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January 18, 2024 - Special Council
Special Council Meeting Agenda January 18, 2024 Hybrid Electronic Meeting Council Chambers 1:30 pm For information related to accessibility requirements please contact: Committee Coordinator 905.420.4611 clerks@pickering.ca Members of the public may observe the open, public portion of the meeting proceedings by accessing the livestream. A recording of the meeting will also be available on the City’s website following the meeting. A Special Meeting of Council has been scheduled and parts of this Meeting will be in-camera in accordance with the provisions of Section 239(2) of the Municipal Act and Procedure By-law, in that the matters to be discussed relate to: c)a proposed or pending acquisition or disposition of land by the municipality or localboard; f)advice that is subject to solicitor-client privilege, including communications necessary for that purpose; k)a position, plan, procedure, criteria or instruction to be applied to any negotiationscarried on or to be carried on by or on behalf of the municipality or local board. Page 1.Call to Order/Roll Call 2.Disclosure of Interest 3.In Camera Matters (Main Committee Room) 3.1 Confidential Verbal Update from the Chief Administrative Officer and theDirector, Finance & Treasurer, and a Presentation from Shawn Oakley, Real Estate Advisory, KPMG LLP Re: Development Analysis: Land Valuation and Options 4.Confidential Special Council – Public Report (Council Chambers) 5.Delegations Members of the public looking to provide a verbal delegation to Members of Council formatters under Section 6 of the agenda may do so either in person, or through a virtual connection into the meeting. For more information, and to register as a delegate, visit www.pickering.ca/delegation, and complete the online delegation form or emailclerks@pickering.ca. Special Council Meeting Agenda January 18, 2024 Hybrid Electronic Meeting Council Chambers 1:30 pm For information related to accessibility requirements please contact: Committee Coordinator 905.420.4611 clerks@pickering.ca The list of delegates who have registered to speak will be called upon one by one by the Chair in the order in which they have registered. A maximum of 5 minutes shall be allotted for each delegation. Please be advised that your name will appear in the public record and will be posted on the City’s website as part of the meeting minutes. 5.1 Sarah Sheehy, Chair, Pickering Public Library Board (In Person) Re: Report FIN 01-24 Capital Projects Priorities 6. Matters for Consideration 6.1 Director, Finance & Treasurer, Report FIN 01-24 1 Capital Projects Priorities Staff/Consultant Delegation Shawn Oakley, Real Estate Advisory, KPMG LLP (In Person) Recommendation: 1. That Report FIN 01-24 of the Director, Finance & Treasurer be received; 2. That Council confirm the first capital budget priority as the Seaton Recreation Complex & Library at an estimated total project cost of $242.97 million (design, construction and furniture & fixtures) and that Council recommends that the Mayor be requested include this project in the 2024 Capital Budget and Capital forecast as follows: a) That the 2024 Capital Budget include $22.95 million for design of the Seaton Recreation Complex & Library to be funded as follows: i. A transfer from the Development Charges Reserve Fund Parks & Recreation in the amount of $17,622,209; ii. A transfer from the Development Charges Reserve Fund Library in the amount of $4,854,760; and Special Council Meeting Agenda January 18, 2024 Hybrid Electronic Meeting Council Chambers 1:30 pm For information related to accessibility requirements please contact: Committee Coordinator 905.420.4611 clerks@pickering.ca iii. A transfer from the Seaton FIA Reserve in the amount of $473,031. b) That the Capital Forecast 2025 to 2033 include funding for construction and related costs for the Seaton Recreation Complex & Library in the amount of $220.02 million. 3. That Council confirm the second capital budget priority as Pickering City Centre Project Phase One which is the City Centre Park at an estimated total cost of $15.0 million (design, construction and furniture & fixtures) and that Council recommends that the Mayor be requested to include this project in the 2024 Capital Budget and Capital Forecast as follows: a) That the 2024 Capital Budget include $1.5 million for design to be funded as follows: i. A transfer from the Casino Reserve Fund in the amount of $750,000; ii. A transfer from the Parks and Recreation Reserve Fund in the amount of $750,000; and, b) That the Capital Forecast 2025 to 2033 include funding for construction and related costs for the Pickering City Centre Project Phase One which is the City Centre Park in the amount of $13.5 million. 4. That Council confirm the third capital budget priority, considering that Recommendations 2 and 3 have a total project cost of $257.97 million and a corresponding estimated Annual Repayment Limit (ARL) impact of 17.5 percent in 2029, from the list of options as presented below in the order of lowest to the highest financial risk: a) No additional capital project selected. This reflects the recommendation of the Director, Finance & Treasurer; or b) Pickering City Centre Project Phase Two (Scenario 9) with the project design starting in 2027, that has an estimated ARL impact of 18.4 percent, and consists of a Special Council Meeting Agenda January 18, 2024 Hybrid Electronic Meeting Council Chambers 1:30 pm For information related to accessibility requirements please contact: Committee Coordinator 905.420.4611 clerks@pickering.ca Senior & Youth Centre; Library renovation; above ground parking deck (552 spaces); new 15,000 square feet of office space and selling of City land with the proceeds being applied to a balloon debt payment associated with the project construction; or c) Petticoat Creek Conservation Park (Scenario 4), subject to negotiations with TRCA, with project construction starting in 2025 that has an estimated ARL impact of 19.4 percent, with the ownership issue still to be resolved; or d) Pickering Heritage Community Centre (Scenario 3), with the awarding of the construction contract having to be considered at the February 2024 Council meeting, that has an estimated ARL impact 19.0 percent, and an estimated gross cost of $61.2 million less Federal Government Grants of ($16.5 million) which translates into a net cost of $44.7 million; or e) Pickering City Centre Project Phase Two (Scenario 6), with the project design starting in 2027, that has an estimated ARL impact of 19.5 percent, and consists of a Senior & Youth Centre, new Library, undergrounding parking (124 spaces), above ground parking deck (552 spaces), and that the City would be in a short term partnership with a “Developer” for the construction of two condo towers built on top of the new municipal facilities and the City would be in a permanent partnership for “common space elements” as related to the two condo towers; 5. That Council authorize the Director, Finance & Treasurer to pursue a financial strategy that maximizes the economic benefit of its Elexicon investment and that the Mayor include sufficient funds in the 2024 Current Budget for the Treasurer to undertake such action; 6. That Council authorize the Director, Finance & Treasurer to pursue all possible options as it relates to addressing the current inadequate DC funding of the growth related capital program and Special Council Meeting Agenda January 18, 2024 Hybrid Electronic Meeting Council Chambers 1:30 pm For information related to accessibility requirements please contact: Committee Coordinator 905.420.4611 clerks@pickering.ca capital forecast and that the Mayor include sufficient funds in the 2024 Current Budget to undertake such action; 7.That Council authorize City staff to pursue naming rights revenues, other private sector partnerships and grant programs for theconfirmed capital budget priorities, whereby it would be beneficialto the City from a financial lens, and that Council recommends thatthe Mayor include $50,000 in the 2024 Current Budget to undertake this activity; and, 8.That the appropriate City of Pickering officials be given authority totake the necessary actions to give effect thereto. 7.Confirmatory By-law 8.Adjournment Report to Council Report Number: FIN 01-24 Date: January 18, 2024 From: Stan Karwowski Director Finance & Treasurer Subject: Capital Projects Priorities -File:A-2000-001 Recommendation: 1.That Report FIN 01-24 of the Director, Finance & Treasurer be received; 2.That Council confirm the first capital budget priority as the Seaton Recreation Complex & Library at an estimated total project cost of $242.97 million (design, construction and furniture & fixtures) and that Council recommends that the Mayor be requested include this project in the 2024 Capital Budget and Capital forecast as follows: a)That the 2024 Capital Budget include $22.95 million for design of the Seaton Recreation Complex & Library to be funded as follows: i A transfer from the Development Charges Reserve Fund Parks & Recreation in the amount of $17,622,209; ii A transfer from the Development Charges Reserve Fund Library in the amount of $4,854,760; and iii A transfer from the Seaton FIA Reserve in the amount of $473,031. b)That the Capital Forecast 2025 to 2033 include funding for construction and related costs for the Seaton Recreation Complex & Library in the amount of $220.02 million. 3.That Council confirm the second capital budget priority as Pickering City Centre Project Phase One which is the City Centre Park at an estimated total cost of $15.0 million (design, construction and furniture & fixtures) and that Council recommends that the Mayor be requested to include this project in the 2024 Capital Budget and Capital Forecast as follows: a)That the 2024 Capital Budget include $1.5 million for design to be funded as follows: i A transfer from the Casino Reserve Fund in the amount of $750,000; ii A transfer from the Parks and Recreation Reserve Fund in the amount of $750,000; and - 1 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 2 b) That the Capital Forecast 2025 to 2033 include funding for construction and related costs for the Pickering City Centre Project Phase One which is the City Centre Park in the amount of $13.5 million. 4. That Council confirm the third capital budget priority, considering that Recommendations 2 and 3 have a total project cost of $257.97 million and a corresponding estimated Annual Repayment Limit (ARL) impact of 17.5 percent in 2029, from the list of options as presented below in the order of lowest to the highest financial risk: a) No additional capital project selected. This reflects the recommendation of the Director, Finance & Treasurer; or b) Pickering City Centre Project Phase Two (Scenario 9) with the project design starting in 2027, that has an estimated ARL impact of 18.4 percent, and consists of a Senior & Youth Centre; Library renovation; above ground parking deck (552 spaces); new 15,000 square feet of office space and selling of City land with the proceeds being applied to a balloon debt payment associated with the project construction; or c) Petticoat Creek Conservation Park (Scenario 4), subject to negotiations with TRCA, with project construction starting in 2025 that has an estimated ARL impact of 19.4 percent, with the ownership issue still to be resolved; or d) Pickering Heritage Community Centre (Scenario 3), with the awarding of the construction contract having to be considered at the February 2024 Council meeting, that has an estimated ARL impact 19.0 percent, and an estimated gross cost of $61.2 million less Federal Government Grants of ($16.5 million) which translates into a net cost of $44.7 million; or e) Pickering City Centre Project Phase Two (Scenario 6), with the project design starting in 2027, that has an estimated ARL impact of 19.5 percent, and consists of a Senior & Youth Centre, new Library, undergrounding parking (124 spaces), above ground parking deck (552 spaces), and that the City would be in a short term partnership with a “Developer” for the construction of two condo towers built on top of the new municipal facilities and the City would be in a permanent partnership for “common space elements” as related to the two condo towers; 5 That Council authorize the Director, Finance & Treasurer to pursue a financial strategy that maximizes the economic benefit of its Elexicon investment and that the Mayor include sufficient funds in the 2024 Current Budget for the Treasurer to undertake such action; 6. That Council authorize the Director, Finance & Treasurer to pursue all possible options as it relates to addressing the current inadequate DC funding of the growth related capital program and capital forecast and that the Mayor include sufficient funds in the 2024 Current Budget to undertake such action; - 2 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 3 7. That Council authorize City staff to pursue naming rights revenues, other private sector partnerships and grant programs for the confirmed capital budget priorities, whereby it would be beneficial to the City from a financial lens, and that Council recommends that the Mayor include $50,000 in the 2024 Current Budget to undertake this activity; and 8. That the appropriate City of Pickering officials be given authority to take the necessary actions to give effect thereto. Executive Summary: At the direction of Council, senior staff have been investigating various major capital project options for City residents. The results of this analysis and recommendations are reflected in this report. This report is based on the professional work undertaken by the firm of Watson & Associates Economists Ltd., and their “findings” are attached for information. The firm of Watson & Associates are experts in Development Charge and Community Benefit Charge funding, municipal economic studies and they are the firm that Durham Region and City of Pickering uses for their Development Charges Studies. While recognizing that there are many excellent capital projects for Council to consider, the financial impact of the City’s debt capacity has to be considered in the final decision. 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. This is known as the Annual Repayment Limit or ARL. However, like your credit card, the goal is not to be at the maximum, instead the goal is to be at an ARL level that allows the municipality the financial flexibility to undertake new financial opportunities through debt financing and to absorb additional debt costs when projects either have increased cost (construction inflation) or higher interest costs that results in higher debt costs. The ARL recommended target is 17.5 percent. At this level, the City still has the additional debt capacity to absorb unanticipated negative events without impacting the financial health of the Corporation. The 2024 debt charges budget (includes interest and principal) is estimated to be $5.1 million. This figure includes the following debt funding components: taxpayer, development charges, and third party debt (Pickering Soccer Dome). The City is the guarantor of DC debt which means that if the total DC fees collected during the year were not enough to pay the DC debt bill, the City would have to make up the shortfall. With an ARL at 17.5 percent, the annual debt payments projection would be $28.7 million which is an increase of $23.6 million over the 2024 estimated debt charges and represents an increase of 464.71 percent. The table below provides a financial summary of the decisions under consideration as it relates to the Annual Repayment Limit or ARL. - 3 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 4 Annual Repayment Limit Options 2025 % 2026 % 2027 % 2028 % 2029 % 2030 % 2031 % 2032 % 2033 % Scenario 2 – Base 5.0 6.1 5.4 11.4 17.5 16.1 14.9 13.7 12.7 Scenario 3 – Base with PHCC 5.0 7.0 7.0 12.9 19.0 17.5 16.2 15.0 13.9 Scenario 4 – Base with PCCP (no pool) 5.0 6.1 6.8 13.0 19.4 17.8 16.5 15.3 14.2 Scenario 5 – Base with PCCP (with pool) 5.0 6.1 6.2 13.1 20.1 19.0 17.6 16.3 15.1 Scenario 6 – Base with Pickering City Centre (PCC) 5.0 6.1 5.4 12.1 19.5 17.7 16.8 18.1 16.7 Scenario 7 – Base with PCC v2 5.0 6.1 5.4 12.2 18.2 19.5 21.2 20.4 19.0 Scenario 8 – Base with PCC v3 5.0 6.1 5.4 11.9 17.9 18.4 17.0 17.7 16.4 Scenario 9 – Base with PCC v4 5.0 6.1 5.4 11.9 17.9 18.0 16.5 17.0 15.9 Legend: PHCC – Pickering Heritage & Community Centre PCCP – Petticoat Creek Conservation Park PCC – Pickering City Centre The Scenario 2 - Base option is the Pickering City Centre Project Phase One (consisting of City Centre Park) and Seaton Recreation Complex & Library. This option is included in the Senior Staff Recommended draft 2024 capital budget and the corresponding forecast (2025 to 2033) capital projects. The Seaton Recreation Complex & Library is a very high priority capital project due to the fact it is the first municipal facility in Seaton which will address the recreational and library needs of this growing population. Once completed, the City could then undertake a full renovation of the Chestnut Hill Developments Recreation Complex (CHDRC) pool that is nearing the end of its life. The Scenario 2 - Base option also takes into consideration those previously approved capital projects that have not yet started or whereby the debt hasn’t been issued. The increase in ARL for Scenario 2 - Base reflects the strategy that the debt that is required for the Seaton Recreation Complex and Library is issued over two years 2027 and 2028 and the corresponding cost is reflected in the ARL increasing for the years 2028 and 2029. Senior staff strongly recommend Scenario 2 – Base to Council as the first capital budget priority. This option still allows for unused debt capacity to be applied to address unanticipated higher costs associated with the Seaton Recreation Complex & Library, interest rates that have not decreased substantially or any other unanticipated uncontrollable event such as - 4 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 5 unfavourable senior government legislation. Members of Council should be aware that with an ARL at 17.5 percent, the City would have one of the highest ARL in Ontario. In addition, with this option, Council could also consider the possibility of applying for new senior government grant opportunities taking into consideration the ARL. Estimated Annual Debt Payments per Recommendation Scenario by Year 2029 2030 2031 2032 2033 Scenario 2 – Base $28,957,414 $28,449,696 $28,265,043 $27,948,550 $27,692,306 Scenario 