| 135876 | REPORT | N | Y | SUPPL | ACTION | NO_ACTN | N | Subway Agreement in Principle and Update on Metrolinx Subway Program - Third Quarter 2024 | 2024.EX16.3a | Y | Y | Y | Y | <p>The Executive Director, Transit Expansion and the Chief Financial Officer and Treasurer recommend that:</p>
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<p>Subway Program Agreement-in-Principle </p>
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<p>1. City Council approve the terms set out in Attachment 1 to this report, and authorize the City Manager to enter into and execute a Subway Program Agreement-in-Principle (“AIP”) with the Province of Ontario, based substantially on the terms set out in Attachment 1, and on such other terms and conditions satisfactory to the City Manager, in consultation with the Deputy City Manager, Infrastructure Services, Chief Financial Officer and Treasurer, Executive Director, Transit Expansion, and any other relevant officials, and in a form satisfactory to the City Solicitor. </p>
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<p>2. Subject to entering into the Subway Program AIP in accordance with Recommendation 1 above, City Council authorize the Deputy City Manager, Infrastructure Services, or designate and any other relevant City officials, to negotiate and execute any such necessary ancillary or related agreements, amendments and renewals with any other relevant parties, including a Subway Main Agreement, for the implementation of the Subway Program, all substantially in accordance with the terms included as Attachment 1, the executed Subway Program AIP, and on such other terms and conditions satisfactory to the Deputy City Manager, Infrastructure Services, or designate in consultation with the Chief Financial Officer and Treasurer, Executive Director, Transit Expansion, and any other relevant officials, and in a form satisfactory to the City Solicitor. </p>
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<p>3. City Council delegate authority to the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions to oversee the management and implementation of the Subway Program AIP, the Subway Main Agreement and any ancillary or related agreements, including, without limitation, providing all necessary consents, approving assignments, and enforcement of warranties. </p>
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<p>4. City Council delegate authority to the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to negotiate, enter into and execute agreements with Metrolinx and any other party, including amendments and renewals for new utility crossing, level crossings and grade separations, including terms related to cost-sharing for construction and on-going maintenance, if any, as appropriate. </p>
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<p>5. City Council, with respect to the Subways Program: </p>
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<p style="padding-left: 30px;">a. Authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to identify and approve the inclusion of enhancements to City infrastructure, as well as any investigative, planning and design studies considered necessary for City infrastructure and services in the vicinity of the work to deliver the Subway Program ("Additional Infrastructure") which Metrolinx's contractor will be asked to design and/or construct as part of the Subway Program, subject to the following conditions: </p>
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<p style="padding-left: 60px;">i. the Deputy City Manager, Infrastructure Services, in consultation with the Executive Director, Transit Expansion, the Chief Financial Officer and Treasurer and relevant Divisions are of the view that the estimated price provided by Metrolinx for the Additional Infrastructure, as may be reviewed by an independent reviewer, is fair and reasonable in the circumstances; and </p>
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<p style="padding-left: 60px;">ii. the funding for the estimated cost of the Additional Infrastructure is or will be available in the year required, within an approved capital budget. </p>
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<p style="padding-left: 30px;">b. Authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to obtain and pay for estimates and pre-estimates for Additional Infrastructure from Metrolinx and/or Metrolinx's contractor; </p>
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<p style="padding-left: 30px;">c. Authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to negotiate, enter into and execute Municipal Infrastructure Agreements with Metrolinx for Additional Infrastructure, including any amendments; </p>
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<p style="padding-left: 30px;">d. Authorize the Deputy City Manager, Infrastructure Services or designate, in consultation with the relevant Divisions, to enter into cost-sharing arrangements with Metrolinx for services or infrastructure requested by the City for mutually beneficial projects in the vicinity of the Subway Program, or where the Province has agreed to cost-share with the City as their work on the Subway Program has created an incremental cost impact to the City’s funded capital projects that are either planned or underway, as long as conditions in Recommendations 5a(i) and 5a(ii) are satisfied; </p>
