THE TTC GATEWAY LEASE CONTRACT – FACTS

Below are facts on the Gateway proposal, created independently by my office and without outside help, based on the original staff report ( http://www3.ttc.ca/About_the_TTC/Commission_reports_and_information/Commission_meetings/2012/October_24/Reports/Gateway_-_Lease_%28For.pdf)

These facts were prepared for my use in deliberating the deal’s merits, without any lobbyist correspondence. The facts were also provided to the Mayor’s office in October and again last week, with no objection from the Mayor presented, publicly or privately, until after the January 21, 2013 TTC meeting:

- The TTC currently has assorted leases with Gateway Newsstands, with staggered lease-end dates. None of the leases the TTC currently has with Gateway are due to expire prior to mid-2014. Some do not expire until mid-2022, nine years from now;

- The proposal was for 10 years plus a 5 year option, retroactive to December 2012. The deal is to go until November 2022. Again, this is only six months later than the expiry of the latest current Gateway lease, when some of the original leases were due to expire;

- The option to exercise the 5 year option in 2022 is TTC’s, meaning this is a 10 year deal total, NOT a 15 year deal. This deal would, in fact, extend several leases by only a few months in some instances, as they were locked in until 2022, anyway. This hasn’t been noted. Again, it is NOT a 15-year deal but “up to 15 years”;

- This deal offers consistency during the Pan Am games, which was very important to me;

- There are franchisees (small business owners) involved. Yes, that is a personal, not business, consideration but it definitely influenced my vote;

- TTC will get a 67% increase in its revenues from Gateway (not including a signing bonus of $1,000,000 in Year 1 and another $500,000 in Year 11, if option exercised);

- They are also doing capital improvements as part of the deal, $1,450,000;

- To RFP (Request For Proposal) the entirety of these leases would have required us to wait until 2022 anyway, because that is the earliest all would have been expired because of their varied terms. They needed to be consolidated to be RFPed as a package.

From Staff:

“The current agreements expire on different dates anywhere from May 2014 to May 2022, forcing Tobmar and the TTC to be in perpetual state of continual renewals, construction updates and refurbishments to the leaseholds. This format is costly and requires significant resources and related expenses to implement the programs. Introducing a consistent lease expiry date for all leases would be more cost effective and an efficient use of resources.” http://www3.ttc.ca/About_the_TTC/Commission_reports_and_information/Commission_meetings/2012/October_24/Reports/Gateway_-_Lease_%28For.pdf

There was no recorded vote on the item on October 24, when it was approved in the first place, but I know there was no opposition.

My asking to reintroduce this matter was only to address a concern from the newspaper industry, not from a Gateway competitor. I found out from Staff the day after the recent Commission meeting that International News indicated that they were going to submit a proposal but they still have not submitted a proposal to the Commission.

A Toronto Star story on the issue can be found here: http://www.thestar.com/news/gta/transportation/article/1319728–ttc-lease-extension-has-newsstand-competitor-crying-foul

“What people seem to be forgetting or not commenting on is that she re-opened (the lease issue) precisely because she wanted there to be transparency and competition in the newspaper distribution element,” said TTC CEO Andy Byford.

I voted for it because the financials were solid and it gave the TTC the opportunity to consolidate all the leases in 2022 for an RFP of the whole lot, rather than the Balkanized situation we have now in our leases.

Thank you for your understanding.

Karen Stintz