Palace Restaurant - Encroachment

Agreement for 716 Pape Avenue

The Corporate Services Committee recommends the adoption of the following report (April5,1999) from the President, Toronto Parking Authority:

Purpose:

To allow 521362 Ontario Limited (the Palace Restaurant) to construct and operate a patio on Authority lands.

Funding Sources, Financial Implications and Impact Statement:

No funding is required by the Toronto Parking Authority or the City of Toronto. The Parking Authority will earn a net profit of $90,000.00 for the first ten year period.

Recommendations:

It is recommended that:

(1)the Parking Authority be authorized to enter into an encroachment agreement with the Palace Restaurant to permit an encroachment upon the subject lands for the purpose of extending a second floor patio of the Palace Restaurant;

(2)the encroachment agreement be in a form acceptable to the City Solicitor;

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

Council Reference/Background History:

The Toronto Parking Authority operates a municipal car park at Pape and Danforth Avenues (Carpark-17) immediately adjacent to the Palace Restaurant.

In 1992 the Parking Authority of Toronto and the City of Toronto granted the Palace restaurant an encroachment agreement that allowed for a patio extending over carpark 17. A report from the Toronto Parking Authority was submitted to Council and it was approved without amendment at its meeting of February 24, 1992. This allowed the owner of the Palace Restaurant to construct a deck over the northeast portion of the Parking facility. Due to economic reasons the owner did not commence the work. As the economy has improved over the last few years, the owner has asked that this project be resurrected according to the format of the previous agreement.

Summary of Proposed Agreement:

The terms of the revised encroachment agreement would be as follows:

(1)the term of the agreement will be for a period of 10 years, with two successive options to extend the term for a period of five years each. Upon exercise of the option by Palace Restaurant, the Board of Directors of the Authority will consider the granting of such extension. The annual fee shall in no event be less than the annual fee that was paid in the previous term;

(2)Palace Restaurant will pay a fee of $8,400.00 in the first five years, and $9,600.00 in the second five-year period. The fee shall be payable on a monthly basis in advance in 12 equal monthly installments per year. Palace Restaurant will be responsible for all costs related to the encroachment inclusive of realty taxes, hydro etc.;

(3)Palace Restaurant will be required to provide a security deposit of $2,000.00 for the duration of the term without interest accruing;

(4)Palace Restaurant will indemnify both the Toronto Parking Authority and the City of Toronto for any loss they may incur in relation to the patio or its operation, and further that the licensee will take out liability insurance of not less than $5 million per occurrence. The licensee will also indemnify the T.P.A. for any damage to the lot, or contents contained thereon;

(5)the patio will be constructed in a manner so as to not affect the availability of any parking space in the lot;

(6)this agreement cannot be assigned by the licensee unless in conjunction with an assignment or sale of the ownership of the business now known as the Palace Restaurant;

(7)the Toronto Parking Authority shall have the right to terminate this agreement under the following circumstances:

(i)if it determines that the encroachment in any way negatively affects the Parking operation;

(ii)if the Palace Restaurant violates any provision of the agreement; and

(iii)in the event the T.P.A. wishes to sell or redevelop the parking lot or the City requires the lands for municipal purposes.

(8)the Palace Restaurant will be required to return, upon termination of this agreement, the T.P.A. lands to their original condition. As a security for the removal of the encroachments, the Palace Restaurant shall provide a letter of credit in a form satisfactory to the Authority and in an amount sufficient to restore the lands to their original condition. The amount of the letter of credit will be adjusted annually on its renewal date in accordance with annual increases in the Southam Construction index for Toronto;

(9)during construction the Palace Restaurant will compensate the Parking Authority for any lost revenue experienced due to parking spaces being closed or obstructed; and

(10)the Parking Authority will not incur any costs, present or future, in relation to the patio.

Conclusions:

The Toronto Parking Authority will realize $90,000.00 in lease payments for the first ten year period. It is felt that the deck, which will overhang the Parking facility, will not impact the parking operations or the parking revenues in any substantial way. The addition of a patio at the Palace Restaurant may increase the restaurant's summer business and therefore it may increase business of the car park. The Toronto Parking Authority at this time and in the foreseeable future has no plans to develop this property hence staff recommend that the Toronto Parking Authority enter into this agreement.

Contact Names:

Maurice J. Anderson

President

Telephone:(416)393-7276

Facsimile:(416)393-7352

Lorne Persiko

Director, Real Estate and Development

Telephone:(416)393-7294

Facsimile:(416)393-7352.