Inspiration and Challenges:

Sunset Lakes

Lecture by Mr. Dan Anderson, President, Sunset Lakes Development Corporation

Carleton University’s School of Architecture Design Economics Class

November 6^th, 2006

Introduction

Dan Anderson grew up in Ottawa and traveled widely after graduating from law school. He thought Ottawa was a great place to raise a family but, after seeing the type of development that was taking place elsewhere, say, for example, in Orlando, where, if you rent an apartment, you also get a pool, he felt Ottawa developers could do better.

Mr. Anderson was invited to lecture at Carleton’s School of Architecture on the inspiration behind the development of Sunset Lakes and its challenges. After graduating from the University of Ottawa’s Law School, Dan began his career as a real estate lawyer. After practicing law for nearly 20 years, he and two partners took on the challenge of developing Sunset Lakes, which eventually took over his law practice. Dan became a full time developer.

Mr. Anderson was asked to speak on the following:

a)    How and why he selected the opportunity;

b)    The steps he had to take with respect to getting City approvals;

c)    How he added value using creative solutions like digging lakes;

d)    His experiences with NIMBY and the OMB;

e)    What he would do differently if he did it all over again (i.e. what he learned from it).

A brief biography of Mr. Anderson is as follows:

• President of Sunset Lakes Development Corporation from 1990 to the present.
• Developer of five communities in the rural Ottawa Village of Greely
• Graduate of the University of Ottawa Law School in 1979
• Practiced law in Ottawa for twenty two years
• Married with four children aged 12 to 20

Lecture Notes

1. Dan initially had two partners.
2. One was an Ontario Land Surveyor and the other was a civil engineer
3. The OLS remains a partner to this day.
4. In Florida, Dan saw lots of dug lakes. He thought: “Why can’t we do that in Ottawa?”
5. We tend to settle for a lot less in Ottawa than is actually possible.
6. He bought the lands in Greely, south of Ottawa because it was affordable and it was weedy and wet, which he saw as an advantage.
7. Ottawa has a lot of north-south routes (Eagleson, Woodroffe, Prince of Wales, Highway 416, Merviale, etc.) so he felt access to downtown would be satisfactory.
8. Under the property they purchased was a clay layer of at least 4 metres.
9. Therefore, he could use the perched water table to create a dug lake that would hold water year-round.
10. The lakes he would dig could be used for summer recreation (water skiing, swimming, etc.) and in the winter too (for ice skating).
11. They would also double as storm water management tools for the development.
12. The first dug lake was 14 acres and back yards ran down to the lake.
13. The storm water management system is so good that in the one on 100 year flood, the lakes will only rise by 4 inches.
14. Dan read an article in Harrow Smith Magazine on what makes a community, a community. The article described a development in Minnesota. Acommunity requires:

1. walk-out basements;
2. walking trails;
3. water features;
4. natural light from two sides in every room;
5. court yards;
6. and more…

15. Dan and his partners did not want to become home builders and have to deal with the more than 25 trades to get each home built. They wanted to focus on their own expertise—land development.
16. They set up a Home Owners’ Association and they required design approval on each home—minimum areas, how each home sat on its lot, materiality, etc.
17. Each homeowner had to show them all four elevations and interior designs as well.
18. Used architectural guidelines from a Fort Myers development as a base.
19. It became a large book and eventually needed to be simplified.
20. Most of the covenants and deed restrictions were enforced through positive means—like inspiring lot buyers with the idea of creating a superb community.
21. Dan personally sold every lot and looked at every design.

