Incorporating the practice of SMITH LYONS May 27, 2003 The Chairman and Members of Etobicoke Community Council Etobicoke City Hall 399 The West Mall Toronto, Ontario M9C 2Y2 Suite 5800, Scotia Plaza 40 King Street West Toronto, Ontario Canada M5H 3Z7 Telephone (416) 369-7200 Facsimile (416) 369-7250 www.gowlings.com Bob S. Onyschuk Direct (416) 369-4574 bob.onyschuk@gowlings.com Attention: Lyn Morgan, Acting Administrator Dear Mr. Chairman and Members of Council: Re: Waterford Project, Etobicoke Waterfront 2083 2095 Lakeshore Blvd. West Park Payment-in-lieu Matter As you know, we act for Waterford Developments Inc., the owners of the Waterford residential condominium project on the Etobicoke waterfront. We are writing to Council to try to resolve a fair and equitable park payment-inlieu amount for the project under the provisions of the Secondary Plan for the Etobicoke Motel Strip, because of an impasse that we have reached with staff. The Waterford project consisting of 272 units, was approved by the Etobicoke Community Council on May, 8, 2002. The unit count was subsequently increased by Committee of Adjustment to a permissible 286 units. The actual development will have 282 units. The lands comprising the subject development are outlined in red on the attached Exhibit A. The Waterford project is currently in its final stages of building permit review and execution of a final Site Plan Control Agreement. As you may recall, the approved Secondary Plan of the Etobicoke Motel Strip in section 15.7.3 states as follows: In calculating the rate of parkland dedication required, Council may consider a reduced rate where the development provides a needed public facility which is deemed to be of benefit to the larger community, or where a development makes a significant contribution to the implementation of the Waterfront Public Amenity Area. (underlining added)
Page 2 It is our submission to you that this is an appropriate instance in which to apply the above policy, which allows Council to approve a reduced rate of parkland dedication for the Waterford project. It is our position that this policy (and the discretion that comes with it), should be used sparingly, but that it is appropriate and proper to apply it in this exceptional case, for the reasons set out below. Significant Contribution made by the Owners of 2083 2095 Lakeshore Blvd. West to the Waterfront Public Amenity Area The above policy in the Secondary Official Plan applies only where there is a significant contribution [made by the owner/owners of the development property] to the implementation of the Etobicoke Waterfront Public Amenity Area. Council will recall Newport s original involvement in establishing the concept of the Waterfront Park by providing the first development, Newport Beach, on the Etobicoke Waterfront with dedication of the waterfront edge to the TRCA. This initial dedication pioneered the implementation of the Waterfront Park concept. Density from the dedicated waterfront piece on Newport 1 was transferred onto the main site leading to the creation of the waterfront edge condition, as well as the local park that now runs up the east side of this project. In the case of the Waterford project, the former owner of the Seahorse Motel property, Mr. John Wren, tried to mirror the Newport concept. He was approached by the TRCA at the time that Etobicoke Council wished to create and build the park under the first trigovernment infrastructure programme. You will recall that it was important for Etobicoke and the TRCA to have the Waterfront lands under their ownership and control, in order that the project could be funded under the Federal/provincial/municipal infrastructure programme of the day. John Wren came to an agreement with the TRCA in 1997, and agreed to quitclaim 1.084 hectares (2.68 acres) of waterfront to the TRCA, including any riparian rights that he had to the waterfront edge (see Parts 5, 10, 19, 20, 21 and 22 coloured yellow, blue, brown and green, on the attached Exhibit A. He did not get any transfer of density from any of this quitclaim onto his main development site, but he did get from the TRCA a quitclaim of approximately 0.178 hectares, which squared off his development parcel on the waterfront side. John Wren acted in a most reasonable and public spirited way in this matter. He wanted to see the waterfront park project succeed, and he did not want to be an obstacle. The TRCA staff will confirm this to you. John Wren believed, and understood, that his quitclaim of the waterfront lands would be treated at the appropriate time as a parkland credit for the development that would proceed on his site. Through inexperience, Mr. Wren did not have this part of the arrangement documented and acknowledged by City Parks or Planning staff. I propose to have John Wren attend at the Community Council Meeting of June 11, to speak to you on this point. Our clients, Newport Beach and Waterford, thought that City staff (particularly City Parks staff) would acknowledge the parkland contribution made by John Wren, our predecessor in title, and for that reason we always assumed that our park payment dedication requirement had been met. For this reason, you may recall that when I appeared before
