Thursday, September 19, 2019

Auditor general report raises red flags about Toronto’s oversight of commercial leases at Union station

auditor general

The city has failed to collect almost $10 million it’s owed by commercial tenants at Union Station and has not exercised basic oversight of some leases at the rail hub for years, according to an auditor general’s report.

The report, which will be debated by the city’s audit committee June 27, determined that “lease administration functions” at Union “have not been performed for the past number of years and immediate action is needed” to rectify the problem.

Among auditor general Beverly Romeo-Beehler’s findings were that the city’s real estate division has not properly billed the station’s major tenants for operating costs for at least four years, could not demonstrate that it had collected what was owed from retailers who have since vacated the station and does not have up-to-date measurements of the commercial space or even a complete list of leases at Union.

Councillor Stephen Holyday, who sits on the committee, said that city real estate staff need to explain what went wrong.

“I am concerned,” he said. “I’m going to give the management a chance to explain it to us, and I really want to feel confident that this will stop . . . It is a lot of money, and it does speak to the public’s trust in our government.”

The city is the primary owner of Union Station, which is in the eighth year of an $800-million renovation.

In 2009, the city entered into an agreement with a private company, Osmington Inc., to administer leases for 33,000 square feet of retail space at Union between 2010 and 2015 and to administer commercial leases in the revitalized station.

In the past five years, Union has generated $59.4 million in leasing revenue, while over the same period, the city has incurred operating costs of $62.4 million.

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