August 20, 1999

To:Administration Committee

From:Acting Commissioner of Corporate Services

Subject:23 Fraser Avenue - Sale of City-owned Property (Ward 20 - Trinity Niagara)

Purpose:

To advise of the outcome of re-marketing this property and to recommend that the Offer to Purchase from Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc. in the amount of $750,000.00 be accepted.

Funding of Sources, Financial Implications and Impact Statement:

The sale of this property for $750,000.00 will result in net proceeds of approximately $725,925.00 after payment of broker's commission.

Recommendations:

It is recommended that:

(1) the Acting Commissioner of Corporate Services or the Executive Director of Facilities and Real Estate be authorized to accept the Offer to Purchase in the amount of $750,000.00 as submitted by Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc.;

(2) the City Solicitor be authorized and directed to take the appropriate action to complete this transaction on behalf of the City of Toronto and be further authorized to amend the closing date to such earlier or later date as considered reasonable; and

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

Background:

23 Fraser Avenue is improved with a tenanted 2-storey commercial building with fully operational film studios and associated office space. The site has a frontage of 141.73 ft. and contains an area of 47,911 sq. ft. It is zoned IC D3 N1.5. The building contains a rentable area of 35,467 sq. ft. and a total gross floor area of 44,559 sq. ft. Title to the property was vested in the City in 1996 as a result of tax default by the previous owner.

The property was previously marketed in 1998 by the City, through its real estate broker, Torode Realty Ltd. The selected Purchaser had an environmental investigation of the property done during the due diligence period. The investigation indicated contamination of the soil and other concerns including the possibility of a buried railcar tanker. On this basis, the Purchaser requested a reduction of the purchase price to reflect the cost of remediation as estimated by its consultant as well as the right to complete further environmental investigation. The estimated remediation cost was considered excessive by staff.

City Council at its meeting on December 16 and 17, 1998, considered and adopted Councillor Pantalone's Notice of Motion and the accompanying report from the Commissioner of Corporate Services (December 16, 1998) on the sale of the property. In so doing, Council adopted the report from the Commissioner of Corporate Services, rejecting the request for the price reduction. Further, Council directed the Commissioner of Corporate Services to have an environmental assessment of the property completed at the City's own cost, and to have the existing broker, Torode Realty Ltd, re-market the property on an "as is" basis, if the Purchaser terminated the Agreement of Purchase and Sale.

The Purchaser did terminate the Agreement of Purchase and Sale, hence the property was re-marketed.

Comments:

Following the Council decision of December 16 and 17, 1998, Torode Realty Ltd was retained to re-market the property. The re-marketing commenced on June 29, 1999, after an environmental assessment of the property was completed by the city's consultant, Burnside Environmental. Copies of the environmental report were given to those prospective purchasers who entered into a Confidentiality Agreement with the City, to enable them to come up with a firm offer based on the existing environmental condition of the property. The intention was that no request for any negotiation on the purchase price after an offer was made would be entertained.

Two Offers to Purchase were received at the office of Torode Realty Ltd. on August 9, 1999, one before the 4:00 p.m. deadline and the other after the 4:00 p.m. deadline. The late submission was rejected on the same day.

The Offer to Purchase received by the submission deadline was from Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc. Details of this Offer are as follows:

Purchaser:Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc.

1 St. Clair Avenue East, Suite 600

Toronto, Ont. M4T 2V7

Purchase Price:$750,000.00

Deposit:$75,000.00

Intended Use:Offices and film studios

Solicitor:Kaplan Freeman Halpern

69 Bloor Street East, Suite 210

Toronto, Ont.M4W 1A9

GST No.:10014 8485

Conditions:None

As part of the standard terms of the Offer to Purchase, the Irrevocable Date shall be October 12, 1999 and the Closing Date December 13, 1999. Vacant possession shall be delivered on closing.

The current offer contains no conditions imposed by the Purchaser. As the property has been exposed to the market over the past two years, it is staff's opinion that adequate exposure of the property has been achieved and that the offer represents the market price of the property on an "as is" basis. It is therefore recommended that the Offer to Purchase from Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc. be accepted by the City. The City's broker, Torode Realty Ltd., shares the same view.

Conclusion:

I am of the opinion that the Offer to Purchase from Alliance Rockliffe Limited in Trust for 1294539 Ontario Inc. in the amount of $750,000.00 represents the market price of 23 Fraser Avenue on an "as is" basis and, therefore, should be accepted.

Contact Name:

Ting Ng, Telephone - 392-1857, Fax - 392-1880, E-mail - tng@toronto.ca (ac99127)

Brenda Glover

Acting Commissioner, Corporate Services