M
Mike in TO
Guest
Getting back on the rails
Developers are curbing their enthusiasm as TTC talks about land development
January 27, 2007
Theresa Boyle
REAL ESTATE REPORTER
When developer Brian Johnston drives past the northwest corner of Yonge St. and York Mills Rd., he sees in his mind's eye an elegant brick and pre-cast condominium enveloping a piazza and public art sculpture. The first floor of this structure bustles with retail and commercial activity.
For years, the president of both Monarch Corp. and the Ontario Home Builders' Association has dreamed about the possibilities for this corner, which is a stone's throw from his own home.
But Johnston's vision stands in stark contrast to the reality. This corner of North York is blighted by a massive parking lot.
And while Johnston is enthusiastic that the TTC is once again talking about developing properties around subway stations such as this one, he and other developers are keeping their excitement in check.
That's because little has happened in the five years since the TTC identified 10 subway stations and transit properties that could be developed.
"You kind of scratch your head and wonder whatever happened to all that. I told one of the city councillors, `Well, good luck with this because this is not the first time that this has been put on the agenda,'" Johnston explains.
From his perspective, one of the reasons the sites remain undeveloped is that the TTC is focused on its main priority: running public transit – as it should be. Other reasons are that the commission draws out the process and imposes too many onerous conditions on builders.
"We've dealt with the TTC for a number of years on various highrise developments and our conclusion is they are a very good transit organization but they leave something to be desired in terms of development," Johnston says.
But a confluence of factors has observers hoping that development plans are truly back on the rails.
First, there's political will. The TTC has a new chair, Adam Giambrone, who is eager to get the ball rolling.
The commission desperately needs the new riders and revenue that development of these sites would bring.
The city's new official plan calls for intensification around transportation lines.
The province's Greenbelt and Places to Grow acts both call for curbing urban sprawl and further intensifying urban areas.
In the past, it's been easier for developers to focus their energies on other projects in the city. But with developable sites dwindling, especially in prime locations, they are now somewhat of a captive audience.
Another factor that bodes well for the development of these sites is the buoyancy of Toronto's real estate market. Developers are aware that there are major opportunities to be had.
"There wasn't the same kind of pressure before. I think people are more ready for it now," says former Toronto mayor David Crombie, now president of the Canadian Urban Institute.
Crombie says the goal of encouraging intensification around subway stops goes back to the official plan of the 1960s.
"It's a natural. It's been talked about for many years. They've made aborted attempts over the years but (plans got nixed) because it was not the right deal struck, local opposition, a variety of issues," he says.
Crombie says a good argument can be made for condo towers at subway stations.
But there are lots of different ideas being bandied about by developers and planners.
For example, Johnston thinks a building no higher than 12 storeys – rather than a tower – would be appropriate for Yonge St. and York Mills Rd.
"I don't see a point tower, given the height restrictions that the city would impose," he explains. "And, to be honest, this would be out of place with the surrounding developments."
Both Johnston and Crombie envision a condo tower with storefront retail going up at the corner of Yonge St. and Eglinton Ave.
Because the TTC would require any new development here to include a new bus terminal, former commission chair Howard Moscoe says a tower of considerable height would be have to be built to pay for the scheme.
But Moscoe sees a problem with this scenario because of the neighbourhood's past opposition to tall condos. The community erupted in outrage five years ago when Minto unveiled plans for two towers in the area.
"The community at Yonge and Eglinton is not enamoured by extremely high density," he says.
Indeed, NIMBYism over tall buildings will undoubtedly be a major challenge in many of these projects.
"You've got to convince people that it's a good thing and overcome the fear," says Crombie, who lives in the Yonge and Eglinton neighbourhood.
"It takes imagination and commitment on the part of developers. It takes some sense of enlightenment by the neighbours. And it certainly takes intestinal fortitude and stick-to-it-iveness by the local councillors."
