Report to Rapport au: Finance and Economic Development Committee Comité des finances et du développement économique 5 May 2015 / 5 mai 2015

Transcription

1 1 Report to Rapport au: Finance and Economic Development Committee Comité des finances et du développement économique 5 May 2015 / 5 mai 2015 and Council et au Conseil 13 May 2015 / 13 mai 2015 Submitted on April 28, 2015 Soumis le 28 avril 2015 Submitted by Soumis par: John L. Moser, Acting Deputy City Manager/directeur municipal adjoint par intérim, Planning and Infrastructure/Urbanisme et Infrastructure Contact Person Personne ressource: Robin Souchen, Manager, Realty Services Branch, Real Estate Partnerships and Development Office/Bureau des partenaires immobiliers et du développement (613) x21549, Robin.Souchen@ottawa.ca Ward: RIDEAU-VANIER (12) File Number: ACS2015-PAI-REP-0005 SUBJECT: FREIMAN PEDESTRIAN BRIDGE OVER RIDEAU STREET OBJET: PASSERELLE PIÉTONNIÈRE FREIMAN AU-DESSUS DE LA RUE RIDEAU

2 2 REPORT RECOMMENDATIONS That the Finance and Economic Development Committee recommend that Council approve: 1. The execution of an Amending Agreement, described in more detail in this report, which will modify the terms of the existing Freiman Bridge Operating Agreement (1982) and provide for the transfer of the City s interest in the Freiman pedestrian bridge structure and associated liabilities and maintenance obligations to Viking Rideau Corporation in exchange for a onetime payment by the City of $400,000, plus applicable taxes; 2. The waiver of the City s Temporary Encroachment fees (estimated at $50,000) payable by Viking Rideau Corporation for use of the Rideau Street Right- of-way during the refurbishment of the Freiman pedestrian bridge, the demolition of the smaller, privately owned pedestrian bridge to the west of the Freiman Bridge and the associated repairs to Rideau Street and abutting building façades; and, 3. The grant, to Viking Rideau Corporation, of a licence to maintain the Freiman pedestrian bridge structure in its current location in lands and airspace within Rideau Street until December 31, 2032, being the remainder of the term of the Freiman Bridge Operating Agreement (1982), with options to extend such term for two (2) additional terms of ten (10) years all for a nominal payment of $1.00. RECOMMANDATIONS DU RAPPORT Que le Comité des finances et du développement économique recommande au Conseil d'approuver : 1. La signature d'une entente modifiée, présentée en détail dans ce rapport, qui modifiera les dispositions du contrat actuel d'exploitation de la passerelle freiman (1982) et permettra le transfert de l'intérêt de la ville dans cette structure ainsi que des passifs et obligations d'entretien connexes à la viking rideau corporation en échange d'un versement unique de la ville de dollars, plus les taxes applicables; 2. La dispense de frais d'empiètement temporaire (estimés à dollars) payables par la Viking Rideau Corporation pour l'utilisation de l'emprise de

3 3 la rue Rideau durant la rénovation de la passerelle Freiman, la démolition de la petite passerelle piétonnière de propriété privée à l'ouest de la passerelle Freiman et les réparations connexes à la rue Rideau et aux façades des bâtiments attenants; 3. L'octroi à la Viking Rideau Corporation d'un permis pour conserver la structure de la passerelle piétonnière Freiman à son emplacement actuel sur des terrains et dans l'espace aérien à l'intérieur des limites de la rue Rideau jusqu'au 31 décembre 2032, ce qui correspond à l'expiration du contrat d'exploitation de la passerelle Freiman(1982), avec la possibilité d'ajouter deux termes de dix ans pour un paiement nominal de 1 dollar. BACKGROUND The Freiman Bridge was constructed during the development of the Rideau Centre as part of the City s objective of connecting the Mackenzie King Bridge and the Bus Rapid Transit system to the ByWard Market area through the Rideau Center and Freiman Mall. The Freiman Mall, formerly Mosgrove Street, was closed and leased to the Hudson s Bay Company ( HBC ) for 99 years subject to a number of conditions including that it be developed in conjunction with the construction of a connecting pedestrian bridge across Rideau Street. Photographs of the original Freiman Bridge are included in Document 1 attached to this Report. The construction, use and maintenance of the Freiman Bridge owned by the City is governed by an Operating Agreement, executed by the City, HBC and the owner of the Rideau Centre, Viking Rideau Corporation ( Viking ), in August of 1982 (the Freiman Bridge Operating Agreement ). The Freiman Bridge Operating Agreement divides the costs of and responsibility for constructing, operating, maintaining, repairing and, ultimately, demolishing the Freiman Bridge between the City, HBC and Viking. The term of the Freiman Bridge Operating Agreement is fifty (50) years ending December 31, In or around the same period, HBC and Viking also constructed a second, smaller, grade separated pedestrian bridge west of the Freiman Bridge (the West Bridge ). The City does not own the West Bridge and bears no responsibility for its operation or maintenance. Between 2003 and 2012, the City spent $78,415 on glazing repairs. A further $62,000 would likely be incurred over the next three years.

