385-401 Queens Quay West - City's Residual

Fee Simple Interests - Declaration as Surplus

(Ward 24 - Downtown)

The Corporate Services Committee recommends the adoption of the following report (September 4, 1998) from the Commissioner of Corporate Services:

Purpose:

To declare surplus to the City's requirements, the City's residual fee simple interests in the lands comprising 385-401 Queens Quay West and to secure Agreements of Purchase and Sale from the lessee and the condominium corporation.

Financial Implications:

Net revenues generated from the eventual sale of these interests will be transferred to the Harbourfront Foundation to support the programmes of Harbourfront (1990).

Recommendations:

It is recommended that:

(1)the City's residual fee simple interests in the lands known municipally as 385 and 401Queens Quay West and described as being Part of Blocks T and U, Registered Plan 536-E, City of Toronto, save and except PARTS 45 and 68 and portions of PARTS 58 and 59 on Plan 66R-15511, be declared surplus to the City's requirements;

(2)the Commissioner of Corporate Services give notice to the public of the interests declared surplus;

(3)the Commissioner of Corporate Services secure from the lessee and the condominium corporation Agreements of Purchase and Sale for the sale of these interest; and

(4)the appropriate City officials be authorized and directed to take the necessary action to give effect to the foregoing.

Background:

On December 15, 1995, Queens Quay West Land Corporation (QQWLC), formerly Harbourfront Corporation, conveyed to the City, amongst others, title to the lands now known municipally as 385Queens Quay West subject to various existing interests, certain interests in 401 Queens Quay West and portions of the Water's Edge Promenade. Under the terms of a letter agreement dated October 6, 1992, as amended by letter dated June 8, 1994 (also known as the Implementation Agreement), the net proceeds from the lease or sale of properties transferred to the City are to be forwarded to Harbourfront Foundation to support the programmes of Harbourfront (1990).

The City's residual fee simple interests in 385 and 401 Queens Quay West include the ground floor commercial area, areas forming the lobby, vehicular and pedestrian accesses, stairwell and walkway on the east side of the condominium building, areas of the below grade parking structure, air rights above the condominium, patio and open space areas east of the building, the majority of which are subject to a perpetual right in the nature of an easement for the exclusive and permanent use of the condominium owners. Various encumbrances and restrictive covenants are registered on title. The second to eighth above grade strata of the condominium are freehold interests in favour of the condominium owners of Metropolitan Toronto Condominium Corporation No.830 (MTCC No.830). With the exception of the support columns on the south side of the condominium and the lands forming the Water's Edge Promenade, the majority of the lands are under a long term lease in favour of Miletus Incorporated. The 60 year lease expires August 31, 2046 and the rent was prepaid to QQWLC. A tri-party Reciprocal Agreement between MTCC #830, the lessee and the City, delineates maintenance and liabilities respecting various areas of the condominium building, the parking structure and the open space.

Comments:

385 Queens Quay West is open space on the surface and is located east of the condominium building. A parking structure is constructed below grade servicing the condominium building. Under the original draft plan of condominium, the surface lands were intended to be publicly accessible open space and were to be contiguous with a park to be developed on MLQ6 (known municipally as 375 Queens Quay West), located west of the Peter Street Slip. A surface carpark presently operates on 375 Queens Quay West, until such time as the site will be development for park purposes.

401 Queens Quay West is a mixed-use condominium building comprised of ground floor commercial space and 73 dwelling units. The ground floor commercial space is leased to Miletus Inc. until the year 2046. Miletus Inc. has advised that various commercial ventures undertaken in the commercial space were unsuccessful and the space has been vacant since 1990. On June 11, 1996, the Committee of Adjustment granted an application filed by Miletus Inc., MTCC No.830 and the City, to alter the ground floor commercial space of 401 Queens Quay West into six additional dwelling units and to designate the existing exterior terraces as personal recreational space. The Committee was satisfied that the requested variances were minor in nature and will facilitate an appropriate development of this property.

