Item - 2020.RA11.2

The Chief Executive Officer, CreateTO recommends that:  

1.  The Board of Directors of CreateTO direct the Chief Executive Officer in consultation with the Executive Director, Corporate Real Estate Management, the General Manager, Economic Development and Culture, the Chief Planner and Executive Director, City Planning along with the General Manager, Parks, Forestry and Recreation to negotiate the terms and conditions of a long-term fair market-value lease agreement with SCG Aquarius Toronto Hotel, Inc., as tenant and SCG Aquarius Toronto Hotel, Inc., in its capacity as General Partner for SWA Toronto L.P., as beneficial tenant, to design, build, finance and operate a new office building and convention centre and other complementary facilities at 11 Bay Street and to report back to the Board of Directors of CreateTO on the results of the negotiations.

The purpose of this report is to provide an update to the Board of CreateTO on the ongoing conversations between staff of CreateTO and QuadReal Property Group Limited Partnership ("QuadReal") and Barney River Investments Limited ("Barney River"), the managers acting on behalf for the tenant, on a proposed long-term lease renewal/new lease agreement and redevelopment of the City owned property at 11 Bay Street (the "Subject Property").  QuadReal and Barney River have proposed a complete redevelopment of the Subject Property which will result in a new office tower and rebuilt convention centre at grade.  

As part of this proposed lease agreement, CreateTO has been working with the City's Parks, Forestry and Recreation, Community Planning and Economic Development divisions to understand the opportunities that exist within this proposal for the Subject Property itself, and within the broader public realm in the Central Waterfront.  Along with a new office tower and rebuilt convention centre, there is an opportunity to leverage the City owned asset to partially fund the redevelopment of the Jack Layton Ferry Terminal ("JLFT"), along with negotiating into the lease agreement, obligations for design excellence, sustainability and connectivity along with ground level activation. CreateTO and Community Planning have identified this redevelopment of the Subject Property as an excellent candidate to help advance the City's Urban Design Initiative which could see an open and international design competition for this major and transformational project.

The current term of the existing ground lease between the City of Toronto, as landlord ("City") and SCG Aquarius Toronto Hotel, Inc., as tenant and SCG Aquarius Toronto Hotel, Inc., in its capacity as General Partner for SWA Toronto L.P., as beneficial tenant (collectively the "Tenant") for 11 Bay Street expires on May 31, 2030, with the option of two subsequent 5 year renewal terms.  These options may be exercised by the Tenant in accordance with the terms of the ground lease, but the City's retained the absolute discretion on whether or not to grant the renewal options.  At the end of the lease term, the Tenant is required to surrender the Subject Property and all buildings and improvements thereon to the City.

There is no financial impact for the adoption of this report.