9 – Base with PCC Phase Two (Lite City Centre) 30,791,108 33,814,484 33,629,830 36,663,562 36,407,318 Scenario 4 – Base with PCCP – no pool 31,811,148 31,578,870 31,394,217 31,077,724 30,821,480 Scenario 3 – Base with PHCC 31,030,557 30,522,839 30,338,185 30,021,693 29,765,448 Scenario 6 – Base with PCC Phase Two (Full City Centre) 31,968,464 31,917,580 33,376,689 37,715,009 37,471,296 The table above provides an estimate of the annual debt payments (interest and principal) related to Recommendation 4 scenarios. These annual debt payments includes taxpayer and DC funded debt. The estimated 2024 debt payments is $5.1 million and the figures in the above table represents a multiplier increase to the annual debt payments. Relationship to the Pickering Strategic Plan: The recommendations in this report respond to the Pickering Strategic Plan Priorities of Advocate for an Inclusive, Welcoming, Safe & Healthy Community; and, Advance Innovation & Responsible Planning to support a Connected, Well-Served Community; Financial Implications: The attached document entitled "City of Pickering Fiscal Impact Assessment” (Watson Study) dated January 10, 2024 as prepared by the firm of Watson & Associates 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, medium and long term financial sustainability. This document reflects the process of projecting revenues and expenditures (including capital expenditures) over a ten-year period while using assumptions relevant to the municipality. The baseline capital expenditures used in this exercise was based on the Senior Staff Recommended Draft 2024 Capital Budget and nine-year forecast. This economic model mainly used a weighted average assessment growth of 4.0 percent for the ten-year period. The City’s actual assessment growth for 2024 is 4.0 percent. The economic model also assumes that starting in 2027, the City would have an asset management levy increase of 1 percent per year to help fund the replacement of key municipal infrastructure that in-turn would reduce debt financing pressures. - 5 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 6 Project Cost Inflation The Watson Study reflects current known or estimated construction costs for the ten-year period. When undertaking this study and corresponding analysis, the revised high cost of capital projects was extraordinary and unprecedented. The graph below illustrates the most recent large increase in cost pressure for two key capital projects. As the above graph indicates, the debt costs in this situation, at a minimum, would have doubled and that in-turn consumes more ARL capacity. These cost pressures are also being experienced with other capital assets, however, not to the same degree. The most recent example of construction cost inflation incurred in the latter half of last year. Before the PHCC tender was released, the City hired a professional firm to undertake a cost analysis. Their cost estimate of the PHCC construction project was $42.5 million and when the tender closed shortly thereafter (July 27), the bid price was $56.309 million. The City then rescoped the project and the tender closed in December of this year. The City was expecting a significant price reduction but the revised tender price is $51.953 million reflecting a savings of $4.356 million. The tender prices stated above do not include consulting, contingency, furniture, fixtures or equipment. Tax Based Capital Reserves Starting with the 2024 Budget, the City begins to draw down its property tax based reserves to fund capital projects for the years 2024 up to and including 2029. This “draw down” strategy is reflected in the graph below. - 6 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 7 Forecast Year-End Capital Reserve Balances (excluding Development-Related Funds) As the above graph indicates, the City is drawing down on its reserves due to the use of reserves and reserve funds consumed at a greater rate than what is being contributed through the annual budget. This graph also includes the use of the casino reserve. Casino funding is being applied to capital projects throughout the ten-year time period. Starting in 2027, the budget levy model assumes that the City would start to increase its contribution to reserve and reserve funds for asset management. Therefore, the City is able to build up its reserves and starts to pay “Cash” for asset infrastructure replacements or for other capital projects. Starting in 2029, the reserve and reserve fund balance starts to trend upwards and in a few years the City would be in a financial position to start to pay “cash-no debt” for infrastructure renewal projects. Discussion: A. 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: - 20.0 40.0 60.0 80.0 100.0 120.0 140.0 2024 2025 2026 2027 2028 2029 An n u a l B a l a n c e ( m i l l i o n s $ ) YearsScenario 2 - Baseline with revised Debt - 7 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 8 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 and 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 (or ARL) 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 two situations whereby municipalities requested an exemption to exceed the limit to borrow funds to install water and sewer infrastructure. Under this situation, these municipalities 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 is undertaking valuable capital projects whereby there is no revenue stream available to service the higher debt costs. For the PHCC and Seaton Recreation Complex and Library, the program revenues are not sufficient to cover all of the operating costs associated with these buildings. In other words, when these buildings open, an additional levy would be required to pay for the following costs: personnel, program supplies and utilities. B. Capital Project Descriptions Seaton Recreation Complex & Library: Seaton Recreation Complex & Library is a new multipurpose recreation and library facility, totaling approximately 180,000 square feet, that will serve the growing community of Seaton. Located at Whitevale Road & Sideline 24, this facility is envisioned to include various program amenities including 25 metre, 6 lane indoor pool with a separate warm water leisure tank, fitness centre with a group fitness studio, full size double gymnasium, walking track, dedicated youth & seniors spaces, multi-purpose program rooms, and library branch with a full suite of services. The introduction of an arena in this facility is subject to an Arena study which is currently being undertaken by the City. The final function program which will inform the final design will be guided by the Recreation and Parks Master Plan and Library Strategic Plan; will involve extensive community engagement; and will be subject to the approval of Council. This facility will be the first multipurpose Recreation Complex built in Pickering since the Chestnut Hill Developments Recreation Complex opened in 1983. - 8 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 9 Pickering City Centre Project: At the March 27, 2023 Special Meeting of Council through Report CAO 05-23 (Resolution #106/23), Council endorsed a preferred option from the Pickering City Centre Project Option Analysis Study for the next phase of analysis regarding the Pickering City Centre Project. Furthermore, staff were directed to retain KPMG to conduct a detailed analysis of the preferred option to be presented to Council in Q1 2024. The results of that study are set out in Attachment 2 and includes a series of design program options, at various price points, as listed below: A. Scenario 6 – Base with PCC: Council Preferred Option with new Seniors & Youth Centre, New Library, Renovation of current Library for expanded City Hall Administration Space, underground Parking Garage and Above Grade Parking Deck behind the Chestnut Hill Developments Recreation Complex with Residential. B. Scenario 7 – Base with PCC v2: is Scenario 6 with no Residential. C. Scenario 8 – Base with PCC v3: new Seniors & Youth Centre and Administration Space, Renovated Library, underground Parking Garage at PCC and Surface Level parking only (not Above Grade Parking Deck) behind the Chestnut Hill Developments Recreation Complex with no Residential. D. Scenario 9 – Base with PCC v4: is Scenario 8 with Above Grade Parking Deck with Residential. Each option presents its advantages and disadvantages with respect to project cost, on-site parking, new vs. renovated facilities and project control. The analysis, prepared by KPMG at the direction of Council, is a valuable resource when evaluating Pickering City Centre Project amongst other important Capital Projects that must be prioritized. Pickering Heritage & Community Centre (PHCC): PHCC is a new 44,000 sq. ft. facility that will celebrate the city’s rich heritage by bringing together Museum, Library and Community Centre into one dynamic space. The facility is envisioned to serve as the new Visitor’s Centre for the Pickering Museum Village (located at Hwy 7 & Greenwood Road) and replace the small, aging administrative building that currently exists on the site. It will also preserve local history and provide much-needed storage space for over 11,000 artifacts, with special environmental and lighting controls, for collections, artifacts and records for the Library, Pickering Museum Village, and City Hall. The construction of PHCC will replace the nearby aging and inaccessible Greenwood Community Centre which is at the end of life with 5-year deferred maintenance totaling approximately $2.58M. PHCC provides a larger, multipurpose facility with newer amenities that will be more cost effective and will best serve local residents and the municipality as a whole, over the long term. PHCC is designed to be zero-carbon – meaning the facility will be highly energy-efficient and minimize greenhouse gas emissions from building materials to operations, and support Pickering’s journey of becoming one of the most sustainable cities in Canada. This project is guided by the City’s approved Cultural Strategic Plan, which sets a vision for the place of arts, culture and heritage in the City and identifies strategic directions for policy, investment, partnerships and programs for 10 years. - 9 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 10 Petticoat Creek Conservation Park: Council received Report CAO 11-23 at the December 11, 2023 Council Meeting (Resolution #365/23) which shared the results of KPMG’s analysis regarding the potential partnership of PCCP property between the City and TRCA, the potential for enhanced park amenities and programming, and the projected financial impact to the City of Pickering. This work was undertaken at the direction of Council through Resolution #158/232. The opportunities outlined in that report are referred to in this report as “Scenario 4 – Base with PCCP (no pool)” and “Scenario 5 – Base with PCCP (with pool)”. C. Recommended Scenarios Recommendation 4 a): Scenario 2 – Base option Please find below, a description of Scenario 2 – Base option and its major components: Seaton Recreation Complex & Library Pickering City Centre Phase One – City Centre Park 2024 Senior Staff Recommended Draft Capital Budget Senior Staff Recommended Capital Forecast (2025 to 2033) Zero Dollars for Pickering Heritage & Community Centre Zero Dollars for Pickering City Centre Phase Two and Three In the 2024 Senior Staff Draft Recommended Budget, there is $22.95 million for the design of the Seaton Recreation Complex & Library. The construction cost reflected in the “Watson Study” reflects staff’s best estimate regarding the project cost. After the architect firm is hired, the strategy is to have a robust community engagement plan that would result in defining the design elements and functionality, as approved by Council, that translates into final drawings. Usually at this stage, when the community “Asks” are considered, there is a potential for the estimated construction costs to increase. The Scenario 1 – Base option provides a financial safety net by providing some ARL capacity that in-turn helps to protect the project and the City’s financial health. Included in this report, for each scenario, will be a breakdown of debt in the year, the ARL is at highest level. The breakdown of debt by source at the ARL highest is provided below: Scenario 2 Annual Estimated Debt Payments Base Case - ARL 17.5% 2029 Existing Debt Payments $4,468,773 Third Party (Soccer Dome) 310,779 New Debt Payments 4,157,599 New DC Payments 20,020,263 Total $28,957,414 - 10 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 11 The $28.9 million in annual debt payments includes interest and principal. As stated earlier, the estimated 2024 debt payment is $5.1 million and the 2029 estimated payment represents an increase of 466.67 percent over the estimated 2024 debt payment cost. Annual Repayment Limit (ARL) for Base Line Scenario As the above graph indicates, under the Scenario 2 – Base option, the City hits its ARL peak in 2029 with a declining ARL for the remainder of the time period. The “Council of the Day” would then have the opportunity to consider additional debt financed projects or senior government grant opportunities. Recommendation 4 b): Scenario 9 – Base with PCC v4 (Pickering City Centre Phase Two) (Lowest ARL Model) This option consists of the following components: Seaton Recreation Complex & Library Pickering City Centre Phase One – City Centre Park 2024 Senior Staff Recommended Draft Capital Budget Senior Staff Recommended Capital Forecast (2025 to 2033) Zero Dollars for Pickering Heritage & Community Centre Pickering City Centre Phase Two with design starting in 2027, and has the following: a. Senior & Youth Centre - $56.33 million b. Library Renovation - $13.36 million c. City Hall Administration Space (new 15,000 Sq. feet) $19.20 million 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2025 2026 2027 2028 2029 2030 2031 2032 2033 ARL Target - 17.5%Base Case Financial impact of Seaton Recreation Complex debt Future Debt Capacity - 11 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 12 d. Underground Parking (124 parking spots) - $12.49 million e. Above grade parking deck - $41.4 million f. Other costs related to project - $14.83 million g. Residential This option provides the City the opportunity to continue with the Pickering City Centre Phase Two in a measured and cost-effective strategy. If the Seaton Recreation Complex was substantially higher or if there was some other unfavorable negative financial event, the City would have the ability to pause this project due to the fact design does not start until 2027. Once the financial picture has improved, the project would continue. With this option, the City would only need a portion of Esplanade South parking lot lands and therefore, would be able to sell the unused land for a considerable amount (residential condo development). With the possibility of obtaining revenues from land sales, the debt strategy would be to structure the debt payments with a balloon payment option. It should be noted that this option has the lowest cost of the Pickering City Centre Phase Two Options. However, in doing so, this option reflects a considerable compromise as compared to the design and functional program from the preferred design concept selected by Council in March 2023 (Resolution #106/23). Most notably, a Library renovation rather than a new Library. The breakdown of debt by source is provided below: Scenario 9 Annual Estimated Debt Payments ARL 18.0% 2030 Existing Debt Payments $3,085,373 Third Party (Soccer Dome) New Debt Payments 5,201,228 New DC Payments 25,527,883 Total $33,814,484 The $32.5 million in debt payments includes interest and principal. As stated earlier, the estimated 2024 debt payment is $5.1 million and the 2030 estimated payment represents an increase of 562.75 percent over the estimated 2024 debt payment cost. - 12 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 13 Annual Repayment Limit (ARL) Comparison Base vs Scenario 9 As the above graph shows, there could be some challenging times from 2029 to 2032 from a financial lens perspective. Recommendation 4 c): Scenario 4 – Base with Petticoat Creek Conservation Park (without Pool) This option consists of the following components: Seaton Recreation Complex & Library Pickering City Centre Phase One – City Centre Park 2024 Senior Staff Recommended Draft Capital Budget Senior Staff Recommended Capital Forecast (2025 to 2033) Zero Dollars for Pickering Heritage & Community Centre Zero Dollars for Pickering City Centre Phase Two Petticoat Creek Conservation Park capital costs up to 2026 for the following items: a) Pickleball Courts $1.8 million b) New Picnic Shelters $300,000 c) Outdoor Exercise Equipment $200,000 d) Winterized Washroom $1.80 million e) Parking Lot Upgrades $1.20 million f) Other costs $1.20 million Petticoat Creek Conservation Park capital costs from 2027 to 2030 a) Splash pads $900,000 b) Beach Volleyball Infrastructure $619,000 c) New Picnic Shelters $310,000 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2025 2026 2027 2028 2029 2030 2031 2032 2033 ARL Target - 17.5%Base Case Scenario 9 Very limited ability to undertake new debt projects for 5 Years. - 13 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 14 d) Sheltered Lakefront Viewing Gallery $323,000 e) Destination Playgrounds $2.6 million f) New Hiking Trails & Enhancements $4.46 million g) New Operations Building $2.58 million The advantage of this option from a financial lens, is that the City would have the ability to phase project components to control the ARL level. This option has a blend of both small and large cost items and this capital project cost structure would provide the City with financial flexibility. The breakdown of debt by source is provided below: Scenario 4 Annual Estimated Debt Payments ARL 19.4% 2029 Existing Debt Payments $4,468,773 Third Party (Soccer Dome) 310,779 New Debt Payments 6,904,437 New DC Payments 20,127,159 Total $31,811,148 The $32.5 million in annual debt payments includes interest and principal. As stated earlier, the estimated 2024 debt payment is $5.1 million and the 2029 estimated payment represents an increase of 523.52 percent over the estimated 2024 debt payment cost. - 14 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 15 Annual Repayment Limit (ARL) Comparison Base vs Scenario 4 (No Pool) As the above graph indicates, City staff would be able to shift the line below the ARL target level by project timing and capital project selection. There is also the possibility of having a few projects completed by 2026. However, Council has