STAFF REPORT ACTION REQUIRED New Casino & Convention Development in Toronto Date: April 5, 2013 To: Executive Committee From: City Manager Wards: All Reference Number: SUMMARY The Ontario Lottery and Gaming Corporation (OLG) is undertaking modernization of casino gaming operations across Ontario. The OLG has identified 29 gaming zones, where it intends to issue a request for proposal for a private sector provider to develop and/or operate a casino in each zone. Two of the zones (C1 and C2) each include areas of Toronto and adjacent municipalities along the city's perimeter. A City Council resolution is required for the OLG to establish a new gaming site. At the November 5, 2012 Executive Committee meeting, the City Manager presented a preliminary report, "Considering a New Casino in Toronto", and was directed to conduct a public consultation, provide further analysis, and report back with recommendations. This report responds to the requests of Executive Committee, and provides analysis on both the OLG C1 and C2 zones. City staff reviewed the issue of a new downtown casino and expanded gaming at the Woodbine site by evaluating key economic, city building, social, health, and fiscal criteria. A detailed analysis of specific study areas in the Port Lands, Exhibition Place, downtown core, and Woodbine is also provided for Council's consideration on possible locations. Should Council consider new casino development, a citywide perspective should be taken to support the potential that exists in both the C1 and C2 zones. A standalone casino is not supported by staff. Any consideration of a new casino in the C1 zone requires that it be in the form of an urban, appropriately-sized entertainment complex that enhances Toronto as a convention and tourist destination. Increasing convention space would be a strategic economic development benefit that could be leveraged with a casino given the opportunities to co-locate these facilities and the synergistic relationship between the casino and convention business. Expanding convention space to bring Toronto into the top ten for convention space in North America has the potential to attract more tourists and would be a key economic driver for the City. It is critical that an appropriate sized 1 casino in the C1 zone include the development of a top-rate convention and trade show infrastructure to improve Toronto's competitiveness in attracting the largest class of events. An expanded gaming facility in the C2 zone should enable the entertainment and retail focus of the existing approved planning framework for Woodbine, and support a revitalization strategy for the area. In addition, the cross-corporate staff analysis identified a number of other economic, social, health, planning and fiscal conditions to address impacts related to new casino development. The advice resulting from this analysis is found in the recommendations section of this report, and Appendix A as City conditions Council may wish to request of the OLG and the Province. Given that the OLG has not selected a proponent and the City has not received a detailed proposal for a specific site in the C1 zone, the report also provides options for Council consideration. Should Council wish to pass the statutorily required resolution "supporting the establishment of a gaming site in the municipality" (O. Reg. 81/12), it is recommended the resolution be conditional upon the OLG meeting Council's requirements. A key requirement is for the OLG to report back to the City Manager following the procurement process, at which time Council can be advised whether the City's conditions are being addressed. If conditions have not been addressed to the satisfaction of Council, it could request that the Minister of Finance not agree to the business case for the proposed casino. Under the regulation as currently worded, the Minister must accept the business case before the OLG can establish a casino. The following summary is outlined in three main sections. Section A outlines the results of a cross-corporate staff analysis and a possible approach to expanded gaming for Council's consideration. Section B outlines the results of the public consultation, stakeholder meetings and a telephone poll conducted by the City. Section C provides an overview of the staff recommendations and related implementation considerations. SECTION A: APPROACH TO EXPANDED GAMING IN C1 AND C2 The OLG has provided an estimate of the size and scope of a new casino facility the market is contemplating in C1 based on results of a Request for Information (RFI). A resort-styled integrated entertainment complex has been suggested in the C1 zone with a maximum gaming floor of 250,000 square feet. The OLG has indicated interest in maintaining the Woodbine slot facility in the C2 zone with the possible introduction of table games and limited amenities subject to market demand. The report outlines an approach to a new C1 casino development to better inform the OLG's procurement process and signal to the market the key opportunities and challenges from the City's perspective of a new casino development in the C1 zone. The report also considers the existing Woodbine gaming facility and the contributions it makes to the City and area. The approach described below provides a response to the OLG for Council's consideration that more appropriately reflects the economic, city building, social, health and fiscal objectives of the City. 2 1. Approach to Development An integrated entertainment complex (IEC) is suggested in both zones (C1 and C2). Planning staff has noted in their analysis that a stand-alone casino is neither practical nor desirable. Economic development direction also supports an IEC, with a convention infrastructure focus in the C1 zone, and an urban entertainment and retail destination in the C2 zone. Through the public consultation process, community members were asked about their preference for either a stand-alone casino or IEC. In all three C1 study area locations, the results indicate a preference for an IEC, a casino with other integrated components (i.e. hotel, retail, convention, etc.). 1.1 C1 Zone: Convention and Trade Show Focused Development Convention Development An expanded first-rate convention centre is the most significant opportunity that could be leveraged as part of an IEC. A facility that can attract some of the largest conferences, conventions and trade shows in North America would deliver a significant increase in visitors to the city and ongoing economic and city building benefits. If City Council consents to host a casino in the C1 zone, then it should require that the proponent also builds and develops an operating plan for an associated convention centre that is competitive with other top-ranked North American facilities. A top-rate convention centre is potentially a bigger tourism draw than a casino. The 10 largest convention centres in North America provide at least 813,000 square feet of total exhibit space (at least 600,000 square feet of contiguous space), in addition to 235,000 square feet of meeting space. Toronto does not have a facility comparable in scale and layout. For example, the Metro Toronto Convention Centre is currently ranked the 33rd largest in North America, with 460,000 square feet of exhibit space and a total of 122,000 square feet of meeting/ballroom space. A convention venue of the scale described, geared towards the largest class of events, could attract over 130,000 additional visitors annually to Toronto, and generate an additional $392 million of direct spending. The potential adverse impact on existing jobs and businesses resulting from a new casino are mitigated by the presence of a top rate convention centre providing a tourism draw for visitors from outside the region. City Planning Analysis (C1 Zone) As previously stated, the OLG has provided an initial estimate of market demand for an IEC in the C1 zone, with a casino gaming floor of up to 250,000 square feet (see Table 1). City Planning assessed the OLG estimates on the potential use, as well as the size and type of facility in the C1 zone that would be consistent with city building objectives. City Planning is of the view that the size, form and profile of the casino gaming floor should not exceed 135,000 square feet, with a regulated number of slot machines and table 3 games. The analysis also identifies that a format more suitable for Toronto's downtown area would consist of an urban entertainment complex, which would limit the casino related food, beverage and retail uses to 100,000 square feet, and leverage an increase in convention space. By taking this approach the following could be achieved: • The profile of the casino facility would be reduced, achieving an improved fit and compatibility within the overall diverse urban character of the downtown area; • Built form of the facility would be able to better integrate with the existing/planned context of the different study areas; • Transportation and infrastructure impacts would be more manageable; • The facility could be more of a tourist attraction rather than a large slot-focused operation as put forward by the OLG which is targeting primarily local patrons; and • Market impact on existing restaurant and retail streets could be minimized where casino-related retail is limited. City Planning's analysis also demonstrates that of the study areas considered the downtown core and Exhibition Place study areas are potentially suitable locations for a convention centre focused IEC. OLG Market Estimate for a Potential Toronto C1 Casino In order for the City's proposed conditions for convention infrastructure to be viable, the OLG estimates that at least 175,000 square feet of casino gaming floor is required. City Planning recommends a casino gaming floor with a maximum of 135,000 square feet to mitigate planning concerns.