Item - 2015.EX10.6

City Council considered Items EX10.6 and EY10.1 together.

The Executive Committee recommends that:

Funding Model

1.  Subject to receipt of the irrevocable and unconditional Letter of Credit described in Recommendation 2, City Council approve the unique funding approach for federal, provincial and City investments to finance the Artscape Project being developed within the Weston/Mount Dennis community, as outlined in the Financial Impact section in the report (November 17, 2015) from the Deputy City Manager Cluster A, the Deputy City Manager Cluster B, and the Deputy City Manager and Chief Financial Officer, wherein revenue from the sale of City land, together with fees, charges, Section 37 and other in-lieu contributions normally payable by a developer to the City, are to be invested directly into the Artscape Project by The Rockport Group, the developer of the adjacent property at 22 John Street ("Rockport" or "22 John Street Developments"), in its capacity as Artscape's contractor for the Artscape Project, in addition to the provision of federal, provincial and City investments to Toronto Artscape Inc. ("Artscape") all to a maximum amount of $10,070,824 (see Table 1a in the report (November 17, 2015) from the Deputy City Manager Cluster A, the Deputy City Manager Cluster B, and the Deputy City Manager and Chief Financial Officer). The funding sources to finance construction of the Artscape Project are set out below:

a.  The value of the following fees and charges normally payable by the developer to the City shall not be payable in this instance and instead, Rockport in its capacity as Artscape's contractor, will be permitted to retain the funds to apply to the capital costs of the Artscape Project:

i.  $2,115,300 in net proceeds of the sale by the Toronto Parking Authority of the City land at 22 John Street;

ii.  $1,600,000 from the Section 37 contribution negotiated with respect to the market rental building at 22 John Street;

iii.  An amount which is the lesser of $1,239,644, the eligible capital cost of constructing the community hub to the satisfaction of the General Manager, Parks, Forestry and Recreation, or the Parks and Recreation component of the development charges payable for the construction of the market rental building at 22 John Street, from the development charges applicable to the construction of the market rental building at 22 John Street as a development charges credit, to be applied toward the capital costs of constructing the community/cultural hub;

iv.  $460,000 from the parkland cash-in-lieu amount arising from the parkland obligation for the market rental development at 22 John Street to be applied toward the eligible capital costs of constructing the community/cultural hub;

b.  A grant to Artscape of $500,000 from the Development Charges Reserve Fund for Parks and Recreation (XR2114) to be applied toward the capital costs of constructing the community/cultural hub, to be administered by the General Manager, Parks, Forestry and Recreation, payable in accordance with the approved payment schedule, and which grant is deemed to be in the interests of the City;

c.  A grant to Artscape of $40,000 from the Capital Revolving Reserve Fund for Affordable Housing (XR-1058) to be applied toward landscaping and storm water management, benefitting the 26 affordable artist live/work rental unit portion of the Artscape Project, which grant is deemed to be in the interests of the City;

d.  Funding to Artscape of $3,900,000 from the Canada-Ontario Investment in Affordable Housing (IAH) Program – Rental Component 2014-2020, to be applied toward the development of the 26 affordable artist live/work rental units portion of the Artscape Project;

e.  In addition, the estimated $215,881 from waived development charges, and planning application and building permit fees, as applicable, for the portion of the community/cultural hub deemed to be eligible as a municipal capital facility and pertaining to Artscape's status as a non-profit organization, the estimated value of which is a city contribution to the Artscape Project's capital budget through a reduction in costs that would otherwise have been payable to the City.

Letter of Credit

2.  City Council authorize the City to accept an irrevocable and unconditional letter of credit in an amount not less than $9.8 million ($8.2 million plus 20%) and in a form satisfactory to the Deputy City Manager and Chief Financial Officer from 22 John Street Developments, the purchaser of 22 John Street and builder of the affordable artist live/work rental units and community/cultural hub, on behalf of Toronto Artscape, to secure the use of the City resources, set out in Recommendation 1 of this report, as well the additional commitments outlined in Table 2: Developer's Letter of Credit in the report (November 17, 2015) from the Deputy City Manager Cluster A, the Deputy City Manager Cluster B, and the Deputy City Manager and Chief Financial Officer.

3.  City Council authorize the Director, Affordable Housing Office, in consultation with the General Manager, Economic Development and Culture, to reduce the Letter of Credit from time to time in accordance with the site-specific zoning by-law and the Section 37 Agreement that 22 John Street Developments must enter into with the City, as construction progresses and as certified by a quantity surveyor, and shall not be reduced below $1.25 million, being the amount required for the Toronto Artscape operating fund, until such operating fund has been paid in full.

