October 5, 1998

To:Corporate Services Committee

From:Commissioner of Corporate Services

Subject:John Street Roundhouse - Requests for Expressions of Interest

(Ward 24 - Downtown)

Purpose:

To report on negotiations with Invacon 98' and TrizecHahn as directed by Council at its meeting of June 3, 4 and 5, 1998.

Financial Implications:

Not applicable at this time.

Recommendations:

It is recommended that:

(1)Clause 1, Corporate Services Committee Report No. 7, titled, "John Street Roundhouse - Request for Expressions of Interest (Ward 24 - Downtown)" be adopted with the exception that Recommendation No. 4 be amended to;

(4)the Commissioner of Corporate Services report back to the Corporate Services Committee by the spring of 1999 with details of the negotiations with TrizecHahn Corporation and recommendations on appropriate next steps.

Background:

In May of 1997, a proposal call was issued for the rehabilitation and reuse of the John Street Roundhouse Complex. This process produced only two responses, neither of which was acceptable. After examining the reasons for this poor response, it was determined that issuing a Request for Expressions of Interest would be appropriate.

At its meeting held on October 6 and 7, 1997, the Council of the previous City of Toronto, adopted, with amendments, Clause No. 9 of Executive Committee Report No. 23, thereby authorizing the Director, Property Services, in consultation with Heritage Toronto and the City Solicitor, to issue a Request for Expressions of Interest (REI) for the Rehabilitation and Reuse of the John Street

Roundhouse Complex.

In addition, the Selection Committee, previously established to serve in an advisory capacity relative to the proposal call was continued under the revised name of the Review Committee. The Review Committee consisted of staff representatives from departments then previously known as City Legal, Property Services, Economic Development, Parks and Recreation, Finance, City Planning and Heritage Toronto, as well as two representatives from the rail heritage community and one member of City Council.

A total of five submissions were received upon the closing of the REI on January 28, 1998. The Review Committee met with all five proponents and submitted a report to the Corporate Services Committee for its consideration.

Report No. 7, Clause 1, titled, "John Street Roundhouse - Request for Expressions of Interest (Ward 24 - Downtown)" was submitted to the Corporate Services Committee at its meeting of May 25, 1998 and considered by Council on June 3, 1998. A copy of the report is attached as Appendix "A".

The report concluded that,

"it is the opinion of the Review Committee that entering into negotiations with TrizecHahn for the rehabilitation and reuse of the John Street Roundhouse, will result in a final product which has been built upon sound business practices and backed by extensive experience in the development industry."

The report recommended the following:

(1)the Commissioner of Corporate Services, in consultation with Heritage Toronto, be authorized to enter into negotiations with TrizecHahn in order to arrive at a comprehensive proposal for the rehabilitation and reuse of the John Street Roundhouse Complex;

(2)in formalizing their proposal, TrizecHahn investigate the possibility of incorporating the Canadian Air Land and Sea Museum and/or the group known as Terminus, as tenants within the Roundhouse;

(3) the Review Committee, convened to assess the submissions received in response to this Request for Expressions of Interest, be continued for the purpose of providing consultative support in the above-noted negotiations; and

(4)the Commissioner of Corporate Services report back to the Corporate Services Committee; at its meeting to be held on September 14, 1998, with details of the negotiations and recommendations on appropriate next steps.

At its meeting of May 25, 1998, the Corporate Services Committee recommended the adoption of the report from the Commissioner of Corporate Services with the amendment:

"...that the position of City Council be communicated to TrizecHahn that any proposal must include an operating railway museum."

Council at its meeting of June 3, 4, and 5, 1998 further amended the report with the following:

"...that the Commissioner of Corporate Services be requested to continue negotiations with the two leading proponents in order to obtain additional information and submit a further report to Council for its meeting to be held on October 1, 1998, through the Corporate Services Committee, once more substantive information is available."

