Yonge/Dundas Redevelopment Project,

Settlement of Expropriation Claims

Salvation Army, Governing Council of Canada,

259 Victoria Street, Toronto (Downtown - Ward 24)

The Strategic Policies and Priorities Committee recommends the adoption of the reports (January 12, 1999, and January 25, 1999) from the Commissioner of Corporate Services.

(Report dated January12,1999, from the

Commissioner of Corporate Services)

Purpose:

To authorize the settlement of all claims for compensation with the owner of 259 Victoria Street resulting from the expropriation of this property as part of the Yonge/Dundas Redevelopment Project.

Funding Sources, Financial Implications and Impact Statement:

Financing has previously been approved by Council and the $2,000,000.00 settlement payment is available in Capital Account No. 216692.

Recommendations:

It is recommended that:

(1)a final settlement be approved with the Salvation Army, Governing Council of Canada, for total compensation in the amount of $2,000,000.00 for its interest in the property located at 259 Victoria Street, in return for a full and final release; and

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

Council Reference/Background/History:

259 Victoria Street is located on the east side of Victoria Street, south of Dundas Street East. The property comprises 6,402 square feet and is improved with a two-storey, above grade, commercial building containing a gross floor area of 8,148 square feet. The owner of the property is the Salvation Army, Governing Council of Canada, which uses the building as a mission, hostel, chapel, and administrative offices.

Subsequent to the favourable decision of the Ontario Municipal Board sitting as a joint board under the Consolidated Hearings Act, an Expropriation Plan was registered on July 28, 1998, to expropriate 259 Victoria Street. An agreement was reached with the Salvation Army whereby Notices of Expropriation and Notices of Possession and an Offer of Compensation were not required to be served by the City.

At its meeting held on July 8, 9, and 10, 1998, Council approved, as amended, Clause 26 of Report No. 10 of The Strategic Policies and Priorities Committee, and thereby authorized the expropriation of the properties required for the Yonge/Dundas Redevelopment Project and directing that final financial settlements with land owners be approved by the Strategic Policies and Priorities Committee and Council.

Comments and/or Discussion and/or Justification:

Agreement has now been reached with the Salvation Army for an all inclusive amount of $2,000,000.00 of which $1,296,000.00 is allocated to the market value of the land and $704,000.00 is allocated in respect of other entitlements including legal costs, appraisal costs, architectural fees, special difficulties in relocation, disturbance damages and interest.

The amount of $1,296,000.00 is, in the opinion of the City's real estate appraiser, consistent with the market value of the property.

The Salvation Army's preferred alternative would have been to relocate the mission and hostel within the community served by the existing facility. After searching and investigating numerous properties within the vicinity, it was determined by the Salvation Army that a replacement property could not be acquired at this time which would provide all of the functional requirements of the existing facility. The sum of $704,000.00 for costs other than land, including special difficulties in relocation, has been reviewed by the City's experts and is considered fair and reasonable.

Although the settlement exceeds the budget estimate, City staff negotiations with the successful proponent to acquire this block have resulted in offers greater than the proponent's original offer and will exceed the $2,000,000.00 settlement amount. This increase in value is as a result of the positive effect that the Yonge/Dundas Redevelopment Project has had on property values in the vicinity.

Conclusion:

The settlement with the Salvation Army, owner of 259 Victoria Street, is considered to be fair and reasonable and should be approved.

Contact Name and Telephone Number:

Doug Wong, Telephone: 392-1858, Fax: 392-1880, dwong@toronto.ca (spp99010.wpd)

(Report dated January25,1999, from the

Commissioner of Corporate Services)

Purpose:

(1)To secure authority to declare 259 Victoria Street and those parcels of public road abutting 259 Victoria Street shown outlined on the attached Map 2, (subject to the road portions being stopped up and closed as public highway), surplus to the City's requirements for the purposes of s. 193(4) of the Municipal Act; and

(2)To secure authority to enter into an agreement with Senator Restaurant Ltd. for the sale of Parcel C which is comprised of 259 Victoria Street and the 5 metre strip of public road abutting to the north and a 50 year lease to permit an advertising tower and connecting pedestrian bridge to be constructed on portions of the lands outlined on Map 2.

Funding:

Revenue in the amount of $2,750,000.00 will be realized in 1999 to offset the overall cost of the Yonge Dundas Redevelopment Project. Additional Revenues will be realized in future years (for 50 years) from the City's participation in net revenues to be generated by the advertising tower.

