Agenda

The City Manager, the Deputy City Manager, Cluster B and the Deputy City Manager and Chief Financial Officer recommend:

SmartTrack

1.  City Council approve the following components which comprise the SmartTrack project scope, and request the Province of Ontario and Metrolinx to partner with the City of Toronto and the Toronto Transit Commission, to complete the remaining technical and planning analysis and undertake any required Environmental Assessment/Transit Project Assessment Process:

a.  SmartTrack/Regional Express Rail (RER) Integration scenario with up to six new stations located at Finch, Lawrence, Gerrard and Unilever on the Stouffville/Lakeshore East GO corridors and Liberty Village and St. Clair West on the Kitchener GO corridor; and

b.  Eglinton West LRT extension with between 8 to 12 stops between Mount Dennis and Renforth Gateway, and potential grade separations located at Martin Grove Road, Kipling Avenue and the Eglinton Flats.

2.  City Council request the City Planning Division and the Toronto Transit Commission, in partnership with Metrolinx, the City of Mississauga and the Greater Toronto Airport Authority (GTAA) to further develop options for extending the Eglinton West LRT between Renforth Gateway and Pearson International Airport.

Scarborough Transit Network

3.  City Council request the City Manager and the Chief Executive Officer, Toronto Transit Commission to remove from consideration the 3-stop McCowan Scarborough Subway Extension (SSE) and continue to develop an SSE Express option, by conducting the following:

a.  Retaining the services of a third-party rail transit construction and cost –estimation expert to undertake a risk assessment and detailed review of the TTC's 5% design cost estimates for the McCowan corridor and other possible express subway alignment options; and

b.  Prepare the Environmental Project Report for the SSE express subway and issue the Notice of Commencement for the Transit Project Assessment Process (TPAP) once ready to proceed.

4.  City Council request the City Manager and the CEO, Toronto Transit Commission, in partnership with Metrolinx, and in consultation with the University of Toronto Scarborough (UTSC), to undertake further technical and planning analysis with respect to an Eglinton East LRT extension to the UTSC, including:

a.  Advancing the Eglinton East LRT to a minimum of 5 percent design;

b.  Assessing the interface at Kennedy Station of the Eglinton East LRT, Metrolinx Eglinton Crosstown project, and the preferred Scarborough Subway Extension (SSE) option as a result of the analysis requested in recommendation 3;

c.  Assessing the potential realignment of Military Trail through UTSC; and

d.  Identifying the requirements for the next phase of the Eglinton East LRT extension to Malvern.

5.  City Council request the City Manager and the Chief Executive Officer, Toronto Transit Commission, in consultation with Metrolinx, to develop a business case analysis for the Scarborough Transit Network solution, and include the following components in the network scenarios:

a.  Express Scarborough Subway Extension (SSE), subject to the additional analysis outlined in recommendation 3; and

b.  Eglinton East LRT extension based on the additional analysis outlined in recommendation 4.

6.  City Council request the Province of Ontario to confirm the timing for delivering the approved Sheppard East LRT extension, with committed funding under the Building Canada Fund and the Toronto-Metrolinx Light Rail Transit Master Agreement signed in 2012, in order to inform transit network planning and business case analysis for Scarborough's future transit network.

Relief Line

7.  City Council approve the Pape-Eastern-Queen alignment for the Relief Line, and authorize the Chief Planner and Executive Director, City Planning and the Chief Executive Officer, Toronto Transit Commission to:

a.  Work in partnership with Metrolinx to confirm station locations for optimal connections between the Relief Line and SmartTrack/Regional Express Rail, including future extensions of the Relief Line; and

b.  Prepare the Environmental Project Report for the Relief Line and issue the Notice of Commencement for the Transit Project Assessment Process once ready to proceed.

8.  City Council authorize the City Manager in consultation with the Chief Executive Officer, Toronto Transit Commission to develop a Terms of Reference with the Province of Ontario and Metrolinx to advance the next phases of planning and design for the Relief Line, including extensions of the Relief Line north to Sheppard Avenue and west to the Bloor subway line.

9.  City Council request the Toronto Transit Commission and the City Planning Division to assess potential impacts associated with tunnelling and station construction during the detailed design phase of the project, and identify mitigation measures for private property owners, and conduct further public consultation where impacts to residential areas are identified, such as near Pape Avenue and Queen Street.

Cost-Sharing and Funding Implications

10.  City Council authorize the City Manager to undertake the following and report to City Council for its consideration:

a.  negotiate cost sharing and intergovernmental fundings arrangements with the Province of Ontario for shared costs associated with:

i.  implementing SmartTrack within the Regional Express Rail program;

ii.  extending an LRT along Eglinton West;

iii.  extending an LRT along Eglinton East;

iv.  operating and maintaining Metrolinx Toronto LRT projects;

v.  municipal utility and infrastructure within Metrolinx-owned rail corridors; and

vi.  any other outstanding transit related matter.

b.  review and report back on governance implications and arrangements to be put in place to effectively carry out the intergovernmental funding and cost share arrangements; and

c.  negotiate and enter into a funding agreement with the Government of Canada for the federal contribution towards the incremental costs associated with implementing the SmartTrack components within the Regional Express Rail program, per recommendation 1, and the Scarborough Transit Network per recommendation 3.

11.  City Council request the City Manager and the Deputy City Manager and Chief Financial Officer to report to City Council on the funding implications to the City associated with the proposed terms of cost-sharing arrangements provided for pursuant to recommendation 10.

12. City Council authorize the City Manager to include additional planning and design work for SmartTrack, Eglinton West LRT, Scarborough Subway Extension, Eglinton East LRT and Relief Line, as part of the priority list of projects to be submitted to the Government of Canada and the Province of Ontario under phase one of the Federal Public Transit Infrastructure Fund.

13.  City Council approve the creation of an Eglinton East LRT capital sub-project within the Corporate Initiatives Capital Program's Transit Expansion Initiatives project, with approval for a 2016 cash flow of $3 million and a 2017 cash flow of $4 million for a total of $7 million, for the purpose of advancing the Eglinton East LRT design work to 5 percent, fully funded from the Capital Financing Reserve Fund (XQ0011).

14.  City Council request the City Manager in consultation with the Chief Executive Officer, Toronto Transit Commission, the Deputy City Manager, Cluster B and the Deputy City Manager and Chief Financial Officer to report through the budget process on the feasibility of establishing dedicated and properly resourced functions for the coordination, analysis and implementation of the City's multi-billion dollar transit expansion initatives.

In March 2016, City Council considered the report EX13.3 Developing Toronto's Transit Network Plan: Phase 1, which provided a comprehensive update on transit expansion projects currently under assessment, including how each project contributes to the development of Toronto's future transit network. City Council directed staff to focus analysis on key options for each transit project. In particular, City Council:

- Approved SmartTrack/GO Regional Express Rail (RER) Integration options C and D for further study and removed from consideration the separate and parallel SmartTrack option, option A and option B.

- Removed heavy rail options on the western corridor for SmartTrack from consideration and requested a review of the Eglinton West LRT extension from Mount Dennis to Mississauga Airport Corporate Centre (MACC) and Pearson  International Airport.

- Removed from consideration the Bellamy and Scarborough Express Rail (SmartSpur) corridors for the Scarborough Subway Extension (SSE); and

- Approved the Pape to Downtown via Queen/Richmond as the preferred corridor for the Relief Line project.

City Council also directed additional analysis be undertaken in partnership with the Toronto Transit Commission (TTC) and Metrolinx to advance these projects for consideration at the June 2016 Executive Committee meeting. This report provides recommendations on the preferred options resulting from further technical, planning and initial business case analysis for SmartTrack/GO RER including Eglinton West LRT, the Scarborough Transit Network, and Relief Line. In particular this report recommends City Council approve the following options which further define the scope of each project:

- SmartTrack/RER Integration scenario with up to six new stations on the Stouffville/Lakeshore East GO corridor (Finch, Lawrence, Gerrard, and Unilever) and the Kitchener GO Corridor (Liberty Village and St. Clair West);

- An Eglinton West LRT extension with 8 to 12 stops between Mount Dennis and Renforth Gateway, as the western corridor for SmartTrack;

- Remove from further consideration the 3-stop SSE, and focus further business case analysis on a Scarborough Transit network solution that considers Express SSE options to Scarborough Centre and an extension of the Eglinton East LRT.

- Approve the Pape-Eastern-Queen alignment for the first phase of Relief Line, and authorize City and TTC staff to prepare the Environmental Project Report (EPR) to move towards the Environmental Assessment (EA)/Transit Project Assessment Process (TPAP).

The recommendations in this report further define the key projects which will form Toronto's transit network by 2031, and identify the next steps to advance to the next phases of analysis and discussion with the Province of Ontario, Metrolinx and the TTC.

The next steps to advance SmartTrack include:

- Advancing further technical and planning work in order to undertake the EA/TPAP processes required for the recommended SmartTrack/RER Integration scenario, the new SmartTrack stations, and the Eglinton West LRT extension from Mount Dennis to Renforth Gateway;

- Commencing negotiations on cost-sharing, project governance, asset ownership, fare policy, and project delivery for SmartTrack and the Eglinton West LRT extensions;

- Identifying the funding implications related to the City's share of costs for SmartTrack; and

- Undertaking further work with the City of Mississauga and the Greater Toronto Airport Authority (GTAA) in partnership with Metrolinx to refine options for extending the LRT between Renforth Gateway and Pearson International Airport as a next phase of the project.

The next steps to advance a preferred solution for Scarborough Transit include:

- Retaining the services of a third-party expert in rail transit construction and cost-estimation to undertake a risk assessment and detailed review of the TTC’s 5 percent design cost estimates for the Express McCowan subway, and other possible express subway alignments;

- Preparing the Environmental Project Report for the SSE Express subway in order to issue the Notice of Commencement for the TPAP once ready to proceed;

- Advancing the design on the Eglinton East LRT to a minimum of 5 percent in order to support decision-making; and

- Evaluating the SSE Express subway option in conjunction with the Eglinton East LRT extension to UTSC and Malvern, in order to determine the preferred network solution for Scarborough through a business case analysis.

The City Manager will bring a subsequent report to City Council with respect to the status of negotiations with the Province of Ontario, Metrolinx, and the Government of Canada, including funding implications for the City's share of costs associated with SmartTrack and Scarborough Transit.

The Relief Line project, a priority for the City and TTC, will continue per Council direction to advance planning, design and the EA/TPAP process for the first phase of the project. The first phase of the Relief Line between Danforth and downtown is a critical component of the longer-term vision for the new subway line which is envisioned to extend north to Sheppard Avenue and west to connect to the Bloor subway line. The City and TTC will work with the Province and Metrolinx to advance the next phases of the Relief Line.

The priority projects advanced in this report will be integrated into further refinement of the City's long term transit network plan through the Official Plan review process, Feeling Congested?, and forwarded to Metrolinx for consideration in the Regional Transportation Plan Review. As directed by City Council in March 2016, a report from the Chief Planner & Executive Director, City Planning will be presented in Q1 2017 with an update on the second phase of Toronto's long term transit network plan.

The City Manager has forwarded this report to the President and CEO, Metrolinx, and the CEO, TTC for submission to the July 11, 2016 TTC Board meeting.

Planning and Design Work

Planning and design work for the Scarborough Subway Extension (SSE) and Relief Line is funded through the Council approved Toronto Transit Commission (TTC) Capital Program within their respective capital projects. This report proposes further design work also be undertaken for the Eglinton East LRT extension.  It is recommended that Council approve the creation of an Eglinton East LRT capital sub-project within the Corporate Initiatives Capital Program's Transit Expansion Initiatives project, with a 2016 cash flow of $3 million, and a 2017 cash flow of $4 million, for the purpose of advancing the Eglinton East LRT design work to 5 percent, fully funded from the Capital Financing Reserve Fund (XQ0011).

This report also recommends the City Manager include eligible planning and design work for the SSE, Relief Line, SmartTrack and Eglinton East LRT as part of the priority list of projects to be submitted to the Government of Canada and Province of Ontario under the Federal Public Transit Infrastructure Fund (PTIF).

Capital Cost Estimates

It is important to emphasize that the following capital cost estimates are preliminary order of magnitude projections that are intended for planning purposes only. The estimates have not been thoroughly validated and will inevitably be subject to change as detailed design and project maturity occurs.

It is also important to note that some estimates were prepared by Metrolinx, and a greater level of scrutinity of the elements and basis of these estimates will be performed for the purposes of any future proposed cost sharing arrangements.

SmartTrack

This report recommends that City Council approve the completion of the remaining technical and planning analysis for the recommended scope of SmartTrack. The current high-level capital cost estimates for the recommended components of SmartTrack are provided below in Table 1. There is currently no funding approved for this project in the 10-Year Capital Plan.

Table 1. SmartTrack Capital Cost Estimates ($ billions)

Scarborough Transit Network

As shown below in Table 2, the current capital cost estimates in year of expenditure (YOE/Escalated$) terms for the Scarborough Transit Network is approximately $4.74 -$4.83 billion. This includes the estimated $3.16 billion capital costs for the SSE McCowan Express subway (including SRT life extension and decommissioning costs), and the Eglinton East LRT extension to UTSC with an estimated capital cost of $1.58 - $1.67 billion. Table 2 also provides the updated capital cost estimate of $4.6 billion for the SSE 3-Stop McCowan subway option (including SRT life extension and decommissioning costs).

Table 2. Scarborough Transit Network- Capital Cost Estimates ($billions)

Table 3 provides a summary of the plan adopted by City Council in 2013 for the funding of the original SSE 3-Stop McCowan option. The 2013 plan provided for a total of $3.56 billion in funding from Federal, Provincial and City contributions.

Table 3. 2013 Scarborough Subway Extension Funding Plan ($millions)

Based on the current capital cost estimates, an additional $1.18 - $1.27 billion in funding will be necessary to implement the full Scarborough Transit Network Plan. This estimate is subject to further design work, third party cost estimate assessments, and availability of federal and provincial funding.

This report recommends that the SSE McCowan Express option be further developed and reviewed by a third party to assess the potential for reduced capital costs. It also recommends that further technical and planning analysis be conducted on the proposed Eglinton East LRT extension to the Scarborough campus of the University of Toronto.

Relief Line

This report recommends that City Council approve the Pape-Eastern-Queen alignment for the Relief Line and the commencement of the Environmental Project Report and Transit Project Assessment Process for this project. Table 4 below provides the current capital cost estimate based on the recommended alignment.

Table 4. Relief Line Capital Cost Estimates ($billions)

Appendix 1 to this report outlines the accuracy ranges, and appropriate uses of cost and schedule estimates at various stages of project design per industry recognized guidelines developed by The Association for Advancement of Cost Engineering (AACE). AACE guidelines indicate that a Class 3 cost and schedule estimate (minimum 10% project design) should be used to authorize the project budget.

The full set of assumptions underlying the cost estimates can be found in the Financial Case section of the following appendices:

- Attachment 1- SmartTrack/RER Integration Initial Business Case
- Attachment 2- SmartTrack Stations
- Attachment 3- Eglinton West LRT Initial Business Case
- Attachment 4- Scarborough Subway Extension Initial Business Case
- Attachment 5- Eglinton East LRT Preliminary Options Analysis
- Attachment 6- Relief Line Initial Business Case
 

Committed Federal Funding

The Government of Canada has committed to funding Toronto transit expansion initiatives under various mandates and programs. A break down of these commitments are found in Table 5.

Table 5. Federal Funding Committments to Toronto Transit Expansion Projects ($millions)

¹  Building Canada Fund Major Infrastructure Component (BCF-MIC)

²  New Building Canada Fund (NBCF)- Provincial-Territorial Infrastructure Componenet (PTIC)

³  Public Transit Infrastructure Fund (PTIF)- Phase 2

Cost-Sharing, Funding and Financing

At the March 2016 meeting of City Council, the City Manager was directed to report to Executive Committee in June 2016 on information regarding cost sharing discussions for a range of transit initiatives, including reporting on any terms and conditions for City Council's consideration, prior to entering into any new or amended agreement with the Province of Ontario and Metrolinx[1]. Section 6 of this report provides an update on the status of cost sharing discussions with the Province of Ontario and Metrolinx.

This report recommends City Council authorize the City Manager to negotiate intergovernmental funding and cost share arrangements with the Province of Ontario on the various transit initiatives. The City Manager will report back on the negotiated terms for funding and cost-sharing for these projects with the Province and other relevant parties, for City Council's approval. The funding implications associated with the City's share of the costs will also be identified for City Council at that time.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council direct the City Manager and the Deputy City Manager and Chief Financial Officer to engage the public on the City of Toronto's long-term financial direction, such engagement to include information, consultation and dialogue to seek input and advice on establishing a robust fiscal framework that includes expenditure management strategies, meaningful governance and oversight of City programs and agencies, prudent management of financial and physical City assets, and adequate revenue generation from existing and new sources to achieve desired public services on a sustainable basis.

2.  City Council approve up to $500,000 for a consultation plan to take place over the balance of 2016 and spring 2017 to support the establishment of a long-term financial plan.

3.  City Council approve an increase of $250,000 gross at $0 net to the 2016 Non-Program Expenditure Budget to be funded from the Innovation Reserve for the delivery of Phase 1 of the long-term financial direction consultation process.

4.  City Council authorize the City Manager and Deputy City Manager and Chief Financial Officer to include up to $250,000 gross at $0 net in the 2017 Non-Program Operating Budget submission, to be funded from the Innovation Reserve, for the delivery of Phase 2 of the consultation plan, as required.

City Council at its June 6, 2016 meeting requested that the City Manager report to the June 28, 2016 Executive Committee with a proposed consultation plan on the long-term financial direction. This report responds to that request.

The public engagement strategy will seek input to support Council's decision-making and objectives for service excellence, value for residents and businesses, and accountable financial oversight. It will employ a range of methodologies in keeping with the complexity, urgency and critical nature of the topic and the diversity of participants and perspectives.

The City Manager and the Deputy City Manager and Chief Financial Officer propose engaging with the public and stakeholders from Fall 2016 through Spring of 2017, to gather input and advice on how to ensure Toronto is a modern, mature government with the appropriate fiscal resources in place to support a City of its size, complexity and aspirations. Participants will be provided with information about the City's long-term financial direction, budget and budget process and Council's strategies and plans in order to support an informed dialogue.

The engagement strategy will support public learning, and multiple opportunities to participate and provide input, and processes that encourage public discussion among participants and stakeholders with diverse opinions and perspectives. The strategy is built on best practices for public engagement including clarity of scope and methodologies that are purposeful, appropriate, accessible, transparent and accountable.

The consultation will be coordinated by the City Manager's Office and the Deputy City Manager and Chief Financial Officer in two phases, building towards a plan which incorporates the many components of the long-term financial direction.

Phase 1 (Fall 2016)

- Opportunities to learn about the City's financial framework, encourage exploration of the issues through dialogue and debate.

- Seek advice to guide decision-making on City revenues, expenditures and assets to support a multi-year revenue strategy, Expenditures Management Plan and maximize the use of assets in supporting service delivery;

- Identification of issues where there is significant public support, common interests, and where differences of opinion exists.

Phase 2 (Spring 2017)

- Build on the findings of Phase 1 seeking in-depth advice on key issues or areas requiring additional study, or where critical differences or divides exist.

- Consultations focused on the City's long-term financial direction, as well as strengthening the City's financial management and oversight of City programs and agencies and supporting Council in setting priorities and outcomes in order to deliver its strategic agenda.

- Engagement report with public input themed to the elements outlined in the long-term financial direction report and findings which support the implementation of a sustainable, coordinated, long-term financial strategy.

Details about the engagement process and findings, the City Manager's reports, and raw data will be posted to the City's website and Open Data page.

In each of 2016 and 2017 budgets, up to $250,000 will be required for costs associated with production of participant resources, online consultation tools, public opinion polling, advertisements, translation, interpretation, and data analysis for a total budget of up to $500,000. No capital costs are anticipated.

The total cost of the consultation plan will be budgeted in the 2016 and 2017 Non-Program Expenditure Budget, to be funded from the Innovation Reserve at no net cost. Authority is required to adjust the Non-Program Expenditure Budget by $250,000 gross, $0 net in 2016 and to include up to an equivalent amount for 2017, as required.

Consultation Key Components:

- Web-based engagement tools and applications

- Polling

- 3rd party consultants, facilitation and moderation, data analysis, reporting

- Online and print advertisements, notices, promotion

- Public and webcast meeting logistics

- Multilingual resources and accessible technologies and methodologies

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council receive this report for information.   

During the 2016 budget deliberations, City Council directed staff to engage an external consultant to perform an updated assessment of the revenue potential of certain new taxes permitted under the City of Toronto Act, 2006 (COTA).  The last time Council broadly considered new tax options was in May 2013 (2013EX31.3) in context of providing advice to Metrolinx regarding its transportation growth funding strategy.

The consulting firm KPMG LLP ("KPMG") was subsequently retained to undertake the Revenue Options Study.  This report serves to transmit the consultant study to Committee and Council.

The scope of work for the study includes those revenue options previously studied in 2007, as well as certain specified taxes currently not permitted under COTA.  In addition the report includes a jurisdictional scan for Municipal Land Transfer Tax (MLTT), Carbon Tax and Uber Registration Fee.  Finally there is a discussion on alternatives to these revenue options relative to property taxes.

The study and this report are also important groundwork for the Long-Term Financial Direction, and will be used for reference during the upcoming report in the fall of 2016.  In June 2016 Council directed the City Manager and Deputy City Manager and Chief Financial Officer to report in the fall on a strategy that would optimize existing and potential new revenues, the latter based on a set of principles for their selection.

Table 1 below is excerpted from the study and lists the revenue options, summarizes the range of net revenue potential based on the rates indicated, whether the tax is currently permitted under COTA, and the estimated time to implement (from the time City staff receive approval and direction to proceed to the time of revenue realization).

In addition, this report responds to two City Council directions during the 2016 budget deliberations relating to Municipal Land Transfer Tax ("MLTT"):  the feasibility of establishing a MLTT Stabilization Reserve Fund funded through budgeted surpluses of MLTT; and the advisability and feasibility of harmonizing the City's MLTT rate structure with that of the Province's Land Transfer Tax (LTT).

The KPMG study identifies certain new taxation options that will be considered as part of the Long-Term Financial Direction report in the fall of 2016.

This report also describes potential options for the City's Municipal Land Transfer Tax ("MLTT") that could also be considered as part of the Long-Term Fiscal Direction, including a strategy for managing budget variances in Municipal Land Transfer Tax.

The City Manager recommends that:

1.  City Council adopt in principle the directions to move to a centralized real estate operating model as broadly described in Appendix A of this report and authorize the City Manager to:

a.  recruit and appoint a transition team; and

b.  develop a transition strategy and implementation plan, in collaboration with affected City agencies and corporations (listed in Table 1), including a recommended governance model incorporating a core city building mandate that considers public policy objectives such as affordable housing, public realm, public transit and economic development and report further to Executive Committee in the first quarter of 2017.

2.  City Council establish a Council Advisory Body (Real Estate Advisory Committee) for the real estate transformation pursuant to the Terms of Reference in Appendix B to this report.

3.  City Council request the Boards of relevant agencies and corporations listed in Table 1 participate in the development of the transition strategy and implementation plan, and provide information as required.

4.  City Council‎ request that the City's affected City agencies and corporations listed in Table 1, during the development of the real estate transition strategy and implementation plan, co-operate and coordinate with the transition team, when undertaking any real estate transaction or development work of significance (whether in dollar value, City building potential, size of site, or otherwise). 

5.  City Council approve one-time transition costs over the next 9 months of $1.702 million ($0.788 million in 2016, $0.914 million in 2017) and 8 temporary positions with funding provided from the Innovation Reserve Fund (XR1713). This increase is for the establishment of a transition team, including a cross-functional Program Management Office for a 9 month period ($1.143 million) and for continued support from Deloitte LLP, the City's third-party consultant retained to support the City-wide Real Estate Review ($0.559 million).

6.  City Council amend the 2016 approved operating budget for Facilities, Real Estate, Environment and Energy by adding $0.788 million gross and $0 net and that the Chief Corporate Officer report back during the 2017 budget process on future requirements.

7.  City Council authorize the City Manager to negotiate and execute an amending agreement with Deloitte LLP to assist in the transition phase of the City-wide Real Estate Review initiative at cost of $0.550 million net of all applicable taxes and charges ($0.559 million net of HST recoveries) which increases the value of the existing contract from $0.2 million ($0.203 million net of HST recoveries) to $0.750 million ($0.762 million net of HST recoveries), on terms and conditions satisfactory to the City Manager and in a form satisfactory to the City Solicitor.

This report is further to City Council's direction to the City Manager to undertake a City-wide Real Estate Review to provide an objective assessment of the City's real estate services delivery model across applicable divisions, agencies and corporations. Its purpose is to provide an update on the status of this review and outline the City Manager's advice to Council related to the opportunities identified through the review process.

This report is intended to set the future direction for the City of Toronto's extensive real estate holdings, the scope of which has been fully captured for the first time through this review process.  The City of Toronto owns an expansive, diverse and valuable real estate portfolio with significant operational and capital expenditures. With holdings conservatively valued at $27 billion including 6,976 buildings covering 106.3 million square feet (9.87 million square metres) and 28,882 acres of leased and owned land, the City of Toronto, including all its divisions, corporations and agencies, has one of the most significant real estate portfolios in the country.

Although it is recognized that many of these assets can never be sold, ensuring the City is effectively positioned to strategically leverage its real estate portfolio, and maximize operating efficiencies is consistent with the City's Long-Term Financial Direction report recently adopted by Council. The Long-Term Financial Direction is focused on strengthening financial processes, strategic planning, oversight and decision-making, while taking a "whole of government" approach to all aspects of City operations, including those of divisions, agencies, and corporations. Further, optimization of the City's assets will aid Council in achieving long-term strategic objectives and city-building priorities.

Table 1 shows there are 15 entities identified as managing their portfolios with varying governance arrangements, mandates, strategic and operational objectives related to real estate assets:

Table 1: 15 City Real Estate Entities

Real Estate Services within the City's Chief Corporate Officer Organization provides day-to-day transactional real estate services to the majority of divisions and agencies. When entities manage their real estate portfolios autonomously, it limits the City's ability to achieve long-term strategic objectives, develop a holistic City building strategy, explore co-location opportunities, maximize the value of assets and find efficiencies in operations.

The City Manager retained third-party expertise from Deloitte LLP (Deloitte) to assist with this initiative in partnership with the Chief Corporate Officer Organization. Deloitte's review concluded that the status quo will not provide the appropriate framework to unlock land value potential and ensure the strategic use of land and building assets. As a result, a comprehensive plan to co-ordinate all City-owned real estate is required, producing long-term efficiencies and improvements for the City.

Deloitte's findings suggests that there is an opportunity for the City to align its real estate operations by creating a new leading edge centralized real estate entity that consolidates all core real estate and facilities management operations and functions over the next two to four years.

Deloitte advises that making these changes will help the City of Toronto to:

- Strengthen the City's ability to make strategic and informed decisions that promote city-building and  City-wide objectives;

- Maximize the value of the City's land and property assets and find savings through co-location and joint ventures while reducing the City's state of good repair backlog;

- Create more mixed-use developments that bring important services closer to residents;

- Develop improved technology platforms and streamlined work and approval processes; 

- Integrate modernized approaches to space planning to allow for enhanced staff productivity and efficiency; and

- Provide better solutions through proactive engagement with all stakeholders, including Council, City staff and the community.

The transformation process to successfully establish a new real estate entity will require significant executive leadership, change management, policy and practice re-engineering, organizational change and information technology investment.

As an immediate first step, the City will need to put in place a comprehensive transition framework, which will include engaging with senior executives and creating a transition team reporting to the City Manager.

The transition team will develop a strategy and a detailed implementation plan, including new policies and practices, and identification of a technology platform by the second quarter of 2017 to help facilitate the restructuring and move to the end state.  It will develop a core city building mandate that considers public policy objectives such as affordable housing, public realm, public transit and economic development.

Expenditures:

An upfront investment is required to successfully facilitate the transition process that will provide incremental benefits in future years. Achieving these benefits requires upfront investments of $1.702 million for an extension of Deloitte's contract to assist in the transition and the establishment of a transition team as noted in table 2.

Table 2 ($M)

The proposed transition team will be comprised of staff from various disciplines for a 9 month period. There will be a need for a net increase in the City's complement of 8.0 temporary positions for the 9-month period. In addition, project management, change management and data analysis resources will be seconded from the existing complement to join the transition team. The expertise needed within the transition team from various disciplines is identified in table 3.

Table 3

Extending Deloitte's contract is necessary to facilitate visioning sessions and workshops and to provide input in the development of a transition strategy. Amending the agreement with Deloitte LLP is in the amount of $0.550 million net of all applicable taxes and charges ($0.559 million net of HST recoveries). This revises the current contract value from $0.2 million ($0.203 million net of HST recoveries) to $0.750 million ($0.762 million net of HST recoveries).

The 2017 request of $0.914 million gross and $0 net, funded by the Innovation will be submitted for Council approval through the 2017 Budget process. 

There will be costs associated with restructuring such as changes in the corporate governance structure and to ensure that the City meets its obligations under various employment agreements. These costs will be reported to Council through future year budget processes.

Funding Source:

As at the end of December 31, 2015, Facilities, Real Estate, Environment & Energy (FREEE) reported a favourable net operating variance of $14.942 million or 22.5 percent below the 2015 Approved Net Operating Budget. This positive year-end variance was primarily due to the receipt and recognition of one-time revenues of $14.507 million with respect to the favourable ruling in the dispute over a long-term ground lease with Brookfield Properties Corporation for 2 Bloor Street East. The disputed lease payments had been made by Brookfield and recorded as deferred revenues pending the arbitration outcome.  As outlined in the staff report entitled "Operating Variance Report for the Year Ended December 31, 2015" to the Budget Committee on June 22, 2016, $3.850 million of the 2015 operating surplus will be transferred to the Innovation Reserve Fund (XR1713) to provide funding for the contract extension and the establishment of a transition team. Of this amount, $1.702 million will be required for ongoing support from Deloitte and the establishment of a transition team for a 9 month period. The remaining $2.148 million will remain in XR1713 for future use.

Potential Savings and Revenues:

By implementing this initiative, Deloitte estimates that the City would realize potential benefits of approximately 5 to 10 percent in savings of the $600 million cumulative operating budget (excluding Toronto Community Housing and Parks, Forestry and Recreation) of all real estate and facilities management operations within the relevant divisions, agencies and corporations. In addition, the City would generate revenues estimated at 5 to 10 percent of the portfolio value, excluding parkland. This increase would be achieved through a combination of process improvement, efficiencies in procurement and capital project delivery, improved asset management and utilization, alternative service delivery and portfolio optimization initiatives.

