Item - 2021.GL27.18

The General Government and Licensing Committee recommends that:  

1.  City Council approve a new lease (the "Phase 2 Lease") between the City of Toronto (the "Landlord"), Lakeshore Princess West Limited Partnership (the "Phase 2 Tenant"), and The Board of Governors, Exhibition Place (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, which term will end co-terminous with the lease for the Phase 1 Hotel X development (the "Phase 1 Lease"), and will be substantially on the terms and conditions set out in Appendix A to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place and Confidential Attachments 1 and 2 to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and 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.  City Council approve, subject to the Site Plan Application review process developed for Exhibition Place by City Planning, the Phase 2 Tenant's 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, titled "Terms and Conditions of Phase 2 Lease" to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place; Appendix A, titled "Schedule 1: Phase 2 Lands" to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place; Appendix A, titled "Schedule 1A: Site Plan of Leased Property" to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place; and Appendix A, titled " Schedule 4: Conceptual Design of Development" to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place.

3.  City Council direct 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 Development.

4. City Council direct that Confidential Attachments 1 and 2 to the report (November 19, 2021) from the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place remain confidential in their entirety and not be released publicly until the end of the term of the Phase 2 Lease, as they pertain to a proposed or pending acquisition or disposition of land by the City and the Board.

Following the completion of a successful Request for Proposal process held in 2007, the City of Toronto and the Board of Governors of Exhibition Place (the "Board"), collectively as landlord, executed a 49-year lease agreement with two options, each to renew for a 25-year term (the "Phase 1 Lease") with Princes Gate Hotel Limited Partnership (the "Phase 1 Tenant") for the development of a new hotel on the Exhibition Place grounds. The first phase of Hotel X opened for operations on March 20, 2018, with the hotel development consisting generally of a 750,000 square foot podium and 29-floor tower that includes 404 rooms, and at least 350 underground parking spots.

Under the Phase 1 Lease, the Phase 1 Tenant had an option to lease certain additional lands to the west of the Phase 1 Lease lands for the development of second hotel tower. The Phase 1 Tenant exercised the option by written notice to the Board dated July 31, 2021. 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 second hotel. However, as discussed below, the option under the Phase 1 Lease did not provide for the Performance Venue, now proposed by the Tenant for Phase 2.

This report recommends that City Council approve entering into a new lease (the "Phase 2 Lease") between the City, as the landlord, and Lakeshore Princess West Limited Partnership (the "Phase 2 Tenant") for the development and operation of a hotel and performance venue on the Phase 2 Lands, based on the negotiated terms and conditions included in this report under Appendix A and Confidential Attachments 1 and 2, as approved by the Board, subject to obtaining the necessary City authorization, by adoption of Item EP20.1 at its meeting of October 29, 2021.

The proposed second phase expansion of the Hotel X facility (the "Phase 2 Development") would be located to the west of Stanley Barracks on the south side of Princes' Boulevard, along the Toronto Waterfront at Exhibition Place, as shown in Appendix A - Schedule 1 (the "Phase 2 Lands"), and includes approximately 750,000 square feet of space comprised of:

- A 400-room hotel (360,000 square feet) (the "Phase 2 Hotel");

- Underground parking of approximately 350 spaces (200,000 square feet);  

- A 6,600 to 7,000 seat auditorium-style entertainment performance venue (190,000 square feet) (the "Performance Venue").
 

CreateTO has reviewed the proposed deal and support the staff recommendations for City Council approval. Pending City Council approval of the recommendations in this report, 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. City and Exhibition Place staff will complete the negotiations of the Phase 2 Lease and will work with the Phase 2 Tenant to develop a community engagement strategy, in consultation with the local Councillor.