to take into consideration that the property is not owned by the City and the ownership model has to be resolved. Recommendation 4 d): Scenario 3 – Base with Pickering Heritage Community Centre (PHCC) This option consists of the following components: Seaton Recreation Complex & Library Pickering City Centre Phase One – City Centre Park 2024 Senior Staff Recommended Draft Capital Budget Senior Staff Recommended Capital Forecast (2025 to 2033) Zero Dollars for Pickering City Centre Phase Two PHCC all in costs including FFE of $61.1 million less Federal Government Grants of $16.5 million which leaves a residual balance of $44.6 million The original vision of the PHCC project was to replace the existing old administration building and to add Library archives to the new structure to obtain synergies and as a byproduct obtain some DC funding. Through successful reviews, an enhanced vision was created that now includes recreation programing functionality that would accommodate the future demolition of Greenwood Community Centre and serve Greenwood residents and broader Seaton 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2025 2026 2027 2028 2029 2030 2031 2032 2033 ARL Target - 17.5%Base Case Scenario 4 - No Pool - 15 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 16 community. Museum staff were successful in obtaining two grants from the Federal Government: Canada Cultural Spaces Fund (CCSF) $4.0 million Green & Inclusive Community Buildings Program $12.5 million. In the fall of 2023, Federal Government staff informed City employees that they were going to re-allocate the City’s CCSF grant to address other cost pressures from other grant recipients. However, the Federal employees did state that the City would be eligible for another CCSF grant (from their 2025/26 budget estimates) if the City approved the construction tender by the end of February 2024. City staff have followed up with Federal Government employees regarding the probability of the grant funding being available for the time period 2025/26. There is a “risk” that due to the fact that these funds are coming from a future budget estimate, that the grant funding conditions or the Federal Government’s ability to fund these programs may change. City staff followed up with the Federal Government employees regarding this issue and Federal staff have given assurances that these dollars would be available. If Council approves the awarding of the construction contract at the February 2024 Council meeting, the City would have to sign a revised contract that would commit the Federal Government to provide the funds. In this agreement, under section “ANNEX B Financial Conditions subsection 2.1” (Attachment 3), there is a clause whereby the Federal Government has the right to reduce or cancel the agreement at the Minister’s discretion that in-turn negates the binding agreement and eliminates the Federal Government’s liability for this project. Additional information provided by the Federal staff state that they have never seen a commitment cancelled. City staff want to bring this information to the attention of Council, so that Council is aware of the current situation and the possible risk. The PHCC project currently has an estimated completion date by the second quarter of 2026. This new facility would provide additional programming functionality and capability to this area. However, if this project proceeds, there would be additional operating costs associated with the opening of this new facility. Members of Council should be aware that the 2026 budget levy would have to include additional funding for this building both for Community Services and Library. At this current time, staff are estimating that a special levy of 1 percent would be required to fund the operating costs associated with this new facility. The breakdown of debt by source is provided below: Scenario 3 Annual Estimated Debt Payments ARL 19.0% 2029 Existing Debt Payments $4,468,773 Third Party (Soccer Dome) 310,779 New Debt Payments 6,196,659 New DC Payments 20,054,346 Total $21,030,557 - 16 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 17 The $31.0 million in debt payments includes interest and principal. As stated earlier, the estimated 2024 debt payment is $5.1 million and the 2029 estimated payment represents an increase of 507.84 percent over the estimated 2024 debt payment cost. Annual Repayment Limit (ARL) Comparison Base vs Scenario 3 (PHCC) The funding strategy for this project is to borrow funds when the project is near completion. By adopting this strategy, the City can hopefully avoid the current high interest rates and by early 2026, the interest rates would be at a more attractive rate. As the above graph shows, this project exceeds the City’s ARL target which provides the City with the least financial flexibility. Recommendation 4 e): Scenario 6 – Base with Pickering City Centre (PCC) (Phase Two with the Construction of Two Condo Towers to Reduce Project Cost) This option consists of the following components: Seaton Recreation Complex & Library Pickering City Centre Phase One – City Centre Park 2024 Senior Staff Recommended Draft Capital Budget Senior Staff Recommended Capital Forecast (2025 to 2033) Zero Dollars for Pickering Heritage & Community Centre Pickering City Centre Phase Two with design starting in 2027 and has the following: a. Senior & Youth Centre - $56.33 million b. New Library - $63.23 million c. Renovation of old library space for City Administration $15.70 million d. Underground Parking - $12.49 million 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2025 2026 2027 2028 2029 2030 2031 2032 2033 ARL Target - 17.5%Base Case Scenario 3 - PHCC - 17 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 18 e. Parking Deck Behind Recreation Complex $41.40 million f. Other costs related to project - $20.0 million This option reflects the Pickering City Centre concept plan as approved by Council on March 27, 2023 (Resolution #106/23). To reduce the City’s project cost, this project would also consist of two condo towers located above the new municipal facilities. The current projection is that each tower would be approximately 45 stories. However, the 45 story projection is a rough estimate due to the fact that there has been no formal or preliminary concept designs. Staff have asked the consultant, if there was a possibility of adding more floors to increase the value of the City’s land. The complicating factor is the requirement to provide underground parking for the condo units and its corresponding cost. A rough estimate of an underground parking space is $100,000 per space. This project provides 676 parking spaces that consists of: 552 parking spaces located at the back of the Recreation Complex and 124 underground parking spaces. The number of underground parking spaces at 124 is less than the current number of at grade public parking spaces located on Esplanade South which is 135. To accommodate anticipated parking demand, it is proposed that the City construct an above ground three story parking deck located at the rear of the Chestnut Hill Developments Recreation Complex. To help make this project financially attractive under this option, the City is proposing the construction of two condo towers. In this partnership arrangement, there are risks, benefits and some nuances. The first important point to consider is that the condo developers usually start construction once the “project is 75.0% sold.” It is our understanding that the condo developer needs to hit the 75% sales target in order to obtain financing for the project. Therefore, the City will be waiting until the condo developer reaches this sales target. While recognizing that the City may be able to assist in lowering the sales target by using its scarce capital dollars to help finance the project and therefore, fast track the project’s timetable but the more important question is why would the City tie up its scarce capital dollars? The second factor to consider is the length of construction period. The developer would start construction once tower A has reached its sales target. However, tower B construction could be delayed by several months or a year or two meaning that the site could be under construction for several years. Another important factor to consider is that the underground parking lot ramps and other common building areas may be either jointly owned or controlled. This means that once the developer has finished the last tower, the City will now have to deal with the “Condo Board.” These relationships can sometimes be challenging. - 18 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 19 The breakdown of debt by source is provided below: Scenario 6 Annual Estimated Debt Payments ARL 19.5% 2029 Existing Debt Payments $4,468,773 Third Party (Soccer Dome) 310,779 New Debt Payments 5,378,016 New DC Payments 21,810,916 Total $31,968,484 The $32.6 million in debt payments includes interest and principal. As stated earlier, the estimated 2024 debt payment is $5.1 million and the 2029 estimated payment represents an increase of 539.21 percent over the estimated 2024 debt payment cost. This project hits the maximum ARL in 2029. However, due to the fact, the ARL capacity increases every year, the ARL percentage decreases but the debt payments continue to increase up to and including 2033. The diagram below shows the growth of debt payments over the nine-year period starting with 2025. Estimated Debt Payments The largest component of these debt payments is DC debt whereby the City is the guarantor of the debt obligation. $1,000,000 $6,000,000 $11,000,000 $16,000,000 $21,000,000 $26,000,000 $31,000,000 $36,000,000 $41,000,000 2025 2026 2027 2028 2029 2030 2031 2032 2033 Estimated Debt Payments - 19 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 20 Annual Repayment Limit (ARL) Comparison Base vs Scenario 6 As the above graph indicates, if the City selects this option, there would be financial challenges starting in 2028 up to and including 2033. The other issue to consider with this option would be the City’s ability to either manage negative events and or participate in senior government grant funding opportunities. D. Conclusion The corresponding scenarios provide Council with many interesting options to consider. The missing voice from all of the capital buildings infrastructure discussions is the need to invest in our roads, bridges and trails. Staff can make strong arguments for all of the options, however, the same passion would be put forth for the other critical assets that Council needs to consider. Under this situation, there is no “right choice,” instead it’s trying to make the “Best” decision in an environment with uncontrollable elements (interest rates and construction cost inflation) while ensuring that the City is not financially over stretched or put in a challenging financial situation. 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2025 2026 2027 2028 2029 2030 2031 2032 2033 ARL Target - 17.5%Base Case Scenario 6 - City Centre Phase 2 - 20 - FIN 01-24 January 18, 2024 Subject: Capital Projects Priorities Page 21 Attachments: 1. Watson Study – “City of Pickering Fiscal Impact Assessment” – Preliminary Findings Presentation – dated January 11, 2024 2. KPMG Study “Pickering City Centre – Analysis of Selected Option” dated January 10, 2024 3. CCSF Contribution Agreement – Annex Financial Conditions Prepared By: Approved/Endorsed By: Original Signed By: Original Signed By: James Halsall Stan Karwowski Division Head, Finance Director, Finance & Treasurer Prepared By: Original Signed By: Danna Munns Senior Budget & Financial Analyst Recommended for the consideration of Pickering City Council Original Signed By: Marisa Carpino, M.A. Chief Administrative Officer - 21 - Findings Presentation January 11, 2024 City of Pickering Fiscal Impact Assessment 0 Attachment #1 to Report FIN 01-24 - 22 - Introduction •The City of Pickering (City) retained Watson & Associates Economists Ltd. (Watson) to prepare a fiscal impact assessment of multiple capital forecast scenarios for the period 2024-2033 •The approach to completing this assessment included the following components: •Prepare a baseline fiscal impact assessment model based on the City’s Senior Staff Recommended draft 2024 Capital Budget and Forecast •Revise the baseline fiscal impact model for multiple capital forecast scenarios, maintaining the baseline projected tax rate forecast, and measure the implications to the City’s annual repayment limit (ARL), tax-based capital reserves and D.C./C.B.C. reserve funds 1 - 23 - 2023-2041 Basecase Fiscal Impact Model •Anticipated development based on January 2023 Fiscal Impact Model projections, updated for 2024 tax assessment data •Annual weighted assessment growth averages 4% annually over the forecast period to 2033 •City’s baseline projected tax rate forecast, including asset management levy commencing in 2027 •Affordable housing assumed at 20% of anticipated development and D.C. phase-in and exemption funding annualized over forecast period ($8.5 million annually) •Analysis provided in constant 2024$, with nominal tax rates and ARL adjusted for 2% inflation •Debt financing assumptions based on the City forecast interest rates for respective debt term •Tax-base capital reserves forecast to maintain $30 million floor and $70 million ceiling 2 Assumptions - 24 - 2024-2033 Fiscal Impact Model 1.Baseline forecast based on City’s approved 2023 Operating Budget (adj. to 2024$) and 2024- 2033 Capital Budget and Forecast, including Glenanna Park and Seaton Community Centre •Scenario removes Pickering Heritage Community Centre (PHCC) capital funding (2023 & forecast) and delays the timing of the Highway 401 Road Crossing Construction from 2027/2030 to 2031/2034 2.Scenario 1, revised to remove $59.4 million in tax-based debt financing from baseline 3.Scenario 2, plus PHCC 4.Scenario 2, plus Petticoat Creek without pool infrastructure 5.Scenario 2, plus Petticoat Creek with pool infrastructure 6.Scenario 2, plus City Centre version 1 (base option & air rights) 7.Scenario 2, plus City Centre version 2 (go it alone) 8.Scenario 2, plus City Centre version 3 (library reno) 9.Scenario 2, plus City Centre version 4 (library reno & air rights) 3 Modeled Scenarios (2024$) - 25 - 2024-2033 Basecase Fiscal Impact Model 4 Capital Funding Plan •All scenarios include dedicated asset management levy commencing in 2027 (2027 - 2% levy, 1% thereafter) Scenario 2 - Baseline with revised Debt Scenario 3 - Scen. 2 with PHCC Scenario 4 - Scen. 2 with PC (no pool) Scenario 6 - Scen. 2 with CC v1 Scenario 9 - Scen. 2 with CC v4 Combined Scenarios (2,3,4,6) Capital Expenditures Non-Growth Capital Needs - Subtotal 305,224,302 306,569,302 344,729,622 305,224,302 305,224,302 346,074,622 Additional Non-Growth Capital Asset Management Needs42,738,890 42,738,890 42,738,890 42,738,890 42,738,890 42,738,890 Growth-Related Capital Needs - Subtotal 554,385,450 576,981,450 554,385,450 707,691,450 670,269,450 730,287,450 Annual Capital Expenditure 902,348,642 926,289,642 941,853,962 1,055,654,642 1,018,232,642 1,119,100,962 Capital Financing Development Charge Reserve Fund 473,270,440 489,418,267 473,270,440 557,031,130 542,975,140 573,178,957 D.C. PPB Interim Financing 1,488,955 1,794,508 1,488,955 1,488,955 1,488,955 1,794,508 D.C. Grants, Subsidies & Contributions - 1,144,859 - - - 1,144,859 CBC Reserve Fund 478,363 645,478 478,363 1,781,904 1,683,198 1,949,019 C.B.C. Grants, Subsidies & Contributions - (224,755) - - - (224,755) Parkland Dedication 2,510,000 2,510,000 2,510,000 2,510,000 2,510,000 2,510,000 Property Taxes 8,115,500 8,315,500 8,115,500 8,115,500 8,115,500 8,315,500 Reserve Funding/Tax Supported 355,556,936 345,806,936 360,500,256 369,347,160 376,679,609 354,152,615 Rate Stabilization Reserve 6,528,015 6,528,015 6,528,015 6,528,015 6,528,015 6,528,015 Other Grants 1,962,000 1,962,000 1,962,000 1,962,000 1,962,000 1,962,000 3rd Party Obligatory Reserve Fund 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Miscellaneous Sale of Land 7,287,202 7,287,202 7,287,202 7,287,202 7,287,202 7,287,202 Total Capital Financing 859,197,411 867,188,010 864,140,731 958,051,867 951,229,619 960,597,920 Net Amount to be Debentured (tax-supported only) 43,151,231 59,101,632 77,713,231 97,602,775 67,003,022 158,503,042 - 26 - 2024-2033 Basecase Fiscal Impact Model 5 ARL Scenario Forecasts •All scenarios are within 25% of forecast own-source revenues, Scenario 2 maintains City’s policy debt limit of 17.5% - 27 - 2024-2033 Basecase Fiscal Impact Model 6 Tax-Based Capital Reserves •All scenarios descend to City’s reserve floor by 2028 before recovering to level greater than 2024 opening balances ($75 million) - 28 - 2024-2033 Basecase Fiscal Impact Model 7 D.C. Reserve Fund •Future debt obligations place pressure on sustaining D.C. reserve funds post-2033 - 29 - Preliminary Findings •Generally, all scenario are feasible independently with increased debt limit policy and amended D.C. by-law •Scenarios in combination would place greater pressure on ARL and capital funding resources •Financial position improves post-2030 providing an opportunity to adjust timing of facilities in scenarios •Scenario 2 (baseline) maintains City’s imposed debt limit of 17.5% •Debt limit will need to be increased to 19% for Scenarios 3, 4 and 9, and 19.5% for Scenario 61 •Debt is forecast to peak at this threshold in 2029/2030 for each scenario and declines to current limit by end of forecast period 8 1 revised from graphs based on updated KPMG cost estimates - 30 - Preliminary Findings •Capital reserves in all scenarios would approach the policy floor ($30 million) in 2028 before recovering above policy ceiling ($70 million) in 2031-2033 •Balances predicated on sustained assessment growth and tax rate forecast, including capital tax levy (2.0% in 2027 and 1% each year thereafter) •D.C. by-law should be amended/replaced to limit gapping between revenues and capital expenditure estimates (2023 baseline debt $22 million/year vs. proceeds of $17 million) •Ability to address potential historic level of service limitations •Amendment could consider D.C. funding eligibility for Petticoat Creek 9 - 31 - Potential Risks and Opportunities •Risks •Development slows from projections reducing assessment growth and D.C./C.B.C. proceeds •Continued capital cost inflation •Forecast tax rate increases tempered by property reassessment •Opportunities •Province amends D.C.A. to remove mandatory phase-in ($8.5 million annually) and permit studies as eligible capital costs •Potential additional grant funding and other revenue