Actual savings will depend on the viability of the opportunities that will be determined through a more detailed review and implementation planning. The expected financial outcomes, once a consolidated framework of City-wide real estate activities are fully implemented, will be reported to Council through future year budget processes.

The City of Toronto will ensure continued financial management, governance and oversight of the new real estate entity as illustrated in the recommended structure and transitional state in figures 2 and 3 on page 11. 

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The City Manager recommends that:

1.  City Council extend congratulations to the following who have been selected by a community panel as recipients of the 2016 City of Toronto Access, Equity and Human Rights Awards: 

            Aboriginal Affairs Award:  Fizul Sima

            Access Award:  Maayan Ziv

            Pride Award:  Alex Abramovich

            William P. Hubbard Award:  Black Lives Matter Toronto

This report advises City Council of the results of the nomination process for the City of Toronto Access, Equity and Human Rights Awards. These Awards are the Aboriginal Affairs Award, the Access Award on Disability Issues, the Constance E. Hamilton Award on the Status of Women, the Pride Award for Lesbian, Gay, Bisexual, Transgender, Trans and 2-Spirit Issues and the William P. Hubbard Race Relations Award. 

The recipient of the Constance E. Hamilton Award is selected by the Women Members of Council and will be a supplementary item to this report.

There are no financial implications to this report.

The Deputy City Manager and Chief Financial Officer have reviewed this report and agree with the financial impact information.

 The Constance E. Hamilton Award Selection Committee recommends that:

1.   City Council confirm the selection made by the Constance E. Hamilton Award Selection Committee comprised of the Women Members of Council that Paola Gomez is the recipient of the 2016 Constance E. Hamilton Award.

The Constance E. Hamilton Award was established in 1979 and is named after the first woman elected in 1920 to municipal council in Toronto.  The award recognizes person(s) who have made a significant contribution to improving the social, economic, cultural and political status of women in Toronto. 

The Selection Committee has reviewed the nominations submitted by the public and selected the following recipient for her contributions toward improving the status of women in Toronto:

Paola Gomez

Paola Gomez has been supporting refugee women in Toronto as a Community Support Worker for many years. Paola Gomez is also a community activist working with women from Latin American backgrounds who have experienced violence. Paola is a member of PEN Canada and a leader within her Writers in Exile group. She offers courses in creative writting for women and enables women who have experienced sexual violence with the ability to speak about their experience and find healing.  She has been an advocate for women in her work with organizations like YWCA Toronto and Romero House. She has been a volunteer with Centre of International Justice.  She is a leader in the art scene in Toronto and the co-founder of SICK MUSE ART PROJECTS, a program she created to promote self-expression among women and children living in shelters and refugee homes. Through this program, Paola led the first group delivering art workshops at the hotels where Syrian refugees have been living since their arrival to Toronto.

Awards Presentation

The Constance E. Hamilton Award will be presented during the City’s Annual Human Rights Awards Ceremony in December when the following awards will also be presented:  Aboriginal Affairs Award, the Access Award on Disability Issues, the Pride Award for Lesbian, Gay, Bisexual, Transgender, Trans and 2-Spirit Issues and the William P. Hubbard Race Relations Award.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council treat that portion of the Council meeting at which this Report is considered as the Annual General Meeting of the Shareholder for Build Toronto by:

a.  appointing Pricewaterhouse Coopers LLP, Chartered Accountants, as the Auditor of Build Toronto for fiscal year 2016, and authorizing the Board of Directors of Build Toronto to fix the Auditor's remuneration;

b.  receiving the Build Toronto 2015 Annual Review, forming Attachment 1 to this Report;

c.  receiving the Build Toronto Financial Report to the Shareholder (which contains its 2015 audited consolidated financial statements), forming Attachment 2 to this Report;

d.  receiving the Build Toronto Inc. 2015 Compensation Disclosure and Analysis, forming Attachment 3 to this Report; and

e.  receiving Build Toronto's 2015 Value Add Report to the Shareholder, forming Attachment 4 to this Report.

2.  City Council request the City Clerk to forward the Build Toronto Financial Report to the Shareholder, forming Attachment 2 to this Report, to the Audit Committee for information.

This report contains recommendations for the actions necessary to comply with the requirements of the Ontario Business Corporations Act (OBCA) for holding the Annual General Meeting of the Shareholder of Build Toronto Inc. (Build Toronto), including receipt of its 2015 Annual Review and audited Consolidated Financial Statements December 31, 2015, as well as the appointment of its auditor for 2016.

This report also contains recommendations for receipt at the Annual General Meeting of the Shareholder of information disclosing the individual compensation of executive officers employed by Build Toronto in 2015, and Build Toronto actions to add value to transferred properties to date.

Subsequent to their 2014 year-end close, Build Toronto issued a $15 million dividend paid to the City in 2015. Subsequent to their 2015 year-end close, Build Toronto declared a $25-million dividend payable in 2016. The 2016 dividend will be contributed to the Capital Financing Reserve and be used to fund capital projects in accordance with the Council-approved non-debt funding strategy.

There are no other financial implications to the City resulting from the implementation of the recommendations in this report.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council treat that portion of the City Council meeting at which this report is considered as the Annual General Meeting of the Shareholder for Casa Loma Corporation by:

a.  Appointing Welch LLP Chartered Accountants, as the Auditor of Casa Loma Corporation for fiscal year 2016, and authorizing the Board of Directors of Casa Loma Corporation to fix the remuneration of the Auditor;

b.  Receiving the Casa Loma Corporation 2015 Annual Report forming Attachment 1 to this report;

c.   Receiving the 2015 Audited Financial Statements for Casa Loma Corporation, forming Attachment 2 to this report.

2.  City Council direct the City Clerk to forward a copy of the Casa Loma Corporation 2015 Audited Financial Statements, forming Attachment 2 to this report, to the Audit Committee for information.

This report contains recommendations for the actions necessary to comply with the requirements of the Business Corporations Act (Ontario) for holding the Annual General Meeting of the Shareholder of Casa Loma Corporation including receipt of its Annual Report and Audited Financial Statements for 2015 and appointment of the auditor for 2016.

In 2014 Casa Loma Corporation successfully transferred the operations of Casa Loma to Liberty Entertainment Group (LEG). Rent payments have been received through 2015 from Liberty Entertainment Group under the terms of the 20 year management agreement and included temporary management of the North Campus as well. Net operating income for 2015 was $1,129,466, with revenues of $1,519,343 and expenses of $389,877. A distribution of $2,012,974 was made to the City of Toronto for restoration work, resulting in a final accumulated surplus at year-end of $2,674,555.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council treat the portion of the City Council meeting at which this report is considered as the Annual General Meeting of the Shareholder for Lakeshore Arena Corporation by:

a.  appointing Welch LLP Chartered Accountants as the Auditor for Lakeshore Arena Corporation for the fiscal year 2016, and authorizing the Board of Directors of Lakeshore Arena Corporation to fix the remuneration of the Auditor;

b.  receiving the Lakeshore Arena Corporation 2015 Annual Report forming Attachment 1 to this report; and,

c.  receiving the Lakeshore Arena Corporation 2015 Audited Financial Statements, forming Attachment 2 to this report.

2.  City Council receive the "Lakeshore Arena Corporation – 2015 Executive Compensation Disclosure" forming Attachment 3 to this report.

3.  City Council direct the City Clerk to forward a copy of the Lakeshore Arena Corporation 2015 Audited Financial Statements, forming Attachment 2 to this report, to the Audit Committee for information.

This report recommends the actions necessary to comply with the requirements of the Business Corporations Act (Ontario) for the holding of the Annual General meeting of the Shareholder of Lakeshore Arena Corporation, including receipt of its Annual Report and Audited Financial Statements for 2015, and appointment of the auditor for 2016.  

This report also contains recommendations for receipt at the Annual General Meeting of the Shareholder of information disclosing the individual compensation of executive officers employed by Lakeshore Arena Corporation in 2015.

Lakeshore Arena Corporation has operated since 2011 without any operating subsidy from the City of Toronto. The Corporation closed 2015 with an accumulated deficit of   $3.375 million after interest and amortization, and at December 31, 2015 had long term debt of $40.095 million.

In November 2015, City Council approved an $8.1 million shareholder capital contribution to reduce the short term interest only loan from the City. As a return on this capital contribution, the City will receive 50% of the Corporation's annual net operating income which is to be allocated to the "Lakeshore Arena Capital Reserve Fund" with the purpose of providing a funding source for Parks Forestry and Recreation capital repair projects associated with the Arena. This is conditional upon the Corporation obtaining permanent third party financing is secured for the remaining $11.9 million balance of the loan, which is expected to take effect in the near future.  The balance of the Arena’s debt, $19.6 million at December 31, 2015, is held as a leasehold second mortgage by a commercial bank with a maturity of October 31, 2017.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.   City Council treat the portion of the Council meeting at which this Report is considered as the Annual General Meeting of the Shareholder for Toronto Community Housing Corporation and:

a.  receive the Letter to the Shareholder and Annual Report from the Toronto Community Housing Corporation's Chair of the Board of Directors and Interim President and Chief Executive Officer dated April 27, 2016 and related attachments, forming Attachment 1 to this report;

b.  receive Toronto Community Housing Corporation's 2015 Audited Annual Consolidated Financial Statements for the period ending December 31, 2015, and the auditor's report dated April 29, 2016, forming Attachment 2 to this report; and

c.  reappoint PricewaterhouseCoopers LLP, Chartered Accountants, as the auditor for Toronto Community Housing Corporation for fiscal year 2016 at the fee provided in the City's agreement with that firm.

2.  City Council approve Toronto Community Housing Corporation's proposed approach to developing its next Strategic Plan and Business Plan as outlined in the letter from the Interim President and Chief Executive Officer dated April 27, 2016, forming Attachment 1, Appendix D to this report.

3.  City Council direct the City Clerk to forward a copy of the "Toronto Community Housing Corporation Consolidated Financial Statements December 31, 2015", forming Attachment 2 to this report, to the Audit Committee for information.

This report recommends the actions necessary to comply with the requirements of the Ontario Business Corporations Act (OBCA) for holding an Annual General Meeting of the Shareholder of Toronto Community Housing Corporation (TCHC), including receipt of Toronto Community Housing Corporation's 2015 audited annual consolidated financial statements and appointment of the auditor for Toronto Community Housing Corporation for 2016.

This report also contains a recommendation for consideration at the Toronto Community Housing Corporation Annual General Meeting of the Shareholder related to Toronto Community Housing Corporation's Strategic Plan and Business Plan, and next steps.

Toronto Community Housing Corporation's 2015 financial statements indicate net income of $27.3 million (a decrease of $46.0 million over 2014), total assets of $3.255 billion (an increase of $185.7 million over 2014), and total liabilities of $2.304 billion (an increase of $162.4 million over 2014). Shareholder's equity increased by $23.3 million in 2015 to $951.0 million, and the value of Toronto Community Housing Corporation's housing projects increased by $81.0 million to $2.608 billion.

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council treat that portion of the Council meeting at which this Report is being considered as the Annual General Meeting of the Shareholder for Toronto Hydro Corporation by:

a.  adopting the recommendations of the "Toronto Hydro Corporation Report" dated May 24, 2016 in Attachment 1 to this report in order to re-appoint KPMG LLP, Chartered Professional Accountants, as the auditor for Toronto Hydro Corporation for 2016 and until a successor is appointed, to authorize the Corporation’s Board of Directors to fix the auditor's remuneration, and to approve the amended By-law No. 1.1 of the Corporation as approved by the Board of Directors of Toronto Hydro Corporation at its March 2, 2016 meeting, forming Appendices A and B to Attachment 1 to the Corporation's report;

b.  receiving the "Toronto Hydro Corporation 2015 Annual Report, "Powering Progress", the "Toronto Hydro Corporation 2015 Annual Financial Report December 31, 2015" including "Toronto Hydro Corporation Consolidated Financial Statements December 31, 2015 and 2014", the "Toronto Hydro Corporation Annual Information Form for the Year Ended December 31, 2015", the "Toronto Hydro 2015 Environmental Performance Report", the "Toronto Hydro Corporation Chief Executive Officer and Chief Financial Officer Certification of Annual Filings" and the "Toronto Hydro Corporation First Quarter Report March 31, 2016", forming Attachments 2, 3, 4, 5, 6 and 12 respectively to this Report;

c.  receiving the "Toronto Hydro Corporation Report to the Shareholder for the year ended December 31, 2015", the "Toronto Hydro Corporation Consolidated Financial Statements December 31, 2015", the "Financial Statements Toronto Hydro-Electric System Limited December 31, 2015 and 2014", and the "Financial Statements Toronto Hydro Energy Services Inc. December 31, 2015 and 2014", forming Confidential Attachments 7, 8, 9 and 10 respectively to this Report;

d.  receiving the two-part report "Executive Compensation Disclosure Toronto Hydro Corporation 2015", forming Attachment 11(a) and Confidential Attachment 11(b) to this Report.

2.  City Council direct that Confidential Attachments 7, 8, 9 and 10 remain confidential in their entirety due to the security of the property of the City and securities requirements arising from Toronto Hydro Corporation's status as an offering corporation under the Business Corporations Act (Ontario), R.S.O. 1990, c.B.16, Toronto Hydro Corporation's status as a reporting issuer under the Securities Act (Ontario), R.S.O. 1990, c.S.5, and the application by the Ontario Securities Commission of National Instrument 51-102. 

3.  City Council direct that Confidential Attachment 11(b) remain confidential in its entirety as it deals with personal information about identifiable individuals.

4.  City Council refer the "Toronto Hydro Corporation Consolidated Financial Statements December 31, 2015 and 2014", included as part of Attachment 3 to this Report, to the Audit Committee for information.

5.  City Council authorize and direct the appropriate City Officials to take the necessary actions to give effect thereto.

This report contains recommendations for actions necessary to comply with the requirements of the Business Corporations Act (Ontario), R.S.O. 1990, c.B.16 ("OBCA") for holding the Annual General Meeting of the Shareholder of Toronto Hydro Corporation ("THC") including receipt of Toronto Hydro Corporation's audited annual consolidated financial statements for 2015 and appointment of the auditor for Toronto Hydro Corporation for 2016.

This report also contains recommendations for receipt at the Annual General Meeting of the Shareholder of Toronto Hydro Corporation, other reports provided by Toronto Hydro Corporation as required by the Amended and Restated Shareholder Direction Relating to Toronto Hydro Corporation ("Shareholder Direction") which, in addition to the OBCA requirements, include:

-  Toronto Hydro Corporation's (THC) annual report and Toronto Hydro Corporation's report on environmental performance;

-  Toronto Hydro Corporation's report to the Shareholder, consolidated financial statements and financial statements for its subsidiaries. Note that Toronto Hydro Corporation has advised the City that Attachments 7, 8, 9 and 10 are confidential due to: the security of the property of the City; and securities requirements arising from THC's status as an offering corporation under the OBCA, THC's status as a reporting issuer under the Securities Act (Ontario), R.S.O. 1990, c.S.5, and the application by the Ontario Securities Commission of National Instrument 51-102;

-  Toronto Hydro Corporation's Annual Information Form, a public document published annually as required by the Ontario Securities Commission from Toronto Hydro Corporation as a public debt issuer; and

-  Toronto Hydro Corporation's disclosure of executive compensation in two parts, with the part in Attachment 11(b) being confidential as it includes personal information about identifiable individuals.

Toronto Hydro Corporation paid the City $56.25 million in dividends in 2015 and, in accordance with the City's Shareholder Direction to Toronto Hydro Corporation, and is expected to pay the City dividends of $63.35 million in 2016.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster A recommends that:

1.  City Council, as the ultimate owner of 58,500 rental units through its sole shareholder corporation, commit to Toronto Community Housing achieving the distinction of being a landlord of choice with a reputation for good repair, cleanliness, and safe and healthy buildings.

2.  City Council direct staff to develop, for Council consideration, an implementation plan, detailing the actions required to:

a.  transition a portion of the Toronto Community Housing Corporation portfolio to a new community-based non-profit corporation;

b.  transition a portion of the Toronto Community Housing Corporation portfolio to existing and interested community-based non-profit social housing providers;

c.  create more mixed-income communities within the social housing sector as a whole, including within Toronto Community Housing Corporation;

d.  create better buildings and more of them, including potential revitalization projects in the Etobicoke/York and Scarborough Community Council districts;

e.  decentralize operations including the creation of an innovation lab established on a lean management model, that actively engages with tenants and innovates in response to tenant feedback;

f.  strengthen partnerships, including detailed opportunities to work with community-based service providers, Local Health Integration Networks, the City, and other service providers to enhance capacity and quality of service delivery;

g.  reform the rent geared to income system, including opportunities to provide tenants with increased opportunities for choice within the social housing sector; and

h.  clarify Toronto Community Housing Corporation mandate and responsibilities within the shareholder direction.

3.  City Council direct that staff review the financial and budget implications and additional funding required to implement each proposed recommendation and report back in the first quarter of 2017.

4.  City Council direct that the Deputy City Manager, Cluster A strike a Toronto Community Housing Corporation Resident Advisory Group to help guide the development of the implementation plan.

5.  City Council direct that the Deputy City Manager, Cluster A strike an Implementation Steering Committee including representatives of the Toronto Community Housing Corporation Board and require City staff to help guide the development of the implementation plan.

6.  City Council request that the City and Toronto Community Housing Corporation undertake a detailed review of Toronto Community Housing Corporation's assets to help determine which buildings Toronto Community Housing Corporation should renovate; which buildings need to be replaced; which buildings may be transferred; and who is best to operate each buildings and that the initial findings be reported to Executive Committee in the first quarter of 2017.

7.   City Council commend the Governments of Ontario and Canada for recent program and policy announcements, but further encourage both governments to actively support Toronto Community Housing Corporation's capital repair program with new or existing tools including capital grants or interest-free loans, implementation of a program to convert existing high interest Canada Mortgage and Housing Corporation (CMHC) mortgages to reflect the lower rates in the current market environment, streamline approvals and donations or preferential sale of surplus public lands, while specifically encouraging the Government of Ontario to adjust utility scales and social assistance rent scales for those Torontonians living in social housing who are in receipt of Ontario Works or Ontario Disability Support Program supports.

8.  City Council thank the Task Force Members for their work in preparing both the Interim and Final Report on Toronto Community Housing Corporation.  

Toronto Community Housing Corporation (TCHC) has experienced significant challenges since its creation through the amalgamation of three housing entities: CityHome, Metro Toronto Housing Company Limited and Metro Toronto Housing Authority in 2002.  There have been a number of high profile governance and leadership challenges over the last six years.  More recently, financial issues have arisen due to a combination of factors, including a business model that is fundamentally broken, a significant state of good repair backlog, and lack of clarity in its mandate.  Security and community health concerns continue to pervade Toronto Community Housing Corporation.  The size of Toronto Community Housing Corporation and its numerous lines of business have limited its ability to respond to a broad range of communities, neighbourhoods and residents it serves. 

Toronto Community Housing Corporation was established as a sole shareholder corporation and intentionally provided with a block subsidy, in order to allow it to operate with minimal interference from the City.  However, throughout Toronto Community Housing Corporation's history, the City has been far more involved in the management and operations of Toronto Community Housing Corporation than originally anticipated.  This involvement has taken many forms, including: Councillor engagement in general, Board directions and relationships, and interactions between staff within the City and Toronto Community Housing Corporation.  This report recommends that Council take a more strategic role in both the management of the social housing system and in providing direction to Toronto Community Housing Corporation.

In January 2015, Mayor Tory established a Task Force, under the leadership of Senator Eggleton, to review Toronto Community Housing Corporation with a particular focus on how to improve conditions for tenants and how to create a sustainable business model.  This report considers the rationale, support for and implications of the Task Force's Transformative Ideas. Staff have undertaken broad stakeholder consultation, a review of other jurisdictions, developed an approach for detailed financial analysis and modelling, and held discussions with members of the Task Force.  Based on this review staff are recommending that Council support the five transformative ideas, with some minor modifications:

1.  (partial) transition to a new (and existing) community-based non-profit housing corporations;

2.  create mixed-income communities;

3.  better buildings and (where possible) more of them;

4.  decentralize operations/strengthen partnerships; and

5.  reform the rent geared to income system.

The Task Force final report was tabled by the Mayor at Executive Committee in January, 2016 and the Task Force recommendations were referred to staff to review and provide advice to Council. The following four assumptions guided staff's review and analysis of the Task Force recommendations:

1.  the status quo is not an option; significant change is required;

2.  improvements in the lived experience and quality of life for Torontonians living in Toronto Community Housing Corporation is central to a successful model;

3.  reform in the social housing system will inform changes in Toronto Community Housing Corporation; and

4.  the way forward must build financial and social sustainability within TCHC and the wider social housing system. 

While this report reflects a strategy for significant change, it is important to note that there remain various structural and systemic barriers that will continue to present challenges as the City moves towards a transformed social housing system.  Structural poverty, increasing incidence of vulnerability, and ever-widening disparities in wealth continue to present as challenges, not only to the outcomes sought through the design and re-design of social housing, but to the success of the City's Poverty Reduction Strategy, Strong Neighbourhoods Strategy and for City-building as a whole.  

This report sets out a set of strategic directions aimed at enhancing Toronto Community Housing Corporation's capacity to provide clean, safe, well-maintained, affordable homes for residents and to help foster neighbourhoods where residents have opportunities.  It also identifies new service models that will help improve the financial sustainability of Toronto Community Housing Corporation and enhance the quality of life of Torontonians who call Toronto Community Housing Corporation home.  Notwithstanding these recommendations, a higher level of investment by the City will also be required, moving forward.   

If implemented, the recommendations in this report will also help to enhance the capacity of the social housing sector and facilitate the development of new and innovative ways to deliver sustainable, supportive and tenant focussed social housing in Toronto. 

The social housing system in Toronto is under-funded.  While these challenges are not limited to Toronto Community Housing, it is clear that the funding model for Toronto Community Housing Corporation (unique in the social housing system) is the most severely and substantially broken.

The strategies set out in this report are part of a long term vision for Toronto Community Housing Corporation and the social housing sector as a whole.  This report is not intended to address the acute operational or capital pressures that Toronto Community Housing Corporation is facing in 2017.  The strategies are aimed at addressing the long-term financial sustainability of Toronto Community Housing Corporation and enhancing the quality of life for Torontonians living in social housing.    

The pressures on Toronto Community Housing Corporation's capital budget have been the subject of numerous reports to Council, including the report on the City of Toronto's long term financial direction.  Toronto Community Housing Corporation has an aging housing stock that is in need of increased capital requirements.  In 2013, Toronto Community Housing Corporation, along with the City, developed a Ten Year Capital Financing Plan that called for the City and the Provincial and Federal governments to contribute an equal one-third share of the $2.6 billion in funding needed over ten years to ensure Toronto Community Housing Corporation's buildings were adequately maintained.  The Federal and Provincial governments have not endorsed the ten year plan and there is no indication that they intend to provide any funding in this regard.  Significant investment is required in order to ensure that the existing housing portfolio is maintained.

In respect of operating pressures, the City of Toronto's long term financial direction report identified a $96 million operating deficit in Toronto Community Housing Corporation's 2017 budget.  This pressure is largely the result of static revenues and rapidly increasing expenses.  According to Toronto Community Housing Corporation's Ten Year Net Operating Cash Flow Forecast, cash inflows (revenues) are expected to remain relatively stagnant, growing from $534 million in 2016 to $587 million by 2025, representing average annual growth of 1.0 percent. Over this same period Toronto Community Housing Corporation's cash outflows (expenditures) are expected to grow by roughly 4 percent, largely as a consequence of increasing utility and maintenance costs.  Toronto Community Housing Corporation's utilities costs are projected to grow from $142 million in 2016, to $267 million in 2025, representing an average annual growth of 7.2 percent. Operating and maintenance costs are projected to grow from $152 million in 2016, to $210 million by 2025, representing average annual expenditure growth of 3.7 percent.

(See Figure 1 titled "Cumulative Growth in

Cash Inflows and Outflows" in the Financial Impact

section of the report (June 14, 2014) from the Deputy City Manager, Cluster A)

The transformative directions addressed in this report carry the potential of addressing the long-term social and financial sustainability of social housing portfolio but may also result in significant financial implications for the City and the other orders of government that cannot be quantified at this time. Staff will report back in the first quarter of 2017 on an implementation plan to transform Toronto Community Housing Corporation, including financial implications for the City.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster A and the Deputy City Manager, Cluster B recommend that:

1.   City Council approve the Post Construction Plan – Term Sheet attached as Appendix 1 to this report; such plan to include the creation of an independent not-for-profit charitable corporation (the "non-profit entity") to program, operate and maintain Project: Under Gardiner ("the Project") that anticipates calling for the inclusion of two members of City Council on its board of directors representing those wards in closest proximity to the Project, currently Wards 19 and 20.

2.  City Council amend the approved 2016 - 2025 Capital Budget and Plan for the Waterfront Revitalization Initiative to adjust Under Gardiner project funding in 2017; replacing $10.0 million in capital funding from the Project Donor with a $1.0 million contribution from the City Wide Parkland Development Cash-in-lieu reserve fund (XR2211) and a $9.0 million contribution from Development Charges (XR2114).

3.  City Council adjust the approved 2016 Operating Budget for City Planning by $2.0 million gross and $0 net, fully funded from the Project donations through a draw from the Gardiner West Public Realm Improvements Reserve Fund (XR3034).  These expenditures will reflect a transfer to the non-profit entity for the purpose of funding costs for the programming, operations and maintenance of the Project.

4.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, to negotiate and enter into an amendment to the Memorandum of Understanding, dated December 21, 2015, among the City of Toronto, Waterfront Toronto and Judy and Wilmot Matthews Foundation, on terms acceptable to the said Deputy City Managers and in a form satisfactory to the City Solicitor, to include the Council-approved Post Construction Plan and facilitate the completion of the Foundation's donation.

5.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B to negotiate and enter into any and all other agreements necessary to implement the Post Construction Plan, on terms acceptable to the said Deputy City Managers and in a form satisfactory to the City Solicitor.

6.  City Council request that the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, report back by the end of 2016 on specific details concerning the following:

a.  necessary legal agreements between the City and the non-profit entity;

b.  provisions to protect public access to new open space and amenities;

c.  protocols related to sponsor and donor recognition;

d.  management of events (including appropriate controls on scale, frequency, intensity); and

e.  collaboration between Fort York National Historic Site and the non-profit entity.

7.  City Council request that the Deputy City Manager, Cluster A, and the Deputy City Manager, Cluster B, following consultations with the non-profit entity, report back on options for a viable long-term funding strategy for the Project by June 30, 2021.

8.  City Council authorize City staff to make submissions for funding to the Government of Canada and the Province of Ontario and to pursue private funding and sponsorships to support programming, operations, maintenance and capital expenses for the Project.

9.  City Council endorse the grade-separated suspended bridge Alternative Design for the Schedule "C" Municipal Class Environmental Assessment Process for the Project.

10.  City Council authorize the General Manager, Transportation Services, to issue a Notice of Study Completion and to file the Environmental Study Report for the Fort York Boulevard Crossing Class Environmental Assessment Study in the public record for 30 days in accordance with the requirements of the Municipal Class Environmental Assessment pursuant to the Environmental Assessment Act.

11.  City Council authorize the acquisition of those lands located beneath the Gardiner Expressway and comprising part of 70 Iannuzzi Street for the purpose of facilitating Project: Under Gardiner based on an existing Record of Site Condition (RSC) and Certificate of Property Use (CPU).

12.  City Council endorse "the Bentway" as the official name for the Project.

This report recommends a governance and funding model for the programming, operations and maintenance of capital associated with Project: Under Gardiner (or "the Project"). Announced last year, the Project has been made possible by a $25 million donation from the Judy and Wilmot Matthews Foundation (the "Donor"). To date, the City has received $3 million, with the balance of funding to be provided once Council approves a governance and funding model satisfactory to the City, Donor and Waterfront Toronto, the parties to the Memorandum of Understanding ("MOU") for the Project.

The full vision for the Project involves the transformation of a 10-acre, 1.75-kilometre linear area beneath the elevated Gardiner Expressway into a new east-west multi-use trail and network of public amenities extending from west of Strachan Avenue to Spadina Avenue. The first phase involves the 5.8-acre area between Strachan Avenue and Bathurst Street with a trail connection extending to Spadina Avenue. Planned elements for the first phase include the "Strachan Gate Timber Pier" structure which provides performance and spectator space, a pedestrian and cycling bridge across Fort York Boulevard, a 450-metre ice skating plaza and programming components to activate the public space on a year-round basis.

Project: Under Gardiner will be a major civic and cultural asset that, much like Toronto's revitalized waterfront, will attract and serve residents from across Toronto. The Project will provide much needed public open space and amenities to a high density and rapidly growing area of Toronto. It will provide linkages to 70,000 residents in adjoining communities, including Fort York, Liberty Village, South Niagara, Bathurst Quay, Wellington Place and City Place. It will also connect multiple visitor destinations including Exhibition Place, Fort York National Historic Site and Toronto's waterfront.

Implementation of Project: Under Gardiner is being managed by Waterfront Toronto in consultation with other partners, including the City. Waterfront Toronto has retained the services of a consultant, HR&A Advisors, Inc. ("HR&A") to provide analysis and options for the long-term programming, operations and maintenance of the area. The HR&A study is included as Appendix 2 to this report.

There is consensus among the partners that a not-for-profit charitable corporation ("non-profit entity") is the most appropriate governance model for Project: Under Gardiner. A range of alternatives were evaluated by HR&A, Project partners and City staff. The non-profit entity was identified as the option that best addresses the interests of all partners and supports the governance objectives for the Project: to balance autonomy and authority; produce "best-in-class programming, operations and maintenance; secure diverse funding streams; leverage existing capacity and achieve sustainable, long-term management.

There are various examples of non-profit management of public space in Toronto and other jurisdictions across North America. Evergreen Brick Works and Artscape Wychwood Barns provide a limited precedent within the local context, although both sites involve outdoor spaces of more modest scale and complexity than that of Project: Under Gardiner. Comparable examples in other jurisdictions include Assiniboine Park Conservancy Incorporated in Winnipeg, Friends of the High Line and Central Park Conservancy in New York City, and Atlanta BeltLine Incorporated.  

If Council endorses the formation of the non-profit entity through this report a number of steps will be taken, including at least two reports back to Council in 2016 and 2021. The first step is to amend the MOU to incorporate an agreed-upon "Post Construction Plan" for project governance and funding that will include a clause establishing the non-profit entity. The terms and conditions of that Post Construction Plan are reflected in the Term Sheet attached as Appendix 1.