Another problem, from a developer's point of view, with the Yonge-Eglinton site is the requirement that a bus terminal be constructed in conjunction with any new development.
"Developers know nothing about bus terminals," Johnston says. "We have zero knowledge about bus terminals. There are issues I'm sure, like venting and fire and noise ... all these things that we know nothing about."
Over at the Danforth and Coxwell site, Martap Developments has first negotiating rights, should the TTC and city decide to sell. (This was part of a prior development agreement that involved a land lease with Martap on a nearby lot.)
Martap principal Tom Falus says he will "most likely" exercise his right to develop the land, but still has to talk to his business partner about it. He would like to see a residential unit go up there, but doesn't yet know if it would be condos or rental apartments.
But TTC budget chief Vince Rodo suggests these sites won't just be residential developments.
"We're hoping that it's not just condos, but that office developments are built, too," he says.
But real estate consultant Barry Lyon says attracting business tenants could be a challenge, since they shoulder a disproportionate share of the municipal property tax burden in Toronto.
"That's why we're seeing this flight to the 905. The office demand has not been there," he says.
Other subway sites the TTC is considering developing include Sheppard, Davisville and Warden.
The commission put out a request for proposals to develop the Sheppard site a couple of years ago. Only one developer responded and that proposal was turned down. Johnston says the site was never developed because there were too many strings attached.
"The Yonge and Sheppard sale imploded because they did not strip away the baggage. Developers like a clean piece of paper with the problems identified up front," he says.
He argues that if any development is going to happen, the projects should be turned over to city-owned land developer TEDCO.
"I don't have faith in the TTC doing it. I don't think they've got the resources and I don't think they've got the will," he says.
"It's not their shtick. They run a great subway system. They should stick with doing subways."
That belief comes from his discussions with other developers and from Monarch's own experiences with the TTC.
"They tend to over-engineer everything and they tend to study things to the minutest detail. They create enormous delays for developers," he says.
When Monarch was building two condos near the Old Mill subway station in the late '90s, Johnston says the TTC threw a few curve balls at them. When a section of subway tunnel was uncovered as part of the project, it was discovered that there was a pre-existing leak. Monarch was asked to fix it.
"The leak had nothing to do with us. It was pre-existing condition. We got into a long negotiation with the TTC, arguing about an issue that had always been there," he says.
Monarch also ran into problems with the TTC a few years ago when it was building two highrise condos near the Scarborough Town Centre, close to the Light Rail Transit line.
Before erecting two cranes, Monarch was asked to put up $25 million in liability insurance, an amount Johnston says was "unheard of" and was more than twice as high as the going rate in the industry at that time. The project was delayed.
"The point is, you're trying to negotiate as you develop. And these were our own sites. The TTC sites are even more complicated," Johnston says. "My view is give it to a body like TEDCO, which can pre-clear all these issues."
Bob Finnigan, president of the Greater Toronto Home Builders' Association, agrees that many of the complicated issues that come with building on or around subways need to be clarified – even before developers are brought into the picture.
"It would be good if the soil reports, the engineering reports and the traffic reports were done ahead of time," he says. "Otherwise, every developer who is interested has to go out independently and do all those studies. It takes a lot of money and a lot of time.
"The best way to proceed is for the TTC to offer a very clear vision of what can go on each site," he adds.
Moscoe is well aware of the past problems between developers and the transit commission. He recalls one developer telling him "I would rather have pins pushed into my eyeballs" than deal with the TTC.
Moscoe agrees developers face too many engineering obstacles.
"Every time you come up with a set of solutions to a problem, the engineers throw three new problems at you," he says. "The TTC needs to give some authority to the development department because, right now, the final say is had by engineers."
Moscoe says another problem is ownership of the lands. The TTC owns everything on the Yonge line south of Eglinton and the city owns everything else.
"It always gets tied up in knots when you're dealing with two agencies," he says.
Rodo says there are innate challenges when it comes to building on or around TTC tunnels, and those take time to tackle.
