Agenda

The Budget Committee, at its meeting of January 12, 2018:

1.  Deferred consideration of item BU40.1 to its meeting of January 23, 2018.
 
2.  Requested budget briefing notes as follows:

Corporate

1. The City Manager on the feasibility and economic impact of additional scheduled and annual reductions to the commercial-to-residential property tax ratio over multiple years and budget cycles, including its impact on:

a. the City's financial outlook;

b. the affordability of the commercial and residential real estate markets; and

c. the competitiveness of Toronto businesses in comparison with surrounding municipalities.

2. The City Manager on the potential impact of re-balancing the Province of Ontario Business Education Tax Rates, including the impact on the competitiveness of Toronto businesses in comparison with surrounding municipalities.

Children's Services

3. The General Manager, Children's Services on the level of funding required to achieve each 1 percent reduction in child care fees in the Child Care Growth Strategy.

Parks, Forestry and Recreation

4. The General Manager, Parks, Forestry and Recreation on an inventory of the work and a corresponding breakdown of the $2 million expenditures being undertaken to ensure a swimmable, walkable and stable waterfront for the summer of 2018.

Shelter, Support and Housing Administration

5. The General Manager, Shelter, Support and Housing Administration on:

a. extending the respite beds beyond April 15, 2018 ensuring everyone who needs a bed receives a bed; and
b. costs related to opening and operating an 1000 additional shelter beds to open as quickly as possible.

Transportation Services

6. The General Manager, Transportation Services report to the Public Works and Infrastructure Committee in early 2019 on the resources necessary to accelerate the 10 year cycling plan to be completed by the end of 2022.

The Budget Committee also received all of the 2018 Operating and Capital Budget Briefing Notes submitted to date, with the exception of Briefing Notes numbers 31 and 33. 

The Budget Committee will consider and make recommendations to the Executive Committee on the 2018 Capital and Operating Budgets.

The 2018 Preliminary Capital and Operating Budget Notes (attached as Background Information) were made available online on December 5, 2017 as part of the agenda for the Budget Committee meeting of December 12, 14, 15 and 18, 2017.

Supplementary reports BU39.1a through BU39.1w were distributed to all Members of Council on December 5, 2017 as part of the agenda for the Budget Committee meeting of December 12, 14, 15 and 18, 2017.

Supplementary reports BU30.1x through BU30.1ae were distributed to all Members of Council as part of the agenda for the Budget Committee meeting of January 12, 2017.

The Audit Committee:

1.  Approved the Auditor General's Office 2018 Operating Budget, attached to the report (October 13, 2017) from the Auditor General, and forwarded it to the Budget Committee.

This report provides information relating to the 2018 Operating Budget for the Auditor General’s Office.

On February 15 and 16, 2017, City Council approved the 2017 Budget Committee Recommended Operating Budget for the Accountability Offices. At that time, City Council approved the "temporary increase of $1.0 million, as reflected in the Auditor General's 2017 Budget Committee Recommended Operating Budget to provide additional capacity to undertake value for money audits and investigations, subject to a report back to Audit and Executive Committees from the Auditor General on a revised audit work plan, and that temporary planned increases of up to $1.5 million in 2018 and an additional $1.4 million in 2019 be subject to consideration in future year budget processes together with revised audit work plans." (Recommendation 250)

http://app.toronto.ca/tmmis/viewAgendaItemHistory.do?item=2017.EX22.2

The Auditor General's 2018 Operating Budget request is $7.445 million. The $1.5 million increase from the approved adjusted 2017 operating budget of $5.903 million reflects City Council's 2017 decision (EX22.2) to provide the Auditor General with additional capacity to undertake value for money audits and investigations.

The Integrity Commissioner recommends that:

1.  Budget Committee recommend to Executive Committee that City Council approve the 2018 operating budget of $866.9 thousand gross and net for the Office of the Integrity Commissioner.

This report details information related to the 2018 Operating Budget for the Office of the Integrity Commissioner (the "Office" or the "OIC") and recommends a full-year 2018 budget of $866.9 thousand gross and net for consideration by the Budget Committee.  This includes base budget pressures of $5 thousand and enhancements of $355.2 thousand.

Approval of the Office of the Integrity Commissioner's 2018 operating budget request will result in an inclusion of $866.9 thousand in the 2018 annual budget of the City of Toronto.

The Lobbyist Registrar recommends that:

1.  Budget Committee recommend to Executive Committee that City Council approve the 2018-2027 Capital Budget and Plan for the Office of the Lobbyist Registrar of $0.7 million.

This report seeks Budget Committee's recommendation for City Council to approve the Office of Lobbyist Registrar's 2018-2027 Capital Budget and Plan.  This 10-Year Capital Budget and Plan enables the Office of the Lobbyist Registrar (OLR) to continue to provide and maintain an accessible, publicly available online lobbyist registry as required by the City of Toronto Act, 2006, s. 165.  The Capital Budget and Plan, which totals $0.7 million, is 100 percent for the Lobbyist Registry State of Good Repair Project (SOGR).

The financial impact of adopting the recommendation in this report will be the inclusion of $0.7 million in the City of Toronto's 2018-2027 10-year Capital Budget and Plan, fully funded from debt.

The Lobbyist Registrar recommends that:

1.  Budget Committee recommend to Executive Committee that City Council approve the Lobbyist Registrar’s 2018 Operating Budget Request of $1,644.0 thousand gross and net.

This report seeks Budget Committee's recommendation for City Council to approve the Office of the Lobbyist Registrar's 2018 Operating Budget Request of $1,644.0 thousand gross and net. 

The financial impact of adopting the recommendation in this report will be an inclusion of the annual budget of the Office of the Lobbyist Registrar at $1,644.0 thousand gross and net in the City of Toronto’s 2018 Approved Operating Budget.

The Ombudsman recommends that:

1.  Budget Committee recommend to Executive Committee that City Council approve the 2018-2027 Capital Budget and Plan for Ombudsman Toronto as submitted with project cost and cash flows of $0.700 million in 2023.

This report requests that Budget Committee recommend that City Council approve the 2018 - 2027 Capital Budget and Plan of Ombudsman Toronto.  The plan includes a requirement of $0.700 million over the 10-year period for state of good repair replacement of the case management system.

Approval of Ombudsman Toronto's budget request will result in the inclusion of $0.700 million with funding from debt in the City of Toronto's 2018-2027 ten year Capital Plan.

The Ombudsman recommends that:  

1.  Budget Committee recommend to the Executive Committee that City Council approve the 2018 full-year operating budget for Ombudsman Toronto of $1,985.2 thousand net.

This report provides detailed information about the 2018 operating budget for Ombudsman Toronto, including a recommended full-year 2018 operating budget of $1,985.2 thousand net for approval by City Council.

Approval of the Ombudsman's 2018 operating budget request will result in $1,985.2 thousand being part of the City of Toronto's 2017 operating budget.

City Council on May 24, 25 and 26, 2017, adopted as amended Item EX25.18 on 2018 Budget Process - Budget Directions and Schedule, and has forwarded the supplementary report (May 23, 2017) from the Deputy City Manager and Chief Financial Officer (EX25.18c) on 2018 Implementation Costs for Various Approved Service Plans to the Budget Committee for consideration with other priorities during the 2018 Budget Process.

