Item - 2024.FWC2.1

The Chief Financial Officer and Treasurer, Executive Director, FIFA World Cup Hosting 2026 and Chief Procurement Officer recommend that:  

1. City Council approve a temporary increase to the Municipal Accommodation Tax from 6 percent to 8.5 percent effective June 1, 2025 to July 31, 2026, and direct the Chief Financial Officer and Treasurer to include the additional revenue towards FIFA World Cup 2026 related costs in the 2025 and 2026 Budgets for the Mayor’s consideration as part of future budget processes.

2. City Council authorize the introduction of the necessary Bills in Council to give effect to City Council's decision by amending City of Toronto Municipal Code Chapter 758, Taxation, Municipal Accommodation Tax.

3. City Council request the Chief Financial Officer and Treasurer to report back through the 2026 Budget Process with an update on the additional increase in Municipal Accommodation Tax revenue generated, and revised estimates up until July 31, 2026.

4. City Council direct the Executive Director, FIFA World Cup Hosting 2026 and Chief Procurement Officer to proceed in accordance with the revised procurement plan to procure the goods and services required for the delivery of FIFA World Cup 2026 set out in Confidential Attachment 1.

5. City Council direct that Confidential Attachment 1 remain confidential at this time as it pertains to criteria to be applied to negotiations carried on or to be carried on by or on behalf of the City of Toronto and be made public at the discretion of the Chief Procurement Officer following the award or closing of the contemplated procurement transactions.

6. City Council adopt the confidential instructions to staff in Confidential Attachment 1.

7. City Council amend the 2024-2033 Capital Budget and Plan for Parks, Forestry and Recreation set out in Confidential Attachment 1.

8. City Council amend the 2024-2033 Capital Budget and Plan for Exhibition Place set out in Confidential Attachment 1.

This report provides an update on planning for the FIFA World Cup 2026 (FWC26) in Toronto, including a revenue strategy identifying ways to offset expenditures, a progress update on community workforce development and business opportunities for local and diverse suppliers through FWC26 procurements, and current state of play of the procurements, including awarded contracts to date and requests to award and negotiate on items captured in a confidential attachment. 

With planning ongoing and budget estimates converting from forecast to actuals, the cost of some goods and services quoted back are higher than projected. This report puts forward a revision to the procurement plan for goods and services for both capital and operational services previously approved by City Council on July 24, 2024 (EX16.32).

As has been previously reported to City Council, the estimated costs to host the FWC26 in Toronto total $380.0 million, which includes all operations, safety and security, and capital upgrades to ensure the City meets all FIFA requirements. Of the $380.0 million required to deliver the games $201.4 million is being offset by provincial and federal funding, resulting in the City required to identify a total of $178.6 million (or 47 percent of total costs). Of this, $83.6 million in revenue has been previously identified through existing municipal sources, commercial rights sales, rental fees, and in-kind contributions. As requested through EX11.12 – Update on Hosting FIFA World Cup 2026, this report outlines additional financial opportunities to the City of Toronto to offset the $95.1 million in remaining funding requirements without impacting the property tax base, including a review of existing revenue tools and new opportunities made available by hosting the games, such as donations, merchandise sales, music royalties, new commercial sales opportunities and revenues specific to FIFA Fan Festival. The FWC26 Toronto Secretariat, in consultation with Finance and Treasury, will continue to explore these targeted revenue opportunities. As they are further developed and refined, staff will report back to the FWC26 Subcommittee, as applicable, with additional information.

As the world’s most-watched sporting event, FWC26 represents a major economic opportunity for Toronto, the Province of Ontario, and Canada, as it welcomes hundreds of thousands of visitors. As noted above, the City is responsible for 47 percent of total costs, however has limited tools to capture revenue associated with the economic activity and benefits associated with hosting the games. Staff have undertaken a review of available funding sources to support the delivery of the FWC26 with the objective of restricting any potential impact on the existing property tax base and planned projects.

