Final Approvals - Yonge Dundas Redevelopment Project

(Downtown)

The Strategic Policies and Priorities Committee recommends that:

(1)the report (June 29, 1998) from the Commissioner of Urban Planning and Development Services be adopted;

(2)approval of final financial settlements with landowners be granted by the Strategic Policies and Priorities Committee and Council; and

(3)the report (June 29, 1998) from the Commissioner of Urban Planning and Development regarding financial matters, which was forwarded to Members of Council under confidential cover, be received.

The Strategic Policies and Priorities Committee reports having requested that the following reports be submitted directly to City Council on July 8, 1998:

(a)the City Auditor to review the financial statements and business plans for the Yonge Dundas Redevelopment Project and report on the financial risks to the City;

(b)the Chief Administrative Officer to report on a critical path and a process to raise funds for this project under the Section 37 Agreements and/or the use of benefitting levies; and

(c)the Commissioner of Urban Planning and Development Services to report on all the figures related to costs and benefits to the City during the next 10 years.

The Strategic Policies and Priorities Committee submits the following report (June 29, 1998) from the Commissioner of Urban Planning and Development Services:

Purpose:

To report on the decision of the Joint Board (Ontario Municipal Board and Board of Inquiry) respecting the Yonge Dundas Redevelopment Project and to seek the endorsement of Council to proceed with the project including the funding and the expropriation of certain lands.

Funding Sources, Financial Implications and Impact Statement:

Gross Costs: Previously estimated at $53 million; unchanged

Net Costs: Previously estimated at $14.4 million; unchanged

Funding Source: Former City of Toronto By-law 1997-0197 provides authority for short term borrowing from reserve pool of up to $53 million, subject to certain limitations; Former City of Toronto Council May 1997 approved permanent financing of $14.4 million and directed that the source of funds be reserves, reserve funds, debentures, or a combination of the above and that the exact source of financing be determined as the project nears to completion.

Funds to cover the expenditures identified in this report are to be charged to Capital Account #216692

Financial Implications and Impact Statement:

Project objective has been to minimize financial risk and maintain reasonable costs. Expenditure in keeping with achieving a major strategic public investment at a key location and will be offset over time with direct and indirect tax benefits and other direct financial benefits to the City which are associated with the revitalization of this area of the downtown core.

Recommendations:

It is recommended that:

(1)the commitment to proceed with the Yonge Dundas Redevelopment Project be endorsed;

(2)the Project funding provisions contained in the former City of Toronto By-law 1997-0197 including the gross expenditure of $53 million, be endorsed;

(3)the former City of Toronto's approval of permanent financing of $14.4 million for this Project and the source of funds, being reserve funds, debentures, or a combination of the above, be confirmed and the exact source of financing be determined and reported by the Chief Financial Officer and Treasurer to the Strategic Policies and Priorities Committee including consideration of ways and means which may be employed to reduce the net cost of the Project;

(4)(a)the funding amounts and sources for implementation costs previously identified for the Yonge Dundas Redevelopment Project including funding for the design and development of the public square, to be allocated in the 1999 Urban Planning and Development Services Capital Account #216692 and funding for incidental and property management costs, be identified by the Chief Financial Officer and Treasurer in consultation with the Commissioner of Urban Planning and Development Services and reported to the appropriate committee for authorization for the allocation of these funds;.

(b)the budget for the Yonge Dundas Redevelopment Project Capital Account #216692 be increased by $36,300,000.00 for 1998;

(c)the cash flow projection shown in Table 2 contained in this report be adopted and approved as the annualized budget of the project for the next three years;

(5)the execution of an amending agreement between the City of Toronto and PenEquity Management Corporation, as outlined in this report, be authorized;

(6)the execution of an agreement between the City of Toronto and Ryerson Polytechnic University based on the Memorandum of Agreement previously authorized by the former City of Toronto as amended by the provisions outlined in this report, be authorized;

(7)the expropriation of the following properties municipally known as 285 Yonge Street, 289 Yonge Street, 299 Yonge Street, 1 Dundas Street East, 311 Yonge Street, 313 Yonge Street, 317 Yonge Street, 319 Yonge Street, 323 Yonge Street, 327 Yonge Street, 38 Dundas Street East and 259 Victoria Street all as shown on Map 2 attached to this report be approved and the following be directed:

(a)the filing of a Plan of Expropriation on or before July 15, 1998 be undertaken provided the following agreements are executed in a form and content satisfactory to the City Solicitor in consultation with appropriate City officials:

(i)an agreement between the City of Toronto and PenEquity Management Corporation;

(ii)an agreement between the City of Toronto and Ryerson Polytechnic University; and

(iii)a lease between PenEquity Management Corporation and AMC Theatres of Canada, Inc.;