A City staff committee will be formed to negotiate further terms with the non-profit entity, once established, and to provide ongoing support as required. The local Councillors and community stakeholders will be consulted throughout this process. It is anticipated that the following areas of concern for the City and adjacent community will be addressed through these negotiations:

- necessary legal agreements between the City and the non-profit entity

- provisions to protect public access to new open space and amenities

- protocols related to sponsor and donor recognition

- management of events (including appropriate controls on scale, frequency, intensity)

- collaboration between Fort York National Historic Site and the non-profit entity.

Staff will report back to Council by the end of 2016 with details regarding the outcome of these negotiations and the proposed further terms for programming, operations and maintenance of the Project, including the roles and responsibilities of the non-profit entity and the City.

To support the early stage operations of the non-profit entity, this report recommends a one-time draw of $10 million in City capital funding to enable a matching $10 million of the Donor's funds to be directed to programming, operations and maintenance from 2016 to 2023. The City's $10 million contribution would be drawn from Development Charges and cash-in-lieu funds intended for the creation of parkland and recreational space. (These capital funds cannot be directly committed to operating expenses.) The Donor's $10 million operating contribution would be drawn from its original $25 million capital donation to the Project.

This $10 million City capital contribution will result in the creation of new public recreation and open space to serve a rapidly growing area of Toronto. It will leverage the $25 million donation and an estimated $20 million in additional non-City revenues, at a minimum, to be raised over the next eight years.

To facilitate this proposed exchange of City and Donor funds, Council authority is sought to amend the Council-approved Waterfront Revitalization Initiative 2016-2025 Capital Budget and Plan for the $25 million Under Gardiner project as follows:

- $10 million decrease in capital funding from the Project Donor

- $9 million in increased capital funding from eligible Development Charge funding

- $1 million in increased capital funding from the City Wide Parkland Development Cash-in-lieu reserve fund

The Donor's contribution of $10 million for programming, operations and maintenance would be placed in the Gardiner West Public Realm Improvements Reserve Fund (XR3034) and allocated by Council to the non-profit entity through the annual budget process. Staff recommend an eight-year cash flow for these funds as per the following table:

The City will allocate the Donor's funding in order to support the Project as proposed above. However, the non-profit entity will be an independent organization and will be responsible for managing to a board-approved budget.

HR&A has estimated that the non-profit entity will have a budget of $3.2 to $4.5 million annually for the first phase of Project: Under Gardiner based on a review of comparable organizations. These figures represent preliminary estimates that will be further refined once detailed programming and operational plans, and a funding strategy are developed. If additional revenues are identified to support a more ambitious program, the non-profit entity's budget may be at the high end of the estimated range. If the Project faces funding constraints, the budget will necessarily be managed to a lower figure. Ultimately, expenses will be constrained to the fixed amount of annual funding processed through the City as well as any other sources of revenue independently raised by the non-profit entity.

In addition to City contributions, the HR&A study identifies a number of funding options for the non-profit entity: fundraising (including federal and provincial sources), sponsorships and earned income. It is expected that the non-profit entity will develop these revenue sources and City funding will decrease as a share of total expenses in future years. The parties acknowledge the need for sustainable and predictable funding for the Project beyond the eight year start-up period. Therefore, City staff will work with the non-profit entity to develop a viable long-term (i.e., post-2023) financial strategy for Project: Under Gardiner and will bring this forward to Council for consideration by June 30, 2021.

The partners have already undertaken considerable fundraising activity. The City has submitted an application for funding through the Canada 150 Fund to support a major sesquicentennial festival for the launch of the Project: Under Gardiner in July 2017, as well as other first year programming. The Toronto Office of Partnerships is currently working with partners to identify additional sponsorship and philanthropic opportunities to support the Project.

This report also details the recommended preferred Alternative Solution in the Municipal Class Environmental Assessment (EA) study for the crossing of Fort York Boulevard. The recommended Alternative Design is a suspended pedestrian and cycling bridge, with an estimated cost of $5 to $6 million funded entirely by Donor capital funds. This option was strongly endorsed by the public through the EA consultation process. It will create a signature piece of infrastructure for the area that attracts visitors and serves as an asset for the community.

Endorsement from Council will enable completion and filing of the Environmental Study Report with the Ministry of the Environment and Climate Change, as well as construction within the implementation timeframes of July 2017.

Additional items in this report include the results of the "Reclaim the Name" campaign for the Project, an update on the air quality assessment within the study area and incorporation of hiring opportunities for youth through various programs.

The 2016 and 2017 Capital Budget years for the Waterfront Revitalization Initiative include funding for the implementation of Project: Under Gardiner, consistent with the $25.0 million donation from the Judy and Wilmot Matthews Foundation (the "Donor"). To date, $3.0 million of the donation has been received. In addition, $1.5 million has been retained by the Donor for its expenses related to the Project, including communications, program development, legal and administrative costs. The remaining $20.5 million is expected to be received in 2016 and 2017 in advance of Project spending.

This report recommends that Council approve a Post Construction Plan for the Project's governance and funding that will include establishing a non-profit entity to provide ongoing programming, operations and maintenance for the Project area.

To support the early stage operations of the non-profit entity, this report recommends a one-time draw of $10.0 million in City capital funding to enable a matching $10.0 million of the Donor's funds to be contributed to programming, operations and maintenance from 2016 to 2023.

Funding Source and Allocations for the Capital Plan

Staff have identified the opportunity to allocate $10.0 million in available funding for the Under Gardiner capital project as per the following:

- $ 9.0 million from the Parks and Recreation Development Charge Reserve Fund (XR2114)

- $1.0 million from the City Wide Parkland Development Cash-in-lieu Reserve Fund   (XR2211)

The maximum amount of Development Charge (DC) funding eligible for the Project is 90 per cent, or $9.0 million, of the City's total $10.0 million contribution.

The City's contribution will result in the creation of 5.8 acres of new public recreation and open space to serve a rapidly growing area of Toronto. This capital funding would be used to support design and construction of growth-related elements of the Project: Under Gardiner capital plan, including:

- Shingle Beach / Shoreline Plaza ($2.5 million for landscaping and $0.5 million for rigging lights)

- Skating Plaza ($3.5 million)

- Strachan Gate Wooden Pier ($3.0 million)

- active rooms ($0.5 million)

The addition of $10.0 million in Development Charge and Parkland Development Cash-in-lieu funding to the Council approved $25.0 million Under Gardiner capital project permits the reallocation of $10.0 million in Donor funding to programming, operations and maintenance.

Funding Source and Allocations for Programming, Operations and Maintenance

Conditional on Council approval of $10.0 million in capital funding noted above, the Donor has agreed to redirect $10.0 million of its donation to programming, operations and maintenance from 2016 to 2023. This $10.0 million would be deposited into Gardiner West Public Realm Improvements Reserve Fund (XR3034) and allocated by City Council to the non-profit entity through the annual budget process as part of the City Planning Operating Budget. (This amount is not sufficient to establish an endowment with a standard yield rate.)

In order to support sufficient and predictable funding for the non-profit entity during this initial phase, staff recommend an increase to the Council-approved 2016 Operating Budget for City Planning of $2.0 million gross and $0 net as first year allocation from the $10 million in Donor funds. 2016 and future year allocations for the remaining $8.0 million would be dispersed over an eight-year period as per the following table:

The balance of funding for the base budget and any additional programming costs would come from other revenue sources, including philanthropy, sponsorships and earned income. Staff will review cash flow estimates on an annual basis as part of future year budget processes and make adjustments as required for Council consideration.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to proceed with an Alternative Financing and Procurement (AFP) model for the implementation of the George Street Revitalization project using a Design-Build-Finance approach as described herein, and refer the project to the 2017 Capital Budget process for consideration by the City Manager and the Deputy City Manager and Chief Financial Officer with other City priorities.

2.  City Council authorize the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer, in consultation with the City Solicitor, to initiate negotiations towards an agreement with Ontario Infrastructure and Lands Corporation (IO), under which Ontario Infrastructure and Lands Corporation and other third-party advisors could:

a.  act as a commercial procurement lead for the Alternative Financing and Procurement approach, through to execution of project agreements and financial close; and

b.  propose a scope of services, terms and estimated cost for professional services required to support the Alternative Financing and Procurement delivery model.

3.  City Council direct the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to seek funding options for the George Street Revitalization project from the Government of Canada's 10-year Social Infrastructure Plan and from the Province of Ontario.

4.  City Council authorize the General Manager, Shelter, Support and Housing Administration, to begin implementing the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration 2016 Approved Capital Budget.

5.  City Council authorize the General Manager, Shelter, Support and Housing Administration, to negotiate with Mental Health Program Services of Metropolitan Toronto (commonly known as Habitat Services) for the purchase of service for up to 150 units of housing with access to on-site supports, as described in this report and endorsed by City Council in November 2015, and submit a business case for consideration by the City Manager and Deputy City Manager and Chief Financial Officer as part of the 2017 budget process.

6.  City Council direct the General Manager, Shelter, Support and Housing Administration, to approach the Province and request enhanced funding to provide additional supports as needed for clients housed in Habitat Services supportive housing units and to support clients with serious and persistent mental health issues moving into scattered site housing.

7.  City Council direct the Deputy City Manager, Cluster A, and the Deputy City Manager and Chief Financial Officer to report back by December 2016 to Executive Committee and Council with a status update on negotiations with Infrastructure Ontario and recommendations, if any, on terms and estimated costs for professional services required to support the Alternative Financing and Procurement procurement, further refined cost estimates, a governance structure, and an updated project schedule.

In November 2015, City Council endorsed the project scope for the George Street Revitalization (GSR) and the Seaton House transition plan.  Council directed staff to retain procurement option consultants and to report back by June 2016 on the recommended delivery model, the implementation funding needed and the resulting refined capital cost estimates for the revitalization and the Seaton House transition plan.  This report fulfils that directive.

As a result of the work undertaken by Ernst and Young Orenda Corporate Finance Inc. (EY), it is evident that the City stands to gain from a range of benefits available through a Public-Private-Partnership (P3), referred to by the Province of Ontario as Alternative Financing and Procurement (AFP).  The Gardiner Rehabilitation Project, approved by Council in September 2015, will be the City's first P3 project.

On the basis of Ernst and Young Orenda Corporate Finance Inc.'s findings and the extensive due diligence completed on the George Street Revitalization project over the past two years, staff recommend a Design-Build-Finance (DBF) procurement and delivery model.  A Design-Build-Finance model will yield an estimated Value for Money (VFM) of 8.1 percent, equivalent to $43.9 million on a present value basis.  A Design-Build-Finance model transfers the responsibilities and associated risks for the design, construction and financing to the private sector and leverages on project investments made to date.  A Design-Build-Finance model combines various aspects of project delivery under one contract, allowing for the bidding consortium to coordinate activities, realize economies of scale, be innovative with respect to design and scheduling, and manage potential cost escalation risks.  As a P3 model, construction payments for a Design-Build-Finance are made only upon substantial completion, projected at 2022 or beyond. 

Based on a Design-Build-Finance model, the revised construction cost estimate for the project is $498.8 million which includes $155.6 million in quantified retained risk which may or may not materialize. With the Seaton House transition cost estimate of $50 million and project expenditures to date of $13.2 million, the total capital cost for the George Street Revitalization is estimated at $562 million of which $475.2 million remains unfunded. 

This report recommends that the funding for the George Street Revitalization project be considered as part of the 2017 budget process with other City priorities.   It also recommends that the City initiate negotiations towards an agreement with Ontario Infrastructure and Lands Corporation (IO), to propose a scope of services under which Ontario Infrastructure and Lands Corporation could act as the commercial procurement lead.  Staff will report back with a status update on negotiations.

The report also provides an update on the status of the Seaton House transition plan.  Staff have been working with key stakeholders to develop a comprehensive transition plan for clients.  The plan, with a Housing First approach, includes purchase of service of up to 150 supportive housing units and 200 housing allowances.  The plan also considers best practices for transitioning a vulnerable population and involving clients in decision making.  Health and other forms of support are being identified with the clients and service partners.  The report seeks Council authority to begin implementing the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration (SSHA) 2016 Approved Capital Budget.

As directed by Council in November 2015, this report also provides a status update on negotiations with the Province of Ontario for the terms of possible rights to acquire the property and buildings at 311 Jarvis Street and 354 George Street.  The site, across the street from Seaton House, could be developed for affordable and mixed housing and other uses once vacated in 2022.  The Province is receptive to dialogue with the City regarding the future use of those properties.

Procurement Recommendation

The City retained Ernst and Young (EY) to conduct a procurement options analysis in accordance with Ontario Infrastructure and Lands Corporation (IO) methodology.  The Comments section of the report describes the process and the options that were reviewed.

The results of a quantitative Value for Money (VFM) analysis indicate that the recommended Design-Build-Finance (DBF) procurement is estimated to result in lower overall project delivery costs by a factor of approximately 8.1 percent, equivalent to $43.9 million on a present value basis, compared to the costs that would be expected under a conventional procurement (Design-Bid-Build).  The cost of the Design-Build-Finance procurement method is estimated at $498.8 million which will bring the total capital cost of George Street Revitalization project to $562 million as noted in the Table 1 below.

Total Refined Project Costs

Hanscomb Ltd. was engaged by the City in 2015 as a cost consultant for the George Street Revitalization project. Those construction costs, based on a Class "C" estimate, were used by Ernst and Young for modelling purposes.  Based on the recommended Design-Build-Finance method and associated capital cost estimates (but subject to the cost of the successful bid), the total estimated cost of the project is $562 million. In addition, the ongoing operating impact of capital is estimated to be $9 million, to be included in future year budget submissions.

This total estimated project amount includes expenses incurred to date, estimated costs for the Design-Build-Finance procurement and Seaton House transition costs, calculated as follows:

Table 1:  Summary of Total Project Costs (in millions of dollars)

*   Project Start refers to the date the project is approved and funded.

** IAH is the provincial Investment in Affordable Housing Program.

Staff recommend that City Council consider the procurement delivery model and the associated costs for the George Street Revitalization project and forward the project to the City Manager and Deputy City Manager and Chief Financial Officer for consideration with other City priorities as part of the 2017 budget process.  Project approval will require additional debt funding in the amount of $475.2 million which currently falls outside the City debt affordability target of 15 percent.

Design-Build-Finance Model and Associated Costs

Project costs for the Design-Build-Finance model were calculated as follows:  

-   Construction: $458.9 million, includes:

-          base costs:                                                             $278.1 M

-          private financing costs:                                         $  25.2 M

    Sub-total (payable at substantial completion)      $303.3 M

-          quantified retained risks

           (which may or may not materialize)                      $155.6 M

                                                                           $458.9 M

-   Project ancillaries (inclusive of all soft costs

     from June 1, 2016 to the end of construction)                    $  39.9 M

    Total                                                                                     $498.8 M

For Design-Build-Finance procurement, the contractor would finance the work during design and construction and at substantial completion, the City would pay 100 percent of the capital costs:  construction plus financing, a total of $303.3 million. However, the City would be responsible for ancillary costs including owner's engineering consultants both pre-construction and during construction, at a cost of $39.9 million. 

Quantified retained risk is the estimated value of major P3/Alternative Financing and Procurement project risks retained by the City (i.e. not transferred to the private sector) to undertake the project under a particular procurement delivery model.  Figures are indicative in nature, and based on a risk matrix agreed by the City with input from its consultants through multiple workshop discussions led by Earnst and Young.

Under Design-Build-Finance, design risk would be transferred to the private sector.  The total risk-adjusted cost of the Design-Build-Finance model of $498.8 includes $155.6 million to address quantified risks retained by the City, such as City approvals, scope changes initiated by City, latent defects, and termination for convenience. Should any of these risks not materialize, any unused amount is retained by the City.

Under the recommended approach and preliminary project schedule, the City would not make any construction payments until substantial completion, projected at 2022 or beyond.  Around the time of completion, the City would begin to issue the necessary debt to finance the project, and start to incur debt service costs in the operating budget.  These debt service costs would normally be funded from the tax base.

All of the estimates above are based on current project cost estimates, schedules and applicable interest rates, and would be built into the preliminary 2017-2016 Capital Budget and Plan.

Transition Plan:  Capital Budget

The Shelter, Support and Housing Administration 10-Year Capital Plan approved by City Council in February 2016 includes funding in the amount of $69.578 million to be directed towards project management and redevelopment costs for the George Street Revitalization project.  The Seaton House transition plan capital costs have been estimated at $50 million.

The transition plan's capital costs include the acquisition and renovation of two new permanent shelter sites and renovation costs for two leased sites.  The amount for one-time capital costs for the acquisition of two sites, as indicated in the report adopted by Council in November 2015 is $20 million and the estimated renovation costs for the four sites is $23 million. 

This report recommends that Council authorize the implementation of the Seaton House transition plan, with funds available in the Shelter, Support and Housing Administration 2016 Approved Capital Budget.  There are three factors contributing to the recommendation:  (1) Seaton House does not meet the needs of vulnerable men and must be redeveloped regardless of the George Street Revitalization project; (2) the search, acquisition and renovation of suitable sites is a long and complex process; (3) should Council approve the George Street Revitalization project, the site must be vacant and ready for demolition within a limited time-frame or the City risks project delays and penalties.

Should Council defer the George Street Revitalization project or not approve funding, Shelter, Support and Housing Administration would seek Council authority to allocate funds from its Approved 10-Year Capital Plan as part of future-year budget processes, to continue implementing the transition plan.  The four new sites would be retained by Shelter, Support and Housing Administration to maintain service levels until an alternative plan were to be submitted to Council for consideration.

Other Funding Sources

Long-Term Care

The long-term care home component will qualify for funding from the Ministry of Health and Long Term Care (MOHLTC). Funding is based on the Ministry of Health and Long Term Care Construction Funding Subsidy Policy for Long-Term Care Homes, 2015, providing a per diem amount for a 25-year period after construction is completed. The amount is based on $16.65 base construction per diem plus $1.00 additional per diem if LEED Silver is achieved.  The total for the 25 years is $60.9 million ($17.65 X 378 beds X 365 day/year X 25 years).

The cost of construction for a long-term care home is cost shared with the Ministry of Health and Long Term Care, but the service provider is required to provide upfront funding for each redevelopment project. Accordingly, the City must pay upfront the full cost of construction before any provincial contribution is forthcoming. As the provincial subsidy is spread out over 25 years, the actual present value of the provincial $60.9 million would be less in terms of today's dollars.  At its May 2015 meeting, City Council adopted a motion that requested the Minister of Health and Long-Term Care to review the Enhanced Long-Term Care Home Renewal Strategy and include a construction funding escalation factor above the fixed rate per diem to account for inflation.

Section 37

Staff are in discussions with the Ward Councillor to determine if Section 37 funds could be allocated to heritage restoration and to public realm improvements for the project.  It is estimated that restoration, adaptive reuse and integration of six heritage buildings will cost approximately $15.9 million and are included in the capital budget.  Public realm improvements in front of the City property on the east side of George Street are estimated at $1.21 million and are also included in the capital budget.  Public realm improvements across from the City property and on the west side of George Street are estimated to cost approximately $2.6 million and are not included in the budget. No estimates are available for public realm improvements beyond this area.

Green Funds

There will be many green initiatives incorporated into the George Street project.  The site is anticipated to have LEED Silver designation and to meet Toronto Green Standards Tier Two.  Staff are exploring potential sources of funding incentives for the green initiatives.

Acquisition of Adjacent Properties

As authorized by Council in July 2013 (EX33.17), the City has acquired the eight properties adjacent to Seaton House lands required for incorporation into the redevelopment project in the amount of $9.377 million.  The initial acquisition of five properties occurred in April of 2014 and the remaining three were finalized in January of 2016.  The acquisition of the properties was funded from the Land Acquisition Reserve Fund (LARF) and included in the George Street Revitalization project capital costs.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster A, the Deputy City Manager, Cluster B, and the Deputy City Manager and Chief Financial Officer recommend that:

1.                         

a.  City Council approve the provision of a construction loan guarantee (the "Construction Loan Guarantee") on behalf  of the YMCA of Greater Toronto ("YMCA") to their lender, Ontario Infrastructure and Lands Corporation ("IO") (the "Lender"), to fund  the construction of a YMCA community centre at 505 Richmond St. W. (the "Project"), in an amount not to exceed $30.0 million, inclusive of all interest costs payable by the YMCA, for a period ending upon substantial completion of the Project, for the purposes of allowing the YMCA to secure $30.0 million in construction financing from  the Lender to complete the construction of the Project;

b.  City Council approve the provision of a capital loan guarantee (the "Capital Loan Guarantee") on behalf of the YMCA to the Lender, in an amount not to exceed $9.5 million, inclusive of all interest costs payable by the YMCA, for a period commencing upon substantial completion of the Project for a term not to exceed 30 years, for the purposes of allowing the YMCA to secure a fixed-term amortizing mortgage to be provided by the Lender for any remaining portion of the construction loan following completion of Project construction.

2.  City Council authorize the Deputy City Manager and Chief Financial Officer to negotiate and the City to enter into the Construction Loan Guarantee and the Capital Loan Guarantee (together the "Guarantees")  and all related agreements including the agreements identified in the Term Sheet attached as Appendix A to this report, which agreements shall be on terms and conditions as outlined in Appendix A together with such other or amended terms and conditions, and ancillary agreements, as are acceptable to the Deputy City Manager and Chief Financial Officer and in a form satisfactory to the City Solicitor.

3.  City Council deem the Guarantees to be in the interest of the City.

4.  City Council authorize the City to enter into a Community Use Agreement with the YMCA for the Project, having a term ending 30 years after commencement of operation, substantially on the terms set out in Appendix B to this report, and on such other terms and conditions deemed necessary and appropriate by the City Solicitor and the General Manager, Parks, Forestry and Recreation.

5.  City Council direct the Chief Planner and Executive Director, City Planning, to allocate those funds secured for community services and facilities from the developments identified in Appendix C towards this Project, including any increases as a result of indexing at the time of payment.

6.  City Council direct the Chief Planner and Executive Director, City Planning, to prioritize this Project as a community benefit for future development applications within, or within close proximity of the King Spadina Secondary Plan area until such time that the City's contribution of $19.0 million plus its share of accrued interest is fully recovered.

7.  City Council authorize payment by the City of up to $19.0 million, plus interest accrued on the City's share of Project cost (2/3 of the capitalized interest from the construction period) to the YMCA or its Lender to repay a portion of the construction loan upon substantial completion of the Project, on terms and conditions satisfactory to the Deputy City Manager and Chief Financial Officer and the General Manager, Parks, Forestry and Recreation, and in a form satisfactory to the City Solicitor.

8.  City Council direct the Deputy City Manager and Chief Financial Officer, should there be insufficient Section 37 and Section 45 funds available from Ward 20 at the time the payment referred to in Recommendation 7 is required to be made, to report to Council on a source of  funds to fulfill the City's funding contribution to the Project which funds are to be recovered from future Section 37 and Section 45 funds in Ward 20, with interest charged on the account at 3 percent per annum, until such time that all the funds advanced are recovered.

9.  City Council authorize and direct appropriate City Officials to take such action as may be necessary to implement the foregoing.

In September 2015, City Council adopted a report from the General Manager, Parks, Forestry and Recreation, and Chief Planner entitled '505 Richmond Street West – Proposed YMCA Centre', and in doing so, indicated City Council's support of a YMCA centre as an appropriate use in the redevelopment of this formerly City owned-property, now owned by Build Toronto (the "Project").  Council also agreed, in principle, that existing and future Section 37 and 45 funds from Ward 20 be used to fund the City's two-thirds share of construction cost with the YMCA contributing the other one-third share.

The obligations and business terms between the numerous parties involved have now been detailed, and are described in the body of this report and summarized in the attached term sheet for City Council consideration.  The YMCA construction and fit-out cost estimate for the proposed recreation centre is approximately $30 million.  Build Toronto, on behalf of the City, will contribute the land value to the YMCA at nominal cost.  The YMCA will enter into a 'Guaranteed Maximum Price' construction contract with the developer for the 'shell' of the facility with an option for fit-out by the same developer.  

The YMCA will enter into a construction financing agreement with Infrastructure Ontario (IO) for the full construction cost, which will be converted to a long-term mortgage (up to thirty years) at substantial completion.  The City will advance its two-thirds share ($19 million plus accrued interest) at substantial completion (expected by the end of 2019), and the YMCA will be obligated to fund the balance of the construction cost.  The City will be required to provide a loan guarantee to IO on behalf of the YMCA for $30 million through the construction phase, which guarantee will be reduced to $9.5 million at substantial completion to support the YMCA's construction take-out mortgage.  The actual amount of the mortgage to be guaranteed is expected to be less depending on the outcome of the YMCA's fundraising for this project.

Funds for community services and facilities pursuant Section 37 and 45(9) of the Planning Act  from Ward 20 in the amount of approximately $5.3 million, as listed in Appendix C, have been secured through agreements with the City and are able to be allocated by the Chief Planner toward this Project when those developments proceed.  In some cases the funds have already been received.  In one case, a companion report will be brought forward by City Planning through Toronto East York Community Council to authorize a redirection of funds for this purpose.  City Planning advises that there are numerous other development projects pending and others that are contemplated within and around the King Spadina Secondary Plan Area which could result in by-laws that include Section 37 contributions.  A recommendation has also been included providing that the Chief Planner be directed to prioritize this Project as a community benefit in the context of pending and future development applications until such time as related Section 37 and 45 funds raised in this area are sufficient to pay the City's contribution to this project.  If there is a shortfall in raising the City contribution to the project of $19 million (plus 2/3 share of accrued interest) at substantial completion, the City will advance its funding obligation from a source to be determined at that time, to be recovered from future Section 37 and 45(9) funds in Ward 20.  

City Corporate Finance staff have reviewed the YMCA's business model and pro-forma for this project, and are satisfied that the business model can support the proposed mortgage of up to $9.5 million over the thirty year (or less) term of the IO loan.  The City will require that various agreements be entered into to protect the City's financial interest during both the construction phase and the community-use operating term.  

The YMCA will enter into a 30-year community-use agreement with the City.  The YMCA will also be responsible for all operating and life-cycle costs of the facility.  If the YMCA does not meet its obligations, the City can assume control of the facility.  At the end of the 30-year operating period, there will be no further obligation on the YMCA, and the YMCA is free to continue operations on site or sell to a third party (with the City having a first option to purchase), and in which case the City shall be reimbursed for the fair market value of the land at that time.

In September 2015, City Council indicated its support in principle for funding the City's two-thirds share of construction costs for this Project from existing and future Section 37 and 45 funds in Ward 20.  Committing to funding significant projects without secured funding in hand incurs risk that the funding may not materialize, or may materialize later than expected.  The City's share of the Project cost is $19 million (plus the 2/3 share of interest accrued during construction), payable upon substantial completion (end of 2019).  As of the date of this report, approximately $5.3 million in Section 37 and Section 45 funds from Ward 20 have been secured through agreements with the City and are able to be allocated by the Chief Planner towards this Project (see Appendix C), leaving a balance of approximately $14 million to be raised by the end of 2019.  City Planning advises there are sufficient development projects planned in Ward 20, including an assumption that 80 percent of the future community benefit value would be applied to this Project, such that the risk in raising the required funds is minimal.  However, there is always a risk that market conditions or local priorities may change in the future, delaying the availability of such funds.  

The City is also being requested to provide a loan guarantee for this project, in two steps.  First, given the Project will be contained within the strata of the overall development project, a construction completion guarantee is being sought by the developer. Ontario Infrastructure and Lands Corporation will provide the full construction financing, but requires a City guarantee for the $29 million construction cost, plus an allowance for estimated accrued interest during construction of $1 million, for a total not to exceed $30 million.  Ontario Infrastructure and Lands Corporation and the YMCA will be monitoring the construction draws and progress.  It is expected that this guarantee would be in effect for a period of approximately two years.  Upon substantial completion, the City will advance $19 million (plus its  2/3 share of accrued interest) to the YMCA, and the YMCA will convert the balance of the construction loan to a long-term, but not to exceed thirty years, amortizing mortgage, and the City's guarantee will fall to an amount not to exceed $9.5 million over that term.  The amount could be lower or nil, depending on the outcome of the YMCA's fundraising plan, and/or the loan term could be less than thirty years. 

A summary of the costs and sources of funds to complete the construction is contained in the following tables below.

Table 1

Summary of Project Construction Costs

($ millions)

Table 2

Construction Funding Sources

* Plus accrued interest from construction loan shared similarly (City 2/3, YMCA 1/3)

** Proposed amounts shown, Ontario Infrastructure and Lands Corporation loan may be up to a maximum $9.5 million, and guaranteed by the City

Issuance of a capital loan guarantee is considered to be a financial commitment of the City.  However, there is no direct cost to the City for providing this guarantee unless the organization defaults on its obligation and the City cannot recover its funds. 

City staff have reviewed the YMCA's business plan for this Project and are satisfied that the business model can support the repayment of up to a maximum of $9.5 million over the mortgage term.  The City will require various agreements be entered into to protect the City's financial interest during both the construction phase and the subsequent operating term.  

The applicant and the project meet all of the eligibility requirements established for loan guarantee requests as amended and adopted by Council in 2014.  Furthermore the amount of the guarantees being requested falls within Council's financial limit for total loan guarantees outstanding.

The Deputy City Manager and Chief Financial Officer and the General Manager, Economic Development and Culture recommend that:

1.   City Council approve the City of Toronto's participation in Toronto Global for an initial three year period, ending March 31, 2019 subject to the negotiation  and execution of  a three year funding agreement with Toronto Global and the Municipalities of Brampton, Mississauga and Caledon; the Regions of Durham, York and Halton, (the "Funding Agreement") in a form satisfactory to the City Manager, City Solicitor and Deputy City Manager and Chief Financial Officer and further subject to the following:

a.  the City's annual contribution amount for each year being $890,412 with adjustments in the first year for transition aspects described in this report, such adjustments and written undertaking to be agreed by the Board of Directors of Invest Toronto, the City Manager, the City Solicitor and the Deputy City Manager and Chief Financial Officer;
 

b.  the Province of Ontario and the Government of Canada committing to enter into funding agreements with Toronto Global in the amount of $2.5 million per year for at least three years; and
 

c.  the Funding Agreement is to include a detailed business plan to the satisfaction of the General Manager, Economic Development and Culture with vision, mission, governance, organization structure, services, sales strategies, marketing and branding directions, specific performance metrics detailing the targeted deliverables and co-ordination protocols.
 

2.  City Council direct that the business and affairs of Invest Toronto be wound up after an orderly transition to Toronto Global and request that the Board of Directors of Invest Toronto, following such consultation with City staff as necessary:

a.  report to the shareholder on the full details of the transition process; and

b.  submit for shareholder approval a proposal for the winding up of the business and affairs and distribution of the assets of the corporation.

3.  City Council direct Toronto Port Lands Company (TPLC) to continue to provide grants to Invest Toronto at the rate of $2.7 million per annum until Invest Toronto ceases operations and to pay any portion of this amount not required by Invest Toronto in 2016 to the City for the purposes of funding the City's first year obligation to Toronto Global.  City Council further direct the Deputy City Manager and Chief Financial Officer to determine through the 2017 Budget process the appropriate source of funding for subsequent years.

