Item - 2016.EX16.13
Tracking Status
- City Council adopted this item on July 12, 2016 without amendments and without debate.
- This item was considered by the Executive Committee on June 28, 2016 and adopted without amendment. It will be considered by City Council on July 12, 2016.
EX16.13 - George Street Revitalization - Recommended Procurement and Delivery Strategy
- Decision Type:
- ACTION
- Status:
- Adopted on Consent
- Wards:
- All
City Council Decision
City Council on July 12, 13, 14 and 15, 2016, adopted the following:
1. City Council authorize the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer to proceed with an Alternative Financing and Procurement model for the implementation of the George Street Revitalization project using a Design-Build-Finance approach as described in the report (June 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer, and refer the project to the 2017 Capital Budget process for consideration by the City Manager and the Deputy City Manager and Chief Financial Officer with other City priorities.
2. City Council authorize the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer, in consultation with the City Solicitor, to initiate negotiations towards an agreement with Ontario Infrastructure and Lands Corporation, under which Ontario Infrastructure and Lands Corporation and other third-party advisors could:
a. act as a commercial procurement lead for the Alternative Financing and Procurement approach, through to execution of project agreements and financial close; and
b. propose a scope of services, terms and estimated cost for professional services required to support the Alternative Financing and Procurement delivery model.
3. City Council direct the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer to seek funding options for the George Street Revitalization project from the Government of Canada's 10-year Social Infrastructure Plan and from the Province of Ontario.
4. City Council authorize the General Manager, Shelter, Support and Housing Administration, to begin implementing the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration 2016 Approved Capital Budget.
5. City Council authorize the General Manager, Shelter, Support and Housing Administration, to negotiate with Mental Health Program Services of Metropolitan Toronto (commonly known as Habitat Services) for the purchase of service for up to 150 units of housing with access to on-site supports, as described in the report (June 14, 2016) from the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer and endorsed by City Council in November 2015, and submit a business case for consideration by the City Manager and the Deputy City Manager and Chief Financial Officer as part of the 2017 budget process.
6. City Council direct the General Manager, Shelter, Support and Housing Administration to approach the Province and request enhanced funding to provide additional supports as needed for clients housed in Habitat Services supportive housing units and to support clients with serious and persistent mental health issues moving into scattered site housing.
7. City Council direct the Deputy City Manager, Cluster A and the Deputy City Manager and Chief Financial Officer to report back by December 2016 to City Council through the Executive Committee with a status update on negotiations with Infrastructure Ontario and recommendations, if any, on terms and estimated costs for professional services required to support the Alternative Financing and Procurement procurement, further refined cost estimates, a governance structure, and an updated project schedule.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-94286.pdf
Attachment 2 - Project Procurement, Delivery Options and Value for Money Analysis Report, prepared by Ernst & Young Orenda Corporate Finance Inc.
https://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-94596.pdf
EX16.13 - George Street Revitalization - Recommended Procurement and Delivery Strategy
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
Committee Recommendations
The Executive Committee recommends that:
1. City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to proceed with an Alternative Financing and Procurement (AFP) model for the implementation of the George Street Revitalization project using a Design-Build-Finance approach as described in the report (June 14, 2016) from the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer, and refer the project to the 2017 Capital Budget process for consideration by the City Manager and the Deputy City Manager and Chief Financial Officer with other City priorities.
2. City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer, in consultation with the City Solicitor, to initiate negotiations towards an agreement with Ontario Infrastructure and Lands Corporation (IO), under which Ontario Infrastructure and Lands Corporation and other third-party advisors could:
a. act as a commercial procurement lead for the Alternative Financing and Procurement approach, through to execution of project agreements and financial close; and
b. propose a scope of services, terms and estimated cost for professional services required to support the Alternative Financing and Procurement delivery model.
3. City Council direct the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to seek funding options for the George Street Revitalization project from the Government of Canada's 10-year Social Infrastructure Plan and from the Province of Ontario.
4. City Council authorize the General Manager, Shelter, Support and Housing Administration, to begin implementing the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration 2016 Approved Capital Budget.