Recommendations:

It is recommended that:

(1)for the purposes of Section 193(40 of the Municipal Act, the real property municipally known as 259 Victoria Street be declared surplus;

(2)subject to the stopping up and closing of the required portions of the public road shown in heavy outline on Map 2, these lands be declared as surplus;

(3)Council affirm that the sale of 259 Victoria Street is in accordance with and pursuant to Section 28 of the Planning Act;

(4)upon compliance with the requirements of By-Law No. 551-98 and the stopping up and closing of the required portions of the public road, the lands forming Parcel C, (comprised of 259 Victoria Street and the 5 metre strip of public road abutting to the north) be sold to Senator Restaurant Ltd., or such other corporation to be formed by Robert Sniderman, the owner of Senator Restaurant Ltd. (the "Purchaser");

(5)approval be granted to enter into a lease with the Purchaser on the remaining lands to be stopped up and closed, shown on Map 2, for the construction and operation of a tower and connecting pedestrian bridge development;

(6)the main terms and conditions of the sale and lease be as set out in Appendix A;

(7)the sale and lease documents be executed by the Purchaser no later than 45 days after City Council approval and to include any other terms deemed necessary by the Commissioner of Corporate Services and in form satisfactory to the City Solicitor; and

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

Background:

The former City of Toronto Council approved the Yonge Dundas Redevelopment Project at its meeting held on May 6, 1997. It also approved a short list of proponents from the Request for Qualifications process for a Request for Proposals for Parcels B and C as shown Map 1.

The two serious proponents for Parcel C were Senator Restaurant Ltd., who provided the City with an all cash offer and Ethan Allen, who was interested in a significant tax concessions as part of its submission. At its meeting held on October 6, 1997, the former City of Toronto Council approved the proposal of Senator Restaurant Ltd. and authorized City staff to negotiate an agreement with Senator Restaurant Ltd. to secure payment for Parcel C in an amount of not less than $1,025,000.00 and to secure conditions to ensure timely and appropriate development on Parcel C.

Negotiations were placed on hold pending the Ontario Municipal Board hearing of both the planning and expropriation related matters which were appealed by certain landowners. The Ontario Municipal Board, sitting as a Joint Board under the Consolidated Hearings Act, held its hearing between February and May of 1998. The Board's decision was favorable to the City and plans of expropriations were filed in July of 1998 to secure the necessary property interests, including 259Victoria Street, for the Yonge Dundas Redevelopment Project.

A report dated January 12, 1999 is currently before your committee outlining the settlement reached with Salvation Army, Governing Council of Canada, the owner of 259 Victoria Street.

Comments:

Parcel C is comprised of 259 Victoria Street, a 6,400 square foot site improved with a two storey 8,148 square foot building, and a 5 metre strip of public road allowance immediately to the north of 259 Victoria Street. Total area of Parcel C is approximately 7,740 square feet.

The Purchaser has retained the architectural firm of A. J. Diamond, Donald Schmitt and Company, and Yolles Partnership Inc. consulting engineers, to arrive at a development proposal for these lands. This proposal involves the construction of an advertising tower on the traffic island currently located between Dundas Street East and Dundas Square, on the east side of Victoria Street. The tower would have a floor plate of approximately 25 square metres (270 square feet) with retail uses proposed for the ground floor. The tower would be approximately 120 feet in height and would serve as an advertising or media tower. On Parcel C, a multi-level commercial building having a total gross floor area of approximately 33,000 square feet would be constructed. Connecting the tower and commercial building would be a pedestrian bridge constructed over the existing TTC tracks which are occasionally used for streetcar detour purposes. A right of way will be maintained for TTC to permit continued detour of its streetcars.

The proposal requires the stopping up and closure as public road the required portions of road allowance shown outlined on Map 2. At this point, it is anticipated that, subject to appropriate transportation and planning considerations, the triangular parcel of land shown hatched on Map 2 will be closed as public highway and incorporated into the fabric of the Yonge Dundas Redevelopment Project. The main development on Parcel C requires the conveyance of fee simple interest in lands forming 259 Victoria Street and the 5 metre strip to its north. The balance of the rights required for the tower and pedestrian bridge will be secured by way of a 50 year lease.

