Sale of City-Owned Property known Municipally as

23 Fraser Avenue (Ward 20 - Trinity Niagara)

The Corporate Services Committee reports having concurred with the Recommendations embodied in the following report (September 11, 1998) from the Commissioner of Corporate Services:

Purpose:

To advise that the offers received for the sale of 23 Fraser Avenue are not acceptable and to secure the Corporate Services Committee's authorization to advise the three prospective purchasers that they will be provided the opportunity to resubmit a highest and final offer in a form acceptable to the City by September 18, 1998. The results will be reported directly to City Council at its meeting on October 1, 1998.

Financial Implications:

Not Applicable

Recommendations:

It is recommended that:

(1)each of the three prospective purchasers be advised that their offer for 23 Fraser Avenue is not acceptable and that they will be provided the opportunity to resubmit a highest and final offer in a form acceptable to the City by September 18, 1998; and

(2)the results be reported directly to City Council at its meeting on October 1, 1998.

Background:

In July, 1996, 23 Fraser Avenue was offered for sale by public tender pursuant to the Municipal Tax Sales Act. The reserve bid, comprised of tax arrears, interest and penalty was $884,032.59. No bids were received and the ownership of the property was vested with the City of Toronto on July23,1996.

23 Fraser Avenue is improved with a two-storey commercial building having an approximate gross floor area of 44,559 square feet and a site area of 47,911 square feet. The building has two fully operational film studios and associated office space.

At its meeting held on December 8, 1997, City Council declared the property at 23 Fraser Avenue surplus to its requirements and directed the Director, Property Services to report to the Board of Management on an appropriate method of sale together with a recommended asking price. To maximize the exposure on the open market, it was concluded that it would be prudent to list the property with a real estate broker previously qualified from the City's proposal call for the retention of real estate brokers and thus, in late December, 1997, the Board of Management authorized the retention of Torode Realty Ltd. to market 23 Fraser Avenue at an asking price of $1,400,000.00. The listing price was determined on the basis of an appraisal completed for the City by Royal LePage Professional Services Inc.

Three Offers to Purchase were received by the deadline date of 4:00 p.m. on Monday, March 2, 1998. None of the offers, ranging from $864,000.00 to $1,200,000.00, were considered acceptable due to either the conditions included or due to the purchase price.

At its meeting on April 16, 1998, City Council adopted the recommendations contained in a report entitled "Sale of City-owned property known as 23 Fraser Avenue" from the Commissioner of Corporate Services to Corporate Services Committee. The report recommended that the Commissioner of Corporate Services be authorized to commence negotiations with Studioasis Media Corporation, the purchaser who submitted the highest offer, in order to secure an acceptable offer and, failing which, authority be granted to re-market the property on the open market and to report back to the Corporate Services Committee, In Camera on the results.

Comments:

As Studioasis Media Corporation was considered to be a serious purchaser and in order to secure a clean offer, City staff permitted Studioasis Media Corporation additional time to satisfy itself of certain issues that affect the property, including the opportunity to undertake a preliminary due diligence investigation.

Studioasis Media Corporation was unable to execute an acceptable Agreement of Purchase and Sale for internal reasons and, as of consequence, the property was re-marketed by Torode Realty Ltd. at an asking price of $1,400,000.00 with an offer submission deadline of 12:00 noon, August 21, 1998. Three offers were received and are summarized below:

Offer No. 1- 1294539 Ontario Inc

Term Sheet:

Purchaser:1294539 Ontario Inc.

225 Mutual Street

Toronto, Ontario M5B 2B5

Purchase Price:$1,050,000.00

Deposit:$52,500.00 with offer and $52,500.00 upon expiry of due diligence period

Intended Use:TV and film studios

Solicitor:Robert J. Bassermann

120 Carlton Street, Suite 214

Toronto, Ontario M5A 4K2

GST. No.:To be provided on or before closing

Irrevocable Date:On or before October 20, 1998

Closing Date:On or before February 22, 1999

Conditions:A 60 day Due Diligence Period during which the Purchaser can conduct an environmental assessment the result thereof shall follow criteria required for the use of the Real Property for Industrial/Commercial purposes pursuant to the Ministry of Environmental & Energy's current guidelines for the decommissioning and cleanup of sites in Ontario.