Agenda

This meeting of the Budget Committee will be conducted by electronic means and the proceedings of the Budget Committee will be conducted publicly. 

These measures are necessary to comply with public health guidelines and prevent the spread of COVID-19.

Members of Council and participating City Officials will be provided with the video conference details closer to the meeting date.

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Written comments may be submitted by writing to buc@toronto.ca.

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toronto.ca/council

This agenda and any supplementary materials submitted to the City Clerk can be found online at www.toronto.ca/council. Visit the website for access to all agendas, reports, decisions and minutes of City Council and its committees. Items with original signatures are kept on file with the City Clerk's Office and are available for viewing.  

Confirmation of Minutes: 

- Meeting 33 on October 8, 2021; and

- Special Meeting 34 on November 3, 2021

Declarations of Interest under the Municipal Conflict of Interest Act 

Communications/Reports

Election of the Vice Chair of the Budget Committee under Municipal Code Chapter 27, Council Procedures, Appendix A-2, for a term of office starting on November 19, 2021, and ending November 14, 2022.

Rates and Fees

The Chief Financial Officer and Treasurer and the General Manager, Toronto Water recommend that:

1. City Council adopt:

a. effective January 1, 2022, a 3 percent rate increase to the combined water and wastewater consumption rates (paid on or before the due date) charged to metered consumers as shown in the table below and in Appendix B to the report (October 21, 2021) from the Chief Financial Officer and Treasurer and the General Manager, Toronto Water:

b. effective January 1, 2022, an increase of 3 percent to the water and wastewater consumption rates (paid on or before the due date) charged to flat rate consumers, as set out in Appendix B to the report (October 21, 2021) from the Chief Financial Officer and Treasurer and the General Manager, Toronto Water;

c. effective January 1, 2022 the water and wastewater service fees, as set out in Appendix C to the report (October 21, 2021) from the Chief Financial Officer and Treasurer and the General Manager, Toronto Water.

2. City Council adopt, with respect to assistance for low-income seniors and low-income disabled persons:

a. effective January 1, 2022, the water rebate for eligible low-income seniors and low-income disabled persons be set at a rate of $1.2776 per cubic metre, representing a 30 percent reduction from the Block 1 rate above (paid on or before the due date).

3. City Council authorize the necessary amendments to Municipal Code Chapter 441 - Fees and Charges, Municipal Code, Chapter 849 - Water and Sewage Services and Utility Bill, and any other necessary Municipal Code Chapters as may be required, to give effect to City Council's decision.

4. City Council authorize the City Solicitor to introduce any necessary Bills required to give effect to Council's decision and authorize the City Solicitor to make any necessary clarifications, refinements, including stylistic, format and organization, minor modifications, technical amendments or by-law amendments as may be identified by the City Solicitor, the Chief Financial Officer and Treasurer and the General Manager, Toronto Water.

Operating and Capital Budgets

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

5. City Council approve the 2022 Operating Budget for Toronto Water of $471.228 million gross, $1,447.021 million revenue and $975.793 million net for the following services:

6. City Council approve the 2022 staff complement for Toronto Water of 1,883.3 positions comprised of 130 capital position and 1,753.3 operating positions.

7. City Council approve 2022 Capital Budget for Toronto Water with cash flows and future year commitments totaling $8,001.172 million as detailed by project in Appendix 6a to the 2022 Staff Recommended Capital and Operating Budget Notes - Toronto Water.

8. City Council approve the 2023-2031 Capital Plan for Toronto Water totalling $7,081.173  million in project estimates as detailed by project in Appendix 6b to the 2022 Staff Recommended Capital and Operating Budget Notes - Toronto Water.

9. City Council request that all sub-projects with third party financing be approved conditionally, subject to the receipt of such financing in 2022 and if such funding is not forthcoming, their priority and funding be reassessed by City Council relative to other City-financed priorities and needs.

Service Levels

The General Manager, Toronto Water recommends that:

10. City Council approve the 2022 service levels for Toronto Water as outlined in Appendix 1 to the report (November 3, 2021) from the General Manager, Toronto Water titled "Recommended 2022 Service Levels – Toronto Water".

This report presents the recommended 2022 water and wastewater consumption rates and service fees arising from the concurrent adoption by City Council of the 2022 Toronto Water Operating and Capital Budgets.

In accordance with the City Council 10 year capital plan approved in 2015, this report recommends a 3% water and wastewater consumption rate increase, effective January 1, 2022, and inflationary fee increases for certain existing water and wastewater service fees, reflecting cost recovery for these services. 

The recommended 2022 water and wastewater consumption rates and service fees will allow the Toronto Water Program to remain fully self-funded and financially stable, with both operating and capital needs being met without excessive year-over-year fluctuations in pricing over the long term.

Rates and Fees

The City of Toronto Water and Wastewater Program (the “Program”) is currently fully funded on a 'pay-as-you-go' basis through a combined water and wastewater rate without any reliance on property taxes or borrowing/debenture financing.  The property tax supported budget is not impacted by adoption of the recommendations contained in this report. 

Based on the recommended 2022 Toronto Water Operating and Capital Budgets, the updated water consumption forecast, and Council's direction that the Capital Plan be predicated on a 3 percent rate increase in 2022 for planning purposes, a rate increase of 3 percent, effective January 1, 2022 is recommended for Block 1 consumers and Block 2 industrial process-use consumers.

