Sault considers buying, demolishing former hospital, selling it for residential development

At its meeting Oct. 1, city council in Sault Ste. Marie will vote on a staff recommendation to buy the former Sault Area Hospital site on Queen Street East and Lucy Terrace.

The plan would see the city purchase the property for $4.75 million, demolish the former building and sell it to developers to be turned into 140 to 422 residential units.

They expect to sell the properties for about $2.3 million and then gain new long-term tax revenue from the residential development.

"Over 20 years in a high-density scenario, the total incremental tax revenue (assuming a two per cent average annual tax increase) would range from $3.6 million to $20.9 million, depending on the number of affordable housing units built," the staff report said.

"The medium density scenario would generate $1.2 million to $6.9 million."

Buying the building would also address chronic complaints about property standard issues and add more affordable housing units in the city. The most likely scenario would see a high-density residential development replace the old hospital.

"Based on current experience, staff believes the scenario with 30 per cent affordable units would likely be the highest number of affordable units for a new development on this property," the report said.

"In the high-density scenario, this translates to $15.3 million over 20 years with a two per cent average annual tax increase. The medium density scenario would generate $5 million over that same period."

A full demolition – including the foundations – would cost between $4.5 million and $4.7 million.

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"Through discussions with multiple demolition companies, an opportunity could exist for a negotiated agreement where demolition services would be provided at a reduced cost in exchange for a portion of the land," the report said.

And outreach by staff found there is "serious" interest in the private sector in developing the property.

"Based on these conversations, staff have a high degree of confidence in the city being able to sell the property in the immediate future," the report said.

The sale would take place through a competitive RFP, a process that would begin within four to six weeks after the sale closes.

However, buying the property means the city would become responsible for any environmental issues discovered after the demolition of the buildings. While archival photos show a fuel was once located on the property, this "is not seen as insurmountable for development in/around this area," the report said.

Read the full report here.