Item - 2023.EX3.6

The Executive Committee recommends that:

1. City Council establish a new obligatory reserve fund called the "Development Charges Reserve Fund – Transit (EELRT)" in Appendix C, Schedule 11 of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds, for the purpose of providing funding for the Eglinton East Light Rail Transit capital project, with criteria set out in Appendix B to the report (March 7, 2023) from the Chief Financial Officer and Treasurer, and transfer funds from Development Charges Reserve Fund – Transit (Balance) (XR2109), in an amount equivalent to the balance in the former Development Charges Reserve Fund – Transit (Scarborough Subway Extension) (XR2125) that was closed earlier this year, to the new Development Charges Reserve Fund –Transit (EELRT).

The City of Toronto (City) receives monies from external parties and are obligated to set aside for specific purposes outlined in Provincial legislation, third party agreements, or for goods and services that will be provided in the future.  These monies create obligations for the City that must be settled at a future date, such as the collection of development charges when building permits are issued that will pay for the cost of infrastructure required to provide municipal services that support the growth of the new development.  When these monies are received, they are recognized on the City's Statement of Financial Position as a liability labelled deferred revenue. The deferred revenue amounts are recognized as earned revenue only when the committed investment is completed in the Statement of Operations and Accumulated Surplus.  This report provides an update of deferred revenue balances and earned revenue for the first nine months of 2022, and deferred revenues balances at September 30, 2022. 

As at September 30, 2022, the City recognized $6,365.3 million in deferred revenues, increased by $1,553.7 million in monies received and reduced by $91.7 million in earned revenues.  This balance represents accumulated deferred revenue balances, which is a reflection of obligated investments not yet completed to support growth, or goods and/or service commitments that the City must deliver to third parties, not yet earned and recognized as revenue.  Deferred revenues are fully committed based on contractual obligations to support growth-related infrastructure investments in the community, or other service or operational obligations.