Report Template

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

5 January 2007 / le 5 janvier 2007

Submitted by/Soumis par : Steve Kanellakos, Deputy City Manager/

Directeur municipal adjoint,

Community and Protective Services/Services communautaires et de protection

Contact Person/Personne ressource : Colleen Hendrick, Director

Cultural Services and Community Funding/Services culturels et financement communautaire

(613) 580-2424 x 23150, Colleen.Hendrick@ottawa.ca

Somerset (14)

Ref N°: ACS2007-CPS-CSF-0003

SUBJECT:	COMMUNITY CONCERT HALL - EXTENSION

OBJET :	SALLE DE CONCERT COMMUNAUTAIRE – REPORT DE LA DATE LIMITE

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council:

1. Extend the deadline for the conditional release of City funding for the Community Concert Hall until February 28, 2008 to provide the Ottawa Chamber Music Society a final opportunity to obtain a decision from the Department of Canadian Heritage and to secure all required funding for the Concert Hall.

2. Authorize the City Manager to finalize and execute an agreement amending the Development Agreement and Restrictive Covenants between the City and Morguard Elgin Limited dated 21 December 2005 to extend the performance dates by one year in accordance with terms and conditions that are consistent with those set out in the draft agreement attached as Annex "A" to this report.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil municipal :

1. de reporter au 28 février 2008 la date limite pour le versement conditionnel des fonds municipaux réservés au financement de la construction d’une salle de concert communautaire, et ce, dans le but de donner à la Société de musique de chambre d’Ottawa une dernière chance d’obtenir une décision du ministère du Patrimoine canadien concernant la participation financière de ce dernier au projet et de recueillir la somme totale nécessaire à la réalisation de celui-ci.

2. d’autoriser le directeur municipal à parachever et à signer une entente modifiant l’entente d’aménagement assortie de clauses restrictives conclue le 21 décembre 2005 entre la Ville et la Morguard Elgin Limited de manière à reporter d’un an les dates d’exécution de cette entente conformément à des conditions compatibles avec celles qui figurent dans l’ébauche d’entente jointe à l’annexe « A » du présent rapport.

EXECUTIVE SUMMARY

In 2004, City Council approved several reports pertaining to the Purchase and Sale of the 150 Elgin Street site. The City of Ottawa, through a Request for Offers to Purchase (RFOTP) selected Morguard Corporation to purchase the City's property and develop a mixed use residential and commercial property on the site. The Ottawa Chamber Music Society (OCMS) was identified as the representative community group for the development of a Community Concert Hall which would be integrated into the site, in a partnership with Morguard, as a public benefit. The OCMS had already been working for several years prior, and assessed the need for a mid-sized performance, broadcast and recording hall for all kinds of music in the downtown core, with over 700 anticipated uses.

On October 13, 2004, City Council conditionally approved the equivalent of $6.1 million ($5.47 million grant, $250,000 in permit fees and the waiving of development charges for the concert hall) in support of the OCMS business plan to build and manage a 925-seat hall on the site. The grants were approved as part of the 2005 Budget. The OCMS was charged with raising the necessary funds to build the venue, including applications in 2005 to the Provincial and Federal governments, as well as private fund-raising. The full $6.5 million in Provincial funding was provided in March 2006 and fund-raising is on target. If the Cultural Spaces Canada Program provides funding, the OCMS estimates that the project would have 92% of anticipated construction cost covered before making any allowance for additional money to be raised from naming sponsors and the community campaign.

After the 2006 federal election, the OCMS was asked by the Department of Canadian Heritage to resubmit their business plan with the final confirmed costs from the builder. OCMS resubmitted their proposal on January 10, 2007 and a response from the Department of Canadian Heritage is anticipated before the end of the second quarter. However, in the 2004 Council report, the release of municipal funding was based on a timetable that all construction funding would need to be secured by September 30, 2006. This timetable was based on the Morguard construction schedule. OCMS has asked the City to extend the deadline to allow sufficient time for the final level of funding to be evaluated and decided. The sale of 150 Elgin to Morguard closed on December 21, 2005 and identified February 28, 2007 as the last date for the OCMS to fuilfill its requirements to Morguard. Morguard has indicated its willingness to extend the performance dates in the Development Agreement with the City by one year. On this basis, February 28, 2008 would become the last date for the OCMS to fulfill its commitments to Morguard. Construction on the site has not yet begun.

This is a community-led project which is leveraging funding from several sources and as a result does not depend on 100% municipal funding. Morguard has also invested a significant amount of time and financial support to the Community Concert Hall and clearly view it as an essential feature of the 150 Elgin St. development. The concert hall was part of the Council approved Ottawa 2020 Plan and will generate significant economic and cultural spin offs for years to come. It would be premature to forego this extension before the Department of Canadian Heritage has had an opportunity to review the revised OCMS submission and provide a response. It is the opinion of the City administration that the Community Concert Hall proposal stands the best chance of succeeding as the anchor for the 150 Elgin site, and that the extension would allow all funding options to be pursued and resolved. If the OCMS Community Concert Hall does not proceed and if the City decides not to lease or purchase the Concert Hall space, the City and Morguard will negotiate an agreement for the alternate use and redesign of the Concert hall space.

RÉSUMÉ

En 2004, le Conseil municipal a approuvé plusieurs rapports concernant l’achat et la vente du 150, rue Elgin. À l’issue d’une demande d’offres d’achat (DOA), la Ville d’Ottawa a décidé de vendre l’actif municipal à la société Morguard, qui doit y aménager un complexe d’utilisations résidentielles et commerciales mixtes. La Société de musique de chambre d’Ottawa (SMCO) a été désignée comme groupe représentant la collectivité dans le cadre de la mise en œuvre, en partenariat avec la société Morguard, du projet à caractère public de construction d’une salle de concert communautaire, lequel s’intègre au lotissement global du 150, rue Elgin. La SMCO travaille à ce dossier depuis plusieurs années déjà et a démontré la nécessité d’aménager au centre-ville une salle de taille moyenne pouvant servir à la fois de salle de concert, de centre de radiodiffusion et de studio d’enregistrement et ce, pour différents genres de musique. La SMCO fixe à plus de 700 les utilisations possibles d’une telle installation.

