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FIN 15-21
Report to Council Report Number: FIN 15-21 Date: October 21, 2021 From: Stan Karwowski Director, Finance & Treasurer Subject: City Centre Financial and Legal Implications -File: F-1200-001 Recommendation: 1. That Report FIN 15-21 of the Director, Finance & Treasurer be received; 2. That Council receive for information the “5-Year Capital & Operating Financial Plan” prepared by Watson & Associates Economists Ltd., dated October 14, 2021; 3. That should Council wish to proceed with the City Centre Project, that the following actions related to the Project be approved: a. That the City Centre project’s fixed cost ceiling be established at $207.70 million, that is funded from reserves of $3.6 million, that results in the preliminary estimated total new debt borrowing of $204.13 allocated between Development Charge Funded Debt of $110.13 million and City Share Debt of $94.00 million (to be funded from future casino revenues), and to reduce the financial stress and strain this total amount of debt (DC and City) would cause in both the short and medium term, that City staff be directed to explore all revenue options including grants and partnerships and that to manage the City’s debt structure below the Provincial Annual Repayment Limit (ARL), all debt financed projects related to Seaton and the Pickering Museum Village be placed on a “medium term pause” (post 2028) and that other future debt financed capital projects be measured against the recommended guideline that they proceed, only if the project is required for the health and safety of residents and/or staff; b. That, in order for staff to meet the April 2022 timeline of awarding of the construction contract for the Pickering City Centre, Council approve the following investments (expenditures) from October 22, 2021 to April 30, 2022: i That Council approve $6,449,000 million (net of HST) to be awarded to architects-Alliance for the preparation of construction drawings and tender documents for the City Centre project excluding the City parking garage; ii That Council approve $345,000 (net of HST) to Cushm an & Wakefield Asset Services LLC on account of its development management fees related to the Senior & Youth Centre, Bridge Link and for the relocation of site services; FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 2 iii That Council approve $627,000 (net of HST) to twopointO Partners Inc. on account of its development management fees related to the Library, Public Square/Public Realm and Performing Arts Centre; iv That Council approve $512,870 (net of HST) to SKA for works related to the design and drawings for the relocation of services; v That Council approve $175,900 (net of HST) to Deloitte LLP for construction project management services to be funded from current budget operating account 2121.2392 and funded 100 percent from the casino reserve in accordance with Purchasing Policy 10.03 (c); vi That Council approve $432,480 (net of HST) to Torys LLP to complete all of the legal agreements necessary for the execution of contracts to be approved at the April 2022 meeting; vii That Council approve $40,700 (net of HST) for soil/environmental testing and related works as part of the due diligence process related to the land transaction and to be funded from the 2019 Capital Budget account; viii That IBI Group be retained to undertake a parking strategy for the new proposed underground parking garage at a cost not to exceed $50,000 (net of HST) and to be funded from 2019 Capital Budget account; ix That Council approve $941,000 (net of HST) to OPB Realty Inc. for reimbursement of work for the City portion of the underground parking garage design and development expenses; x That Deloitte LLP be retained to undertake and develop a debt financing strategy for the City Centre project at a cost not to exceed $45,800 (net of HST); xi That the Director, Finance & Treasurer be authorized to allocate the above approved expenditures and prior approved and prior year’s City Centre expenditures to the various capital accounts and to maximize the use of development charge funding; and xii That Council approve $92,284 (plus HST) to be awarded to EllisDon Corporation for General Contractor Services consulting contract related to preconstruction work for the City Centre project under RFP2021 -3 and this cost be funded from the 2019 Capital Budget account. 4. That, in the event Council approves the actions set out in Recommendation 3 above, the material content of the provisions contained in the draft Master Agreement and related Memorandum (Attachment 2) are endorsed, and will be contained within a final Master Agreement to be executed by the City and OPB Realty Inc. (or an affiliate of OPB Realty Inc.), subject to the satisfaction of the concerns more particularly set out within this report regarding: (i) profit sharing on any future sale of the South Esplanade Block and (ii) certain restrictions on title to OPB's lands; FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 3 5. That, in the event Council approves the actions set out in Recommendation 3 above, the form of Contract for Architectural Services (Attachment 7) be approved for use in respect of the design and construction of each of the new City facilities included in the City Centre project, and that the Mayor and City Clerk be authorized to execute such contracts in conformity with the budget parameters established in this report by the Director, Finance & Treasurer and subject to minor revisions acceptable to the Chief Administrative Officer and the Director, Corporate Services & City Solicitor; 6. That, in the event Council approves the actions set out in Recommendation 3 above, the final form of Master Agreement, and all project contracts referred to within it, be brought before Council for approval as they are negotiated, but no later than April, 2022; and 7. That the appropriate City of Pickering officials be authorized to take the necessary actions as indicated in this report. Executive Summary: The 2021 budget report (FIN 05-21), included a discussion on the need to undertake a “5-Year Capital & Operating Plan” (5YCOP) due to the City Centre project and ambitious capital plan for the years 2022 up to and including 2026. The building blocks of the financial plan are: Asset Management Plan or AMP (approved in principle for financial planning purposes , Resolution #683/21); 2022 Preliminary Draft Capital Budget & Four Year Forecast ( approved in principle for financial planning purposes, Resolution #661/21); Revised cost estimate for the City Centre project as developed by Turner & Townse nd. After many months of work, and leveraging the expertise of consultants Watson & Associates Economists Ltd, the results of the analysis is reflected in this report and set out in Attachment 1. The City Centre project represents a multi-generational opportunity that will transform the City’s downtown core. The 2022 draft capital budget and four year forecast includes capital projects that will generate long-term community benefits. The purpose of the 5CYOP is not to debate the merits and/or community benefits of these projects but to answer the fundamental financial question of affordability, risk and the impact of these projects on the City’s finances. Complicating the analysis is the pandemic and its possible negative and short and long term impact of the local and national economies. It should be noted that the approval for the construction of the City Centre project occurred in a pre-pandemic environment. In addition, to the core financial analysis, staff have also investigated other matters related to the City Centre project such as parking, naming rights revenues and preliminary estim ates for the operating costs of the City Centre project. The information, presented in this report, represents the best available information and/or expert opinions at this current date and can change over time. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 4 The 5CYOP was developed by Watson & Associat es Economists Ltd. and the City Centre DC funding reflected in the document is based on their expertise in this area . To prepare the 5CYOP, assumptions had to be made in order to develop financial plans and options . The results of the analysis indicates that the City is hitting the Annual Repayment Limit or ARL if it plans to undertake all of the capital construction projects (City Centre and capital forecast). The issue of the ARL was identified by the Treasurer in the 2020 and 2021 budget reports . To reduce the financial pressure and strain, a second option was developed whereby the Pickering Heritage Community Centre & Library and Seaton Recreation & Library Community Centre are deferred. Even after employing this option, and while recognizing that the financial stress level is reduced, it is still financially uncomfortable. Therefore, from a financial lens only, the Treasurer does not recommend adopting recommendation 3 . a and b. However, if there are new revenue sources (such as senior government grants) and depending upon the dollar level of new revenues, the Treasurer’s recommendation could be reversed. Whatever course of action Council approves, the City should continue with its current business practice as it relates to its finance management of prudent and conservative fiscal management that has served the City well. In the event that Council decides to proceed with the City Centre project, it will be necessary to enter into a Master Agreement with OPB Realty Inc. to define the many elements of the project and the roles and responsibilities of the City and OPB with respect to the design, construction, operation and maintenance of the project. Subject to the specific concerns set out in this report regarding (i) profit sharing on any sale of the South Esplanade Block and (ii) restrictions on title to OPB's lands, it is recommended that Council endorse the material content of the attached draft Master Agreement and related Memorandum, for inclusion in the final form of Master Agreement to be brought to Council for subsequent approval, together with the other project contracts referred to in the Master Agreement. In the event that Council decides to proceed with the City Centre project , it is further recommended that the attached template Contract for Arc hitectural Services be approved, and that contracts with architectsAlliance be approved and executed on the same terms for each of the City facilities comprising the project. Financial Implications: The “5-Year Capital & Operating Plan” (5YCOP) is a framework for Council and senior staff to consider the future financial challenges and opportunities through financial forecasting, scenarios and analysis with the goal of trying to achieve short and long term financial sustainability. The 5YCOP is the process of projecting revenues and expenditures (including capital expenditures) over the five year period while using assumptions relevant to the municipality. The development of the 5YCOP is complex and contains several inter-related decision making factors. It is recommended to Council that the 5YCOP be refreshed every two years in order to identify and highlight both positive and potential “bumps in the road”. With each update to the 5YCOP, the data and information will be more refined to reflect the current financial environment and the corresponding challenges and opportunities that the City may leverage and or develop appropriate strategies. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 5 The 5YCOP, as developed by Watson & Associates, is based on Council approved inputs for the following two major components: 2022 Preliminary Draft Capital Budget & Four Year Forecast (FIN 13-21) and Asset Management Plan (FIN 14-21). Another key building block of the 5YCOP is future anticipated development and the consultant used the City’s 2020 and 2021 year-to-date building permit activity and growth data from the City’s 2017 DC Background Study. The growth data is important due to the fact it develops the calculation for assessment growth and corresponding taxation revenue for the five year time period. City Centre Project – Financial Summary and Discussion Table One City Centre Project Expenditure Ceiling April 2022 Col. A Col. C Expenditures DC Line # Capital - (Alphabetical Order) (Net of HST 1.76%)DC's City Share Fund. % 1 Bridge Link 1,234,017$ 895,720$ 338,297$ 72.60% 2 Library 47,017,879 22,360,092 24,657,787 47.60% 3 Performing Arts Centre (PAC)69,550,000 15,251,204 54,298,797 21.90% 4 Phase 1 Service Relocations 7,489,001 4,390,798 3,098,203 58.60% 5 Public Realm (City Lands)6,861,816 450,000 6,411,816 6.60% 6 Public Square 5,948,814 3,379,510 2,569,304 56.80% 7 Senior & Youth Centre (S&Y)43,038,550 41,871,070 1,167,481 97.30% 8 Underground Parking (350 Stalls)26,529,470 21,981,205 4,548,265 82.90% 9 Total City Expenditure Celling 207,669,547$ 110,579,599$ 97,089,950$ 53.25% Col. B Funding Sources The Bridge Link costs as shown above are substantially lower than previous estimates . The decrease in the cost is mainly due to the original concept of the bridge link was first treated as an add-on and therefore, Poole Construction Limited (PCL) had placed a premium on the bridge and support structure. The other factor is that the current design of the bridge link is integrated into the SYC and Library buildings and therefore, the support structure of the bridge budget is being carried in each of those budgets. As the above table indicates, the expenditure ceiling for this project from a City perspective is $207.7 million with Development Charge (DC) funding providing 53.2 percent of the total project costs. It should be noted that there is the potential for some of the Public Realm costs to be funded through a “Community Benefit Charge (CBC)”. As stated in the 2021 budget presentation, City staff have now started the Development Charge Study and Community Benefit Study process and where possible, staff will explore the opportunity to have these costs funded by the CBC. It is interesting to note that the Senior & Youth Centre DC funding component is almost funding the entire project’s capital cost. Table One excludes any future senior government grant funding opportunities. It is staff’s intent to apply for all grant opportunities even including smaller grants where there may be an opportunity to help fund energy efficient equipment and/or accessibility capital investments. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 6 Table Two City Centre Project Estimated Net Cost April 2022 Total City Expenditure Celling $207,669,547 Less: PTC Refund (6,300,000) Estimated Net Project Cost $201,369,547 The Pickering Town Centre (PTC) Refund and timing of the payment is based on the City completing the “Public Realm” improvements. The goal is to have the Public Realm improvements completed when the City Centre is completed. Payment is received from PTC only when the entire public realm project area has been completed. The Public Realm area consists of a new public urban square and will be constructed between the Performing Arts Centre and the Youth & Seniors Centre extending from the Central Library to Glenanna Road. In addition, a small secondary urban square is proposed immediately north of the new Central Library. These two park blocks will have a combined area of 2,403 square metres, and are intended to be conveyed to the City to satisfy the parkland dedication requirements under the Planning Act for the future redevelopment of the easterly portion of the PTC lands. The Public Square blocks will feature a unique paving treatment with seating, planters, public art, water feature and landscaping in a design that connects the Central Library, Seniors & Youth Centre and Performing Arts Centre. This space will be used for outdoor experiences; from large events to small performances while providing access to the retail stores at the Pickering Town Centre. The proposed hardscape treatment is intended to extend through the new public road fronting the Central Library, and will continue through Esplanade South to the Chestnut Hill Developments Recreation Complex. The purpose of this extension of hardscape features is to provide a unified streetscape treatment from the Central Library to the Recreation Complex, that will connect all existing and new City facilities, as well as create a cohesive and defining identity for the City Centre neighbourhood . The area of the Public Realm improvements is shown in diagram one. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 7 Diagram One Public Realm Area Notes: The light green area represents Public Realm The red crosshatched area is the responsibility of the residential tower owner City Centre Debt Analysis & Watson Report As stated earlier in the 2020 and 2021 budget reports, the Treasurer has raised the issue and expressed concerns regarding the level of debt as it relates to the planned future capital expenditures and its impact on the Annual Repayment Limit or ARL. The City Centre project and the City’s capital forecast both add to the financial strain and stress referenced in recommendation 3. a. A financial snapshot is presented in Table Three of the Council approved 2022 Preliminary Draft Capital Budget and Four Year Forecast. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 8 Table Three 2022 Preliminary Draft Capital Budget & Four Year Forecast ($ Millions) 2022 Preliminary 2023 2024 2025 2026 Total Draft Forecast Forecast Forecast Forecast Budget Major Project Animal Shelter Highway 401 Bridge Seaton Community Centre Design Civic Complex Renovations Seaton Community Centre Construction Total Expenditures 41.3$ 117.3$ 66.8$ 50.7$ 134.8$ 410.7$ Financing By Major Sources External Debt 3.1 24.2 18.3 27.6 19.5 92.7 Internal Loans 2.0 3.4 2.7 3.1 1.0 12.1 DC Debt 6.9 11.1 18.5 0.0 88.3 124.7 Sub Total 12.0 38.7 39.5 30.7 108.8 229.5 Prov/Fed Gov Grants 6.1 7.0 4.6 6.8 4.0 28.5 DC Funding 6.7 30.1 5.4 4.1 8.0 54.3 City Funded Reserves 10.9 14.6 12.1 6.8 11.0 55.3 Third Party Contributions 2.3 25.3 1.1 0.7 1.4 30.7 Other *3.3 1.7 4.2 1.6 1.6 12.3 Total 41.3$ 117.4$ 66.8$ 50.7$ 134.8$ 410.7$ Table Three does not include the City Centre project cost. As shown in Table Three, the preliminary 2022 draft capital plan is substantially funded with debt. The Development Charges (DC) debt is the largest forecasted component and this debt is required to be issued due to the fact the City’s DC reserve funds do not have sufficient dollars to meet the growth related capital expenditures. The issue of the DC reserve funds having insufficient balances and, therefore, having to borrow funds was identified by the Treasurer in Report FIN 11-21. Table Four Debt Summary (City Centre & 2022 Capital Budget & 4 Year Forecast) City Centre Debt DC Debt City Share Debt $110,129,598 94,009,951 $204,139,549 2022 Budget & Forecast Total Estimated New Debt 229,500,000 $433,639,549 FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 9 Table Four above only reflects new debt. The City currently has outstanding (issued) debt of $30.6 million plus $32.7 million of new debt to be issued from previously approved capital budgets, totaling 63.3 million. (The 2021 budget included the Pickering Heritage Community Centre of which $11.4 million of the project’s cost would be funded from debt). The estimated new debt represents an increase of 6.85 times over the revised debt of $63.3 million. What is the ARL? The Municipal Act through Regulation 403/02 permits a maximum of 25 percent of net operating revenues to be used to fund principal and interest charges for debt . For Pickering, the net operating revenues consists of the following major items: Property tax revenue User fees and charges Fines, penalties and interest on taxes License fees, permit fees and rent Gaming and casino revenues Every year, as the budget levy increases, the City’s annual repayment limit increases that in - turn results in a higher ARL. Over the last seven years, the City has maintained a steady course as it relates to debt use and has maintained its debt level below 5 percent of the maximum allowed of 25 percent. The financial strategy of being prudent and cautious has served the City well as it relates to its management of debt. With the addition of a new revenue source (casino revenue), the City can now proceed to consider, to a certain degree, to expand its use of debt. Ontario Regulation 403/02 does permit municipalities to appeal to the Ontario Land Tribunal (OLT) to exceed the 25 percent limit. The use of this path by municipalities is rare. Staff are aware of one situation whereby a municipality requested an exemption to exceed the limit to borrow funds to install water and sewer infrastructure. Under this situation, the municipality could demonstrate that the additional debt costs could be accommodated through future water and sewer revenues. In other words, the higher capital costs were directly funded by corresponding water and sewer rates and this revenue stream has a low risk of default and or failure. In Pickering’s situation, the City Centre capital program , when completed, results in higher net operating costs. In other words, the revenue stream from the City Centre project is inadequate to cover the debt costs. To start the appeal process, the City’s solicitor would have to write to the OLT asking for an increase to the debt ceiling. The following information would have to be provided to the Tribunal: i. Set out the current debt limit ii. Set out why the debt limit needs to be increased iii. Describe the extent of the increase iv. Describe what the increased funds would be used for v. Describe the costs of the project vi. Give the rationale for the project FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 10 vii. Describe the plan to return to balanced position It is staff’s understanding that the “hearing” would be held by correspondence and the process is not subject to the current backlog of the OLT. Therefore, it appears that a decision could be rendered within a reasonable amount of time. Watson & Associates Report Analysis When reviewing the “5-Year Capital & Operating Financial Plan” prepared by Watson & Associates, the reader has to understand that certain assumptions were made in developing the various scenarios and options in consultation with finance staff. The key assumptions are: City Centre debt borrowing occurs over a three year period , rate stabilization reserve balance would be at 15 percent of net expenditures, population would increase by 1.8 percent per year translating into assessment growth and the goal is to build up the casino reserve balance to 2 years’ of annual debt financing costs to offset unpredictable events . Table Five ARL Summary (Watson & Associates Report – Pages 22 to 27) Line # Option A Option B Deferral Scenario’s Capital All In Seaton Rec & North Heritage 2027 2027 A #1 – Maintain Status Quo 26.5% 20.7% B #2 – Reflects AMP Strategy 24.6% 19.2% C Average 25.6% 20.0% The above information on table f ive can be found on pages 22 to 27 of the attached Watson & Associates report. Option A Scenario 1 is based on the City’s current approach of moderate increases to the tax levy and includes all of the capital projects (City Centre and capital forecast) proceeding as currently forecasted. Under this scenario, the City exceeds the ARL. Scenario 2 takes into the consideration the City’s Asset Management Plan (AMP) with corresponding levy increases with the identical capital construction build plan as scenario 1. The ARL is lower for scenario 2 due to the fact the annual property tax increases have been higher to reflect the AMP strategy (of increasing the tax levy to fund capital replacements) and therefore, creating more ARL room. If the City adopts a phase-in approach as reflected in Line C, the City is still above the ARL. For this reason, and only viewing from a financial lens, the Treasurer strongly does not recommend Option A. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 11 Option B The ARL figures represented in “Option B” represents the capital construction plan (City Centre), with a deferral of the Pickering Heritage Community Centre & Library ($29.08 million) and the Seaton Recreation & Library Community Centre ($110.10 million). By deferring these two major capital projects, the City reduces its ARL below the 25 percent limit. However, by adopting the “Average” AMP levy strategy, the City is still above average ARL as compared to the vast majority of municipalities in Ontario. There is still a sufficient level of risk associated with this approach such as: the willingness of Council to consider moderate increases in the tax levy to fund the AMP, uncertainty in a post pandemic economic environment, casino revenue streams and future assessment growth. The capital program (City Centre and forecast) is based on the principle of “growth”, that in-turn generates DC fees to pay for DC debt. A recession and/or other significant negative even that disrupts the “growth” model assumption translates into financial stress for the City. To partially mitigate this risk, the Treasurer recommends that a reserve be established with a target balance equivalent to two years of City Centre debt financing costs. However, it should be noted that there are other DC debt financed projects where a reduction in DC fees that results insufficient funds to meet the DC borrowing costs would have to be funded from other City sources. The Treasurer is still recommending that the project not proceed under Option B even when considering the significant deferrals due to the fact the City is still relatively close to the ARL limit, the uncertainty of the pandemic and its impact on local economy and assessment growth . If and when other or additional revenue sources become available such as senior government grants, these additional revenues may reduce the financial stress and or the amount borrowed. The fiscal challenge for any municipality while still operating in a pandemic is trying to manage the risk when undertaking such a large investment (City Centre & Capital Forecast). There are basically five options in managing the risk: defer projects over a longer period of time, decrease the number of projects, scale back the size of the capital projects (smaller buildings) find alternative or new sources of revenues or increase the size of the contingency or rainy day fund. Unfortunately, there is no mathematical formula that would develop the optimum strategy for managing the risk envelope of what the City is proposing. However, the guiding principle should be to be cautious and or risk adverse at the initial stage of the five year plan until some of the variables trend in a positive direction for the City. It should be recognized that the City Centre project provides other community, socio-economic benefits described later in this report that when taken into consideration, Council may decide to move the project forward. The recommendations made in this report by the Treasurer are based only on financial inputs and/or considerations and do not take these other factors into account. From a financial lens and when considering Options A and B, B is preferred . However, from a financial perspective, the best option is not to proceed, unless there are other new revenue streams that would lower the ARL to a more moderate level. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 12 Discussion: Explanation of Key Recommendations a) Hiring of architects-Alliance for preparing construction and tender documents – Recommendation 3. b. i architects-Alliance staff and their team of consulting engineers will be working with the development managers and the pre-construction general contractor to complete working drawings and progressively tender the City Centre project (excluding the City parking garage). b) Engagement of Cushman & Wakefield (Development Managers) – Recommendation 3. b. ii Staff from Cushman & Wakefield will be working with City staff, architects-Alliance staff as well as their team of consulting engineers on the following items: developing and reviewing the City Centre working drawings; working with the pre-construction General Contractor on the progressive tendering of the City Centre project; and obtaining all the necessary approvals from the City and other authorities having jurisdictio n required for City Centre related to the Senior & Youth Centre, Bridge Link and for the relocation of site services c) Employment of twopointO (Development Managers) – Recommendation 3.b. iii The team from twopointO will be working with City staff and other project staff related to the following City Centre projects: Library, Public Square/Public Realm and Performing Arts Centre. The work performed will be similar as to the Cushman & Wakefield project work, however, the DM’s work will be focused on differe nt buildings and structures related to the City Centre. d) Hiring of SKA for Relocation of Services – Recommendation 3. b. iv The engineering consulting firm of Sabourin, Kimble & Associates Ltd. (SKA) was retained in March 2019 to provide project management services and undertake preliminary engineering services for the relocation of services associated with the City Centre Project. In July 2019 , the scope of their assignment was expanded to include detail design, utility relocation coordination and transportation planning. The revised project cost for the assignment was $880,000 (HST extra). SKA worked on the assignment until the end of March 2020 after which the City Centre project was placed on “pause” due to economic uncertainty as a result of the COVID-19 pandemic. At that point SKA had completed approximately 60 percent of the assignment. Taking into account the 18 months that has passed since agencies have reviewed the first submission of the design, there is additional time, and effort required to get back to what is considered a 60 percent design submission. SKA has submitted a proposal dated September 27, 2021 outlining the scope of work and cost estimate to complete the relocation of services design assignment which includes project management services, additional preliminary engineering services, detail design services FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 13 (discounted to reflect work completed), geotechnical work and utility locates. The estimated cost of their services is $512,870 (net of HST) for the period of October 2021 to April 2022. It should be noted that this schedule is aggressive, but all efforts will be made to achieve full approvals by April 30, 2022. It should also be mentioned that the previous and the proposed design assignments include costs related to both the Phase 1 relocation of services (benefiting the Performing Arts Centre, Library, Youth & Seniors Centre, residential tower and the underground parking garage) and Phase 2 relocation of services that solely benefits Ontario Pension Board’s (OPB) proposed development on the Pickering Town Centre lands south of the Youth & Seniors Centre to Pickering Parkway. As such, some of the costs within the scope of the assignments are to be cost shared with OPB. e) Contracting of Construction Project Management Services to Deloitte LLP – Recommendation 3. b. v There is a need for the City to engage the services for construction project management to undertake several of the major development tasks related to the City Centre project . These tasks include the following such as perform reviews and provide recommendations to senior City staff on quality, tender document compliance including design/technical specifications, scheduling cost and change order processes. f) Hiring of Torys LLP to Complete Legal Agreements – Recommendation 3. b. vi The Master Agreement lists as schedules the various other contracts and documents which must be finalized in order to completely define all aspects of the Project. Provided that OPB and the City agree on the business terms as set out in the draft Master Agreement (Attachment 2), staff do not expect major disagreement between the parties on the terms of the other contracts and documents. That being said, a significant amount of work will be necessary to negotiate and finalize the other contracts and document s. Torys LLP has been advising the City with respect to the Project since 2019 and, since May of this year, has advised the City with respect to all the matters addressed within the draft Master Agreement. g) Hiring of IBI Group to develop the strategy for New Underground Parking Garage – Recommendation 3. b. viii As a follow up to the Civic Complex Parking Strategy, it is recommended that the City retain a consultant to conduct an operational review of the proposed underground parking garage that will service the City’s Youth & Seniors Centre, Library and Performing Arts Centre. There is a need to determine strategies around parking space designation and allocation, technology to be used to control ingress/egress and parking, and an operating model to be used. It is important to have this determined early so that requirements for technologies and systems can be worked into the design drawings for the underground parking garage and three facilities. Staff requested a scope of work and cost proposal from IBI Group who have expertise in this field of work. Staff is recommending that IBI Group be retained at a cost not to exceed $50,000 to undertake this work. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 14 h) Payment to Pickering Town Centre for Underground Parking Design – Recommendation 3. b ix A key component of the project is the City Centre parking garage. The City has approximately 350 parking stalls on the P1 level of the garage that connects directly to the Library, Seniors & Youth Centre as well as the Performing Arts Centre. Due to the integrated nature of the parking facilities, the parties have agreed that that the parking garage will be constructed by Pickering Town Centre and the City will reimburse PTC for their proportion share of the cost. The payment is to reimburse PTC for the City’s share of th e parking garage design related costs. i) Hiring of Deloitte LLP to develop a Debt Financing Strategy – Recommendation 3. b. x The City Centre project and four year capital forecast heavily rely on the use of external debt (City and DC) financing. In the past, the City would use external debt financing, however, the debt amount and its impact on the ARL was never an issue . With the City Centre project and other future planned debt financed capital projects, there is a need to seek outside expertise to develop a strategy that not only considers the historical low interest (borrowing) costs but also considers a blended borrowing approach (medium and long term debt) that would strike a balance between risk and cost. The work plan is to develop a debt financing strategy between November and March (2022) and present the strategy at the March 2022 budget meeting . j) Maximizing DC Funding for City Centre Development Start-Up Costs – Recommendation 3. b. xi The 2019 Capital Budget included $2.0 million for City Centre start-up costs funded from the rate stabilization reserve. Many of these costs such as developing the legal agreements and consulting resources for the RFPQ and RFP could be considered as part of the projects over all cost. Any costs that are re-allocated as a capital cost, would result in being funded (in theory) at the 53.25 percent DC level resulting in a transfer and or increase to the rate stabilization reserve. Under this scenario, the City Centre cost ceiling approved by Council in Recommendation 3a, would be increased to match the transfer to the rate stabilization reserve. k) Hiring of EllisDon Corporation to undertake consulting work related to preconstruction for the City Centre – Recommendation 3. b. xii Between now and April 2022, the City will be utilizing the expertise and experience of its DM’s and EllisDon Corporation staff as it relates to preconstruction activities. These activities includes tendering for the various building and construction components such as plumbing and electrical and also engaging in a value engineering exercise to control and potential reduce the overall project cost while maintaining program functionality. l) The Master Agreement – Recommendation 4 The goal of Pickering’s new City Centre project (the “Project”) is to create a vibrant, connected, and bustling downtown, where municipal service delivery, shopping and retail, and residential FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 15 intensification come together as the heart of the City. Pursuant to report CAO 07-19 dated July 22, 2019 (Attachment 3), City Council endorsed the non-binding Memorandum of Understanding (“MOU”) outlining the main features of the Project and directed staff to negotiate binding agreements to govern all the issues set out in the MOU. Pursuant to report CAO 04-21 dated May 25, 2021 (Attachment 4), City Council approved, among other things, the retainer of external legal counsel to assist with the negotiation of the various contracts which define the Project. Consistent with both these reports, City staff have entered into negotiations with Dentons LLP, the solicitors for OPB, with respect to an overarching Master Agreement which, once finalized and signed, will contain binding obligations on both the City and OPB with respect to the land transfers and the construction of the various facilities and appurtenant services which will create the Project. City staff have been assisted in the negotiation of the Master Agreement by Torys LLP and Deloitte LLP. These negotiations have also involved Twopoint0 Partners Inc., the development manager for the City, and Cushman & Wakefield Asset Services ULC, the development manager for OPB, and for the City's new Seniors and Youth Centre. The Master Agreement sets out all of the required agreements and obligations of the parties necessary for the construction, development and operation of the Project. It includes a series of land exchanges between OPB and the City and the construction on lands to be acquired from OPB of the following new City facilities (collectively, the “New City Facilities”): (i) New central library; (ii) New Seniors and Youth Centre (“SYC”); (iii) New Performing Arts Centre (“PAC”); (iv) Pedestrian public square physically and visually connecting City Hall with the new City facilities and the Pickering Town Centre Shopping Centre; (v) Public Realm improvements, inclusive of a visually unifying surface treatment, from the Public Square through Esplanade Park and Esplanade South to the Chestnut Hill Development Recreation Complex; (vi) underground parking with access to and from each of the New City Facilities and OPB’s new rental apartment building; and (vii) connecting roads, amenities and other improvements; In addition, the Master Agreement addresses the construction by OPB (or an affiliate of OPB) of a 50 storey rental apartment building to be constructed by OPB above the SYC. The location of these facilities, and their orientation around the new public square are depicted on the Master Plan (Attachment 5). This vision for the Project is consistent with Provincial recognition of the site as an Urban Growth Centre and Mobility Hub. In exchange for the lands to be acquired by the City, OPB (or a third-party at OPB’s direction) will acquire from the City the South Esplanade Block, on which it is presently contemplated will be constructed a mixed use residential development including a six storey pedestal bisected by a public road and a pedestrian walkway, and two condominium towers, in conformity with the requirements of City Zoning By-law 7719/19; FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 16 The Master Agreement addresses the servicing needs of the new City Facilities as well as the new rental and condominium development, including sanitary sewer, storm sewer and water service capacity. To facilitate the location of the new City Facilities and the residential rental tower existing Regional water and sewer lines will be relocated from what is now the east parking lot of the Pickering Town Centre Shopping Centre to Glenanna Road. Since late May of this year, City staff, with the assistance of Torys LLP and Deloitte LLP, have negotiated the terms of the Master Agreement with Dentons LLP (solicitors for OPB Realty Inc.). Since that time, the parties have reached consensus (subject to Council approval) on most of the significant business terms that define the role of each party in the Project. This includes the Master Agreement terms regarding the site plan for the new City facilities, rental tower and South Esplanade Block condominium development, the cost and operation of shared facilities and the land transfers between the City and OPB Realty Inc. Attachment 2 is the draft Master Agreement, together with a Memorandum from Torys LLP which sets out the positions of the parties (and their substantial agreement) on the terms of the land swap and the other main features of the Project. The Master Agreement is not ye t finalized, but it is sufficiently complete to serve as a statement of the obligations of both parties with respect to the Project. A key feature of the Master Agreement is the exchange of lands between the parties. It is important to note that staff have negotiated significant improvements to the terms of the land swap since they were first set out in the non-binding MOU approved by Council in July of 2019. Those improvements are summarized below: 1. Library – As of November, 2019, the expectation was that t he City would receive a strata parcel of part of the OPB lands on which the new Library was to be built. No air rights or other interests were to be conveyed. As of September, 2021, OPB has agreed to convey fee simple (freehold) title to the City of the lands on which the Library will be situated, together with easements for access and support. This increases the value and long term usability of the Library lands. 2. City Parking Structure – As of November, 2019, the expectation was that the City would receive a 99 year lease of a subsurface strata parcel of part of the OPB lands on which the City’s Parking Structure (Level P1) would be built. As of September, 2021, OPB has improved its proposal by agreeing to convey fee simple title to the City of a strata parcel of part of the PTC land on which the City’s Parking Structure will be situated, together with easements for access and support. It must also be noted that the portion of the City Parking Structure lying below the Library will also be conveyed to the City in fee simple. These improvements increase the value and usability of the City Parking Structure. 3. Public Square – As of July, 2019, OPB proposed to give the City no interest whatsoever in the public square area of the Project. As of November, 2019, OPB was prepared to offer the City a 99 year lease of a strata parcel to accommodate the Public Square. As of September, 2021, OPB has agreed to convey fee simple title to the City of a strata parcel for the Public Square, together with easements for access and FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 17 support. This means that the City will, appropriately, remain the owner of its Public Square in perpetuity. 4. Public Road – Before September, 2021, OPB proposed that the new local road adjacent to the Library, Town Square and PAC would be a private road. As of September, 2021, staff have obtained the agreement of OPB to make this a public road, with ownership being transferred to the City. The transfer of this road to the City will be a combination of fee simple (freehold), and strata parcel (where the road sits atop the underground parking structure). Again, this improves the value and utility of the land being conveyed to the City. Outstanding Issues in the Master Agreement The negotiations of the Master Agreement terms since May of this year have resulted in resolution in principle of most of the fundamental business terms of the Project. That being said, there remain some areas of concern which must be brought to Council’s attention: 1. Participation Covenant: The Master Agreement (and previously the non-binding MOU) contemplates residential condominium development on the South Esplanade Block. To enable this development, OPB intends to direct the transfer of the South Esplanade Block to a developer experienced in residential condominium development. This aspect of the Project is of significant value to OPB, and it is also important to the City, because the development will result in assessment growth and an increase in property tax revenues that will help defray the City’s project costs. If development of the South Esplanade Block does not occur, the expected assessment growth will not materialize. In an effort to protect the City from that possibility, staff have sought the agreement of OPB and its transferee that, if development does not occur, and instead the South Esplanade Block (or any part of it) is sold within five years, the City would be entitled to a 50 percent share of the net profit realized on such sale. This commitment (referred to as a “participation covenant”) was requested to deter land banking (i.e. the developer simply electing not to construct the residential condominium development) and land speculation (i.e. a subsequent ‘flip’ of the undeveloped South Esplanade Block for a purchase price significantly in excess of that attributed to the lands as part of the land swap arrangements with OPB). OPB is unwilling to make this commitment to the City. 2. Restrictive Covenants: The City is aware of certain restrictive covenants which affect the OPB lands which the City will be acquiring. These restrictive covenants appear in certain leases with tenants of the Pickering Town Centre Shopping Centre. The City i s currently aware of two restrictions in particular, in favour of Farm Boy and Cineplex, which as it currently stands, have a material impact on the proposed operation of the new City Facilities. These restrictions will limit the ability of the City to hold a farmers’ market in the new public square, and will also prevent the City from showing videos or films in any of the new City Facilities. These restrictions will need to be removed or amended to enable the City to fully use the new City Facilities for their intended purpose. Discussions are ongoing with OPB as to how these restrictions will be addressed, but any resolution will require the agreement of both Farm Boy (Sobeys) and Cineplex. There may be other restrictions which become apparent as further d ue FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 18 diligence is conducted on the OPB lands by the City. It must be noted that the draft Master Agreement (Attachment 2) calls for the City to receive title to the lands for the new City Facilities “free and clear” of such encumbrances, however, the risk remains that OPB may not be able to obtain the agreement of its tenants to remove or amend in a satisfactory manner, these restrictive covenants. 3. Environmental Condition of the South Esplanade Block : As part of the land swap terms, the City is required to deliver the South Esplanade Block to OPB without any material environmental contamination and following issuance of a Record of Site Condition (“RSC”) from the Ministry of the Environment sufficient to permit the residential development. The City has not yet undertaken environmental site assessments of the South Esplanade Block to identify what, if any, contamination exists. To the extent any such contamination does exist, the City will be required to remediate at its sole cost and expense to the satisfaction of the Ministry. In addition, the timing for obtaining the necessary RSC is unclear and could take upwards of four months from the time an application is submitted to the Ministry. It is therefore unlikely that the RSC will be available for the spring of 2022, when the closing of the land swap and commencement of construction of the Project is anticipated. Architect’s Agreement – Recommendation 5 Attachment 7 is the template Contract for Architectural Services between the City and architects-Alliance. Architects-Alliance has provided architectural design and related services for the Project since 2019, and has also been engaged by OPB Realty Inc. to design the rental tower which will be located above the SYC. As Council may recall, the Project was put on hold in 2020 due to the COVID pandemic. If Council proceeds with the Project, it will be important to re-engage architects-Alliance to complete its design work, so that the parties can proceed to the construction phase. The attached template Contract for Architectural Services has been reviewed by City staff, the City’s Development Manager and Torys LLP, and contains terms satisfactory to City staff. Project Contracts Contemplated by the Master Agreement – Recommendation 6 The Master Agreement lists as schedules the various other contracts and documents which must be finalized in order to completely define all aspects of the Project. These other contracts and documents include the following: (i) Agreement of Purchase and Sale f rom PTC Ownership to City; (ii) Agreement of Purchase and Sale from City to PTC Ownership-South Esplanade Block-substantially the same form as (i) above; (iii) Reciprocal Operating Agreements for Library, SYC, PAC, Public Square and City Parking Structure; (iv) Parking Garage Development Management Agreement; FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 19 (v) Parking Management Agreement; (vi) City and Region of Durham standard development and servicing requirements; (vii) City Centre Master Plan; (viii) Draft Plan of Subdivision for the PTC Lands; (ix) Legal Description of the Performing Arts Centre Parcel; (x) Legal Description of the City Lands; (xi) Legal Description of the Library Parcel; (xii) Legal Description of the PTC Ownership Lands; (xiii) Legal Description of the PTC Lands; (xiv) Legal Description of the SYC Parcel; (xv) Legal Description of the South Block Lands; (xvi) Site Plan to be submitted under s.41 of the Planning Act; (xvii) Architect’s agreements; (xviii) CCDC 2 construction contracts; and (xix) Shared Facilities Management Agreement. Socio-economic Benefits of the Project The capital expenditure by the City to construct the City Centre Project can be expected to generate economic activity at the Provincial, regional and local level, contributing to Ontario’s GDP, creating and maintaining jobs and generating tax revenues. The City of Pickering has retained Deloitte LLP to provide a high level estimate of the potential economic contributions of the Project and to profile selected socio -economic benefits that can also be expected. Below is an excerpt of the quantitative analysis provided by Deloitte LLP. Additional details c an be found in the Deloitte report, which is Attachment 6 to this report. The total capital expenditure for the Project is estimated at $207.7 million. It is estimated that the City of Pickering’s capital expenditure during the construction period could yield the following economic contributions: $0.96 of GDP for every dollar spent by the City of Pickering on the Project could be generated for the Ontario economy; $199.5 million in GDP, as well as 1,779 jobs (FTEs) created or maintained FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 20 in Ontario; $33.9 million in Provincial and municipal tax revenues, of which $18.9 million is at the Provincial level and $15 million is at the municipal level. The aforementioned estimates account for direct, indirect and induced economic contributions from the construction of the project and are reported in 2021 Canadian dollars. The table below provides more details: Table 1 -Detailed estimated economic contributions The totality of the City Centre project represents an important series of investments for the local economy and community. As summarized by Deloitte LLP in Attachment No. 6, a number of potentially lasting socio-economic benefits could be observed as a result of this major capital investment including but not limited to: 1. The immediate spike in economic activity that can be expected during construction, coupled with the longer-term benefits gained from new investments, could advance the standard of living of the community and help contribute to local economic competitiveness. The expected enhanced transportation networks (enhanced local road network) will help local businesses and lead to positive economic outcomes. 