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LONDON FREE PRESS |
| June 11, 2010 |
City offered home in Bell building.
Real Estate: Shmuel Farhi says the city could save millions leasing space from him instead of renovating City Hall.
By Norman De Bono The London Free Press
Shmuel Farhi says he can save London taxpayers $120million.
The London developer is pitching a plan to the city to move city hall to the downtown Bell building he owns.
A long-term lease for 250,000 square feet would give the city enough room for its growing staff at a fraction of the cost of building a new city hall, or renovating the existing one, Farhi said.
"If they rent space, it will be cheaper than what it costs just to finance a new building," he said.
"The real goal should be to end up with the best possible premises at the lowest possible cost. If they commit to doing that, I can save the taxpayers literally millions of dollars."
The move also would finally give the local government the space it needs because it’s crowded into a 140,000-square-foot tower at Dufferin Ave. and satellite offices that it could close, he said.
Farhi’s math works like this:
Renovating city hall may cost $10 million just to remove asbestos. A total renovation would top $35 million, he estimates, and city hall would still be too small, meaning more money would have to be spent on expanding. With interest payments of 5.5%, a renovation alone would cost the city $1.9 million a year.
The city has said it will cost $20 million to renovate, but Farhi disagrees.
He said the city grossly underestimated renovation costs in other buildings, such as the former TD Canada Trust building at Dundas and Wellington streets.
"I base that on the cost of redoing the J. Allyn Taylor building a few years ago, where the cost was $250 per square foot, much more than budgeted but in line with industry averages," he said.
"The city should not waste money fixing it up when the most cost-effective solution is plainly long-term leases in the core."
Building a new city hall of 250,000 square feet, the space needed, would top $80million, Farhi said, and interest of 5.5% would see the city spend about $4.4million a year in interest alone.
Farhi is offering 250,000 square feet at the Bell building for $1.2 million in rent annually, more than $3 million savings.
During a 40-year-lease, the city could save more than $120 million, he said.
"The city would still own the 300 Dufferin property, could sell it and pocket the money," he said.