4.  The General Manager, Economic Development and Culture be authorized to negotiate and execute the Funding Agreement with Toronto Global in accordance with the above recommendations.

Since the last update report considered by City Council at its September 30, 2015 meeting, significant progress has been made towards transitioning from the interim non-profit "Newco" to a new, permanent, GTA Regional Foreign Direct Investment (FDI) attraction agency to be named "Toronto Global".  This report provides a high level overview of activities to date and recommends the following:

That the City of Toronto become a funding party of Toronto Global, together with the Municipalities of Brampton, Mississauga and Caledon; the Regions of Durham, York and Halton; the Provincial and Federal Governments; and that the General Manager of Economic Development and Culture be authorized to negotiate and sign a Funding Agreement subject to approval by the, City Manager, City Solicitor and the Deputy City Manager and Chief Financial Officer consistent with terms set out in this Report.

That Invest Toronto be closed after an orderly transition to Toronto Global and Invest Toronto's Board be requested to report to the shareholder on the full detail of the transition process and to work with the General Manager of Economic Development and Culture to negotiate a financial resolution with Toronto Global of all the transition matters described in this Report.

Invest Toronto's Board of Directors be requested, following such consultation with City staff as necessary, to submit for shareholder approval a proposal for the winding up of the business and affairs, distribution of the assets and dissolution of  Invest Toronto.

That Toronto Port Lands Company (TPLC) be directed to continue to provide a grant to Invest Toronto at the current rate (annual amount of $2.7 million) until Invest Toronto stops operating as an FDI agency at which time TPLC pay any portion of the budgeted Grant not required by Invest Toronto in 2016 to the City for the purposes of funding the City's first year obligation to Toronto Global. Thereafter, the funding source for Toronto Global is to be determined through the 2017 budget process.
 

Efforts to establish Toronto Global have involved the Cities of Toronto, Mississauga, Brampton and Caledon; the Regions of Halton, York and Durham; the Province of Ontario and the Government of Canada. The Province provided $730,000 in seed funding for start-up costs and to help build consensus on Toronto Global's strategic priorities and operational model. The interim CEO has convened and chaired regular meetings of a working group comprised of Economic Development Officers (EDO) from the funding municipalities to advance these activities. The Province has committed $2.5 million per year for three years.  The Federal government is currently seriously considering a funding commitment of $2.5 million per year for three years.

Based on past experience and background research undertaken in the lead-up to Toronto Global, it is anticipated that the City will realize an increased number of Foreign Direct Investment leads arising from a more resourced and better co-ordinated regional Foreign Direct Investment attraction agency.

Currently, Invest Toronto's operating costs are about $2.7 million of which the City-owned Corporation, Toronto Port Lands Company (TPLC), provides almost all the funding through a grant. This funding arrangement was established when Invest Toronto was formed in 2009. Once the transition to Toronto Global is complete, these grant amounts will not be needed for Invest Toronto.

If the City of Toronto enters into the Funding Agreement with Toronto Global, the City will be required to contribute $890,412 annually, for the initial three year term of the agreement, based on a per capita funding model and tied to the Province's fiscal year (April 1 to March 31).

The funding source for the City's first year contribution to Toronto Global is recommended to be TPLC. This report recommends that the Deputy City Manager and Chief Financial Officer determine through the 2017 Budget process the appropriate source for the City's funding commitments to Toronto Global in 2017 and 2018.

In 2016, there are a number of transitional aspects related to Toronto Global's start-up and related impacts to Invest Toronto:

- The staffing of Toronto Global is to be determined. The Greater Toronto Marketing Alliance (GTMA) has essentially closed operations and its staff are now housed alongside Invest Toronto staff in Invest Toronto's offices.

- The lease for Invest Toronto's offices including recent leasehold improvements to accommodate Toronto Global.

- Invest Toronto operational commitments (computer and office equipment services, etc.)

- Invest Toronto financial (cash) and tangible (furniture and equipment) assets

- There will be some wind-up costs for Invest Toronto (auditing, etc)

- Invest Toronto has a shared services agreement with Toronto Port Lands Company (TPLC) for accounting, payroll and other back office functions. Toronto Global is currently negotiating with TPLC to do the same thing.

- Toronto Global has expressed interest in assuming or acquiring significant aspects of Invest Toronto's operations.

This report recommends that the Board of Invest Toronto report to the shareholder on the transition process and submit for approval a proposal for the winding up of the business and affairs and distribution of assets of Invest Toronto.

Given the complexities of the above matters and their resolution, the final financial outcome is not yet known.  Subsequent reports will include financial outcomes within stated parameters and will seek required Council authority to support this process.

The General Manager, Parks, Forestry and Recreation, the Chief Planner and Executive Director, City Planning, and the Deputy City Manager and Chief Financial Officer recommend that:

1. City Council direct the General Manager, Parks, Forestry and Recreation to enter into an agreement to the satisfaction of the City Solicitor with the Toronto District School Board to invest in the new Davisville Junior Public School to construct a 3-storey school to create a smaller footprint and therefore allowing for room on the site for the City to construct a City owned and operated aquatic and community recreation facility.

2.  City Council direct that future non-program budgets include provisions for the disbursement of Sections 37 and 45 funds of $1.000 million in 2017 and $5.807 million in 2018 as grants to the Toronto District School Board to support the design and construction of an additional third floor and the underground garage as part of the Davisville Junior Public School project.

3.  City Council direct the General Manager, Parks, Forestry and Recreation to include in the 2017 Capital budget submission a project for the design and construction of the Davisville community and aquatic facility.

4.  City Council direct the General Manager, Parks, Forestry and Recreation to negotiate with the Toronto District School Board on an shared-use operating agreement that optimizes the City's capital investment in the new Davisville Junior Public School prior to the release of the funds for construction of phase one funding, noting that the aquatic facility will be owned and operated by Parks, Forestry and Recreation.

The purpose of this report is to seek City Council approval to work collaboratively with the Toronto District School Board (TDSB) to create a project to be known as the Davisville Aquatic and Community Recreation Centre currently estimated at approximately $23.942 million. 

The project will be delivered in two phases and will be included as part of the 2017 – 2026 Parks, Forestry and Recreation Capital Budget Submission. 

Phase 1 will be the commitment to the TDSB of $6.807 million towards the design in 2017 and construction starting in 2018 for the new Davisville Junior Public School in order to facilitate community hub components which include an expanded gymnasium and underground parking in the TDSB portion of the new school.  The new 3-storey school design will result in a much smaller footprint and will allow for room on the school's site for the City to construct a Phase 2 city-owned and operated aquatic and community recreation facility approximately 30,000 square feet to expand on the recreation programming already being delivered in the community at the existing school.     

Operating costs based on similar-sized recreation facilities are estimated at $0.534 million in 2016.  Anticipating completion in 2023, projected operating costs for the new community recreation facility are estimated to be $0.626 million assuming an annual inflation rate of 2 percent.

This is a time-sensitive opportunity as the Province has already approved the funds necessary for the Davisville Junior Public School redevelopment. The TDSB is imminently planning to commence with a Request for Proposal for design in 2016 and requires the City's commitment of $6.807 million in order to consider the 3rd storey design vs the standard 2-storey design.

Approval of this report to enter into an agreement with the Toronto District School Board (TDSB) will create a two-phase financial commitment for the City to create a new aquatic and community recreation facility in Ward 22. This facility is not currently included in the Parks, Forestry and Recreation 10-year Capital Plan, but its inclusion will not defer any previously included project.

Phase 1 is the commitment to the TDSB of $6.807 million to be cash-flowed in the amount of $1.000 million in 2017 towards the design of the required third storey of the new Davisville Junior Public School; and $5.807 million in 2018 for construction in order to facilitate community hub components, including an expanded gymnasium and underground parking in the TDSB portion of the new building. Phase 1 is intended to be funded from a combination of funds received from Section 37 and Section 45 Agreements generated in Ward 22. Specific authority to disburse these funds to the TDSB will be sought from City Council after agreements are in place to the satisfaction of City Planning and the City Solicitor. Total funds received to date from various Section 37 and Section 45 Agreements are $4.202 million. Three (3) of the Section 37 and Section 45 funds identified for the project in the amount of $0.533 million are subject to necessary approvals of rezoning and new agreements to be formalized with developers in order to conform with the approved use of the funds for community benefits. To date, the City has not received funds from two (2) of the identified Section 37 developments in the amount of $2.500 million; however, these development projects are council-approved and awaiting above-grade building permits. The remaining funds are expected to be received by the start of the third Quarter in 2017 and well before these funds are required in 2018. 

In the unlikely event that the aforementioned funding is not secured, the City will be required to identify other sources of funding to complete this project, which may include a reassessment by City Council of other City-funded priorities and needs. 

Phase 2, is a project costing $17.135 million to design and construct a new 3-storey, approximately 30,000 square foot city-owned aquatic and community recreation facility on the west end of the school site. Phase 2 will be funded from Development Charges, applicable Reserve Funds, and various Section 37 and Section 45 Agreements, as appropriate, generated in Ward 22 subject to receiving the necessary approvals and agreements. Construction is anticipated to begin late 2020 /early 2021 once the new school is completed which is anticipated prior to the start of the new school year in 2020. The project will not require any debt-funding. 

Operating impacts for the new facility are anticipated to begin, at the earliest, in 2023.   Operating costs based on similar-sized recreation facilities are approximately $0.534 million in 2016. Projected operating for this facility are estimated to be $0.626 million beginning in 2023 assuming an annual inflation rate of 2 percent. 

The following chart shows how the proposed funding contribution is to be allocated:

 The contribution to the TDSB school construction will result in a savings to the City as it is in lieu of purchasing land in order to construct a new city-owned stand-alone facility to achieve the same purpose as this shared-use opportunity. 

This is a time-sensitive opportunity as the Province has already approved the funds necessary for the Davisville Junior Public School redevelopment. The TDSB is imminently planning on commencing with design in 2016 and requires the City's commitment of $6.807 million in order to consider the third storey design option that will allow for the adjacent City-owned aquatic facility. 

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster B, and the Chief Planner and Executive Director, City Planning recommend:

1.  City Council direct the Deputy City Manager, Cluster B, and the Chief Planner and Executive Director, City Planning in partnership with the Toronto Transit Commission and Waterfront Toronto, to initiate Phase 2 of the Waterfront Transit "Reset" for further development and costing of alignment concepts, detailed analysis of transit operations and ridership, identification of priority segments, as well as the creation of a Business Case and implementation strategy for delivering a coordinated waterfront transit solution.

2.  City Council direct the Deputy City Manager, Cluster B, and the Chief Planner and Executive Director, City Planning to report back on the results of Phase 2 of the Waterfront Transit "Reset" in the second quarter of 2017.

3.  City Council direct the Deputy City Manager, Cluster B to submit for Council's consideration as part of the 2017 Budget process, a funding request to initiate a 30 percent preliminary design by the Toronto Transit Commission for the extension of streetcar service from the Exhibition Loop to the Dufferin Gate Loop, in accordance with the approved Environmental Assessment Modification Report (2008.PG17.10), and to be coordinated with plans to replace the Dufferin Street bridge over the Gardiner Expressway and Lake Shore West Rail Corridor.

At its meeting of November 3 and 4, 2015, City Council directed staff to work with the Toronto Transit Commission and Waterfront Toronto on a comprehensive review of waterfront transit initiatives and options (Item EX 9.9).  An external consultant, Steer Davies Gleave, was retained to assist staff with the review.  The study area is from Long Branch in the west to Woodbine Avenue in the east, and south of the Queensway/Queen Street.

The Waterfront Transit "Reset" was divided into two phases. Council approved funding for Phase 1 of the "reset" for the following work program items: review all relevant background material; create an overall study vision with related objectives; develop a preliminary list of improvement concepts; consult with the public and stakeholders; identify preferred concepts for further study; and develop a scope of work for Phase 2.

The completion of the Phase 1 work has reinforced the importance of a comprehensive waterfront transit solution from Long Branch to Woodbine Avenue, which has not been realized to date. This is supported by the public and stakeholders, by previous studies, and by recent trends in population and employment growth in the waterfront.

One of the first tasks in Phase 1 was to conduct a complete review of the history of waterfront transit planning since 1995.  It is clear from the review that transit planning has been incremental in terms of undertaking individual studies, although there have been some broader policy and network-focused efforts through the Official Plan, Official Plan Update (Feeling Congested?), and the Central Waterfront Secondary Plan.

A vision statement was developed early on in the study as a foundation for defining the future waterfront transit network. It also served as a reference point for discussions with the public and stakeholders. The vision is as follows:

To provide high quality transit that will integrate waterfront communities, jobs, and

destinations, and link the waterfront to the broader City and regional

transportation network.

This vision recognizes the wide variety of land uses that transit must serve, and the importance of considering the waterfront in the context of current and emerging transit initiatives in the City.  These major initiatives include SmartTrack, the Scarborough Rapid Transit Network, the Relief Line, and Metrolinx including the Regional Express Rail (RER), Electrification of the GO Transit Corridors, updated GO Station Assessment and the "The Big Move" Regional Transportation Plan update.   In terms of the overall City transit network, it is clear that there is a significant gap in the higher order transit network along the waterfront, and this gap coincides with areas of major future population and employment growth.

Following the vision for waterfront transit and a preliminary assessment of land use and travel patterns, the study area was divided into four distinct geographic segments. Within these four segments, a total of 25 initial transit improvement concepts were developed. Next, using City Planning's Feeling Congested? transit projects evaluation framework and considering public and stakeholder feedback, the 25 initial concepts were reduced to a list of 16 by the study team. The initial list of concepts and the shortened list that are the subject to further analysis in Phase 2 are all documented in this report.

Phase 1 of the Waterfront Transit "Reset" has identified three main findings/directions.

First, the importance of completing Phase 2 has been reaffirmed.  In particular, Phase 2 will focus on unresolved areas of the network with the potential to add significant transit network benefits: the East Bayfront and the extension of transit into the Port Lands, and the section from Legion Road and Lakeshore Boulevard to Exhibition Place. 

A preliminary Work Plan for Phase 2 of the Waterfront Transit "Reset"  is included in this report. To summarize, Phase 2 will include (with focus on the areas of the network identified above): further development of the preferred transit improvement concepts for the complete study area; transit modelling analysis; a more detailed comparative evaluation of alternatives; coordination and consultation with Metrolinx; identification of a preferred network solution, including functional plan drawings to a 5 percent level of detail and associated cost estimates; public and stakeholder consultation; and a Business Case to consider the potential strategic, economic, financial, deliverability and operational impacts of the proposed solution.

Phase 2 will conclude with recommendations for advancing a preferred waterfront transit solution through the Transit Project Assessment Process (TPAP). This will be done so that priority components can be planned and designed quickly, and be ready for implementation once funding becomes available.

The second key finding of the Waterfront Transit "Reset" is that there is an opportunity to move to preliminary design on extending the existing exclusive streetcar network from the Exhibition Loop to the Dufferin Gate Loop, through the northwest portion of Exhibition Place. It is recommended that Toronto Transit Commission staff initiate a 30 percent level of design for this EA-approved section of network, with funding to be identified through the 2017 capital budget process. Design work would be coordinated with the current plan to replace the Dufferin Street bridge connection across the Gardiner Expressway and Lake Shore West Rail Corridor.  The extension would have the following benefits: 1) increased transportation network connectivity and flexibility; 2) improved transit service to the Liberty Employment Area and Exhibition Place; and, 3) potential relief of transit congestion on the 504 King Streetcar, and other Toronto Transit Commission routes.

The third key direction of the "reset" is to support the Toronto Transit Commission's transit service improvements that support the waterfront network vision.  This extensive list of improvements is documented in the report, but some of the highlights include: 1) 188 Kipling Express bus service, implemented in early 2016, between the Kipling Subway station and Lake Shore Boulevard West; 2 ) a revision to the 72 PAPE bus route, implemented in June 2016, that has restored a connection with Union Station, and provides new service to Queens Quay East; and, 3) restoration of continuous service on the 501 Queen Streetcar, timing subject to delivery and rollout of the new LRV's, eliminating transfers at the Humber Loop.

In conclusion, the Phase 1 work described in this report is an important step forward in the realization of a comprehensive transit network vision for the waterfront. This vision, along with the transit improvement concepts that would achieve it, were generally well received by the public and stakeholders. There is an overall public expectation that completing the work and implementing solutions will be a key priority for the City, the Toronto Transit Commission and Waterfront Toronto.

In view of these findings, staff recommend that City Council approve funding to complete Phase 2 of the Waterfront Transit "Reset" and authorize staff to begin 30 percent design for the extension of the exclusive streetcar network from the Exhibition Loop to the Dufferin Gate Loop.

The cost of retaining consulting services to assist the City in completing the Phase 2 scope of work is estimated to be up to $500,000. Funding is available from the Waterfront Revitalization Initiative, capital project CWR003-10.

The cost of retaining consulting services to assist the Toronto Transit Commission in completing a preliminary design up to 30 percent level of detail for extending the existing streetcar in its own right-of-way from the Exhibition Loop to the Dufferin Gate Loop is estimated by the Toronto Transit Commission at $3.6 million.  The cost will be presented for Council's consideration as part of the 2017 Budget process.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager, Cluster B and the Chief Planner and Executive Director, City Planning recommend that:

1.  City Council recognize the Province of Ontario's June 14, 2016 announcement to initiate the planning and technical analysis to build a new freight corridor that will by-pass the Bramalea to Georgetown section of the Kitchener GO corridor (The Missing Link), and direct the Deputy City Manager, Cluster B and the Chief Planner and Executive Director, City Planning to participate in further discussions with Metrolinx, other municipalities, levels of government and transportation agencies to consider this plan, and request the Chief Planner and Executive Director, City Planning, to report back with an update on the Missing Link initiative within 12 months, or sooner if progress necessitates such action;

2.  City Council direct the Deputy City Manager, Cluster B and the Chief Planner and Executive Director, City Planning  to continue negotiations with Metrolinx to secure a new multi-modal GO Station at Bloor Street, a Community Improvement Plan for the study mitigation area, a multi-use path and connection south to the West Toronto Railpath, a design solution and mitigation strategy for the rail corridor intersection at Dupont Street, and to participate in the project Community Advisory Committee.

At its meeting of December 9 and 10, 2015, City Council, in considering item PG8.13, "Davenport Community Rail-Rail Grade Separation", directed the Chief Planner and Executive Director, City Planning, to report in early 2016 on the "Missing Link" initiative and its merits as a key element of the freight rail network serving the City and the GTA.  City Council also opposed the Davenport overpass grade separation in favour of a tunnel option, and requested that Metrolinx reconsider this option.  Despite City objections Metrolinx launched the formal Transit Project Assessment Process (TPAP) for the overpass option in January 2016 and the Notice of Completion for the project was issued May 26, 2016.

At this juncture, there is little opportunity to request reconsideration of the project recommendation for an overpass.  The Minister for the Ministry of the Environment and Climate Change (MOECC) may only require further consideration or conditions where a matter is of provincial importance in relation to the natural environment or cultural or heritage values, or where a constitutionally protected aboriginal interest is involved.  The Minister’s response to this project is anticipated August 2nd of this year.  In light of Metrolinx's decision to undertake the overpass option, and with no formal options to object, City staff are prepared to continue discussions with Metrolinx, the local community and elected officials to address the outstanding issues of concern.

On June 14, 2016 the Province of Ontario announced its plans to expand GO Transit rail service to the Waterloo Region.  The Province, through its agency Metrolinx, secured an agreement-in-principle with CN to allow GO Regional Express Rail (RER) to be built along the Kitchener GO corridor.  The agreement-in-principle also provides direction to initiate a planning and technical analysis to build a new freight corridor by-pass that would divert most of CN's rail activity on the Kitchener GO line between Bramalea and Georgetown.  The by-pass could effectively function as the Missing Link (see Maps 1 and 2).  This is a timely and welcomed announcement by the Province, as the Missing Link has the potential to also redirect freight traffic currently using the CP North Toronto rail corridor that runs east-west through the City.  It is recommended that City Council recognize the Provincial announcement to initiate the planning and technical analysis to build a new freight corridor by-pass, and direct staff to participate in further discussions with all relevant parties.

The Missing Link

The impetus for a review of the Missing Link initiative was led by the City of Mississauga and jointly commissioned in early 2015 by Mississauga and the cities of Cambridge and Toronto, and the Town of Milton.  The review was undertaken by the IBI Group, and a report was produced in August, 2015, entitled "Feasibility Study and Business Case of Constructing the Missing Link".  The purpose of this study was to investigate the feasibility of separating freight rail traffic from passenger rail traffic on the Kitchener GO rail corridor and Milton GO rail line.  Within the City of Toronto, this study has bearing on the CP freight rail line that intersects the Barrie GO rail corridor at grade, at the point of the currently planned Metrolinx Davenport grade separation, as well as the Kitchener GO rail corridor within which increased passenger rail service is being planned in the context of the City's SmartTrack initiative and Metrolinx's Regional Express Rail program.

The Feasibility Study, included as Appendix 1 to this report, concludes that the separation of freight and passenger traffic is possible if the majority of freight traffic is redirected to alternative freight rail corridors north of Toronto, requiring construction of a new rail connection within the City of Mississauga, i.e. the Missing Link.   Map 1 identifies the existing rail network and Map 2 shows the potential network with the Missing Link added.

City staff determined that the Missing Link is consistent with the City Official Plan policies to expand passenger rail service in the City and provide multi-modal travel options within Toronto.  The Missing Link also aligns with the Mayor's recently announced "Technology Corridor" between Toronto and Kitchener-Waterloo, and with better management of freight rail within Toronto.

Davenport Overpass

The Davenport Rail Grade Separation initiative on the Barrie GO rail corridor is part of the Metrolinx Regional Express Rail (RER) program, which envisions the expansion of GO Transit rail service across all seven corridors. RER will provide two-way, all day, GO service as frequent as every 15 minutes through electrification of provincially owned GO rail corridors. The RER program is expected to be delivered over the next ten years by Metrolinx. The City of Toronto supports this overall commitment to transit expansion in the Greater Toronto and Hamilton Area (GTHA).

In the spring of 2015, Metrolinx advised of their intention to conduct an Environmental Assessment under the streamlined Transit Project Assessment Process for the grade separation of the Barrie GO rail corridor and the CP North Toronto Subdivision rail line north of Dupont Street, and that the option under consideration is to elevate the GO corridor on an overpass structure above the CP rail line.  Metrolinx indicates the grade separation is needed to accommodate the increase in GO service, to minimize potential delays, and to ensure safety as GO trains are currently required to wait if a freight train on the CP line is crossing the Barrie corridor at the level interchange point.

The preliminary design for the overpass structure is approximately 1.4 km in length, beginning just north of Bloor Street West, rising to a height of approximately 8.4 m above the CP corridor, and returning back to the existing grade just south of Davenport Road.  Metrolinx refers to the reduced length of 570 m for a "guideway" structure on columns (not including the sections on berm), but the total length of the grade separation remains at 1.4 km.

In addition to the structure height, there will be noise mitigation walls integrated into the overpass structure, and overhead catenary with eventual electrification, that would add to the structure’s vertical dimension. By comparison, the total height (13.4 m) at the highest point is similar to a 4+ storey residential building.  A revised rendering of the proposed structure by Metrolinx is shown in Exhibit 1, and included as Appendix 2 to this report for reference.

The Transit Project Assessment Process (Ontario Regulation 231/08) sets out the steps to be followed for this study, including completion of an environmental project report containing a description of all studies undertaken in relation to the project, and consultation on those studies.  The process expressly removes the requirement to consider need, alternatives, and many local impacts typically considered in environmental assessments.  Significant preparatory analysis is required to develop the project concept, examine the potential environmental impacts of the option(s), consult and consider input, and identify measures to mitigate any impacts. 

Despite City objections the formal Transit Project Assessment Process process was launched January 2016 with the issuance of the Notice of Commencement, which began the official process by the proponent under the Environmental Assessment Act.

Significant planning issues and community impacts have been identified to-date for the overpass option, and theyinclude, but are not limited to the following:

-  The need for a comprehensive vision for the areas immediately surrounding the overpass structure;

-  A multi-modal station at Bloor;

- Cycling connections from the proposed multi-use path to the West Toronto Rail Path;

- The need for a mitigation Strategy for the design of the overpass at Dupont Street;

- Issues of long-term operation and maintenance of the proposed Greenway;

- The need for a design resolution between the proposed Greenway and City Park land; and

- The need for resolution of outstanding Noise, Vibration and Safety issues. 

Notwithstanding the unresolved issues, the Notice of Completion was issued May 26, 2016, and City staff are prepared to continue discussions with Metrolinx, the local community and elected officials on the remaining issues of concern.

The Deputy City Manager and Chief Financial Officer recommends that:

1.  City Council amend the City's Investment Policy by adding "Deposit of cash in the High Interest Savings Account (HISA) program through the Municipal Finance Officers' Association of Ontario's ONE Investment Program" to the list of Authorized and Suitable Investments.

2.  Authority be granted to staff to incorporate the changes into the City's Investment Policy.

This report provides a review of the annual investment returns realized in 2015 on the funds invested in the City's General Group of Funds. In 2015, the City's investment portfolio of $5.1 billion earned $137.8 million and yielded a return of approximately 2.7 percent.  These portfolios hold the City's working capital and the amounts designated for the City's reserves and reserve funds.  The investment results for other funds, such as sinking, pension and trust funds are reported separately.

Municipal Finance Officers' Association of Ontario's One Investment Program (ONE) is an eligible investment for the City under Ontario Regulation 610/06, Financial Activities (the "Regulation")  under the City of Toronto Act, 2006 (COTA).  Recently, ONE offers a High Interest Savings Account with interest rates for deposits more attractive than the rates offered by the City's bank. The proposed change to the Investment Policy is to add cash deposit in ONE's High Interest Savings Account program to the list of Authorized and Suitable Investments.

In compliance with the Regulation, a record of each transaction in the City's own securities is listed in Appendix A of this report.

Under the current Ontario legislation, municipalities are permitted to invest in either short-term money market fixed income securities or long-term bonds under prescribed rules.  Municipalities are limited in investing in equities, only through the One Equity Portfolio (jointly administered by Association of Municipalities of Ontario and The Municipal Finance Officers' Association).

A staff report, submitted earlier this year, notified City Council that the Province of Ontario has approved reforms to the Regulation late in 2015.  The reforms provide the City of Toronto with a framework to invest according to the prudent investor standard and are expected to enable the City to earn better risk-adjusted returns on its investments. This authority will come into force on January 1, 2018.  During the transition period before this date, a mandated independent investment board will be created and a new investment policy will be developed.

In 2015, investment earnings on the City's General Group of Funds totalled $137.8 million.  The earnings were allocated to the operating budget ($121.3 million) and reserve funds ($16.5 million) according to the Council approved interest allocation policy. 

The investment activities conducted by staff in 2015 were in compliance with the investment policies and goals adopted by City Council.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager and Chief Financial Officer recommends that:

1.  City Council adopt the recommendations and instructions to staff contained in Confidential Attachment 1.

2.  City Council authorize the payment of funds required to carry out the instructions contained in Confidential Attachment 1 from the Benefits Reserve Fund.

3.  City Council authorize the public release of Confidential Attachment 1 at the conclusion of the City Council meeting.

The purpose of this report is to provide Council with the results of the recent Canada Revenue Agency (CRA) Employer Compliance Audit regarding parking locations at all Toronto Paramedic Services (TPS) and Toronto Fire Services (TFS) work locations, and to obtain direction regarding the action to be taken to implement and respond to the results of the audit.  The City actions proposed in confidential attachment 1 and the treatment of TPS and TFS employees is the same with respect to similar CRA parking audits for the Police and other City employees.

The financial impacts of this report are set out in Confidential Attachment 1.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Deputy City Manager and Chief Financial Officer and the Executive Director, Social Development, Finance and Administration recommend that:

1.  City Council adopt the Community Asset Evaluation Framework, described in Appendix 1, and the findings of the June 2016 evaluation of school properties as community assets in Toronto, reported in Tables 1 and 2 of this report.
 

2.  City Council approve the following directions for five school properties, should these properties be declared surplus and approved for disposition:
 

a.  City Council authorize the Chief Corporate Officer to negotiate and submit an offer to the Toronto Lands Corporation for the acquisition of the property municipally known as 925 Albion Road (Thistletown Multi-Service Centre), funded from the remaining balance of the Land Acquisition Reserve Fund allocated to the School Lands Acquisition Framework  and with additional contribution of funding from the Parkland Acquisition Reserve Funds, and on such other terms and condition as may be acceptable to the Chief Corporate Officer in consultation with the Executive Director, Social Development Finance and Administration, and General Manager Parks, Forestry and Recreation, and in a form satisfactory to the City Solicitor;

b.  City Council encourage the Government of Ontario to pursue its expressed interests in acquisition of the property municipally known as 155 McNicoll Avenue (McNicoll Public School) and in acquisition of the property municipally known as 65 Hartsdale Drive (Silver Creek Public School) properties; both of which are sites for delivery of provincially-funded children's mental health and developmental services;

c.  City Council strongly encourage the Toronto District School Board and the Community Hubs Secretariat of Ontario to explore with all interested parties the feasibility of ongoing public use of all or a portion of the property municipally known as 200 Poplar Road (Sir Robert Borden Business and Technical Institute); and

d.  City Council direct the General Manager, Children's Services to work with the Toronto District School Board to relocate child care spaces from 100 Allanhurst Drive (Buttonwood Hill Public School) and ensure no net loss of spaces in the local community.

3.  City Council adopt the following "Eight Principles for Redeveloping School Properties for Strong Communities" and request that school boards operating in Toronto, the Toronto Lands Corporation, the Ministry of Education, the Community Hubs Secretariat of Ontario and other relevant entities adopt these principles to preserve and maximize community benefit during the disposition of school properties:

a.  new development or additions to existing school facilities and lands must be consistent with the City's Official Plan and Council approved design guidelines;

b.  school boards must ensure that they accommodate long-term growth projections prior to disposing of school sites and coordinate with the local municipality on population growth planning;

c.  schools boards should accommodate any child care program that would be impacted by the disposition of a school within other school facilities to ensure that there is no net loss of child care space in the local community;

d.  redevelopment of school sites should accommodate community facility space that will be displaced as a result of the disposition of a school facility to ensure no net loss of community space in the local area;

e.  redevelopment of school sites should maximize both the onsite provision of public parkland and the provision of privately owned but publicly accessible open space;

f.  the provision of a full range of housing, including affordable housing, should be secured as part of any site generally greater than 5 ha. Affordable housing will be encouraged on all sites that can support multi-unit redevelopment;

g.  built heritage resources will be evaluated prior to the disposition of a school site; and

h.  where appropriate, provision of joint facilities, either with the school board, the City, a private developer, or any combination thereof, for community service purposes, is encouraged.