Page 3 Community Council on the final approvals of this project, we agreed to make a parkland cash-inlieu payment of $70,000 towards local park development in Ward 6. This payment was structured as a contribution that we were prepared to make over and above the normal requirement of park payment cash-in-lieu, which we believed had been fully met. The Position of the City Park s Department It was not until shortly before the Phase 1 building permit application, that we learned of a different position being taken by the City Parks and Recreation Department. Throughout the negotiations leading up to the final planning staff report on the Waterford project, and the subsequent execution of the Development Agreement, we were under the belief that the full cash-in-lieu requirement had been met. Firstly, as the planning staff report dated April 22 nd, 2002 correctly points out at section 9.7: it is the planning department s policy to support the inclusion of the land area relinquished to facilitate the Waterfront Amenity Area be included as a credit in calculating the alternate park dedication rate. Planning staff note that the applicant and previous owner surrendered their ownership interest in a significant area of land (emphasis added) to accommodate the waterfront park and existing local park. Secondly, we were aware as of May 1, 2002, that discussions over the amount of potential credit had been held between planning staff and certain officials of the TRCA, and we were advised by staff that the potential credit would be.623 hectares of land in which Mr. Wren surrendered his interest; which would have more than satisfied the park dedication requirements, consisting of:?.129 hectares for local park located between the south edge of the development parcel and Waterfront Drive (Parts 10 and 21, coloured yellow on attached Exhibit A );?.299 hectares for Waterfront Drive (Parts 19 and 22, coloured blue on attached Exhibit A ); and?.195 hectares for those lands located between Waterfront Drive and the water s edge - the Waterfront Public Amenity Area (coloured green on attached Exhibit A ). In addition there would be the on-site credits of.092 ha. Thirdly, we departed from a meeting on June 5, 2002 with planning staff on the understanding that staff had acknowledged and accepted the above public elements, as being appropriate parkland credits, and were prepared to accept as credit, the tableland portion of these public elements. This understanding with City staff on June 5, 2000, was reflected in our letter back to staff dated June 12, 2002, which included a copy of what we thought would be the final draft of Schedule F to the Development Agreement and the parkland contribution language agreed to (Exhibit B attached).
Page 4 However, we ultimately agreed with your staff to the standard boiler plate wording of Schedule F, as your Parks staff had indicated that they needed additional time to further confirm with the Conservation Authority the amount of waterfront lands surrendered by John Wren for parkland purposes, and the boiler plate language did us no harm. But at no time did your Parks staff tell us that they had a different interpretation of the park dedication issue. It was only at the time of the Waterford Phase 1 building permit application, that the position of the City Parks staff came to light. Mr. Tim Park and Ms. Patty Simpson took the position that John Wren had never had paper title to the waterfront lands which he had quitclaimed to the TRCA, and therefore was not entitled to a credit for any of it. It is true that John Wren did not have paper title to the 1.084 hectares of land which he quitclaimed to the TRCA. However, it is also clear that the lands to which he did have clear paper title, had always fronted on the Etobicoke Waterfront; and that there had been significant accretion that had occurred to them over the passage of time. This can been seen by the wavy lines that cut across the attached Exhibit A survey plan, on which are marked the high water marks of the Etobicoke Waterfront edge through the years 1895, pre-1954, 1954, 1978, and 1992. This can also be confirmed from aerial photography for the relevant years. The law is very clear that lands that are naturally accreted belong to the owner of the adjacent property. This is what happened in this case, and it is also supported by the fact that over the years the swimming pool, tennis court and parking lot areas located to the rear of the former Seahorse Motel were built on that land so accreted, and were occupied by the then owners of the Motel. More importantly, however, is the fact in law that the owner of a waterfront property has what are called riparian rights attached to the property. This means that he has the right to the waterfront edge (no matter where it may be by natural accretion over the years), but also that no one else can build anything on the water side of his property. Therefore, even if the suggestion now made by the City Parks staff that over the years there may have been some illegal filling activity (-- i.e.: filling beyond the high watermark for any given year) by the various owners of the motel, the riparian rights to the waterfront edge still continue and are an extremely valuable asset that remained with the Seahorse Motel from time to time. Quite apart from the 1.084 hectares of land dedicated by quitclaim which he made to the TRCA, John Wren transferred, and conveyed all riparian rights that came with this property. Without the release of these riparian rights, the Conservation Authority and the City could not have filled the water s edge area for the park that they subsequently built. This is a very important point for members of Council to understand, because despite the fact that Mr. Wren may not have had paper title to the accreted land (whether or not any part of it may have arisen as a result of improper filling), there is absolutely no dispute that John Wren owned the riparian rights to this part of the Etobicoke waterfront, and that surrendering them to the Conservation Authority, was a major, major valuable public dedication. The City Parks and City Legal position, initially, was that there was no parkland credit accruing to the Wren property (because there was no paper title ), and that therefore, Waterford owed the City $2.98M in cash-in-lieu based on the.5 ha./300 units formula and
