September 29, 1998

To:Toronto Community Council

From:H.W.O. Doyle

Subject:Amendments to the Section 36/37 Agreement for the Bay-Adelaide Project

(Ward 24 - Downtown)

Purpos :

This report seeks authority to amend the Section 36/37 Agreement respecting the Bay-Adelaide Project to facilitate recent amendments submitted by the owners.

Funding Sources, Financial Implications and Impact Statement:

There are no financial implications for the City.

Recommendations:

It is recommended that authority be given to conclude and execute any necessary amendments to the Section 36/37 Agreement and collateral documentation respecting the Bay-Adelaide Project , as determined by the City Solicitor, to facilitate development of the project as recently amended and described in the report September 29, 1998 of the City Solicitor.

Council Reference/Background/History:

The former City Council enacted Official Plan Amendment No. 483 and Zoning By-law No. 998-88 on October 22, 1988 to permit the development of the majority of the lands bounded by Yonge Street, Queen Street West, Bay Street and Adelaide Street West (the "Bay-Adelaide Project"). The Bay-Adelaide Project was authorized pursuant to Section 37 of the Planning Act (formerly Section 36) which permitted increases in height and density in return for certain public benefits. The project consisted of the following major elements:

-construction of a 57-storey office tower on the block between Temperance Street and Adelaide Street West ("South Block");

-preservation and relocation of the facade of the historic Aikenhead's building (17 Temperance Street) as part of a new office building (9 Temperance Street);

-preservation of the facade of the building at 45 Richmond Street West;

-creation of a public park and the construction of a 12-storey office building on the middle block between Richmond Street West and Temperance Street (the "North Block"); and

-retention and restoration of the historic Simpsons store on the block between Queen Street West and Richmond Street West.

Following approval of Official Plan Amendment No. 483 and Zoning By-law 998-88, an agreement between the City and the owners was executed and registered on title (the "Section 36/37 Agreement"). The project was commenced, the historic Simpsons building retained and restored, the public park designed and built on the North Block and the facade of the historic Aikenhead's building was incorporated into the new office building at 9 Temperance Street (now owned and occupied by the Hong Kong Trade Development Council).

Construction of the 57-storey office tower on the South Block was commenced, but completion was delayed due to the downturn in the office market.

Recently, Canapen (Bay-Adelaide) Limited purchased a 50% interest in Bay-Adelaide, the other 50% co-tenancy being owned by TrizecHahn Corporation.

It is the intention of the current owners to complete construction of the office tower on the South Block and plans have been submitted which represent a slight modification to the original plans. An application for site plan approval was submitted to the City on August 6, 1998 and is being circulated. Site plan approval is anticipated in the near future.

The project had been before the former City Council on two previous occasions for which authority was given to amend the by-laws and the Section 36 Agreement. In 1992 authorization was given to extend the time necessary to complete restoration of the heritage building at 45 Richmond Street. As well, the boundaries of the park were slightly amended. This resulted in the first amendment to the Section 36/37 Agreement which has been executed but not registered due to a title issue which must be dealt with, as it has also delayed the conveyance of the park to the City pending its resolution: Part of the park lands are encumbered by an easement permitting crane overswings from an abutting property owned by the estate of a Mr. Greisman. This encumbrance was not on title at the time the original transaction was entered into in 1988. Realignment of the park lands in 1992 included new lands which became subject to the "Greisman Easement". Bay-Adelaide has indicated that it would be difficult or financially unfeasible to obtain a release of the Greisman Easement.

In 1994, authorization was given to further amend the Section 36/37 Agreement and planning instruments to delete the requirement to restore and maintain 45 Richmond Street West and reduce the project's non-residential gross floor area. This amendment is outstanding as it is dependant on completion of the first Section 36/37 Amendment.

Comments and/or Discussion and/or Justification:

Revised Plans and Minor Variance Respecting Common Outdoor Space

The current plans provide for a reduced height and density of development. The office tower on the South Block has been reduced from 57-storeys to 50-storeys, and the non-residential gross floor area has been reduced from 156,614 square metres to 126,953 square metres. The owner has received a Committee of Adjustment variance to reduce the aggregate requirement for common outdoor space and public park from 4,756.5 square metres to 4,200 square metres. The requirement for a 2,183 square metre public park has been met insofar as the park has been built, but the park must still be conveyed to the City.

The balance of the common outdoor space requirement was previously met by the provision of common outdoor space on the South Block and the North Block. Common outdoor space on the South Block included a ground floor arcade that ran through the 57-storey office tower and provided a mid-block connection between Temperance Street and Adelaide Street West. The mid-block arcade was enclosed on both sides and covered above by the office tower; however, because it was open to the street at both ends it qualified as "common outdoor space". The revised design replaces the ground floor arcade with openings at both ends with a mid-block connection enclosed with doors at both ends. Technically, therefore, the space does not qualify as common outdoor space.

The Committee of Adjustment granted the required minor variance which is now in force. Amendments are therefore needed to the Section 36/37 Agreement to reflect the Committee of Adjustment decision and reduction in common outdoor space.

Underground Pedestrian Tunnel

An important element of the Bay-Adelaide Project is the construction of an underground pedestrian tunnel connecting the Bay-Adelaide Project under Adelaide Street to Scotia Plaza (the "Adelaide Street Tunnel"). The Adelaide Street Tunnel is the last link in the City's eastern extension of the PATH system. Completion of the tunnel would allow unimpeded pedestrian access wholly on the east side of Bay Street from Union Station to the Atrium-on-Bay at Dundas Street. The owners of the Bay-Adelaide lands have acknowledged their obligation to build the Adelaide Street Tunnel in accordance with the terms of the Section 36/37 Agreement which provides for construction of the tunnel upon agreement being reached with the owners of Scotia Plaza regarding connection, construction and maintenance of the tunnel.

Amended Design and Phasing

It should be noted that in order to facilitate the revised plans, certain other technical amendments are needed to the Section 36/37 Agreement and collateral documentation as the agreement reflects the original design. As well, the original development proposed that the North and South Blocks be constructed concurrently. The owners wish to proceed with the South Block at this time and the North Block at a future date. It would be appropriate to authorize changes to the agreement to reflect the amended design and to allow for the phasing of construction of the development.

Other Issues

There are other issues associated with the development of the Bay-Adelaide Project that need to be resolved. These issues include: execution and registration of an Assumption Agreement and Heritage Easement Agreement respecting 9 Temperance Street, conveyance of the park to the City, and the owner's application for part-lot control exemption respecting the Bay-Adelaide lands.

Conclusions:

If Council wishes for the Bay-Adelaide project to proceed, it would be appropriate to provide authority to amend the agreements.

The issues referred to above are to be dealt with in the implementation of the current development proposal including the Greisman Easement title issue, the execution and registration of the Assumption Agreement and Heritage Easement Agreement for 9 Temperance Street, articulation of the owner's obligations respecting the Adelaide Street Tunnel , timing of the conveyance of the park to the City, and a response to the owner's application for part-lot control exemption. It is anticipated that the issues will be resolved and terms incorporated in the current amendments; however, if it is necessary to seek further instructions a report will be provided as required.

The Commissioner of Urban Planning and Development Services advises it would be favourable to proceed with this authorization report at this time to allow the project to proceed.

Contact Name:Raymond M. Feig

Telephone:(416) 392-7224

Fax:(416) 392-0024

E-mail:rfeig@city.toronto.on.ca

H.W.O. Doyle

City Solicitor

Legal Services

p:\1998\ug\cps\leg\TO980040.leg