Save Union Station

Bulletin

SAVE UNION STATION, Bulletin No. 17, June 16, 2003.

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In this issue:

1. City staff report once again for Union Pearson

2. LP Heritage letter to Administration Committee

3. Special Committee meeting: Tuesday June 17, 1 pm

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1. City Staff report once again for Union Pearson

On Friday evening June 13, after the close of the business day when most people had left their offices, city staff finally released the two reports (dated June 12) submitted for the special Administrative Committee meeting on June 17. One always knows there is serious business afoot when the public is given next to no time to read reports and respond to them.

The reports generally make the case that the city should proceed quickly to finalize the arrangements with the Union Pearson Group.

One report deals with the request of the Administration Committee on January 29, 2003 to release full financial information on the bids, including a reduction of the lease term to 50 years. Staff note that only preliminary discussions were held on the reduction of the lease from 100 to 50 years “because this recommendation had not been referred to council.” Most other times staff have been unwilling to pursue issues because council had already made a decision. Ah, one can’t win.

When it came to releasing financial information, the Union Pearson Group balked. In a letter to staff dated March 18, 2003 (which, interestingly, is not part of the electronic version of the report filed on the city web site), Union Pearson says “the financial and business elements of our proposal contain, in their details, sensitive commercial information, the disclosure of which could cause us, and our consortium members injury.” Union Pearson would only agree to “public disclosure of a summary of the `essential elements’ of the proposal.”

Staff then include in the report a summary of the two offers. It shows a capital investment of $95 million by Union Pearson - which is far below the $150 million staff said in its January 22 report Union Pearson was investing, or using a 50 year term which Union Pearson has not agreed to, $102 million. It is very unclear what the figures mean or where they come from. The city’s income from Union Pearson in the first 50 years is estimated at $37.5 million.

Apparently LP Heritage has never been asked by staff to reveal its financial offer, although LP Heritage officials claim it is higher than Union Pearson’s offer. (See letter from LP Heritage, below.) The city summary says the LP Heritage base offer was $25.6 million.

But other information has been revealed from those familiar with the bid. The Union Pearson base offer was $500,000 for the first ten years – while the LP Heritage base offer was $600,000 a year, which would produce revenue over fifty years without including cost-of-living increases and other calculations to share in profit and revenue, of more than $30 million. One other statement floating around is that the LP Heritage bid guaranteed the city more than $70 million.

Until the bids are made public, it is very difficult to know the truth. Given what has happened so far, the city staff estimates must be taken with a large grain of salt.

The other city staff report deals with design matters. It is fair to conclude that in this report city staff is biased towards Union Pearson beyond reason. For instance, staff state that the Union Pearson route to the Skydome is more direct that that provided by LP Heritage. LP Heritage proposes to enhance the existing route through the west wing main floor. Union Pearson will cut that route off and have people walk through a corridor less than 3 meters wide located at the south side of the west wing. It is laughable to conclude the Union Pearson route is `more direct,’ as anyone who has seen the two plans will attest.

The city staff reports are available at http://www.toronto.ca/union_station/index.htm and click on Special June 17 meeting.

2. LP Heritage letter to Administration Committee

Meanwhile, LP Heritage has written directly to the Committee, making the case that it won the bid and should be awarded the contract. It is unclear whether LP Heritage will appear at the meeting. The letter follows:

June 9, 2003

We have reviewed the full report of Justice Coulter Osborne that was presented to City Council on May 22, in respect to the RPF Process for Union Station. The Report, that must be read in its entirety, addresses many previously unknown facts in respect to the voting and the overall selection process. The Report, although not an exhaustive investigation of all of the facts, nevertheless discloses some very disturbing facts about the manner in which the Successful Proponent to restore, re-develop and operate Toronto Union Station was selected.

It is our firm belief, based on the terms in the RFP, the City’s selection process and the facts now known to all the parties, that the LP Heritage+ Union Station Consortium rightfully earned the Toronto Union Station Project and was indeed, on merit, the Successful Proponent. A decision on the merits was made by the Selection Committee on May 8, 2002 and according to Justice Osborne, as of that date, members of the Selection Committee believed they had concluded their deliberations and completed the voting on the project. As all of you now know, our consortium was selected by a wide margin.

Without limiting our overall concerns about the selection process, we wish to point out one particularly flawed aspect in the Selection Committee process following the May8th vote that obviously and perhaps unwittingly, undermined the City’s ability to select the proper candidate based on the criteria set out in the RFP. Namely, the re-vote by Judge Paul Dill on June 17th, 2002 as it relates to three key financial categories. We agree with Justice Osborne’s findings that Ms. Dill’s decision to award our consortium zeros in all three financial categories during the Selection Committee re-vote were both “patently unreasonable” and “an over-reaction – a misguided response” to the evidence (quotes from Justice Osborne’s report). Ms. Dill’s decision to give our consortium the lowest possible score in these three critical categories was obviously unreasonable, unfair and inequitable with regard to the objective facts in the tender material.

It is our position that there was no basis for a second vote and that a second vote should not have taken place given the fact that the financial capacity of the bidders had been pre-qualified and even after the completion of the “ad hoc” due diligence regarding the Prime Group, the Selection Committee ultimately concluded that both Proponents had the financial capacity to accomplish the project (see Selection Committee Report and Recommendation to Administration Committee, July 2002).

Given that our financial offer was significantly higher and more beneficial to the city than that of our opponent (the UPG offer has been revealed to the public), it is inconceivable that the superior bid would be rejected by the City. Moreover, any information relating to our consortium’s financial status was publicly available and/or part of the material filed in the tender process. At all times, the City was obliged to act absolutely fairly and equitably to the bidders, fully disclosing the potential second vote to the bidders along with any information (i.e. the PriceWaterhouseCoopers report) that was before the Selection Committee and providing both bidders with the opportunity to respond fully to this new information.

At the time Council passed its resolution, we appreciate that Council may not have been aware of all the facts leading up to the Committee’s recommendation including the circumstances relating to the original vote on May 8, 2002, the re-vote and the fact that Ms. Dill’s voting was “patently unreasonable”. The City is now aware of these facts and is obligated to award the project to the successful bidder, that being LP Heritage+ Union Station Consortium.

We hereby respectfully request the Administration Committee comply with its obligations under the RFP and act in accordance with those obligations by awarding the contract for Union Station to LP Heritage+ Union Station Consortium. We are fully prepared to begin contract negotiations and provide the City with appropriate and customary assurances of specific performance consistent with such negotiations.

Respectfully,

Patrick B. O’Leary

Managing Partner, Landau & Heyman

3. Special Committee meeting

The City’s Administration Committee is holding a special meeting to deal with Union Station at 1 pm, Tuesday June 17, in Committee Room 2, second floor, City Hall. Members of the committee are: Doug Holyday, Paul Sutherland, Frances Nunziata, David Solnacki, David Miller, Rob Ford, Anne Johnston, and Brian Ashton. It seems the committee is split right down the middle on this issue, with the first four named wishing to proceed with awarding the contract to Union Pearson, and the last four being much more dubious about that course of action.

About ten speakers have already contacted the clerk, but normal practise for the committee is to hear from anyone who attends and asks to speak, whether or not they have a prepared text. If you have something to say about this matter, please try to get to the meeting, which will probably last for much of the afternoon. If you’ve been looking for a good moment to show your concern about a public issue, now’s the time to do it.

Apparently Mr. Holyday intends to have this matter forwarded directly to council when it meets on June 24 so that Union Pearson can be given the contract.

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