Report to/Rapport au :


Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique


and Council / et au Conseil


4 May 2006 / le 4 may 2006


Submitted by/Soumis par : Ned Lathrop, Deputy City Manager/Directeur municipal adjoint,

Planning and Growth Management/Urbanisme et Gestion de la croissance 


Contact Person/Personne ressource : Rob Mackay, Manager/Gestionnaire,

Strategic Projects/Projets stratégiques

(613) 580-2424 x22632,


Orléans (1)

Ref N°: ACS2006-PGM-ECO-0011













That the Corporate Services and Economic Development Committee recommend that Council authorize staff to enter into negotiations with Orléans Town Centre Partnership for the design, build, finance, maintenance and ownership with reversion back to the City at the end of the operating term/transfer and maintenance of the Orléans Arts Centre facility; the transfer/ownership, operation and maintenance of the Orléans Client Service Centre building with the provision of a long-term lease to the City; and the ownership and development of the City-owned Orléans Town Centre lands.




Que le Comité des services organisationnels et du développement économique recommande au Conseil d’autoriser le personnel à entamer les négociations avec le Partenariat du Centre d’activités d’Orléans en vue de la conception, de la construction, de l’entretien et du droit de propriété financiers avec réversion à la Ville à la fin du mandat d’exploitation du Centre des arts d’Orléans; du transfert/droit de propriété, de l’exploitation et de l’entretien de l’édifice abritant le Centre du service à la clientèle d’Orléans avec l’offre d’un bail à long terme à la Ville; et du droit de propriété et de l’aménagement des terrains du Centre d’activités d’Orléans appartenant à la Ville.




On October 26, 2005 Council directed staff to proceed to Stage 2 of the procurement process for the development of an Orléans Arts Centre facility and the Orléans Town Centre land using a P3 approach.  Stage 2 of the process involved the release of a Request for Proposals (RFP) to an approved shortlist of four qualified respondents.  The RFP was issued by Supply Management Division and distributed to the shortlisted Respondents on 19 December 2005.  The RFP closed on 23 March 2006, with the City receiving proposals from two of the four short-listed Respondents.  Proposals were received from:


- Orléans Town Centre Partnership, Toronto (includes:  Forum Leasehold Partners Inc., Aecon Buildings, Johnson Controls Inc./BLJC and Lemay & Doyle Architects); and

- Morguard Plenary Consortium, Mississauga (includes:  Morguard Investments Ltd., Plenary Group Canada Ltd., PCL Constructors Canada Inc. and ema Architects)


An evaluation committee was established to review and score the two proposals.  Through an extensive review, in accordance with the prescriptive process stipulated in the procurement document, the proposal submitted by Orléans Town Centre Partnership was found to meet the objectives of the City's RFP, and provided best value to the City.




Evaluation Process

The evaluation team was facilitated by Supply Management Division, and included representatives from the Strategic Projects Division, Cultural Services, as well as representatives from Real Property Asset Management, Financial Services, Planning and Infrastructure Approvals, and an external representative with expertise in P3 financial modelling.  An independent Fairness Commissioner was retained to oversee the process to ensure that the evaluation was conducted in a fair, transparent and consistent manner.


At the outset of the evaluation process, City subcommittees consisting of the appropriate staff subject matter experts (SME's), along with Supply Management and the Fairness Commissioner, were struck to evaluate each of the technical and financial components of the proposals.  The two subcommittees scored the proposals against a set of pre-determined evaluation criteria.  Representatives from the subcommittees also formed part of, and advised, the Executive Evaluation Committee who confirmed and finalized the scoring of the two proposals.


The proposals were rated on the degree to which they met the evaluation criteria for each of the five components of the RFP.  These relate to (1) the design and development of the Orléans Arts Centre, (2) the design and development of the Town Centre land, (3) the operations and maintenance of both the Orléans Arts Centre and the Client Service Centre building, and (4) the overall Business Plan.  The fifth component consisted of a scored presentation given by each Respondent team after the close of the RFP.  The interview provided each Respondent with the opportunity to present their submission and give clarification to the Executive Evaluation Committee.  The results of this extensive evaluation process assigned the higher overall score (out of 100 points) to Orléans Town Centre Partnership (OTCP) who were able to demonstrate best overall value for the City.


Summary of Proposal by Orléans Town Centre Partnership

1.  Design and development of the Orléans Arts Centre (OAC):  The proposed design consists of a 2.5 storey, 86,000 square foot building, whose exterior design is in keeping with the City's policies and guidelines.  The 500 seat theatre met the City's desired acoustic quality and functional layout requirements.  However, certain circulation, flow, adjacency and accessiblity elements of the floor plan and building specificiations were not completely satisfactory, and will need to be revised.  In addition, the City will request written confirmation that specialized equipment, furnishings and fittings, as well as unique requirements of the program spaces are as indicated in the RFP.  Going forward, staff will address these matters with the Proponent within the proposed fixed price and building envelope.


