Item - 2016.EX16.12

The Executive Committees recommend that:

1.   City Council approve the Post Construction Plan – Term Sheet attached as Appendix 1 to the report (June 20, 2016) from the Deputy City Manager, Cluster A and Deputy City Manager, Cluster B; such plan to include the creation of an independent not-for-profit charitable corporation (the "non-profit entity") to program, operate and maintain Project: Under Gardiner ("the Project") that anticipates calling for the inclusion of two members of City Council on its Board of Directors representing those wards in closest proximity to the Project, currently Wards 19 and 20.

2.  City Council amend the approved 2016 - 2025 Capital Budget and Plan for the Waterfront Revitalization Initiative to adjust Under Gardiner project funding in 2017; replacing $10.0 million in capital funding from the Project Donor with a $1.0 million contribution from the City Wide Parkland Development Cash-in-lieu reserve fund (XR2211) and a $9.0 million contribution from Development Charges (XR2114).

3.  City Council adjust the approved 2016 Operating Budget for City Planning by $2.0 million gross and $0 net, fully funded from the Project donations through a draw from the Gardiner West Public Realm Improvements Reserve Fund (XR3034).  These expenditures will reflect a transfer to the non-profit entity for the purpose of funding costs for the programming, operations and maintenance of the Project.

4.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, to negotiate and enter into an amendment to the Memorandum of Understanding, dated December 21, 2015, among the City of Toronto, Waterfront Toronto and Judy and Wilmot Matthews Foundation, on terms acceptable to the Deputy City Managers and in a form satisfactory to the City Solicitor, to include the Council-approved Post Construction Plan and facilitate the completion of the Foundation's donation.

5.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B to negotiate and enter into any and all other agreements necessary to implement the Post Construction Plan, on terms acceptable to the Deputy City Managers and in a form satisfactory to the City Solicitor.

6.  City Council request that the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, report back by the end of 2016 on specific details concerning the following:

a.  necessary legal agreements between the City and the non-profit entity;

b.  provisions to protect public access to new open space and amenities;

c.  protocols related to sponsor and donor recognition;

d.  management of events (including appropriate controls on scale, frequency, intensity); and

e.  collaboration between Fort York National Historic Site and the non-profit entity.

7.  City Council request that the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, following consultations with the non-profit entity, report back on options for a viable long-term funding strategy for the Project by June 30, 2021.

8.  City Council authorize City staff to make submissions for funding to the Government of Canada and the Province of Ontario and to pursue private funding and sponsorships to support programming, operations, maintenance and capital expenses for the Project.

9.  City Council endorse the grade-separated suspended bridge Alternative Design for the Schedule "C" Municipal Class Environmental Assessment Process for the Project.

10.  City Council authorize the General Manager, Transportation Services, to issue a Notice of Study Completion and to file the Environmental Study Report for the Fort York Boulevard Crossing Class Environmental Assessment Study in the public record for 30 days in accordance with the requirements of the Municipal Class Environmental Assessment pursuant to the Environmental Assessment Act.

11.  City Council authorize the acquisition of those lands located beneath the Gardiner Expressway and comprising part of 70 Iannuzzi Street for the purpose of facilitating Project: Under Gardiner based on an existing Record of Site Condition (RSC) and Certificate of Property Use (CPU).

12.  City Council endorse "the Bentway" as the official name for the Project.

This report recommends a governance and funding model for the programming, operations and maintenance of capital associated with Project: Under Gardiner (or "the Project"). Announced last year, the Project has been made possible by a $25 million donation from the Judy and Wilmot Matthews Foundation (the "Donor"). To date, the City has received $3 million, with the balance of funding to be provided once Council approves a governance and funding model satisfactory to the City, Donor and Waterfront Toronto, the parties to the Memorandum of Understanding ("MOU") for the Project.

The full vision for the Project involves the transformation of a 10-acre, 1.75-kilometre linear area beneath the elevated Gardiner Expressway into a new east-west multi-use trail and network of public amenities extending from west of Strachan Avenue to Spadina Avenue. The first phase involves the 5.8-acre area between Strachan Avenue and Bathurst Street with a trail connection extending to Spadina Avenue. Planned elements for the first phase include the "Strachan Gate Timber Pier" structure which provides performance and spectator space, a pedestrian and cycling bridge across Fort York Boulevard, a 450-metre ice skating plaza and programming components to activate the public space on a year-round basis.

Project: Under Gardiner will be a major civic and cultural asset that, much like Toronto's revitalized waterfront, will attract and serve residents from across Toronto. The Project will provide much needed public open space and amenities to a high density and rapidly growing area of Toronto. It will provide linkages to 70,000 residents in adjoining communities, including Fort York, Liberty Village, South Niagara, Bathurst Quay, Wellington Place and City Place. It will also connect multiple visitor destinations including Exhibition Place, Fort York National Historic Site and Toronto's waterfront.

Implementation of Project: Under Gardiner is being managed by Waterfront Toronto in consultation with other partners, including the City. Waterfront Toronto has retained the services of a consultant, HR&A Advisors, Inc. ("HR&A") to provide analysis and options for the long-term programming, operations and maintenance of the area. The HR&A study is included as Appendix 2 to this report.

There is consensus among the partners that a not-for-profit charitable corporation ("non-profit entity") is the most appropriate governance model for Project: Under Gardiner. A range of alternatives were evaluated by HR&A, Project partners and City staff. The non-profit entity was identified as the option that best addresses the interests of all partners and supports the governance objectives for the Project: to balance autonomy and authority; produce "best-in-class programming, operations and maintenance; secure diverse funding streams; leverage existing capacity and achieve sustainable, long-term management.