4 4 The original terms of the Freiman Bridge Operating Agreement also required the City to assume approximately 56% of the annual operating costs for the Freiman Bridge; however, in1992, the City and HBC agreed that HBC would assume a larger share of the operating costs in exchange for increased retailing opportunities within the Freiman Mall and changes to the hours of operation for the Freiman Mall. The Freiman Bridge Operating Agreement did not contemplate a refurbishment of the bridge before 2032 as the 50 year term of the agreement was designed to match the economic life of the structure; however, at 33 years old, the Freiman Bridge now requires lifecycle repairs which include, but are not limited to, repairs to glazing. Viking is currently engaged in a substantial refurbishment of the Rideau Shopping Centre. In connection with this project, Viking approached the City and HBC and proposed a substantial refurbishment of the Freiman Bridge to match the new Rideau Center façade with a work completion date set for late (A concept drawing of the refurbished Freiman Bridge is attached at Document 2 ). The estimated cost of Viking s proposed refurbishment is $3 million, with approximately $2 million relating to new glazing or cladding to be installed on the Freiman Bridge structure. Planning and Growth Management have noted that the proposed refurbishment of the Freiman Bridge would complement the objectives of the City sponsored Rideau Street streetscaping initiative. Timing of the Freiman Bridge refurbishment works poses some challenges. The Rail Implementation Office (RIO) indicated that, while the use of the Rideau Street right of way for the purposes of the Freiman Bridge refurbishment could be accommodated in the short term, as of Q4 2015, and possibly earlier. However, the City s light rail contractor s requirements for construction staging areas within Rideau Street to support the construction of the future Rideau Light Rail Transit Station would be such that access to Rideau Street for other construction projects would likely not be available again until late Q Viking felt that significant efficiencies could be achieved if the refurbishment work was performed concurrently with the Rideau Center renovations. Viking indicated that it was prepared to assume the whole cost of and responsibility for the Freiman Bridge refurbishment project as part of its larger Rideau Centre renewal project, but is seeking the support of the City for this initiative in the form of a waiver of the City s standard encroachment fees associated with the use of Rideau Street for the purposes of the Freiman Bridge refurbishment and the demolition of the West Bridge.

5 5 In order to address timing issues presented by the Confederation Line and Rideau Centre construction schedules, Viking, HBC and the City negotiated an initial amendment to the Freiman Bridge Operating Agreement whereby Viking assumed all of HBC s obligations to maintain and operate the Freiman Bridge and undertook the refurbishing of the Freiman Bridge. From the City s perspective, the assignment of HBC s obligations to Viking, and Viking s agreement to undertake the refurbishment of the Freiman Bridge, did not result in any added risk or financial burden to the City and as a result, the City entered into this initial amending agreement by delegated authority in February The City, through Real Estate Partnerships and Development Office (REPDO), negotiated a Construction Licence with Viking in order to carefully control Viking s work within the Rideau Street right of way, while providing the expedited access required to accommodate the timing constraints imposed by the Confederation Line project. The Construction License contains, among other things, extensive provisions intended to ensure that the Confederation Line Project takes precedence over the refurbishment of the Freiman Pedestrian Bridge. The refurbishment of the Freiman Bridge is now underway pursuant to the Construction Licence and is expected to be completed in mid Q In order to ensure that Viking will derive the full benefit of the costs which it will incur in connection with the refurbishment of the Freiman Bridge, Viking has requested the option of extending the term of the Freiman Bridge Operating Agreement for two (2) additional terms of ten (10) years beyond While forecasting an air rights license payment 17 and 27 years into the future to match the option periods of and is tenuous. The current market value payment of a ten (10) year term is estimated at $28,000 per annum and calculating for rental growth, and using a 5% discount factor for the time value of money, the net present value to the future income stream to be forgiven is approximately $335,000. Viking is also prepared to assume the ownership of and responsibility for the Freiman Bridge structure from the City as well as all of the City s remaining maintenance and operational obligations and its obligation to demolish the Freiman Bridge at the end of the term in exchange for a onetime payment of $400,000 (plus applicable taxes). DISCUSSION The City benefits from the refurbishment of the Freiman Bridge, particularly in light of the Rideau Street Improvement Plan, and is desirous of being released from its obligations relating to the ongoing operation, maintenance, repair and, ultimately, the