Page 5 Waterford s proposed 282 dwelling unit project -- i.e.: 282/300 X.5 ha. =.470 hectares of land value owing. City staff subsequently modified their position to acknowledge that they would be prepared to give a partial parkland credit amounting to.270 hectares, consisting of:?.178 hectares of off-site credit -- (being Part 10 and Parts 21 and 22 coloured yellow and blue respectively, on Exhibit A ) attached).?.092 hectares of on-site park credit, (being Parts 15, 17, 18, cross-hatched in brown and blue on Exhibit A ), and These credited parts served to reduce the cash payment-in-lieu, to some $1.27M. We have disputed the lack of full credit for the lands so quitclaimed, and the matter is still unresolved today. The Issue of the Cruise Motel Property A part of the complication and reason for the difference of opinion between us and City Parks staff on the cash payment-in-lieu, is the fact that we were requested in the strongest of terms by Community Council and by City Planning Staff, to acquire the Cruise Motel Property. It was regarded by staff as a remnant piece, being an undersized lot, with a frontage of less than 40 meters. Planning staff also expressed their concerns to Waterford as to whether the Cruise site could be developed in accordance with the Built Form Guidelines in Section 15.8 of the Secondary Plan. We, of course, had sufficient frontage on Lakeshore Road and did not require the Cruise Motel property for our development approvals to go forward. The Cruise property adds 40 units to our project, which are included in the above number of 282 units. However, those 40 units also carry with them the requirement of providing park payment-in-lieu. 40 residential units translate into 11 units of parkland cash-in-lieu under the Etobicoke Motel Strip Secondary Plan formula of 0.5 ha./300 units, and applying the value (as established by your appraiser) of $38,500 per unit for parkland cash-in-lieu contribution, this equates to a value of $418,500. As members of Community Council will know, the negotiations with the Cruise Motel owners were very difficult, and at times acrimonious. Mrs. Ruczynski would not sell her land at normal density values. She had a figure of $2.1M in mind, which kept increasing as our clients tried to meet her expectations. She would not reduce her demands, and ultimately agreed to sell her property at a price of $2,300,000. This translates to a value of $57,500 per unit as opposed to the value of $38,500 per unit as found by the City s appraisers to be the fair market value on the Etobicoke waterfront on a per unit basis. The difference between $57,500 and $38,500 is $19,000 per unit, or almost $800,000 in premium paid for this holdout piece. Waterford therefore had to pay a premium of almost $800,000, and accrued a potential park payment liability of an additional $418,500, for a property worth only $1,540,000 at fair market value rates (i.e.: 40 units of density x $38,500).
Page 6 If the City Council were to waive the parkland cash-in-lieu requirement for the Cruise Motel on the basis that Council and staff had asked Waterford to acquire the property because it was the last unassembled holdout piece to the redevelopment of this part of the Motel Strip then we believe we could come to a satisfactory conclusion with City Parks and City legal staff on an appropriate park payment-in-lieu. Newport s Park Payment-in-Lieu Position It continues to be our position that Waterford is entitled to a full parkland credit for the lands (above the high water mark) quitclaimed by John Wren to the Conservation Authority, and for the riparian rights transferred and conveyed by John Wren to the Conservation Authority As you will see below, Waterford does not need to use all of the amount of land quitclaimed by John Wren in order to meet the parkland dedication requirements under the 0.5 ha./300 units formula found in the Etobicoke Waterfront Secondary Plan. And this is before any consideration of the value of the riparian rights transferred to the Conservation Authority, which we say are substantial. Based on the parkland standard found in the Etobicoke Secondary Plan, a development with 282 residential units (as currently contemplated by Waterford) would require a parkland contribution of 0.470 ha. (page 5 above). As indicated above, City Parks and Legal staff have conceded that Waterford is entitled to total on and off-site parkland credits amounting to at least.270 hectares, which reduces Waterford s obligation to.20 hectares. If one were to apply against this, the other land area quitclaimed by John Wren (being Parts 5, 11, 19 and the land portion of Part 20 as shown on Exhibit A attached) -- excluding any value for riparian rights -- this would amount to an additional 0.411 hectares approximately, more than enough to satisfy the.20 ha. requirement. To be clear, this.411 hectare portion that the City is not willing to recognize as a credit, excludes all land that Mr. Wren quitclaimed located below the former top-of-bank, including land under water, and the riparian rights associated with it, all of which amounts to an additional approximately 0.609 hectares (being Part 20 (excluding the portion above top-ofbank), and Part 24, all of which is coloured green on Exhibit A attached). In total then, applying the land only.411 ha. portion +.270 ha. (City credits) portion =.681 hectares of park land credit against the required contribution of.470 hectares, which more than satisfy Waterford s parkland contribution -- in fact, leaving a further credit of.211 hectares. Therefore, the merits of the remaining.609 hectares of quitclaimed land below the top-of-bank, and under water, or the associated riparian rights, as a potential parkland credit, becomes a moot point. City Parks and legal staff have not accepted our position, and are not prepared to give us a credit for more than the.270 ha. as set out at page 5 above -- i.e. on-site credits of 0.092 ha., plus off site credits of 0.178 ha. (being Parts 10, 21 and 22).