The Chair, Toronto Police Services Board recommends that:

1.  Budget Committee recommend to Executive Committee that City Council approve the Toronto Police Service's 2018 net operating budget request of $1,005.3 million (M), a 0 percent increase over the 2017 approved budget.

2.  Budget Committee recommend to Executive Committee that City Council approve the Toronto Police Service's 2018-2027 Capital Program with a 2018 net request of $20.9 million (excluding cash flow carry forwards from 2017), and a net total of $220.4 million for the 10 year period 2018-2027, and as detailed in Attachment A contained within Appendix A.

3.  Budget Committee recommend to Executive Committee that City Council approve the Toronto Police Service Parking Enforcement Unit's 2018 net operating budget request of $46.7 million (M), a 0 percent increase over the 2017 approved budget.

4.  Budget Committee recommend to Executive Committee that City Council approve a proposed 2018 net operating budget of $2,309,100 for the Toronto Police Services Board, which is an increase of 0 percent over a 2017 adjusted budget of $2,309,100.

The purpose of this report is to provide the Budget Committee with the 2018 operating budget request for the Toronto Police Service, the Toronto Police Service 2018-2027 Capital Program, the Toronto Police Service Parking Enforcement Unit and the Toronto Police Services Board (‘the Board’).

Toronto Police Service

The Toronto Police Service's (Service) 2018 operating budget net request of $1,005.3 million ($1,137.7 million gross) is $0 million or 0 percent above the 2017 approved budget, and marks the second year in a row that the Service has achieved a 0 percent increase.

The Service is in the process of transitioning to a new organizational structure that will enable, drive and transform the way policing services are delivered to the various diverse communities and neighbourhoods in the City.

The level of funding being requested in 2018 will ensure public safety services continue to be delivered and at the same time recognizes and helps address the fiscal challenges the City is facing.

A summary of the Service's 2018 changes in the net operating budget request is provided in Table 1. 

Table 1 - 2018 Summary of Changes

Toronto Police Service's 2018-2027 Capital Program

Capital projects are funded either from the issuance of debt by the City of Toronto (City) or through draws from the Toronto Police Service's (Service's) Vehicle and Equipment Reserve.  Some projects also qualify for Development Charges (D.C.) which are fees collected from developers to help pay for the cost of infrastructure required to provide municipal services in growing areas.

The Service is continuing its strategy to properly fund the replacement of vehicles, technological and other equipment through contributions to the Vehicle and Equipment Reserve.  This Reserve is funded from contributions from the Service’s operating budget.  The use of this reserve, along with the allocation of City development charges for qualifying Service projects, reduces the Service’s and City’s reliance on debt funding.

The implementation of capital projects can have an impact on the Service's on-going operating budget requirements.  Capital projects and investments usually require maintenance and operational support beyond the initial one-time project cost.  Where additional infrastructure and equipment are required, operating budget increases are required to replace the assets in accordance with their life cycle. It is therefore important to determine the ongoing impact of capital investments on the operating budget.  As a result, capital spending decisions are not made independently of the operating cost impact; the total cost of ownership is considered.

Table 1 below provides a summary of the Toronto Police Service's (Service) 2018-2027 Capital Program request compared to the City of Toronto’s ten-year debt target.

The Service's 2018-2027 Capital Program meets the City's ten-year debt-affordability target on average over the ten years. Additional details on debt-funded and reserve-funded projects can be found in Attachments A and B respectively.

Table 1.  Summary of 2018-2027 Capital Program Request ($Ms)

Toronto Police Service Parking Enforcement Unit

The Toronto Police Service Parking Enforcement Unit's (P.E.U.) 2018 net operating budget request is $46.7 million ($48.3 million gross).  This request includes the 2018 impact of the labour contract settlements for Toronto Police Association (T.P.A.) members, and requires the same level of funding as the 2017 approved net operating budget - a 0 percent increase.

The Toronto Police Services Board

The proposed 2018 net operating budget, recommended in this report, represents an increase of 0 percent over a 2017 adjusted budget of $ 2,309,100. The Toronto Police Services Board ("the Board") 2018 operating budget request is a net amount of $2,309,100.

The Board of Health recommends to the Budget Committee that:

1.  City Council approve a 2018 Recommended Capital Budget for Toronto Public Health with a total project cost increase of $3.584 million and a 2018 cash flow of $4.378 million and future year commitments of $2.786 million.  The 2018 Capital Budget is comprised of the following:

a.  New cash flow funding for:

1.  Six new sub-project and two change in scope sub-projects with a 2018 total project cost increase of $3.584 million that requires cash flow of $1.707 million in 2018 and future year commitments of $1.818 million in 2019; and $0.059 million in 2020; and

2.  Three previously approved sub-projects with a 2018 cash flow of $2.671 and future year commitments of $0.909 million in 2019.

2.  City Council approve the 2019-2027 Capital Plan for Toronto Public Health totalling $18.487 million in project estimates, comprised of $0.646 million in 2019, $3.341 million in 2020, $3.000 million in 2021, $2.500 million in 2022, $2.200 million in 2023; $1.700 million in 2024, $1.700 million in 2025, and $1.700 million in 2026; and $1.700 million in 2027.

3.  City Council approve additional debt funding of $4.308 million to implement four additional IT projects to improve service delivery and enhance systems.

At its meeting on September 25, 2017, the Board of Health considered item HL21.6 - Toronto Public Health 2018 - 2027 Capital Budget and Plan Request.

The Board of Health recommends to the Budget Committee that:  

1.  City Council approve the Toronto Public Health 2018 Operating Budget Request of $248,413.1 thousand gross / $61,081.8 thousand net and an increase of 11 positions as summarized in Table 2, "Overview of 2018 Operating Budget Submission" contained in Attachment 1 "Toronto Public Health Operating Budget Request 2018" to the report (September 11, 2017) from the Medical Officer of Health.

2.  City Council approve the list of base budget adjustments as summarized in Table 2, "Overview of 2018 Operating Budget Submission" contained in Attachment 1 "Toronto Public Health Operating Budget Request 2018" to the report (September 11, 2017) from the Medical Officer of Health, totaling an increase of $1,371.0 thousand gross and $189.4 thousand net and an increase of 6.9 positions.

3.  City Council approve the 2018 Reduction Options of $744.3 thousand gross and $189.4 thousand net and 4.9 positions, which includes efficiency savings of $719.3 thousand gross and $183.1 thousand net and minor service changes of $25.0 thousand gross and $6.2 thousand net, as outlined in Attachment 2 - "Summary of Reduction Options" and Attachment 3 - "Summary of Confidential Reduction Options" to the report (September 11, 2017) from the Medical Officer of Health, to meet the City's zero percent reduction target.

4.  City Council approve the 2018 New and Enhanced Requests of $1,019.4 thousand gross and $254.9 thousand net and an increase of 9 positions, as outlined in Table 2, "Overview of 2018 Operating Budget Submission" contained in Attachment 1 "Toronto Public Health Operating Budget Request 2018" to the report (September 11, 2017) from the Medical Officer of Health.

5.  City Council approve an increase of $2,749.0 thousand gross and net for the Student Nutrition Program as outlined in Table 3, "Other New and Enhanced Services" contained in Attachment 1 "Toronto Public Health Operating Budget Request 2018" to the report (September 11, 2017) from the Medical Officer of Health.