The Toronto Water 2022 Operating and Capital Budget requires a combined water and wastewater expenditure level of $1.447 billion, which is fully funded from the recommended 2022 water and wastewater consumption rates and service fees.

As shown in Chart 1 below, the recommended rate increase impact on an average home consuming 230 m3/year, billed at the Block 1 Rate, will be 3 percent or $29 over the calendar year (from $951 in 2021 to $979 in 2022).  The impact of the 3% increase on a commercial consumer at the Block 1 rate and an industrial consumer at the Block 2 rate with annual consumption of 100,000 m3 will be $12,400  and $8,868 respectively, the latter reflecting a 30% discount from the Block 1 rate for eligible industrial consumers. The rate increase impact on a large industrial consumer of 1,000,000 m3 eligible for the Block 2 rate will be $87,009.

Chart 1- Impact of recommended water rates effective, January 1, 2022

The recommended increases to certain water and wastewater service fees set out in Appendix C are expected to generate additional revenue of approximately $737,472 which is intended to offset the cost increases associated with delivering these services.

Service Levels

The service levels recommended in this report are fully funded by the 2022 Recommended Operating and Capital Budgets for Toronto Water.

Rates and Fees

The Chief Financial Officer and Treasurer and the General Manager, Solid Waste Management Services recommend that:
 

1. City Council adopt effective January 1, 2022, the Solid Waste Management Services Rates and Fees as set out in Appendix A to the report (November 1, 2021) from the Chief Financial Officer and Treasurer and General Manager, Solid Waste Management Services.
 

2. City Council authorize that the necessary amendments be made to the Municipal Code Chapter 441 (Fees and Charges) and any other necessary Municipal Code Chapters as may be required to give effect to these Recommendations.
 

3. City Council authorize the City Solicitor to introduce any necessary Bills required to give effect to Council's decision and authorize the City Solicitor to make any necessary refinements, including stylistic, format and organization, as may be identified by the City Solicitor, the Chief Financial Officer and Treasurer, and General Manager Solid Waste Management Services.
 

4. City Council direct that all the rates, fees and charges set out in Appendix A to the report (November 1, 2021) from the Chief Financial Officer and Treasurer and the General Manager, Solid Waste Management Services, adopted by Council in Recommendation 1 and 2 above, continue in full force and effect until such time as they are amended or repealed by City Council.
 

5. City Council authorize the General Manager, Solid Waste Management Services to negotiate and enter into amending agreements with the City's existing contractors providing the sale and distribution of garbage bag tags to extend the contracts for a term ending December 31, 2023, with one optional year to extend and with the provision that the City, in its sole discretion, may end the contract term earlier than the specified end date, and on any other terms satisfactory to the General Manager, Solid Waste Management Services, and each in a form satisfactory to the City Solicitor.

6. City Council extend the existing authority for the General Manager, Solid Waste Management Services or designate, from December 31, 2021 until December 31, 2026, to negotiate and enter into any agreements or related documents necessary to facilitate renewable energy projects from biogas / landfill gas, for the City, including without limitation non-competitive procurement agreements under Municipal Code Chapter 195 (Purchasing), agreements to receive funding, and related amending agreements, on such terms that are acceptable to the General Manager, Solid Waste Management Services, and in a form satisfactory to the City Solicitor.

 
7. City Council extend the existing authority for the General Manager, Solid Waste Management Services or designate, from December 31, 2021 until December 31, 2026, to negotiate and enter into any agreements or related documents necessary to produce, manage, market, distribute, use and sell renewable energy projects, from biogas / landfill gas, resulting from the implementation of Recommendation 6 above and / or the associated environmental attributes, including without limitation non-competitive procurement agreements under Municipal Code Chapter 195 (Purchasing), agreements to receive funding, and related amending agreements, on such terms that are acceptable to the General Manager, Solid Waste Management Services, and in a form satisfactory to the City Solicitor.

 
8. City Council authorize the Deputy City Manager, Corporate Services, or designate, to negotiate and enter in to any lease agreement, license agreement, easements or similar instruments necessary to implement Recommendations 6 and 7 above where Municipal Code Chapter 213 (Real Property) does not otherwise apply, on terms acceptable to the Deputy City Manager, Corporate Services and the General Manager, Solid Waste Management Services, and in a form satisfactory to the City Solicitor.

Operating and Capital Budgets

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

9. City Council approve the 2022 Operating Budget for Solid Waste Management Services of $377.809 million gross, $390.966 million revenue and $13.157 million net for the following services:

10. City Council approve the 2022 staff complement for Solid Waste Management Services of 1,139.3 positions comprised of 50.6 capital position and 1,088.7 operating positions.

11. City Council approve the 2022 new user fees, market rate user fee changes, and other fee changes above the inflationary adjusted rate for Solid Waste Management Services identified in Appendix 9 to the 2022 Staff Recommended Capital and Operating Budget Notes - Solid Waste Management Services, for inclusion in the Municipal Code Chapter 441 (Fees and Charges).