2. The addition of approximately 3,692 new residential units is aligned to national action on housing, and could help the Pickering increase available housing stock. Finally, the new Library, SYC, and PAC can help support positive learning, health, mental health and skills outcomes, and create new opportunities for the community to congregate and connect with one another, and create new business opportunities for Pickering. Notes: While the construction of approximately 3,692 new residential units can be expected to generate economic contributions, they are not accounted for in Deloitte’s review. The economic contributions are estimated using an “Input -Output” methodology, which traces how spending associated with the City’s capital expenditures contributes to the economy by creating demand for goods and services across different industries. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 21 h) Other Matters for Consideration Civic Complex Parking Strategy Pursuant to Recommendation 2. d of Report CAO 04-21 endorsed by Council on May 25, 2021, IBI Group was retained to undertake a parking strategy to review immediate and short term parking needs for the Pickering Civic Complex area. During the relocation of municipal services onto Glenanna Road between Kingston Road and Pickering Parkway, the availability of parking on Glenanna Road and within the Esplanade South parking lot will be impacted. As such, there will be a requirement to find alternative parking for City staff and Civic Complex (Library and City Hall) patrons. In order to determine existing and future parking demand, the consultant referenced the Institute of Transportation Engineers Parking Generation Manual in lieu of conducting parking utilization surveys given the on-going COVID-19 pandemic. Parking demand profiles were generated, allowing hourly parking demands to be estimated based on time-of-day distribution of parking demand. Since peak utilization will increase above the 87 percent level with all parking available, there is a requirement to find alternative parking. Once the Glenanna Road relocation of services project commences, peak utilization will be 125 percent, therefore the requirement for alternative parking will occur early in the City Centre project. It has been determined that the best source of alternative parking is the existing gravel overflow parking area that is located in the south east parking lot of the Chestnut Hill Developments Recreation Complex. This parking area will require upgrades including asphalt paving, line marking, lighting and security cameras in order to provide a safe environment an d to maximize the number of parking spaces. The estimated cost to upgrade the parking area is $400,000. A project cost of $270,000 was approved in the 2020 Capital Budget and the funding source for this project is the casino reserve. Risks & Opportunities Stormwater Management When the Pickering Town Centre Mall was being expanded in the 1980’s, the requirement for storage of stormwater from major storms for the upstream drainage area was addressed by providing on-site parking lot storage as a stormwater management facility. The parking lot was designed and graded for approximately 7400 m 3 of water to be detained on the surface until such time as downstream flows subsided. The development of the south area of the Master Plan (Blocks 4, 6, 7 and 8) is in the area of the storm water storage area. The consulting firm of Sabourin Kimble and Associates (SKA), on behalf of Ontario Pension Board (OPB), have prepared a Preliminary Servicing and Stormwater Management Report to address both the interim and ultimate solution for the storage of stormwater on the site. SKA has determined that for Phase 1 of the Master Plan (Blocks 1-9), some of the stormwater can be stored in underground chambers while some FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 22 stormwater can remain as surface storage by regarding the parking lot. For the ultimate development of the site (Blocks 10-17 west of Phase 1), the storage of stormwater can be addressed as either a combination of underground and surface storage, or stored entirely in underground chambers. This issue may have financial implications for the City. If the project proceeds, staff will endeavor to investigate the possible financial liability and report back at a future date. Transportation In support of the City Centre Master Plan (Blocks 1-9 and the South Block), a report entitled “Pickering City Centre Master Plan Review Urban Transportation Considerations” was prepared by BA Consulting Group Ltd., and submitted to the Ministry of Transportation (MTO) for review and comment. In discussions with MTO prior to submission of this report, their staff raised no significant concerns raised regarding the initial development consisting of the three City facilities, the residential tower and the South Block. MTO did request that a traffic impact study be undertaken. As such, City staff are not anticipating any significant requirements from MTO such as Highway 401 interchange improvements in order to proceed with the first phase of the Master Plan. MTO is aware that the City will be issuing a Request for Proposals for a City Centre Transportation Master Plan that will consider not only full build out of the City Centre Master Plan, but also the transportation needs and impacts of other development projects either underway, such as Universal City, or proposed along Kingston Road. Future development projects could possibly trigger the need for improvements at critical Highway 401 interchanges such as Brock Road, Liverpool Road and Whites Road. The Terms of Reference for the City Centre Transportation Master Plan, which have been reviewed and accepted by MTO, include studying existing and future traffic demands at these interchanges Tillings Road Land Sales The City’s Operations facility located at 2570 Tillings Road was vacated in July of 2019 when Public Works moved to the new Operations Centre at 1955 Clements Road. The area of the site used by Public Works at the Tillings Road site was the 10 acres immediately south of Scenic Lane Drive. All buildings and above grade structures were demolished and removed in 2020. The City is currently completing an environmental site assessment and submission to the Ministry of Environment prior to the final remediation and decommissioning of the site. The Durham District School Board have expressed the intent to acquire up to 8 acres of the site as the location of a future planned elementary school, once remediation is complete. Remediation is anticipated to be completed in 2022, subject to final approval from the Ministry of Environment. The City intends to work with the Durham District School Board for the sale of land to accommodate the new school and the goal is to obtain fair market price for the land . At this time, it would be premature to attach a sales figure for the land, however, based on recent experiences, City staff estimate a land value of $2.1 million of developable acre. Before the land is sold, however, the City would engage a certified property appraiser . The net proceeds FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 23 from the land sale would be transferred to the Rate Stabilization Reserve to offset and or reduce the dollar amount of identified debt financed capital projects. The remaining 2 acres at the west end of the property would be retained by the City and staff will recommend to Council re-purposing this land as a parkette amenity to provide passive green space in the neighborhood. City Centre Net Operating Costs Estimated Forecast The following tables provide an estimate of the 2026 and 2027 net costs (based on 2021 costs) to operate the three City Centre buildings, underground parking garage (City portion) and the Public Square based on an opening date of July 1, 2026. For 2026, the net operating costs include pre-opening costs for the first six months and net operating costs for the remaining six months of the year. Naming Rights revenue has been included in each of the City buildings and the Public Square estimated revenues for 2026 and 2027. The City had earlier engaged Sponsorship Canada to value the naming rights for these assets. Sponsorship Canada provided the City with a 10 year pricing range (High, Mid and Low) for selling the naming rights of each facility and the Public Square. For this financial exercise, the mid-point naming rights pricing was used to estimate the naming rights revenue. There are also additional revenue opportunities available by obtaining naming rights revenue for internal large rooms/structures such as the Library Auditorium. The internal naming rights revenue is not included in the City Centre cost exercise. Table Six New Central Library Incremental Net Operating Costs 2026 2027 Expenses Salary & Benefits Building & Equipment Maintenance Library Materials & Program Supplies General Administration & Technology Total Expenses (July 1 opening date) $816,320 195,040 43,250 374,395 $1,429,005 (full 12 months) $1,019,365 293,380 57,500 351,630 $1,721,875 Revenues Building Naming Rights Other Total Revenues ($50,000) (22,625) ($72,625) ($100,000 (42,250) ($142,250) Net Incremental Operating Costs $1,356,380 $1,579,625 Regarding the City Centre Library, incremental expenses and revenues for 2026 and 2027 have been identified that are in addition to the Central Library’s current expenses and revenues and are based on a July 1, 2026 opening date and pre -opening costs. The incremental cost to operate the City Centre Library is primarily for additional staffing (See Table 10) followed by increased costs for building utilities and maintenance, general FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 24 administration and technology. Building naming rights revenue is estimated at $50,000 in 2026 (July 1st opening date) and $100,000 in 2027. Table Seven Performing Arts Centre Net Operating Costs 2026 2027 Expenses Salary & Benefits Building & Equipment Maintenance Marketing & Promotion Programming General Administration & Technology Total Expenses (July 1 opening date) (full 12 months) $1,426,825 $1,873,155 143,015 204,125 267,250 299,500 474,000 861,000 373,555 438,850 $2,684,645 $3,676,630 Revenues Ticket Sales Rental Revenue Other Building Naming Rights Total Revenues ($646,500) (255,600) (304,150) (62,500) ($1,268,750) ($1,293,000) (511,200) (608,300) (125,000) ($2,537,500) Net Operating Costs $1,415,895 $1,139,130 The largest driver of operating costs for PAC are salary and benefits followed by programming costs, and marketing and promotion costs. The PAC’s operating costs are partially offset by Ticket Sales, rental revenues and grants and donations. Building naming rights revenue is estimated at $62,500 in 2026 (July 1st opening date) and $125,000 in 2027. Table Eight Public Square Net Operating Costs 2026 2027 Expenses (July 1 opening date) (full 12 months) Salary & Benefits $128,965 $236,080 Public Square & Equipment Maintenance 156,150 203,600 Programming 25,500 37,000 General Administration 20,850 30,700 Total Expenses $331,465 $507,380 Revenues Square Naming Rights ($30,000) ($60,000) Total Revenues ($30,000) ($60,000) Net Operating Costs $301,465 $447,380 The cost to operate the Public Square is largely due to salary and benefit costs (see table 10) to maintain the public square (during all seasons) and equipment maintenance costs. Public Square naming rights revenue is estimated at $30,000 in 2026 (July 1st opening date) and $60,000 in 2027. FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 25 Table Nine Seniors & Youth Centre Net Operating Costs 2026 2027 Expenses Salary & Benefits Building & Equipment Maintenance Marketing & Promotion Programming General Administration & Technology Total Expenses (July 1 opening date) $977,745 213,265 119,000 43,250 228,655 $1,581,915 (full 12 months) $1,563,770 274,960 83,000 50,500 244,265 $2,216,495 Revenues Programming Other Building Naming Rights Total Revenues (297,500) (63,800) (12,500) ($373,800) (595,000) (127,600) (25,000) ($747,600) Net Operating Costs Less savings from ESCC closure $1,208,115 (318,270) $1,468,895 (636,590) Net Incremental Operating Costs $889,845 $832,305 Regarding the new Seniors and Youth Centre (SYC), the 2026 and 2027 net costs to operating the SYC have been calculated in the above table. Estimated savings from the closure of the ESCC (subject to Council approval) have then been deducted to arrive at the net incremental costs to operate the new SYC in 2026 and 2027. The net cost to operate the SYC is largely due to salary and benefits costs for new staff including an enhanced corporate security staff team (See Table 10) followed by building utilities and maintenance costs, marketing and promotion costs for City programs and general and administrative expenses, partially offset by programming revenues. Building naming rights revenue is estimated at $12,500 in 2026 (July 1st opening date) and $50,000 in 2027. Table Ten Underground Parking Garage Expenses 2026 2027 (July 1 opening date) (full 12 months) Salary & Benefits $158,785 $213,895 Parking Garage & Equipment Maintenance 76,500 134,000 General Administration 17,875 14,500 Total Expenses $253,160 $362,395 Net Operating Costs $253,160 $362,395 The cost to operate the underground parking garage (City portion) is largely due to salary and benefit costs (see Table 10) and parking garage and equipment maintenance costs. Revenues FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 26 have not yet been estimated until the City has completed its external underground parking strategy. Table Eleven Additional Staff Additional Staff (Full Time Equivalents or FTEs) Facility 2025 2026 2027 Total Additional FTEs Central Library -16.9 (0.7) 16.2 PAC 2 23.0 -23.0 Public Square -3.5 0.4 3,9 SYC -20.4 -20.4 Underground Garage -2.8 -2.8 Total 2 66.6 (0.3) 68.3 The total Net City Centre Operating Costs will add $4.5 million to the City’s total 2026 operating expenditures which will increase the 2026 tax levy in the range of 4.5 percent to 5.5 percent. Usually, most municipalities construct and open one building. The City Centre project consists of three buildings, underground parking garage and public square. As the construction period comes to an end, there may be an opportunity to partially “Phase -in” the operating costs over a few years. The estimated tax levy range between 4.5 and 5.5 percent will be in addition to the City’s estimated average annual 2.5 percent tax levy increase that was used for financial modelling purposes for this report. Attachments: 1. 5-Year Capital and Operating Financial Plan dated October 14, 2021 by Watson & Associates Economists Ltd. 2. Draft Master Agreement 3. Report CAO 07-19 4. Report CAO 04-21 5. Master Plan Excerpts 6. Deloitte LLP Socio-economic Contributions Summary 7. Contract for Architectural Services FIN 15-21 October 21, 2021 Subject: City Centre Financial and Legal Implications Page 27 Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: James Halsall Paul Bigioni Division Head, Finance Director, Corporate Services & City Solicitor Approved/Endorsed By: Original Signed By: Stan Karwowski Director, Finance & Treasurer Recommended for the consideration of Pickering City Council Original Signed By: Marisa Carpino, M.A. Chief Administrative Officer Watson & Associates Economists Ltd. 905-272-3600 October 14, 2021 info@watsonecon.ca 5-Year Capital and Operating Financial Plan City of Pickering ________________________ Final Report Attachment #1 to Report FIN 15-21 Table of Contents Page 1. Introduction......................................................................................................... 1 1.1 Background ................................................................................................ 1 1.2 Approach to the Financial Plan and Scenario Analysis .............................. 2 2. Anticipated Development .................................................................................. 4 3. Capital Expenditures and Capital Funding....................................................... 8 3.1 Introduction ................................................................................................ 8 3.2 City Centre Project ................................................................................... 10 3.3 Capital Funding ........................................................................................ 12 4. Operating Expenditures and Revenues .......................................................... 17 5. Financial Plan Summary .................................................................................. 20 5.1 Introduction .............................................................................................. 20 5.2 Conclusions ............................................................................................. 24 Watson & Associates Economists Ltd. H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Report Chapter 1 Introduction Watson & Associates Economists Ltd. H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 1. Introduction 1.1 Background The City of Pickering (City) is preparing to undertake a number of capital investments over the next five-year period (2022-2026) in response to anticipated growth and development in the City. These capital projects, which will allow the City to continue to provide established levels of service to the growing community, include • City Centre; • Highway 401 Road Crossing; • Animal Shelter; • Seaton Community & Library Centre; • Pickering Heritage & Community Centre; • Civic Complex Renovation; and • Replacement of Fire Hall #5. Furthermore, the City has completed their Asset Management Plan (AMP) which will identify the financial resources required to support existing City infrastructure in delivering adequate levels of service. Watson and Associates Economists Ltd. (Watson) has been retained by the City to undertake a financial plan to assess the fiscal impacts of the anticipated capital needs and AMP on the City over the next five years. The funding sources considered in the financial plan are primarily reserves/reserve funds, debt, and property taxes, but will also include potential casino gaming revenue. The financial plan assesses the sufficiency and sustainability of these funding sources, and their impacts relative to the City’s current position. In developing the financial plan multiple scenarios have been considered based on changes in the pace of development, casino revenues, and AMP funding requirements to provide a range of fiscal impacts for staff and Council’s consideration. Watson & Associates Economists Ltd. PAGE 1 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 1.2 Approach to the Financial Plan and Scenario Analysis The financial plan was designed to consider the fiscal impacts in aggregate for the City over a 5-year forecast period (i.e. 2022-2026). While additional scenarios were considered, ultimately two scenarios are presented in this report, including • Scenario 1: Maintaining current annual capital funding levels; and • Scenario 2: Increasing capital spending to full annual lifecycle funding. Increase to be phased in over a 15-year period as identified in the City’s AMP. The approach utilized herein for scenario 1 is to: • Set the annual property tax rates for the forecast period at the City’s projected rates; • Forecast the associated property taxation revenues, and non-tax revenues, for the anticipated development and assessment; • Apply the projected revenues against the net operating expenditure forecast to determine the available funding for capital expenditures; and • Measure the impacts of the capital requirements in terms of the available funding, considering additional debt financing requirements, associated debt capacity utilization, and reserve/reserve fund sustainability. The impacts for scenario 2 were measured by increasing the forecast tax levy (and property tax rates) to accommodate the additional annual capital lifecycle funding. The financial plan for each scenario, as summarized in the following chapters, addresses: • Anticipated development; • Capital expenditures and capital funding, including: o Lifecycle capital funding requirements o Reserve/reserve fund sustainability o Annual debt repayment limits; o Net operating expenditures; and • Fiscal impacts on the City’s property tax rates and non-tax revenues. Watson & Associates Economists Ltd. PAGE 2 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Chapter 2 Anticipated Development Watson & Associates Economists Ltd. PAGE 3 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 2. Anticipated Development The anticipated development and resulting assessment growth have been projected for the 2022-2026 period. Each scenario has been developed based on the pace of development in the City over the 2020-2021 period and the type and location of development identified in the City’s 2017 D.C. Background Study, with adjustments for the timing of Seaton development. Table 2-1 summarizes the incremental residential dwelling unit forecast by type, and the associated City-wide population, over the 2022-2026 period. Table 2-2 summarizes the incremental forecast of non-residential employment growth by type, and the associated City-wide employment, over the same period. Over the forecast period, population within in the City would increase by 1.8% per year. Similarly, employment growth would increase by 1.4% per year. The development forecast has been prepared on this basis as it reflects the higher level of development in the City over the 2020 to 2021 period compared to historical development but is conservative in comparison to the pace of development identified in the Regional Official Plan. The forecast in weighted property taxation assessment for the period 2022-2026 is based on the application of market value assessment estimates to the anticipated development, and the City’s current property taxation by-law. The market value assessment estimates are based on similar property type samples within the City, taken from fiscal impact studies for the area by the Region of Durham. The City’s property taxation by-law was utilized to provide the 2021 weighted assessment base and current property taxation ratios. Based on the foregoing, the residential and non-residential development forecasts to 2026 are estimated to increase the City’s weighted property assessment for taxation purpose by $3.1 billion. The weighted assessment forecast is summarized in Table 2-3. Watson & Associates Economists Ltd. PAGE 4 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 2-1 2022-2026 Residential Development Forecast Summary Residential Growth 2022 2023 2024 2025 2026 Dwelling Units (Incremental) Seaton Singles & Semi-Detached 170 170 170 170 170 Multiples 271 271 271 271 271 Apartments 188 188 188 188 188 Seaton Total 629 629 629 629 629 Rest of Pickering Singles & Semi-Detached 118 118 118 118 118 Multiples 188 188 188 188 188 Apartments 130 130 130 130 130 Rest of Pickering Total 436 436 436 436 436 Pickering Total 1,065 1,065 1,065 1,065 1,065 Population (Incremental) Seaton 1,755 1,755 1,755 1,755 1,755 Rest of Pickering 1,215 1,215 1,215 1,215 1,215 Decline within Existing Housing (779) (779) (779) (779) (779) Pickering Total 2,191 2,191 2,191 2,191 2,191 Watson & Associates Economists Ltd. PAGE 5 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx - Table 2-2 2022-2026 Non-Residential Development Forecast Summary Non Residential Growth 2022 2023 2024 2025 2026 Employment (Incremental) Seaton Industrial 324 324 324 324 324 Commercial 139 139 139 139 139 Institutional 38 38 38 38 38 Seaton Total 501 501 501 501 501 Rest of Pickering Industrial 50 50 50 50 50 Commercial 10 10 10 10 10 Institutional 2 2 2 2 2 Rest of Pickering Total 62 62 62 62 62 Pickering Total 563 563 563 563 563 Table 2-3 2021-2026 Weighted Assessment Forecast ($, millions) Weighted Assessment 2021 2022 2023 2024 2025 2026 Incremental Residential Singles & Semi-Detached 157 157 157 157 157 Multiples 186 186 186 186 186 Apartments 109 109 109 109 109 Total 452 452 452 452 452 Non-Residential Industrial 163 163 163 163 163 Commercial 21 21 21 21 21 Institutional ----- Total 184 184 184 184 184 Loss in Assessment from Appeals (2) (2) (2) (2) (2) Total (Incremental) 635 635 635 635 635 Total (Cumulative) 22,074 22,709 23,344 23,979 24,613 25,248 Watson & Associates Economists Ltd. PAGE 6 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Chapter 3 Capital Expenditures and Capital Funding Watson & Associates Economists Ltd. PAGE 7 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 3. Capital Expenditures and Capital Funding 3.1 Introduction Anticipated capital needs and funding sources have been provided by the City for the 2021 and the 2022 to 2026 forecast period based on the City’s 5-year capital budget. This capital forecast however excluded the City Centre project as those costs have been assessed separately. As summarized in Table 3-1, the City anticipates spending $691.6 million in total capital expenditures over the forecast period, including $207.7 million for the City Centre project. Watson & Associates Economists Ltd. PAGE 8 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx - Table 3-1 2021-2026 Capital Expenditures 2021 2026 2021 2022 2023 2024 2025 2026 Capital Expenditures City Centre Project 207,669,549 69,223,183 69,223,183 69,223,183 Other Capital Projects 483,901,410 73,191,800 41,275,264 117,255,600 66,750,872 50,666,324 134,761,550 Total Capital Expenditures 691,570,959 73,191,800 110,498,447 186,478,783 135,974,055 50,666,324 134,761,550 Watson & Associates Economists Ltd. PAGE 9 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 3.2 City Centre Project The total costs of the City Centre project are $216.1 million including Phase 2 service relocation costs ($8.4 million) which have not been considered within this financial plan as they will be funded directly by developer contributions. The capital cost estimates for the various components of the City Centre project and funding sources are summarized in Table 3-2. $110.6 million of the costs are D.C. eligible, $90.8 million remain a City cost, while $6.3 million will ultimately be funded by the Pickering Town Centre (PTC). Watson & Associates Economists Ltd. PAGE 10 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 3-2 City Centre Costs Expenditures Funding Sources D.C. Component (Incl. Net Hst 1.76%) D.C.s City Share PTC Funding % S & Y Centre 43,038,550 41,871,070 1,167,481 97.3% Theatre 26,601,421 -26,601,421 0.0% Classrooms and Multi-Purpose Space 36,736,522 15,251,204 21,485,319 41.5% Theatre FFE 6,212,057 -6,212,057 0.0% PAC Subtotal 69,550,000 15,251,204 54,298,797 -21.9% Public Library Building 34,003,290 16,170,799 17,832,491 47.6% Roof Patio and City Facilities 13,014,589 6,189,292 6,825,297 47.6% Library Subtotal 47,017,879 22,360,092 24,657,787 -47.6% City Lands Public Realm 6,861,816 450,000 111,816 6,300,000 6.6% City Parking 350 Stalls 26,529,470 21,981,205 4,548,265 82.9% Bridge Link 1,234,017 895,720 338,297 72.6% Public Square 5,948,814 3,379,510 2,569,304 56.8% Phase 1 Service Relocations 7,489,001 4,390,798 3,098,203 58.6% Subtotal 207,669,549 110,579,598 90,789,951 6,300,000 53.2% Phase 2 Service Relocations 8,384,928 --8,384,928 0.0% Total 216,054,477 110,579,598 90,789,951 14,684,928 51.2% Watson & Associates Economists Ltd. PAGE 11 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx The eligible funding sources identified in Table 3-2 are further disaggregated in Table 3- 3 to identify the individual D.C. reserve funds that will be the funding source for the growth-related cost share. The City’s current D.C. Background Study was used as the basis for considering the D.C. eligibility of the various cost components, with anticipated contributions from PTC ($6.3 million) being recognized. While these assumptions have been used for the basis of this financial plan, the City may wish to revisit the funding allocations for the purposes of the D.C. calculation as the scope of the project and developer negotiations are finalized. Moreover, the non-D.C. recoverable share of the Public Realm costs could potentially be included in a community benefits strategy under the authority of the Planning Act and recovered in part from high density development in the City. Table 3-3 City Centre Costs and Eligible Funding Sources Description Total Total Costs 207,669,549 Funding Sources D.C. Cost Share 7622 RF DC -Parks & Recreation Services 81,566,180 7630 RF DC -Library 28,563,418 7610 RF DC -Transportation Services 450,000 Subtotal 110,579,598 City Cost Share Benefit to Existing 90,126,384 Operating included in Capital Budget 663,567 Subtotal 90,789,951 Pickering Town Centre Cost Share PTC -Public Square/Public Realm 6,300,000 Subtotal 6,300,000 Total 207,669,549 3.3 Capital Funding The main sources of funding for the City’s capital needs over the forecast period, will be debt and transfers from reserves or reserve funds (including 3rd party contributions and tax-based funding). The capital funding sources have been based on the City’s 5-year Watson & Associates Economists Ltd. PAGE 12 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx capital budget with adjustments made to ensure reserves/reserve funds are maintained at sustainable levels to provide sufficient flexibility for cash-flow and emergency situations (such as the COVID-19 Pandemic). The sustainability of the City’s reserves/reserve funds for these purposes are discussed further in Section 5. Table 3-4 summarizes the anticipated capital funding sources over the 5-year forecast period. Within the capital funding sources, $454.0 million in additional debt financing will be required between 2021 and 2026. Table 3-5 identifies what share of the additional debt financing is required for the City Centre project versus other capital projects and whether the debt will be funded through D.C.s or will be property tax supported. Approximately 45% of the anticipated debt ($204.1 million) is related to the City Centre Project. Furthermore, 50% of the anticipated debt ($227.9 million) will be funded through D.C. revenues. Depending on the actual development and D.C. revenue that is realized over the forecast period, the annual D.C. debt financing costs may represent the majority of D.C. revenue collected annually limiting the City’s ability to utilize D.C. reserve funds for other growth-related needs. Reserves/reserve funds also represent a significant capital funding source, providing 31% of total capital funding (i.e. $211.5 million). Watson & Associates Economists Ltd. PAGE 13 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 3-4 Capital Funding (2021-2026) Forecast Capital Funding (2021-2026) 2021-2026 2021 2022 2023 2024 2025 2026 Capital Expenditures City Centre Project 207,669,549 69,223,183 69,223,183 69,223,183 Other Capital Projects 483,901,410 73,191,800 41,275,264 117,255,600 66,750,872 50,666,324 134,761,550 Total Capital Expenditures 691,570,959 73,191,800 110,498,447 186,478,783 135,974,055 50,666,324 134,761,550 Capital Funding City Centre Project D.C. Cost Share D.C. Reserve Funds 7622 RF DC - Parks & Recreation Services - 7630 RF DC - Library - 7610 RF DC - Transportation Services 450,000 150,000 150,000 150,000 D.C. Debt 7622 RF DC - Parks & Recreation Services - 81,566,180 - 27,188,727 27,188,727 27,188,727 -- 7630 RF DC - Library 28,563,418 9,521,139 9,521,139 9,521,139 7610 RF DC - Transportation Services ---- City Cost Share Tax Funded Debt - 94,009,951 -- 29,283,317 - 32,363,317 - 32,363,317 -- Transfers From Reserves 7050 R - Senior Ctr new 2,800,000 2,800,000 - 7066 R - Library Building 280,000 280,000 Subtotal City Centre Project 207,669,549 -69,223,183 69,223,183 69,223,183 -- Other Capital Projects Reserves 55,505,038 10,083,305 9,730,836 9,671,624 9,342,050 8,143,938 8,533,285 D.C. Reserve Funds 79,364,417 25,024,180 6,742,410 30,126,626 5,382,700 4,068,636 8,019,865 Other Reserve Funds 68,650,917 18,895,917 10,487,196 11,720,850 9,322,454 9,545,500 8,679,000 Property Taxes 4,413,535 731,660 665,500 569,000 912,750 755,250 779,375 Internal Debt 15,662,613 2,622,500 2,620,000 3,464,000 2,815,313 3,187,000 953,800 External Debt 249,854,230 11,391,900 9,526,000 59,458,500 36,715,605 24,966,000 107,796,225 Other (Grants, Donations, Sale of Land) 10,450,660 4,442,338 1,503,322 2,245,000 2,260,000 -- Total Funding 483,901,410 73,191,800 41,275,264 117,255,600 66,750,872 50,666,324 134,761,550 Total Capital Funding 691,570,959 73,191,800 110,498,447 186,478,783 135,974,055 50,666,324 134,761,550 Watson & Associates Economists Ltd. PAGE 14 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 3-5 Debt Funding for Capital Projects (2021-2026) Debt Funded Capital Costs 2021-2026 2021 2022 2023 2024 2025 2026 City Centre Project D.C. Debt 110,129,598 -36,709,866 36,709,866 36,709,866 -- Tax Based Debt 94,009,951 -29,283,317 32,363,317 32,363,317 -- Subtotal City Centre Project Debt 204,139,549 -65,993,183 69,073,183 69,073,183 -- Other Capital Projects D.C. Debt 117,798,415 -11,068,500 18,451,500 -88,278,415 Tax Based Debt 132,055,815 11,391,900 9,526,000 48,390,000 18,264,105 24,966,000 19,517,810 Subtotal Other Capital Projects Debt 249,854,230 11,391,900 9,526,000 59,458,500 36,715,605 24,966,000 107,796,225 Total 453,993,779 11,391,900 75,519,183 128,531,683 105,788,788 24,966,000 107,796,225 Watson & Associates Economists Ltd. PAGE 15 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Chapter 4 Operating Expenditures and Revenues Watson & Associates Economists Ltd. PAGE 16 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 4. Operating Expenditures and Revenues The analysis to follow provides a review of the operating expenditures and revenues arising from development over the forecast period. Operating expenditures have been assessed on two different bases: (1) operating costs related to the incremental capital assets identified in the previous chapter, and (2) service/program operating costs required to service the incremental population and employment-related demands. The former identifies the specific operating costs anticipated to be incurred as additional capital assets (i.e. roads, facilities, etc.) are constructed or assumed, based on current maintenance cost of assets (e.g. $ per infrastructure replacement value). The latter identifies service/program expenditures which are linked to population and employment growth at anticipated service levels. The forecast net operating costs using the approach summarized above have been based on the City’s 2021 Operating Budget and supplemented to include facility related operating costs identified for the City Centre Project and forecast increases in operating costs for additional fire fighters in the City. In addition to these projections of operating costs, additional lifecycle funding costs of existing and incremental assets are identified in Section 5. Operating revenues are assessed for property tax and non-property tax sources. Incremental weighted property assessment, anticipated as a result of residential and non-residential building activity over the forecast period, gives rise to additional property tax revenues. Non-property tax revenues, such as user fees, permits, licenses, etc., are generally anticipated to grow in concert with population and employment growth to offset some of the incremental program costs. The ability of property tax and non-property tax revenues to support the incremental operating costs determines the fiscal impact of the proposed development within the City over the five-year horizon. The annual net expenditures over the 2021-2026 forecast period are presented in Table 4-1. Net operating costs are anticipated to increase by $10.3 million (+13%). Forecast levels of casino gaming revenues are not considered within this assessment of net revenues and are addressed separately in Section 5. Watson & Associates Economists Ltd. PAGE 17 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 4-1 Net Operating Cost Forecast ($, millions) Department 2021 2022 2023 2024 2025 2026 Total Expenditures (Net of Transfers) General Government 4.8 4.9 4.9 4.9 4.9 4.9 Mayor and Council 1.2 1.2 1.2 1.2 1.2 1.2 Office of the CAO 3.4 3.4 3.4 3.4 3.5 3.5 City Development 8.2 8.3 8.4 8.4 8.5 8.6 Culture, Recreation & Facilities 15.3 15.6 15.8 16.2 16.4 17.7 Public Works 17.3 17.5 17.7 18.2 18.4 18.6 Corporate Services 6.9 7.0 7.0 7.0 7.1 7.1 Engineering 6.3 6.3 6.4 6.5 6.5 6.6 Finance 4.6 4.7 4.7 4.8 4.9 4.9 Fire Services 18.4 18.7 19.1 19.3 19.7 19.9 Human Resources 1.5 1.5 1.5 1.5 1.5 1.5 Libraries 6.0 6.1 6.2 6.3 6.4 6.7 Net City Centre Operating Costs ----0.3 4.5 Subtotal 93.9 95.0 96.2 97.8 99.2 105.9 Total Revenues (Net of Transfers) General Government 0.1 0.1 0.1 0.1 0.1 0.2 Mayor and Council -0.0 0.0 0.0 0.0 0.0 Office of the CAO 0.5 0.5 0.5 0.5 0.6 0.6 City Development 5.6 5.7 5.8 5.9 6.0 6.0 Culture, Recreation & Facilities 3.4 3.4 3.5 3.6 3.6 3.7 Public Works 0.8 0.8 0.8 0.8 0.9 0.9 Corporate Services 1.5 1.5 1.5 1.6 1.6 1.6 Engineering 0.8 0.8 0.9 0.9 0.9 0.9 Finance 3.3 3.3 3.4 3.4 3.5 3.5 Fire Services 0.4 0.4 0.4 0.4 0.4 0.4 Human Resources 0.2 0.2 0.2 0.2 0.2 0.2 Libraries 0.1 0.2 0.2 0.3 0.3 0.4 Subtotal 16.7 17.1 17.4 17.7 18.0 18.4 Total Net Operating Costs 77.2 78.0 78.8 80.1 81.1 87.5 Watson & Associates Economists Ltd. PAGE 18 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Chapter 5 Financial Plan Summary Watson & Associates Economists Ltd. PAGE 19 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx 5. Financial Plan Summary 5.1 Introduction The analysis provided herein has considered the financial impact of growth within the City over the next five years on the City’s assessment base, capital expenditures and funding sources, and operating costs. Of principle importance to the City in undertaking this financial plan are the implications of the forecast expenditures and funding sources on the City’s reserves/reserve funds and the impact of anticipated debt financing and annual financing costs on the City’s annual debt repayment limit. Furthermore, the implications of anticipated casino gaming revenues and increasing capital funding to full lifecycle replacement levels has also been considered. AMP Lifecycle Funding The City’s AMP identifies that there is currently a $25.5 million annual funding gap between the required funding to maintain adequate services levels through existing assets (i.e. $40.3 million annually) and the annual funding the City is currently committing towards existing assets (i.e. $15.8 million). The annual lifecycle funding requirement identified in the AMP equates to 3% of asset replacement costs. Using this relationship of replacement costs to annual lifecycle costs, the annual lifecycle costs of new infrastructure to be constructed over the forecast period has been estimated as $12.5 million. The impact of these additional funding requirements has been considered in scenario 2. Debt Financing & Annual Repayment Limit (ARL) The Ministry of Municipal Affairs regulates the level of debt incurred by Ontario municipalities, through its powers established under the Municipal Act. Ontario Reg. 403/02 provides the current rules respecting municipal debt and financial obligations. Through the rules established under these regulations, a municipality’s debt capacity is capped at a level (annual repayment limit) where no more than 25% of the municipality’s own source revenue may be allotted for servicing the debt (i.e. annual debt charges). Ontario Reg. 403/02 also identifies that to exceed the annual repayment limit, the Council must obtain the approval of the Ontario Land Tribunal before authorizing the works. Watson & Associates Economists Ltd. PAGE 20 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Reserve/Reserve Fund Policies Because of the significant capital investment required over the forecast period and the pressure on reserves/reserve funds, the following principles for the utilization of reserves/reserve funds has been adhered to for the purpose of the financial plan: • Target 15% of net levy within the City’s Ration Stabilization reserve to provide cash-flow flexibility, consistent with current City practices; • Maintain positive balances in reserves and in aggregate across all D.C. reserve funds; and • Target 2 years’ annual debt financing costs for the City Centre project in the Casino Reserve to provide funds for emergency situations (e.g. COVID-19 pandemic) Table 5-1 summarizes the annual net financial position over the forecast period for scenario 1 and includes net operating expenditures summarized in Section 4, transfers to/from reserves, reserve funds and capital, and annual debt financing costs. The net financial position also includes other revenue sources that are anticipated including grants, casino revenue, and 3rd party contributions. The net financial position has been forecast in the context of the City’s anticipated tax rate increases. Table 5-1 also identifies the annual net expenditures, tax levy, weighted property tax assessment, and debt capacity utilization. The impacts summarized in Table 5-1 for scenario 1 and also presented in Table 5-2 for scenario 2. Table 5-3 summarizes the current and forecast balances for the City’s reserves/reserve funds under scenario 1, including identifying the forecast balances for the City’s Rate Stabilization reserve, D.C.s City’s Share reserve, and Casino reserve. Watson & Associates Economists Ltd. PAGE 21 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 5-1 Scenario 1: Net Financial Position Summary Line # Description Expenditures 2021 2022 2023 2024 2025 2026 Operating Expenditures 1 Gross Operating Expenditures 93,876,028 95,006,272 96,177,956 97,828,470 98,926,250 101,320,612 2 3 Net City Centre Operating Costs (Not incl. in gross operating expenditure forecast) Subtotal 93,876,028 95,006,272 96,177,956 97,828,470 271,000 99,197,250 4,535,007 105,855,619 Annual Debt Payments 4 External Debt (Tax Funded - Non City Centre Debt) 4,199,807 4,262,435 6,123,379 8,174,178 9,980,075 11,828,326 5 External Debt (Tax Funded - City Centre Debt) --1,820,386 3,979,651 6,291,937 6,291,937 6 External Debt (D.C. Funded - City Centre Debt) -2,282,054 4,731,320 7,354,156 7,354,156 7 External Debt (3rd Party-PSC) 318,777 319,725 319,856 318,553 317,423 316,813 8 9 Internal Debt (Tax Funded) Subtotal 192,241 4,710,826 92,626 4,674,786 849,807 11,395,482 1,440,742 18,644,445 1,966,727 25,910,319 2,360,547 28,151,779 Transfers to Reserves 10 Transfer to Rate Stabilization Reserve 11 Transfer to Other Reserves 5,162,855 2,525,027 6,638,474 10,014,633 6,451,519 7,891,037 12 Transfer to D.C. Reserve Funds 13 14 Transfer to Other Reserve Funds Subtotal 6,357,305 11,520,160 6,357,305 8,882,332 6,357,305 12,995,779 6,357,305 16,371,938 6,357,305 12,808,824 6,357,305 14,248,342 Capital 15 Transfers to Capital 731,660 665,500 569,000 912,750 755,250 779,375 16 Capital Funded through Operating (Growth Studies) 1,289,828 17 18 19 AMP Funding Gap (Existing Infrastructure) Subtotal Total Expenditures 2,021,488 112,128,502 665,500 109,228,890 569,000 121,138,217 912,750 133,757,604 755,250 138,671,643 779,375 149,035,114 Revenues Operating Revenues 20 Non-Tax Revenues 16,723,044 17,054,500 17,385,956 17,717,412 18,048,868 18,380,324 21 Grants 12,966,996 12,966,996 12,966,996 12,966,996 12,966,996 12,966,996 22 Safe Restart Fund 2,802,100 23 3rd Party Contribution (PSC Debt) 318,777 319,725 319,856 318,553 317,423 316,813 24 3rd Party Contribution (City Centre) 6,300,000 25 26 3rd Party Contribution (401 Crossing) Subtotal 32,810,917 30,341,221 807,306 31,480,114 1,614,613 32,617,574 1,614,613 32,947,900 1,614,613 39,578,746 Transfers from Reserves 27 Transfer from Rate Stabilization Reserve 2,228,526 7,460,600 13,156,853 11,699,557 7,395,546 28 Other Reserves 3,040,591 1,313,628 1,313,628 1,313,628 1,313,628 1,313,628 29 D.C. Reserve Funds 1,289,828 -2,282,054 4,731,320 7,354,156 7,354,156 30 31 32 Other Reserve Funds Subtotal Total Revenues 579,705 4,910,124 37,721,041 - 3,542,154 33,883,375 - 11,056,282 42,536,396 - 19,201,801 51,819,375 - 20,367,341 53,315,242 - 16,063,331 55,642,076 Net Expenditures 33 Incremental Net Expenditures 2,466,820 5,723,125 9,059,534 12,477,706 20,514,343 34 2021 Net Expenditures 72,878,695 72,878,695 72,878,695 72,878,695 72,878,695 72,878,695 35 Total Net Expenditures (Uninflated) 72,878,695 75,345,515 78,601,820 81,938,229 85,356,401 93,393,038 36 Total Net Expenditures (Inflated) 72,878,695 76,098,970 80,181,717 84,421,039 88,822,213 98,157,021 37 % Increase 4.4% 5.4% 5.3% 5.2% 10.5% Weighted Assessment 38 Incremental Weighted Assessment 634,758,027 1,269,516,053 1,904,274,080 2,539,032,107 3,173,790,133 39 40 41 2021 Weighted Assessment Total Weighted Assessment % Increase 22,074,352,342 22,074,352,342 22,074,352,342 22,709,110,369 2.9% 22,074,352,342 23,343,868,395 2.8% 22,074,352,342 23,978,626,422 2.7% 22,074,352,342 24,613,384,449 2.6% 22,074,352,342 25,248,142,475 2.6% 42 ESTIMATED Annual Tax Levy Increase (%) TBD 2.5% 2.5% 2.5% 7.7% Debt Capacity Calculation 43 Annual Debt payments (Tax funded) 4,747,218 4,582,160 8,263,620 12,472,383 16,589,436 18,437,076 44 Annual Debt payments (D.C. funded) 134,822 447,197 3,609,873 7,212,324 10,593,233 14,275,627 45 Annual Debt payments (Tax funded and D.C. funded) 4,882,041 5,029,357 11,873,493 19,684,708 27,182,669 32,712,703 46 47 Own Source Revenues Annual Debt Payments (% of Own-Source Revenues) 93,601,739 5.2% 101,153,470 5.0% 108,167,673 11.0% 113,738,451 17.3% 118,671,081 22.9% 128,537,346 25.4% Watson & Associates Economists Ltd. PAGE 22 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 5-2 Scenario 2: Net Financial Position Summary Line # Description Expenditures 2021 2022 2023 2024 2025 2026 Operating Expenditures 1 Gross Operating Expenditures 93,876,028 95,006,272 96,177,956 97,828,470 98,926,250 101,320,612 2 3 Net City Centre Operating Costs (Not incl. in gross operating expenditure forecast) Subtotal 93,876,028 95,006,272 96,177,956 97,828,470 271,000 99,197,250 4,535,007 105,855,619 Annual Debt Payments 4 External Debt (Tax Funded - Non City Centre Debt) 4,199,807 4,262,435 6,123,379 8,174,178 9,980,075 11,828,326 5 External Debt (Tax Funded - City Centre Debt) --1,820,386 3,979,651 6,291,937 6,291,937 6 External Debt (D.C. Funded - City Centre Debt) -2,282,054 4,731,320 7,354,156 7,354,156 7 External Debt (3rd Party-PSC) 318,777 319,725 319,856 318,553 317,423 316,813 8 9 Internal Debt (Tax Funded) Subtotal 192,241 4,710,826 92,626 4,674,786 849,807 11,395,482 1,440,742 18,644,445 1,966,727 25,910,319 2,360,547 28,151,779 Transfers to Reserves 10 Transfer to Rate Stabilization Reserve 11 Transfer to Other Reserves 5,162,855 2,525,027 6,638,474 10,014,633 6,451,519 7,891,037 12 Transfer to D.C. Reserve Funds 13 14 Transfer to Other Reserve Funds Subtotal 6,357,305 11,520,160 6,357,305 8,882,332 6,357,305 12,995,779 6,357,305 16,371,938 6,357,305 12,808,824 6,357,305 14,248,342 Capital 15 Transfers to Capital 731,660 665,500 569,000 912,750 755,250 779,375 16 Capital Funded through Operating (Growth Studies) 1,289,828 17 18 19 AMP Funding Gap (Existing Infrastructure) Subtotal Total Expenditures 2,021,488 112,128,502 1,336,177 2,001,677 110,565,067 2,798,727 3,367,727 123,936,944 4,407,674 5,320,424 138,165,278 6,171,121 6,926,371 144,842,764 8,097,533 8,876,908 157,132,647 Revenues Operating Revenues 20 Non-Tax Revenues 16,723,044 17,054,500 17,385,956 17,717,412 18,048,868 18,380,324 21 Grants 12,966,996 12,966,996 12,966,996 12,966,996 12,966,996 12,966,996 22 Safe Restart Fund 2,802,100 23 3rd Party Contribution (PSC Debt) 318,777 319,725 319,856 318,553 317,423 316,813 24 3rd Party Contribution (City Centre) 6,300,000 25 26 3rd Party Contribution (401 Crossing) Subtotal 32,810,917 30,341,221 807,306 31,480,114 1,614,613 32,617,574 1,614,613 32,947,900 1,614,613 39,578,746 Transfers from Reserves 27 Transfer from Rate Stabilization Reserve 2,228,526 7,460,600 13,156,853 11,699,557 7,395,546 28 Other Reserves 3,040,591 1,313,628 1,313,628 1,313,628 1,313,628 1,313,628 29 D.C. Reserve Funds 1,289,828 -2,282,054 4,731,320 7,354,156 7,354,156 30 31 32 Other Reserve Funds Subtotal Total Revenues 579,705 4,910,124 37,721,041 - 3,542,154 33,883,375 - 11,056,282 42,536,396 - 19,201,801 51,819,375 - 20,367,341 53,315,242 - 16,063,331 55,642,076 Net Expenditures 33 Incremental Net Expenditures 3,802,997 8,521,852 13,467,208 18,648,827 28,611,876 34 2021 Net Expenditures 72,878,695 72,878,695 72,878,695 72,878,695 72,878,695 72,878,695 35 Total Net Expenditures (Uninflated) 72,878,695 76,681,692 81,400,547 86,345,903 91,527,522 101,490,571 36 Total Net Expenditures (Inflated) 72,878,695 77,448,509 83,036,698 88,962,270 95,243,906 106,667,610 37 % Increase 6.3% 7.2% 7.1% 7.1% 12.0% Weighted Assessment 38 Incremental Weighted Assessment 634,758,027 1,269,516,053 1,904,274,080 2,539,032,107 3,173,790,133 39 40 41 2021 Weighted Assessment Total Weighted Assessment % Increase 22,074,352,342 22,074,352,342 22,074,352,342 22,709,110,369 2.9% 22,074,352,342 23,343,868,395 2.8% 22,074,352,342 23,978,626,422 2.7% 22,074,352,342 24,613,384,449 2.6% 22,074,352,342 25,248,142,475 2.6% 42 ESTIMATED Annual Tax Levy Increase (%) TBD 4.3% 4.3% 4.3% 9.2% Debt Capacity Calculation 43 Annual Debt payments (Tax funded) 4,747,218 4,582,160 8,263,620 12,472,383 16,589,436 18,437,076 44 Annual Debt payments (D.C. funded) 134,822 447,197 3,609,873 7,212,324 10,593,233 14,275,627 45 Annual Debt payments (Tax funded and D.C. funded) 4,882,041 5,029,357 11,873,493 19,684,708 27,182,669 32,712,703 46 47 Own Source Revenues Annual Debt Payments (% of Own-Source Revenues) 93,601,739 5.2% 102,503,009 4.9% 111,022,655 10.7% 118,279,682 16.6% 125,092,775 21.7% 137,047,934 23.9% Watson & Associates Economists Ltd. PAGE 23 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Table 5-3 Scenario 1: Reserves/Reserve Funds Line # 1 Reserves/Reserve Funds 7021 R - Rate Stabilization 2021 16,824,843 2022 12,525,207 2023 12,917,998 2024 10,042,784 2025 6,329,443 2026 9,748,912 2 7022 R - DC's City's Share 7,124,988 1,892,652 ---- 3 7067 R - Casino 3,723,037 11,723,037 11,723,037 11,723,037 11,723,037 11,723,037 4 Subtotal 27,672,868 26,140,896 24,641,035 21,765,821 18,052,480 21,471,949 5 Other Reserves 22,577,485 14,091,819 14,384,304 15,061,619 15,869,356 15,098,465 6 Reserves 50,250,353 40,232,716 39,025,338 36,827,440 33,921,837 36,570,414 7 D.C. Reserve Funds 33,070,277 26,807,132 5,485,672 7,694,335 8,966,031 5,987,684 8 Other Reserve Funds 42,839,003 34,488,173 28,515,207 25,153,629 21,567,889 18,852,982 9 Total 126,159,633 101,528,021 73,026,217 69,675,404 64,455,757 61,411,080 5.2 Conclusions The following observations are provided for the scenario 1 and 2 based on the financial impacts in Tables 5-1 to 5-3. Scenario 1 (Current Capital Funding Levels) • The anticipated development would provide annual weighted assessment growth of 2.7% over the 5-year period. When combined with average annual increases in the tax levy of 3.3%, the total net expenditures would increase by 6.1% per year providing additional funding capacity for capital investments, AMP funding requirements, and increases in operating costs. • Annual debt financing costs would increase from $4.9 million currently to $32.7 million by 2026. This level of indebtedness would increase the debt capacity utilization for the City from 5.2% of own-source revenues in 2021 to 25.4% by 2026. Moreover, due the amount of additional debt anticipated in 2026 (i.e. $107.8 million), a further $4.5 million in annual debt financing costs would be anticipated in 2027. With the addition of these debt servicing costs, changes in existing annual debt payments and continued growth in own- source revenues, the City’s debt capacity utilization would increase to 26.5% (6% above the legislated limit). • Reserves and Reserve Funds. o The objective for Casino gaming revenues is to be contributed to the Casino reserve to establish and maintain a balance of 2 years’ debt financing costs for the City Centre project (i.e. approximately $27 million). To ensure the City’s rate stabilization reserve maintains a positive balance, the Casino reserve would accumulate $11.7 million over the forecast period. The objective of 2 years’ debt financing costs for the City Watson & Associates Economists Ltd. PAGE 24 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Centre project has been used to provide financing flexibility during emergency situations such as the COVID-19 pandemic or economic downturns. o As identified above, the target balance for the Rate Stabilization reserve is 15% of net expenditures. Within the financial plan the current reserve balance, which represents 15% of the net expenditures, would decrease to 10% of net expenditures by 2026 (i.e. $9.7 million). • Within the reserve/reserve fund principles and forecast tax rates above, the pressures placed on the City’s annual debt repayment limit could be alleviated by deferring some scheduled capital expenditures over the forecast period. In discussion with City staff and for financial modelling purposes the deferral of the Pickering Heritage Community Centre & Library in 2021 and the Seaton Recreation & Library Community Centre in 2026 have been considered. The deferral of the above projects would