6.  City Council direct that the Confidential Attachment 3 to the report (September 11, 2017) from the Medical Officer of Health remain confidential in its entirety, as it relates to personal matters about identifiable individuals, including municipal or local board employees, and labour relations and employee negotiations.

7.  City Council direct that the Confidential Budget Briefing Note dated September 22, 2017 from the Medical Officer of Health remain confidential in its entirety, as it relates to personal matters about identifiable individuals, including municipal or local board employees, and labour relations and employee negotiations.

At its meeting on September 25, 2017, the Board of Health considered item HL21.3 - Toronto Public Health 2018 Operating Budget Request.

The Board of Health recommends to the Budget Committee that:

1.  City Council approve the request for a net increase of $1,681,365 included in the Toronto Public Health 2018 Operating Budget Request to be allocated to existing student nutrition programs towards the cost of nutritious food to increase the City's investment rate to 20 percent of total program costs from 17 percent in 2017, providing a stronger funding base for existing programs.
 

2.  City Council approve the request for an additional net increase of $442,773 included in the Toronto Public Health 2018 Operating Budget Request to extend municipal funding towards the cost of nutritious food to up to 20 student nutrition programs which are currently operating in public schools without municipal funding.

3.  City Council approve the request for an additional net increase of $624,824 included in the Toronto Public Health 2018 Operating Budget Request to gradually extend municipal funding towards the cost of nutritious food to student nutrition programs in independent schools serving higher needs communities, which meet program eligibility criteria, including $40,000 to support community capacity building and municipal oversight of program grants.

4.  City Council direct that the confidential information contained in Confidential Attachment 1 of the report (September 11, 2017) from the City Solicitor attached to the letter (September 22, 2017) from the Board of Health Budget Committee [Item HL21.4b] remain confidential in its entirety, as it contains advice which is subject to solicitor-client privilege.

At its meeting on September 25, 2017, the Board of Health considered item HL21.4 - Toronto Public Health 2018 - 2027 Capital Budget and Plan Request.

The Board of Health:

1. Referred the following Recommendation 1 in the letter (May 29, 2017) from the 2017 Toronto Urban Health Fund Review Panel to the City's Budget Committee for consideration with the 2018 Budget Process:

"1.  The Board of Health increase the annual Toronto Urban Health Fund funding by 15 percent for the next funding cycle."

2. Requested the Medical Officer of Health to consult with the community to ensure funding reflects a priority population focus that includes the prioritization of African Caribbean and Black communities in all three Toronto Urban Health Fund funding streams. 

3. Directed the Medical Officer of Health to conduct an evaluation of the Application, Review and Allocation process and service enhancement plan to ensure the funding and support for the HIV Prevention Stream for priority populations, in advance of the second round of Toronto Urban Health Fund (TUHF) three-year funding that includes consultation with:

a.  agencies (approved and unsuccessful)

b.  agencies that dropped out of applying; and

c.  the Toronto Urban Health Fund Review Panel.

such evaluation to be reported to the November 2018 meeting of the Board of Health with recommendations on how to:

1.  improve the application process to ensure greater equity;

2.  create an enhanced and more user-friendly application website;

3.  provide timely, constructive and meaningful feedback to agencies on the funding applications; and

4.  ensure geographic equity.

At its meeting on June 12, 2017, the Board of Health considered item HL20.9 - Requests for Increased Funding and Focused Funding for Priority Populations - Toronto Urban Health Fund.

City Council on October 2, 3 and 4, 2017, in adopting Item EX27.21 on Tree Protection Enforcement, referred the creation of seven permanent full-time positions to address the need for tree protection enforcement under the Municipal Tree Protection By-Laws to the Budget Committee for consideration in the 2018 Operating Budget Process.

City Council on March 28 and 29, 2017, in adopting MM27.39 on Massey Hall Revitalization, has requested the Budget Committee to consider financial support for Phase 2 of the Massey Hall Revitalization Project in the 2018 budget process.

City Council has adopted MM27.39 on Massey Hall Revitalization and in so doing, has expressed support of the Massey Hall Revitalization Project. City Council has also requested the Budget Committee to consider financial support for Phase 2 of the Massey Hall Revitalization Project in the 2018 budget process.

The Corporation of Massey Hall and Roy Thomson hall has embarked on a major revitalization of the iconic Massey Hall that involves both an extensive restoration of this heritage building combined with significant new construction elements, and a significant strategic evolution in how this renewed asset is to be operated. This project is about building self-sustaining digital infrastructure that will help grow our music industry in an increasingly important and competitive global market.

The full scope of the Massey Hall Revitalization will be undertaken in 2018. The Massey Hall Revitalization team has set out the case for the $110 million Phase 2 Massey Hall Revitalization to all levels of government. They have requested $34 million from each of the federal and provincial governments, as well as meaningful support from the City of Toronto and expect to raise over $40 million in private sector contributions.

As 2018 approaches it is critical that the support and commitment of public sector partners is secured. The federal and provincial governments' initial investment of $8 million each in Phase 1 allowed progress on the Massey Hall Revitalization, the first major renovation in over 70 years. To complete the job it is necessary to move forward to Phase 2 to capitalize on the full potential of this national cultural institution.

The economic and social impact study undertaken as part of the Revitalization shows that it will contribute in measurable long-term growth in jobs and for our economy. When complete the impact will be:

- 300 Full Time Equivalent jobs a year

- $26.8 million contribution to Gross Domestic Product

- $8.3 million contribution to the tax base

Massey Hall will continue to operate without public operating grants from any level of government. A public sector capital commitment to Massey Hall, spread over four of five years, is a realistic investment that will reap long term benefits for the City of Toronto, the performing arts sector, and the local economy for many years going forward.

The Public Works and Infrastructure Committee:

1.  Requests the Budget Committee to consider and make recommendations on the funding required to implement the further acceleration and expansion of the Road Safety Plan in 2018, rather than 2019.

The Public Works and Infrastructure Committee on November 29, 2017 considered a report (November 24, 2017) from the General Manager, Transportation Services on Vision Zero Road Safety Plan (2017-2021) Update.

The Public Works and Infrastructure Committee:

1.  Referred the item to the Budget Committee for consideration in the 2018 budget process.

The Toronto Realty Agency recommends to the Budget Committee that:

1.  City Council approve an increase of $879,000 contingency fund to the staff recommended Operating Budget Request for Human Resources purposes and professional services and that the Board must give prior approval to the expenditure of funds from this contingency fund.

2.  City Council approve the staff recommended Toronto Realty Agency's 2018 Operating Budget request of $11.434 million gross, and $0 net, as amended by Recommendation 1 above.

At its meeting on November 27, 2017, the Toronto Realty Agency considered item RA6.3 - Toronto Realty Agency 2018 Operating Budget Request.

City Council on November 7, 8 and 9, 2017, adopted, as amended, Item EX28.12 on Update and Next Steps on the Potential Relocation of the Etobicoke Civic Centre. In so doing City Council has referred the request of $3.5 million ($3.0 million in 2018, $0.5 million in 2019) to provide funding to the Toronto Realty Agency through Facilities, Real Estate, Environment and Energy's 2018-2027 Capital Budget and Plan for the work required to the Budget Committee for consideration in the 2018 Budget process.

At its meeting on Tuesday, November 28, 2017 the Toronto Transit Commission Board considered the attached report entitled "2018-2027 Toronto Transit Commission Capital Budget and Plan".

