For well over 75 years, by way of a lease granted to it by the City, the Regina Exhibition Association Limited (REAL) has been responsible for the care and management of the land and buildings traditionally known as “The Regina Exhibition Grounds”, renamed Evraz Place and more recently identified as the REAL Campus (the Campus). The most recent lease agreement, entered into in 2015, has now expired. A new agreement is proposed which, although based on the 2015 agreement, provides for a number of changes and additional terms and conditions to reflect the current state of the Campus and to support the commercial development strategy presented to City Council by REAL on April 29, 2020 as “REAL 2.0 Strategic Plan”.
The purpose of this report is to obtain Committee and Council approval of: (1) the City entering into a 40-year lease agreement with REAL for the continued operation, maintenance and development of the Campus as described herein and including the key terms and conditions as outlined in Appendix A; and (2) delegation of authority to the City Manager, or his designate, to sign or authorize the signing of any required planning permits on behalf of the City, as landowner, to initiate any planning processes for development contemplated by and in accordance with the proposed lease.
Accessibility
Commercial development and material alterations to the Campus would be built to current design standards for accessibility. Furthermore, REAL will allocate broad public access to the municipal recreation facilities located on and operated from the Campus to meet community needs as identified from time to time by the City.
Environmental
When pursuing its Commercial Development Strategy for the Campus, REAL agrees to provide reasonable consideration for any relevant opportunities and projects that contribute to the City’s commitment to becoming a renewable city.
Financial Impact
The previous lease agreements with REAL for the Campus included an annual lease payment of $1.00 which will continue under the new agreement.
The proposed lease supports the commercial development strategy presented to City Council by REAL on April 29, 2020 as “REAL 2.0 Strategic Plan”. Implementation of this strategy is a key component to ensuring the long-term economic sustainability of the Campus.
Policy/Strategic Impact
The proposed lease supports REAL, a municipal corporation of the City, in fulfilling its mandate to:
a. operate in the best interests of the community and enrich the quality of life for people in the community through the hosting and delivery of local, regional, national and international events
b. develop, operate and maintain City and other facilities to provide world-class hospitality for trade, agri-business, sporting, entertainment and cultural events that bring innovation, enrichment and prosperity to the community
c. operate with an entrepreneurial spirit and to pursue expanded business ventures that could generate additional revenue
The Campus is located within and part of the City Centre Core as identified in the City’s Design Regina: The Official Community Plan Bylaw. In the proposed lease, REAL agrees that its use, management and development of the Campus, including development of a Master Site Plan, will be consistent with the vision and guiding principles as established in the City Centre Core Framework approved by City Council on April 14, 2021.
In accordance with section 41 of The Regina Administration Bylaw, the City Manager is authorized to approve leases of City owned property, with some exceptions:
· 41. Subject to any policy established pursuant to section 40.1, the City Manager, or his or her delegate, is authorized to approve and enter into agreements for the transfer, sale, option to sell, or lease of City owned property, other than the sale or lease of park land or dedicated lands, provided:
a) the transaction is at fair market value
i) the terms and conditions of the agreement are terms and conditions generally available within the industry and do not represent concessions provided by the City
ii) the terms and conditions of the agreement and the transaction comply with the provisions of The Tax Enforcement Act, if the agreement involves property where the transaction is subject to that legislation
iii) where the agreement is a lease, its term does not exceed 10 years, including any renewal periods
iv) the agreement does not provide a first right of refusal to purchase the property
v) the agreement results from a tender process or proposal call initiated by the City, or the property had been publicly identified as being for sale or lease
In this instance, Council approval is required because the proposed lease is longer than 10 years, the rent is less than fair market value and the agreement does not result from a tender process.
Risk/Legal
A requirement of the proposed lease is for REAL to commission, prepare and provide the City with a Master Site Plan. The Master Site Plan will consider the integration of the proposed commercial developments with the existing campus as well as identify (a) the proposed development parcels;
(b) the existing facility uses and proposed land uses and (c) all relevant site conditions and servicing requirements.
The Master Site Plan is to be provided to the City for its approval within ninety (90) days of the commencement of the proposed lease or such other period of time as may be agreed to by REAL and the City. It should be noted that approval of the Master Site Plan will constitute approval by the City as the landowner and landlord as to the allowable uses and purposes the City is willing to have the property be used for or developed as; it will not constitute approval for the purposes of any requisite planning and development applications from a regulatory perspective.
The Master Site Plan will be a guiding document that will help inform decisions made by REAL through its Commercial Development Strategy. All future commercial (or other) developments on the Campus will still be required to go through the standard development application, review and circulation process applicable to all new development proposals, including the applicable zoning amendment, development and building permit application processes.
City Council could refuse to provide approval for the proposed lease, approve the lease subject to conditions, or direct Administration to negotiate changes to any specific terms of the proposed lease that are of concern.
Public notice of Council’s intention to consider the proposed lease of the subject property to REAL at less than fair market value and without a public offering will be given in accordance with The Public Notice Policy Bylaw, 2020.
A copy of this report has been provided to REAL and Council’s decision will also be provided to REAL.
Effective January 1, 2014, REAL was continued under The Non-Profit Corporations Act, 1995 (Saskatchewan), with the City becoming its sole voting member. As a municipal corporation of the City, REAL’s governance is subject to a Unanimous Member’s Agreement also dated January 1, 2014. Under this governance structure, REAL is a separate legal entity, but the City has control in setting its mandate, board composition, and decision-making authority with respect to its actions which require City approval. REAL’s corporate mandate specifically identifies that it will “develop, operate and maintain City and other facilities to provide world-class hospitality for trade, agri-business, sporting, entertainment and cultural events that bring innovation, enrichment and prosperity to the community.”