22. Dan learned how to turn a handicapped property into a gem. One group of lots had an ‘ugly’ sand bank running through their backyards and no one wanted these lots. They build one spec (speculative, i.e., not pre-sold) home on one of the lots and sold it on the basis of the sand bank protecting the home from the (cold) north winds and also being a hill for sliding/snowboarding for the kids in the winter. The lots then sold out.
23. Before Ottawa amalgamated, the area was divided into 11 cities and townships with one regional government. In hindsight, the system was great, much better than the post-amalgamated city with one, centralized government and bureaucracy.
24. In Osgoode Township (where the Village of Greely is located), approvals were worked on with one local engineer and a Reeve (Mayor) and Councillors on a first name basis. Planning was based on common sense.
25. The system had accountability in it for all but the Reeve and the Council really bought into the concept of taking an old gravel pit and making it into a special community;
26. The Township did not want to own the lakes, trails, tennis courts, etc. Too much maintenance and too much liability.
27. However, Osgoode wanted $250,000 cash in lieu of parkland which was a great deal more than the Provincially required 5%. Dan took the position that they were providing amenity space anyway and there should be zero cash in lieu.
28. The Township held up approvals for 6 months—Dan and his partners eventually had to agree to pay the $250,000.
29. Even so, dealing with the local township was much faster than dealing with post-amalgamated Ottawa. Approvals were usually obtained in less than a year prior to amalgamation.
30. The first two phases of Sunset Lakes contained just 30 lots and they cam onto the market during the early 1990s when the real estate industry was in the doldrums.
31. Dan and his partners had a $2 million mortgage that they had personally guaranteed and one year they sold only five lots.
32. It was a scary time. In the middle of this, Canada introduced the GST and this added 7% to the cost of their lots.
33. Sunset Lakes was just scraping by.
34. No home builders would buy any of their lots and build homes without having them pre-sold. They were afraid of being caught with unsold inventory.
35. Builders would come out and do nice drawings and price out their homes but this never resulted in any sales.
36. They had to be resourceful—they created a builder incentive program. They would loan builders some of the money they needed to build a spec home and would hold the lots for them as well. Sunset Lakes would get paid for their lots and their loans would be repaid only if and when the homes sold. Fortunately, the homes did sell.
37. The builders had to personally guarantee the loans—Dan wanted to make sure they wouldn’t back away with half done homes. The initial loan program was $45,000 per home and is higher now.
38. The program had just three builders initially.
39. Now when Dan needs to seed a new phase, he supports the builders with signage, Internet, client referrals, loan program and lot program.
40. Earned media (Ottawa Citizen coverage) was very helpful to get Sunset lakes out of difficulties in the 1990s.
41. Timeline:

1. 1989- bought land;
2. 1992- first approval;
3. 1993- first home;
4. 2000- Phases 1 and 2 completed.

42. Then the City amalgamated!
43. Greely is 10 km. from serviced area.
44. They bought another 145 acres.
45. Dan needed the owners to take back a mortgage on the land which they did.
46. Dan then added two more parcels: 100 and 110 acres.
47. Amalgamation was everything developers feared and more.
48. Osgoode went from 13,000 people to 17,000 people with a Council of 5 including the Mayor.
49. The City of Ottawa is 850,000 people with 22 Councillors, 21 of which couldn’t care less about Osgoode.
50. Instead of one planner, Dan now had to deal with 18.
51. They did not understand what Dan was trying to do.
52. There was massive mistrust by the planners.
53. They said: “You are creating sprawl.”
54. They said: “You are creating an environmental area.”
55. They said: “You are creating too many lots on your land.”
56. For a ½ acre lot, you can get $80,000, for a 1 acre lot, $100,000 and for a 2 acre lot maybe $120,000. But a 2 acre lot costs a lot more to develop—more roadway and a longer sell through period.
57. Sunset lakes uses a 1 acre lot density—the buildable lot area is ½ acre but there is so much amenity space that the average on a gross basis is 1 acre per lot (including roadway areas).
58. The market is for homes from $400,000 to $600,000.
59. The next approval took from 2000 to 2004 and would never have been approved by the City—Dan had to go to the OMB.
60. The main roadblock the City put up was the Hydro Geology study.
61. City staff are now all powerful and are really running the process.
62. Staff have become the opponents.
63. You have to assume that every development project will go to the OMB.
64. There is talk now and pressure from staff to get rid of the OMB, a bad idea. The idea that your rights, either human rights or property rights, can be crushed without right of appeal goes against a 1,000 years of common law and jurisprudence. (Ed. Note: See, “Democratic Abuse—Getting Rid of the OMB is Not the Answer).
65. Dan recommends that you always select the best consultants (civil engineers, Hydro Geo consultants, etc), verify their references and test them too.
66. City staff said that the lot density was too high and there would not be enough rainwater to dilute the nitrates from septic fields.
67. They refused to count rainwater from roofs and roadways. Dan made the point that this water never left the site—it went into the lakes and was available for dilution.
68. The Provincial guideline for nitrates is a limit of 10. Sunset Lakes has 0 in wells on site and 1 in their lakes.
69. Despite all the evidence, City staff would not accept or move to have the plan approved.
70. Dan has been to the OMB 9 times and won 9 times. The 10^th hearing is coming up in January 2007.
71. OMB proceedings are given before panel members who, for the most part, are trained in the law. Evidence is given under oath and subject to cross-examination. Hence, City staff can not distort matters with water cooler rumor or innuendo.
72. After winning at the OMB in 2004, the next phases of Sunset Lakes sold 120 lots in two years—the most successful rural sub-division ever in Ottawa.