(b)the Chief Financial Officer and Treasurer or designate and the City Clerk or designate be authorized and directed to execute a Certificate of Approval in the form prescribed in the Expropriations Act;

(c)authority be granted to the Commissioner of Corporate Services to sign the Notices of Expropriation and Notices of Possession on behalf of the City;

(d)offers of compensation, in compliance with the requirements of the Expropriations Act, to the registered owners, and/or whomever may be entitled to be served, be approved up to the amount of the appraisal reports obtained by the Commissioner of Corporate Services, and that the appropriate City officials be authorized to make payment in accordance with accepted offers of compensation and to otherwise settle the compensation claims within the limits of their authority and further be authorized to complete these transactions; prepare the necessary documents releasing the City from any claims arising from the expropriation of land; pay any interest charges or expenses incurred by the City; and pay any reasonable legal and appraisal fees associated therewith;

(e)the lands be placed under the jurisdiction of the Commissioner of Corporate Services until required for purposes as outlined in this report;

(f)the appropriate City officials be authorized to take such action as may be necessary to complete these transactions and/or take possession of the land involved including the preparation and registration of the Expropriation Plan and service of the required documents such as Notice of Expropriation, Notice of Possession, Notice of Election, Without Prejudice Offers, Appraisal Reports, etc.; and

(g)notwithstanding the expropriation, negotiations already underway with Optical Properties (38 Dundas Street East) and the Salvation Army (259 Victoria Street) continue with a view to potentially resolving their particular issues;

(8)continued participation in a collaboration with the Yonge Street Business and Resident Association Inc. in undertaking the Downtown Yonge Street Regeneration Program be approved on the following basis:

(a)a grant of up to $81,000.00, conditional on matching funds being raised by the Yonge Street Business and Resident Association Inc., be approved from Capital Account #216692 for 1998;

(b)the grant be deemed to be in the interest of the municipality;

(c)a Grant Agreement be entered into with the Yonge Street Business and Resident Association Inc. to contain such terms and conditions as set out in the existing Grant Agreement with said Association and other such terms and conditions as deemed necessary by the City Solicitor and the Commissioner of Urban Planning and Development Services;

(d)the Program continue to be administered by the Commissioner of Urban Planning and Development Services and the existing Steering Committee continue to oversee the program and the account; and

(e)the release of any funds be subject to the satisfactory completion of a Declaration Form regarding the adoption of the City of Toronto's non-discrimination policy;

(9)the filing of a Site Plan Approval application by PenEquity Management Corporation for Parcel A lands acquired by the City through expropriation be authorized and the Commissioner of Corporate Services be instructed to provide an authorization for such application at the appropriate time;

(10)the potential variances to the Project generally described in this report be endorsed in principle and the Commissioner of Urban Planning and Development Services be directed to provide all reasonable efforts to assist PenEquity Management Corporation in achieving approvals for the variances, if required, through the Committee of Adjustment, including appearance at the Ontario Municipal Board, if necessary;

(11)the City Solicitor, in consultation with the Commissioner of Urban Planning and Development Services and the Commissioner of Corporate Services be instructed to draft a "Nathan Phillips Square"-type Municipal Code Amendment to establish regulations for the use and programming of the public square on Parcel D and it be forwarded for consideration to City Council, through the appropriate Committee;

(12)the appropriate City officials be directed to take whatever steps are necessary to undertake the implementation of the Yonge Dundas Redevelopment Project as outlined in this report;

(13)the City Clerk be directed to notify the Ontario Municipal Board of City Council's decisions respecting this matter immediately following the Council meeting of July 8, 9 and 10, 1998;

(14)leave be granted for the introduction of the necessary Bills in Council to give effect thereto; and

(15)the appropriate City officials be authorized and directed to the steps necessary to give effect to the foregoing.

Background:

The Yonge Dundas Redevelopment Project is the key piece of the Downtown Yonge Street Regeneration Program, a public-private initiative aimed at revitalizing Yonge Street between College and Queen Streets. This initiative had its origins in 1994 (chronology attached) with a request from the former City of Toronto Council to develop a plan for the improvement of Yonge and Dundas and from concerns raised by the business and resident community about Yonge Street's diminished role as the City's traditional main shopping street and the street's generally deteriorating character, appearance and level of public safety.

The Yonge Street Business and Resident Association initiated the Downtown Yonge Street Regeneration Program in 1996 with a specific work program which included facilitating a redevelopment project to create new retail and entertainment space on Yonge Street and an improved shopping environment. The Yonge Dundas Redevelopment Project was conceived of and planned during 1996/97 and the former City of Toronto Council approved the project, its funding and related planning regulations in May, 1997.

Project Description:

The Project involves the assembly of land on the east side of Yonge Street north and south of Dundas Street to create four parcels (see maps 1 and 2 attached).