reduce the debt funding requirements by $100.8 million. In comparison to the debt capacity utilization in 2026 and 2027 (i.e. 25.4% and 26.5% of own-source revenues, respectively), the deferral of these projects would decrease the annual debt financing costs by $8.0 million, thereby reducing the debt capacity utilization to 22.1% and 20.7% of own source revenues in 2026 and 2027, respectively. Scenario 2: Increasing capital spending to full annual lifecycle funding as identified in the City’s AMP, plus full lifecycle funding of incremental capital infrastructure constructed over the 2021-2026 period • All aspects of scenario 1 remain unchanged with the addition of the full annual lifecycle funding as identified in the City’s AMP. For the purposes of this analysis and consistent with the AMP recommendations, the tax levy has been increased by 1.8% annually to provide a sustainable level of funding over a 15-year period. The inclusion of these additional costs would result in an average annual increase in net expenditures of 7.9%. When combined with average annual 2.7% weighted assessment growth, funding the AMP cost obligations would require an average annual tax levy increase of 5.1%. Moreover, in comparison to scenario 1, the net expenditures in 2026 would be 9% greater. • As scenario 2 results in a greater annual increase in the net expenditures, the City’s annual repayment limit will also increase, providing a greater ability to issue debt within the legislated borrowing limits. Watson & Associates Economists Ltd. PAGE 25 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx o For scenario 1 above, it was identified that in 2027, with the forecast annual debt financing costs and growth in own-source revenues, the City’s debt capacity utilization would be 26.5% and that this would decrease to 20.7% with the deferral of the Pickering Heritage Community Centre & Library in 2021 and the Seaton Recreation & Library Community Centre in 2026. o Under scenario 2, with the 9% increase in net expenditures over the forecast period compared to scenario 1, the debt capacity utilization in 2027 (including the Pickering Heritage Community Centre & Library and the Seaton Recreation & Library Community Centre) would be 24.6% (below the annual repayment limit). With the deferral of the above capital projects, the debt capacity utilization would decrease to 19.2%. Additional Observations In additional to the foregoing the following observations are offered in relation to the City’s 5-year financial plan: • The City is currently undertaking a study to assess the impact on PIL revenue and other financial and economic factors as a result of the decommissioning of the Pickering Nuclear Generation Plant. Once the financial impacts of these changes are better understood, they financial plan should be revisited. • The City will be incurring some growth-related expenditures that are not D.C. eligible, such as a portion of the Public Realm costs at the City Centre and the City animal shelter. The City may wish to consider undertaking a C.B.C. strategy to potentially recover a share of these costs. • The costs of the City Centre project included in this assessment have increased since the City’s last D.C. update was undertaken. Including these costs in an updated D.C. will allow the City to increase the recovery of these costs from growth in the next 5-years. Furthermore, the significant amount of D.C. debt that is forecast associated financing costs should also be considered in the forthcoming D.C. by-law update to ensure principal and interest costs associated with new development are recovered. • The City has spent a considerable amount of staff time as well as consulting expenses on the City Centre project. A portion of these costs could be eligible for recovery from D.C.s. Doing so would provide additional funding over the Watson & Associates Economists Ltd. PAGE 26 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx forecast period to repay the initial funding sources used for the growth-related share of the costs. • The annual D.C. debt payments total $14.3 million by 2026, with a further $3.1 million financing costs in 2027. These debt payments would represent 1.1 times the D.C. collections in 2026 at current D.C. rates and the forecast pace of development. This means, based on the current growth model, the City would not collect enough fees to pay for committed D.C. debt financing costs. Therefore the city would have to make up the difference. If the anticipated pace of development was to slow, even greater pressure would be placed on the City’s reserves and limit funding to provide adequate service levels to existing residents. To alleviate some of these funding pressures, it is recommended that when the City next updates their D.C. Background Study and by-law that anticipated financing costs are included in the calculation of the charge. Watson & Associates Economists Ltd. PAGE 27 H:\Pickering\2021 5-year Financial Plan\Report\Pickering 5-year plan v5.docx Attachment #2 to Report FIN 15-21 DRAFT AGREEMENT –FOR DISCUSSION PURPOSES ONLY MASTER AGREEMENT THIS AGREEMENT made as of the day of , 20 , B E T W E E N : THE CORPORATION OF THE CITY OF PICKERING (hereinafter called the "City") -and - PTC OWNERSHIP REALTY INC. (hereinafter called "PTC Ownership") WHEREAS: A. In 2018 the City and PTC Ownership announced a strategic partnership for the redevelopment of PTC Ownership lands on the east side of the Pickering Town Centre and for the redevelopment of City lands on the south side of Esplanade South, which redevelopment is known as the “City Centre Joint Initiative”; B. The parties share the goal of creating a vibrant, connected, and bustling downtown, where municipal service delivery, shopping & retail, and residential intensification come together as the heart of the City; C. The vision for the City Centre Joint Initiative includes, among other things, a series of land exchanges between PTC Ownership and the City and the construction on lands to be acquired from PTC Ownership of a new: (i) central library, and (ii) seniors and youth centre, with a 50 storey rental apartment building to be constructed above it, and (iii) performing arts centre, and (iv) a pedestrian piazza connecting City Hall with the new City facilities and the Pickering Town Centre Shopping Centre, and (v) public realm improvements from the Piazza through Esplanade Park and Esplande South through to the Parks and Recreation Centre. NATDOCS\56762896\V-3 2 (vi) underground parking with access to and from each of the new City facilities and residential building, and (vii) connecting roads, amenities and other improvements; D. In exchange, PTC Ownership will acquire from the City certain lands which are referred to as the “South Block Lands” on which will constructed, on a future date, mixed use residential including two condominium point towers; E. The parties have agreed on a master plan (the “City Centre Master Plan”) that describes the development of the PTC Ownership lands and the City lands to be exchanged and developed in accordance with City Centre Plan; F. On July 22, 2019, Council endorsed a Memorandum of Understanding (“MOU”) dated July 16, 2019 between the City and PTC Ownership that formed the basis for negotiating the definitive agreements necessary to implement the Master Plan and City Centre 2023 Plan, and including, without limitation, this Agreement; [NOTE: THE LAST EXECUTED MOU FILES IS DATED “AUGUST 6, 2019 UPDATED NOVEMBER 26, 2019”] G. In 2019, the City initiated rezoning of the lands contemplated in the City Centre Master Plan and in accordance with the MOU, to support the development of the City Centre Joint Initiative and the development described herein; H. The proposed use and development of the PTC Ownership lands and the City lands as described in the City Centre Master Plan conforms with the City’s Zoning By-Law 7443/17; I. The City has determined that adequate sanitary, storm and water service capacity exists to permit the development of the South Block Lands as intended by PTC Ownership without delay, and [NTD: 1) we should address that we are awaiting MTO’s consent -note MTO are reviewing the off ramp implications from Brock to Whites Rd in Pickering because of the overall City growth (presume and improvements will be part of the Levies?)] J. The City and PTC Ownership have both actively engaged in and independently retained consultants to assist with conducting the necessary due diligence to move forward with the City Master Plan, , the contemplated land exchanges, and the definitive agreements necessary to implement the City Centre Master Plan and City Centre 2023 Plan; K. The affected lands are provincially recognized as an Urban Growth Centre and Mobility Hub, and L. The City and PTC Ownership have agreed to enter into this Agreement with respect to setting out the roles and responsibilities of each of them in all matters concerning the City Center Joint Initiative and including the contemplated land exchanges, the construction of infrastructure and new facilities and improvements, the entering into of the definitive agreements and all other matters related to and necessary for the build out of the City Centre Master Plan. NOW THEREFORE this Agreement witnesses that in consideration of the covenants contained herein, as well as other good and valuable consideration and the sum of ten dollars ($10.00) of lawful money of Canada, now paid to each of the parties by the other party (the receipt and sufficiency whereof are hereby acknowledged), the Parties hereby covenant, promise and agree with each other as follows: NATDOCS\56762896\V-3 3 ARTICLE 1 DEFINITIONS and INTERPRETATION 1.1 In this Agreement and the attached Schedules, the words and expressions listed in this Section shall have the meanings set out below: (a) “Agreement” means this executed master development agreement and its schedules, all of which are incorporated by reference into and form part of the Agreement, as follows: [NOTE: WILL WE HAVE ACTUAL FINAL OPERATING AGREEMENTS AND LEASE TO ATTACH OR OUTLINE OF TERMS?] (i) Schedule “A” -Agreement of Purchase and Sale from PTC Ownership to City - Arts Centre Parcel (ii) Schedule “B’ -Agreement of Purchase and Sale from PTC Ownership to City - Library Parcel (iii) Schedule “C” – Agreement of Purchase and Sale from PTC Ownership to City – S Y & C Parcel (iv) Schedule “D” -Agreement of Purchase and Sale from City to PTC Ownership- South Block Lands (v) Schedule “E” -Library Development Management Agreement (vi) Schedule “F” – Library Reciprocal Operating Agreement (vii) Schedule “G” – S & YC Development Management Agreement (viii) Schedule “H” – S & YC Reciprocal Operating Agreement (ix) Schedule “I” – Arts Centre Development Management Agreement (x) Schedule “J” – Arts Centre Reciprocal Operating Agreement (xi) Schedule “K” – Lease of Piazza and City Parking Structure (xii) Schedule “L” – Piazza and City Parking Structure Reciprocal Operating Agreement (xiii) Schedule “M” – Parking Garage Development Management Agreement (xiv) Schedule “N” -Parking Management Agreement (xv) Schedule “O” -City and Region of Durham standard development and servicing requirements (xvi) Schedule “P” – City Centre Master Plan NATDOCS\56762896\V-3 4 (xvii) Schedule “Q – Draft Plan of Subdivison for the PTC Lands [NTD: change lettering on remainder of Schedules (xviii) Schedule “Q” – Legal Description of the Arts Centre Parcel (xix) Schedule “R” – Legal Description of the City Lands (xx) Schedule “S” – Legal Description of the Library Parcel (xxi) Schedule “T” – Legal Description of the PTC Ownership Lands (xxii) Schedule “U” – Legal Description of the PTC Lands (xxiii) Schedule “V” – Legal Description of the S & YC Parcel (xxiv) Schedule “W” – Legal Description of the South Block Lands (xxv) Schedule “X” – Legal Description of ● (xxvi) Schedule “Y” – Legal Description of ● (xxvii) Schedule “Z” -Site Plan to be submitted under s.41 of the Planning Act [NTD: single site plan or multiple and phased?] (xxviii) Schedule “AA” -Form of Architect’s agreement (xxix) Schedule “BB” – Form of CCDC 2 construction contract (xxx) Schedule “CC” – Memorandum of Understanding (xxxi) Schedule “DD” – Schedule A1 to the MOU (xxxii) Schedule “EE”● [NTD…Schedules to be confirmed] (b) “Architects” means Architects Alliance including their subconsultants responsible for the design of the City Facilities, Parking Garage, (c) “PAC” means a 600 seat performing arts and concert hall to be built on the Arts Centre parcel and to be owned and operated, directly or indirectly, by the City. (d) "PAC Parcel" means the freehold parcel legally described on Schedule ● located at ● within the existing PTC Lands, and to be conveyed by PTC Ownership to the City, and upon which the PAC is to be situate, together with and subject to such support and access easements as may be necessary for the use and enjoyment of such freehold parcel and the adjoining improvements. [NTD: do we include the triangle Parkette ? – yes make this part of Part 2] (e) “PAC PTC Common Area" means ●[NTD; there is no common area between PAC and PTC do not know where the definition will be used] NATDOCS\56762896\V-3 5 (f) “PAC Development Management Agreement” means the agreement attached as Schedule ● between the City and the City Development Manager to oversee the procurement, design and construction, fixturing and interior fit out of the PAC on behalf of the City. (g) “City” means the Corporation of the City of Pickering (h) City Centre means the City Facilities, (i) “City Development Manager” means twopointO, (j) City Facilities means the Library, PAC and SYC buildings (k) “City Lands” means the lands to be conveyed to the City by PTC Ownership in exchange for the South Block Lands to be conveyed to PTC Ownership by the City, and being specifically the PAC Parcel, Library Parcel, and SYC Parcel. (l) “City Parking Structure” means that portion of the Parking Garage located on the first level thereof to be leased to the City under the City Parking Structure and Piazza Lease. (m) "City Parking Structure and Piazza Lease" means the 99 year lease by which the subsurface strata parcel for the City Parking Structure and the at grade parcel for the Piazza are leased to the City, and which is attached as Schedule ●. (n) City Public Realm Improvements means the Public Realm improvements on Glenanna Rd through Esplanade Park, Esplanade South through to the Parks and Recreation Centre. (o) “City Shared Facilities” means the City facilities electrical vault and central plant that will be located in the S&YC Parcel (p) “Credits” [NTD: do we need to define the development and cost-sharing credits that will accrue to PTC Ownership as a result of its contributions?] (q) “Commercial Space” means commercial space within the Master Plan lands [NTD: including the City facilities?] . (r) “Cushman & Wakefield” means Cushman & Wakefield Asset Services ULC. (s) “CW Development Manager” means Cushman & Wakefield. (t) “Draft Plan of Subdivision” means (u) “Definitive Agreements” means each the following ● (v) “Development Charges” means ● (w) “Effective Date” means ● (x) “Future Development Parcels” means ● NATDOCS\56762896\V-3 6 (y) “General Contractor” means ● the General Contractor retained pursuant to Section 4.3 (z) “Governmental Authorities” means the City acting in its regulatory capacity, Durham Region and [NTD: is there a role for the conservation authority? Need to clarify any other government authorities Check with Planning – conservation authority is not an issue here. The City is storing upstream stormwater on the PTC site which we have developed an interim solution for – we can discuss this in more detail on our next call. We should add some reference about MTO as well.] (aa) “Library Development Management Agreement” means the agreement attached as Schedule ● between the City and the City Development Manager to oversee the procurement, design and construction, fixturing and interior fit out of the Library on behalf of the City. (bb) “Library Parcel” means the strata parcel legally described on Schedule ● located at ● within the existing PTC Lands, and to be conveyed by PTC Ownership to the City, and upon which the Library is to be situate, together with and subject to such support and access easements as may be necessary for the use and enjoyment of such strata parcel and the adjoining improvements. (cc) “Library PTC Common Area” means ● [NTD: there is no common area between Library and PTC] (dd) “Block Plan” means the nine blocks of land as defined in the City Centre Master Plan and attached as Schedule ●. (ee) “Master Plan Lands” means that portion of the PTC Lands which include Blocks 1 to 9 as shown in ● on Schedule ● that will be developed mutually with the City as part of the City Centre Master Plan. (ff) “Parking Garage Development Management Agreement” means the agreement attached as Schedule ● between PTC Ownership and the C&W Development Manager to oversee the procurement, design, construction, fixturing and interior fit out of the Parking Garage. (gg) “Parcels” means ● (hh) “Parking Garage”” means a three-level underground parking garage structure to be constructed by PTC Ownership , which includes the City Parking Structure, the Rental Property Parking Structure and the Shared Facilities. (ii) “Parking Management Agreement” means the agreement attached as Schedule ● to be entered into between the Parties regarding the operation and management of the City Parking Structure. (jj) “Parking Structure PTC Common Area” means ● (kk) “Parties” means PTC Ownership and the City collectively, and “Party” means one of PTC Ownership or the City as the context determines. NATDOCS\56762896\V-3 7 (ll) “Piazza” means the public exterior plaza to be located at grade over the City Parking Structure including all related facilities and services, as shown hatched in green on Schedule ●. (mm) “PTC” means the Pickering Town Centre shopping centre. (nn) “PTC Ownership” means the owner of PTC, who is PTC Ownership Realty Inc as of the date hereof. (oo) “PTC Ownership Contribution” means ● (pp) “PTC Lands” means the lands legally described on Schedule ●. [NTD: this is the definition for the existing shopping centre lands] (qq) “PTC Ownership Contribution” means any financial cost-sharing as agreed to and documented in this Agreement as well as PTC Ownership’s contributions to the sewage and water pipe realignment along Glenanna Rd to align with City Facility relocation and PTC Ownership’s contribution towards the cost of constructing the Piazza. (rr) “PTC Residential” means the owner of the rental building to be constructed on the S&YC Parcel above the S&YC. (ss) “Public Realm Improvements” means the Piazza and City Public Realm Improvements as shown in Green on Schedule DD. (tt) “Rental Building” means the rental apartment building to be constructed on the S & YC Parcel above the S & YC and owned by PTC Residential. (uu) “Rental Building Parking Structure” means that portion of the Parking Garage located on the second and third level thereof. (vv) “Shared Costs” means ●. (ww) “Shared Facilities” in respect of the City and PTC Residential means the shared entry ramp to the first parking level, shared water / fire pump and telecom rooms, the storm water meter room and storage tank as well as the shared loading dock, as shown in ● on Schedule ●. (xx) “SYC” means the Seniors & Youth Centre and related facilities and improvements comprised of approximately 64,000 square feet and shown in ● on Schedule ●. (yy) “SYC Parcel” means the strata parcel legally described on Schedule ● located at ● within the existing PTC Lands, and to be conveyed by PTC Ownership to the City, and upon which the SYC is to be situate, together with and subject to such support and access easements as may be necessary for the use and enjoyment of such strata parcel and the adjoining improvements. (zz) "SYC PTC Common Area" means the lands outlined in ● on Schedule ● and adjacent to the SYC, to which the general public will have access he City Centre as will the tenants and patrons of PTC. [NTD: I believe this is intended to be the Piazza. Tenants and NATDOCS\56762896\V-3 8 patrons of the shopping centre have access and egress (do we need an easement for this?) to the Piazza through the mall doors but this is the City’s space (aaa) “SYC Development Management Agreement” means the agreement attached as Schedule ● between the City and the C&W Development Manager to oversee the procurement, design and construction of the SYC on behalf of the City. (bbb) “South Block Lands” means the lands legally described on Schedule ●, to be conveyed to PTC Ownership by the City in exchange for the conveyance of the Library Parcel, PAC Parcel and the SYC Parcel to the City by PTC Ownership. (ccc) “South Block Plans” means the plans attached as Schedule ● [NTD: these plans require a C of A approval] (ddd) “twopoint0” means twopoint0 partners inc. 1.2 The documents that comprise this Agreement are complementary and what is called for by any one of them shall be interpreted as if called for by all, except in the event of ambiguities, conflicts or inconsistencies, in which case Section 1.3 shall apply. 1.3 In the event of ambiguities, conflicts or inconsistencies between or among any of the provisions of this Agreement, the provisions shall govern in the following order of precedence with each taking precedence over those listed subsequently: (a) the provisions of amendments in writing to this Agreement signed by the Parties including changes shall govern and take precedence only over those specific provisions of this Agreement expressly amended thereby; (b) any provision establishing a higher standard of safety, reliability, durability, performance or service shall take precedence over a provision establishing a lower standard of safety, reliability, durability, performance or service; (c) the body of this Agreement; (d) the Dispute Resolution Procedure set out in Article 11. [NTD…..need paramountcy language regarding schedules if there is a conflict among the schedules and this Agreement] NOTE: SCHEDULES WILL BE MORE DETAILED AND SPECIFIC AND THEREFORE I THINK SHOULD GOVERN IN THE EVENT OF CONFLICT ARTICLE 2 RECITALS AND SCHEDULES 2.1 The Parties agree that the recitals hereinbefore set out are true in substance and in fact, and that the Recitals and Schedules form an integral part of this Agreement. NATDOCS\56762896\V-3 9 ARTICLE 3 CO-ORDINATION OF DEVELOPMENT AND USE OF THE PUBLIC FACILITIES 3.1 The City and PTC Ownership have jointly submitted the City Centre Master Plan and the South Block to the City’s Director of City Development.. The City Centre Master Plan will be presented for the Planning Development Committee Approval on October 3rd 2021 and if approved there on to City Council approval on October ●, 2021 3.2 The City has made a preliminary site plan submission for the Library, PAC and SYC to the City’s Director of City Development. The City Planning Department is in general satisfied with the site plan submissions subject to the satisfaction of the customary site conditions and formal sign off from the Authorities having jurisdiction. [NTD: the City Planning Department has NOT signed off to date but will have if the Parties sign this agreement] 3.3 PTC Ownership has made a preliminary site plan submission for the Rental Building, Commercial Space and South Block to the City’s Director of City Development. The City Planning Department is in general satisfied with the site plan submissions subject to the satisfaction of the customary list of site conditions and formal sign off from the Authorities having jurisdiction. [NTD: the City Planning Department has NOT signed off to date but will have if the Parties sign this agreement] 3.4 PTC Ownership will submit a Draft Plan of Subdivision for the Master Plan Lands based on the City Centre Master Plan to the City’s Director of City Development. Provided that the Draft Plan of Subdivision conforms with the City Centre Master Plan, the City will support PTC Ownership in this application. 3.5 The Parties will determine by the time an application for subdivision approval is submitted at the latest, which roads will be privately held and which roads will be assumed by the City as public roads. 3.6 The City shall have sole responsibility for programming and issuing permits for use of the Piazza, as well as for insuring it in regards to its use. The Parties agree that the City may temporarily close the Piazza to vehicular traffic from time to time as the City sees fit and to support programming. 3.7 The City will ●[NTD…should we have a covenant obligating the parties to execute the Definitive Agreements? Should we have language obligating PTC Ownership to cause PTC Residential to execute agreements as applicable?] NOTE: I THINK A COVENANT TO EXECUTE OR CAUSE TO BE EXECUTED BY THE APPLICABLE PARCEL OWNERS WOULD BE APPROPRIATE ARTICLE 4 CONSTRUCTION OF CITY AND SHARED BUILDINGS The Parties agree that to facilitate and support the development of the City Lands (including the Rental Building) and the future development of the South Block, reciprocal easements will be granted between each of the Parcels to ensure pedestrian and vehicular access, installation of servicing, construction NATDOCS\56762896\V-3 10 phasing and shared facilities. [NTD…do we need language obligating the parties to consent the easements, etc?] 4.1 The City and PTC Ownership have independently retained the Architect to develop an integrated design for the City and PTC Ownership buildings making up City Centre. 4.2 The City and PTC Ownership confirm that PTC Ownership has retained Cushman & Wakefield as development managers to oversee the design, development, and construction of the Parking Garage, SYC, Rental Building and the Commercial Space. The City and PTC Ownership confirm that twopointO has been retained by the City to oversee the design, development and construction of the Library, PAC and the Public Realm Space. 4.3 To benefit from cost efficiencies and to ensure optimal coordination of construction activity, the City and PTC Ownership have independently retained the same General Contractor using the same CCDC2 form of contract. The General Contractor will be responsible for the construction of all Building(s) [NTD; add a definition for ‘Building’ from DoW] save and except those to be constructed on the South Block. 4.4 The City is responsible for the construction of the Library, PAC, SYC and the Public Realm Space. PTC Ownership will be responsible for the construction of the Rental Building, Commercial Space, Parking Garage and PTC Public Realm Improvements. In addition, at the time of the demolition of the old PTC theatres, PTC Ownership shall construct the Library/PTC shared loading facility [NTD: we need to pick up how the City reimburses PTC Ownership for their portion of this cost.] The work to be completed by each Building by the respective Party and the easements required through Adjacent Building(s) [NTD: add a definition for ‘Adjacent Building’] are detailed in the Delineation of Work (DoW) between the Parties as attached in Schedule ● [NTD: clarify any wording required in the DoW rather than attempting to restate the work in this Master Agreement as the DoW will be used by the Architects, Cost Consultants and General Contractor to define what goes in each Building] 4.5 The General Contractor will have individual construction contract (and therefore take instructions only) from the City respecting the construction of each of the Library, PAC, SYC and Public Realm Improvements. The General Contractor will have individual construction contract (and therefore take instructions from PTC Ownership) respecting the construction of each of the Rental Building, Commercial Space, Parking Garage and PTC Public Realm Improvements [NTD: need to add PTC Public Realm Improvements to the definitions]. 4.6 [NTD: Add Cross-default provisions to protect the Parties in the event of a default by the General Contractor in any one of the buildings. Also, need to add wording to protect both Parties once the work proceeds -both Parties are depending on the performance of the other once the work commences] 4.7 The Parking Garage, including the City Parking Structure, shall be constructed by PTC Ownership, subject to the reimbursement by the City to PTC Ownership for the City Parking Structure costs. The City Parking Structure will be designed and constructed in accordance with plans and specifications reviewed and approved by the City and PTC Ownership. PTC Ownership has enter into contracts with C&W Development Manager, the Architects, the General Contractor NATDOCS\56762896\V-3 11 respecting the design and construction of the Parking Garage (including the City Parking Structure). PTC Ownership and the City will approve in writing the Parking Garage Budget and…. [NTD: we need to articulate in this section how the Parties will approve the progress draw payments to the contractor (even though the City does not pay until the work is substantially complete] 4.8 The shared City Centre vision contemplates common hard and soft landscaping treatment from the Piazza, Glendale Avenue, South Esplande and Esplanade Park through to the Parks and Recreation Centre. The City shall be responsible for constructing the Public Realm Improvements with a $6.3M contribution from PTC Ownership. The Parties have agreed to provide further definition as to the hard and soft landscaping materials to be used throughout the public realm space bench marked against the specification used to establish the PTC Ownership Contribution. The Parties have agreed that the Public Realm Improvements will be completed prior to occupancy of the City Facilities, and the City will use all commercially reasonable efforts to effect the completion of same to ensure timely occupancy of the City Facilities. The PTC Ownership payment for their portion of the Public Realm Improvements to the City will be made when the Public Realm Improvements are Substantially Complete (as defined in the CCDC 2 contract) 4.9 Prior to commencement of construction of the Parking Garage the City will be responsible for the Phase 1 relocation of the existing sanitary and storm sewers, and the existing watermain from the PTC Lands to Glenanna Road as well as the reinstatement of Glenanna Rd. PTC Ownership will be responsible for the Phase 2 relocation of the existing sanitary and storm sewers, and the existing watermain from the PTC Lands to Glenanna Road, including the reinstatement of Glenanna Rd. all as shown on Schedule ●. PTC Ownership may elect to complete the Phase 2 relocation concurrently with Phase 1 or at such later date as may be determined by PTC Ownership and agreed by the City. In the event PTC Ownership does not elect to commence the Phase 2 relocation concurrently, the City at its expense will tie the relocated Phase 1 services into the existing services on the PTC Lands. [NTD: The City has taken the lead on the relocation of services. Is the City going to oversee this work? Should we investigate converting PTC Ownership Phase 2 service relocates to cash in lieu?] 4.10 [NTD: Overview of Service Capacity and Consent from Authorities Having Jurisdiction - City to confirm that there is adequate service capacity to complete the Master Plan. MTO capacity still to be determined if not available by the time this is signed what do we do? Confirm that City to carry out ‘interim stormwater relocation’ at such a time as Block 6, 7 and 8 are ready for development (PTC Ownership to provide access to the Bay South lot to make the necessary modifications). Lastly, need confirmation from the Region that a pumping station is not required] 4.11 No work shall be commenced by either Party and/or its contractors until it has filed with the other Party a certificate of public liability insurance with reasonable coverages, in accordance with this Agreement and which are then acceptable with the City, acting as a municipality, or other applicable Governmental Authorities having jurisdiction and which insurance coverages and terms are mutually agreed upon by the Parties, acting reasonably. All costs related to such insurance shall be included in the Shared Costs. NATDOCS\56762896\V-3 12 ARTICLE 5 OPERATION OF MASTER PLAN FACILITIES 5.1 The City will be solely responsible for the maintenance and operation of the City Facilities, and PTC Residential will be solely responsible for the maintenance and operation of the Rental Building. 5.2 External common areas shall be operated and maintained by ● [NTD each Party responsible for their own with the exception of snow removal which makes sense to be shared] 5.3 The City Parking Structure shall be operated and maintained by the City. PTC Residential shall operate and maintain the Rental Building Apartment Structure and the Shared Facilities. The Shared Facilities will be maintained in accordance with the Shared Facilities Management Agreement. 5.4 The Parties have agreed that the roads shown in ● on Schedule ● will be private roads to be operated and maintained by PTC Ownership, and the roads shown in ● on Schedule ● will be assumed by the City as municipal roads to be operated and maintained by the City. [NTD: Lets look at this plan – there is a plan to have one road initially as an easement which would become a public road in the future.] 5.5 PTC Ownership will develop the South Blocks independent of the City, except for its role as a regulator / Government Authority. [NTD: confirm that the City is generally satisfied with the South Block plans subject to customary site plan review. Confirm the public road and walkway over the South Block to CAPREIT lands. Confirm C of A support to plan changes as a result of CAPREIT settlement] ARTICLE 6 OWNERS’ COMMITTEE 6.1 Final decisions on the matters set out in this Agreement, or any of the Definitive Agreements shall be made by the Committee, subject to ratification by City Council and PTC Ownership. It is the role of the Committee to advance the decision-making to a place where it can be presented to Council for final approval. 6.2 (a) The Committee shall consist of: (i) representing the City, Paul Bigioni, ● and (ii) representing PTC Ownership, ● [NTD…do we need PTC Residential too?] (b) The City and PTC Ownership agree that the following provisions apply to the Committee in carrying out its mandate: (c) The City and PTC Ownership may each have advisors present at Committee meetings. NATDOCS\56762896\V-3 13 (d) All decisions shall be made by unanimous consent of the Committee. (e) The Committee shall be responsible to finalize drafts and make recommendations in respect of finalization of the architects agreement template, the template agreement with the General Contractor, the agreement of purchase and sale template, and any other related matters to be presented to Council for final approval. (f) Each of the parties agrees to be bound by, adopt and implement all of the decisions of the Committee, subject to any limitations on authority noted herein. The decision of a Committee Member with respect to a specific matter will be deemed to be the decision of the party who has appointed such Committee Member. (g) The Committee shall use their best efforts to prevent any deadlock in the decision- making process, and, in the event of a deadlock, the parties shall submit the matter for consideration by their respective senior management. (h) Either party shall be entitled at any time to remove any of its Committee Member by notice to such Committee Member and the other party, and nominate a successor who shall, effective upon removal of the existing Committee Member, be appointed a Committee Member to replace the Committee Member so removed. (i) The Committee shall endeavour to meet bi-weekly during the period until the agreements are approved by Council, and may choose to meet thereafter to assist in the development process. Any Committee Member may call a meeting of the Committee at any time on five (5) business days prior written notice to the other Committee Members. With respect to all meetings of the Committee, the Committee Member calling such meeting shall issue a written notice in respect of such meeting that indicates the time and place of the meeting and provides a summary of the matters to be considered. (j) A quorum for meetings of the Committee shall consist of four (4) members of the Committee, provided that at least two (2) Committee Member representing the City and two Committee Members representing PTC Ownership are present. Committee Members may attend meetings in person or by proxy, and they may also participate in the meeting by means of conference call or similar communications equipment that permits all Committee Members to hear each other. Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting if one or more written consents to such action shall be signed by a quorum of Committee Members or otherwise by or on behalf of the parties. ARTICLE 7 COST SHARING 7.1 Subject to the provisions of this Agreement, costs not otherwise apportioned will be shared by the parties on the following basis: (a) in respect of the Parking Garage, NATDOCS\56762896\V-3 14 (i) PTC Ownership shall pay 61.1 % of the total costs, including contract administration and subject to the further provisions of this section. (ii) City shall pay 38.9 % of the total costs, including contract administration and subject to the further provisions of this section. (iii) The City and PTC Ownership shall each be responsible for paying half the cost of the entry ramp to the P1 parking level. (iv) PTC Ownership shall be responsible for paying 100% of the costs of ramp construction and gates or other security features related to the PTC Residential Parking. (v) The City shall be responsible for the costs and necessary action to operate and maintain the City Parking Structure, and shall commission and provide to PTC Ownership copies of engineering certificates verifying appropriate maintenance has been carried out, every five years. (vi) PTC Ownership shall be responsible for the costs and necessary action to maintain the Residential Parking Structure, being levels 2 and 3 of the Parking Structure, and shall commission and provide to the City copies of engineering certificates verifying appropriate maintenance has been carried out, every five years. (vii) The City and PTC Ownership shall share equally all costs associated with the construction, operation and maintenance of the Shared Facilities. The Shared Facilities will be operated and maintained in accordance with the Shared Facilities Management Agreement. (b) in respect of the Piazza, PTC Ownership shall pay the total costs of construction, and the City will assume the Piazza as a municipal facility, and shall be responsible for the operation and maintenance and operations costs of the Piazza, including without limitation, all landscaping, lighting, walkways, driveways, furniture and other improvements within the Piazza. [NTD: need to set out responsibility for landscaping, furniture, lighting, etc.] (c) the City shall be responsible for paying all costs of construction, maintenance and operations of the Library, to be provided for in the Library Development Management Agreement. (d) the City shall be responsible for paying all costs of construction, maintenance and operations of the Arts Centre, to be provided in the Arts Centre Development Management Agreement. (e) PTC Ownership shall be responsible for paying all costs of construction, maintenance and operation of the PTC Residential. (f) The City shall be responsible for paying all costs of construction, maintenance and operation of the SYC. NATDOCS\56762896\V-3 15 (g) the City and PTC Ownership shall share the cost of maintaining and operating shared external common areas as identified on Schedule ●[NTD: who pays hard and soft landscaping, street furniture , lighting and drainage pipe and waterproofing over parking garage –not clear from dow] (h) the City and PTC Ownership will each be responsible for paying any costs related to the Shared Facilities [NTD…see delineation of work document] (i) the Parties agree that neither the City or PTC Ownership shall terminate, amend or otherwise modify the scope or the shared costs agreed to because to do so would materially and adversely affect the ability of the Parties to undertake the Master Plan development, and could increase the potential for liability. [NTD: We assume that details respecting invoicing and payment of construction that is cost- shared, will be set out in the construction agreements. Please advise if it should be added here] NOTE: SHOULD BE ADDED HERE. PARTIES TO THE CONSTRUCTION CONTRACTS MAY BE DIFFERENT THAN THE MASTER AGREEMENT? [NTD: to what extent are the normal development and servicing requirements be included in this Agreement? I think it is important to cover them off to the greatest extent possible] [NTD…..need language confirming that PTC Ownership has satisfied its parkland dedication obligations and no cash in lieu will be required] ARTICLE 8 CITY FEES AND CHARGES, AND APPLICABLE CREDITS 8.1 PTC Ownership acknowledges that it will be responsible for the payment of all development levies, fees and charges that would normally apply from all Governmental Authorities when developing land within the City including but not limited to application fees, development charges, parkland cash in lieu, and community benefits charges and subject to credits that may apply. [NTD…to be confirmed] 8.2 The City accepts responsibility for paying all applicable fees and charges that may apply from all Governmental Authorities in respect of the construction and operation of the City Facilities and it will not seek any development levies, fees and charges from PTC Ownership in respect of the NATDOCS\56762896\V-3 16 City Facilities, regardless of who has responsibility to construct or maintain such facilities. For clarity, this includes the City Parking Facility and the Piazza. 8.3 The City acknowledges that certain of the works to be carried out by PTC Ownership under this Agreement may be eligible for credits against applicable City and Durham Region Development Charges and the City agrees to apply any such credits. 8.4 PTC Ownership will pay applicable Development Charges in accordance with the provisions of By-Law # 7595/17 as amended, and Durham Region By-Law # 28-2018 as amended before the first above ground permit is issued for each building. 8.5 Certain capital infrastructure is required to build out the Master Plan, and the Parties may work together to consider whether front-end financing under s. 44 of the Development Charges Act or construction as a municipal capital facility under s. 110 of the Municipal Act, 2001 should apply. ARTICLE 9 LAND TRANSFERS The Parties agree that the lands to be transferred between them are to be of equivalent value, and that this has been confirmed by market appraisals undertaken by ● and dated ●. And furthermore that any difference has been made up through costs PTC Ownership (PTC Ownership Contributions) has assumed that go beyond fees and charges that would normally apply. 9.1 Separate agreements of purchase and sale will be entered into for each parcel or strata parcel of land to be conveyed within the Master Plan. 9.2 The parties agree that the proposed land severances are required to implement the Master Plan development as approved by the Parties and that they will [NTD: option of deal with through the plan of subdivision or jointly apply to the Durham Region Land Division Committee and support the technical land severance consents required to convey the land parcels contemplated by this Agreement.] NOTE: DO WE NEED PROVISION TO ALLOW FOR THE STRATA PARCELS TO BE ADJUSTED ONCE STRUCTURES ARE COMPLETE? 9.3 The Parties will agree on a date for the land transfers to take place, following approval of this Agreement by City Council and by PTC Ownership. 9.3.1 The Parties agree that PTC Ownership reserves the ability to determine who will take title of the South Block lands to be acquired from the City. 9.4 The Parties agree that as conditions of consent to sever the land, all required reciprocal support and access easements for both vehicles and pedestrians shall be finalized for all lands within the Master Plan as well as general easements to provide rights-of-way for the maintenance and repair of buildings on adjacent lands, the installation of utilities and services, rights of support, emergency egress and temporary construction access. [NTD….Land transfer tax considerations] NATDOCS\56762896\V-3 17 ARTICLE 10 REPRESENTATIONS and WARRANTIES 10.1 The City represents that it has authority to enter into this development Agreement. 10.2 PTC Ownership represents that it has authority to enter into this development Agreement. 10.3 The City represents that it will provide PTC Ownership, twopoint0 and Cushman Wakefield with an “ambassador level of service” in respect of obtaining all necessary approvals required to construct this project. [NTD: Additional reps and warranties to be added once further information is available] ARTICLE 11 Dispute Resolution 11.1 A Party may give written notice of a difference with respect to any determination under this Agreement, or the interpretation, application or administration of this Agreement to the other Party. Such notice shall describe the particulars of the matters in dispute. The other Party shall reply to such notice no later than twenty (20) business days after they receive it or are considered to have received it, setting out in such replies their position regarding the matters in dispute. 11.2 Where a notice and replies have been given, if the Parties fail to resolve the dispute within ten (10) business days after delivery of all replies within the period of time described above, each Party, within five (5) business days thereafter, shall nominate a senior officer of its management to meet at a mutually agreeable place and time to resolve the matters in dispute. Should the Parties be unable to resolve the dispute to their mutual satisfaction within a further thirty (30) days after such nomination, then either Party may give written notice to the other Party requiring that the dispute be referred to mediation under Section 11.2. 11.3 The mediation shall be held within sixty (60) days following the date of notice given by a party requiring that the dispute be referred to mediation. 11.4 Within ten business (10) days following the end of such notice, the Parties shall jointly select and appoint a skilled and experienced mediator to assist the Parties to reach an agreement through mediation. 11.5 The mediation shall be conducted under such mediation rules as the mediator recommends and the cost of mediation shall be shared equally by the Parties. Any settlement reached by mediation shall be set forth in writing, shall be signed by the Parties and shall be final and binding on them. If the Parties fail to agree on a mediator within such ten (10) business day period or the dispute is not resolved to the mutual satisfaction of the Parties (as evidenced by the written NATDOCS\56762896\V-3 18 agreement referenced herein) within sixty (60) days following the selection of the mediator as provided herein, then Section11.3 shall apply with respect to such dispute. 11.6 Either Party may elect to refer this matter to binding arbitration by a single arbitrator selected and paid for proportionately by both Parties. ARTICLE 12 NOTICE 12.1 Any notices, requests, demands, instructions, certificates, consents or other communications required or permitted under this Agreement shall be in writing and delivered under this Agreement shall be delivered, (a) to the City: Attention: Email: And Attention: Email: (b) To PTC Ownership: Attention: Email: 12.2 A notice given by email or by hand delivery to the persons identified above, shall be deemed to have been received on the day it is delivered, subject to: (a) a notice delivered or transmitted on a day that is not a business day or on a business day after 4pm EST, shall be deemed to have been received on the next business day; NATDOCS\56762896\V-3 19 (b) a notice delivered by email shall be deemed to have been received only if and when the recipient acknowledges receipt of such email by reply email or by otherwise acknowledging receipt in writing. ARTICLE 13 REMEDIES 13.1 1If at any time or from time to time a Party does not advance its responsibilities under this Agreement, such Party is hereinafter referred to as a “Defaulting Party” and the other Party as “Non-Defaulting Party”. In the event of default as aforesaid and should such default continue for five (5) days after written notice thereof is given to the Defaulting Party by the Non-Defaulting Party, the Non-Defaulting Party may elect to demand the Defaulting Party remedy the Default within a specified time. [NTD: we have used clauses that would allow the non-defaulting party to notify the Defaulting Party’s bonding company to demand the bonding company assume responsibility. Is this something we want to consider as a way to keep the project moving? If yes, we would suggest putting some construction clauses in this Agreement as well as the construction contracts. Additionally we may want to have each Party named as an additional insured on the other’s coverage] [NTD….should there be language inserting a predetermined damages amount should either party abandon its obligations under this Agreement or any Definitive Agreement?] 13.2 Force Majeure In the event either shall be delayed or hindered in or prevented from the performance of any act required to be performed by such party by reason of Acts of God, strikes, lockouts, unavailability of materials or services, failure of power, prohibitive governmental laws or regulations, delays in issuance of governmental approvals, riots, insurrections, the act or failure to act of the other party, adverse weather conditions preventing the performance of work as certified to by an architect, war or other reason beyond such party's control, including in respect of a pandemic which impacts labour availability, then the time for performance of such act shall be extended for a period equivalent to the period of such delay. Lack of adequate funds or financial inability to perform shall not be deemed to be a cause beyond the control of such party. 13.3 The Party claiming relief shall notify the other as soon such an event occurs and shall also notify the other Party as soon as the consequences of the event of Force Majeure have ceased, and of when performance of its affected obligations can be resumed. 13.4 If, following the issue of any notice referred to in this section, the Party claiming relief receives or becomes aware of any further information relating to the event of Force Majeure and/or any failure to perform, such Party shall submit such further information to the other Party as soon as reasonably possible. 13.5 Insured Exposure [NTD: Do we want this here or in the construction agreements? ] The compensation payable to the Non-defaulting Party pursuant to this Section 13shall be reduced by any amount which the Non-Defaulting Party recovers, or is entitled to recover, under NATDOCS\56762896\V-3 20 any insurance policy, or would have recovered if it had complied with the requirements of this Agreement in respect of insurance or the terms of any policy of insurance required under this Project Agreement, which amount, for greater certainty, shall not include any excess or deductibles or any amount over the maximum amount insured under any such insurance policy. 13.6 Modifications The Parties shall use commercially reasonable efforts to agree to any modifications to this Agreement which may be equitable having regard to the nature of an event or events of Force Majeure. The Dispute Resolution Procedure set out in Article 11 shall not apply to a failure of the City and PTC Ownership to reach agreement pursuant to this Article 13. ARTICLE 14 CONFIDENTIALITY 14.1 Each Party shall keep confidential the terms of this Agreement and of all negotiations related to the Master Plan and redevelopment of the site, except to the extent disclosure is necessary to inform their individual professional advisors, potential lenders or investors, or the officers, directors, Members of Council or employees of each Party to the extent they have a need to know. 14.2 All dispute resolution proceedings shall be strictly confidential, and each Party shall have a fiduciary obligation to the other to protect, preserve and maintain the integrity of such confidentiality. 14.3 Neither Party shall issue any news release or other public announcement or communication about this Agreement and its contents without the prior written approval of the other party. 14.4 The Parties agree that any public notice to third parties, including the City, and any media release or publicity issued concerning the redevelopment of the Site shall be jointly planned and coordinated by the Parties. 