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Home My WebLink AboutLEG 07-22Report to Council Report Number: LEG 07-22 Date: January 24, 2022 From: Paul Bigioni Director, Corporate Services & City Solicitor Subject: Squires Beach Road Overpass Cost Contribution Agreement -Update on Status of Agreement -File: L-4610-008-20 Recommendation: 1.That this report be received for information and that Council provide direction to City staff with respect to the matters set out in this report. Executive Summary: The City has commenced the design of a bridge over Highway 401 that will connect Notion Road to Squires Beach Road. The overpass will accommodate increased traffic volumes expected from the Pickering Casino Resort and other new development in the vicinity. The City has also commenced the acquisition of parcels of land required for construction of the overpass. The estimated total cost of the overpass project, including design, land acquisition and construction, is $85,200,000. In August, 2020, the Pickering Casino Resort landowners gave the City their written commitment to pay forty percent of the cost of the overpass (Attachment 1). Also in August, 2020, Council directed City staff to prepare an agreement to secure that commitment. Protracted negotiations of the agreement have reached an impasse, notwithstanding significant concessions agreed to (subject to Council approval) by City staff. The casino landowners are now unable to post the Letter of Credit required as security for their commitment to pay their forty percent share of the overpass costs. City staff do not recommend proceeding without Letter of Credit security. Before responding to the casino landowners, City staff require direction from Council. Financial Implications: There are no direct financial implications to this report. Discussion: The Pickering Casino Resort opened to the public on July 26, 2021. The casino is located at 888 Durham Live Drive on lands owned by Pickering Developments (401) Inc., Pickering Developments (Bayly) Inc. and Pickering Developments (Squires) Inc. at 888 Durham Live Avenue. (Those corporations are referred to collectively in this report as the “casino landowners”.) On October 30, 2020 (and as amended on June 30, 2021), the casino landowners obtained a Minister’s Zoning Order enabling additional uses on their lands, including 1,500 dwelling units. LEG 07-22 January 24, 2022 Subject: Squires Beach Road Overpass Cost Contribution Agreement Page 2 To accommodate additional traffic anticipated from the casino as well as other development in the area, the City has commenced the design of a bridge over Highway 401 that will connect Notion Road to Squires Beach Road. The City has also commenced the acquisition of parcels of land required for construction of the overpass. The estimated total cost of the overpass project, including design, land acquisition and construction, is currently estimated to be $85,200,000. On August 5, 2020, the Chief Administrative Officer prepared a Memo to Council (Attachment 2) setting out details of the overpass project. As of that time, the project costs were estimated to be $65,000,000 (being $53,000,000 for construction, $10,000,000 for land acquisition and $2,000,000 for design). Since then, City staff and the consultant jointly retained by the City and the casino landowners have done a more refined estimate of $61,500,000 for construction costs, $20,000,000 for land acquisition and $3,700,000 for design, for a total project cost of $85,200,000. By a letter dated August 5, 2020 (Attachment 1), the Pickering Casino Resort landowners gave the City their written commitment to pay forty percent of the cost of the overpass. On August 20, 2020, Council directed City staff to prepare an agreement to secure that commitment. Since then, staff have prepared a draft cost contribution agreement and have met with the casino landowners and their lawyers on multiple occasions in an effort to finalize the agreement. An important feature of the cost contribution agreement is the requirement that the casino landowners post Letter of Credit security for their 40% share of project costs. Recognizing the negative impact of the COVID-19 pandemic on the new casino’s opening and operation, staff agreed to requests from the casino landowners for extended payment terms. Subject to Council approval, staff have agreed to: (a) a 24 month payment holiday for most non- construction project costs to enable the casino landowners to manage pandemic-induced cash flow challenges; (b) a cap on the casino landowners’ total payment obligation based on the current estimated project cost (but subject to indexing of the construction component for inflation); (c) a credit to the casino landowners for the value of any road widenings contributed by them, to the extent that the City is not entitled to such road widenings at no cost under the Planning Act; and (d) City front-funding of construction costs with repayment by the casino landowners spread over 20 years. Notwithstanding these concessions, protracted negotiations of the agreement have reached an impasse. The casino landowners are now unwilling or unable to post the required Letter of Credit to secure payment of their share of the overpass project costs. Because the draft cost contribution agreement provides for repayment of construction costs over a twenty year period, it is prudent to require Letter of Credit security. Staff do not recommend proceeding with the overpass project based only on an unsecured contractual commitment to make payments over a twenty year period. The unwillingness or inability of the casino landowners to post a Letter of Credit puts the overpass project in jeopardy. Before responding to the casino landowners, City staff require direction from Council. LEG 07-22 January 24, 2022 Subject: Squires Beach Road Overpass Cost Contribution Agreement Page 3 Attachments: 1.Letter from PDI