There are various examples of non-profit management of public space in Toronto and other jurisdictions across North America. Evergreen Brick Works and Artscape Wychwood Barns provide a limited precedent within the local context, although both sites involve outdoor spaces of more modest scale and complexity than that of Project: Under Gardiner. Comparable examples in other jurisdictions include Assiniboine Park Conservancy Incorporated in Winnipeg, Friends of the High Line and Central Park Conservancy in New York City, and Atlanta BeltLine Incorporated.  

If Council endorses the formation of the non-profit entity through this report a number of steps will be taken, including at least two reports back to Council in 2016 and 2021. The first step is to amend the MOU to incorporate an agreed-upon "Post Construction Plan" for project governance and funding that will include a clause establishing the non-profit entity. The terms and conditions of that Post Construction Plan are reflected in the Term Sheet attached as Appendix 1.

A City staff committee will be formed to negotiate further terms with the non-profit entity, once established, and to provide ongoing support as required. The local Councillors and community stakeholders will be consulted throughout this process. It is anticipated that the following areas of concern for the City and adjacent community will be addressed through these negotiations:

- necessary legal agreements between the City and the non-profit entity

- provisions to protect public access to new open space and amenities

- protocols related to sponsor and donor recognition

- management of events (including appropriate controls on scale, frequency, intensity)

- collaboration between Fort York National Historic Site and the non-profit entity.

Staff will report back to Council by the end of 2016 with details regarding the outcome of these negotiations and the proposed further terms for programming, operations and maintenance of the Project, including the roles and responsibilities of the non-profit entity and the City.

To support the early stage operations of the non-profit entity, this report recommends a one-time draw of $10 million in City capital funding to enable a matching $10 million of the Donor's funds to be directed to programming, operations and maintenance from 2016 to 2023. The City's $10 million contribution would be drawn from Development Charges and cash-in-lieu funds intended for the creation of parkland and recreational space. (These capital funds cannot be directly committed to operating expenses.) The Donor's $10 million operating contribution would be drawn from its original $25 million capital donation to the Project.

This $10 million City capital contribution will result in the creation of new public recreation and open space to serve a rapidly growing area of Toronto. It will leverage the $25 million donation and an estimated $20 million in additional non-City revenues, at a minimum, to be raised over the next eight years.

To facilitate this proposed exchange of City and Donor funds, Council authority is sought to amend the Council-approved Waterfront Revitalization Initiative 2016-2025 Capital Budget and Plan for the $25 million Under Gardiner project as follows:

- $10 million decrease in capital funding from the Project Donor

- $9 million in increased capital funding from eligible Development Charge funding

- $1 million in increased capital funding from the City Wide Parkland Development Cash-in-lieu reserve fund

The Donor's contribution of $10 million for programming, operations and maintenance would be placed in the Gardiner West Public Realm Improvements Reserve Fund (XR3034) and allocated by Council to the non-profit entity through the annual budget process. Staff recommend an eight-year cash flow for these funds as per the following table:

The City will allocate the Donor's funding in order to support the Project as proposed above. However, the non-profit entity will be an independent organization and will be responsible for managing to a board-approved budget.

HR&A has estimated that the non-profit entity will have a budget of $3.2 to $4.5 million annually for the first phase of Project: Under Gardiner based on a review of comparable organizations. These figures represent preliminary estimates that will be further refined once detailed programming and operational plans, and a funding strategy are developed. If additional revenues are identified to support a more ambitious program, the non-profit entity's budget may be at the high end of the estimated range. If the Project faces funding constraints, the budget will necessarily be managed to a lower figure. Ultimately, expenses will be constrained to the fixed amount of annual funding processed through the City as well as any other sources of revenue independently raised by the non-profit entity.

In addition to City contributions, the HR&A study identifies a number of funding options for the non-profit entity: fundraising (including federal and provincial sources), sponsorships and earned income. It is expected that the non-profit entity will develop these revenue sources and City funding will decrease as a share of total expenses in future years. The parties acknowledge the need for sustainable and predictable funding for the Project beyond the eight year start-up period. Therefore, City staff will work with the non-profit entity to develop a viable long-term (i.e., post-2023) financial strategy for Project: Under Gardiner and will bring this forward to Council for consideration by June 30, 2021.

The partners have already undertaken considerable fundraising activity. The City has submitted an application for funding through the Canada 150 Fund to support a major sesquicentennial festival for the launch of the Project: Under Gardiner in July 2017, as well as other first year programming. The Toronto Office of Partnerships is currently working with partners to identify additional sponsorship and philanthropic opportunities to support the Project.

This report also details the recommended preferred Alternative Solution in the Municipal Class Environmental Assessment (EA) study for the crossing of Fort York Boulevard. The recommended Alternative Design is a suspended pedestrian and cycling bridge, with an estimated cost of $5 to $6 million funded entirely by Donor capital funds. This option was strongly endorsed by the public through the EA consultation process. It will create a signature piece of infrastructure for the area that attracts visitors and serves as an asset for the community.

Endorsement from Council will enable completion and filing of the Environmental Study Report with the Ministry of the Environment and Climate Change, as well as construction within the implementation timeframes of July 2017.

Additional items in this report include the results of the "Reclaim the Name" campaign for the Project, an update on the air quality assessment within the study area and incorporation of hiring opportunities for youth through various programs.