Item - 2021.GL26.9

The General Government and Licensing Committee recommends that:  

1. City Council approve the recommended Head Lessee proponent, TAS Tecumseth Niagara LP, and their Project Proposal for the design, construction, leasing and management responsibilities in connection with the reuse of the Wellington Destructor property at 677 Wellington Street West.

2. City Council authorize the Executive Director, Corporate Real Estate Management to enter into a long-term lease with TAS Tecumseth Niagara LP, conditional upon declaration that the 677 Wellington Street West property is surplus to the City's needs and conditional upon capital funding approval through the 2022 budget process, substantially on the major terms and conditions set out in Revised Confidential Attachment 2 to the CreateTO Board Report (August 30, 2021) from the Chief Executive Officer, CreateTO, and on such other or amended terms and conditions including funding and financial conditions acceptable to the Executive Director, Corporate Real Estate Management, or their designate, and in a form satisfactory to the City Solicitor.

3. City Council authorize the Executive Director, Corporate Real Estate Management, or their designate, to administer and manage the Lease including the provision of any amendments, consents, approvals, waivers, notices, and notices of termination, provided that the Executive Director, Corporate Real Estate Management may, at any time, refer consideration of such matters, including their content, to City Council for its determination and direction.

4. City Council authorize the City Manager and / or any other relevant City Official, in consultation with the Chief Financial Officer and Treasurer, to apply for and receive funding, and negotiate, enter into and execute any agreements required in respect of such funding for the Wellington Destructor project, including any amendments and extensions thereto, with the Government of Canada, the Province of Ontario and their respective agencies, and / or non-government sources, in a form satisfactory to the City Solicitor.

5. City Council authorize the public release of the Confidential Attachment 1 and the Revised Confidential Attachment 2 to the CreateTO Board Report (August 30, 2021) from the Chief Executive Officer, CreateTO, following the execution of the Lease by the Head Lessee and the City.

The purpose of this report is to seek approval from City Council on the project proposal (the "Project Proposal") put forth by the recommended head lessee, TAS Tecumseth Niagara LP ("the Head Lessee", "TAS Tecumseth Niagara LP "), and to authorize the Executive Director, Corporate Real Estate Management to enter into a long term lease (the "Lease") with TAS Tecumseth Niagara LP and to administer and manage the Lease for the Wellington Destructor property at 677 Wellington Street West (“the Property”), based on the terms and conditions recommended by the CreateTO Board, subject to obtaining City Council approval, by adoption of Item RA24.10 at its meeting of September 13, 2021 (“the CreateTO Board Report”), as set out in the CreateTO Board Report’s Revised Confidential Attachment 2. This report also seeks authority to apply for funding from other levels of government and from private sources, and to enter into and execute required agreements.

The Property presents an opportunity for the adaptive reuse of an existing City-owned heritage building as a cultural and community hub, with employment and commercial uses to generate new income, as well as to complement and support the existing and proposed employment uses of the surrounding area.

At its meeting on April 24, 25, 26 and 27, 2018, City Council authorized the Deputy City Manager, Internal Corporate Services (now Corporate Services) to develop and undertake a call process to seek and secure a head lessee for a long-term lease of the Wellington Destructor, and to report back to City Council on the results of the call process with a final recommendation for the selected head lessee. In 2019, Corporate Real Estate Management completed the call process, including the evaluation of proposals. As directed by City Council, CreateTO negotiated a term sheet with the proposed Head Lessee, which outlines the basic terms of the Lease and ongoing management of the Property.  

Pending City Council approval of the recommendations in this report, and subject to the approval of the City's capital funding contribution to the Project Proposal to be brought forward in the 2022 Budget process, City and CreateTO staff will complete the negotiations of the Lease and will work with the Head Lessee to develop a community engagement strategy, in consultation with the local Councillor.

The purpose of this report is to seek comments from the Board of CreateTO on the proposed commercial terms of a long term ground lease for the Wellington Destructor property located at 677 Wellington Street West, as outlined in Confidential Attachment 2, to ensure that the terms, beyond those contained in the City's Request for Proposal and the proponent's proposal, are commercially reasonable and reflect the requirements of the Wellington Destructor Head Lessee Request for Proposal, issued by Corporate Real Estate Management.

At its meeting on April 24, 25, 26 and 27, 2018, City Council authorized the Deputy City Manager, Internal Corporate Services to develop and undertake a call process to seek and secure a Head Lessee for the long-term lease of the Wellington Destructor and to report back on the call process with final recommendations. The report also outlined a process for Real Estate Services (now Corporate Real Estate Management) to engage with CreateTO in the determination of commercial terms related to the proposed head lease agreement and ongoing property management of the building prior to reporting back to Council.

Corporate Real Estate Management has completed the two-stage call process and proposals were evaluated by an inter-divisional and inter-agency evaluation team including CreateTO. Confidential Attachment 1 to this report outlines the process undertaken by Corporate Real Estate Management to seek and select a Head Lessee, as well as provides details on the Head Lessee proponent selected. CreateTO has subsequently negotiated the major terms of the head lease agreement to limit risks to the City, as Landlord, and to maximize the obligations of the Head Lessee, as Tenant.

The Wellington Destructor is a 3,700 square metre, purpose-built garbage incinerator that was constructed in 1925 and remained in active use until the incineration of solid waste was halted in the mid-1970s. The building was adapted to be used as a transfer station until 1986, at which time it was decommissioned. The building has been vacant since. In 2013, the Wellington Destructor property was transferred to the Real Estate Services Division, at which time, the building was deemed to be unsafe due to extensive structural repairs required and health and safety concerns. Work was undertaken in 2016 to secure and mothball the site to protect the building until such time as permanent and appropriate uses have been determined. 

The Destructor site presents an opportunity for the adaptive reuse of an existing City-owned heritage building as a cultural and community hub, with employment and commercial uses that could generate new income, as well as complement and support the existing and proposed employment uses of the surrounding area.

The Board of Directors of CreateTO is requested to review and recommend the negotiated term sheet between the City of Toronto and the recommended Head Lessee proponent, in anticipation that City staff will bring forward a report to General Government and Licensing Committee and City Council in October and November 2021 to approve the City the staff administered Wellington Destructor Head Lessee call process and selected proponent.