Item - 2019.EX9.1

The Executive Committee recommends that:

1.  City Council authorize the City Manager and any other relevant City Officials, in consultation with the Chief Executive Officer, Toronto Transit Commission and the City Solicitor, to negotiate, enter into and execute an agreement (the “Preliminary Agreement”) with the Province and/or any other relevant provincial agency, in accordance with the terms set out in the term sheet attached as Attachment 6 to the report (October 15, 2019) from the City Manager reflecting the principles/parameters set out in the letters from the Minister of Transportation and the Special Advisor to Cabinet provided as Attachments 7 and 8 to the report (October 15, 2019) from the City Manager.

2.  City Council authorize the City Manager, in consultation with the Chief Executive Officer, Toronto Transit Commission, to negotiate a Master Agreement and/or other applicable Agreements with the Province and/or any other relevant provincial agency for the purposes of the planning, procurement, construction, operations, and maintenance of the provincial priority projects, on the terms set out in Attachment 6 to the report (October 15, 2019) from the City Manager and any additional terms deemed necessary, and to report back to the Executive Committee on the results of such negotiations.

3.  Subject to entering into the Preliminary Agreement, and in anticipation of the realization of the City's project expectations including project benefits as described in the report (October 15, 2019) from the City Manager, City Council endorse the re-allocation of the federal funding under the Investing in Canada Infrastructure Program Public Transit Infrastructure Fund Phase 2 in accordance with the following, and direct the City Manager to advise the Government of Canada and the Province of Ontario accordingly:

a.  up to $0.660 billion for the Province's proposed three-stop Line 2 East Extension as described in the 2019 Ontario Budget; and

b.  up to $3.151 billion for the Province's proposed Ontario Line as described in the 2019 Ontario Budget and Initial Business Case.

4.  City Council direct the City Manager to provide semi-annual updates to City Council regarding the ongoing realignment of transit responsibilities and status of the provincial transit expansion program.

5.  City Council direct the City Manager, in consultation with the Chief Executive Officer, Toronto Transit Commission, to ensure the provincial priority projects continue to materially meet the City's expectations and provide the anticipated benefits as described in the report (October 15, 2019) from the City Manager, and report back to City Council in the event of changes to the provincial priority projects that vary materially from such expectations.

6.  City Council direct the City Manager, in consultation with the Chief Executive Officer, Toronto Transit Commission, to report in 2020, prior to the launch of the 2021 budget process, on funding and financing options for the reallocation of funds previously approved, identified, or contemplated for the provincial priority projects, for the purposes of state-of-good-repair of the Toronto Transit Commission subway network informed by Attachment 1 to the report (October 15, 2019) from the City Manager, and other expansion projects.

7.  City Council direct the City Manager to work with the Provincial and Federal governments to develop a long-term plan for dedicated and stable funding to support ongoing transit operations, state of good repair, and expansion projects.

8.  City Council direct the Deputy City Manager, Infrastructure and Development Services, to engage with Metrolinx through the next stages of detailed design and the Transit Project Assessment Process to mitigate the potential local impacts of the four new transit lines, with particular focus on the above ground sections of the Ontario Line and to ensure City staff are involved in reviewing and informing plans for:

a. safety, including City safety standards;
b. noise and vibration;
c. proximity of tracks to buildings and houses;
d. construction impacts and constructability;
e. impacts to local services and amenities including parks and community centres;
f. station location and integration with local communities;

g. accessibility; and

h. business impacts.

9. City Council direct the Deputy City Manager, Infrastructure and Development Services to request Metrolinx to mitigate the impacts described in Recommendation 8 above and to consider options for constructing further portions of the Ontario Line underground, where local impacts cannot be reasonably managed.
 

10. City Council direct the Deputy City Manager, Infrastructure and Development Services to engage with Metrolinx to ensure robust community consultations with communities through which the new lines will be constructed.

The Deputy City Manager, Infrastructure and Development Services gave a presentation on Toronto-Ontario Transit Update. 

The purpose of this report is to provide City Council with both an update on the status of the technical assessment of the Province's Sole Responsibility Projects and progress on discussions between the City and the Province in accordance with the Terms of Reference for the Realignment of Transit Responsibilities Review. Based on the results of the technical assessment and the current status of discussions on the realignment of transit responsibilities between the City and Province, this report includes a series of recommendations to ensure ongoing engagement to advance important transit initiatives to support the City's growth. This report was prepared in consultation with the Chief Executive Officer, Toronto Transit Commission.

