Item - 2026.EX33.1

The Executive Director, Corporate Real Estate Management and the General Manager, Parks and Recreation recommend that:  

1. City Council authorize the Executive Director, Corporate Real Estate Management, on behalf of the City, in consultation with the General Manager, Parks and Recreation, to negotiate and enter into a lease with Tempo Basketball Club Inc. for a portion of the property municipally known as 701 Fleet Street, substantially on the terms and conditions set out in Attachment 1, and including such other terms and conditions satisfactory to the Executive Director, Corporate Real Estate Management and in a form satisfactory to the City Solicitor, after the property is declared surplus in accordance with Article 1, Chapter 213 of the City of Toronto Municipal Code.

2. City Council authorize the General Manager, Parks and Recreation to negotiate and enter into a Community Access Agreement with Tempo Basketball Club Inc. to secure City programming access and general public basketball-related recreational use substantially on the terms and conditions set out in Attachment 1 and including such other supporting terms and conditions acceptable to the General Manager, Parks and Recreation and in a form satisfactory to the City Solicitor.

3. City Council authorize the General Manager, Parks and Recreation, in consultation with the Executive Director, Corporate Real Estate Management, to negotiate and enter into a Construction Management Agreement with Tempo Basketball Club Inc. to facilitate performance of the Tenant obligations for design and construction of the above base park and public realm components of the subject land at 701 Fleet St, including access rights to the public parkland that may be required, as not otherwise secured through the Site Plan Approval process, on terms and conditions acceptable to the General Manager, Parks and Recreation, in a form satisfactory to the City Solicitor.

4. City Council direct that Confidential Attachment 1 remain confidential at this time as it pertains to a position, plan, procedure, criterial or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City of Toronto.

5. City Council authorize the public release Confidential Attachment 1, at the completion of the design and construction of the above base park, public realm components, as well as the practice facility at 701 Fleet Street.

This report recommends that the City of Toronto, as Landlord, enter into a long-term lease and Community Access Agreement with Tempo Basketball Club Inc. (Tempo) to enable development of a new Women's National Basketball Association practice facility with secured year-round community access, plus related public amenities.

The proposed lease of City-owned land to Tempo Basketball Club Inc. would have an initial term of 40 years, with two options to renew for a further 20 years each, and would leverage private investment to deliver substantial community benefits. In addition to secured year-round indoor public recreation access, the first agreement of its kind for a Women's National Basketball Association practice facility, these benefits include a new public park featuring outdoor basketball courts, washrooms and other public realm improvements.

The proposed agreements reflect the City's established practice of leveraging long-term lease arrangements to secure investment in City-owned lands while advancing public benefits. Other examples, such as the OVO Athletic Centre, Lamport Stadium, the Ford Performance Centre, and the recently executed agreement with the Ontario Tennis Association, demonstrate how City real estate assets can support professional and amateur sport, expand community access, and strengthen Toronto's role as a center for high-performance athletics.

The proposal would deliver an approximately 60,000-square-foot Toronto Tempo practice facility including two full-sized indoor basketball courts, training and support spaces and other amenities to support Toronto Tempo operations and City-led recreation programming. Through a Community Access Agreement the City would secure a minimum of 2,260 hours of annual access for public recreation programming including registered and drop-in programs, permit opportunities and seasonal programs such as CampTO, with a focus on women, girls and youth.

The proposal would also accelerate delivery of long-planned parkland at 701 Fleet Street by at least ten years. Tempo would design and construct a new City-owned and operated park on the non-leased portion of the property at no capital cost to the City, including outdoor basketball courts, public washrooms, pathways, seating, landscaping, trees, shade elements, and other public amenities, with the final design to be informed by community and Indigenous engagement.

Tempo would be responsible for all costs associated with the design, construction, financing, operation, maintenance, repair, utilities, and taxes for the practice facility, and would be required to maintain capital repair reserves and report annually on community access. The City would be responsible for future operating costs associated with the new park, public washrooms, and City programming, estimated at $0.8 million annually, to be considered through future budget processes. Beginning in Year 5 of the initial lease term, Tempo would provide additional financial contributions to support City programming and operating needs.

The proposal aligns with Council directed priorities including support for women’s sports facilities, advancing gender equity in sport, facility access and equity, integration with Exhibition Place Master Plan, and park washroom enhancement. 

Overall, the proposed agreements would optimize City-owned land to secure a significant private investment, advance a long-standing parkland objective, expand year-round community recreation access, and support the continued growth of professional women’s sport in Toronto.

Impacts from the Proposed Long-Term Lease:

Tempo Basketball Club Inc. (the "Tenant") is responsible for all costs related to the design, construction, and delivery of the practice facility (the "Practice Facility") at 701 Fleet Street (the "Property"). The Tenant is also responsible for all operating costs associated with the Practice Facility, including permitting, financing, operations, maintenance, repairs, utilities, and taxes, and for maintaining sufficient reserve funding for capital repairs and demonstrating its adequacy on an ongoing basis.

The initial 40-year term of the proposed lease provides for the payment of basic rent through in-kind consideration, including the performance of capital work to construct the new park on the City-owned Property and committed hours in the Practice Facility for City access and programming.  The new park will include outdoor basketball courts, public washrooms, and other public amenities. The estimated value of the capital contributions and community access benefits exceeds the appraised market value of the initial 40-year lease term, details are included in Confidential Attachment 1.

The Tenant is also required to complete Phase One and Phase Two Environmental Site Assessments at its own cost. The City will reimburse the Tenant for costs associated with bringing the park to a condition suitable for public parkland use. Funding for these costs is included in Parks and Recreation’s 2026 to 2035 Capital Budget and Plan for parkland acquisition.

Beginning in Year 5 of the initial term, the Tenant will provide additional financial contributions to support City programming and operating needs. This obligation may be satisfied through annual payments of $100,000, up to $3.5 million, or alternatively, a one-time lump sum payment of $2.0 million in Year 5. The revenue generated through these contributions will be directed to Parks and Recreation's Operating Budget to support year-round access for City programming and recreational use at the Property.

Should the Tenant exercise its options to renew the lease at the end of the initial 40-year term, rent during any renewal term would be established based on then-current fair market value of the property. Any lease revenue from the renewal term will be directed to Parks and Recreation's Operating Budget.

New City-Owned Park and City Programming:

The City will assume operating responsibility for the park and park washrooms which are expected to be operational by Fall 2028, as well as for City programming within the Practice Facility, which is expected to be operational by Summer 2028. The estimated gross annual operating cost to the City is expected to be $0.8 million. Depending on program offerings, program registration and permit fees may be generated to offset a portion of operating costs. Any financial impact would be included in Parks and Recreation's future operating budget submissions for consideration through the annual budget process.

Impacts to the Existing Use of the Property:

The surface parking lot portion of the property (the "Parking Lot") is currently managed by Exhibition Place ("ExPlace") through an interim agreement and supports event parking, staging, and marshalling activities. Parking revenues from the Parking Lot support ExPlace operations and are included in its operating budget to help fund its operations and maintenance requirements.

Redevelopment of the Parking Lot is anticipated to result in a reduction to annual parking revenue with a full year impact to ExPlace of approximately $491,000 in 2027. City staff are working collaboratively with Exhibition Place to identify alternative operational arrangements that may mitigate or eliminate these impacts. Given the Parking Lot has been operated by Exhibition Place on an interim basis pending repurposing for park purposes, the financial impact is limited to 2027.

The Chief Financial Officer and Treasurer has reviewed this report and agrees with the information as presented in the Financial Impact Section.