Item - 2015.EX7.6

The Executive Committee recommends that:

1. City Council request the Intergovernmental Steering Committee to direct the Board of Waterfront Toronto to:

a. develop a transition plan to find efficiencies and manage the period between now and the time of Waterfront 2.0 funding decisions;

b. implement a corporate-wide performance measurement system that is "SMART" (specific, measurable, attainable, relevant and time-bound);

c. implement a common approach to project data management to promote project-based (as opposed to work package-based) reporting that is consistent, efficient and enterprise-wide;

d. strengthen its Freedom of Information policies and oversight to more closely reflect those of Municipal Freedom of Information and Protection of Privacy Act (MFIPPA); and

e. adopt wrongdoing policies that more closely reflect those contained in the Toronto Public Service By-law.

 
2. City Council provide the required consent to borrow money and mortgage or otherwise encumber assets pursuant to Subsections 4(5) and 4(6) of the Toronto Waterfront Revitalization Act substantially on the terms and conditions contained in the draft Consent (attached as Appendix A) to the report (June 19, 2015) from the Acting City Manager and authorize the Deputy City Manager responsible for the Waterfront Initiative to execute such Consent with such modifications as he shall deem necessary or desirable and in a form approved by the City Solicitor, and to deliver such Consent to Waterfront Toronto subject to such conditions regarding reporting and oversight as he shall deem necessary and desirable.

3. City Council request the Auditor General to undertake a value for money audit of Waterfront Toronto at the conclusion of the agency's 2015-2016 fiscal year, with funds allocated from the 2016 Waterfront Revitalization Initiative capital budget.

4. City Council direct the City Manager to review the real estate development responsibilities of Waterfront Toronto in parallel with the City-wide Real Estate Review, to ensure that Waterfront Toronto's real estate development work is aligned with that of City agencies, corporations and divisions.

5. City Council support, in principle, the undertaking of a second phase of waterfront revitalization supported by tri-government funding and governance.

6. City Council affirm flood protection, waterfront transit, land servicing, and public realm enhancements as priorities for capital projects to be delivered in the second phase of waterfront revitalization, with individual projects to be confirmed as funding commitments are secured and subject to approval through the annual budget process.

7. City Council:

a. request the Mayor to contact his Provincial and Federal counterparts to initiate a "Call to Action" negotiation process regarding funding for Waterfront 2.0 projects, to conclude as soon as possible in 2016; and

b. direct the Deputy City Manager responsible for the Waterfront Initiative to report back on the outcomes of the "Call to Action" process for Council's consideration and response.

8. Assuming a scenario of tri-government funding and governance to support a second phase of waterfront revitalization, City Council affirm Waterfront Toronto as the preferred delivery entity.

This report summarizes the outcomes of the Waterfront Strategic Review, including a performance assessment of Waterfront Toronto (WT) conducted by Ernst and Young LLP (EY). A key proposal is that the City lead a "Call to Action" with the Provincial and Federal governments to advance ongoing funding discussions regarding a second phase of waterfront revitalization.

The City, Provincial and Federal governments have provided funding and land contributions to support the Toronto Waterfront Revitalization Initiative (TWRI) that was launched in October 2000. Waterfront Toronto has been the primary delivery entity through which a range of revitalization projects have been successfully implemented. These projects have included land servicing, soil remediation, flood protection, habitat restoration and enhanced public spaces, which, in turn, have encouraged and accelerated private sector redevelopment. The tri-government partnership has initiated a process of growth and change that is transforming the face of Toronto's waterfront.

Ninety percent of government funding has been invested to date in the first phase of revitalization, known as Waterfront 1.0. The last of Waterfront 1.0 projects will be fully completed by 2024, using the remaining government funding and proceeds from land sales, leases and other revenues. A second phase of delivery, called Waterfront 2.0, is proposed. Over the past year, intergovernmental funding negotiations at the senior staff level regarding tri-government support for the Waterfront 2.0 concept have been positive but inconclusive.

With the task of revitalizing the City's waterfront far from complete, there is a danger of losing the positive momentum that has been created. The Waterfront Strategic Review has been undertaken to facilitate the completion of Waterfront 1.0 projects and to inform the City on how to proceed with a second phase of revitalization.