2.  Design and development of the Orléans Town Centre:  OTCP's proposal clearly met the City's objectives for the Town Centre and provided evidence of the ability to cause at least $170 million worth of construction on the Town Centre land within Phase 1 of their proposed three-phase development plan (by 2009).  This would be through the construction of a hotel, senior's residence and some residential development.  Through negotiations, the City will ensure that suitable performance requirements are in place to encourage OTCP to complete this work by 2009.  The road pattern and vehicular access to the Arts Centre as proposed may be subject to modification through negotiation.


3.  Operations and Maintenance of the Orléans Arts Centre (OAC) and Client Service Centre (CSC):  Orléans Town Centre Partnership proposes the use of Johnson Controls Inc./BLJC for the operations and maintenace of both buildings.  A point of negotiation will relate to the mechanical components proposed for the OAC, and achieving assurance that the proposed lifecycle arrangement will result in the City receiving a quality building that will retain its value long after the term of the partnership agreement, when the building reverts to City ownership.  As indicated in the RFP, the Client Service Centre is transferred to the P3 partner in perpetuity.


4.  Business Plan:  The proposed financial structure results in a net annual operating cost to the City that is in line with the costs that were identified by staff in the June 2005 Council Report.  Similar to past P3 projects, the City will be required to guarantee the OTCP loan to ensure the best financing rate possible.  The City will also need to enter into Municipal Capital Facilities Agreements for each of the OAC and CSC buildings in order to exempt OTCP from realty taxes, as well as from development charges on the OAC building.  During the 25-year term of the agreement, the City is to pay rent on the OAC that includes the cost of financing, plus operations and maintenance costs of the facility; rent on the CSC is to be a standard office lease.


Because construction is to begin in early 2007, the Respondent's proposals were submitted in 2007 dollars, and incorporate a reasonable escalation for construction costs.  Despite this, the annual cost proposed by OTCP is still within range of the annual cost estimate highlighted in a June 2005 Council report.


The June 2005 Council report indicated that the Arts Centre could be constructed in the price range of $25M to $27M by using a P3 approach.  With the contribution of the City's offsets, including its vacant land and Client Service Centre building, the net cost would be reduced to between $10M and $13.5M.  The staff report recommended that the net cost of the Arts Centre be paid through a lease to own approach by converting the net capital cost of $10 to $13.5 million into annual payments over 25 years.  The City's annual cost estimate (2005 dollars) was as follows:


Loan repayment on Net Capital Cost of OAC ($10 - $13.5 million)....................$725K to $1M/yr




Building maintenance, life cycle costs, and incremental rent.........................$1.3M/yr to $1.8M/yr

on OAC and existing Client Service Centre building


TOTAL...................................................................................................................$2 to $2.8M/yr


In addition, the net operating budget for arts programming and staffing is estimated to be $450K/yr.


Timelines and Next Steps

Following Council's approval of the Orléans Town Centre Partnership as the Preferred Partner, the Strategic Projects Division will form a negotiation team to develop a partnership agreement related to the construction of the Orléans Arts Centre, the transfer of ownership of the Client Service Centre building, and development of the Town Centre land.


Selection of a preferred partner does not automatically imply that negotiations will be successful.  Issues related to the modification of the proposal and contractual agreements require review and negotiation.  The City will need to conduct a due diligence process to further verify the information and assumptions made by the respondent in their proposal.  The firm of KPMG has been retained to assist the City with this process.  Negotiations will focus on achieving the best value for the City within an acceptable risk structure.


While the City is committed to the process and has full expectations of entering into a successful partnership, it will only proceed if there is a strong sense that a successful and positive partnership can be formed between the City and the Orléans Town Centre Partnership.  Failing this, the City will have the option of entering into negotiations with the second ranked Respondent, Morguard Plenary Consortium.


It is anticipated that negotiation of the partnership framework will run from June through August, 2006.  This will allow a report to be presented to Committee and Council in September 2006 to confirm the structure and business terms of the partnership agreement.


A public meeting will be held in the community prior to the completion of the negotations stage, and will be organized by OTCP in conjunction with City staff.  Staff will report the outcome of the public consultation as part of its September 2006 report to Committee and Council.


Following this, the legal elements of the agreement are anticipated to be finalized, with a formal partnership agreement being entered into by the end of this year.  Construction of the Arts Centre would begin in 2007, with completion of construction and occupancy planned for the fall of 2008.




Following the work of the Executive Evaluation Committee, the Ward Councillor was consulted and informed of the recommended Preferred Partner.  The City's Orléans Arts Centre program partners (Arts groups) have been informed of the results of the RFP evaluation process, and the recommended Preferred Partner.




In June 2005, Council authorized staff to proceed with the proposed public-private partnership framework for the development of the Orléans Arts Centre and Town Centre.  The June 2005 staff report outlined the results of the Public Sector Comparator (PSC) which compares the overall cost of the project using a P3 approach against the cost of the project using a traditional public-sector approach.  The report indicated that the Arts Centre could be constructed at a lesser price by using a P3 approach.  The complete financial implications to the City will be spelled out in a subsequent report targeted for September 2006, following negotiations with the preferred proponent.


For the purpose of this report, there are no financial implications.








The Strategic Projects Division, in coordination with Cultural Services Division will implement the recommendations as directed by Council.