Provision of Food Services at City Hall

 The Corporate Services Committee recommends the adoption of the following report (June 16, 1998) from the Commissioner of Corporate Services:

 Purpose:

 To secure authority to issue a proposal call, substantially as outlined in this report, to select an operator to design, construct and operate a café on the main floor of Toronto City Hall, and to provide catering services within Toronto City Hall.

 Financial Implications:

 It is anticipated that the proposals will result in no net capital or operating costs to the City.

 Recommendations:

 It is recommended that:

 (1)the Commissioner of Corporate Services be authorized, in consultation with the City Solicitor, to issue a Proposal Call, substantially as outlined in this report, to select an operator to design, construct and operate a café on the main floor and associated basement space of Toronto City Hall, and to provide catering services within Toronto City Hall;

 (2)the Commissioner of Corporate Services be authorized, to establish a Selection Committee chaired by the Acting Executive Director of Facilities and Real Estate and including representatives of Facilities and Real Estate, Public Health, Finance, Protocol and Legal to review submissions received and to develop recommendations on the selection of an operator; and

 (3)the Commissioner of Corporate Services report back to the Corporate Services Committee on the results of the proposal call process.

 Background:

 The basement cafeteria at Toronto City Hall currently operates under a Management Contract with Versa Services Ltd., on a month-to-month basis. This operation is subsidized by the City. Although larger when originally opened, the current cafeteria compromises the area shown on Appendix 1.

 In 1995, a food services consultant, R.I. Wade & Associates Ltd., was retained by the City Property Department to examine the scale and viability of a main floor café as an alternative to the basement cafeteria. The food services consultant determined that a main floor café would be viable. The principal recommendation contained within the consultant's report was the closure of the existing basement cafeteria service areas and replacement with a main floor café which would utilize the existing food preparation facilities and kitchen equipment located in the basement.

The proposed main floor space allocated for café purposes was comprised of approximately 3,550 square feet plus a common area of approximately 628 square feet as shown on Appendix 2. In addition to this main floor space the consultant proposed the utilization of the existing food preparation area located in the existing cafeteria and a ware washing facility of approximately 718 square feet located below the main floor space and shown on Appendix 3.

 The former Toronto City Council at its meeting held on December 18 and 19, 1995, adopted Executive Committee Report No. 3, Clause No. 12, with amendments to authorize the Acting Commissioner of City Property to develop a proposal call for food services in City Hall, including provision of a new café on the main floor, closing of the cafeteria in the basement and to eliminate any requirement for ongoing subsidy. In addition all proponents were requested to indicate their intention with respect to offering employment to the existing cafeteria staff.

 A public proposal call was prepared and required that the services include the design, construction and operation of a main floor café as well as provide catering services for City Hall functions. The provisions of these services were to be at no cost to the City of Toronto, in terms of capital and operating costs, with the exception of the demising walls and mechanical systems to the limit of the leased space.

 As a result of the proposal call process, three submissions were received and the Selection Committee unanimously recommended 1158093 Ontario Limited as the preferred proponent subject to certain issues being resolved. Negotiations were conducted with Mr. Tony Palermo, the principal of 1158093 Ontario Limited and ultimately a lease acceptable to the Commissioner of Corporate Services, was negotiated and recommended to the former Toronto City Council. Due to operating cost factors, the proponent decided the café would be comprised of the main floor space, the 718 sq.ft. space and a 162 sq.ft. staff change room as shown on Appendix 3 but not the existing kitchen. As the terms required by 1158093 Ontario Limited differed from their original submission, including the requirement that the City provide substantial funds towards the capital costs, Council at its meeting of December 6, 1996, Executive Committee Report No. 3, Clause No. 3 decided not to proceed with the lease with 1158093 Ontario Limited and directed that the proposal call be reissued.

 Due to the pending decision with respect to the long-term use of Toronto City Hall, the former Toronto Board of Management instructed staff to postpone a proposal call. As a result of the decision to locate the seat of government at the Toronto City Hall, it is now appropriate to issue a new proposal call for an operator to design, construct and operate a café on the main floor and associated basement space of Toronto City Hall.

 Comments:

 Main Elements of Proposal Call:

 (1)the main food service facility would be located on the main floor of City Hall in the space identified on Appendix 2. In addition, the areas identified as staff change room and storage room set out on Appendix 3 will be made available. Also, the existing food preparation area located in the basement will be made available;

 (2)the proponents will be requested to provide comments on a coffee/muffin type service to be located on the second floor during limited time periods during the day. The location of such a portable service is still to be determined;

 (3)a patio area comprising 580 sq. ft. directly outside the cafe space, and as indicated on Appendix 2, will also be made available for the proponent's use;

 (4)the lease will be for a term of ten years in order to permit the proponent sufficient time to recover capital costs. The lease will also include an option for a further five years, pending satisfactory performance by the operator as determined by the Commissioner of Corporate Services;

 (5)the successful proponent will be responsible for all metered utility costs, taxes, repairs and maintenance to the leased area and the equipment;

 (6)the proponent will be required to provide these services at no cost to the City of Toronto, in terms of both capital and operating costs. The exception will be the provision of utility services, which will be brought to the limit of the leased space in the form of a single connection. The proponent will be responsible for the cost of distributing the services. While certain work may be required to be completed by the City the proponent will be responsible for the cost;

 (7)the successful proponent would be granted the right to exclusivity in terms of catering services for City Hall functions, subject to review after one year of operation by the Commissioner of Corporate Services;

 (8)the proponents will be required to submit designs for the space they propose to comprise the food service facility in order to ensure the proposal will be clear and is functionally and operationally acceptable;

 (9)the proponent will be required to offer employment to the existing cafeteria employees which was a requirement of the former Toronto Council; and

 (10)the proposal call will indicate to proponents that if they are not interested on the foregoing basis, then alternative proposals may be considered, including the provision by the City of capital funds to assist with the initial capital cost of constructing the facility.

