Return to Background Index Background Letter to Gordon Chong and the Board of Go Transit, March 10, 2003 THE MAJOR ISSUES, as of March 2004 There are five major issues which must be addressed. They are, * Defining the Public Goals for Union Station Development * Working with a Flawed Bidding Process * Making Union Station a Transportation Hub for the Future * Protecting Heritage Aspects of Union Station * Protecting the City's Financial Interest Each is explored in some detail below: 1. Defining the Public Goals for Union Station Redevelopment In 1991 City Council approved the Railway Lands East Secondary Plan. Among other things, it calls for the adoption of a Master Plan for Union Station before redevelopment occurs. Section 10.4.2 of the Secondary Plan states: "To this end it is the policy of Council to adopt a Master Plan for Union Station that will: - respect the historic significance of Union Station; - ensure transportation use is the primary function of Union Station; - provide for each of the necessary transportation functions in a safe, efficient and coherent manner; - ensure flexibility for expansion and future changes of use; - ensure that Union Station is fully integrated with its environs; and - establish civic design quality." The city's requirement for a Master Plan was noted in the RFP in 2001 (but seemingly not raised by city staff at the time bids were submitted and some were pre-qualified), but it was not until early in 2004, after the preferred proponent had been selected and staff were in the final stages of preparing contract documents, that staff proposed drafting a Master Plan. The need to draft a Master Plan was included in a January 12, 2004, report titled "Rezoning Application, 61-71 Front Street East," from city staff to the Planning and Transportation Committee. Unfortunately, the report does not contain the relevant section of the 1991 Secondary Plan (quoted above) setting out the purpose of the Master Plan. The Master Plan is obviously the kind of document that would establish public objectives to be achieved in the redevelopment. The fact that it was not prepared before the bidding process has meant that City Council has not had any statement of public objectives against which bids can be assessed. It is clear from the wording of the 1991 Secondary Plan that a rezoning would not be permitted before a Master Plan had been adopted. The Master Plan outlined in the January 12, 2004, report has never been part of any public consultation. Further, it does little more than describe the development proposal of Union Pearson, which is understandable since the report was written by the very staff involved in the selection of Union Pearson as the preferred proponent in the first place. Nor does the staff-prepared document refer to the issues raised by the two bids submitted. It is known, for instance, that the LPH bid included installing escalators between the concourses and platforms, which would seem to be a very sensible idea. (In fact, city staff said that LPH was penalized for making such a proposal.) LPH proposed that the roof over the tracks required replacement, and that the tracks should be realigned to widen the platforms. But these ideas are not covered in the staff's draft Master Plan. A third bidder, who withdrew before submission of a final bid, proposed that several tracks be dead-ended in the European style to provide easy access to the tracks and to provide opportunities to build over the tracks, but these ideas are not referred to. In short, the staff's draft Master Plan is a very deficient document. Once drafted, the Master Plan must be subject to public comment and discussion, and it can then be used to assess the bids for Union Station. The Master Plan should deal with the following issues, among others: * Public areas in public control Following the example of the renovation of Grand Central Terminal, the areas used by the public on a regular basis must be controlled by a public body such as the city. This space should not become privately controlled like Eaton Centre, where private security guards can decide who is permitted to be there and who is not. * Maximize Public use of the Great Hall Uses and routes within the Station should be configured to ensure that passengers pass through the very distinguished Great Hall, the building's central space and one of the most inviting and inspiring in the city (much like the commuter-friendly main hall of Grand Central). * Ensure the Beaux-Arts standard of design is maintained Unless there is great vigilance, this goal will not be met. Union Pearson has proposed concourses filled by almost two dozen staircases, which will make for a cluttered, unclear and unpleasant space. The Master Plan must be forceful in requiring that the building's original Beaux-Arts concept is maintained throughout the public areas. * Ease of vertical movement between the building's levels, and wide, comfortable platforms Currently, staircases from the concourse level to GO Transit's track level comprise 31 steps, and staircases between the teamways on Bay and York Streets and the GO track platforms will likely be more than 31 steps - about three flights of stairs. GO Transit plans to install a number of new access points - stairways, not escalators - to each platform. GO management states a preference for stairs over escalators for several reasons: a set of stairs costs only $200,000, whereas an escalator costs $500,000; stairs can be used for passenger storage when platforms are full, but escalators move people more quickly (meaning that crowds would accumulate fast on the narrow platforms). However, doubling or tripling the number of access points (staircases or escalators) on platforms will consume platform space and lead to crowding. Current platforms are very narrow, much narrower than required under current Building Code requirements, and often feel unsafe. (Standard train-station platform width is something like 22 feet; the existing platforms are much narrower than this, some only 14 feet.) Consideration should be given to widening platforms, something that many commuters have already suggested. Platforms should be wide enough to accommodate the inevitable increase in GO passenger numbers well into the future. Escalators must be installed. It doesn't make sense to design a facility currently used by 40 million people with the plan to double that number, and require that most people walk up and down three or four flights of stairs. * Taxi and drop-off area Convenient drop-off areas are especially important, as the Station is used for inter-city trains as well as commuters. An area for taxis and cars dropping off/picking up travellers should be