Le 13 octobre 2004, le Conseil municipal a conditionnellement approuvé un soutien financier à hauteur de 6,1 millions de dollars (5,47 millions de dollars en subventions, 250 000 $ en droits de permis et la renonciation aux redevances d’aménagement) comme preuve d’appui au plan d’affaires de la SMCO visant la construction et la gestion d’une salle de concert pouvant accueillir 920 spectateurs. Les subventions figuraient dans le budget de 2005. La SMCO a été chargée de recueillir les fonds nécessaires pour construire la salle, et notamment de présenter en 2005 les demandes de financement requises aux gouvernements provincial et fédéral ainsi qu’aux entreprises privées. En mars 2006, la Province a octroyé à la SMCO sa part intégrale du financement, soit 6,5 millions de dollars. Par ailleurs, les activités de financement de la SMCO ont jusqu’ici atteint leurs objectifs. Si le programme Espaces culturels Canada décide de participer financièrement au projet, la SMCO estime qu’elle sera parvenue à amasser 92 p. 100 des sommes nécessaires. Il lui suffira d’amasser les 8 p. 100 restants auprès des commanditaires (droits d’appellation) et du public.

Après l’élection fédérale de 2006, le ministère du Patrimoine canadien a demandé à la SMCO de lui présenter de nouveau son plan d’affaires ainsi que la confirmation du devis du constructeur, ce que la Société a fait le 10 janvier 2007. Celle ci s’attend à recevoir une réponse du Ministère avant la fin du deuxième trimestre de l’année. Dans son rapport datant de 2004, le Conseil précisait cependant que la Ville ne verserait les fonds approuvés à la SMCO que si celle-ci parvenait à recueillir tous les fonds nécessaires à la réalisation du projet au plus tard le 30 septembre 2006. Cette échéance était fondée sur le calendrier des travaux de construction établi par la société Morguard. La SMCO a demandé à la Ville de reporter cette échéance pour permettre l’évaluation et l’approbation de la dernière tranche de fonds nécessaire à la réalisation du projet. La société Morguard est devenue propriétaire du 150, rue Elgin le 21 décembre 2005 et elle avait alors accordé à la SMCO jusqu’au 28 février 2007 au plus tard pour respecter ses engagements envers elle. La société Morguard se dit par ailleurs prête à reporter d’un an les dates d’exécution de l’entente d’aménagement conclue avec la Ville. Par conséquent, la SMCO a jusqu’au 28 février 2008 au plus tard pour respecter les engagements pris à l’endroit de la société Morguard. Les travaux de construction prévus n’ont pas encore commencé.

La construction de la salle de concert est un projet communautaire faisant appel à plusieurs bailleurs de fonds. La Ville n’est donc pas responsable pour 100 p. cent du financement du projet. La société Morguard a investi beaucoup de temps et d’argent dans ce projet qu’elle considère clairement comme un élément essentiel de l’aménagement du complexe du 150, rue Elgin. La salle de concert faisait partie du plan Ottawa 20/20 et elle aura des retombées économiques et culturelles importantes pendant de nombreuses années. Il serait prématuré de refuser un report de la date limite prévue pour le versement des fonds avant que le ministère du Patrimoine canadien ne puisse examiner le projet révisé de la SMCO et y réagir. Le personnel administratif de la Ville est d’avis que c’est dans le cadre de l’aménagement du complexe du 150, rue Elgin que le projet de construction d’une salle de concert communautaire est le plus susceptible de se concrétiser et que le report de la date limite demandé permettrait aux responsables d’évaluer à fond toutes les possibilités de financement. Si la salle de concert communautaire proposée par la SMCO n’est pas construite et si la Ville décide de ne pas louer ou acheter l’espace prévu pour cette salle, la Ville et la société Morguard négocieront une entente en vue de l’utilisation de cet espace à d’autres fins.

BACKGROUND

In April 2003, City Council adopted the Ottawa 2020 Arts Plan which identified and rationalized the need for a mid-sized concert hall in Ottawa. The community concert hall will provide a solution to almost all of the current facility needs for music in the City of Ottawa. The Ottawa Chamber Music Society is leading the project, which will bring thousands of music patrons into the downtown core on a regular basis, contributing to the economic vibrancy and quality of life of the City.

In considering an offer from Morguard Corporation to purchase the City’s 150 Elgin property as the result of a Request for Offers to Purchase Process (RFOTP), Council acknowledged, on June 23, 2004 (Report #ACS2004-CRS-RPR-0034), the Ottawa Chamber Music Society (“OCMS”) as the representative community group for the development of a Festival/Concert Hall in accordance with the Ottawa 20/20 Growth Plan Strategy and directed that OCMS be responsible for:

a) Establishing a business plan that demonstrates the viability of constructing and operating a Festival/Concert Hall at 150 Elgin within the parameters of the Morguard’s offer to purchase;

b) Providing the necessary performance specifications necessary to the Morguard in order that it can assess the construction and operating viability of such a facility within the framework of its proposal; and

c) Undertaking the required fund-raising to support both the construction and the operation of a Festival/Concert Hall.

City Council, on June 23, 2004 (Report #ACS2004-CRS-RPR-0034), also accepted the Morguard offer as the Preferred Offer under the RFOTP and delegated authority to the City Manager to negotiate an agreement of purchase and sale with Morguard and directed that the negotiated agreement be returned to Council for approval with a report assessing:

a) The viability of the OCMS business plan to construct and operate a “Festival/Concert Hall with acoustics to support performing arts”; and

b) Whether the proposed Festival/Concert Hall can be constructed within the parameters set out by the offer to purchase as submitted by Morguard, respecting the financial pro forma, the scheduling, the allocation of community benefit space and the physical envelope of the proposed complex.

Business Plan Evaluation Report

On October 13, 2004 City Council approved the 150 Elgin Street Concert Hall, Business Plan Evaluation Report (ACS2004-DEV-BUS-0007) to:

1. Support the Ottawa Chamber Music Society (OCMS) in their pursuit of a concert hall at 150 Elgin Street,

2. Pre-commit the 2005 Capital Budget by $5.47M to allow a municipal capital grant for the concert hall in the proposed Morguard building at 150 Elgin Street, with funds to be released to the OCMS upon:

a. The City receiving prior to September 30, 2006 satisfactory written confirmation from a Chartered Accountant in good standing representing the OCMS, that all required funding for the construction of the concert hall is in place save and except the City’s $5.47M share;

b. The City receiving prior to September 30, 2006 an executed memorandum of understanding between Morguard and the OCMS specifying the terms, conditions and timing of the delivery of the concert hall space; and,

c. The execution of a Contribution and Community Access Agreement by September 30, 2006 between the City of Ottawa and the OCMS, which among other matters will establish the specific timing of the City’s contribution and the amount of community access required for the concert hall facility.