Affordable Artist Live/Work Rental Component

4.  City Council authorize the Director, Affordable Housing Office, to submit a request to the Ministry of Municipal Affairs and Housing through the Canada-Ontario Investment in Affordable Housing (IAH) Program – Rental Component 2014-2020  for funding of $3,900,000 for the 26 affordable artist live/work rental units to be developed at 33 King Street.         

5.  City Council pass a by-law pursuant to section 252 of the City of Toronto Act, 2006, providing authority to:

a.  Enter into a Municipal Housing Capital Facility Agreement with Toronto Artscape Inc., or a wholly owned subsidiary owned by it, for the 26 live/work affordable rental units and space ancillary to such use at 33 King Street ("the Eligible Property") in accordance with Ontario Regulation 598/06; and

b.  Exempt the Eligible Property from property taxation for municipal and school purposes, which tax exemption is to be effective from the latter of the following dates: (i) the date the municipal capital facility agreement is signed, (ii) the date the by-law is enacted; (iii) the commencement date of the Lease. 

6.  City Council direct the City Clerk to give written notice of the by-law to the Minister of Education, the Municipal Property Assessment Corporation, the Toronto District School Board, the Toronto Catholic District School Board, the Conseil Scolaire de District du Centre-Sud-Ouest, and the Conseil Scolaire de District du Catholique Centre-Sud.

7.  City Council authorize the Director, Affordable Housing Office, to negotiate and enter into, on behalf of the City, a Municipal Housing Capital Facility Agreement, with respect to the operation of the affordable artist live/work rental component to be operated by Toronto Artscape, on terms and conditions satisfactory to the Director, Affordable Housing Office and in a form approved by the City Solicitor.

8.  City Council authorize the City to enter into a lease for the affordable artist live/work rental units located at 33 King Street amongst 2295477 Ontario Inc. as landlord, Toronto Artscape Inc. as tenant, and the City of Toronto as a third party, for a term of fifty (50) years less one (1) day, based substantially on the terms and conditions set out in Attachment 3, and on such other or revised terms and conditions acceptable to acceptable to the Chief Corporate Officer or his or her designate, in consultation with the Director, Affordable Housing Office, or his or her designate, and in a form and content acceptable to the City Solicitor.

9.  City Council authorize the Director, Affordable Housing Office, to designate the Weston affordable artist live/work rental component as social housing for the purpose of allowing all or part of the project relief from normal parking standards.

10.  City Council authorize the City Solicitor to execute any documents required to register the security for the funding approved for the affordable housing component of the Project required of Toronto Artscape Inc. or its wholly owned subsidiary, and to postpone, confirm the status or and/or discharge the security when and if necessary.

Community/Cultural Hub      

11.  City Council authorize the City to enter into a lease for the Weston community/ cultural hub located at 33 King Street amongst 2295477 Ontario Inc. as landlord, Toronto Artscape Inc. as tenant, and the City of Toronto as a third party, for a term of fifty (50) years less one (1) day, based substantially on the terms and conditions set out in Attachment 4 to the report (November 17, 2015) from the Deputy City Manager Cluster A, the Deputy City Manager Cluster B, and the Deputy City Manager and Chief Financial Officer, and on such other or revised terms and conditions acceptable to the Chief Corporate Officer or his or her designate, in consultation with the General Manager, Economic Development and Culture, or his or her designate, and in a form and content acceptable to the City Solicitor.

12.  City Council authorize the Chief Corporate Officer to administer and manage the Enhanced Farmers Market Area adjacent to the community/cultural hub and north of the proposed market apartment building at 22 John Street, including the provision of any consents, approvals, notices and notices of termination, provided that the Chief Corporate Officer may, at any time, refer consideration of such matters (including their content) to City Council for its determination and consideration.

13.  City Council pass a by-law pursuant to section 252 of the City of Toronto Act, 2006, providing authority to:

a.  Enter into a Municipal Capital Facility Agreement with Toronto Artscape Inc. for the portion of the community/cultural hub at 33 King Street that will be used as an eligible municipal capital facility for community centre use and for parking ancillary to such use (the "Eligible Hub Property") all in accordance with Ontario Regulation 598/06 on such terms and conditions satisfactory to the General Manager, Economic Development and Culture and in a form approved by the City Solicitor; and    

b.  Exempt Eligible Hub Property from development charges, planning application and building permit fees, and property taxation for municipal and school purposes, and for which the property tax exemption is to be effective from the latter of: (i) the date the municipal capital facility agreement is signed, (ii) the date the by-law is enacted; (iii) the commencement date of the Lease.