The Board adopted the recommendations in the staff report, as follows:

"It is recommended that the Board:

1.  Approve the 2018-2027 Toronto Transit Commission Capital Budget and Plan of $10.252 billion (including the Toronto-York Spadina Subway Extension, Scarborough Subway Extension, Relief Line and Waterfront Transit expansion projects) as outlined in Appendix A of this report;

2.  Direct the Toronto Transit Commission's Chief Financial Officer to consult with the Toronto City Manager and Chief Financial Officer on the development of a financing strategy to address the $2.702 billion in unfunded base capital requirements for consideration as part of the 2019 Budget process; and

3.  Provide authority to proceed with the procurement of bicycle parking at an additional 9 Toronto Transit Commission stations at a cost of $0.130 million, enabling staff to amend the 2018 Capital Budget through delegated authority provided to PTIF eligible projects.

4.  Forward this report to the City Budget Committee and the City Manager as the official 2018-2027 Capital Budget and Plan submission for the Toronto Transit Commission."

The Board also adopted the following motion:

i.  Direct Toronto Transit Commission staff to work with the City's Transportation Services Division on the remaining 20 stations to develop a plan and a funding strategy for the 2019 Budget and to report back mid-2018 if any jurisdictional difficulties present themselves.

The foregoing is submitted for your further handling.

At its meeting on Tuesday, November 28, 2017 the Toronto Transit Commission Board considered the attached report entitled "2018 Toronto Transit Commission and Wheel-Trans Operating Budgets".

The Board approved the recommendations in the staff report, amended as a result of the approval of a two-hour transfer policy and member motions, as follows:

"1. Approve the 2018 Toronto Transit Commission Recommended Operating Budget as detailed in this report and amended to include the implementation of a 2 hour time based transfer policy, with revised gross expenditures of $1.825 billion, revenues of $1.244 billion and net subsidy requirement of $580.8 million, reflecting an additional $34.0 million operating subsidy requirement for TTC Conventional Service over the 2017 budgeted level.

2.  Approve the 2018 Wheel-Trans Budget as detailed in this report, with gross expenditures of $152.0 million, revenues of $8.6 million and net subsidy requirement of $143.4 million, reflecting an additional $0.7 million subsidy requirement for Wheel­Trans service over the 2017 budgeted level;

3.  Approve a 2018 year-end workforce complement of 14,984 positions as described in

Appendix E; and

4.  Forward this report to the City Budget Committee and the City Manager as the official 2018 Operating Budget submission for the Toronto Transit Commission."

The Board also approved the following motions:

i.  Amend the 2018 Operating Budget to include a draw from the Toronto Transit Commission Stabilization Reserve in the amount of $14 million to be applied to the 2018 Toronto Transit Commission Operating Budget.

ii.  Toronto Transit Commission request the Province to develop a strategy to fund the operating deficit of the Toronto Transit Commission most particularly in 2018, the Two-Hour Transfer and the Fare Equity Strategy, and;

iii.  Toronto Transit Commission request Council and the Province to support revenue tools to support the operating costs of the Toronto Transit Commission.

iv.  Direct staff to adhere as much as is possible to the Toronto Transit Commission's loading standard with a net zero budget impact:

a.  in the off-peak hours;

b.  in the peak hours using every available vehicle; and

v.  To report quarterly on adherence to the loading standard through the Chief Executive Officer's report.

The foregoing is submitted for your further handling.

At its meeting on Tuesday, November 28, 2017 the Toronto Transit Commission Board considered the attached report entitled "Introducing a Two-Hour Transfer Policy".

The Board approved the recommendations in the staff report, as amended and as follows:

"It is recommended that the Board:

1.  Approve the Toronto Transit Commission fare policy change to adopt a Two-hour Transfer on PRESTO from August, 2018 or sooner.

2.  Approve the addition of off-peak service hours from September 2018 and in subsequent years to support the estimated ridership increase resulting from recommendation 1.

3.  Amend the Toronto Transit Commission's 2018 Operating Budget endorsed by the Toronto Transit Commission Budget Committee to include a new/enhanced request to adopt a Two-hour Transfer on PRESTO from August, 2018 or sooner with an increased 2018 subsidy requirement of $11.1 million and additional incremental impacts of $9.4 million in 2019 and a further $0.4 million in 2020."

The foregoing is submitted for your further handling.

The Executive Committee referred the item to the Budget Committee for consideration.

At is meeting of October 13, 2017, the Tenant Issues Committee considered a presentation from the Fire Chief and General Manager, Fire Services and the Deputy Fire Chief, Fire Prevention, Fire Services on Fire Prevention in High-Rise Buildings.

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

1.  City Council authorize the Deputy City Manager, Cluster B, or his delegate, in consultation with the Acting Chief Financial Officer, to execute a Contribution Agreement with the Federal and Provincial governments and Waterfront Toronto for Port Lands Flood Protection, based substantially on the terms outlined in Attachment 1, upon such terms and conditions as may be acceptable to the Deputy City Manager, or such delegate, and the Acting Chief Financial Officer, in a form acceptable to the City Solicitor.

This report provides further details associated with the funding of the Port Lands Flood Protection project, which is included in the City's recommended 2018 to 2027 Capital Budget and Plan. In addition, this report seeks City Council authority to enter into a Contribution Agreement with the Federal and Provincial governments and Waterfront Toronto.

The Port Lands Flood Protection project will enable the redevelopment of the Port Lands and the South of Eastern areas, including the Unilever Precinct. The project will provide flood protection to the level of the regulatory storm event (the equivalent of Hurricane Hazel), a precondition for revitalization in the Port Lands and South of Eastern areas.

On November 8, 2016, City Council directed the Deputy City Manager, Cluster B, and Chief Financial Officer to identify funding for the City's one-third share of Port Lands Flood Protection, and to make the necessary cost sharing funding requests to the Federal and Provincial governments. In addition, Council approved funding for the Cherry Street Stormwater and Lakefilling project, a "quick-start" component of Port Lands Flood Protection. Subsequently, through the 2017 to 2026 Capital Budget and Plan, Council approved the City’s share of funding for the full project, with a related cash flow.

On June 28, 2017, the Prime Minister, Premier and Mayor announced funding for the full Port Lands Flood Protection project. The announcement followed Federal and Provincial Treasury Board approvals for two-thirds of the funding for the overall $1.25 billion dollar project. The Federal and Provincial governments have thus matched the City's one-third share of funding.

Changes are required to the project cash flow that was approved by Council in the 2017 to 2026 Capital Budget and Plan. These changes are the result of negotiations between the government partners around the timing of Federal and Provincial funding contributions. Under the finalized cash flow, City funding will be required between 2017 and 2020, while Federal and Provincial funding will be provided between 2018 and 2023.

City staff require Council authority to enter into a Contribution Agreement with the Federal and Provincial governments and Waterfront Toronto. Attachment 1 summarizes the key terms of a Contribution Agreement that City staff will advance as part of ongoing negotiations between the three governments and Waterfront Toronto.

Cost of Project

The Port Lands Flood Protection project totals $1.250 billion, with cash flows over the 2017 to 2023 period that include funding for the Cherry Street Stormwater and Lakefilling project ($65.0 million) and the Port Lands Flood Protection project ($1.185 billion). These projects will be funded by the three orders of government (Federal, Provincial and City) on an equal 33.3% share basis. The City portion of the Port Lands Flood Protection and related projects total is $416.7 million and is summarised in Table 1 on the following page.

