Item - 2020.EX15.2

The Executive Committee recommends that:

1.  City Council approve the terms and conditions summarized in Confidential Attachment 1 to the report (July 7, 2020) from the City Manager, and authorize the City Manager to enter into an Agreement with the Federation of Canadian Municipalities and the Toronto Atmospheric Fund for a $40 million contribution to the Toronto Atmospheric Fund, as an endowment of $38 million and a $2 million operating grant, in accordance with these terms and such other terms and conditions as may be satisfactory to the City Manager, in a form satisfactory to the City Solicitor.

2.  City Council authorize the Chief Financial Officer and Treasurer to receive the $40 million from the Federation of Canadian Municipalities and transfer the funds to the Toronto Atmospheric Fund, in accordance with the Toronto Atmospheric Fund Act, 2005.

3.  City Council authorize the Toronto Atmospheric Fund to obtain a Line of Credit of up to $1.6 million secured by the federal endowment once the funds are received.

4.  Council approve the action of the Toronto Atmospheric Fund Board with respect to having borrowed up to $250,000 from the City endowment to cover start-up costs related to the federal endowment.

5.  City Council authorize the City Manager, in consultation with the Toronto Atmospheric Fund, to amend the Toronto Atmospheric Fund Relationship Framework to align with the Agreement in a form satisfactory to the City Solicitor. 

6.  City Council authorize the Toronto Atmospheric Fund to undertake financial commitments, liabilities and contractual obligations for up to six months beyond the 2018-2022 term of City Council, for which transactions are to be calculated as part of the City's debt and financial obligation limit under Subsection 11(8) of the Toronto Atmospheric Fund Act, 2005.

7.  City Council authorize the public release of Confidential Attachment 1 to the report (July 7, 2020) from the City Manager, once the Agreement is executed between the Federation of Canadian Municipalities, the Toronto Atmospheric Fund and the City of Toronto and the federal contribution has been received.

The City Manager is seeking City Council approval to execute an agreement between the City of Toronto, the Toronto Atmospheric Fund and the Federation of Canadian Municipalities for a $40 million contribution from the Government of Canada to Toronto Atmospheric Fund to support the Low Carbon Cities Canada project. Pending confirmation from the Government of Canada, the contribution via the Federation of Canadian Municipalities Green Municipal Fund is structured as a $38 million perpetual endowment and a $2 million operating grant.

The Toronto Atmospheric Fund Board of Directors approved the terms of the Agreement at its meeting on July 6, 2020. Under the Toronto Atmospheric Fund Act, 2005 and the draft Agreement, City Council is required to approve the terms of this agreement. This report seeks approval of the terms and conditions for the Agreement found in Confidential Attachment 1, and authority for the City Manager to resolve any outstanding issues and execute the Agreement on behalf of the City of Toronto.

In its March 2019 budget, the Government of Canada provided $350 million to Federation of Canadian Municipalities for a national urban climate action program. These funds include $183 million to establish  the Low Carbon Cities Canada initiative, which is a network of seven climate action centres – Toronto, Vancouver, Edmonton, Calgary, Ottawa, Montreal and Halifax– that will be modelled on Toronto Atmospheric Fund and promote local grants and initiatives. Toronto Atmospheric Fund, as an Low Carbon Cities Canada centre, will receive $40 million of the Low Carbon Cities Canada funding to enhance its capacity to accelerate low-carbon solutions in the Greater Toronto and Hamilton Area.

The federal $40 million contribution will bring Toronto Atmospheric Fund's asset value to approximately $90 million, including the City's initial 1992 endowment of $23 million, the 2017 endowment of $17 million from the Government of Ontario, and investment earnings. The Low Carbon Cities Canada Agreement builds on the current endowment model where Toronto Atmospheric Fund's annual operating costs are funded by the proceeds from investing the endowment funds. The terms align with Toronto Atmospheric Fund's accountability and obligations to City Council for the City and Provincial endowments, and provide for Federation of Canadian Municipalities governance over the federal endowment within Toronto Atmospheric Fund's existing frameworks outlined in the Toronto Atmospheric Fund Act, 2005, the City-Toronto Atmospheric Fund Relationship Framework and Toronto Atmospheric Fund's Statement of Investment Objectives and Principles.

Confidential Attachment 1 summarizes the terms of the Agreement. Through the Low Carbon Cities Canada Agreement, Federation of Canadian Municipalities confers to Toronto Atmospheric Fund the terms and conditions of their Agreement with the Government of Canada related to reporting, communication and performance standards. Ultimately, within the parameters of the Agreement, it entrusts the management of federal funds to the City-appointed Toronto Atmospheric Fund Board. The composition and governance structure of the Toronto Atmospheric Fund Board and its accountabilities to City Council remain unchanged, with the exception of Federation of Canadian Municipalities representation on Toronto Atmospheric Fund's Investment Committee.

The Low Carbon Cities Canada initiative aligns with and will advance the goals of the City's TransformTO Climate Strategy and strengthens the work of the Federation of Canadian Municipalities and the City of Toronto which together seek to build federal-municipal relationships.