12. City Council approve 2022 Capital Budget for Solid Waste Management Services with cash flows and future year commitments totaling $625.585 million as detailed by project in Appendix 6a to the 2022 Staff Recommended Capital and Operating Budget Notes - Solid Waste Management Services.

13. City Council approve the 2023-2031 Capital Plan for Solid Waste Management Services totalling $223.535 million in project estimates as detailed by project in Appendix 6b to the 2022 Staff Recommended Capital and Operating Budget Notes - Solid Waste Management Services.

Service Levels

14. City Council approve the 2022 service levels for Solid Waste Management Services as outlined in Appendix 1 to the report (October 20, 2021) from the General Manager, Solid Waste Management Services.

This report outlines the recommended 2022 Solid Waste Management Services Rates and Fees arising from the adoption of the 2022 Solid Waste Management Services Operating and Capital Budgets. The recommended rate increase is consistent however fee increases will vary based on customer group and are highlighted in Table 1.

Table 1 highlights the recommended key Solid Waste Management Services Rates and Fees effective January 1, 2022.

Table 1 - 2022 Recommended Rates and Fees Increases (Effective January 1, 2022)

The recommended three (3) per cent increase in Solid Waste Management Services Rates will provide and maintain Council Approved service levels unchanged from the prior year and fund the 2022 Capital Budget and 10-Year Capital Plan. The $15.546 million increase in 2022 operating expenditures over prior year is attributable to the increase in organic collection and processing costs due to volume and contractual inflation adjustments, increase in the Fleet Reserve contribution as per the vehicle replacement plan, reinstatement of advertising and promotion budgets that were previously reduced due to the prior     year's provincial pandemic shutdown, start-up of the Dufferin Renewable Natural Gas Facility and increase in debt principal and interest payments to fund the 10-Year Capital Budget and Plan.

The three (3) per cent utility rate increase for 2022 is recommended to maintain the contribution to Waste Management Reserve fund in line with last year's forecast to finance future capital investments, which include the construction of the third Anaerobic Digester, Landfill Gas Development or Energy from Waste initiatives and Dufferin Waste Facility Site Improvement.

The 2022 Operating Budget expenditure is $390.966 million, representing an increase of $11.651 million or 3.1 percent increase over the prior year approved budget including a $13.157 million contribution to the Waste Management Reserve Fund, all of which are offset by total revenues of $390.966 million.

The 2022 Capital Budget is $69.729 million including carry-forwards, which is comprised of $63.668 million in new 2022 funding and $6.061 million in funding carried forward from 2021 into 2022. The 2022 Capital Budget and Plan remains generally unchanged from last year focusing on the following key capital objectives and priorities for Solid Waste Management Services:

- To safely and efficiently collect materials from 875,000 homes, business and public spaces by implementing Council's direction on health and safety by installing telematics solutions on vehicles in support of Vision Zero 2.0;

- To manage 900,000 plus tonnes of material in an environmentally and fiscally sustainable manner which includes constructing a 3rd Anaerobic Digester to help address organics processing capacity constraints;

- To continue investigating long-term disposal options including landfill capacity development and energy from waste and strategically using alternate landfill sites;

- To continue to develop and invest in renewable energy such as Renewable Natural Gas facilities. 

Rates and Fees

Solid Waste Management Services is a utility funded program that recovers program costs from a combination of service rates and fees, recoverable debt, other charges, the sale of recyclables and industry stewardship funding. The 2022 Budget provides funding to support Solid Waste Management Services operations and capital projects, and diversion by reducing materials entering the waste stream and overall waste sent to landfill.

Revenues total $390.966 million in the recommended 2022 Operating Budget as outlined in the table below.

Table 2 - 2022 Operating Budget Revenues

Service Rates and Fees of $335.009 million represent 86 percent of total revenues which consists of a three (3) percent rate increase.

The 2022 Recommended Rates and Fees associated with the various customers and services are outlined in Appendix A.

The 2022-2031 Capital Budget and 10-Year Plan totals $849.120 million, which includes 2021 capital carryovers to 2022 and future years of $15.483 million, financed by reserve funding of $392.712 million (46 percent) and recoverable debt of $456.408 million (54 percent).

The City issues debt on behalf of Solid Waste Management Services and debt servicing costs are repaid to the City by Solid Waste Management Services through the Debt Reserve Fund financed by operating fee revenues. Capital projects are funded by the Program’s operating contributions to the Waste Management Reserve Fund, Fleet Reserve, Green Lane Reserve Fund and Perpetual Care Reserve Fund.

The Solid Waste Management Services 2022 Operating Budget also includes $34.411 million to repay debt issued to fund capital infrastructure needs ($16.396 million) and to pay for the Green Lane Landfill acquisition ($18.015 million).

At its meeting of March 7, 2019 City Council adopted the recommendations in the Executive Committee Report EX2.3 "2019 Rate Supported Budgets – Solid Waste Management Services and Recommended 2019 Solid Waste Rates & Fees" and directed the General Manager, Solid Waste Management Services and the Executive Director, Financial Planning to develop a Multi-Year Financial Strategy and rate structure for the Solid Waste Management Services Division which was reported back in the 2020 budget submission to Budget Committee.

A consultant has been retained to work with Solid Waste Management Services to assist with this review to maintain a sustainable multi-year financial plan under the following scenarios:

- Develop a baseline scenario that trues-up the rates to equal the cost of providing existing services.

