$5.7 million for just over an acre of land and a building that has to be torn down: was a property owner enriched?

News 100 blueBy Pepper Parr

November 4, 2014

As you drive south on Walkers Line and pass under the GO tracks and get ready to drive over the QEW you may not see the construction taking place on the west side just a little north of the North Service Road.

Walkers North Service new road goes hereThere is a fairly large sign with the word BELL on it and a Subway shop tucked in behind. That patch of land has a level of sensitivity to it that doesn’t apply to most other pieces of property in the city.

Some of that land recently changed hands at what can only be described as “eye-popping” prices. We got calls from a number of people suggesting we sniff around a little and learned that the whopper of a land sale price is related – tangentially – to the deal that never closed also known as the new IKEA location.

Walkers North Service Hopewell site

This is where IKEA wanted to relocate their Aldershot operation. They were going to build a bigger store and add quite a few head office jobs as well. The city went along with Official Plan and zoning changes. The Conservation Authority would not go along with the parking plans close to Tuck Creek.  The green line is Tuck Creek.

Back in March of 2011 IKEA decided they wanted to move from their current Plains Road location to a property on the North Service Road. When the Gazette first learned of those plans we drove out to the site – what was immediately obvious to us was that the North Service Road was never going to be able to carry the traffic that IKEA planned on attracting.

And it wasn’t just the North Service Road that was a problem – Walkers Line itself would not be able to handle the volume that was expected to come in off the QEW.

Anything done to Walkers Line has to go through Ministry of Transportation filter.  As the city worked its way through the IKEA proposal all kinds of interesting tid bits of information bubbled to the surface – the most significant being – a lot of people both at the city and IKEA had not done their homework.

Walkers North Service location aerial

The owner of this property had plans to develop it beyond the single storey structure. His plans did not fit with the developing IKEA Plans. That red line is where Tuck Creek flows.

In order for the North Service Road to get wider Walkers Line had to widen and that impacted on the ramps that lead from and to the QEW. Those QEW ramps are Ministry of Transportation (MTO) territory .

We walked the North Service Road from Walkers Line to Guelph Line to get a better sense as to what had to happen if the IKEA site was going to have roads that let traffic get to it.

It was at about this point in time that the Economic Development people began to feel their oats and were coming up with some slick marketing phrases. Burlington was going to have Prosperity Corridors – several of them.

The property either side of Walkers Line was going to be one of those prosperity corridors. The idea was to identify property that was zoned and labelled for economic development and get them to the point where they were “shovel ready”.

Members of city council and the Economic Development Corporation really liked that “shovel ready” phrase. It seemed to mean that when someone wanted to locate in Burlington the city had property that was ready for a shovel to dig into it and put up a building that was going to house people doing well paying high tech jobs.

Walkers-North service - taken

We will buy this said the city….

IKEA wasn’t going to employ all that many high tech people – it’s a retail operation but they were going to expand their head office administration space and bring in a bunch of people.
The IKEA plans didn’t make it through all the hurdles. More than three years at the talking stage but it was all for naught. When IKEA withdrew their application it wasn’t clear why they had decided not to go forward. That gets us back to that piece of property that has a building going up.

IKEA apparently wanted to put parking spots a little too close to Tuck Creek which runs down the east side of what is called the Hopewell property. The Halton Conservation Authority wasn’t prepared to go along with that idea. It all hinged on what the Conservation people call “top of bank” which is a term used to describe just what it says – the top of the bank – be it a creek or a large body of water.

Walkers North Service - left

… and you can keep that part.

Top of bank is the starting point for what is called “stable top” which has to do with the geology. Stable bank is determined by a formula that starts from where the top of the bank is. All complex and esoteric but it was those two terms that brought the IKEA project on the North Service to a halt.

A lot of time and a lot of money was spent on getting IKEA from Aldershot to the North Service Road. The people that make the wheels move at city hall decided to put a positive spin on the loss of IKEA and are saying that the North Service road has to be improved anyway so let’s get on with making the road wider and ensuring that access is what it needs to be.

Walkers North Service - Tuck CreekDuring this multi-year exercise the city improved its relationship with the Ministry of Transportation (MTO) and what it plans on doing with the QEW and its access ramps. They learned that Walkers Line will reach capacity around 2031 (some think it is already beyond capacity but those people don’t know what real traffic is) which means the MTO people weren’t wanting to pay a lot of attention to improving things on Walkers Line.

No Walkers Line improvement – not much you can do with the North Service Road and if you don’t do something with the North Service Road there goes the Prosperity corridor concept and there won’t be much in the way of land you can put a shovel in.

Different level of government has different levels of responsibility for roads.  Walkers Line is a city road whereas Brant, Guelph Line, Appleby Line and Burloak are Regional Roads with some portion a city responsibility.

While all this is happening the owner of the land that is east of Tuck Creek and to the west of Walkers Line between the GO tracks and the QEW take an application to city hall.

