Item - 2025.EX26.5

The Executive Committee recommends that:

1. City Council direct that $8 million be transferred from the Waste Management Reserve Fund to the Green Lane Reserve Fund to ensure that the short to medium term capital and operating funding needs for the Green Lane Landfill project are available in the Green Lane Reserve Fund without impacting the 2025 Solid Waste Management Services Operating Budget.

2. City Council direct that $80.129 million in Land Transfer Tax stabilization funds, temporary held in the Capital Financing Reserve be transferred to the recently created Municipal Land Transfer Tax Stabilization Reserve to ensure sufficient funds are available to mitigate fluctuations in the Municipal Land Transfer Tax revenues during periods of slower real estate activity and to support stability and sustainability of City revenues and services.

The City of Toronto (City) maintains deferred revenue balances that will be recognized as revenues in future years, in addition to reserves and discretionary reserve funds that are intended to support the City's future activities. This report provides an update of these balances, as well as their related earned revenues and activities for the six months ended June 30, 2025.

Deferred Revenue

Deferred revenue, or obligatory reserve funds, are monies received from external parties for specific purposes outlined in Provincial legislation or third-party agreements.   

For the six-month period ended June 30, 2025, the City’s deferred revenues increased from $6,728.9 million to $7,514.7 million. The increase of $785.8 million was primarily driven by monies received from water and wastewater rate revenue, development and planning act contributions and the federal housing accelerator fund.

Reserves and Discretionary Reserve Funds

Reserves and Discretionary Reserve Funds are established by Council to support the financial management and operations of the City, minimize annual tax rate fluctuations, and provide a measure of financial flexibility to address the impact of significant unexpected pressures.

Reserves and Discretionary Reserve Funds balances increased by $70.8 million over the six-month period ended June 30, 2025, going from $5,610.6 million to $5,681.4 million. This net increase is the result of Council-authorized contributions for capital investments in housing, transit, capital infrastructure, and vehicle and equipment replacement. The majority of the City's Reserves and Discretionary Reserve Funds balances ($5,454.1 million, or 96.0%) are committed to future Council directed activities that include capital and operating expenditures and rate-based activities.

The remaining reserve and discretionary reserve fund balance ($227.3 million, or 4.0%) is uncommitted and available to respond to various unanticipated costs, stabilize funding sources, including the tax base, or for emergency purposes such as extreme weather events.  The uncommitted amount represents 1.2% of the total 2025 approved Operating Budget of $18,849.1 million.

There are total commitments and obligations of $41,066.7 million against the $13,196.1 million balance in committed reserves, discretionary reserves and deferred revenue consistent with the approved 10-Year Capital Plan and other requirements and obligations. These commitments and obligations are greater than three times the current reserve, discretionary reserve fund and deferred revenue balances, requiring continued reserve contributions to support planned expenditures. A further breakdown of the City’s current balances in comparison to planned operating and capital expenditures, including both deferred revenues and discretionary reserve funds, can be found in Appendix F.