Item - 2025.EX28.14

The Executive Committee recommends that:

1. City Council direct that a total of $84.0 million be transferred between reserves and discretionary reserve funds and that following these transfers 20 aged reserves and discretionary reserve funds be closed out, as detailed for both transfers and close outs in Appendix F to the report (November 25, 2025) from the Chief Financial Officer and Treasurer.

The City of Toronto (City) maintains obligatory reserve funds 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 nine months ended September 30, 2025.

Obligatory Reserve Funds

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

For the nine-month period ended September 30, 2025, the City’s obligatory reserve funds increased from $6,726.4 million to $7,963.3 million. The increase of $1,236.9 million was primarily driven by monies received from water and wastewater rate revenue, development and planning act contributions, provincial new deal funding 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 $433.2 million over the nine-month period ended September 30, 2025, going from $5,612.8 million to $6,046.0 million. This net increase is the result of Council-authorized contributions for capital investments in housing, capital infrastructure, operational support and vehicle and equipment replacement. The majority of the City's Reserves and Discretionary Reserve Funds balances ($5,752.7 million, or 95.1 percent) 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 ($293.3 million, or 4.9 percent) 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 1.6 percent 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 $14,009.3 million balance in committed reserves, discretionary reserves and obligatory reserve funds consistent with the approved 10-Year Capital Plan and other requirements and obligations. These commitments and obligations are almost three times the current reserve, discretionary reserve fund and obligatory reserve fund 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 obligatory reserve funds and discretionary reserve funds, can be found in Appendix E.