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Karen Stintz Reviewing TTC Newsstand Deal

Controversial $50 million contract to operate newsstands in the transit system to be compared with an offer from another would-be operator.

Photo by anotherfaceinthecrowd, whose work you can also find here.

Since the last meeting of the TTC board a storm has been brewing over a $50 million contract with Tobmar Investments, which operates the newsstands, lottery booths, and coffee shops located in the transit system under the brand name Gateway Newsstands. That contract was agreed upon without entertaining bids from potential competitors, and many—especially Mayor Rob Ford—have condemned the sole-source deal.

Stintz has maintained that there is nothing to worry about: Tobmar is the current operator, and the new contract (which she describes as a simple lease extension) would consolidate individual agreements covering specific locations into one master contract. Those individual agreements expire at different times over the next 10 years, and Stintz says bundling them together will make management, and future contract negotiations, easier going forward. She has also gone so far as to say that Ford just doesn’t understand the contract in question.

That defence was somewhat confounded earlier this week, however, when the National Post reported that 95 per cent of those current agreements are set to expire next year—meaning that most of the consolidation could in theory be achieved without committing up front to a specific operator for the next decade, and a full open bidding process could still make sense. (That was City staff’s recommendation for handling the issue.)

Today Stintz announced that the since TTC has received another offer for operating the newsstands, from International News—an offer Stintz says she first learned about through the press—she will be asking staff “to conduct a third-party review” of that proposal, comparing it to the one with Tobmar.

Here is the full text of the letter she sent to TTC commissioners today:

Dear Commissioners:

By now, you should have received an “unconditional” offer from International News, submitted at 8:00 p.m. yesterday evening, with respect to operating the newsstands within the subway system. I learned about this proposal at 9:45 p.m. last evening through the media, and reviewed it for the first time this morning.

While the proposal claims to be unconditional the terms of the proposal are very unclear, since the current leases do not expire until 2014 at the earliest.

I cannot explain why this proposal was not submitted over the course of the last four months when this issue was before the Commission; however, I believe that it should be reviewed in the interest of fairness and transparency. I will be asking TTC staff to conduct a third-party review of the International News proposal against the Gateway proposal and to provide a briefing note to the Commissioners before the next meeting. This third-party review should include commentary from legal and real-estate experts and will evaluate the terms of each proposal for value-for-money, the current relationship each tenant has with its respective landlord(s), and the customer-service impact on the TTC.

If you feel there are other components regarding this issue which need to be covered by such a third-party review please forward them to me.

I feel strongly that this review be conducted by a third-party since TTC staff have been inconsistent in their recommendations to the Commission.

I also believe very strongly that this issue has become a distraction to the good work that is going on at the TTC. This needs to end. Andy Byford agrees with me.

This review, I believe, will still demonstrate that the Tobmar/Gateway lease extension proposal is very solid. It makes enormous business sense to extend leases for good tenants when the rents are increased by 67%. This is not a sole-source contract. It is a lease-extension and a very common practice throughout the TTC, the City and its Agency, Boards and Commissions where there is a landlord-tenant relationship.

For the record, the Mayor has yet to contact me on this issue.

Thank you.

Yours truly,

Karen Stintz
TTC Chair & City Councillor for
Ward 16, Eglinton-Lawrence
City of Toronto

Gateway Newsstands responded to the controversy with a press statement this afternoon.

In an impromptu press conference late this afternoon Stintz provided reporters with more details regarding this review, explaining that its purpose was not to re-open a contract that has already been voted on by the Commission. “No, we’re not revising anything,” she said. Rather, the goal is to “demonstrate the process has been fair and transparent to all parties.”


CORRECTION: 5:07 PM In our original headline we wrote that Stintz was “reconsidering” the newsstand deal. In a press conference since that was published the TTC Chair clarified that her intention is not to re-open the contract but to provide a review for the sake of transparency. We have updated the headline to reflect this.

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