available to minimize the need for walking a considerable distance to/from trains. There should be short-term parking directly under the station to allow ease of access for those driven to the station by friends and relatives, and who may have luggage. Off-site parking suggested by staff would be inconvenient since it is 400 or 500 metres from the Station. * A reasonable balance between uses There are no clear principles determining a middle ground between serving the needs of the transit operators and the needs of retailers. Redeveloping the Station involves at least two different priorities that compete with each other: its use as a transportation hub, and its use as a commercial and retail centre. Those agencies offering transportation want to move passengers quickly and efficiently to make way for other passengers. In contrast, retail lessees will see the building as a "destination," a place to spend time and money in stores and restaurants. * Appropriate additional density proposals The idea of building new structures within Union Station - such as over the tracks - must be resolved before the refurbishing of the Station is considered. The existing plan is to worry about building over the station later. Yet that would certainly involve disruption of work completed under any lease signed by the city since new structures will involve footings that go down through the three or four levels of the station, and they will have impacts on train platforms and the roof over the tracks. This issue must be addressed before any lease is signed. In addition, plans to incorporate additional density must be appropriate, given all the other public objectives for the Station. 2. Working with a Flawed Bidding Process What do we conclude from the bidding process? First, that LP Heritage's bid was considered the best bid by the Selection Committee - until it was decided to take another vote. If the scores of the Commissioner of Urban Development Services were excluded on the second vote as being "patently unreasonable," LP Heritage would have won that vote as well. Nevertheless, staff recommended, and council agreed, to give the contract to the Union Pearson Group. There's something wrong with this scenario. Second, the reason bidders were financially pre-qualified was to get that issue out of the road at the beginning. Yet this matter was raised in the middle of bidding, and raised in a way that never allowed LP Heritage to respond to the allegations being made against it. What happened is that the Selection Committee decided to revisit the question of financial qualification without telling the bidder. It was that revisiting which allowed the vote of the Commissioner to have such sway. This can't be considered fair. Third, it's hard to know which bid is best because neither bid has been made public. The only people who know what the bids actually say are the members of the Selection Committee, and collectively, with the exception of the Commissioner, they favour LP Heritage, which is not being awarded the bid. The easiest way to resolve these problems is to make the bids public and allow public debate on them. City Council has refused to do this for reasons that are not clear. The city's code of practice requires that bids be made public, but the code is not being followed in this case. The allegations of former mayor Lastman's conflict of interest - which he finally declared - has already been mentioned. There is one other matter that deserves to be mentioned. Al Leach, who had an annual $100,000 retainer with SNC Lavalin, one of the Union Pearson partners, served throughout the bidding as a board member of GO Transit, a key Union Station user. Even if Leach removed himself from discussion of these matters at GO Transit, his dual role gives a strange flavour to the bidding arrangements. The city's business reputation rests on its fairness in dealing with companies who are interested in doing business with it. This flawed process is not one City Council can be proud of. It demeans the city's reputation. 3. Making Union Station a Transportation Hub for the Future Union Station was built eighty years ago as a transportation hub, and that remains its key function. In planning its redevelopment, the most important issue is ensuring it serves as an effective transportation hub for the next 100 years. Its two main purposes today are serving commuters and rail travellers to more distant destinations. These functions will change. For instance, GO Transit wishes to double the number of commuters using the station. As well, there will most certainly be an attempt to meet the demand for medium- and high-speed trains serving cities in the Montreal-Windsor corridor. Perhaps attempts should also be made to integrate bus transportation into the Station. There are clear and obvious problems with the Station as it currently exists. The platforms for GO trains are much too narrow for current passenger usage - doubling that number of passengers will create a significant problem. The platforms must be widened, and that probably means realigning the tracks, which is expensive - although perhaps not out of line if amortized over the next 100 years. If the platforms are to be served by escalators - it is difficult to see any other future for the three-storey set of stairs in the Station - then platforms must be widened. The Station roof, although it is of great interest for historical reasons, is unpleasant and decrepit. Most of the Station requires a new, attractive roof, which entails a hefty price tag. Many GO commuters are forced to use the basement concourse, which holds none of the attractiveness of the Great Hall. Plans to create a second basement concourse (on the York Street side) must be carried out with a fundamentally improved design. Meeting these transportation goals requires substantial sums of money. GO Transit has been forced to exist for the past five years on a hand-to-mouth financial diet, and does not have the funding to undertake these necessary changes. In response to its precarious financial state, it claims these changes are not necessary - that platforms need not be widened; that escalators need not be installed to platforms; that the train shed need not be improved - but one must assume those conclusions stem from a deep financial problems rather than from good planning. Whatever else happens, monies must be found to fund these transportation improvements. City Council should help to ensure adequate funds are available from senior governments and that contractual relationships for other parts of the station encourage rather than inhibit such important transportation changes. The city's vision should state clearly and forcefully that