The Strategic Policies and Priorities Committee recommends the adoption of the following report (April 2, 1998) from the Chief Administrative Officer:

Purpose:

The purpose of this report is to recommend a formal Toronto City Council response to the provincial government's draft legislation for the establishment of a Greater Toronto Services Board (GTSB).

Funding Sources, Financial Implications and Impact Statement:

The recommendations in this report have no financial implications.

Recommendations:

It is recommended that:

(1) Council support the establishment of a GTSB as constituted in the Proposed Greater Toronto Services Board Act released by the Minister of Municipal Affairs and Housing on March 12, 1998 subject to the following recommendations and comments;

(2) The provincial government be requested to amend Part I of the Proposed Greater Toronto Services Board Act to vest authority in the GTSB to do any or all of the following:

(a) prepare a GTA urban structure plan and master plans for major inter-regional infrastructure, for example, sewer, water, and transportation;

(b) allocate Provincial funding to GTSB member municipalities for inter-regional projects and programs consistent with the GTA urban structure and infrastructure master plans;

(c) approve, or appeal to the approval authority, environmental assessments for major inter-regional infrastructure based on consistency with the GTA urban structure and infrastructure master plans; and

(d) support or appeal land use decisions to the approval authority, including the Ontario Municipal Board, based on consistency with the GTA urban structure and infrastructure master plans;

(3) the provincial government be requested to review the relationship of GT Transit to the GTSB with a view to ensuring that their respective responsibilities and powers in regard to the design, construction and operation of the regional transit system are clearly defined and distinct. This review should include consideration of the option of increasing the City of Toronto's representation on GT Transit to 50 per cent;

(4) Council inform the Minister of Municipal Affairs and Housing that the City of Toronto opposes the method of levy apportionment based on weighted assessment, as set out in clause 19 (2) of the Proposed Greater Toronto Services Board Act, and request the provincial government to work with City staff to identify alternative approaches to levy apportionment by the GTSB;

(5) that the provincial government amend the proposed Greater Toronto Services Board Act by removing the GTSB's power to directly access financial markets;

(6) this report be forwarded to Mr. Alan Tonks, the Minister of Municipal Affairs and Housing, all Regional and Area Municipal Councils in the GTA and the Council of the Regional municipality of Hamilton-Wentworth as the City of Toronto's response to the proposed Greater Toronto Services Board Act; and

(7) the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Council Reference/Background/History:

In February, 1995 the previous provincial government established the Greater Toronto Area (GTA) Task Force with a mandate to make recommendations on a wide range of matters including governance of the GTA. The Task Force released its final report in January, 1996, in which it recommended the elimination of the Metro and regional governments and the establishment of a GTA authority.

A provincial review panel, chaired by Libby Burnham, reported on May 6, 1996 that there was very little consensus on the GTA Task Force recommendations other than on the need for co-ordination in the GTA. Subsequently, on May 30, 1996, the provincial government established the Who Does What Panel, chaired by David Crombie. The Panel reviewed the distribution of responsibility for delivery and funding of the full range of municipal services and examined municipal finance and governance. The Panel submitted its recommendations to the Minister of municipal Affairs and Housing in a series of letters throughout the summer and fall of 1996. With respect to GTA governance, the Panel recommended the creation of a Greater Toronto Services Board, elimination of the regional municipalities and consolidation of member municipalities into strong cities including a strong urban core for the GTA.

The provincial government responded to these recommendations with the introduction of Bill 103, the City of Toronto Act, on December 17, 1996. At the same time, the Minister of Municipal Affairs and Housing announced the appointment of Mr. Milt Farrow as Special Advisor on the formation of a Greater Toronto Services Board. Mr. Farrow was asked to undertake consultation and advise the Minister on: the GTSB's powers; how it should be governed; what types of services it should concern itself with; how it should be funded; and what relationship it should have with municipalities, the public and the province.

Mr. Farrow released his final report, entitled "Getting Together," on June 18, 1997. Mr. Farrow proposed that a GTSB be set up as a statutory corporation. All upper, lower and single tier municipalities in the GTA would be members. Hamilton-Wentworth would be a member only with respect to the GTSB's involvement in GO Transit. The GTSB's decision-making and executive arm would be a 28 member Executive Committee, half of whose membership would initially be drawn from the new City of Toronto. Three representatives from Hamilton-Wentworth would be added to the Executive Committee when issues relating to GO Transit were on the agenda. The Executive Committee would receive input from and link to the GTSB's membership through an Urban Issues Advisory Committee and a Rural Issues Advisory Committee. All member municipalities would sit on one of these two committees.

