July 3, 1998
To:Corporate Services Committee
From:Commissioner of Corporate Services
Subject:Acquisition of 40 Wabash Avenue For A Municipal Recreation Facility-
Advancing the Closing Date and Approval of A Leaseback From The City Of Toronto To
Jodno Limited (Ward 19 - High Park)
Purpose:
To obtain approval in accordance with the terms and conditions set out in the body of this
report to advance the closing date and for the leaseback of the property to Jodno Limited for
a period of up to two years.
Financial Implications:
Cost of the acquisition, environmental testing and soil remediation in the amount of
$1,462,600 is to be provided from the completed sale transactions of closed portions of
public highway adjoining the Eaton Centre to Cadillac Fairview Corporation Ltd., as
authorized by the former City of Toronto Council on October 6/7, 1997.
Recommendations:
It is recommended that:
(1)City Council confirm the acquisition of 40 Wabash Avenue;
(2)the closing date to acquire 40 Wabash Avenue be moved up to October 29, 1998 from
no less than one (1) year and no more than two (2) years from the expiry date of the due
diligence period;
(3)the City leaseback to Jodno Limited (the tenant) of the entire property having the
municipal
address of 40 Wabash Avenue, shown on the attached sketch, for a term of two years from
the date of closing be approved;
(4)the City Solicitor be authorized to prepare the appropriate documents in a form
satisfactory to him; and
(5)the appropriate City Officials be authorized to take the necessary action to give effect to
the foregoing.
Background:
The former City of Toronto Council, at its meeting on October 6/7, 1997, approved former
City of Toronto Executive Committee Report No. 23, Clause 116, a copy of which is
attached hereto and thereby authorized the City's purchase of 40 Wabash Avenue in the
amount of $1,250,000; pay Land Transfer Tax, GST, if any and related costs in the amount
of $62,000; pay environmental remediation costs up to an amount of $100,000 and retain the
services of a consultant to conduct environmental testing in the estimated amount of $50,000
including GST. The acquisition by the City is conditional on the completion of the sale
transaction of closed portions of public highway adjoining the Eaton Centre to Cadillac
Fairview Corporation Ltd. The City can terminate the agreement if the property remediation
cost is greater than $150,000. The closing date of the transaction was to be no less than one
year and no more than two years from the expiry date of the due diligence period with three
months' notice to the City.
On December 30, 1997, the vendor received four copies of an Agreement of Purchase and
Sale executed by a member of the former Board of Management. The agreement contained
an irrevocable period of fourteen days. The vendor failed to execute the agreement within
the irrevocable period.
Although the vendor had agreed to the general terms and conditions contained in the
agreement by a sign back letter, the vendor advised that, due to increased activity in the real
estate market, the vendor was of the opinion that the purchase price of $1,250,000.00 was
less than what the property could be sold for as a residential redevelopment site.
Comments:
After lengthy negotiations with the vendor, it was agreed, that the closing date be moved up
to an earlier date and the entire property be leased back to the vendor, in order to
accommodate his business plans and subject to the following terms and conditions:
- the City will pay One Thousand Dollars ($1,000) (the "First Deposit") by certified cheque
upon execution of the agreement, and One Hundred and Twenty Four Thousand
($124,000) by certified cheque (the "Second Deposit") upon expiry of the due diligence
period provided the City has decided to proceed with the transaction;
- the tenant, Jodno Limited, pays semi-gross rent of Three Thousand Five Hundred Dollars
($3,500.00) per month, payable in advance on the first day of each and every month of
the term;
- the tenant shall pay a security deposit of $3,500.00 to be held by the City, without
interest, and shall apply to the last month's rent;
- the City shall pay all realty taxes relating to the leased premises;
- save and except for realty taxes, the leaseback shall be net to the City;
- the tenant may terminate the leaseback at any time during the term on 30 days prior
written notice to the City; and
- the tenant shall be permitted to sublet portions of the leased premises to the existing
tenants of the property on the terms and conditions of their present tenancies and the
tenant shall be permitted to sublet other portions of the property at its discretion.
To accommodate the revised closing date, the due diligence period has been amended to 75
days. All other terms of the agreement including the purchase price remain the same. On
May 28, 1998 the vendor executed an Offer to Sell agreement based on the above terms and
conditions in a form that is to the satisfaction of the City Solicitor. The agreement must be
executed by the City within 70 days from May 28,1998 to make it binding.
I have recently consulted the Commissioner of Economic Development, Culture and
Tourism who has advised that he supports the acquisition of 40 Wabash Avenue for the
purpose of future construction of a Community Centre.
Source of Funds:
The source of funds for this acquisition is to be provided from the sale of three transactions
of closed portions of public highway adjoining the Eaton Centre to Cadillac Fairview
Corporation Ltd..
The status of the transactions is as follows:
Parcel LocationSale ProceedsClosing Date
| Salvation Square |
$621,876.00 |
May 13, 1998 |
| 250 Yonge Street |
$483,039.00 |
March 27, 1998 |
| South of 250 Yonge Street |
$1,692,753.57 |
Closing Anticipated in
July/98 |
The proceeds from the sale of Salvation Square and 250 Yonge Street have been deposited
in the Capital Funds from Assets Sold Account # 506000.
The sale of the parcel referred to as 'South of 250 Yonge Street' is subject to the execution
of easement agreements between Toronto Hydro, Toronto District Heating Corporation and
Cadillac Fairview Corporation Ltd. As well, a reference plan that shows the location of the
easements must be executed and deposited prior to completion of the transaction. All other
draft closing documents have been received by City Legal staff. The sale of this parcel is
anticipated to be completed in July 1998.
Conclusion:
I am of the opinion the terms and conditions outlined herein are fair and reasonable and that
the City should proceed with the acquisition of 40 Wabash Avenue.
Contact Name:
Peter Aziz, Telephone 392-1856, Fax 392-1880, E Mail - paziz@city.toronto.on.ca
(cs98125.wpd)
Margaret Rodrigues
Commissioner, Corporate Services
