Imagine CK project could cost up to $125M

CK Community Hub and Entertainment Complex proposal concept drawing. (Photo courtesy of the Municipality of Chatham-Kent)

Chatham-Kent residents are finally getting a look at the estimated costs for the proposed “Imagine Chatham-Kent” project.

In early June, a group of local investors who purchased the Downtown Chatham Centre revealed their preliminary redevelopment plans for the site and their plans to revitalize Chatham’s downtown core.

The modern plans include a community hub and promenade with a new city hall, a public library, and a museum inside the former Sears building, an entertainment complex with a new municipally-owned 4,000 seat hockey arena and a local sports hall of fame in the middle, and a third phase closer to Retro Suites that could be turned into more hotel suites or apartments. The proposal also mentions retaining lands behind the buildings for future private sector commercial and residential development.

Group of local investors present Downtown Chatham Centre preliminary redevelopment plans. June 7, 2022.

According to a staff report going to council on Monday night, the proposal breaks down the development of the Downtown Chatham Centre property into three phases of sequential development.

Phase One includes the re-development of the former Sears portion of the Downtown Chatham Centre into a facility capable of hosting current operations from the Civic Centre, Chatham Library, and the Museum and Art Gallery portions of the Cultural Centre. This phase will also include construction of the adjacent promenade and transfer of a repaired parking garage to the municipality.

Phase Two includes construction of the entertainment complex along with a privately retained commercial segment along King Street.

Phase Three will be privately retained for future development, including possible housing or a hotel.

All infrastructure and land not privately retained by the group of investors will be owned by the municipality.

“The municipality would be responsible for all costs associated with the development, acquisition, and ongoing operation of all facilities and structures proposed to fall under municipal ownership at the conclusion of the project,” read the report.

Administration currently estimates project costs under municipal responsibility, based on current market conditions, inflation rates and in the absence of schematic drawings required for more refined estimate, as follows:

-Phase 1 $53-million

-Phase 2 $60-$70 million

-Phase 3 $0

The municipality’s project estimate includes taxes less rebate, land purchase, architectural and engineering consultation, contract administration, 15 per per cent contingency, and 15 per cent material and labour escalation factoring inflation. This estimate is subject to scope finalization and negotiation.

According to the report, a range is provided for the Phase 2 estimate due to the uncertain scope of the entertainment complex. Direction from council on its final size and intended usage is required to reduce this variability.

“Pending direction from council on further due diligence, funding source recommendations will be outlined in the future,” staff said through the report. “However, it is anticipated Phase 2 will be recommended to be conditional on the securement of other sources of funding to cover a portion of the cost.”

CK Community Hub and Entertainment Complex proposal concept drawing. (Photo courtesy of the Municipality of Chatham-Kent)

CK Community Hub and Entertainment Complex proposal concept drawing.

According to the report, there are several other cost considerations with the proposal that council should be made aware of that are not reflected in the cost estimates including increased operating costs of an entertainment complex compared to a current municipal arena, costs of maintaining the parking garage, one-time moving expenses of Civic Centre equipment and assets from the museum, art gallery, and library as well as upgrades to traffic, parking, and transit services which may be required to accommodate an entertainment complex.

As part of the due diligence process, administration obtained certified professional appraisals for the three municipal buildings in which operations may be accommodated with the proposal’s Phase 1 infrastructure development.

According to the report, The Civic Center, Chatham Library and Cultural Centre were appraised at a combined total of $9.8-million.

“Council would be under no obligation to divest these buildings,” read the staff report. “Recommendations on their future are not included in this report and should be informed through further stakeholder engagement and analysis. Within the terms of the proposal the [group of investors[ have offered a “floor bid” for each building in order to mitigate risk to the municipality. If council chooses to divest these properties in the future, they may also be placed for sale on an open market to attract the best and highest bids.”

The report also notes that it would cost an estimated combined total of $32-million in renovations and upcoming lifecycle costs for the same three municipal buildings, which would be avoided if the buildings are divested and Phase 1 of the proposal moves ahead.

Council won’t be making any final decisions related to the development phases on Monday night. However, there are some important next steps that will be discussed and voted on.

Up for council approval on Monday is designating “Imagine Chatham-Kent” as a priority project due to its “alignment with council’s strategic term priorities and various previously approved plans, policies and strategies outlined in this report.”

“This designation is intended to transparently identify the project as warranting further resources necessary to determine, in a responsible and timely manner, its overall value for taxpayer dollars, business validity, and to ensure final decisions regarding scope reflect the current and future needs of the community,” read the report.

Despite this designation, no final decision on project approval is being requested of council at this time. Rather, the project will be prioritized to proceed with further due diligence.  According to staff, additional reports will be brought to council when the project is at a stage where approval decisions can be considered.

Municipal staff is recommending that further due diligence be taken to inform the next steps on the Imagine Chatham-Kent proposal.

The following steps are up for council approval on Monday as well:

– A certified appraisal and engineering report, where relevant, for the portions of the Downtown Chatham Centre property proposed to be transferred to the municipality be obtained

– External legal counsel be retained to initiate the legal negotiation of the terms of a development agreement and related legal matters with the community partners and that the terms of an agreement be subject to final approval by council

– The CAO be authorized to execute any operational agreements related to the due diligence process, subject to financial approval limits and satisfactory to the director of legal services for the purposes of implementing the above recommendations

– Up to $2-million for further due diligence and professional services including external legal counsel be funded from the Building Lifecycle Reserve

“This funding is required for professional services for validation of municipal value received from the proposal, retaining outside legal counsel to initiate legal negotiation of the terms of a development agreement with the [local investor group,] additional public consultation, business case assessment, advancing the project scope to refine estimates, and overall project management,” read the report.

Council will also vote on putting out a request for proposal to retain a qualified and independent firm to lead further public consultation, feasibility and business case assessment, and the engineering and financial review outlined in the staff report with recommendations on final scope, value, and next steps reported to council.

Additionally, staff is recommending that the cost weighting in the request for proposal matrix for consultants be reduced from 30 per cent to 10 per cent in order to prioritize technical expertise and project schedule

According to the report, the project is too large of an undertaking for the municipality to handle on its own.

“Based on the scale of the proposal, its outstanding questions, risks, and public demand for further input, administration has determined there is insufficient internal capacity for the significant due diligence required to advance this project in the responsible and timely manner expected by all parties,” the report read. “It is recommended a request for proposal be issued for the purpose of acquiring a qualified and independent firm to oversee several aspects of the next stage of due diligence.”

The investors involved in the project previously said the revitalization project is expected to be just over 400,000 square feet and if council approves it, shovels should be in the ground this fall with the entire redevelopment taking about five years to complete.

Between June 14 and July 17 administration invited public comment on the Imagine Chatham-Kent proposal though the Let’s Talk CK website.

According to the report, 108 submissions were received by members of the public and reviewed by administration. The page was visited 2,260 times

“Submissions were descriptive in nature with many individuals qualifying statements of support or opposition with specific concerns, further ideas, or outstanding questions.”

You can read the full 12 page report going to council on Monday night by clicking here. 

Public comments received in regards to the proposal can be viewed by clicking here and an FAQ page regarding the proposal can be found here.