It appears that the root of the problem is this line:
G33 = (.87*(11.61*s^2 + 1)/(73.132*s^2 + 22.69*s + 1))*exp(-s);
G33 has an s^2 in the numerator and the denominator, so G33 is proper, whereas all of the other G** transfer functions have denominators with higher order than the numerators, i.e. strictly proper.
TF33, which is the product of G33 and PID(3) is improper (numerator higher order than denominator), which then carries all the way to feed3. step() can't simulate the repsonse of an improper model (which Matlab also calls non-causal, but I'm not sure that's correct terminology for continuous time systems).