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Old Posted Oct 1, 2010, 12:46 AM
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Join Date: Jan 2004
Location: London,Ont
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Is city hall on the move?

The city is preparing a bid to buy the Bell building to escape overcrowding at 300 Dufferin Ave.

The Dundas St. Bell building (Free Press file photo) London wants to make Bell Canada’s downtown building its new city hall and is preparing a bid to buy the tower.

But owner Shmuel Farhi, the downtown’s major landlord, insists the Dundas St. building is not for sale. Instead, he prefers the city — out of room at its 40-year-old city hall, and facing huge upgrading costs there — lease space in his newer tower partly occupied by 700 Bell workers.

“I am not a seller — I do not sell and I do not need to sell,” said Farhi. “I bought (the building) for a reason. It is part of the puzzle and Bell is a big part of my vision.”

That vision is to own anchor properties in every area of the core, bustling with tenants.

The issue now is being discussed at city council and the offer may be on the table soon, said city chief administrator Jeff Fielding.

Even if costly renovations are done to city hall, the Dufferin Ave. site may not be large enough for the city’s needs.

Farhi bought the Bell building in 2008 for $11 million. The city also tried to buy it then with an offer of $15.5 million, but it had conditions attached while Farhi’s offer did not.

“We will try again. It is the only building in the downtown with sufficient space to accommodate us,” said Fielding, who acknowledges Farhi has other ideas.

“We are exploring the opportunity now. He has not said he wants to sell it, but we will take a look at that opportunity,” said Fielding.

With its space crunch, London already has city hall operations spread across other downtown locations.

Farhi is urging the city to lease space at the Bell site — either for all of city hall, or two floors for some departments — to ease the crowding.

It’s a solution that’ll save the city $120 million, he added.

A long-term lease for 250,000 sq. ft. 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, he said.

His math works like this:

Renovating city hall may cost $10 million just to remove asbestos, and a total renovation may top $35 million, he estimates.

Building a new city hall of 250,000 sq. ft., the space needed, would top $80 million. At 5.5%, interest would cost the city about $4.4 million a year.

Farhi is offering 250,000 sq. ft. at the Bell site for $1.2 million in annual rent, more than $3 million savings over interest. During a 40-year-lease, the city could save more than $120 million, he said.

Mayor Ann Marie DeCicco-Best declined comment, declaring a conflict since the bar she owns with her husband, Tim Best, leases space in a Farhi building.

But Deputy Mayor Tom Gosnell said council won’t support the city leasing a new city hall, since it wants to own its own.

“I am not sure the city wants to be in a situation of a long-term lease, or to leave a city hall that is still functional,” he said.

He supports the idea of renovating the Dufferin Ave. site and continue to lease space in the core.

“I am leaning more that way. As a rule, city halls are not leased. A city owns them.”

City hall opened in 1971 owning it has saved the city money for years, he added.

“We have paid that off many times over.”

In 1980, when it was built, the Bell building cost about $68 million. If built today, it would cost about $100 million, said Farhi.

Farhi owns 87 properties in downtown London, with about 500,000 sq. ft. of vacant space, he said.

Fielding declined comment on how much council is preparing to bid, saying that’s been the subject of closed meetings at city hall.

The issue will go to the next council meeting.

The city now pays Farhi about $2.1 million a year in leases on other downtown properties.

--- --- ---

BELL BUILDING


100 Dundas St., at Talbot St.

Eight floors, five occupied by 700 Bell workers

360,000 sq. ft.

Built in 1980.

Sold to London developer Shmuel Farhi in 2008 for $11 million.


CITY HALL


300 Dufferin Ave., at Wellington St.

Built 1971.

12 floors

120,000 sq. ft. of work space

11th-floor upgrades of more than $1 million, if repeated on every floor, would push renovation costs to $20 million, with little extra space.
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