May 11, 1998

To: Corporate Services Committee

From: Commissioner of Corporate Services

Subject: Use of City Property by Non-Profit Corporations at Below Market Charges

To request the Corporate Services Committee to approve a policy and procedures as set out in this report for the processing of requests for use of City-owned or leased property by non-profit corporations at below market charges.

Financial Implications:

If the recommendations in this report are approved, the Municipal Grants Review Committee will be in a position to determine on a case by case basis whether it wishes to provide an indirect grant to non-profit corporations wishing to utilize City property at below market charges.

Recommendations:

It is recommended that:

Background:

There is a continuing demand for use of City-owned or leased property by non-profit corporations at below market charges. Such requests should be considered within the context of a standardized policy and established procedures. In addition, as these requests generally impact upon the financial status of the City, it is necessary that each request, unless extremely short term in nature, i.e., two weeks or less, be approved by City Council.

The only former municipality which had a formalized policy and procedure for administering requests of this type was the old City of Toronto. Material on the policy and the procedures is attached as Appendix 4 to this report.

In view of the number of existing non-profit tenants in City-owned space and new requests there is a need to establish a policy and procedures to process these requests, a need to review the existing non-profit tenants and a need to establish a proper method to track the grants being provided for these types of users.

Policy and Procedures:

There is a requirement for an established policy and procedures which ensure that there is a financial need of the non-profit corporation, that their services provide a benefit to residents of the City of Toronto, ensure a proper process is undertaken in order to submit the necessary information to the Municipal Grants Review Committee and Council and require that City Council make the final decision on any non-profit tenancy request.

The Real Estate Group for the City has reviewed this matter and developed a policy and set of procedures as set out in Appendices 1 and 2 respectively. The policy and procedures require that a comprehensive review of the non-profit corporation is undertaken to ensure that the objectives set out above are met and to require that City Council make the final decision on non-profit tenancy requests. The only exception to these procedures is those requests for use of City property for a duration of two weeks or less. A companion report before you today recommends that approval authority for those types of requests be delegated to the Commissioner of Corporate Services.

Existing Non-profit Tenants and New Requests:

The existing non-profit tenants are listed on Appendix 3 to this report. As these tenancies have been established in various manners by the old municipalities, it is appropriate to review all existing non-profit users and submit a report on those users in accordance with the policies and procedures set out in this report. It is anticipated that the overall report on the current users can be completed and submitted in approximately three months. New non-profit requests will be processed in accordance with the policies and procedures set out in this report.

There have recently been several requests to accommodate non-profit groups in the former Civic Centre buildings. A space rationalization team is in the process of identifying available space in these facilities that can accommodate various City of Toronto departments currently occupying leased premises. At this time, priority will be given to placing City staff whose leases with private landlords are expiring into municipal space. Accordingly, until such a time as the space rationalization exercise is completed, consideration should not be given to placing non-profit groups into the various Civic Centre buildings.

Options to Monitor Costs:

The attached policy identifies the benefit provided to the non-profit corporation as an indirect grant. This type of approach does not clearly show the true cost to the City of this kind of program. It is therefore proposed that a process be established to better show these costs. One alternative approach would involve the establishment of an envelope of funds during each budget cycle to be administered by the Municipal Grants Review Committee. The imputed cost for each of the ongoing non-profit corporation=s lease would be transferred from this envelope of funds to the property accounts. Similarly, any new requests approved during a given year would also require a transfer of funds to cover the costs of the lease for the balance of the fiscal year. This process is revenue neutral to the City and provides an alternative method of monitoring the cost of approving below market non-profit accommodation requests. It is appropriate to request input from the Chief Financial Officer and the Municipal Grants Review Committee on the preferred method of monitoring these costs and to submit a further report thereon with appropriate recommendations including the method of monitoring costs effective January 1, 1999.

Conclusion:

Due to the number of requests received for utilization of City-owned or leased space by non-profit corporations, there is a need for Council to establish a policy and a set of procedures to administer these requests. The policy and procedures recommended in this report will result in a consistent, uniform review of all such requests, financial accountability and full information being provided to City Council when considering such requests.

Doug Stewart, Telephone 392-7202, Fax 392-1880, E-mail - dstewart@city.toronto.on.ca, (cs98017.wpd)

Margaret Rodrigues

Commissioner, Corporate Services

Appendix 1

Request for Below Market Use of City-Owned

or Leased Property by Non-Profit corporations

POLICY

1. This policy will outline the City of Toronto=s approach to all requests for either occupancy or extensions of occupancy of City-owned or leased space at below market rates.

 

This policy will not address occupancy agreements at market rates nor the use of City-owned or leased property for residential purposes, or for occasional uses such as events. Permits issued by Parks and Recreation to community groups and leases to groups for Parks purposes, such as tennis clubs, as approved by City Council are explicitly excluded from this policy.

 

2. Requests for occupancy at below market rent rates can only be considered if the proposed occupant is a non-profit corporation, because Section 113 of the Municipal Act, R.S.O. 1990, Chapter M 45, permits such arrangements only with non-profit corporations.