For context, over the next twenty years, the City's population is projected to grow by about 960,000 people. By 2041, the City's population will be more than 3,900,000, exceeding the Provincial Growth Plan forecasts by more than 500,000[1].  This growth will add pressure to Toronto's transit infrastructure, already in need of significant investment by all orders of government. The City and Toronto Transit Commission have identified state of good repair and growth needs totaling at least $33.5 billion as per the Toronto Transit Commission Capital Investment Plan.  The Province, in announcing its investment in their four priority projects (i.e., Ontario Line, three-stop Line 2 East Extension, Yonge Subway Extension and Eglinton West Light Rail Transit), has estimated an investment of at least $28.5 billion.  Taken together, this represents a more than $60 billion in transit investment, critical to maintaining the safety and reliability of the existing system and growing the system to meet mobility demands of the City and region.

Technical Assessment of Provincial Projects

Since the last report to City Council on the status of the Toronto-Ontario Transit Responsibilities Realignment Review, City and Toronto Transit Commission staff have continued to meet with Provincial staff for the purpose of carrying out the assessment of the Provincial Priority Projects. City and Toronto Transit Commission staff have assessed the Ontario Line and Line 2 East Extension, and will now, with City Council’s support, work with the Province to advance all four priority projects.

Based on the Ontario Line proposal, and the level of design completed to date in respect to the Line 2 East Extension (3-stop), the City and Toronto Transit Commission believe the projects as proposed have the ability to deliver positive benefits to Toronto's transit network, and are therefore supportable in principle. Both projects have elements that are similar to projects previously considered by Council and as such have the potential to bring similar positive benefits to the City, including contributing to the relief of Line 1.  Further, both projects will enhance the transit network by providing new higher-order transit lines throughout the city including to equity-seeking communities. The City and Toronto Transit Commission have received limited information regarding the Eglinton West Light Rail Transit and the future plans for the Yonge Subway Extension to date and will continue to work with the Province to better understand the benefits of those projects.

As part of the technical assessment, the City and Toronto Transit Commission have also identified key areas requiring further discussion with the Province in order to ensure that the projects continue to materially deliver the anticipated minimum benefits and address City expectations. City and Toronto Transit Commission staff will also continue to engage closely with the Province on the location of potential portals and tracks for the Ontario Line, and the coordination of major capital construction projects, especially in the area of the Lower Don River.

The Province has committed to collaborate with the City and Toronto Transit Commission as the priority projects are developed and to ensure seamless integration of the extensions with existing subway infrastructure and assets. Through collaboration, City and Toronto Transit Commission staff will ensure that outstanding areas of concern are addressed as the projects are further developed, and that they proceed without undue delay. City and Toronto Transit Commission staff will also continue to work with the Province through established tables to advocate for meaningful public consultation on the Province's Sole Responsibility Projects.

Realignment of Transit Responsibilities

In parallel with the work on the technical assessment, the City and Province have been engaged in ongoing discussions regarding the realignment of transit responsibilities, as directed by Council and agreed to in the Terms of Reference. These discussions have culminated in a Provincial commitment of intent and a proposed package of terms as set out in an October 10, 2019 letter from the Minister of Transportation Caroline Mulroney, and an October 9, 2019 letter from the Deputy Minister of Transportation Shelley Tapp and Special Advisor to Cabinet – Transit Upload Michael Lindsay, both of which are attached to this report. 

These letters taken together articulate a provincial commitment of intent and a set of principles and parameters to guide the working relationship of the City and Province in delivering the expansion of transit. They contain the package of terms that form the foundation of a preliminary agreement, summarized and presented in a term sheet, also attached to this report.

In summary, the Provincial proposal provides the following:

- The City Retains Ownership of the Existing Subway Network – The Province has determined that it is no longer necessary to assume ownership of the existing subway system in order to expand Toronto’s transit network. The existing Toronto Transit Commission subway system will remain under the ownership of the City of Toronto and Toronto Transit Commission.

 
- Toronto Transit Commission Retains Operations of the Transit Network - The Toronto Transit Commission will continue to operate the existing network, and will maintain day-to-day operations of the four Provincial priority projects as they come into service, including labour relations. With respect to maintenance functions and service levels/standards, the Province will work with the City and Toronto Transit Commission to further define roles and responsibilities through operating and maintenance agreements. Farebox revenue will be used to defray operating costs, and the Province has committed to negotiate ongoing and commensurate operating contributions from other municipalities where subway service is provided. Under the proposal the City will be responsible for funding any net subsidy required to operate each of the priority projects.

