I learned this sales technique from a friend of mine who sold promotional products. Sometimes, he would respond to a RFP (Request for Proposal) for a huge quantity of product that he was pretty certain he couldn’t win. But by participating in the process, he would get to know all the players in a government department say, or a large private sector firm. When he lost, he would wait a couple of days and then (politely) ask the people involved for some feedback on what he could do better next time. He was such a gracious loser that they often would give him an order for something and, the next thing you know, he had a new client*.
But there are other ways to ‘win by losing’, as long as you keep your mind open to opportunity.
We went to the OMB (Ontario Municipal Board) on a matter involving a piece of vacant land in the heart of a small village in the western suburbs of Ottawa. Since amalgamation of the 11 municipalities and townships plus the Regional Government a number of years ago, the City, in my view, has taken a decided tilt towards urban issues. Rural villages around Ottawa are not a priority for the City. In fact, I get the feeling that the City’s planners would prefer it if everyone lived in a walk up flat above a retail mall on Elgin Street. Now that might be fun if I was 19 again but for a family person with a wife and five kids and my mother-in-law, it does not have much appeal—either economically or from a lifestyle POV. I get up at 5 am to get ready for work, about two hours after Elgin Street quietens down from a night of partying. This is not an attractive proposition**.
The piece of land we are talking about in the Village is ten acres and is right at the intersection of the two main roads that form the spine of the Village. (Villages tend to form at the intersection of major arteries—like two rivers, a railroad and a road, two roads, a railroad and a port, what have you…) To the south is some industrial land. Across the street is a restaurant, a vet, a couple of Churches. To the north there is a High School, a plaza, about 185 homes, a recreation centre and more stuff. The City has just bought up the local store at the intersection which has been around since the 1830s to knock it down (actually, it has already been demolished) and put in a fully signalized intersection and turning lanes. I am guessing that this (along with some environmental remediation) will set our City back more than one million dollars.
Now I have no idea what the Village is really worth but we can make a stab at it. I am sure to the people who live there (as I once did), it is, like they say in the TV commercial, ‘priceless’. I agree with that assessment. My Dad told me that you should not look at your home as an investment like maybe you look at your mutual funds or your stock portfolio. He told me: “You live there. If you sell it, you just need another place to go. So enjoy it because you only have one life.”
If you add a basement recreation room like we did in our home in Kanata, you should know that REALTORS will tell you (and they’re right) that you will probably only get around 50% of your ‘investment’ back on its sale. The same probably holds true for a swimming pool, a third garage*** and similar changes to your home. But so what? If you have five kids and they can go to the basement rec room, it’s helps the parents stay sane and its’ good for the kids to have some independence from their parents too. If you die in your own home, the fact that you are not going to get back the $65,000 you spent on your basement isn’t going to mean anything compared to the peace of mind and enjoyment that the money generated while you were alive.
Back to valuing the Village. Here is a wild stab at it:
Nov. 16, 2008 Notional Value of Dunrobin Village
New Signalization and Env. Remediation $1,000,000
Roads $6,000,000 12000 m. $500 per m.
High School $12,000,000 60000 sq. ft. $200 per sq. ft.
Elementary Schools $8,000,000 $4,000,000 2 schools
Rec. Centre $1,500,000
Public Investment $28,500,000
Housing and services $46,250,000 185 $250,000 3.5 648
Shopping $1,250,000 DOR POP
Industrial $1,010,000
Services $4,500,000
Golf Course $10,000,000 $5,000,000 2
Private Investment $63,010,000
Total $91,510,000
So according to the above, we have a total public sector and private sector investment in the Village of around $91.5 million. Of that, about 1/3 is by the public sector. The population of the Village (based on a guessed at 3.5 DOR, dwelling occupancy rate) is around 650 persons and I have drawn the Village boundaries to include the Village of Dunrobin, West Carleton High School, two elementary schools, Dunrobin Lake and Dunrobin Springs. This is pretty arbitrary. I could have included the community along the Ottawa River but I felt this would have distorted the numbers even though locals might consider it part of the Village. When you start adding in those homes (some of which are very expensive) and all the roads and utilities to service them, the numbers would get a LOT bigger.
