Item - 2024.PA8.5

The Board of Directors of the Toronto Parking Authority:

1. Requested the City Manager to request the Chief Financial Officer to provide an update on on-going discussions at the May 28, 2024 meeting of Board of Directors of the Toronto Parking Authority on the status of the Toronto Parking Authority's Net Income Sharing Agreement.

2. Directed that Confidential Attachment 1 and Confidential Attachment 1, Appendix A to the report (March 12, 2024) from the President, Toronto Parking Authority remain confidential in their entirety, as they pertain to a position, plan, procedure, criteria, or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City or Toronto Parking Authority.

The Board of Directors of the Toronto Parking Authority recessed its public session to meet in closed session to consider the item as it pertains to a position, plan, procedure, criteria, or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City or Toronto Parking Authority.

The purpose of this report is to provide the Board with an update about Toronto Parking Authority’s Net Income Sharing Agreement with the City of Toronto, the actions Management is taking to maintain financial stability in the short-term and what changes will be required to Toronto Parking Authority’s 2025 Operating and Capital Programs given the continued absence of a sustainable Agreement with the City.

Toronto Parking Authority is a self-sustaining agency of the City of Toronto that fully funds its operations from the revenues it generates. In addition, Toronto Parking Authority also makes significant contributions to the City's general revenues through a 2017 Net Income Sharing Agreement with the City that requires Toronto Parking Authority to remit 85 percent of its net annual income to the City. Since 2002, Toronto Parking Authority has contributed more than $1.4 billion to the City of Toronto to fund other municipal services and programs, including public transit, housing and parks.

Toronto Parking Authority is at a crossroads, caught between its past and present. Toronto Parking Authority’s legacy Net Income Share Agreement expired in 2019 and does not recognize nor support Toronto Parking Authority’s current mandate, which has been expanded to include both the operating and capital requirements for a rapidly growing Bike Share program, as well as the operation, maintenance, and continued expansion of Canada’s largest municipally-owned electric vehicle (EV) charging program. The current Net Income Share Agreement also failed to anticipate the extensive backlog in state-of-good-repair (SOGR) in Toronto Parking Authority’s parking garages, currently estimated to exceed $300 million over a ten (10) year period. Further capital pressures include the need to replace Toronto Parking Authority’s 3,000+ Pay and Display machines, which are approaching their end-of-life.

Lastly, the continued operation of Toronto Parking Authority’s surface parking facilities remains at risk due to the City’s housing program and other competing City-building objectives. At its meeting of February 29, 2024, Executive Committee received and debated 2024.EX12.4. This report included recommendations for City staff to undertake a review of all off-street, transit oriented, City-owned parking facilities that may support Council's housing, community or fiscal goals and better align municipal parking services to City and Provincial planning policies, and to report back to City Council with a list of priority sites, timelines and resource requirements for due diligence to determine 'parking-to-homes' and/or community infrastructure opportunities. This report will be considered by City Council at its meeting of March 20, 2024.  The foregoing underscores the urgent need to secure a new Net Income Sharing Agreement with the City.

Management has been engaged in discussions with Finance and Treasury Services for over 24 months with an expectation that a new Agreement would be reached as part of the 2024 Budget Cycle. At present, no resolution has been achieved. Given the absence of a new Agreement and to ensure that sufficient working capital is maintained for continued operations over the next two (2) years, Management has identified $14.1 million of planned capital investments in 2024 that will be deferred to future years.

In 2023, Management prepared a comprehensive Enterprise Risk Management Strategy that details the Toronto Parking Authority’s risk profile across a number of strategic measures including but not limited to governance, financial, cyber security, customer, talent, etc. Through this rigorous ranking process, the absence of a sustainable Net Income Sharing Agreement has been identified as the single biggest risk to the sustainability of the organization. Without a new Agreement being reached in the near-term, Management will be forced to make material cuts over and above the reductions described herein from Toronto Parking Authority's 2025 Operating and Capital programs.