- Funding for State of Good Repair Needs and Transit Expansion - The Province's proposal indicates that it would not seek capital contributions from the City for the Province's four priority expansion projects (Ontario Line, Line 2 East Extension, Yonge Subway Extension, and Eglinton West Light Rail Transit), in accordance with the commitment that the City will redirect the capital contributions it would have otherwise been expected to make toward incremental investments in the state-of-good-repair needs of the system, as illustrated in the letter attached from the Chief Executive Officer, Toronto Transit Commission, Rick Leary.  The Province would also consider the redirection of these funds to investment in other transit expansion priorities identified by Council, based on a fully developed business case, and subject to credible progress to the relief of the state of good repair backlog in the subway system.

- Advancing and Accelerating Transit Projects - The Province will own and be solely responsible for the delivery of the four priority Provincial subway projects, and have committed to collaboration and engagement with the City and Toronto Transit Commission through the design, development, and delivery of these projects, similar to the approach taken with the Eglinton Crosstown Light Rail Transit project.

- In order to accelerate delivery of priority expansion projects, the City and Province will jointly seek opportunities to streamline processes, where possible.  The Transit Expansion Office will act as the one-window access to the City, and facilitate the City's role in project implementation, while also developing improved processes to meet timelines.

- The Province will work with the City to identify opportunities to leverage powers and authorities available through the Province to expedite delivery, and to develop a Memorandum of Understanding related to Transit Oriented Development, recognizing the desire to create and capture value to offset capital costs while advancing the principles of good city planning.

- The Province is seeking a commitment that the City will engage and work collaboratively to identify how to efficiently manage key interchange stations and intersecting assets to facilitate construction and seamless integration. As outlined in the letter from Minister Mulroney, the Province is seeking a City commitment to grant the Province a level of access to and control over the interchange stations and other intersecting assets, following engagement between senior provincial and City officials.

 
- Financial Support of Projects – The Province has committed to undertaking a financial review and reconciliation of costs incurred by the City and Toronto Transit Commission to date on the Relief Line South and the Line 2 East Extension, and subject to further review of commitments made, the Province has committed to reimbursing the City for reasonable costs incurred.  The Province has also committed to reimbursing the City for staff services and appropriate consulting services provided in support of advancing its priority projects.

 
- Endorsement of Projects for Federal Funding – As a result of the City's findings through the technical assessment of the projects, and in accordance with the above terms, the Province is seeking the City’s endorsement of the re-allocation of the funding under the Investing in Canada Infrastructure Program Public Transit Infrastructure Fund Phase 2 to the Ontario Line and the Line 2 East Extension projects, consistent with the Investing in Canada Infrastructure Program Public Transit Infrastructure Fund Phase 2 approvals framework.

- The Province and the City will continue to advance the SmartTrack Stations Program and Bloor-Yonge Capacity Improvement project through the federal Investing in Canada Infrastructure Program Public Transit Infrastructure Fund Phase 2 program.

- The Province and City will work together to seek further federal engagement and funding commitment to all priority projects.

 
The package of terms as proposed by the Province, subject to endorsement by Council and outlined in the attached Term Sheet, provide a starting framework for agreements that will result in significant new transit investment in Toronto to both maintain and expand the existing system.

Subject to Council approval, staff will negotiate, enter into, and execute an agreement (the "Preliminary Agreement") with the Province on the basis of these terms, transitioning them into a formal arrangement between the parties.  This Preliminary Agreement will form the starting foundation of a more fulsome Master Agreement or series of agreements, which will be negotiated between the parties as the projects advance through their respective lifecycles. These agreements will be subject to future Council approval.

This report outlines the significant outcomes achieved as a result of the discussions between the City and Province since the signing of the Terms of Reference in February. Continued engagement with the Province will provide the City and Toronto Transit Commission the critical opportunity to collaboratively advance the priority projects through their lifecycles, ensure the projects continue to materially meet the City's anticipated benefits and expectations, and advance much needed investment in transit without undue delay.

[1] Canadian Centre of Economic Analysis and the Canadian Urban Institute. Toronto Housing Market Analysis. January 2019. https://www.toronto.ca/legdocs/mmis/2019/ph/bgrd/backgroundfile-124480.pdf