Table 1: Summary Revised Port Lands Flood Protection Cash Flow

Project Cash Flow

The Port Lands Flood Protection project, including the Cherry Street Stormwater and Lakefilling project, was approved in the 2017 to 2026 Capital Budget and Plan with cash flows totaling $1.250 billion, including the City share at $411.0 million. The original cash flow plan split the funding by year in equal shares between Federal, Provincial and City financing sources for the balance of the Port Land Flood Protection project, with the Federal government picking up 50% of the costs associated with the Cherry Street Stormwater and Lakefilling project. Changes to the funding assumptions for the Federal portion of the overall project costs to a one-third share for both Port Land Flood Protection and the Cherry Street Stormwater and Lakefilling projects, have resulted in the City share of total project costs increasing to $416.7 million in the revised cash flow estimates. The 2018 budget and future year cash flow changes for the City share of the

Port Lands Flood Protection project are part of the City's recommended 2018 Capital Budget and Plan.

Negotiations in May 2017 finalized the funding details and timing of payments from the Federal and Provincial partners, resulting in changes to the cash flow by funding partner which are included in the City's recommended 2018 to 2027 Capital Budget and Plan.

Table 2 below summarises the impact of the negotiations that will result in the City share increasing by $5.5 million and the timing of City funding shifting to the first four years of the project, with the Federal and Provincial funding weighted more to the last three years of the project.

Table 2: Summary Cash Flow Changes

Sources of City Funding

The City share of $416.7 million of project costs will be financed from a combination of: recoverable debt (327.6 million) with debt charges funded from DC reserves for Roads (XR2110), Sanitary Sewer (XR2112) and Stormwater (XR2113); City issued tax supported debt ($45.7 million); Capital Finance Reserve ($27.1 million); Water Capital reserve fund ($10.7 million) and the Storm Water Management DC reserve fund ($5.5 million). Table 3 on the following page summarizes the financing sources by project.

Table 3: Summary City Share Financing

The City's financing sources will be subject to change pending the completion of the 2018 Development Charges Bylaw Review and background study scheduled for Council approval in the spring of 2018. Changes to City funding sources will be considered in future year budget processes.

Toronto Port Lands Company (TPLC)

As a result of the Port Lands Flood Protection project, TPLC will experience a loss in revenues from the development of the new river mouth, associated parks and infrastructure.  TPLC has estimated lost revenues and reduced future land values associated with the flood protection project over the next six years to be in the order of $17 million.

Dividends from TPLC along with Build Toronto will be used to support the City's new Toronto Realty Agency beginning in 2018. The impact in 2018 is not projected to be material, however any loss in revenue that impacts the funding of the Toronto Realty

Agency operations will need to be addressed in future year budget processes and may influence future dividends to the City.

Development Charge Optimization

The Development Charges Act s.6(1) and (2) and its Regulations describe how the City's estimate of recoverable growth related capital costs are reduced to adjust for capital grants, subsidies or other contributions made to a municipality.

The City can optimize its development charges (DC) funding if a funding contribution agreement contains a clear provision that Provincial and Federal project contributions be applied to non-DC eligible project works to the extent possible. Alternatively, the agreement could provide that the City can direct its funding to specific components of the project costs.

In the absence of an expression of such "clear intention" in the contribution agreement, the capital costs are to be reduced in accordance with s.6(2) of the Regulation (i.e., in the same proportion for all individual projects).

Accordingly, the key terms for the Contribution Agreement contain provisions to optimize the City's development charges recovery. It is anticipated that these provisions will have no practical impact on the way the Provincial and Federal funding is flowed. However, these recommended provisions will marginally reduce the City's net tax and rate supported capital contributions.

The City Manager recommends that:

1.  City Council authorize the Interim Chief Financial Officer to adjust the following 2018 Preliminary Capital Budgets to fund the 14 Participatory Budgeting Pilot projects detailed below:

a.  The Parks, Forestry and Recreation 2018 Preliminary Capital Budget be increased by $690,000 gross, $0 debt for:

The following Ward 33 projects to be funded from Account XR2207 Parkland Acquisition - North District Local Development Reserve Fund at a cost of $220,000 gross, $0 debt:

- Exercise Park in Parkway Forest Park - $75,000 gross, $0 debt;

- Seniors Exercise Park in Godstone Park - $50,000 gross, $0 debt;

- Pleasantview Park Improvements - $20,000 gross, $0 debt; and

- Shawnee Park Recreation Improvements - $75,000 gross, $0 debt.

The following Ward 35 projects to be funded from Account XR2205 Parkland Acquisition - East District Local Development Reserve Fund at a cost of $225,000 gross, $0 debt:

- Upgrade Lighting in Madelaine Park - $45,000 gross, $0 debt;

- New Junior Playground in Madelaine Park - $100,000 gross, $0 debt;

- Water Bottle-Filling Station in Oakridge Park - $20,000 gross, $0 debt;

- Improve Pathway at Madelaine Park - $50,000 gross, $0 debt; and

- Water Bottle-Filling Station in Prairie Drive Park - $10,000 gross, $0 debt.

The following Ward 12 projects to be funded from Account XR2203 Parkland Acquisition - West District Local Development Reserve Fund at a cost of $245,000 gross, $0 debt:

- Exercise Park in Maple Leaf Park - $75,000 gross, $0 debt;

- Lights Around Maple Leaf Park Reservoir - $50,000 gross, $0 debt;

- Walking Path Around Maple Leaf Park Reservoir - $100,000 gross, $0 debt; and

- Chess Tables in Maple Leaf Park - $20,000 gross, $0 debt.

b.  The Transportation Services 2018 Preliminary Capital Budget be increased by $15,000 gross, $0 debt for the following project to be funded from Account XR1410 - Public Realm Reserve Fund:

- Shawnee Park Accessibility Improvements - $15,000 gross, $0 debt.

This report authorizes the Interim Chief Financial Officer to fund the cost of community improvements chosen by residents through the 2017 Participatory Budgeting (PB) Pilot in the amount of $690,000 gross, $0 debt from the Parkland Acquisition Reserve Fund, and $15,000 gross, $0 debt from the Public Realm Reserve Fund.

2017 was the last year of the City's three-year Participatory Budgeting Pilot in three neighbourhoods: Oakridge (Ward 35), Rustic (Ward 12), and across all of Ward 33. In the Pilot, residents propose, develop and vote on local community improvement projects. Each community had up to $250,000 this year to spend on capital projects on City-owned property. This year's votes concluded in December and residents from these three neighbourhoods selected a total of 14 community projects at a total cost of $705,000.

City staff will continue the evaluation of the Pilot and will report to City Council in 2018 with recommendations regarding participatory budgeting in Toronto.

Approval of the recommendations contained in this report will result in an increase of $705,000 to the 2018 Preliminary Capital Budget for Parks, Forestry and Recreation ($690,000) and Transportation Services ($15,000).

This increased capital investment will be fully funded through the following Reserve Funds: XR2207 Parkland Acquisition - North District Local Development Reserve Fund ($220,000); XR2205 Parkland Acquisition - East District Local Development Reserve Fund ($225,000); XR2203 Parkland Acquisition - West District Local Development Reserve Fund ($245,000); and XR1410 - Public Realm Reserve Fund ($15,000).

