HomeMy WebLinkAboutLEG 03-26Report to Council
Report Number: LEG 03-26
Date: January 26, 2026
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: Retainer of KPMG LLP for Frenchman’s Bay Environmental and Other Due
Diligence
File: L-4610-003-23
Recommendation:
1.That Council approve the hiring of KPMG for consulting and professional services
regarding the City’s purchase of Frenchman’s Bay, understanding that senior
government funding required to complete the purchase is not yet in place, such services
to include environmental sampling, testing and analysis, business and financial analysis
and advice, in an amount of $401,715.00 (HST included) or $361,756.80 (net HST
rebate) be accepted in accordance with Purchasing Policy 10.03 (c);
2.That the Director, Finance & Treasurer be authorized to finance the net HST project
cost of $361,756.80 from a transfer from the Rate Stabilization Reserve (account
408007.11100); and
3.That appropriate City of Pickering officials be authorized to take the actions necessary
to implement the recommendations in this report.
Executive Summary: The purpose of this report is to seek Council’s approval to retain
KPMG to undertake environmental due diligence work and to provide business and financial
advice necessary for the City’s purchase of Frenchman’s Bay.
Relationship to the Pickering Strategic Plan: The recommendations in this report respond
to the Pickering Strategic Plan Priority of Advocate for an Inclusive, Welcoming, Safe &
Healthy Community; and Lead & Advocate for Environmental Stewardship, Innovation &
Resiliency.
Financial Implications:
1.Proposal
Frenchman’s Bay – Due
Diligence
$355,500.00
HST (13%)
Total Gross Project Amount
46,215.00
$401,715.00
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2.Estimated Project Costing Summary
Frenchman’s Bay – Due Diligence
HST (13%)
Total Gross Project Amount
HST Rebate (11.24%)
Total Net Project Costs
$355,500.00
46,215.00
$401,715.00
(39,958.20)
$361,756.80
3.Approved Source of Funds - Operating Budget
Approved Code Source of Funds Approved Budget Required
408007.11100 Rate Stabilization Reserve 600,000.00 $361,756.80
Total Funds $600,000.00 $361,756.80
Project Cost under (over) approved funds by $238,243.20
The remaining dollars may be used to fund other costs associated with the due diligence
phase related to this project.
Discussion: The purpose of this report is to seek Council’s approval to retain KPMG to
undertake environmental due diligence work and to provide business and financial advice
necessary for the City’s purchase of Frenchman’s Bay.
On October 23, 2025, the City executed an Agreement of Purchase and Sale (“APS”) to
acquire Frenchman’s Bay from Pickering Harbour Company Limited (“PHC”). Frenchman’s
Bay consists of the lands and water municipally known as 591 and 600 Liverpool Road, as
shown on Attachment 1. Section 3.1(a) of the APS makes the APS conditional until June 1,
2026 on the City being satisfied with all aspects of the Frenchman’s Bay properties, including
conducting a review of title, off-title compliance matters, physical inspections and tests,
environmental matters and property documents and other due diligence documents and any
other investigations or inquiries with respect to other matters that the City may deem
necessary or desirable.
Staff recommend that KPMG be retained to carry out the necessary environmental
investigations, testing, sampling, analysis and advice, and to provide business and financial
advice to the City within the due diligence conditional period and to retain subcontractors
satisfactory to City staff as may be necessary to perform such environmental investigations.
The KPMG retainer will, if approved by Council, require KPMG to provide the following
services to the City:
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1.Review and summarize all leases and agreements of PHC. Will also include a review on
any statements, claims, liens and budgets.
2.Financial due diligence of revenues, operating costs and capital requirements of the
assets of PHC, including the Lake House and Marina. Will include 5-year cashflow
projection as well as a review of potential obligations such as dredging of the PHC
share of the Bay.
3.Review of potential operating models for the Lake House and Marina.
4.Environmental and facility condition assessments of the site and buildings thereon.
(KPMG will subcontract to qualified engineering firm). The scope of the environmental
assessment will include environmental site assessments, Phase 1 and Phase 2 and
include all associated drilling and laboratory work. The water lots will also be tested.
Details of this scope are provided under separate attachment. As part of this review, the
scope will include a preliminary archaeological assessment of the dry-lands.
5.Analyze costs and mitigation strategies related to environmental impacts.
6.Inventory, assessment and estimate of value of the Lakehouse and Marina equipment
as well owned vehicles
7.General real estate transaction advice.
KPMG’s advice will enable Council to determine if it is satisfied to waive condition 3.01(a) in
the APS and, if all other conditions have also been satisfied, proceed to close the City’s
purchase of Frenchman’s Bay. KPMG’s advice will also enable the City to assess the value of
the Marina and The Lake House as ongoing business operations. This will position the City for
success after it becomes the owner of the Bay. The amount of $355,500.00 plus HST is
expected to be sufficient to cover the cost of the services described above.
It is important to note that the APS (section 3.1(c)) is also conditional upon obtaining
appropriate funding commitments from the Federal and/or Provincial Governments for at least
two thirds of the purchase price. Discussions with the Provincial and Federal Governments
were initiated by City staff upon execution of the APS and, while progress has been made
(especially with the Provincial Government), the necessary commitments have not yet been
given to the City. Ideally, the City would not begin the due diligence work until after the Federal
and Provincial funding commitments are in hand. Unfortunately, however, we must prepare
now to begin the due diligence work so that it is completed well in advance of the June 1, 2026
condition expiry date. There remains a risk that the City will expend funds on the due diligence
work and find out later that the purchase of the Bay must be terminated due to the lack of
necessary Federal/Provincial funding. To mitigate this risk, staff will make every effort to defer
the most costly elements of the environmental testing until March. (This may be necessary in
any event due to freezing weather conditions that hinder the drilling of underwater test bore
holes.)
KPMG is well-positioned to provide these services because it has already reviewed
Frenchman’s Bay and advised Council on various matters relevant to the proposed purchase
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of the Bay. Staff therefore recommend that Council approve the retainer of KPMG in
accordance with this report.
Attachment:
1.Map of Frenchman’s Bay
Prepared/Endorsed By: Approved/Endorsed By:
Paul Bigioni Stan Karwowski, MBA, CPA, CMA
Director, Corporate Services & City Solicitor Director, Finance & Treasurer
Cathy Bazinet, CPPB, NIGP-CPP
Manager, Procurement
PB:ks
Recommended for the consideration
of Pickering City Council
Marisa Carpino, M.A.
Chief Administrative Officer
Original Signed By:Original Signed By:
Original Signed By:
Original Signed By:
Attachment 1 to Report LEG 03-26