4.  City Council direct the Executive Director, Social Development, Finance and Administration, in coordination with the Chief Planner and Executive Director, City Planning, the General Manager, Children's Services, the General Manager, Parks, Forestry and Recreation, and the Director, Real Estate Services, to work on a regular basis with school boards in Toronto to assess the City's interests in school properties as community assets and to report to Council as required.

5.   City Council recommend that school boards operating in Toronto work with the City to assess the impact of new and planned transit and future growth when considering the disposition of school properties and to consider retaining some school sites as Core Holdings to provide flexibility to address future growth.

6.   City Council send a letter to the Minister of Education and the school boards operating in Toronto to acknowledge recently improved board-to-City communication related to surplus properties planning and to encourage the parties to strengthen board-to-board communication and disclosure on these matters.

7.   City Council direct the Deputy City Manager and Chief Financial Officer to report back to Council with options for replenishing the School Lands Acquisition Reserve Fund to $15 million by the 2018 budget cycle, in order to serve as a funding strategy for future surplus school property acquisitions.

8.   City Council direct the Director, Real Estate Services in consultation with the General Manager, Parks, Forestry, and Recreation, the General Manager, Children's Services and the Executive Director, Social Development, Finance and Administration, to prepare a business case outlining capital and operational financial considerations and referencing the City of Toronto June 2016 Review of Toronto District School Board properties as community assets as part of any request to utilize the school lands acquisition reserve fund for future acquisitions.

9.   City Council strongly encourage the Ministry of Education, the Community Hubs Secretariat and other relevant provincial ministries, to work with school boards to establish a publicly-accessible inventory of community agency tenants and community services provided in publicly-funded schools and an inventory of space available in schools for community use.

10. City Council forward this report to the Minister of Education, the Community Hubs Secretariat, and the four school boards operating in Toronto.

Toronto District School Board (TDSB) has identified up to twenty-three school properties for potential surplus declaration and disposition between 2016 and 2018/19.  This report documents the City's assessment and prioritization of these properties as community assets.

It is intended to help the City respond strategically, rather than reactively, when TDSB sites are circulated for sale.

To assess the school properties, City has developed a Community Asset Evaluation Framework which considers schools as sites for advancing equitable provision of child care, green space and community programming and for responding to future growth. 

The City has clarified that it is not opposed to the redevelopment of schools in principle, but does want to see school properties that represent significant community assets retained for continued public access and community use.  Moreover, the potential disposition of school sites needs to be carefully assessed against the future growth and natural life cycle changes of the various communities throughout the City.  The opportunity to establish new schools is limited in terms of access to appropriate sites and the high cost of land. The City encourages school boards to consider retaining some school sites as Core Holdings to provide flexibility to address future growth. 

Any discussion about the City's response to surplus school properties must be considered within the context of the City's severely constrained financial context, including $29 billion in unfunded capital projects, as reported by the City Manager in May 2016.

This report underscores that the City of Toronto lacks the financial resources and the mandate to retain provincially-funded public infrastructure, such as schools, in the public domain. Reflecting that there is broader public interest in retaining some of these sites, this review also helps to identify the wider range of provincial, public sector and community sector parties that have a role to play in securing surplus school buildings and school lands for continued public use, where needed.  The Province of Ontario has a responsibility to ensure that, where appropriate, publicly-owned infrastructure remains accessible for public purposes, and to address the school funding formula that is driving some school boards to sell off valuable community assets.

Given current and future capital and operating pressures, the City of Toronto's ability to purchase surplus school properties is severely constrained and limited to the highest-priority community assets at best. Out of the twenty-three TDSB properties reviewed, only one property was rated as a highest priority community asset: Thistletown Multi-Service Centre. This report recommends that the City negotiate to acquire Thistletown in order to protect community access to this site, which has been leased by the City for community services for nearly thirty years. 

Conditions shaping this review and the TDSB list of properties for consideration continue to be dynamic. The results of this review reflect current conditions as of June 2016. A profile of City interests in each of the twenty-three TDSB properties is included as an Appendix.

This report recommends that the City negotiate to purchase the 4.5 acre property known municipally as 925 Albion Road, funded from the remaining balance of the Land Acquisition Reserve Fund in the amount of $5.4 million allocated to the School Lands Acquisition Framework  and with additional contribution of funding from the Parkland Acquisition Reserve Funds, and on such other terms and condition as may be acceptable to the Chief Corporate Officer in consultation with the Executive Director, Social Development Finance and Administration, and General Manager Parks, Forestry and Recreation, and in a form satisfactory to the City Solicitor.

The Toronto Lands Corporation, the real estate arm of the Toronto District School Board (TDSB), has publicly reported that TDSB properties have ranged in value between $2 million/acre and $7million/acre. An appraisal of the property has not yet been conducted. An adjustment to the Parks, Forestry and Recreation Capital Budget will be required once more precise costs for this acquisition have been determined.

Altogether the City has identified six properties representing priority community assets that could be considered for acquisition. The total investment to retain these properties in the public domain could range from $48 million to $168 million. This value dramatically exceeds the City's available resources for school lands acquisitions. Staff recommend that the City work with stakeholders to identify alternate primary investors for these properties.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The City-School Boards Advisory Committee recommends to the Executive Committee that:

1. City Council request the Minister of Education to support a continuum of learning and the stabilization of early years and child care programs located in school buildings by undertaking the following five actions which have been developed collaboratively by the City of Toronto and Toronto District School Board, Toronto Catholic District School Board, Conseil scolaire Viamonde, and Conseil scolaire de district catholique Centre-Sud:

a. Improve the funding formula in order to fully fund the occupancy cost of early learning and child care space in schools directly to the school boards;

b. Ensure the funding formula takes into account the higher cost of building, operating and maintaining spaces for young children;

c. Ensure the funding formula for early learning space is not a per person rate, but a per room rate;

d. Ensure the funding formula accounts for the incrementally higher cost of operating before- and after-school programs in shared spaces; and

e. Ensure that the school utilization formula reflects the improved funding formula and fully accounts for early learning space in schools.

Working in collaboration, staff from Toronto District School Board, Toronto Catholic District School Board, Conseil scolaire Viamonde, and Conseil scolaire de district catholique Centre-Sud and City of Toronto Children's Services have defined five actions for the Ministry of Education to strengthen school funding and school utilization formulas in support of a continuum of learning, starting in the early years. When implemented these changes will facilitate cooperative working relationships between the City and school boards in relation to child care and early years programming delivered in school buildings.

The Chief Corporate Officer and the Chief Planner and Executive Director, City Planning recommend that:

1.  City Council direct City Planning and request Build Toronto, in consultation with Real Estate Services, to lead a site planning and massing exercise for the current Etobicoke Civic Centre Complex lands and to advance the current site planning and massing exercise established by Build Toronto for the Bloor/Islington lands, to an extent sufficient to inform the business case for each site, and report back to City Council in the third quarter of 2017 with the results.

2.  City Council request Build Toronto to lead a design competition for the Westwood Theatre Lands, limited to establishing a new Etobicoke Civic Centre Complex and developing potential recommendations to the existing Build Toronto concept plans, and direct City Planning and Real Estate Services to provide advice and support to Build Toronto, and report back to City Council in the third quarter of 2017 with:

a.  Results of the design competition; and

b.  A draft building program for a new Etobicoke Civic Centre.

3.  City Council direct the Chief Corporate Officer, in consultation with Build Toronto and City Planning, to establish a business case that considers the costs and revenues associated with the proposed plans for the Westwood Theatre Lands, Bloor/Islington, and current Etobicoke Civic Centre Complex lands, and report back to City Council in the third quarter of 2017 with:

a.  The cost and feasibility of relocating the Etobicoke Civic Centre Complex to the Westwood Theatre Lands;

b.  The cost associated with other proposed public spaces and/or community facilities; and

c.  Potential revenues and/or funding sources, including revenue estimates from the sale of City-owned lands at the current Etobicoke Civic Centre Complex, Bloor/Islington and surplus properties near the Westwood Theatre Lands.

4.  City Council direct the Chief Corporate Officer, City Planning and the Affordable Housing Office, in consultation with Build Toronto, and to determine opportunities for affordable housing at the Westwood Theatre Lands, Bloor/Islington lands, and current Etobicoke Civic Centre Complex Lands through the business case and site planning process, and report back on such opportunities to City Council in the third quarter of 2017.

In 2007, City Council approved the urban design visions for City-owned lands at:

1.  Bloor/Islington (Northwest corner of Bloor Street West and Islington Avenue)

2.  Westwood Theatre Lands (Southeast corner of Bloor Street West and Kipling Avenue)

3.  Current Etobicoke Civic Centre Complex (Southeast corner of Burnhamthorpe Road and The West Mall).

The design exercise was known as the West District Design Initiative ("WDDI").  The report concluded that the Bloor/Islington site and the Westwood Theatre Lands were both suitable for accommodating a new West District Civic Centre.

City staff have completed a Location Evaluation Framework to evaluate Bloor/Islington and the Westwood Theatre Lands as a potential relocation site for a new Etobicoke Civic Centre Complex. The analysis determined that the Westwood Theatre Lands are more suitable for new Civic offices when compared to the Bloor/Islington site, due to improved overall accessibility, lower cost projections and greater City building opportunities.

The purpose of this report is to seek City Council support for the potential relocation of the Etobicoke Civic Centre Complex to the Westwood Theatre Lands, subject to a business case to be submitted in 2017 for City Council consideration. It should be noted that no funding exists for this project in the 2016-2025 Approved Capital Plan. Accordingly, given the City's $29 billion capital back log, this project would not proceed without a self‑financing business case, given current resource constraints.

Build Toronto will fund the costs of the limited design competition for the Westwood Theatre Lands. The site planning and massing exercise will be completed with existing, in‑house resources with no additional funding required from the City.

It should be noted that no funding exists for this project in the 2016-2025 Approved Capital Plan. Accordingly, given the City's $29 billion capital back log, this project would not proceed without a self-financing business case, given current resource constraints.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Treasurer recommends that:

1.  City Council authorize the levy and collection of taxes for the 2016 taxation year on railway roadways and rights of way and on land used as transmission or distribution corridors owned by power utilities, in accordance with subsection 280 (1) of the City of Toronto Act, 2006 and subsection 257.7 (1) the Education Act.

This report seeks Council authority for the introduction of the by-law necessary to levy and collect taxes for the 2016 taxation year on railway roadways and rights of way and on land used as transmission or distribution corridors owned by power utilities, totalling approximately $7.1 million in taxation revenue, of which the municipal share is $6.5 million and the provincial education share is $0.6 million.

The 2016 levy of taxes on railway roadways and rights of way and on power utility transmission or distribution corridors will raise approximately $7.1 million in taxation revenue, of which the municipal share is $6.5 million and the provincial education share is $0.6 million. 

Comparatively, the total revenue for 2015 was approximately $7.1 million, of which the municipal portion was $6.5 million and the provincial education portion was $0.6 million.

Table 1, below, summarizes the acreage rates prescribed by the Province, the total acreage for each group of properties, and the resulting 2016 levy on railway roadways or rights of way and on power utility transmission or distribution corridors, with a comparison to 2015.

Table 1: Levy Amounts for 2016 and 2015 on Railway Roadways or Rights of Wayand on Power Utility Transmission or Distribution Corridors

1.  Metrolinx was known as Greater Toronto Transit Authority (GO Transit). The Greater Toronto Services Board Act, 1998, exempted the real property owned by Greater Toronto Transit authority from education taxes.  Pursuant to the GO Transit Act, 2001, as of January 1, 2002, GO Transit became a Crown Agency of the Province.  It is exempt from property taxes but subject to payment‑in-lieu of taxes for the municipal portion of taxes only.

2.  For Hydro One properties, the City retains the education portion of taxes. In the rows labelled "Adjusted Total", the education portion for Hydro One properties has been included in the Municipal Portion of taxes.  Prior to April 1, 1999, under a revenue sharing arrangement for Ontario Hydro properties, the City retained both the education and municipal portions of taxes.  Section 361.1 of the Municipal Act was amended effective April 1, 1999 to establish that the taxes payable were included in the definition of payment-in-lieu (PIL) properties.  This allowed the City to continue to retain both the municipal and education portion of taxes, and this has been continued under the City of Toronto Act, 2006.

Overall, the net revenue retained by the City for 2016 has decreased by $2,190 from 2015 as the result of a reduction in the total acreage of railway roadways and hydro corridor rights of way from 4,325.07 acres in 2015 to 4,321.49 acres in 2016 (representing a decrease of 3.58 acres):

- Canadian National Railway's total acreage has decreased by 1.32 acres (138.95 acres to 137.63 acres) as a result of the sale of portions of land.

- Canadian Pacific Railway's total acreage has decreased by 5.84 acres (534.38 acres to 528.54 acres) due to land severance, a portion of which was acquired by Metrolinx. The two remaining portions of land which were purchased by private companies have been assigned separate assessment roll numbers and are now taxable.

- Metrolinx's total assessable acreage has increased by 3.58 acres (938.97 acres to 942.55 acres) due to the severance and acquisition of land, a portion of which was acquired from Canadian Pacific Railway.

This reduction in the acreage resulted in a corresponding reduction of $2,190 in the municipal portion of the levy, and a reduction of $5,890 in the provincial education portion of the levy.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Treasurer recommends that:

1.  City Council authorize the levy and collection of amounts for the 2016 taxation year on colleges and universities, public hospitals, and correctional facilities as authorized by Section 285 of the City of Toronto Act, 2006.

2.  City Council direct that the maximum prescribed amount of $75 be applied per provincially rated hospital bed, full time student, or resident place as prescribed by Ontario Regulation 121/07.

This report requests Council authority to adopt a by-law to levy amounts for the 2016 taxation year for colleges and universities, public hospitals, and correctional facilities (the "institutions"), estimated at approximately $17.8 million (annual "Heads and Beds" levy).

Estimated revenue of approximately $17.8 million will be raised through the 2016 levy on institutions.  The Province has provided 2016 final capacity figures for colleges and universities, hospitals and correctional facilities in a letter dated June 10, 2016 (Attachment 1).  The estimated levy amount for 2016 is similar to the range of the levy amounts reported for the past three (3) years (2013 -2015), which vary from $16 to $18 million (Table 1).

The Non-Program 2016 Operating Budget includes an estimate of 2016 revenues of approximately $17.23 million.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The City Solicitor recommends that:

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

2.  City Council authorize the public release of the recommendations in Attachment 1 if adopted, with the remainder of Attachment 1 to remain confidential at the discretion of the City Solicitor.

St. Michael's Hospital and the Hospital for Sick Children are concerned that potential development and associated construction could interfere with the flight paths for their respective heliports.  The Province has issued a Minister's Zoning Order that regulates development within these flight paths, but it will expire at the end of September 2017.  The City must contemplate the most effective approach towards regulating development within proximity to these hospitals.

The City Solicitor requires further directions.

The financial impacts are set out in the confidential attachment.

The Deputy City Manager Cluster A, the Deputy City Manager Cluster B and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council approve the Open Door Affordable Housing Program to provide City financial incentives, the new Open Door Planning Service, and activate surplus public land for affordable housing.

2.  City Council approve the five-year Open Door Affordable Housing Investment Plan Projections in the Financial Implications section of this report, based on Council's approved annual targets of 1,000 new affordable rental homes and 400 new affordable ownership homes.

3.  City Council request the Director, Affordable Housing Office in collaboration with the City Manager's Office provide an update, annually, on the prior year results of the Open Door Program including funding allocations, incentives provided and other contributions from all sources on a go-forward basis.

This report fulfills City Council's December, 2015 request for the City Manager to report on the financial and administrative implications of the Open Door Affordable Housing Program.

Open Door is a program where the City contracts/secures affordable housing through a co-ordinated approach to financial incentives, funding, planning approvals and activation of public and private land. Implementation matters addressed in this report include:

-  a multi-year affordable housing investment plan to meet targets;

-  the streamlining of application processes for City affordable housing funding and incentives;

-  expanded planning supports, such as the new Open Door Service application review process; and

-  annual reporting on performance toward achieving targets.

Concurrent reports recommend the approval of a number of Open Door pilot projects that were reported to Council in December 2015.

The program's success is premised on ongoing federal/provincial housing investments and the scaling up of the capacity of the non-profit and private housing sectors to participate and produce affordable housing.  In this regard the recent 2016 federal and provincial budgets provide important new funding sources for affordable housing.

By accelerating the creation of affordable housing, Open Door will increase the opportunity for lower-income and vulnerable individuals and families to access safe, healthy and adequate homes. This will assist in improving Toronto's economic and social well-being and easing health, justice and social costs.

This report provides a summary of the Open Door Affordable Housing Program Multi-Year Investment Plan, including potential City incentives needed to meet the City's housing targets in future years. 

As directed by City Council in December 2015, the Director, Affordable Housing Office in collaboration with the City Manager's Office, will coordinate a corporate-wide annual report to the Affordable Housing and Executive Committees on the progress and results of Open Door.  These annual reports will provide updates on Open Door implementation and investment plans including actual developments supported by the program.  The annual reports will also detail affordable housing contributions from Build Toronto or other City Agencies, Boards or Corporations, including the value of any land contributions. An annual report for the Open Door 2016 results is recommended for the 2nd quarter of 2017.

Multi-Year Investment Plan Expenditures

The City's Housing Opportunities Toronto – Affordable Housing Action Plan 2010-2020 (HOT) established targets of 1,000 new affordable rental and 200 new affordable ownership homes completed annually.  In considering Open Door in 2015, Council increased the affordable ownership target to 400 homes annually.

Rental housing projects meeting the City's definition of affordable rental housing (100 percent of average market rents) for a minimum of 25 years, are eligible for City incentives and supports.

The City's affordable rental housing incentives include one-time fee exemptions from development charges, planning application fees, building permit fees, and parkland dedication fees, and multi-year relief in the form of property tax exemptions (25 years). The City also makes direct capital contributions primarily from the Development Charges Reserve Fund for Subsidized Housing (XR2116) and the Capital Revolving Fund for Affordable Housing (XR1058).  Finally, City contributions may also include City land, Section 37 contributions, and Build Toronto contributions from land sales. 

Projects may also qualify for federal and provincial funding through the Investment in Affordable Housing (IAH) Program.   

The Home Ownership Assistance Program (HOAP), provides down payment assistance to low and moderate income households to purchase an affordable home.  The City's affordable ownership contributions of approximately $25,000 per unit, or $10 million annually (in order to meet City targets), are no-interest and no-payment second mortgage loans.  The loans are primarily funded from the Development Charges Reserve Fund for Subsidized Housing (XR2116).  Additional government support may be provided from Build Toronto or the provincial and federal governments (through IAH). 

Notes:
1.  City capital funding is site/project specific but has often been part of the City's contribution in the past. These estimates are based on past contributions and projected revenues.

2.  City land contributions are site/project specific but have often been part of the City's contribution in the past.

3.  Build Toronto contributions relate only to sites that are developed by BT and are determined by the BT Board.

4.  Federal and Provincial Investment in Affordable Housing Program (IAH) funding is limited and site/project specific but has often been part of the City's contribution in the past. The current maximum funding per unit under the IAH is $150,000.

Notes:

5. DC Reserve Funding for affordable home ownership loans under the City's Home Ownership Assistance Program is currently limited to $2 million annually. The program is delivered at $25,000 per loan, providing 80 loans annually.

6. Build Toronto contributions are site specific and are estimated to range from $0 to $100,000 per unit based on the 505 Richmond St project.

7. Federal and Provincial Investment in Affordable Housing Program (IAH) funding is limited and site/project specific but has often been part of the City's contribution in the past. The current average funding per unit under the IAH is $33,000.

Note:

8.  Supports are provided to both rental and ownership housing, unless otherwise indicated.

9.  These figures represent a combination of the current Federal and Provincial IAH Program, which ends March 31, 2020, and the anticipated federal Social Infrastructure Fund (SIF) with provincial matching funding for affordable rental and ownership housing.

2010-2015 Completions Summary

In the six years between the beginning of the Housing Opportunities Toronto term in 2010 and the end of 2015, the City has contributed incentives and funding for the completion of 2,848 affordable rental and 777 affordable ownership homes.  Total federal/ provincial program funding was $269.8 million, with the City contributing $13 million in funding from dedicated housing reserves and an estimated $66.4 million in in-kind incentives. The City contributed $8 million in funding from dedicated housing reserves and an estimated $65.2 million in in-kind incentives for the 2,848 affordable rental homes, and $5 million in funding from dedicated housing reserves and an estimated $1 million in in-kind incentives for the 777 affordable ownership homes. These figures include developments approved and funded through the 2009 federal/provincial economic stimulus program.

Using the HOT targets in effect during that period of 1,000 new affordable rental and 200 new affordable ownership homes annually, the cumulative shortfall for 2010-2015 is 3,152 affordable rental and 423 affordable ownership homes.  The estimated City contributions to make up this shortfall are $110.3 million for the affordable rental and 10.6 affordable ownership homes for a combined $121 million. Open Door will help address the shortfall.

2016 Proposed Developments

In 2016, there are nine affordable rental and 10 affordable ownership developments approved, awaiting approval, or with proposals in development, totalling 748 homes. Total federal/provincial program funding is projected to be $19.1 million, with the City and Build Toronto contributing $18.2 million in funding and an estimated $14.8 million in in-kind incentives.

Concurrent reports recommend the approval of a number of Open Door pilot projects that were reported to Council in December 2015, as well as tax relief for additional developments, all of which are incorporated in the Open Door Investment Plan.  The Director, Affordable Housing Office, will bring forward project-specific reports for Council approval for the remaining developments in the 2016 plan.

Of the 748 homes, 414 are affordable rental units and 334 are affordable ownership homes.  Using the current HOT targets of 1,000 new affordable rental and 400 new affordable ownership homes annually, the 2016 shortfall is projected to be 586 rental and 66 ownership homes.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council approve the Open Door Affordable Housing Program to provide City financial incentives, the new Open Door Planning Service, and activate surplus public land for affordable housing.

2. City Council approve the five-year Open Door Affordable Housing Investment Plan Projections in the Financial Implications section of this report, based on Council's approved annual targets of 1,000 new affordable rental homes and 400 new affordable ownership homes.

3. City Council request the Director, Affordable Housing Office in collaboration with the City Manager's Office to provide an update, annually, on the prior year results of the Open Door Program including funding allocations, incentives provided and other contributions from all sources on a go-forward basis.

4. City Council approve that the non-profit affordable ownership housing development applications where a minimum of 20 percent of the residential gross floor area of the development is affordable ownership housing be eligible for the Open Door Service.

5. City Council request the Director, Affordable Housing Office, to initiate a conversation with the affordable home ownership providers to explore opportunities to expand long term affordability.

This report fulfills City Council's December, 2015 request for the City Manager to report on the financial and administrative implications of the Open Door Affordable Housing Program.

Open Door is a program where the City contracts/secures affordable housing through a co-ordinated approach to financial incentives, funding, planning approvals and activation of public and private land. Implementation matters addressed in this report include:

- A multi-year affordable housing investment plan to meet targets,

- The streamlining of application processes for City affordable housing funding and incentives,

- Expanded planning supports, such as the new Open Door Service application review process, and

- Annual reporting on performance toward achieving targets.

Concurrent reports recommend the approval of a number of Open Door pilot projects that were reported to Council in December 2015.

The program's success is premised on ongoing federal/provincial housing investments and the scaling up of the capacity of the non-profit and private housing sectors to participate and produce affordable housing. In this regard the recent 2016 federal and provincial budgets provide important new funding sources for affordable housing.

By accelerating the creation of affordable housing, Open Door will increase the opportunity for lower-income and vulnerable individuals and families to access safe, healthy and adequate homes. This will assist in improving Toronto's economic and social well-being and easing health, justice and social costs.

The Chief Corporate Officer and the Deputy City Manager, Cluster A recommend that:

1.  City Council authorize the Chief Corporate Officer (the "CCO") to negotiate, in consultation with the Director, Affordable Housing Office, the acquisition of the Property with Toronto Community Housing Corporation ("TCHC") for a nominal purchase price, and authorize the City to enter into an agreement of purchase and sale (the "Agreement") substantially on the terms outlined in Appendix "A" to this report and on such other or amended terms and conditions as may be acceptable to the Chief Corporate Officer, in consultation with the Director, Affordable Housing Office, and in a form satisfactory to the City Solicitor.

2.  City Council authorizes severally each of the Chief Corporate Officer, and the Director of Real Estate Services to execute the Agreement and any ancillary agreements and documents under the Agreement on behalf of the City.

3.  City Council authorize the Chief Corporate Officer to administer and manage the purchase of the Property from Toronto Community Housing Corporation, in consultation with the Director, Affordable Housing Office, including the provision of any consents, approvals, waivers and notices, provided that she may, at any time, refer consideration of any such matters (including their content) to City Council for its consideration and direction.

4.  City Council authorize the City Solicitor to complete the contemplated purchase transaction on behalf of the City, including paying any necessary expenses, amending the closing, due diligence and other dates, and amending and waiving terms and conditions, on such terms as the City Solicitor considers reasonable.

5.  City Council authorize the Chief Corporate Officer to  declare the Property as surplus to the City's needs, for the purposes of entering into a 50-year lease with Dominus Capital Corporation, and take all necessary steps to comply with the City's real estate disposal process, as set out in Chapter 213 of the City of Toronto Municipal Code.

6.  City Council authorizes the City to accept the Offer to Lease from Dominus Capital Corporation, or a related corporation formed for the purposes of this transaction, for a term of 50 years, for the property municipally known as Block 36 North, substantially on the terms and conditions outlined in Appendix "B", and on such other or amended terms and conditions acceptable to the Chief Corporate Officer, or the Chief Corporate Officer's designate, and in a form acceptable to the City Solicitor.

7.  City Council authorize each of the Chief Corporate Officer and the Director of Real Estate Services severally to accept the Offer to Lease on behalf of the City.

8.  City Council authorize the Chief Corporate Officer, or the Chief Corporate Officer's designate, to administer and manage the lease agreement, including the provision of any consents, approvals, notices and notices of termination provided that the Chief Corporate Officer may, at any time, refer consideration of such matters (including their content) to City Council for its determination and direction.

9.  City Council authorize the Director, Real Estate Services, in consultation with the Director, Affordable Housing Office, to make or provide its consent once it is the owner, to any regulatory applications by Dominus Capital Corporation or a related corporation and to grant a licence or licences to Dominus Capital Corporation for a term or terms of up to forty-two (42) months from the date of the City's acceptance of the Offer to Lease, for the purposes of entering onto the Property to carry out environmental testing and monitoring and other pre-development activities and authorizes severally each of the Chief Corporate Officer, and the Director of Real Estate Services to execute the applications, consents and licences.

10.  City Council authorize the Director, Real Estate Services, in consultation with the Director, Affordable Housing Office, to grant a licence or licences to provide access for the construction on the Property, at no cost, to Dominus Capital Corporation or a related corporation, over City property at the Mouth of the Creek and North Linear Park on terms and conditions satisfactory to the Director, Real Estate Services, and in a form approved by the City Solicitor.

11.  City Council authorize the Director, Affordable Housing Office, to submit a request to the Ministry of Municipal Affairs and Housing for funding through the federal/ provincial Investment in Affordable Housing for Ontario Program (Extension 2014-2020) – Rental Component, in the amount of $7,000,000 to be used by Dominus Capital Corporation for the development of the affordable housing units on the Property.

12.  City Council authorize the Director, Affordable Housing Office, to provide capital funding from the Development Charges Reserve Fund for Subsidized Housing (XR1116) in an amount not to exceed $6,400,000 to fund the expenses relating to the transfer from Toronto Community Housing Corporation, development and construction costs, including infrastructure  and environmental remediation.

13.  City Council authorize the Director, Affordable Housing Office, to:

a.  Negotiate and enter into, on behalf of the City, a municipal housing facility agreement, the City's "Contribution Agreement", with Dominus Capital Corporation or a related corporation, to secure the financial assistance, including the exemption from taxation for municipal and school purposes for a maximum duration of the affordable rental period, being provided and to set out the terms of the development and operation of the new affordable rental housing, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor; and

b.  Execute, on behalf of the City, the municipal housing facility agreement, any security or financing documents or any other documents required to facilitate the funding process, including any documents required by Dominus Capital Corporation, or its related corporation to complete construction and conventional financing, where required.

14.  City Council authorize the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

15. City Council authorize that the development on the Property be exempt from the payment of development charges and be exempt from the payment of planning and park dedication fees and building permits under existing City policy.

16. City Council authorize the Director, Affordable Housing Office to designate the Property as social housing for the purpose of allowing all or part of the Property relief from normal parking standards.

17. City Council authorize that the appropriate City officials be directed to take the necessary action to give effect thereto.

This report recommends Council approve Dominus Capital Corporation as the successful proponent of a Request For Proposals to build and operate 80 affordable rental homes for 50 years on Queen’s Wharf Road (Block 36 North) in City Place (Railway Lands) in Ward 20 Trinity-Spadina (the "Property"). These homes will provide quality affordable housing for low-income individuals and families.  It also recommends that the City re-acquire the site from Toronto Community Housing for a nominal sum.

This initiative, in partnership with Toronto Community Housing, will be supported by federal/provincial funding of $7,000,000 and City funding, including contingences, of $6,400,000, consisting of $3,000,000 to reduce capital costs and ensure affordability and $3,400,000 for required site improvements (including soil remediation), physical infrastructure costs, development levies and public art contributions and the provincial portion of the land transfer tax.  As well, the City will provide other financial incentives and 15 rent supplements to make the housing more affordable to lower-income households.  Dominus will contribute $15.4 million to this initiative. The site will be leased to Dominus for 50 years for a nominal sum.

Proceeding with this development will activate a site that has remained undeveloped for 20 years and contribute to the City meeting its annual targets for new affordable rental housing in the Housing Opportunities Toronto Action Plan 2010-2020.

The projected cost to build 80 affordable rental homes at Block 36 North is approximately $33,000,000, including contingencies, of which more than $15,400,000 will be provided by Dominus Capital Corporation by way of an equity contribution of approximately $2,800,000 and approximately $12,600,000 in mortgage financing.  The balance of the costs will be satisfied by a combination of federal, provincial and City funding and incentives, as described below.

This report recommends an allocation of $7,000,000 from the federal/provincial Investment in Affordable Housing for Ontario Program (Extension 2014-2020) – Rental Component ("IAH-E funding") which is available in the approved Program Delivery and Fiscal Plan submitted to the Province. In addition, $3,000,000 will be provided in capital funding by the City from the Development Charges Reserve Fund for Subsidized Housing (XR-2116) to assist in making the homes more affordable.