You will note that services like natural gas, cable, telephone, well, septic, electrical etc. are included in the Private Sector total. This is because, unlike the prevailing public and political perception, these services, many of which used to be provided by the Public Sector, are, in fact, now not only provided for privately but paid for privately by the original developer who puts in and pays for some of these services, by DCs (Development Charges) paid to the municipality by home builders and builders of commercial property and by the utilities themselves.
In any event, the City has a significant stake in the Village measured in some tens of millions of dollars.
The City’s own OP (Official Plan) calls for adding on to existing infrastructure and for densifying existing areas. Not only does the City and the Private Sector have a significant investment in the Village, the Village has a lot of needed services including Churches, schools, rec centre, post office, shopping plaza, golf courses, restaurants, marina, boat launch, vet, storage business, mechanic and auto repair, etc.
With the current zoning, the land in question (10 acres) can have only one home on it. In the urban areas of the City, 10 acres could support approximately 80 single family homes or 150 towns. In the Village, lots need to be larger because they need room for wells and septic fields. In the past, 0.5 acres per lot was considered satisfactory by the MOEE (Ontario Ministry of Environment and Energy). What was proposed was to go to a higher standard—which meets the City’s own policy—of one acre per lot. So the 10 acres would support 8 to 10 homes or businesses instead of one. It seemed a reasonable compromise.
To make matters worse, the City had promised (at least in our view) to do a CDP (Community Design Plan) for the Village, which would have looked at not only these lands but lands around the Village and come up with a long term plan for this community. At an AARAC (Agricultural and Rural Affairs Committee) meeting, the City quietly asked for our support for a delay in doing a CDP (because of budget constraints) in return for their support for allowing the 10 acres to go forward to provide some additional inventory (of lots) in the interim.
Subsequently, with our support, AARAC deferred the CDP. When the matter of the 10 acres came up immediately thereafter, imagine our surprise when the same City planner came out against the idea of developing the lands since it was premature—because there was no CDP!
In my experience, it is not the first time that the City has not lived up to its word but it is rare. That made the whole thing that much harder to swallow.
The matter went to the OMB and the Board concurred with the City’s position—it was premature without the CDP, which unfortunately is not on the drawing boards for any time soon.
The City had argued the matter on three counts at the Board—1. that it was premature, 2. that there were sufficient lots to meet demand and 3. the well water in the area was bad.
On the latter two points, we argued:
• there were only three vacant lots left in the Village, not enough inventory to keep the market in balance (which is another one of the Provincial Planning Guidelines—if the planners don’t keep enough inventory, home prices will spiral upward);
• they had used a 20 year old ‘study’ of well water in Kanata that actually didn’t sample any wells and relied on hearsay evidence.
The consultant the City used ended their report the way many gold-digging consultants do: “This warrants further study.”
The Hearing was atrocious. The result unconscionable****. The development land that the City Planner (the same one who appeared at AARAC) said was available for construction of new homes in the Village and, hence, was one of his main arguments against the development of the 10 acre parcel was, in fact, a major (Provincially Significant Class One) wetland.
We don’t build on wetlands in Ontario. Wetlands are an incredibly important part of the earth’s eco system—they are the lungs of our planet. What it demonstrated to me was the incredible hubris of the City’s position and the urban focus of the City’s representatives. They had never even left their downtown offices to survey the site; otherwise they would have known that the ‘inventory’ they were pointing to was a wetland. If you tried to walk it, you would be wet in a hurry. During each Spring, the wetlands are so high that part of the road (Thomas A. Dolan Parkway) is underwater.
When that was entered into evidence, the City changed its position—they said that there were undeveloped lots in the area—but they had to extend the boundary by a factor of ten to find them. Any economist could tell you that keeping a land market in balance means that you look at the closest substitute. The closest substitute for a home in the Village of Dunrobin is NOT a home in the more distant Villages of Carp or Fitzroy but in Kanata.