- Assess the potential impact of full Extended Producer Responsibility starting in 2023 that identifies the impact of the City's reduced recycling responsibilities when recycling collection, processing and recycling disposal responsibilities are transferred from the City of Toronto to producers of printed paper and packaging.

- Review Solid Waste Management Services 10-Year Capital Budget and Plan funding to ensure capital reserve contributions and recoverable debt adequately fund current and future infrastructure requirements.

The 2022 Operating Budget is recommending a three (3) per cent rate increase which is consistent with the direction received during the 2021 budget process for 2022 outlook in last year's budget submission. The three (3) per cent rate increase for 2022 is an increase from last year's budget which included a lower 1.5 percent increase that mitigated impacts on Solid Waste Management Services customers in response to the ongoing COVID-19 pandemic. In addition, the Solid Waste Management Services capital plan and rate model have been developed based on a three (3) per cent annual rate increase for the 2023 and 2024 outlook years, and the remaining seven years through 2031, to ensure sufficient contributions to reserves are maintained to fund the capital budget and plan. This year-over-year increase is aligned with the rate increase projection that was presented to Council during the 2021 budget process.

The introduction of Extended Producer Responsibility results in a net reduction in expenditures of $1.979 million beginning in 2023, an additional $10.882 million in 2024 has been incorporated in the outlook years to help stabilize the rate. If the City has not transitioned to Extended Producer Responsibility by 2024, Solid Waste Management Services will need to reassess the projected future annual rate increases to ensure service levels and funding for the 10-year Capital Budget and Plan are able to be sustained.

Operating Budget recommends the following user fees:

Table 4 - 2022 Recommended 2022 and Proposed 2023 to 2031 User Fee Increase

(See Table 4 titled "- 2022 Recommended 2022 and Proposed 2023 to 2031 User Fee Increase",

in the Financial Impact section of the letter dated November 1, 2021 from the Chief Financial Officer and Treasurer and General Manager, Solid Waste Management Services)

Forecasted future rates and fee increases by customer group are as described in Appendix B.

Solid Waste Management Services 10-Year Capital Budget and Plan funding:

This report recommends that the user fees be increased by 3.00 percent in 2022 and 3.00 percent in each of the subsequent 9 years as indicated in Table 4 above, which is the same as last years projected increases.

In addition, Extended Producer Responsibility funding of $1.979 million in 2023 and $10.882 million in 2024 and Renewable Natural Gas revenues of $3.305 million in 2022. The Extended Producer Responsibility funding contributes to keeping user fee increases to the rate of inflation over the 10-year Capital Budget and Plan. However, if City has not transitioned to Extended Producer Responsibility by 2024, Solid Waste Management Services will need to reassess the projected future annual rate increases to ensure funding for the 10-year Capital Budget and Plan is able to be sustained.

Given the recommended rate increase, as well as Extended Producer Responsibility and Renewable Natural Gas funding the Capital or Waste Management Reserve balance will change from $67.694 million in 2022 to $43.346 million in 2023 and to $88.422 million in 2031 which is adequate to fund the recommended 10-Year Capital Budget and Plan and provides a reserve balance base for future year requirements beyond 2031 such as a new or expanded land fill site or other Council approved diversion facility as shown below in Chart 1.

Chart 1 – Capital Funding and Waste Management Reserve Balance

(See Chart 1 titled "- Capital Funding and Waste Management Reserve Balance",

in the Financial Impact section of the letter dated November 1, 2021 from the Chief Financial Officer and Treasurer and General Manager, Solid Waste Management Services)

Table 5 provides a summary of anticipated major capital investments required in the 10- Year period beyond the 10-Year Capital Plan (2032-2041) which aligns to the implementation of longer term disposal options including future landfill options once Green Lane is at capacity, completion of Energy from Waste as well as a new future Mixed Waste Processing facility.

Table 5 - Capital Investments for the period 2032 to 2041 is $825.000 million

Note 1: Total estimated cost is $250.000 million; $100.000 million of this total has been accounted for in years 2030/2031 within the 2022-2031 Capital Plan submission.

Note 2: Pending Council direction

Pending initiatives and actions, in addition to Extended Producer Responsibility uncertainties, that may impact Solid Waste Management Services future operating costs and revenues are shown below.

Expiry and renewal of following major operating contracts valued at $338.825 million over the next three years include:

- District 1 Collection contract expiring June 30, 2022 with one (1) option year remaining ($75.421 million); Request for Quotation in progress, new contract to take effect July 1, 2023.

- Processing and Haulage of Source Separated Organics waste contacts with two

(2) service providers is expiring on May 31, 2024 with one (1) option year ($23.255 million).

- Processing services for Leaf and Yard Waste expiring December 31, 2022, with two (2) option years remaining ($64.559 million).

- Two (2) processing services contracts for up to 30,000 tonnes of Leaf and Yard Waste annually are expiring November 30, 2023 with two (2) option years ($5.815 million).

- Supply, delivery and maintenance of recycling and garbage bins expiring November 30, 2022 ($47.149 million).

- Single Stream Recovery Material Processing Contract expiring January 31, 2023, with four (4) option years remaining ($113.565 million).

