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TTC lease deal could be dead, sources say

The TTC's plan to lease a gleaming new headquarters is likely to be killed Wednesday, leaving the transit agency on the hook for up to $2-million to break the deal, The Globe and Mail has learned.

Enough commissioners intend to vote against consolidating the Toronto Transit Commission's offices in a new tower near the York Mills subway station, sources say.

"The problem has always been that it would cost the TTC more than the status quo," said Peter Milczyn, vice-chair of the TTC. "I imagine that most of the commissioners would be skeptical about proceeding with the deal now."

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"Based on what I've heard from staff so far, they're not convinced it makes financial sense for the TTC," added TTC chair Karen Stintz, who also represents the proposed site as a local councillor.

Former mayor David Miller and his one-time protégé Adam Giambrone championed the controversial new TTC headquarters as one of their final projects before leaving office.

At Mr. Giambrone's urging, the commission voted 5-4 in late August to sign a conditional offer to lease an environmentally friendly new office tower on a commuter parking lot at 4050 Yonge St. developed by Build Toronto, the city's real-estate corporation.

That offer was signed Oct. 12, two weeks before Rob Ford swept to victory.

Figures obtained by The Globe indicate TTC staff are now seeking approval for up to $2-million to break the conditional lease; however, the final number would likely be lower as two city agencies work together to unwind the deal.

About 1,000 TTC engineers, designers, lawyers and other office staff are currently scattered across five leased locations and two TTC-owned buildings, including its headquarters atop Davisville station - an edifice that needs $30-million in repairs and upgrades in the next five years.

Although the transit authority has been shopping for a single home for some time, TTC staff recommended against leasing the 4050 Yonge St. site back in August because they believed it was too expensive.

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Build Toronto has been lobbying Mr. Ford's office and his hand-selected commissioners to stick with the deal, which would see the TTC lease 340,000 square feet of the 430,000-square-foot, seven-storey office tower, with an option to lease an additional 20,000 square feet on the main floor for a TTC museum.

Build Toronto was concerned about the fallout if the deal was scrapped, according to a copy of the presentation the agency made to the mayor's transition team, dated Dec. 15.

If the TTC intends to back out of the deal, the document recommends finalizing a communications strategy by Jan. 5 with the objective of "maintaining the integrity of the TTC," and "maintaining the reputation of Build Toronto as a credible deal maker."

In a letter to commissioners dated Jan. 25, also obtained by The Globe, Build Toronto's president, Lorne Braithwaite, argues the TTC's number crunchers aren't properly calculating how much the TTC could save by consolidating office space.

"The TTC chart shows that moving to 4050 Yonge is more expensive by $14-million to the TTC and by $3.3-million overall to the city when all real estate values are considered," the letter reads.

But by Build's calculations, the deal could produce a "net present value benefit" to the city over 20 years of an estimated $75-million.

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That's why there's still a possibility enough commissioners could change their minds and vote to salvage the deal after the TTC's closed-door session Wednesday.

If the TTC pulls out, Build is confident it can find another anchor tenant for a cutting-edge building next to a GO Transit and TTC station.

"We know that this is a very desirable location and a premier office opportunity," said John Macintyre, Build's senior vice-president for corporate affairs. "So we will continue to market that site to potential tenants and we have a number that we are already talking to."

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Health reporter

Kelly Grant is a health reporter with The Globe and Mail. More

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