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

City Council on December 5, 6, 7 and 8, 2017, adopted this Item, and in so doing, directed the General Manager, Parks, Forestry and Recreation to:

a.  report to the Budget Committee as part of the 2018 Operating Budget Process on the maximum number of program spaces that can be created in existing facilities in 2018 and the associated cost, with a regional breakdown of the number of new spaces and types of programs that would be expanded;

b.  report to the Budget Committee, as part of the 2018 Operating Budget Process, on the cost to increase the number of new recreation spaces in 2018 to a goal of 20,000 spaces and to report to the Community Development and Recreation Committee by the second quarter of 2019 on next steps to increase targets of service growth in community recreation; and

c.  fully implement the Recreation Service Plan goal of delivering the Swim to Survive program to all grade four students by 2021 and include the operating costs required for the Phase 3 implementation in the 2018 Operating Budget for City Council consideration.

City Council on December 5, 6, 7 and 8, 2017, adopted this Item, and in so doing, has referred the new and enhanced request of $0.460 million gross and net for 5.0 positions and $0.535 million gross and net for community partnership initiatives, for a total of $0.995 million gross and net, and included in the 2018 Operating Budget Submissions for Social Development, Finance and Administration for consideration with other City priorities through the 2018 and future-year budget process.

City Council on December 5, 6, 7 and 8, 2017, adopted this Item as amended, and in so doing, has authorized the General Manager, Shelter, Support and Housing Administration and the Director, Affordable Housing Office to:

a.  make the necessary budget adjustments to the 2018 City Operating Budgets for Shelter, Support and Housing Administration and the Affordable Housing Office to utilize and spend (net $0) affordable housing funding from the capital and operating allocations of the Investment in Affordable Housing Program and the Anti-Human Trafficking Community Support Fund, with future year requests subject to City Council approval through the annual budget process; and

b.  make the necessary budget adjustments to the 2018 City Operating Budget for Shelter, Support and Housing Administration and to enter into the appropriate agreements with the Provincial government, other City divisions, community agencies, private entities and/or individuals to allocate the Investment in Affordable Housing Program rent supplements.

City Council on December 5, 6, 7 and 8, 2017, adopted this Item, and in so doing, has referred the new and enhanced request of $0.480 million gross and net for the addition of 4.0 positions to staff the Indigenous Affairs Office and $0.040 million gross and net to retain an external consultant, for a total of $0.520 million gross and net, included in the City Manager's Office 2018 Operating Budget Submission for consideration as part of the 2018 Budget Process.

City Council on December 5, 6, 7 and 8, 2017, adopted this Item, and in so doing, has requested the City Manager and the Interim Chief Financial Officer to include this initiative in the City Manager's Office 2018 Operating Budget, for consideration in the 2018 Budget Process with other City priorities.

City Council on December 5, 6, 7 and 8, 2017, adopted this Item, as amended, and in so doing, funded 100 percent of the cost to administer the Business Improvement Area utility locate service, such funds to be considered as part of the 2018 budget process.

The General Manager, Shelter, Support and Housing Administration recommends that:

1.  City Council approve the acceptance of $80,663,900, as the confirmed allocation, and up to $299,835,237, as the conditional allocation, from the Ministry of Housing for renovations and retrofit of eligible social housing buildings under the Social Housing Apartment Improvement Program.

2.  City Council authorize the General Manager, Shelter, Support and Housing Administration, in consultation with the City Solicitor, to enter into a Transfer Payment or similar Agreement with the Ministry of Housing for Social Housing Apartment Improvement Program funding on terms and conditions addressing program administration, funding, building condition assessments and monitoring, energy audit and reporting requirements that are satisfactory to the General Manager, Shelter, Support and Housing Administration, and in a form satisfactory to the City Solicitor.

3.  City Council authorize the General Manager, Shelter, Support and Housing Administration, to utilize any administrative funding approved by the Ministry of Housing to administer Social Housing Apartment Improvement Program implementation.

4.  City Council amend the 2018 Preliminary Operating Budget for Shelter, Support and Housing Administration by $2,070,000 gross and $0 net, under the Social Housing Apartment Improvement Program, to pay for the cost of building condition assessments for non-profit and co-operative housing providers; Ashrae Level 3 energy audits for proposed retrofit projects; and authorize the General Manager, Shelter, Support and Housing Administration, to enter into agreements with Toronto Community Housing Corporation and non-profit and co-operative housing providers, and/or private sector organizations to carry out the necessary building condition assessments, energy audits and evaluations required.

5.  City Council amend the 2018 Preliminary Operating Budget for Shelter, Support and Housing Administration by $256,000 gross and $0 net, under the Social Housing Apartment Improvement Program (SHAIP), to hire two full time temporary Agency Review Officers and a full time temporary Financial Systems Analyst to assist with the administration of Social Housing Apartment Improvement Program.

6.  City Council authorize the General Manager, Shelter, Support and Housing Administration, to enter into agreements with Toronto Community Housing Corporation, non-profit and co-operative housing providers and other service providers on terms and conditions addressing funding, building condition assessments and monitoring, energy audit and reporting requirements satisfactory to the General Manager, Shelter, Support and Housing Administration, and in a form satisfactory to the City Solicitor to utilize $80,663,900 and up to $119,502,075 in funding for Social Housing Apartment Improvement Program (SHAIP) year 1 (2017-18), and up to $60,111,054 in funding for each of Social Housing Apartment Improvement Program year 2 (2018-19), year 3 (2019-20), and year 4 (2020-21), plus any additional Ministry of Housing funding allocations, to carry out retrofit work and all required audits and evaluations associated with Social Housing Apartment Improvement Program.

Supporting their Climate Change Action Plan, the Province is making available $556 million for the Social Housing Apartment Improvement Program (SHAIP) over four years across Ontario.  Social Housing Apartment Improvement Program will provide funding to complete retrofits on eligible social housing high-rise apartment buildings which will help reduce greenhouse gas (GHG) emissions, improve the quality and sustainability of social housing stock and enhance the quality of life of tenant households.

The City of Toronto has been provided with a conditional allocation of $299.8 million over the four years of the program.  Funding is dependent upon revenues generated through future provincial carbon market auctions.  At present $80.7 million in year one funds have been confirmed. This is not net new funding and is included in the 2018-2027 Preliminary Capital Budget and Plan for Shelter, Support and Housing Administration as an allocation to Toronto Community Housing Corporation to address its capital plan requirements.

Table 1: Social Housing Apartment Improvement Program (SHAIP) Conditional and Confirmed Allocation

*Note: Final confirmed allocation pending future provincial carbon market auctions

This report recommends actions necessary to enable the City deliver the activities funded from the Program.

All Social Housing Apartment Improvement Program funding for years one and two will be allocated for retrofit projects in Toronto Community Housing Corporation (TCHC) buildings.  As Toronto's largest housing provider, Toronto Community Housing Corporation has the need and capacity to utilize this funding in the short-term to address necessary state-of-good-repair priorities that can generate the necessary greenhouse gas reductions.  

Building condition assessments and/or energy audits will be completed on Social Housing Apartment Improvement Program eligible non-profit and co-operative housing providers under Shelter, Support and Housing Administration administration.  With a comprehensive understanding of the current capital needs across the portfolio, Shelter, Support and Housing Administration will be better positioned to make informed funding allocations through Social Housing Apartment Improvement Program for program years three and four.

