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I Can't Fake It:
The town is paying $515,000 plus a further $120,000 "to be set aside for building maintenance." The Auroran article doesn't say if this amount must be spent now or will be over a period of years.
There doesn't appear to be a specific use in mind for this building although CAO Garbe says: "We want to approach the Farmers' Market to see if there is any interest in having a year-round Farmers' Market there, get their feedback and see if this facility will work out," he said. "If it passes, we will move forward with having discussions with them.
I have never heard of a municipality buying a building on speculation, without having at least two or three possible uses for it. If the town itself has a use for the building then effectively there is no revenue to the town. What is the point of charging one pocket 6% and taking that money and sticking it into another pocket? Same pair of pants.
It is my understanding that the individual "farmers" pay some sort of fee to the town in order to obtain a permit for a booth/space at the present Farmers' Market location on Wells Street. I don't know if the Market itself pays anything to the town. But 6% of a capital cost of $515,000 (plus some part of the $120,000 maintenance - let's say spread evenly over four years would add another $30,000) so you are looking at 6% of $545,000 or $32,700. Can the Farmers'Market afford this? Has anyone thought to ask in advance of buying a speculative building?
Are there any other group in Aurora that might be interested in entering into a long lease? Has anyone asked.
If a serious tenant is not found shortly the town will be stuck with maintenance costs and in particular heating as winter approaches.
Your assumptions toward the end of your comment are correct from a mathematical standpoint - obviously you know your "times" table.
You stature in your second last paragraph: "Provided you can borrow money at less than the cap rate an investment like this can be leveraged by using debt financing thereby driving the return on investment up (same income, lower capital investment). I have no idea whether the town plans to leverage the investment or not."
If you borrow at 4% and your income is 6% you are making 2% on the borrowed money. But this is peanuts to the town's finances and probably isn't worth the time to arrange.
It still boils down to having a serious client for the building's use before you go out and buy another one to add to the town's inventory
Posted by Anonymous to Our Town and Its Business at 11 September 2014 10:58
Thursday, 11 September 2014
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I sometimes think that I am "off base" in my ideas when I look at what the town & council are doing but I am reassured when your guest post and others have some of the same thoughts.
I read the info in The Auroran about the building and I automatically thought - WOW!!!!- the Queen's Rangers get some sort of sweet deal on the lease of the old Hydro facilities and The Town of Aurora is then going to pay market value less 10% for the Armouries from DND. The DND must be laughing all the way to the bank. Who else was the DND going to sell this space to? (and how is it zoned?) I read that last spring the Town gave it a historical designation. What does that mean to it's future. It's not like a manufacturer would be allowed there and was going to bid on the property? Would it be a site for new townhouses or condos - probably not. I'm sure as it's in heritage area others would be up in arms about that. So the Town takes it over with no plans or even sound suggestions.
Sure the Aurora Farmers' Market would love to be there every Saturday - rain or shine and in winter weather. But they are not going to want to pay market value in rent or any rent at all (even pro-rated for Saturday mornings) they haven't worked that into their prices. Otherwise they'll have to charge more and that will drive away their clientele.
While we're at it - why does the Town of Aurora and a portion of its citizens treat the Farmers' Market like it is some golden organization. I always get this feeling that council thinks by supporting the Farmers' Market that it is some kind of pathway to Aurora's economic success. That so long as we have a Farmers' Market all is well in Aurora. People - it's a Farmers' Market - almost every community in Ontario has one and the "Farmers" not the artisans and the community groups, etc., do it all very well themselves. Not that the non-farmers don't add to it but somehow Aurora has this idea that our Farmers' Market is special, it's different and better than anywhere else. The Town & the council treat it that way giving it all sorts of extra and special considerations and more importantly so much more time than it really needs or deserves. Tell me what over businesses in Aurora get this much attention? If the best idea for the building is renting it out Saturday mornings then council and/or staff are not thinking hard enough.
Perhaps the Town and Council need to be a little more in touch with the community and getting suggestions from the citizens as to how community groups could utilize it and if they could use it at all.
Here's an idea - give it over to Aurora's Historical Society and let them turn it into a museum. Oh, sorry that was already tried with that building by the library as it became the Aurora Cultural Centre.
Aurora looks to be a throw back to "Sunshine Sketches of a Little Town".
10:58 If I were betting & had not vowed not to do so again, I would be inclined to wager that Mr Garbe made an error in thinking the Farmers' Market would want that place for year round activities. They are not about to give up the Town Park.
& I know we are not supposed to use staff names but it was in the Auroran. He is leading this initiative.
What if a Farmers' Market were restricted to selling those goods that were produced from the soil, from the crops and the trees that grow in the soil, from the fowl and the animals that eat the food grown in the soil?
Would that reduce the number of participants? Would the above enhance the participants as a result of their farming/culinary skill and increase their sales/profit?
We already have surplus real estate that seems to be having trouble finding a buyer or tenant.
It's really very interesting to read about the small bits and pieces that somehow all come together in our town, sometimes smoothly and at other times a bit of a mess.
At the moment I am reading THE MANTLE OF COMMAND. It deals with the period April, 1941, Churchill's meeting with Roosevelt at Placentia Bay, to November, 1942, and the successful operation TORCH, the American invasion of north-west Africa.
The book focuses on Franklin Roosevelt's position as Commander-in-Chief of the American military and the actions and decisions he took and made, often against the advice of his generals and admirals. And invariably he was right.
The book also portrays Churchill's attempt to maintain the British Empire, and eventually, admitting its demise, a last effort at keeping India in its traditional historic role with Britain.
The issuers are immense, also the personalities.
In today's world we have none such as these, although there are a few events that are becoming extremely serious, and will require strong and capable leadership to deal with them.
I sincerely hope that this will happen so I can go back to daydreaming about Aurora politics and the lack of quality in many candidates seeking public office.
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