opportunities (e.g. naming rights) 10 - 32 - 1Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. City of Pickering January 18, 2024 Report for Public Session Pickering City Centre – Analysis of Selected Option Attachment #2 to Report FIN 01-24 - 33 - 2Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. This document (“Document”) has been prepared by KPMG LLP (“KPMG”) for the City of Pickering (“Client”) pursuant to the terms of the engagement agreement dated the 14th of October, 2022 and amended on 2nd of May, 2023 (the “Engagement Agreement”). KPMG neither warrants nor represents that the information contained in this document is accurate, complete, sufficient or appropriate for use by any person or entity other than Client or for any purpose other than set out in the Engagement Agreement. This document may not be relied upon by any person or entity other than Client, and KPMG hereby expressly disclaims any and all responsibility or liability to any person or entity other than Client in connection with their use of this document. The procedures we performed do not constitute an audit, examination or review in accordance with standards established by the Chartered Professional Accountants of Canada, and we have not otherwise verified the information we obtained or presented in this Document. We express no opinion or any form of assurance on the information presented in the Document and make no representations concerning its accuracy or completeness. We also express no opinion or any form of assurance on potential costs that Client may realize should it decide to implement the options and considerations contained within this Document. The Client is responsible for the decisions to implement any options and for considering their impact. Disclaimer - 34 - 3Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Contents 01 Review of Mandate 02 Analysis of Selected Concept 1.Background –Selected Concept 2.Program Validation 3.Floor Layouts 4.Renderings 5.Parking Options 03 Project Phasing 04 Financial Analysis 05 Partnership Models 06 Market Sounding 07 Conclusion and Next Steps 08 Appendix - 35 - 4Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 01: Review of Mandate - 36 - 5Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •The City of Pickering’(“City” or “Pickering”) has a bold vision to develop a great city centre that has an exciting new cultural hub with municipal facilities including a new central library, a community centre with (seniors and youth space) and a performing arts centre given the City’s anticipated population growth within the City and in the city centre specifically. The City also envisions a new park space for the community. •For the Pickering City Centre Project (“PCC” or “Project”), the City could partner with a developer to assist with the construction of its new facilities while also helping to reduce Project risks, offer project and construction management support, control development timing and total project costs. Pickering City Centre Project Pickering has a vision to develop a vibrant and active city centre anchored by new municipal facilities including a new central library, a community centre, a parkland and a performing arts centre. This centre will be the core of surrounding residential development. - 37 - 6Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •Pickering expects to grow to over 200,000 people by 2041, including a City Centre that is expected to grow to approximately 19,000 people (10,500 dwelling units). •Given the rapid growth of the City,Pickering has identified the need for additional municipal facilities. The preliminary functional requirements of the facilities have been defined as follows: Executive Summary –Project Background The City of Pickering has a vision to develop a central hub that provides a collection of spaces to allow residents to grow culturally, academically and physically. The objective of the central hub is to form a great city centre. Central Library (40,000-45,000 square feet (“sf”)) Performing Arts Centre (“PAC”) (35,000-40,000 sf) Community Centre (65,000-70,000 sf including dedicated senior and youth space) Public Park (CentreCourt Developments Parkland Dedication) Administrative Space Expansion (35,000-40,000 sf, to renovate former library space for administrative staff) Public Amenities (service counter & washrooms) Note: The square footage of the facilities have been estimated based on programming validation and initial floor plate designs. *Sources: Durham Region Growth Management Study (G.M.S.) –Phase 2 - 38 - 7Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Pickering seeks reduced risk and partnership structure complexity, financial sustainability and space flexibility throughout the PCC project and wants to be seen as a leader in sustainability. The City of Pickering has the following goals and objectives for the PCC project: Goals for the PCC Project Reduced Risk and Simple Structure Deliver the project through a simple partnership structure to reduce project risk. Financial Sustainability Capture value of residential development opportunity and optimize construction cost synergies between civic facilities envisioned in the PCC project. Space Flexibility and Synergies Build flexible spaces with synergies between requirements –library, administration space expansion and community centre. Sustainability Leadership “Our time is now” to be a leader in sustainability as reference point for future City development and source of pride. Cultural Hub Develop a cultural hub to serve citizens better and provide them with space that enables socialization, access to culture, etc. - 39 - 8Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •In 2022, the City engaged KPMG and HPA to perform an options analysis for the PCC project. This involved an assessment of three options to enable Council to make an informed decision regarding next steps. Review Council report from March 2023 for more details. •In 2023, Council directed KPMG and HPA to conduct Phase 2 to analyze the selected concept in greater detail. This is the focus of this report. Process Overview for PCC Project Phase 1 The first phase included preparing three architectural concepts and determining the project economics for the various options. Phase 2 A more detailed design and business case analysis of the preferred option, endorsed by Council. Phase 3 Support a procurement process and evaluation to find the right development partner. Phase 1: Option Analysis Study Phase 2: Analysis of Preferred Option Phase 3: Setting the Course for Development Completed We are here 2024-onward Pre-development Process Overview for PCC Project Continuing from Phase 1, KPMG and HPA are engaged in Phase 2 to analyze the selected concept. - 40 - 9Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. The following methodology was developed by KPMG and HPA to deliver the options analysis study mandate. Step 1: Functional Requirements Identify the functional requirements for City and community needs Step 2: Design Conduct public survey and program validation sessions to develop building floor plans Step 5: Net Project Cost Analyze and estimate potential project cost net of land value based on floor plans Step 4: Potential Partnership Structure Develop framework for City Centre project Step 7: Report Development Develop report for mandate, identify next steps and present to Council Step 3: Stakeholder Engagement Virtual open house to present program layout designs to the public (on City website). Website will provide opportunity for public comments for future consideration Methodology Step 6: Market Sounding Perform market sounding of developers and investors - 41 - 10Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Section 02: Analysis of Selected Concept - 42 - 11Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •The selected concept ‘Facilities on-the-Park’ was selected by City Council on March 27, 2023. •This report provides an overview of the selected concept and detailed floor plan designs created by HPA. •City Council established the following parameters to guide the design and analysis in this phase of work: •Establish City-driven functional programs •Relocate The Esplanade S to enable the selected concept •No parking under City Centre Park •This section focuses on the analysis of the selected concept which includes: -Program validation; -Floor layouts; -Parking; and -Renderings Overview of Analysis of Selected Concept This section of the report outlines the analysis of the selected concept (Base option) to bring the vision of the PCC Project to life. Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 43 - 12Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 2.1: Background –Selected Concept - 44 - 13Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Pickering Town Centre Above Grade Parking 300 municipal parking stalls above grade Administrative Expansion Senior Youth Centre Library Residential Development Upgrades to Existing Bldg. Facades Parkland dedication and features Public square and water feature Above grade parking deck Recreation Complex The Esplanade N The Esplanade S Phase 1 –Selected Concept –Facilities on-the-Park KPMG and HPA assessed options for the PCC project as part of Phase 1 and City Council selected the Facilities on-the- Park concept to complete further analysis in Phase 2. The Phase 1 selected concept shown below forms the basis of the refined floor plan designs and business case that is outlined in the remainder of this report. Admin. Expansion/Public Amenities 38,000 sf GFA | 2 Stories Library 45,000 sf GFA | 2 Stories | 435 municipal parking stalls below grade Residential Towers 794,400 sf GFA | 45 Stories | 2 towers Performing Arts Centre 40,000 sf GFA | 2 Stories | 120 municipal parking stalls below grade Community Centre 50,000 sf GFA | 2 Stories Parkland Dedication Water feature/skating rink, art installation, pavilion, infrastructure for farmers market, trees Update to City Hall/Recreation Complex - 45 - 14Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. This concept leverages the City owned south block to provide strong views of the Esplanade Park from Glenanna Rd and provides an opportunity to accommodate a larger footprint for the library and community centre while improving park views. Key Features of This Concept Great City Centre •Forms a cohesive centre of Pickering leveraging all lands Parkland spaces •Dedicated parkland site opens programming opportunities Mobility •Dedicated parkland site provides parking below grade Delivery controls •City develops city-owned land Iconic design •Library has potential to open up to south end of the Esplanade Park Construction synergies •Library/community centre within the same building Space flexibility •Library/community centre within same building, opportunity for flexibility Active spaces •Sufficient space for active spaces Sustainability •Potential for sustainability leadership demonstrated in project Program synergies •Co-location of library and community centre allows for program overlap and efficiencies Business continuity •Existing services remain operational during construction •Minimizes controversial perspectives –existing library Loading and logistics •Separate loading for residential and facilities from The Esplanade S •Library remains operational until new complete - 46 - 15Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Selected Concept –Facilities On-the-Park View Selected Concept –Facilities On-the-Park View from Phase 1 –March 27, 2023 - 47 - 16Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 2.2: Program Validation - 48 - 17Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Approach to Program Development Below outlines the approach used to refine the selected concept and develop floor plan designs with consideration from the community through a public survey and City staff through program validation meetings. Meetings with Program and Facilities Staff Held an initial set of meetings with City staff to develop a functional program Public Survey A public survey gathered feedback and identified what types of spaces and programs should be used Consolidated Review of Program Hosted a validation meeting with program and facilities staff, and senior leadership to review, validate and approve program plan Program Layout Meetings Completed a meeting with respective program and facilities working groups and senior leadership to review program floorplan designs 3 4 5 6 1 7 2 Meeting with Senior Leadership Held a meeting with senior leadership to consider public feedback and make final revisions to the floor plans. Developed concept sketch and program floor plan designs based on validated program Revised program floorplan designs based on feedback Finalized floor plan design layouts Public Information Sharing Updated public on the development of the program floor plans including revised concepts and floor plans on the City website Meeting with Council Participated in a meeting with Council to seek approval on the floor plan designs and business case and next steps Se l e c t e d C o n c e p t Fl o o r p l a n D e s i g n s o f Co n c e p t March 2023 January 2024 - 49 - 18Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •KPMG and HPA shared a draft functional program matrix which leveraged information provided by City staff from older studies performed. •City staff completed an exercise to validate the required components of the Project based on new needs for the community. •KPMG and HPA met with City staff to discuss the functional programs for the new library, community centre, performing arts centre, City Centre Park, expanded admin space etc. and looked for opportunities to develop space efficiencies while developing a functional program. •The program was validated with Senior Leadership. City Staff Program Validation Exercise KPMG and HPA performed an extensive program validation with City staff. - 50 - 19Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Community Engagement Findings (1/2) •In August 2023 the City released a public survey (physical and online copies) for the community to respond to in order to support KPMG and HPA with the program validation process. •The public survey involved several questions to collect feedback from the community. The survey was available online and physical copies of the survey were provided at the City’s community facilities (e.g., library, community centres, City Hall) and handed out by staff and City events. •The survey received 625 responses from all age groups from 15 to 55+. •Key feedback provided through the survey included that people want: •green spaces, outdoor event space, walkability, public spaces; •resources that support physical and mental wellness; and, •spaces to attend programs, performances, access spaces to learn new skills and hobbies, for teens, access technology and be creative. Source: City of Pickering In a public survey conducted in August 2023, the Pickering community shared their excitement and vision for the future of Pickering City Centre. The survey received 625 responses and some key takeaways are highlighted below. - 51 - 20Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. 229 429 354 286245 244 151 190 99 Community Engagement Findings (2/2) The survey findings below informed the design analysis. 80%56% Greenspace is Very Important Energy Efficiency and Sustainability is Very Important Positive Responses to Greenspace and Environmental Considerations 493 275 179 95 59 Drive Walk Bike Public Transit Other Park Features for City Centre Park Method of Travel to PCC - 52 - 21Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Proposed Program The proposed program detailed below reflects the output of the program validation with City staff and feedback provided from the public survey. Considerations were also made to determine how to best incorporate the requirements with the program space available within the boundaries of the project. Library Community Centre Shared Park PAC CHILDREN’S LIBRARY 8,000 SF TEEN SPACE & COLLECTION 2,000 SF OPEN OFFICE SPACE2,200 SF COLLECTIONS2,950 SF MULTI PROGRAM ROOMS2,400 SF DOUBLE GYM 18,000 SF ACTIVITY ROOMS 6,400 SF DANCE STUDIO4,000 SF YOUTH ROOM 2,000 SF SENIOR’S ROOM2,500 SF MAIN FLOOR LOBBY 5,000 SF UPPER FLOOR LOBBY2,000 SF BOARDROOM1,600 SF CAFÉ 900 SF REFRIDGERATED SKATING RINK Size to be determined AMENITY BUILDING3,900 SF 600 SEAT THEATRE 9,300 SF REHEARSAL/SECONDARY PERFORMANCE SPACE 2,500 SF LOBBY AND COMMUNITY SPACE5,000 SF - 53 - 22Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Place des Festivals, Montreal QC Park Programming Israels Plads Square, Denmark Nathan Phillips Square, Toronto ON Food Trucks Emera Oval Pavilion, Halifax NS Amenities Building Hardscape Farmer’s Market Performance Infrastructure Toronto Flower Market, Toronto ON Refrigerated Skating Rink The proposed program for the park includes the following uses. Chinguacousy Park, Brampton ON Note: Images are from public sources - 54 - 23Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 2.3: Floor Layouts - 55 - 24Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •City Council identified the Facilities on-the-Park concept as its selected option as noted earlier. As such, HPA and KPMG performed program validation for the project with inputs from the community and City staff. •Following the program validation, HPA developed a concept sketch (see image on right) and associated floor plans for the program on the specific locations attributed for the Facilities on-the-Park concept. •Over the course of the past few months, HPA developed several options for City staff and senior leadership to review and select their preferred floor plans for the library/community centre space. •The master plan and floor layout recommended by senior leadership as best suited to meet project needs is presented in the following pages of this report. •High-level concept layout designs are outlined for the PAC and park afterward. Developing Concept Sketch and Floor Plan Test Fits Based on the program validation performed, a concept sketch and floor plan test fits were developed for the Facilities on the Park concept. Early HPA concept sketch depicting the vision for a holistic plan for the selected concept showing connectivity and walkways with major features. - 56 - 25Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Master Plan The master plan below provides a vision for the PCC project, which encompasses the new library and community centre, above and below grade parking, the performing arts centre, as well as the City Centre Park. Source: PCC Master