Item - 2022.EX31.5

The Executive Committee recommends that:

1. City Council approve the following terms and approach to be incorporated into the drafting of Implementing Agreements between the City, the Province of Ontario and Cadillac Fairview:

a. a minimum of 5 percent of the total permitted residential gross floor area at East Harbour, and no less than 215 affordable rental housing units, shall be constructed and financed by Cadillac Fairview for a 99-year period, based upon the City Council approved Inclusionary Zoning definition of affordable rent;

b. to the satisfaction of the City, Cadillac Fairview shall design, construct, finish and convey ownership of two 62 pupil childcare facilities to the City of Toronto, in accordance with the City of Toronto's Child Care Development Guideline;

c. to the satisfaction of the City, Cadillac Fairview shall design, construct, finish and convey ownership of a Community Recreation Centre of approximately 6,500 square metres south of Future Street "E" to the City of Toronto;

d. the Province of Ontario and Cadillac Fairview will be responsible for funding two-thirds of the cost for the Phase One Broadview Eastern Flood Protection project, with the remaining one-third to be funded by the City;

e. the City and Cadillac Fairview (through its financial contribution) will each be responsible for funding fifty per cent of costs associated with the road portion of the Broadview Avenue Extension from Eastern Avenue to the Metrolinx rail embankment;

f. Cadillac Fairview will contribute $2.5 million to offsite capital upgrades to the Queen Saulter, Jones, and/or Riverdale branches of the Toronto Public Library;

g. Cadillac Fairview will contribute $2.0 million to the delivery of public art in the vicinity of East Harbour;

h. the Province of Ontario and Cadillac Fairview will ensure the appropriate legal mechanisms are in place so that the community benefits secured as part of the existing Master Section 37 Agreement, dated October 5, 2018, will be honoured by the owner of East Harbour and incorporated into future agreements as required to confirm the obligation; and

i. no development charge credits will be provided to Cadillac Fairview for any of the community benefits and enabling infrastructure described in Recommendations 1.a. through 1.g. above.

2. City Council authorize the Deputy City Manager, Infrastructure and Development Services to negotiate Implementing Agreements with the Province of Ontario and Cadillac Fairview that secure City interests, subject to terms outlined in this report and including the key terms defined in Recommendation 1 above, and for the Deputy City Manager, Infrastructure and Development Services to report back to City Council in the first quarter of 2023 on the proposed terms for City Council consideration.

3. City Council direct the Deputy City Manager, Infrastructure and Development Services and the Chief Financial Officer to identify funding for $57 million, the City's one-third share of the balance of the Phase One Broadview Eastern Flood Protection project, through the 2023 - 2032 Capital Budgeting and Planning process, with implementation subject to securing the remaining two-thirds share from the Province of Ontario and Cadillac Fairview.

4. City Council direct the Deputy City Manager, Infrastructure and Development Services and the Chief Financial Officer to identify funding for $4.5 million, the City's fifty per cent share of the costs of the extension of Broadview Avenue from Eastern Avenue to the Metrolinx rail embankment, through the 2023 - 2032 Capital Budgeting and Planning process, with implementation subject to securing the remaining fifty per cent share from the Province of Ontario and Cadillac Fairview.

In April 2021, the Province announced a Transit Oriented Communities (TOC) commercial partnership with Cadillac Fairview for the East Harbour site.  The TOC partnership proposes to add 302,000 square metres (3.25 million square feet) of residential development, or approximately 4,300 residential units, to the 926,000 square metres (10 million square feet) of employment development previously approved in the Unilever Precinct Secondary Plan and relevant Zoning By-laws.  Materials submitted by Cadillac Fairview in May 2021 propose nine residential towers, nine office towers, and a street network similar to the 2018 East Harbour Master Plan.  As part of the commercial Contribution Agreement between Cadillac Fairview and the Province, the two parties have negotiated a capital contribution toward matters they expected the City would require for the East Harbour site, including affordable housing, community services and facilities, and enabling infrastructure for the East Harbour Transit Hub.