"These properties are complicated. I don't want to make people believe it's an easy thing to construct over live subway operations. Some of these things, the planning studies for them, can take years," he says.
And while the sites in question may be stalled, Rodo says the TTC has made strides on other developments, such as the plan by SNC-Lavalin to build its head office at the Islington subway station.
"Do we want to do more? Yes. Is it complicated? Does it take a bigger focus? Probably," he says.
"A lot has been done in the last decade, but I'd agree that for projects that look enticing to us, we really do want to get on with them."
Rodo says the TTC will explore several options as it moves forward, including leasing the properties and working with TEDCO. Asked if the TTC would follow the lead of Hong Kong's MTR transit agency, which also acts as a property developer, Rodo sounded doubtful. The MTR builds and leases massive highrise complexes, including condos and offices, around its subway stations, which provides both revenue and riders. The TTC had considered this as recently as 2004.
"We don't have a development arm, per se, so we're interested in dealing with developers to develop these properties," Rodo says. "We need to be talking with the commission about whether we want to be in the position of building the buildings and then going out and trying to get tenants for them."
Lyon says any future developments around new subway lines, including the extension to York University, would go smoother if adjacent lands were zoned high-density residential.
"I do think the city and the TTC should have their knuckles wrapped for not more aggressively pursuing as-of-right development around subway stations earlier," he says.
With renewed interest in developing these lands, a special committee of the commission has been formed to tackle the problem. It met for the first time this past week.
Developers are closely watching and will be ready to pounce if the conditions are right.
"We're always looking. I've been watching those sites for years," says Johnston, suggesting developers are already jousting with each other – at least jokingly – over the properties.
"I remember talking to one of the Del Zottos about the Yonge and York Mills site. He looked at me and said, `Well, that's our site,'" Johnston laughs.
But he says developers will gladly take on these projects if the process is streamlined and there aren't onerous strings attached – like bus terminals.
"These highrise sites are very desirable, as long as they don't come with a lot of baggage."
Developers are curbing their enthusiasm as TTC talks about land development
January 27, 2007
Theresa Boyle
REAL ESTATE REPORTER
When developer Brian Johnston drives past the northwest corner of Yonge St. and York Mills Rd., he sees in his mind's eye an elegant brick and pre-cast condominium enveloping a piazza and public art sculpture. The first floor of this structure bustles with retail and commercial activity.
For years, the president of both Monarch Corp. and the Ontario Home Builders' Association has dreamed about the possibilities for this corner, which is a stone's throw from his own home.
But Johnston's vision stands in stark contrast to the reality. This corner of North York is blighted by a massive parking lot.
And while Johnston is enthusiastic that the TTC is once again talking about developing properties around subway stations such as this one, he and other developers are keeping their excitement in check.
That's because little has happened in the five years since the TTC identified 10 subway stations and transit properties that could be developed.
"You kind of scratch your head and wonder whatever happened to all that. I told one of the city councillors, `Well, good luck with this because this is not the first time that this has been put on the agenda,'" Johnston explains.
From his perspective, one of the reasons the sites remain undeveloped is that the TTC is focused on its main priority: running public transit – as it should be. Other reasons are that the commission draws out the process and imposes too many onerous conditions on builders.
"We've dealt with the TTC for a number of years on various highrise developments and our conclusion is they are a very good transit organization but they leave something to be desired in terms of development," Johnston says.
But a confluence of factors has observers hoping that development plans are truly back on the rails.
First, there's political will. The TTC has a new chair, Adam Giambrone, who is eager to get the ball rolling.
The commission desperately needs the new riders and revenue that development of these sites would bring.
The city's new official plan calls for intensification around transportation lines.
The province's Greenbelt and Places to Grow acts both call for curbing urban sprawl and further intensifying urban areas.
In the past, it's been easier for developers to focus their energies on other projects in the city. But with developable sites dwindling, especially in prime locations, they are now somewhat of a captive audience.