(a) Parcel A includes the first six properties north of Dundas Street up to but not including the existing HMV store, and the air rights over the Ryerson parking garage. Through a Request for Qualifications process and industry consultations which were held in late 1996 and early 1997, the former City of Toronto selected a private developer to purchase and develop this parcel. An agreement to sell the land was subsequently entered into with PenEquity Management Corporation. Together with the use of the air rights over the Ryerson parking garage, the Yonge frontage lands are to be developed by PenEquity for "Metropolis", an "urban entertainment centre" containing 385,000 square feet for street-related retail, restaurant and entertainment space in "vertical retailing" formats and a cinema "megaplex" with up to 30 screens operated by AMC Theatres of Canada;

(b) Parcel B has longer term redevelopment potential for hotel and residential uses with possible interim use for retail space. The parcel contains the City-owned building at 277 Victoria Street and 38 Dundas Street East, a small triangular property containing a retail building. The former City of Toronto Council authorized staff to negotiate an agreement with the owners of 38 Dundas Street East in order to maintain a development option for Parcel B that would include both properties;

(c) Parcel C is 259 Victoria Street which is owned by the Salvation Army. The former City of Toronto, through the Request for Proposals process, selected Senator Restaurants Limited to negotiate the purchase of the property to complete a retail edge around the square on Parcel D. City officials are currently negotiating arrangements with Senator Restaurants and the Salvation Army to complete this transaction; and

(d) Parcel D includes four properties fronting on Yonge Street between Dundas Square and Dundas Street, the City lane and the lot operated by the Parking Authority at 25 Dundas Street East. The proposed use is a public square with approximately 250-space below grade parking facility operated by the Parking Authority. The square would be developed following a competitive design process and would be subject to a Municipal Code Amendment similar to that which governs the use of Nathan Phillips Square.

Previous Approvals Secured:

Subsequent to the former City of Toronto Council's approvals, the Minister of Municipal Affairs and Housing issued his notice of decision to approve the various planning regulations on June 19, 1997. The Financial Advisory Board reviewed the proposal and approved it on July 15, 1997.

The associated land expropriation process commenced in September 1997 after receiving certain approvals required from the Minister of Municipal Affairs and Housing. Notwithstanding the initiation of the expropriation process, the City made two series of offers to landowners in the area and has maintained an "open door" with respect to achieving negotiated land acquisitions.

Both the planning and the expropriation related-matters were appealed by certain landowners in the summer and fall of 1997. The Ontario Municipal Board, sitting as a Joint Board under the Consolidated Hearings Act, held a hearing on these matters between February and May 1998 and rendered its decision on June 5, 1998, approving the project as proposed by the former City of Toronto and the Yonge Street Business and Resident Association.

Decision of the Joint Board (Ontario Municipal Board):

The Board dismissed all appeals and approved Official Plan, Community Improvement Plan and Zoning By-law amendments as approved by the former City of Toronto Council in May 1997 and as modified in October 1997. The Board withheld its order pending fulfilment of conditions which are outlined below.

The Board, acting in its role as Inquiry Officers under the Expropriations Act, also found that "the taking of the land is fair, sound and reasonably necessary in the achievement of the objectives" of the City and by this decision reports to City Council, the approval authority, that "the application for approval has merit and should proceed".

The Board's decision, as amended by their order of June 22, 1998, is conditional on the following:

(a)that City Council "endorse the commitment to proceed with the project" and "commit the necessary funding and confirm its intent to proceed with the expropriation". The commitment must be made by July 10, 1998 and plans of expropriation must be filed by July15, 1998;

(b)finalizing and confirming the PenEquity/AMC lease and the PenEquity/City Agreement by July 15^th ; and

(c)fulfilling certain planning conditions by August 30^th including:

(i)the Section 37 Agreement required by the Official Plan and Zoning By-law;

(ii)Site Plan Approval of Parcel A (Metropolis by PenEquity) including certain specific issues relating to the TTC and the design and function of sidewalk areas; and

(iii)for the Public Square, a municipal code amendment to regulate use and an approved design process.

Other important matters which the Board did not include in its conditions which should be addressed contemporaneously include:

(i)the Ryerson Agreement with the City which will be assigned to PenEquity Management Corporation;

(ii)applications to stop up and close affected lanes and portions of streets; and

(iii)Parcel B and C negotiations.

Overview of Project Benefits:

While the project has always been estimated to involve a net cost to the City, as a "city building" or community improvement project, it is with some considerable benefit that this investment in infrastructure is being made. The social and economic well-being of the City was clearly recognized by the Ontario Municipal Board as the principle motivation for this undertaking, recognizing that "infrastructure" in the late 1990's means supporting tourism and economic development by regenerating this area of the traditional downtown core, especially on the east side of Yonge Street.