Additional capital funding of up to $500,000 from the Development Charges Reserve Fund for Subsidized Housing (XR-2116) will be made available for required environmental remediation.  In addition, up to $800,000 from the Development Charge Reserve Fund for Subsidized Housing (XR-2116) will be made available to construct a retaining wall along the north boundary of the Property adjacent to the rail corridor, to fund the expenses relating to the transfer from Toronto Community Housing Corporation and for other infrastructure costs.  If it is demonstrated that these costs exceed the budgeted amount further capital funding of $1,200,000 from the Development Charges Reserve Fund (XR-2116) is to be made available.

As the site is located in the Railway Lands, a Public Art Fee and a Development Levy to contribute to the cost of constructing schools, a library, a daycare and a community centre is payable.  The Public Art Fee at 1 percent of construction costs is estimated at $275,000 and the Development Levy at $525,000, and if applicable for this project would be sourced from the Development Charges Reserve Fund for Subsidized Housing (XR-2116).

Non-cash City incentives by way of waived development charges equivalent to $1,684,000 and waived building permit and planning fees of $303,700 and an exemption from property taxes for the length of the lease estimated at $ 1,071,000 will also be contributed.

In addition, closing costs on the conveyance of the Property from Toronto Community Housing Corporation are estimated at just under $100,000, including land transfer tax and registration fees, also to be sourced from the Development Charges Reserve Fund for Subsidized Housing (XR2116).

The uncommitted balance in the Development Charges Reserve Fund for Subsidized Housing (XR-2116) is sufficient to support the recommendations in this report.

The 2016 and future years' Operating Budget for Shelter, Support and Housing Administration will be amended, and separate authority will be sought, pending the timing requirements of the cash flows for the development of the project with a $0 net impact.

The City is leasing the land for 50 years less a day at nominal cost to Dominus Capital Corporation to ensure the affordability level of the rents for 50 years.

The City is also providing 15 rent supplements from Toronto Community Housing Corporation, subject to Dominus Capital Corporation entering into a rent supplement agreement,  to increase rent affordability.  In addition, at the City's option throughout the term of the Contribution Agreement, Dominus Capital Corporation will be obligated to make up to 25 percent of the apartments available to households receiving a housing allowance. In both cases, households are to be referred through the housing access system.

Summary of Proposed Funding for Block 36 North

The indirect contribution outlined above is consistent with City policy for assisting the development of affordable housing.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information. 

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council authorize the Chief Corporate Officer (the "CCO") to negotiate, in consultation with the Director, Affordable Housing Office, the acquisition of the Property with Toronto Community Housing Corporation ("TCHC") for a nominal purchase price, and authorize the City to enter into an agreement of purchase and sale (the "Agreement") substantially on the terms outlined in Appendix "A" to this report and on such other or amended terms and conditions as may be acceptable to the CCO, in consultation with the Director, Affordable Housing Office, and in a form satisfactory to the City Solicitor.

2. City Council authorize severally each of the CCO, and the Director of Real Estate Services to execute the Agreement and any ancillary agreements and documents under the Agreement on behalf of the City.

3. City Council authorize the CCO to administer and manage the purchase of the Property from TCHC, in consultation with the Director, Affordable Housing Office, including the provision of any consents, approvals, waivers and notices, provided that she may, at any time, refer consideration of any such matters (including their content) to City Council for its consideration and direction.

4. City Council authorize the City Solicitor to complete the contemplated purchase transaction on behalf of the City, including paying any necessary expenses, amending the closing, due diligence and other dates, and amending and waiving terms and conditions, on such terms as the City Solicitor considers reasonable.

5. City Council authorize the CCO to declare the Property as surplus to the City's needs, for the purposes of entering into a 50-year lease with Dominus Capital Corporation, and take all necessary steps to comply with the City's real estate disposal process, as set out in Chapter 213 of the City of Toronto Municipal Code.

6. City Council authorize the City to accept the Offer to Lease from Dominus Capital Corporation, or a related corporation formed for the purposes of this transaction, for a term of 50 years, for the property municipally known as Block 36 North, substantially on the terms and conditions outlined in Appendix "B", and on such other or amended terms and conditions acceptable to the CCO, or the CCO's designate, and in a form acceptable to the City Solicitor.

7. City Council authorize each of the Chief Corporate Officer and the Director of Real Estate Services severally to accept the Offer to Lease on behalf of the City.

8. City Council authorize the CCO, or the CCO's designate, to administer and manage the lease agreement, including the provision of any consents, approvals, notices and notices of termination provided that the Chief Corporate Officer may, at any time, refer consideration of such matters (including their content) to City Council for its determination and direction.

9. City Council authorize the Director, Real Estate Services, in consultation with the Director, Affordable Housing Office, to make or provide its consent once it is the owner, to any regulatory applications by Dominus Capital Corporation or a related corporation and to grant a licence or licences to Dominus Capital Corporation for a term or terms of up to forty-two (42) months from the date of the City's acceptance of the Offer to Lease, for the purposes of entering onto the Property to carry out environmental testing and monitoring and other pre-development activities and authorizes severally each of the CCO, and the Director of Real Estate Services to execute the applications, consents and licences.

10. City Council authorize the Director, Real Estate Services, in consultation with the Director, Affordable Housing Office, to grant a licence or licences to provide access for the construction on the Property, at no cost, to Dominus Capital Corporation or a related corporation, over City property at the Mouth of the Creek and North Linear Park on terms and conditions satisfactory to the Director, Real Estate Services, and in a form approved by the City Solicitor.

11. City Council authorize the Director, Affordable Housing Office, to submit a request to the Ministry of Municipal Affairs and Housing for funding through the federal/provincial Investment in Affordable Housing for Ontario Program (Extension 2014-2020) – Rental Component, in the amount of $7,000,000 to be used by Dominus Capital Corporation for the development of the affordable housing units on the Property.

12. City Council authorize the Director, Affordable Housing Office, to provide capital funding from the Development Charges Reserve Fund for Subsidized Housing (XR1116) in an amount not to exceed $6,400,000 to fund the expenses relating to the transfer from TCHC, development and construction costs, including infrastructure and environmental remediation.

13. City Council authorize the Director, Affordable Housing Office, to:

a) Negotiate and enter into, on behalf of the City, a municipal housing facility agreement, the City's "Contribution Agreement", with Dominus Capital Corporation or a related corporation, to secure the financial assistance, including the exemption from taxation for municipal and school purposes for a maximum duration of the affordable rental period, being provided and to set out the terms of the development and operation of the new affordable rental housing, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor; and

b) Execute, on behalf of the City, the municipal housing facility agreement, any security or financing documents or any other documents required to facilitate the funding process, including any documents required by Dominus Capital Corporation, or its related corporation to complete construction and conventional financing, where required.

14. City Council authorize the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

15. City Council authorize that the development on the Property be exempt from the payment of development charges and be exempt from the payment of planning and park dedication fees and building permits under existing City policy.

16. City Council authorize the Director, Affordable Housing Office to designate the Property as social housing for the purpose of allowing all or part of the Property relief from normal parking standards.

17. City Council authorize that the appropriate City officials be directed to take the necessary action to give effect thereto.

This report recommends Council approve Dominus Capital Corporation as the successful proponent of a Request For Proposals to build and operate 80 affordable rental homes for 50 years on Queen’s Wharf Road (Block 36 North) in City Place (Railway Lands) in Ward 20 Trinity-Spadina (the "Property"). These homes will provide quality affordable housing for low-income individuals and families. It also recommends that the City re-acquire the site from Toronto Community Housing for a nominal sum.

This initiative, in partnership with Toronto Community Housing, will be supported by federal/provincial funding of $7,000,000 and City funding, including contingences, of $6,400,000, consisting of $3,000,000 to reduce capital costs and ensure affordability and $3,400,000 for required site improvements (including soil remediation), physical infrastructure costs, development levies and public art contributions and the provincial portion of the land transfer tax. As well, the City will provide other financial incentives and 15 rent supplements to make the housing more affordable to lower-income households. Dominus will contribute $15.4 million to this initiative. The site will be leased to Dominus for 50 years for a nominal sum.

Proceeding with this development will activate a site that has remained undeveloped for 20 years and contribute to the City meeting its annual targets for new affordable rental housing in the Housing Opportunities Toronto Action Plan 2010-2020.

The Director, Affordable Housing Office recommends that:

1.  City Council approve allocating up to $1.25 million from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 50 down payment assistance loans of $25,000 each to eligible purchasers of housing to be developed on the property currently known as 30 Tippett Road, under the terms of the City's Home Ownership Assistance Program.

2.  City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

3.  City Council approve up to $1.0 million from the Development Charges Reserve Fund for Subsidized Housing (XR2116) to provide capital assistance to Shiplake Properties Limited, or a related corporation, towards the development of 50 affordable rental units on the property currently known as 30 Tippett Road, in the form of a grant by way of forgivable loan.

4.  City Council authorize the Director, Revenue Services, to recommend an exemption from taxation for municipal and school purposes to the Municipal Property Assessment Corporation for the 50 affordable rental units to be developed on the property currently known as 30 Tippett Road for the affordable rental period and up to 25 years.

5.  City Council authorize the Deputy City Manager and Chief Financial Officer to approve the waiving of all the development charges and planning fees for the affordable rental units to be developed on the property known as 30 Tippett Road.

6.  City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, municipal housing facility agreements and any security, financing or other documents required with Build Toronto, the affordable housing developer, and any other party deemed necessary to facilitate the funding and incentives detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

7.  Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding and incentives for 50 new affordable rental and 50 affordable ownership homes at 30 Tippett Road in Ward 10 York Centre. The affordable housing plan for this site resulted from a collaboration with Build Toronto and developer Shiplake Properties Limited, a subsidiary of which has entered into an agreement to acquire the site from Build Toronto.

Financial contributions for the 100 affordable homes are proposed from Build Toronto, the Federal and Provincial Governments, and the City.  An allocation from the Federal/Provincial Investment in Affordable Housing Program and funding from the City's Development Charges Reserve Fund for Subsidized Housing are recommended.

City Council adopted the Tippett Road Area Regeneration Study in July 2015 and directed the Director, Affordable Housing Office, to work with Build Toronto and the Regeneration Area property owners to deliver affordable rental and ownership homes.

On March 31 and April 1, 2016 City Council allocated federal and provincial funding and City funding and incentives for the first 100 affordable homes on the Build Toronto lands at 36 Tippett Road.  A concurrent report, A Program for 50 New Affordable Ownership Homes at 4, 6 and 9 Tippett Road, will provide federal, provincial and City funding for 50 additional affordable ownership homes on private lands in the Tippett Road Regeneration Area.  Combined, these three reports provide support for 250 affordable homes.

The Regeneration Area is bounded by Wilson Heights Boulevard, Wilson Avenue, Champlain Boulevard, Highway 401 and Allen Road in Ward 10 – York Centre.

This report recommends that City Council allocate affordable housing funding and incentives for 100 homes at 30 Tippett Road under the affordable housing plan for the Tippett Road Regeneration Area.

The affordable housing plan proposes the investment of approximately $2.75 million in City incentives and funding for 50 affordable rental homes and approximately $2.9 million in City, federal, and provincial funding for up to 50 affordable ownership homes at 30 Tippett Road, as summarized below.

The funding for affordable housing projects is cash flowed through the Operating Budget for Shelter, Support and Housing Administration.  Future year operating budget submissions will include the necessary IAH and DCRF funding for the advancement of the project based on project implementation schedule and construction timelines. 

Affordable Rental Homes

The City incentives for the 50 rental homes represents relief from development charges, planning fees and municipal property taxes.  This approximately $1.75 million contribution is not a direct capital payment but represents the forgiveness of City levies and is thus foregone revenue to the City.  Municipal property tax relief is recommended for the 25-year affordability term of the rental homes and the total value of the incentives includes an estimation of the net present value of that 25-year relief.

An additional $1.0 million in direct capital assistance is recommended for the 50 affordable rental homes from the Development Charges Reserve Fund for Subsidized Housing (XR2116).  The Open Door Program recommended staff utilize the Development Charges Reserve Fund to support new affordable rental homes.

To assist in the fulfillment of the commitments made by Build Toronto in the Affordable Housing Memorandum of Understanding between Build Toronto and the City, Build Toronto will also contribute $1.0 million towards the development and affordability of the rental homes.

Affordable Ownership Homes

Contributions to the affordability of 50 new affordable ownership homes are proposed to be made from the federal/ provincial Investment in Affordable Housing Program – Homeownership Component (IAH) and the City's Home Ownership Assistance Program (HOAP).

It is recommended that $25,000 for each of the 50 affordable ownership homes be provided from the HOAP for a total of up to $1.25 million.  HOAP is funded from the Development Charges Reserve Fund for Subsidized Housing (XR2116) and funds are provided as down-payment assistance loans to eligible lower-income purchasers.

This HOAP funding can be provided from the $2 million annually that Council has approved for the program.

City Council has provided delegated authority to the Director, Affordable Housing Office, to make allocations from the IAH.  The Director proposes to provide approximately $1.65 million from the IAH for up to 50 affordable ownership homes. Similar to the HOAP funding, IAH funds are delivered as loans for down-payment assistance to eligible lower-income purchasers.  Loans are provided in an amount of up to 10 percent of the purchase price of the home.

Under both the IAH and the HOAP, loans are repaid to the City with a share of appreciation in the value of the home when the original purchaser sells or refinances the home.  The funds are then available to assist additional purchasers.

The uncommitted balance in the Development Charges Reserve Fund for Subsidized Housing (XR2116) is sufficient to support the recommendations in this report.  The sufficiency of the reserve is reviewed regularly by the Affordable Housing Office and on an annual basis as part of the City's operating budget process.  There is also sufficient IAH funding available.

A change to the terms of the City's Home Ownership Assistance Program is recommended so that the down payment assistance loans no longer be forgivable after 25 years, but be repayable on sale of the home so that they may be used to assist additional purchasers through the program.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agree with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council approve allocating up to $1.25 million from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 50 down payment assistance loans of $25,000 each to eligible purchasers of housing to be developed on the property currently known as 30 Tippett Road, under the terms of the City's Home Ownership Assistance Program.

2. City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

3. City Council approve up to $1.0 million from the Development Charges Reserve Fund for Subsidized Housing (XR2116) to provide capital assistance to Shiplake Properties Limited, or a related corporation, towards the development of 50 affordable rental units on the property currently known as 30 Tippett Road, in the form of a grant by way of forgivable loan.

4. City Council authorize the Director, Revenue Services, to recommend an exemption from taxation for municipal and school purposes to the Municipal Property Assessment Corporation for the 50 affordable rental units to be developed on the property currently known as 30 Tippett Road for the affordable rental period and up to 25 years.

5. City Council authorize the Deputy City Manager and Chief Financial Officer to approve the waiving of all the development charges and planning fees for the affordable rental units to be developed on the property known as 30 Tippett Road.

6. City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, municipal housing facility agreements and any security, financing or other documents required with Build Toronto, the affordable housing developer, and any other party deemed necessary to facilitate the funding and incentives detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

7. City Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding and incentives for 50 new affordable rental and 50 affordable ownership homes at 30 Tippett Road in Ward 10 York Centre. The affordable housing plan for this site resulted from a collaboration with Build Toronto and developer Shiplake Properties Limited, a subsidiary of which has entered into an agreement to acquire the site from Build Toronto.

Financial contributions for the 100 affordable homes are proposed from Build Toronto, the Federal and Provincial Governments, and the City. An allocation from the Federal/Provincial Investment in Affordable Housing Program and funding from the City's Development Charges Reserve Fund for Subsidized Housing are recommended.

City Council adopted the Tippett Road Area Regeneration Study in July 2015 and directed the Director, Affordable Housing Office, to work with Build Toronto and the Regeneration Area property owners to deliver affordable rental and ownership homes.

On March 31 and April 1, 2016 City Council allocated federal and provincial funding and City funding and incentives for the first 100 affordable homes on the Build Toronto lands at 36 Tippett Road. A concurrent report, A Program for 50 New Affordable Ownership Homes at 4, 6 and 9 Tippett Road, will provide federal, provincial and City funding for 50 additional affordable ownership homes on private lands in the Tippett Road Regeneration Area. Combined, these three reports provide support for 250 affordable homes.

The Regeneration Area is bounded by Wilson Heights Boulevard, Wilson Avenue, Champlain Boulevard, Highway 401 and Allen Road in Ward 10 – York Centre.

The Director, Affordable Housing Office, recommends that:

1.  City Council approve allocating up to $800,000.00 from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 32 down-payment assistance loans of $25,000 each to eligible purchasers of housing to be developed on the property currently known as 2 Bicknell Avenue, under the terms of the City's Home Ownership Assistance Program.

2.  City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, and any security, financing or other documents required with Build Toronto, the affordable housing developer, and any other party deemed necessary to facilitate the funding detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

3.  City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

4.  City Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding for up to 32 new affordable ownership homes at 2 Bicknell Avenue in Ward 12 York South-Weston. The affordable housing plan for this site was developed in collaboration with Build Toronto and developers Trillium Housing Non-Profit Corporation and Van Mar Constructors, who have acquired the surplus City site from Build Toronto.

Financial contributions for the 32 affordable homes are proposed from Build Toronto, the Federal and Provincial Governments, the City and the developers. Funding from the federal/provincial Investment in Affordable Housing Program and from the City's Development Charges Reserve Fund for Subsidized Housing is recommended.

City Council on December 9 and 10, 2015 adopted EX10.18 Affordable Housing Open Door Program which detailed land, planning and financial investments and initiatives to enhance the City's ability to deliver affordable housing and achieve its approved housing targets.  It contained actions to better utilize surplus public lands and provide financial contributions for new affordable housing.  Two Bicknell Avenue was included as an upcoming affordable housing opportunity.

Two Bicknell Avenue is northwest of Rogers Road and Keele Street and has been approved for 63 low rise residential units.  The affordable homes will be distributed throughout the development.

This report recommends that City Council allocate affordable housing funding for 32 homes at 2 Bicknell Avenue, as summarized below.

The funding for affordable housing projects is cash flowed through the Operating Budget for Shelter, Support and Housing Administration.  Future year operating budget submissions will include the necessary IAH and DCRF funding for the advancement of the project based on project implementation schedule and construction timelines. 

Contributions to the 32 new affordable ownership homes are proposed from the federal/provincial Investment in Affordable Housing Program – Homeownership Component (IAH) and the City's Home Ownership Assistance Program (HOAP).

It is recommended that $25,000 for each of the homes be provided from the Home Ownership Assistance Program for a total of up to $800,000.00.  The Home Ownership Assistance Program is funded from the Development Charges Reserve Fund for Subsidized Housing (XR2116) and funds are provided as down-payment assistance loans to eligible lower-income purchasers.  This funding can be provided from the $2 million annually that Council has approved for the program.

Council has provided delegated authority to the Director, Affordable Housing Office, to make allocations from the IAH.  The Director proposes to provide up to $1.12 million for up to 32 affordable ownership homes.  Similar to the Home Ownership Assistance Program funding, Investment in Affordable Housing Program – Homeownership Component funds are delivered as down-payment assistance loans to eligible lower-income purchasers.  Loans are provided in an amount of up to 10 percent of the purchase price of the home.

The funding from both programs are applied together to make home ownership more accessible for lower-income households.

Under both the Investment in Affordable Housing Program – Homeownership Component and the Home Ownership Assistance Program, loans are repaid to the City with a share of appreciation in the value of the home when the original purchaser sells or refinances the home.  The funds are then available to assist additional purchasers.

A change to the terms of the City's Home Ownership Assistance Program is recommended so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home so that they may be used to assist additional purchasers through the program.

The uncommitted balance in the Development Charges Reserve Fund for Subsidized Housing (XR2116) is sufficient to support these recommendations.  The sufficiency of the reserve is reviewed regularly by the Affordable Housing Office and on an annual basis as part of the City's operating budget process.  There is also sufficient Investment in Affordable Housing Program – Homeownership Component funding available.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agree with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council approve allocating up to $800,000.00 from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 32 down-payment assistance loans of $25,000 each to eligible purchasers of housing to be developed on the property currently known as 2 Bicknell Avenue, under the terms of the City's Home Ownership Assistance Program.

2. City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, and any security, financing or other documents required with Build Toronto, the affordable housing developer, and any other party deemed necessary to facilitate the funding detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

3. City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

4. City Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding for up to 32 new affordable ownership homes at 2 Bicknell Avenue in Ward 12 York South-Weston. The affordable housing plan for this site was developed in collaboration with Build Toronto and developers Trillium Housing Non-Profit Corporation and Van Mar Constructors, who have acquired the surplus City site from Build Toronto.

Financial contributions for the 32 affordable homes are proposed from Build Toronto, the Federal and Provincial Governments, the City and the developers. Funding from the federal/provincial Investment in Affordable Housing Program and from the City's Development Charges Reserve Fund for Subsidized Housing is recommended.

City Council on December 9 and 10, 2015 adopted EX10.18 Affordable Housing Open Door Program which detailed land, planning and financial investments and initiatives to enhance the City's ability to deliver affordable housing and achieve its approved housing targets. It contained actions to better utilize surplus public lands and provide financial contributions for new affordable housing. Two Bicknell Avenue was included as an upcoming affordable housing opportunity.

Two Bicknell Avenue is northwest of Rogers Road and Keele Street and has been approved for 63 low rise residential units. The affordable homes will be distributed throughout the development.

The Director, Affordable Housing Office recommends that:

1.  City Council approve allocation up to $625,000 from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 25 down payment assistance loans of $25,000 each,  to eligible purchasers of housing to be developed on the property currently known as 9 Tippett Road, under the terms of the City's Home Ownership Assistance Program.

2.  City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, and any security, financing or other documents required with Malibu Investments Limited, or a related corporation, and any other party deemed necessary to facilitate the funding detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

3.  City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

4.  Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding for 25 affordable ownership homes at 9 Tippett Road in Ward 10 York Centre. The affordable housing plan for this site was developed in collaboration with the developer Malibu Investments under the policies of the Tippett Road Area Regeneration Study.

Allocations from the federal/provincial Investment in Affordable Housing Program and the City's Development Charges Reserve Fund for Subsidized Housing are recommended.

City Council adopted the Tippett Road Area Regeneration Study in July 2015 and directed the Director, Affordable Housing Office, to work with the Regeneration Area property owners to deliver affordable homes.

On March 31 and April 1, 2016 City Council approved federal and provincial funding and City funding and incentives for the first 100 affordable homes in the Regeneration Area at 36 Tippett Road.  A concurrent report, A Program for 100 New Affordable Rental and Ownership Homes at 30 Tippett Road, will recommend similar funding for a further 100 affordable homes on former City land in the Regeneration Area. Combined, these three reports recommend support for 250 affordable homes.

The Tippett Regeneration Area is bounded by Wilson Heights Boulevard, Wilson Avenue, Champlain Boulevard, Highway 401 and Allen Road.

This report recommends that City Council allocate affordable housing funding for 50 homes at 9 Tippett Road under the affordable housing plan for the Tippett Road Regeneration Area, as summarized below.

The funding for affordable housing projects is cash flowed through the Operating Budget for Shelter, Support and Housing Administration.  Future year operating budget submissions will include the necessary Investment in Affordable Housing Program and DCRF funding for the advancement of the project based on project implementation schedule and construction timelines. 

It is being proposed that contributions to the 25 new affordable ownership homes be made from the federal/ provincial Investment in Affordable Housing Program – Homeownership Component (IAH) and the City's Home Ownership Assistance Program (HOAP).

It is recommended that $25,000 for each of the 25 affordable ownership homes be provided from the HOAP for a total of up to $625,000. HOAP is funded from the Development Charges Reserve Fund for Subsidized Housing (XR2116) and funds are provided as down-payment assistance loans for eligible lower-income purchasers.

This HOAP funding can be provided from the $2 million annually Council has approved for the program.

City Council has provided delegated authority to the Director, Affordable Housing Office, to make allocations from the IAH.  The Director proposes to provide approximately $825,000 from the IAH for up to 25 affordable ownership homes.  Similar to the HOAP funding, IAH funds are delivered as down-payment assistance loans to eligible lower-income purchasers.  Loans are provided in an amount of up to 10 perdent of the purchase price of the home.

The programs are applied together to deepen affordability for purchasers and make home ownership more accessible for lower-income households.  With the combined loan funding the price of each home is effectively reduced by $58,000.  Under both the IAH and the HOAP, loans are repaid to the City with a share of appreciation in the value of the home when the original purchaser sells or refinances the home.  The funds are then available to assist new purchasers.

A change to the terms of the City's Home Ownership Assistance Program is recommended so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home so that they may be used to assist additional purchasers through the program.

The uncommitted balance in the Development Charges Reserve Fund for Subsidized Housing (XR2116) is sufficient to support these recommendations.  The sufficiency of the reserve is reviewed regularly by the Affordable Housing Office and on an annual basis as part of the City's operating budget process.  There is also sufficient IAH funding.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agree with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council approve allocation up to $625,000 from the Development Charges Reserve Fund for Subsidized Housing (XR2116) for up to 25 down payment assistance loans of $25,000 each, to eligible purchasers of housing to be developed on the property currently known as 9 Tippett Road, under the terms of the City's Home Ownership Assistance Program.

2. City Council authorize the Director, Affordable Housing Office, to negotiate, enter into and execute, on behalf of the City, all affordable housing funding agreements, and any security, financing or other documents required with Malibu Investments Limited, or a related corporation, and any other party deemed necessary to facilitate the funding detailed in this report, on terms and conditions satisfactory to the Director, Affordable Housing Office, in consultation with the Deputy City Manager and Chief Financial Officer, and in a form approved by the City Solicitor.

3. City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

4. City Council grant authority to the City Solicitor to execute, postpone, confirm the status of, and discharge any City security documents registered as required by normal business practices.

This report recommends funding for 25 affordable ownership homes at 9 Tippett Road in Ward 10 York Centre. The affordable housing plan for this site was developed in collaboration with the developer Malibu Investments under the policies of the Tippett Road Area Regeneration Study.

Allocations from the federal/provincial Investment in Affordable Housing Program and the City's Development Charges Reserve Fund for Subsidized Housing are recommended.

City Council adopted the Tippett Road Area Regeneration Study in July 2015 and directed the Director, Affordable Housing Office, to work with the Regeneration Area property owners to deliver affordable homes.

On March 31 and April 1, 2016 City Council approved federal and provincial funding and City funding and incentives for the first 100 affordable homes in the Regeneration Area at 36 Tippett Road. A concurrent report, A Program for 100 New Affordable Rental and Ownership Homes at 30 Tippett Road, will recommend similar funding for a further 100 affordable homes on former City land in the Regeneration Area. Combined, these three reports recommend support for 250 affordable homes.

The Tippett Regeneration Area is bounded by Wilson Heights Boulevard, Wilson Avenue, Champlain Boulevard, Highway 401 and Allen Road.

The Director, Affordable Housing Office, recommends that:

1.  City Council authorize the City to enter into an agreement with Artscape, Build Toronto, the Developer and any other party deemed necessary, to secure the purchase and financing of the Artscape Units at below market value.

2.  City Council authorize the City to be a party to the agreements of purchase and sale contemplated to be entered into for the Artscape Units as a contingent transferee, in order to ensure the benefit of the Artscape Units is secured for the intended purposes, in the event Artscape or its assignee is not able to complete the transactions.

3.  City Council authorize the City to assign its interests in the Artscape Units to another not for profit housing provider, chosen by the Director, Affordable Housing Office to give effect to the intended purpose of the Artscape Units as affordable housing, or to an arm's length purchaser at fair market value if no agreement can be made with a suitable not for profit, on terms and conditions determined by him and in a form approved by the City solicitor prior to the closing date with the Developer, with the intention that there are no financial consequences to the City having been a party to the agreements of purchase and sale for the Artscape Units.

4.  City Council authorize the proceeds of the assignment of an agreement of purchase and sale for a Artscape Unit at fair market value to be paid to the Capital Revolving Reserve Fund for Affordable Housing (XR1058) after payment of all expenses incurred in making the assignment of any of the Artscape Units.

5.  City Council approve allocation up to $375,000.00 in financial assistance from the Development Charges Reserve Fund (2009) for Subsidized Housing (XR2116) for up to 15 down payment assistance loans ($25,000 per unit maximum) for delivery by Artscape,  under the terms of the City's Home Ownership Assistance Program.

6.  City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

7.  City Council authorize the Director, Affordable Housing Office to negotiate and execute, on behalf of the City, the agreement referred to Recommendation 1 and the agreements with Artscape to secure the funding referred to in Recommendations 5 and 6, as well as any documents, agreements, or security required to give effect to the foregoing on terms and conditions determined by the Director, Affordable Housing Office and in a form approved by the City Solicitor.

8.  City Council authorize and direct the City Solicitor to execute the agreements of purchase and sale for the Artscape Units, together with any documents or agreement relating to an assignment or a re-sale transaction that may occur as a result of entering into that agreement, and to amend and to waive any terms and conditions on behalf of the City, on such terms as she considers reasonable.

9.  Council grant authority to the City Solicitor to execute any documents required to register security for the funding referred to in Recommendations 5 and 6 and to postpone, confirm the status of, and discharge security, as required by normal business practices.

10. City Council waive the restrictions of Section 2.4(a) of Build Toronto's Shareholder Direction solely for this transaction on terms and conditions satisfactory to the City Manager and in a form approved by the City Solicitor, in order to permit Build Toronto to facilitate the acquisition at below market value by Toronto Artscape of 15 affordable housing units at 505 Richmond Street West, Toronto through funds provided by an affiliate of Build Toronto.

This report recommends an innovative affordable ownership housing initiative between Toronto Artscape ("Artscape"), the City of Toronto, Build Toronto and the condominium Developer MOD Developments Downtown Properties Inc. and 505 Richmond Inc. (the "Developer") in Ward 20, Trinity Spadina.  Fifteen affordable ownership homes will be funded to provide housing for lower-income arts workers and their families.  The homes will be incorporated into the condominium development at 505 Richmond Street West, a surplus City of Toronto property transferred to Build Toronto in 2011.

This report seeks authority for the City to enter into an affordable housing agreement with Artscape, Build Toronto, and the Developer whereby 15 homes will be sold at below-market value. Both Build Toronto and the City will provide contributions to make the homes affordable to eligible lower-income households through Artscape's long-term affordable ownership housing program.

Affordable housing program funding is recommended to come from the federal/ provincial Investment in Affordable Housing Program (IAH) and the City's Home Ownership Assistance Program (HOAP), with additional financial contributions from Build Toronto. The Investment in Affordable Housing Program provides loans valued at up to 10 percent of a home's purchase price and the Home Ownership Assistance Program provides loans of $25,000 per home.  To secure the long-term affordability of the units, Artscape will ensure that when a family sells the home, the funding remains with the unit to assist the next eligible Artscape household to purchase the home.