Council also approved a grant-in-lieu of permit fees and the waiving of all development charges for the concert hall, bringing the total value of the City's contribution to $6.1 million.

On October 13, 2004 City Council also considered a separate report (ACS2004-CRS-RPR-0044), with respect to Morguard’s revised development concept dated the 30th of June 2004 that provided for the OCMS concert hall and approved the terms and conditions for an agreement of purchase and sale with Morguard. The Agreement of Purchase and Sale with Morguard for 150 Elgin was executed on November 25, 2004 and updated by a Restated Agreement of Purchase and Sale dated December 5, 2005. The Agreement of Purchase and Sale contained provisions that if the OCMS fails to meet its commitments to Morguard, Morguard can still proceed with development subject to Morguard providing written notice to City that OCMS will not be proceeding with acquisition and development of Concert Hall Space provided that:

a) The City has the first option to purchase or lease all or a portion of Concert Hall Space for use as a visual or performing arts facility identified as a priority in Arts & Heritage Plan (e.g. concert hall, theatre, art gallery or heritage display facility).

b) If the City leases or purchases, the City will negotiate with Morguard provisions of a lease/sale agreement for the City facility but the City is still entitled to comparable benefit to that set out in approved Development Plan for Community Accessible/Public Benefit Space. The agreement will also provide for extension to time limits for commencement & completion of construction as required to accommodate redesign and construction of the Concert Hall Space.

c) If the City decides not to lease or purchase the Concert Hall space, the City and Morguard will negotiate an agreement for the alternate use of the Concert hall Space to ensure the City still receives comparable benefit to that set out in approved Development Plan for Community Accessible/Public Benefit Space and that alternate uses are consistent with those set out in Concept Plan submitted by Morguard. The agreement will also provide for extension to time limits for commencement & completion of construction as required to accommodate redesign and construction of Concert Hall Space.

d) The City will not be responsible for any costs to Morguard if OCMS does not proceed with Concert Hall and space is used for an alternate use.

The sale of 150 Elgin to Morguard closed on December 21, 2005 and, at the same time, a Development Agreement and Restrictive Covenants were executed and registered on title to preserve the City rights regarding the Concert Hall Space as indicated above. The Development Agreement and Restrictive Covenants currently set out February 28, 2007 as the last date for the OCMS to fulfill its commitments to Morguard.

Morguard - Ottawa Chamber Music Society Partnership

Since May 2004, the OCMS and Morguard have partnered on a design and construction plan for a 925-seat community concert hall Over 700 anticipated uses of the concert hall would include concerts, rehearsals, radio broadcasts, television broadcasts, web casts, CD recording, and DVD recording. In addition, the complex could accommodate conventions, convocations, weddings, lectures, readings, receptions, films, symposia, and business conferences. An impressive number of local music organizations, festivals, broadcasters and recording players have already indicated that they would definitely use the community concert hall as a venue. These organizations, collectively, bring with them committed performers, professional staff, solid audiences, strong volunteer bases, and broad community support. In total, the list of potential regular users totals almost 100 organizations.

The total area of the Community Concert hall, including lobby, backstage and offices is 51,000 square feet. The City sold the land to Morguard with the express provisions to have the community concert hall and other public benefits built on the site. The community concert hall constitutes the primary public benefit component for the combined residential/office/retail project and represents a unique and innovative feature of the development of this former municipal site which has been a parking lot for the last 20 years. The Community Concert Hall will be owned and managed by the Ottawa Chamber Music Society which is also raising all the funds from the private and public sector.

DISCUSSION

Status of Federal and Provincial Funding

The Ottawa Chamber Music Society has led a lengthy lobbying process by local residents and members of Ottawa's arts, business and political communities to solicit Provincial and Federal funding for the Community Concert Hall. In 2005, the OCMS applied to the Federal Cultural Spaces Canada program administered by the Department of Canadian Heritage. However, following the 2006 Federal election of a new government, the OCMS was asked to resubmit a new business plan with the final confirmed cost estimates from the builder and additional information requested by the federal government. The OCMS submitted the revised business plan on January 10, 2007 and it is anticipated that a decision on federal government funding will be made before the end of the second quarter of 2007. The City will send a letter to the Federal Minister of the Department of Canadian Heritage to request a decision as soon as possible.

Since the Province did not have a funding program for cultural infrastructure, the OCMS submitted its Business Plan directly to the Minister of Culture in 2005. The Province committed full funding of $6.5 million for the Community Concert Hall in March 2006. The Provincial funds are held by the City of Ottawa for the concert hall project in an internal trust account. In May 2006, Council approved an advance of $500,000 from the Provincial grant to the OCMS to offset costs relating to the prime consultant fees and honoraria required for the construction project. Engaging the architects, theatre consultants, engineers, and acousticians was critical in order to finalize the building program and final costs for the facility. Project Management services were also needed to lead the building project on behalf of the OCMS Board and to work with the developer to ensure appropriate development of this specialized facility.

In order to allow the OCMS a full opportunity to prepare a revised business plan, based on more detailed design and cost estimates, and to file the revised business plan with, and receive a funding decision from the Department of Canadian Heritage, Cultural Spaces Canada Program, Morguard has now indicated its willingness to extend the performance dates in the Development Agreement with the City by one year. On this basis, February 28, 2008 would become the last date for the OCMS to fulfill its commitments to Morguard. An amendment to the Development Agreement with Morguard, to extend the performance dates by one year is now being prepared by the City for execution by the City Manager and Morguard. OCMS has submitted a request for an extension to February 29, 2008.

