Item - 2024.EX16.3

The Executive Committee recommends that:

Subway Program Agreement-in-Principle 

1.  City Council approve the terms set out in Attachment 1 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer, and City Council authorize the City Manager to enter into and execute a Subway Program Agreement-in-Principle with the Province of Ontario, based substantially on the terms set out in Attachment 1 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer, and on such other terms and conditions satisfactory to the City Manager, in consultation with the Deputy City Manager, Infrastructure Services, the Chief Financial Officer and Treasurer, the Executive Director, Transit Expansion, and any other relevant officials, and in a form satisfactory to the City Solicitor. 

2.  Subject to entering into the Subway Program Agreement-in-Principle in accordance with Recommendation 1 above, City Council authorize the Deputy City Manager, Infrastructure Services, or designate and any other relevant City officials, to negotiate and execute any such necessary ancillary or related agreements, amendments and renewals with any other relevant parties, including a Subway Main Agreement, for the implementation of the Subway Program, all substantially in accordance with the terms included as Attachment 1 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer, the executed Subway Program Agreement-in-Principle, and on such other terms and conditions satisfactory to the Deputy City Manager, Infrastructure Services, or designate, in consultation with the Chief Financial Officer and Treasurer, the Executive Director, Transit Expansion, and any other relevant officials, and in a form satisfactory to the City Solicitor. 

3.  City Council delegate authority to the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to oversee the management and implementation of the Subway Program Agreement-in-Principle, the Subway Main Agreement and any ancillary or related agreements, including, without limitation, providing all necessary consents, approving assignments and enforcement of warranties. 

4.  City Council delegate authority to the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to negotiate, enter into and execute agreements with Metrolinx and any other party, including amendments and renewals for new utility crossing, level crossings and grade separations, including terms related to cost-sharing for construction and on-going maintenance, if any, as appropriate. 

5.  City Council, with respect to the Subways Program:  

a.  authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to identify and approve the inclusion of enhancements to City infrastructure, as well as any investigative, planning and design studies considered necessary for City infrastructure and services in the vicinity of the work to deliver the Subway Program ("Additional Infrastructure") which Metrolinx's contractor will be asked to design and/or construct as part of the Subway Program, subject to the following conditions: 

i.  the Deputy City Manager, Infrastructure Services, in consultation with the Executive Director, Transit Expansion, the Chief Financial Officer and Treasurer and relevant Divisions, are of the view that the estimated price provided by Metrolinx for the Additional Infrastructure, as may be reviewed by an independent reviewer, is fair and reasonable in the circumstances; and 

ii. the funding for the estimated cost of the Additional Infrastructure is or will be available in the year required, within an approved capital budget; 

b.  authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to obtain and pay for estimates and pre-estimates for Additional Infrastructure from Metrolinx and/or Metrolinx's contractor; 

c.  authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to negotiate, enter into and execute Municipal Infrastructure Agreements with Metrolinx for Additional Infrastructure, including any amendments;  

d.  authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to enter into cost-sharing arrangements with Metrolinx for services or infrastructure requested by the City for mutually beneficial projects in the vicinity of the Subway Program, or where the Province has agreed to cost-share with the City as their work on the Subway Program has created an incremental cost impact to the City’s funded capital projects that are either planned or underway, as long as conditions in Recommendations 5.a.i. and 5.a.ii. above are satisfied;

e.  notwithstanding City of Toronto Municipal Code Chapter 71, Financial Control, authorize the Chief Financial Officer and Treasurer to approve budget adjustments, provided that sufficient funds are available, and: 

i.  reallocate funds between capital projects or sub-projects in an amount not more than $3 million; and

ii.  report any exercise of this delegated authority to the appropriate standing committee at the first opportunity; and

f.  direct that Confidential Attachment 3 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer remain confidential in its entirety, as it contains confidential information supplied in confidence to the City of Toronto by the Province of Ontario and contains financial information related to ongoing negotiations with the Province of Ontario. 