The new building is between Spadina Avenue and Bathurst Street on the south side of Richmond Street West.  The Artscape homes will be clustered together within the building to foster community.

This report recommends City Council allocate affordable housing funding for 15 homes at 505 Richmond Street West, as summarized below.

The funding for affordable housing projects is cash flowed through the Operating Budget for Shelter, Support and Housing Administration (SSHA).  Future year operating budget submissions will include the necessary Investment in Affordable Housing Program – Homeownership Component and Development Charges Reserve Fund funding for the advancement of the project based on project implementation schedule and construction timelines. 

Contributions to the 15 homes are proposed from the federal/provincial Investment in Affordable Housing Program – Homeownership Component (IAH) and the City's Home Ownership Assistance Program (HOAP).

It is recommended that a total of $375,000 be provided from the Home Ownership Assistance Program . The Home Ownership Assistance Program is funded from the Development Charges Reserve Fund for Subsidized Housing (XR2116) and funds are provided as $25,000 down-payment assistance loans for eligible lower-income purchasers.

This funding can be provided from the $2 million annually Council has approved for the program.

Council has provided delegated authority to the Director, Affordable Housing Office, to make allocations from the  Investment in Affordable Housing Program – Homeownership Component. The Director proposes to provide up to $536,250.00 for up to 15 affordable ownership homes.  Similar to the Home Ownership Assistance Program ,  Investment in Affordable Housing Program – Homeownership Component funds are delivered as down-payment assistance loans to eligible lower-income purchasers.  Loans are in an amount up to 10 percent of the purchase price of the home.

The programs are applied together to deepen affordability for purchasers and make home ownership more accessible for lower-income households.

In accordance with the Home Ownership Assistance Program , the terms and conditions of the loans include:

· Maximum eligible unit sales price of $693,524, based on the Provincial definition.

· Eligible purchasers have maximum incomes meeting Provincial affordability threshold, currently $88,900 annually.

· The loans are registered as second mortgages on title of individual purchasers' homes.

· Loans from the  Investment in Affordable Housing Program – Homeownership Component can be up to 10 percent of the purchase price.

· Loans are interest and payment-free but a share of capital appreciation is returned to the program on resale.

A change to the terms of the City's Home Ownership Assistance Program is recommended so that the down payment assistance loans no longer be forgivable after 20 years, but be repayable on sale of the home so that they may be used to assist additional purchasers through the program.

The uncommitted balance in the Development Charges Reserve Fund for Subsidized Housing (XR2116) is sufficient to support these recommendations.  The sufficiency of the reserve is reviewed regularly by the Affordable Housing Office and on an annual basis as part of the City's operating budget process.  There is also sufficient Investment in Affordable Housing Program – Homeownership Component funding available.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agree with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1. City Council authorize the City to enter into an agreement with Artscape, Build Toronto, the Developer and any other party deemed necessary, to secure the purchase and financing of the Artscape Units at below market value.

2. City Council authorize the City to be a party to the agreements of purchase and sale contemplated to be entered into for the Artscape Units as a contingent transferee, in order to ensure the benefit of the Artscape Units is secured for the intended purposes, in the event Artscape or its assignee is not able to complete the transactions.

3. City Council authorize the City to assign its interests in the Artscape Units to another not for profit housing provider, chosen by the Director, Affordable Housing Office to give effect to the intended purpose of the Artscape Units as affordable housing, or to an arm's length purchaser at fair market value if no agreement can be made with a suitable not for profit, on terms and conditions determined by him and in a form approved by the City solicitor prior to the closing date with the Developer, with the intention that there are no financial consequences to the City having been a party to the agreements of purchase and sale for the Artscape Units.

4. City Council authorize the proceeds of the assignment of an agreement of purchase and sale for a Artscape Unit at fair market value to be paid to the Capital Revolving Reserve Fund for Affordable Housing (XR1058) after payment of all expenses incurred in making the assignment of any of the Artscape Units.

5. City Council approve allocation up to $375,000.00 in financial assistance from the Development Charges Reserve Fund (2009) for Subsidized Housing (XR2116) for up to 15 down payment assistance loans ($25,000 per unit maximum) for delivery by Artscape, under the terms of the City's Home Ownership Assistance Program.

6. City Council approve a change to the terms of the City's Home Ownership Assistance Program so that the down payment assistance loans no longer be forgivable after twenty years, but be repayable on sale of the home.

7. City Council authorize the Director, Affordable Housing Office to negotiate and execute, on behalf of the City, the agreement referred to Recommendation 1 and the agreements with Artscape to secure the funding referred to in Recommendations 5 and 6, as well as any documents, agreements, or security required to give effect to the foregoing on terms and conditions determined by the Director, Affordable Housing Office and in a form approved by the City Solicitor.

8. City Council authorize and direct the City Solicitor to execute the agreements of purchase and sale for the Artscape Units, together with any documents or agreement relating to an assignment or a re-sale transaction that may occur as a result of entering into that agreement, and to amend and to waive any terms and conditions on behalf of the City, on such terms as she considers reasonable.

9. City Council grant authority to the City Solicitor to execute any documents required to register security for the funding referred to in Recommendations 5 and 6 and to postpone, confirm the status of, and discharge security, as required by normal business practices.

10. City Council waive the restrictions of Section 2.4(a) of Build Toronto's Shareholder Direction solely for this transaction on terms and conditions satisfactory to the City Manager and in a form approved by the City Solicitor, in order to permit Build Toronto to facilitate the acquisition at below market value by Toronto Artscape of 15 affordable housing units at 505 Richmond Street West, Toronto through funds provided by an affiliate of Build Toronto.

This report recommends an innovative affordable ownership housing initiative between Toronto Artscape ("Artscape"), the City of Toronto, Build Toronto and the condominium Developer MOD Developments Downtown Properties Inc. and 505 Richmond Inc. (the "Developer") in Ward 20, Trinity Spadina. Fifteen affordable ownership homes will be funded to provide housing for lower-income arts workers and their families. The homes will be incorporated into the condominium development at 505 Richmond Street West, a surplus City of Toronto property transferred to Build Toronto in 2011.

This report seeks authority for the City to enter into an affordable housing agreement with Artscape, Build Toronto, and the Developer whereby 15 homes will be sold at below-market value. Both Build Toronto and the City will provide contributions to make the homes affordable to eligible lower-income households through Artscape's long-term affordable ownership housing program.

Affordable housing program funding is recommended to come from the federal/ provincial Investment in Affordable Housing Program (IAH) and the City's Home Ownership Assistance Program (HOAP), with additional financial contributions from Build Toronto. The IAH provides loans valued at up to 10 percent of a home's purchase price and the HOAP provides loans of $25,000 per home. To secure the long-term affordability of the units, Artscape will ensure that when a family sells the home, the funding remains with the unit to assist the next eligible Artscape household to purchase the home.

The new building is between Spadina Avenue and Bathurst Street on the south side of Richmond Street West. The Artscape homes will be clustered together within the building to foster community.

The Director, Affordable Housing Office recommends that:

1.  City Council authorize the Director, Revenue Services to recommend an exemption from taxation for municipal and school purposes for the 20 new affordable rental homes at 3087 Danforth Avenue for the period the units remain affordable, and up to 25 years.

2.  City Council grant authority to the Director, Affordable Housing Office, to negotiate, enter into and execute the municipal capital facility agreements with New Frontiers Aboriginal Residential Corporation or its successor corporation, to ensure the creation of affordable rental units at or below 80% of average market rates for a minimum of 20 years and 100 percent thereafter, and any security, financing or other documents required, as well as any amendments thereto on terms and conditions acceptable to the Director, Affordable Housing Office and in a form approved by the City Solicitor.

3.  City Council grant authority to the City Solicitor to execute, postpone, confirm the status of and discharge any City security documents registered as required by normal business practices.

4.  City Council grant authority to cancel or refund any taxes paid from the by-law exempting the property from taxation.

5.  The appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Consistent with City policy, this report recommends that City Council exempt 20 affordable rental homes at 3087 Danforth Avenue in Ward 35 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years. The exemption will allow the new housing project to offer more affordable rents to lower-income aboriginal households.

In keeping with City policy, this report recommends that City Council exempt 20 affordable rental homes at 3087 Danforth Avenue in Ward 35 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years, being the minimum term that the units must remain at or below 80% of average market rents for 20 Years and 100% thereafter.

The value of the annual property tax exemption at this property is estimated at $13,847 at current rates.  The net present value of this property exemption over the 25 year term is estimated at $177,009, of which $128,632 represents the City portion of taxes and $48,377 for the education portion.

A tax exemption would have no net present impact to the City for the educational portion of taxes that are remitted to the Province.

Development charges and planning and building fees of $257,483 have previously been waived for NFARC.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Affordable Housing Committee recommends to the Executive Committee that:

1.  City Council authorize the Director, Revenue Services to recommend an exemption from taxation for municipal and school purposes for the 20 new affordable rental homes at 3087 Danforth Avenue for the period the units remain affordable, and up to 25 years.

2.  City Council grant authority to the Director, Affordable Housing Office, to negotiate, enter into and execute the municipal capital facility agreements with New Frontiers Aboriginal Residential Corporation or its successor corporation, to ensure the creation of affordable rental units at or below 80 percent of average market rates for a minimum of 20 years and 100 percent thereafter, and any security, financing or other documents required, as well as any amendments thereto on terms and conditions acceptable to the Director, Affordable Housing Office and in a form approved by the City Solicitor.

3.  City Council grant authority to the City Solicitor to execute, postpone, confirm the status of and discharge any City security documents registered as required by normal business practices.

4.  City Council grant authority to cancel or refund any taxes paid from the by-law exempting the property from taxation.

5.  The appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Consistent with City policy, this report recommends that City Council exempt 20 affordable rental homes at 3087 Danforth Avenue in Ward 35 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years.  The exemption will allow the new housing project to offer more affordable rents to lower-income aboriginal households.

The Affordable Housing Committee recommends to the Executive Committee that:

1.  City Council authorize the Director, Revenue Services to recommend an exemption from taxation for municipal and school purposes for the 22 new affordable rental homes at 3738 St. Clair Avenue East for the period the units remain affordable, and up to 25 years.

2.  City Council grant authority to the Director, Affordable Housing Office, to negotiate, enter into and execute the municipal capital facility agreements with New Frontiers Aboriginal Residential Corporation or its successor corporation, to ensure the creation of affordable rental units at or below 80% of average market rates for a minimum of 20 years and 100% thereafter, and any security, financing or other documents required, as well as any amendments thereto on terms and conditions acceptable to the Director, Affordable Housing Office and in a form approved by the City Solicitor.

3.  City Council grant authority to the City Solicitor to execute, postpone, confirm the status of and discharge any City security documents registered as required by normal business practices.

4.  City Council grant authority to cancel or refund any taxes paid from the by-law exempting the property from taxation.

5.  The appropriate City officials be authorized and directed to take the necessary action to give effect thereto.

Consistent with City policy, this report recommends that City Council exempt 22 affordable rental homes at 3738 St. Clair Avenue East in Ward 36 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years.  The exemption will allow the new housing project to offer more affordable rents to lower-income aboriginal households.

In keeping with City policy, this report recommends that City Council exempt 22 affordable rental homes at 3738 St. Clair Avenue East in Ward 36 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years, being the minimum term that the units must remain at or below 80% of average market rents for 20 years and 100% thereafter.

The value of the annual property tax exemption at this property is estimated at $16,955 at current rates.  The net present value of this property exemption over the 25 year term is estimated at $216,740, of which $157,505 represents the City portion of taxes and $59,235 for the education portion.

 A tax exemption would have no net present impact to the City for the educational portion of taxes that are remitted to the Province.

Development charges and planning and building fees of $323,359 have previously been waived for NFARC.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

Consistent with City policy, this report recommends that City Council exempt 22 affordable rental homes at 3738 St. Clair Avenue East in Ward 36 – Scarborough Southwest, currently owned and operated by New Frontiers Aboriginal Residential Corporation (NFARC) from property taxes for a period of 25 years. The exemption will allow the new housing project to offer more affordable rents to lower-income aboriginal households.

At its meeting on May 30, 2016, the Board of Health forwarded the report (May 13, 2016) from the Medical Officer of Health to the Executive Committee for its information.

The Deputy City Manager and Chief Financial Officer recommends that:

1.  City Council approve the budget adjustments detailed in Appendix E to amend the 2015 Approved Operating Budget between Programs that have no impact to the 2015 Approved Net Operating Budget.

The purpose of this report is to provide Council with the City of Toronto's Operating Variance for the year ended December 31, 2015 and the disposition of the 2015 year-end operating surplus.  This report also requests Council's approval for amendments to the 2015 Approved Operating Budget between Programs to better align and reflect the loss of the Toronto Pooling Compensation grant that has no impact to the 2015 Approved Net Operating Budget. 

As noted in Table 1 below, the preliminary 2015 year-end operating surplus for Tax Supported Operations resulted in a net favourable variance of $130.928 million which is available for distribution after Council directions and legislative requirements are met.  This surplus represented 1.3% of the gross Tax Supported budget. 

Consistent with City Council approved Surplus Management Policy, at least 75 percent or ­­­­­­­­$98.196 million will be allocated to the Capital Financing Reserve and $32.732 million will be allocated to underfunded liabilities and/or reserve funds for replenishment.

The 2015 surplus was driven largely by:

-  Lower than planned financial employment benefits for OW clients mainly due to functionality issues related to the Social Assistance Management System that processed client applications for Toronto Employment and Social Services ($12.820 million); under-spending in Non-Program Expenditures particularly in the Heritage Tax Rebate program, Parking Tag Enforcement and Operations, and various Other Corporate Expenditure accounts ($12.597 million); combined with under-expenditures in various departmental non-labour expenses including utilities, leasing and fuel costs for TTC – Conventional Services ($10.119 million). 

- Higher than budgeted net revenue from the Municipal Land Transfer Tax ($92.122 million), Supplementary Taxes ($15.003 million) as a result of supplementary/omits rolls being higher than originally forecast, a year-end adjustment to recognize retroactive lease payments since 2011 based on a favourable ruling in regards to 2 Bloor Street West in Facilities, Real Estate, Environment & Energy ($14.942 million), stronger than forecast permit net revenue largely from high rise condominium applications for Toronto Building ($11.700 million), as well as one-time unbudgeted revenues and net Pan Am Games recoveries for Toronto Police Service ($8.363 million).

- The favourable expenditure revenue variances, as noted above, were partially offset by under-achieved in Payment in Lieu of Taxes as a result of higher than anticipated appeals and other adjustments ($7.643 million); a delay in approval of the Toronto Hydro dividend ($11.250 million); reduced ticket issuance by Parking Tag Enforcement & Operations reflecting higher than anticipated success of traffic initiatives and the Pan Am Games ($10.495 million); and under-achieved utility cut repair revenues and lower than expected permit parking fees for Transportation Services ($9.522 million). 

Rate Supported Programs reported a year-end net favourable variance of $48.863 million. Table 2 below summarizes the net variances for Rate Supported Programs:

The year-end favourable net variance of $48.863 million was driven by the following:

- Solid Waste Management Services reported a favourable net variance of $8.222 million at year-end, primarily due to lower processing costs resulting from lower tonnages of recyclable materials; salaries and benefits resulting from vacancies and WSIB costs of $5.449 million; deferred advertising campaigns; and lower than planned debt service costs due to delayed issuance of debentures.  These favourable variances were partially offset by under-achieved revenues due to lower than expected single and multi-resident volumes; adjusted stewardship funding for lower tonnages; lower tonnes of Green Lane waste; and lower prices for sales of recyclables.

- Toronto Parking Authority experienced higher than expected net revenue of $3.923 million or 7.5% at year-end driven largely by higher off-street parking revenues in the downtown garages and surface carparks as a result of higher than anticipated customer volume.   

- Toronto Water reported a favourable net variance of $36.718 million as at December 31, 2015, mainly due to underspending in salaries and benefits in the amount of $11.613 million as a result of vacancies combined with lower than anticipated demand for chemicals, electricity, professional and technical services, as well as underspending in the transfer costs of biosolids as a result of continued beneficial use for sludge.  In addition, revenues exceeded budget due to higher than anticipated volume of water sold, increase in new watermain and sewer service connections, and industrial waste agreements. 

Table 3 below summarizes the staff vacancy rate for the twelve months ended December 31, 2015.

 Table 3

Summary of 2015 Approved Complement at Year-End 

(Includes Capital and Operating Positions)

* Vacancy % minus Budgeted Gapping % or 0% whichever is higher.

For the year-end, the City recorded a vacancy rate of 2.2% after budgeted gapping for an approved complement of 54,304.9 operating and capital positions.  A more detailed analysis is provided in the Approved Complement Section of this report. 

Table 4 below provides a breakdown of the City's $130.928 million favourable net variance for City Operations and Agencies for the twelve-month period ended December 31, 2015.

After $38.598 million is allocated to comply with approved Council directions and legislative requirements as outlined on pages 12 to 13, the 2015 year-end surplus available for distribution is $130.928 million for Tax Supported Programs.  The 2015 operating surplus for Tax Supported Programs represented only about 1.3% of the approved gross expenditure budget.

In accordance with the City's Surplus Management Policy:

- At least 75 percent or $98.196 million will be allocated to the Capital Financing Reserve;

- $32.732 million will be allocated to underfunded liabilities and/or reserve funds.  Table 5a below summarizes the allocations for Tax Supported Programs.  

(See Table 5a titled 2015 Year-End Operating Results -

Tax Supported Programs and Agencies

in the Financial Impact Section of the report dated June 6, 2016

from the Deputy City Manager and Chief Financial Officer)

The 2015 final year-end operating results for Rate Supported Operations, excluding the Toronto Parking Authority, of $44.941 million will be allocated based on the following as shown in Table 5b below:

(See Table 5b titled 2015 Year-End Net Operating Results -

Rate Supported Programs

in the Financial Impact Section of the report dated June 6, 2016

from the Deputy City Manager and Chief Financial Officer)

Appendices

- Appendices A, B and C attached summarize year-end results for City net expenditures, gross expenditures and revenues, respectively. 

-  Appendix D provides a detailed assessment of the complement and strength for the twelve months ended December 31, 2015. 

-  Appendix E details the in-year budget adjustments to the 2015 Approved Operating Budget. 

-  Appendix F provides dashboard view for each City Program and Agency with four, six, nine month operating forecasts and the year-end results in the trend analysis for the twelve months ended December 31, 2015. 

The Budget Committee recommends that:

1. City Council approve the budget adjustments detailed in Appendix E to the report (June 6, 2016) from the Deputy City Manager and Chief Financial Officer to amend the 2015 Approved Operating Budget between Programs that have no impact to the 2015 Approved Net Operating Budget.

The purpose of this report is to provide Council with the City of Toronto's Operating Variance for the year ended December 31, 2015 and the disposition of the 2015 year-end operating surplus. This report also requests Council's approval for amendments to the 2015 Approved Operating Budget between Programs to better align and reflect the loss of the Toronto Pooling Compensation grant that has no impact to the 2015 Approved Net Operating Budget.

As noted in Table 1 below, the preliminary 2015 year-end operating surplus for Tax Supported Operations resulted in a net favourable variance of $130.928 million which is available for distribution after Council directions and legislative requirements are met. This surplus represented 1.3 percent of the gross Tax Supported budget.

Consistent with City Council approved Surplus Management Policy, at least 75 percent or ­­­­­­­­$98.196 million will be allocated to the Capital Financing Reserve and $32.732 million will be allocated to underfunded liabilities and/or reserve funds for replenishment.

The 2015 surplus was driven largely by:

- Lower than planned financial employment benefits for OW clients mainly due to functionality issues related to the Social Assistance Management System that processed client applications for Toronto Employment and Social Services ($12.820 million); under-spending in Non-Program Expenditures particularly in the Heritage Tax Rebate program, Parking Tag Enforcement and Operations, and various Other Corporate Expenditure accounts ($12.597 million); combined with under-expenditures in various departmental non-labour expenses including utilities, leasing and fuel costs for TTC – Conventional Services ($10.119 million).

- Higher than budgeted net revenue from the Municipal Land Transfer Tax ($92.122 million), Supplementary Taxes ($15.003 million) as a result of supplementary/omits rolls being higher than originally forecast, a year-end adjustment to recognize retroactive lease payments since 2011 based on a favourable ruling in regards to 2 Bloor Street West in Facilities, Real Estate, Environment & Energy ($14.942 million), stronger than forecast permit net revenue largely from high rise condominium applications for Toronto Building ($11.700 million), as well as one-time unbudgeted revenues and net Pan Am Games recoveries for Toronto Police Service ($8.363 million).

- The favourable expenditure revenue variances, as noted above, were partially offset by under-achieved in Payment in Lieu of Taxes as a result of higher than anticipated appeals and other adjustments ($7.643 million); a delay in approval of the Toronto Hydro dividend ($11.250 million); reduced ticket issuance by Parking Tag Enforcement & Operations reflecting higher than anticipated success of traffic initiatives and the Pan Am Games ($10.495 million); and under-achieved utility cut repair revenues and lower than expected permit parking fees for Transportation Services ($9.522 million).

Rate Supported Programs reported a year-end net favourable variance of $48.863 million. Table 2 below summarizes the net variances for Rate Supported Programs:

The year-end favourable net variance of $48.863 million was driven by the following:

- Solid Waste Management Services reported a favourable net variance of $8.222 million at year-end, primarily due to lower processing costs resulting from lower tonnages of recyclable materials; salaries and benefits resulting from vacancies and WSIB costs of $5.449 million; deferred advertising campaigns; and lower than planned debt service costs due to delayed issuance of debentures. These favourable variances were partially offset by under-achieved revenues due to lower than expected single and multi-resident volumes; adjusted stewardship funding for lower tonnages; lower tonnes of Green Lane waste; and lower prices for sales of recyclables.

- Toronto Parking Authority experienced higher than expected net revenue of $3.923 million or 7.5 percent at year-end driven largely by higher off-street parking revenues in the downtown garages and surface carparks as a result of higher than anticipated customer volume.

- Toronto Water reported a favourable net variance of $36.718 million as at December 31, 2015, mainly due to underspending in salaries and benefits in the amount of $11.613 million as a result of vacancies combined with lower than anticipated demand for chemicals, electricity, professional and technical services, as well as underspending in the transfer costs of biosolids as a result of continued beneficial use for sludge. In addition, revenues exceeded budget due to higher than anticipated volume of water sold, increase in new watermain and sewer service connections, and industrial waste agreements.

Table 3 below summarizes the staff vacancy rate for the twelve months ended December 31, 2015.

Table 3

Summary of 2015 Approved Complement at Year-End

(Includes Capital and Operating Positions)

* Vacancy percent minus Budgeted Gapping percent or 0 percent whichever is higher.

For the year-end, the City recorded a vacancy rate of 2.2 percent after budgeted gapping for an approved complement of 54,304.9 operating and capital positions. A more detailed analysis is provided in the Approved Complement Section of this report.

The Deputy City Manager and Chief Financial Officer recommends that: 

1.  City Council receive this report and attached Appendices for information.

The purpose of this report is to provide Council with the City of Toronto Capital Variance for the year-ended December 31, 2015. 

Capital expenditures for the twelve months ended December 31, 2015 totalled $2.868 billion or 68.3 percent of the 2015 Approved Capital Budget of $4.199 billion (see Table 1).  This spending pattern is consistent with prior years. 

For the year- ended December 31, 2015, Tax Supported Programs and Agencies reported capital expenditures of $2.189 billion representing 65.8 percent of their collective 2015 Approved Capital Budget of $3.328 billion. Rate Supported Programs reported capital expenditures of $679.584 million, representing 78.1 percent of their collective 2015 Approved Capital Budget of $870.628 million.

Table 1

Summary of Capital Spending

The rate of spending in 2015 was driven largely by expropriation process delays for the acquisition of various sites, site conditions, longer than planned timelines to obtain necessary approvals or required permits; design issues and difficulty in securing necessary resources for project delivery. The detailed explanations of project delays by Program/Agency are provided in Appendix 3 attached to the report.

Chart 1 below shows historical spending rate over the last 6 years. There has been a marked increase and improvement in capital spending over the last 2 years reaching all time high of $2.868 billion in 2015.

Chart 1

2010 – 2015 Capital Budget Spend Rate

(See Chart 1 titled Capital Budget Spend Rate

in the Summary Section of the report dated June 6, 2016

from the Deputy City Manager

and Chief Financial Officer) 

Table 2 below outlines the 2015 actual expenditure for Tax and Rate Supported Programs for the year ended December 31, 2015.

Table 2

Capital Year-End Spending by Cluster

Total expenditures for Tax and Rate Supported Programs and Agencies for the year-ended December 31, 2015 are $2.868 billion representing 68.3 percent of their combined 2015 Approved Capital Budget. Actual spending at year-end is higher than previous years with the highest spending levels attributed to capital work for City Agencies and Toronto Water.

Appendix 1 provides summary of the year-end spending rate by City Program and Agency. Appendix 3 provides detailed project status by 2015 year-end in a dashboard approach. 

Closed Capital Projects

During the last 5 years, City Programs and Agencies completed capital work on 1,764 capital projects that have had a combined total project cost of $3.849 billion and actual expenditures of $3.395 billion, coming under budget by $453 million, of which $153 million resulted in avoided debt funding.

Table 5

2011 – 2015 Closed Capital Projects

(See Table 5 titled 2011-2015 Closed Capital Projects

in the Financial Impact Section of the report dated June 6, 2016

from the Deputy City Manager

and Chief Financial Officer)

A consolidated list of projects and sub-projects to be closed were part of the first quarter variance report for 2016. Since 20 projects with $83.1 million in project cost and realised saving of $ 33.2 million will be closed with the first quarter of 2016 Variance report, City Programs and Agencies did not request any closure of capital projects with this report. Accounting Services staff ensured that all expenditures for the identified capital projects/sub-projects were fully funded prior to closure.

Carry Forward

A total of $1.138 billion representing 24.7 percent of the 2015 Approved Capital Budget has been approved to be carried forward to 2016 Approved Capital Budget to ensure continuation of work on those capital projects.

The Budget Committee recommends that:

1. City Council receive the report and attached appendices (June 6, 2016) from the Deputy City Manager and Chief Financial Officer for information.

The purpose of this report is to provide Council with the City of Toronto Capital Variance for the year-ended December 31, 2015.

Capital expenditures for the twelve months ended December 31, 2015 totalled $2.868 billion or 68.3 percent of the 2015 Approved Capital Budget of $4.199 billion (see Table 1). This spending pattern is consistent with prior years.

For the year- ended December 31, 2015, Tax Supported Programs and Agencies reported capital expenditures of $2.189 billion representing 65.8 percent of their collective 2015 Approved Capital Budget of $3.328 billion. Rate Supported Programs reported capital expenditures of $679.584 million, representing 78.1 percent of their collective 2015 Approved Capital Budget of $870.628 million.

Table 1

Summary of Capital Spending

The rate of spending in 2015 was driven largely by expropriation process delays for the acquisition of various sites, site conditions, longer than planned timelines to obtain necessary approvals or required permits; design issues and difficulty in securing necessary resources for project delivery. The detailed explanations of project delays by Program/Agency are provided in Appendix 3 attached to the report.

Chart 1 below shows historical spending rate over the last 6 years. There has been a marked increase and improvement in capital spending over the last 2 years reaching all time high of $2.868 billion in 2015.

Chart 1

2010 – 2015 Capital Budget Spend Rate

(See Chart 1 titled Capital Budget Spend Ratein the Summary Section of the report dated June 6, 2016

from the Deputy City Manager and Chief Financial Officer)

The City Manager and the Deputy City Manager and Chief Financial Officer recommend that:

1.  City Council approve the 2017 Budget Process and Schedule which is designed to develop, review and adopt 2017 Rate Supported Operating Budget and 2017 to 2026 Capital Budget and Plan by December 14, 2016 and the 2017 Tax Supported Operating Budget and 2017 to 2026 Capital Budget and Plan by February 16, 2017 as set out in Appendix 1 of this report.

2.  City Council direct that all Agencies submit their respective final Board-approved 2017 Operating Budget and 2017 – 2026 Capital Budget and Plan requests no later than October 1, 2016.

3.  Budget Committee consider and recommend one of the following options for 2017 Operating Budget targets for City Programs, and Agencies for City Council approval:

a.  across the Board budget reduction target of  -2.6 percent net below the 2016 Approved Net Operating Budget for all City Programs and Agencies; or

b.  a budget reduction target of -5.1 percent net below the 2016 Approved Net Operating Budget for all City Programs and Agencies and a 0 percent net increase budget target for Toronto Transit Commission, Toronto Police Service and Toronto Community Housing that maintains 2017 funding equal to their 2016 Approved Net Budget; or

c.  a budget reduction target of -3.8 percent net below the 2016 Approved Net Operating Budget for City Programs and Agencies; a budget reduction target of -4.1 percent for the Toronto Transit Commission to absorb incremental debt servicing for its capital costs and a budget reduction of a 0 percent increase for the Toronto Police Service and Toronto Community Housing that maintains 2017 funding equal to their respective 2016 Approved Net Budget.

4.  City Council direct that City Programs and Agencies submit their 2017 – 2026 Capital Budget and Plans requiring that:

a.  Capital Plan submissions adhere to the debt levels approved by Council for the 2017 – 2025 Capital Plan as part of the 2016 Budget process, and projects be added in the new tenth year, 2026, that can be accommodated within current affordability targets;

b.  annual cashflow funding estimates be examined to more realistically match cashflow spending to project activities and timing, especially in the first 5 years of the Capital Plan’s timeframe; and

c.  unfunded capital project estimates and timing be refined and submitted for prioritization.

5.  Budget Committee consider whether its recommended 2017 operating budget reduction targets and also its capital budget guidelines detailed in Recommendation 4 above be applied to Accountability Offices for the 2017 Budget process.

The purpose of this report is to establish the 2017 Budget process and schedule to review and approve the Tax and Rate Supported 2017 Operating Budget and the 2017 to 2026 Capital Budget and Plan for the City of Toronto.

The recommended 2017 Budget Process and Schedule is designed to ensure that the Rate Supported Operating Budgets and 10-Year Capital Plans are approved by December 14, 2016 and the Tax Supported Operating Budget and 10-Year Capital Plan are approved by February 16, 2017. To ensure adequate time to review agency budget submissions, it is recommended that City Council direct all Agencies to submit their final Board-approved budget submissions by October 1, 2016.

This report also lays out the 2017 operating revenue and expenditure projections which have been, in part, determined by decisions approved in the 2016 Budget process as well as anticipated costs and revenues associated with maintaining 2016 approved service levels. These projected pressures are presented to assist Budget Committee and Council in establishing recommended budget targets and directions for City Programs, Agencies and Accountability Offices in order to address significant budget pressures forecasted for 2017. These estimates are projected based on current information and are not final. These estimates will change with the receipt of actual budget submissions.

