Item - 2008.EX24.1

The City Manager recommends that:

1.         To advance Toronto’s broad economic competitiveness and unlock the value of the City’s under-utilized real estate holdings, Council adopt the Business Case Study, Attachment 1 to this report, for the establishment of 2 new corporations referred to as Build Toronto and Invest Toronto.

Governance:

2.         Council authorize the City Solicitor to incorporate two new corporations pursuant to section 148 of the City of Toronto Act, 2006 and Ontario Regulation 609/06, the City Services Corporation Regulation, and the Business Corporations Act (Ontario):

a.         one with the operating name Build Toronto to unlock the value in under-utilized lands and use the available City and ABC land base to attract targeted industries, stimulate the creation of desirable employment, and regenerate neighbourhoods; and

b.         one with the operating name Invest Toronto to engage the private sector in marketing and promotion activities to increase business investment and create desirable jobs in Toronto;

and, as of the date of incorporation, appoint the City Manager, Deputy City Manager and Chief Financial Officer (CFO), and City Chief Corporate Officer (CCO) as initial interim directors of both boards until the new boards are appointed by Council, in order to execute any documents or take other actions necessary to set up operations.

3.         Effective on the date that Council appoints the recruited citizen directors, the Board of Directors of Build Toronto be comprised of 11 members as follows:

a.         the Mayor as Chair for the first 2 year term;

b.         a citizen as Vice-Chair for the first 2 year term;

c.         the Chair of the City’s Economic Development Committee;

d.         the City’s General Manager of EDCT;

e.         the City’s Chief Corporate Officer; and

f.          6 residents of Toronto who are not elected officials or employees of the City or any of its ABCs or Corporations (ABCCs);

and that after the initial 2 year term, or as the Chair deems appropriate, the Vice-Chair become the Chair and the Mayor may continue as Vice-Chair or name a designate to be Vice-Chair of the Board.

4.         Effective on the date that Council appoints the recruited citizen directors, the Board of Directors of Invest Toronto be comprised of 15 members as follows:

a.         the Mayor as Chair;

b.         a citizen as Vice-Chair;

c.         the Chair of the City’s Economic Development Committee;

d.         the City’s General Manager of EDCT; and

e.         11 residents of Toronto who are not elected officials or employees of the City or any of its ABCCs.

5.         The Public Appointments Policy corporations nominating process, currently used for other corporate boards, apply to Build Toronto and Invest Toronto and the City Manager be authorized to amend the Policy by adding the following specific qualifications for each board:

a.         for Build Toronto – accomplished in real estate law, planning and development, capital financing, environmental remediation, and construction; and

b.         for Invest Toronto – accomplished in international business, academics, marketing, government relations, labour, tourism or other marketing linkages.

6.         The Mayor establish a Corporations Nominating Panel to recruit citizen members of the Board of Directors for the 2 new corporations and conduct a national search for the Chief Executive Officers for the 2 corporations.

7.         The Remuneration Policy and the Expense Reimbursement Policy for City ABCCs apply to Invest Toronto and Build Toronto and the City Manager recommend remuneration for these boards for Council approval at the same time as the citizen board members are appointed by Council.

8.         The City Manager develop shareholder directions for the 2 new corporations for Council approval at the same time as the citizen board members are appointed by Council.

9.         a.         effective January 1, 2009, TEDCO’s current incubator programs along with the associated funding and staffing be managed by and subsequently transferred to EDCT and included in the 2009 budget; and

b.         the General Manager of EDCT, or a person acting in that capacity, be authorized to execute on behalf of the City any agreements necessary with TEDCO or others to provide for the transfer of the incubator programs and the funding for such programs.

Real Estate Strategy  and Authorities for Land Transfers and Turnovers

Note 1: A land transfer conveys title to Build Toronto; a land turnover gives Build Toronto effective control over the lands to manage, develop and market lands without transferring title.  Transfers may be used when there are no City or ABC program interests in the lands and a turnover may be used when there is one or more City or ABC program interests.

Note 2: "TEDCO’s lands" means TEDCO’s development projects and land holdings, together with the development projects and land holdings of TEDCO’s subsidiaries.

10.       To immediately begin the process of unlocking the value of land holdings, the City’s CCO develop a City-wide real estate strategy that incorporates long term plans for all City and ABC programs and be authorized to conduct any real estate audits necessary; and all stakeholders be directed to participate in the process as set out in section C of this report in order to optimize the use of City and ABC land holdings, and to transfer or turn over to Build Toronto any City or ABC lands with potential for private development.

11.       Council authorize the Deputy City Manager responsible for waterfront revitalization to review and determine the appropriate disposition of all TEDCO’s lands within the waterfront planning area, with a view to expediting renewal of this large area, ensuring effective management of those lands that are likely to remain in industrial use, and ensuring that the use of other lands is optimized while awaiting renewal by Waterfront Toronto.

12.       Those prior Council authorities providing for the transfer of title of certain City-owned properties to TEDCO, as more particularly set out in Attachment 5, be rescinded.

13.       Conditional upon a satisfactory review by the CFO of the financial and real estate issues and subject to the execution of an agreement with Build Toronto on terms and conditions satisfactory to the CFO and in a form satisfactory to the City Solicitor:

a.         the properties that are the subject matter of the authorities rescinded by the adoption of recommendation 13 above, be transferred to Build Toronto;

b.         all TEDCO's lands outside the waterfront planning area be transferred to Build Toronto for nominal consideration, with appropriate arrangements for supporting staff and other resources as deemed necessary; and

c.         as a result of the review in recommendation 12 above, where the Deputy City Manager determines that lands should be transferred to Build Toronto, those lands be transferred to Build Toronto for nominal consideration, with appropriate arrangements for supporting staff and other resources as deemed necessary.