It is recommended that this date become the last date for the OCMS to meet the conditions set out by the City in October 2004 for the release of City funding. The OCMS is actively pursuing proposals with potential naming sponsors based on the valuation of the naming opportunity at $6.5 million provided by Ketchum Canada (KCI). This leaves a balance of $1.15 million to be raised from the community, including the prospective major donors mentioned above, after the OCMS formally launches the public fund-raising campaign. In the event that the OCMS receives less from naming sponsors than projected by KCI, they anticipate that they will be able to cover any shortfall with additional funds raised through the community campaign.

With the contribution from the Federal Cultural Spaces Canada program, the OCMS estimates that the project would have 92% of anticipated construction costs covered before making any allowance for additional money to be raised from naming sponsors and the community campaign, which they plan to launch early in 2007. The OCMS, as part of their business plan, is planning to raise $3 million of the $5 million endowment fund required to support operation of the Hall by the time the Hall opens in 2009. They plan to raise an additional $2 million for the endowment fund during the first two years of operation of the Community Concert Hall.

Rationale for Extension

There are several important factors to take into consideration in extending this timeline further. This is a community-led project which is leveraging funding from several sources and as a result does not depend on 100% municipal funding. It has taken over three years of planning and effort by the volunteer board and staff of the OCMS to reach this phase of the 150 Elgin Street project. The project is construction ready. Morguard has also invested a significant amount of time and financial support to the Community Concert Hall and clearly view it as an essential feature of the 150 Elgin St. development. This is the first purpose built arts facility constructed in the downtown core in three decades. The concert hall was part of the Council approved Ottawa 2020 Plan and will generate significant economic and cultural spin offs for years to come. Two of the three needed government funders are committed. Private fund-raising is within its target, and it would be premature to forego this extension before the Department of Canadian Heritage has had an opportunity to review the revised OCMS submission and provide a response. The other provisions of the 2004 Council report are administrative in nature and can be achieved within the timeline.

The Development Agreement does give the City the option to provide another alternative cultural facility on the site in the event that the OCMS concert hall does not proceed. However, there are no alternative cultural facilities that are as close to their funding targets and ready for development and construction as the community concert hall proposed by the OCMS. Any other option as proposed in the Development Agreement would be starting at the feasibility stage and it would take an equal amount of time (at least three years) to reach this phase of construction readiness and committed funding. This would cause major delays to start-up of construction on the entire site.

The City Archives building program is a critical cultural infrastructure priority, however its requirements and layout (48,000 sq ft) exceed site capacity and are not necessarily compatible with Morguard’s proposed development at 150 Elgin. A multiple use high rise building presents unacceptable risks for the Archives holdings (e.g. water damage from above, fire, security). The archival vault should be at ground level with nothing above it or underneath it. The majority of the floor space for Archive uses is assigned to storage and staff use and these uses are not necessarily suited to, or compatible with other uses in, a high profile downtown complex such as the one proposed for 150 Elgin. A report on the Archives Relocation is scheduled for the Community and Protective Services Committee on February 15, 2007.

It is the opinion of the City administration that the Community Concert Hall proposal stands the best chance of succeeding as the anchor for the 150 Elgin site, and that the extension would allow all funding options to be pursued and resolved.

If the OCMS Concert Hall project does not proceed and if the City decides not to lease or purchase the Concert Hall space, the Development Agreement and Restrictive Covenants registered on title contain provisions that the City and Morguard will negotiate an agreement for the alternate use of the Concert hall Space to ensure the City still receives comparable benefit to that set out in the approved Development Plan for Community Accessible/Public Benefit Space and that alternate uses are consistent with those set out in the Concept Plan submitted by Morguard. The agreement will also provide for extension to time limits for commencement & completion of construction as required to accommodate redesign and construction of Concert Hall Space.

CONSULTATION

The Department of Community and Protective Services has consulted with the Ottawa Chamber Music Society, the Department of Canadian Heritage, Legal Services, and RPAM in the preparation of this report. RPAM and Legal Services have consulted with Morguard Elgin Ltd. and Morguard has indicated in writing that the form, terms and conditions, of the draft agreement attached as Annex "A" of this report, are acceptable to Morguard.

FINANCIAL IMPLICATIONS

Funds for this project were approved in the 2005 Capital budget.

SUPPORTING DOCUMENTATION

Attached as Annex "A" is a draft agreement that sets out terms and conditions that are acceptable to Morguard Elgin Limited regarding an extension to the performance dates in the Development Agreement and Restrictive Covenants.

DISPOSITION

Community and Protective Services and Corporate Services will continue to monitor the progress of this project and execute the necessary agreements.

Upon approval of Recommendation #2 of this report, the amending agreement, for extending the performance dates in the Development Agreement and Restrictive Covenants, will be finalized by Legal Services for execution by the City Manager and Morguard Elgin Limited.

ANNEX A

AMENDMENT TO DEVELOPMENT AGREEMENT AND RESTRICTIVE COVENANTS

150 ELGIN STREET/ 31 GLOUCESTER STREET, OTTAWA

This Agreement made at Ottawa this day of February, 2007

BETWEEN:

CITY OF OTTAWA

(the “Vendor”)

- and -

MORGUARD ELGIN LIMITED

(the “Purchaser”)

WHEREAS:

(A) On October 13, 2004, the Council of the Vendor approved the sale of the lands and building municipally known as 150 Elgin Street/31 Gloucester Street and legally described as Part of Lot 52 and all of Lots 53 to 57, Plan 4556, North Gloucester Street, City of Ottawa (the “Property”) to the Morguard Corporation (“Morguard”) on the terms and conditions as set out in the Report approved by City Council on that date;

(B) The Vendor and Morguard subsequently entered into an Agreement of Purchase and Sale dated December 5, 2005 (the “Purchase Agreement”) with respect to the Property;

(C) Morguard assigned all of its right, title, interest, obligations and liabilities under the Purchase Agreement to the Purchaser, a subsidiary of Morguard, by Agreement dated December 21, 2005 subject to Morguard remaining liable on all of the Purchaser’s covenants, agreements, obligations and liabilities in the Purchase Agreement;

(D) The Vendor and the Purchaser completed the sales transaction on December 21, 2005 and, in accordance with the provisions of the Purchase Agreement, also entered into a development agreement on December 21, 2005 (the “Development Agreement”) which was registered on title on that date as Instrument No. OC548062 that sets out the terms under which the Purchaser will develop the Property as a mixed-use development including residential, office, retail and cultural components for both community and commercial use as approved by City Council on October 13, 2004;

(E) The Development Agreement sets out performance dates with respect to the commencement and completion of construction by the Purchaser relative to the inclusion of a concert hall facility (the “Concert Hall”) under a separate agreement between the Purchaser and the Ottawa Chamber Music Society (the “OCMS”) based on planned fundraising activities by the OCMS;

(F) An Application to Annex Restrictive Covenants (the “Restrictive Covenants”) was also registered on December 21, 2005 as Instrument No. OC548018 which contains provisions corresponding to those contained in the Development Agreement; and

(G) The parties hereto acknowledge that extensions to the performance dates in the Development Agreement, are now required to accommodate the actual fundraising activities of the OCMS for the Concert Hall.