- Mechanical Litter removal expiring Dec 31, 2024 ($9.061 million).

The extent to which these initiatives and contract changes will impact future expenditures and revenues is not fully known; however, estimates have been included in the outer years.

Service Levels

The service levels recommended in this report are fully funded by the 2022 Recommended Operating and Capital Budgets for Solid Waste Management Services.

 Operating and Capital Budgets

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

1. City Council approve the 2022 Operating Budget for Toronto Parking Authority of $105.9 million gross, $120.3 million revenue and ($14.4 million) net for the following services:

2. City Council approve the 2022 staff complement for Toronto Parking Authority of 326.5 operating positions.

3. City Council approve 2022 Capital Budget for Toronto Parking Authority with cash flows and future year commitments totaling $132.6 million as detailed by project in Appendix 6a to the 2022 Staff Recommended Capital and Operating Budget Notes - Toronto Parking Authority.

4. City Council approve the 2023-2031 Capital Plan for Toronto Parking Authority totalling $68.9 million in project estimates as detailed by project in Appendix 6b to the 2022 Staff Recommended Capital and Operating Budget Notes - Toronto Parking Authority.

5. City Council direct the Chief Financial Officer and Treasurer, in consultation with the President of Toronto Parking Authority, to report to the Budget Committee on an updated Income Sharing Renewal Agreement no later than December 31, 2022.

6. City Council request that all sub-projects with third party financing be approved conditionally, subject to the receipt of such financing in 2022 and if such funding is not forthcoming, their priority and funding be reassessed by City Council relative to other City-financed priorities and needs.

Service Levels

The President of Toronto Parking Authority recommends that:

7.  City Council approve the 2022 service levels for Toronto Parking Authority as outlined in Appendix 1 to the report (November 3, 2021) from the President, Toronto Parking Authority.

8. City Council direct that Confidential Attachment 1 to the report  (September 10, 2021) from the President, Toronto Parking Authority remain confidential in its entirety, as it pertains to personal matters about identifiable individuals, including municipal or local board employees, and labour relations or employee negotiations, and the security of property belonging to the City or one of its agencies or corporations.

This report provides the recommended 2022 Service Levels for Toronto Parking Authority in comparison to service levels planned and achieved from 2019 to 2021.

Service levels have historically been presented in the Budget Notes for each Program/Agency for review by Budget Committee and approval by City Council.  Beginning in 2020, as part of the budget modernization project, service levels were provided in a separate document in an effort to deliver a more efficient and simplified budget process that will create greater opportunities for public participation through inclusive and outcome focused budget materials.

The service levels recommended in this report are fully funded by the 2022 Recommended Operating and Capital Budgets for Toronto Parking Authority.

The Board of Directors of Toronto Parking Authority:

1. Forwarded the 2022 Operating Budget and 2022-2031 Capital Budget for Toronto Parking Authority, as outlined in the report (September 10, 2021) from the President, Toronto Parking Authority, to City Council.

At its meeting on September 29, 2021, The Board of Directors of Toronto Parking Authority considered Item PA26.2 and forwarded its Budget to City Council.

Summary from the report (September 10, 2021) from the President, Toronto Parking Authority:

Management is forecasting a full year 2021 net income loss of $(9.5) million; $(7.3) million worse than budget and a decline of $(85.1) million compared to pre-pandemic 2019 net income.  Operating revenues forecasted at $78.5 million, or $(12.5) million worse than budget, following transaction volume declines of -23 percent versus prior year and -51 percent versus 2019. Cash reserves at the end of 2021 are forecasted to be $51.5 million due to management's continued focus on cash preservation and to ensure Toronto Parking Authority's operational obligations can be met; Toronto Parking Authority reserves are planned to be fully utilized in 2024.  As directed by City Council, Toronto Parking Authority will provide a $12 million dividend to the City of Toronto in 2021. These funds will be sourced through Toronto Parking Authority's cash reserves.

In 2022, Management is planning full year net income of $14.4 million with revenue improving to 72 percent of pre-pandemic (2019) levels. This net income will trigger a $12.2 million dividend to the City and has been included in Toronto Parking Authority's budgeted 2022 cash reserves forecast. Financially, and despite an improving top-line operating environment, Management will remain focused on driving cost productivity and cash preservation. Operationally, Management will be maniacally focused on delivering our five strategic platforms: Build a Great Place to Work, Strengthen the Core, Accelerating Growth and Financial Sustainability, Connecting with our Customers, and Engage and Innovating with our Strategic City Partners.

Critical projects identified within our strategic framework for 2022 include Talent

Development, Health and Safety, fast tracking the deployment of Toronto Parking Authority's Electric Vehicle Charing Infrastructure, accelerating expansion of the Bike Share  program, and development and execution of our asset management plan.

This report also provides an executive summary of the On and Off-street rate reviews and responds to City Council direction for Toronto Parking Authority to carry out a market rate analysis of parking rate adjustments in coordination with the annual budget process.

The Chief Financial Officer and Treasurer recommends that:

1. City Council approve in-year budget adjustments to the 2021-2030 Approved Capital Budget and Plan as detailed in Appendix 4 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer.