Plan from Phase 2 –December 6, 2023 City Centre Park Library and Community Centre Performing Arts Centre Parking Deck - 57 - 26Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Master Plan Component Details Detailed components for the new library and community centre and City Centre Park can be seen in this drawing. Legend Library Community Centre Service Spaces Shared Lobby Spaces Residential - 58 - 27Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Layout –City Centre Park The public park (City Centre Park) is parkland dedication from CentreCourt Developments. This is a conceptual layout as to how the City could imagine the parkland dedication ‘City Centre Park’. The lands are expected to be conveyed to the City around 2024 and free and clear of encumbrances by 2026. CentreCourt Developments’ Proposed Greenspace City Centre Park (to be City-owned Land) Source: Conceptual City Centre Park Layout from Phase 2 –December 18, 2023 - 59 - 28Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Layout –Gathering and Performing Spaces The PCC Project provides various additional spaces for City residents to gather and to enjoy performances as shown below in the yellow areas. Source: Conceptual City Centre Park Layout from Phase 2 –December 21, 2023 - 60 - 29Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –Sketch of Library/Community Centre Source: HPA –December 6, 2023 HPA concept sketch depicting the vision for a floor plan for the library and community centre. The sketch shows a heart (large public space) connecting the community centre on the left (green) with the library on the right (blue). - 61 - 30Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –Program Options Four program options were developed for the project which consider new build of the full program, renovation of the existing library for the library, and development without residential. Option B is the same as base option but without residential. Option C considers renovating the library (versus building new) and adding some additional office space. Option D is same as Option C, but without residential The base option considers the full program with residential. PLACE IMAGE HERE PLACE IMAGE HERE PLACE IMAGE HERE Build New –Community Centre and Library Renovate Existing Library for City Hall Administrative Space Build New –Community Centre and Office Space Renovate Existing Library for Library PLACE IMAGE HERE PLACE IMAGE HERE PLACE IMAGE HERE PLACE IMAGE HERE Base Option Option B Option C Option D Note: To enable the City Centre project a City Initiated Zoning By-law will need to be completed to accommodate the building locations as well as the increase in tower heights and reduced residential parking ratio. The delivery of municipal facilities is dependent on the housing market conditions (condo sales and/or unit rents) of the development partner. - 62 - 31Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –Library/Community Centre –First Floor Below presents the first floor layout of the library and community centre. Mechanical spaces are preliminary. Legend Library 20,107 SF Community Centre 37,265 SF Service Spaces 4,392 SF Shared Lobby Spaces 5,177 SF Residential - Ground Floor Total Area (Excluding Residential) 66,941 SF Total of Both Floors (Excluding Residential) 110,955 SF Source: Library/Community Centre Floor Plan from Phase 2 –December 18, 2023 - 63 - 32Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –Library/Community Centre –Second Floor Below presents the second floor layout of the library/community centre. Mechanical spaces are preliminary. Legend Library 22,615 SF Community Centre 14,897 SF Service Spaces 1,518 SF Shared Lobby Spaces 4,984 SF Residential - Ground Floor Total Area (Excluding Residential) 44,014 SF Total of Both Floors (Excluding Residential) 110,955 SF Source: Library/Community Centre Floor Plan from Phase 2 –December 18, 2023 - 64 - 33Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –No Residential –First Floor Below presents the first floor layout of the library/community centre without the residential development footprint. This concept aligns the proposed community centre closer to the existing recreation complex. Source: Library/Community Centre Floor Plan Without Residential Footprint from Phase 2 –December 21, 2023 - 65 - 34Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –No Residential –Second Floor Below presents the second floor layout of the library/community centre without the residential development footprint. Source: Library/Community Centre Floor Plan Without Residential Footprint from Phase 2 –December 21, 2023 - 66 - 35Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Concept Floor Layouts –Performing Arts Centre The PAC is estimated to have a 500 to 600 seat theatre that features front of house and back of house areas. The floor layout for the PAC is conceptual to determine its fit on the site, but has not been formally validated. Source: Conceptual PAC Floor Plan from Phase 2 –December 18, 2023 Existing Recreation Complex FRONT OF HOUSE BACK OF HOUSE - 67 - 36Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Residential Concept •Residential development could include units for sale (condominium) or for rent (apartment). •The current market conditions within the residential sector show lagging demand for sales but strong demand for rental units. •Typically rentals units are less expensive to build and target a lower affordability segment of the population. •Rental development may not provide the same short-term land value as condominium. •Rental may require less parking as the demand for vehicles could be less. •Tenants of either rental or condos may act as users of the community centre and library, while also activating the City Centre. •Summary –given the current strong demand for rental housing, a partnership with a developer looking to build a purpose-built apartment complex should be explored. Condominium One Yonge Pinnacle with Community Recreation Centre, Toronto ON Rental TAS 299 Campbell Ave with Toronto Public Library, Toronto ON Both condominiums and apartment rentals would provide residential activation and opportunity for the City Centre while also generating some return (either short-term or over the long-term) to help offset the costs of development. Note: Images are from public sources - 68 - 37Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 2.4: Renderings - 69 - 38Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. View Along Glenanna Road Towards the North Rendered Image. Source: HPA, December 5, 2023 City Centre Park on the left and community centre on the right. - 70 - 39Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. View of City Centre Park and Water Features Rendered Image. Source: HPA, December 5, 2023 The Pickering sign is attached to the proposed amenities building which would provide skate rental, snack sales, and washrooms. The white screens would provide shade to visitors on hot days. - 71 - 40Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Rendered Image. Source: HPA, December 5, 2023 Facing north-east from the corner of The Esplanade S and Glenanna Road. The small green space (parkette) connects the community centre to City Hall and to City Centre Park. View of Library/Community Centre - 72 - 41Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Winter View of City Centre Park Rendered Image. Source: HPA, December 5, 2023 - 73 - 42Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Skating Features in City Centre Park Rendered Image. Source: HPA, December 5, 2023 - 74 - 43Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Walking Along The Esplanade Park By relocating The Esplanade S, the community centre on the left is directly connected to the Esplanade Park on the right. Rendered Image. Source: HPA, March 27, 2023 - 75 - 44Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 2.5: Parking Options - 76 - 45Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. The existing parking around the City Centre is 255 spaces above grade, however, the surface gravel lot behind the Chestnut Hill Developments Recreation Complex can be paved for a cost of about $2 million (2028 $), to add another 105 spaces. 65 Gravel 135 Paved 55 on Street Existing Parking in the City Centre Area Area Parking Existing PCC Area Parking 190 Rec Centre Area Parking 65 TOTAL 255 Source: PCC Master Plan from Phase 2 –December 6, 2023 - 77 - 46Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. New Above Grade Parking Deck PCC Parking Residential Parking •To address parking requirements for the library, community centre and administrative space expansion, new parking can go below grade under the new library/community centre and above grade behind the recreation complex. The new residential parking will go under the residential towers and connect to the below grade parking used for the PCC public parking. •This parking section refers to either ‘PCC Parking’ or ‘Residential Parking’. PCC Parking refers to the required parking for the library/community centre and the administrative space expansion only. The parking for PAC is not considered as that would be conducted in a future phase. Preliminary Parking Options The preliminary parking options include the construction of a new above grade parking deck in the existing gravel lot behind the recreation complex and to introduce underground parking below the library/community centre. New Underground Garage Source: PCC Master Plan from Phase 2 –December 6, 2023 - 78 - 47Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •Based on the proposed GFA of the library and community centre facilities and administrative space expansion, parking estimates were based in the current City zoning requirements. The parking analysis assumes that about 50% of the existing surface spaces, currently used by city staff and visitors, will be replaced. The other 50% of surface spaces is assumed to be used by library patrons and staff. •Program sharing assumes that some facilities will be more active, while other facilities are more quiet, e.g. during the day,the library and admin spaces could be busy, while in the evening could be quieter while the community centre is busy. Program staff have estimated the number of accessible parking spaces at 35, being equivalent in size to 1.5 regular size spaces to be incorporated primarily below the community centre/library with some being allocated to the above grade parking deck. Preliminary Parking Requirements –PCC Parking An analysis of parking requirements found that the net new parking required for the library and community centre as well as administrative space expansion is approximately 468 shared spaces. PCC GFAs and PARKING REQUIREMENTS Municipal Facilities Level 1 Level 2 Total (/1,000 SF) Spaces Library 20,107 22,615 42,722 2.5 107 Community Centre 37,265 14,897 52,162 4.0 209 Shared Spaces (Community Ctr & Library) 5,177 4,984 10,161 3.5 36 Service Spaces (Community Ctr & Library) 4,392 1,518 5,910 0 TOTAL Library & Community Centre 66,941 44,014 110,955 351 City Hall Admin (Net New - Library Reno)33,411 33,411 2.0 67 TOTAL PCC 100,352 44,014 144,366 418 Less Program Sharing 15%-63 Accessible Spaces 35 Add 35 x0.5 to account for for wider spaces 18 TOTAL PCC Facilites Parking Requirements 373 EXISTING AREA PARKING Today Spaces Replace Existing - South Block 135 50%68 Replace Existing - Street (Esplanade)55 50%28 TOTAL Existing 190 95 Total Required Parking (new program parking PLUS existing)468 GFA (SF)Required Parking Used by Library patrons and City Staff & visitors Replacement - 79 - 48Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •As compared to the base option, the library and admin space requirements are less. Preliminary Parking Requirements –PCC Parking –Options C/D An analysis of parking requirements found that the net new parking required for the library and community centre as well as administrative space expansion is approximately 405 shared spaces. PCC GFAs and PARKING REQUIREMENTS - OPTIONS C/D Municipal Facilities Level 1 Level 2 Total (/1,000 SF) Spaces Library 33,411 33,411 2.5 84 Community Centre 37,265 14,897 52,162 4.0 209 Shared Spaces (Community Ctr & Library) 3,000 3,000 6,000 3.5 21 Service Spaces (Community Ctr & Library) 3,000 3,000 0 TOTAL Library & Community Centre 76,676 17,897 94,573 313 City Hall Admin (Net New)15,000 15,000 2.0 30 TOTAL PCC 91,676 17,897 109,573 343 Less Program Sharing 15%-51 Accessible Spaces 35 Add 35 x0.5 to account for for wider spaces 18 TOTAL PCC Facilites Parking Requirements 310 EXISTING AREA PARKING Today Spaces Replace Existing - South Block 135 50%68 Replace Existing - Street (Esplanade)55 50%28 TOTAL Existing 190 95 Total Required Parking (new program parking PLUS existing)405 GFA (SF)Required Parking Replacement Used by Library patrons and City Staff & visitors - 80 - 49Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •For the residential development, the net parking requirement for 900 residential units is estimated at 0.55 spaces/unit, amounting to 495 parking spaces. Residential developments also consider 0.15 spaces/unit for visitors, which would equal to an additional 135 new parking spaces. •In total, 630 parking spaces are required for the residential development. •Parking requirements for the residential development could possibly be lower as the City requirements track actual demand (sales) of surrounding projects. Preliminary Parking Requirements –Residential Parking An analysis of parking requirements for the residential component found that the parking required is approximately 495 unit spaces and 135 visitor spaces. Total residential parking requirement is estimated at 630 spaces. RESIDENTIAL PARKING REQUIREMENT Residential Development GFA Towers Ground Floor (SF)12,757 Total stories (3-47)45 Number of towers 21,261 Number of towers 2 Tower(s) footprint (SF)765,000 Tower(s) footprint (SF) 8,500 Total Residential GFA (SF)799,018 Total Tower GFA (SF)765,000 Average Unit Size Total units per floor 10 Total units 900 Avg Unit (Selling) Area (SF)87% 772 (Based on ratio of selling area / GFA) Parking - Required Spaces Ratio Spaces Parking spaces / unit (residents)0.550 495 Parking spaces / unit (visitor)0.150 135 TOTAL Parking spaces / unit (total)0.700 630 FULL BYLAW - 81 - 50Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Recreation Complex –Above Grade Parking Deck A new three-level parking deck behind the recreation complex would provide part of the overall PCC parking requirements and could accommodate about 552 spaces at a significant cost discount to building parking below the library and community centre facility. This new parking deck could be built and made operational before the existing street and south block parking are taken out of service for construction. •The option for an above grade parking deck could include the construction of a canopy walkway (red line) to connect visitors directly to the lobby of the recreation complex lobby. In the development of a new above grade parking deck, 160 (65 existing gravel lot + 95 surface replacement) of the new 552 parking spaces are replacing existing outdoor parking, with about 392 spaces being net new. •For consideration, an extra (fourth) level of parking would provide approximately 184 additional spaces at a cost of about $14.3 million (2028 $). Parking Deck with 184 spaces/level Total of Three Levels –552 spaces Source: PCC Master Plan from Phase 2 –December 6, 2023 - 82 - 51Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. The parking requirements analysis indicated that 1,098 total parking spots are required for PCC Parking and Residential Parking. Based on the available parking options, the parking requirements can be addressed through the implementation of the proposed three-level above grade parking deck plus two levels of below grade parking underneath the library and community centre. •Within the below-grade garage, the library and community centre requires approximately 124 of the available spaces (the analysis identified a requirement for 468 parking spaces), while the residential components require approximately 630 spaces. •The preliminary design show a minor surplus parking of 48 spaces for the library and community centre.. Preliminary Parking Options Parking Requirements - PCC 468 Parking Requirements - Residential 630 1,098 POTENTIAL PCC PARKING POTENTIAL RESIDENTIAL PARKING per Level Levels Total per Level Levels Total Total New Parking (Rec Ctr Deck) Rec Centre - Parking Deck 184 3 552 552 Less Existing Rec Centre (unpaved)-65 -65 Less Existing South Block -95 -95 Net New Parking Deck 392 0 392 New Parking (Below PCC) Com.Ctr. & Library Level 1 124 1 124 135 1 135 259 For Residential Visitors Level 1 119 1 119 119 For Residential Residents Level 2 394 1 394 394 Total Below PCC 124 648 772 TOTAL PARKING PCC 516 648 1,164 Parking Surplus / (Shortfall)48 18 66 Gross Parking Constructed Rec Ctr Deck 552 Under PCC 124 Total 676 - 83 - 52Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. This option considers PCC Parking and Residential Parking as per current City by-law requirements. Potentially, parking requirements for the PCC Parking and the visitor Residential Parking could be shared to allow greater flexibility although could be complex to manage operationally. 119 Residential Spaces 124 PCC Parking Spaces 135 Residential Visitor Spaces Base Parking Option 1 –per By-law Requirements –First Level Proposed Below-grade Parking PCC Parking and Residential Visitors Parking (highlighted in red below) 259 Spaces (includes 135 spaces for residential visitors) Residential Parking (highlighted in grey below) 119 Spaces Residential Parking –Second Level (shown on next page) 394 Spaces Total Residential Parking 648 Spaces Source: HPA, Nov 21, 2023 - 84 - 53Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Base Parking Option 1 –Per By-law Requirements –Second Level Following the previous slide, the drawing below shows the 394 residential parking spaces located on the second level. 394 Residential Spaces - 85 - 54Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. This option considers residential parking as per current market expectations. In this analysis, requirements for residential parking is reduced to 0.45 (from 0.55) and visitor parking is reduced to 0.12 (from 0.15). City could have access to an additional 135 spaces. •In the parking layout below, PCC Parking would have access to entire parking section (coloured in red below), which is equivalent to 259 parking spaces. •The development of an extra 135 spaces is about $14 million (2028$). 