In total the City may receive up to $299.8 million in Social Housing Apartment Improvement Program (SHAIP) funding conditional on revenues received by the Province through future carbon market auctions.  At present, $80.7 million in year one funds have been confirmed.  Funding for Social Housing Apartment Improvement Program is allocated within four program years with a requirement that funded activities for each year are completed within three years. 

Table 2: Social Housing Apartment Improvement Program Funding Overview

*Note: Final confirmed allocation pending future provincial carbon market auctions

The Shelter, Support and Housing Administration's 2018-2027 Preliminary Capital Budget and Plan presented to the Budget Committee assumes Social Housing Apartment Improvement Program funding of $120 million from the province to be allocated to Toronto Community Housing Corporation for the Provincial 2018/2019 fiscal year (2019 for the City), subject to provincial confirmation and the timing of the funding. Of this, the province has confirmed $80.7 million.

Social Housing Apartment Improvement Program provides administration funding of up to 5 percent up to the actual dollar amount requested by the Service Manager or 5 percent of total full year confirmed allocation, whichever is less.  Administration funding based on the confirmed Social Housing Apartment Improvement Program allocation of $80.7 million is $4.0 million for 2018.

For 2018, three full-time temporary staff positions (with an estimated start date of May 1, 2018) to administer the program and the completion of building condition assessments and energy audits for non-profit and co-operative housing providers that will inform funding allocations for future years of the program.  The positions will be required for the duration of the program and the building condition assessments and energy audits are a one-time expense.

This will require Shelter, Support and Housing Administration's 2018 Preliminary Operating Budget to be increased by $0.256 million gross and $0 net to be fully funded by Social Housing Apartment Improvement Program for these positions plus a one-time increase of $2.070 million to fund Building Condition Assessments for a total increase of $2.326 million in 2018.

The annualized salary and benefit impact of the three positions is $0.384 million.

(See the Financial Impact Section of the report dated January 11, 2018

from the General Manager, Shelter, Support and Housing Administration for

Table 3 titled "Social Housing Apartment Improvement Program Administration Expenses")

The full year salary and benefit costs of $0.384 million as well as other operating budget requirements for future years, pending additional confirmed Social Housing Apartment Improvement Program funding, will be included in future years budget process and will be fully funded from Social Housing Apartment Improvement Program.

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

The Acting Chief Financial Officer and the General Manager, Parks, Forestry and Recreation recommend that:  

1.  City Council approve an amendment to the 2018 Preliminary Parks, Forestry and Recreation Capital Budget to add a new sub-project in the Land Acquisition project known as "28 Bathurst Street Build Reimbursement" with a project cost and cash flow in 2018 in the amount of $1,266,583.38, with funding from the Parkland Acquisition South District Local Land Reserve Fund (XR2208).

This report responds to the direction from City Council to report back regarding the manner in which Build Toronto may be reimbursed for expenses related to development costs for the City-owned site located at 28 Bathurst Street.

Staff recommend that Build Toronto be reimbursed $1,266,583.38 from parkland reserves; the breakdown of this amount is provided in Attachment 1 to this report.

This report recommends amending the 2018-2027 Preliminary Capital Budget and Plan to add a new-sub project in the Land Acquisition project titled "28 Bathurst Street Build Re-imbursement with a total project cost of $1.267 million with cash flow in 2018 of $1.267 million.  This project will be fully funded from the Parkland Acquisition South District Local Land Reserve Fund (XR2208).  Funding will be used to reimburse Build Toronto for expenses incurred to date for the development of the property as outlined in greater detail in Attachment 1 of this report.

The Parks, Forestry and Recreation 2018-2027 Preliminary Capital Budget and Plan includes $0.200 million for remediation in 2018 under the Parkland Acquisition FY2017 sub-project in the Land Acquisition project.  Once the site is assessed, funding will be allocated in future Capital and Operating budget submissions for the development and operation of the park.

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

The Deputy City Manager, Internal Corporate Services and the Chief Financial Officer recommend that:

1.  City Council approve an increase to the total project cost from $800.7 million to $823.5 million, requiring additional reserve funding and an increase to Facilities, Real Estate, Environment and Energy (FREEE)'s 2018 – 2027 Preliminary Capital Budget and Plan for the Union Station Revitalization project in the amount of $22.8 million in 2018, funded through the Capital Financing Reserve Fund.

2.  City Council direct that any recoveries for increased costs from third parties will be returned to the Capital Financing Reserve Fund.

The purpose of the report is to advise on the status of the City of Toronto's Union Station Revitalization Project and recommend an increase to the total project cost and funding necessary to complete the renovation / restoration.

Union Station is by far the largest and busiest transportation hub in the country handling 65 million passengers per year, which is expected to grow to 130 million passengers per year by 2031. There have been and are a number of projects in and surrounding the Station, including Toronto Transit Commission subway work, the work on the UP Express Terminal and GO Transit train shed, with re-investment and revitalization by all levels of government and organizations estimated at over $1.5 billion. These transit projects are an investment in the city's infrastructure that will promote transit oriented growth in the long term.

As the Union Station Revitalization Project (USRP) has progressed, the area surrounding Union Station has undergone a transformation, with both residential and commercial growth.  It is becoming increasingly evident that the vision approved by Council in 2006 is becoming a reality, with the Station also acting as a commercial retail hub and a destination for culture, entertainment and dining experiences.  This transformation will carry on in 2018, as construction milestones are reached, more retail locations open, and programming and marketing activities continue to drive attraction to the station.

This report outlines the costs incurred to date on the Union Station Revitalization Project, and identifies the additional funding required to complete the project.  Approval of this report will result in an increase of $22.8 million in the total project cost for the Union Station Revitalization Project. The total project cost will increase from $800.7 million to $823.5 million, representing an increase of 2.8 percent from total project cost in Facilities, Real Estate, Environment and Energy (FREEE)'s 2017 – 2026 Council Approved Capital Budget and Plan.

The additional funding requirement is mainly the result of the coordination of ongoing and active projects at Union Station, specifically the coordination and interdependency with the remaining adjacent major capital projects being undertaken by Metrolinx. Completion of the City's base building work in the Bay Concourse is dependent on Metrolinx's construction project. Metrolinx's planned work at track level is undergoing changes to accommodate its Regional Express Rail (RER) plans. Significant work is being done related to updates to GO Transit infrastructure including the Union Station Rail Corridor Renewal, revitalization work above track level and the electrification of the rail network. Metrolinx has additional projects planned at Union Station that are currently being reviewed with the City that will further enhance infrastructure and increase capacity.  All this work is required for GO Transit to meet its objective of providing two-way, all-day regional transportation service, and to increase capacity.  From the City's perspective, this will also support components of the City's SmartTrack plan.  Overall, this will allow the City and Metrolinx to achieve shared objectives of enhancing transit infrastructure and improving the commuter experience.

However, the changes, resequencing and additional project requirements of Metrolinx's track level work is delaying the City's completion of its base building work on the revitalized Bay Concourse and lower level retail.  This is delaying the Union Station Revitalization Project by 8 to 12 months, with a revised expected substantial completion shifting from early 2018 to the end of 2018.  Both organizations are committed to working together to mitigate both schedule and budget impacts.  Staff will be reviewing all changes to also assess any lost revenues or other cost impacts and will seek to make recoveries where applicable.