So now do you wonder why rural residents feel shortchanged?
(You should also know that you can buy a lot in the Township of West Carleton for about half the cost in Kanata. The DCs are about one quarter so, overall, housing costs are a lot lower. Again, there is blatant discrimination, at least in my view, not only against rural residents but also against forms of lower cost housing.)
In the last few minutes of the Hearing (Trial, if you will), the City’s lead lawyer let drop (he later told me by accident) something that none of the proponents had ever heard before. He said that in the rural areas, there are no minimum lot sizes for commercial uses!
As a result, some of the lands were sold to a local developer (one acre for a self car wash and one acre for a new vet building). This leaves eight more acres available for some other type of commercial/professional services development.
So sometimes, you can win by losing.
Dr. Bruce
Post Script: The City is taking the local developer back to the OMB on his self car wash and the new vet building to argue the matter on the same points dealt with at the first hearing. This is a colossal waste of the City’s legal resources and the developer’s time and money. He needs to spend more dough on planners, lawyers, water quality experts, hydro geological studies, well drilling, chemical analysis and more. In my view, as a former supporter of amalgamation, the results have been poor—for the rural areas, as well as for urban residents. We were promised, for example, that by combining 12 local governments into one, we would go from 12,000 FTEs (Full Time Equivalents, i.e., jobs) to 8,000 at a savings of around $400,000,000 per year in wages, benefits, office and equipment costs. Instead, today seven years after amalgamation, the City has a bloated staff count of more than 13,000 FTEs. Compare that to Calgary that somehow gets by with 9,000 FTEs to run a much faster growing city and a larger one to boot.
*It reminds me a bit of a guy I knew who owned a Quick Print business. His name was Bill (not his real name BTW). Now that is one tough, competitive business. The poor guy had a terrible limp and was one of the nicest people you will ever meet. He would deliver some of the jobs himself—he would walk from his downtown store and drop off printed materials even if it was a very small order. I asked him one day: “Gee Bill, it’s snowing and the sidewalks are slippery, you didn’t have to bring over our order. We could have sent someone to pick it up.” Bill responded: “Dr. Firestone (he was a very polite person, ed.), I do it so I can meet my customers and, frankly, when I personally deliver five orders, I bring back six (new ones, ed.)!”
We also planned, if we had lost the bid to Bring Back the Senators in 1990, to immediately have our own press conference in Palm Beach. I told our presentation team (Randy Sexton, now AGM of the Florida Panthers, Cyril Leeder, COO of the Ottawa Senators, Gary Burns, former partner of Peat Marwick Thorne and now a financier in Ottawa, former Mayor Jim Durrell, now owner of Capital Dodge Chrysler and the late former United States Attorney General, Elliot Richardson) that we would: a) thank the NHL for allowing us to participate in the Sixth Planned Expansion of the National Hockey League and b) announce that we would be back! It was a smart strategy for us if we had lost—it would keep the zoning process moving forward for our lands in Kanata (where Scotiabank Place is now), keep our supporters ‘on the bus’ with us and, as it turned out, the NHL would go on to accept two more teams the following year—Florida and Anaheim. I was on the Expansion Committee that admitted those two cities and, if circumstances had been different, it might have been Ottawa in the following year.
** For more on this, read: In Defence of Suburbia, Part II.
*** A second garage might add more than its cost but a third might add less than its cost. This is the law of increasing and decreasing returns…
**** A major US-based developer has been noted to say about Ottawa: “If that City was the last place in North America to practice real estate, I would get out of the business.” Certainly the City has an international reputation as being a difficult place to do work in. Whatever you think of the merits of the previous north-south light rail contract that the City signed with PCL and Siemens, it is not good for our reputation to unilaterally set aside a binding agreement. When (and if) the City ever gets around to putting out a RFP for a new light rail system, major providers will think twice about bidding here. After all, they have limited BD (Business Development) budgets and they have to spend it where they think there is a good likelihood of actually doing something other than getting involved in protracted litigation.