(H) *** ADD DETAILS RE: APPROVAL AUTHORITY BY CITY***

THEREFORE in consideration of the sum of One Dollar ($1.00) and in consideration of the mutual covenants and agreements set forth in this Agreement, the Vendor and the Purchaser agree to the following terms and conditions:

1. Paragraph 11(a) of the Development Agreement is hereby deleted and replaced with a new Paragraph 11(a) as follows:

“11. (a) The Purchaser shall make reasonable commercial efforts to obtain a building permit and commence construction of the Development by no later than April 28, 2007, subject to any events of Force Majeure, and to substantially complete construction of the Development no later than twenty-four (24) months following the commencement of construction, subject to any events of Force Majeure. For the purposes of this Section 11, “commencement of construction” shall mean when the installation of footings for the buildings forming part of the Development has been bona fide commenced. Subject to events of Force Majeure, if the Purchaser has not commenced construction of the Development by April 28, 2007 and at any time after April 28, 2007 and on or before February 28, 2008 OCMS gives the Vendor and the Purchaser written notice that OCMS is committed to funding and is ready, willing and able to commence construction of the improvements for the Concert Hall Space (as defined in Section 12(a) below) (the "OCMS Notice") or if at any time between April 28, 2007 and February 28, 2008 OCMS provides written notice to the Purchaser and Vendor that it will not be proceeding with the Concert Hall (the “OCMS Notice of Termination”), and the Vendor is committed to funding and is ready, willing and able to commence construction of a visual or performing arts facility identified as a priority in the City of Ottawa 20/20 Arts and Heritage Plan as adopted by the Council of the City on April 23rd, 2003 (as defined in Section 12(a) below), the Vendor shall have the right to give the Purchaser written notice (the "First Notice") requiring the Purchaser to commence construction of the Development within ten (10) months from the date of the First Notice. If the Purchaser does not commence construction of the Development within ten (10) months of the First Notice, the Vendor shall have the right, within a period of thirty (30) days thereafter, to give the Purchaser written notice (the "Second Notice") that the Vendor wishes to reacquire the Property and in such event, the Purchaser shall re-transfer, within thirty (30) days following the Vendor giving the Second Notice, the Property to the Vendor free from encumbrances, other than encumbrances in existence immediately prior to the Closing of the Purchaser's acquisition of the Property, at the price of Six Million Six Hundred Thousand Dollars ($6,600,000.00). In the event that the Purchaser has not commenced construction of the Development by February 28, 2008 and the Vendor has also by February 28, 2008 not exercised its right to have the Property re-transferred from the Purchaser to the Vendor as provided herein, the Purchaser shall be entitled to commence construction of the Development at such time as the Purchaser, in its sole, absolute and unfettered discretion, determines and the Vendor shall retain its right to utilize the Concert Hall Space as set out in Paragraph 12(c) below. “

2. Paragraph 12(a) of the Development Agreement is hereby deleted and replaced with a new Paragraph 12(a) as follows:

“12(a) The Vendor acknowledges that the sale of the space designated for the Concert Hall (the “Concert Hall Space”) by the Purchaser to OCMS will be conditional on:

(i) OCMS committing, by February 28, 2007, to funding the cost of the base building area for the Concert Hall and any upgrades to the base building requirements for the other portions of the Development necessary to accommodate the Concert Hall and OCMS fit-up requirement, and

(ii) OCMS committing, by February 28, 2008, to funding and commencing

construction of the improvements for the Concert Hall space.”

3. Paragraph 2(a) (including the reference therein to Paragraph 12(a) of the Development Agreement) of the Restrictive Covenants is hereby amended to show the same amendments to the dates contained therein as are noted in Paragraphs 1 and 2 above.

4. The Purchaser agrees that this Agreement will be registered against the title of the Property as notice to, and to bind, prospective purchasers, transferees or assignees of the obligations under this Agreement.

5. The parties hereto agree that all other terms and conditions of the Development Agreement and the Restrictive Covenants shall remain in full force and effect.

6. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both of which taken together shall be deemed to constitute one and the same instrument. Counterparts may be executed either in original or telecopied form and the parties to this Agreement adopt any signatures received by receiving telecopier machine as original signatures of the parties.

IN WITNESS WHEREOF this Agreement has been executed by the proper signing officers of the Vendor and the Purchaser duly authorized in that behalf.

CITY OF OTTAWA

Per:_____________________________

Name: Kent Kirkpatrick

Office: City Manager

Date of Execution: February, 2007

I have authority to bind the

corporation.

MORGUARD ELGIN LIMITED

Per: ___________________________

Name:

Office:

Per:____________________________

Name:

Office:

Date of Execution: February, 2007

We have authority to bind the

corporation.

Corporate Services and Economic Comité des services organisationnels

Development Committee et du développement économique

Report 2 rapport 2

Extract of draft Minutes 3

6 february 2007

Extrait de l’ébauche du procès-verbal 3 – 6 février 2007

COMMUNITY CONCERT HALL - EXTENSION

SALLE DE CONCERT COMMUNAUTAIRE – REPORT DE LA DATE LIMITE

ACS2007-CPS-CSF-0003 somerset (14)

Ms. C. Hendrick, Director of Cultural Services and Community Funding, introduced Messrs. J. Armour, Artistic Director of the Ottawa Chamber Music Society (OCMS) and C. Cook, President and Board Chair of the OCMS. Ms. Hendrick then provided a brief overview of the staff report.

