Yonge Street, Known as "The Jolly Miller" -

Report on RFP Responses -

North York Centre South

The North York Community Council recommends the adoption of the following report (October 1, 1998) from the Commissioner of Economic Development, Culture and Tourism, Corporate Services and Chief Financial Officer and Treasurer:

Purpose:

The purpose of this report is to secure approval in principle to negotiate a lease with a single proponent for the tenancy of the property at 3885 Yonge Street, known as "The Jolly Miller".

Source of Funds: N/A

Recommendations:

It is recommended that:

(1)staff be authorized to negotiate within 6 months, a lease with Prime Asset Management Corporation for tenancy of the property at 3885 Yonge Street, known as "The Jolly Miller", according to the terms set out in the Request for Proposal (FA64-98003), the Condition Assessment, and subsequent correspondence, and satisfactory to the Commissioners of Corporate Services and Economic Development, Culture and Tourism; and

(2)once negotiated, the lease be forwarded to Council for approval through the Corporate Services Committee.

Background:

The Jolly Miller Tavern, located at 3885 Yonge Street, was constructed in 1856 and is the only 19th century commercial structure remaining on its original site in North York. It has been approved for designation under the terms of the Ontario Heritage Act (R.S.O. 1990) as a building of historical and architectural significance in the North York community. In 1997, the former City of North York purchased the property to bring it into public ownership. The parking lot on the north portion of the site is operated by the Toronto Parking Authority. When the parking lot is no longer required to recoup the costs of acquisition, which is estimated to be within 20 years, Council will reconsider the use of this land as a parking lot.

The Report on the Official Plan / Zoning Amendment for the site, approved by North York Council on June 25, 1997, identified the following objectives in relation to the property:

(a) to provide for the protection and enhancement of the heritage property's character while providing a variety of commercial opportunities to ensure the financial integrity for the re-use of the Jolly Miller;

(b) to ensure that the heritage nature of the Jolly Miller property is preserved and enhanced and that, in the long term, the property shall be integrated in a compatible manner into the surrounding open space system; and

(c) the continued commercial function of the Jolly Miller building is encouraged in a manner that is complementary and sympathetic to its heritage nature. To complement the heritage aspects of the building, future expansions should be generally limited to the north and east sides of the Jolly Miller building.

On May 20, 1998 the Economic Development, Culture and Tourism Department and the Corporate Services Department issued a Request for Proposals for the Lease of the Jolly Miller. The Request for Proposal (RFP) outlined the City's objectives as identified above, the criteria for evaluation, zoning restrictions, and terms and conditions. A Condition Assessment of the heritage building was prepared by Philip Goldsmith and Co. Ltd. on the City's behalf and was provided to all parties that obtained the RFP package. A copy of the full package is on file with the Clerk of the North York Community Council.

Four proposals were received by the closing date of June 15, 1998. The proponents were interviewed and the proposals reviewed by a Review Team of staff representing the following divisions: Parks and Recreation, Culture, Finance, Planning, Legal, and Property.

All proposals were reviewed against the provisions of the RFP, which included:

(1)City's objectives and criteria for the property as outlined in the Report on the Official Plan/Zoning Amendment approved by North York Council on June 25, 1997;

(2)requirements for restoration and upgrading of the property, identified in the Condition Assessment;

(3)requirement that the lease be carefree to the City and that the tenant bear all costs for leasehold improvements, restoration and enhancement, realty taxes, maintenance and insurance;

(4)stated preference for one tenant for the entire building;

(5)requirements for parking over and above the immediate site would be the responsibility of the tenant to negotiate with the Toronto Parking Authority; and

(6)no obligation on the part of the City to accept the proposal for the highest amount expressed as rent to be paid.

Review of the Proposals:

In assessing the relative merits of each proposal, a number of factors were considered: ability to address the conditions set out in the RFP, sensitivity to the heritage nature of the property, financial return to the City, financial ability of the proponent, and the limiting conditions stipulated with each proposal.

The emphasis of the financial analysis was based on the business terms proposed by each of the proponents based on the net financial returns to the City and the probability that these returns will be realized (i.e. that the proponent is of sufficient financial strength to honour its commitments under the lease agreement). The financial analysis of the proposals is attached as Appendix 'A'.

Appendix 'B' provides an assessment of the proposals against the evaluation criteria. The proposals can be summarized as follows:

(A)Falcon Construction and Associates:

Falcon Construction and Associates has submitted a proposal to move the original building to the east end of the site, construct new foundations and additions, and operate a restaurant similar to "Marche" on the first floor, a high-end seafood/steak house on the second floor and use the third floor for administrative space.

Falcon Construction and Associates, proposes a capital cash outlay of $1,733,000.00 with a rental fee of $2.00 per annum for a 99 year lease.

(B)Jessup Food and Heritage Limited:

Jessup Food and Heritage Ltd. proposes to restore the original building and the 1920s addition, and to remove the later additions. They also propose reconstruction of the historic verandah on Yonge Street and to build a two-storey verandah on the east side of the building. It would be operated as a "period" fine dining establishment with professional offices on the second and third floors.

Jessup Food and Heritage Limited, proposes a capital cash outlay of $1,063,000.00. They propose to pay $100.00 per annum as rent for the first 20 years and $24,000.00 per annum for the final five years. The present value of rent paid over the 25 year period is $17,386.00.

(C)Oliver Bonacini Restaurants:

Oliver Bonacini Restaurants propose to restore the original building and the 1920s addition and remove the later additions. The Yonge Street verandah would be reconstructed and a two-storey east facing verandah added. A new addition, appropriate in design to the period, would be built on the north-east side of the building behind the 1920s addition. The property would be operated as a food shop, market cafe and grill. The second and third floors of the original building would become the operational headquarters for the corporation.