to the City dated August 5, 2020 2.Memo dated August 5, 2020 from the Interim Chief Administrative Officer to City Council regarding the Overpass project and its funding Prepared By: Paul Bigioni Director, Corporate Services & City Solicitor PB:ks Recommended for the consideration of Pickering City Council Marisa Carpino, M.A. Chief Administrative Officer Original Signed By: Original Signed By: Pickering Developments (Squires ) Inc. 186 BARTLEY DRIVE, TORONTO, ONTARIO M4A 1E1 TEL 416-751-4242 | FAX 416-750-8884 August 5, 2020 Marisa Carpino Interim Chief Administrative Officer City of Pickering One The Esplanade Pickering, ON L1V 6K7 Subject: Notion Road Overpass project -Highway 401 Road Crossing -Durham Live This letter is to confirm that Pickering Developments (Squires) Inc. will enter into a cost sharing agreement with the City of Pickering for the Notion Road Overpass project wherein Pickering Developments Inc. will fund 40% of the total Notion Road Overpass project costs which includes but is not limited to the Highway 401 crossing to connect Notion Road and Squires Beach Road (in the City of Pickering), land acquisition, design, construction and other ancillary costs. The cost sharing agreement is subject to the enactment of the MZO for the Durham Live site. Pickering Developments (Squires) Inc. looks forward to working in cooperation with the City of Pickering to complete these important infrastructure improvements. Yours truly, Steve Apostolopoulos Pickering Developments Inc. - 3 - Attachment # 1 to Report LEG 07-22 Memo To: Deputy Mayor Ashe Members of Council August 5, 2020 From: Marisa Carpino Interim Chief Administrative Officer Copy: Director, Corporate Services & City Solicitor Director, Finance & Treasurer Director, Engineering Services Subject: Notion Road Overpass project -Highway 401 Road Crossing -Durham Live File: D-1000-004 Please find attached correspondence from Pickering Developments Inc. that confirms their commitment to enter into a cost sharing agreement with the City of Pickering for the total Notion Road Overpass project costs at a rate of 40 percent, subject to the enactment of the MZO for the Durham Live site. The total Notion Road Overpass project costs include but are not limited to the Highway 401 crossing to connect Notion Road and Squires Beach Road (in the City of Pickering), land acquisition, design, construction and other ancillary costs. The remaining balance of 60 percent will be borne by the City of Pickering which is subject to eligible DC funding. The City of Pickering may pursue other cost sharing partners who are considered to benefit from these infrastructure improvement s (i.e. Region of Durham). At the Special Meeting of Council of August 10th, staff seek Council’s endorsement of the attached correspondence from Pickering Developments Inc. dated August 5, 2020 and that appropriate City of Pickering officials be authorized to take the actions necessary to draft t he Notion Road Overpass project cost sharing agreement, satisfactory to both parties, and return it to Council for approval. Background Information: Projected costs associated with the Notion Road Overpass project are reflected in the 2020 Capital Budget and 2021-2022 Capital Forecast Budget as follows: 2020 Capital Budget 1.5321.2002 Highway 401 Road Crossing Design $2,000,000 2.5321.2004 Highway 401 Road Crossing Land Acquisition $5,000,000 2021 Capital Forecast Budget 1.5321.2101 Highway 401 Road Crossing Land Acquisition $5,000,000 Attachment # 2 to Report LEG 07-22 August 5, 2020 Page 2 of 2 Notion Road Overpass project 2022 Capital Forecast Budget 1.5321.2208 Highway 401 Road Crossing Construction $53,000,000 In late 2019, t he City of Pickering and Pickering Developments Inc. completed a Municipal Class Environmental Assessment (EA) for a new Highway 401 crossing to connect Notion Road and Squires Beach Road, in the City of Pickering, Region of Durham. The need for a new road crossing to link Notion Road with Squires Beach Road for vehicles, pedestrians and cyclists was identified in the City of Pickering Official Plan, Edition 8 (2018), the Town of Ajax Official Plan (2016), the Region of Durham Official Plan (2017), and the Region of Durham Transportation Master Plan (2017). The aim of the Notion Road Overpass project is to provide improved road network connectivity, capacity and active transportation to support continued growth in the City of Pickering and bring relief to the existing road infrastructure. The design is expected to be awarded in Fall 2020 with the anticipated completion by Spring 2022. Constr uction is expected to begin shortly thereafter and be completed by 2024. :mc Attachment Pickering Developments Inc. correspondence dated August 5, 2020 Subject Area diagram Pickering Developments (Squires ) Inc. 186 BARTLEY DRIVE, TORONTO, ONTARIO M4A 1E1 TEL 416-751-4242 | FAX 416-750-8884 August 5, 2020 Marisa Carpino Interim Chief Administrative Officer City of Pickering One The Esplanade Pickering, ON L1V 6K7 Subject: Notion Road Overpass project -Highway 401 Road Crossing -Durham Live This letter is to confirm that Pickering Developments (Squires) Inc. will enter into a cost sharing agreement with the City of Pickering for the Notion Road Overpass project wherein Pickering Developments Inc. will fund 40% of the total Notion Road Overpass project costs which includes but is not limited to the Highway 401 crossing to connect Notion Road and Squires Beach Road (in the City of Pickering), land acquisition, design, construction and other ancillary costs. The cost sharing agreement is subject to the enactment of the MZO for the Durham Live site. Pickering Developments (Squires) Inc. looks forward to working in cooperation with the City of Pickering to complete these important infrastructure improvements. Yours truly, Steve Apostolopoulos Pickering Developments Inc. - 3 - Notion Road Overpass project: Subject Area diagram