Item - 2025.EX22.2

The Executive Committee recommends that:

1. City Council direct the Executive Director, Corporate Real Estate Management, in consultation with the General Manager, Toronto Shelter and Support Services, the General Manager, Senior Services and Long-Term Care, the Executive Director, Housing Secretariat, the Executive Director, Housing Development Office, and the Executive Director, Social Development, Finance and Administration, to proceed with the design and construction of Phase 1 of the George Street Revitalization project based on a City-delivered approach outlined in the report (March 31, 2025) from the Executive Director, Corporate Real Estate Management and within the current approved project budget.

The George Street Revitalization (GSR) project is a signature initiative of the Downtown East Action Plan and is distinguished by its continuum of care model that co-locates and integrates shelter services, a long-term care home, supportive housing with wrap-around services, and a community hub on a single site. The purpose of this report is to outline a path forward to deliver the GSR project in a manner that aligns with the original project vision, responds to the City’s emerging priorities, and adheres to the approved project budget.

In July 2016, City Council authorized staff to proceed with an alternative financing and procurement approach, also known as a Public-Private Partnership (P3) model for the implementation of the GSR project, with Ontario Infrastructure and Lands Corporation (also known as Infrastructure Ontario, or IO) acting as procurement lead. Through 2020 and onwards, the construction sector began to experience significant financial impacts by the volatile increase in construction material costs, global supply chain disruptions, and labour shortages due to COVID-19 pandemic pressures. The same impacts were felt across the City, including the GSR project through the P3 process.

In February 2024, City Council directed staff to explore a City-delivered procurement and implementation model for the GSR project in order to bring the project in compliance with the approved project budget. Through work with City divisions and value engineering, the City can accommodate the delivery of key program elements and preservation of the three existing heritage buildings, two of which are semi-detached, on the Phase 1 site, through a City-led development within the current approved budget. Phase 1 occupies two-thirds of the site and includes the core elements of the GSR project, and Phase 2 occupies the remaining one-third of the site to the south, creating a potential future affordable housing opportunity.

The phased development approach allows the fully funded Phase 1 to proceed independently of Phase 2, which requires further project design and planning studies, due diligence work, as well as funding – ultimately minimizing the risk of delay of Phase 1.

The GSR project will be delivered through a Construction Management approach, an industry standard method which can emphasize certainty on budget prior to the start of construction; and provides further control and accountability to the owner. In this approach, the construction manager can take on the financial risk of completing the project within a set budget.

Pending adoption of the City-delivered approach, staff will proceed with the design services and construction procurement for Phase 1, and report back to the appropriate committee upon the conclusion of the competitive procurement process, estimated to take place by the third quarter of 2025. Phase 1 construction is estimated to start by the fourth quarter of 2026 with occupancy estimated for end of 2029.

To align all GSR related decision-making, two separate heritage and planning reports will be considered by City Council in April 2025 concurrently with this report. This includes a report from the Senior Manager, Heritage Planning, on the proposed heritage conservation and integration of the three designated heritage properties into the Phase 1 GSR building and a report from the Director, Community Planning, Toronto and East York District on the recommended approval of a City-initiated Official Plan and Zoning By-law Amendment to permit the construction of the Phase 1 GSR building.

As outlined in this report, staff are committed to continued thoughtful community engagement and the Seaton House Transition Plan, ensuring stakeholders receive updates and provide ongoing advisory input to the City of Toronto.