This is to advise that prior to Budget Committee on November 19, 2021, a Capital Variance Report for the nine months ended September 30, 2021, with additional analysis and recommendations will be submitted for consideration. Due to accelerating the agenda to ensure 2022 rate budget materials are publicly shared and to the additional complexity associated with analyzing financial implications of COVID-19, additional time is required to provide detailed review and analysis for the variance reports, in advance of the Budget Committee meeting.

The Capital Variance Report will contain capital spending results for the nine months ended September 30, 2021 as well as projected expenditures to December 31, 2021. The report will also request City Council's approval for in-year budget adjustments to the 2021 Approved 2021-2030 Capital Budget and Plan.

The financial implications will be provided in the report to be submitted to Budget Committee.

The Chief Financial Officer and Treasurer recommends that:

1.  City Council approve in-year budget adjustments to the 2021-2030 Approved Capital Budget and Plan as detailed in Appendix 4 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer.

The purpose of this report is to provide City Council with the City of Toronto capital spending for the nine month period ended September 30, 2021, as well as projected expenditures to December 31, 2021. Furthermore, this report seeks Council's approval for in-year budget adjustments to the 2021 Approved Capital Budget and Plan.

As illustrated in Table 1 below, City's 2021 capital expenditure was $1.917 billion or 36.4 percent of the 2021 capital budget of $5.267 billion for the period ended September 30, 2021 and is projecting to expend $4.076 billion or 77.4 percent by December 31, 2021.

Table 1 - Capital Variance Summary

*Note: Includes 2020 carry forward funding

The Capital spending pattern for the first nine months typically ranges between 32 percent and 48 percent of the total Council Approved Capital Budget, with the 2021 experience of 36.4 percent. The total City projected spend of 77.4 percent by year-end is comprised of a Tax Supported Programs spending rate of 73.5 percent and a Rate Supported Programs spending rate of 87.4 percent.

Moving forward, the City will continue to plan annual capital projects in line with both affordability and achievability, based on the historical actual capacity. The strategy is expected to build on improvements experienced to date and also improve capital spend rate in future years; fully utilizing approved funding and enabling any excess funding capacity to support additional capital priorities.

The capital expenditures in the first nine months of 2021 total $1.917 billion and year-end expenditures are anticipated to increase to $4.076 billion or 77.4 percent of the total 2021 Approved Capital budget. 16 of the 38 City Programs and Agencies have projected year-end spending rate in excess of 70 percent.

Appendix 1 summarizes the Year to Date spending in the first nine months of 2021; and the projected year-end spending rate by City Programs and Agencies.

Appendix 4 includes recommended in-year capital budget adjustments to the 10-Year Capital Plan, which includes a $34.9 million cash flow reduction in 2021 and $22.5 million cash flow addition in 2022 – 2030. The net impact is a cash flow reduction of $12.4 million to the 10-Year Capital Plan.

The Chief Financial Officer and Treasurer recommends that: 

1.  City Council approve the budget adjustments and any associated complement changes detailed in Appendix D1 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer, to amend the 2021 Approved Operating Budget with no impact on the Net Operating Budget of the City, and approve the expenditure authority as detailed in Appendix D2 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer.

This is to advise that prior to Budget Committee on November 19, 2021, an Operating Variance Report for the nine months ended September 30, 2021, with additional analysis and recommendations will be submitted for consideration. Due to accelerating the agenda to ensure 2022 rate budget materials are publicly shared and to the additional complexity associated with analyzing financial implications of COVID-19 on operations, additional time is required to provide detailed review and analysis in advance of the Budget Committee meeting.

The Operating Variance Report will contain operating results for the nine months ended September 30, 2021 as well as projections to year-end. The report will also request City Council's approval for required amendments to the 2021 Approved Operating Budget that have no impact on the City's 2021 Approved Net Operating Budget.

The financial implications will be provided in the report to be submitted to Budget Committee.

 The Chief Financial Officer and Treasurer recommends that:

1.  City Council approve the budget adjustments and any associated complement changes detailed in Appendix D1 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer, to amend the 2021 Approved Operating Budget with no impact on the Net Operating Budget of the City, and approve the expenditure authority as detailed in Appendix D2 to the report (November 19, 2021) from the Chief Financial Officer and Treasurer.

The purpose of this report is to provide City Council with the Operating Variance for the nine months ended September 30, 2021 as well as projections to year-end. This report also requests City Council's approval for amendments to the 2021 Approved Operating Budget that have no impact on the City's 2021 Approved Net Operating Budget.

Since March of 2020, the City of Toronto has been experiencing significant financial impacts, both in the form of added costs and significant revenue losses as a direct result of the COVID-19 pandemic.

COVID-19 related financial impacts have been budgeted to a total $1.596 billion for the City of Toronto's 2021 Operating Budget. COVID-19 funding support applied to the City's 2021 Budget, from the Government of Canada and Province of Ontario in the form of Safe Restart Agreement, added Reaching Home funding and other funding programs total $1.521 billion in combined COVID-19 support funding, reflecting over 95 perrcent of budgeted COVID-19 funding requirements, reducing the 2021 year-end funding shortfall to $74.5 million related to Transit.

In total, the City has benefited from approximately $2.6 billion in intergovernmental COVID-19 relief funding since the start of the pandemic, ensuring continuation of the City's critical frontline services.