Mr. Farrow recommended that, initially, the GTSB should have four primary roles. These would be:

(1) development of a comprehensive, long-term Infrastructure Co-ordination Strategy for the GTA;

(2) provision of a discussion forum and liaison with all levels of government;

(3) resolution of inter-regional servicing issues when consensus among municipalities cannot be reached in areas such as water and sewage treatment, inter-regional transit and watershed management. The GTSB would implement decisions and allocate costs; and

(4) operation of GO Transit and development of a long-term, post collection waste management strategy for the GTA.

On December 11, 1997 the Toronto Transition Team released its Final Report, in which it recommended that the new Toronto City Council, "recognizing that Greater Toronto is one economic, social and environmental region, should impress on the Province the importance of creating the Greater Toronto Services Board (GTSB) as soon as possible to provide a forum for building a strong city-region in partnership with other municipalities in the Greater Toronto Area."

The Transition Team proposed that the GTSB should have a mandate "to coordinate city-region growth and infrastructure investments and take joint action on such shared interests as watershed planning and development of a solid waste strategy."

On March 12, 1998, the provincial government published draft legislation to provide for the establishment of a GTSB. The Minister of Municipal Affairs and Housing announced that the government intends to introduce a Bill for First Reading in the spring sitting of the Legislature. An information bulletin from the CAO, enclosing a message from the Minister of Municipal Affairs and Housing, a news release announcing the draft legislation, and a backgrounder describing the highlights of the draft legislation, was circulated to all Members of Council on March 13, 1998.

The province has appointed Mr. Alan Tonks, former Chair of the Toronto Transition Team and Metro Council, to moderate a review of the draft legislation. The Minister of Municipal Affairs and Housing has requested all municipalities in the GTA to provide comments on the draft legislation to Mr. Tonks.

This report recommends a formal Toronto City Council response to the draft legislation.

Comments and/or Discussion and/or Justification:

Under the proposed legislation, the GTSB is established as a corporation without share capital. It is not a municipality and is explicitly stated not to be a local board The objects of the GTSB are two-fold:

(i) to promote co-ordinated decision making among municipalities in the GTA; and

(ii) to supervise the management of the Greater Toronto Transit Authority ("GT Transit") and allocate the costs of that authority, in accordance with the Act.

The powers of the GTSB in respect of these two roles are summarized in the Appendix to this report.

Establishment of a Greater Toronto Services Board:

The GTA Task Force, Burnham Review Panel, Who Does What Panel, Milt Farrow Final Report and the Final Report of the Toronto Transition Team all concluded that there is the need for an institution to deal in a unified and coordinated way with the problems facing the GTA. Legislation to create the GTSB is a step in the right direction.

Other forums to discuss GTA issues do exist. These include the GTA Mayors' and Regional Chairs' Committee and the Greater Toronto Coordinating Committee under the auspices of the provincial Office for the Greater Toronto Area. These forums have generally only been successful where the Councils of the affected municipalities could reach a mutually beneficial agreement, often with provincial subsidies provided as an incentive. They have failed to resolve major issues related to growth management in the GTA. In addition, they lack formal powers or even the formal accountability structures to be persuasive.

The GTSB will provide a more balanced forum for the debate of GTA issues. Its representative structure and legislated mandate will provide a more accountable means for setting and addressing the region-wide agenda than groups such as the GTA Mayors' and Regional Chairs' Committee. It is recommended that Council support the establishment of a GTSB as constituted in the Proposed Greater Toronto Services Board Act released by the Minister of Municipal Affairs and Housing on March 12, 1998 subject to the following comments.

Growth Management Issues:

Ensuring that growth proceeds in a manner that respects the natural environment and provides for efficient, cost effective use of infrastructure and public resources is a primary challenge for the GTA. Effective growth management in the GTA requires coordinated decision making in the provision of infrastructure and services and development of land. This, in turn, requires that problems be identified and addressed in the context of the GTA as a whole and that there be authority to implement the recommended actions.

Under Part I of the draft legislation, the powers of the GTSB (other than in respect of GO Transit) are advisory in nature. The GTSB will have the power to "promote", "advise", "act as a liaison", "facilitate" and "provide a mechanism", but not to implement or compel implementation of its decisions. Therefore, the extent to which decisions of the Board relating to growth management are implemented will be dependent on the adoption of the decisions by the affected municipalities.

To some degree, this inherent weakness in the GTSB may be mitigated if decisions or other strategies of the Board are recognized in other processes, for example, provincial policy statements or consideration of planning issues by the Ontario Municipal Board (OMB). Because of its legislated mandate, this is more likely to occur with resolutions by the GTSB than other existing ad hoc committees. However, it is not certain to happen.

