Acquisition of Property Interests Sheppard Subway -

Bayview Station Owner: Verdiroc Holdings Limited,

Daniels Financial Corporation and John Henry Daniels in Trust

The Corporate Services Committee recommends:

(1)the adoption of the following report (May 23, 1998) from the Commissioner of Corporate Services; and

(2)that the communication (May 7, 1998) from the City Clerk, North York Community Council be received.

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 subject to Council first taking all steps necessary to comply with the former City of North York disposal By-law No. 32512 including:

 (i)two City owned strips of property, namely a 5 foot right-of-way traversing the Dangreen property and 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)Council direct that the property then be disposed of in accordance with the Purchase Agreement to be concluded with Dangreen, directly to Verdiroc Holdings Limited, Daniels Financial Corporation, and John Henry Daniels In Trust;

(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; and

(3)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 22, 1998, we are awaiting the formal report from the inquiry officer.

North York Community Council, at its meeting on May 6, 1998, during its consideration of issues related to the Bayview Station, adopted a motion expressing concern with the settlement proposal negotiated by staff which motion is also before you. Further, the TTC at its Committee of the Whole meeting on May 20, 1998, adopted a motion directing staff to assist in facilitating discussion for resolution of the overall development issues of the site.

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:  (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 No. 94-21-413-41-B containing an area of 173.0 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)stratified fee simple interest or a permanent exclusive easement to be defined by survey as may be appropriate to accommodate a surface bus loop; and

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

The draft plan of survey prepared by JD Barnes Limited as No. 94-21-413-41-B is on file with the City Clerk. 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 were being finalized on the form of an agreement which would have provided for the acquisition of all of the TTC property requirements by way of a nominal sum land exchange. This option would 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. More recently, as a result of North York Community Council=s consideration of this matter, Councillor Moscoe, Chair of the Toronto Transit Commission and a group of Councillors for this ward and the two adjacent wards, with the assistance of Planning Department staff, have had discussions with the developer and the adjacent property owner. This has resulted in a new built form concept for the proposed residential building which more appropriately addresses community concerns and allows for the bus loop to be located at the Teagarden intersection.

The new development concept has been reviewed by TTC staff. As a result, the following new issues have been identified:

(i)the revised bus loop location will now be located over the developer=s proposed underground parking structure. The net capital construction cost will increase by $55,000.00. In the event the parking structure has not been built by the time the bus loop is required, it will be necessary to temporarily remove the bus loop to facilitate the developer=s construction activity. This will result in further costs which have been estimated at $25,000.00 per year for increased bus operating costs and a further capital cost of $120,000.00 to re-establish the bus loop. Also, a small strip of land may be required from the adjacent property to accommodate a proposed exit driveway from the development;

 (ii)an additional $12,000.00 will be required to increase the load bearing capacity of the existing columns to support a three level structure over the electrical substation;

 (iii)the revised development concept proposes a residential development on the adjacent property which may also be connected to the subway station. This will result in an additional cost of $50,000.00 to provide forced ventilation for the electrical substation;

 (iv)as part of the discussions between the developer and the Councillors, a need was identified to provide a pedestrian linkage from the Bayview/Sheppard intersection to Bayview Village Shopping Mall.

On May 21 and 22, 1998, further meetings were held with the owner. The owner has also met with Mr. Phil King of Orlando the adjacent owner. Agreement has been reached with respect to the additional issues wherein Dangreen will be responsible for the additional costs incurred by the TTC for the bus loop including the initial capital costs up to a maximum of $55,000.00 and the additional operating and reconstruction costs if required. The TTC has agreed to defer construction of the bus loop as long as possible. Dangreen will also be responsible for the additional column costs required in the electrical substation up to a maximum of $12,000.00.

With respect to the pedestrian connection, Dangreen has agreed to provide a pedestrian walkway through its building for public access.

Dangreen has confirmed that Orlando will provide land for the proposed exit driveway, if required at no cost, as long as it does not result in Orlando losing parking spaces and Orlando will be responsible for the additional ventilation costs, if required, at the time the Orlando building proceeds. Accordingly, no additional costs will be incurred by the TTC in this regard.

The original transaction, included an option whereby, in the event Council did not approve a land exchange, the property interests would be acquired pursuant to Section 30 of the Expropriations Act. 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 as originally negotiated. Dangreen has now confirmed that it is no longer prepared to agree to a Section 30 agreement pursuant to the Expropriations Act as part of this settlement.

Under the proposed settlement, Dangreen will convey at no cost 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 and the additional costs as detailed herein. 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 remaining Dangreen property and the 10 foot strip located immediately east of their remaining site. All conveyances will be at no direct cost and Dangreen waives its right to any compensation for injurious affection.

In the event that Council is not prepared to convey the City owned property interests to Dangreen, 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 22, 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.

Although, the ultimate compensation payable under an expropriation cannot be determined at this time, it will no doubt be significant. 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. 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 allows the City to acquire the property interests required to accommodate the Bayview Station and related facilities within the required time frames and at no direct cost. The costs required for support structures and other preliminary work will be recovered when the property is developed.

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, a further report on the formal expropriation process will be forthcoming when the Hearing Officer=s report is received.

Contact Name:

Mr. Douglas F. Warning

Acting Director of Real Estate (392-8165)

The Corporate Services Committee submits the following communication (May 7, 1998) from the City Clerk, North York Community Council:

The North York Community Council at its meeting on May 6, 1998, concurred with the following motion by Councillor Moscoe, North York Spadina:

AWHEREAS the Toronto Transit Commission is in the process of acquiring land to construct the Sheppard Subway;

AND WHEREAS the Toronto Transit Commission has, through Johnson Donald Associates, been negotiating a deal to acquire land for the Bayview Station;

AND WHEREAS in doing so they are negotiating away the ability of the North York Community Council to ensure that the official plan objectives of the City can be met;

AND WHEREAS by negotiating away the easements that will ultimately control whether or not these lands can be developed, or how they can be developed, they are robbing the community and their elected representatives of the leverage necessary to shape the development of this quadrant;

AND WHEREAS if the city uses the consensual expropriation route it is clear that any money expended on the expropriation will ultimately be recouped through the sale of the easements and related development rights;

AND WHEREAS the interests of the community are better served by retaining the opportunity for the Community Council to shape the development of North York;

AND WHEREAS consensual expropriation will allow the land to be acquired without delay to the subway construction schedule and at the same time retain community control of the destiny of the development on these lands and the neighbouring plaza lands;

THEREFORE BE IT RESOLVED that Council be advised that it is the position of the North York Community Council that the land for the Bayview Station be acquired through the consensual expropriation option;

AND BE IT FURTHER RESOLVED that the matter of the comprehensive development of the block bounded by Bayview Avenue, Bayview Mews, Hawksbury Drive and Sheppard Avenue East, be referred to planning staff for a full report to the North York Community Council.@

(A copy of the sketch attached to the foregoing report was forwarded to all Members of Council with the May 25, 1998, agenda of the Corporate Services Committee, and a copy thereof is also on file in the office of the City Clerk.)