Results of Negotiations:

Negotiations have been concluded with Robert Sniderman, owner of Senator Restaurant Ltd. and the Term Sheet attached as Appendix A outlines the agreed upon terms and conditions for the transaction. Main points of the business arrangement are as follows:

(a)Purchase Price of $2,750,000.00 plus participation of 20 percent of net revenues from the advertising tower development;

(b)Additional payments to the City if additional densities are approved above current permitted density for Parcel C;

(c)Sale of freehold interest in Parcel C lands including the 5 metre strip adjoining to the north; 50 year lease of lands required for construction of the advertising tower and a pedestrian bridge connecting the tower to the main building on Parcel C;

(d)Deposits of $100,000.00 upon City acceptance and an additional deposit of $175,000.00 upon waiver of Purchaser's Initial Conditions;

(e)Closing Date of September 30, 1999;

(f)Purchaser's Initial Conditions to be satisfied within 120 days after acceptance;

(g)Closing conditions include the stopping up and closing of the portions of road allowance required for the Purchaser's proposed development.;

(h)The City has the right to repurchase the lands at the Purchase Price and terminate any lease agreement if the Purchaser does not commence construction within 9 months of closing; and

(i)The Purchaser has limited assignment rights for the first 5 years after substantial completion of the development;

The offered purchase price in the amount of $2,750,000.00 with additional net income participation from the advertising tower has been reviewed by the City' real estate appraiser, Mr. Robert Robson, AACI of Robson, McLean and Associates. Mr. Robson has advised that based upon a review of the tentative details for the proposed sale supplied to date, the proposed $2,750,000.00 purchase price fairly reflects market value for the proposed density to be utilized. Further, the proposed rental participation (at 20 percent of net revenue) represents a reasonable return to the City for the value arising from the advertising opportunities on the proposed media tower that is likely to be generated by the Yonge Dundas Redevelopment Project.

Section 193 (4) of the Municipal Act requires that before selling any real property, a municipality must declare the property surplus. In the present instance, however, 259 Victoria Street was acquired as part of a Community Improvement Plan adopted by the City pursuant to Section 28 of the Planning Act. There is an apparent inconsistency in the provisions of the two Acts. This sale is not because 259 Victoria Street is surplus to the City's needs, rather the sale is to implement the City's objectives as expressed in the Community Improvement Plan. Therefore, if City Council approves this business arrangement, the lands forming 259 Victoria Street should be declared surplus solely for the purpose of and in accordance with Section 193 (4) of the Municipal Act, but at the same time, Council should affirm that 259 Victoria Street was acquired and will be disposed of in accordance with the objectives of the Community Improvement Plan and pursuant to Section 28 of the Planning Act.

Conclusion:

The agreement with Senator Restaurant Ltd. is considered to be fair and reasonable and should be approved, subject to the stopping up and closing of the required portions of public road.

Contact Name:

Doug Wong, Telephone: 392-1858, Fax: 392-1880, E-mail: dwong@toronto.ca (spp99016.wpd)

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Appendix A

Term Sheet - Development Parcel C

Vendor:City of Toronto (the "City" or the "Vendor")

Purchaser/Tenant:Senator Restaurant Ltd. or a corporation to be incorporated of which Robert Sniderman will own no less than 25 percent interest (the "Purchaser")

Property Description:Freehold: Development Parcel C under Plan 1, Zoning By-law 1997-0194, including entire 5 metre strip adjoining to the north

Leasehold:Portions of road allowance required for the advertising tower and connecting pedestrian bridge

Purchaser's Proposed

Development:to be the equivalent, or generally similar, to the proposed development of Parcel C and the tower lands submitted by the Purchaser in its response to the City's Request for Proposals, including 3070 square metres of non-residential gross floor area on Parcel C, approximately 75 square metres of non-residential gross floor area (comprised of three floors) in the 120 foot high tower to be constructed on the tower lands, and a bridge between the building and the tower for a pedestrian walkway

Purchase Price:$2,750,000.00

Deposit:$50,000.00 upon submission of offer, $50,000.00 upon the City's acceptance, and $175,000.00 upon waiver of Purchaser's Initial Conditions; deposit to be held and invested by the City with interest earned credited to the Purchaser on closing

Balance of Purchase Payable on closing, subject to the usual adjustments

Price:

Additional Payments:If the Purchaser changes its proposed development and successfully applies for a rezoning of Parcel C prior to substantial completion of construction of its development, the Purchaser shall be required to make an additional payment to the City equal to the increase in the non-residential gross floor area multiplied by $60.00 per square foot; for greater certainty, this obligation will be at an end upon the Purchaser completing a development with non-residential gross floor area equal to or less than that currently proposed for the Purchaser's proposed development of Parcel C