119 Residential Visitor spaces 124 PCC Parking Spaces 135 PCC Parking Spaces Parking Option 2 –Align Residential with Market Expectations Source: HPA, Below-grade Parking Concept, Dec 19, 2023 Parking - Required Spaces EXTRA Ratio Spaces Ratio Spaces Spaces Parking spaces / unit (residents)0.550 495 0.450 405 Parking spaces / unit (visitor)0.150 135 0.120 108 TOTAL Parking spaces / unit (total)0.700 630 0.570 513 ACTUAL Parking spaces / unit (total)648 513 135 FULL BYLAW DESIGN FIT Note: This parking ratio has not been approved for other local developments. Although planning staff are continuously evaluating new proposals. Note: The City would have to pass a site specific by-law to reduce parking requirements from current standards. - 86 - 55Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Parking Option 3 –No Residential 368 PCC Parking Spaces This option considers PCC parking without the residential development as per current City by-law requirements. In the parking layout below, PCC Parking would have access to 368 parking spaces. The City would need to pave the surface parking lot to create the additional 105 parking spaces as per City requirements. - 87 - 56Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 03: Project Phasing - 88 - 57Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Conceptual Project Phasing Assumptions Key assumptions have been made regarding the project phasing. Library and Community Centre Library and community centre would be constructed at the same time as the residential development. Performing Arts Centre PAC would be considered in the long-term. Detailed layout and associated parking considerations would be re-evaluated at that time. Above Grade Parking Deck Required above grade parking deck needs to be constructed in advance of commencing construction of the library and community centre to accommodate parking that will be misplaced. Parkland Dedication Parkland dedication will be provided to the City once the developments by CentreCourt Developments are completed as it is to be used after encumbrances are removed.The lands are expected to be conveyed to the City around 2024 and free and clear of encumbrances by 2026. - 89 - 58Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1: Construct the park west of Glenanna Rd. referred to as City Centre Park. Phase 2:Construct new above grade Recreation Complex parking. Phase 3: Relocate the Bell vault, move The Esplanade S, construct below grade parking, construct the library and community centre, sell air rights for residential development. Phase 4:Renovate current library for admin expansion. Future Phase 5: Construct the PAC, construct below grade parking for PAC, update the Recreation Complex façade, consider upgrades to update the city hall façade. Conceptual Project Phasing 2 3 4 5 1 5 5 The project is envisioned to be delivered through four phases. The costs outlined are preliminary and do not constitute a detailed cost estimate. - 90 - 59Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 04: Financial Analysis - 91 - 60Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Cost consultant, AW Hooker, provided construction costs, based on an assumed tender date of Q1 2024, with escalation assumptions through 2027, and 3% has been assumed annually after. The costs included contingencies based on an estimate for comparable projects. The estimated project costs have been derived based on preliminary concepts and not full design. Therefore, these costs are preliminary and do not constitute a detailed cost estimate. As the design evolves, costing will become more defined. Costs include: •Total costs for library, community centre and administrative expansion space •Costs for additional capital projects: •The above grade parking deck behind Recreation Complex •The re-location of the Bell vault •The improvements to CentreCourt parkland dedication •Less attributable land value Total project costs do not consider sources of funding (e.g., developer contributions, grants or development charges). The potential development charge eligibility will be determined separately by Watson & Associates. Additionally the costs do not include the costs of the PAC as this is a future phase of work. In other words, the costing refers the PCC which does not include the PAC. Key Project Cost Estimate Assumptions The net project costs are preliminary and do not constitute a detailed cost estimate. - 92 - 61Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Gross Project Costs Based on the unit assumptions in the Appendix, the preliminary costs of the parking, library, community centre and administrative renovations are summarized below to outline the gross project costs. Unit Costs to Build are provided in the Appendix. Total gross project cost is estimated at about $209 million for the full program. The cost estimates do not consider funding sources e.g. development charges. Note: The PCC costs exclude PAC as outlined in the assumptions. Project Costs Base Option - Full PCC with Residential (2028 $) Facility PCC Library $/SF Total ($M) DCs (%) DCs ($M) Tax ($M) Bell Vault Relocation $ 2.65 $ 0.00 $ 2.65 Esplande S. Relocation $ 3.87 $ 0.00 $ 3.87 Library 42,722 $1,480 $ 63.23 $ 0.00 $ 63.23 Community Centre (CC)52,162 $1,080 $ 56.33 $ 0.00 $ 56.33 Shared Spaces (CC/Library)10,161 $880 $ 8.94 $ 0.00 $ 8.94 Service Spaces (CC/Library)5,910 $650 $ 3.84 $ 0.00 $ 3.84 City Hall Admin - Library Renovation 33,411 $470 $ 15.70 $ 0.00 $ 15.70 Total 110,955 33,411 $ 154.57 0%$ 0.00 $ 154.57 Parking Spaces $/Space Cost ($M) DCs (%) Cost ($M) Cost ($M) Below Community Centre/Library L1 Only 124 $100,750 $ 12.49 $ 0.00 $ 12.49 Rec Centre Deck 3 Levels 552 $75,000 $ 41.40 $ 0.00 $ 41.40 Parkette Access $ 0.70 $ 0.00 $ 0.70 Total 676 $ 54.59 0%$ 0.00 $ 54.59 Total PCC ($M)$ 209.16 0%$ 0.00 $ 209.16 Costs to Build FundingArea (SF) - 93 - 62Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Gross Project Costs –Cashflow Forecast The project is estimated to be built commencing in 2028. Inflation 3.0%3.0%3.0% Compounded 0.0%0.0%3.0%6.1%9.3% Project Costs (2028 $)Total ($M) Design Cost 10%Design Build Facility Total ($M)Year Year 2026 2027 2028 2029 2030 2031 TOTAL Esplande S. Relocation $ 3.87 2027 2028 $ 0.00 $ 0.39 $ 3.49 $ 0.00 $ 0.00 $ 0.00 $ 3.87 Relocation of Bell vault $ 2.65 2027 2028 $ 0.00 $ 0.26 $ 2.38 $ 0.00 $ 0.00 $ 0.00 $ 2.65 Library $ 63.23 2027 2028 $ 0.00 $ 6.32 $ 56.91 $ 0.00 $ 0.00 $ 0.00 $ 63.23 Community Centre (CC)$ 56.33 2027 2028 $ 0.00 $ 5.63 $ 50.70 $ 0.00 $ 0.00 $ 0.00 $ 56.33 Shared Spaces (CC/Library)$ 8.94 2027 2028 $ 0.00 $ 0.89 $ 8.05 $ 0.00 $ 0.00 $ 0.00 $ 8.94 Service Spaces (CC/Library)$ 3.84 2027 2028 $ 0.00 $ 0.38 $ 3.46 $ 0.00 $ 0.00 $ 0.00 $ 3.84 City Hall Admin Renovation $ 15.70 2029 2030 $ 0.00 $ 0.00 $ 0.00 $ 1.62 $ 14.99 $ 0.00 $ 16.61 Total $ 154.57 $ 0.00 $ 13.89 $ 124.98 $ 1.62 $ 14.99 $ 0.00 $ 155.48 Parking Cost ($M) Year Year Below Community Centre/Library $ 12.49 2027 2028 $ 0.00 $ 1.25 $ 11.24 $ 0.00 $ 0.00 $ 0.00 $ 12.49 Rec Centre Deck $ 41.40 2026 2027 $ 4.14 $ 37.26 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 41.40 Parkette Access $ 0.70 2026 2027 $ 0.07 $ 0.63 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.70 Total $ 54.59 $ 4.21 $ 39.14 $ 11.24 $ 0.00 $ 0.00 $ 0.00 $ 54.59 Total PCC ($M)$ 209.16 $ 4.21 $ 53.02 $ 136.22 $ 1.62 $ 14.99 $ 0.00 $ 210.07 - 94 - 63Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Program Options –Gross Project Costs The high-level options are summarized below. Key issue is providing parking –full levels are assumed. •The Base Option considers the full program with residential. •Option B is the same as Option A but without the residential. •Option C considers residential plus renovating (versus building new) the library and adding some additional office space. •Option D is same a Option C, but without residential. This excludes land value attributed to potential residential development for Base Option and Option C. Project Costs Base Option - Full PCC with Residential 2028 $Project Costs Option C - Residential, Renovate Library and Build Office 2028 $ Use GFA Cost ($M)Use GFA Cost ($M) New Construction Library & Community Centre 110,955 $ 138.87 New Construction Community Centre & Office 77,608 $ 84.53 Current Library Reno for City Hall Admin Space 33,411 $ 15.70 Current Library Renovate Library 33,411 $ 19.20 Rec Ctr Deck Under PCC Total Rec Ctr Deck Under PCC Total 552 124 676 $ 54.59 552 124 676 $ 54.59 Surplus/ (shortfall) 48 Surplus/ (shortfall) 111 Total $ 209.16 Total $ 158.32 Project Costs Option B - Base Option with No Residential 2028 $Project Costs Option D - Option C, no Residential 2028 $ Assumes parking difference Use GFA Cost ($M)Use GFA Cost ($M) New Construction Library & Community Centre 110,955 $ 138.87 New Construction Community Centre & Office 77,608 $ 84.53 Current Library Reno for City Hall Admin Space 33,411 $ 15.70 Current Library Renovate Library 33,411 $ 19.20 Rec Ctr Deck Under PCC Total Rec Ctr Deck Under PCC Total 368 378 746 $ 66.38 170 378 548 $ 40.78 Surplus/ (shortfall) 118 Surplus/ (shortfall) -17 Total $ 220.95 Total $ 144.51 Parking Spaces (Built) Parking Spaces (Built) Parking Spaces (Built) Parking Spaces (Built) - 95 - 64Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Zero-carbon Option (1/2) An engineer provided a high-level assessment of sustainable systems that could be considered for the project including heating, cooling, space conditioning, ventilation, hot water, electrical capacity, solar shading, natural lighting, envelope, air tightness, solar panels, and electric vehicles. Some sustainable alternatives are described below: System Baseline (Tier 1)Sustainable Alternative (Tier 2 and CaGBC ZCB) Heating •Community Centre and Library: Condensing Gas Boiler and Air-to- Water Heat Pump •City Centre Park Amenities Building: Split Unit Heat Pump •Shared geo-exchange field with thermal network with central heat pumps in each building •Ice Rink Chiller Plant: 80-ton air source chiller with thermal recovery Cooling •All chillers are air cooled and sized to complement the cooling provided by the heat pumps above Space Conditioning •Community Centre and Library: Recirculating air handling unit with glycol heating and cooling and hydronic baseboards •Community Centre: Recirculating air handling units with glycol heating and cooling dedicated to gym and fitness spaces, dedicated outdoor air systems with chilled beams for multi-purpose spaces •Library: Dedicated outdoor air systems with chilled beams and allowance for fan coils in high load zones •City Centre Park Amenities Building: Water-to-Air Heat Pump Solar Shading •N/A •Install shades for each window to limit glare •Facades for library, community centre, and performing arts centre Natural Light •N/A •Install skylight for community centre and library Envelope – Opaque •All: Code Baseline R20 •All public infrastructure: Improved with thermal breaks Air Tightness •No additional measures •Air tightness testing Solar Panels •N/A •Add solar panels to both existing buildings (e.g. Library) and new development Electric Vehicles •Non-Residential: EV Rough-in for 20% of parking spaces •Residential: 40% EV Rough-in and 10% EV Ready with Level II •Non-Residential: Level II EV Ready for 20% of parking spaces •Residential: Level II EV Ready for 100% of parking spaces - 96 - 65Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. PCC TOTAL Mechanical Electrical Shading Skylights Envelope Glazing Air Tightness Photovolt EV Structure Unallocated Costs $ 4,608,000 $ 1,858,000 $ 2,176,000 $ 1,764,000 Assumed PCC Share 50%10% 100% 30% Above Grade parking $ 60,000 $ 20,000 $ 40,000 1 Below Grade Parking Garage (124/772)$ 78,705 $ 78,705 6 Library New Construction $ 6,342,000 $ 4,170,000 $ 96,000 $ 100,000 $ 610,000 $ 1,366,000 7 Community Centre (CC)$ 14,753,000 $ 6,180,000 $ 192,000 $ 2,304,000 $ 479,000 $ 150,000 $ 920,000 $ 185,800 $ 2,176,000 $ 529,200 $ 1,637,000 4 shared Spaces - CC & Library $ 620,000 $ 490,000 $ 20,000 $ 110,000 8 Service Spaces - CC & Library $ 550,000 $ 440,000 $ 20,000 $ 90,000 2 City Hall Renovation $ 3,980,000 $ 3,980,000 TOTAL $ 26,383,705 $ 15,338,705 $ 288,000 $ 2,304,000 $ 479,000 $ 310,000 $ 1,770,000 $ 185,800 $ 2,176,000 $ 529,200 $ 3,003,000 2028 $ $ 31,156,276 18.1% GFA (SF) 144,366 Premium / SF $ 216 Total Project Cost $ 207,900,000 Premium 13% AWH Estimate (R.4 - Nov. 24, 2023) Assume Tender Date of Q4 2021 $ Zero-carbon Option (2/2) The net PCC project cost account for a typical design standard, which has some basic sustainability components but is far from a zero-carbon standard. The below table show the cost premium to bring the building up to a zero-carbon standard. The analysis shows an overall project cost premium of about 13% - 97 - 66Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Section 05: Partnership Models - 98 - 67Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models –Key Considerations There are a wide variety of partnership models that can be used to deliver major projects such as the PCC Project, however, the type of partnership model utilized will impact three main factors. Degree of Ownership and Control Different partnership models allow for varying levels of City control and responsibility during the design and construction phases of the project. Degree of Risk Transfer between Owner and Third Party Different partnership models allow for varying levels of risk allocation between the City and the developer. Agreement Complexity Different partnership models have different levels of complexity in the partnership agreements and the overall structure. A key City mandate is to deliver the PCC Project using a simple partnership structure to reduce project risk - 99 - 68Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Overview of Partnership Models Partnership Models Degree of Developer Control and Developer Risk Degree of City Control and City Transfer Selecting a partnership model will require the City to determine the optimum balance of risk that is transferred to the developer vs the degree of control the City would like to maintain during the design, construction and development. Construction Management (CM) Design-Bid-Build (DBB) Construction Management At Risk (CM@Risk) Design-Build (DB)Public Private Partnerships (P3) P3s require the most complicated structure and the most developer control and are therefore not considered. - 100 - 69Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models: Overview and Comparison The allocation of design and construction responsibilities, and the level of risk transferred to the developer varies with the partnership model chosen. Partnership Feature Design-Bid-Build (DBB) Construction Management (CM) Construction Management at Risk (CM @ Risk) Design-Build (DB) Design Progress Before Partnership •~90%. •~10%•~10%•~10% Design Responsibility •Prime Consultant •Prime Consultant •Prime Consultant •Developer Construction Responsibility •Construction Contractor •Developer as CM manages and administers construction contractor (s) •Developer as CM@Risk manages and administers construction contractor(s) •Developer Risk •City retains cost and schedule risk •City retains cost and schedule risk •Developer as CM@Risk retains cost risk up to GMP •Developer Ownership and Control •Full transparency and ownership of day to day design and construction activities •Transparency and ownership of design and construction activities •CM has day to day oversight •Transparency and ownership of design and construction activities •CM@Risk has day to day oversight and signing authority •Developer controls design and construction once initial design approved by City More City control, less risk transfer Less City control, more risk transfer - 101 - 70Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Pros and Cons of Partnership Models There are pros and cons associated with each of the various partnership models. Key Consideration Design-Bid-Build (DBB)CM CM @ Risk Design-Build (DB) Owner Control & Transparency PR O S City retains full control of design and construction and transparency of cost City manages the design and retains some transparency into costs City approves the design for compliance CO N S Some oversight and control of design and construction transferred to construction manager More oversight and control transferred to developer than DBB and CM (including signing authority) City loses some control of design and construction quality but can remain involved Costs PR O S Fully developed design results in lower bid premium for construction Developer oversight leads to value engineering, efficiency and cost savings Some cost risk transferred from the City through the GMP arrangement Fully integrated design and mechanical system creates efficiencies and cost savings (between residential development and municipal facilities) CO N S Potential for cost overruns that requires more City staff involvement to manage cost overrun risk Risk to costs remains with the City Potential for more claims from developer Schedule PR O S Developer efficiencies and project management can minimize schedule delays Fully integrated design and mechanical system creates efficiencies in schedule CO N S Schedule may be longer due to sequential design and construction Risk to schedule remains with the City Constructability PR O S Design is reviewed from a constructability perspective Enhanced constructability due to integration from design builder CO N S No collaboration between designer and contractor to ensure constructability More difficult to make changes to project once contract commences Contractors PR O S City has access to more and smaller scale contractors and can maintain less adversarial relationships Developer responsible for hiring contractor and managing sub- contractors CO N S CM would hire and manage sub-contractors - 102 - 71Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Conclusion on Preferred Partnership Model •Effectively allocates scope and transfers risks including design and construction risks to the developer. •Provides strong cost and schedule certainty. •The City has the internal project delivery capability to oversee a Design Build project. •Better leverages the skills and relationships of the developer through an integrated design and development process when compared to other models. Design Build The results of the partnership model analysis demonstrated that the Design Build model is the most suitable partnership model to deliver the PCC project in a manner that aligns with the City’s mandate and optimizes the objectives of the project. •The analysis first shortlisted four partnership models that could satisfy the objectives of the PCC Project and align with the City’s mandate for this project. •The allocation of responsibilities and risk between the City and the developer, and the benefits and challenges of each procurement model were summarized. •The analysis further assessed the suitability of the each partnership model against specific criteria to determine the optimal partnership model. •The results indicated that the Design Build has the most alignment with the criteria for the Project and should be used by the City to deliver the Project. •Refer to Appendix C for additional details. - 103 - 72Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 06: Market Sounding - 104 - 73Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Market Sounding Approach 01 Identify Key Market Participants •Contacted investors and developers identified by the City and by KPMG/HPA that may be interested in participating in a market sounding for the PCC Project 02 Develop Market Sounding Questionnaire •Developed a market sounding questionnaire that captures the breadth and depth of the project to provide participants with an overview of project. 