Since the announcement, City staff have been working with the Province and Cadillac Fairview, including providing support for a public engagement process led by the Province, to review materials submitted for the proposal.  A key focus of the review by City staff has been responding to the City Council mandated terms for negotiations with the Province and Cadillac Fairview.  The East Harbour TOC proposal has been advanced by the Province within the context of the legislative framework provided by the Building Transit Faster Act, the Transit Oriented Communities Act, and Minister's zoning powers under the Planning Act.  It is within this context that this proposal has been reviewed by City staff, and to every extent possible, City staff have sought to negotiate and protect for municipal objectives to achieve appropriate outcomes.

This report follows from the January 2022 update to Executive Committee (EX29.4 Assessment of the East Harbour Transit Oriented Communities Proposal) and outlines the high level terms of an initial agreement for the City on parameters for the East Harbour TOC proposal put forward by the Provincial government and Cadillac Fairview.  City staff are seeking City Council approval of these terms and City Council direction regarding further detailed negotiations related to several Implementing Agreements.

There are two key means through which the TOC proposal will be advanced initially: a Minister's Zoning Order will provide the land use permission and development parameters for the site, and the Province and Cadillac Fairview will enter a commercial Contribution Agreement.  This report requires City Council consideration of conditions which should be adopted in order for matters of municipal interest to be addressed to the greatest extent possible at this stage.  A number of Implementing Agreements outlined below will constitute the next stage of approvals considered by City Council. 

The commercial Contribution Agreement between the Province and Cadillac Fairview has framed the East Harbour TOC proposal.  The City is not a party to this Contribution Agreement and City officials have not seen its full text.  City staff have, however, reviewed the Conditions Precedent outlined in the Agreement and have had an opportunity to provide input into potential revisions to those conditions.  (The Conditions Precedent describe conditions or events that must come to pass before parties are obligated to perform commitments in the agreement.  These do not legally bind the City, but have shaped the issues under negotiation).   Many of the Conditions Precedent require City actions or approvals to be executed prior to Cadillac Fairview releasing its financial contribution.  The Conditions Precedent include:

- Confirmation of rail safety measures for development at East Harbour;

- Conclusion of a Municipal Infrastructure Agreement between the City and Cadillac Fairview to advance infrastructure to enable the East Harbour Transit Hub and East Harbour development;

- Acceptance of the design for an onsite flood protection landform and that it will satisfy East Harbour flood protection requirements;

- Draft Plan Approval of the draft Plan of Subdivision;

- Confirmation of the cross-section and Right of Way dimensions for the Broadview Avenue extension;

- Confirmation by the Province and City of Cadillac Fairview's proposed approach to environmental requirements for conveyances;

- Conclusion of an Access Agreement with the City and CreateTO to allow permanent and temporary access across the Keating Lands for the extension of Broadview Avenue, underground services, construction gate access points, contractor parking, and other elements deemed necessary for the development of East Harbour;

- Confirmation of zoning permissions for residential development through a Minister's Zoning Order (MZO);

- Conclusion of an Affordable Housing Agreement with the Province, City and Cadillac Fairview; and

- Conclusion of a Development Agreement between Cadillac Fairview and the City related to required community services and facilities, parkland dedication and other planning matters
 

Over the course of the past nine months, City staff have negotiated terms to try to reflect the City's main interests as directed by City Council.  City staff have achieved significant concessions in the negotiations to reflect these interests.  The key high level terms of the proposed agreement with the Province and Cadillac Fairview for the East Harbour TOC include:

- Cadillac Fairview will deliver a minimum of 215 affordable rental housing units at Inclusionary Zoning levels of affordability for 99 years, in line with recent City policy on affordable housing;

- Cadillac Fairview will deliver additional community services and facilities (two childcare centres and a Community Recreation Centre at East Harbour) along with cash contributions to public art and offsite libraries to serve the growing residential population in this area of the City;

- Cadillac Fairview will deliver a minimum of 7,000 square metres of parkland, exclusive of the building footprint for the Community Recreation Centre, in two blocks;

- Cadillac Fairview (through its financial contribution) will contribute a fifty per cent share of the costs of the Broadview Avenue extension north of the Metrolinx rail embankment;

- Cadillac Fairview (through its financial contribution) and the Province will together contribute two-thirds of the costs of the Phase One Broadview Eastern Flood Protection project;