Of the revenue tools enabled by the City of Toronto Act, 2006 (COTA), the Municipal Accommodation Tax (MAT) provides the most effective opportunity to generate revenue directly from increased economic activity resulting from FWC26, while ensuring no impact to the City’s property tax base. Implementing a temporary incremental increase to the MAT, applied to hotels and short-term rentals, of 2.5 percent over a 14-month period (June 1, 2025 – July 31, 2026) is projected to generate an additional $56.6 million in revenue, offsetting the majority of the remaining funding requirement. It is anticipated that any potential impacts on hospitality operators will be largely offset by increased room demand and related visitor spending in the lead up, during, and following the FWC26, as well as substantial future benefits due to Toronto’s global visibility gained from hosting the FWC26.

In addition to recommending a temporary increase, staff will continue to monitor base performance of the MAT prior to the FWC26, along with other corporate revenues, which could help to further alleviate any remaining budget pressures. Further, to address any remaining funding requirements, staff also remain committed to ensuring cost mitigation strategies are in place for the delivery of the games to minimize financial impacts on the City of Toronto, residents, and businesses.

The total estimated cost of hosting the FIFA World Cup 2026 (FWC26) in Toronto, including operating and capital costs, remains unchanged at $380.0 million gross, as captured in Table 1 below.

Table 1: Current Estimated FWC26 Hosting Costs, Total ($000s):

Cost Mitigation

Staff are committed to ensuring costs to deliver the FWC26 are contained as much as possible. The FIFA World Cup 2026 Subcommittee was established by Executive Committee (EX13.16) to provide oversight on procurement, expenditures, and the overall budget. As directed by the FWC26 Subcommittee on July 4, 2024 (FWC1.3), in August of 2024 the FWC26 Toronto Secretariat, Councillor Shelley Carroll, and the Mayor's Envoy David Soknacki, met with divisions and agencies to review, in detail, capital and operational budgets associated with hosting the FWC26 in Toronto. To date, the review has yielded approximately $4.8 million in savings against a $10 million budget pressure. Additional savings are expected as part of on-going reviews across all areas of the FWC26 budget and associated impacts.

Additionally, a process for tracking and approving expenses has been established and will be fully rolled out, communicated, and implemented with Divisions in November 2024.

Capital Projects

FIFA has reduced training site requirements at Centennial Park from two training pitches and field houses down to one for the duration of the tournament in Toronto.  This change results in net savings in capital expenses allocated to training sites plus additional savings to operations including safety and security budgets. Savings from the training site capital budget will be reallocated to other FWC26 budget requirements including the Toronto Stadium capital project.

With the completion of pre-construction work at Toronto Stadium, rough order of magnitude pricing is surpassing initial estimates. The increase in capital costs for the stadium will be offset by: reallocation of savings from the training site capital project; investment of new funding from MLSE; and continued work with FIFA and all vendors to reduce scope and identify and implement cost saving measures wherever possible.

Recommended amendments to allocations within the overall $380 million FWC26 Budget between programs and projects are included in Confidential Attachment 1.  These amendments reflect the capital project requirements noted above and will support upcoming procurement initiatives. Full impacts of these amendments within the unchanged $380 million FWC26 Budget will be reflected in 2025 budget materials following completion of upcoming procurement actions.

Maple Leaf Sports & Entertainment Investments

Maple Leaf Sports & Entertainment (MLSE) announced this month that they will be reinvesting their revenue share from commercial sales back into stadium improvements for the FIFA World Cup 2026.

MLSE investments will contribute to meeting FIFA requirements at the stadium, upgrading the fan experience and improving technology and broadcast quality within the City-owned asset as a long-term legacy. Details of the investment, including long-term benefits to the city, are in negotiations and will be brought to the FWC26 Subcommittee for information.

