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CAMH rent may skyrocket

September 16th, 2015 · No Comments

College and Russell streets facilities at risk

Brookfield, which is developing condominiums at the southeast corner of Spadina Avenue and College Street, says its property across the street, leased to CAMH, should be valued on highest and best use. Doing so would increase the hospital’s rent by as much as 333 per cent. BRIAN?BURCHELL/GLEANER?NEWS

Brookfield, which is developing condominiums at the southeast corner of Spadina Avenue and College Street, says its property across the street, leased to CAMH, should be valued on highest and best use. Doing so would increase the hospital’s rent by as much as 333 per cent.
Brian Burchell, Gleaner News

By Brian Burchell

The College Street branch of the Centre for Addiction and Mental Health (CAMH) is facing a whopping 333 per cent rent increase when its lease is renewed for another 20-year term in 2018.

The landlord, a numbered company owned by Brookfield Asset Management, says raising the rent from $1.2 to $4 million a year is justified given the underlying value of the land.

Under the terms of the hospital’s lease, which was signed in 1998 and includes an adjacent state-of-the-art research facility at 33 Russell St., CAMH has the option to renew for two additional 20-year terms, subject to negotiation. At this point, the parties are so far apart that a negotiated settlement seems unlikely.

The crux of the dispute appears to be what yardstick to use when determining the underlying value of the land. Brookfield, which is formerly known as Brascan and has $27.9 billion in assets in Canada (including First Canadian Place), is using the real estate principle of highest and best use to determine value. The appraiser for CAMH pegs the present value of the lands at $24 million, while the appraiser for Brookfield says they are worth $103 million.

“My hope was that Brookfield would negotiate in good faith, instead of what is now an expensive, formal legal process,” said Joe Cressy (Ward 20, Trinity-Spadina). “When the lease was established in 1998, it stipulated that there would be three 20-year terms and that throughout the only use of the space allowed would be a hospital. For Brookfield to take the position that it could be anything else for the purposes of determining valuation is not acting in good faith.”

Not only does the original lease prevent Brookfield from using the site for anything other than a hospital until 2058, any attempt to replace the hospital with a mixed-use condominium development would not be supported by the City of Toronto, argued Cressy, who views the move as “an attempt to strong-arm a mental health hospital to make room for condos”.

Brookfield’s ownership of the land dates to 2004, when the provincial government, sold the property to the company for $16 million.

“This was a foolish decision by the former Harris and then Eves governments which shows you that what happens when you sell off public assets to make a quick buck is you risk future generations,” said Cressy. “Our downtown neighbourhoods are growing in leaps and bounds and the reality is we need more health services to support a growing population.”

CAMH’s College Street location not only serves the area’s growing population, but also treats patients from across Ontario in the province’s only 24-hour mental health emergency station. Approximately 9,000 people were treated in the site’s emergency department alone last year, up from 3,500 just five years ago. And according to Dev Chopra, CAMH’s executive vice president of clinical programs, this number is increasing by 7 to 10 per cent a year.

“The prevalence of mental illness in society is wide, and as celebrities and athletes start to acknowledge their own illnesses, this has an impact on the population,” said Chopra, who attributed the growth in patients in part to “an awareness within society about mental illness, the reduction of stigma related to mental health issues, and the increasing accessibility of CAMH services”.

There’s also an increasing intersection between the Toronto Police Service and the mental health care system in Ontario. As former Supreme Court Justice Frank Iacobucci wrote in a report in the wake of the shooting and killing of Sammy Yatim by a Toronto Police officer, “the system must recognize that the Toronto Police Service is dispatched to approximately 20,000 calls for service annually to persons-in-crisis, and about 8,000 of these events involve apprehensions under the Mental Health Act”.

Most recently, CAMH and Brookfield appeared before superior court in July to settle a dispute over the process for determining a compromise between the parties.

“The lease stipulates that a third party appraiser will appraise the value of the lands in 20 days, should the parties not agree,” explained Chopra. “The court decided in 2006 that the appraisal process should be akin to an arbitration [where the parties can make submissions and cross-examine each other’s submissions]. It was necessary to go back to court recently, because Brookfield felt that the appraiser should decide what the prevailing rent should be within 20 days, notwithstanding the 2006 decision.”

In a judgment released Aug. 11, Justice G. Dow ruled that the lease stipulated that an appraiser would determine the site’s value (and therefore the rent), but with the caveat that the appraiser must conduct the process as an arbitration. The court has also appointed Ken Stroud, who previously appraised the site in 2006 and is taking submissions until Sept. 15. He will then announce a binding decision within 30 days.

Andrew Willis, Brookfield’s senior vice president for communications and media, who was reached just before press time, declined to comment except to say “we are still working things through with CAMH, and we value our relationship with all of our tenants and we are working hard to resolve the issue”.

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