14.5 For purposes of the Municipal Freedom of Information and Protection of Privacy Act, the parties agree that the contents of this Agreement, and the agreements to be negotiated and all related documents constitute financial and commercial information the disclosure of which will harm the economic interests of the City and PTC Ownership if disclosed. NATDOCS\56762896\V-3 21 ARTICLE 15 GENERAL 15.1 The headings in the body of this Agreement form no part of the Agreement but shall be deemed to be inserted for convenience of reference only. 15.2 The Schedules attached hereto form an integral part of this Agreement. 15.3 This Agreement shall be construed with all changes in number and gender as may be required by the context transmitted (as the case may be). 15.4 PTC Ownership may assign, transfer, or otherwise dispose of this Agreement in whole or in part without the consent of the City provided that the person to whom any such assignment, transfer or disposition has the legal capacity, power and authority to accept such assignment, transfer or disposition, and agrees in writing with the City to be bound by and to perform all the obligations of PTC Ownership that have been assigned, transferred or disposed. 15.5 Any amendment to or waiver of any provision of this Agreement must be in writing and signed by the Parties. 15.6 If any covenant or provision of this Agreement, including all or any part of this clause, is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provision and all other provisions hereof shall continue in full force and effect. 15.7 Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, in order to effectively implement and carry out the true intent and meaning of this Agreement. 15.8 This Agreement shall be construed and enforced in accordance with, and the rights of the Parties shall be governed by, the laws of the Province of Ontario and of Canada applicable thereto, and the Parties submit to the jurisdiction of the courts of the Province of Ontario. 15.9 If at any time during the continuation of this Agreement, the Parties shall deem it necessary or expedient to make any alteration or addition to this Agreement, they may do so by means of a NATDOCS\56762896\V-3 22 written agreement among all of them which may be signed in counterparts, which shall be supplemental and form part of this Agreement. 15.10 It is agreed that there is no representation, warranty, collateral agreement or condition affecting this Agreement except as expressed in it. 15.11 Any reference in this Agreement to any law, by-law, rule, regulation, order or act of any government, governmental body or other regulatory body shall be construed as a reference thereto as amended or re-enacted from time to time, or as a reference to any successor thereto. 15.12 Time shall be of the essence with respect to all time limits mentioned in this Agreement. 15.13 This Agreement may be executed in counterparts. IN WITNESS WHEREOF the parties hereto have executed this Agreement. THE CORPORATION OF THE CITY OF PICKERING Per: ___________________________________ Name: Title: Per: ___________________________________ Name: Title: I/We have authority to bind the City PTC OWNERSHIP REALTY INC. Per: ___________________________________ Name: Title: Per: ___________________________________ Name: Title: I/We have authority to bind the Corporation. NATDOCS\56762896\V-3 MEMORANDUM PRIVILEGED AND CONFIDENTIAL DENTONS COMMENTS SEPTEMBER 24, 2021 To OPB Realty Inc. Dentons LLP Date September 20, 2021 (original draft dated August 25, 2021) From Torys LLP The Corporation of the City of Pickering Re Pickering City Centre Redevelopment – Draft Master Agreement (revision dated as of July 21, 2021) (the “Agreement”) City staff and advisors have undertaken an initial review of the Agreement. The following memorandum reflects the preliminary comments, questions and proposals of the City. We would be happy to facilitate a detailed review and/or provide further information on any of the comments below and look forward to advancing the Agreement with you. All capitalized terms used in this memorandum shall have the meanings ascribed to such terms in the Agreement. General Comments 1. The Agreement remains a work in progress and further legal comments including drafting revisions will be provided in due course. Dentons – agreed. The business terms need to be settled asap. 2. City would like to understand the relationship between PTC Ownership Realty Inc. and OPB Realty Inc. City requires assurances as to OPB’s continued involvement in the project (i.e. no disposition of any interests during development without the approval of the City (not to be unreasonably withheld), no release of OPB’s covenant etc.). Further information to be provided as to the identity of the OPB entity which will own/operate the rental tower and who will own and maintain the OPB Parking Garage. Dentons – PTC Ownership Inc. has not been created yet so far as we are aware. We understand that the intention is that the obligation to construct and develop should bind the owner of the shopping centre 58 acre parcel. There can be no controls on OPB or its assets as we have discussed. City proposes that all roads servicing City Facilities and the Parking Garage are conveyed to the City as public roads, with the City then dedicating the same as ‘public highway’. Notwithstanding, we understand the road which will service the Parking 32990746.5NATDOCS\58116755\V-1 – 2 – Garage would remain a private road, therefore appropriate public easements would be required over such private road to enable access to the Parking Garage. Dentons – Agreed in principle. 3. Section 4.6 -Provisions should be added (or a new construction coordination agreement should be added as a schedule) to address the construction of the Parking Garage and covenants and obligations of the parties with and to each other, with respect to construction generally and construction contracts. For instance, with respect to the Parking Garage, the City will need rights for input/approval as to any change orders, payments and other development matters under the construction contract with OPB. It will also need benefit of warranties etc. This would also speak to mutual obligations to pay contractors, commence and complete the construction of the various facilities, as well as provide clarity on the cross-default provisions of the contracts (i.e. neither owner will be required or compelled by the other to enforce cross-default under its contracts). Dentons – agreed in principle. OPB to have the lead as constructor of the parking garage. We can discuss particulars of inputs and approvals and applicable time frames recognizing the shared cost of this facility. 4. Timing for execution of agreements of purchase and sale and closing of all land transfers to be discussed. Also question of due diligence (e.g. title due diligence, existing restrictive covenants on OPB lands which could impact use/development of the site) to be considered. We understand OPB/Dentons is in the process of preparing a summary of the relevant restrictive covenants which relate to the OPB lands for review by City and mitigation of the impacts of these may need to be addressed in the Agreement. We understand that the agreement in principle is that the City would not be subject to any restrictions on title which would impact the proposed use and/or development of the lands to be transferred to the City. Dentons-agreed in principle. Materially adverse restrictions on title will be dealt with. We note that the Cineplex lease has a theatre exclusive that contemplates permitted uses by the Performing Arts Centre that will remain on title. An excerpt from the Cineplex lease is attached as Schedule “A”. 5. Detailed operating and maintenance cost breakdown of shared facilities and estimates of such costs are required. Breakdown should include, for example, lighting, landscaping, utilities and details on other items. Dentons – need to identify what are shared facilities. 6. Commercial space in SYC Centre – the agreement should address the commercial space to be located in the SYC Centre building but retained by OPB. City would propose registration on title to the lands of a form of restrictive covenant which would limit certain noxious uses (e.g. nightclubs, adult entertainment etc.). Dentons – agreed in principle. 7. Responsibility and cost associated with additional deliverables (such as, reference plans, environmental reports etc.) to be agreed between the parties and reflected in the Agreement. We understand the agreement in principle is that each party would bear costs of its own engineers/advisors, however there may be some scope for reliance on other party’s reports etc. Dentons – to be discussed. To the extent available, retainer agreements should provide for reliance by both parties regardless of who has commissioned the report, etc. 32990746.5NATDOCS\58116755\V-1 Formatted: Strikethrough – 3 – 8. An additional recital and/or schedule should be included clearly identifying which parts of the site lands the Agreement relates (i.e. South Block Lands and lands on which City Facilities and Rental Tower are being constructed). Dentons – we do not understand this comment. City to clarify the request. 9. The draft agreement contains a number of references to events which have yet to occur, but which must take place prior to execution of the agreement. Dentons – these issues should be addressed and resolved by the time the Master Agreement is executed. City to confirm target signature date – is it next spring? For instance, a number of the recitals state definitive positions of the parties (e.g. Recital E (“parties have agreed on a master plan”), Recital I (“City has determined that adequate sanitary, storm and water service capacity exists”). At the present time, these statements are not correct, however we understand the majority of these will be verified or known at the date of signing of the Agreement. These include: a. Recital H -The City cannot confirm that that the Master Plan conforms with the City Centre Zoning By-law until they have reviewed the detailed plans. Variances or other technical zoning by-law amendments may be required. b. Recital I -The Region will need to provide confirmation that there is adequate water and servicing capacity. Through the master plan planning process, the Region may need to confirm adequacy of servicing for services it controls. OPB needs to demonstrate compliance with City Centre SWM guidelines. Dentons – City to confirm the solution to stormwater management and stormwater storage should be addressed in the Master Agreement. c. Section 1.1(a) – Schedule “O” – There is also a stand-alone servicing agreement required by the Region. This should be referenced also. Dentons-we assume the City will also be a party to the servicing agreement given the land swap. Please confirm. d. Section 3.1 -The South Block Lands are zoned to permit residential. City is in process of determining what, if any, additional approvals from Council are required (Note: South Block Lands also remain subject to the Minutes of Settlement dated March 30, 2021). Dentons – has MTO approval been obtained? If not, what is the plan and timing? 10. Parties to consider including the settled form of ‘Delineation of Works’ memorandum as a new schedule to the Agreement. Dentons – Agreed. Recitals 11. General – Further review and revisions to recitals will be necessary to reflect the agreed facts of the development and planning process. This will occur in due course closer to execution of the Agreement. Dentons – Agreed. 12. Recital D: a. City will require the transferee of the South Block Lands to agree to certain acceptable profit-sharing mechanisms on any future sale of the South Block 32990746.5NATDOCS\58116755\V-1 Formatted: Strikethrough – 4 – Lands within a certain period following closing. This profit sharing would not apply to the sale of residential condominium units constructed on the South Block Lands. Please find attached as Schedule “A” to this memorandum a draft of the proposed profit sharing (Participation) agreement for review and comment. It remains important for the City to ensure expedient development of the South Block Lands and avoid a long-term construction site in such close proximity to new facilities. City and transferee of the South Block Lands to enter into a lease to the City on closing for purposes of car parking at a nominal rent for a term commencing on closing and ending on the commencement of residential condominium tower construction. Dentons – agreed. City to repair, replace, maintain, insure, etc. Carefree lease to PTC Ownership. Lease term to run until South Block lands are ready to be developed. b. Include in Recital D, reference to “two condominium towers, a 14.5-metre wide public road and an 8-metre wide pedestrian walkway as identified on Figure 6.13.2(a) of Zoning by-law 7719/19”. The public road is to be conveyed to the City as a strata parcel. Title to the 8-metre wide pedestrian walkway, is to be retained by the City. The land areas for both the 14.5 metre wide road and the 8-metre wide pedestrian walkway are to be excluded from the FSI calculation. The pedestrian walkway can be accepted as parkland dedication. For greater certainty, all lands on which public or private roads are to be constructed would not form part of the appraised lands for purposed of the land swap (e.g. no value should be ascribed to lands designated for road use). Dentons – we understand that this has been modified now to provide density to Pickering Town Centre lands and that the appraisals should consider the value of the lands swapped that will be roads? We also understand that the City will have a strata ownership of both the walkway and the public road 13. Recital E – Please change references throughout from “City Centre Master Plan” to “PTC Master Plan”. This refers to the master plan for the development of PTC lands, not the City Centre project. At the end of the section, please change the words “City Centre Plan” to “City’s Official Plan, City Centre Zoning By-law 7753/17 and City Centre Urban Design Guidelines.” Dentons – we thought this was called the Pickering City Centre project and Pickering City Center Master Plan? City to clarify the purpose of this request. 14. Recital J – Please provide further information on the reference to the “City Centre 2023 Plan”. Dentons – this was taken from a Council Report. Can be deleted if concerning. Article 1 -Definitions 15. Change following defined terms throughout the Agreement: a. “Arts Centre” change to “Performing Arts Centre”. b. “Piazza” change to “Public Square”. c. “S & YC” (and in some instances “SY&C”) change to “SYC”. 32990746.5NATDOCS\58116755\V-1 – 5 – d. “Parks and Recreation Centre” change to “Chestnut Hill Development Recreation Complex” (this should also be added as a defined term). Dentons – agreed. 16. Section 1.1(a) – We suggest a single form of template which would be attached as a schedule to the Agreement for each (A) Agreement of Purchase and Sale for Performing Arts Centre, Library, SYC and a form for the South Block Lands (including a form of development agreement); and (B) Reciprocal Operating Agreement. Dentons – agreed. Torys agreed to produce the draft form of purchase agreement. 17. Section 1.1(a) – Schedule “N” – Parking Management Agreement, we understand that the City and OPB will each appoint their own parking manager to manage their portion of the Parking Garage. Dentons – there will have to be an agreement between the parties. Makes sense if each party is to own its respective parking facilities. There can be no impediment to access or egress to the lower parking levels. 18. Section 1.1(a) – Schedule “Q” – There is a requirement for a registered plan of subdivision for the 9 Blocks (other than for Block 2 (PAC) which will not be included in the draft plan of subdivision), the public roads and the Public Square so the Lands can be exchanged when construction is approved by the Owners (this is important to protect the use of DC funding). Dentons – City to clarify. 19. Section 1.1(a) – Schedule “CC” – Memorandum of Understanding. Delete this schedule, the MOU will be essentially superseded by the Agreement. Dentons – agreed. 20. Section 1.1(a) – Reference is made in Section 5.5 of the agreement to a “Shared Facilities Management Agreement” which should be added as a new schedule. There will likely also be the need for a shared facilities agreement and reciprocal operating agreement to address issues such as access by both parties across each other’s respective properties for purposes of repair and maintenance of certain infrastructure. Dentons – agreed. Torys agreed to produce the template shared facilities agreements/ operating agreements 21. Section 1.1(j) – City Facilities -Include Public Square in the definition Dentons – City to clarify. 22. Section 1.1(k) – City Lands -Definition should be revised by deleting the words “in exchange for the South Block Lands to be conveyed to PTC Ownership by the City”. Dentons – City to clarify. This is the land swap component. 23. Section 1.1(m) – City Parking Structure and Public Square – we understand development managers for the City and OPB are working with City Development Department to prepare a site specific zoning by-law amendment to be submitted by OPB to permit the transfer of the FSI for the public roads to OBP’s lands. The City will not transfer the FSI on the public square. We understand the Public Square will now be a parkland dedication and the City Parking Structure is to be conveyed to the City as a strata parcel. This section should be revised to reflect the outcome of those discussions. Dentons – City Parking Structure to be conveyed (instead of leased) so long as no issues related to Building Code/ fire separation, etc. We believe that FSI is to be transferred. No obstruction of ingress or egress to PTC Ownership parking levels. This seems to conflict with note 12(b) 32990746.5NATDOCS\58116755\V-1 – 6 – 24. Section 1.1(bb) -Library Parcel -Given the conveyance of ‘Road B’ to the City for purposes of a public road, consideration should be made to convey freehold title (rather than a strata title) for the lands on which the Library will be situated. This should be possible given there would be no part of OPB’s subsurface parking structure beneath the Library. This proposal would be subject to agreement in principle from City Development Department. Dentons – agreed in principle. Is this land being appraised on the basis of a freehold transfer? 25. Section 1.1(ff) – Parking Garage Development Management Agreement – Please provide for review once available. Dentons – we will follow up with Cushman. We also understand a development manager agreement has yet to be prepared with respect to service relocation [Dentons – between City and Cushman] and public realm work [Dentons – between City and twopoint0]. For further consideration and discussion. 26. Section 1.1(ll) – Public Square – The Public Square shall have its own legal description and will be deeded to the City as parkland dedication for Block 1 and 3-9. Dentons – correct. + South Block Lands? [See note 29(b)(ii) below] 27. Section 1.1(ss) – Public Realm Improvements – City considering the scope and detail of what constitutes public realm improvements (e.g. benches, light fixtures, trash receptacles, wayfinding signage). Dentons – City to clarify. City to carry the same finishes throughout. 28. Section 1.3 – The paramountcy language is somewhat unclear. Further discussions between legal counsel required to ensure clarity and appropriateness of the ‘waterfall’. Article 3 – Co-Ordination of Development and Use of the Public Facilities 29. General: a. Agreement should also speak to development of Rental Building and requirements of City and confirm that the Rental Building is purpose built rental. [Dentons – agreed] OPB should also agree to a prohibition against any future condominiumization of the Rental Building. [Dentons – we have requested OPB to confirm] Please confirm all easements, air rights and mutual support requirements are contemplated in the reciprocal operating agreement. Dentons – agreed. Torys agreed to produce the template reciprocal operating agreement. b. Parkland dedication – parkland dedication issues should be addressed in the Agreement and are being further considered by City Development Department. In particular: i. Need to add a schedule identifying the legal description, boundary and area of the Public Square lands. Graphic to be added showing the approximate location and boundary of the Public Square. ii. Confirmation to be included that the Public Square only satisfies parkland dedication for Blocks 1 and 3 through 9 and the South Block Lands, and not for the entire OPB site. 32990746.5NATDOCS\58116755\V-1 Formatted: Strikethrough – 7 – c. We understand that development managers for City and OPB are working on a collaborative basis with City Development Department on required zoning amendment(s) and minor variances (if required), given that the lands will be owned by OPB until they are transferred to the City. Appropriate revisions to be included in the Agreement to reflect the outcome of these discussions. Dentons – agreed. d. Propose an additional and separate provision in the Agreement to address requirement for public easements, which would include, if required a right-of- way/access easements for vehicles and pedestrians will be required over any private roads servicing City Facilities (Note: appropriate reference plans will need to be prepared and registered on title prior to the opening of the City Facilities). Dentons – agreed in principle. 30. Section 3.2 – Remove reference to ‘preliminary’ site plan submission, as there is no recognized concept of ‘preliminary’ submission. Dentons – agreed. We understand City and OPB’s development managers together with architectsAlliance are preparing site plan applications for submission to City Development Department. All site plan approval is delegated to the Director, City Development & CBO. The City does not issue customary site plan conditions. 31. Section 3.3 – Same comment as above regarding ‘preliminary’ site plan submission.Dentons -agreed 32. Section 3.4 – Parcel creation for Blocks 1 and 3-9, + Library? public roads and parkland to be by way of plan of subdivision. Dentons – what about South Block? 33. Section 3.5 -The public roads will be identified through the Master Plan review process and we understand will be conveyed to the City on closing. Dentons – what is the timing re note 32 and 33? 34. Section 3.6: a. Decision to close the Public Square should be City’s exclusively and Public Square should be deemed a closed, private space, subject to certain exceptions (e.g. limited rights of access/egress to and from PTC in the event of emergency). Dentons – agreed in principle. How does this affect ingress and egress to the shopping centre? Concern regarding emergency fire exit capacity from the shopping centre to be reviewed. b. OPB will require a permit from the City use the Public Square. Form of permit and requirements to be addressed (i.e. license of occupation restricted to a few days per year to host events for tenants, not commercial events). Dentons – suggest that OPB follow the City’s usual permit procedures. c. The City agrees that any permanent signage facing the Public Square be installed so as not to interfere with or create a nuisance for the tenants occupying the Rental Building. 32990746.5NATDOCS\58116755\V-1 Formatted: Strikethrough – 8 – 35. Section 3.7 – Obligation should be for each party to negotiate and finalize agreements (in substantially the same form as provided in the schedules) acting reasonably and in good faith. Timing for execution of the agreements to be discussed further. Dentons – agreed. Article 4 – Construction of City and Shared Buildings 36. Section 4.4 – Clarification to be included to differentiate the Public Realm Improvements and the PTC Public Realm Improvements referenced in third line of Section 4.4. We understand the PTC Public Realm Improvements relate to the residential component (and shown on the plan), which PTC is completing and will not be included in the $6.3m contribution. Dentons – agreed. 37. Section 4.8 -Further clarity to be provided with respect to how the $6.3m contribution from OPB to City is to be effected. Dentons – please see page 10 of MOU. Is a set off from City’s construction costs of the parking garage. Article 5 – Operation of Master Plan Facilities 38. Section 5.3 – Should there also be reference to “Rental Building Parking Structure”? Dentons – City to clarify This may also need to be made in Section 7.1(a)(vi). We understand each of City and OPB will be responsible for operating its respective parking garage. Dentons – agreed if no building code issues caused by separate ownership. 39. Section 5.5 – City to approve any transferee of the South Block Lands. Further Formatted: Strikethrough information required from OPB as to its proposal for the transfer and development of the South Block Lands (see comment re: Recital D above). Intentionally Deleted. Article 6 – Owner’s Committee 40. Section 6.1 – Further discussion required on the composition and authority of the proposed owner’s committee. City would not be in a position to delegate any binding authority on the members and would see this more of a steering committee to address ongoing development issues as they arise and report back. We certainly see value in something like this for purposes of the reciprocal operating agreements and the Parking Garage. Dentons – no issues. Article 7 – Cost Sharing 41. General: a. Demolition cost – Lands are to be delivered ‘as is, where is’ but language to be added requiring OPB to deliver the Library lands with the existing theatre demolished to grade, other than the walls and floors which are being left for the benefit of the Library. Dentons – please see Delineation of Work. With respect to South Block Lands, environmental investigations are required to ascertain condition of the lands. Dentons – this is a City responsibilty. Further discussions between the parties may be required following issuance of Phase II environmental site assessment. Dentons – will need the ability of both parties to rely upon the Phase II reports. 32990746.5NATDOCS\58116755\V-1 – 9 – b. Loading docks – In principle, the City would be prepared to pay 50% of initial capital costs of loading docks and 50% of costs of maintenance and life cycle work. Dentons – agreed. 42. Section 7.1(a)(i) and (ii) – Proportionate share of costs of the Parking Garage as between OPB and City to be as set out in the agreed upon ‘Delineation of Works’ memorandum and confirmed upon issuance of final design drawings. Formatted: Strikethrough 43. Section 7.1(a)(iii) – In principle, City is prepared to pay 50% of initial capital costs for entry ramp onto P1 parking level and 50% of costs of maintenance and life cycle work. Dentons – agreed. 44. Section 7.1(b) – Reference to “total costs of construction” should this be just the roof of the Parking Structure? City is concerned about a double-count. Dentons – PTC Ownership to provide $6.3M contribution to public realm and it will be done through adjustment to parking structure costs as contained in MOU. City to assume all responsibility for design, construction, operation, maintenance, etc of the Public Square. All finishes to be consistent throughout. 45. Section 7.1(c), (d) – Costs of construction, maintenance and operations of facilities are not provided for in the DMAs. Should the reference be the respective construction contracts and operating and maintenance agreements? With respect to those aspects of operation and maintenance of the City Facilities that the City is required to undertake, there should be no obligation on City to use OPB service/maintenance provider or have any limitations on the contractors or vendors the City can retain. All City work would be undertaken by contractors or venders selected by the City, in its sole discretion.Dentons – as the leases provided for in the MOU have been eliminated, there is no obligation on the City to use PTC Ownership service, maintenance providers for City Facilities. 100% City cost = 100% City choice. Need a provision confirming collective use of Development Managers for construction and development as per MOU. 46. Section 7.1(g) – Operating and maintenance costs and share of such costs to be further discussed. City requires additional detail of the proposed scope of the items subject to operating and maintenance. Form of operating agreement OPB intends to use with its service/maintenance provider to be provided for review. Dentons – we will review upon receipt of form of agreement from Torys. Article 8 – City Fees and Charges and Applicable Credits 47. Section 8.1 – Include reference to, among other things, OPB Rental Building, Rental Building Parking Structure and Public Square. Dentons – City to clarify. Public Square is being conveyed for parkland dedication credit. Article 9 – Land Transfers 48. General – City is in process of obtaining updated appraisals for all parcels. Appraisals will be based on highest and best use. Dentons – please provide once obtained. 49. Section 9.2 – The form of purchase and sale agreement for strata properties would need to contemplate initial reference plans to enable the transfer of strata title prior to 32990746.5NATDOCS\58116755\V-1 Formatted: Strikethrough – 10 – construction commencement, with a mechanism for the parties to work together following completion to revise (e.g. transfer if additional title required and/or quit claim where required) the parties ownership interests. Dentons – agreed. Torys to produce form of agreement of purchase and sale. 50. Section 9.3 – Further information to be provided by OPB with respect to proposed Formatted: Strikethrough transferee of South Block Lands. Intentionally Deleted Article 10 – Representations and Warranties 51. General – Further consideration is ongoing with respect to appropriate representations and warranties required from OPB. Dentons – will review when received. 52. Section 10.3 – Please delete. City will act in accordance with its obligations under Municipal Act and otherwise, no preferential or ‘ambassador level’ service is permitted. Dentons – agreed. Article 13 – Remedies 53. Section 13.1 – Is this necessary given the nature of the Agreement? Suggest obligations would simply be to act reasonably and in good faith. We are unsure of the relevance of bonding in the notes provided. Further discussion may be necessary. Dentons – we can discuss further. Not a large issue. Article 14 – Confidentiality 54. Section 14.1 – Further discussion required with respect to MFIPPA application. There is limited ability of City to keep certain agreements confidential, given the City’s freedom of information obligations. Dentons – no issue. Clause is intended to trigger certain MFIPPA protections. City to advise. Article 15 – General 55. Section 15.4 – There should be no ability for OPB to assign or transfer its ownership of Formatted: Strikethrough the Agreement or the development without the consent of the City, not to be unreasonably withheld. In the event of consent being provided, there would be no release of OPB from its covenants under the various agreements. This is a transaction where OPB is essential and needs to be involved until the completion of all development contemplated. Intentionally Deleted. Legal counsel can discuss an appropriate mechanism to ensure that the owner of the shopping centre 58 acres is bound by the obligations to construct and develop as we believe that the intention is that the owner of the shopping centre be committed to this project. Please see our comment in note 2 above. Formatted: Strikethrough 32990746.5NATDOCS\58116755\V-1 – 11 – Schedule “A” Draft Participation Agreement Cineplex Lease Restriction [To be attached] 8.2 Restrictive Covenants (a) So long as the Tenant is conducting business in the Leased Premises in accordance with the provisions of Section 8.1(a), then: (i) During the Term, provided the Tenant is not in material default of any of its obligations under this Lease beyond any cure period applicable to such default, the Landlord, except as hereinafter provided, shall not occupy or use or permit any premises or space in the Shopping Centre other than by the Tenant (or a related entity), for the purpose of the operation of a motion picture theatre or for the exhibition of motion pictures, opera, concerts, event cinema and/or stage plays/live theatre. Notwithstanding the restriction in the preceding sentence of this subsection 8.2(a)(i), the Landlord may use, lease, license or otherwise use or permit to be used premises or space within the Shopping Centre, in the approximate location outlined in heavy BLACK on Schedule “B” attached hereto, for the purpose of a performing arts centre (herein the “Performing Arts Centre”), which facility may be used (in addition to any other use or uses not expressly prohibited under the preceding sentence of this subsection 8.2(a)(i)) to present live opera, live concerts, live stage plays and live theatre to an audience within the Performing Arts Centre and/or transmitted to an audience outside the Shopping Centre, provided that: (A) the Performing Arts Centre shall not present: (i) to any audience therein any onscreen opera, concerts, stage plays/theatre (whether pre-recorded; on DVD, Blu-Ray or any technological evolution thereof; televised, broadcast, cablecast, simulcast, narrowcast, delivered via satellite, internet or otherwise) except a recording of live opera, concert and/or stage plays/theatre which was originally performed at the Performing Arts Centre; and (ii) the public, ticketed performance of onscreen educational or instructional content; and (B) the Performing Arts Centre may present motion pictures provided such motion pictures: (i) are accompanied by a live orchestra performing within the Performing Arts Centre facility; or (ii) form part of a live opera, live concert, or live stage play/theatre performance performed at the Performing Arts Centre and were custom created for the particular live presentation being performed and were never released theatrically in motion picture theatres in North America. Formatted: Strikethrough Formatted: Strikethrough Formatted: Normal, Left, Indent: Left: 0", Don't adjust space between Latin and Asian text, Don't adjust space between Asian text and numbers Formatted: (none) Except as specified in this subsection 8.2(a)(i), the restrictions contained above in the first sentence of this subsection 8.2(a)(i) shall be binding upon the Performing Arts Centre, and the restrictive covenant set out in this subsection 8.2(a)(i) shall hereinafter be referred to as the “Theatre Exclusive”. 32990746.5NATDOCS\58116755\V-1 c4,6 _ DICKERING Report to Council Report Number: CAO 07-19 Date: July 22, 2019 From: Tony Prevedel Chief Administrative Officer Subject: New Pickering City Centre Memorandum of Understanding ("MOU") File: D-1000-003-18 Recommendation: 1. That the draft Memorandum of Understanding dated July 16, 2019 regarding the construction of new City facilities and the transfer of certain parcels of land (Attachment No. 1 to this Report) be endorsed. 2. That City staff be directed to negotiate binding agreements to govern all of the issues set out in the Memorandum of Understanding, and that such binding agreements be brought to Council for final approval; and 3. That the appropriate City of Pickering officials be authorized to take the necessary actions as indicated in this Report. Executive Summary: The Memorandum of Understanding ("MOU") dated July 16, 2019 Attachment No. 1 to this Report) contains a proposal to build a new, larger Central Library, a Seniors & Youth Centre and a Performing Arts Centre, all in close proximity to the existing Pickering Civic Complex. These new facilities would be located on the west side of Glenanna Road, occupying what is now the east part of the Pickering Town Centre parking lot. A concept Plan showing the proposed location of these new facilities is Attachment No. 2 to this Report. These new public facilities would be surrounded by new residential buildings to the south, on both sides of Glenanna Road at the South Esplanade. The construction of these new public facilities close to the Pickering Civic Complex will create something that has never existed before: a genuinely urban environment in Pickering's downtown core. Artist's renderings of the new public facilities are Attachment No. 3 to this Report. The new facilities will be constructed at the City's expense. The main features of the new City Centre are as follows: New Library: The new Central Library will be a three storey building of approximately 43,000 square feet in size. It will include a green roof amenity space and will be located on the west side of Glenanna Avenue, as shown on Attachment No. 2. Seniors & Youth Centre: The new Seniors & Youth Centre will be a 2 storey structure of approximately 63,000 square feet. It will feature 2 full sized gymnasiums, 3 multipurpose activity rooms, a full service kitchen and related amenities and services. Attachment #3 to Report FIN 15-21 CAO 07-19 July 22, 2019 Subject: Downtown Vision -MOU Page 2 Performing Arts Centre: The new Performing Arts Centre will be a 2 -storey, 37,000 square foot facility. It will include a 600 -seat theatre space, multi-purpose rooms for arts -related programming, rehersals, meetings, together with a 5, 000 square foot lobby area. New Public Square: As shown on Attachment No. 2, the new City facilities will be arrayed around a public square space that will act as a meeting place and a focal point for community activity. New Underground Parking Structure: A 3 -storey underground parking structure will be built below the new City facilities. It will have approximately have 930 stalls with 350 dedicated for City uses under a long term lease/ maintenance agreement. Complementing these new public facilities would be new residential development. A 50 -storey residential tower would be built above the Seniors & Youth Centre, and residential development would also take place along the South Esplanade, east of Glenanna Road. This new development will help transform the City centre into a true downtown, and it will generate significant property tax revenue for the City. The MOU is not a binding contract. It is the basis for negotiating binding contracts that will detail all aspects of the design, construction and cost of the new facilities, related improvements and required utilities and services. Financial Implications: The MOU provides that the new City facilities are to be constructed at the City' s expense, but the MOU does not contain cost amounts. It describes the main features of the new City Centre, and is intended to serve as the basis for negotiation and completion of binding agreements that will precisely define the scope of the City Centre project and its costs. A detailed analysis of known costs is found in Report FIN 15- 19. Discussion: The closure of the Sears Canada store at the Pickering Town Centre mall (" PTC") was an unfortunate change in Pickering' s retail landscape, but it has resulted in discussions between the City and the mall' s owner ( OPB Realty Inc., represented by Cushman & Wakefield Asset Services) regarding new and innovative ways of using available space at the mall site. The proximity of the Pickering Civic Complex to newly vacant portions of the mall site presents the City with a unique opportunity: new City facilities can be built on the mall site to function together with the existing Civic Complex. Locating multiple public facilities in one area, and connecting them with innovative and consistent architectural features will enable Pickering to create an entirely new City Centre. Complemented by new residential development, these public facilities will be at the heart of a transformed downtown core. The Civic Complex and the Pickering Town Centre lie within the City Centre area identified by the City' s Official Plan Policies. Those policies call for greater density of development and a more urban mix of built forms and uses. The new facilities and the development described in the MOU delivers on those planning objectives. A City initiated rezoning application has been commenced to enable the new built form described in the MOU. That rezoning was the subject of a Public Information meeting held by the City on June 24, 2019, and will be presented to Council in a recommendation report in September. The main features of the new City Centre are as follows: 3 CAO 07-19 July 22, 2019 Subject: Downtown Vision -MOU Page New Library: At approximately 43, 000 square feet, the new Central Library will be significantly larger than the existing facility. This expansion will improve the delivery of new and existing services, and provide opportunities to better delineate key areas such as children' s programming and seniors programming . The new library will include a green roof feature. The construction of the new library will also facilitate the much-needed expansion of administrative and office space in City Hall into the old Central Library location. New Seniors & Youth Centre: The new Seniors & Youth Centre will be a 2 -storey structure of approximately 41, 500 square feet. It will feature 2 full sized gymnasiums, 3 multipurpose activity rooms, a full service kitchen, youth centre with a combined computer, multimedia/ games and general activity room, meeting room/ boardroom, public change rooms, washrooms and storage rooms. A diverse array of recreation and leisure services will be offered at this community hub. Construction of the new Seniors & Youth Centre will enable the City to close its existing East Shore Community Centre, an undersized and aging building which is costly to maintain. Performing Arts Centre: The new Performing Arts Centre will be a 2 -storey, 27, 500 square foot facility. It will include a 600 -seat theatre space with world class acoustics, seat comfort and sight lines to accommodate live theatre, music, dance, opera, film, speakers and special events; a multi-purpose room appropriate for a range of programs/activities including meetings, special events, rehearsals, performances and private rentals; classrooms and practice spaces to support arts education, fine arts programming and private rentals; and a 5, 000 square foot lobby with concession area suited for large public gatherings, corporate events and art exhibitions. New Public Square: The new City facilities will be arrayed around a public square space that will act as a meeting place and a focal point for community activity. Through smart and pedestrian - focused design, the City will have the ability to close off sections of Glenanna Road in order to add to the public square and create a massive community gathering space that could accommodate large festivals and special events, such as a Christmas market and an Asian -style night market. All of the facilities will be seamlessly connected via activated and pedestrian -friendly walkways, which will expand the public square concept to the farther reaches of the project. New Underground Parking Structure: To maximize the public space at ground level, a 3 -storey It is anticipated to have 930 stalls with 350 dedicatedunderground parking structure will be built. for City uses by a long term lease/ maintenance agreement. The remaining stalls will be allocated for residential use, to serve the adjacent residential development. Above the parking structure, title to parcels of real estate (air rights) would be transferred to the City for the new Library, Seniors & Youth Centre and Performing Arts Centre. New residential development would take place on what is now the South Esplanade parking lot, which would be transferred to OPB Realty Inc. (" OPB"). A key component of the new residential development will be a 50 storey residential tower constructed over top the new Seniors & Youth Centre. CAO 07-19 July 22, 2019 Subject: Downtown Vision -MOU Page 4 The MOU contains a statement that: the terms of this MOU are entirely non-binding and that any further discussions, negotiations and future understandings between the Parties with regard to the subject matter of this MOU and the PTC Development Proposal remain subject to all necessary due diligence, approvals and authorizations which may be required by the Parties, including, without limitation, ensuring that the contemplated arrangements comply with applicable laws, the conduct and receipt of all necessary financial, design, planning, construction, environmental, geotechnical and other customary real property due diligence, and the receipt of all necessary City Council and PTC Ownership board of directors' approvals, and no binding agreement( s) shall be created or deemed to have been created between the parties unless and until the Parties, each in its sole, absolute and unfettered discretion, have entered into a binding definitive agreement( s) in writing. Construction contracts, agreements of purchase and sale, lease( s), servicing and maintenance agreements and rezoning to accommodate all new construction must all be in place to make this proposal a reality. For the purpose of finalizing the binding agreements that will define the City Centre project, staff will comprehensively address the host of design and construction issues that a project of this magnitude inevitably raises, including : a) Negotiating fixed price construction contracts for all new City facilities; b) Obtaining real property appraisals to ensure that the South Esplanade lands being transferred to OPB are approximately equivalent in value to the strata parcels and long term leasehold interest being transferred to the City; c) Obtaining appropriate access rights and rights of support in perpetuity for the City facilities being constructed in the strata parcels, to ensure the City's ability to construct, operate, repair and replace the City facilities; d) Obtaining a commercially reasonable assurance that the construction and development contemplated by the MOU will be completed; and e) Relocation/ oversizing of required services. Attachments: 1. Draft Memorandum of Understanding dated July 16, 2019. 2. Concept Plan of new City Centre area. 3. Artist' s renderings of proposed new City facilities. Prep. ed,/Endorsed By: Approved/ Endorsed By: Paul Big o i Stan Karwowski Director, orpi rate Services & Director, Finance & TreasurerCity Solicitor CAO 07-19 Subject: Downtown Vision -MOU July 22, 2019 Page 5 Recommended for the consideration of Pickering City Council III at, Tony Prevedel, P. Eng. Chief Administrative Officer Attachment # 1 to Report # CAO 07-19 July 16, 2019 Revised Office of the Chief Administrative Officer The Corporation of the City of Pickering Pickering Civic Complex One The Esplanade Pickering, ON L1V 7K7 Attention: Tony Prevedel, Chief Administrative Officer, City of Pickering Dear Tony, RE: MEMORANDUM OF UNDERSTANDING — CITY CENTRE 2022 PLAN We are pleased to present, on behalf of the owners of Pickering Town Centre (" PTC Ownership"), this MOU") which will serve as the basis for further discussions betweenmemorandum of understanding (" the City of Pickering ( the " City") and PTC Ownership ( which together are sometimes collectively referred to as the " Parties" and individually as a " Party") with a view to facilitating the development objectives of the Parties in creating a vibrant new City Centre. In furtherance of that objective, this MOU will outline a proposal for the development of existing lands at the Pickering Town Centre ( which are shown outlined in PURPLE on Schedule A), and certain other lands and which will encompass the provision of new City Facilities and other public realm improvements ( the " PTC Development Proposal"). The intent of this Memorandum of Understanding will be to serve as the basis for the negotiation and completion of binding agreements between the City and PTC Ownership which will set out more specific details and understandings pertaining to the Parties' respective obligations in respect of the PTC Development Proposal. In executing this MOU the Parties understand and acknowledge that the terms of this MOU are entirely non-binding and that any further discussions, negotiations and future understandings between the Parties with regard to the subject matter of this MOU and the PTC Development Proposal remain subject to all necessary due diligence, approvals and authorizations which may be required by the Parties, including, without limitation, ensuring that the contemplated arrangements comply with applicable laws, the conduct and receipt of all necessary financial, design, planning, construction, environmental, geotechnical and other customary real property due diligence, and the receipt of all necessary City Council and PTC Ownership board of directors' approvals, and no binding agreement( s) shall be created or deemed to have been created between the parties unless and until the Parties, each in its sole, absolute and unfettered discretion, have entered into a binding definitive agreement( s) in writing. 27327342. 4 2 - Zoning In order to meet the design intent of the PTC Development Proposal, PTC Ownership is seeking the following amendments to the Pickering City Centre Zoning By-law 7553/ 17: as shadedSCHEDULE 2 -The City Lands south of the Esplanade South ( the " South Block Lands") ( in BLUE on Schedule " A" attached) amended from CCC to CC2 in order to permit residential SCHEDULE 5 -PTC Lands") ( as outlinedFor identified portions of Pickering Town Centre Lands (" in purple on Schedule " A" attached) amend the maximum height limit to 125 meters and one building located above the Senior and Youth Centre to 155 meters. The South Block Lands will be amended to a height of 125 meters Any agreement contemplated herein which may be entered into between the Parties shall be conditional upon the above-described zoning amendments being obtained in final form and all applicable appeal periods having expired. City Facilities Provided final zoning amendments described in the section entitled " Zoning" above are obtained, PTC Ownership will provide assistance to the City with the development of a new Library, Seniors & Youth Centre, Arts Centre and Parking Structure ( collectively, the " City Facilities") on the terms outlined below: Library Use: Municipal library, including all related facilities and services as deemed necessary by the City (the " Library"). Premises: Approximately 45, 000 SF on three levels as shaded in ORANGE on Schedule " A" attached. Strata Parcel Purchase: PTC Ownership will, for the price of $ 1, convey to the City, title subject to permitted encumbrances to be agreed between the Parties) to a strata parcel at an agreed location upon/ within the PTC Lands and upon which the Library is to be situate, together with such support and access easements as may be necessary for the use and enjoyment of such strata parcel ( collectively, the " Library Parcel"). Operating Agreement: It is intended that, concurrent with the purchase of the Library Parcel by the City, the City and PTC Ownership will have negotiated and entered into a mutually agreeable form of operating and cost sharing agreement respecting the control and use of external common area space on certain portions of the PTC Lands within the lands generally shown outlined in PURPLE on Schedule A which are adjacent to the Library, and which the City, the general public and patrons of the Library shall have the non-exclusive right to use in common with PTC Ownership and tenants and patrons of Pickering Town Centre and the 27327342. 4 3 - Completion Date: Construction of Library: Construction Cost: Timing of Payments: Parking: Utilities: PTC Lands, to be more particularly set out in the Operating Agreement the " Library PTC Common Area"). The Operating Agreement will include, but not be limited to, operation, maintenance, security and insurance of the Library PTC Common Area, and each of the Parties will be responsible to pay their proportionate share of the costs thereof on a basis to be agreed. Estimated to be July 1, 2022 The City will enter into a procurement, design and construction management agreement ( the " Library Construction Management Agreement") with a development manager, to be mutually agreeable to PTC Ownership and the City, ( the " City Development Manager"), pursuant to which the City Development Manager will undertake to oversee the procurement, design and construction of the Library on behalf of the City, including, without limitation, all fixturing and interior fit out. The City Development Manager will take direction from the City on all aspects of the procurement, design and construction, and the building will be designed, built and furnished in accordance with City approved plans and specifications. Under the terms of the Library Construction Management Agreement, the City Development Manager will receive a fee equal to 4. 