The benefits of this undertaking include:

(a)one-acre public square in an area recognized as deficient in open space by the Official Plan;

(b)250-space below-grade parking garage;

(c)high quality retail and entertainment space within the redevelopment project and spin-off redevelopment in the Yonge and Dundas vicinity;

(d)Ryerson Polytechnic University: use of 12 cinemas (up to 2800 seats) for lecture hall purposes during the morning; guaranteed parking revenues; physical improvements to the Victoria Street streetscape; an "address" on the new square for this important downtown institution;

(e)projected direct tax revenue (present value) and levies of $15.1 million and spin-off tax revenue (present value) of $24.9 million;

(f)projected direct increase in employment of between 700 and 1300 jobs not including construction jobs or jobs from spin-off redevelopment;

(g)improving and maximizing use of infrastructure for the important and growing tourism sector of the economy; and

(h)providing economic and social stability for a neglected part of the traditional downtown core; addressing social issues including crime and safety especially related to the drug trade.

Development Strategy:

Pursuant to the Community Improvement powers of the Planning Act and the former City of Toronto's Official Plan community improvement policies, the development strategy for this project has involved the following:

(a)acquisition and sale of land at a strategic location for retail and entertainment uses;

(b)acquisition of land for a public square with below grade parking to be operated by the City;

(c)on-going feasibility testing involving outside expert consultants;

(d)on-going risk minimization through:

(i)maintaining an open offer to negotiate land acquisition with land owners to provide greater certainty;

(ii)keeping up with current information on potential land acquisition and business disturbance costs;

(iii)building cushions into the City/PenEquity agreement in the event of land cost increases; and

(iv)providing for mechanisms which will over time permit the recovery of the City's net costs eg. Section 37 payments from redevelopment in the vicinity.

Expropriation Process:

It is recommended that City Council, as the Approval Authority under the Expropriations Act, approve the application as requested, accepting the report of the Ontario Municipal Board, as Inquiry Officers, that the taking of the lands is fair, sound and reasonably necessary in the achievement of the objectives of the City for the reasons identified herein.

The expropriation involves 10 properties fronting on Yonge Street, from 285 to 327 Yonge Street and two properties to the east along Dundas Street at Victoria Street - 38 Dundas Street East and 259 Victoria Street (also known as 37 Dundas Street East). It is considered appropriate in the context of this project and the nature of the properties being expropriated that possession of these properties not be required until January 15, 1999, after the 1998 holiday season.

The former City of Toronto Council authorized negotiations with the owners of the Dundas Street East properties - Optical Properties and the Salvation Army respectively - with a view to achieving the project goals in a timely and appropriate manner. With respect to Optical Properties, discussions have been held respecting their potential involvement in a development option on the property. With respect to the Salvation Army, discussions have been held respecting their potential relocation in the vicinity. In order to comply with the conditions set down by the Board, the expropriation of these properties should proceed with the proviso that negotiations already underway with these owners continue with a view to potentially resolving their particular issues.

Project Funding:

The former City of Toronto Council passed By-law 1997-0197 providing authority for short term financing up to $53 million to be provided from the City's working capital and other reserves (General Fund). Permanent financing of $14.4 million for the Project was approved by the former City of Toronto and it was directed that the source of funds be reserves, reserve funds, debentures or a combination of the above and that the exact source of financing be determined as the Project nears completion.

It is recommended that City Council endorse the Project funding provisions contained in the former City of Toronto By-law 1997-0197 and that City Council confirm the former City of Toronto's approval of permanent financing of $14.4 million for this project and confirm that the source of funds be reserve funds, debentures, or a combination of the above with the exact source of financing to be determined by the Chief Financial Officer and Treasurer.

(a)Funding Authorities:

On December 9, 1996, the former City of Toronto Council approved a Stage Two Feasibility and Approvals Process budget of $750,000.00 for the Yonge Dundas Redevelopment Project. Subsequently, on May 6, 1997, the former City of Toronto Council directed that short term interim financing up to $53.0 million be provided from the former City's working capital and other reserves (General Fund) and approved permanent financing of $14.4 million for the project under the authority of By-law 1997-0197 and directed that the source of funds be reserves, reserve funds, debentures, or a combination of the above and that the exact source of financing be determined as the project neared completion.

It should be noted that on July 15, 1997, the Financial Advisory Board approved the short term financing plan subject to the following conditions: that the total cost of the project not exceed $56.7 million and the net cost to the former City of Toronto not exceed $14.4 million.

(b)Current Status and Projections:

Table 1, below, shows the fund status, as of receipt of OMB approval of the Project:

Table 1

While Table 1 shows a "deficit", expenditures have not exceeded the former City of Toronto Council May 1997 total Project funding authority which was intended to cover all soft costs from the commencement of the Project.