03 Conduct Market Sounding Exercise •Engaged 6 developers / investors to evaluate interest in development and provide consolidated findings in this report. Three steps were followed to complete the market sounding. - 105 - 74Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Market Sounding Questions 1.What opportunities and concerns do you see with constructing or operating public recreation facilities within a residential development? 2.What construction or system synergies will result from integrated building designs? 3.What are the opportunities to integrate the recreation and residential spaces with the surrounding greenspaces? 4.What are your thoughts with regards to operating mixed-use parking for the City Centre and residential components? 5.What sort of green building standards would you consider for this type of project? 6.Are there any other comments with respect to the floor layout? 7.What opportunities are there to modify the design to increase market interest? Design Considerations Residential Development Considerations 1.In addition to land value, how can the development community bring value to this project and complement live, work and play? 2.What other amenities would you see being integrated into the development (e.g., retail, dining, etc.)? 3.Compared to freestanding construction, where would you expect construction costs to be for facilities integrated with a residential development? 4.Do you see the residential development leveraging the proposed Community Centre and Library versus having to build its own amenities? 5.How much parking would you expect to develop for the residential project? Transaction Considerations 1.Would you consider this project on a land lease structure? 2.In order to ensure the municipal components get built in a challenging residential market, how could the transaction be structured to ensure the municipal components are built? Market Considerations 1.Within a 2km radius, there are 11 other condo buildings (~9,000 units) that are going to market. Given current supply of approved condo developments, what unique attributes does this project have to attract interest from the development industry? 2.Would you position this project for purpose-built rental or condominium? The following themes and questions were considered during the market sounding exercise. - 106 - 75Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Initial Market Sounding Feedback (1/2) Below outlines initial market sounding feedback: Design Considerations •Consider more density on the south block site to create a more “Bold” project •Several project examples that integrate mixed use within a residential project •Functional program proposed by the City should be feasible –architects and engineers can work to integrate programming with required site constraints •Construction synergies possible such as building envelope, sharing mechanical systems •Opportunity for hotel development as there is a shortage in the region •For hotel development, preference is for standalone systems •Consider impact on surrounding communities and strategies for moving visitors in and out of Pickering City Centre –e.g., expanded public transit, additional parking beyond proposed scope •Consider development of restaurants and other amenities to attract visitors to the City Centre •Consider implementation of car sharing programs or on-site shops for necessities e.g. grocery and drug store •Parking requirement can be combined for residential visitors and community centre parking due to the different times of use Residential Impact Considerations •Developers see value to having a library and community centre included in the project and that these could be shared to limit requirements for private amenities (e.g., gym) •More residential density could create more activation for the parklands and would be attractive for future land owners •Residential market not fully transitioned to net zero given it is costly and difficult to sell condos at higher cost •Hotel market also not fully transitioned to net zero or green building investments, as costs are passed onto the guests •For a hotel development, guest-only amenities should be provided - 107 - 76Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Initial Market Sounding Feedback (2/2) Below outlines initial market sounding feedback: Market Considerations •Current market timing (of residential) due to rising interest rates, high construction costs is a concern •Many developers are not purchasing land •Many developers are not initiating new residential projects right now •Proposed waiting for market economics to improve •Mixed use developers are staying away from residential because current market (high interest rates and high construction costs) are very volatile, but are open to commercial development •Project marketing should emphasize livability and amenities in the close vicinity •While residential condo sale market is weak, rental remains strong. • Transaction Considerations •Land value can help to offset costs for the municipal costs (however, market plays a big factor) •Some developers have no interest in land lease projects •Purpose built rentals would not provide the land value opportunity the City is seeking •Developers noted complexity in integrating municipal facilities with residential development - 108 - 77Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Market Sounding Conclusions Developers like the concept, truly believing that PCC will be ‘centre ice’ and serve as a central gathering point for the community. Developers have done many examples of mixed use projects and have visions to help realize live, work and play. Developers are likely to bring construction cost efficiencies and are well suited to mitigate construction risks. The timing of the City delivery versus current state of residential markets could be problematic. Developers are not interested in partnership models where they do not retain ownership or equity in the project. The key considerations found from marketing sounding interviews are captured below. - 109 - 78Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Section 07: Conclusion and Next Steps - 110 - 79Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Overall Conclusions City staff with support from public consultation validated and concluded a draft functional program for an integrated mixed-use development. A master plan of PCC includes the City Centre Park (provided through parkland dedication) to provide the community with a great amenity to anchor the City Centre Project. Parking for the community facilities and residential component of the project can be provided through two levels of underground parking under the library and community centre, reducing costs for the developer and increasing associated land value. Based on the functional program and the initial floor plans developed for the library and community centre, and the potential for two residential towers, the gross project cost is estimated at between approximately $209 million for the full program to $144 million to build the community centre, renovate the library and build office space. The Design Build model presents the most buy-in from the developer and investor community and aligns most with City objectives for the Project. The market sounding suggested that the current market conditions are a challenge for residential development, however the PCC location and future development potential is attractive to the market. Based on the information presented within this report, the following conclusions can be made: - 111 - 80Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Key Elements to Consider Partnership Model The City will have to develop a development agreement, purchase and sale agreement and/or lease agreement that it would negotiate with the preferred proponent for the project. The City may want to consider engaging external legal counsel that is familiar with these types of agreements in advance of the procurement process so they are involved throughout the process. Funding The City should ensure it has allocated sufficient budget for the project. The City should seek opportunities for provincial and federal grant programs if they become available in the future. Procurement A two staged procurement process should be considered in order to shortlist proponents. This incentivizes the private sector to make investments within the request for proposals stage as they would be among a smaller bidder pool. Design Evolution The designs presented as part of this Phase 2 are early phases of design to include initial floor plans and site plans. The intention of the design work was to determine the feasibility of the functional program with consideration for the residential component. The design developed to this point would inform the City as a reference case and inform the developer/investor about the functional program and requirements for the project. However, the private sector would be expected to develop their own design that meets the objectives. Establishing Governance The City should set a clear governance structure for the procurement, design and construction phase to enable a efficiencies regarding proceeding through the process and should have established formal reporting for key decisions. Refer to Appendix D for high-level overview of potential project governance. The City should understand how the design will evolve throughout the process, and begin preparing for the procurement process. - 112 - 81Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. The following high-level process is envisioned for Pickering to execute the remaining analysis for the procurement process. Phase 1: Option Analysis Study Phase 2: Analysis of Preferred Option Phase 3: Setting the Course for Development Steps: •KPMG/HPA complete Options Analysis Study that includes high- level architectural concepts and project economics Action: •Council to: o select a preferred option for further study o approve funding and further analysis for preferred option Steps: •Support two phased procurement process (e.g., RFQ, RFP) •Support evaluation •Support negotiation with preferred developer partner Action: •Workshop partnership principles •Approve procurement documentation •Approve recommendation for preferred partner and to commence negotiation Complete Procurement Process Steps: •KPMG/HPA to conduct design of facility floorplates to fully consider program requirements •City with support from KPMG/HPA to conduct stakeholder and community engagement •KPMG/HPA to produce business case with updated designs, financial analysis, and provide recommendation on preferred partnership and governance structures. Action: •Council to: o approve recommendation for preferred option o approve proceeding to procurement Procurement Process Overview for PCC Project - 113 - 82Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 3: Setting the Course for Development Steps Phase 3 will involve the City preparing for and executing a two-staged procurement process to set the course for the development of the PCC project. •Phase 3 will see six main activities to select the right developer partner, which are described at a high level below Activity Description a)Develop project and partnership principles After selecting a partnership structure, KPMG to leverage and review the guiding principles developed within this options analysis study, the risks of development and the value of a developer partner and craft project and partnership principles. The project and partnership principles should be workshopped with City staff and City Council as they will form the evaluation framework for the Request for Qualifications (“RFQ”). b)Test market conditions In advance of releasing an RFQ, KPMG will perform an updated market assessment to assess the current conditions of the market (e.g., residential market, land values, developer interest) and determine the value of Pickering lands. This can inform timing to approach the market for the Project. c)Draft and release a Request for Qualifications Leveraging the project and partnership principles, KPMG can support development of a RFQ. It should comprise of two parts; part one should market the opportunity to the development community, and part two should outline the procurement process and evaluation framework that includes the project and partnership principles. d)Evaluate and shortlist proponents The City should evaluate the respondents and shortlist three to five proponents for the Request for Proposals (“RFP”) stage. KPMG can provide ad hoc advisory services. e)Draft and release a Request for Proposals While the RFQ is in market, KPMG can support preparation of the RFP document that would include a technical submission and a financial business case. The technical submission would require the proponents to outline their vision in detail and the financial business case would require the proponent to lock in their net project cost. f)Find the right developer partner The City should evaluate the shortlisted proponents and select the right developer partner based on the scored evaluation that considers both the technical submission and financial business case. KPMG can provide ad hoc advisory services to support negotiation with the selected developer partner to reach an agreement. - 114 - 83Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Pre-Development and Development Roadmap The development roadmap and timeline for the next phase of PCC work is detailed in the table below. 2022 2023 2024 2025 2026 and BeyondRoadmapQ4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 Pre-development Phase Phase 1:Options Analysis Study (Completed) Phase 2: Analysis of Preferred Option (Completed) Phase 3: Setting the course for development a)Develop project and partnership principles b)Test market conditions c) & d) Draft and release RFQ and evaluate and shortlist proponents e) & f) Draft and release RFP and find the right developer partner Development Phase a)Developer partner initiates development process b)Development commences* * Development could take two to three years to complete until construction can commence. - 115 - 84Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Appendix - 116 - 85Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Appendix A: Master Plan Model View - 117 - 86Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1 -PCC Project Facing South-West Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 118 - 87Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1 -PCC Project Facing West Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 119 - 88Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1 -PCC Project Facing South Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 120 - 89Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1 -PCC Project Facing South-East Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 121 - 90Document Classification: KPMG Public© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Phase 1 -PCC Project Facing East Selected Concept –Master Plan Model View from Phase 1 –March 27, 2023 - 122 - 91Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Appendix B: Financial Analysis Support - 123 - 92Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Unit Cost Escalation Assumptions The table below provides an estimate of the hard cost per buildable SF and the parking cost per space used to estimate the PCC project and other capital projects cost. The hard cost per SF and escalation rates were provided by a cost consultant (AW Hooker). The cost estimates are based on a tender date as of Q1 2024 and escalated as per the assumptions below. Construction (Hard) Cost Assumptions 2024 estimates and escalation per AW Hooker R.5 as at Jan 10, 2024 Base Cost Included Contingency 35% New Construction Contingency 30%2024 2025 2026 2027 2028 2029 per Annum 6.0%4.0%4.0%3.0%3.0%3.0% Compounded Base Costs 6.0%10.2%14.6%18.1%21.6%25.3% Library $1,044 $774 $820 $853 $887 $914 $941 Community Centre (CC)$759 $562 $596 $620 $645 $664 $684 Shared Spaces (CC/Library)$620 $459 $487 $507 $527 $543 $559 Service Spaces (CC/Library)$460 $341 $362 $376 $391 $403 $415 Admin - Library Reno $317 $235 $249 $259 $269 $277 $286 Admin - New Construction $864 $665 $705 $733 $762 $785 $808 Below grade $270 $200 $212 $220 $229 $236 $243 Above grade $220 $163 $173 $180 $187 $192 $198 Parkette Access $ 0.60 $ 0.45 $ 0.47 $ 0.49 $ 0.51 $ 0.53 $ 0.54 Bell Vault Relocation $ 2.50 $ 1.85 $ 1.96 $ 2.04 $ 2.12 $ 2.19 $ 2.25 Esplande S. Relocation $ 3.66 $ 2.71 $ 2.87 $ 2.99 $ 3.11 $ 3.20 $ 3.30 Construction (Hard) Costs (Excluding 35% Contingencies) New Facilities Inflation City Hall Other TOTAL $ Parking - 124 - 93Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Unit Cost Assumptions The table below provides an estimate of the hard cost per buildable SF and the parking cost per space used to estimate the PCC project and other capital projects cost. The hard cost per SF was provided by a cost consultant (AW Hooker) and adjustments for soft costs and contingency applied based on estimate for comparable projects. These are preliminary and do not constitute a detailed cost estimate. Project Unit Cost Assumptions - $/SF or $/Space (2028 $) Base Cost Design & Construction Contingency Cost With Contingency New Facilities 2028 30%25% Library $914 $274 $1,188 $297 $1,480 Community Centre (CC)$664 $199 $863 $216 $1,080 Shared Spaces (CC/Library)$543 $163 $705 $176 $880 Service Spaces (CC/Library)$403 $121 $524 $131 $650 35%25% $277 $97 $374 $94 $470 Library Renovation (85%)$236 $82 $318 $80 $400 30%25% $785 $235 $1,020 $255 $1,280 Parking 20%10% Below grade $236 $47 $283 $28 $310 325 $100,750 Above grade $192 $38 $231 $23 $250 300 $75,000 Parkette Access $ 0.53 $ 0.11 $ 0.63 $ 0.06 $ 0.70 Infrastructure 10%10% Bell Vault Relocation $ 2.19 $ 0.22 $ 2.41 $ 0.24 $ 2.65 Esplande S. Relocation $ 3.20 $ 0.32 $ 3.52 $ 0.35 $ 3.87 1- Construction (Hard) Costs are based on Q1, 2024, include noted Design & Construction Contingency PLUS post-contract changes 2- Soft Costs include design costs and Furniture, fixtures and Equipment, but assume no permit costs payable for City assets Other TOTAL $ Admin - New Construction New Facilities Construction (Hard) Costs $/SF [1] SF / Space Parking Cost / Space Admin - Library Reno Design, Fees & FFE (soft) Costs $/SF [2] Total $/SF (Rounded) City Hall PARKING - 125 - 94Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Appendix C: Partnership Models - 126 - 95Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models Analysis –Selecting a Model This partnership models analysis intends to select a partnership model that aligns with the City’s mandate and optimizes the outcomes for the PCC Project. Perform multi-criteria analysis to select preferred partnership model A multi-criteria analysis is performed to assess the suitability of each model against specific key objectives for the PCC and identify a preferred partnership model. Identify key partnership model considerations Important considerations for selecting a partnership model are outlined including the degree of City ownership and control, the degree of risk transfer between the City and developer and the complexity of the partnership deal structure. Shortlist four partnership models Four partnership models are shortlisted based on the key model considerations and the alignment of the structure to the City’s mandate for a simple partnership structure. Identify key model challenges and risks The key benefits and challenges to each of the shortlisted partnership models are outlined. The section describes the process and results of the analysis. The following steps were leveraged to select the most suitable partnership model: - 127 - 96Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models –Developer Partners Value Developer partners can bring a lot of value to a project including trade and materials relationships, project management expertise, historical experience, retention of design and construction risk and private sector financing. Retention of design and construction risk Depending on the partnership model, developers can be responsible for design and construction scope, which means that the developer retains risks associated with constructability issues due to design or cost overruns. Trade and materials relationships Developers have long standing relationships with suppliers, trades and key industry players that could potentially be leveraged to reduce costs. Project management expertise Developers can bring project management to a project, to help ensure it remains on schedule and cost. They can also help manage risks appropriately. Private sector financing potential Developers can bring private sector financing to a project if desired. Depending on their credit rating, the developer may be able to get an attractive borrowing rate, which can help manage Pickering’s current debt capacity. Historical experience Developers bring extensive prior experience to development projects to help mitigate challenges, bring innovative ideas, and help ensure successful delivery. - 128 - 97Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models –Risks of Development There are several risks associated with development, which include development cost risk, market risk, financing risk, delivery control risk and planning risk. Cost Risk Risk that the cost of construction and overall development increases over the project, due to changes in requirements/ scope,design, cost of materials, cost of labour, interest rates etc. City Delivery Control Risk Risk that the City has insufficient decision making and delivery controls during the development of the project. Market Risk Risk that land value and condo values could decrease since these are a function of the market and could decline in the face of rising construction costs and rising interest rates. Council Approval Process Risk The project needs to proceed through the council approval process with Council. The process is risky if Council changes, or if the project requires zoning change approvals. - 129 - 98Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Model 1 –Design-Bid-Build Model City of Pickering Design Construction Financing Prime Consultant Contract Contractor Contract Sub-contractors and Suppliers Operations Maintenance City of Pickering Responsibility Private Sector Responsibility Developer Developer Land Sale The Design-Bid-Build (DBB) involves engaging a prime consultant and contractor separately through two distinct contracts to design and construct the project. The City sells vacant lands. - 130 - 99Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Model 2 –CM Model Construction Financing Construction Management Contract Sub-contractors and Suppliers Operations Maintenance Developer (Oversight) City of Pickering Design The Construction Management (CM) model involves engaging a prime consultant for design services, and a developer to provide construction management services for the project. The developer could help incorporate residential development with municipal facilities. Prime Consultant Contract City of Pickering Responsibility Private Sector Responsibility - 131 - 100Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Model 3 –CM @ Risk Model Construction Financing Construction Management Contract under GMP arrangement Sub-contractors and Suppliers Operations Maintenance Developer (Oversight) City of Pickering Design The Construction Management at Risk (CM@Risk) is similar to the model 2 CM Model, however,under this arrangement the contract price is capped to an agreed Guaranteed Maximum Price (GMP), transferring more risk to the developer than the CM Model. Prime Consultant Contract City of Pickering Responsibility Private Sector Responsibility - 132 - 101Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Model 4 –Design-Build Model City of Pickering Developer Financing Operations Design Build Contract Design Construction Sub-contractors and Suppliers Maintenance The Design-Build (DB) model involves engaging a developer to design build the project. The developer integrates residential development with municipal facilities. City of Pickering Responsibility Private Sector Responsibility - 133 - 102Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Partnership Models: Services and Feature Detail The following table outlines the details of the partnership models based on respective services and features. More City control, less risk transfer Less City control, more Developer risk Partnership Feature Design-Bid-Build (DBB)CM and CM @ Risk Design-Build City Developer City Developer City Developer Design Phase Procure Prime Consultant N/A Procure Prime Consultant Oversight and integration of design Develop design to 30% and approve final design Integrated design and construction Construction Phase Procure Construction Contractor N/A Monitor costs and approve payments Manage and administer contractor(s) N/A Integrated design and construction Development process Lead N/A Lead Support Support Lead Commissioning of buildings Lead N/A Lead Oversight Support Lead Project management services Lead N/A Co-Lead Co-Lead N/A Lead Financing Finance Project N/A Finance Project N/A City typically acquires financing Developer could provide financing Cost Savings Potential for 0-5%Potential for 6-10%Potential for 10%+ - 134 - 103Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Criteria for Analysis The key criteria to assess the partnership models are as follows. The assigned scoring is on the next page. #Criteria Description 1 Efficient allocation of risk / scope The risks associated with the project development are allocated to the party best able to manage the risk. 2 Leverage skills and relationships of developer The developer should bring extensive prior experience to development projects to help mitigate risks as optimal risk allocation improves the likelihood of on-time and on-budget delivery and may improve value for money. 3 Ensure City has sufficient control over design and development The City should maintain sufficient decision making and delivery controls during the development of the project. 4 Provide cost and schedule certainty The developer should have demonstrated capacity from previous work to reduce cost risk and ensure on- time project delivery. The developer should retain risks associated with constructability issues due to design or cost overruns. 5 Alignment with internal project delivery capability The extent that the City has the internal capability (capacity and experience) to deliver project through particular approach. 6 Market risk The developer should be informed of market risks and work with the City to mitigate market risks. 7 Design and construction risk transfer The developer should bring extensive prior experience to development projects to help mitigate risks as optimal risk allocation improves the likelihood of on-time and on-budget delivery and may improve value for money. 8 Private Sector Capacity and Interest If there is insufficient market capacity or interest (e.g., due to poor market conditions), it may not be possible to deliver the Project at all. Achieving value for taxpayer dollars invested in PCC requires sufficient interest to drive purchase of units and reduces market risk. - 135 - 104Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Analysis as Applied to PCC Project The key criteria are assessed below to determine the partnership model. #Criteria DBB CM CM @ Risk DB 1 Efficient allocation of risk / scope 1 3 4 5 2 Leverage skills and relationships of developer 1 3 3 5 3 Ensure City has sufficient control over design and development 5 4 3 1 4 Provide cost and schedule certainty 1 2 4 5 5 Alignment with internal project delivery capability 3 3 4 5 6 Market risk 1 3 3 5 7 Design and construction risk transfer 1 3 4 5 8 Private Sector Capacity and Interest 1 5 5 4 14 26 30 35 Legend 1 –Limited alignment with criteria 2 –Some alignment with criteria 3 –Moderate alignment with criteria 4 –High alignment with criteria 5 –Very high alignment with criteria - 136 - 105Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Appendix D: Proposed Governance - 137 - 106Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. •A sample governance structure has been provided outlining the Project Steering Committee, Core Project Team and External Advisors to help ensure a successful project. •The Project Steering Committee provides strategic direction and oversight with particular reference to governance, scope and budget. •The Core Project Team is responsible for delivering within the approved parameters and managing all aspects of the delivery. •The City needs to assign an individual as a project manager with overall responsibility for project management and planning of the project Proposed Governance Core Project Team •Project Manager •Director, Public Libraries •Manager, Development Review & Urban Design •Director, Community Services •Director, Economic Development & Strategic Projects •Director, Engineering Services •Director, Operations City of Pickering Council External Advisors (as required) •Transaction/Financial Advisor •Technical Advisor Working Groups Various –commercial, technical, operations, etc. •Chief Administrative Officer (Chair) •Director, Corporate Services & City Solicitor •Director, Finance & Treasurer •Director, City Development & Chief Building Official Project Steering Committee The City should develop an internal governance structure that ensures it is set up to select a developer partner and to work with a developer partner throughout the project to ensure some delivery controls are retained. A sample draft governance structure has been outlined below. External Advisors (as required) •Project Advisor •Fairness Advisor •Legal Advisor - 138 - 107Document Classification: KPMG Confidential© 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. Proposed Governance –Roles and Responsibilities •Provides strategic direction, oversight and control with particular reference to governance, scope and budget. •Responsibilities of the Project Steering Committee: •Ensuring necessary approvals related to the procurement are obtained; •Providing strategic level advice and decisions regarding scope, schedule, cost and quality; •Providing guidance on decisions that may impact outcomes; •Providing oversight for procurement evaluation decisions and receiving reports on due diligence and fairness; •Ensuring the Core Project Team is provided with the necessary resources; •Facilitating strategic meetings with other senior level individuals as required; and •Resolving disputes. Project Steering Committee Core Project Team •Responsible for delivering within the approved parameters and managing all aspects of the delivery. •Provides leadership and direction and is accountable for the deliverables. •Reports to the Project Steering Committee. •The responsibilities of the Core Project Team include: •Managing project activities and timelines; •Implementing directives from the Project Steering Committee to achieve project outcomes; •Updating and ensuring the Project Steering Committee is aware of what is required to preserve project timelines; •Managing third-party works, external consultants and associated contracts; and •Implementing and managing working groups as required. A high-level overview of proposed roles and responsibilities for the partnership governance are provided below. - 139 - Document Classification: KPMG Confidential The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2024 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. home.kpmg/ca - 140 - ANNEXE FINANCIAL CONDITIONS 1.MAXIMUM AMOUNT OF CONTRIBUTION 1.1 Disbursements of the contribution to the Recipient will not exceed the amount(s) below for the applicable fiscal year(s) or 50% of the total eligible expenses for the Project or Programming, as per the payment breakdown and eligible expenses that will be incurred by the Recipient. Federal Government Fiscal Year 2021-2022: Federal Government Fiscal Year 2022-2023: $2,000,000 $2,000,000 1.2 The federal government's fiscal year starts on April 1st and ends on March 31st of the following calendar year. For each individual fiscal year, only the goods and services received by the Recipient between April 1st and March 31st of the following calendar year are eligible for the funding allocated for the applicable fiscal year. 1.3 The Recipient must confirm, in writing, expenses to be incurred for the government's current fiscal year and aq:ording to clauses 1.1 and 1.2 above, no earlier than 60 days prior to the end of tl]e federal government's fiscal year. In the event that the Recipient forecasts to incur fewer expenses than anticipated, the Minister will consider any request to adjust the fol-lowing fiscal year's contribution allocation accordingly but the Minister will have no obligation to do so. 2.REDUCTION/TERMINATION OF THE AGREEMENT 2.\ Any payment made under this Agreement is subject to the appropriation of funds by the Parliament of Canada and to the maintenance of current and forecasted program budget levels. Funding under this Agreement may be reduced or terminated at the Minister's discretion in response to the government's annual budget, a parliamentary, governmental or departmental spending decision, or a restructuring or reordering of-the federal mandate and responsibilities that impact on the Program under which this Agreement is made. 2.2 In the event ofa proposed reduction or termination of the funding of the Program under clause 2.1 above, the Minister may, upon giving the Recipient. written notice of ninety (90) days, reduce the funding or terminate this Agreement. Subject to the terms and conditions of this Agreement, in the event that funding is terminated under the Program, the Minister shall reimburse the Recipient for any eligible costs incurred up to the end date of that notice period. The funding obligations of the Minister shall cease at the end of the notice period. 3. SURPLUS 3.1 The Recipient acknowledges having disclosed to the Minister, as part of its application for funding underthe Program, all proposed sources of funding, including cash and/or in-kind amounts from all levels of government and anticipated expenditures, for any activity or objective within the scope of the Proj ect!Programming. These proposed sources of funding and anticipated expenditures are set out in the , Budget a�ached in Annex A. The Recipient further acknowledges that the Minister's approval of funding for the Project was based in part on the representations set out in the Budget. 3.2 When submitting progress reports as required under section 6 of this Annex, the Recipient shall also declare any changes to the proposed sources·offunding or expenditures for the Project/Programming. 3.2.1 If total federal, provincial and municipal government funding of the activities and objectives set out in the Project/Programming exceeds 100 per cent of the total cost to the Recipient for undertaking these activities and objectives, unless the Minister requires the recipient to adjust its activities/results accordingly, the Recipient shall repay any excess to Canada. Until repaid to Canada, the excess amount constitutes a debt owing to Her Majesty. 3.3 Notwithstanding 3.2.1 above, in the event that a surplus is realized at the end of the Project/Programming, the Minister may recover its share of the surplus based on its pro-rata share of the funding. 4.DESCRIPTION OF ELIGIBLE EXPENDITURES 4.1 The Recipient agrees that the Minister's contribution will be applied to only those eligible cash expenditures described in Annex A of this Agreement. - 4.2 Eligible in-kind expenditures will not be reimbursed, however they will be considered for the calculation of: 4.2.1 The government stacking limit. 4.2.2 The Minister's maximum percentage share (identified in clause 1.1 of this Annex) towards eligible expenditures. File#: 066536-20 I 92020-3-1 Canada Cultural Spaces Fund --------------··----···· --·--······· ···-· ··-· Page6ofl9 Commitment#: 1326855 Attachment #3 to Report FIN 01-24 - 141 -