Item - 2023.GG6.21

The General Government Committee recommend that:

1. Subject to the execution of the head lease amending agreement set out in Recommendation 2 below:

a. City Council, pursuant to the head lease dated June 16, 2005 (the "Head Lease"), between the City of Toronto and the Board of Governors of Exhibition Place (collectively, the "Landlord"), and BPC Coliseum Inc. (the "Tenant"), consent to the amendments to the sublease dated July 1, 2005 (the "Sublease") between BPC Coliseum Inc. (the "Sublandlord"), and Maple Leaf Sports and Entertainment Ltd. (the "Subtenant"), for the Sublease extension term of 10 years commencing July 1, 2025 and ending June 30, 2035, with an option to extend for a further 10 years to 2045, substantially on the terms and conditions set out in Appendix B and Confidential Attachment 1, and such other and amended terms and conditions deemed appropriate by the Deputy City Manager, Corporate Services and the Chief Executive Officer, Exhibition Place, and in a form satisfactory to the City Solicitor.

2. As a condition of granting the consent in Recommendation 1 above, City Council authorize the City and the Board to enter into a Head Lease amending agreement with BPC Coliseum Incorporated as set out in Schedule "B", whereby during the 10 year extension term from 2025 to 2035, the share of sublease rent, after payment of realty taxes and any other amounts provided for in the Head Lease, be distributed 75 percent to the City and the Board, as Landlord, and 25 percent to BPC Coliseum Incorporated, as Tenant, rather than 50 percent to each of the Landlord and Tenant as currently provided in the Head Lease.

3. City Council authorize the Director, Transaction Services to execute the Head Lease amending agreement set out in Recommendation 2 above, any agreements to give effect to the City consent set out in Recommendation 1 above, and any related documents, on behalf of the City.

4. City Council direct that the confidential information contained in Confidential Attachment 1 to this report remain confidential in its entirety, as it pertains to a position, plan, procedure, criteria or instruction to be applied to negotiations carried on or to be carried on by or on behalf of the City and the Board.

5. City Council direct the Chief Executive Officer, Exhibition Place to continue to optimize community use opportunities at Coca-Cola Coliseum such as public skating through engagement, partnerships and sponsorships with the Tenant and Subtenant for their allotted days as well as over Landlord allotted days.

The General Government Committee recessed its public session to meet in closed session to consider this item, as it relates to measures to be applied to negotiations by or on behalf of the municipality or local board.

The City and the Board of Governors of Exhibition Place (the "Board"), (collectively the "Landlord"), and BPC Coliseum Inc. ("BPC", the "Tenant") (now part of Oxford Properties), entered into a lease (the "Head Lease") dated June 16, 2005 for the premises now known as the Coca-Cola Coliseum (the "Leased Premises") for 49 years that expires October 31, 2052. Concurrently, BPC (the "Sublandlord"), and Maple Leaf Sports and Entertainment Ltd. ("MLSE", the "Subtenant") entered into a sublease (the "Sublease") dated July 1, 2005 for the use of the Premises as the home arena of the Toronto Marlies hockey club.

The Sublease term is for a 20-year period from July 1, 2005 to June 30, 2025. The Subtenant has a right, upon written notice on or before June 30, 2023 and subject to certain other conditions, to extend the term of the Sublease for a successive period of 10 years to June 30, 2035.  In 2005, the annual basic rent, percentage rent and supplemental rent for the extension term were negotiated and included in the Sublease. These existing provisions are set out in Confidential Attachment 1.

Maple Leaf Sports and Entertainment Ltd. is requesting to amend the Sublease for additional term with changes to the rent structure for basic rent, percentage rent and supplemental rent (which is the capital contribution in the Sublease). Maple Leaf Sports and Entertainment Ltd. and BPC Coliseum Inc. have entered into a conditional agreement setting out the proposed terms of the extension of the Sublease. Under the Head Lease, the Landlord's consent is required for any amendment to the Sublease. Accordingly, BPC Coliseum Inc. has approached the City and Board requesting consent to the proposed amendments for the Sublease.

Due to a number of recent and long term factors, including COVID-19 restrictions and historical sporting event attendance during the initial term of the Sublease, it has been necessary for the Board, the City and BPC Coliseum Inc. to revisit the financial and revenue assumptions made in 2005. Accordingly, this report recommends that City Council consent to the proposed amendments to the Sublease, as set out in Appendix B and Confidential Attachment 1, provided that BPC Coliseum Inc. agrees to amend the Head Lease to increase the share of Sublease rent payable to the City and Board, as approved by the Board, subject to obtaining the necessary City authorization, by adoption of Item EP5.11 at the Board's meeting of September 15, 2023.