Page 7 To this we reply in 2 ways: (1) Even if Parks and Legal staff were correct (which we say they are not), the 0.270 ha. credit does not take into account the riparian rights that were quitclaimed, transferred and conveyed by John Wren to the Conservation Authority, which are clearly more valuable than the.20 ha. shortfall. Without these rights, the Conservation Authority and the City could not have filled any of the water area in front of the Wren property, and the park could not have been created. The riparian rights given away by John Wren had, and have, considerable value. (2) Alternatively, since City staff was prepared to acknowledge, and give us a credit for Part 22 (in blue), then there is no logical or factual basis upon which to exclude giving us a credit for Part 19 (also in blue, constituting the road - Waterfront Drive), which lies immediately to the east of Part 22. This block also formed a part of the Wren holdings, and as Exhibit A confirms, accommodated a portion of his tennis court, light standards and parking lot which was quitclaimed by Wren to the Conservation Authority. If we took as a credit only that part of block 19 that is encompassed by both Waterfront and Marine Parade Drives that wraps around the rear of the Waterford parcel, (coloured blue cross-hatched and being 0.163 hectares), the total credits (including the.270 ha.) would be 0.433 ha., a shortfall of 0.037 hectares. In our negotiations with the Parks staff, we were prepared to pay the remaining park dedication amount of 0.037 hectares (some 6.105 units worth of density) at the valuation amount established by the City s appraisers (at some $38,500 per unit), for a total of $235,042.00 of parkland contribution in lieu. An Alternative Parkland Cash-in-Lieu Requirement for These Lands We are putting forward to Council an alternative, reduced parkland calculation formula that is consistent with the Motel Strip Secondary Plan Policy permitting reduced parkland contributions to projects that have made a significant public contribution to the Waterfront Amenity Area. We would ask that Community Council endorse and adopt the following: (a) (b) (c) that City staff s on-site parkland credit should continue to be recognized for Parts 15, 17 and 18 amounting to.092 hectares; that City staff s off-site parkland credit should continue to be recognized for Parts 10, 21 and 22, amounting to.178 hectares; and that an additional off-site parkland credit should be recognized for the crosshatched portion of Part 19 (with the curvature of Marine Parade Drive), which amounts to an additional.163 hectares. The only issue that Parks staff have raised with (c) above, is the paper title issue. But again on this point, you should consider: (1) possessory title and that for decades, a substantial amount of this quitclaimed 0.163 hectare piece, as shown on Exhibit A, was
Page 8 taken up by the motor hotel s rear tennis courts and parking area; (2) the fact that staff have recommended Part 22 for inclusion, immediately to the west of Part 19; and (3) that the issue of riparian rights needs to be addressed and recognized for value. This formula would require us to make a cash-in-lieu contribution of $235,042.00 which represents the amount attributable to 282 dwelling units, 40 of which include the density attributable to the former Cruise Motel site. This number would include Waterford s commitment of $70,000.00 for local park improvements within Ward 6. In addition, Waterford would be prepared to honour its other contribution commitment, being $120,000.00 for Waterfront Park enhancements over and above this amount. We think that this arrangement would properly recognized the contribution made by John Wren to the creation of the Waterfront amenities, including his release of the riparian rights attaching to his Waterfront lands, which allowed the Etobicoke Waterfront park to be built as presently constructed. The Wren piece was the lynchpin piece that made the public Waterfront Park possible. Furthermore, this arrangement would also recognise the valuable land assembly efforts by Waterford in acquiring the Cruise site, which we respectfully submit has led to a more even distribution of building mass and built form compliance with the Plan s Guidelines in this part of the Waterfront, than would otherwise not have been possible, had the Cruise parcel been left isolated, and on its own. We intend to appear before the Community Council to speak to this matter at your next scheduled Community Council Meeting on June 11, 2003. Yours very truly, B.S. Onyschuk cc: Ms. Patricia Simpson, City of Toronto, Legal Department Mr. Tim Park, City of Toronto, Economic Development Culture & Tourism Department Mr. Gary Wright, City of Toronto, Community Planning Department All Etobicoke Councillors