Item - 2025.EX23.8

The Executive Committee recommends that:

1. City Council authorize the Chief Financial Officer and Treasurer to negotiate and enter into an amendment of the City Loan Agreement with the Leaside Memorial Gardens Arena Board of Management and Ontario Infrastructure and Lands Corporation to:

i. ensure that loan prepayments employing excess revenues do not result in an operating deficit for Leaside Memorial Gardens Arena; and

ii. remove the requirement to add annual Leaside Memorial Gardens Arena operating deficits to the principal balance of the City loan,

effective January 1, 2025, in a form satisfactory to the City Chief Financial Officer and Treasurer and the City Solicitor.

2. City Council authorize an exemption to waive the requirement of the existing City Loan Agreement to add Leaside Memorial Community Gardens Arena operating deficits to the principal balance of the City loan for the fiscal years 2018 to 2024.

The purpose of this report is to seek City Council's approval of combined prior year settlement of operating results for the fiscal periods of 2020, 2021, and 2022 with Leaside Memorial Community Gardens ("Leaside"). Also, as a result of Council's recent adoption of amended City loan and loan guarantee policies, staff undertook a review of Leaside's existing loans, the outcome of which is a recommendation to amend the existing City capital loan arrangements for the Leaside second ice pad, which are supported by a tri-partite agreement between the City, Infrastructure Ontario, and Leaside.

On an annual basis, the City of Toronto receives audited financial statements from eight Arena Boards of Management (Arena Boards). The audited financial statements assist the City in determining whether additional operating subsidy payments need to be provided to, or clawed back from, the Arena Boards to settle their operating deficits or surpluses. City staff report annually on the Arena Boards' operating surpluses and deficits once the respective Arena Boards' audited financial statements have been approved by Council. The audited financial statements are based on the Public Sector Accounting Board requirements for government not-for-profit entities, while the operating deficits or surpluses align with the modified cash basis of accounting.

At its meeting on December 17, 2024, City Council approved prior-year settlements of all Arena Boards, except for Leaside, during the consideration of the settlement report (EX19.17). It was noted that the Leaside's 2020, 2021, and 2022 settlement was delayed due to late completion of its annual audits and would be submitted in a standalone report recommending amendments to the City capital loan agreement with Leaside and determining whether an operating surplus/deficit settlement would be rolled into the outstanding balance of the loan to build Leaside's second ice pad. 

Leaside is a City Arena Board, operated by the Leaside Arena Board of Management. In January 2012, Council authorized the construction of a second ice pad at Leaside, and entered into financing arrangements that included a $7.3 million capital loan from the City. The terms of the City loan include a requirement for Leaside to add the amount of its annual operating deficits to the principal of the City loan. No other Arena Boards are required to repay the amount of their operating deficits to the City.

This report recommends amending the terms of the City loan agreement to ensure consistent treatment across all Arena Boards, removing the requirement for Leaside to add the amount of any future operating deficits to the principal City loan balance, and waiving the requirement to add the amount of its operating deficits from fiscal 2018 through 2024 to the principal City loan balance, with the exception being any annual deficit directly resulting from over or under payments on the City loan, with a prepayment resulting in a deficit being prohibited under the amended terms. The report also recommends combined settlement of operating surplus and deficits for 2020, 2021 and 2022 based on their audited financial statements for the years ended December 31.