- These contributions by Cadillac Fairview will be in lieu of future Community Benefits Charges and the application of Inclusionary Zoning provisions on the site;

- The Province and the City (working with the Toronto and Region Conservation Authority and Waterfront Toronto) will conclude terms for the further design, construction and governance of the Phase One Broadview Eastern Flood Protection project;

- The City will contribute a fifty per cent share of the costs of the Broadview Avenue Extension north of the Metrolinx rail embankment, and one-third of the costs of the Phase One Broadview Eastern Flood Protection project;

- The Provincial MZO will maintain the Holding provisions and the existing Master Section 37 Agreement benefits, contained in the existing site specific Zoning By-law, will remain in place for non-residential development; and

- The Province, the City and Cadillac Fairview will continue negotiations on a series of Implementing Agreements to address the specific terms of the initial agreement and ensure implementation.
 

The TOC proposal will be implemented through an MZO to introduce residential development permissions at East Harbour. This report discusses the basic parameters for the MZO.  City staff have had an opportunity to review and comment on the draft MZO.  City comments focused on strengthening the preservation of existing Holding provisions, ensuring the existing Master Section 37 Agreement remains intact, and protecting the integrity of the underlying site specific and parent Zoning By-laws.  It is the City's expectation that the MZO will maintain the City's full site plan approval authority for future development at East Harbour, and that it will be deemed a municipal by-law.  At the time of writing this report, discussions of the MZO continue with the Province.  The Province is expected to issue the MZO sometime this spring.

Over the course of the next year, the Province, City and Cadillac Fairview will need to negotiate a number of Implementing Agreements that will flow from the Contribution Agreement and the broader negotiations among the Parties.  Some of these agreements are tied to the use of an MZO, which will limit the City's ability to use some of its usual planning legal instruments.  City staff are seeking City Council direction regarding the negotiations of these Implementing Agreements, and will report back to City Council in early 2023 seeking approval of the final terms.

The target is to conclude the following Implementing Agreements by March 31, 2023:

- Memorandum of Understanding between the Province and the City related to the East Harbour TOC project as a whole;

- Development Agreement between the City and Cadillac Fairview related to the delivery of the range of commitments and establishing a direct relationship between the City and Cadillac Fairview;

- Affordable Housing Agreement between the Province, City and Cadillac Fairview to confirm the terms for the delivery of affordable housing;

- Municipal Infrastructure Agreement between the Province, City and Cadillac Fairview to advance the construction of certain services that may be required for the East Harbour Transit Hub and related development;

- Potential Conveyance Agreement involving the Province, City and Cadillac Fairview to address the timing and approach to property conveyance linked to advancing the East Harbour Transit Hub;

- Access Agreement between Cadillac Fairview and CreateTO for permanent and temporary access across the Keating lands to facilitate the construction of the Broadview Avenue extension, site servicing, construction gate access points, constructor parking and other elements deemed necessary to facilitate East Harbour development;

- Amendment to the existing Master Section 37 Agreement to reflect changes only to the location and timing of certain elements

- Delivery and Governance Agreement involving the Province and the City (working with the Toronto and Region Conservation Authority and Waterfront Toronto) related to the Phase One Broadview Eastern Flood Protection project;

- Delivery and Governance Agreement involving the Province, City, and other parties related to the Broadview Avenue Extension from Eastern Avenue to the Metrolinx rail embankment;
 

Based on negotiations among the Parties, targets have also been set for concluding several matters that do not require separate agreements.  By March 31, 2023, the Parties aim to:

- Confirm rail safety measures for development at East Harbour with the appropriate approval authorities;

- Confirm approval of the design of the flood protection landform south of the Metrolinx rail embankment on the East Harbour site;  

- Achieve draft Plan Approval of the draft Plan of Subdivision; and

- Confirm the final cross-section and Right of Way dimensions for the Broadview Avenue extension
 

This report provides an assessment of how the high level terms of agreement for the East Harbour TOC address the negotiating mandate set out by City Council for East Harbour. The report also outlines how City Council's negotiating mandate will be advanced during the negotiation and drafting of the Implementing Agreements, and addresses further direction that City staff require to continue with negotiations.