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GFIVE pays $1,000.00, City pays $5.4 million to get rid of SGH

Tue, 08/01/2017 - 14:09 -- Chris Cooke

“It is easy to take on debt. There is no immediate political tax pain. When you sip from the debt cup you will sip again and again”.

That’s the view of Mayor Mike Bradley after Sarnia Council agreed to take on $5.4 million to finance a deal with a group of Sarnia businessmen who will buy and demolish the abandoned Sarnia General Hospital.

The demolition is pegged at $8.8 million but could go higher depending on environmental issues as the businessmen, Mark Lumley, Kenn Poore, Alex Jongsma, Charles Dally and Marty Raaymakers known as GFIVE Inc. offered $1,000.00 to purchase the hospital. They will be responsible for any costs exceeding $5.4 million.

Asked by First Monday if the group got a good deal Poore said “ask me in two years … there is potential for a loss but hopefully not”.

For $1000.00 GFIVE is taking on most of the risk associated with demolition of the asbestos – filled hospital and property remediation.

The proposal calls for full demolition of the existing hospital and nursing residences and replacement with residential lots, new commercial and medical buildings. While the City web site contains a site plan developed by GFIVE both Lumley and Jongsma refused to discuss details.

“You are my favourite reporter but I’ve got nothing to say,” said Lumley.

Poore said his group wants to “work with the neighbourhood” to develop the 7.5 acres at 220 Mitton Street and 327 George Street. The property has an appraised value of $1.75 million

The $8.8 million demolition does not include soil remediation.

Mike Kelch recommended Council finance the sale by issuing debt to be repaid over 10 years. “The City is in a good position financially due to previous decisions by Council”. Since 2005 the City has reduced debt from $95 million to $12 million.

Finance director Lisa Armstrong says the City doesn’t have to rush into debt financing noting, “There are cash reserves available”.

Bradley suggested the City curtail spending and lean on capital reserves to finance the GFIVE deal instead of relying on debt. “This City could have been debt free by 2020. Now we are looking at 2030 and beyond”.

But Anne Marie Gillis wasn’t worried noting that with $12 million in debt the City has borrowing capacity of at least $161 million.

Matt Mitro pointed out that the $5.4 million over 10 years would cost the City a million dollars in interest. “I’m concerned about locking in debt now. I want staff to have the ability to negotiate”. He also questioned the possibility of getting senior government money “that we aren’t aware of now” to help pay down the $5.4 million.

Noting the City’s policy for more than a decade has been to reduce debt David Boushy pushed Council colleagues to use funding from reserves.

However, Cindy Scholten – Holt wasn’t having any of it noting the City’s infrastructure is in poor shape. “Our focus has been debt reduction while our roads are crumbling and our beaches are eroding”.

GFIVE made a $15 million proposal for the hospital in 2014 for a medical campus but the deal fell through due to a dispute with Bluewater Health over the ownership of the building and property. Since then a Provincial court ruled the City is the sole owner.

Neighbourhood resident Mike Hurry told First Monday he is pleased with the outcome even if it will cost the City money. “Concerns raised by residents about the medical campus have been resolved with the new proposal and it is time to get on with it”.

“The community has made it very clear they want the hospital site cleared as soon as possible and this proposal accommodates that” said Brian White.

Health Ministry approval preventing GFIVE from reselling parts of the property until demolition is completed will be part of the sale approval.

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