Item - 2021.EP20.1

The Board of Governors of Exhibition Place:

1.  Subject to obtaining City Council approval, approved a new lease (the "New Lease") between the City of Toronto, as landlord (the "Landlord"), Lakeshore Princess West Limited Partnership (the "Tenant"), and the Board, for a term commencing on the earlier of:

i.  commencement of the excavation of the Phase 2 lands in accordance with the necessary excavation permits issued by the City; and

ii.  90 days after the issuance by the City of all required excavation permits, and ending co-terminous with the lease for the Phase 1 Hotel X development, substantially on the terms and conditions set out in Appendix "A", Confidential Attachment 1, and Confidential Attachment 2 to the report (October 14, 2021) from the Chief Executive Officer, Exhibition Place, and such other and amended terms and conditions deemed appropriate by the Deputy City Manager, Corporate Services, the Chief Executive Officer, Exhibition Place, and in a form satisfactory to the City Solicitor.

2.  Directed the Chief Executive Officer to work with the Deputy City Manager, Corporate Services to seek Council's approval for the New Lease set out in Part 1 above.

3.  Subject to the Site Plan Application review process developed for Exhibition Place by City Planning, approved the tenant design proposal for the Phase 2 Hotel and Performance Venue Development as set out in the proposed design plan and situated on the Phase 2 Lands as provided for in Appendix "A" Term and Conditions of New Lease; Appendix "A" - Schedule 1 Exhibition Place Phase 2 Lands; Appendix "A" - Schedule 1A Site Plan of Leased Property; and Appendix "A" - Schedule 4 Tenant Proposed Conceptual Design of Development to the report (October 14, 2021) from the Chief Executive Officer, Exhibition Place.

4.  Directed the Chief Executive Officer, Exhibition Place, in consultation with the Executive Director, Social Development, Finance and Administration and the Executive Director, Corporate Real Estate Management, to review the City of Toronto's community benefit initiatives and consider the inclusion of applicable components in the Phase 2 Hotel X development.

5.  Directed that Confidential Attachment 1 and Confidential Attachment 2 to the report (October 14, 2021) from the Chief Executive Officer, Exhibition Place remain confidential in their entirety and not be released publicly until the end of the term of the New Lease, as they pertain to a proposed or pending acquisition or disposition of land by the City and the Board of Governors of Exhibition Place.

Phase 1 Development

A Request for Proposal (RFP) for the Phase 1 Hotel X development was released through the City of Toronto Purchasing on April 17, 2007. Both of the two hotel developers short-listed through a previous REOI process submitted a proposal and the Board approved HK Hotels LLC (“HKH”) as the successful proponent. In March 2008, the Board approved a Letter of Intent (LOI) between the Board and HKH, which set out general terms along with an exclusive right to negotiate. 

At its meeting of October 8, 2009, the Board of Governors approve of entering into a 49-year lease agreement with two 25-year renewal terms with HKH (the "Phase 1 Lease"), which report was subsequently approved by City Council at its meeting of November 30, December 1, 2, 3, 4, 7, 2009 by adoption of Executive Committee Item EX36.3.

The 750,000 square feet first phase of Hotel X opened for operations on March 20, 2018, with the hotel development consisting generally of a podium and tower (29 floors for the tower, 404 rooms, and 411 underground parking spots).

Phase 2 Development

Under the current lease for Hotel X, the tenant, Princes Gate Hotel Limited Partnership (the "Phase 1 Tenant"), as per City Council authority in December 2009 by adoption of Executive Committee EX36.3 has an option to lease certain phase 2 lands to the west of the current property. By letter dated July 31, 2020, the Phase 1 Tenant gave formal written notice to the Board Chair and CEO of Exhibition Place that it wished to exercise that option for the second tower and other related amenities. The Board was advised of the notice at its meeting of September 18, 2020 by adoption of report EP14.5, under which the Board:

1. Requested the Chief Executive Officer, Exhibition Place to commence discussions with City of Toronto Corporate Real Estate Management staff and Hotel X representatives to start negotiations on the Phase 2 development and report back to the Board on:

a.  the results of the discussions;

b.  terms and conditions for the development, including design concept;

c.  an overview of the approval process; and

d.  how the development will take into consideration the recent Exhibition Place Master Plan.

At its meeting of October 26, 2020 (EP14.5), the Board received from the Phase 1 Tenant's principal shareholder, Mr. Henry Kallan, Overactive Media Corporation, and their architect, Populous, a power point presentation on the progress of the Phase 2 development design concept.

The 360,000 square foot second phase expansion of the Hotel X facility includes a 400-room hotel with underground parking of approximately 400 spaces (the "Phase 2 Hotel") and a 190,000 square feet, 6,600 to 7,000 seat auditorium-style entertainment performance venue (the "Performance Venue") for a total area of 550,000 square feet (all figures approximate), but excluding the 200,000 square feet parking space. The proposed Phase 2 Hotel and venue would be located to the west of Stanley Barracks on the south side of Princes' Boulevard. The performance venue will be designed with state‐of‐the-art technology to accommodate eSports tournaments and leagues, and would be home to the Toronto Defiant of the Overwatch League ("OWL") and the Toronto Ultra of the Call of Duty League ("CDL").

Located along the Toronto waterfront at Exhibition Place, the Performance Venue facility plans to host more than two hundred (200) events a year, driven primarily by premium music and entertainment bookings. It will also serve to attract major citywide conventions, corporate events and product launches, awards shows, and a full slate of eSports events increasing over time.

The vision for the Performance Venue is to combine a premium concert and live events program with world leading technology and best in class hospitality to create an unparalleled experience for fans. The Performance Venue will help to position Toronto and Canada as a destination of choice for the global industry of gaming and eSports.

The financial terms and conditions, concept/specifications/design plan and signage plans surrounding the Phase 2 Hotel and Performance Venue have been negotiated between the parties and shall be subject to review and approval by both the Board and City Council.

A future site plan application will be subject to review through City Planning and the approval of the Chief Planner and Executive Director, City Planning Division.

The proposed Phase 2 Hotel is permitted based on the approval of Council of the Phase 1 Hotel lease, which provided the Phase 1 tenant with an option to develop a Phase 2 Hotel.