Item - 2024.PH13.6

The Planning and Housing Committee recommends that:

Land Considerations

1. City Council authorize the Executive Director, Corporate Real Estate Management, in consultation with the Executive Director, Housing Secretariat, to negotiate and execute on behalf of the City the agreement of purchase and sale with Markee Missing Middle (Merton) GP Inc. and Markee Missing Middle (Merton) Limited Partnership  (the "Vendor") in respect of 267 Merton Street and the lease with the Markee Missing Middle (Merton) Limited Partnership (the "Tenant") in respect of 267 Merton Street and 275 Merton Street, and any documents ancillary thereto, on forms approved by the City Solicitor.

2. City Council authorize the public release of Confidential Attachments 1 and 2 to the report (May 30, 2024) from the Executive Director, Housing Secretariat and the Executive Director, Corporate Real Estate Management, following the completion of the developments contemplated in Confidential Attachment 2 to the report (May 30, 2024) from the Executive Director, Housing Secretariat and the Executive Director, Corporate Real Estate Management, at the discretion of the Executive Director, Corporate Real Estate Management.

Affordable Housing

3. City Council authorize the affordable rental housing units described in Confidential Attachments 1 and 2 to the report (May 30, 2024) from the Executive Director, Housing Secretariat and the Executive Director, Corporate Real Estate Management, to be constructed on the lands known as 267 and 275 Merton Street, to be eligible for waivers of fees for planning applications, building permits, parkland dedication and development charges exemptions, unless already paid or exempted by provincial legislation.

4. City Council authorize an exemption from taxation for municipal and school purposes for 99 years for the affordable rental housing units described in Confidential Attachments 1 and 2 to the report (May 30, 2024) from the Executive Director, Housing Secretariat and the Executive Director, Corporate Real Estate Management, to be located on 267 and 275 Merton Street.

5. City Council authorize City staff to cancel or refund any taxes paid after the effective date of the exemption from taxation for municipal and school purposes as set out in the Contribution Agreement.

6. City Council authorize the Executive Director, Housing Secretariat, to negotiate and enter into, on behalf of the City, a municipal housing facility agreement (the "Contribution Agreement") with the Tenant for the development of affordable housing to be constructed on 267 and 275 Merton Street, to secure the financial assistance being provided and to set out the terms of the operation of the new affordable rental housing, on terms and conditions satisfactory to the Executive Director, Housing Secretariat, and in a form approved by the City Solicitor.

7. City Council authorize the Executive Director, Housing Secretariat to execute, on behalf of the City, any security or financing documents required by the Tenant to secure construction and conventional financing and subsequent refinancing, including any postponement, tripartite, confirmation of status, discharge or consent documents where and when required during the term of the Contribution Agreement, as required by normal business practices, and provided that such documents do not give rise to financial obligations on the part of the City that have not been previously approved by City Council.

8. City Council authorize the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report provides City Council with information on a strategic opportunity to leverage the City-owned lands at 275 Merton Street (the "City Site") to create new purpose-built rental homes, including a minimum target of 30% affordable rental homes. Through negotiations led by CreateTO, in consultation with Corporate Real Estate Management and Housing Secretariat, staff have finalized the terms of a development partnership with Collecdev-Markee Limited Partnership (the “Developer”), which advance a development on the City Site, as well as the adjacent site, 267 Merton Street (the "Developer Site"), which is owned by a subsidiary of the Developer.

This report outlines the opportunity to leverage the City Site in a way that would deliver a substantial number of new affordable rental and rent-controlled market homes in support of the City's HousingTO 2020-2030 Action Plan targets to approve 65,000 new rent-controlled homes by 2030; and leverage underutilized City-owned properties to create new affordable housing. This report requests Council authority to proceed with the related real estate transactions required to advance this strategic development, along with additional City incentives to support affordable housing, as endorsed by the CreateTO Board on February 16, 2024, the details of which are outlined in Confidential Attachment 1.