Mr. C. Cook, President and Board Chair of the OCMS, reviewed the background of this project. He reminded Committee that the business plan was put together over the summer of 2004 and presented to Committee and Council in the fall of that year, at which time it was accepted and supported. At that time, the OCMS was following industry practices to determine costs and structural plans vis-à-vis the concert hall. Over the past year, the OCMS, the developer, the builders, the architects and the theatre design group had spent the better part of the last 8 months determining the precise details, allowing the OCMS to submit an updated business plan to the Department of Heritage on January 10, 2007. He submitted that inflationary pressures as well as structural and legal amendments kept them working hard at refining and adjusting the final numbers and budgets to ensure that the project would still be viable. He indicated they had added in some areas and deleted or deferred in others to enable him to sit before Committee to tell them that the City’s continued support at the 2004 level of financial commitment would mean there was a strong likelihood that Ottawa would have its community concert hall. He reported that on January 10, 2007, the OCMS submitted a revised business plan to the federal Department of Heritage. A follow-up meeting with heritage staff confirmed that they were satisfied with the submission and were looking at their program to determine how they could help. He noted this was an established, funded federal program and the OCMS was very encouraged by Heritage staff’s response. Mr. Cook was confident that the Department of Heritage would be able to make a determination in the next few months, if not sooner. He referenced the delays and the fact that the OCMS had received a constant flow of interest. However, he reported that they were preparing the community campaign to begin with a bang following the federal approval. Given that this was a facility for the entire community, he anticipated having the opportunity to mobilize the support of music fans around the region, with fundraising opportunities in every musical genre over the next 2 years, during the project’s construction. He felt this project would become a tremendous tourist draw and he indicated he looked forward to Council’s continued support.

Mr. G. Old, a resident, introduced himself, discussed his background, and referenced members of Council’s participation in various service clubs. He suggested music had always had time on its side and this delegation was asking for just that; time. He noted music was by far the largest of the arts. He listed the many different groups and organizations that would benefit from the proposed concert hall, stating it should be accessible to all. In closing, he submitted that the NAC had made a cultural difference in our lives and that the time had come to add a community concert hall.

Councillor McRae felt this was a very important project. However, she also felt it was unfortunate that this was still being debated after 2 years. She asked how much money the OCMS was seeking from the federal government. Mr. Cook indicated his understanding was that because this was part and parcel of a commercial development, because the meeting was a public forum and because there were privacy concerns, it would be more appropriate to answer such questions off the record.

When Councillor McRae requested clarification on this response, Mr. Cook deferred to the OCMS past-president, Mr. A. Lister, who appeared before Committee on this project in 2004. Mr. Lister referenced the October 2004 by-law, which stated that the OCMS would be looking for fixed amounts from three levels of government. He noted the wording did not say that the OCMS could not request more from one level of government. The original motion, which the OCMS sought to have extended, made it conditional that the City’s amount flow, the province’s amount flow and the federal amount flow. It did not say the OCMS could not ask one or more of those levels of government for a greater amount of money.

Councillor McRae was outraged by this answer, noting that representatives of the OCMS would not provide a dollar amount. She recalled that in 2004, the organization had been seeking $7M but she believed they were now seeking as much as $10M. She felt it was important to have this information before voting on this item.

Mayor O’Brien asked the speakers to provide a number, if they had one, in a clear and concise manner. Mr. Lister confirmed that they had a number. However, he indicated that federal government officials had advised them it would not be appropriate, at this time and in this venue, to disclose the number. He re-iterated that the motion the organization sought to have extended set out, in very clear wording, the minimum amount of money each level of government needed to agree to fund. He maintained they would not be asking for less than that amount, otherwise they would not be in compliance with the motion they were asking Council to extend.

Councillor McRae noted Mr. Lister’s reference to a minimum amount and she inquired as to that amount. Mr. Lister believed the 2004 motion referred to $6.5M.

Councillor McRae asked when the OCMS had placed its original application to the federal government. Mr. Armour noted it was an on-going process. However, the final request for the first business plan had been delivered to Heritage Canada in December 2005.

Responding to a further question from Councillor McRae, Mr. Cook re-iterated that the organization had submitted its most recent request on January 10, 2007. He explained that they had not submitted earlier because they did not have final construction numbers to be able to complete the last aspects of the business plan.

Councillor McRae asked about the total cost of the project, in 2004 and now, because she believed the proposal had changed significantly since Committee and Council voted on it in 2004. Since they were not comfortable speaking to a specific number, Mr. Cook submitted it was in the same ballpark as originally estimated. He maintained the OCMS was looking to achieve the same results with the support of the federal government, so with the money that City Council and the Province had put on the table and with a confirmation of the federal level of support.

Responding to further questions from Councillor McRae, Mr. Lister indicated the original proposal had been just shy of $28 million and he confirmed that the project costs had not escalated to $38 million. He re-iterated that with the funds committed by the City and the Province, and with the proposal under consideration at the federal level, they saw no difficulty in making the project a reality.

In terms of private sector fundraising, Councillor McRae indicated she had made a formal inquiry to staff in December 2005, however she asked if someone from the OCMS could confirm who had come forward from the private sector, whether there were large organizations committed to supporting the project, and how much private sector funding had been raised so far. Mr. Lister recalled that the organization had made a public announcement in November 2005 confirming that through board members and 3 close organizations to the OCMS, they had already committed $1 million worth of private funding. He noted this was before the province or the federal government came on board. Therefore, he re-iterated that they had little concerns that, once the third level of government came on board, they would have any difficulty raising the remainder amount of money. Furthermore, he noted that once the federal funding came on board, close to 90% of the construction costs would be covered.

Councillor McRae stated she had not asked about the organization’s projected thoughts. She noted that Committee and Council were being asked to extend a contract into 2008, which would bind City of Ottawa taxpayer money until 2008. Therefore, she maintained she wanted answers to some questions before voting on the matter. She noted there was also fundraising with respect to an endowment fund for the facility’s operation. She advised that some of her residents had raised concerns with respect to not having all the facts. Therefore, she asked how much money the organization currently had in the bank in terms of private sector funding; not pledges or promises but actual cash. Mr. Lister indicated they were not trying to be contrary and that they were trying to give Committee members information that would assist them. He maintained that the delays had been nobody’s fault. He stated they were not looking at the Provincial government for having waited a year and a half to come to the table, and they were not looking at the Federal government and attempting to blame them for the fact that it had taken a while, due to two minority governments, for their proposals to be put forward. He re-iterated that the OCMS had a committed $1 million and that they could not touch that money until such time as they were certain the project was going forward.