Oliver Bonacini Restaurants, proposes a capital cash outlay of $2,500,000.00 and a rental payment stream over a 50-year period equivalent to $354,350.00 in present value terms. Their proposed lease is for 20 years with six additional 5-year renewal options. They have requested an option to purchase at the end of 10 or 20 years and have been advised that this is unlikely.

(D)Prime Asset Management Corporation:

Prime Asset Management Corporation submitted a proposal to restore the original building and the 1920s addition to the mid-19th century period, and to remove the later additions. A three-storey structure would be built on the east side, connected to the original by a glass atrium and running the full north/south length of the building. The ground and lower levels would be leased for restaurant and retail uses, and the second and third floors for office and community space. Prime Asset alternately proposed the positioning of the addition to the south of the property, which is contrary to the requirements of the RFP.

Prime Asset proposes a capital cash outlay of $2,470,000.00 and a rental payment stream over a 30-year period equivalent to $1,391,461.00 in present value terms. It is proposed that a 50-year lease term be executed, but it should be noted that the cash flows that have been identified in present value terms reflect only the first 30 years. The remaining 20 years contemplate a lease payment adjusted by the inflation index. This proposal yields the highest financial return to the City.

Review by the North York Heritage Committee:

The North York Heritage Committee, at its meeting held July 9, 1998, reviewed the heritage aspects of the four proposals and provided their comments for the consideration of the Review Team.

The North York Heritage Committee was encouraged by the creative responses to this property and by the obvious care taken by the proponents to address the heritage nature of the property. The Committee indicated a preference for the Oliver Bonacini proposal because it retains the original elements of the building and its 1920s character, using photographs and other documentation for the restoration. The size and location of the addition also provides a better perspective on the heritage building. The Heritage Committee considered that the addition proposed by Prime Asset is too large and its placement and connection by an atrium in both design options detracts from the heritage building. The Jessup Food and Heritage treatment of the 1920s addition was thought to detract from the original building. The Committee will not support the move of the original building as proposed by Falcon Construction. With these comments in mind, it will support any of the other three proposals.

Discussion:

Following review of the proposals, interviews with the proponents and the review provided by the North York Heritage Committee, the Staff Review Team short-listed to two proponents: Prime Asset Management Corporation and Oliver Bonacini Restaurants. These two leading proponents were asked to provide additional information about their corporate structure, their experience with similar projects, and their financial status. Sketches of their proposals are attached as Appendices 'C' and 'D'.

From a design perspective, the submissions by Prime Asset Management Corporation and the Oliver Bonacini Restaurants are both considered desirable. They offer more than just rehabilitating the existing structure and undertaking the 'Required Work' described in the Condition Assessment report by introducing additional floor area by way of building expansions.

The Prime Asset proposal includes two design schemes for consideration. Scheme "A" consists of removing or restoring the later additions and constructing a three storey rear east addition. The structure would be designed in a complementary style and separated from the original building by a full height glass atrium thus maintaining the east wall of the existing structure. The original brick building will retain predominance on the site. This scheme also creates an opportunity to establish a landscaped feature at the Yonge Street/Mill Street corner. The Scheme "B" proposal comprises a two-storey expansion to the south side of the existing structure which extends along the Mill Street frontage. As with the other scheme, the design is complementary and is separated by a glass atrium to expose the existing south wall. Of the two, Scheme "A" is considered the more desirable, as it does not visually dominate the heritage building.

The Oliver Bonacini Restaurants submission also comprises the removal or restoration of the later additions and a two-storey addition at the north-east corner of the existing structure, behind the garage. The design would be appropriate and sympathetic with the original architecture. From a built form perspective, this expansion proposal competes the least with the existing structure.

The location and conceptual designs of both submissions are considered to be compatible with the zoning and site plan review criteria outlined in the RFP and (with the exception of the Scheme "B" Prime Asset proposal) do not detract from, screen or visually dominate the heritage nature of the existing building. A further advantage of these submissions would be the additional floor area component. The extra floor space would be a more desirable asset for the City once the lease expires.

Conclusions:

Considering the four proposals against the criteria and objectives established by the City, the staff review team is prepared to recommend that the City of Toronto begin negotiations with Prime Asset Management Corporation for a lease and restoration plan for The Jolly Miller. This proposal will provide the City with a significant asset which protects and enhances this heritage building, while also providing the highest financial return to the City.

To ensure that there is no delay in proceeding with the redevelopment , the lease should be fully negotiated and reported to the Corporate Services Committee within 6 months from the time of approval by Council.

Contact Names:

Beth Hanna

Manager, Culture Office, North York

Telephone:395-7415

Fax:395-7886

Vicky Papas

Telephone:392-1830

Fax:392-1880

________

(A copy of the Appendices referred to in the foregoing report is on file in the office of the City Clerk, North York Civic Centre.)

The North York Community Council also reports having had before it a confidential report (November 9, 1998) from the City Solicitor and the Chief Financial Officer and Treasurer and a confidential report (October 29, 1998) from the Commissioner of Economic Development, Culture and Tourism, copies of which have been provided to Members of Council under "Confidential" cover.

The following persons appeared before an In Camera meeting of the North York Community Council with respect to this matter:

-Mr. Peter Oliver, Partner, Oliver Bonacini Restaurants;

-Mr. Andrew Wilkes, Managing Partner, Prime Asset Management Corporation;

-Ms. Barbara Wilkes, Management Initiatives Inc.,

-Mr. Ken Lipson, Principal, Prime Asset Management;

-Mr. Angus Stein, Architect;

-Mr. Grant Warfield, owner of Gaby's Restaurants.

Councillor Feldman, North York Spadina, declared his interest in the foregoing matter as he resides in the immediate vicinity of the Jolly Miller.