73. The Community Association owns the lakes and recreational buildings and facilities. Each family pays $300 per year to the C.A.
74. Apple trees have a limited life after which they do not produce fruit.
75. A land owner in the Village of Greely wanted to sell his old apple orchard for a lot of money to Sunset Lakes. In fact, land owners everywhere in the area were saying to Dan: “You buy my land for a lot of cash, you do the impossible in terms of getting approvals from the City, I’ll just take your money and retire comfortably…”
76. Greely Orchard brought in another bidder to drive up the price.
77. They did eventually buy the land—50 acres were inside the Village and 50 acres were outside.
78. Dan did 75 lots on the 50 acres inside the Village (½ acre lots) and 2 acre lots outside the Village boundary. The average is 93 lots on the 100 acres.
79. The new Official Plan of Ottawa (2003) says that no 2 acre sub-divisions will be allowed within 1,000 metres of the existing urban boundary or village boundaries. This is under appeal by Dan and will be heard in January 2007. For landowners within the 1,000 metre buffer zone, their lands can be used for practically nothing. The City has effectively expropriated their lands without compensation.
80. The City has reacted again against this new plan.
81. Dan said to the planners: “I will trade places with you. You build and develop the sub-division and I will collect the property taxes and pick up the garbage and plow the streets.” Greely Orchard (93 lots) will produce an annuity for the City of $400,000 per year (equal to a GIC of around $20 million). The City will make more money from the sub-division than the developer will with ZERO risk.
82. Dan put in a water ski course because he likes to water ski. But only two lots ever sold because of this—and Dan’s is one of them. Remember that you are not the market. If Dan had marketed this as a water ski community, it would have failed.
83. Any development project does not and can not succeed until you get to the end user. That is, until homeowners buy there, you have nothing but an idea.
84. Landowners are dreaming if they think that the developer or home builder is the end user and will pay them a lot of money for their land. It is only worth something when all the approvals are in place and you can deliver to an end user. (Ed. Note: a lot is a problem to a buyer. They have to build a home before they can get any value out of it and home building is a complex undertaking. The house is the solution.)
85. If the homes don’t sell, everything will stall.
86. Dan now controls the resale price of the builders in his builder program to make sure they don’t over price them and stall the project.
87. The chain of success must go all the way to the end user and beyond—they must also be able to successfully resell their homes as the need arises.
88. It’s a tough world—people do not meet their commitments.
89. Builders often fall down in this regard.
90. Dan practiced law for 20 years and he makes sure there is no misrepresentation. Everything is on their website. He doesn’t want anyone coming back after they bought and saying: “Gee, I didn’t know there would be water skiing behind my house…”
91. 90% of Ottawa is rural and 10% is urban.
92. Greely is the largest in area village in Ottawa with the largest population—7,000 people are now in the watershed.
93. Yet it has only one old house that doubles as a general store, one hairdresser and a post office.
94. Manotick is 9 kms. away and South Keys Shopping Centre is 11 kms. away.
95. So City staff did a CDP (Community Design Plan) for Greely and decided that they would create a core where the four businesses are now in a old-style main street.
96. They rezoned the street for CC (Community Commercial) but no commercial has developed.
97. So Dan did a plan for Greely Village Centre to get some commercial going and City staff accused him of trying to steer commercial development to his lands. They took this position despite the fact that 20 acres of Dan’s lands along Highway 31 with over 12,000 vpd were already zoned for commercial development.
98. Greely Village Centre Plan includes a shopping centre, a recreation centre, a hockey arena, soccer pitches, lakes, offices, residential lots, pool, tennis courts and more.
99. It might be nice to have an office next to a lake. Offices will be architecturally designed to fit in with the residential motif.
100. OMB hearings are tough on your health. They are intense legal proceedings.
101. Dan stresses that you must work on the most important thing in your business each day.
102. The planned shopping centre will not be a big box design. There will be eight separate buildings on a Village street. Each store will have a storefront on the Village street.
103. However, you need parking in Ottawa because it is so cold.
104. Dan believes that once his commercial project goes ahead, the CDP may actually work with other entrepreneurial commercial interests moving into the area. So Dan sees his plan as complementary to the CDP. City staff does not agree.
105. You are allowed to sell lots under contract once you have draft plan approval of your sub-division.
106. The arena zoning is there for future use. Dan may do a P3 (Public Private Partnership) with the City or set up a non-profit corporation and a charitable trust to get the arena built the way communities used to do it anyway.
107. Dan paid a $43,000 application fee to the City for this plan and got no reaction from City staff for one year other than a negative reaction on the Hydro geo. City staff said: “You are going to ruin the existing wells,” despite all the evidence before them that this is untrue.
108. AARAC (the City’s Agricultural and Rural Affairs Committee) overruled City staff in October 2006 but 2 weeks later City Council overruled AARAC. City Council had heard rumors that the developer was trying to move the commercial core to the east and they also said there was no need for more Village lots since there was a 20 year supply.
109. Staff’s position is that there should be no urban expansion. Del/Brookfield in the west end and Sunset Lakes have gone to the OMB and won.
110. They are filling in ‘holes’ in the urban/village fabric.
111. At the AARAC meeting, more than 40 people showed up—to support Dan’s plan; the opposite of NIMBY.
112. If Dan were to things differently, he would have made all the trails open to the public. This causes problems—people like to walk the trails but if they are private, people can object.
113. You need to think through any restrictive covenants. If you don’t enforce one of them, perhaps all of them become unenforceable.
114. Keep your rules simple.
115. Their minimum house sizes are 1,500 sq. ft. for a bungalow and 2,000 sq. ft. for a two-storey. The two-storey used to have to have a minimum of 800 sq. ft. on the second floor but this turned out to be too constraining.
116. Remember this—Make a Promise, The Over Do It! Trust is the number one thing in this business and referrals will be the main source of leads if you do it right.