Stage Two funding in the amount of 750,000. was provided to finance conditional acquisition agreements for land acquisitions, continue existing consultants working on the Project, and retain additional consultants. In July 1997, the Board of Management authorized $772,163.00 in specific consultant studies, and in November 1997, Board of Management authorized an additional $493,174.00 in O.M.B. specific consultant studies. The 1997 funding grant for the Yonge Street Business and Resident Association Inc., and donations to same, have been processed through this fund. It is anticipated that the Association will receive funding in the amount of $81,000.00 through this account in 1998 (discussed further below). The balance of expenses and commitments incurred are of an administrative nature (salaries, advertising, presentation materials, etc.) dealing with land acquisition and hearings.

The initial allocation of $750,000.00 has not been increased pending the O.M.B. decision brought down on June 5, 1998. An additional allocation of $1.3 million will be required to offset existing administrative expenditures of $781,000.00 and commitments of $519,000.00 to year end (discussed further below).

The plans of expropriation are scheduled to be registered on or before July 15, 1998. Within three months, ie. by October 15, 1998, Offers of Compensation will be presented to all property owners. The property owners can accept the offers of compensation, presenting the City with an accrued liability estimated at $35 million. Even though this is a worst case scenario, we must be prepared to meet this obligation.

Taking into account the recommended amendment to the PenEquity Agreement outlined in this report, the total consideration to the City is potentially up to $37 million paid as follows: Upon closing of Parcel A on January 15, 1999, PenEquity Management Corporation will provide the City with $21.5 million. An additional $4 million payment for participation entitlement (if the City or PenEquity Management Corporation so elects) will be made 210 days after the January 15, 1999 closing. 60 days after substantial completion of PenEquity's development on Parcel A, which is estimated to be Fall, 2000, PenEquity Management Corporation will pay the City an additional $8.5 million. Should land purchase costs exceed the allocation provided by the City, PenEquity will reimburse the City up to $3.0 million.

Cash flow projections for the project are as follows:

Table 2

While the Project is expected to generate direct and indirect tax benefits to the City which offset the net cost and provide a net benefit, it is also recommended that the consideration being given to various ways and means which may be employed to reduce the net cost of the project to the City in the short term be examined in more detail and reported to City Council for further direction. These ways and means include the use of Section 37 funds from redevelopment in the vicinity, the sale of city-owned property in the vicinity, the use of a benefiting levy and potential various commercial benefits associated with the public square.

There are additional costs which were previously reported to the former City of Toronto Council with respect to the implementation of the project, generally relating to the design and the development of the public square. It is recommended that the Chief Financial Officer and Treasurer in consultation with the Commissioner of Urban Planning and Development Services identify funding amounts and sources for implementation costs previously identified for the Yonge Dundas Redevelopment Project including funding for the design and development of the public square to be allocated in the 1999 Urban Planning and Development Services Capital Budget and funding for incidental and property management costs and report to the appropriate committee of Council for authorization to allocate these funds.

(c) Related Funding Issues:

The following matters are addressed in the discussion above.

(i)Ontario Municipal Board Hearing Expenses:

The City continued to utilize the services of Borden and Elliot and KPMG Management Consulting throughout the OMB hearing process, as authorized by City Council on October 6 and 7, 1997. The hearing was a substantial undertaking involving hundreds of hours of preparation and hearing time. Additional consultant services which were required during the course of the hearing were largely paid for from existing funding allocations.

(ii)Yonge Street Business and Resident Association (YSBRA) Grant:

In 1996 and 1997, the former City of Toronto Council granted YSBRA funds to undertake the Downtown Yonge Street Regeneration Program, a collaborative initiative which concentrates on improving the environment and perceptions of Yonge Street, promoting and marketing the street and working with the City to identify redevelopment opportunities including the Yonge Dundas Redevelopment Project.

Private sector participation in this program has been substantial and is pursued on an on-going basis. The YSBRA is working toward re-establishing a Business Improvement Area on the street which may provide the necessary long-term vehicle for self-sufficiency, maintenance and management of the area. Support has been solicited from a cross-section of land owners in the area and the BIA notice procedure will potentially be undertaken this fall. As the street renews itself, it is important, however, for the City to support the community's efforts. In this regard, the Ontario Municipal Board found that:

"it is essential that YSBRA continue its efforts to ensure that the principles expressed in the CIP (Community Improvement Plan) are fully realized. In this regard, the Board encourages its active participation in the maintaining of the area as a safe and clean environment which attracts tourists and visitors and citizens of Toronto to Yonge and Dundas as has been accomplished by the BID (Business Improvement District) in Times Square."

