Sale of 548 Front Street West and
10 Portland Street (Municipal Carpark 96)
The Corporate Services Committee recommends the adoption of the report (April 14, 1998) from the President,
Toronto Parking Authority:
Purpose:
To sell the above-noted property while maintaining some public parking, and use the proceeds from the sale of the
property to acquire an alternative site in order to better meet the parking demands of the King/Spadina area. The City will
retain ownership of a portion of the site, on which the Purchaser must construct 35 public parking spaces to be operated by
the Parking Authority.
Funding Sources, Financial Implications and Impact Statement:
The net proceeds (excluding sales commission, legals, and environmental consultation) to the Toronto Parking Authority
will range between $3.86 million to $4.1 million depending upon the amount of environmental remediation required. The
proceeds will be used to purchase an additional property in order to meet the remaining parking shortfall in the area. In
addition, the Toronto Parking Authority will own 35 parking spaces valued at approximately $420,000.00 ($12,000.00 per
space).
Recommendations:
It is recommended that:
(1)Council approve an Agreement of Purchase and Sale dated March 13, 1998, and an associated Amending Agreement
for the sale of 548 Front Street West and 10 Portland Street to Cityscape Niagara Corp. at a purchase price of
$4,100,000.00 which will be subject to an adjustment for environmental remediation costs to a maximum of $240,000.00.
These funds will be placed into an environmental reserve fund which can be used by the Purchaser to deal with
environmental issues relating solely to Volatile Organic Compound (VOC) located in the ground water at the northwest
portion of the site. Following remediation, any unused amount will be transferred to the Parking Authority. The agreement
requires the Purchaser to construct a 35 space parking garage, the cost of which is included in the purchase price;
(2)the Purchase and Sale Agreement be satisfactory in form to the City Solicitor; and
(3)the appropriate Civic officials be authorized to take the necessary steps to implement the foregoing.
Council Reference/Background History:
At its meeting of October 6 and 7, 1997, City Council gave consideration to Clause No. 83 of Report No. 23 of The
Executive Committee, titled ASale of 548 Front Street West and 10 Portland Street, (ward 5)@. At that meeting, Council
took the following action:
(1)Authorized the City and the Parking Authority to enter into a Purchase and Sale Agreement for the sale of 548 Front
Street West and 10 Portland Street at a purchase price not to be less than $4.6 million which includes cost adjustments for
remediation, subject to ratification by the Parking Authority of Toronto Board of Commissioners;
(2)directed that the Purchase and Sale Agreement be satisfactory in form to the City Solicitor;
(3)authorized the appropriate Civic officials to take the necessary steps to implement the foregoing; and
(4)instructed that, should the Parking Authority of Toronto propose to incorporate surface parking at this location, they
would be required to seek further approval from City Council at the time of application for site plan approval.
At that time we informed City Council that the Purchase and Sale and Agreement with Lakeshore Toolworks Limited
previously approved by Council at its meeting of July 14, 1997, (Clause No. 32 of Report No. 18 of the Executive
Committee) was terminated because of the Purchaser=s inability to satisfy its conditions. We believed that the property was
very marketable and we were seeking a new purchaser. We proposed that Council authorize the Parking Authority to sell
the property when it found a purchaser, provided that any agreement entered into was for a price not less than $4.6 million.
This was the amount that we felt that the City could obtain in the market that existed six months ago. However, since that
time there has been an increase in the number of residential proposed developments and as a result land values have
declined. We have received an appraisal report dated April 13, 1998, from The Morassutti Group, real estate appraisers,
and they have determined that the appraised value of the land is $3.8 million without cost adjustments for remediation.
Comments and/or Discussion and/or Justification:
Subsequent to City Council=s approval to continue to proceed with the sale of the property, the Toronto Parking Authority
directed its agent, CB Real Estate Group Canada Inc., to re-list the property. A potential Purchaser has come forward and
an agreement has been negotiated, subject to certain conditions, such as approval from the Parking Authority Board of
Directors and City Council. The Parking Authority=s Board of Directors have approved the transaction.
Summarized below are the basic terms and conditions of the Purchase and Sale Agreement and the associated Amending
Agreement with Cityscape Niagara Corp.:
(1)Purchase Price: The purchase price of $4,100,000.00 is payable as follows:
(i)$150,000.00.00 by certified cheque payable to CB Commercial Real Estate Group Canada Inc., in trust together with
the Offer;
(ii)$250,000.00 by certified cheque payable to the agent in trust together with the execution of the amending agreement;
(iii)$250,000.00 by certified cheque payable to the agent in trust on July 10, 1998;
If we receive approval from City Council, the deposits noted above are non-refundable;
(iv)The balance of the purchase price of $3,450,000.00 will be paid to the Parking Authority on closing of which
$240,000.00 will be placed in an environmental reserve fund (see point 5 re: details).
(2)The closing of this transaction will take place on August 28, 1998.