5% of the Library project costs, on a basis to be agreed in the Library Construction Management Agreement ( the " Library CMA Fee"). Any construction contract, architects contract, and other consultants' agreements relating to the Library will be entered into directly between the City and such contractor, architect and other consultants. It is intended that City will be responsible for all costs relating to the procurement, design and construction of the Library, including the Library CMA Fee and, on a basis to be agreed in the Library Construction Management Agreement, the cost of the staff of the City Development Manager who are directly involved in the construction and interior design/ build out of the Library. Under the terms of the Library Construction Management Agreement, the City Development Manager will prepare monthly draws for verification and payment by the City as the design and construction of the Library progresses. Included in Parking Structure section. The Library will be separately metered and the City will pay the cost of all utilities directly to the utility provider. 27327342. 4 4 - Seniors & Youth Centre Use: Premises: Strata Parcel Purchase: Operating Agreement: Completion Date: Construction of S& YC: Seniors and Youth Centre, including all related facilities and services as deemed necessary by the City ( the " S& YC"). Approximately 60, 000 SF on two levels approximately as shaded in yellow on Schedule " A" attached. PTC Ownership will, for the price of $ 1, convey to the City, title subject to permitted encumbrances to be agreed between the Parties) to a strata parcel at an agreed location upon/ within the PTC Lands upon which the S& YC is to be situate, together with such support and access easements as may be necessary for the use and enjoyment of such strata parcel ( the " S& YC Parcel"). It is intended that, concurrent with the purchase of the S& YC Parcel by the City, the City and PTC Ownership will have negotiated and entered into a mutually agreeable form of operating and cost sharing agreement respecting the control and use of external common area space on certain portions of the PTC Lands within the lands generally shown outlined in PURPLE on Schedule A which are adjacent to the S& YC, and which the City, the general public and patrons of the S& YC shall have the non-exclusive right to use in common with PTC Ownership and tenants and patrons of Pickering Town Centre and the PTC Lands, to be more particularly set out in the Operating Agreement the " S& YC PTC Common Area"). The Operating Agreement will include, but not be limited to, operation, maintenance, security and insurance of the S& YC PTC Common Area, and each of the Parties will be responsible to pay their proportionate share of the costs thereof on a basis to be agreed. Estimated to be July 1, 2022 The City will enter into a procurement, design and construction management agreement( the " S& YC Construction Management Agreement), with PTC Ownership, pursuant to which PTC Ownership will undertake to oversee the procurement, design and construction of the S& YC on behalf of the City, including, without limitation, all fixturing and interior fit out. Cushman & Wakefield Asset Services ULC, as agent and manager for PTC Ownership ( the " PTC Ownership Development Manager"), will take direction from the City on all aspects of the procurement, design and construction, and the building will be designed, built and furnished in accordance with City approved 27327342. 4 5- Construction Cost: Timing of Payments: Parking: Utilities: Arts Centre Use: Premises: Strata Parcel Purchase: plans and specifications. Under the terms of the S& YC Construction Management Agreement, the PTC Ownership Development Manager will receive a fee equal to 4. 5% of the S& YC project costs, on a basis to be agreed in the S& YC Construction Management Agreement ( the S& YC CMA Fee"). Any construction contract, architects contract, and other consultants' agreements relating to the S& YC will be entered into directly between the City and such contractor, architect and other consultants. It is intended that City will be responsible for all costs relating to the procurement, design and construction of the S& YC, including the S& YC CMA Fee and, on a basis to be agreed in the S& YC Construction Management Agreement, the cost of the staff of the PTC Ownership Development Manager who are directly involved in the construction and interior design/ build out of the S& YC. Under the terms of the S& YC Construction Management Agreement the PTC Ownership Development Manager will prepare monthly draws for verification and payment by the City as the design and construction of the S& YC progresses. Included in Parking Structure section. The S& YC will be separately metered and the City will pay the cost of all utilities directly to the utility provider. Living Arts theatre and concert hall, including all related facilities and services as deemed necessary by the City ( the " Arts Centre"), specifically excluding the showing of motion pictures and certain other on screen presentations on a basis to be agreed. An Arts Centre containing up to 600 seats as shaded in red on Schedule A" attached. PTC Ownership will, for the price of $ 1, convey to the City, title subject to permitted encumbrances to be agreed between the Parties) to a strata parcel at an agreed location upon/ within the PTC Lands upon which the Arts Centre is to be situate, together with such support and access easements as may be necessary for the use and enjoyment of such strata parcel ( the " Arts Centre Parcel"). It is intended that, concurrent with the purchase of the Arts CentreOperating Costs: Parcel by the City, the City and PTC Ownership will have negotiated and entered into a mutually agreeable form of operating and cost 27327342. 4 6 - Completion Date: Construction of Arts Construction Cost: Timing of Payments: sharing agreement respecting the control and use of external common area space on certain portions of the PTC Lands within the lands generally shown outlined in PURPLE on Schedule A which are adjacent to the Arts Centre, and which the City, the general public and patrons of the Arts Centre shall have the non-exclusive right to use in common with PTC Ownership and tenants and patrons of Pickering Town Centre and the PTC Lands, to be more particularly set out in the Operating Agreement( the " Arts Centre PTC Common Area"). The Operating Agreement will include, but not be limited to, operation, maintenance, security and insurance of the Arts Centre PTC Common Area, and each of the Parties will be responsible to pay their proportionate share of the costs thereof on a basis to be agreed. Estimated to be July 1, 2022 Centre: The City will enter into a procurement, design and construction management agreement ( the " Arts Centre Construction Management Agreement") with the City Development Manager, pursuant to which the City Development Manager will undertake to oversee the procurement, design and construction of the Arts Centre on behalf of the City, including, without limitation, all fixturing and interior fit out. The City Development Manager will take direction from the City on all aspects of the procurement, design and construction, and the building will be designed, built and furnished in accordance with City approved plans and specifications. Under the terms of the Arts Centre Construction Management Agreement, the City Development Manager will receive a fee equal to 4. 5% of the Arts Centre project costs, on a basis to be agreed in the Arts Centre Construction Management Agreement ( the " Arts Centre CMA Fee"). Any construction contract, architects contract, and other consultants' agreements relating to the Arts Centre will be entered into directly between the City and such contractor, architect and other consultants. It is intended that City will be responsible for all costs relating to the procurement, design and construction of the Arts Centre, including the Arts Centre CMA Fee and, on a basis to be agreed in the Arts Centre Construction Management Agreement, the cost of the staff of the City Development Manager who are directly involved in the construction and interior design/ build out of the Arts Centre". Under the terms of the Arts Centre Construction Management Agreement the City Development Manager will prepare monthly 27327342. 4 7 - Parking: Utilities: Parking Structure Use: Premises: Strata Lease Operating Costs: draws for verification and payment by the City as the design and construction of the Arts Centre progresses. Included in Parking Structure section The Arts Centre will be separately metered and the City will pay the cost of all utilities directly to the utility provider Parking structure, including all related facilities and services as deemed necessary by the City, for use by the City, and patrons of City Facilities, as described below ( the " Parking Structure"). 350 parking stalls below grade. PTC Ownership will, for the price of $ 1, grant to the City, a 99 year lease ( the " Parking Structure Lease") of a subsurface strata parcel subject only to permitted encumbrances to be agreed between the Parties) at an agreed location upon/ within the PTC Lands upon which the Parking Structure is to be situate, together with such support and access rights thereunder as may be necessary for the use and enjoyment of such strata parcel. The Parking Structure Lease shall be net to the landlord. Without limiting the foregoing, the City will be responsible, at its cost, for the operation, maintenance, repair, security, insurance and property taxes relating to the Parking Structure ( subject to the Parking Management Agreement described below). It is intended that, concurrent with the entering into of the Parking Structure Lease, the City and PTC Ownership will have negotiated and entered into a mutually agreeable form of operating and cost sharing agreement ( having a term which is co -terminus with the Parking Structure Lease) respecting the control and use of external common area space on certain portions of the PTC Lands within the lands generally shown outlined in PURPLE on Schedule A which are adjacent to the Parking Structure, and which the City, the general public and patrons of the City Facilities shall have the non-exclusive right to use in common with PTC Ownership and tenants and patrons of Pickering Town Centre and the PTC Lands, to be more particularly set out in the Operating Agreement ( the " Parking Structure PTC Common Area"). The Operating Agreement will include, but not be limited to, operation, maintenance, security and insurance of the Parking Structure PTC Common Area, and each of the Parties will be 27327342. 4 8 - Completion Date: Construction of Parking Construction Cost: Timing of Payments: Utilities: Management: responsible to pay their proportionate share of the costs thereof on a basis to be agreed. Estimated to be July 1, 2022 Structure: The City will enter into a procurement, design and construction management agreement ( the " Parking Structure Construction Management Agreement"), with PTC Ownership, pursuant to which PTC Ownership will undertake to oversee the procurement, design and construction of the Parking Structure. The PTC Ownership Development Manager as agent and manager for PTC Ownership will take direction from the City on all aspects of the procurement, design and construction, and the structure will be designed, built and furnished in accordance with City approved plans and specifications. Under the terms of the Parking Structure Construction Management Agreement, PTCthe Ownership Development Manager will receive a fee equal to 4. 5% of the Parking Structure project costs, on a basis to be agreed (the " Parking Structure CMA Fee"). Any construction contract, architects contract, and other consultants' agreements relating to the Parking Structure will be entered into directly between the City and such contractor, architect and other consultants. It is intended that City will be responsible for all costs relating to the procurement, design and construction of the Parking Structure, including the Parking Structure CMA Fee and, on a basis to be agreed, the cost of the staff of the PTC Ownership Development Manager who are directly involved in the construction and interior design/ build out of the Parking Structure]. Under the terms of the Parking Structure Construction Management Agreement the PTC Ownership Development Manager will prepare monthly draws for verification and payment by the City as the design and construction of the Parking Structure progresses. The Parking Structure will be separately metered and the City will pay the cost of all utilities directly to the utility provider. It is intended that the Parties will enter into a parking management agreement (the " Parking Management Agreement") under which the Parking Structure will be operated, managed, secured, repaired and maintained by PTC Ownership on behalf of the City, at the City' s expense, on a basis and fee to be agreed. Should the City elect to charge for the parking within the Parking Structure, the Parking 27327342. 4 9 - Management Agreement will include the payment of an additional fee to PTC Ownership on a revenue share basis on terms to be agreed. South Block Lands It is intended that, concurrent with the Zoning amendments in respect of the South Block Lands, and provided PTC Ownership has conveyed to the City, the Library Parcel, the S& YC Parcel and the Arts Centre Parcel and entered into the Parking Structure Lease, the City will, for the price of 1, convey title to the South Block Lands to PTC Ownership ( or such other company or entity as directed by PTC Ownership), subject to permitted encumbrances to be agreed between the Parties, following reconfiguration as described below. The City shall use commercially reasonable efforts to obtain the required zoning amendments for the South Block as set out in the " zoning" section of this Memorandum of Understanding. The conveyance of the South Block Lands by the City to PTC Ownership as well as the conveyance of the Library Parcel, the S& YC Parcel, the Arts Centre Parcel and the granting of the Parking Structure Lease by PTC Ownership to the City, will be conditional upon the City making certain that adequate sanitary, storm and water service capacity to permit the development of the South Block Lands as intended by PTC Ownership. To the extent City parking on the South Block Lands is temporarily displaced during the construction by PTC Ownership on the South Block Lands, PTC Ownership will provide replacement parking at an agreed location on PTC Lands at no cost to the City. Ancillary Public Realm Improvements PTC Ownership shall construct, at its cost, the public realm improvements which are to be constructed on the PTC Lands, as outlined in red on Schedule A, and the City shall construct, at its cost, the public realm improvements which are to be constructed on the City Parcels as outlined in green on Schedule A. The scope and details of each of the Party' s respective public realm improvements will be on a basis to be agreed. The Parties have agreed that the public realm improvements will be completed prior to occupancy of the City Facilities, and they will use all commercially reasonable efforts to effect the completion of same to ensure timely occupancy of the City Facilities. Service Capacity The City has engaged Sabourin Kimble & Assoc. consulting engineers to determine whether sufficient sanitary sewer and water capacity exists in the Regional sewer and water main to permit the construction of the City Facilities, PTC Ownership' s intended development of the South Block Lands and the PTC Lands, and the existing uses on the lands of PTC Ownership and relevant third parties and it has been determined that additional sanitary sewer or water capacity is not required for such purposes. 27327342. 4 10 - Any agreement which may be entered into between the Parties shall be conditional upon there being sufficient storm sewer capacity to service the City Facilities and PTC Ownership' s intended developments on the South Block Lands and the PTC Lands. Service Relocation In order to permit the construction of the Parking Structure, the existing sanitary sewer, storm sewer and water main located within the area identified as Phase 1 Servicing Limits on Schedule A attached hereto ( the " Phase 1 Services") will need to be relocated from the PTC Lands onto Glenanna Road. PTC Ownership will undertake the relocation of the Phase 1 Services including restoration of Glenanna Road, on behalf of the City, at the City' s expense, such work to be done concurrently with the demolition of existing improvements on the PTC Lands which are scheduled to commence in August 2019. The existing sanitary sewer, storm sewer and water main located within the area identified as Phase 2 Servicing Limits on Schedule A attached hereto ( the " Phase 2 Services"), may be relocated by PTC Ownership, at its expense, concurrently with the relocation of the Phase 1 Services and restoration of Glenanna Road, or at such later date as may be determined by PTC Ownership and agreed to by the City. In the event that the Phase 2 Services are not relocated concurrently with the relocation of the Phase 1 Services, the City will, at its expense, tie the relocated Phase 1 Services into the existing services for Pickering Town Centre until such time as the Phase 2 Services are relocated. Design Intent The Parties have agreed that the master plan and design for the PTC Development Proposal, including the City Facilities, and including the layout, building massing and road configurations on the PTC Lands, including access points to and from the PTC Lands and Glenanna Road, are as shown on the plan attached as Schedule A and the renderings as shown on Schedule B attached hereto. SIGNATURE PAGE FOLLOWS] 27327342. 4 We look forward to working with you on this exciting project. PTC OWNERSHIP, currently OPB Realty Inc., by its agent and manager Cushman and Wakefield Asset Services ULC Per: George Buckles Authorized Signatory) We hereby acknowledge and agree to the above. CORPORATION OF THE CITY OF PICKERING Per: Name: Authorized Signatory) 27327342. 4 12 - SCHEDULE " A" 27327342. 4 4 13 - SCHEDULE " B" 27327342. 4 Attachment # 2 to Report # CAO 07-19 Arts Centre Footprint : 2,254 sm 124, 262 sf City Lands PTC Lands PHASE 1 PTC Lands NG CITY HALL s 41 SI ' r SKATING RINK Parking Garage Lands NG TOWN CENTRE SHOPPING MALL 418RARV THE ESPLANADE QRK Library Footprint : 1, 794 sm 119, 310 sf THE ESPLANADE SOUTH SOUTH BLOCK Easement through South Block for pedestrian and car traffic excluding commercial traffic) to The South Esplanade r Youth/ Seniors Centre Footprint : 4,064 sm 143, 745 sf South Block Lands Site area : 9, 163 sm 198, 630 sfj p Attachment # 3 to Report # CAO 07-19 0. 1 I OH 11 11! 11"0.# 044 " . 1111111 I1" 1. 4111%1. ingsflowim Attachment #4 to Report FIN 15-21 Report to Council Report Number: CAO 04-21 Date: May 25, 2021 From: Marisa Carpino Chief Administrative Officer Subject: Pickering City Centre Project -Construction Cost Estimating Services & Next Steps -File: A-1400 Recommendation: 1. That Report CAO 04-21 of the Chief Administrative Officer be received; 2. That Council approve staff to undertake the following one-time actions to facilitate the development of the five year capital and operating financial plan as it relates to the City Centre project: a. That request for proposal RFP 2021-1 Cost Estimating Services – Pickering City Centre submitted by Turner & Townsend Canada Inc., in the amount of $46,217 (HST included) and a net project cost of $41,620 (net of HST rebate) to be funded from 2019 Capital Budget account 5203.1902.6500; b. That architectsAlliance be approved to participate in the stakeholder and community design consultation exercises, cost estimating value engineering and “Savings By Design Program” review with costs not to exceed $25,000 (HST included) and a net project cost of $22,513 (net of HST rebate) and to be to be funded from 2019 Capital Budget account 5203.1902.6500; c. That Sponsorship Canada be retained to undertake sponsorship asset valuation services for the three Pickering City Centre facilities (Library, Performing Arts Centre, Seniors & Youth Centre), Piazza & Public Realm, and other new municipal construction projects originally budgeted at $30,000 and now increased to an upset limit of $45,000 (HST included) and a net project cost of $40,524 (net of HST rebate) and to be charged to account 2121.2392.0000 and funded 100% from the Casino Reserve (7067.0000.0000); d. That IBI Group be retained to undertake a parking strategy that reviews the immediate and short-term parking needs for the Pickering Civic Complex at a cost not to exceed $50,000 (HST included), and a net project cost of $45,027 (net of HST rebate) and to be funded from 2019 Capital Budget account 5203.1902.6500; e. That Deloitte LLP be engaged to assist with quantitative analysis as it applies to the five year financial plan and the corresponding City’s debt capacity as it relates to the Annual Repayment Limit and develop corresponding options at a cost not to exceed $45,000 (HST included) and a net project cost of $40,524 (net of HST rebate) to be funded from the 2019 Capital Budget account 5203.1902.6500. CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 2 3. That Council approve staff to undertake the following actions related to the ongoing development of the City Centre project as part of the development of the five year capital and operating financial plan: a. That Tory’s LLP be retained at a cost of $228,960 (net of HST rebate) to advise and assist with the negotiation of the various contracts which define the Pickering City Centre Project, sufficient to identify project costs so they can be accounted for in the project cost estimate, and that these costs be allocated to the following 2020 Capital Budget accounts as follows: i) Seniors & Youth Centre (5740.2003) – 50% ii) Central Library (5740.2002) – 25% iii) Performing Arts Centre (5740.2001) – 25% b. That the services of CAM Consulting be retained to undertake a review of the architectural drawings for the Performing Arts Centre at an upset limit of $25,000 (HST included) and a net project cost of $22,513 (net of HST rebate) to be funded from account 2740.2392 and funded 100% from the Casino Reserve; and c. That through a competitive process that the services of a project management firm be approved to undertake project management services for the City Centre Project for a period of 4 months at an upset limit of $81,100 (HST included), and a net project cost of $73,000 (net of HST rebate) and to be funded from account 2121.2392 and funded 100% from the casino reserve; 4. That appropriate City of Pickering officials be authorized to take the actions necessary to implement the recommendations in this Report. Executive Summary: As outlined in the 2021 Budget Report (FIN 05-21), there is a need for the City to develop a five year financial plan that considers both future operating and capital expenditures in relation to the Pickering City Centre Project. The financial plan will include the following projected elements: • Pickering City Centre Capital Costs • Pickering City Centre Operating Costs • Pickering City Centre Revenue/Funding Opportunities • 2021 Capital Budget • 4 year Capital Forecast and Asset Management Plan • City’s debt capacity and Annual Repayment Limit (ARL) This comprehensive approach to prepare a five year financial plan is intended to provide Council with all of the costs/revenues and other considerations associated with the Pickering City Centre project by Fall 2021 so they can make an informed decision to proceed with the Pickering City Centre design and other projects. To that end, several actions/activities are required to be initiated at this time by staff as they will take several months to complete. CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 3 These actions are listed within the recommendations section of this report and are divided between one-time and ongoing project costs. The one-time costs are more associated with providing the critical financial information that is required for the five year financial plan. Without this information, the financial plan may lead to the development of inaccurate recommendations. The ongoing project costs could be viewed from the perspective that these expenses are investments that are required to assist in developing the project and are also required for the five year financial plan. The recommendations identified in this report represent the investment required to enhance the financial clarity of the City Centre project and its link to the five year financial plan. For some of the ongoing costs, there is opportunity to use development charge funding to reduce taxpayer costs. In any event, the implementation of these actions is necessary to inform the five year Financial Plan which will be presented to Council in Fall 2021. This plan or roadmap will be based on future capital and operating expenditures taking into consideration “best available information.” Assumptions will be clearly identified so that Council can understand how the assumptions were incorporated into the development of the financial plan. The recommendations of the five year financial plan will be based on the “financial numbers” of which the City Centre costing exercise will be critical. As such, these recommendations may range from maintaining the status quo (green light for all projects to proceed) to the partial short term or long term deferral of City capital projects. As is sometimes the case, capital projects are deferred (through the staff budget development exercise) due to either limited financial or staffing resources. For example, the Recreation Complex renovation was first discussed as part of the 2016 capital budget and was postponed and/or deferred until 2020 when the project could be accommodated in the City’s fiscal plan. In most cases, deferred capital projects are eventually submitted to Council for approval. At the current time, with the financial exercise in the preliminary stage, staff are not in a position to provide any estimates regarding future recommendations that will be presented to Council in the Fall 2021. Financial Implications: A breakdown of the costs by either one-time or ongoing is presented below. CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 4 Recommendation Ref. One-Time Costs NET HST Other NET Taxpayer Cost 2a 2b Cost Estimating Stakeholder Consultation 41,620 22,513 $41,620 22,513 2c Sponsorship/Revenues 40,524 40,524 0 2d Parking Study 45,027 45,027 2e Financial Analysis Sub Total 40,524 $190,208 - $40,524 40,524 $109,160 3a 3b 3c Ongoing Costs Legal Performing Arts Consult. Construction/Mgmt. Services Sub Total $228,960 22,513 73,000 $324,473 $150,697 22,513 73,000 $246,210 $78,263 0 0 $78,263 Total $514,681 $286,734 $187,423 Percentage Funding 55.71% 44.29% Development charge funding is contributing approximately 65.8 per cent of the total legal cost. The development charge funding percentage is different for each major building. The project management services, performing arts centre design consulting costs and sponsorship consulting are funded 100 per cent from the casino reserve and therefore, zero cost to the taxpayer. The 2019 Capital Budget included startup funding for the City Centre project in the amount of $1.5 million account (5203.1902.6500). The 2021 opening balance for this capital account is $473,507. Recommendations 2a, b, d and e are charging $149,684 (net HST) to this Capital Budget account leaving a residual balance of $323,823 for future expenditures. As shown above, non-taxpayer funded sources are funding almost 55.7 per cent of the gross expenditures requested in this report. Discussion: The first step in the five year financial strategy is to update the City Centre project costs. The last update the City received for the City Centre project costs from the CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 5 development managers was fourth quarter 2019. Almost 20 months later, and taking into consideration the effects of the pandemic and its impact on construction costs (wood, concrete and steel), a revised and more detailed estimate is required to input into the financial plan and that in-turn will develop the corresponding strategy and Council report recommendations. Cost Estimating Services for the Pickering City Centre Project – Recommendation 2a The City released Request for Proposal No. RFP 2021-1 for the Cost Estimating Services for the Pickering City Centre Project on April 1, 2021 and this RFP closed on April 29, 2021. The cost consultant will provide a detailed Class C cost estimate for the construction of City facilities, Library, Seniors & Youth Centre, Performing Arts Centre, Relocation of Services and Public Realm improvements. This Class C cost estimate will be based on the design consultants current design development drawings that are 85 percent complete and the supplementary information provided in the RFP documents that identify the delineation of work. The Class C cost estimate submitted to staff will provide an independent construction cost estimate that will be incorporated into the City Centre financial impact Report to Council intended to submitted to Council in September 2021. Request for Proposal No. RFP 2021-1 closed on April 29, 2021. Five consultants submitted proposals. The evaluation committee reviewed the submitted proposals and interviewed the three highest ranking submissions. After careful consideration of submissions staff are recommending award to the highest ranking proponent’s submission, Turner & Townsend Canada Inc., in the sum of $46,217 (HST included). The total net project cost is $41,620 (net of HST rebate). Hiring of architects-Alliance for services related to the City Centre Project - Recommendation 2b A key component of the City Centre design development is community and stakeholder engagement. At this time, while still in the design development phase, it is critical that City staff initiate a comprehensive engagement exercise with applicable community and stakeholder groups (Seniors Club, Youth Council, Associations established and prospective Facility Users) and the broader resident population. This exercise will enable necessary revisions and adjustments before working drawings are prepared for tender – after which time, design changes can be cost prohibitive. The community and stakeholder engagement program is envisioned to take place during June and July 2021 through virtual meetings and community engagement digital platforms. Where appropriate, and being considerate of public health measures, some targeted in person consultation sessions may be hosted by the City. To support and facilitate the community and stakeholder engagement process, the participation of architects Alliance is required. During the preparation of the cost estimate by Turner & Townsend Canada Inc. they will identify elements of the project that provide opportunities to consider alternate design, selection of material and systems that are more cost effective. A cost consultant’s knowledge of current market costs allows them to benchmark the costs of major elements, shown on the current design development drawings, that should be referred back to the design teams for review. This process of value engineering requires the input of the design team and their sub- CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 6 consultants to review and confirm alternates that are acceptable to the original project design intent and the City. The cost consultant will be able to incorporate these value engineered revised elements in their final cost estimate report. The participation of architects-Alliance is also required to support the review of the Enbridge “Savings by Design” program that is intended to result in future energy savings. The City enrolled this proposed development in the Enbridge Savings by Design program, in support of the Council approved 2019-2024 Corporate Energy Management Plan. The Enbridge Savings by Design program is an incentive program to encourage the design and construction of high- performance, energy efficient buildings that are at least 15 per cent better than the Ontario Building Code. This target aligns with the City’s Corporate Energy Management Plan. The value of this program is to identify and incorporate energy saving design strategies into the project and lower the operating costs of the facilities. Another benefit of this program is the ability for staff to leverage the best practices and knowledge gained from participation in this program to influence the design and construction of future facility and capital projects. Over 200 projects have successfully gone through this program and the City Centre initiative would be the first commercial project in Pickering to participate. Engagement of Sponsorship Canada – Recommendation 2c As noted previously, revenue from naming rights for Seniors & Youth Centre, Performing Arts Centre, and Library will be a critical factor in the five-year financial plan for the Pickering City Centre Project. Sponsorship Canada (division of REV XM) will complete a full valuation exercise for all three City Centre facilities, Piazza and Public Realm within the City Centre Project. All tangible and intangible variables, physicals, digital impression data, social and digital reach and paid PR value will be reviewed as part of the valuation exercise. Once completed, the final report will identify projected revenues through naming rights for each facility, which will be allocated towards construction costs, and future operating and maintenance expenses. The exercise will also review sponsorship opportunities for the future Animal Shelter, Pickering Heritage & Community Centre and the Seaton Recreation Complex. Parking Strategy for the Pickering Civic Complex – Recommendation 2d The Pickering City Centre Master Plan includes the development of the South Block which is located on the south side of The Esplanade South between Glenanna Road and Valley Farm Road. Currently the parking lot for the Pickering Civic Complex (staff and visitors) is on the western portion of these lands and will need to be replaced. A parking strategy is required to be prepared to inform the City on both the immediate (1 to 5 year) and short term (5 to 10 year) parking needs (supply and demand), and identify where the required parking supply will be provided. The parking strategy will look at both on-street parking (Glenanna Road, The Esplanade North, The Esplanade South, Valley Farm Road and Diefenbaker Court) and off- street parking (at the Chestnut Hills Development Recreation Complex and surrounding area). One of the outcomes of this study may be the need to provide additional parking to support visitors of the Pickering Civic Complex and this cost would then be reflected in the five year financial plan. CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 7 IBI Group has just completed the City’s first Integrated Transportation Master Plan (ITMP) which included a City wide Parking Management Strategy as one of the background reports. It is recommended that City staff engage in conversations with IBI Group regarding Terms of Reference for a parking strategy for the Pickering Civic Complex, and agree to a work plan to complete the parking strategy, at a cost not to exceed $50,000 (HST included). Analysis & Financial Modelling & Development of Recommendations – Recommendation 2e The five year financial plan is complicated due to the estimated high dollar level of the planned capital expenditures and the corresponding financing and debt strategies that will be required to support the capital and operating costs. Therefore, the financial plan must take into account or accurately measure the risks associated with the various options and scenarios explored in the development of the five year financial plan. By engaging Deloitte, the City is able to utilize their expertise for this financial exercise to ensure that the end result is both accurate and obtainable. Acquisition of Legal Resources – Recommendation 3a As Members of Council are aware, one of the buildings (Seniors & Youth Centre) will be jointly operated (to some degree) by the City and the Ontario Pension Board. As such, legal agreements must be prepared for the City Centre project. These agreements (Recommendation 3 a) will define who is responsible for the ongoing maintenance and future replacement of common operated facilities and/or common areas. These legal agreements will clearly define the financial responsibility for many facets of these buildings that in-turn produces accurate future operating cost estimates. The end result of this exercise will be a more accurate financial plan and should avoid unfavourable future surprises. The law firm of Torys LLP has already provided guidance to the City in connection with the City Center project. Over the course of 2019 and 2020, Torys provided legal advice and document drafting services to the City in connection with: (a) the City Centre Memorandum of Understanding, (b) finalization of the Development Management Agreements with Cushman & Wakefield Asset Services ULC and twopoint0 partners inc., (c) review of the draft Construction Contract template and (d) review of the draft architect’s Agreement. Below is a preliminary list of the main agreements required to define the City Centre project: Library: Agreement of Purchase and Sale for Strata Parcel, City-OPB Realty Inc. (“OPB”) Construction Contract, City-General Contractor (“GC”) Operating and Cost Sharing Agreement, City-OPB Development Management Agreement, City-twopoint0 Seniors & Youth Centre: Agreement of Purchase and Sale for Strata Parcel, City-OPB Construction Contract, City-GC Operating and Cost Sharing Agreement, City-OPB Development Management Agreement, City-Cushman & Wakefield CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 8 Performing Arts Centre: Agreement of Purchase and Sale for Strata Parcel, City-OPB Construction Contract, City-GC Operating and Cost Sharing Agreement, City-OPB Development Management Agreement, City-twopoint0 Parking Structure/Piazza: Long Term Lease, City-OPB Cost Contribution Agreement, City-OPB Development Management Agreement, OPB-Cushman & Wakefield Operating and Cost Sharing Agreement, City-OPB Parking Management Agreement, City-OPB South Block Lands: Agreement of Purchase and Sale, City-OPB Torys’ understanding and experience of the City Center project will enable it to efficiently advise the City as it proceeds to negotiate the various contracts required to define the project. This is needed for the Cost Consultant to identify and account for the project’s capital and operating costs. The City Solicitor will coordinate the legal input into the finalization of the project contracts, and will act as liaison between the City and Torys. Most of Torys’ services will be provided by Andy Gibbons and Rose Chen. Andy Gibbons has already worked on the City Centre, and both lawyers have capably represented the City in several complex real estate transactions in the Seaton Innovation Corridor. The estimated cost of retaining Torys LLP to render these services is $225,000 plus applicable HST. These agreements are specifically required at this stage of the project because the terms and conditions set out in these agreements inform the financial obligations of each party. This information is critical to complete the 5 year financial plan for Council’s consideration in the Fall 2021. Arts Centre Design Consultant – Recommendation 3b The design for the Performing Arts Centre has been informed, to date, by the findings of the 2016 Webb Report (Business Case for an Arts Centre), site visits of municipal arts centres in Ontario, and the input of City staff as facilitated by architects Alliance and their sub-consultant Theatre Consultants Collaborative (who are subject matter experts). That said, City staff learned quite clearly from municipal colleagues operating arts centres that input from an Executive Director, Arts Centre during the design stage is key to ensure the facility functions optimally. Consistent with this methodology, Report FIN 07-19 (Res. #116/19) dated July 22, 2019, Council approved staff’s recommendation to proceed to lift the hold on the Executive Director, Arts Centre position. Funding for this position was reflected in the Council approved 2019 Current Budget. Accordingly, staff proceeded in late 2019/early 2020 with a public recruitment CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 9 process that was ultimately put on hold in April 2020 due to the pandemic (Report FIN 05-20, Res. #284/20). At this time, in lieu of hiring an Executive Director, Arts Centre, it is critical that the support of a consultant experienced in the field of arts centre design, construction and operation be secured to provide input in the Performing Arts Centre design and participate in the community and stakeholder engagement of that design. To that end, Council’s approval is being sought in this report to secure the consulting services of CAM Consulting at an upset limit of $25,000. As part of this exercise, CAM Consulting will undertake a comprehensive review, assessment and gap analysis of the design for the Pickering Performing Arts Centre by reviewing the PAC architectural drawings within City Centre, consultating with the design committee and stakeholders and reviewing relevant documents (studies, reports, minutes) that helped inform the design. Brian McCurdy is a partner in CAM Consulting assisting clients with performing arts facility planning and management, cultural planning and community engagement. Brian McCurdy has over 30 years’ experience with building, opening and managing performing arts centres. This has included leading organizations through the facility planning and construction process, the development of business operating plans, overseeing capital fundraising campaigns, hiring staff, multi-year budget development, planning and programming performance seasons, building capacity of resident facility users, gala openings, and developing arts education programs. McCurdy oversaw the development of the Performing Arts Centre, University of Lethbridge, a 4 theatre complex opened in 1980; Thunder Bay Community Auditorium, a 1500 seat performing arts centre, opened in 1985; and the Mondavi Center for the Performing Arts, University of California, Davis, a $64 million performing arts center, including an 1800 and 200 seat theatres, that opened in 2002. McCurdy also oversaw the re-development of the historic Grand Theatre in Kingston Ontario, and re-opened it in the Spring of 2008 following a 3 year renovation. McCurdy retired in 2016 as Executive Director of the Burlington Performing Arts Centre, a 2 theatre complex opened in the fall of 2011. McCurdy also served as the first Cultural Director for the City of Kingston and oversaw the development of the Cultural Services Department responsible for the management of the Grand Theatre, Pumphouse Museum, and the MacLachlan Woodworking Museum. He oversaw the City’s first Municipal Culture Plan and Cultural Tourism Plan and the development of the Tett Centre for Creativity. As a partner in CAM Consulting for the past five years, Brian’s recent projects have included the Cultural Master Plan, Town of Canmore; Arts and Heritage Plan for the City of Edmonton; a Feasibility and Business Plan for Aurora Cultural Centre; a City of Ottawa Cultural Roadmap, Ottawa Cultural Alliance; and management services for the Burlington Performing Arts Centre. Brian also acted as the Programming consultant for University of Arizona (UA Presents); conducted a five year Five Year Strategic Plan, and a Ticketing and Customer Relationship Management Systems review, for Flato Markham Theatre. He continues to provide consulting services on policy development for the evolving role of Municipal Performing Arts Centres in their communities, for Ontario Presents. CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 10 Retaining of Project Management Firm – Recommendation 3c In developing a five year financial strategy for the City Centre project, an experienced project management consulting company will play an integral role in not only representing the City’s best interest, but also working closely with the City’s Senior Management team to finalize the full project scope. The key tasks during this time include finalizing the City’s work plan, mapping out detailed roles/responsibilities and deliverables, resolving design gaps from 85 per cent design development drawings, review of evaluation of value engineering options, providing support for the development of operating cost including the identification of ongoing shared costs (delineation) and defining the required resources & timelines. As staff plan to deliver a five-year financial strategy to Council in the fall of 2021, it is critical for the City to retain a project management consulting company to complete outstanding works required in the next 4 months that can provide the appropriate financial input required for the five year financial strategy. City staff are recommending hiring a qualified and experienced consulting firm that can step into this specific role immediately. Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Marisa Carpino, M.A. Marisa Carpino, M.A. Chief Administrative Officer Chief Administrative Officer Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Fiaz Jadoon, Director, Economic Fiaz Jadoon, Director, Economic Development & Strategic Projects Development & Strategic Projects Prepared By: Approved/Endorsed By: Original Signed By:Original Signed By: Stan Karwowski, Stan Karwowski, Director, Director, Finance & Treasurer Finance & Treasurer CAO 04-21 May 25, 2021 Subject: Pickering City Centre Project Page 11 Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Kyle Bentley Kyle Bentley Director, City Development Director, City Development Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Richard Holborn Richard Holborn Director, Engineering Services Director, Engineering Services Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Brian Duffield Brian Duffield (Acting) Director, Community Services (Acting) Director, Community Services Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: Paul Bigioni Paul Bigioni Director, Corporate Services Director, Corporate Services & City Solicitor & City Solicitor Recommended for the consideration of Pickering City Council Original Signed By: Marisa Carpino, M.A. Chief Administrative Officer GSPublisherVersion 849.6.6.100 Attachment #5 to Report FIN 15-21 BI M c l o u d : S p a c e b a l l 1 - B I M c l o u d B a s i c f o r A R C H I C A D 2 4 / P T C M a s t e r / P T C M a s t e r p l a n Pr i n t e d O n : F r i d a y , O c t o b e r 1 5 , 2 0 2 1 Pickering City Centre Master Plan 2021-10-15 aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com GSPublisherVersion 849.6.6.100 BLOCK 2 G L E N A N N A R O A D LIBRARY S/Y CEN T R E SOUTH BLOCK BLOCK 1 N BI M c l o u d : S p a c e b a l l 1 - B I M c l o u d B a s i c f o r A R C H I C A D 2 4 / P T C M a s t e r / P T C M a s t e r p l a n Pr i n t e d O n : F r i d a y , O c t o b e r 1 5 , 2 0 2 1 BLOCK 2 (PAC) Site area: 3,199 sm| 34,434 sf LIBRARY Footprint : 2,165 sm| 23,303 sf LAND EXCHANGE AREA (Block 2 + Library + Road B) 8,574 sm | 92,290 sf T H E E S P L A N A D E S O U T H CITY CENTRE MECHANICAL PENTHOUSE 556 sm| 5,985 sf SENIORS/YOUTH CENTRE 3,943 sm| 42,442 sf SOUTH BLOCK LANDS Site area : 9,163 sm| 98,630 sf Pickering City Centre Master Plan Issued on: 2021-10-15 1:2000 PCC - LAND SWAP aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com aA architectsAlliance 205 - 317 Adelaide Street West Toronto, ON M5V 1P9 Canada t 416 593 6500 f 416 593 4911 info@architectsalliance.com www.architectsalliance.com A R K P I 6 S T O R E Y A TOWER ROA D V A T E I P R PUBLIC R O A D B G L E N A N N A R O A D PU B L I C R O A D B trnase 2 eeivd Pts Phre Sat2D | Public a GL E N A N N A R O A D PEDESTRIAN BRIDGE PICKERING PARKWAY TO PICKERING GO TRAIN STATION 40 STOR E Y H : 124.0 0 m 1 9 . 0 0 m T H E E S P L A N A D E N O R T H PODIUM 4 STOR E Y H : 13.00 m BLOCK 9 PODIUM / L O A D I N G 2 STORE Y H : 7.00 m HOTEL10 STOR E Y H: 32.00 m 3 S T O R E Y H : 1 4 . 7 0 m FL Y T O W E R H : 2 2 . 3 0 m BLOCK 2 PERFOR M I N G ARTS C E N T R E H : 11.50 m 2 STORE Y H : 9.30 m LIBRAR Y H : 9.00 m 4 STORE Y H : 19.00 m PRIV A T E R O A D C T H E E S P L A N A D E S O U T H PODIUM ROOF G A R D E N 6 STOR E Y H : 21.00 m 3 STOR E Y H : 15.00 m TERRAC E H : 5.00 m PODIUM BLOCK 1 SENIOR / 9 STORE Y H : 30.00 m YOUTH C E N T R E PRIVATE INTERIM H : 11.00 m 2 STORE Y H : 9m TOWER50 STOR E Y H : 153.0 0 m TOWER38 STO R E Y ROAD D FOR PHASE 1 H : 124.0 0 m BLOCK 3 OFFICE/ R E S . PODIUM 4 STORE Y H : 19.00 m PODIUM TOWER 9 STOR E Y H : 1 38 ST 18.00m OREY H : 28.00 m PODIUM 6 STOR E Y H : 19.00 m BLOCK 4 TOWER40 STOR E Y PODIUM H : 124.0 0 m 2 STORE Y H : 7.00 m RO A D B F O R P H A S E 1 PR I V A T E I N T E R I M PUBL I C R O A D D STRATA PUBLIC ROAD AT STRATA PUBLIC GRADE LEVEL WALKWAY AT GRADE LEVEL N BI M c l o u d : S p a c e b a l l 1 - B I M c l o u d B a s i c f o r A R C H I C A D 2 4 / P T C M a s t e r / P T C M a s t e r p l a n Pr i n t e d O n : F r i d a y , O c t o b e r 1 5 , 2 0 2 1 PICKERING TOWN CENTRE PODIUM 6 STOREY PODIUM 6 STOREY PODIUM 6 STOREY TOWER TOWER 30 STOREY 38 STOREY PODIUM PODIUM SOUTH BLOCK 2 STOREY 2 STOREY WAY RK NG P E I C PARKING LOT TOWER 40 STOREY BLOCK 5 H : 124.00m PODIUM BLOCK 5 6 STOREY H : 19.00m PODIUM 2 STOREY H : 7.00m BLOCK 6 PODIUM 2 STOREY H : 7.00m OFFICE COMPLEX PARKING GARAGE TOWER 40 STOREY H : 124.00m BLOCK 7 PODIUM 2 STOREY H : 7.00m PODIUM 9 STOREY H : 28.00m PODIUM 6 STOREY PARKING H : 19.00m GARAGE DURHAM COLLEGE BLOCK 8 15 STOREY H : 46.00m PODIUM 2 STOREY H : 7.00m TOWER 40 STOREY H : 124.00m PODIUM 6 STOREY H : 19.00m PRIVATE ROAD E PRIVATE ROAD F PARKING LOT PARKING LOT Pickering City Centre Master Plan Issued on: 2021-10-151:2000PHASE 1 MASTER PLAN GSPublisherVersion 849.6.6.100 Attachment #6 to Report FIN 15-21 City Center Project Deloitte LLP Socioeconomic Contributions Summary Context The City of Pickering is embarking on a large scale, multi-dimensional infrastructure project that can be expected to introduce several new assets into the community. Included within the construction plan for the City Center Project are features such as: • 3,692 new residential units within 8 residential towers ranging in heights between 38 to 50 storeys; • Approximately 15,200 square metres of non-residential space, plus: o A new 3,844 square metre library; o A 5,808 square metre Seniors and Youth Cente (SYC); o A 4,600 square metre Performing Arts Centre (PAC); and o A road network with a mix of municipal roads and private streets and blocks. Viewing potential socioeconomic contributions The socioeconomic contributions of the proposed project can be viewed in several ways. Firstly, through economic impact modelling, the potential impacts to Gross Domestic Product (GDP), job creation, and to taxes at various levels can be advanced. Thisdocument builds on potential quantifiable benefits, to qualitatively describe a number of potential socioeconomic contributions and benefits the project could yield.. To do this, Deloitte LLP first reviewed documentation provided by the City of Pickering on the nature of the project. Deloitte LLP then added targeted research that further exemplified how specific features of the project, could drive socioeconomic benefits. We present our contributions into three categories: • Estimated quantified economic contributions; • Potential socioeconomic contributions during construction of the project; and • Potential socioeconomic contributions of the assets included in the City Center Project project(s) once operational. Approach to developing estimated quantified economic contributions The capital expenditure by the City of Pickering for the project can be expected to generate economic activity in both the province and Ontario thereby contributing to the province’s GDP. In addition, the project can be expected to create and maintain jobs and to generate government tax revenues at the municipal, provincial and national levels. In this section, we summarize the quantified estimated economic contributions associated with the City of Pickering spending on the City Center Project.1The economic contributions are estimated using an “Input-Output” methodology, which 1 Capital expenditures have been provided by the City of Pickering and have not been independently reviewed as part of this analysis. 