 

Specific City Council authorization will be required for the provision of any space to non-profit corporations at below market rates, including occupancy agreement renewals except for short term occupancies of two weeks or less which will be administered by the Commissioner of Corporate Services. Any provision of space will be subject to availability and having regard to the needs of the Corporation as determined by portfolio management and accommodation policies and procedures of the City.

 

3. The provision of City-owned or leased property to non-profit corporations at below market rent is an indirect grant. The amount of this indirect grant includes not only the Asubsidy@ in the form of market rent forgone, but also any direct expenses incurred by the City such as maintenance and operating costs. The annual value of this indirect grant will be reported on a yearly basis to City Council.

 

4. The corporation must be incorporated as a non-profit corporation and the corporation must meet the policy criteria as amended from time to time.

 

5. Groups and Organizations must:

- be non-profit and accountable to the community through an elected Board of Directors or other responsible body;

- be located in the City of Toronto and serve City of Toronto residents;

- show that the organization can manage its financial affairs;

- show that programs and activities are effectively meeting a community need;

- show that community volunteers are actively involved in the group, and support the activity proposed;

- cooperate with other community organizations and City of Toronto services to plan and coordinate activities; and

- show that the organization has adopted and upholds equal opportunity and non-discrimination policies.

 

6. Programs or Services must:

- not duplicate already existing services;

- have clearly stated goals and objectives, and show how the activity will be evaluated;

- show clearly what community need is being met, and how the service or activity can effectively meet the need;

- be provided within the boundaries of the City of Toronto for City of Toronto residents;

- support volunteers and participants to contribute effectively to the programs and management of the group;

- show that they are financially viable, and that other appropriate funding sources have been approached;

- be free or affordable for the intended participants; and

- demonstrate that they are operated with adequate regard for participants= safety.

 

7. Priority is given to projects and services that:

- assist people who are disadvantaged in terms of income, employment and other opportunities;

- are small or medium size organizations without access to core grants or volunteer support for fundraising; and

- reflect City of Toronto goals and policies as reflected in City reports relevant to the type of services offered.

 

8. In all cases of occupancy of City-owned or leased property by non-profit corporations, an occupancy agreement will be entered into, stipulating specific terms and conditions. A maximum of three years will be allowed for any term of occupancy. The length of the term will have regard to the type and cost of leasehold or other improvements necessary to facilitate the group=s utilization of the space and the value that these improvements will add to the City asset.

 

9. In the event that the needs of more than one applicant can be matched to the same available site, a report on each applicant will be forwarded to the Municipal Grants Review Committee.

 

10. The Municipal Grants Review Committee will make a recommendation (including proposed terms of occupancy) on each request for use of City-owned or leased property in a report to City Council.

Appendix 2

 

Request for Below Market Use of City-Owned

or Leased Property by Non-Profit Corporations

 

PROCEDURES

 

1. All requests for occupancy at below-market rent rates of City-owned or leased property will be co-ordinated by the Facilities & Real Estate Division (FRE) of Corporate Services Department and should be directed to that Division. FRE will instruct the applicant to complete a space request form, attached as Appendix 2(a).

 

2. If the applicant appears to meet the requirements, then FRE will determine whether appropriate City-owned or leased property is or can be made available. If no space is available, the Executive Director of FRE will write to the applicant to this effect and no further action will be taken.

 

3. If space is available, FRE will contact other City departments and agencies, as appropriate, and ask that the programs, services, financial position and administrative capability of the non-profit corporation be evaluated for consistency with City objectives, specifically whether the non-profit corporation meets all the requirements set out in the Policy. If the requirements are not met, the Executive Director of FRE will write to the applicant to this effect and no further action will be taken.

 

4. The Ward Councillor and any other member of Council who has requested such information will be advised of the space request and kept informed throughout the review process.

 

5. FRE staff will estimate the market rent, operating and maintenance costs for the space and the cost of any leasehold improvements.

 

6. If the non-profit corporation meets the policy requirements, the Commissioner of Corporate Services will submit a report to the Municipal Grants Review Committee on the request. This report will contain the following:

- information on the applicant non-profit corporation;

- details of the request;

- financial impact of the request including market rent, operating and maintenance costs, budget implications, assessment of the applicant=s ability to pay some or all of the market rent and the applicant=s provision of leasehold and other improvements;

- comments and recommendations from other City departments and agencies; and

- proposed terms of occupancy including length of lease term.

 

7. The Municipal Grants Review Committee will consider the request and submit a report thereon to City Council.

 

8. If City Council approves the provision of space to a non-profit corporation, FRE, will prepare an occupancy agreement stipulating specific terms and conditions and in a form satisfactory to the City Solicitor, including:

- the tenancy may be terminated during the lease period if a material change in circumstances and/or purpose of the non-profit corporation occurs; and,

- the City Treasurer and City Auditor are entitled to have access to the records, books and accounts of the non-profit corporation, as they require.

 

9. The Commissioner of Corporate Services will submit each year, at year end, a report to City Council via the Municipal Grants Review Committee, listing the indirect grant in each case for all occupancies by non-profit corporations, including market rent forgone and other costs and benefits.

 

10. Prior to any renewal of an occupancy agreement, FRE will determine whether or not the requirements of this policy are still being met by the particular non-profit corporation and report the results to the Municipal Grants Review Committee. The agreement will only be renewed if City Council so authorizes.