Councillor McRae recalled that Ms. Hendrick had given Council a different answer and she asked her to speak to the discrepancy. Ms. Hendrick said the memo sent to members of Council confirmed that donations and pledges from the private sector amounted to $4.7 million. She indicated that had been provided following discussions with the OCMS.

Responding to a further question from Councillor McRae on the discrepancy, Mr. Cook explained the response given by Mr. Lister spoke very specifically to community support in the sense of public monies; approximately $1 million of the figure provided by City staff as being committed from individuals. He indicated the difference related to corporate funding.

Councillor McRae asked whether that formed part of the projected $12.3 million in fundraising. Mr. Cooke responded in the affirmative.

Councillor McRae asked whether the organization received municipal, provincial or federal funding for its operating budget and if so, whether they could operate without public money. Mr. Cooke confirmed that the original 2004 proposal included a modest amount for operations. Mr. Listed indicated the OCMS received annual funding for all three levels of government and that this had been the case for many years. With respect to whether or not they could operate without public money, he submitted that the OCMS had gained such popularity and momentum that it would certainly continue to move forward. However they would never have to find out whether or not they could continue to put on the world’s largest chamber music festival without public funding.

Responding to a further question from Councillor McRae, Mr. Lister explained that event ticket prices depended on the event. He referenced a concert the previous evening, for which tickets had been $25. He suspected ticket prices through other organizations or venues would likely be three or four times as much and he explained that part of the OCMS mandate was to make music accessible and affordable.

Councillor McRae inquired as to the intended target audience relative to the project. Mr. Cook re-iterated that this was intended to be a community concert hall and the whole point of the exercise was to provide a facility for the entire community. He maintained the OCMS could not make use of a 1,000-seat hall by itself. The plan was to ensure all acoustic presentation groups had access to world-class facilities to be able to offer performances of a calibre that would be expected in a Nation’s capital. He submitted this explained the support the project had enjoyed from some 30 arts groups.

Responding to a final question from Councillor McRae, Mr. Kanellakos indicated staff’s understand was that Heritage Canada was expected to render a decision on the proposal in the spring; April or May. He referenced earlier questions with respect to the amount of the request and indicated his understanding was that the figures were being protected under privacy legislation because those applications were in competition nationally with other cities and other organizations. He clarified this because he felt that had not been made clear by the delegation and he did not want to leave an impression that they did not want to answer questions.

In light of Mr. Kanallakos’ response, Councillor McRae indicated she would be moving that Committee defer making a decision on tying up taxpayer dollars to 2008 until such time as a firm answer was received from the federal government with respect to funding and that this matter would be reconsidered at the first meeting of Corporate Services and Economic Development Committee in June. She indicated she had supported this project in 2004 and had taken a lot of heat for it, however she was not comfortable with some of the answers given today. She felt it was a good project, but she was disappointed with the way it had evolved and with the delays.

Mr. S. Finnamore, Director of Real Property Asset Management, indicated he had no objections to Committee deferring Recommendation 1. However, he asked members to move forward on Recommendation 2, which takes the actual deadline date to February 8 for the City to inform Morguard, the project’s developers. He submitted that would give Council maximum flexibility over the year to make decisions and it would leave the City in a position to deal properly with Morguard.

Councillor McRae agreed with Mr. Finnamore’s comments and indicated her motion only applied to Recommendation 1 of the report.

Councillor Wilkinson indicated she would also move a motion asking the OCMS to provide Council with a copy of its fundraising plan. She expressed concerns with respect to the fundraising, noting she had not seen a fundraising plan. Mr. Lister indicated the original business plan submitted to Council in 2004 contained a lengthy section detailing the fundraising plan. He reported that the OCMS had retained the services of Ketcham Canada Incorporated (KCI), the largest fundraising organization in the country and by far one of the most successful, and they were guided by their counsel to put together how they intended to get a name sponsor, which would cover off a good amount of the $8 million they would be looking raise from the community. With respect to the delays, he submitted it was a bit of a chicken-and-egg scenario; the launch of a public fundraising campaign was being held up by the fact that funding had not yet been secured by all three levels of government. He hoped the OCMS would have an opportunity to speak to the deferral motion because he felt it would send exactly the wrong message to the federal government at exactly the wrong time.

Councillor Wilkinson maintained the motion was not intended to suggest that the City was “pulling out” but simply to give a shorter extension than what was requested. She explained the intention was to ensure that, should the federal funding not be secured, the portion committed by the City would be put back into the next year’s budget cycle. Councillor Wilkinson asked for confirmation that the OCMS would not be coming back to request financial assistance from the City for the concert hall’s operation. Mr. Cook responded in the affirmative. Mr. Lister added this had been part of the agreement made in October 2004.

Responding to questions from Councillor Desroches, Ms. Hendrick referenced the various stages at which communications had taken place and she indicated all of the communications between staff and Heritage Canada representatives with respect to this proposal had been positive. She explained that normally, the Cultural Space Canada (CSC) program operated on a national panel, which reviewed applications on a national basis, and she advised that panel dates were fixed and specified each year. With respect to this submission, CSC had indicated they would pull together the national review team outside of that regular review process in order to review this submission as quickly as possible. Ms. Hendrick felt those were very strong indications of the Federal staff working with this community submission to give it its best chance. Furthermore, she believed there was an increasing awareness by the Federal government that Federal commitments to cultural infrastructure in this community had been low. For all these reasons, she was hopeful.

In response to a further question from Councillor Desroches, Ms. Hendrick confirmed that to date, all communications had been either verbal or through e-mail with federal staff.

Mayor O’Brien inquired as to the size of the federal fund and the average amount of allocations. Mr. Kanellakos indicated staff’s understanding was that the CSC allocated $30 million annually. Ms. Hendrick added that looking back over past CSC data, Ontario projects had received about 1% of the envelope and across some major cities, the CSC had awarded in the neighbourhood of $7 million.

