May 19, 1998

 To:Corporate Services Committee

 From:Commissioner of Corporate Services

 Subject:ACQUISITION OF PROPERTY INTERESTS

SHEPPARD SUBWAY - BAYVIEW STATION

OWNER: VERDIROC HOLDINGS LIMITED, DANIELS FINANCIAL CORPORATION AND JOHN HENRY DANIELS IN TRUST

 Purpose:

 Acquisition of property interests required for the construction and operation of the Sheppard Subway in the vicinity of the Bayview Station.

 Funding Sources, Financial Implications and Impact Statement:

 Financing has previously been approved by Council and is available in Capital Account No. TC-392.

 Recommendations:

 It is recommended that:

 (1)the terms and conditions of the settlement with Verdiroc Holdings Limited, Daniels Financial Corporation, and John Henry Daniels In Trust (collectively referred to as ADangreen@) as detailed herein be approved;

 (2)authority be granted for the execution and registration of all contract and conveyancing documentation necessary to give effect thereto, including the Purchase Agreement and all Schedules thereto together with such ancillary agreements as may be necessary to implement the transaction including any contracts and conveyancing adjustments shown necessary following completion of the construction, all to be on terms satisfactory to the Commissioner of Corporate Services, the Chief General Manager of the Toronto Transit Commission, and in a form satisfactory to the City Solicitor;

 (3)in the event Council decides to pursue the Land Exchange Option:

 (i)two City owned strips of property, namely a 5 foot right-of-way traversing the Dangreen property and the northerly part of a 10 foot strip of land adjacent thereto and legally described as Instrument No. 448441 (Schedule G) and Instrument No. 448441 (Schedule D and E) respectively be declared surplus to Corporate requirements;

 (ii)all steps necessary for compliance with the former City of North York disposal by-law No. 32512 be taken; and

 (iii)Council direct that the property then be disposed of in accordance with the Purchase Agreement directly to Verdiroc Holdings Limited, Daniels Financial Corporation, and John Henry Daniels In Trust;

 (4)the Commissioner of Corporate Services be authorized to give notice pursuant to paragraph (6) of the Purchase Agreement thereby giving effect to the Land Exchange Option as detailed herein; and

 (5)the appropriate municipal officials be authorized and directed to take all necessary actions to give effect hereto.

 Council Reference/Background/History:

 The previous Metropolitan Council, by its adoption of Clause No. 2 of Report No. 9 of the Management Committee (as amended) on March 8 and 9, 1994, and subject to further reports regarding funding, approved the construction of the Sheppard Subway to Don Mills Road. By the approval of Clause No. 2 of Report No. 14 of the Management Committee, as amended, on April 20, 1994, Council authorized the debenture funding to commence the project. Finally, Metropolitan Council by its adoption of Clause No. 2 of Report No. 21 of the Financial Priorities Committee on September 25 and 26, 1996, as amended, approved completion of the Sheppard Subway Project.

 Metropolitan Council, at its meeting on June 18, 1997, by the adoption of Clause No. 5 of Report No. 15 of the Corporate Administration Committee, authorized an Application for Approval to Expropriate Interests in Land for the construction and operation of the Sheppard Subway in the vicinity of the Bayview Station. Notice of Application for Approval to Expropriate was served on Dangreen and a Hearing of Necessity was requested. The Hearing of Necessity commenced on March 23, 1998 and was concluded on April 14, 1998. As of May 11, 1998, we are awaiting the formal report from the inquiry officer.

 Comments and/or Discussion and/or Justification:

 As part of the construction of the Sheppard Avenue Subway/Bayview Station and related facilities, property interests are required from the Dangreen property. This property is located on the east side of Bayview Avenue extending from Sheppard Avenue East on the south to Bayview Mews Lane on the north. The property is generally rectangular in shape and contains an area of approximately 2.335 acres (101,712 square feet). The property is currently vacant, zoned RM3 according to the City of North York zoning by-law and designated commercial in the City of North York=s official plan.