Closing Date:September 30, 1999, subject to a right of extension for one period of 3 months if the conditions of closing are not satisfied or waived by the Purchaser and subject to a further right of extension for up to an additional 3 months upon payment of interest on the purchase price at the annual rate of the CIBC "prime rate" plus 1 percent for the period of the second extension

Conditions: (1)Purchaser's Initial Conditions - to be satisfied within 120 days after acceptance, including:

(i)general due diligence including title,

(ii)environmental audit,

(iii)Purchaser satisfying itself with respect to the City's requirements for parking and loading,

(iv)Purchaser obtaining written assurances with respect to the requirements of TTC for streetcar tracks,

(v)Purchaser satisfying itself with respect to the costs of utility relocation, and

(vi)mutually satisfactory terms and conditions of bridge and tower lease to be negotiated between the City and the Purchaser;

(2)Conditions of Closing - to be satisfied by Closing, including:

(i)Purchaser making application, at its expense, for City to close and authorize the conveyance or lease (as applicable) to the Purchaser of that portion of the road allowance required for the Purchaser's proposed development;

(ii)Purchaser obtaining, at its expense, satisfactory rezoning of the tower lands (if required) and other necessary governmental approvals to permit the Purchaser's tower and proposed signage;

(iii)Purchaser obtaining, at its expense, any necessary minor variances to permit the Purchaser's proposed development on Parcel C;

(iv)Purchaser obtaining, at its expense, site plan approval for its proposed development;

(v)City delivering vacant possession of the lands on Closing (without being required to demolish the existing building);

(vi)no material delay in the development and construction schedule for, and no material change in City's policies in respect of, the "Metropolis" development and the Dundas public square ; and

(vii)City approvals for the Purchaser's proposed development shall confirm that the purchase price and additional payments specified above are "all inclusive" such that the Purchaser will be exempt from any "benefitting levy" or similar levy or charge implemented by the City in connection with the Yonge Dundas Redevelopment Project

(3)Covenants - The City and the Purchaser shall take all necessary steps and use reasonable efforts to satisfy conditions as soon as possible (Purchaser to acknowledge that development will be subject to all of the City's normal procedures for development proposals and the entering into of the Purchase Agreement does not fetter the City's discretion as a municipal authority);

Repurchase Option:Purchaser shall acknowledge the City's intention that the transaction is only being entered into to facilitate the Purchaser's development. If the Purchaser does not complete its working drawings, apply for a building permit and commence construction of the proposed development within 9 months following Closing or fails at any time thereafter to proceed with due diligence to complete construction, subject to force majeure, the City shall have a right to repurchase the lands and terminate any bridge license agreement upon payment to the Purchaser of the amount equal to the original purchase price paid by the Purchaser.

Bridge and Tower Lease:

Landlord:City of Toronto

Tenant:Purchaser

Term:50 years less one day

Rent:$2.00

Participation Rent:the City shall be entitled to receive 20 percent of the net revenue from the advertising tower; net revenue shall be equal to all gross revenue derived from the tower, less the operating costs, utilities, realty taxes, reasonable management fees of a third party sign management company and amortized capital costs reasonably allocated to the tower (all reasonable development and construction costs amortized on a straight-line basis over 10 years using an interest rate of 8 percent)

Use Restrictions:retail and signage uses permitted from time to time under City zoning by-laws

Net Lease:Purchaser responsible for all development and construction costs for the Purchaser's proposed development, taxes, utilities and operating costs

Other LeaseGeneral terms and conditions to be substantially based on the City's

Conditions:standard form.

Other General Terms and Conditions Applicable to both Sale and Lease:

Assignment/Sale:no assignment by the Purchaser prior to the fifth anniversary of substantial completion of the Purchaser's proposed development (except to joint venture partner(s) and lender(s) for security purposes and provided Robert Sniderman maintains a minimum 25 percent interest).

Documentation:the sale and lease documents be executed by Senator Restaurant Ltd, or such corporation to be formed, no later than 45 days after City Council approval and to include any other terms deemed necessary by the Commissioner of Corporate Services to protect the City's interest and in form and content satisfactory to the City solicitor

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(Copies of the maps attached to the foregoing reports were forwarded to all Members of Council with the January 26, 1999, agenda of the Strategic Policies and Priorities Committee, and copies thereof are also on file in the office of the City Clerk.)