Responding to questions from Councillor Desroches, Mr. Finnamore confirmed this project was very much an exercise to take a vacant piece of property and to develop it to its maximum potential. Part of the project includes affordable housing as well as other revitalization ideas with respect to the urban planning. He noted Morguard had acquired the site, had an extensive development proposal for it and would be starting construction in the spring.

In response to further questions from Councillor Desroches, Ms. Hendrick stated that last year, staff had come forward with a report to Council to advance $500,000 of the Provincial grant allocation to this initiative in order to provide funds to OCMS so they could hire sufficient and adequate project management and consultants to work with Morguard in terms of the design and construction plans. She reported that over the past 15 years, many studies had identified needs for a range of concert venues. She maintained that what was before Committee and Council represented a very critical requirement for a medium-sized, specific, purpose-built concert venue that would be accessible across the community for a range of music types. She noted this was one of the priorities identified in the City’s Arts and Heritage Plan, approved by Council. With respect to other initiatives, she believed the National Arts Centre was looking for opportunities to expand, though at a different scale.

Councillor El-Chantiry expressed some level of discomfort with the projected fundraising associated with the project. Mr. Kanellakos felt the Committee did not have all the information it required to make a decision. Therefore, he suggested that at some point during the meeting, the Committee go In Camera to receive the information requested by Councillor McRae earlier in the discussions about the business plan because. He felt there was some risk to the organization, pursuant to the agreement reached in 2004, should Committee defer its decision on Recommendation 1 of the report.

Mayor O’Brien indicated he did not see the need to go In Camera at this juncture, noting that the deferral motion was very clear. Should there still be a problem by the time of the first CSEDC meeting in June, then Committee could be informed on the details and extend the timelines.

Councillor Deans recalled that the previous Thursday, a number of people had come forward to talk about the Arts Investment Strategy and one of the things Councillors heard repeatedly was that, as a municipality, the City of Ottawa had been very unsuccessful in leveraging money from upper tier governments. She viewed this as a rare opportunity to leverage funding from upper tier governments. She spoke to the background of this project and its objectives and to the rarity of this opportunity. She indicated she voted for the project in 2004 and she still supported it. Therefore, she did not want to do anything that might a wrong message, though unintended as it might be. She recapitulated some of the points made by staff and she suggested that Committee go In Camera so members could receive more information and understand the business plan before voting on deferral.

Councillor Bloess referenced the fact that a federal decision was expected in the spring and in light of that, he wondered why the OCMS was requesting an extension to the end of February 2008. Ms. Hendrick believed that, following the federal government’s decision, the OCMS might need time to reassess the implications of that Federal decision.

Councillor Bloess asked about the risk to the City. Mr. Kanellakos submitted that should the Federal government deny the application outright or provide significantly less than the amount requested, the City could then work with Morguard with respect to making the best possible use of the space that would have been taken by the concert hall.

Responding to a series of questions from Councillor Bloess with respect to the value of naming rights and the relationship with KCI, Mr. Lister confirmed that KCI had valued the naming rights at approximately $6 million. He explained that during the term of their contract with them, the OCMS had made the best possible use of KCI’s knowledge and expertise but that the company was no longer on retainer and, once funding was secured from all three levels of government, they would be able to move forward with their community fundraising campaign.

Councillor Bloess concurred with Councillor Deans’ suggestion that before voting on deferral, the Committee should go In Camera to receive more detailed information on the business plan.

Councillor Brooks wondered, should this project not move forward, whether or not the portion of funding committed by the City could then be re-invested in the City’s capital program. Mr. Kirkpatrick responded in the affirmative.

Councillor Jellett referenced a response given by Ms. Hendrick with respect to allocations from the CSC and he asked for more detailed information with respect to those allocations; whether they were for single projects or multiple projects within the major cities. He expressed an interest in know how much money the CSC gave out last year, who got it and what it was funding.

Responding to a direct question from Councillor Jellett, Mr. Lister stated that, should the federal funding be less than the amount requested, the OCMS will not come back to the City to ask for the balance.

Responding to questions from Mayor O’Brien, Mr. Cook confirmed that, should the Committee go In Camera, the OCMS would be prepared to share information with respect to its business plans and the numbers requested earlier. However, he was not sure they could provide names with respect to supporters. Mr. Lister indicated they would share whatever information they had, short of breaching private confidences.

Moved by D. Deans

That the meeting of the Corporate Services and Economic Development Committee move In Camera pursuant to Section 13(1)A of the Procedure By-Law to consider the security of the property of the City.

CARRIED

Yeas (7): S. Desroches, R. Bloess, D. Deans, E. El-Chantiry, M. McRae, M. Wilkinson, L. O’Brien

Nays (2): G. Brooks, R. Jellett

Resuming in open session, Mr. C. Thomson, Manager of Corporate and Commercial Law, asked that Committee provide a date for the requested extension, regardless of what that date may be, rather than deferring Recommendation 1. He suggested that would accurately convey the continuation of the conditional funding commitment. He submitted that should Recommendation 1 be deferred, an argument could be made that the City had withdrawn its conditional funding.

A discussion ensued amongst Committee members with respect to an appropriate length of extension to ensure that, should the federal funding not be approved or fall well below the requested amount, the City’s portion could be put back into the budget for the 2008 budget process. As a result of this discussion, Councillor McRae moved that the extension be until November 30, 2007.

Moved by Councillor M. McRae

That the date of the extension, referenced in recommendation 1 of the staff report, be changed from February 28, 2008 to November 30, 2007.

CARRIED

Yeas (8): R. Bloess, G. Brooks, R. Chiarelli, D. Deans, E. El-Chantiry, M. McRae, M. Wilkinson, L. O’Brien

Nays (1): R. Jellett

Moved by Councillor M. Wilkinson

That the Ottawa Chamber Music Society provide a fundraising plan clearly detailing how the necessary funds will be raised for the concert hall, including timelines, to the Corporate Services and Economic Development Committee within 30 days.

CARRIED

Committee then voted on the report recommendation, as amended.

That the Corporate Services and Economic Development Committee recommend Council:

1. Extend the deadline for the conditional release of City funding for the Community Concert Hall until November 30, 2007 to provide the Ottawa Chamber Music Society a final opportunity to obtain a decision from the Department of Canadian Heritage and to secure all required funding for the Concert Hall.

CARRIED as amended with R. Jellett dissenting.

For the information of Council

Pour la gouverne du Conseil