In its discussions with the former City of Toronto concerning its 1997 budget, YSBRA proposed a $162,000.00 budget for 1998 consisting of $81,000.00 grant from the City matched by $81,000.00 raised by YSBRA. In a letter dated February 24, 1998, (attached), the then Chairman, Eamon Kelly, (since replaced by Interim Chairman Arron Barberian) advised the YSBRA share of the 1998 budget was close to being attained through fundraising and they formally requested a matching grant from the City for $81,000.00.

It is recommended that the existing Grant Agreement between the City and YSBRA be extended to 1998 to provide for a $81,000.00 grant with appropriate terms and conditions as may be appropriate and deemed necessary by the City Solicitor and the Commissioner of Urban Planning and Development Services.

Business Issues:

In respect of the City of Toronto / PenEquity Agreement and the City of Toronto / Ryerson Agreement, certain amendments are recommended as follows:

(a)The former City of Toronto entered into an agreement with PenEquity Management Corporation on September 10, 1997. Supplementary agreements have been entered into to extend the agreement to facilitate the approvals process and to allow PenEquity to assign the agreement to an associated company. An amendment is recommended to the agreement to allow additional funding for the City in the event of increases in land costs.

The amendment also contemplates that PenEquity may apply for variances to the project as currently configured in the draft Site Plan Approval generally as follows: 3700 square metres of additional gross floor area within the proposed building envelope and an increase in height of approximately 10 metres to the signature tower at Yonge and Dundas to permit additional signage opportunities. These potential design modifications have been reviewed and can be endorsed in principle.

(b)The former City of Toronto entered into a Memorandum of Terms with Ryerson Polytechnic University on November 3, 1997. The memorandum is being transformed into an agreement, the intention of which is to serve as a contract between PenEquity Management Corporation and Ryerson once the agreement is assigned from the City upon taking title to the lands.

The agreement covers issues which arise from developing above the Ryerson parking garage including the transfer of the air rights, the guarantee of parking revenues, the operation of the garage, possible disruption to the operation of the Ryerson bookstore and the Tim Hortons, payments to Ryerson, use of the theatres for lecture hall space, the design of the development as it affects Ryerson and various miscellaneous matters.

These terms have not changed since the approval of the former City of Toronto Council with the following exception. Ryerson has requested that the City stand behind PenEquity's guarantee of the revenue from the Ryerson parking garage. The City's guarantee would be for approximately $1.5 million during the construction period of the project and for $750,000.00 from substantial completion until there was a 2 year period of no claims on the guarantee. In consideration of the City's role in brokering an arrangement between PenEquity and Ryerson which will be of some considerable benefit, it is appropriate in this limited circumstance that the City stand beside Ryerson to ensure that it maintains its revenue position.

Planning Issues:

(a)Work Program:

The following outlines key elements of the work program for the next several months essentially related to the development of Parcel A. There are other matters related to the development of Parcel D - the public square and Parking Authority facility - and Parcels B and C which will be pursued, but which are not subject to the time constraints of the OMB decision:

(i)preparation of Section 37 and development agreements;

(ii)Site Plan Approval - Parcel A;

(iii)Public Art Plan;

(iv)applications to stop up and close: portions of Victoria and Gould Street immediately abutting 17 Gould Street and O'Keefe Lane north and south of Dundas Street;

(v)related matters pertaining to removal of trees and existing public art;;

(vi)Municipal Code Amendment application respecting signage on Parcel A; and

(vii)related matters pertaining to the TTC, utilities and other required approvals

(b)Site Plan Approval:

PenEquity Management Corporation filed a "draft Site Plan Approval" application in October 1997 and the City issued a "draft Statement of Approval" on March 2, 1998. The process facilitated a review of the site plan prior to land acquisition, given that the question of expropriation was being considered by the Ontario Municipal Board. The draft approval did identify a number of outstanding matters which require resolution. In addition, a formal site plan approval application will be required from PenEquity, with the agreement of the City and Ryerson, once the City takes title to the land but before the land and the Ryerson air rights are conveyed to PenEquity. It is recommended that authority for the Commissioner of Corporate Services to authorize a Site Plan Approval application immediately upon the City obtaining title to the lands be granted.

Several site plan issues were discussed during the OMB hearing which, based on the Board's findings, will have to addressed in the Site Plan Approval.

The Board found that the appellants' architect's evidence with respect to improvements to the draft site plan "should be seriously considered and incorporated, if feasible". These matters include:

(a)strengthening the connection to the subway from the building and between the cinema and the parking garage;

(b)potential for congestion along Dundas Street respecting vehicular pick-up and drop-off activity;

(c)pedestrian entrance and exiting conflicts along Dundas Street;

(d)pedestrian and vehicular conflicts along Victoria Street in the vicinity of the parking garage entrance;

(e)desire to keep the plans flexible to accommodate different uses; and

(f)further design work on the Victoria Street elevations.