 As part of the Bayview Station construction, the following property interests are required from the Dangreen property. These interests are illustrated on a draft plan of survey prepared by J. D. Barnes Limited, as No. 94-21-413-41-B, a copy of which is on file with the City Clerk:

 (a)a fee simple road widening located on the east side of Bayview Avenue just north of Sheppard Avenue and illustrated as Part 1 on the draft reference plan containing an area of 173 square metres (1,862.2 square feet);

 (b)a stratified fee simple interest to accommodate the Bayview Station and electrical substation structure illustrated as Part 2 on the draft reference plan. The upper limit of this fee interest is elevation 190.6 or approximately 8 metres above grade;

 (c)a working easement to facilitate the construction of the station entrance and electrical substation illustrated as Part 4 on the draft reference plan. The term of the working easement will commence on the closing date and conclude on December 31, 2000. A further working easement above the electrical substation, illustrated as Part 3 on the draft reference plan, will commence on September 1, 2000 and conclude on May 1, 2001;

 (d)a permanent exclusive easement to be defined by survey to accommodate a surface bus loop; and

(e)a permanent exclusive easement to be defined by survey to accommodate a hydro vault, required to be relocated as a result of the subway construction.

 Following construction of the subway station and electrical substation, it will be necessary to review the limits of the conveyances to ensure that the surveyed legal interests accurately reflect the subsequent as built condition and where necessary, survey boundaries will be adjusted.

 Negotiations between municipal staff, TTC staff, Dangreen and legal counsel have been ongoing for an extended period of time. In addition, staff have briefed the Commission=s Committee of the Whole with respect to the ongoing status of negotiations. The property owners are experienced real estate developers and are desirous of developing the balance of the subject property. A development application for the property has been outstanding since 1994 and is currently under review by North York Planning staff, who have recommended that, among other things, any development on the site be integrated with the subway station. Consequently, in order not to preclude or in any way pre-judge the planning process, the Bayview station facilities have been designed to include support columns which will support a development over the subway station and electrical substation. This is consistent with development criteria prepared by North York staff but not approved by North York Council.

 The inclusion of these columns mitigate the adverse impact on the development potential of the balance of the property. In the event Dangreen develops the property within 10 years, it must repay to the City the costs of constructing these support columns up to a maximum of $1,050,000.00.

 In addition, the owners have expressed a strong desire to acquire two property interests currently owned by the City of Toronto. The first is a 5 foot wide right-of-way which traverses the property in a southeast to northwest direction and is legally described in Instrument No. 448441 (Schedule G). This right-of-way was conveyed to the City at the time approvals were given for the townhouse development located on the north side of Bayview Mews Lane. The second property interest consists of a 10 foot strip of land abutting the easterly boundary of the subject property and legally described in Instrument 448441 (Schedule D and E). This 10 foot strip is owned in fee simple by the City and separates the subject property from the Bayview Village Mall located immediately to the east.

 Negotiations have resulted in a form of an agreement which provides for the acquisition of all of the TTC property requirements in one of two ways: by either a nominal sum land exchange or through an agreement pursuant to Section 30 of the Expropriations Act with an immediate payment of $750,000.00. The land exchange option will require that the City declare the two municipally owned parcels surplus to City requirements in accordance with the former City of North York disposal by-law No. 32512. A summary of the terms and conditions of the land exchange option and the Section 30 option are as follows:

 Land Exchange Option:

 Under the Land Exchange Option Dangreen will convey all of the property required by the Toronto Transit Commission to facilitate the subway station and related facilities including the lands required for the relocation of a hydro vault to the east side of Bayview Avenue. In addition, Dangreen will provide a Permission to Enter for the purposes of constructing the hydro vault immediately following Council=s approval of this option. Dangreen will also convey to the City an easement to protect an existing storm sewer.