The City, for nominal consideration ($1.00), has historically (going back to before 1954) leased all of the land and buildings comprising the Campus to REAL. Over that period, the term of the agreements has varied, and the conditions of the lease have been revised and modernized to reflect the circumstances and intended uses for the property of the day. The principal business relationship between the City and REAL has been that of landlord and tenant, with REAL being assigned specific property management obligations for the maintenance and operation of the Campus on the City’s behalf.
At its April 27, 2015 (CR15-44) meeting, City Council most recently approved a four-year lease agreement with Regina Exhibition Association Limited (REAL) for the Campus. This lease expired April 1, 2019. There was no provision for renewal of the lease. However, there was provisions for both parties to continue under the same terms and conditions while the City and REAL negotiate a new lease.
Throughout 2019, REAL explored various options for the Campus to ensure that it remains relevant and focused on community needs, today and into the future. This work resulted in REAL adopting a strategic vision for the Campus, which it presented to City Council on April 29, 2020 as “REAL 2.0 Strategic Plan”. That Plan includes (1) the managing and coordinating the use of existing facilities, that were constructed by REAL and/or the City with public funding and are primarily municipal purpose facilities for recreation and trade event uses and (2) private development of new commercial buildings and related businesses proposed for the Campus (the Commercial Development Strategy). This new strategic direction had significant impact on the terms of a new lease for the Campus. The proposed revisions are intended to support REAL in pursuing the Commercial Development Strategy while ensuring that the Campus, and particularly the existing municipal purpose facilities, continue to be well maintained, operated and accessible to and for the broad benefit of the citizens of Regina and the community generally. Administration had planned to complete negotiations of a new agreement by Q1 2020. However, this work was put on hold as both REAL and Administration dealt with the emergence and subsequent effects of the COVID-19 pandemic.
Administration and REAL have now completed their review of the existing lease arrangements in the context of the current state of the property, the REAL 2.0 Strategic Plan and the Commercial Development Strategy. As a result, the parties have concluded that a leasing arrangement for the Campus, as opposed to an operating and maintenance agreement or some other arrangement, is still the preferred structure to be used. On that basis, the parties have negotiated an updated long-term lease for the Campus. The proposed lease agreement does not include Mosaic Stadium as it is situated on a separate parcel of land and subject to a separate Operating & Maintenance agreement with REAL.
The proposed lease carries forward many of the provisions from the 2015 agreement, including the responsibility to collect property taxes on portions of the property occupied by third parties, the duties relating to maintenance matters and site or event coordination, formal reporting obligations and insurance and indemnity requirements. The lease also continues the annual rent paid by REAL to the City at the rate of $1.00.
A key change from the 2015 agreement identified by REAL was the need for a long-term commitment from the City. This is reflected in the proposed term of the lease. In order to permit a clear vision and direction for the Campus to be established and carried out by REAL, a lease term of forty (40) years, with the possibility to renew and extend the agreement for an additional two consecutive periods of twenty (20) years each is being sought. This will support the long-term stewardship of the Campus and allow REAL to negotiate and secure long-term business arrangements that realize REAL’s vision for the Campus, as outlined in the Master Site Plan. If fully extended the lease could be in place for up to 80 years. However, the lease also includes a number of provisions to ensure the agreement will stay current and potentially be ended if it becomes unworkable, including: (1) the right of either party to opt out of an extension upon giving notice; (2) rights of immediate termination for failure to perform or default and (3) a requirement for the parties to regularly review REAL’s performance and to formally review and discuss the terms and conditions of the Agreement and give reasonable consideration to any proposed amendments within 12 months of each municipal election that occurs during the term. The City is further protected through its position as the controlling member of the municipal corporation and the Unanimous Member’s Agreement.
Other key terms and conditions that have been updated or added to the proposed lease are outlined in Appendix A.
Administration recommends approval of:
· the key terms and conditions of the proposed lease
· the delegation of authority to the City Manager, or his designate, to negotiate and approve the final terms and conditions of the lease
· the delegation of authority to the City Manager or his designate, to sign or authorize the signing of any required planning permits on behalf of the City, as landowner, to initiate any planning processes for development contemplated by and in accordance with the proposed lease
This will permit a clear vision and direction for the Campus to be established and carried out by REAL, support the long-term stewardship of the Campus and allow REAL to negotiate and secure long-term business arrangements that realize REAL’s vision for the Campus.
On April 27, 2015 (CR15-44) City Council approved a four-year lease agreement between the City of Regina and the Regina Exhibition Association Limited (REAL – Evraz Place).
On April 29, 2020 (CR20-24), City Council authorized REAL to pursue material alterations to the Campus for the development of commercial opportunities which are aligned with their REAL 2.0 Strategic Plan.
On July 29, 2020 (CR20-66), City Council approved the discretionary use application for Restaurant, Food and Beverage located at 1700 Elphinstone Street, being block FF, Plan No. 84R29489 Ext 1, in Evraz Place.
On December 16, 2020 (CR20-98) City Council approved the proposed 40-year lease agreement between the City of Regina and McDonald’s Restaurants of Canada Limited for the site located at Evraz Place.
The recommendations in this report requires City Council approval.
Respectfully Submitted, Respectfully Submitted,
Barry Lacey Chris Holden
Executive Director, City Manager
Financial Strategy & Sustainability
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