6 6 demolition of the Freiman Bridge at the end of the Freiman Bridge Operating Agreement. The proposed recommendations are to amend the Freiman Bridge Operating Agreement to provide for the transfer to Viking of the City s interest in the Freiman Bridge and its remaining obligations under the Freiman Bridge Operating Agreement, giving Viking complete ownership of the bridge and the financial obligations associated with its continued use. Consultation: Under the Real Estate Partnerships and Development Office (REPDO) standard disposal practises an internal circulation was completed seeking input on the transfer of the City s obligations. There were no objections arising from the circulation. Planning and Growth Management commented that the north-south pedestrian traffic flow between the McKenzie Bridge and the ByWard Market would shift significantly with the development of a Confederation Line Station on Rideau Street. In addition, the center of gravity for the Rideau Center will also shift eastward between the Rideau Center expansion and the William Street gateway to the ByWard Market near the location of a light rail station entrance. These factors greatly diminish the importance of the Freiman Bridge in terms of pedestrian connectivity and render the West Bridge obsolete. Owing to the changing transit environment, the Freiman Bridge will essentially serve as a retail/commercial extension of the Rideau Center rather than a pedestrian pathway for the public in general and specifically bus transit passengers heading to the ByWard Market. Given the pending changes to pedestrian traffic flow HBC and Viking have agreed to demolish the West Bridge, which they jointly own, at the earliest opportunity once the Freiman Bridge is refurbished. Right-of-Way Management was also consulted with respect to ensuring protection of the City s rights and control over Rideau Street. RIO provided input on the Construction Licence in order to manage any overlap between the Freiman Bridge refurbishment project and the Confederation Line Project. Similar provisions will also be included, as applicable, in the proposed Amending Agreement described in this report and will consider stratified subterranean easements for the pedestrian bridge supports. These will be indentified at a later point once the permanent works of the Rideau Station Cavern have been completed by Rideau Transit Group (RTG).

7 7 Proposed Amending Agreement: A further amendment to the Freiman Bridge Operating Agreement is required in order to provide for the ongoing use, operation and maintenance of the refurbished Freiman Bridge and the assumption by Viking of the City s remaining financial obligations under the Freiman Bridge Operating Agreement. The key terms of the proposed Amending Agreement with Viking are outlined below: Viking to Assume City Obligations to Maintain/Demolish: Viking would assume responsibility for all maintenance and repair of the refurbished Freiman Bridge including the maintenance of windows, exterior glass and glazing, bridge piers and foundations as well as all ongoing operating cost. Transfer of Bridge Structure: The City would transfer to Viking, for a nominal payment of $1, all bridge assets currently owned by the City including bridge support infrastructure (including bridge piers and foundations) on an as is basis. City Payment Net Present Value of Future Capital Costs: The City would pay to Viking a sum of $400,000 (plus applicable taxes) representing the estimated net present value of future operating and lifecycle capital costs which the City anticipates having to incur with respect to the Freiman Bridge structure under the Freiman Bridge Operating Agreement (including costs associated with the eventual demolition of the Freiman Bridge). Waiver of Encroachment Fees: During the refurbishment of the Freiman Bridge as well as the demolition of the Western Bridge and associated repairs to Rideau Street and building façades, the City would waive its standard encroachment fee for use of the Rideau Street right of way. This represents an estimated $50,000 in forgiven fees. Licence: The City would grant to Viking a licence to maintain the Freiman Bridge structure in its current location in lands and airspace located within Rideau Street to the end of the existing Bridge Agreement (December 31, 2032) and provide two renewal options each of ten (10) years, all for a nominal payment of $1. Indemnity: Viking would indemnify the City with respect to any claims, damages or costs arising from the maintenance, repair, use, operation or demolition of the Freiman Bridge.