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<p style="padding-left: 30px;">e. Notwithstanding City of Toronto Municipal Code Chapter 71, Financial Control, authorize the Chief Financial Officer and Treasurer to approve budget adjustments, provided that sufficient funds are available, and: </p>
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<p style="padding-left: 60px;">i. reallocate funds between capital projects or sub-projects in an amount not more than $3 million; and </p>
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<p style="padding-left: 60px;">ii. report any exercise of this delegated authority to the appropriate standing committee at the first opportunity. </p>
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<p style="padding-left: 30px;">f. Direct that the confidential information contained in Confidential Attachment 3 remain confidential in its entirety, as it contains confidential information supplied in confidence to the City of Toronto by the Province of Ontario and contains financial information related to ongoing negotiations with the Province of Ontario. </p>
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<p>6. City Council authorize the General Manager, Transportation Services to negotiate, in consultation with the TTC, and execute a TO360 Wayfinding Implementation Agreement, and any ancillary or related agreements and amendments, with Metrolinx for the Subway Program and other Metrolinx-led transit projects within the City of Toronto for the purpose of completing design studies, producing wayfinding maps and signs, sharing data and standards, and other deliverables as may be required to support wayfinding programs, in a form satisfactory to the City Solicitor. </p>
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<p>7. City Council receive Attachment 3 – Subway Program Update of this report for information.</p>
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<p>Transit Ledger Clearing </p>
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<p>8. City Council authorize the Chief Financial Officer and Treasurer to negotiate and execute an agreement with the Province of Ontario, in terms satisfactory to the Chief Financial Officer and Treasurer, in consultation with the City Manager, for the settlement and clearing of transit ledger items outlined in Confidential Attachment 1 to this report, to fulfil a term in the Terms of the Ontario-Toronto New Deal, and in a form satisfactory to the City Solicitor.</p>
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<p>9. City Council direct that the confidential information contained in Confidential Attachment 1 remain confidential in its entirety, as it contains confidential information supplied in confidence to the City of Toronto by the Province of Ontario and contains financial information related to ongoing negotiations with the Province of Ontario. </p>
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<p>Scarborough Subway Extension – Eglinton East LRT Kennedy Station Interface</p>
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<p>10. City Council direct the Executive Director, Transit Expansion, to continue discussions with Metrolinx and the Province of Ontario to explore options that provide appropriate transit network integration between the EELRT and SSE at Kennedy Station.</p>
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<p>11. City Council authorize the public release of Confidential Attachment 2 to this report following completion of the Scarborough Subway Extension project, as it contains commercial information, supplied in confidence to the City, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization and involves the security of the property belonging to the City of Toronto.</p> | <p>1. Subway Program Agreement-in-Principle </p>
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<p>The AIP outlines funding obligations for the delivery of the Subway Program. The Province is responsible for funding 100% of the capital cost of the Subway Program and the City will not be responsible for funding any capital cost of the Subway Program. The Province will also retain all Development Revenue (which includes revenue from Transit Oriented Communities, and property revenue, as defined in Attachment 1). The Province will own all assets in the Projects, except for the SSE and YNSE rolling stock (i.e., trains), or other assets otherwise agreed to by the City and the Province. The Province has agreed to fund the purchase of the SSE and YNSE rolling stock, which will be owned by the TTC.</p>
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<p>Through the Ontario-Toronto New Deal, the Province and the City agreed to undertake a longer-term targeted review of the City’s finances, to be completed by 2026. To allow for these discussions to occur, the AIP defers many decisions on roles and responsibilities for operating and maintenance costs until the targeted review is completed, with agreement that the farebox and non-farebox revenue from the Projects (i.e., OL, SSE, YNSE and ECWE) will be used to defray operating cost associated with operations and maintenance. This will ensure that, consistent with our current funding approach for transit, farebox and non-farebox revenue will continue to be used to partially offset the gross costs to operate and maintain the lines. The AIP also confirms that the TTC will set fares for the Subway Program in accordance with TTC fare policy, amongst other operational terms.</p>