14.       a.         authority be granted to enter into Turnover Agreement(s) with Build Toronto, on terms and conditions satisfactory to the City Manager (including, but not limited to, those terms set out in Attachment 2), in consultation with the City Solicitor, and including amending agreements from time to time, all in a form satisfactory to the City Solicitor;

b.         conditional upon Build Toronto having entered into a Turnover Agreement, land which has been declared surplus with the intended manner of disposal to be by way of turnover to Build Toronto to manage, develop and market, be turned over to Build Toronto for such purposes; and

c.         authority be granted to execute a Power-of-Attorney or other authority to empower signing officers of Build Toronto to sign documents on behalf of the City relating to City-owned lands turned over to Build Toronto, without further review or approval by City staff.

15.       While Build Toronto will be entirely free to deal with the inventory of lands transferred in title to it (subject only to the terms of any Transfer Agreement), the terms of any proposed transfer of title of City or ABC land to Build Toronto, and of any proposed sale/disposal (including leases of 21 years or more) by Build Toronto of land subject to a Turnover Agreement, be reported through Committee and Council for consideration and determination.

16.       The City Solicitor be authorized to complete the Turnover, future Transfer, and other, Agreements on behalf of the City, including paying any necessary expenses, amending the closing and other dates, and amending and waiving terms and conditions, on such terms as she considers appropriate.

Funding

17.       Council allocate the amount of $10 million to the non-program expenditure budget to be funded from the Land Acquisition Reserve Fund, to be disbursed to Build Toronto and Invest Toronto, on terms satisfactory to the CFO, for the purpose of setting up and commencing business development operations including development of a business plan that identifies sustainable revenue sources.

Unanimous Shareholder Declaration, Shareholder Resolution, and Indemnity

This will require TEDCO to take all actions necessary by TEDCO to implement the recommendations in this report.

18.       In order to protect current and future directors and officers of TEDCO, and current and future officers of TEDCO subsidiaries, the City:

a.         make a unanimous shareholder declaration to TEDCO, and pursuant to that declaration, make a shareholder resolution in form and substance as Attachment 3 with such changes as the City Manager may determine are appropriate, and

b.         indemnify and save harmless the directors and officers from time to time of TEDCO and the directors and officers from time to time of TEDCO subsidiaries against any claims they may incur from compliance (or in the case of directors and officers of TEDCO subsidiaries, compliance at the direction of TEDCO) with the unanimous shareholder declaration.

Amendments/Review - Existing By-laws and Decisions

19.       City of Toronto Municipal Code, Chapter 213, Sale of Real Property, be amended as set out in the draft Bill in Attachment 4.

20        The City Manager be requested to review the financial needs of Build Toronto together with the existing Policy entitled "…Proceeds from Sale of Surplus City Owned Real Property" embodied in Clause No. 1 of Report No. 9 of the Policy and Finance Committee adopted as amended by Council on June 18, 19 and 20, 2002 and report back to Council.

General Authorities

21.       Authority be granted to enter into such additional or other agreements or documents and to do all things deemed appropriate as may, in the opinion of the City Manager or City Solicitor, be desirable to give effect hereto.

22.       The appropriate City officials be authorized and directed to introduce in Council any Bills necessary to give effect to the foregoing.

The Prosperity Agenda and the Blueprint for Fiscal Stability and Economic Prosperity both indicated a need for substantive change in how the City attracts new investment and uses its under-utilized real estate holdings to regenerate Toronto.  The City has reorganized the Economic Development Culture and Tourism Division (EDCT) and, together with its Federal and Provincial partners, commenced waterfront revitalization through Waterfront Toronto. The logical next phase is to review the optimal organization and governance structure for City arm’s length corporation(s) to achieve the City’s economic development objectives and to enable the City to maximize the value of its real estate holdings.

The City Manager engaged the Randolph Group and NetGain Partners to conduct interviews of all stakeholders including the City of Toronto Economic Development Corporation (TEDCO) board and staff, and to recommend a model that would satisfy both of these objectives.  The law firm of Borden, Ladner, Gervais LLP was engaged to provide legal advice on corporate structures, financing options, and land ownership issues.  To provide world-wide context, staff reviewed an extensive study of other jurisdictions by Greg Clark, an acknowledged global expert and advisor on city and regional development.  Business and development experts also provided comments on the proposed model.  The Toronto Transit Commission (TTC) study of its own real estate function and the review of the City’s Facilities and Real Estate Division (FRED) were also taken into account.

Based on this wide range of advice, this report recommends establishing two new City corporations referred to in this report as Invest Toronto and Build Toronto, amending the mandates of EDCT and FRED, and instituting a centralized real estate strategy that includes all City land holdings including those managed or owned by City Agencies, Boards, and Commissions (ABCs) such as the TTC.

"Invest Toronto" will engage the private sector in promoting Toronto as an investment opportunity through marketing, conducting trade missions, and coordinating with other governments and business.  "Build Toronto" will engage private and public sector partners in the development of under-utilized City real estate to unlock value, stimulate the creation of desirable jobs, and regenerate neighbourhoods, consistent with the City’s broader economic, social and environmental goals.  Development revenues will either be used by Build Toronto to fund additional projects that further the City’s agenda or will come back to the City through various forms of revenue sharing from development projects or dividends to be used for City requirements.  The activities of both corporations will lead to an increased tax base. Both corporations will be closely aligned with the City’s policy objectives, but will be able to implement plans on an independent basis.

This plan represents a vital step forward in meeting the objectives laid out in the Prosperity Agenda and the Blueprint for Fiscal Stability and Economic Prosperity.