Province estimates Therme will pay it $1.1B in direct revenue over 95-year Ontario Place lease

Infrastructure Ontario anticipates Therme Canada will pay at least $1.1 billion in rent over the near-century it’ll operate a spa and waterpark at Ontario Place, plus another $855 million to help maintain the larger site.

The provincial government predicts it’ll derive “a minimum of $17 million” in annual tax revenue from the spa, according to estimates the infrastructure agency released on Thursday in tandem with the province’s lease with the company. 

Therme is also expected to pay another $200 million fixing up 16 acres of public space at the site to open a revamped park and beach, on top of the $500 million — up from $350 million — it now plans to spend building its spa and waterpark. Under its lease with Ontario’s government, which was signed in 2022, Therme will also cover property taxes, commercial taxes, and utility fees.

The company’s expenditures through its deal to lease Ontario Place’s west island from the provincial government for up to 95 years don’t include the costs of a new parking facility, however. The province will cover the cost of it, which it’s still discussing options for with the City of Toronto, Infrastructure Ontario president and CEO Michael Lindsay said during a technical briefing on Thursday.

He declined on Thursday to provide an estimate of what new parking, much of which its lease with Therme requires the government to build, could cost. 

Taxpayers have already footed the bill for “hundreds of millions” of dollars worth of site-servicing costs at Ontario Place ahead of the Ford government’s redevelopment, according to Lindsay.

Documents the infrastructure agency released said the province will pay an additional $25 million for flood mitigation and shoreline repair work and to upgrade some public amenities on and around the site, as well.

The parking facility the province is currently planning would include roughly 2,500 spots, according to documents provided to reporters. Of those, Therme would be allocated 1,600 and share them with Live Nation when Budweiser Stage hosts concerts and events. The parking facility will also serve the new science centre. 

Live Nation’s current lease, portions of which were obtained by The Trillium, guarantees it at least 1,200 spots. 

The parking structure has to be within 650 metres of Therme’s entrance pavilion, but the exact location is still subject to negotiations between the City of Toronto and the provincial government. 

The province originally planned to build it under the new science centre. As part of last year’s new deal for the city between Toronto Mayor Olivia Chow and Premier Doug Ford, his government agreed to look at options on the nearby mainland of Exhibition Place. 

On Wednesday, Chow said she recently sat down with Infrastructure Minister Kinga Surma to determine where exactly the new facility will be located. 

If the parking facility isn’t finished by 2030 or the time the Therme’s spa and waterpark opens, if it’s earlier than next decade, the province will pay Therme $5 per day for every parking spot short of 1,600. 

Currently at Ontario Place, a company contracted by the province is removing trees on its west island — work it began within the last couple of days.

The removal of trees is happening now, Lindsay explained, because sensitive bird and bat species’ mating seasons have concluded. He reiterated, on Thursday, the province’s promise to replace all the trees removed as part of the redevelopment with twice as many, and then some.

Nevertheless, critics of the government’s redevelopment plan cast the timing of the lease’s release as a distraction for the tree removal work. 

“I think the real reason is that they want to distract attention from the destruction that’s happening on the west island at Ontario Place,” NDP MPP Chris Glover said on Thursday. “That is public parkland that was paid for by the people of Ontario.”  

Lindsay said Infrastructure Ontario had been planning to release the lease for “a couple of weeks.”

Infrastructure Ontario expects Therme to take over the west island to start building its facility and upgrade its public spaces next year.

Based on figures provided by the government, the land is valued at around $55 million, or roughly $3.5 million per acre. 

The value, according to an official, was based on what the existing zoning allows on the site. Because the government won’t allow a casino, condos or other types of development, the land valuation is “reflective of permitted uses at Ontario Place.” 

The amount the provincial government expects Therme to pay it in direct rent payments — estimated to be at least $1.1 billion — over the course of its lease will be partially dependent on the business’ success. Its lease’s terms will require Therme to pay the province minimum rent at a rate of 3.5 per cent of the land’s value. Additional “performance rent” payments from Therme are also expected by the province, several years after its facility opens.

Under the lease, Therme’s annual payments to the province will be capped at eight per cent of the land value. 

The lease also says Therme must clear any public communications with the government prior to release “to ensure there is awareness and alignment of approach.” 

NDP Leader Marit Stiles said that clause is “stinky” and reminiscent of a gag order. 

The province would also be allowed to cancel the lease after Therme has been in business for 10 years, provided it gives five years’ notice. If the province were to evict Therme from Ontario Place, the parties must try to find an alternate location for a new spa. The province could also be forced to pay a year’s worth of Therme’s earnings and fund the new facility. 

If the province wants to demolish the facility, that would come on the taxpayers’ dime.