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<p>Staff will continue discussions with the Province regarding funding responsibilities for transit operations and maintenance as well as the net operating subsidy required and will report back to City Council once the New Deal discussions have been completed.</p>
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<p>2. Transit Ledger Clearing</p>
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<p>As part of the New Deal terms that the City committed to deliver, the City agreed to settle and clear the ledger on historical transit costs. City staff have negotiated a settlement for costs incurred prior to December 31, 2020, related to the relevant transit lines with the Province of Ontario. This includes costs for planning and design work the City had undertaken prior to the upload of the Provincial Transit Priority Projects. The Province also had sought to recover from the City certain costs related to Metrolinx projects.</p>
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<p>Given that the value of the costs that each party sought to recover are of the same order of magnitude, and in support of the renewed partnership to deliver transit, the Province and City have negotiated a letter of agreement to formalize the settlement of claims and clear the ledger on historical transit costs.</p>
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<p>The settlement of these claims has no impact on the City’s approved Capital or Operating Budgets and reflects a change in accounting treatment that does not have a material impact to the City’s overall net financial position. A summary of these settled amounts is provided under Confidential Attachment 1.</p>
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<p>3. Scarborough Subway Extension – Eglinton East LRT Kennedy Station Interface</p>
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<p>Item EX10.17 Advancing Eglinton East Light Rail Transit adopted by City Council at its meeting in December 2023 authorized City staff to execute necessary agreements with Metrolinx to advance design of the SSE tunnel box structure in order to protect for the EELRT Kennedy Station overbuild (Overbuild). Council also approved work to design and to construct a knockout panel at Sheppard-McCowan Station to facilitate the efficient flow of passengers between the EELRT and SSE in the future, and to undertake utility relocations to allow for a future EELRT utility exclusion zone at and in the vicinity of Kennedy Station. Funding to undertake further assessment of the design and to advance preliminary design work only by Metrolinx was also approved through EX10.17 based on Metrolinx estimates at that time.</p>
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<p>To include the Overbuild protection within the scope of the SSE contract, MTO has requested formal confirmation from the City that the City would need to fund the costs of both the design and delivery of the Overbuild, as well as the associated delay costs to the SSE, no later than July 31, 2024. The estimated cost of the Overbuild at Kennedy Station has been provided by Metrolinx, and City staff have commenced an in-depth review to better understand and confirm these cost estimates. The total cost comprises of design and delivery costs, as well as schedule delay costs to add the Overbuild scope to the SSE project, and additional risk associated costs (or contingency) given the level of design. These amounts are outlined in Confidential Attachment 2 as the estimates contain commercial and financial information, supplied in confidence to the City of Toronto, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.</p>
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<p>Given the significant costs of delivering the Overbuild (Option 1), along with the fact that the EELRT is at 10% design, and full funding for its construction has not been secured, City staff do not recommend committing to the costs of the Overbuild at this time.</p> | <p>The Province of Ontario's Subway Program, being delivered by Metrolinx, is a significant transit expansion project within the City of Toronto. The Subway Program consists of the Ontario Line, Scarborough Subway Extension, Eglinton Crosstown West Extension, and Yonge North Subway Extension projects. This report provides City Council with an update on four key items related to the Subway Program, namely:</p>
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<p style="padding-left: 30px;">1. Subway Agreement-in-Principle;</p>
<p style="padding-left: 30px;">2. Settlement of the transit ledger in accordance with the terms of the Ontario-Toronto New Deal;</p>
<p style="padding-left: 30px;">3. Scarborough Subway Extension-Eglinton East LRT Kennedy Station interface; and,</p>
<p style="padding-left: 30px;">4. Update on the status of the Subway Program projects.</p>
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<p>1. Subway Agreement-in-Principle</p>
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<p>In February 2020, the Province and the City negotiated a Preliminary Agreement (PA) for the Subway Program, amongst other matters. The PA outlined high-level roles and responsibilities of the City and Province in the planning, delivery, and operations of the Subway Program. As the Province continues to advance the Subway Program, through its delivery agent Metrolinx, there is a need to develop and execute a Subway Agreement in Principle (AIP) that enhances the principles outlined within the PA to further guide the ongoing design and delivery of the Subway Program.</p>