Miletus Inc. has advised that it wishes to proceed to acquire the City's residual interests in order to facilitate the conversion from leasehold retail space to freehold residential condominiums. Discussions have been ongoing with the lessee and MTCC No.830, the City's real estate, parks, planning and legal staff respecting the purchase of the City's residual interests in 385-401 Queens Quay West.

The City Surveyor has confirmed that the City owns the lands described as Parcel T-7, Section A-536-E, which includes all the lands in premises 385 Queens Quay West as well as part of premises 415 Queens Quay West, which is part of the Water's Edge Promenade. Miletus Incorporated has a long term lease of the City's land described by Parcel T-1 Leasehold, Section A-536-E, being all the lands in premises 385 Queens Quay West and includes the ground floor interests in the building that contains MTCC No.830 located at 401 Queens Quay West. Any sale of the City's lands should not include any portion of the Water's Edge Promenade, more particularly identified as PARTS 45 and 68 on Plan 66R-15511 (being parts of Parcel T-6 and T-7, Section A-536-E) and any sale should be subject to all encumbrances and restrictive covenants on record. Because of the complicated nature of land ownership in this area, a strata reference plan is required to delineate those parts of PARTS 58 and 59 on Plan 66R-15511 being retained for the Water's Edge Promenade and it is recommended that the City Surveyor's office prepare all descriptions required for any transfer of City-owned lands.

With respect to the Water's Edge Promenade and 385 Queens Quay West, parks staff advised that under the Harbourfront transfer arrangements, it was intended that the patio and the landscaped open space east of the building would be integrated with the potential public uses of the ground floor commercial space. However, with the approval granted to convert this space to dwelling units, the open space areas lend themselves more to personal recreational space. In addition, due to the inherent liabilities associated with maintaining a surface open space over a below grade parking structure, parks staff are not opposed to the City divesting its interest at this location provided that the City retains ownership of the Water's Edge Promenade and areas south of the building footprint presently being utilized by the public as part of the Water's Edge Promenade and identified as PART68 and portions of PARTS 58 and 59, Plan 66R-15511.

The area planners have advised that the original development agreement respecting the condominium development at 401 Queens Quay West identified an area on the east side of the building to be publicly accessible open space. In disposing of the City's interest at this location, an amendment to the site plan will be required, thereby providing City staff with the opportunity to ensure that the landscaping improvements would lend itself to the future proposed public park to be developed on the City's parcel at 375 Queens Quay West (MLQ6).

A poll was undertaken of the City's divisions, agencies, boards and commissions and ward councillors to determine whether or not there is any other municipal interest in retaining the City's residual fee simple interests in these lands. No other interest was expressed. Discussions with Miletus Inc. and MTCC No.830 to acquire the City's residual fee simple interests in the site are ongoing and Agreements of Purchase and Sale should be finalized shortly. In order to proceed with the sale, the City must comply with the procedures governing sale of real property. Pursuant to section 193 of the Municipal Act relating to the sale of property, before selling real property Council must declare the property surplus by by-law or resolution passed at a meeting open to the public; give notice to the public of the proposed sale; and obtain at least one appraisal of the market value of the property, unless exempted by regulations passed under the legislation. An appraisal of the market value of the City's residual fee simple interests has been undertaken by staff appraisers.

Conclusion:

The sale of the City's residual fee simple interests in 385 and 401 Queens Quay West will result in: the City continuing to retain ownership of the Water's Edge Promenade for park purposes; the City divesting certain inherent liabilities associated with maintenance of an open space over a below grade parking structure; the City resolving the complicated nature of ownership by selling its residual leasehold interest in the ground floor commercial space to Miletus Inc. and other interests in 385 and 401 Queens Quay West to MTCC No.830; and generating additional revenue for the Harbourfront Foundation to support the programmes of Harbourfront (1990). The City's residual fee simple interests in 385 and 401 Queens Quay West should be declared surplus to municipal requirements and the City should proceed with the sale.

Contact Name:

Luba Tymkewycz, 392-7207, Fax No.: 392-1880, ltymkewy@city.toronto.on.ca