the transportation goals are integral to how the station will be changed in the foreseeable future. There should be excellent linkages in all directions, providing easy and safe routes for pedestrians. This will probably require a redesign of the TTC's Union Station subway station, a rethinking of the connection to the new GO Bus Terminal on the east side of Bay Street, and special connections at the northwest corner of the site. The city should play a major coordinating and implementing role in making these linkages effective. It is also important to ensure that the public areas of Union Station - that is, those areas used daily by the travelling public - remain in public control. This can easily be done by only leasing out those parts of the Station which are used for commercial purposes, as is done with Grand Central Terminal. As already pointed out, the transportation goals need to be set out clearly in a Master Plan. That is the best way of ensuring that the goals are clear, and that care is taken to ensure those goals will be reached and the funds needed for them will be available. 4. Protecting the Heritage Aspects of Union Station For most residents, Union Station is one of the most important heritage buildings in Toronto. It needs strong protection to ensure its important attributes are enhanced, and that whatever change occurs within or around it is appropriate. Current heritage legislation in Ontario is very weak - it permits council to delay issuing a demolition permit for up to 180 days, but then it provides no protection of any kind. Since the building and land are currently owned by the City, the City can determine what kinds of controls will be placed on whoever leases the structure in the future. The terms of these controls must be spelled out before a lease is entered into. Determining what it means to "protect the Station's heritage values" isn't as easy as it seems. There are two competing visions about heritage issues. One is the "museum" interpretation, which forbids changing anything inside the existing Union Station. But it is impossible to adapt a building to ongoing uses if change is not permitted at all. Another vision is the "retail" interpretation, which says everything is up for grabs. This too is inappropriate. Recent decisions by federal Parks staff - they control heritage decisions because the Station is designated as a building of national importance - seem to indicate that they believe in the "museum" interpretation. On the other hand, the city has taken a laissez-faire position in the short time it has owned the building, allowing vendors to sell trinkets and clothing from folding tables in the Great Hall - uses that are totally inappropriate in the space. A heritage framework (both principles and process) must be agreed on somewhere between a museum interpretation and the anything-goes approach. This has not yet been done. Perhaps this framework should be part of the Master Plan. In any case, it must be agreed on before any lease of the property is finalized. Another aspect that must be considered is the construction of a new roof and new buildings over the railway tracks. These must be done in a sensitive manner than enhances the heritage aspects of the Station. To date, no consideration has been given to such construction - the city has not recognized the need to replace the roof and has suggested new buildings will be another phase of redevelopment, with a new bidding process, although it is difficult to know how new buildings will fit within a structure for which a 100-year lease has been signed. 5. Protecting the City's Financial Interest Currently, the city gets rental income from Union Station of $100,000 per month, or about $1.2 million a year. If the city were making capital repairs, some of this sum would be used for those repairs so the net city return would be less. It should be pointed out that at present the city is not maximizing revenue from the Station - the west wing, containing about 100,000 square feet of office space, sits vacant as the future of the Station is finalized. It is noted that the cost of capital repairs needed in the station is about $16 million, which, if amortized, would eat up most of the revenue now being generated by the city. What kind of revenue should the city expect from Union Station? This is obviously a difficult question to answer. One of the advantages of a bidding process is that it allows the city to see what bidders are willing to offer. Unfortunately, since the bids have never been made public, it is unknown exactly what each of the bidders was willing to offer. Instead, the best information we have is from city staff, who have reported some aspects of the bids from Union Pearson. Staff have reported that if Union Pearson is given a lease for 100 years - 35 years, plus a 15-year renewal, plus a further 50-year renewal for building a pedestrian route from the Via concourse to the west side of Air Canada Centre - then the city gets revenue in three parcels. There would be a base rent of $500,000 a year; a participatory rent equal to 5 per cent of net revenue after Year 11; and a bump-up of the base rent subject to a formula that has not been made public. Staff have been unable to estimate what amounts the second and third parcels might generate. The hope of getting real money from a percentage of "net income" (the second parcel) may not be too realistic. Many blockbuster Hollywood movies produce no "net revenue" given the terms of the agreements under which they were made. Whether this would be the situation here depends entirely on the words in the agreement, but these are not available for the public to consider. A return of $500,000 a year on a 100-year lease means that in essence the city is putting a capital value on the complex of about $5 million. That seems to be exceptionally low for such a key site. Need the lease be for 100 years? A rule of thumb in the development industry is that an investment should provide a 100% return within about 10 years. Even in current public-private partnerships (P3) in the UK where private developer-operators are spending more than $300 million on a single hospital project, the operating lease terms are about 30 years, after which the facility must be turned back to the public in nearly new condition. Tenant improvements are noted to be worth tens of millions of dollars, but they will likely have little if any value to the City, and can actually represent a liability if they require renewal or demolition in the future. Tenant improvements should not be considered as a significant investment in the future value of the asset Union Station.

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