Table 1 below details the budgeted 2021 City-wide COVID-19 related financial impacts against secured and assured COVID-19 support funding; and the resulting financial position that is reflected in the year-end variance projections:

Table 1 - 2021 Projected COVID-19 Financial Impacts

* Includes Toronto Community Housing Corpration impact of $37.5M

** Based on Budgeted impacts and excludes greater impacts and associated funding experienced in 2021; as well as immunization costs for Public Health

While the City is currently reporting a 2021 budgeted funding shortfall of $74.5 million related to Transit, over 95 percent of budgeted 2021 COVID-19 impacts have secured funding support from the Federal and Provincial governments through the first nine months of the year and staff continue to expect that 2021 COVID-19 impacts will be fully funded by year-end.

Tax Supported Programs:

The following table summarizes the projected year-end financial position of the City's Tax Supported Operations as of September 30, 2021. The projected unfavourable variance is directly attributed to the combination of a COVID-19 funding shortfall for Transit, unconfirmed intergovernmental funding for projected costs associated with the City's Refugee Response and additional pressures primarily related to the continued financial impacts of COVID-19 that are offset by favourable Municipal Land Transfer Tax revenue resulting in an overall $98.6 million pressure projected for year-end for tax supported programs.

Table 2 - Tax Supported Operating Variance Summary

Note 1: Rate supported programs and Toronto Community Housing Corporation variance information is not reflected in the table above, which details Tax Supported Programs only

Note 2: Due to technical reasons, Toronto Transit Commission's Second Quarter Year-to-Date result is used in this report

Nine Month Year-to-Date and Projected Year-End Spending Results:

As noted in Table 2 above, for the nine months ended September 30, 2021, Tax Supported Operations experienced a favourable net variance of $123.6 million or 1.6 percent of planned expenditures adjusted for Toronto Building and City Planning. It is important to note that the September 30th experience is a snapshot in time and the year-end projection is based on current and expected COVID-19 impacts.  The continued impact of COVID-19 and any deviation from expectations to year end will impact variance projections.  Any changes will be reflected in variance reporting for the twelve months ending December 31, 2021.

-  The variance is primarily attributable to underspending within City Divisions and Agencies that is partially offset by the timing of receipt of COVID-19 related Federal and Provincial funds through the first nine months of 2021, as compared to initial calendarization. The impacts on the year-to-date results are reflected in the following areas:

-  City wide expenditure savings, some of which due to public health measures during the year contributed to the favourable year-to-date variance. For example, Parks Forestry and Recreation incurred underspending arising from the cancellation of recreation programming that was partially offset by revenue losses from registration sales; permit revenues; and other user fees, all driven by the requirement for PFR to close community facilities and parks during the COVID-19 pandemic.
 

-  Non-Program Revenues: An unfavourable year-to-date net variance of $1.6 million due to a timing difference between budgeted and actual receipt of confirmed Safe Restart Agreement funding as well as impacts from COVID-19 have resulted in lower than planned revenues for Interest and Investment Earnings, Parking Tag Revenues and Casino Woodbine. This was partially offset by higher than anticipated Municipal Land Transfer Tax revenues from increased sales activity in the period.
Toronto Transit Commission - Conventional Service:  A favourable year to date (Second Quarter) net variance of $15.4 million is mainly attributable to continued expenditure management where possible, which was partially offset by underachieved revenue due to the impact of COVID-19 on ridership.

For year-end, the City is projecting an unfavourable variance of $98.6 million or 0.6 percent of the 2021 Gross Operating Budget, adjusted for Toronto Building and City Planning. The unfavourable variance is primarily due to the COVID-19 funding shortfall for Transit related pressures and outstanding intergovernmental funding confirmation for the City's Refugee Response. The City is also anticipating that over performance of Municipal Land Transfer Tax from increased sales activity projected in 2021 with offset greater than expected COVID-19 impacts experienced through the year due to added waves and variants.

Rate Supported Programs:

Rate Supported Programs reported a favourable year-to-date net variance of $31.0 million. The favourable variance is attributed to lower than budgeted expenditures primarily from Toronto Water and Solid Waste Management Services partially offset by lower than planned revenue across all rate programs. At year-end, a favourable projected net variance is anticipated to be $37.3 million, again primarily driven by lower than budgeted expenditures from Toronto Water and Solid Waste Management Services.

Rate Supported Programs are funded entirely by the user fees that are used to pay for the services provided and the infrastructure to deliver them. Solid Waste Management Services and Toronto Water's respective year-end surpluses, if any, must be transferred to the Wastewater and Water Stabilization Reserves and

Waste Management Reserve Fund, respectively, to finance capital investments and ongoing capital repairs and maintenance.

Table 3 - Rate Supported Operating Variance Summary

For the nine months ended September 30, 2021 the City experienced a favourable net variance of $123.6 million for Tax Supported Programs. Please note, due to technical reasons, Toronto Transit Commission's Second Quarter Year-to-Date result is used in this report The City is projecting for December 31, 2021 an unfavourable net variance of $93.7 million (Tax Supported Programs, adjusted for Toronto Building and including committed Safe Restart Agreement and other COVID-19 support funding).