Another factor that bodes well for the development of these sites is the buoyancy of Toronto's real estate market. Developers are aware that there are major opportunities to be had.
"There wasn't the same kind of pressure before. I think people are more ready for it now," says former Toronto mayor David Crombie, now president of the Canadian Urban Institute.
Crombie says the goal of encouraging intensification around subway stops goes back to the official plan of the 1960s.
"It's a natural. It's been talked about for many years. They've made aborted attempts over the years but (plans got nixed) because it was not the right deal struck, local opposition, a variety of issues," he says.
Crombie says a good argument can be made for condo towers at subway stations.
But there are lots of different ideas being bandied about by developers and planners.
For example, Johnston thinks a building no higher than 12 storeys – rather than a tower – would be appropriate for Yonge St. and York Mills Rd.
"I don't see a point tower, given the height restrictions that the city would impose," he explains. "And, to be honest, this would be out of place with the surrounding developments."
Both Johnston and Crombie envision a condo tower with storefront retail going up at the corner of Yonge St. and Eglinton Ave.
Because the TTC would require any new development here to include a new bus terminal, former commission chair Howard Moscoe says a tower of considerable height would be have to be built to pay for the scheme.
But Moscoe sees a problem with this scenario because of the neighbourhood's past opposition to tall condos. The community erupted in outrage five years ago when Minto unveiled plans for two towers in the area.
"The community at Yonge and Eglinton is not enamoured by extremely high density," he says.
Indeed, NIMBYism over tall buildings will undoubtedly be a major challenge in many of these projects.
"You've got to convince people that it's a good thing and overcome the fear," says Crombie, who lives in the Yonge and Eglinton neighbourhood.
"It takes imagination and commitment on the part of developers. It takes some sense of enlightenment by the neighbours. And it certainly takes intestinal fortitude and stick-to-it-iveness by the local councillors."
Another problem, from a developer's point of view, with the Yonge-Eglinton site is the requirement that a bus terminal be constructed in conjunction with any new development.
"Developers know nothing about bus terminals," Johnston says. "We have zero knowledge about bus terminals. There are issues I'm sure, like venting and fire and noise ... all these things that we know nothing about."
Over at the Danforth and Coxwell site, Martap Developments has first negotiating rights, should the TTC and city decide to sell. (This was part of a prior development agreement that involved a land lease with Martap on a nearby lot.)
Martap principal Tom Falus says he will "most likely" exercise his right to develop the land, but still has to talk to his business partner about it. He would like to see a residential unit go up there, but doesn't yet know if it would be condos or rental apartments.
But TTC budget chief Vince Rodo suggests these sites won't just be residential developments.
"We're hoping that it's not just condos, but that office developments are built, too," he says.
But real estate consultant Barry Lyon says attracting business tenants could be a challenge, since they shoulder a disproportionate share of the municipal property tax burden in Toronto.
"That's why we're seeing this flight to the 905. The office demand has not been there," he says.
Other subway sites the TTC is considering developing include Sheppard, Davisville and Warden.
The commission put out a request for proposals to develop the Sheppard site a couple of years ago. Only one developer responded and that proposal was turned down. Johnston says the site was never developed because there were too many strings attached.
"The Yonge and Sheppard sale imploded because they did not strip away the baggage. Developers like a clean piece of paper with the problems identified up front," he says.
He argues that if any development is going to happen, the projects should be turned over to city-owned land developer TEDCO.
"I don't have faith in the TTC doing it. I don't think they've got the resources and I don't think they've got the will," he says.
"It's not their shtick. They run a great subway system. They should stick with doing subways."
That belief comes from his discussions with other developers and from Monarch's own experiences with the TTC.
"They tend to over-engineer everything and they tend to study things to the minutest detail. They create enormous delays for developers," he says.