The plans that property owner had did not fit in with the long terms plans the city had for improving access to the North Service Road. The city knew they did not want to approve the application and they probably knew they didn’t want to expropriate – so it was time to “do a deal” and what a deal they did.


What is now an empty field on North Service Road just west of Walkers Line is to be the new home for a $60 million 428,500 sq ft IKEA facility to open in 2013

It is still an empty field on which a lot of money has been spent.  Hopewell is still looking for a buyer and there are reported to be a lot of people “sniffing” around.  Access to the road will be improved but the road itself is still two lanes.  IKEA had planned on a  $60 million 428,500 sq ft facility to originally open in 2013

The city bought a chunk of the land – it was 1.1 acres in size and paid $5,676,880 They then apparently gave the property owner an “enhancement” in allowing him to put more on the property than would have been permitted.

One exceptionally well informed Gazette reader had these comments:

“Was the $5.7 million just for the land and the building or was there monies paid for the property owner to move his tenants out of the existing building into the new building when it is completed?”

The Gazette learned that the $5.7 million was for the land shown on the graphics and the building – even though the building sits on land that is now owned by the city and the company – 1100 Walkers Line Inc.

“Were there any sweeteners in this deal – because it is a deal” says our informant.

“It is unlikely that a private property owner enter into a deal like this unless there was a benefit to him, at a cost to the City.

The property transferred from a private commercial property owner to City on February 10, 2014. At a Council meeting on February 19th, they went into a closed session to discuss a property matter” which we later learned was IKEA. The next day the city put out a press release saying IKEA had withdrawn their application.

The city is now stuck with land for which there is no justification because there is no reason to enhance access to the North Service Road.

“It is very unusual for any level of government to secure property under speculative conditions; in fact, governments typically only acquire property once there is justification to do so; the IKEA relocation was the justification, but, that did not happen, so this deal should also have not happened. It also becomes an issue of fairness and equity; why not buy up other locations from other private landowners? And who made the decision to buy the land that was purchased. Is there anything on the public record?

“If the market value of commercial land is in somewhere in the range of $1M – $1.5M/acre in Burlington, why did the city pay $5.7M/acre? Did the purchase price include payment for the demolition of an old commercial building and the cost to build a new 6-storey office building?

If so, is the $5.7M paid so far to the private property owner the end of it, or, is there more money to be paid by the City to the proud owner of the new building.

“Is this a case of enrichment? The City should have only entered into such a deal if the City had an irrevocable IKEA relocation play in place including all MTO interchange reconstruction commitments in place, together with cost sharing with IKEA to offset the City’s share of the total costs.

Did the city have any indication that IKEA was going to withdraw their application? When did IKEA make the call to the city.

“One of the smell tests for this situation is this: If MTO were to reconstruct the interchange, they would only pay market value for the city’s 1.1 acre; basically, the city would not be able to recover the $5.6M because that is well in excess of the market value of the land bought by the City, and the interchange reconstruction would be under the jurisdiction of the MTO.

What our informant may not have been aware of is that Walkers Line is a city Road. MTO owns the ramps leading to Walkers Line and they have the right to intervene on anything built within 300 metres of the centre line of any MTO. So – MTO was “in the room” as they say, but they weren’t picking up any of the tabs.

“It appears” says our informant” that the City made and concluded a deal they should not have completed, to the benefit and arguably an enrichment of a private sector commercial land owner, and now they are pitching it as a planned acquisition to encourage new economic development at the northwest quadrant of Walkers Line and QEW.

“This deal is an expensive outcome from a major failed relocation which appears to benefit a private owner as enrichment”

Our informant thinks there may be more money to be paid to this property owner once construction is complete but doesn’t have any proof – yet he adds.


We are still tracking this part of the deal which as one authority who understands these kinds of arrangements said: “it doesn’t pass my smell test”

Walkers North Service structure started

The structure will rise to six storeys and over look the railway tracks at the back and the QEW at the front. On a nice summer day office workers can wander down to the edge of Tuck Creek,

The steel beams for the six storey office building snuggled up close to the GO trains tracks are being put in place. The city is clearing the land they bought to improve access to the North Service Road – not that the road will be able to handle all that much traffic – but the Prosperity concept is now still valid.

Hopewell Developments, the people who own the land IKEA was going to build on are still looking for a buyer. That is one of the few remaining properties Hopewell has in Ontario – they want to pull back to their Alberta roots where they probably realize prosperity is much more than a corridor.

$5,676,880 for 1.1 acres of land. That is eye-popping.  Admittedly the city also bought the building that is now on the land – but they are going to tear that down – and you know who is going to pay for the demolition.

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9 comments to $5.7 million for just over an acre of land and a building that has to be torn down: was a property owner enriched?

  • Bryce Lee

    Those railway tracks that are identified as GO tracks are in fact CN’s freight only Halton Subdivision. No GO trains!