In view of the concerns raised by the rail heritage community, it was decided to add Councillor Michael Prue and Jon Harstone (Heritage Toronto Board Member) to the Review Committee. On July 14, 1998, the Review Committee met and agreed to send letters to the two leading proponents, Invacon 98' and TrizecHahn Corporation to obtain the additional information necessary to report to Corporate Services Committee. The letters dated July 20, 1998 are attached as Appendix "B" to this report.

On August 13, 1998, a response was received from Invacon 98' and on August 14, 1998 a response was received from TrizecHahn Corporation. A further clarification was received from TrizecHahn on September 3, 1998 after staff at the request of the Review Committee contacted TrizecHahn. These responses are attached as Appendix "C" to this report.

Comments:

REI Discussion:

On September 1, 1998, the Review Committee met and reviewed the letters received from Invacon 98' and TrizecHahn Corporation and determined the appropriate next steps.

Invacon 98'

The response dated August 13, 1998 received from Audrey Fennell of the Law Firm, Cassels Brock & Blackwell, on behalf of Invacon 98' states, "...that all of this information has already been provided in our clients Proposal documents."

After reviewing the material in their original REI submission, Finance staff provided comments and verified that Invacon 98' did not demonstrate satisfactory financial ability to make a commitment to develop the John Street Roundhouse Complex. Invacon 98' was given a further opportunity to supply new information to clarify their REI submission as requested by Council at its meeting of June 3, 4 and 5, 1998. A letter was sent by the City dated July 20, 1998, which is attached as Appendix "B". No new information was submitted as indicated in their response dated August 13, 1998. The Review Committee discussed this matter and decided to recommend to the Commissioner of Corporate Services that Invacon 98' be eliminated from this REI process.

TrizecHahn Corporation

The response dated August 13, 1998, received from Bud Purves, Senior Vice President, Development of TrizecHahn Corporation states, "If the City is satisfied that there are others who have solved these issues, we suggest that they be selected by the City to move forward."

The Review Committee discussed this matter and decided staff should contact TrizecHahn Corporation to get clarification of their letter dated August 13, 1998.

Staff have contacted TrizecHahn Corporation and TrizecHahn has confirmed in a letter dated September 3, 1998 attached as Appendix "C" that, should Council decide to approve Report No. 7, Clause 1, titled, "John Street Roundhouse - Request for Expressions of Interest (Ward 24 - Downtown)" which was initially considered at Council on June 3, 4 and 5, 1998, then TrizecHahn is prepared to commence negotiations to arrive at a comprehensive proposal for the Roundhouse Complex and to commence studies, at their cost, in consultation with the City, to identify an appropriate solution for the future of the Roundhouse Complex.

The Review Committee discussed this matter on September 1, 1998 and decided to recommend to the Commissioner of Corporate Services to request City Council to again consider the original report submitted to Corporate Services Committee at its meeting of May 25, 1998. Raymond Kennedy, one of the members of the Review Committee representing the rail heritage community, dissents this recommendation.

Status of Reconstruction of Bays 1 to 11

As a component of the Metro Toronto Convention Centre development, a portion of the Roundhouse, Bays 1 to 11 was dismantled and stored for future assembly. The reassembly work of Bays 1 to 11 commenced in early August, 1998. The reassembly work will take approximately 30 weeks to complete as illustrated in the bar chart attached as Appendix "D". However, due to the Bricklayers strike, the reconstruction may be delayed.

Conclusions:

The Review Committee having reviewed responses from Invacon 98' and TrizecHahn Corporation

as directed by Council at its meeting of June 3, 4 and 5, 1998 has recommended to eliminate Invacon 98' from this REI process and that the original Report No. 7, Clause 1, titled, "John Street Roundhouse - Request for Expressions of Interest (Ward 24 - Downtown)" be approved by City Council. I concur with the recommendations of the Review Committee.

Contact Name:

Bonnie G. Duncan, Telephone No. 392-1861, Fax No. 392-1880, bduncan@city.toronto.on.ca

and Mike Saffran, Telephone No. 392-7205, Fax No. 392-1880, msaffran@city.toronto.on.ca,

Report No. cs98169.wpd.

Margaret Rodrigues

Commissioner of Corporate Services