The Strategic Review has engaged  the other two orders of government, including senior staff representatives that comprise the waterfront Intergovernmental Steering Committee (IGSC), and has drawn from the input of stakeholders and other waterfront agencies, along with the findings of the Ernst and Young LLP study. The outcome is a set of findings and recommendations that apply to Waterfront 1.0 and, separately, a set of recommendations aimed at moving forward, in a timely and constructive manner, with a second phase of waterfront revitalization.

The Ernst and Young LLP study concludes that Waterfront Toronto has generally delivered revitalization projects effectively, with due regard for economy and efficiency, and consistent with international best practice. Waterfront Toronto has created a pool of knowledge, expertise and processes that has given it credibility in delivering waterfront renewal. In addition, Waterfront Toronto's precinct plans and public spaces have been internationally recognized for urban design, landscape architecture and planning excellence. Waterfront Toronto is also recognized as a leader in public consultation.

However, areas for improvement are identified. In particular, an appropriate balance between Waterfront Toronto staffing levels and the level of project spending should be maintained with due consideration to the duration of down cycles. Waterfront Toronto should also be requested to implement a corporate-wide performance measurement system and refine its data management approach to support project-based reporting. Furthermore, Waterfront Toronto 's Freedom of Information and wrongdoing policies require strengthening to more closely align with those of the City.

Based on the findings of the Ernst and Young LLP study, City staff have identified the need for Waterfront Toronto to develop a transition plan to manage the period between now and the time of Waterfront 2.0 funding decisions. The transition plan should identify the core strengths of the organization, a staff retention strategy and a balancing of staff resources with anticipated project delivery. Opportunities to realize efficiencies should be maximized.

Some City-led processes affecting Waterfront 1.0 delivery should be refined. For example, the City should lead future government-led audits on behalf of the three partners, since Federal and Provincial funding for Waterfront 1.0 has been almost fully invested. Also, the City has multiple entities engaged in real estate development and staff are reviewing the approach to real estate development. In parallel to this real estate review, staff should consider the real estate development responsibilities of Waterfront Toronto.

To ensure that Waterfront Toronto can complete its delivery of Waterfront 1.0 projects, it is recommended that Council provide authority to Waterfront Toronto to borrow up to $40 million for a five-year period without financial recourse to the City. The borrowing authority, which is needed to bridge Waterfront Toronto between land sales revenue payments and its expenses, requires tri-governmental approval. Approval by the Province has been provided, and Federal approval is imminent. The government partners have jointly developed an appropriate governance model, supporting oversight and monitoring of Waterfront Toronto's borrowing.

The tri-government model has enabled intergovernmental collaboration, remained non-partisan, and reflected a shared set of goals for waterfront revitalization. Benchmarked against achievements prior to 2000, and what the City could have reasonably achieved alone, the tri-government model combined with Waterfront Toronto as the primary delivery entity, has delivered substantial benefits to the City.

Consequently, the Strategic Review recommends that Council affirm its strong interest in continuing the tri-government waterfront revitalization partnership, and that the City take a leadership role by proposing a Call to Action. The Call to Action is proposed as a time-limited, formal and structured intergovernmental negotiation process to confirm Waterfront 2.0 funding commitments and the scope of project delivery. Led by elected officials and supported by the IGSC, the proposed Call to Action is intended to be completed as early as possible in 2016.

To frame the City’s negotiating approach, positions related to key project areas have been developed based on Strategic Review findings and are provided in this report. Stakeholder consultation indicated strong support for four priority Waterfront 2.0 areas: flood protection, waterfront transit, land servicing and public realm. These priority areas are consistent with Waterfront Toronto’s 2013 Strategic Business Plan: 2014:2023, the Central Waterfront Secondary Plan and the Official Plan. These should be affirmed by Council at this time as Waterfront 2.0 priorities, with individual projects to be confirmed as funding commitments are secured.

Deliberations by the governments through the proposed Call to Action will largely determine the role of Waterfront Toronto in the delivery of a second phase of waterfront revitalization. Ernst and Young LLP recommends that Waterfront Toronto conduct a full efficiency review following the government partner decisions. Assuming a tri-government funding commitment, a renewal of the tri-government partnership and broad agreement on priority project areas, staff recommend that Council affirm Waterfront Toronto as the preferred delivery entity. As indicated in the Ernst and Young LLP study, Waterfront Toronto has delivered value for money to the City, is aligned with international best practice, and has achieved recognition for public outreach and design excellence.