Item - 2023.EX8.4

The Executive Committee forwards the Item to City Council without recommendation.

The Executive Committee directed the Interim Chief Financial Officer and Treasurer to report directly to the October 11, 12 and 13, 2023 meeting of City Council detailing the expected loss in growth-related capital revenue over the ten year capital planning period, resulting from development-related funding changes imposed from Bill 23 and the associated cost of social and hard infrastructure, such as water and sewage service, roads, community centres, libraries, and other services required for complete neighbourhoods, including a high-level consideration of the cost and revenue impact should the City meet its Provincially-set 2031 Municipal Housing Target.

The City of Toronto (City) receives monies from external parties and is obligated to set these monies aside for specific purposes outlined in Provincial legislation or third party agreements. These monies may also be set aside for goods and services that will be provided in the future. In both instances, the receipt of these monies creates obligations for the City that must be settled at a future date. An example of such an obligation is the collection of development charges when building permits are issued. These development charges will contribute to the cost of growth-related infrastructure required to provide municipal services that support new development. When these monies are received, they are recognized on the City's Statement of Financial Position as a liability called Deferred Revenue. The deferred revenue amounts are recognized as earned revenue only when the committed investment is completed, and expenditures are recognized as tangible capital assets in the Statement of Financial Position or as operating expenses in the Statement of Operations and Accumulated Surplus. This report provides an update of deferred revenue balances at June 30, 2023, and earned revenue for the period ended June 30, 2023, which is included in the City's Statement of Operations and Accumulated Surplus.

As at June 30, 2023, the City recognized $6,838.9 million in deferred revenues, increased by $1,311.6 million in monies received and reduced by $96.6 million in earned revenues as compared to the December 31, 2022 balance of $5,623.9 million. This balance represents accumulated deferred revenue balances, which reflect 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 performance obligations. In particular, the City estimates that $22.7 billion of deferred revenues have been committed over the 2023-2032 period – this indicates that the City’s commitments are 3.3 times greater than the amount of deferred revenues recognized as at June 30, 2023.