A net tax supported revenue increase of $66 million is projected for 2017. This estimate is driven by an assumed 2 percent residential tax rate increase of $52 million, assessment growth of $40 million or 1 percent and only a marginal increase of $20 million in Municipal Land Transfer Taxes that will be reduced to account for the reversal of $38 million in approved one-time 2016 revenues and other net revenue reductions of $8 million.

Operating expenses are forecasted to increase by $582 million with Capital Financing and other Non-Program expenses ($166 million), Toronto Transit Commission ($178 million), Toronto Community Housing Corporatin ($96 million) and Toronto Police Services ($19 million) projected as the key service cost drivers. With revenues fixed at $66 million, budget reduction strategies are required to offset net base pressures of $516 million in order to balance the 2017 Operating Budget. These strategies would simply address current service costs and exclude any funding for new and enhanced service investments.

Given the limited funding for City services, there is no additional financial capacity to fund any new capital works in 2017. As a result, City Programs, Agencies and Accountability Officers must submit 2017 – 2026 Capital Budget and Plans on a status quo basis. This requires capital plan requests to adhere to the 2017 – 2025 Capital Plan’s annual debt funding approved by Council as part of the 2016 Budget process, and projects be added in the new tenth year, 2026, that can be accommodated within current debt targets as provided by the Deputy City Manager and Chief Financial Officer.

Staff are requested to continue to refine their estimates for the unfunded capital projects valued at $29 billion identified in 2016 and to submit these to establish priorities. Staff have begun developing a funding plan for priority capital projects, which will include a review of debt capacity, the application of new and existing revenue options, as well as the eligibility of Federal and Provincial funding programs over the next 12 to 24 months. The ensuing list of new unfunded capital projects will be considered in concert with the City Manager and Chief Financial Officer's report on a multi-year revenue strategy which will then form the basis for the development of a funding plan for priority capital projects as part of the City's Long Term Financial Plan. The funding plan would then be submitted to Council for its consideration and approval.

Revenue tools currently under study may not be available for the 2017 Budget process and should not be considered as providing any significant relief for 2017. Should any become available for use, they must be considered as a bridging strategy to sustainable operating budgets only. New revenue sources must be considered for the sizable unfunded capital needs that have been identified as critical to maintaining reliable City service delivery and meeting city building and other strategic objectives.

In prior years, the City Manager and Chief Financial Officer set targets for all City Programs and Agencies in advance of budget preparation. These targets have been met with varying degrees of compliance and impact. Beginning with the 2017 Budget process, Budget Committee is requested to recommend budget targets for all City Programs, Agencies and Accountability Offices for approval by City Council.

In addressing 2017 budgetary challenges, it will be necessary to ensure consistency between decisions to be taken in 2017 with the City's emerging longer-term priorities.

Adoption of the recommendations in this report will establish the 2017 Budget process timelines and provide City Programs, Agencies and Accountability Officers with Council approved directions and budget targets to address projected operating expenses based on revenues anticipated for 2017. Similarly, guidelines and directions provided for the preparation, review and approval of the 2017 – 2026 Capital Budget and Plan will support the continuation of establishing a 10-year Capital Plan based on the City's current 15 percent debt ratio guideline.

The Budget Committee recommends that:

1. City Council approve the 2017 Budget Process and Schedule which is designed to develop, review and adopt 2017 Rate Supported Operating Budget and 2017 to 2026 Capital Budget and Plan by December 14, 2016 and the 2017 Tax Supported Operating Budget and 2017 to 2026 Capital Budget and Plan by February 16, 2017 as set out in Appendix 1 to the report (June 17, 2016) from the City Manager and the Deputy City Manager and Chief Financial Officer.

2. City Council direct that all Agencies submit their respective final Board-approved 2017 Operating Budget and 2017 – 2026 Capital Budget and Plan requests no later than October 1, 2016.

3. City Council adopt an across the board budget reduction target of -2.6 percent net below the 2016 Approved Net Operating Budgets for all City Programs, Agencies, Toronto Community Housing Corporation, and Accountability Offices; and that strategies including but not limited to the following strategies be used to achieve the -2.6 percent target:

a. fund any new or enhanced services from within existing budgets, and review for impact on staff time and planned service delivery any new or enhanced services with a "net zero" funding impact;

b. continue to control expenditures through cost saving measures;

c. explore all services for efficiency savings including opportunities from business process reengineering, streamlining, transformation and innovation to service delivery including from:

i. service delivery rationalization and restructuring; and

ii. opportunities for alternative service delivery, including contracting out;

d. review service levels and outcomes for relevance, value and impact, focussing on non-public facing services first;

e. maximize user fee revenue by reviewing full cost-recovery where applicable, review existing fines and permit fees and identify new fines and other user fees where appropriate;

f. provide a thorough justification for any new Full-time Equivalents (FTEs); and,

g. avoid "offloading" expenses to other City Programs and Agencies.

4. City Council direct that City Programs and Agencies submit their 2017 - 2026 Capital Budget and Plans requiring that:

a. Capital Plan submissions adhere to the debt levels approved by Council for the 2017 - 2025 Capital Plan as part of the 2016 Budget process, and projects be added in the new tenth year, 2026, that can be accommodated within current affordability targets;

b. annual cashflow funding estimates be examined to more realistically match cashflow spending to project activities and timing, especially in the first 5 years of the Capital Plan's timeframe; and

c. unfunded capital project estimates and timing be refined and submitted for prioritization.

5. City Council direct that the operating and capital guidelines detailed in Recommendations 3 and 4 above be applied to the Accountability Offices for the 2017 Budget process.

6. City Council direct the City Manager to provide the following information as part of the 2017 tax suported budget:

a. detailed information about anticipated gapping of front line staff; and

b. detailed information on proposed changes to cost recovery or cost shared services.

7. City Council direct the City Manager to prepare the 2017 tax-supported net operating budget based on estimated revenue resulting from a residential property tax increase at or below the rate of inflation.

8. City Council direct the City Manager and the Deputy City Manager and Chief Financial Officer, as part of the 2017 budget process, to accelerate the use of digital solutions, measurements and analytics. 

The purpose of this report is to establish the 2017 Budget process and schedule to review and approve the Tax and Rate Supported 2017 Operating Budget and the 2017 to 2026 Capital Budget and Plan for the City of Toronto.

The recommended 2017 Budget Process and Schedule is designed to ensure that the Rate Supported Operating Budgets and 10-Year Capital Plans are approved by December 14, 2016 and the Tax Supported Operating Budget and 10-Year Capital Plan are approved by February 16, 2017. To ensure adequate time to review agency budget submissions, it is recommended that City Council direct all Agencies to submit their final Board-approved budget submissions by October 1, 2016.

This report also lays out the 2017 operating revenue and expenditure projections which have been, in part, determined by decisions approved in the 2016 Budget process as well as anticipated costs and revenues associated with maintaining 2016 approved service levels. These projected pressures are presented to assist Budget Committee and Council in establishing recommended budget targets and directions for City Programs, Agencies and Accountability Offices in order to address significant budget pressures forecasted for 2017. These estimates are projected based on current information and are not final. These estimates will change with the receipt of actual budget submissions.

A net tax supported revenue increase of $66 million is projected for 2017. This estimate is driven by an assumed 2 percent residential tax rate increase of $52 million, assessment growth of $40 million or 1 percent and only a marginal increase of $20 million in Municipal Land Transfer Taxes that will be reduced to account for the reversal of $38 million in approved one-time 2016 revenues and other net revenue reductions of $8 million.

Operating expenses are forecasted to increase by $582 million with Capital Financing and other Non-Program expenses ($166 million), Toronto Transit Commission ($178 million), Toronto Community Housing Corporatin ($96 million) and Toronto Police Services ($19 million) projected as the key service cost drivers. With revenues fixed at $66 million, budget reduction strategies are required to offset net base pressures of $516 million in order to balance the 2017 Operating Budget. These strategies would simply address current service costs and exclude any funding for new and enhanced service investments.

Given the limited funding for City services, there is no additional financial capacity to fund any new capital works in 2017. As a result, City Programs, Agencies and Accountability Officers must submit 2017 – 2026 Capital Budget and Plans on a status quo basis. This requires capital plan requests to adhere to the 2017 – 2025 Capital Plan’s annual debt funding approved by Council as part of the 2016 Budget process, and projects be added in the new tenth year, 2026, that can be accommodated within current debt targets as provided by the Deputy City Manager and Chief Financial Officer.

Staff are requested to continue to refine their estimates for the unfunded capital projects valued at $29 billion identified in 2016 and to submit these to establish priorities. Staff have begun developing a funding plan for priority capital projects, which will include a review of debt capacity, the application of new and existing revenue options, as well as the eligibility of Federal and Provincial funding programs over the next 12 to 24 months. The ensuing list of new unfunded capital projects will be considered in concert with the City Manager and Chief Financial Officer's report on a multi-year revenue strategy which will then form the basis for the development of a funding plan for priority capital projects as part of the City's Long Term Financial Plan. The funding plan would then be submitted to Council for its consideration and approval.

Revenue tools currently under study may not be available for the 2017 Budget process and should not be considered as providing any significant relief for 2017. Should any become available for use, they must be considered as a bridging strategy to sustainable operating budgets only. New revenue sources must be considered for the sizable unfunded capital needs that have been identified as critical to maintaining reliable City service delivery and meeting city building and other strategic objectives.

In prior years, the City Manager and Chief Financial Officer set targets for all City Programs and Agencies in advance of budget preparation. These targets have been met with varying degrees of compliance and impact. Beginning with the 2017 Budget process, Budget Committee is requested to recommend budget targets for all City Programs, Agencies and Accountability Offices for approval by City Council.

In addressing 2017 budgetary challenges, it will be necessary to ensure consistency between decisions to be taken in 2017 with the City's emerging longer-term priorities.

The Deputy City Manager and Chief Financial Officer recommends that:

1.  The 2014 operating surpluses totalling $3,278 from three Arenas (Larry Grossman Forest Hill Memorial, Ted Reeve and North Toronto) be paid to the City of Toronto and be used to partially fund the cumulative operating deficit of $186,612 for five Arenas (George Bell, William H. Bolton, Leaside Memorial Community Gardens, McCormick, and Moss Park), resulting in an operating net deficit of $183,334 to be funded by the City, as detailed in Appendix A, column (d), of the report.

2.  A funding provision for the 2014 net deficit of $174,384 is made through the 2015 Final Year-End Operating Variance Report, as calculated in the attached Appendix A.

3.  Leaside Memorial Community Gardens Arena's 2014 operating deficit of $83,851 be added to the City loan balance outstanding related to the "Leaside Arena 2nd Pad Expansion Project".

This report recommends settlements with the eight Arena Boards of Management (Arenas) of their 2014 operating surpluses and deficits based on the audited financial statements for the year-ended December 31, 2014, with operating surpluses payable to the City and operating deficits funded by the City upon Council's approval.

The Arena Boards of Management final net settlement for the year 2014 requires that surplus funds of $3,278 be paid to the City from three Arenas and be used to partially fund the operating deficit of $186,612 for the remaining five arenas, resulting in a net funding requirement from the City of $183,334. A summary of net funding to the Arenas and surpluses payable to the City are detailed in Appendix A.

In addition, $97,487 of the 2013 settlement was funded from the 2014 Operating Budget, resulting in a total 2014 settlement funding requirement of $280,821.

Of this total funding requirement of $280,821; $106,437 was provided through the 2014 Final Year-End Operating Variance Report, leaving a balance of $174,384 to be funded through the 2015 Final Year-End Operating Variance Report.

The City will recover Leaside Arena's 2014 operating deficit of $83,851 over time, as the agreement for the loan to build Leaside Arena's second pad requires that any operating deficit during the life of the loan be rolled into the outstanding balance for repayment.

The Budget Committee recommends that:

1. City Council direct that the 2014 operating surpluses totalling $3,278 from three Arenas (Larry Grossman Forest Hill Memorial, Ted Reeve and North Toronto) be paid to the City of Toronto and be used to partially fund the cumulative operating deficit of $186,612 for five Arenas (George Bell, William H. Bolton, Leaside Memorial Community Gardens, McCormick, and Moss Park), resulting in an operating net deficit of $183,334 to be funded by the City, as detailed in Appendix A, column (d), of the report (June 8, 2016) from the Deputy City Manager and Chief Financial Officer.

2. City Council direct that a funding provision for the 2014 net deficit of $174,384 be made through the 2015 Final Year-End Operating Variance Report, as calculated in Appendix A to the report (June 8, 2016) from the Deputy City Manager and Chief Financial Officer.

3. City Council direct that the Leaside Memorial Community Gardens Arena's 2014 operating deficit of $83,851 be added to the City loan balance outstanding related to the "Leaside Arena 2nd Pad Expansion Project".

This report recommends settlements with the eight Arena Boards of Management (Arenas) of their 2014 operating surpluses and deficits based on the audited financial statements for the year-ended December 31, 2014, with operating surpluses payable to the City and operating deficits funded by the City upon Council's approval.

The General Manager, Economic Development and Culture recommends that:

1.  City Council direct the General Manager of Economic Development and Culture to include capital projects at 16 Ryerson Avenue to reduce the State of Good Repair backlog identified in the Building Condition Audit in 2014 and comply with the Accessibility for Ontarians with Disabilities Act in its 2017 - 2026 Capital Budget and Plan submission for consideration.

City Council, in February 2016, directed the General Manager, Economic Development and Culture and the Chief Financial Officer to review the agreement with Theatre Passe Muraille (TPM), and the funding of the 16 Ryerson Avenue Capital Maintenance Reserve Fund (XR3213) to develop a realistic plan for required contributions and capital maintenance, and report back in June 2016, prior to the 2017 Budget process.

Theatre Passe Muraille is Canada's oldest alternative theatre devoted to the development and production of original Canadian work and is the sub-tenant at 16 Ryerson, a City of Toronto owned building.  In December 2007, the City acquired the building from Theatre Passe Muraille to assist them in managing a financial crisis while continuing to develop and produce Canadian theatre in the building.

In January 2008, the City entered into a below market rent (BMR) lease with Toronto Artscape Inc. to manage the building as a City-owned performing arts centre, operated by Theatre Passe Muraille.  The current lease is for a 10-year term with two five-year renewal options.  The lease established that $200,000 from the proceeds of the sale of the building was to be used to create a Reserve Fund, held by the City as security for any future capital costs.  A condition of the lease requires the tenant to contribute a minimum of $20,000 annually to the Reserve Fund.  Such funds, over the $200,000 principal, are to be applied to the capital costs of the building, through the Economic Development and Culture Division's Capital Budget.

In 2014, an updated Building Condition Audit for 16 Ryerson Avenue identified over $600,000 in State of Good Repair (SOGR) backlog, (construction estimates only), excluding architects' fees, accessibility upgrades, and a new required electrical service.

Economic Development and Culture staff recently completed a financial review of Theatre Passe Muraille.  The not-for-profit theatre relies heavily on grants and donations just to maintain programming and operations. Theatre Passe Muraille does not have the capacity and resources to maintain the building in a state of good repair, beyond the contribution it is already making to the reserve.

The 2014 Building Condition Audit identified $600,000 in State of Good Repair backlog for only the construction component. The total cost including architects' fees, environmental abatement, archaeology and Accessibility for Ontarians with Disabilities Act (AODA) accessibility compliance will exceed $1,000,000.

The Building Condition Audit (BCA) for Theatre Passe Muraille updated in 2014 calls for:

- roof replacement on the north end of the building;

- exterior masonry repair, repointing and rebuilding required throughout;

- restoration or replacement of wood windows and doors (note Theatre Passe Muraille has secured $25k under the Toronto Heritage Grant Program for the front doors.)

- fire separation and guardrails throughout Backspace;

- structural reinforcing steel plates and tie rods—north elevation;

- structural reinforcing timber roof beams—south end;

- mechanical system balancing and distribution re-design; and

- fire and life safety system replacement.

Not identified in the Building Condition Audit:

- replacement of obsolete electrical supply and distribution system;

- accessibility improvements to move toward AODA standard (some work beginning 2016);

- sidewalk widening to improve patron circulation and safety; and

- connection between main stage and back stage spaces to improve visitor experience and operational efficiency.

The above projects will be included for consideration in Economic Development and Culture's 2017-2026 Capital Budget and Plan submission within its debt targets. Depending on the timing of the capital projects, they will be partially funded by what is available in the Reserve Fund, and the remaining will be funded by debt, donations and grants. Economic Development and Culture's 2016-2025 Approved Capital Budget and Plan includes $249,000 in 2016 and $782,000 from 2019 to 2025 for major maintenance at Theatre Passe Muraille.

There will be no operating costs to the City of Toronto arising from these recommendations as they are the responsibility of the tenant under the lease.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

Parks, Forestry and Recreation has been awarded a two-year grant through the Ministry of Tourism, Culture and Sports, Ontario Sport and Recreation Community Fund for the amount of $0.251 million.

This report seeks authority for staff to accept the grant funding which in combination with  existing resources will be used to expand and further implement consistent quality standards into all children's programming offered by the Community Recreation Branch utilizing the HIGH FIVE® nationally recognized quality assurance program.

The Ministry of Tourism, Culture and Sport's will be providing a two-year grant up to a total amount of $0.251 million through the Ontario Sport and Recreation Community Fund to expand and further implement consistent quality standards into all children's programming offered by the Community Recreation Branch utilizing the HIGH FIVE® nationally recognized quality assurance program.

To account for this grant funding, the 2016 Operating Budget for Parks, Forestry and Recreation will be increased by $0.118 million, fully funded by the Ontario Sport and Recreation Community Fund grant, for a net zero impact.  The remaining grant funding of $0.132 million will be included for Council's consideration in the 2017 Operating Budget Submission for Parks, Forestry and Recreation.  The grant will fully fund 2.0 temporary position needed to complete the delivery and implementation of the project for a duration of two years.  These additional positions can be accommodated within the existing workforce by repurposing 2 temporary vacant positions.  An increase in the Council Approved Complement for Parks, Forestry and Recreation is not required.   

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The Budget Committee recommends that:

1. City Council authorize the General Manager, Parks, Forestry and Recreation to sign a transfer payment agreement with the Ministry of Tourism, Culture and Sport for the Ontario Sport and Recreation Community Fund grant and receive funds up to $0.251 million in provincial contribution over 2 years.

2. City Council increase the Council approved 2016 Operating Budget for Parks, Forestry and Recreation by $0.118 million, fully funded by the Ontario Sport and Recreation Community Fund grant for a net zero impact, and include the remaining grant funding of $0.132 million in the 2017 Operating Budget Submission.

The General Manager, Toronto Water recommends that:

1.  City Council authorize the reallocation of funds within Toronto Water's approved 2016 Capital Budget and 2017-2025 Capital Plan in the amount of $28.204 million, for acceleration and deferral of projects, as presented in Schedule A (Part A and B), with a zero Budget impact.

 2.  City Council authorize the reallocation of funds in Toronto Water's approved 2016 Capital Budget and 2017-2025 Capital Plan in the amount of $15.8 million from projects that have been completed or delayed to those requiring additional funding in the same amount as presented in Schedule A (Part C), with a zero Budget impact.

This report requests City Council’s authority to amend Toronto Water’s Approved 2016 Capital Budget and 2017-2025 Capital Plan by adjusting project costs and cash flows contained within the Budget and Plan, respectively, to align the 2016 Capital Budget with changes made to the 2015 Capital Budget at year end.  Additional reallocations to project cashflows and project costs are requested where recent project estimates exceed the current approved cashflow.  These reallocations will allow Toronto Water to continue to deliver projects within its capital plan.  The adjustments will have a zero dollar impact on the 2016 Capital Budget and 2017-2025 Capital Plan and will align the 2016 Capital Budget to Toronto Water's capital project delivery schedule and program requirements.

Toronto Water achieved a delivery rate of 83.6 percent of its 2015 approved Capital Budget of $756 million. The delivery of a number of projects exceeded 2015 cash flow forecasts while some others fell behind schedule resulting in the need to amend the 2015 Approved Budget to reflect project accelerations and deferrals as outlined in Appendix A (Part A and B). The reallocations undertaken for 2015 year end reporting need to be extended to the 2016 Approved Capital Budget to align the 2016 approved cashflows with the changes to the capital project delivery schedule made in 2015. The increases to the approved 2016 and 2017 cashflows as shown in Appendix A- Part B are offset by decreases in Appendix A- Part A resulting in no additional costs.

In addition, with the completion of detailed designs for two wastewater treatment plant projects and escalating bid prices for watermain and sewer replacement projects, additional relocation is required as outlined in Appendix A- Part C to ensure projects can continue to be awarded through the summer months. The additional costs are offset by savings with the completion of 2015 watermain and sewer replacement projects with no additional costs.

There are no additional costs to the City as a result of the approval of this report. The recommended adjustments will align the 2016 Capital Budget and 2017-2025 Capital Plan with Toronto Water's capital project delivery schedule and program requirements.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

This report requests City Council's authority to amend Toronto Water's Approved 2016 Capital Budget and 2017-2025 Capital Plan by adjusting project costs and cash flows contained within the Budget and Plan, respectively, to align the 2016 Capital Budget with changes made to the 2015 Capital Budget at year end. Additional reallocations to project cashflows and project costs are requested where recent project estimates exceed the current approved cashflow. These reallocations will allow Toronto Water to continue to deliver projects within its capital plan. The adjustments will have a zero dollar impact on the 2016 Capital Budget and 2017-2025 Capital Plan and will align the 2016 Capital Budget to Toronto Water's capital project delivery schedule and program requirements.

The Chair, Toronto Police Services Board recommends that:

1.  City Council approve the Service’s revised 2016-2025 Capital Program with a 2016 net request of $21.6 Million (excluding cash flow carry forwards from 2015), and a net total of $243 Million for 2016‑2025, as detailed in Attachment B; contained within Appendix A.

The purpose of this report is to provide the Budget Committee with the 2016-2025 revised capital program request for the Toronto Police Service (the "Service").

The Service’s 2016-2025 Capital Program as revised by the Council, exceeds the Board-approved amount by $526,000. The ten-year program as approved by Council includes a cash flow adjustment made by City Finance for the Peer to Peer Site project and an increase of $526,000 to State of Good Repair (SOGR).

The revised program includes a shift in funding for the Peer to Peer project as site selection has not yet been finalized. The total cost of the project remains the same; however, $4 million was moved from 2016 to 2017 as it is anticipated that construction will not commence until 2017. As a result of this change, the required amounts in 2018 and 2019 were also revised that also impacted the Developmental Charges (DC) for those years.

The City also transferred $526,000 in 2016 from their Facility Maintenance budget which was allocated for two projects at 255 Dundas (52 Division), rehabilitation of building façade and elevator modernization, to the Service. The work will be completed by the Service’s Facilities Management Unit as part of a major update project currently ongoing.

Table 1 below provides a summary of the changes to the Service’s 2016-2025 Capital Program and compare it to the affordability target.

Additional detail on debt-funded and reserve-funded projects can be found in Attachments A and B respectively.

The purpose of this report is to provide the Budget Committee with the 2016-2025 revised capital program request for the Toronto Police Service.

The Board of Governors of Exhibition Place recommends that:

1.  City Council approve the following amendments to the Muzik Clubs Lease and any other terms that may be required by the Chief Executive Officer and City Solicitor:

a.  amend sections 5.1 and 5.2 of the Muzik Clubs Lease to allow Muzik Clubs to host banquets provided that if Muzik Clubs, in any one year, contracts to hold more than thirty (30) banquets, Muzik Clubs will provide notice to the Liberty Grand Entertainment Group ("Liberty"), and Liberty will have the right to cater such banquets, in accordance with Liberty’s price listing so that the amended sections of the Muzik Clubs Lease will be substantiality as provided in Appendix "A".

2.  City Council authorize the Board of Governors to:

a.  confirm in writing to Muzik Clubs Inc. that, in respect of trade and consumer shows, although the prohibition in the Muzik Clubs Lease will remain, the current practice of the Landlord allowing Muzik Clubs to host occasional trade and consumer shows with the prior consent of the Landlord in appropriate circumstances and in the Landlord's sole discretion will continue, provided that as a condition for this ongoing cooperation, Muzik Clubs Inc. must refrain from marketing itself as a venue for trade and consumer shows, or any other uses not permitted by the terms of the Muzik Clubs Lease; and

b.  establish a procedure whereby any consent will be submitted to the Business Development Committee and then to the Board of Governors for approval, provided however that in the case of urgent matters, the Chief Executive Officer of Exhibition Place will have the authority to give or withhold consent.

3.  City Council direct that the Confidential Attachment 1 remain confidential as it contains advice and information that is subject to solicitor-client privilege.

This report provides information in relation to the lease agreement between the Board of Governors of Exhibition Place and Hypnotic Clubs Inc. (successor to Muzik Clubs Inc.) (the "Muzik Clubs Lease") and other leases for the grounds. Specifically, it recommends amendments to the "Use" provisions in the Muzik Clubs Lease.  Leases with terms that are longer than four (4) years are approved by both the Board of Governors and City Council and the Muzik Clubs Lease which is 20 years falls into this category.  Revisions to the "Use" clauses in the Muzik Clubs Lease would be considered an amendment to a substantive term that would have been part of the terms in the Letter of Intent for the Muzik Clubs Lease approved by City Council.

There may be financial consequences to this report.

The Chair, Toronto Police Services Board, recommends that:

1.  City Council authorize the City of Toronto to sign the Amending Agreement to the Community Policing Partnership (CPP) Agreement with the Province and the Toronto Police Services Board, subject to approval as to form by the City Solicitor.

The purpose of this report is to request the Executive Committee to submit a recommendation to City Council to authorize the City of Toronto to enter into an Amending Agreement to the Community Policing Partnership (CPP) Program Agreement between the Province of Ontario (Province), the City of Toronto, and the Toronto Police Services Board.  This Amending Agreement was received on April 18, 2016 and amends the current Agreement, which expired on March 31, 2016, extending the term of the Agreement for a period of one year - April 1, 2016 to March 31, 2017.

Under the CPP Program, the Toronto Police Service (Service) receives grant funding of up to $7.53 million annually to cover a portion ($30,000 per officer) of the salaries and benefits of up to 251 officers.  Although the program has been on-going, a formal agreement is entered into every two years.  This year, the Province has provided a commitment for a one-year agreement only, with no further commitment for funding under the program at this time.    Revenue of $7.53 million is built into the Service budget each year for the CPP grant program.  In order to maximize the amount of funding received under this grant, the Service must maintain its uniform staffing levels at a pre-determined benchmark of at least 5,180 officers.  Uniform staffing levels have been maintained above this benchmark every year since the inception of the CPP Program in 1998 and the uniform strength for the duration of this grant term, which ends March 31, 2017, is projected to continue to exceed the benchmark.

There is no financial impact beyond what has already been approved in the current year’s budget for the Service.

As the CPP Program has been an on-going program, grant funding, estimated at $7.53 million, is included as revenue in the 2016 Toronto Police Service Operating Budget. Entering into the Amending Agreement with the Province in respect of the Community Policing Partnership Program will have no further financial implications or impact. However, failing to enter into the Amending Agreement would result in the loss of revenue of $7.53 million for the Board and the City with respect to the 251 officers that are partially funded through the grant program.

The Community Policing Partnership Program Amending Agreement with the Province does not commit the City to any additional expenditures.

The Chair, Toronto Police Services Board recommends that:

1.  City Council authorize the City of Toronto to sign the Amending Agreement to the Safer Communities - 1,000 Officers Partnership Program Agreement with the Province and the Toronto Police Services Board, subject to approval as to form by the City Solicitor.

The purpose of this report is to request the City’s Executive Committee to submit a recommendation to Toronto City Council to authorize the City of Toronto to enter into an Amending Agreement to the Safer Communities – 1,000 Officers Partnership Program Agreement between the Province of Ontario (Province), the City of Toronto and the Toronto Police Services Board.  This Amending Agreement was received on April 18, 2016, and amends the current Agreement, which expired on March 31, 2016, extending the term of the Agreement for a period of one year – April 1, 2016 to March 31, 2017.

Under the Safer Communities – 1,000 Officers Partnership Program, the Toronto Police Service (Service) may receive grant funding of up to $8.75 million annually to cover a portion ($35,000 per officer) of the salaries and benefits of up to 250 officers.  Although the program has been on-going, a formal agreement is entered into every two years.  This year, the Province has provided a commitment for a one-year agreement only, with no further commitment for funding under the program at this time. 

Revenue is built into the Service budget each year for this grant program.  In order to maximize the amount of funding received under the grant, the Service must maintain its uniform staffing levels at a predetermined benchmark of at least 5,510 officers.  Due to declining numbers of uniform officers, with few or no replacements being made, the Service no longer meets the requirements to obtain full funding under the grant.  With further separations of uniform members anticipated, and no plans to hire further uniform recruits in 2016, it is expected that the claim for period of the Amending Agreement will be less than half of the $8.75M funding available (amount claimed will vary depending on the number of uniform separations).  However, discussions are ongoing with the Province to negotiate changes to the terms and conditions of the Agreement that would allow the Service to maximize the claim under the grant program.

The Safer Communities - 1,000 Officers Partnership Program has been an on-going program, and grant funding of up to $8.75 million has been included annually as revenue in the Service's Operating Budget. The grant revenue is tied to uniform staffing levels. As these staffing levels were projected to decline below the grant's threshold for full funding in 2016, a 2016 revenue budget of $7.7M was established for the grant, resulting in a $1M estimated loss in grant funding in the Service's 2016 operating budget. Early in 2016, after approval of the 2016 Operating Budget, the Service altered its hiring plans for the year and reduced the planned number of uniform hires of 146, down to only 15 hires. This was done to help the Service contain the cost of policing services in 2017 and moving forward. As a result, the Service will fall well below the threshold to maintain full grant funding over the term of the Amending Agreement. Based on current projections, the Service will be eligible to claim only approximately $3.5M to $4M of the full $8.75M in funding available from the grant. This is based on a projected uniform staffing level of 5,247 officers by the end of the grant term – March 31, 2017. Figures may vary, depending on the actual number of uniform separations that occur in the year. To help to alleviate the loss of the grant funds, the Service and the Province are currently discussing possible changes to the Agreement that would allow the Service to make a greater grant claim and reduce the loss. Any such changes to the Agreement would be reviewed for approval as to form by the City Solicitor.

Entering into the Amending Agreement with the Province in respect of the Safer Communities - 1,000 Officers Partnership Program will have no further financial implications or impact. However, failing to enter into the Agreement would result in a loss of revenue of $3.5M to $4M (and potentially up to $8.75M) for the Board and the City with respect to the officer salaries that are partially funded through the grant program.

The Safer Communities - 1,000 Officers Partnership Program Amending Agreement with the Province does not commit the City to any additional expenditures.