CALGARY, Alberta–(BUSINESS WIRE)–Walton Ontario Land L.P. 1 (the “Partnership”) and its general partner Walton Ontario Land 1 Corporation (the “General Partner”) announced today the Partnership’s results for the third quarter of 2016. Launched in January 2010, the Partnership’s objective is to maximize returns to limited partners through the management of, concept planning on, and eventual sale of, its Ottawa Property (the “Property”). The Property consists of approximately 300 acres adjacent to existing residential communities located to the north and northwest, and immediately south of Ottawa’s current urban area boundary.
In 2014, as part of their Municipal Comprehensive Review of the Official Plan, the City made a decision not to expand the urban boundary to include the Property. The Partnership filed an appeal of the Official Plan with the Ontario Municipal Board (“OMB”) on May 15, 2015, based on a number of planning and process related considerations identified by management as a part of the City review process. The Partnership has actively participated in the appeal process including presenting supporting arguments at hearings with the OMB.
On February 23, 2016, the OMB issued a favorable decision supporting the basis of management’s appeal. The OMB decision requires the City to complete a Land Evaluation and Area Review and an Employment Lands Study, including a full and proper review of these issues, before the OMB will reconvene a hearing. The City was also advised, as a part of the OMB decision, to review its planning horizons utilized to ensure consistency with the Provincial Policy Statements 2014 with a reference to a time frame of 2036, as opposed to the 2031 horizon utilized by the City in the Official Plan Amendment.
On June 20, 2016, the City’s Planning and Growth Management Department issued a memorandum to the members of the Planning Committee and Agricultural and Rural Affairs Committee outlining the work program to provide the information and material requested by the OMB to permit the outstanding appeals of the Official Plan, including the appeal filed by the Partnership, to be addressed.
As part of the work program outlined in the memorandum, the City extended its planning horizon to 2036. The memorandum indicated that projections show a need for 131,000 additional housing units and 158,000 new jobs over the planning horizon, increases of 34% and 27% from 2014 respectively. The Ottawa Employment Lands Review Final Report was presented to and received for information by the Planning Committee on September 13, 2016. The report indicated that the City of Ottawa has an excess supply of vacant employment lands over the long-term and that some lands can be considered for non-employment uses within the Official Plan. Notwithstanding the recommendations of the report, management continues to advocate there is not an appropriate range and mix of available lands and there is the need for the City to consider comprehensively planned mixed-use opportunities outside of the existing boundary as part of the qualitative and quantitative assessment to change the current designation for certain Employment and Enterprise Area lands to General Urban Area.
The City has also commenced the Land Evaluation and Area Review to determine if the Agricultural Resource Boundary in the City’s Official Plan should change based on an assessment of soil capacity for agriculture, land use and parcel size. The field work for this study is being completed by the City and recommendations on possible changes, if any, to the Agricultural Resource Area will be sent to all affected landowners. A draft Official Plan Amendment is tentatively scheduled to be presented to the Agricultural and Rural Affairs and Planning Committees in November 2016 and Council in January 2017 as part of a combined amendment to also modify the planning horizon and update the employment area policies.
Management and the Partnership continue to share the view that the Ottawa Property has excellent attributes to accommodate a future employment and mixed-used development opportunity and is well suited for an urban boundary expansion.
As a result of the ongoing appeal and related planning processes associated with the Official Plan, the time frame for the Partnership to hold its interest in the Property as an investment has exceeded the original anticipated two to four year time horizon. Management continues to work with CBRE as listing agent to seek market opportunities for the Property.
Management will continue to collaborate with the City and other levels of government in advancing the Partnership’s objectives for the Property, which focuses on the Property being included within the City’s urban boundary and realizing the highest and best use potential for the lands to maximize investment returns.
Third Quarter Financial Results
During the three and nine months ended September 30, 2016 and September 30, 2015, the Corporation did not recognize any revenue relating to land sales and incurred no cost of sales.
During the three months ended September 30, 2016, the Partnership realized a net loss of $198,590 compared to a net loss of $193,944 for the three months ended September 30, 2015. Total expenses have increased by $4,646, primarily the result of an increase in director fees in the three months ended September 30, 2016 of $5,878, due to the entity having only one independent director throughout the entire third quarter of 2015, compared to having two independent directors throughout the entire third quarter of 2016.
During the nine months ended September 30, 2016, the Partnership realized a net loss of $606,300 compared to a net loss of $639,675 for the nine months ended September 30, 2015. Total expenses have decreased by $33,375, primarily as a result of the reduction of servicing fees of $49,293, due to the fees no longer being incurred as per the Prospectus. This has been offset by an increase in directors’ fees of $24,013, due to increased compensation paid to each independent board member effective April 1, 2015 combined with the fact that, there was only one independent director throughout the entire third quarter of 2015, compared to two in 2016.
Overall, the Partnership is performing consistent with the Partnership’s intention of holding its interest in the Property as an investment until market conditions are appropriate, at which time it is anticipated that a sale will be made.
Walton International Group Inc. (“WIGI”), which manages the Partnership, continues to undertake that management notwithstanding that its management fees are being accrued and will not be paid until there is an exit with respect to the Property. In the third quarter of 2016, a total of $166,470 in management fees was accrued. The total amount of Management fees outstanding and payable to WIGI as at September 30, 2016 is $868,837.