1 traces how spending associated with the City’s capital expenditures contributes to the economy by creating demand for goods and services across difference industries.2 While the construction of 3,692 new residential units can be expected to generate economic contributions, they are not estimated as part of this projection as further information is required on the distribution of expenditure between the City of Pickering and relevant private partners. Estimated Economic Contributions The total capital expenditure for the City Center Project is evaluated at $207.7M3. It is estimated that the City of Pickering’s capital expenditure during the construction period could yield the following economic contributions: • $0.96 of Gross Domestic Product for every dollar spent by the City of Pickering on the City Center Project could be generated for the Ontario economy; • $199.5M in GDP, as well as 1,779 jobs (FTEs) created or maintained in Ontario; • $33.9M in provincial and municipal government revenues via taxes, of which $18.9M in provincial taxes and $15.0M in municipal taxes. The aforementioned estimates account for the direct, indirect and induced economic contributions of the construction of the City Center Project and are reported in 2021 Canadian dollars. The table below provides more details: Table 1 -Detailed estimated economic contributions Construction Increasing flow through foot traffic: A construction project(s) of this scale can 2 Please see Appendix for additional details on the methodology used to develop quantifiable estimates 3 A detailed overview of the sequencing and timing of each component of the City Center Project was not provided. We assume this expenditure will occur during the overall City Center Project construction period. 2 be expected to stimulate several forms of positive economic contributions associated with the inflow of new workers/specialists into the community to work on the site. These workers can enhance the flow-through foot traffic to local businesses thereby enabling the City of Pickering to capture new forms of spending within the community. These economic impacts could be articulated and measured in several ways including but not limited to: o New spending in the community ($); o Job creation/retention (#s) for local businesses as a result of the new spending; o GDP impacts ($); and o Contributions to municipal, provincial and/or federal taxes associated with new spending ($). Notably, this temporary influx of spending during the construction phase of the project(s) can help assist in economic recovery in the region, given significant job losses and declines in revenues for local businesses affected by COVID-19 related impacts and lock-down measures. Operations Once each of the dimensions of the City Center Project have been constructed and are operational, a number of important economic contributions can be expected: Enhanced transportation can help to drive positive economic outcomes: By leveraging future pedestrian, cycling, transit and street networks, this project will create traffic calming measures and visually interesting streetscapes, helping make daily commuting more reasonable. In recent years, a key issue the Greater Toronto Area has experienced is growing commuter congestion tied to population growth. In Pickering alone, the municipality has forecasted a population increase by 62 percent over the 2021 to 2040 timeframe.4 The proposed investments could help to accommodate new residents, and reduce travel times for light vehicles and trucks throughout the city centre. Improved transportation could also improve the connectivity between Pickering and the GTA region, furtherenabling the flow of goods and services, thereby contributing to positive economic development outcomes (i.e., growth in business activity, enhanced access to localbusinesses/services etc). Current estimates of the project assume that the area road network will continue to operate under busy, but acceptable, traffic conditions under future conditions, with a high likelihood that a modal shift towards transit will result inbetter traffic operations.5 Given the proximity to the GO Station, an option for the reduction of parking rates is being considered, as is the exploration of ride sharing to serve the 4 City of Pickering, “Detailed 20 Year Population Forecast”, page ii. 5 BA Group, “Pickering City Master Plan Review”, page 66. 3 proposed residential buildings. New road infrastructure could also help to yield environmental and health benefits by supporting green vehicle adoption, incentivizing mode shift from auto to transit and reducing road congestion. For example, the project plan seeks to provide a safe, convenient, and enjoyable environment for pedestrians and cyclists dedicated bicycle parking in its plans. As well, the project will encourage the installation of electric vehicle charging stations, having the necessary infrastructure to support their adoption within facilities, therefore avoiding costly retrofits. New housing units in the community Enhancing housing stock in the community: Across all levels of government in Canada, it is widely recognized that there are significant pressures facing the Greater Toronto Area housing market. Importantly, this investment can be seen to exemplify commitments made in the municipality’s Housing Strategy Study, focused on developing a diverse range of housing, including affordable, age- friendly, and accessible housing in Pickering over the next 10 years, which also supports fostering a diverse workforce.6 The addition of approximately 3,692 new residential units is aligned to national action on housing and could help Pickering to increase available housing stock. These new units can support further real estate investment in the community and increase the supply of available housing in the community. This feature of the project is notable as several reviews of Ontario’s economic landscape identify significant pressures associated with a restricted supply of housing in communities. Greater and more varied housing supply helps create competition in the market, thereby enabling new entrants, and promoting home ownership, especially amongst younger families. Notably, the City Center Project includes the construction of a 50 storey building intended to provide rental units which are lacking in the City. Accessible housing units could help to alleviate some of the demand for this type of housing in the community and thereby support enhanced socioeconomic mobility for families that have been shut out of the housing market. An increase in supply of rental housing could also contribute to the stabilization of high rental costs driven by a lack of supply.7 Notably, high rental rates associated with tight demand disproportionately affect low-income renters across Canada, who are at the highest risk of eviction into homelessness, and disproportionately more likely to be racialized, young people, single parent households and immigrants.8 As more families move into the community, broader spending in the municipality 6 City of Pickering, “Housing Strategy Study”, website. 7 Info on the share of affordable housing units are not available to Deloitte at this time. 8 Max Bell School of Public Policy & CMHC, “A Path Forward: Housing Discrimination in Canada: Urban Centres Rental Market & Black Communities”, 2021 4 can be expected to increase, which can further support economic opportunities in the region. Moreover, as new families choose to live in Pickering, the community’s diversity and community profile can be expected to evolve and grow and help contribute to a stronger community profile. This community development could also support the development of new businesses servicing local residents, which would create further streams of job creation, and positive GDP impacts. New community infrastructure assets: The project will see the development of several new community assets that can be expected to drive important socioeconomic contributions. Library • The proposed 3,844 square metre library, could directly support and help set- up families and young people for success; • As a nexus point for the community, the library could provide stable employment, and volunteer opportunities through potential programming and community engagement opportunities (i.e., book clubs, after school programs, librarian research supports, skills development courses), as well as enhancing and supporting strong child/youth literacy outcomes; • Moreover, libraries can support local child literacy: o Early literacy is linked to better educational attainment levels employment opportunities, and earning potential, thus helping young children develop a strong foundation for literacy skills, both benefits for their health, and the community at large;9 o Furthermore, for young women, data suggests that higher literacy proficiency translates to more educational credentials, which has an 10impact on future income potential. Senior and Youth Centre (SYC) The proposed 5,808 square metre SYC could help to foster astronger community, with healthier citizens in several ways: • The SYC could provide a wide variety of drop-in and registered recreational and cultural programs for seniors and youth, with facilities including: a gymnasium, a multipurpose room, an art room, and a gaming and lounge space; • Forums in which youth and seniors can interact or participate in dedicated or joint programming can help to build a sense of community, and transfer skills and experiences that can improve quality of life; • As a gathering point for the community, the SYC could create new job and 9 Deloitte Canada, “An Economic Overview of Children’s Literacy in Canada”, November2020. 10 Ferguson, Sarah-Jane et al., “Does reading proficiency at age 15 affect employment earnings in young adulthood?” 5 volunteer opportunities and also be a partner to other community or government organizations seeking to achieve similar outcomes; • Specifically, community services at the SYC could contribute to morepositive mental health outcomes for youth; o This feature is notable, as self-reported mental health for youth has been worsening over the last five years;11 o The effects of the pandemic related lock down have further exacerbated this challenge;12 • For seniors, the SYC serves as a dedicated centre where they can partake in shared activities,receive support or interact with peers could also help to combat a central challenge – isolation, and defend against mental health concerns worseningdue to the COVID-19 pandemic; • In 2020, Ontario had approximately 2.6 million citizens who were aged 65 years or older;13 o Seniors centres allow our elders to avoid social isolation and poor mental health conditions and feel part of an active community and focus on a better quality of life, as they live longer, healthier lives; o This potential benefit is notable given the significant stresses seniors have faced as a result of COVID-19 lockdowns which in many cases, limited access and engagement with family and friends; and • Venues like this can also support advancing caregiving services for local seniors,which can alleviate financial, physical and mental pressures for family/caregivers o For example, if services are offered at the SYC, caretakers can take time to focus on skills development, employment, volunteering or other forms of activity that benefit the economy, and society. Performing Arts Centre (PAC) The proposed 4,600 square metre PAC will enable more than just community expression, public art and skills development. This venue could serve as an agent of new economic activity associated with several dimensions: o New employment opportunities at the PAC; o Revenue generation via ticket sales; o Salaries and wages of performers (and associated spending); o Attraction of new spending in the community -notably, performers and spectators from outside of Pickering can be expected to visit and stay in the City to participate in shows, thereby creating additional economic activity; o The creation of new volunteer and community service placements which can lead to skills development and training; and 11 Statistics Canada, “Portrait of youth in Canada: Data report”, 2021. 12 Statistics Canada, “Portrait of youth in Canada: Data report”, 2021. 13 Statistics Canada. Table 17-10-0005-01 Population estimates on July 1st, by age and sex 6 o The purchase of new goods and services to support performances, potentially creating business opportunities for local businesses. The economic contributions of the PAC are observable. In 2018, the performing arts sector generated salary and wages worth $142 million inOntario, with $71 million provided in contracting fees, for venue rentals for example. This sector also engaged 14 thousand volunteers in the province, representing over 745 thousand hours of community service.14 For Ontario, the performing arts sector generated total revenues of $137million, of which nearly 75 percent came through the sales of single tickets.15 Enhancing Pickering’s value proposition for business investment Several factors can inform the site selection choices businesses make. The extent to which a community can provide a hospitable, inviting community with a high standard of life to attract and retain top talent is one of them. The aforementioned community assets associated with the project can reinforce Pickering’s value proposition for new business investment, while amplifying the community’s existing comparative advantages. Specifically, given that several sectors of the economy have embraced work from home approaches following the COVID-19 pandemic, with the development of such new assets and amenities, Pickering could be increasingly viewed as a viable alternative for remote/mobile office locations given its proximity to downtown Toronto. Potential increased business investment in the City will drive several positivesocioeconomic impacts, including: • Supporting higher productivity which tends to increase incomes and standards of living; • Introducing potential competition into the community thereby supporting the development of new products and services; • Creating new job opportunities, further enriching the regional economy and labourmarket; and • Driving a critical component of accelerating economic recovery. This City Center Project investment could also directly complement Pickering’s economic development objectives, by enhancing the value proposition communicated by partners such as Invest Durham or Invest Ontario to global investors. In particular, given the cross-cutting nature of road investments, and benefits to the standard of living within the community, Pickering’s efforts to attract and retain investment in prioritysectors/opportunity areas such as advanced 14 Statistics Canada. Table 21-10-0184-01 Performing arts, salary expenses and volunteerstatistics, not-for-profit, 2018. 15 Statistics Canada. Table 21-10-0188-01 Performing arts, sources of performancerevenue, not-for-profit (x 1,000) 2018. 7 manufacturing, and the ‘E3N Cluster’ (Energy, Environmental and Engineering) could be supported.16 Opportunities for businesses to leverage and grow in Pickering include: a vibrant business infrastructure and a healthy community, its proximity to the GTA area, and access to major markets in Canada and time saving access to the American markets of Buffalo and Detroit. In addition, the municipality has amongst the lowest business costs in the GTA and is competitive globally, with a diverse and stable regional economy, a skilled labour force with over 56% of its population having a post-secondary credential with access to 5 universities and 6 colleges. As well, Pickering prides itself on providing businesses available land to grow, and a high quality of life to support its citizens.17 Potential positive impacts on surrounding property value: Analogous to the potential positive impacts to business investment, property values for existing and new housing in and around the new community assets could be seen as more attractive to buyers. Proximity to community assets such as a new library, a dedicated PAC, and SYC, could increase the perceived attractiveness of a property in the community. Taken together, with the new community assets and housing, these unitswill hold positive tax implications for the municipality as rising property values could lead to higher property tax revenues which can be invested into the community. In addition, the initiative includes investments designed to develop the resiliency of roads and infrastructure thereby potentially managing the long-term fiscal expenditures associated with repairs. The value for the City of Pickering: When collectively reviewed, the City Center Project investment represents an important series of investments for the local economy and community. As summarized here, a number of potentially lasting socioeconomic benefits could be observed as a result of the new investments. The immediate spike in economic activity that can be expected during construction, coupled with the longer-term benefits gained from new investments could advance the standard of living of the community, and help contribute to localeconomic competitiveness. The expected enhanced transportation networks will help local businesses and the community more easily access one another – leading to positive economic outcomes. The addition of 3,692 new residential units is aligned to interests at both the national and provincial levels on enhancing housing supply, and could help to increase housing stock in the community. Finally, the new community infrastructure in the form of a new library, a Senior and Youth Centre, and a Performing Arts Centre, can help support positive learning, health, mental health and skills outcomes, creating new opportunities for the community to congregate and connect 16 City of Pickering. Business Sectors. Web source: https://www.pickering.ca/en/business/businesssectors.aspx 17 Economic Development Office of Pickering, “Top Ten Reasons to Invest in Pickering”. 8 with one another and create new business opportunities for Pickering. 9 Appendix Modelling approach The City of Pickering’s economic contribution is estimated across four commonly used variables: • Gross Domestic Product-GDP (Value-added): GDP is the “total unduplicated value of goods and services produced in the economic territory of a country or region during a given period”. GDP includes household income from current productive activities (wages and salaries). In the context of our study, GDP serves as a measure of the total economic value-added resulting from the City’s capital spending; • Labour income: Labour income represents the total earnings of employees (including employees of suppliers to the projects), consisting of wages and salaries as well as supplementary labour income (such as employer’s contributions to pension funds, employee welfare funds, the Unemployment Insurance Fund and Workers Compensation Fund); • Employment: In our analysis the employment impact is measured in terms of full-year equivalent positions for ongoing employment (i.e., employment impact associated with annual expenditures). Full-year equivalent positions are counted according to their duration and not according to whether they were employed on a full-time or part-time basis. That is, two part-time employees would be counted as one full-year equivalent if the total time they spent on the job adds up to one year. This approach is consistent with standard statistical terminology; and • Government revenue: In this analysis, government revenues includes provincial, and municipal products and production taxes such as sales tax (GST), payroll taxes, property tax, and excise duty. This report also includes corporate income taxes and personal income taxes. For each variable, the economic contribution is estimated at three levels: • Direct impact associated with the total revenue generated from EPEA’s services; • Indirect impact associated with the businesses that provide goods and services to EPEA for the purpose of overhead and operations; and • Induced impact associated with the spending of wages and salaries earned by the employees and suppliers of EPEA. Examples include purchases of goods and services at the household level. Statistics Canada Input-Output Modelling In Canada, the authoritative and comprehensive source for calculating economic variables is the Statistics Canada input-output model (2017). This model estimates the impact of demand shocks at a provincial level using relationships between products/services, industries, and inter-provincial trade at the provincial and national jurisdictional levels. 10 Input-Output Modelling Input-output models are used to simulate the economic impact of an expenditure on a given basket of goods and services or the output of one of several industries. Input- output analysis uses data on the flow of goods and services among various sectors of the economy, and attempts to model how an expenditure, increase in demand, or investment ripples through a region’s economy. This is done by mapping the production of products and service by each industry, and identifying the intermediate inputs used in the production of each final product or service used by consumers, sold as an export, or purchased by government. The model can then aggregate all of the employment and value-added impacts generated in the supply chain as commodities are produced. Input-output models also consider the role of imports, which tie the supply chain to the global economy. This data is combined into a single model of the economy which can be solved to determine how much additional production is generated by a change in the demand for one or more commodities or by a change in the output of an industry. Assumptions and Limitations of the Input-Output Model The Statistics Canada input-output model is the industry standard for estimating economic benefits, however it does present the following key assumptions and limitations: • The model reflects a simplified macroeconomic structure; • The model does not include some variables of interest for macroeconomic analysis, such as interest rates or corporate income taxes; • The model assumes that the Canadian economy has the spare capacity available to produce the goods and services stimulated by the economic shock. Deloitte’s estimates provide a snapshot of the economic activity likely to be associated with the City’s capital spend. However, our results will not take account of the opportunity cost of resources used. As such, the estimates do not represent net new economic impacts. 11 Attachment #7 to Report FIN 15-21 Canadian Standard Form of Contract for Architectural Services DOCUMENT SIX Edition ADAPTED FOR: Corporation of the City of Pickering For the Project: The Pickering City Centre Library With the Architect: architectsAlliance - A Partnership of Corporations aA Project No. 21904 A x RAIC Authorization Seal Here The Document within this cover is protected by copyright and when an authorization seal is a xed the contract is an authorized copy of the Canadian Standard Form of Contract between Architect and Consultant. The Royal Architectural Institute of Canada Canadian Standard Form of Contract for Architectural Services DoFument Si[ 2018 Edition This document has been developed by the Royal Architectural institute of Canada (RAIC) on behalf of the architectural profession in Canada. EnTuiries on the application and use of this document should be directed to the Practice Advisors of the appropriate Provincial Association of Architects. Suggestions on the development of standard contract documents can be forwarded in writing to: The Royal Architectural Institute of Canada Suite 330 55 0urray Street Ottawa, Ontario .1N 503 © Copyright 2018 0ust not be copied in whole or in part without written permission of the Royal Architectural Institute of Canada Contents Agreement pages AF1 to AF4 A1 Date A2 Client A3 Architect A4 Project A5 Place of the Work A6 Owner A7 Construction Budget A8 Construction Schedule A9 Construction Contract A10 Professional Services A11 Consultants A12-A19 Fees and Reimbursable Expenses A20-A24 Professional Liability Insurance A25 Other Terms of Contract Signing page Definitions pages D1 and D2 General Conditions pages GC1 to GC7 GC0 Preamble GC1 Architect’s Responsibilities and Scope of Services GC2 Additional Services GC3 Client’s Responsibilities GC4 Construction Budget, Construction Cost Estimate and Construction Cost GC5 Architect’s Role and Authority During Construction GC6 Use of Documents GC7 Standard of Care GC8 Indemnification GC9 Limitations of Liability GC10 Insurance GC11 Termination and Suspension GC12 Payments to the Architect GC13 Percentage-Based Fee GC14 Dispute Resolution GC15 Miscellaneous General Conditions Schedules Schedule A – Services (tabular) and Schedule B – Reimbursable expenses (tabular) and Schedule C – Time-Based rates (Tabular) Supplemental Schedules Schedule A1 – Predesign Services Schedule A2 – Building Condition Report Services Schedule A3 – Services for a Simple to Average Project Schedule A4 – Custom Residential Design Services Schedule A5 – Interior Fit-up Services Document Six – 2018 Edition © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract for Architectural Services – Document Six without an authorization seal constitutes an infringement of the copyright. _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________ ____________________________________________________ ___________________________________________________________ ______________________________________________________ Canadian Standard Form of Contract for Architect’s Services DOCUMENT SIX 2018 Edition Agreement A1 This agreement is made on: August 01, 2019 (Date) A2 between the Client: Corporation of the City of Pickering c/o twopointO partners inc. (Name) 161 Bay Street, Suite 2700 (Address) Toronto, ON M5J 2S1 gbuckles@twopointO.org (E-mail) (Fax no.) architectsAlliance - A Partnership of Corporations (architectsAlliance) A3 and the Architect: _____________________________________________ (Name) 205-317 Adelaide Street West (Address) Toronto ON M5V 1P9 (E-mail) (Fax no.) A4 for the following Project: The Pickering City Centre Library A5 at the following Place of the Work: Pickering ON A6 The owner, if other than the Client, is: n/a A7 The Construction Budget is: 29,600,000.00$ ____________________________________________ A8 The Client’s anticipated dates for construction are: .1 Commencement of construction: August 01, 2020 .2 Ready-for-Takeover: ______________________________________________________________December 01, 2023 A9 The anticipated Project delivery method and form of Construction Contract are: .1 Project delivery method: General Contractor .2 Form of Construction Contract: CCDC-2, 2008 (Modifed) A10 The Architect shall provide the Services described in Schedule A – Services OR Schedule A___ - __________________________ whichever is attached to this contract. The Client shall be responsible for other services as indicated in Schedule A – Services OR Schedule A___ - __________________________ whichever is attached to this contract. Document Six – 2018 Edition AF 1 of 4 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. ______________________________________ _____________________________________ ______________________________________ _____________________________________ ______________________________________ _____________________________________ ______________________________________ _____________________________________ A11 The following Consultants have been or will be engaged on the Project: .1 by the Architect: TMP, Entuitive, Gradient Wind, EQ, MBII, Resource Planning Group, Ballantyne, Cini-Little, Entro, Ankor Jensen Hughes, Aercoustics, KJA, .2 by the Client: Surveyor, Testing & Inspection, Geotechnical, Hydrological A12 The fee for the Services, excluding any Value Added Taxes, shall be comprised of one or more of the following as indicated in Schedule A - Services: 2,619,270.85.1 A fixed fee of $____________________________ n/a.2 A percentage-based fee calculated as ___________% of the Construction Budget, the Construction Cost Estimate, and the Construction Cost as described in GC 13 – Percentage-Based Fee. .3 A fee based on time-based rates for personnel employed by the Architect or the Architect’s Consultants as stated in Schedule C – Time Based Rates. .4 Other: A13 Payment of a fixed or percentage fee shall be apportioned to the phases of the Services as follows: .1 Pre-design phase: .2 Schematic design phase: .3 Design development phase: .4 Construction documents phase: .5 Bidding or negotiation phase: .6 Construction phase: .7 Post-construction phase: Total: 100 % _____% _____% _____% _____% _____% _____% _____% 1.0 15.0 20.0 39.0 0.00 25.0 0.00 A14 Reimbursable Expenses shall be payable on the basis stated in Schedule B – Reimbursable Expenses. A15 The Client shall pay the Architect, upon execution of this contract, a retaining fee in the amount of $____________________, which shall be applied to the Architect’s last invoice.0.00 A16 The Architect shall issue invoices for the Architect’s fee and Reimbursable Expenses, plus Value Added Taxes, in accordance with GC 12.1. Invoices shall be issued monthly, unless the Client and the Architect agree otherwise. Document Six – 2018 Edition AF 2 of 4 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. A17 The Client shall pay the Architect within 30 days after date of issuance of an invoice or within such time as is prescribed by the law of the Place of the Work, whichever is earlier. An invoice unpaid after 30 days shall bear interest, calculated monthly at the rate of ________% per annum. 2.0 A18 The addresses for official notices in writing between the Architect and the Client shall be as stated in Articles A2 and A3. The delivery of such notices shall be by hand, by courier, by first class mail, by facsimile, or by other means of electronic communication during the transmission of which no indication of failure of receipt is communicated to the sender. A notice shall be deemed to have been received by the addressee on the date of delivery if delivered by hand or by courier or, if sent by mail, it shall be deemed to have been received five calendar days after the date of mailing, not counting days without mail service. If sent by electronic means, a notice shall be deemed to have been received on the date of its transmission, provided that if such day is not a working day, or if received after the end of normal business hours on the date of its transmission at the place of receipt, then it shall be deemed to have been received at the opening of business at the place of receipt on the first working day next following the transmission. Any change in address of the parties for official notices shall be communicated by official notice in accordance with this Article. A19 If, at any time during provision of the Services, the Construction Cost Estimate or the lowest compliant bid or the lowest negotiated proposal exceeds the Construction Budget, and the excess is less than or more than 15% as the case may be, the provisions of GC 4.4, or GC 4.5 and 4.6, shall apply. Alternatively, if the Architect and the Client wish to agree to a percentage other than 15%, that percentage shall be ____%. A20 The professional liability insurance to be carried by the Architect pursuant to GC 10.1 shall be a claims made policy with limits of not less than $ ______________________ per claim, with an aggregate limit of not less than 5,000,000.00 5,000,000.00$ _________________________ within any policy year. This policy shall be maintained continuously from the commencement of the Services and, subject to commercial availability, for a minimum of three years after the Ready-for-Takeover date. The Client acknowledges that the actual amount of insurance available at any given time under a claims made policy will be dependent on the aggregate amount of all claims made during a policy year. OR (Strike out either A20 or A21.) A21 The Client shall arrange and pay for project specific professional liability insurance in the amount of $__________________ , with a maximum deductible of $ _________________ . This policy shall be maintained continuously from the commencement of the Ready-for-Takeoveryears after the and for ______ Services date. 5,000,000.00A22 The Architect’s liability pursuant to GC 9.1.2 shall be limited to: $________________________________. A23 The general liability insurance to be carried by the Architect pursuant to GC 10.2 shall have limits of not less than $ ________________________ per occurrence. 5,000,000.00 OntarioA24 This contract shall be governed by the laws of ___________________________________. A25 This contract represents the entire and integrated contract between the Client and the Architect and supersedes all prior negotiations, representations, agreements, or contracts, either written or oral. This contract may be amended only in writing signed by the Client and the Architect. Document Six – 2018 Edition AF 3 of 4 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. ________________________________________________ ________________________________________________ _______________________________________________ _______________________________________________ _______________________________________________ _______________________________________________ Signatures Client agent and manager, twopointO partners inc. CORPORATION OF THE CITY OF PICKERING, by its Name: Principal George Buckles Title: I have authority to bind the corporation Witness Name: Title: Architect architectsAlliance -a partnership of corporations by its partners PETER CLEWES ARCHITECT LTD. Per: Peter Clewes I have authority to bind the corporation STEPHEN WELLS ARCHITECT LTD. Per: Stephen Wells I have authority to bind the corporation ADAM FELDMANN ARCHITECT LTD. Per: Adam Feldmann I have authority to bind the corporation Witness Name: Title: Document Six – 2018 Edition AF 4 of 4 Definitions The following Definitions apply to this contract. References to the singular shall be considered to include the plural as the context requires. Additional Services Additional Services are the services that are not included as Services to be provided by the Architect in Schedule A – Services at the time this contract is made but which, with the written agreement of the Client and Architect, are subsequently added to the Services identified in Schedule A – Services. Architect The Architect is the person or entity identified in Article A3 of the agreement and who is registered, licensed or otherwise authorized to use the title "Architect" and to practice architecture at the Place of the Work. Client The Client is the person or entity identified in Article A2 of the agreement. Construction Budget The Construction Budget is the maximum amount of money, including contingency allowances, which the Client is prepared to spend on the Construction Cost. This amount is stated in Article A7 of the agreement or may be an adjusted amount determined or approved by the Client under the terms of this contract. Construction Contract The Construction Contract is the contract between the Client and the Constructor and is comprised of the Construction Documents and other documents that identify the contractual rights and obligations of the Client and the Constructor. Construction Cost The Construction Cost is the total cost of the Work to the Client to construct all elements of the Project designed or specified by, or on behalf of, or as a result of coordination by, the Architect, consisting of the Construction Contract price, cost of changes to the Work during construction, construction management fees or other fees for the coordination and procurement of construction services, and all applicable taxes, except Value-Added Taxes, which shall be excluded. Construction Cost excludes the compensation of the Architect and Consultants, land cost, land development charges and other professional fees. Construction Cost Estimate The Construction Cost Estimate is the anticipated total Construction Cost at the anticipated time of construction, including contingency allowances, as determined or agreed to by the Architect from time to time, the accuracy of which corresponds to the available level of detail of design development and the Construction Documents, and the extent of construction completed. Construction Documents The Construction Documents are the drawings, specifications and other documents appropriate to the size and complexity of the Work, used to describe the size, quality, and character of the entire Work, including architectural and where applicable structural, mechanical, electrical, and other systems, materials and elements, setting forth in detail the requirements for the Work. Constructor For the purposes of this contract, the Constructor is the person or entity engaged by the Client under the Construction Contract to perform some or all of the Work. It does not mean “constructor” as this term may be defined in any provincial or territorial legislation. Consultant A Consultant is a person or entity engaged by the Client or the Architect to provide specialized services or services supplementary to those provided by the Architect. Document Six – 2018 Edition GC 1 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. General Review General Review, which is synonymous with field review, is review by the Architect and Consultants during visits to the Place of the Work and, where applicable, at locations where building components are fabricated for use at the Place of the Work, at intervals appropriate to the stage of the construction that the Architect and Consultants, in their professional discretion, consider necessary to become familiar with the progress and quality of the Work and to determine that the Work is in general conformity with the Construction Documents and to so report, in writing, to the Client, the Constructor, and authorities having jurisdiction. Instruments of Service Instruments of Service are representations, in any medium of expression, of the tangible and intangible creative work that forms part of the Services or Additional Services. Place of the Work The Place of the Work is the designated site or location of the Work identified in Article A5 of the agreement. Project The Project is the total undertaking contemplated by the Client, of which the Work may be the whole or a part. Ready-for-Takeover Ready-for-Takeover is as defined in the Construction Contract or, if not defined in the Construction Contract, the date of substantial performance or completion of the Work as defined in the lien legislation applicable to the Place of the Work. Reimbursable Expenses Reimbursable Expenses are those expenses, necessarily incurred by the Architect and Consultants engaged by the Architect, in the interests of the Project, as identified in Schedule B – Reimbursable Expenses and which are payable by the Client in addition to the fee for the Architect’s Services. Services The Services means the professional services identified in Schedule A – Services including those performed by the Architect, the Architect’s employees, and the Consultants engaged by the Architect. Toxic or Hazardous Substances or Materials Toxic or Hazardous Substances or Materials are any solid, liquid, gaseous, thermal or electromagnetic irritant or contaminant, and include, without limitation, pollutants, moulds, asbestos, biocontaminants, biohazards, nuclear, and special wastes, whether or not defined in any federal, provincial, territorial or municipal statutes or regulations. Value Added Taxes Value Added Taxes are those taxes levied by the federal or any provincial or territorial government including the Goods and Services Tax, the Quebec Sales Tax, the Harmonized Sales Tax, and any similar tax, the collection and payment of which are imposed by tax legislation. Work The Work means the total construction and related services required by the Construction Documents. Document Six – 2018 Edition GC 2 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. General Conditions GC0 Preamble 0.1 The terms of this preamble are incorporated into and form part of this contract. 0.2 This contract is entered into for the mutual benefit of the Client and the Architect for the development of the Project. 0.3 This contract shall be interpreted fairly and reasonably. 0.4 The relationship between the Client and the Architect shall be one of mutual respect, support, openness, and good faith. 0.5 The final design of the Project is unknown at the outset of this contract and thus exploration of solutions and adaptability to changing circumstances are essential aspects of the relationship between the Client and the Architect. This contract anticipates and accommodates necessary adjustments during the Project’s design and construction. 0.6 The Client acknowledges that the Architect has a duty of care arising by law and from the Architect’s professional status and professional code of ethics. 0.7 The Client and the Architect acknowledge that the success of the Project is reliant on a relationship of mutual respect, support, openness, and good faith with the Constructor. GC1 Architect’s Responsibilities and Scope of Services 1.1 The Architect shall: .1 perform those Services identified as the Architect’s responsibilities in Schedule A – Services, .2 perform the Services with professional skill and care, consistent with the orderly progress of the Services and the Work, .3 authorize, in writing, a person to act on the Architect’s behalf (in the absence of such authorization, the signatory on the agreement is deemed to be the Architect’s authorized representative), .4 utilize key personnel where so identified and request the Client’s approval of any change to key personnel, which approval shall not unreasonably be withheld, .5 engage those Consultants identified in Article A11.1 of the agreement under contracts that incorporate applicable terms and conditions of this contract, .6 request the Client’s approval of any change to those Consultants identified in Article A11.1 of the agreement, which approval shall not be unreasonably withheld, .7 advise the Client in the interest of the Project, .8 advise the Client of the need to engage Consultants or other third parties when necessary, .9 perform the Services of the coordinating professional who: .1 manages the communications among all Consultants identified in Article A11 of the agreement and with the Client, .2 provides direction to all Consultants identified in Article A11 of the agreement as necessary to give effect to all design decisions, and .3 reviews the services of all Consultants identified in Article A11 of the agreement to identify matters of concern and monitor Consultants’ compliance with directions, .10 maintain appropriate administrative, financial, and other Project related records, including records of Reimbursable Expenses and any Services for which the fee is based on hourly rates, and make these records available to the Client for review upon request, and .11 perform the Services with impartiality and, except with the Client’s knowledge and consent, neither engage in any activity, nor accept any commission, discount, payment, gift, or other benefit that would compromise the Architect’s professional judgment or that would cause, or would appear to cause, a conflict of interest. GC2 Additional Services 2.1 Upon recognizing a need to perform Additional Services, either the Architect or the Client shall promptly notify the other explaining the facts and circumstances. 2.2 The Architect and the Client acknowledge that the need for Additional Services may arise for reasons that include, but are not limited to: Document Six – 2018 Edition GC 3 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. .1 changes to the Client’s program of requirements, .2 changes to the Project size, scope, quality, or complexity, .3 changes to the Client’s Construction Budget, .4 changes to the Client’s schedule, including the anticipated dates for construction as stated in Article A8 of the agreement, .5 changes to the project delivery method or the form of Construction Contract as stated in Article A9 of the agreement, .6 Client instructions that are inconsistent with instructions or written approvals previously given by the Client, .7 the Client’s failure to render decisions in a timely manner, .8 the enactment of new or revised statutes, regulations, codes, or by-laws, .9 information provided by the Client, Consultants, or other third parties engaged by the Client that differs materially from actual conditions, .10 interpretations by authorities having jurisdiction that differ from the Architect’s interpretations of statutes, regulations, codes or by-laws, which differences the Architect could not have reasonably anticipated, .11 acceptance of Constructor proposed substitutions that require revisions to the Construction Documents, .12 an unreasonable number or complexity of Constructor claims, requests for information (RFIs) or proposed substitutions, .13 replacement of work damaged or destroyed during construction by fire, flood, or other cause, .14 major defects or deficiencies in the Work or default by either the Client or the Constructor under a Construction Contract, and .15 dispute resolution proceedings arising out of the Construction Contract. 2.3 The Architect shall only perform Additional Services with the prior written agreement of the Client and the Architect. GC3 Client’s Responsibilities 3.1 The Client’s responsibilities shall include those items identified as Client responsibilities in Schedule A – Services. 3.2 The Client shall provide to the Architect the Project objectives, constraints, criteria and the following information, as applicable: .1 Legal description and surveys describing physical characteristics, legal limitations and utility locations for the Place of the Work and adjoining properties showing, as applicable, grades and lines of streets, alleys, pavements and structures, adjacent drainage, rights of way, restrictions, easements, encroachments, zoning, deed restrictions, site boundaries and contours, locations and dimensions of existing buildings, other improvements, trees, and information concerning utility services, both public and private, above and below grade, including inverts and depths. .2 Subsurface investigation reports including test borings, test pits, determination of soil bearing values, percolation tests, a list of and evaluations of Toxic or Hazardous Substances or Materials present at the Place of the Work, ground corrosion and resistivity tests, including necessary operations for anticipating subsoil conditions, with appropriate professional recommendations. .3 Air and water pollution tests, tests for Toxic or Hazardous Substances or Materials, structural, mechanical, chemical and other laboratory and environmental tests, inspections, field tests and reports with appropriate professional recommendations. .4 All available information on existing buildings, including investigation or condition reports, facility management drawings, and original drawings and specifications, via electronic media where possible and with the permission of copyright holders for the use of such information. 3.3 The Architect shall be entitled to rely upon the accuracy and completeness of all information provided by the Client, Consultants, or other third parties engaged by the Client. 3.4 The Client shall: .1 authorize in writing a person to act on the Client's behalf and shall define that person's scope of authority as necessary (in the absence of such authorization, the signatory on the agreement is deemed to be the Client’s authorized representative), .2 engage the Consultants identified in Article A11.2 of the agreement, Document Six – 2018 Edition GC 4 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. .3 ensure that all Consultants identified in Article A11.2 of the agreement are engaged under contracts compatible with this contract, provide upon the Architect’s request a copy of such contracts and evidence that such Consultants carry professional liability insurance acceptable to the Architect, and obtain the Architect’s written approval of any change to such Consultants, which approval shall not be unreasonably withheld, .4 engage a qualified Constructor under a Construction Contract compatible with this contract, .5 notify the Architect in writing of Client initiated increases or decreases to the Construction Budget, .6 give due consideration to the Architect’s advice and recommendations, and make necessary written decisions promptly, .7 review documents submitted by the Architect and give the Architect timely written decisions and approvals thereon for the orderly progress of the Services, .8 comply with all regulatory requirements applicable to the design and construction of the Project, including signing or arranging for signing of applications for, and paying for, all development approvals and permits required by authorities having jurisdiction, .9 if the Client is not the owner of the real property at the Place of the Work, obtain the owner’s written consent for the Work, .10 promptly notify the Architect in writing if the Client observes or otherwise becomes aware of any fault or defect in the Work or any nonconformity with the Construction Documents, and .11 promptly notify the Architect in writing if the Client is dissatisfied with any of the Services. GC4 Construction Budget, Construction Cost Estimate and Construction Cost 4.1 The Architect’s initial evaluation of the Construction Budget and any preliminary or updated Construction Cost Estimates that may be prepared by the Architect represent the Architect’s judgement as a design professional. However neither the Architect nor the Client has control over the cost of labour, materials or equipment, over the Constructor’s methods of determining bid prices, or over competitive bidding, market or negotiating conditions. Accordingly, the Architect cannot and does not warrant or represent that the lowest compliant bid or the lowest negotiated proposal will not vary from the Construction Cost Estimate and the Construction Budget. 4.2 The Construction Cost Estimate shall include contingency amounts to cover unforeseen or changing factors of cost including: .1 a design and pricing contingency to provide for the evolution of the design and refinement of the Construction Cost Estimate prior to the construction phase, .2 an escalation contingency to cover price escalation from the time a Construction Cost Estimate is prepared to the time when bids or proposals are received, and .3 a construction contingency to cover necessary design and construction changes that cause Construction Cost increases during the construction phase including those arising from GC7.3. 4.3 If the bidding or negotiation phase does not commence within three months after the Architect submits the completed Construction Documents to the Client, the Construction Cost Estimate shall be adjusted to reflect escalation in construction prices between the time of submission of the Construction Documents to the Client and the time when bids or proposals are sought. 4.4 If at any time the Construction Cost Estimate or the lowest compliant bid or the lowest negotiated proposal exceeds the Construction Budget by less than the percentage stated in Article A19 of the agreement, the Architect shall make appropriate recommendations to the Client and the Client shall: .1 provide written approval of an increase in the Construction Budget or, .2 co-operate with the Architect in decreasing the Project scope or quality as an Additional Service. 4.5 If at any time the Construction Cost Estimate or the lowest compliant bid or the lowest negotiated proposal exceeds the Construction Budget by more than the percentage stated in Article A19 of the agreement, the Architect shall make appropriate recommendations to the Client and the Client shall: .1 provide written approval of an increase in the Construction Budget, or .2 abandon the Project and terminate this contract in accordance with GC11 Termination and Suspension, or .3 co-operate with the Architect in decreasing the Project scope or quality. 4.6 If the Client proceeds under GC 4.5.3, and the overage is not due to extraordinary market conditions or other factors not reasonably foreseeable by or under the control of the Architect, then the Client may require the Architect to modify the design, the Construction Documents, or provide other Services, including Services related to re-bidding or re-negotiating of a Constructor’s proposal, as necessary to reduce the Construction Cost Estimate to within the percentage in Document Six – 2018 Edition GC 5 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. excess of the Construction Budget as stated in Article A19 of the agreement, in which case the Architect shall perform these Services for no additional fee. This shall be the limit of the Architect's responsibility under this GC 4.6. GC5 Architect’s Role and Authority During Construction 5.1 The Architect shall provide administration of the Construction Contract. 