Mr. Dan Anderson, President, Sunset Lakes Development Corporation, 6576 Apple Orchard Road, Greely, Ontario K4P 1E5

Tel.: (613) 860-1100 Fax: (613) 821-7997 Email: sunsetlakes@rogers.com Internet: www.sunsetlakes.ca

http://www.dramatispersonae.org/DesignEconomicsFrontPage.htm

http://www.dramatispersonae.org/EnterpriseOfTheCity/HomePage/EnterpriseOfTheCityFrontPage.htm

http://www.dramatispersonae.org/

Appendix

a)    How and why he selected the opportunity.  Researched similar projects from 1981 to 1988 in British Columbia, California, Arizona, Texas, Florida and New Zealand.  Conducted a land search in 1988 and 1989, maps, flights.  Sought approvals from 1990 - 1997.

b)    The steps he had to take with respect to getting City approvals.

•         pre-consultation
•         studies - Archaeology, Environmental, Noise Traffic, Drainage, Hydrogeology
•         concept and draft plan
•         application
•         circulation, comments, meetings with Osgoode Township and RMOC
•         draft conditions
•         zoning - Official Plan Amendment
•         registration - satisfaction of conditions, subdivision agreement, final drainage plan, Ministry of the Environment, Certificate of Approval

c)    How he added value using creative solutions like digging lakes. Added value - Design Review. Creative solutions - Owners Association, lakes (multi purpose), Storm water Management facility, realty taxes, phasing.

d)    His experiences with NIMBY and the OMB.  What may be more relevant is development "post" amalgamation.  Ottawa Provincial Policy Statement "Sustainable Rural Development" or urban sprawl?

•         NIMBY - Community Design Plan - Woodstream Phase 2
• Ontario Municipal Board - 9 times
•         Arbitration
•         Agriculture and Rural Affairs Committee

e)    What he would do differently if I did it all over again (i.e. what he learned from it).  Learning from experience, we have created four communities in Greely after Sunset Lakes - South Village, Woodstream, Greely Orchard and Greely Village Centre.  Some changes in design, amenities, ownership.  Many changes in approval process.