When Monarch was building two condos near the Old Mill subway station in the late '90s, Johnston says the TTC threw a few curve balls at them. When a section of subway tunnel was uncovered as part of the project, it was discovered that there was a pre-existing leak. Monarch was asked to fix it.
"The leak had nothing to do with us. It was pre-existing condition. We got into a long negotiation with the TTC, arguing about an issue that had always been there," he says.
Monarch also ran into problems with the TTC a few years ago when it was building two highrise condos near the Scarborough Town Centre, close to the Light Rail Transit line.
Before erecting two cranes, Monarch was asked to put up $25 million in liability insurance, an amount Johnston says was "unheard of" and was more than twice as high as the going rate in the industry at that time. The project was delayed.
"The point is, you're trying to negotiate as you develop. And these were our own sites. The TTC sites are even more complicated," Johnston says. "My view is give it to a body like TEDCO, which can pre-clear all these issues."
Bob Finnigan, president of the Greater Toronto Home Builders' Association, agrees that many of the complicated issues that come with building on or around subways need to be clarified – even before developers are brought into the picture.
"It would be good if the soil reports, the engineering reports and the traffic reports were done ahead of time," he says. "Otherwise, every developer who is interested has to go out independently and do all those studies. It takes a lot of money and a lot of time.
"The best way to proceed is for the TTC to offer a very clear vision of what can go on each site," he adds.
Moscoe is well aware of the past problems between developers and the transit commission. He recalls one developer telling him "I would rather have pins pushed into my eyeballs" than deal with the TTC.
Moscoe agrees developers face too many engineering obstacles.
"Every time you come up with a set of solutions to a problem, the engineers throw three new problems at you," he says. "The TTC needs to give some authority to the development department because, right now, the final say is had by engineers."
Moscoe says another problem is ownership of the lands. The TTC owns everything on the Yonge line south of Eglinton and the city owns everything else.
"It always gets tied up in knots when you're dealing with two agencies," he says.
Rodo says there are innate challenges when it comes to building on or around TTC tunnels, and those take time to tackle.
"These properties are complicated. I don't want to make people believe it's an easy thing to construct over live subway operations. Some of these things, the planning studies for them, can take years," he says.
And while the sites in question may be stalled, Rodo says the TTC has made strides on other developments, such as the plan by SNC-Lavalin to build its head office at the Islington subway station.
"Do we want to do more? Yes. Is it complicated? Does it take a bigger focus? Probably," he says.
"A lot has been done in the last decade, but I'd agree that for projects that look enticing to us, we really do want to get on with them."
Rodo says the TTC will explore several options as it moves forward, including leasing the properties and working with TEDCO. Asked if the TTC would follow the lead of Hong Kong's MTR transit agency, which also acts as a property developer, Rodo sounded doubtful. The MTR builds and leases massive highrise complexes, including condos and offices, around its subway stations, which provides both revenue and riders. The TTC had considered this as recently as 2004.
"We don't have a development arm, per se, so we're interested in dealing with developers to develop these properties," Rodo says. "We need to be talking with the commission about whether we want to be in the position of building the buildings and then going out and trying to get tenants for them."
Lyon says any future developments around new subway lines, including the extension to York University, would go smoother if adjacent lands were zoned high-density residential.
"I do think the city and the TTC should have their knuckles wrapped for not more aggressively pursuing as-of-right development around subway stations earlier," he says.
With renewed interest in developing these lands, a special committee of the commission has been formed to tackle the problem. It met for the first time this past week.
Developers are closely watching and will be ready to pounce if the conditions are right.
"We're always looking. I've been watching those sites for years," says Johnston, suggesting developers are already jousting with each other – at least jokingly – over the properties.
"I remember talking to one of the Del Zottos about the Yonge and York Mills site. He looked at me and said, `Well, that's our site,'" Johnston laughs.
But he says developers will gladly take on these projects if the process is streamlined and there aren't onerous strings attached – like bus terminals.
"These highrise sites are very desirable, as long as they don't come with a lot of baggage."