5.2 The Architect is not the Client’s authorized agent or representative for the purposes of the Construction Contract. 5.3 The duties, responsibilities and limitations of authority of the Architect as set forth in the Construction Contract shall be modified or extended only with the written consent of the Client, the Architect, and the Constructor. 5.4 The Architect shall: .1 perform General Review of the Work, .2 be, in the first instance, the interpreter of the Construction Contract, and shall make written interpretations and findings that are impartial and consistent with the intent of the Construction Documents, .3 manage or be included in all communications between the Client and the Constructor, .4 have the authority to reject work that does not conform to the requirements of the Construction Contract, .5 have the authority to require special inspection or testing of work, whether or not such work has been fabricated, installed or completed, and .6 have the authority to order minor adjustments in the Work that are consistent with the intent of the Construction Contract, when these do not involve an adjustment in the Construction Cost or an extension of the Construction Contract time. 5.5 Issuance of a certificate for payment by the Architect shall constitute a representation by the Architect to the Client, based on the Architect's General Review and on review of the Constructor’s schedule of values and application for payment, that the Work has progressed to the value indicated, that to the best of the Architect's knowledge, information and belief, the Work observed during the course of General Review is in general conformity with the Construction Contract, and that the Constructor is entitled to payment in the amount certified. 5.6 Issuance of a certificate for payment by the Architect shall not be a representation that the Architect has made any examination to ascertain how and for what purpose the Constructor has used the monies paid by the Client, or that the Constructor has discharged its legal obligations. 5.7 The Architect shall not be responsible: .1 for, nor be responsible for the discovery of, acts or omissions of the Constructor, subcontractors, suppliers or any other persons performing any of the Work, nor for failure of any of them to carry out the Work in accordance with the Construction Documents, .2 for, nor have control, charge, or supervision of construction means, methods, techniques, schedules, sequences or procedures, nor for safety precautions and programs required in connection with the Work, .3 for any and all matters arising from Toxic or Hazardous Substances or Materials, .4 for information provided by product manufacturers, nor .5 for providing Services that involve substantive modification of the Construction Documents, except as provided under GC 7.3 or except as Additional Services. GC6 Use of Documents 6.1 The Architect and the Consultants engaged by the Architect shall retain all common law, statutory and other reserved rights, including copyrights to the Instruments of Service and including moral rights. 6.2 Submission or distribution of any of the Instruments of Service to meet requirements of authorities having jurisdiction or for other similar purposes shall not to be construed as publication in derogation of the rights of the Architect and of the Consultants engaged by the Architect. 6.3 The Architect grants to the Client a non-exclusive license to use the Instruments of Service solely for the purposes of constructing, using, maintaining, altering, and adding to the Project. The Architect may rescind this license if the Client fails to fulfill its obligations under this contract, including failure to make payment for Services when due, or if the Architect terminates this contract pursuant to GC 11.4. 6.4 The Instruments of Service shall be used only by the Client for the intended purposes of the Project at the Place of the Work and shall not be offered for sale or transfer to third parties without the Architect’s written consent. Document Six – 2018 Edition GC 6 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. 6.5 Any alterations to or unauthorized use of the Instruments of Service shall be at the Client’s sole risk. Moreover, the Client shall indemnify the Architect and the Consultants engaged by the Architect against claims and costs (including legal costs) associated with such alterations or unauthorized use. In no event shall the Architect or the Consultants engaged by the Architect be responsible for any damages, costs, or other liability of any kind whatsoever arising in consequence of any alterations or unauthorized use. 6.6 If building information modelling (BIM) will be used for the Project, and the standard BIM Contract Appendix published by the Institute for BIM in Canada (IBC) is appended to this contract, copyright for the model and model elements shall be as set out in the BIM Contract Appendix. 6.7 This GC6 shall survive suspension, termination, or completion of this contract. GC7 Standard of Care 7.1 The Architect and the Consultants engaged by the Architect shall perform the Services to the standard of care ordinarily exercised by other members of their professions under similar circumstances, at the same time and in the same or similar locale. 7.2 The Client acknowledges that the standard of care prescribed in GC 7.1 does not require perfection. 7.3 The Architect and the Client shall promptly notify the other in writing upon discovery of any matters that require clarification or amendment of the Instruments of Service prepared by the Architect or a Consultant engaged by the Architect. The Architect shall provide the necessary Services to remedy or clarify such matters arising in the Instruments of Service. Such amendments shall be carried out on a without prejudice basis in a timely fashion so as to minimize disruption to the Project. 7.4 If the Client considers any matter to be a negligent error or omission of the Architect or of a Consultant engaged by the Architect, the Client shall promptly notify the Architect in writing accordingly. The Architect shall thereupon take the necessary steps to advise any Consultant so impacted, and to preserve its coverage under any professional liability insurance policy that may apply. GC8 Indemnification 8.1 Subject to GC 9 Limitations of Liability, the Architect and the Client shall each indemnify and hold harmless the other from and against all claims, demands, losses, costs, damages, actions, suits or proceedings in respect of claims by a third party, provided such claims are attributable to: .1 negligent performance of professional Services by the Architect or by those for whom the Architect is responsible in law, or .2 a breach of this contract by the party from whom indemnification is sought. 8.2 This GC 8 shall survive suspension, termination or completion of this contract. GC9 Limitations of Liability 9.1 Any and all claims, whether in contract or tort, which the Client has or may have against the Architect in any way arising out of, or related to, the Architect's duties and responsibilities, including those arising from GC 8 Indemnification, shall be limited in amount to the lesser of: .1 the amount of insurance coverage provided under Article A20 or A21 of the agreement that is available at the time the claim is made, or .2 the amount stated in Article A22 of the agreement. 9.2 The Architect shall not be liable, in contract or tort, for: .1 any alterations to the Architect’s design or to the Construction Documents made by the Client, the Constructor, or other third parties without the Architect’s written approval, .2 acts, omissions, or errors of the Client, of Consultants or other third parties retained by the Client, or of the Constructor, nor .3 for the result of any interpretation or finding of the Architect rendered in good faith in accordance with the Construction Documents. 9.3 The liability of the Architect and the Client with respect to any claims against each other, in contract or in tort, shall be limited to direct damages only and neither party shall have any liability whatsoever for consequential or indirect loss or damage incurred by the other party. GC10 Insurance 10.1 Unless the Client arranges and pays for project specific professional liability insurance as stated in Article A21 of the agreement, the Architect shall carry professional liability insurance under a policy that has limits not less than those stated in Article A20 of the agreement. 10.2 The Architect shall carry general liability insurance under a policy with limits not less than those stated in Article A23 of the agreement, from the date of commencement of the Services until one year after the Ready-for-Takeover date. Document Six – 2018 Edition GC 7 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. 10.3 The Architect shall require all Consultants engaged by the Architect to carry insurance. 10.4 Upon request, insurance policies of the Architect and of the Consultants engaged by the Architect shall be available for the Client’s inspection. 10.5 This GC 10 shall survive suspension, termination or completion of this contract. GC11 Termination and Suspension 11.1 If the Architect or the Client is adjudged bankrupt, or makes a general assignment for the benefit of creditors because of its insolvency, or a receiver is appointed because of its insolvency, the other party may, without prejudice to any other right or remedy it may have, terminate this contract by giving that party or receiver or trustee in bankruptcy notice in writing to that effect. 11.2 The Client may suspend performance of the Services or terminate this contract by notice in writing sent to the Architect. Upon receipt of such notice in writing, the Architect shall perform no further Services and shall take measures to mitigate costs incurred by the Architect as a result of the suspension or termination. 11.3 If the Client suspends performance of the Services through no fault of the Architect: .1 the Architect shall be entitled to be paid for all Services performed and Reimbursable Expenses incurred to the date of suspension, plus additional fees for demonstrable costs that the Architect reasonably incurs as a direct result of the suspension, .2 resumption of the Services shall be conditional upon an agreement in writing between the Client and the Architect regarding the time of the resumption of the Services and any additional fees payable by the Client as a result of the suspension, and .3 if there is no agreement to resume the Services within 60 calendar days after the date of the suspension, the Architect may terminate this contract upon providing a notice in writing to the Client. 11.4 If the Client is in default in the performance of any of the Client’s obligations under this contract, including but not limited to failure to make payments to the Architect when due, the Architect may suspend performance of the Services or terminate this contract by notice in writing sent to the Client. The Architect shall not be liable for any delay or damages the Client may suffer as a result of such suspension or termination. The Architect’s right to such suspension or termination shall be in addition to and not in substitution for any other rights the Architect may have under this contract or by law. 11.5 If the Client terminates this contract through no fault of the Architect, or if the Architect terminates this contract pursuant to GC 11.1, 11.3.3, or 11.4, the Architect shall be entitled to be paid for all Services performed and Reimbursable Expenses incurred to the date of termination, plus additional fees for demonstrable costs, including loss of profit, which the Architect reasonably incurs as a direct result of the termination. GC12 Payments to the Architect 12.1 The Architect shall invoice the Client for Services performed and Reimbursable Expenses incurred based on, as applicable: .1 the apportionment of a fixed or percentage-based fee for each phase of the Services as stated in Article A13 of the agreement and in proportion to progress made within each phase of the Services, .2 time-based rates as stated in Schedule C – Time Based Rates, and .3 Reimbursable Expenses as stated in Schedule B – Reimbursable Expenses. 12.2 Any expenditure not defined in Schedule B – Reimbursable Expenses, which the Architect intends to invoice as a Reimbursable Expense, shall be approved by the Client in writing as a Reimbursable Expense prior to the expenditure being incurred. 12.3 The Client shall pay the Architect’s invoices as stated in Article A17 of the agreement. The Client shall not make any deductions or set-offs from amounts invoiced by the Architect on account of any claims or demands of the Client. 12.4 If the Client retains holdback from payments to the Architect pursuant to applicable lien legislation, and the Architect provides Services both before and after the commencement of the Work, then, for purposes of the applicable lien legislation, this contract shall be deemed to be divided into two contracts comprised of: .1 a contract for the provision of Services up to and including the commencement of the Work, and .2 a second contract for the provision of Services after the commencement of the Work, so that the holdback related to the first contract may be released upon its completion. GC13 Percentage-Based Fee 13.1 This GC 13 shall apply only when the Architect’s fee, or a part thereof, is percentage-based as stated in Article A12 of the agreement. Document Six – 2018 Edition GC 8 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. 13.2 The basis for calculating the percentage fee shall be as follows: .1 before a Construction Cost Estimate is available, the fee shall be based on the Construction Budget at the time of the invoice, .2 after a Construction Cost Estimate is available, the fee shall be based on the Construction Cost Estimate at the time of the invoice, and .3 after the Construction Contract is entered into, the fee shall be based on the Construction Cost at the time of the invoice. 13.3 The fee shall not be subject to any retroactive adjustments based on increases or decreases to the Construction Budget or the Construction Cost Estimate as the Services progress. 13.4 If the Client furnishes labour or material below market cost, the amounts upon which the fee is calculated shall be adjusted as if all labour and material were paid for at market prices at the time of construction. GC14 Dispute Resolution 14.1 Differences between the Architect and the Client as to the interpretation, application or administration of this contract, or any failure to agree where agreement between the Architect and the Client is called for, collectively called disputes, shall be settled in accordance with this GC 14. 14.2 The Architect and the Client shall make all reasonable efforts to resolve disputes by amicable negotiations and shall provide, on a without prejudice basis, frank, candid and timely disclosure of relevant facts, information and documents, to facilitate these negotiations. 14.3 If the Architect and the Client so agree, the dispute shall be submitted to mediation or arbitration in accordance with CCDC 40 - Rules for Mediation and Arbitration of Construction Industry Disputes, in effect on the date of this contract. 14.4 If the Construction Contract or a subsequent agreement between the Client and Constructor provides that a dispute between the Client and Constructor may be finally resolved by arbitration: .1 the Client shall notify the Architect in writing of the matter in dispute at least 14 calendar days in advance of any arbitration proceeding, .2 the Client shall ensure that the Construction Contract or a subsequent agreement between the Client and Constructor provides that the Architect has the option to request or object to the joinder of the Architect as an additional party to the arbitration, and .3 if the Architect requests the joinder of the Architect as an additional party to the arbitration, the Client shall consent to the joinder, and .4 if the Client fails to comply with GC 14.4.1, 14.4.2, or 14.4.3, the Client shall have no claim against the Architect arising from matters resolved by the arbitration. 14.5 This GC14 shall survive suspension, termination, or completion of this contract. 14.6 Nothing in this contract shall be deemed to affect any right to adjudication which may be prescribed by the law of the Place of the Work. GC15 Miscellaneous General Conditions 15.1 The Architect and the Client shall maintain each other’s confidentiality. Except as necessary in the proper performance of the Services and except for promotional purposes with the Client’s written consent, which shall not be unreasonably withheld, the Architect shall neither use, nor disclose nor otherwise communicate any information about the Project or the Client. 15.2 The Architect shall be entitled to sign the building by inscription or otherwise, on a permanent, suitable and reasonably visible part of the building. 15.3 The Architect and the Consultants engaged by the Architect shall be identified on any temporary Project identification signs erected at the Place of the Work. 15.4 If any provision of this contract is declared by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such provision shall be severed from this contract and the other provisions shall remain in full force and effect. 15.5 The Client and the Architect respectively bind themselves, their partners, successors, assigns and legal representatives to the other party to this contract and to the partners, successors, assigns and legal representatives of such other party with respect to all covenants of this contract. Except as otherwise provided herein, neither the Client nor the Architect shall assign, sublet, or transfer an interest in this contract without the written consent of the other. Consent to such assignment or transference shall not be unreasonably withheld. 15.6 Unless otherwise agreed in writing by the Architect and the Client, the Services and this contract shall be considered complete one year after the Ready-for- Takeover date. Document Six – 2018 Edition GC 9 of 9 © 2018 This document is protected by copyright. It may be reproduced and used when an RAIC Authorization Seal is affixed to the cover of the document. The use of the Canadian Standard Form of Contract between Architect and Consultant – Document Nine without an authorization seal constitutes an infringement of the copyright. _________________________________________________________________________________ _________________________________________________________________________________________ C Schedule A -SERVICES Editing Note: This Schedule must be reviewed line-by-line and edited to suit the circumstances of each individual contract. It is intended for use as a checklist in the first instance. Review each item to determine whether it is applicable/required, determine the applicable method of fee determination, and insert the appropriate alphanumeric designation in the far right column. Alternatively, at the user’s discretion, inapplicable items may also simply be deleted, although it is generally advisable to clearly indicate those Services that will NOT be provided by the Architect by leaving them in the schedule and designating them as “N/A” or “C”. The headings and descriptive language provided are intended to be generally appropriate for most required services but should be reviewed and edited for appropriateness to the needs of individual Architects, Clients and contracts. The Services that the Architect is responsible to provide under the contract are as described in this Schedule A - Services. Other services that are not applicable, or that the Client is responsible to provide, are so indicated in this Schedule A - Services. The method(s) of fee determination applicable to the contract is as stated in Article A12 of the agreement. The following designations are used to indicate the method of fee determination applicable to each line item, or the non-applicability of an item to the contract: F1 Indicates the service is the responsibility of the Architect and the fee for the service is included in the fixed fee stated in the agreement. F2 Indicates the service is the responsibility of the Architect and the fee for the service is included in the percentage- based fee stated in the agreement. F3 Indicates the service is the responsibility of the Architect and the fee for the service is payable on the basis of time- based rates as stated in Schedule C – Time Based Rates. N/A N/A (or an item left blank) indicates the service is not anticipated to be required at the time of contract signing and will not be provided by the Architect nor the Client. If the item is subsequently determined to be required, it shall be an Additional Service. Indicates the service is required but will be the responsibility of the Client and not the Architect. ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 1 GENERAL SERVICES, ALL APPLICABLE PHASES 1.1 Structural Consulting Engineering Services -Engage a structural engineer for all services related to the structural integrity of the Work including building foundations and superstructure and minor secondary supports such as loose masonry and steel lintels. If the Work involves expansion to, or renovation of, an existing building, services include modifications and upgrades to existing structural components and systems. F1 1.2 Mechanical Consulting Engineering Services – Engage a mechanical engineer for all services related to mechanical systems and their controls including: plumbing and drainage; heating, ventilating and air conditioning; fire protection; process piping and equipment; and other special systems. If the Work involves expansion to, or renovation of, an existing building, services include modifications and upgrades to existing mechanical components and systems. F1 1.3 Electrical Consulting Engineering Services – Engage an electrical engineer for all services related to electrical systems and their controls including: normal and emergency power; lighting; communications; lightning protection; grounding; fire protection; access control; and other special systems. If the Work involves expansion to, or renovation of, an existing building, services include modifications and upgrades to existing electrical components and systems. F1 1.4 Acoustic Consulting Services – F1 1 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 1.5 Audio Visual Consulting Services – F1 1.6 Building Sciences Consulting Services – F1 1.7 Energy Modelling Consulting Services – F1 1.8 Civil Engineering Consulting Services – Includes coordination with civil engineering F1 1.9 Commissioning Agent Consulting Services – Engage a commissioning agent for services over and above take-over at completion of construction. N/A 1.10 Cost Estimating Consulting Services – F1 1.11 Food Services Consulting Services – N/A 1.12 Heritage Conservation Consulting Services – N/A 1.13 Archaeological Consulting Services – F1 1.14 Hardware Consulting Services – F1 1.15 Interior Design Consulting Services – F1 1.16 Laboratory Design Consulting Services – N/A 1.17 Landscape Architect Consulting Services – F1 1.18 Lighting Design Consulting Services – F1 1.19 Microclimate Consulting Services – F1 1.20 Planning Consulting Services – C 1.21 Security Consulting Services – F1 1.22 Building Security and Communications Systems Consulting Services – F1 1.23 Traffic Consulting Services – C 1.24 Vertical Transportation Consulting Services – F1 1.25 [ ] Consulting Services – N/A 1.26 Furniture, Fixtures and Equipment (FF&E) Selection, Procurement, and Installation Coordination – Provide services for the selection, procurement and installation of FF&E, including re-use of Client’s inventoried FF&E. Post construction FF&E by the City. All FF&E that needs to be incorporated into the design and be installed during construction is included in fixed fee. C 1.27 Graphic Design and Signage – Provide services for design, selection, procurement and installation of graphics, corporate logos, signage and similar elements for interior and exterior application. F1 1.28 Tenant Improvement Design Services – Provide tenant layout and fit up Construction Documents coordinated with base building Construction Documents. N/A 1.30 Multiple Construction Contracts -Additional Construction Documents and Construction Contract administration in connection with multiple bid packages, multiple Construction Contracts, and fast track Project delivery. F1 2 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 1.31 Multiple Phases -Services in connection with multiple phased occupancies. F1 1.32 Coordination of Work of Client's Own Forces – Coordinate Work of Client’s own forces with that of Constructor. C 1.33 Coordination of Client's Equipment – Coordinate delivery, receipt, and installation of Client’s equipment with Constructor. IT and security infrastructure will be in the working drawings. C 1.34 Value Engineering Services – F1 1.35 Life Cycle Cost Analysis Services – N/A 1.36 Energy Modelling Services – F1 1.37 Climate Change Analysis – Analyse effects of climate change on building components and systems over the life of the Project. N/A 1.38 Enhanced Sustainable Design -Enhanced sustainable design services to incorporate advanced levels of sustainable design. F1 1.39 Sustainable Design Certification -Services to document and prepare submissions to independent bodies for review and certification of achieved sustainable design objectives. F1 1.40 Commissioning -Services related to commissioning of the building. F1 1.41 Multiple Language Services – Construction Documents, and all other Services, provided in a language other than the language of this contract. N/A 2 COORDINATION SERVICES, ALL APPLICABLE PHASES 2.1 Project Protocols -Meet with Client and Consultants at the outset of the Project to establish project protocols, lines of communications and administrative procedures. Prepare and circulate minutes. F1 2.2 Client Meetings -Hold regular Client meetings with Client and, when relevant, with Consultants to review status of Project, exchange information, provide recommendations, receive decisions and coordinate efforts. Hold meetings at intervals appropriate to the progress of the Project (generally monthly). Prepare and circulate minutes. F1 2.3 Consultant Coordination Meetings -Hold regular Consultant coordination meetings with Consultants and, when relevant, with Client to review progress and coordinate efforts. Hold meetings at intervals appropriate to the progress of the Project (generally monthly). Prepare and circulate minutes. F1 2.4 Project Dossier -Maintain written records of information flow between Architect, Client, Consultants, authorities having jurisdiction and other Project stakeholders. Document information requested and provided, recommendations made and accepted, advice given and decisions taken. F1 3 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 2.5 Project Report -Prepare Project report, including key information flow between Architect, Client, Consultants, authorities having jurisdiction and Project stakeholders. Document Project status, design, proposed materials, components and building systems, schedule, Construction Budget, Construction Cost Estimate, information requested and provided, recommendations made and accepted, advice given and decisions taken. Obtain and coordinate input from Consultants. Provide to Client and Consultants at: 1. end of Pre-Design Phase, 2. end of Schematic Design Phase, 3. end of Design Development Phase, 4. when Construction Documents Phase is 50% complete, and 5. end of Construction Documents Phase. F1 2.6 Coordination of Consultants -Coordinate the services of each Consultant identified in the agreement with the architectural services and with the services of all other Consultants identified in the agreement. F1 2.7 Coordination of Multiple Constructors -Coordinate Work of multiple Constructors, including contract administration for multiple Construction Contracts. F1 2.8 Coordination of Client's Own Forces -Coordinate Work of Client’s own forces with that of the Constructor. C 2.9 Coordination of Client's Furniture, Fixtures and Equipment (FF&E) – Coordinate the delivery, receipt, and installation of Client’s FF&E with the Constructor. C 2.10 Computer-Aided Design and Drafting (CADD) – Utilize and coordinate the Client’s CADD standards. F1 2.11 Building Information Modelling (BIM) – Utilize BIM in accordance with the IBC 100-2013 BIM Contract Appendix published by the Institute for BIM in Canada (IBC) and appended to this contract. F1 2.12 BIM Model Manager – Function as the model manager in accordance with the IBC 100-2013 BIM Contract Appendix published by the Institute for BIM in Canada (IBC) and appended to this contract. F1 3 AUTHORITIES HAVING JURISDICTION SERVICES, ALL APPLICABLE PHASES 3.1 Review of Regulatory Requirements -Review applicable statutes, regulations, codes and by-laws, and where necessary review with authorities having jurisdiction, so that necessary regulatory consents, approvals, licences and permits may be obtained. F1 3.2 Zoning or Land Use Amendment -Assist Client in preparation of documents for, application for, and attendance at public hearings for, amendments to land use or zoning by-laws. F1 3.3 Variances -Assist Client in preparation of documents for, application for, and attendance at, public hearings for variances. F1 3.4 Site Development Review -Assist Client in preparation of documents for, application for, and attendance at, public hearings and other meetings for site development review. F1 4 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 3.5 Development Approval or Agreement -Assist Client in preparation of documents for and attendance at meetings for a development approval or agreement. F1 3.6 Public Hearings – Assist Client in preparation of documents for, and attendance at, public hearings. F1 3.7 Building Permit Application -Prepare documents for building permit application for Client or owner’s signature and assist with submission of the application. F1 4 PRE-DESIGN PHASE SERVICES 4.1 Analyses of Client Needs -Review Client’s stated objectives for the Project and advise. F1 4.2 Program Confirmation -Review and advise on Client’s program of requirements and other Client provided information. F1 4.3 Initial Evaluation -Prepare and review with Client an initial evaluation of Client’s program of requirements, schedule, Construction Budget, Project site, proposed Project delivery and procurement methods, and other initial Client provided information. F1 4.4 Owner’s Statement of Requirements -Set out fundamental objectives of the Project, including interrelation of space allocations, areas required for the spaces, specific materials and assemblies to be used, massing, time factors, cost implications, constraints, and any special design considerations. F1 4.5 Functional Programming -Analyse Client’s needs and prepare functional program. F1 4.6 Furnishings, Fixtures and Equipment (FF&E) Inventory -Provide an inventory of existing FF&E including details on space, environmental and service requirements. C 4.7 Financial Feasibility Study -Analyze the reasonable probability of the Client’s objectives for the Project being reached within the Construction Budget and advise on measures to align the Project requirements with the Construction Budget. F1 4.8 Technical Investigation -Undertake technical investigations of existing building materials, components and systems and advise on a range of possible actions. F1 4.9 Building Condition Assessment -Undertake a building condition assessment of entire building and provide a reserve fund study or similar type of report. N/A 4.10 Construction Cost Estimate -Based on functional program, site conditions and constraints, time of construction, and known construction economics, prepare a Construction Cost Estimate. Advise Client accordingly. F1 4.11 Site Evaluation Study -Review Project site and assess its suitability to accommodate the Client’s Project. F1 4.12 Comparative Studies of Prospective Sites -Review a number of potential Project sites and assess the suitability of each to accommodate Client’s Project. 4.13 Investigate Existing Conditions -Visit the Place of the Work and review characteristics of the site. F1 5 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 4.14 Measured Drawings -Prepare measured drawings of existing conditions. F1 4.15 Verifying Accuracy of Drawings Furnished by Client -Review drawings, visit Project site and take measurements to satisfy that drawings are reasonably accurate in their representation of the existing premises. F1 4.16 Drawing Conversion -Convert drawings provided by Client to an another appropriate format. F1 4.17 Photographs -Prepare a photographic record of existing conditions. N/A 4.18 Engage Land Surveyor -Engage a land surveyor to provide a land survey. C 4.19 Assist Client Regarding Land Survey Information Required -Coordinate with land surveyor and other Consultants to identify information required from the survey. F1 4.20 Engage Geotechnical Consultant -Engage a geotechnical Consultant to provide a geotechnical or soils investigation report and advice. C 4.21 Assist Client Regarding Geotechnical Information Required – Coordinate with geotechnical and other Consultants as to identification of information required from the report. F1 4.22 Engage Toxic or Hazardous Substances Consultant – C 4.23 Assist Client Regarding Toxic or Hazardous Substances Information Required – Coordinate with toxic or hazardous substances Consultant and other Consultants as to identification of information required. F1 4.24 Marketing -Prepare promotional presentations or special marketing materials. Service will be required for public engagement and communications. F1 4.25 Basic Climate Analysis: Review for sun paths, wind conditions, temperature and precipitation data, and climate change effects. [NTD: Consultant to consider design resiliency, in particular for exterior envelope and HVAC capacity for more annual cooling days. In other words not a minimum code designed building] [Note from Brian: This is basic climate analysis, we particularly need to understand sun loads and passive cooling designs and wind conditions in the public square due to the size and massing of adjacent buildings. If they are incorporating this into the design and can provide supporting analysis, this can be deleted] N/A 5 SCHEMATIC DESIGN PHASE SERVICES 5.1 Design Approaches -Discuss with Client alternative design approaches at outset of the schematic design concepts. F1 5.2 Schematic Design Concept(s) -Based on the Project’s requirements agreed upon with the Client, the Architect shall prepare for the Client’s approval a concept design, or designs, illustrating the scale and relationship of the Project components. Prepare Class ‘D’ Construction Cost Estimates as appropriate for each concept design. F1 6 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 5.3 Schematic Design Documents -Based on the Client approved schematic design concept and Class ‘D’ Construction Cost Estimate, prepare for the Client’s review and approval schematic design documents to illustrate the scale and character of the Project and how the parts of the Project functionally relate to each other and including, as appropriate: 1. site plan, 2. principal floor plans(s), 3. schematic sections and elevations, 4. massing representation, and 5. other Illustrative sketches or renderings to convey the intent of the design. Prepare a schematic design report incorporating, as appropriate: 1. design approach or philosophy, 2. site data, 3. design area(s) comparison to functional program, 4. design compliance with regulatory requirements, 5. architectural, structural, mechanical and electrical building systems descriptions, 6. Project schedule, and 7. Class ‘C’ Construction Cost Estimate. F1 5.4 Marketing Documents -Provide or arrange for provision of promotional materials. F1 5.5 Architectural Models -Provide or arrange for provision of scale models. F1 5.6 Architectural Renderings -Provide of renderings and other special delineations. Consultant to provide renderings as part of fixed fee. F1 5.7 Digital Modelling -Provide or arrange for provision of 3D digital modelling. F1 5.8 Submit Schematic Design -Submit the schematic design documents to the Client and obtain the Client’s approval prior to proceeding to the Design Development Phase. F1 7 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 6 DESIGN DEVELOPMENT PHASE SERVICES 6.1 Design Development Documents -Based on the Client approved schematic design documents [and agreed Construction Cost Estimate], and any Client’s authorization of adjustments in the Project requirements [and the Construction Budget], prepare for the Client’s review and approval, design development documents, drawings and other documents to describe the size and character of the Project including as appropriate the architectural, structural, mechanical, and electrical systems, materials and such other elements, and including: 1. site plan, 2. floor plans, 3. elevations, 4. building sections, and 5. other Illustrative sketches or renderings to convey the intent of the design. Prepare an updated design development report incorporating, as appropriate: 1. design approach or philosophy, 2. site data, 3. updated design area(s) comparison to functional program, 4. design compliance with regulatory requirements, 5. architectural, structural, mechanical and electrical building systems descriptions, 6. outline specifications, 7. materials, finishes and preliminary colour schemes, 8. project schedule, and 9. [Class ‘B’ Construction Cost Estimate]. F1 6.2 Update Project Schedule -Update and submit to the Client for approval a Project Schedule identifying major and minor tasks, sequence of tasks, duration of tasks, start and finish dates of tasks, interdependencies of tasks, critical path and major project milestones. F1 6.2 Submit Design Development -Submit the design development documents to the Client, advise the Client of any adjustments to the Construction Cost Estimate and obtain the Client’s approval prior to proceeding to the Construction Documents Phase. F1 7 CONSTRUCTION DOCUMENTS PHASE SERVICES 7.1 Drawings and Specifications -Based on the Client approved design development documents [and agreed updated Construction Budget], prepare for Client’s review and approval, Construction Documents consisting of drawings and specifications setting forth in detail the requirements for the Work. F1 7.2 Update Construction Cost Estimate -Advise the Client of any adjustments to the Construction Cost Estimate, including adjustments indicated by changes in requirements and general market conditions. Provide: 1. an updated Class "B" Construction Cost Estimate when the Construction Documents are [ ]% completed, and 2. a Class "A" Construction Cost Estimate when they are fully completed F1 7.3 Update Project Schedule -Update and submit to the Client a Project schedule identifying major and minor tasks, sequence of tasks, duration of tasks, start and finish dates of tasks, interdependencies of tasks, critical path and major project milestones. F1 8 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 7.4 Prepare Bidding Requirements and Construction Contract Conditions -Obtain instructions from and advise Client on the preparation of the necessary bidding requirements, bid forms, and form of Construction Contract(s). F1 7.5 Prepare Bidding Requirements for Alternative Prices – Identify and specify requirements for alternative prices to be submitted with bids. F1 7.6 Prepare Bidding Requirements for Unit Prices – Identify and specify requirements for unit prices to be submitted with bids. F1 7.7 Bidding Requirements for Multiple Bid Packages -Prepare multiple bid packages as required for sequential bidding of trade contracts and multiple Construction Contracts. F1 7.8 Submit Construction Documents -Submit Construction Documents to Client for formal review at 50%, 75% and 100% completion. Submit final Construction Documents to Client and obtain Client’s approval to proceed to the Bidding/Negotiation Phase. F1 8 BIDDING/NEGOTIATION PHASE 8.1 Assist Client with Pre-qualification of Bidders -Prepare request for qualifications, receive responses from interested parties, evaluate responses, and report results to Client for decision. F1 8.2 Assist Client in Calling for Bids – Arrange and manage the process for public or invitational call for bids and distribution of bid documents. F1 8.3 Pre-Bid Meetings -Organize pre-bid meetings for bidders. F1 8.4 Bidding Inquiries – Respond to and address questions raised by bidders during the bid period. F1 8.5 Addenda -Prepare and issue addenda during bid period and before award of Construction Contract(s). F1 8.6 Bid Receipt and Review -Arrange for receipt of bids, opening of bids, review bids for compliance, and report to Client. F1 8.7 Bidding/Negotiation -Assist the Client with Construction Contract negotiations. F1 8.8 Bonds and Insurance -Receive bonds and insurance documents for Client's review and acceptance. N/A 8.9 Assemble Construction Contract -Assemble Construction Contract for legal review and signature by the contracting parties. F1 9 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 9 CONSTRUCTION PHASE SERVICES 9.1 Project Protocols -Meet with Client, Constructor and Consultants to establish project protocols, lines of communications and administrative procedures. Prepare and circulate minutes. F1 9.2 Architect Chaired Site Meetings -Organize and direct site meetings with Constructor, major sub-contractors, Client and Consultants to review the progress of the Work, address emerging concerns and coordinate efforts. Prepare and issue meeting minutes. Architect must attend all formal site meetings. F1 9.2 Constructor Chaired Site Meetings -Attend all site meetings chaired by the Constructor. Review and comment on meeting minutes prepared by the Constructor. F1 9.3 Update Construction Documents -Update and issue revised Construction Documents to incorporate addenda and negotiated changes made during the Bidding/Negotiation Phase. F1 9.4 Submittals -Review and take appropriate action with reasonable promptness on all Constructor’s submittals required by the Construction Contract. F1 9.5 Requests for Information (RFI's) -Receive RFIs from Constructor and respond. F1 9.6 Supplemental Instructions -Prepare and issue supplemental instructions as required for clarification of the requirements of the Construction Documents. F1 9.7 Contemplated Change Notices, Change Orders and Change Directives -Prepare contemplated change notices with required drawings and specifications, evaluate Constructor's proposals, and prepare change directives and change orders for the Client’s approval in accordance with the Construction Contract. F1 9.8 General Review -Provide General Review at intervals required by the definition of General Review in the contract. F1 9.9 Additional General Review -Provide additional General Review with more frequent visits to the Place of the Work than required by the definition of General Review in the contract, as follows: [ ]. [NTD: City to advise what additional review requirements are necessary. At a minimum, require field reviews by the principal Consultant and all sub-consultants at a frequency needed to ensure the project quality and schedule is maintained and verified] [Note from Brian: We need to ensure an obligation for site reviews, at an appropriate frequency, is in the agreement.] N/A 9.10 Additional Off-Site General Review of Manufactured Products – Provide additional General Review of major components produced at off-site prefabrication or manufacturing facilities with more frequent visits to those off-site facilities than required by the definition of General Review in the contract, as follows: [ ]. F3 9.11 Additional Project Representation – Provide full-time on-site representation for the duration of construction. N/A 9.12 Inspection and Testing Services – Provide assistance in having inspection and testing companies perform services as required by the Construction Contract, receive and review their reports and report to Client. F1 9.13 Enhanced Inspection and Testing Service -Provide assistance related to the inspection and testing of mock-ups, including witnessing testing of Project elements and systems F1 10 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule A -SERVICES ITEM SERVICE SERVICE PROVISION AND BASIS OF FEE 9.14 Constructor's Proposed Substitutions – Evaluate substitutions proposed by the Constructor and make any resulting necessary revisions to the Construction Documents. F1 9.15 Services Necessitated By Default of Client or Constructor – Provide services necessitated by the default of the Constructor or the Client under the Construction Contract, or by major defects or deficiencies in the Work of the Constructor. F3 9.16 Services Related to Replacement of Damaged Work – Provide consultation concerning replacement of Work damaged by fire or other cause during construction and provide services related to replacement of such Work. F3 9.17 Evaluation of Extensive or Unreasonable Claims -Evaluate an extensive or unreasonable number of claims by the Constructor or others. F3 9.18 Payment Certification -Receive and assess the Constructor's applications for payment and determine amounts payable by the Client under the Construction Contract. F1 9.19 Deficiency Review -Review Constructor's list of outstanding and deficient Work. Identify incomplete Work and defects and deficiencies in the Work. Report in writing to the Client, Constructor, and Consultants. F1 9.20 Record Drawings -Prepare record drawings showing changes to the Work made during construction based on as-built drawings (marked up prints) and other data submitted by the Constructor. F1 9.21 Close-out Submittals -Review and take appropriate action with reasonable promptness on all Constructor’s close-out submittals required by the Construction Contract. F1 9.22 Systems Demonstrations -At the completion of construction coordinate with the Constructor, and if appropriate, Consultants to conduct systems demonstrations for the Client’s operations personnel. F1 9.23 Lien Legislation Certification – Issue certification as and when required by lien legislation applicable at the Place of the Work. F1 9.24 Ready for Take-Over Certification – Issue certification as and when required by the Construction Contract. F1 10 POST CONSTRUCTION PHASE SERVICES 10.1 Warranty Review -Prior to the end of the warranty period, undertake a review for defects or deficiencies and notify the Constructor in writing of items requiring attention by the Constructor. F1 11 of 11 29574149.4 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule B -REIMBURSABLE EXPENSES The Client shall pay to the Architect Reimbursable Expenses on the basis described in this Schedule B - REIMBURSABLE EXPENSES. Probable costs, where indicated, are the Architect’s estimate of the total amount, excluding Value Added Taxes, of Reimbursable Expenses that may become payable for each item. Except where Reimbursable Expenses are indicated as payable on an “E3” basis, the Architect does not represent nor warrant that the Reimbursable Expenses will be less than or equal to the probable costs indicated. The following designations are used to indicate the method of remuneration applicable to each line item, or the non- applicability of an item to the contract: E1 Indicates that these Reimbursable Expense items are payable by the Client to the Architect on the basis of actual costs, as they are incurred and supported by receipts. An administrative charge of ____ % will be added to these items. E2 Indicates that these Reimbursable Expense items are payable by the Client to the Architect on the basis of actual costs, as they are reasonably incurred and supported by receipts, but without any added administrative charge. E3 Indicates that these Reimbursable Expense items are payable by the Client to the Architect as a pre-determined fixed amount, regardless of actual costs incurred. This amount is indicated in the probable cost column but shall not be exceeded. It shall be apportioned to the phases of the Services as stated in Article A13 of the agreement and is payable accordingly. E4 Indicates that these Reimbursable Expense items are payable by the Client to the Architect as a pre-determined percentage of the Architect’s fee for Services, regardless of the method of fee calculation and regardless of actual costs incurred. The percentage is ____ %, which amount shall be added to each invoice. E5 Indicates that these items are deemed to not be Reimbursable Expenses that are separately payable by the Client to the Architect. They are deemed to be included in the Architect’s fee for Services. N/A N/A (or an item left blank) indicates that, on the date the agreement is made, these Reimbursable Expense items will not be incurred. ITEM REIMBURSABLE EXPENSE BASIS OF PAYMENT PROBABLE COST 1 General reproduction graphic services including: 1. Small format (ledger sized sheet or smaller) colour or black and white photocopying of original hard copies or printing of digital files. 2. Large format (greater than ledger sized sheet) colour or black and white photocopying of original hard copies or printing of digital files. 3. Scanning original hard copies to create digital files. 4. Printing and binding of reports and specifications. 5. Printing and binding of construction drawings. E2 2 Special reproduction graphic services including: 1. High-quality colour or black and white printing of digital files. 2. Mounting or framing of prints. 