Status on Intergovernmental Funding

FWC26 represents a significant opportunity for all three orders of government, providing not only international recognition but also long-term economic benefits and facilitating capital investments. In a letter dated December 2023, the Province of Ontario confirmed a conditional commitment of up to $97.0 million to support Toronto's efforts to host the FWC26. The funding to support the event is exclusively limited to investments that build lasting public infrastructure and benefits that will serve the community over the long-term following the completion of the games. This commitment was followed up in May 2024 with an announcement of $104.3 million in federal funding for both operational and capital expenditures related to hosting FWC26. In total, intergovernmental funding contributions will represent $201.3 million, or 53 perecent of total estimated FWC26 costs.

Previously Identified Funding Sources

In consideration of the $201.4 million in committed funding from the provincial and federal governments, the City is required to identify a total of $178.6 million (or 47 percent of total costs). $83.5 million in funding from the City of Toronto had been previously identified for FWC26. This includes $46.3 million from reserves and reserve funds that were approved through prior year budgets as part of the City’s commitment to match funding from other governments. Further funding sources include an estimated $34.6 million from rental fees and commercial rights sales available to host cities. Finally, $2.6 million in services provided in-kind have been identified.

All combined, the identified funding sources total $284.9 million, resulting in a remaining funding requirement of $95.1 million, as detailed below in Table 2.

Table 2: Estimated FWC26 Funding Sources ($000s), as of September 30, 2024

Additional Proposed Funding Sources

Staff were directed to report back to the FIFA World Cup 2026 Subcommittee on an approach to address the FWC26 remaining funding requirement of $95.1 million.  Staff have undertaken a review of available funding sources to support the delivery of the FWC26 with the objective of restricting any potential impact on the existing property tax base and planned projects, resulting in the following recommended actions which are detailed further below:

-Review of the Municipal Accommodation Tax

-Temporary increase in the rate

-Revenue generated above budgeted expectations

-Further targeted revenue opportunities

Municipal Accommodation Tax

A temporary 14-month (June 1, 2025 – July 31, 2026) increase in the Municipal Accommodation Tax (MAT), applied to hotels and short-term rentals, by 2.5 percent is projected to generate an additional $56.6 million which could directly support the delivery of the FWC26. This revenue is incremental to the anticipated $135.8 million in revenue under the existing base of 6 percent MAT rate over the same 14-month period. Further details of this proposed change can be found within the comments section of this report.

In addition to recommending a temporary increase, staff will continue to monitor base performance of the MAT in the lead-up to the FWC26, along with other corporate revenues, which could help to further alleviate any remaining budget pressures. For example, as of the six months ending June 30, 2024, MAT revenues were projected to exceed the 2024 Operating Budget by $16.7 million by year-end, driven by increased demand and occupancy rates for hotels and short-term rentals. Should overperformance in MAT continue, staff may consider recommending an allocation of funds to support the FWC26 as part of future in-year variance reports or through annual budget processes.

Further Revenue Opportunities

Further revenue opportunities are being evaluated and explored by the FWC26 Toronto Secretariat, in order to address the estimated remaining funding requirement of up to $21.8 million, including:

-Donations secured by the FIFA World Cup 2026 Champions Table 

-Percentage of FWC26 Toronto merchandise sales

-Percentage of FWC26 music royalties provided to Host Cities

-New commercial sales opportunities specific to hospitality sales at the Stadium

-Revenue opportunities specific to FIFA Fan Festival (e.g. premium ticketed events, vendor rental fees, etc.)

FIFA World Cup 2026 Toronto Champions Table

Led by Mayor Chow, the FIFA World Cup 2026 Champions Table (FWC26 CT) plays a critical role in developing support for the event across the city, throughout the business community, and for years to come.

The FWC26 CT brings together members of the private sector to raise funds through private donations to help offset event costs and develop a strong legacy for Toronto through improvements to local sports infrastructure and increased access to community youth sport programs.

Promoting civic investment, the Champions Table, FWC26 Toronto Secretariat and it’s Commercial Rights Sales Agent (MLSE) will work to secure donations aligned with FIFA’s Commercial Rights Guidelines with one hundred percent of donations going to the City of Toronto.

The FWC26 CT is underway and set to start securing donations starting Q1 2025.