6.  City Council authorize the General Manager, Transportation Services to negotiate, in consultation with the Toronto Transit Commission, and execute a TO360 Wayfinding Implementation Agreement, and any ancillary or related agreements and amendments, with Metrolinx for the Subway Program and other Metrolinx-led transit projects within the City of Toronto for the purpose of completing design studies, producing wayfinding maps and signs, sharing data and standards, and other deliverables as may be required to support wayfinding programs, in a form satisfactory to the City Solicitor.  

7.  City Council receive Attachment 3 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer for information.

Transit Ledger Clearing 

8.  City Council authorize the Chief Financial Officer and Treasurer to negotiate and execute an agreement with the Province of Ontario, in terms satisfactory to the Chief Financial Officer and Treasurer, in consultation with the City Manager, for the settlement and clearing of transit ledger items outlined in Confidential Attachment 1 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer, to fulfil a term in the Terms of the Ontario-Toronto New Deal, and in a form satisfactory to the City Solicitor.

9.  City Council direct that Confidential Attachment 1 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer remain confidential in its entirety, as it contains confidential information supplied in confidence to the City of Toronto by the Province of Ontario and contains financial information related to ongoing negotiations with the Province of Ontario. 

Scarborough Subway Extension – Eglinton East LRT Kennedy Station Interface

10.  City Council direct the Executive Director, Transit Expansion to continue discussions with Metrolinx and the Province of Ontario to explore options that provide appropriate transit network integration between the Eglinton East Light Rail Transit and Scarborough Subway Extension at Kennedy Station.

11.  City Council authorize the public release of Confidential Attachment 2 to the supplementary report (July 15, 2024) from the Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer following completion of the Scarborough Subway Extension project, as it contains commercial information, supplied in confidence to the City, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization and involves the security of the property belonging to the City of Toronto. 

Other

12.  City Council request Metrolinx to provide the City with an urgent update on the current status of construction on the Eglinton Crosstown Light Rail Transit including a projected date for the commencement of revenue service.

13. City Council request the Deputy City Manager, Infrastructure Services to continue to advance the following goals around the sites of Ontario Line Construction in Ward 14:

a.  better engagement through the provision of a Metrolinx Community Office at Pape and Danforth;

b.  an improved tenant support strategy for current tenants who will be relocated and tenants who have previously been relocated by Ontario Line Construction;

c.  replacement of parking lost via the occupation of Toronto Parking Authority lots to continue to support local businesses and residents; 

d. additional construction mitigation measures in consultation with the local community, including the addition of construction hoarding with public art, to minimize impact and beautify the site; and

e. maintaining a clean and accessible public realm around the construction site in consultation with business owners, and immediate improvements to remove obstructions in the vicinity of 777 Danforth Avenue.

The Province of Ontario's Subway Program, being delivered by Metrolinx, is a significant transit expansion project within the City of Toronto. The Subway Program consists of the Ontario Line, Scarborough Subway Extension, Eglinton Crosstown West Extension, and Yonge North Subway Extension projects.

In February 2020, the Province and the City negotiated a Preliminary Agreement (PA) for the Subway Program, amongst other matters. The PA outlined high-level roles and responsibilities of the City and Province in the planning, delivery, and operations of the Subway Program. As the Province continues to advance the Subway Program, through its delivery agent Metrolinx, there is a need to develop and execute a Subway Agreement-in-Principle (AIP) that enhances the principles outlined within the PA to further guide the ongoing design and delivery of the Subway Program.

Negotiations on the Subway Program AIP are ongoing and will conclude imminently. As such, the purpose of this report is to note that City staff will provide a supplementary report with the details on the outcome of negotiations as soon as possible.

The supplementary report to Executive Committee will provide an update on four key items related to the Subway Program, namely:

1. Subway Agreement-in-Principle;

2. Settlement of the transit ledger in accordance with the terms of the Ontario-Toronto New Deal;

3. Scarborough Subway Extension-Eglinton East LRT overbuild protections; and,

4. Update on the status of the Subway Program projects.

The Province of Ontario's Subway Program, being delivered by Metrolinx, is a significant transit expansion project within the City of Toronto. The Subway Program consists of the Ontario Line, Scarborough Subway Extension, Eglinton Crosstown West Extension, and Yonge North Subway Extension projects. This report provides City Council with an update on four key items related to the Subway Program, namely:

1. Subway Agreement-in-Principle;

2. Settlement of the transit ledger in accordance with the terms of the Ontario-Toronto  New Deal;

3. Scarborough Subway Extension-Eglinton East LRT Kennedy Station interface; and,

4. Update on the status of the Subway Program projects.

1. Subway Agreement-in-Principle

In February 2020, the Province and the City negotiated a Preliminary Agreement (PA) for the Subway Program, amongst other matters. The PA outlined high-level roles and responsibilities of the City and Province in the planning, delivery, and operations of the Subway Program. As the Province continues to advance the Subway Program, through its delivery agent Metrolinx, there is a need to develop and execute a Subway Agreement in Principle (AIP) that enhances the principles outlined within the PA to further guide the ongoing design and delivery of the Subway Program.

As such, this report is seeking City Council authority to execute a binding Subway AIP with the Province of Ontario, based on the terms outlined in Attachment 1. The AIP is intended to provide a clear understanding and agreement between the City and the Province on respective roles and responsibilities, authorities, funding responsibilities, ownership, and approvals that are crucial to the implementation of the Subway Program. Subject to City Council approval, the AIP will provide a framework for continued engagement between the City and the Province, as well as the TTC and Metrolinx, and will provide the basis from which a detailed Subway Main Agreement and additional ancillary agreements can be negotiated and executed by City staff in consultation with the TTC.

2. Transit Ledger Clearing

This report also seeks authority to negotiate and execute an agreement with the Province of Ontario to settle claims and clear the ledger on historical transit costs. The costs the City has sought to recover from the Province for planning and design work on the extension and development of new subway lines (prior to the upload of the Provincial Transit Priority projects) are of the same order of magnitude as the costs the Province has sought to recover from the City for work related to Metrolinx projects. Therefore, as a term of the New Deal Agreement, both the Province and the City of Toronto have agreed to settle their claims to support the shared commitment to advance the delivery of transit projects in the City. The settlement of these claims, that for both the City and the Province are of the same order of magnitude, reflect a change in accounting treatment and do not have a material impact to the City’s overall net financial position. A summary of these settled amounts is provided under Confidential Attachment 1.

3. Scarborough Subway – Eglinton East LRT Kennedy Station Interface

In December 2023, through EX10.17, City Council authorized City staff to execute the necessary agreements with Metrolinx to advance only the design of the Scarborough Subway Extension (SSE) tunnel box structure in order to protect for the Eglinton East Light Rail Transit (EELRT) Kennedy Station overbuild (Overbuild), at a cost of up to the maximum amount outlined in Confidential Attachment 2 to that report (EX10.17).

On May 31, 2024, the Ministry of Transportation (MTO) requested formal written confirmation from the City that the City would fund the costs of both the design and delivery of the Overbuild, as well as the associated delay costs to the SSE, as provided by Metrolinx and outlined in Confidential Attachment 2 to this report, no later than July 31, 2024. City staff subsequently met with Metrolinx to further clarify and confirm how the cost estimate was derived, its breakdown, risk assumptions, and anticipated cash flow according to the stages of the EELRT Overbuild protection delivery process.

In parallel, City staff explored alternative options that removed structural dependency on the SSE tunnel box while achieving the same design and operations requirements as the design with the Overbuild. A potentially viable alternative has emerged (i.e., Option 2 as described in this report and in Confidential Attachment 2). Additional work is required to confirm the feasibility, costs and risks of Option 2. Confidential Attachment 2 also provides the benefits, and risks associated with Option 2.

Given the significant costs of delivering the Overbuild (Option 1), along with the fact that the EELRT is at 10% design, and full funding for its construction has not been secured, City staff do not recommend committing to the costs of the Overbuild at this time. However, to ensure a responsible intergovernmental approach to transit expansion, this report seeks City Council approval for staff to continue discussions with Metrolinx and the Province of Ontario to explore options that provide appropriate transit network integration between the EELRT and the SSE.

4. Subway Program Update

Attachment 3 provides updates on procurement, design, construction, and engagement milestones achieved by Metrolinx since City staff last reported to City Council on the full Subway Program in June 2023 and addresses related City Council directives that request bi-annual reports to Council on the overall Subway Program.