14.  City Council direct the City Clerk to give written notice of the by-law to the Minister of Education, the Municipal Property Assessment Corporation, the Toronto District School Board, the Toronto Catholic District School Board, the Conseil Scolaire de District du Centre-Sud-Ouest, and the Conseil Scolaire de District du Catholique Centre-Sud.

15.  City Council authorize the General Manager, Economic Development and Culture or his designate to negotiate and enter into, on behalf of the City, a Municipal Capital Facility Agreement, with respect to the operation of the community/cultural hub to be operated by Toronto Artscape, on terms and conditions satisfactory to the General Manager, Economic Development and Culture and in a form approved by the City Solicitor.

16.  City Council pass a resolution that the municipal capital facility in Recommendation 13 above is for the purposes of the City and is for public use.

17.  City Council request the General Manager, Economic Development and Culture, to monitor the adequacy of operating resources and fundraising efforts to fund the operation of the Weston community/cultural hub, and should issues arise, to explore options for funding, working with Toronto Artscape, in consultation with the Executive Director, Financial Planning, and to report back to the Executive Committee.

Expropriation of 14 John Street

18.  City Council authorize funding of  $1,000,000 from the Land Acquisition Reserve Fund (LARF) to meet any cost incurred in providing compensation and/or in remediating the City-expropriated land at 14 John Street, over and above the funds for the expropriation t held in the Community Development Reserve Fund (XR3100) established to support community joint ventures, administered by the Executive Director of Social Development, Finance and Administration, to satisfy the expropriation expenses and to transfer the $1,000,000 into capital account CCA226-03 (14 John Street Expropriation), with any unused funding returned to LARF, after all expropriation matters have been completely settled.

Six Affordable Accessible Units at 22 John Street

19.  City Council grant authority to the Director, Affordable Housing Office, to provide a grant by way of forgivable loan to 22 John Street Developments Inc. in the amount of $636,000 from the Capital Revolving Fund for Affordable Housing (XR1058) toward the development of six one-bedroom affordable accessible units for persons with disabilities for a 20-year period, to be located in the market rental building to be developed at 22 John Street.

20.  City Council grant authority to the Director, Affordable Housing Office, to negotiate and enter into a contribution agreement with 22 John Street Developments Inc. with respect to the operation and management of the six one-bedroom affordable accessible units to be funded by the City, on terms and conditions satisfactory to the Director, Affordable Housing Office and in a form approved by the City Solicitor.

21.  City Council authorize the City Solicitor to execute any documents required to register the security for the funding approved for the six affordable accessible housing units at 22 John Street, and to postpone, confirm the status or and/or discharge the security when and if necessary.

General Authorities

22.  City Council direct that approval of this report be conditional on City Council's approval of EY10.1 entitled "Final Report and Supplementary Report – 22 John Street, 33 King Street and 2 Elsmere Avenue (The Weston Community Cultural Hub) - Official Plan Amendment and Zoning By-law Amendment Application" from the Director, Community Planning, Etobicoke York District, as these reports are complementary and integral to one another.

23.  City Council authorize the Director, Affordable Housing Office, and the General Manager, Parks, Forestry and Recreation to bring forward to future year budget processes the cash flow requirements to fund the construction of the Weston community/cultural hub development.

24.  City Council confirm that should the developer not be able to obtain above grade building permits and commence construction of the new apartment building on the Toronto Parking Authority Site at 22 John Street by the end of July 2016 and the developer is not willing to extend the fixed price term beyond that date in the amount of $11.82 million for the construction and delivery of the 26 affordable artist live/work rental homes, the community/cultural hub and the enhanced Weston farmers market area, the Deputy City Manager Cluster A report back through Executive Committee on whether or not to proceed with the project, and if so, the source of additional funds required.

25.  City Council direct the Director, Affordable Housing Office, in consultation with other affected Divisions, to report to the Executive Committee in 2018 on the progress on the development of the Weston community/cultural hub innovative approach to delivering a Council strategic priority revitalization initiative, said report to include social, economic and financial measures to evaluate the feasibility and success of this model in achieving Toronto's city-building objectives.

26.  City Council grant authority for the introduction of the necessary bills to give effect thereto.