5. City Council authorize the General Manager, Shelter, Support and Housing Administration, to negotiate with Mental Health Program Services of Metropolitan Toronto (commonly known as Habitat Services) for the purchase of service for up to 150 units of housing with access to on-site supports, as described in the report (June 14, 2016) from the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer and endorsed by City Council in November 2015, and submit a business case for consideration by the City Manager and the Deputy City Manager and Chief Financial Officer as part of the 2017 budget process.
6. City Council direct the General Manager, Shelter, Support and Housing Administration, to approach the Province and request enhanced funding to provide additional supports as needed for clients housed in Habitat Services supportive housing units and to support clients with serious and persistent mental health issues moving into scattered site housing.
7. City Council direct the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to report back by December 2016 to Executive Committee and Council with a status update on negotiations with Infrastructure Ontario and recommendations, if any, on terms and estimated costs for professional services required to support the Alternative Financing and Procurement procurement, further refined cost estimates, a governance structure, and an updated project schedule.
Origin
Summary
In November 2015, City Council endorsed the project scope for the George Street Revitalization (GSR) and the Seaton House transition plan. Council directed staff to retain procurement option consultants and to report back by June 2016 on the recommended delivery model, the implementation funding needed and the resulting refined capital cost estimates for the revitalization and the Seaton House transition plan. This report fulfils that directive.
As a result of the work undertaken by Ernst and Young Orenda Corporate Finance Inc. (EY), it is evident that the City stands to gain from a range of benefits available through a Public-Private-Partnership (P3), referred to by the Province of Ontario as Alternative Financing and Procurement (AFP). The Gardiner Rehabilitation Project, approved by Council in September 2015, will be the City's first P3 project.
On the basis of Ernst and Young Orenda Corporate Finance Inc.'s findings and the extensive due diligence completed on the George Street Revitalization project over the past two years, staff recommend a Design-Build-Finance (DBF) procurement and delivery model. A Design-Build-Finance model will yield an estimated Value for Money (VFM) of 8.1 percent, equivalent to $43.9 million on a present value basis. A Design-Build-Finance model transfers the responsibilities and associated risks for the design, construction and financing to the private sector and leverages on project investments made to date. A Design-Build-Finance model combines various aspects of project delivery under one contract, allowing for the bidding consortium to coordinate activities, realize economies of scale, be innovative with respect to design and scheduling, and manage potential cost escalation risks. As a P3 model, construction payments for a Design-Build-Finance are made only upon substantial completion, projected at 2022 or beyond.
Based on a Design-Build-Finance model, the revised construction cost estimate for the project is $498.8 million which includes $155.6 million in quantified retained risk which may or may not materialize. With the Seaton House transition cost estimate of $50 million and project expenditures to date of $13.2 million, the total capital cost for the George Street Revitalization is estimated at $562 million of which $475.2 million remains unfunded.
This report recommends that the funding for the George Street Revitalization project be considered as part of the 2017 budget process with other City priorities. It also recommends that the City initiate negotiations towards an agreement with Ontario Infrastructure and Lands Corporation (IO), to propose a scope of services under which Ontario Infrastructure and Lands Corporation could act as the commercial procurement lead. Staff will report back with a status update on negotiations.
The report also provides an update on the status of the Seaton House transition plan. Staff have been working with key stakeholders to develop a comprehensive transition plan for clients. The plan, with a Housing First approach, includes purchase of service of up to 150 supportive housing units and 200 housing allowances. The plan also considers best practices for transitioning a vulnerable population and involving clients in decision making. Health and other forms of support are being identified with the clients and service partners. The report seeks Council authority to begin implementing the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration (SSHA) 2016 Approved Capital Budget.
As directed by Council in November 2015, this report also provides a status update on negotiations with the Province of Ontario for the terms of possible rights to acquire the property and buildings at 311 Jarvis Street and 354 George Street. The site, across the street from Seaton House, could be developed for affordable and mixed housing and other uses once vacated in 2022. The Province is receptive to dialogue with the City regarding the future use of those properties.
Background Information
https://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-94286.pdf
Attachment 2 - Project Procurement, Delivery Options and Value for Money Analysis Report, prepared by Ernst & Young Orenda Corporate Finance Inc.
https://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-94596.pdf