8 8 Insurance: Viking would obtain insurance, satisfactory to the City, with respect to the ongoing use, operation, maintenance, repair and eventual demolition of the Freiman Bridge. Public Access to Freiman Bridge: Public access to, from and through the Freiman Bridge would be provided from 6 am to 2 am Monday to Saturday and from 6 am to 12 am on Sunday, 7 days a week, 365 days a year via an unobstructed, barrier free, pedestrian passageway 18 feet in width. Construction Scheduling: The Amending Agreement would contain provisions to ensure that the refurbishment of the Freiman Bridge and demolition of Western Bridge do not interfere with Confederation Line construction works in and around the Rideau Street right of way. End of Term Demolition of Freiman Bridge and Reinstatement of Right of Way: Viking would be solely responsible for all aspects of and costs associated with the demolition of the Freiman Bridge at the end of the licence term or any extension of the licence term including all costs of reinstating Rideau Street to the satisfaction of the City as well as any required repairs to the façade/wall of HBC or Viking s buildings. Taxes: Viking would be responsible for all taxes applicable to the Freiman Bridge. Any HST/GST payable with respect to the transfer of the bridge structure to Viking to be payable by Viking. Staff have concluded that the waiver of encroachment fees in support of the Freiman Bridge refurbishment and the demolition of the West Bridge, together with the transfer of the City s obligations to maintain, repair and ultimately demolish the Freiman Bridge, subject to the above described conditions, are in the City s best interest and will benefit the City. As a result, the above described measures are recommended for approval. RURAL IMPLICATIONS There are no rural implications associated with this report. CONSULTATION This is an administrative matter, no public consultation is required. Internal consultations were held with Planning and Growth Management, Rail Implementation

9 9 Office, Rideau Transit Group, OC Transpo, Public Works, ByWard Market Management and Corporate Communications. External consultations were held with Cadillac Fairview Corporation (Viking Rideau Corporation) and Hudson Bay Company. Borden Ladner Gervais (BLG) provided legal advice during the process. COMMENTS BY THE WARD COUNCILLOR(S) Councillor Fleury was informed of the discussions with Viking to amend the Freiman Bridge Operating Agreement and transfer ownership of the Pedestrian Bridge and support structures. The Councillor concurs with the staff recommendations in this report. LEGAL IMPLICATIONS Subject to a separate Council approval for the requested funding for the initiative described in the report, there are no legal impediments to implementing the recommendations in the report. The legal agreement referenced in the report dates back to the early 1980's, prior to the advent of any delegation of authority by-laws and, thus, staff do not have delegated authority to address the matter. The main terms of the proposed Amending Agreement are as outlined in the report. RISK MANAGEMENT IMPLICATIONS Risks associated with the assumption of the Freiman Bridge asset by Viking would be managed by the appropriate staff in accordance with the terms of the Amending Agreement described in this Report. ASSET MANAGEMENT IMPLICATIONS The transfer of the Freiman Pedestrian Bridge to Viking complies with the City s Asset Management Strategy. It will eliminate a capital item from the forecast of lifecycle expenditures and generate a cost avoidance in 2015 of $45,000 and further estimate of $17,000 in In addition, the cost to demolish will be avoided at the end of the Freiman Bridge Operating Agreement. There is a modest operational saving of $4,000 per annum. FINANCIAL IMPLICATIONS Recommendation 1 Funding for the $400,000 payment required to transfer the City s interest has been identified within the Rideau/Arts Public Realm project, and is subject to Council approval through the Term of Council Strategic Initiative exercise.

10 10 Recommendation 2 Waiving of the temporary encroachment fees of approximately $50,000 will impact Planning and Growth Management s operating status. Recommendation 3 The Bridge Operating Agreement has no charge for the use of the air space for the initial term ending December 31, The estimated license fee today, based on City market value terms and conditions, would be $28,000 for a ten year term in current dollars. The City would forgo the 2032 market rent for a ten year term and the 2042 market rent for a ten year term. The estimated net present value of the license payment to be forgiven is approximately $335,000. ACCESSIBILITY The refurbished Freiman Bridge will be barrier free and will comply with the provisions of the Accessibility for Ontarians with Disabilities Act and the City s Accessibility Policy. TERM OF COUNCIL PRIORITIES The proposal outlined in this report will provide a financial benefit to the City of Ottawa by transferring ongoing maintenance and repair obligations of the City to Viking and by providing for significant upgrades to the Freiman Bridge, which will improve both the Rideau Street streetscape and the pedestrian experience for transit riders accessing the future Rideau light rail transit station. As a result, it furthers many of the Term of Council Priorities including Fiscal Responsibility and Transportation and Mobility. SUPPORTING DOCUMENTATION The following documents are appended to this Report: (1) DOCUMENT 1 Photographs of Freiman Bridge prior to refurbishment (2) DOCUMENT 2 Drawings illustrating refurbished Freiman Bridge. DISPOSITION Following approval, Realty Services Branch and Borden Ladner Gervais LLP will finalize the Bridge Operating Agreement in accordance with this report subject to Council approval of the funding through the Term of Council Strategic Initiative exercise.

11 DOCUMENT 1 - Photograph of Freiman bridge looking east on Rideau street 11 Photograph of Freiman Bridge looking west on Rideau Street:

12 12 DOCUMENT 2 - Freiman bridge refurbishment- concept drawing