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)
The Corporate Services Committee recommends the adoption of the following report (July3, 1998) from the
Commissioner of Corporate Services:
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 $1,462,600.00 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 and 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 and 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 $1,250,000.00; 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 $100,000.00 and retain the services
of a consultant to conduct environmental testing in the estimated amount of $50,000.00 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 $150,000.00. 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:
(1)the City will pay One Thousand Dollars ($1,000.00) (the "First Deposit") by certified cheque upon execution of the
agreement, and One Hundred and Twenty Four Thousand ($124,000.00) by certified cheque (the "Second Deposit")
upon expiry of the due diligence period provided the City has decided to proceed with the transaction;
(2)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;
(3)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;
(4)the City shall pay all realty taxes relating to the leased premises;
(5)save and except for realty taxes, the leaseback shall be net to the City;
(6)the tenant may terminate the leaseback at any time during the term on 30 days prior written notice to the City; and
(7)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 70days 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 No. 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)
(A copy of the attachments to the foregoing report was forwarded to all Members of Council with the July 20, 1998,
agenda of the Corporate Services Committee, and a copy thereof is also on file in the office of the City Clerk.)