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Porter Air at the Toronto Island Airport.Peter Power/The Globe and Mail

The stage is set for Toronto's island airport to get its long awaited pedestrian tunnel, with a last-minute deal reached over land use between the city and the Toronto Port Authority.

The agreement, made public on Monday, will to go before council this week and is the latest chapter in the controversial efforts by the Port Authority to get a link to the airport. Under the proposed deal, the parties have agreed to swap land along the lakeshore to ease tunnel design and construction. The tunnel, initially proposed as pedestrian only, will now be designed to carry city water mains and sewers. Placing the water lines in the tunnel will cost the city $10-million, about half the estimated cost of running water services separately to the island, a staff report to council states.

As part of the agreement, the city will lease land for three years to the Port Authority during construction and both parties have agreed to resolve traffic concerns in the docking area at the foot of Bathurst Street. The land to be leased from the city includes the Canada Malting site and land under the Gardiner Expressway.

The preservation of the original airport terminal building also is included in the deal. The building, constructed in the late 1930s, is the oldest of its kind in Canada. The staff report states talks are taking place to find a potential site for the terminal, such as Downsview Park, if it is no longer needed at the airport.

Although the new city council hasn't taken a formal position on the tunnel, Mayor Rob Ford has said he supports it.

The Port Authority announced in January, 2010, that it intended to pursue a private-public partnership to construct a pedestrian-only tunnel beneath the western gap after Ottawa rejected the project as a candidate for stimulus funding. Fees from the airport's users are being used to cover the costs.

Local councillor Adam Vaughan described the proposed agreement as the "sweetheart of sweetheart deals," noting that the city will lease land for $3-per-square foot a year to the Port Authority, which could collect about the same amount in one day in parking fees.

The airport is aiming to open the tunnel in 2013, but a final date has not been set, a spokeswoman for the Port Authority said.

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