March 11, 1999

To:Corporate Services Committee

From:Commissioner of Corporate Services

Subject:Roster of Real Estate Brokers to Market Industrial, Commercial, Institutional and Substantial Residential Properties for the City of Toronto (All Wards)

Purpose:

To secure City Council approval of a list of prequalified real estate brokerage firms to assist the City with real estate services to market various surplus properties.

Financial Implications:

Not applicable at this time.

Recommendations:

It is recommended that:

(1)six real estate brokerage firms, Avison Young Commercial Real Estate (Ontario) Inc., J.J. Barnicke Limited, CB Richard Ellis Limited, Collier Macaulay Nicholls (Ontario) Inc., Cornerstone Commercial Realty Corporation and Royal LePage Commercial Inc., be listed on a roster for the marketing of significant properties by the City, on an as required basis and according to their expertise, as more detailed in the body of this report;

(2)the authority previously granted to the Commissioner of Corporate Services to execute listing agreements on behalf of the City, as more fully detailed in the body of this report, be extended to also specifically authorize the Executive Director of Facilities and Real Estate and the Director of Real Estate Services to execute such agreements;

(3)the unsuccessful real estate brokerage firms be notified that they will not be given further consideration at this time;

(4)the Commissioner of Corporate Services be authorized to remove any of the prequalified brokers from the list if in her sole discretion she deems it appropriate to do so; and

(5)the appropriate City Officials be authorized and directed to take the necessary action to implement the foregoing.

Background:

The practice of using the services of real estate brokers to assist staff varied in the former municipalities. The former City of Toronto established a roster of real estate brokers for the marketing of its properties and other municipalities utilized brokers on a selection basis. Listing City properties for sale with real estate brokers realizes savings in staff time and resources, provides specialized services, provides enhanced marketing programs and provides access to their client network. The use of brokers has also allowed staff to manage the sale of numerous properties simultaneously.

For the marketing of single family residential properties, the practice of utilizing local brokers has proven effective as these brokers have knowledge of the local market. By its adoption of Clause No. 1 of Report No. 11 of the Corporate Services Committee at its meeting held on July 29, 30 and 31, 1998, City Council authorized the continued use of local brokers for these types of residential properties.

For the marketing of the City's significant properties, City Council, in the same authority, approved a prequalification process to establish a roster of real estate brokerage firms to market industrial, commercial, institutional and substantial residential properties for the City.

Comments:

To ensure fairness of access to City business, a Request for Proposal (RFP) was issued and provided an opportunity for all established real estate brokerage firms meeting the requirements, to submit a proposal to act for the City in disposing of industrial, commercial, institutional and substantial residential properties on the open market. The RFP will result in the City establishing set rates of commission, determining other appropriate contract terms and conditions and will enable staff to use the services of a real estate broker on an as required basis. With respect to commission fees, City Council, in the authority quoted above, further delegated to the Commissioner of Corporate Services the authority to set specific rates of commission which she deems appropriate for individual listings.

The RFP, administered by Purchasing & Material Supply staff, was advertised in the Globe & Mail and was listed on the City's website. Successful proponents will:

act as the principal contact for the City;

represent the City's interest in the sale of surplus properties;

ensure that the sale is administered by professional, accountable real estate brokers;

have the expertise in administering the sale of industrial, commercial, institutional and/or substantive residential properties;

provide advice to the Executive Director of Facilities and Real Estate on various real estate related matters;

provide a marketing strategy which would see that the City's unique portfolio of surplus properties receives the greatest exposure and achieves the maximum selling price; and

have a strong presence across the new City of Toronto.

To secure the services of a real estate brokerage firm that can properly represent the City's interest and provide a marketing strategy that would see the City's property receive the greatest exposure and the sale being administered by professional, accountable real estate brokers, it was necessary to establish stringent criteria to assess the proposals received.

Seventeen responses were received and submissions were evaluated against a range of criteria including:

the demonstrated ability of the real estate brokerage firm to successfully carry out all aspects of the marketing and sale of surplus properties from the City's unique portfolio, as would be identified from time to time;

the expertise in administering sales for public bodies;

the success record of the brokerage firm over the past year;

the success record of the principal agents over the past year;

the success record of the brokerage firm in marketing and selling industrial, commercial, institutional and/or substantive residential properties;

the professionalism and viability of the marketing strategy;

the rate of commission fees;

the ratios of listings to sales and listing prices to sale prices;

the expertise, resources and ability to successfully market and sell the City's properties;

the ability to provide ongoing consultative advice, including the appropriate method of reporting to the City and the proposed reporting relationship with the City; and

the ability to provide a full critique and summary of the offers received together with providing recommendations.

A Selection Team consisting of three staff members from the Real Estate Section and staff representatives from the Toronto Parking Authority and the Toronto Transit Commission reviewed and evaluated each of the proposals on the basis of the set criteria. Each team member individually graded each proposal.

It is the Selection Team's consensus that six brokerage firms clearly displayed professionalism, expertise, resources, attributes and abilities required to meet the City's needs. The successful proponents not only possess experience in dealing with a wide variety of industrial, commercial and investment properties, but have also dealt with the public sector and have knowledge of processes and policies when dealing with governmental bodies.

Each real estate brokerage firm will be required to enter into a listing agreement at the time a property is listed for sale, which will contain relevant terms and conditions acceptable to the Commissioner of Corporate Services and in a form satisfactory to the City Solicitor. By its adoption of the authority cited above, Council has delegated to the "Commissioner of Corporate Services or her designate" the authority to execute listing agreements on behalf of the City. Practical/legal experience indicates that this authority should be specifically expanded to include the Executive Director of Facilities and Real Estate and the Director of Real Estate Services, i.e. such that any one of the three may sign such agreement on behalf of the City.

At minimum, the roster should be used for the term of this Council but no longer than a five year period or such earlier date as deemed appropriate by the Commissioner of Corporate Services. In addition, the Commissioner of Corporate Services should be given the delegated authority to remove any one or more of the real estate brokerage firms from the roster where, in her sole discretion, she deems it appropriate to do so.

The recommended real estate brokerage firms for inclusion on the roster are listed alphabetically as follows:

(1)Avison Young Commercial Real Estate (Ontario) Inc.

(2)J.J. Barnicke Limited

(3)CB Richard Ellis Limited

(4)Collier Macaulay Nicholls (Ontario) Inc.

(5)Cornerstone Commercial Realty Corporation

(6)Royal LePage Commercial Inc.

In certain situations, there may be extenuating circumstances where it would be to the City's advantage to utilize the services of a real estate broker not on the roster. Should this situation present itself, staff would seek prior Council approval before retaining a broker not on the roster.

Conclusion:

The use of real estate brokers provides valuable assistance to staff and enhances the marketing programs for the sale of City properties resulting in greater financial benefits to the City. Accordingly, for the marketing of significant properties by the City, it is recommended that the roster of real estate brokerage firms set out herein be established.

Contact Name:

L.L. Tymkewycz, 392-7207, Fax No. 392-1880, ltymkewy@toronto.ca, (cs99035)

Margaret Rodrigues

Commissioner of Corporate Services