESCRIPTION The property currently owned by CLC occupies the north-east diagonal half of the entire Wellington Basin Sector, bordered by Bridge Street to the west, Mill Street to the south, the Peel Basin to the east and raised railroad tracks to the north. The south-west diagonal half of the sector is currently leased to an actively operating flour milling company, until 2024. Specifically, this irregular shaped site measures approximately 342 metres along the Lachine Canal to the east, 338 metres along the railroad tracks to the north, 200 metres along Mill Street to the south, and 87 metres along Bridge Street to the west. The property line then steps down following the contours of existing buildings operated by a flour milling company, towards Oak Street (internal road) and Mill Street. (See attached Site Plan map.) The property is largely vacant, but there are several concrete silo structures situated along the exposed remnant of the Wellington Basin, connected to the Peel Basin and Lachine Canal system. Immediately to the west of the site is a Costco big-box warehouse store, and to the south along Mill Street are several light industrial manufacturers (plumbing, housewares). To the north of the site, north of the elevated railway tracks, is the Lachine Canal and newly-emerging Griffintown neighbourhood. HISTORY The Wellington Basin sector has played an important role in the economic, political and social history of Canada, particularly with shipping. In the 1850s, the Lachine Canal corridor was the birthplace of Canadian industrialization as a variety of industries took advantage of the availability of significant hydraulic power to service their operations. The Wellington Basin was built during the 1870s to warehouse bulk commodities, such as coal and iron ore, on its peers. Next door, the Tate Dry Dock, built during the 1850s, was the site of ship repair shops. However, with the opening of the St. Lawrence Seaway in 1960, the Wellington Basin was largely filled-in when commercial traffic along the canal ceased. Originally 2.5 acres in size, only 10% of the original basin's area is still visible. The original Tate Dry Docks occupied 1.2 acres, but there are no traces of it left today, except for a commemorative plaque. Page 8
COMMUNITY ENGAGEMENT PROCESS Over the past two years, CLC has undertaken an extensive community engagement process to establish the overall vision and general principles to guide the development of the property. This process was conducted with the participation of the public and key stakeholders, such as the City of Montreal, Old Port of Montreal, Parks Canada and representatives from a variety of cultural, economic and heritage entities, as well as local merchants and residents. As a result of the consultation, the following five (5) pillars of 'shared vision' for the Wellington Basin redevelopment were identified as the 'roadmap' for redevelopment of the property: 1. An exceptional new, city-defining, master-planned development in terms of architecture, landscape design and sustainable development, well integrated with its immediate environment. 2. Preservation of the industrial heritage to high standards, by the implementation of measured interventions designed to reveal the site's historical value and offer both residents and visitors an original, authentic experience. 3. A mixed-use approach intended for a wide range of users, leading to a series of projects of varying scope, spread out over time and supported by public and private investments. 4. A destination for Montrealers and tourists, providing exceptional views of the city and region. 5. A symbol of Montrealers taking ownership of their city with the property having been redeveloped through an exemplary participatory approach in terms of citizen outreach and in partnership with and respect for neighbouring communities. Note: This is a hypothetical summary of community engagement outcomes and redevelopment vision made for the benefit of this academic case competition only. Page 9
KEY STAKEHOLDERS AND INTERESTS Following is a list of several key stakeholders and interests that emerged from the community engagement process: City of Montreal - In its Vision 2025 Plan, the City of Montreal has indentified three strategic initiatives: Montreal's New Harbourfront, the Quartier des Spectacles and Montreal Technopole. All CLC properties within the federal Montreal New Harbourfront initiative fall within the 'Montreal Harbourfront' district. The Mayor is personally enthusiastic for development and in past, has shown considerable support for CLC as a responsible developer. Sud-Ouest Borough - The Wellington Basin Sector is located in the Sud-Ouest Borough, which was historically a working class area of Montreal that was adversely affected by the closure of the Lachine Canal due to the loss of jobs and population decline. This led to community activism in favour of social housing and local economic development that includes strong public participation by residents, artists and artisans. Old Port of Montreal Corporation Inc. (OPMC) - The OPMC is a fully-federal funded entity that owns and operates the recreation, tourism and culture activities in the Old Port of Montreal. There are several on-going and planned initiatives underway at the Old Port, which proponents should be aware of. http://www.planoldport.com/consultation/documents/3056/download Parks Canada - This federal agency operates the Lachine Canal National Historic Site that borders the Wellington Basin Sector and attracts nearly one million users annually. There are also several on-going and new infrastructure initiatives and improvements planned for the Lachine Canal that proponents should be aware of. http://www.pc.gc.ca/eng/lhn-nhs/qc/canallachine/plan/plan1/a.aspx http://news.gc.ca/web/article-en.do?nid=1042419 Community and Interest groups - There are many well-organized community and interest groups in the area, including: Regroupement économique et social du Sud-Ouest (RESO), a community based organization whose mandate is to work on the economic stimulation of southwest Montreal; Board of Trade of Metropolitan Montreal; Sud-Ouest Chamber of Commerce and Industry; Old Montreal Merchants Association and Old Montreal Residents Association. CLC enjoys excellent relationships with these organizations. However, the activist nature of these groups suggests that our good relationships cannot be taken for granted, and that community activism must always be considered a risk to be managed accordingly taking full account of CLC s mandate and corporate objectives. Page 10
MONTREAL'S NEW HARBOURFRONT INITIATIVE - OVERVIEW MAP New Havre Basin Wellington Basin Pointe-du-Moulin Sector Ireland Road Sector Cite du Havre Parcel A Cite du Havre Parcel B Page 11
WELLINGTON SECTOR - AERIAL VIEW AND MAP Bridge Street Mill Street Peel Basin CN Railway tracks Page 12
URBAN CONTEXT Downtown Montreal Old Port of Montreal Alexander Quay Wellington Basin Lachine Canal Bonaventure Neighbourhood FUTURE RÉSEAU ÉLECTRIQUE MÉTROPOLITAIN (REM) - NEW STATIONS (ADDED NOVEMBER 2016) Wellington Basin Sector Page 13
SOME REFERENCE MATERIALS Canada Lands Company http://en.clc.ca/ Wellington Basin Lands http://en.clc.ca/property/45 New transit station https://www.cdpqinfra.com/en/content/r%c3%a9seau-%c3%a9lectrique-m%c3%a9tropolitainrem-three-new-stations-downtown-montr%c3%a9al CMHC housing reports https://www.cmhc-schl.gc.ca/housingmarketinformation/ Office reports http://www.avisonyoung.com/offices/montreal Montreal demographics general https://www12.statcan.gc.ca/census-recensement/2011/as-sa/fogs-spg/facts-cmaeng.cfm?lang=eng&gk=cma&gc=462 2017 Altus Construction Cost Guide http://www.altusgroup.com/media/6253/altusgroup_costguide2017_web.pdf McGill Urban Planning Department Studio Concepts https://www.mcgill.ca/urbanplanning/files/urbanplanning/studio_ii_report.pdf Page 14