Ottawa Hospital to pay city $12.9M to allow long-term care project to go through near Riverside Campus

City Hall in downtown Ottawa is seen in this undated file photo. (CTV News Ottawa)

A slice of land near the Ottawa Hospital Riverside Campus could one day become a major long-term care and retirement complex, but it would require city council not act on an agreement between the city and the hospital over land use.

Agreeing not to act on that agreement could result in nearly $13 million being deposited into city coffers.

The city of Ottawa sold surplus land at 1967 Riverside Dr. to the Ottawa Hospital (TOH) in 2005 for $1, as part of a deal approved in 2000, before amalgamation, according to a report prepared for Wednesday's council meeting. As part of the deal, the city and the Ottawa Hospital entered into an agreement called a reversionary covenant that said that the city could reclaim ownership of the land if it ever ceases to be used for non-profit health-care purposes.

The report reveals that hospital officials met with planning staff confidentially in October 2021 to discuss a proposal to lease approximately five acres of the 19-acre property to Schlegel Villages Inc. for 75 years to build an eight-storey, 256-bed long-term care home and a 15-storey, 270-suite retirement residence that would be privately operated on a for-profit basis. The covenant, however, says the land is intended for non-profit health-care use and while a long-term care facility would meet the health-care requirement, operating it for profit would not.

The Ottawa Hospital is now asking the city not to act on the covenant and to remove it from that section of land in order for the project to proceed. 

The city would be within its rights to reclaim ownership of the land the Ottawa Hospital wants to lease, staff said, but the report states that the city's corporate real estate office found no city interest in it.

"Given the financial resources invested to date by TOH and its partner, the project’s functional programing focusing on senior’s care, and the operational synergies being adjacent to TOH on Riverside Drive, City staff consider the 'healthcare hub' concept an appropriate use for the Lands," the report states.

Staff say the hospital supports the project, as it would increase the number of licenced long-term care beds in the city, and it would be near a hospital, creating a 'healthcare hub' that would provide a continuum of care for the elderly.

City seeking $12.9 million to remove covenant

While it is recommended that council not take the land back from the Ottawa Hospital, staff said the city is asking for a measure of compensation for agreeing to remove the reversionary convenant.

The value of the land was appraised at $12.9 million, based on the fact that if the reversionary covenant is removed, the land would become eligible for for-profit uses and, therefore, more valuable.

Staff say the Ottawa Hospital is willing to pay that amount if council agrees to remove the agreement.

"At this time, TOH is seeking concurrence from the City that removal of the covenant can occur so that TOH can then enter the final steps of negotiations and finalization of agreements with the developer/operator of the subject lands," the report says. "In return for that concurrence from the City, TOH has agreed to deposit the $12.9 million into an escrow account. Upon execution of agreements between TOH and developer/operator, City staff will report back to Council on an allocation plan for said funds."

The report explains that since this is not a sale of city land—as the land is and will remain owned by the Ottawa Hospital—policies that require a portion of money acquired through the disposal of city land be used for affordable housing and municipal parkland would not apply.

The report says the $12.9 million would be held in a separate account as an agreement between the City of Ottawa and The Ottawa Hospital until a future direction is determined with respect to the request for a Municipal Local Share Contribution in support of the new Ottawa Hospital Civic Campus.