Partially in response to these issues, and in keeping with issues already identified by the City which were in need of resolution, the City offered the following conditions relating to the Site Plan Approval:

(a)TTC related matters respecting access, linkage and improvements to the Dundas Station;

(b)detailed design program of the Victoria Street sidewalk including the consideration of sidewalk widening, weather protection, lighting and amenities;

(c)detailed design of the facade including provision for Public Art;

(d)with respect to the cinema facility, a detailed pick-up/drop-off plan and entrance and exiting plan; and

(e)with respect to Dundas Street, a detailed design program for the pedestrian area.

The Board specifically found that the street entrance to the subway on the northeast corner of Dundas and Yonge should be relocated to an internal access to the project as recommended by the architect for PenEquity.

It is noted that should PenEquity seek modifications to the Site Plan Approval, it will be processed as a site plan amendment, in concert with any minor variances which may be required.

(c)Lane and Road Closing Issues:

(i)Parcel A and Parcel D:

There are three components requiring Council approval: the closing and conveyance of the O'Keefe Lane between Dundas Street and Gould Street; and the closing and conveyance, through sale or lease, of portions of the Victoria and Gould Street right-of-ways immediately abutting the site. Portions of the right-of-ways are required for the project to permit the construction above the Ryerson parking garage including column supports and exiting.

The closing of O'Keefe Lane between Dundas Street East and Dundas Square is required. As the land is being retained by the City, conveyance is not required.

(ii)Process:

In May, 1997, the former City of Toronto Council authorized the initiation of the lane closing process as may be required to undertake the Yonge Dundas Redevelopment Project.

A technical feasibility analysis has been undertaken with respect to these closures and appropriate terms and conditions respecting the closure will be reported to the appropriate committee of Council, following which notice is given for a public meeting and Council adoption of appropriate by-laws.

This process will commence once title is obtained by the City to the abutting lands. Consent from other affected landowners (335, 331 and 329 Yonge Street and 17 Gould Street) will be required with private rights-of-way established to maintain access from Gould Street to the rear of the Yonge Street properties as required .

(d)Parcel D (Public Square):

The Ontario Municipal Board decision requires two conditions be met with respect to Parcel D prior to August 30, 1998. The first is a "Nathan Phillips Square-type Municipal Code Amendment" which is intended to provide regulations for what activity is permitted on the square and how the square may be programmed. As this will in part depend on a number of related matters including the design of the square, funding and sponsorship opportunities and community participation, it is proposed that a general by-law be prepared now for Council's consideration with potential for amendments at a later date once other questions are answered. It is recommended that the City Solicitor be instructed to prepare such a by-law in response to the Board's decision.

A second condition relates to the design process for the square. This condition has already been addressed by the former City of Toronto Council's adoption on August 21, 1997 of a "Design and Development Process" for Parcel D. This process will commence with a working committee and technical committee shortly and will include a report back to Council regarding the retention of a Professional Advisor and Jury for the competitive portion of the process. The Board also requires the involvement of the Toronto Safe City Committee and the Toronto Police Service which was intended by the process approved in 1997.

Next Steps:

The Ontario Municipal Board requires that the Plans of Expropriation be filed by July 15, 1998. Following this, an intensive work program with respect to fulfilling the conditions of the Board's decision is to be undertaken prior to August 30, 1998.

Contact Name:

Gary Wright and Gregg Lintern, Toronto City Hall Office (392-1791 and 392-7363), Fax 392-1330

gwright@city.toronto.on.ca / glintern@city.toronto.on.ca.

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Appendix

Abridged Chronology - Downtown Yonge Street 1992 - 1998

No. 1997-0197. A BY-LAW

To permit short term borrowing from the City's entire pool of reserve funds, for the purposes of the Yonge Dundas Redevelopment Project, if funding from the City's working capital and other reserves is insufficient.

(Passed May 6, 1997.)

WHEREAS under Municipal Code Chapter 101, Reserves, borrowing from the City's reserve funds is limited to the Parking Meter Reserve Fund, Sewer Impost Reserve Fund and the Sewer Maintenance Reserve Fund and the amount which may be borrowed in the aggregate can not exceed $30,000,000.00;

AND WHEREAS the City's working capital and other reserves (General Fund) may not be sufficient to fund the Yonge Dundas Redevelopment Project;

AND WHEREAS Council, at its special meeting held on May 6, 1997 by its adoption of Communication Item No. 1(a) authorized temporary borrowing for the Yonge Dundas Redevelopment Project of up to $53 million from the City's entire pool of reserve funds not just the Parking Meter Reserve Fund, Sewer Impost Reserve Fund and Sewer Maintenance Reserve Fund;

THEREFORE the Council of The Corporation of the City of Toronto enacts as follows:

1.Despite Municipal Code Chapter 101, Reserves, if short term financing is required for the purposes of the Yonge Dundas Redevelopment Project which exceeds the funding available in the City's working capital and other reserves, the City's entire pool of reserve funds may be used for short term financing for this project up to $53 million, and the money to be repaid to the reserve funds will be repaid with interest at the same rate that the City earns on its investments.

