Item - 2025.EX20.3

The Executive Director, Corporate Real Estate Management recommends that:  

1. City Council direct the Executive Director, Corporate Real Estate Management and request the Board of Directors, CreateTO to direct the Chief Executive Officer, CreateTO to re-examine potential future uses for Old City Hall, substantially in accordance with the Revitalization and Management Principles outlined in Attachment 1, and other considerations outlined in this report, and report back to City Council by no later than the second quarter of 2026.

The purpose of this report is to provide an update on the efforts made by staff to date to occupy and program Old City Hall (OCH) and recommend next steps.

Built between 1889 and 1899, OCH is an example of civic architecture, a widely recognized city landmark at the junction of Bay and Queen Streets and a National Historic Site. Since 1972, the primary tenant of OCH had been the Ontario Infrastructure and Lands Corporation, more commonly known as Infrastructure Ontario (IO), acting on behalf of the Government of Ontario (the "Tenant"). The space was leased for use by the Provincial Courts. OCH has also been home to the Provincial Offenses Courts, managed by the City of Toronto's Court Services Division.

The Provincial Courts have relocated to the new Toronto courthouse adjacent to Toronto City Hall at 10 Armoury Street, and the Provincial Offenses Courts will re-locate to St. Lawrence Market North by the end of April 2025, leaving OCH vacant with no further active uses currently planned.

As directed by City Council in 2018, staff have utilized a variety of strategies to program OCH in anticipation of this vacancy, including seeking a head lessee to implement a long-term mixed-use property management and tenanting model. These efforts were unsuccessful, given a range of factors detailed in this report, including market conditions and the costs associated with bringing the building to a suitable state of good repair for use. For example, in 2019, it was estimated that a full restoration and upgrade of the building would require approximately $225 million in 2020 dollars. Furthermore, given the historic and complex nature of the building, including an inefficient floor plan and heritage status, any future use will need to consider opportunities to improve the leasable area and the need to conserve and protect the heritage character and attributes of the building.

Staff now recommend renewed actions to facilitate temporary, interim uses, along with undertaking new examinations to determine a longer-term operating model and future uses for OCH. Corporate Real Estate Management (CREM) and CreateTO have assembled a team to identify both short and longer term uses, in consultation with Economic Development and Culture (EDC), Toronto Public Library (TPL) and other relevant City Divisions and Agencies. CreateTO will advise CREM on options for future uses and operating models, while CREM will continue to maintain the property in its role of asset owner.

Previous work to occupy and program OCH will inform staff's next steps for a renewed approach to this historical asset. In addition, the following Revitalization and Management Principles will guide decision-making related to any future long-term uses and programming for OCH:

-Increase Public Access and Interest;

-Conserve the National Historic Site;

-Foster Local Economic Development; and

-Achieve Financial Sustainability.

Staff will report back to City Council by the second quarter of 2026 on the findings of this renewed analysis.

As a responsible asset owner, CREM will continue to undertake work to satisfy any health, safety, and legislative requirements to ensure OCH is safe and preserved in its soon-to-be vacant state, pending a broader restoration and upgrade of the building once a long-term use has been identified.

Funding in the amount of $16 million is included in the Approved CREM 2024 - 2033 Capital Budget and Plan. The funding is also part of CREM's 2025 - 2034 Capital Budget and Plan submission, earmarked to address any health, safety, and legislative requirements to ensure OCH is safe and preserved in its soon-to-be vacant state. The budgeted amount is also available to support the work to be led by CreateTO, in consultation with CREM, on a renewed highest and best use analysis and recommended potential future uses for OCH, as well as costs associated with activating interim uses.

Any interim use(s) or activation while staff examine future use options for OCH would result in incremental operating costs, including enhanced security. Any revenues generated from interim uses would need to be considered against the costs to enable the interim use and available budget, prior to implementing.

Implementing future, longer-term uses for OCH will also require significant capital investments to bring it up to modern technological, operating, and safety standards, as well as to conserve the historic attributes of the building. As part of the 2019 competitive process to seek a head tenant for OCH, it was estimated that a full restoration and upgrade of the building would require approximately $225 million in 2020 dollars.  Further analysis of options for future uses will re-examine capital and operating costs and any required funding would be addressed through future budget submissions.

The Chief Financial Officer and Treasurer has been advised of the financial impacts associated with this program to be considered along with other priorities in future budget processes.