(3)Parking Garage: Cityscape Niagara Corp. will construct 35 parking spaces at no cost to the Parking Authority and will
deliver ownership to the TPA upon completion of the spaces. The parking spaces will be designed in accordance with
TPA=s specifications including pedestrian and disabled access and signage as mutually agreed upon by TPA and
Cityscape. The Toronto Parking Authority must be satisfied with the preliminary design of the garage within 30 business
days following waiver or satisfaction of the Purchaser=s conditions.
(4)Purchaser=s Conditions: In the Amending Agreement, the Purchaser is waiving all conditions related to the agreement.
(5)Environmental Reserve Fund: It has been determined by both parties that there is an environmental issue relating to
Volatile Organic Compound (VOC) located in the ground water at the northwest portion of the property. In the event that
the issues relating to the VOC contamination have not been resolved prior to closing, the sum of $240,000.00 will be
deducted from the purchase price and placed in an environmental contingency fund on closing. This money will be
available to the Purchaser to the extent that remediation of the VOC contamination is required. The Toronto Parking
Authority will have the approval rights regarding the expenditure of these funds as they relate to the cleanup of the
VOC contamination. If the environmental costs, once remediation has been completed, are below $240,000.00, the Parking
Authority will receive all excess proceeds. In the event that the remediation costs are above $240,000.00, all financial risks
and costs will be borne by the Purchaser. Furthermore, Cityscape will assume all financial risks and environmental liability
for any other contaminated soil which is contained on the property. It is expected that remediation will be concurrent with
the commencement of the project construction.
The Purchaser=s environmental consultant and our consultant, Water Earth & Associates, have determined that there are
certain environmental issues that must be dealt with prior to any development occurring on the site. There are two main
issues of concern. One issue relates to the contamination level of the soils. It has been agreed by both the Toronto Parking
Authority=s consultant and the Purchaser=s consultant that the cost to remediate the soils will be approximately
$200,000.00. As a result, we have negotiated an adjustment to the purchase price reducing it from $4.2 million to $4.1
million, the Purchaser having assumed 50 percent of these costs. In addition, there is an issue related to the VOC
contamination. It has been estimated by our consultant that the cost to remediate the VOC contamination is approximately
$145,000.00. The Purchaser=s consultant estimates the cost to be $300,000.00. Since there is such a large discrepancy
between the two consultants= estimated cost, the Purchaser and the Parking Authority have agreed to set up an
environmental contingency reserve in the amount of $240,000.00 which will be deducted from the purchase monies and
held in trust until remediation has been completed. It is expected that the expenditure of these funds will occur at the time
the Purchaser commences construction of the residential development. In the event that the cost to remediate the VOC
contamination is less than $240,000.00, then the balance of the proceeds from the fund will be returned to the Authority. In
the event that the cost to remediate is more than $240,000.00 all remediation costs above this amount will be the sole
responsibility of the Purchaser.
Our consultant has determined that the source of the VOC contamination is from the adjacent property. We are obtaining a
legal opinion from outside counsel of the possible courses of action that we may take in order to recover the environmental
costs. No course of action will be undertaken before consulting with the City Solicitor.
Purchaser=
The principals of Cityscape Developments are John Berman, Matthew Rosenblatt, David Jackson and James Goad. These
principals are successful developers of in-fill housing in the west area of downtown Toronto. Their projects include the
Wellington Worx building on Wellington Street West and The Movie House on College Street, both of which are fully sold
out. They are now developing Cityscape Terrace, a 106 unit development at Richmond and Augusta.
David Jackson and James Goad have additional experience in the development of in-fill residential having developed a
number of smaller projects throughout the west area of Toronto over the past six or seven years including One Columbus
and 200 Clinton Street. The proposed development on this site will be in-fill housing which is similar to their other
development projects.
The Parking Authority staff have determined the supply of public parking spaces in this location exceeds the demand with
the exception of when Skydome has events. Being located between Bathurst and Spadina on Front Street, there is little
short term parking generated. The proceeds from the sale of the property will be used to acquire an alternative site in order
to better meet the parking demands of the King/Spadina area. It is estimated that the Parking Authority will only require
approximately 60 spaces in the area of which 35 spaces can be accommodated on the Portland site with the remainder on
another site yet to be identified.
We believe that this is a good business decision for both the City and the Toronto Parking Authority. The net proceeds
(excluding the sales commission, legals and environmental consultation) to the Parking Authority will range between $3.86
million to $4.1 million depending upon the amount of remediation required. In our previous report to Council, we obtained
approval to sell the property for not less than $4.6 million. At the time of receiving that approval, we had not negotiated a
final agreement and we believe as stated before, land values since that time have declined.
Given a current appraised value of $3.8 million which does not include remediation costs, we have negotiated a deal in
excess of this amount. In addition, we will retain ownership of 35 fully constructed spaces. As indicated below, the total
value of this arrangement is $4,280,000.00.
Also, in the previous agreement, there were outstanding issues regarding surface parking which have been resolved in this
agreement as the public parking component will be located within a garage.
Maurice J. Anderson