 Proposed Timelines:

 Subject to City Council authorization, the proposal call would be advertised in Toronto daily newspapers. A deadline for responses would be approximately August 15, 1998. The Selection Committee would evaluate responses shortly thereafter and report to the Commissioner of Corporate Services with its recommendations. The Commissioner of Corporate Services would table a report with recommendations on selection of a potential operator to the Corporate Services Committee on September 14, 1998, and Toronto City Council on October 1, 1998.

 Selection Criteria:

 A Selection Committee would be formed, chaired by the Acting Executive Director of Facilities and Real Estate Division with representative from Facilities and Real Estate, Public Health, Finance, Protocol and Legal.

 The proposals would be evaluated based on the criteria contained in the proposal call document, including the following items:

 (a)Proposed Financial Arrangements:

 (i)the ability of the operator to demonstrate adequate funding;

 (ii)reasonableness of financial assumptions and analysis including projected revenues from the café and catering service; and

 (iii)financial return to the City.

 (b)Protection of City's interests:

 (i)enhancements of City's assets by the proposed improvements; and

 (ii)guarantees to limit City liability in defaults in operation or against general liability.

 (c)Proponent's Previous Experience:

 (i)the ability to operate a food service operation of the nature envisioned as a viable business including the proponent's ability to obtain all necessary licensing; and

 (ii)previous experience of the proponent as it relates to the submission.

 (d)Compliance of Terms and Conditions:

 (i)ability to meet the City's schedule for assuming operation; and

 (ii)ability to comply with the proposed terms and conditions under a lease agreement with the City.

 Proposal Requirements:

 Each proponent would be required to submit a business plan for the operation of a new café and provision of catering services to City Hall including the following information:

 (i)goals for food service operation including marketing analysis and planning;

 (ii)proposed operation including organizational structure, staffing and proposed salary range of staffing positions involved;

 (iii)description of all proposed capital improvements including the design of the café and upgrades to be carried out, together with an estimate of the cost of the improvements;

 (iv)financial analysis and projections over the term of the proposed lease agreement including funding sources, projected sources and extent of revenues and expenses;

 (v)proposed financial return to the City;

 (vi)proposed method of providing security for financial obligations;

 (vii)attributes of proponent corporation, including experience and financial statements;

 (viii)proposed menu and pricing including the manner in which the requirement for a multi-ethnic menu mix shall be met.

 (ix)confirmation that:

 (A)Toronto City Hall is a designated historical building and all work carried out on the subject premises must be approved by the Commissioner of Corporate Services in consultation with the Toronto Historical Board; and

 (B)the proponent accepts the terms and conditions included in the Proposal Call Package.

 Other Food Service Contracts:

 The City has a month-to-month lease for the operation of the snack bar on the square. This concession should be dealt with separately in context with the overall review of the proposed civic complex. The City also has a contract with a vending company for the provision of four vending machines located in the basement of Toronto City Hall. This contract also deals with vending machines at other locations and accordingly, should also be dealt with separately. It is noted that as a result of the more intensive use, there may be a need to place vending machines on the second floor to accommodate late night demand for refreshments.

 Conclusion:

 It is anticipated that the issuance of a public proposal call would provide the City of Toronto with an improved food service facility to meet the needs of Toronto City Hall as the new seat of government. In addition, the City would realize the elimination of an annual subsidy to the current operator under the existing Management Agreement and capital improvements to City Hall.

 Contact Name:

 Rhonda Anderson, telephone: 392-1854, fax: 392-1880, Email: randerso@city.toronto.on.ca. (con98044.wpd)

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 The Corporate Services Committee reports, for the information of Council, also having had before it:

 (1)a confidential report (May 13, 1998) from the Commissioner of Corporate Services respecting the Main Floor Cafe at City Hall; and

 (2)a communication (June 19, 1998) from Mr. David P. Smith P.C., Q.C., on behalf of Mr. Tony Palermo, advising that Mr. Palermo is prepared to proceed to operate the facility in accordance with the terms in his previous bid; and recommending that the Corporate Services Committee instruct staff to neogtiate with Mr. Palermo an acceptable package and report back to the Committee.

 Mr. Ted Graham, and Mr. Tim Peters, Versa Services Limited, appeared before the Corporate Services Committee in connection with the foregoing matter, and filed information respecting the services provided by Versa Services Limited.

 Councillor Chris Korwin-Kuczynski, High Park, appeared before the Corporate Services Committee in connection with the foregoing matter.