  • Chris Ariens

    James: from Conservation Halton’s website…

    Development proposals are reviewed to determine how the proposed works may impact upon, and/or be impacted by, the natural environment. We have the regulatory responsibility to ensure that works are not permitted in areas of natural hazards in order to prevent the loss of life and property due to flooding, erosion and unstable soils/bedrock and to enhance natural resources.

    Given the August floods, one might argue their role with respect to development should be increased. The amount of land in the creek area is quite small – IKEA could have resolved it if they wanted to do so.

  • James

    The Mayor owes us an explanation of what really happened, where our tax dollars really went, and what benefit we’re getting from this spending. This isn’t a small amount of money.

    It’s also very interesting to find out that Conservation Halton played a major role in squashing any hopes and dreams of a brand new IKEA at that location. This certainly sheds new light on the problem, where we can now see that it was they who were the cog in the wheel. The City bent over backwards, worked with MTO to find solutions, and went to unprecedented lengths to help and guide IKEA’s proposal, yet even with all their wheeling and dealing, still couldn’t find a way to make IKEA work within the “Prosperity Corridor” all because of as it turns out, Conservation Halton. That does beg the question, is ANY large business going to work in that location? This so-called “Prosperity Corridor” seems to be off to a rocky start if even the great IKEA couldn’t make it work. It sounds wonderful that we have a “Prosperity Corridor”, but can anyone actually build anything of any meaningful size, or do they too have to spend 3 years and millions of dollars to find out that Conservation Halton is anti-development, and doesn’t want them there? So much for “shovel ready”. The only thing that’s being shovelled around is red tape. What message does this send to other business interests looking to invest in Burlington? And why does Conservation Halton have such strong power to veto the efforts of City Hall anyway? Why aren’t our elected officials the ones making the decisions? This failure has raised far more questions than answers if you ask me.

    • Tom Muir

      I hope you are going to call the Mayor and ask him for this explanation. He won’t provide it because we have said he should here.

  • Kurt

    Wow, this deserves a reply from the City. Was this the best use of our tax dollars?

    • Tom Muir

      If you want this explanation then ask your Ward Councillor for it, and then ask the Mayor. It needs to be detailed and the business case provided.

  • Chris Ariens

    Thanks, Pepper for bringing this spending to light. That is a heck of a price to pay for this land.

    In the 2014 Capital budget, I understand there was provision for $24 million to be spent on the Walkers / North Service intersection as part of this “prosperity corridor” marketing initiative. It looks like this land deal may be part of that plan?

    As for Walkers line being above capacity…traffic models have an assumption of continued straight-line growth in demand for automobile travel. You can see how accurate those assumptions have been here…https://daily.sightline.org/2013/12/23/traffic-forecast-follies/

    In most cases it is the existence of the new capacity that drives the growth in local demand, not actual need for that capacity. Vehicle miles travelled are falling. The millenials that are starting new ventures and launching families are looking for other ways of getting around – transit, walking, cycling. They don’t want to spend their lives stuck in traffic on the QEW. The idea that wider roads create “prosperity” died out with the Disco era. They don’t create prosperity…they create car traffic that makes our lives less prosperous.

    I can’t possibly imagine what could be built in this location that will contribute $24 million in net economic value to the city. This land has sat empty for the length of time the highway has been there. We’re not going to be attracting many more big-box furniture stores here – they are all in the vicinity already. Even the $5 million for the land will be next to impossible to recoup unless we attract massive new development. Is there anyone on the BEDC that can speak to the business case and possibly justify this massive investment on behalf of the city’s taxpayers?

    • Greg Woodruff

      This idea that you can double the population of Halton and not cause a massive increase in traffic is simply not true. Though we should invest in public transit systems – people have to get realistic as to what percentage of people these systems move about. Public transit typically moves about 10% of and active transit moves 5%. France has 85% of all trips in cars. How are the rest of the 175,000 extra people going to move about? Massive roads will be the answer unless we get realistic and sensible planning.

      • Chris Ariens

        Greg…dependes highly where the growth goes. Burlington is actually slated to be the slowest-growing community in the GTA. Most of Halton’s growth is going to Milton and the northern section of Oakville. Burlington is most definitely not going to become a city of 350,000.

        Fact is that we can’t even afford to maintain the roads we have now. Building more has to be considered a last resort, after maximizing the other options. We have yet to attempt that. If somehow we could get just 5% of Burlington trips taken by active transportation, and also see similar uptake of transit usage – that means that we can handle all of the planned growth to 2031 with the capacity we have today – freeing up hundreds of millions of dollars of capital we can put towards addressing our infrastructure deficit.

        Investing more money on massive roads just acts as a barrier to that – we add more expensive infrastructure that taxpayers have to maintain and we discourage the active transportation and transit that enables us to get more efficiency out of those roads.