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<p>As such, this report is seeking City Council authority to execute a binding Subway AIP with the Province of Ontario, based on the terms outlined in Attachment 1. The AIP is intended to provide a clear understanding and agreement between the City and the Province on respective roles and responsibilities, authorities, funding responsibilities, ownership, and approvals that are crucial to the implementation of the Subway Program. Subject to City Council approval, the AIP will provide a framework for continued engagement between the City and the Province, as well as the TTC and Metrolinx, and will provide the basis from which a detailed Subway Main Agreement and additional ancillary agreements can be negotiated and executed by City staff in consultation with the TTC.</p>
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<p>2. Transit Ledger Clearing</p>
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<p>This report also seeks authority to negotiate and execute an agreement with the Province of Ontario to settle claims and clear the ledger on historical transit costs. The costs the City has sought to recover from the Province for planning and design work on the extension and development of new subway lines (prior to the upload of the Provincial Transit Priority projects) are of the same order of magnitude as the costs the Province has sought to recover from the City for work related to Metrolinx projects. Therefore, as a term of the New Deal Agreement, both the Province and the City of Toronto have agreed to settle their claims to support the shared commitment to advance the delivery of transit projects in the City. The settlement of these claims, that for both the City and the Province are of the same order of magnitude, reflect a change in accounting treatment and do not have a material impact to the City’s overall net financial position. A summary of these settled amounts is provided under Confidential Attachment 1.</p>
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<p>3. Scarborough Subway – Eglinton East LRT Kennedy Station Interface</p>
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<p>In December 2023, through EX10.17, City Council authorized City staff to execute the necessary agreements with Metrolinx to advance only the design of the Scarborough Subway Extension (SSE) tunnel box structure in order to protect for the Eglinton East Light Rail Transit (EELRT) Kennedy Station overbuild (Overbuild), at a cost of up to the maximum amount outlined in Confidential Attachment 2 to that report (EX10.17).</p>
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<p>On May 31, 2024, the Ministry of Transportation (MTO) requested formal written confirmation from the City that the City would fund the costs of both the design and delivery of the Overbuild, as well as the associated delay costs to the SSE, as provided by Metrolinx and outlined in Confidential Attachment 2 to this report, no later than July 31, 2024. City staff subsequently met with Metrolinx to further clarify and confirm how the cost estimate was derived, its breakdown, risk assumptions, and anticipated cash flow according to the stages of the EELRT Overbuild protection delivery process.</p>
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<p>In parallel, City staff explored alternative options that removed structural dependency on the SSE tunnel box while achieving the same design and operations requirements as the design with the Overbuild. A potentially viable alternative has emerged (i.e., Option 2 as described in this report and in Confidential Attachment 2). Additional work is required to confirm the feasibility, costs and risks of Option 2. Confidential Attachment 2 also provides the benefits, and risks associated with Option 2.</p>
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<p>Given the significant costs of delivering the Overbuild (Option 1), along with the fact that the EELRT is at 10% design, and full funding for its construction has not been secured, City staff do not recommend committing to the costs of the Overbuild at this time. However, to ensure a responsible intergovernmental approach to transit expansion, this report seeks City Council approval for staff to continue discussions with Metrolinx and the Province of Ontario to explore options that provide appropriate transit network integration between the EELRT and the SSE.</p>
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<p>4. Subway Program Update</p>
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<p>Attachment 3 provides updates on procurement, design, construction, and engagement milestones achieved by Metrolinx since City staff last reported to City Council on the full Subway Program in June 2023 and addresses related City Council directives that request bi-annual reports to Council on the overall Subway Program.</p> | 16 | 3 | CMMTTEE | EX | All | N | 1721793600000 | … | Report | ACTION | No Action | Supplementary | Committee | … | … | … | … | … | … | … | … | … | … | … | Decision information not found | false | No Action | … | … | … | … | PROP_SUP | Information explicitly supplied in confidence to the City of Toronto by the Province of Ontario and relate to ongoing negotiations with the Province of Ontario and contains commercial and financial information, supplied in confidence to the City of Toronto, which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization | a | Certain proprietary information supplied in confidence to the municipality/local board | — | — | — | — | — |