It is important to note that the September 30th experience is a snapshot in time and the year-end projection is based on current and expected COVID-19 impacts. The continued impact of COVID-19 and any deviation from expectations as a result of the pandemic will impact variance projections.  Any changes will be reflected in variance reporting for the twelve months ending December 31, 2021.

Appendices A, B and C provide a detailed summary of gross expenditures, revenue and net expenditures for the nine month results and projections to year-end by Program and Agency, respectively. Appendix D details the recommended in-year budget adjustments that are fiscally neutral to the 2021 Approved Operating Budget.

The Chief Financial Officer and Treasurer recommends that:

1. City Council approve the establishment of a discretionary reserve fund called the 'Toronto Public Library IT Asset Replacement Reserve Fund' in Appendix B, Schedule 7 - Corporate Discretionary Reserve Funds of the City of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds, the purpose of which is to provide funding to purchase Information Technology equipment for Toronto Public Library as part of the annual replacement cycle for Information Technology equipment, with criteria set out in Appendix G to the report (November 3, 2021) from the Chief Financial Officer and Treasurer.

2. City Council approve the establishment of a Stabilization Reserve called the 'Debt Servicing Stabilization Reserve' in Appendix A, Schedule 3 - Stabilization Reserves of the City of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds, the purpose of which is to reduce the volatility of the City's annual debt service costs, with criteria set out in Appendix H to the report (November 3, 2021) from the Chief Financial Officer and Treasurer.

3. City Council authorize that the name of the 'Sony Centre Facility Fee Reserve Fund' be changed to the 'TO Live Facility Fee Reserve Fund' and that the criteria sheet, reflecting changes to the purpose, and its contribution and withdrawal policies be amended, as outlined in Appendix I to the report (November 3, 2021) from the Chief Financial Officer and Treasurer, and amend Appendix B, Schedule 8 of Chapter 227 to reflect the revised purpose.

4. City Council adopt a change in name of the 'Public Health Efficiency Reserve Fund' account to the 'Public Health Reserve Fund', as well as a change to its purpose and criteria as reflected in the revised Criteria Sheet in Appendix J to the report (November 3, 2021) from the Chief Financial Officer and Treasurer, and amend Appendix B, Schedule 7 of Chapter 227 to reflect the revised name and purpose.

5. City Council authorize that the names of the following accounts be changed to be consistent with the change in name of their respective Divisions, and amend the schedules of Chapter 227 as set out in the following table:

6. City Council direct the following accounts, which have zero balances, be closed and deleted from the Schedules to Chapter 227 as set out in the table to follow.

7. City Council direct that the balance of the 'Toronto Centre for the Arts Improvement Reserve Fund' in the amount of $213,689.00 be transferred to the 'TO Live Facility Fee Reserve Fund' and it be closed and deleted from Appendix B, Schedule 8 in Chapter 227.

8. City Council direct that the balance of the 'Toronto Centre for the Arts Stabilization Reserve' in the amount of $372.76 be transferred to the 'TO Live Facility Fee Reserve Fund' and it be closed and deleted from Appendix A, Schedule 3 in Chapter 227.

9. City Council direct that the balance of the 'Water Efficiency Loan Reserve Fund' in the amount of $2,393,277.21 be transferred to the Water Capital Reserve Fund (deferred revenue) and it be closed and deleted from Appendix C, Schedule 16 in Chapter 227.

The City of Toronto (City) maintains balances that are recognized as revenues in future years, in addition to reserves and reserve funds that provide future funding offsets.  This report provides balances for obligatory reserve funds (deferred revenues) and reserves and discretionary reserve funds as at September 30, 2021.

In addition, this report requests Council approval for administrative amendments to the City of Toronto Municipal Code Chapter 227, Reserves and Reserve Funds ("Chapter 227"). This includes a request to establish a new reserve and discretionary reserve fund change the names/purposes of a number of reserves and reserve funds to better reflect divisional allocation, and close five reserve/reserve fund accounts and transfer residual balances accordingly.

As at September 30, 2021, the City recognized $8,978.8 million in total deferred revenues (obligatory reserve funds) and discretionary reserve funds, an increase of $1,393.0 million from the December 31, 2020 balance of $7,585.8 million. These balances are subject to annual changes based on receipts from third parties, recognition of amounts into revenue based on third party agreements and revenue recognition principles and transfers between funds, based on Council approvals. A total of 97.1 percent of the City's deferred revenues and reserves are fully committed, with the breakdown of the total balance as follows:

- Committed funds included in the City's reserves, or in support of legislated, contractually bound or Council-directed activities ($8,059.6 million);

- Committed funds to fund capital costs and pressures on rate-based activities ($655.5 million);

- Uncommitted funds of $263.7 million, or 2.9 percent of the total balance, to respond to various unanticipated costs and to stabilize various funding sources, including the tax base.

There are no current or known future year financial impacts arising from the recommendations contained in this report.

As noted above, the majority (97.1 percent) of the City's obligatory reserve funds (deferred revenues) and reserve amounts, are committed funds based on legislative or third party agreements, Council-directed activities, or to fund capital costs and pressures for rate-based activities.  As at September 30, 2021, only 2.9 percent are available to respond to unanticipated costs or stabilize various funding sources, such as the tax base.