Item - 2022.EX33.8

The Executive Committee recommends that:  

1. City Council adopt the amended Toronto Atmospheric Fund Relationship Framework with the City substantially as set out in Attachment 1 to the report (May 25, 2022) from the City Manager and Chief Financial Officer and Treasurer, as amended by Recommendation 2, below.

2. City Council amend Article 7.1 in the Toronto Atmospheric Fund Relationship Framework in Attachment 1 to the report (May 25, 2022) from the City Manager and Chief Financial Officer and Treasurer so that it now reads as follows:

7.1 Composition of the Board

Council has the sole authority to alter the composition of the Board, at its discretion or at the request of the Board.

The Board currently consists of 11 members: 3 City Council members and 8 Public Members. One City Council member shall be the Mayor or a designate appointed by the Mayor. Less than a majority of Public Members of the Board shall be non-Toronto residents that live in the Greater Toronto and Hamilton Area. The Board recruitment process outlined in Article 7 considers desired competencies of Public Members.

3. City Council adopt the Toronto Atmospheric Fund's Procedural By-law, which is provided as Schedule 1 of the Relationship Framework in Attachment 1 to the report (May 25, 2022) from the City Manager and Chief Financial Officer and Treasurer.

4. City Council delegate the following authorities to the Toronto Atmospheric Fund Board of Directors as permitted under Section 3 of the Toronto Atmospheric Fund Act, 2005 to give effect to the proposed Relationship Framework amendments:

a. to appoint its Board Chair;

b. to create, amend or repeal the provisions of its Operating By-law, also known as Toronto Atmospheric Fund By-law 1, without having to obtain Council approval;

c. to hire, fire, manage and receive reports on the performance of Toronto Atmospheric Fund investment managers; and

d. to carry out Toronto Atmospheric Fund responsibilities under the Municipal Freedom of Information and Protection of Privacy Act.

5. City Council approve the amended Statement of Investment Objectives and Principles of the Toronto Atmospheric Fund substantially as set out in Attachment 2 to the report (May 25, 2022) from the City Manager and Chief Financial Officer and Treasurer.

6. City Council authorize the City Manager, in consultation with the City Solicitor, to make any changes to the Toronto Atmospheric Fund Relationship Framework, Procedural By-law and Statement of Investment Objectives and Principles as may be required to give effect to Council's decision.

7. City Council authorize the City Manager, in consultation with the City Solicitor, to support the Toronto Atmospheric Fund to pursue certain amendments to the Toronto Atmospheric Fund Act, 2005, including:

a. to remove references to the Corporations Act (Ontario) and instead reference the new Not-for-Profit Corporations Act, 2010 (Ontario) where applicable;

b. to remove or adjust outdated references to the Municipal Act;

c. to remove the requirements for meetings of Toronto Atmospheric Fund committees to be open meetings; and

d. other administrative amendments as required.

8. City Council direct the City Clerk to forward these decisions and final versions of documents to the Province of Ontario and the Federation of Canadian Municipalities, as parties to the Transfer Payment Agreement and Canada Funding Agreement respectively, for their information. 

This report recommends that City Council approve amendments to the Toronto Atmospheric Fund (TAF) Relationship Framework and Statement of Investment Objectives and Principles (SIOP).

TAF was established by the former City of Toronto Council in 1991 with a $23 million endowment to advance climate change and air quality solutions. TAF was incorporated by the Toronto Atmospheric Fund Act (the TAF Act) in 1992 and continued through a subsequent TAF Act amendment in 2005 as a corporation without share capital that carries out its prescribed mandate through grants and investments in low-carbon technologies, research, and partnerships with business and community organizations.  TAF funds its work through the proceeds of investment of its endowment and other external funds such as grants from charitable foundations or governments, without any draw on the City's operating or capital budgets. 

In addition to the TAF Act, the governing instruments for TAF include:

- The Relationship Framework, which describes the roles and responsibilities of City Officials, Divisions and TAF and its Board;

- The SIOP, which outlines TAF's investment guidelines to ensure continued prudent and effective investment management, capital preservation and financial well-being; and

- TAF's Operating By-law (also called TAF By-law No. 1), which outlines operational and administrative requirements as a not-for-profit corporation.

Since it was established, and with the support of Council, TAF has grown into an internationally-recognized and high-impact expert and agent for urban climate action. The value of its endowment has grown to an estimated $90 million through investments and contributions from the Province and the Government of Canada, its geographic mandate broadened to the Greater Toronto and Hamilton Area (GTHA) with the Ontario and Canada funding, and its investment strategies have grown in value and sophistication.

The City exercises control and custody over various aspects of TAF, in accordance with the TAF Act, specific Council delegations, and certain Council-adopted policies and Council-directed reporting obligations applicable to TAF. As part of its overall fiduciary responsibility to TAF, the Board's role in this process is to ensure generally that TAF is in compliance with Council direction, including approving matters and seeking Council approval where required, and to delegate implementation of Council direction to TAF staff where appropriate.

The proposed amendments to TAF governance documents reflect the maturity of TAF as a 30-year old entity, its relationship with the City, its expanded mandate to the Greater Toronto and Hamilton Area (GTHA), and the significant growth of its endowment funds following a $17 million contribution from the Province of Ontario in 2016 and a $40 million contribution from the Government of Canada in 2020.

Together, these amendments are intended to give TAF and the TAF Board more autonomy and responsibility to manage TAF's activities and affairs.  Consistent with the TAF Act, City Council still appoints the TAF Board, provides direction to TAF and delegates to TAF's Board, and the City's Chief Financial Officer and Treasurer retains appropriate oversight of TAF funds.  However, as part of TAF's greater autonomy, City officials will continue to provide support and confirm due diligence where needed, while TAF and the TAF Board will assume broader responsibilities to manage TAF.

This report recommends Council adopt the amended Relationship Framework and SIOP as attached and delegate certain powers to the TAF Board, as permitted under the TAF Act, to give effect to these proposed amendments.   To give effect to these amendments, this report also recommends Council delegate specific responsibilities to TAF and its Board, as permitted under the TAF Act, and to pursue minor changes to the TAF Act with the Province of Ontario.

The TAF Board of Directors has reviewed the Relationship Framework amendments and approved the SIOP amendments, substantially as set out in the attachments to the report, and the City Manager and Chief Financial Officer and Treasurer recommend them to Council for approval.