3. Production of marketing or presentation materials. E2 3 Delivery costs including: 1. Couriers 2. Registered or express mail 3. Postage E2 4 Local transportation including: 1. Taxis 2. Use of personal vehicles at rate of [$0.50/km][ ] 3. Automobile rental 4. Parking E5 Attach 7 Architects Agreement -Library (Schedule B -Reimbursable Expenses -City Comments) 1 of 2 29576125.3 _________________________________________________________________________________ _________________________________________________________________________________________ Schedule B -REIMBURSABLE EXPENSES ITEM REIMBURSABLE EXPENSE BASIS OF PAYMENT PROBABLE COST 5 Other Transportation including: 1. Air fare, rail fare, intercity bus fare 2. Use of personal vehicles at rate of [$0.50/km] [ ] E5 6 Meals: 1. Allowance of [$50/day] [ ] N/A 7 Travel time of Architect's and Architect's Consultant's personnel E5 8 Communications charges including: 1. Long distance telephone and facsimile charges 2. Internet services 3. Video and teleconference services 4. Collaborative project-specific internet sites 5. Project web camera 6. Cell phone charges E5 9 Local Project office E5 10 Commissioned presentation materials including: 1. Renderings 2. Physical models 3. Computer models 4. Computer animations E5 11 Internet based services 1. Virtual storage 2. FTP site 3. Project management file sharing service E5 12 Miscellaneous E5 TOTAL PROBABLE COST Attach 7 Architects Agreement -Library (Schedule B -Reimbursable Expenses -City Comments) 2 of 2 29576125.3 ___________________________________________________________________________________________________ ________________________________________________________________________________________ Schedule C -TIME BASED RATES The Architect’s fee shall be based on the following time based rates for personnel employed by the Architect and the Architect’s Consultants. All rates exclude Value-Added Taxes. PERSONNEL RATE Principal $350 Associate/Senior Architect III $175 Senior Architect II $150 Senior Architect I $125 Intermediate Architect/Graphic Designer $100 Junior Architect $85 $ $ $ $ $ $ $ $ $ $ $ $ $ $ _ REVISED PAC Schedule C -Time Based Rates Nov 12 19.docx 1 of 1 Schedule D Supplementary Conditions attached to and forming part of the Contract made as of the [1st day of August, 2019] between The Corporation of the City of Pickering and architectsAlliance for the following Project: The Pickering City Centre Library NO. ARTICLES SC [●] ARTICLE A2 Insert the following: The Corporation of the City of Pickering One The Esplanade Pickering, Ontario L1V 6K7 Attention: City Administrative Officer Email: mcarpino@pickering.ca with a copy to: twopointO partners inc. 161 Bay Street Suite 2700 Toronto, Ontario M5J 2S1 Attention: Mr. George Buckles Email: gbuckles@twopointo.org SC [●] ARTICLE A5 Insert the following: Part of Lots 21&22, Concession 1, City of Pickering Regional Municipality of Durham (Portion of PIN # 26335-0003 to 26335-0006, municipally known as 1340 & 1355 Kingston Road, Pickering, Ontario SC [●] ARTICLE A11.1 Insert the following: 28974956.4 “The key personnel of each of the Consultants engaged by the Architect are identified on Exhibit 1 and must not be replaced or removed without the Client’s written consent. The Architect will not engage any Consultants to perform any Services or Additional Services under this contract except ones identified in Article A11.1 or specifically approved in writing by the Client. Every Consultant must be duly licensed or qualified in the province in which the Project is situated in their respective fields of specialization. The Architect shall, subject to GC9, be fully responsible to the Client for Services and Additional Services rendered by, and all acts and omissions of, Consultants retained by the Architect and nothing in this contract will be deemed to create any contractual or agency relationship between the Client and any such Consultant”. SC [●] ARTICLE A11.1.2 Insert the following: “The key personnel of each of the Consultants engaged by the Client are identified on Exhibit 2. The Client may engage those Consultants listed and any other Consultants as required by the Client in its sole discretion for completion of the Work. The Architect will coordinate their Services with those of all Consultants engaged by the Client.” SC [●] ARTICLE A12 Delete A12.2. Insert the following for A12.4: Fees for changes (except for coordination changes, the fee for which, if any, is deemed to be included in the fixed fee) and Additional Services shall be as agreed prior to the commencement of the Services for the change or the Additional Service. If a specific fee for a change or Additional Services is not agreed to prior to the performance of the Services in respect of the change or the Additional Service, the fee shall be computed at the hourly rates as set out in Schedule C”. SC [●] ARTICLE A12 Insert the following as a new paragraph: Without limiting the preceding paragraphs or Schedule A to this contract, the Architect acknowledges and agrees that it is acting as the “Consultant” pursuant to the provisions of a Construction Contract to be entered into between the Client and [] or such other Constructor as the Client, in its sole discretion, may elect to contract with for the construction of the Project. The Architect acknowledges that it has reviewed a draft of the Construction Contract and agrees with the Client that its 28974956.4 responsibilities under this contact shall include those of the “Consultant” under the Construction Contract. SC [●] ARTICLE A13 Delete the words “a fixed or percentage fee” in A13 and replace them with the words “the fixed fee” Insert the following after the Total in A13: The Architect acknowledges having received payment in the amount of $[●] on account of the Architect’s fee and, to the extent applicable, Reimbursable Expenses, and represents that it has provided the Client with a Proper Invoice(s) in respect of such payments. SC [●] ARTICLE A15 Delete Article A15 in its entirety. SC [●] ARTICLE A16 Delete Article A16 in its entirety and replace it with the following: “A16 Each invoice on account of the Architect’s fee and Reimbursable Expenses plus Value Added Taxes must be a Proper Invoice. Proper Invoices must be submitted monthly unless otherwise agreed. At least ten (10) Working Days before submitting a final Proper Invoice, the Architect will submit a draft of a Proper Invoice to the Client for the Client’s review and comments. The Client will, within five (5) Working Days of receipt of a draft Proper Invoice, submit to the Architect any comments, issues, questions, concerns and requests for information regarding the draft Proper Invoice and the Architect will, before submitting any final Proper Invoice (the “Final PI”), provide complete and detailed written responses to the Client addressing any such comments, issues, questions, concerns and requests for information raised by the Client in writing, and make any adjustments to the draft Proper Invoice as may be needed, within two (2) Working Days of the Client’s receipt of the draft Proper Invoice. If the Client disputes the amount of the Final PI, it will give a notice of non-payment disputing the amount within fourteen (14) days of receipt of the Final PI which notice will be in the form prescribed by the Construction Act (Ontario) and regulations. The Client will make payment of the part of the amount that it does not dispute, or if the Client does not dispute the amount of the Final PI, it will make payment of the whole amount, in either case, within twenty-eight (28) days of its receipt of the Final PI, less the holdback required by the Construction Act (Ontario). Each Final PI must be delivered to the individual identified in this contract as the designated recipient and must be delivered to the address specified in this contract”. 28974956.4 S C [●] ARTICLE A17 Delete Article A17 and replace it with the following: “A17 An unpaid invoice or the unpaid balance thereof shall bear interest, calculated annually at the rate that is one percentage point greater than the rate of interest quoted by The Toronto-Dominion Bank as its prime rate of interest for commercial loans in Toronto, or such other rate as is specified in the Construction Act (Ontario). The interest will accrue starting twenty-eight (28) days after the Client receives the Final PI delivered to the individual and the address indicated in A16. Deductions for disputed amounts shall be resolved in accordance with the provisions of GC14.” SC [●] ARTICLE A19 Delete the following sentence in its entirety: “Alternatively, if the Architect and the Client wish to agree to a percentage other than 15%, that percentage shall be __%.” S C [●] ARTICLE A20, A21, A22 and A23 Delete Articles A20, A21, A22 and A23 and replace Articles A20 and A21 with the following: “A20 If the Client makes the payments required to be made by it to the Architect as required by this contract, in the event that a construction lien has been registered against the Project or the Place of the Work by anyone claiming through the Architect, the Architect will, at its own expense, forthwith take whatever steps may be necessary to vacate or discharge any such lien, as the case may be, including, without limitation, posting security into court and, in any event, by no later than five (5) Working Days after receipt of the Client’s written request to do so. In addition, the Architect will take all further steps necessary to protect the interests of the Client, including but not limited to providing a defence to the Client in any lien proceedings and to holding the Client entirely harmless in the event that any such lien claimant, claiming through the Architect, successfully prosecutes an action which results in liability to the Client. A21 The Client may deduct from payments to the Architect, any unpaid amounts owed by the Architect to any Consultants engaged by the Architect unless arrangements satisfactory to the Client are made to ensure payment of the unpaid amounts”. DEFINITIONS SC [●] Add the following definitions: 28974956.4 “agreement/contract All references to agreement and/or contract herein mean this agreement between the Architect and the Client, including all schedules, appendices and exhibits hereto, as the same may be amended, supplemented or restated from time to time.” “Project Manager Project Manager means the representative of the Client identified in GC 3.5.1.” “Proper Invoice A Proper Invoice is a request for payment of Services or Reimbursable Expenses that are in the form of Exhibit 5; contain the information specified in the Construction Act (Ontario) and/or regulations under that Act; include, without limitation, the following information; and meet all other requirements of this contract: .1 the Architect’s name and address; .2 the date of the Proper Invoice and the period during which the Services were provided, or the Reimbursable Expenses were incurred; .3 information identifying the authority, whether under this contract or otherwise, under which the Services were provided, or the Reimbursable Expenses were incurred; .4 a description of the Services that were provided and the Reimbursable Expenses that were incurred; .5 the amount payable for the Services that were provided and the payment terms; .6 the name, title, telephone number, mailing address and email address of the person(s) to whom payment is to be sent; and .7 all other information and documents specified in GC 12.3”. “Project Schedule Project Schedule means the critical path method (CPM) schedule for the construction of the Project, as the same may be amended from time to time with the prior approval of the Client.” “Working Day 28974956.4 Working Day means a day other than a Saturday, Sunday, statutory holiday, or statutory vacation day that is observed by the construction industry in the area of the Place of the Work.” SC [●] Make the following change to the paragraph entitled “Construction Contract”: .1 In the first line delete “and is comprised of the” and substitute the word “including” therefor. NO. CONDITIONS S GC [●] GC 1 Architect’s Responsibilities and Scope of Services Make the following change to GC 1.1.1 After the words “responsibilities in Schedule A – Services” add the words “and as otherwise described in this contract.” Delete GC 1.1.2 and replace it with the following: “perform all obligations under this contract and the Services for the sole and exclusive benefit of the Client and in accordance with the degree of care, skill and diligence expected of a qualified professional architect and appropriate for the nature and complexity of the Project.” Delete GC 1.1.3 and replace it with the following: “1.1.3 The Architect acknowledges that the designation by the Architect of responsibility for supervision of the performance of the Architect's responsibilities under this contract to the individuals identified on Exhibit 3 (the “Architect's Representatives”) was a material inducement in causing the Client to enter into this contract. At all times, at least one of the Architect's Representatives will be in charge of the Project on behalf of the Architect and will attend to all communications between the Client and the Architect required pursuant to this contract. If all of the Architect's Representatives are reassigned, responsibility for the Project is transferred to others, or if all of the Architect's Representatives become unable to continue to be in charge of the Project on behalf of the Architect, as required above, the Client may, at its sole option, terminate this contract and the termination will be considered to be termination pursuant to a default which will entitle the Client to exercise remedies. The Client shall also have the right, by written notice to the Architect, to require the Architect to replace any Architect's Representative or any other employee, agent, representative, officer or partner of the Architect, from time to time, if the individual is not carrying out her or his duties under the contract to the Client's reasonable satisfaction”. 28974956.4 S GC [●] Delete GC 1.1.4 S GC [●] Delete GC 1.1.5 and replace it with the following: “1.1.5 engage those Consultants identified in Article A11.1 of the agreement under contracts that incorporate all applicable terms and conditions of this contract, including without limitation the Standard of Care, Indemnification, Limitations of Liability, and Insurance provisions.” S GC [●] Delete GC 1.1.6 and replace it with the following: “1.1.6 obtain the Client’s approval of any appointment or changes to any Consultants engaged by the Architect.” S GC [●] Delete the period at the end of GC 1.1.11, and insert the following as new paragraphs GC 1.1.12 through to GC1.1.38: “1.1.12 permit the Client to make direct inquiries to and obtain information from each of the Consultants engaged by the Architect and ensure that prompt and complete responses are provided to all reasonable questions and requests for information, (the Client to act reasonably in keeping the Architect informed of the Client's inquiries), 1.1.13 ensure that each of the Consultants engaged by the Client is afforded the right of access for inspection purposes and the degree of liaison with the Architect and the Consultants engaged by the Architect that the Consultants engaged by the Client reasonably require in order to complete and perform their services, 1.1.14 ensure that all certificates, inspections and reports that may reasonably be required by any lender that provides financing for the Project are produced by the Architect or the appropriate Consultant engaged by the Architect in a timely manner, 1.1.15 without limiting the Architect’s obligations as the “Consultant” under the Construction Contract, the Architect will review each draft application for payment submitted by the Constructor; will submit comments on a timely basis concerning any deficiencies in the applications; will assist the Client in resolving issues related to applications for payment, and will issue certificates for payment, together with explanations in respect of all items rejected in applications for payment, on a timely basis, so as to enable the Client to respond to the Constructor with written notices of dispute, where appropriate, in accordance with the requirements (including timeframes) provided for in the Construction Act (Ontario),” 1.1.16 take all reasonable steps, in light of the Architect’s level of actual and implied knowledge of the Place of the Work and the Client’s needs with respect to the Project, to familiarize itself with the existing site conditions at the Place of the Work and bring to the Client’s attention all reasonably foreseeable adverse conditions that would impact the Project Schedule, the Construction Budget, or both, if not remediated, 28974956.4 1.1.17 assist in obtaining all necessary approvals, consents, licences and permits necessary for the Project from authorities having jurisdiction, as pre-authorized by the Client, 1.1.18 monitor the Project Schedule to ensure the timely completion of the Project and promptly advise the Client of all existing and reasonably foreseeable conditions that would impact the Project Schedule, the Construction Budget, or both, 1.1.19 perform the Services in compliance with the Project Schedule, as may be amended with the written consent of the Client, 1.1.20 provide adequately coordinated Instruments of Service in accordance with the timeframes detailed in the Project Schedule, 1.1.21 design acting in accordance with the degree of skill and care prescribed by GC 1.1.2 and 1.1.24, and to design the Project within the limits established by the Client in the Construction Budget, 1.1.22 respond in a timely manner to all requests made by the Client, the Consultants engaged by the Client, the Consultants engaged by the Architect, the Constructor, and all contractors engaged by the Client or the Architect, including, but not limited to, requests regarding change orders, requests for changes, requests for information, change directives and other matters required by the Construction Contract or this agreement so as not to delay performance of the Work, 1.1.23 be responsible for the coordination amongst the Consultants engaged by the Client, the Consultants engaged by the Architect, the Constructor, and all contractors engaged by the Client or the Architect, and the Project Manager, 1.1.24 provide the Services and perform all obligations which it has covenanted to perform pursuant to the terms of this agreement with the standard of care and skill provided by an experienced and prudent architect supplying similar services, having regard to the nature, size and scope of the Project. Without in any way limiting the generality of the foregoing, the Architect and its work and services, including the Services, shall comply with all known laws, codes, ordinances, and regulations which are relevant to the Project. The Architect must exercise all reasonable due care and diligence respecting any products that it may recommend to the Client, 1.1.25 ensure that the Consultants engaged by the Architect perform the Services which are to be performed by them to the standard of care and skill provided by an experienced and prudent consultant supplying similar services, having regard to the nature, size and scope of the Project. Without in any way limiting the generality of the foregoing, the Consultants engaged by the Architect and their work and services, including the Services, shall comply with all known laws, codes, ordinances, and regulations which are relevant to the Project. The Consultants engaged by the Architect must exercise all reasonable due care and diligence respecting any products that they may recommend to the Client, 1.1.26 act as the Client’s “Consultant” as that term is defined in the Construction Contract, 28974956.4 1.1.27 ascertain the purpose of measured drawings and the accuracy required. After confirming the purpose with the Client, make measurements, augment with photographs and field notes, and prepare drawings, 1.1.28 review and verify the accuracy of drawings furnished by the Client, conduct site visits and take measurements to satisfy that the drawings are reasonably accurate in their representation of the premises at the Place of Work, 1.1.29 assist and advise the Client regarding survey information required and assist the Client in the engagement of a land surveyor, 1.1.30 review characteristics and investigate existing conditions at the Place of Work, 1.1.31 conduct continuous review all applicable statutes, codes regulations and bylaws that may impact the Project from the pre-design phase to the occupancy of the premises, 1.1.32 prepare issued for construction (IFC) drawings and specifications based on the Client’s requirements and the Construction Cost Estimate, 1.1.33 monitor the progress of construction, carry out regular inspections and confirm that the Work is being carried out in conformity with the design requirements for the Project, 1.1.34 assess the rate of progress of the Work and carefully monitor the Project Schedule, 1.1.35 advise the Client of all regulatory requirements applicable to the design and construction of the Project and comply with all such regulatory requirements in providing the Services, 1.1.36 before proceeding with each phase of the Services, obtain the Client’s written approval of the Architect’s deliverables from the preceding phase, 1.1.37 permit the Client to review, comment upon and critique the Architect’s deliverables and Instruments of Service, and 1.1.38 if, in the Client’s opinion, there is an error or omission in the Services, perform any remedial Services requested by the Client as a result of that error or omission. For greater certainty, these remedial Services are not Additional Services. S GC [●] GC 2 Additional Services Delete GC 2.2.4, 2.2.6, GC 2.2.7, GC 2.2.9, GC 2.2.10, GC 2.2.11, GC 2.2.12 and GC 2.2.15. S GC [●] Add GC 2.4 as follows: “2.4 If more extensive representation at the Place of the Work than is described in General Review and in GC1 is required by the Client as a result of a dela y in completing the Construction Contract or as a result of extraordinary conditions encountered during the construction or as a result of negligence by the Constructor or the Consultants engaged by the Client, additional visits will be charged as an 28974956.4 Additional Service at the hourly rates set out in Schedule C. If the Architect determines that additional visits, on the basis of what is set out above in this GC2.2 are to be charged, it must, in advance of the additional visit or visits, give a notice in writing to the Client setting out the basis of its determination in reasonable detail, and must obtain the Client's written approval for the additional visits. If the Client disagrees with the Architect's determination and the Architect and Client are unable to resolve the matter, it will be determined in accordance with GC14. If an emergency exists, or the Client, by written notice, instructs the Architect to proceed with an additional visit or additional visits despite its position that the additional visit or visits is or are not an Additional Service, the Architect will perform the additional visit or visits, without prejudice, to its right to have the matter settled, or resolved in accordance with GC14. The Client will require Architect to ensure sufficient visits to the Place of Work to ensure a clear understanding of the development of the Project as it proceeds and to provide clear and timely answers to and questions of the Client.” S GC [●] GC 3 Client’s Responsibilities Delete GC 3.2.4 Delete GC 3.3 and replace it with the following: “3.3 Subject to any reservations or qualifications which the Client may communicate in writing to the Architect with respect to any particular information, the Architect shall be entitled to rely upon the accuracy and completeness of all information provided by the Client. The Architect shall promptly notify the Client of any inaccuracies or incompleteness noticed in any information provided by the Client.” S GC [●] Delete GC 3.4.1, GC 3.4.2, GC 3.4.3, GC 3.4.4, GC 3.4.7, and GC 3.4.8 S GC [●] Add GC 3.5.1 as follows: “3.5.1 The Client may employ, at its cost and expense, one or more representatives (the “Project Manager”) who shall be authorized to act on behalf of the Client or to represent it in any other capacity in conjunction with the construction of the Project and to supervise on behalf of the Client the construction of the Project. Such representative may, at the direction of the Client, carry on continuous on-site observation or inspection of the Project during the whole or any part of its construction, provided that in no event shall the appointment of any such representatives or their observations or inspections relieve the Architect of any of its duties or obligations hereunder or lessen any such duties or obligations. Unless the Client notifies the Architect of a change of the Project Manager, the Project Manager for the Project is twopointO partners inc., the contact particulars for which are set forth in Article A2”. S GC [●] GC 4 Construction Budget, Construction Cost Estimate and Construction Cost 28974956.4 Make the following change to GC4.2: In the first line, after the words “contingency amounts” add “, which shall be itemized in the Construction Cost Estimate and approved by the Client,” Make the following change to GC4.3: Delete “shall be adjusted to reflect escalation in construction prices between the time of submission of the Construction Documents to the Client and the time when bids or proposals are sought.” and replace with “the Client will give due consideration to adjusting the agreed Construction Cost Estimate in order to reflect changes in the general level of prices in the construction industry between the date of submission of the Construction Documents to the Client and the date on which bids for proposals are sought.” Delete GC 4.4 and replace it with the following: “4.4 If at any time the Construction Cost Estimate or the lowest compliant bid or the lowest negotiated proposal exceeds the Construction Budget, the Architect shall make appropriate recommendations to the Client and the Client shall: .1 provide written approval of an increase in the Construction Budget, or .2 abandon the Project and terminate this contract in accordance with GC11 Termination and Suspension, or .3 co-operate with the Architect in decreasing the Project scope or quality at no additional cost to the Client as per GC 4.6.” Make the following change to GC4.5.3: Add the following at the end: “at no additional cost to the Client as per GC4.6.” Delete GC4.6 and replace it with the following: “4.6 If the Client proceeds under GC 4.4.3 or GC 4.5.3, then the Client may require the Architect to modify the design, the Construction Documents, or provide other Services, including Services related to re-bidding or re-negotiating of a Constructor’s proposal, as necessary to reduce the Construction Cost Estimate to the Construction Budget, in which case the Architect shall perform these Services for no additional fee.” Add new paragraph GC4.7 as follows: “4.7 Notwithstanding GC4.1, the Architect shall review the Construction Budget and Construction Cost Estimate and provide comments thereon, in writing, to the Client.” 28974956.4 S GC [●] GC 5 Architect’s Role and Authority During Construction Make the following change to GC5.1: After the words “Construction Contract”, add “and coordinate the work of the Consultants engaged by the Client, the Consultants engaged by the Architect, and the Constructor. Make the following change to GC5.4.3: After the word “all”, add the word “relevant” Make the following change to GC5.4.5: .1 Delete the words “have the authority to require” and replace with “consult with the Client regarding any” .2 After the word, “completed,” add “and obtain the Client’s written authorization to such special inspection or testing before proceeding with same” Add GC 5.4.7 as follows: “5.4.7 Prepare the required building permit applications for signature by the Client; submit the completed applications and pursue the issue of those permits (subject to the Client paying the permit application fees)”. Make the following change to GC5.5: After the last line of the paragraph, add, “The Architect shall not issue a certificate for payment to the Constructor or to any contractor unless the Constructor or contractor is in conformance with PART 5 – PAYMENT of the CCDC2 2008 Stipulated Price Contract.” S GC [●] Make the following change to GC5.7.1: Delete the words, “nor be responsible for the discovery of” Make the following change to GC5.7.2: Delete the words “charge or supervision” Make the following change to GC5.7.5: Delete the words “under GC 7.3” and insert the words “hereunder” 28974956.4 S GC [●] Add GC 5.8 as follows: “5.8 The Architect acknowledges that the Constructor may use a web-based project management system for the distribution and storage of Project related documentation. If such a system is used by the Constructor, then: (a) the Architect will use that system as required by the Constructor and will require any Consultants engaged by the Architect for the Project to do likewise; (b) during the course of the Project the Architect and the Consultants engaged by it will have access to the documents that were either sent to or by the Architect or those Consultants; and (c) at the conclusion of the Project, the Architect will be provided with a soft copy of those documents on a medium suitable to the size and number of the files involved”. S GC [●] GC 6 Use of Documents GC 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 are deleted and replaced with the following: “6.1 All drawings and specifications, computations, sketches, test data, survey results, models, photographs, renderings, Instruments of Service and other materials prepared by the Architect or any Consultant engaged by the Architect, and all other subcontractors and suppliers to the Architect, in connection with the performance of the Architect’s obligations under this agreement (the “Project Materials”) shall be the property of the Client. The Architect hereby undertakes not to design any other Project containing designs which are similar in any material respects with the Project. The Architect shall, upon request and subject to conditions as to assumptions inherent and limited reliance, release the copyright in the drawings and specifications and any copyright it might have in any other Project Materials and copies thereof relating to the Project (to the extent that the same may be used in the Project) in favour of the Client. 6.2 If this agreement is terminated, the Architect shall promptly deliver to the Client a complete set of all Project Materials in the Architect’s possession, including all design documents prepared or obtained by the Architect together with any predesign, conceptual design or other studies prepared by the Architect. If the Architect fails to comply with its obligations under this paragraph, the Client shall be entitled, in addition to any other remedies to which it may be entitled, to appropriate equitable relief, including the remedy of specific performance as money damages will be an inadequate remedy with respect to the receipt of such Project Material by the Client. 6.3 This GC 6 shall survive suspension, termination or completion of this contract. 6.4 The Architect shall obtain all necessary approvals and permissions for the use of all intellectual property which it does not own and which the Architect has incorporated into the Project Materials or which may be necessary for the use thereof by the Client.” 28974956.4 S GC [●] S GC 15 is hereby deleted. S GC [●] S GC 16 is hereby deleted. S GC [●] GC 7 Standard of Care Make the following change to GC7.1: Delete “ordinarily exercised by other members of their professions under similar circumstances, at the same time and in the same or similar locale” and substitute the following words therefor “and skill set out in GC1.1.2 (as amended in these Supplementary Conditions), GC1.1.21 and 1.1.24, above.” Delete GC 7.2 in its entirety. Make the following change to GC7.3: In the third line, delete “on a without prejudice basis” Add GC 7.5 as follows: “7.5 The Client, acting reasonably and in a bona fide manner, shall be entitled from time to time to require, without any additional cost or expense to the Client, the assistance of the Architect or any Consultant in order to resolve any problem or concerns the Client may have relating to the performance of this contract by the Architect or the Consultants. Without limiting what is stated above, the Client may question the Architect and any Consultant from time to time in respect of the performance by the Architect or Consultant of terms and obligations contained in this contract to be observed and performed by the Architect or such Consultant”. S GC [●] Add GC 7.6 as follows: “7.6 Subject to the limitation of liability clause below GC 9, nothing in GC 7 or if any other provision of this contract relieves the Architect from its obligation to provide its Services in accordance with the appropriate professional standard and to cause the Consultants engaged by the Architect to do likewise, and no provision absolves the Architect from failure to conduct the types or the number of reviews required by the standards of the profession to provide adequate protection to the Client against errors, deficiencies, defects or other conditions that a competent Architect or Consultant providing Services for a project such as the Project should provide. The Architect has been retained for the Project on the basis of the Architect’s reputation, experience and skill in providing Services for projects such as the Project”. S GC [●] Indemnification Delete GC 8.1 and replace it with the following: 28974956.4 “8.1 Subject to GC 9 Limitations of Liability, the Architect shall indemnify and hold harmless the Client, its employees, directors, officers and successors, from and against all claims, demands, losses, cost, damages, actions, suits, judgements or proceedings of any nature or kind to the extent the same arise from, are in connection with or are attributable to: .1 acts, errors, omissions, negligence or conduct, in the performance of the Services by the Architect or by those for whom the Architect is responsible in law; or .2 a breach of this contract by the Architect or those for whom the Architect is responsible at law”. S GC [●] GC 9 Limitations of Liability Delete GC 9.1 and replace it with the following: “9.1 Any and all claims whether in contract or tort, which the Client has or may have against the Architect in any way arising out of, or related to the Architect’s duties and responsibilities under this Contract, including those arising from GC 8 Indemnification, shall be limited to the amount recoverable under the professional liability insurance policy referred to in GC 10.2 and, if applicable, the amount of professional liability insurance recoverable under the professional liability insurance policy referred to in GC 10.3. In both cases, for the purposes of determining the amount of professional liability insurance recoverable, the deductible amount under the applicable professional liability insurance policy will be deemed to be a recoverable amount”. S GC [●] Delete GC 9.3 and replace it with the following: “9.3 Notwithstanding anything to the contrary contained herein, the Architect’s liability under this agreement shall not be limited for matters arising as the result of the Architect’s gross negligence or willful misconduct. For further greater certainty, nothing herein, shall limit the Client’s right to claim under and/or be covered by any insurance required by the Architect pursuant to the agreement, in the applicable amounts of said insurance. In addition, nothing herein, shall limit the Client’s right to claim against the Architect any claims that may not be covered by the Architect’s insurance.” S GC [●] GC 10 Insurance Delete GC 10.1, GC 10.2, GC 10.3 and GC 10.4 and replace them with the following: “10.1 The Architect shall maintain throughout the period while it provides Services under this contract the following insurance, at its own cost: 28974956.4 .1 Commercial general liability insurance which covers the Architect's liability while performing Services under this contract. The commercial general liability policy (including excess coverage) will have coverage limits of at least five million dollars ($5,000,000.00) per occurrence and shall include the Client as an additional insured. It will contain cross-liability and severability of interest clauses, contractual liability clause, non-owned automobile liability clause, the Client as additional insured as their interest may appear and a waiver of subrogation clause and will be written by an insurance company or companies approved by the Client, acting reasonably. The Architect shall furnish the Client with policies or, at the sole discretion of the Client, certificates showing the relevant details of the insurance. The commercial general liability policy referenced above will provide that no cancellation may become effective unless notice is given to the Client at least thirty (30) days in advance by registered mail. The commercial general liability policy shall be maintained for at least 24 months after “Substantial Performance of the Work” as defined in the Construction Contract, unless otherwise provided in this agreement. The Architect shall require each of the Consultants engaged by the Architect to carry and maintain insurance policies at all times while engaged in performance of the Services covered by this contract in accordance with the coverage limits described in this GC10.1. 10.2 Before the Architect begins providing Services to the Client under this contract, it will furnish the Client with evidence of insurance by way of policies or, in the sole discretion of the Client, a certificate of insurance, confirming coverage with respect to the Project under the Architect's blanket or practice policy. That policy will cover against any and all claims made for negligent acts, errors or omissions, or attributable to, or relating to the performance of the Services or Additional Services by the Architect under this contract with limits of not less than five million dollars ($5,000,000,00) per claim and in the aggregate, the deductible not to exceed one hundred thousand dollars ($100,000.00) unless the Client requires a lower deductible and pays the additional premium that is required in order to reduce the deductible. This policy shall not exclude prior acts relating to the Services or Additional Services provided by the Architect under this contract and is to be underwritten by a company qualified to effect that insurance in the jurisdiction in which the Project is situated. The insurer must be acceptable to the Client acting reasonably. Policies or, in the sole discretion of the Client, certificates of this insurance are to be supplied to the Client throughout the period of construction and for a period of three (3) years following “Substantial Performance of the Work” as defined under the Construction Contract. Policies and certificates are to be countersigned by the Architect's insurer and contain a provision that the insurance will not be cancelled or endorsed to reduce limits of liability or increase the deductible without thirty (30) days' prior written notice being given to the Client. 28974956.4 The Architect represents and warrants that there are no claims pending of which it is aware or ought reasonably to be aware against the Architect's blanket or practice policy. The Architect shall require all of the Consultants engaged by the Architect to independently carry and maintain insurance in the form required in this GC10.2. The Client shall approve limits and deductible amounts upon receipt of evidence of insurance by way of policies or, at the sole discretion of the Client, certificates of insurance under the blanket or practice policies of the Consultants engaged by the Architect countersigned by their respective insurers and containing a provision that the insurance will not be cancelled or endorsed to reduce limits of liability or increase deductibles without thirty (30) days' prior written notice being given to the Client. The Architect shall be responsible for the collection of and distribution to the Client of the policies or certificates of insurance, as the case may be, evidencing the insurance required to be provided by the such Consultants. Each of the Architect's Consultants will be required to represent and warrant to the Client that there are no claims pending of which it is aware or ought reasonably to be aware against its blanket or practice policy”. 10.3 If the Client elects to obtain coverage with respect to the Project under a single Project specific professional liability insurance policy it will furnish the Architect with evidence of insurance by way of a certificate of insurance evidencing that coverage. That single Project specific policy will cover against any and all claims made for negligent acts, errors or omissions of, or attributable to, or relating to the performance of the Services or Additional Services by the Architect, for which the Architect and the Consultants engaged by the Architect are at law responsible, with limits per claim and in the aggregate selected by the Client, and as agreed by the Architect, and a deductible not to exceed one hundred thousand dollars ($100,000.00). This single Project specific policy will exclude prior acts relating to the Services and Additional Services provided by the Architect under this contract. Certificates of this insurance are to be supplied by the Client throughout the period during which the Architect and the Consultants engaged by the Architect provide Services and Additional Services under this contract and for a period of three (3) years following “Substantial Performance of the Work” as defined under the Construction Contract. The Client will maintain the Project specific policy and be responsible for paying all premiums. The Architect will co-operate with the underwriters of the Project specific policy to the extent they require information from the Architect.” Add GC 10.6 as follows: “10.6 The Architect shall promptly inform the Client of any notification received by the Architect regarding any change to the insurance policies required 28974956.4 under this agreement. The Architect shall promptly inform the Client of notices regarding the potential loss of the Architect’s Certificate of Practice.” Add GC 10.7 as follows: “10.7 The Architect will provide verification of WSIB coverage at the commencement of the provision of Services and as requested by the Client from time to time. The Architect shall remain solely responsible for the safety of its employees, Consultants and servants at all times during the provision of Services and Additional Services under this agreement.” S GC [●] GC 11 Termination and Suspension Make the following change to GC11.2: .1 In the first line after the word “contract” add “for any reason that the Client determines in its sole discretion, including, but not limited to, convenience,” .2 In the second line after the words “mitigate costs” add “, if any,” Delete GC 11.3 and replace it with the following: “11.3 Unless the suspension is due to a default by the Architect or Consultants engaged by the Architect, the Architect shall not be liable for delay or damage as a result of the suspension of Services. Upon suspension, the Architect shall submit an invoice for all Services performed to the effective suspension date, together with Reimbursable Expenses and applicable taxes then due. The Architect will also be entitled to payment within twenty-eight (28) days after submission of a Proper Invoice of the suspension expenses defined in GC 11.4. If the Services are suspended (other than by reason of a default by the Architect or Consultants engaged by the Architect), and the Services are recommenced, the Architect's Fees for the remaining Services and the time schedules shall be adjusted equitably to take into account the direct impact of the suspension”. S GC [●] Delete GC 11.4 and replace it with the following: “11.4 Suspension expenses are limited to those set out on Exhibit 6 and if no Exhibit 6 is included in this contract, or if that Exhibit is blank, then no suspension expenses are payable. The Architect shall properly care for and protect all work in progress and materials, supplies, and equipment the Architect has on hand for the performance of the Services and use its best efforts to utilize its materials, labour and equipment in such a manner as to mitigate costs associated with such suspension or termination”. S GC [●] Delete GC 11.5 and replace it with the following: 28974956.4 “11.5 Termination expenses are in addition to compensation for the Services and are limited to those directly attributable to termination for which the Architect is not otherwise compensated up to the date of termination. The termination expenses include only those set out on Exhibit 6. If Exhibit 6 is not included in this contract, or if that Exhibit is blank, then no suspension expenses are payable”. Add GC 11.6 as follows: “11.6 If the Architect believes that suspension or withdrawal of suspension justifies modification of the Construction Cost or the Project Schedule, the Architect shall so notify the Client in writing (with adequate supporting documentation for the Client’s verification and approval) within ten (10) Working Days after receipt of the notice of suspension or withdrawal of suspension and thereafter the Client and the Architect shall agree upon an equitable adjustment in the Construction Cost and/or the Project Schedule based upon such verified and approved supporting documentation as full settlement to the Architect for the suspension or withdrawal of suspension; provided that in no event shall the Architect be entitled to any special, incidental, indirect or consequential damages because of such suspensions or withdrawals of suspension (including, without limitation, loss of profits, loss of opportunity or loss of productivity).” Add GC 11.7 as follows: “11.7 If the Architect is in default in the performance of any of the Architect’s obligations under this contract, the Client may, without prejudice to any other right or remedy the Client may have, notify the Architect in writing that the Architect is in default of its contractual obligations and instruct the Architect to correct the default in the five (5) Working Days immediately following receipt of such notice. If the Architect fails to correct the default in the time specified or in such other time period as may be subsequently agreed in writing by the parties, without prejudice to any other right or remedy the Client may have, the Client may terminate this agreement. The Client must pay the Architect for the Services rendered and Reimbursable Expenses incurred by the Architect to the date of termination, less any amounts necessary to compensate the Client for damages or costs incurred by the Client or by any person employed by or on behalf of the Client arising from the Architect’s default.” Add GC 11.8 as follows: “11.8 Without limiting the generality of GC 11.2, the Architect expressly agrees that the Client may terminate this agreement at its convenience at any time on providing written notice of such termination. Upon termination for convenience, the Architect shall be entitled to be paid for all Services performed and Reimbursable Expenses incurred to the termination date, plus reasonable and properly documented costs 28974956.4 incurred by the Architect in demobilizing and terminating its contracts with Consultants. For certainty, the Architect shall not be entitled to any loss of profit that the Architect or any Consultants incur as a result of termination under any circumstances.” S GC [●] GC 12 Payments to Architect Delete GC 12.3 and replace it with the following: “12.3 The Client shall pay the Architect invoices as stated in Article A16 of the contract, each of which invoices must be a Proper Invoice, and where applicable shall be in proportion to the Services performed in each phase of the Services and shall be consistent with a schedule for paying and timing of payments provided for in the Article A13 and GC 12.1.” S GC [●] Delete GC 12.4 S GC [●] GC13 Percentage Based Fee does not apply, as the Architect’s fee or part thereof is not percentage-based as stated Article A12 of the Agreement. S GC [●] GC14 Dispute Resolution Delete GC 14.4 and replace it with the following: “14.4 In this GC 14.4 “Adjudicator” has the meaning ascribed to it under the Construction Act (Ontario) (the “Act”). .1 If a dispute occurs, and the dispute is referred to adjudication pursuant to the Act, an adjudicator shall be selected in accordance with the Act, and the Client may, in its sole discretion, elect to appoint an arbitrator to resolve the dispute separately from the adjudication. In that case the Client may elect to have the arbitration proceed concurrently with the adjudication without delaying the arbitration proceedings and may elect to have the arbitration proceed on an expedited basis. The arbitrator selected by the Client will be a person who is approved by the Client and the Architect. The arbitrator will be selected by mutual approval or appointed pursuant to the arbitration legislation of the Province in which the Project is located. The Client may elect to add the Consultants and other parties to the arbitration. .2 If the Client pays an amount to the Architect in accordance with a determination made by an adjudicator and the Client has elected to have the matter determined separately by an arbitrator or by a court, the Architect will, within seven (7) Working Days of the Client’s notice in writing requiring it to do so, provide to the Client an irrevocable letter of credit, or other form of security satisfactory to the Client, equal to the amount paid plus twenty-five percent (25%) of that amount. The letter 28974956.4 of credit will be in a form, and will be issued by, a bank acceptable to the Client, and will allow the Client to draw on it upon resolution of the dispute should the dispute be resolved by the arbitrator or the court, in favour of the Client”. Add new clause GC14.7: “14.7 For any dispute, neither party may suspend the performance of its obligations under this agreement, while the parties are following the dispute resolution procedures contemplated under this agreement. Notwithstanding the foregoing, the Client may, acting reasonably, withhold payment of disputed amounts in invoices while the parties are following the dispute resolution provisions hereunder to resolve the dispute over those amounts. The Client will pay those amounts promptly after the dispute is resolved, to the extent it is resolved in the Architect’s favour.” S GC [●] GC15 Miscellaneous General Conditions In GC 15.1 delete the words: “which shall not be unreasonably withheld”. S GC [●] Delete GC 15.2 and GC 15.3 S GC [●] Delete 15.5 and replace it with the following: “15.5 The Architect shall not assign, sublet, subcontract, or transfer an interest in this contract without the written consent of the Client, which consent may be unreasonably withheld. The Client shall have the right to assign or transfer all or any part of its interest in this Contract: .1 as security to be granted by the Client in connection with the financing of the Project or a part of it; .2 in connection with the bona fide sale or transfer of the whole or any part of the Project if: .i the purchaser or transferee agrees to covenant directly with the Architect to fulfill its obligations under this contract; .ii to an affiliate of the Client within the meaning of the Ontario Business Corporations Act; or .iii to a partnership in which the Client is the general or managing partner”. S GC [●] Make the following change to GC15.6: 28974956.4 Delete the words “after the Ready-for-Takeover date” and insert the words ““Substantial Performance of the Work” as such term is defined in the Construction Contract.” S GC [●] GC 16 Construction Lien Holdbacks Add the following General Condition: “GC 16 Construction Lien Holdbacks 16.1 The Client will holdback from all payments to the Architect those amounts required to be held back under the provisions of the Construction Act (Ontario). Accordingly, the required percentage of the price of the Architect’s fee and Reimbursable Expenses under this contract will be held back until the time for preserving liens in respect of the Services and/or Additional Services under this contract has expired and all amounts payable to the Architect will be calculated accordingly. In addition, the Client will holdback all other amounts required to be held back where claims for lien are made in respect of the Project in connection with Services or Additional Services provided by the Architect or any Consultant engaged by the Architect”. 28974956.4 EXHIBIT 1: To RAIC Document Six, 2018 Edition Key Personnel of Consultants Engaged by the Architect (ARTICLE A11.1) Structural & Building Envelope: Entuitive Principal: Eric Gordon Mechanical: TMP – The Mitchell Partnership Principal: Reg Callahan Electrical: MBII – Mulvey Banani International Inc. Principal: Joe Berardi Life Safety: Jensen Hughes Principal: Gordana Tijanic Wind/Noise/Vibration: Gradient Wind Principal: Vincent Ferraro Acoustics: Aercoustics Principal: Nicholas Sylvestre-Williams Vertical Transportation: KJA Principal: Andrew Wells Library Planning: Resource Planning Group Inc. Principal: TBD Specifications Writer: BBS Principal: Brian Ballantyne Energy/Sustainability: EQ Principal: Craig McIntyre Waste: Cini-Little Principal: G. Ian Jameson Wayfinding: Entro Principal: Andrew Kusyk Window Washing/BME/Fall Arrest: Ankor Engineering Principal: Josef Budziak 28974956.4 EXHIBIT 2: To RAIC Document Six, 2018 Edition Key Personnel of Consultants Engaged by the Client (ARTICLE A11.2) 1. Civil Consultant: N/A Responsible for: Coordinated by: 2. Environmental Consultant: Stantec Responsible for: Coordinated by: Martin Lang 3. Geotechnical Consultant: EXP Responsible for: Coordinated by: Simon Lam 4. Ontario Land Surveyor: Scheffer & Dzaldov Responsible for: Coordinated by: Dan Dzaldov 5. Independent Inspection & Testing Agency: TBD Responsible for: Coordinated by: 28974956.4 EXHIBIT 3: To RAIC Document Six, 2018 Edition Architect’s Representatives per GC 1.1.3 ArchitectsAlliance Peter Clewes – Principal Peter van Rooy – Project Architect 28974956.4 EXHIBIT 4: To RAIC Document Six, 2018 Edition Client’s Representatives per GC 3.5 twopointO partners inc. George Buckles, Principal 28974956.4 ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ EXHIBIT 5: To RAIC Document Six, 2018 Edition Form of Invoice per ARTICLE A16 and GC 12.3 (To be submitted on Architect’s letterhead) FORM OF PROPER INVOICE PROJECT: DATE OF CONTRACT: Address for Submission of Invoices: Bill to (per property ownership): Attention to: Invoices to be emailed to: Name of Architect’s Representative issuing Invoice: Phone Number of Architect’s Representative: Date of this invoice covering period from ______________ to _____________ including Reimbursable Expenses incurred during that period. Description of the Services and Reimbursable Expenses covered by this invoice (see Schedules A and B to the AGREEMENT). Amount payable for the Services:__________________________________ Attached are copies of all invoices, time sheets, hourly charges, names of individuals and titles where hourly charges are included and date of performance of Services – See Schedule C to the AGREEMENT. Amount payable for the Reimbursable Expenses:__________________________________ 28974956.4 ____________________________________________________________________________________ Attached are copies of all third party invoices and receipts in respect of Reimbursable Expenses. 28974956.4