City staff continue to face other inherent challenges from carrying out a major revitalization project on a historic, heritage building that remains open and active throughout construction.   Staff continue to mitigate impacts on both budget and schedule as a result of these challenges to the extent possible. The City has received contractor claims over the course of the project, and is actively working to challenge and mitigate these claims.  The City, with the support of third party legal, will continue to actively manage these claims, while focusing on closing out construction work in the final year of Union Station Revitalization Project.

Approval of this report will result in an increase to the total project cost from $800.7 million to $823.5 million and an increase to Facilities, Real Estate, Environment and Energy (FREEE)'s 2018 – 2027 Preliminary Capital Budget and Plan of $22.8 million for the Union Station Revitalization Project. This increase is mainly due to schedule impacts resulting from coordination of work with Metrolinx, as well as ongoing challenges due to the unique nature of a project of this size and scope, and ongoing legal costs associated with actively managing and protecting the City's interests on contractor claims received to date.  The schedule delays are expected to result in additional costs for construction and indirect costs related to internal staffing, insurance, and continuation of third party consultant support.  City staff are working diligently to mitigate costs associated with schedule impacts, and will ensure entitlement is established prior to any additional costs being paid to contractors or third party consultants due to schedule delays.  Lastly, the updated forecasted total project cost does not include any future cost of claims that are currently being actively managed by the project team, with support from City and external legal.

Table 1 below outlines the changes from the current approved budget to the revised forecast, excluding the potential cost of claims.

Revised future cash flows based on these estimates, compared to the current approved plan, is outlined in table 2 below:

The current estimates are reflected in the 2018 – 2027 Preliminary Capital Budget and Plan.  Although substantial completion is expected in 2018, $3.5 million, representing 0.4 percent of the approved project budget, is estimated in 2019 for project close out costs and is included in the 2018-2027 Preliminary Capital Budget and Plan for Facilities, Real Estate, Environment and Energy.

Financing Sources:

The financing sources for the current Council approved budget for the Union Station Revitalization project is outlined in table 3 below:

Approval of this report will result in an increase in contributions from reserves by $22.8 million, as the incremental funding forecasted to complete the project will be funded through the Capital Financing Reserve Fund.

Given that the increased project costs are mainly driven by delays related to the coordination and interdependency with the remaining adjacent major capital projects being undertaken by Metrolinx, the City is currently in discussions with Metrolinx to reimburse or fund a portion of these incremental costs.  Should any incremental costs incurred be recovered, these funds will be directed to the Capital Financing Reserve Fund.  Furthermore, the City continues to assess cost impacts driven by needs and changes related to other stakeholders in and around the Station, and will engage with these stakeholders to reimburse or fund components of work attributable to them.  Any recoveries made will be reported through future updates on the project.

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

The Deputy City Manager, Internal Corporate Services recommends that:

1.  City Council approve an increase in the total project cost of $9.5 million, increasing the total project budget to $102.3 million, requiring additional debt funding and an increase to Facilities, Real Estate, Environment and Energy (FREEE)'s 2018 ‑ 2027 Preliminary Capital Budget and Plan for the St. Lawrence Market North Redevelopment project in the amount of $9.5 million in 2020.

The purpose of the report is to advise on the status of the City of Toronto's St. Lawrence Market North Redevelopment Project and recommend an increase to the total project cost and funding necessary to award the construction contract and complete the construction of the new north market.

This report outlines the costs incurred to date on the St. Lawrence Market North project, and identifies the additional funding required to complete the project.  Approval of this report will result in an increase in the total project cost of $9.5 million for the St. Lawrence Market North Redevelopment. When incorporating the additional $1.4 million that has already been included in Facilities, Real Estate, Environment and Energy (FREEE)'s 2018 - 2027 Preliminary Capital Budget and Plan, the total project cost will be increase to $102.3 million.

The key drivers for the additional funding are as follows:

1)  CONSTRUCTION TENDER PRICE- Following the issue of a request for tenders for the construction phase of the project, the construction tender bids that were received have reflected higher costs than estimated. This is mainly due to market conditions which always dictate actual prices and market appreciation over the duration of the delays in schedule. As a result, staff have determined that $3.3 million in increased project funding is required, excluding the archaeology.

2)  ARCHAEOLOGICAL - The extensive assessment work related to stage 4 archaeology required by the Ministry of Tourism, Culture and Sport (MTCS) on the project resulted in a schedule delay of 14 months and cost escalation that is not in the current budget.  As a result of the archaeological assessment and the archeological interpretation, $3.9 million in additional funding is required.  Of this amount, $1.4 million has already been included in the preliminary capital budget, therefore an incremental $2.5 million is being requested.

3)  ADDITIONAL PROJECT CONTINGENCY - Based on the complexity of this project an additional project contingency of $3.6 million is being requested to address any unforeseen project requirements. 

Total Project Cost and Current Estimate:

Approval of this report will result in an increase to the Preliminary 2018-2027 Capital Budget and Plan of $9.5 million for the St. Lawrence Market North Redevelopment project.  Table 1 below details the updated cost estimates compared to the current budget, and identifies the incremental funding required to complete the project:

The above table shows the total revised project cost and additional contingency from this amendment, as well as the $1.4 million included in the Facilities, Real Estate, Environment and Energy's 2018 - 2027 Preliminary Capital Budget and Plan. This increases the total project cost from $91.5 million to $102.3 million. While the $1.4 million included in the 2018 Preliminary Capital Budget is for incremental design and construction of the heritage archeological interpretation display, the additional $10.9 million outlined in this report represents the full impact of archeological work (including the $1.4 million), Stage 4 archaeological mitigation process, as well as the changes in cost discovered through new information included in the construction bids and additional project contingency.

Future cash flows based on these estimates, and a comparison to the current approved plan, is outlined in table 2 below:

Projections to year-end 2017 indicate that the project's capital expenditures are forecasted to be $3.0 million or 91 percent of the 2017 approved cash flow of $3.3 million. At the end of the year, any unspent cash flow with their respective funding sources will be carried forward into 2018 for Facilities, Real Estate, Environment and Energy to continue the delivery of the project.

Financing Sources:

The Council approved budget and financing plan for the St. Lawrence Market North Redevelopment project is outlined in table 3 below:

This increase in total project costs will require new debt funding which will result in debt servicing costs of $0.3 million in 2020 and $0.6 million in 2021.

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

The Acting Chief Financial Officer recommends that:

1.  City Council receive this report for information.

This report discusses the impact of excluding amortization expenses, post-employment benefits expenses, and Solid Waste landfill closure and post-closure expenses from the 2018 Operating Budget.

Ontario Regulation 286/09 "Budget Matters – Expenses" requires that the City prepare a report, prior to adoption of its budget, detailing amortization, post-employment benefits and landfill closure and post-closure expenses, if excluded from the budget.  It also requires that the City adopt the report by resolution. 

Consistent with prior years, the City's 2018 Operating and Capital budgets have been prepared on the modified cash basis and therefore exclude the expenses listed above.

There are no financial implications as a result of this report. 

Table 1 of this report outlines that the consolidated budget, (tax – operating and capital, water, solid waste, agencies and corporations), would show a surplus of $1.4 billion, if these budgets were prepared on an accrual basis.