2.This by-law shall not come into force until the approval of the Financial Advisory Board, established under the City of Toronto Act, 1997, has been obtained.

BARBARA HALL,SYDNEY K. BAXTER

Mayor.City Clerk.

Council Chamber,

Toronto, May 6, 1997.

(L.S.)

(Copies of the two maps attached to this bylaw, are on file in the office of the City Clerk.)

The Strategic Policies and Priorities Committee also submits the following communication (June 29, 1998) from Councillor Gardner:

Re: Yonge-Dundas Redevelopment Project - OMB Decision.

This matter has been brought to my attention by several parties which have expressed their concerns about this development.

There may be some legal liabilities which must be considered if the City decides to enter into this venture. According to discussions between my office and staff, the properties in question may be expropriated at two times density, and then sold to Pen Equity Developments at four times density. This could potentially result in a legal liability for the City where property owners at two times density, have their properties expropriated, only to have them resold at a higher density.

Further, the large scale of this complex may result in detrimental impacts on the viability of existing theatres.

The Strategic Policies and Priorities Committee also submits the following report (June15,1998) from the Commissioner of Urban Planning and Development Services:

Purpose:

To notify the Committee of the decision of the Ontario Municipal Board respecting the Yonge Dundas Redevelopment Project and to advise that a further report is forthcoming.

Funding Sources, Financial Implications and Impact Statement:

To be discussed in a further report.

Recommendation:

That this report be received for information.

Comments:

On June 5, 1998 the Ontario Municipal Board issued its decision for the Yonge Dundas Redevelopment Project. The decision, by a Joint Board which was appointed pursuant to the Consolidated Hearings Act, considered both the related appeals before the Board.

The decision of the Board is very positive and approves the City's proposal in all respects including the necessity for the use of expropriation if required. I have attached a copy of the decision. The decision has a number of conditions for the approval and the key ones are as follows:

(1)that the newly formed City of Toronto Council endorse the commitment to proceed with the project and commit the necessary funding and confirm its intent to proceed with expropriation. The decision requires that the commitment be made by June 30, 1998 and the plans of expropriation be filed within the first two weeks of July;

(2)that the formal lease between AMC and Pen Equity and the terms of the agreements between PenEquity and the City be finalized and confirmed by July 15, 1998; and

(3)that the planning conditions (contained in Exhibit 296 and attached as Schedule "C" to the decision) shall be fulfilled on or before August 30, 1998.

Staff have asked the Board to amend condition number 1 to reflect Council's meeting dates of July 8, 9 and 10, 1998.

At present, City staff are discussing with PenEquity the finalization of the agreement including risk mitigation. I will be reporting on this and other matters directly to your meeting on June 30, 1998.

Contact Name:

Gary Wright, Manager, East Section , City Planning, Phone: (416) 392-1791, Fax: (416) 392-1330

e-mail:gwright@city.toronto.on.ca.

(A copy of the Ontario Municipal Board Decision has been circulated to all Members of Council under separate cover by the Commissioner of Urban Planning and Development Services.)

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The following persons appeared before the Strategic Policies and Priorities Committee on June30,1998, in connection with the foregoing matter:

-Mr. Allen Karp, Chairman and CEO, Cineplex Odeon Corporation

-Mr. David Wood, on behalf of Toronto East Downtown Residents' Association

-Mr. Stan Kazman, Solicitor for Mr. John Mikrogianakis

-Mr. John Mikrogianakis

-Mr. Bob Onyschuk, Smith, Lyons, Solicitor on behalf of expropriated people

-Mr. Gary Stanoulis on behalf of Quan Developments Inc.

-Mr. Steve Rockwell

-Dr. Claude Lajeunesse, President, Ryerson Polytechnical University

-Mr. David Steele, President, Student Council, Ryerson Polytechnical University

-Mr. John S. Bailey, on behalf of Famous Players

-Mr. Arron Barberian, President, Yonge Street Business and Residents Association

-Mr. Harry Peckham, on behalf of AMC Canada

(A copy of a communication dated February 24, 1998, addressed to Councillor Rae from Mr. Eamon Kelly, Chairman, Yonge Street Business and Resident Association Inc. referred to in the report dated June 29, 1998, from the Commissioner of Urban Planning and Development Services is on file in the office of the City Clerk.)