 In exchange, the City will convey to Dangreen the 5 foot right-of-way across the Dangreen property and the 10 foot strip located immediately east of their site. All conveyances will be at no direct cost and Dangreen waives its right to any compensation for injurious affection.

 Section 30 Option:

 In the event that Council is not prepared to convey the City owned property interests to Dangreen as part of the negotiated settlement, the agreement provides an option that will allow the municipality to acquire all of the property interests pursuant to Section 30 of the Expropriations Act. Under this scenario, the municipality will make an immediate payment to Dangreen in the amount of $750,000.00, plus Dangreen=s reasonable legal fees incurred to negotiate this agreement. Dangreen will reserve the right to apply to the Ontario Municipal Board for additional compensation, in accordance with all the terms and conditions of the Expropriations Act. As part of this right to obtain additional compensation, the owner will be entitled to all of their reasonable legal, appraisal and other fees in accordance with the provisions of the Act.

 The ultimate compensation under this Section 30 Option may be significantly greater than the $750,000.00 immediate payment. Throughout the negotiations, Dangreen has taken the position that the value of their property is in the range of 10.5 million dollars and that the subway facilities and property requirements have a significant adverse impact on the value of the balance of their site.

 In the event Dangreen fails to execute the negotiated agreement or Council approval is not obtained, it would then be necessary to pursue a formal expropriation process. In this regard, Notices of Intention to Expropriate have been served and a lengthy Hearing of Necessity has been held. As of May 11, 1998, we are awaiting the report from the Inquiry Officer. Following receipt of the Inquiry Officer=s report, a further report to Council will be required to formally expropriate the required property interests. Due to the recent decision to relocate the hydro vault to the east side of Bayview Avenue, these property interests do not include the lands required for the proposed hydro vault relocation. Under this scenario, it would not be possible to relocate the hydro vault, all of which was the subject of a separate report to Council=s May 13, 1998 meeting. Following Council=s formal approval of the expropriation, a period of 90 days will be required before possession can be obtained. Compensation would then be payable to Dangreen in accordance with all the provisions of the Expropriations Act (as with the Section 30 Option).

 Both the exchange option and the Section 30 Option include a provision that in the event the owner or their successors erects a building within 10 years of this agreement, the owner will reimburse the City the actual costs of the columns, plus a design fee of $150,000.00 all to a maximum of $1,050,000.00.

 The Bayview Station contract award is the last station contract award for the Sheppard Subway. A delay in obtaining possession of the property will necessitate a delay in the construction contract award and as a consequence delay the proposed opening of the Sheppard Subway and the start of revenue service.

 Conclusions:

 The settlement agreement as negotiated and detailed herein provides two mechanisms for the City to acquire the property interests required to accommodate the Bayview Station and related facilities within the required time frames. The agreement provides an option to Council to enter into a land exchange agreement with Dangreen and thereby provide all of the property interests at no direct cost. Should Council wish to elect this option, it is necessary to approve all of the recommendations in this report. Should Council not wish to enter into a land exchange, the agreement provides for an acquisition of the property interests in accordance with the provisions of Section 30 of the Expropriations Act. Although the ultimate compensation payable under this option cannot be determined at this time, it is expected that the ultimate payment for the property may be significant. Should Council elect to approve the Section 30 Option, recommendations (1), (2), and (5) should be approved.

 The North York Community Council, at its meeting on May 6, 1998, adopted a motion made by Councillor Moscoe which recommends that the property interests be acquired under the Section 30 Option.

 The terms and conditions of the land exchange option are considered fair and reasonable and are recommended herein. Should Council elect not to approve the land exchange agreement, the Section 30 Option will provide the lands required for the construction of the Bayview Station and related facilities in a timely manner.

 Contact Name:

 Mr. Douglas F. Warning

Acting Director of Real Estate (392-8165)

 Margaret Rodrigues

Commissioner of Corporate Services

 WRD/vp