The GTSB's powers under Part I need to be enhanced to make it more likely that the decisions of the GTSB will result in coordinated growth management, including greater coordination in infrastructure use and investments and economic development in the GTA. It is recommended that the provincial government be requested to amend Part I of the Proposed Greater Toronto Services Board Act to vest authority in the GTSB to do any or all of the following:

(a) prepare a GTA urban structure plan and master plans for major inter-regional infrastructure, for example, sewer, water, and transportation;

(b) allocate Provincial funding to GTSB member municipalities for inter-regional projects and programs consistent with the GTA urban structure and infrastructure master plans;

(c) approve, or appeal to the approval authority, environmental assessments for major inter-regional infrastructure based on consistency with the GTA urban structure and infrastructure master plans; and

(d) support or appeal land use decisions to the approval authority, including the Ontario Municipal Board, based on consistency with the GTA urban structure and infrastructure master plans.

GT Transit Authority:

The draft legislation proposes the creation of an initial seven member GT Transit Authority as a separate but subsidiary body to the GTSB. The legislation sets out the respective roles of each with respect to the operation of GO Transit. Although the GTSB clearly has authority in regard to budget matters, the draft legislation appears to assign almost identical responsibilities to both boards, with respect to the operation of GO Transit. This leads to a concern that the distinctions between their responsibilities in regard to design, construction and operation of the regional transit system may become blurred in practice.

While many of their responsibilities are similar, the proposed composition of the GTSB and the GT Transit Authority are very different. For matters related to GO Transit, the GTSB will have 31 members, 14 from the City of Toronto, 14 from the 905 Regions, 2 from Hamilton-Wentworth, and a Chair. Initially, the GT Transit Authority will comprise seven members, one each from the City of Toronto, the four GTA regional municipalities and Hamilton-Wentworth and a Chair. After its initial term the Authority may consist of six or seven members depending on the election of the Chair. In either case the City of Toronto will have only one vote on the Authority.

The different composition of the two agencies creates a significant potential for political conflict. There may be a number of substantive issues on which the City and the 905 Regions adopt different positions. Based on their respective membership composition, the Transit Authority may vote in favour of 905 interests and the GTSB in favour of City interests. For example, the 905 Regions may support increased express train service with fewer stops within the City. However, as the City is responsible for almost 50 percent of the operating deficit it may support the opposite position. It would be appropriate for City representation on the GT Transit Authority to be proportional to its representation on the GTSB.

It is recommended that the provincial government be requested to review the relationship of GT Transit to the GTSB with a view to ensuring that their respective responsibilities and powers in regard to the design, construction and operation of the regional transit system are clearly defined and distinct. This review should include consideration of the option of increasing the City of Toronto's representation on GT Transit to 50 per cent.

Financing Issues:

The draft legislation's provisions concerning the GTSB's ability to finance its proposed responsibilities give rise to several issues. These issues include the manner in which the GTSB apportions costs and is able to levy a charge against member municipalities, and implications for the management of debt.

Ability to Levy the Member Municipalities:

While the draft legislation does not provide the GTSB with the authority to tax directly, it proposes that the GTSB would levy against the Regions of Durham, Halton, Peel and York and the City of Toronto an amount sufficient to pay the estimated operating costs of the GTSB. These levies would be apportioned among the GTA municipalities in accordance with the legislation and the monies owed by the GTA municipalities under this levy would constitute debt of the municipalities.

With respect to GT Transit, the GTSB would be able to impose two levies on its member municipalities (including the Region of Hamilton-Wentworth):

(I) to cover the amount by which the cost of operations and non funded liabilities exceed revenues; and

(ii) for the cost to the GTSB of capital borrowing for GT Transit.

These levies would constitute debt of the member municipalities.

Levy Apportionment:

The method of levy apportionment, as set out in clause 19(2) of the draft legislation, would be based upon the total weighted assessment of each of the member municipalities in proportion to the total weighted assessment of the GTA. This method bears no relation to the issue of affordability and ability to pay or to the amount of service that would be utilized by the residents of a municipality. If this method is used to apportion debt obligations and debt charges, it could have negative implications for Toronto's could impair credit rating since the City could be responsible for a level of debt that is in excess of its capacity and impair the City's ability to issue debt for other projects.

In time, if the GTSB's role evolves to encompass a broader range of responsibilities, the balance of whose benefits are broadly distributed across the GTA, including the City of Toronto, a system of levy apportionment based on weighted assessment may make sense. At present such an approach is not in the City's best interest. It is recommended that Council inform the Minister of Municipal Affairs and Housing that the City of Toronto opposes the method of levy apportionment based on weighted assessment, as set out in clause 19 (2) of the Proposed Greater Toronto Services Board Act, and request the provincial government to work with City staff to identify alternative approaches to levy apportionment by the GTSB.

Borrowing for Capital Purposes:

The draft legislation provides for the GTSB to be permitted to borrow for GT Transit's capital requirements (not including operating) with the passage of a by-law by a 2/3 majority of the Board. Clause 47 (c) establishes that the GTSB has the power to borrow money to fund the capital requirements of GT Transit and issue debentures, subject to the Ontario Municipal Board Act. Under clause 47 (d), the GTSB also has the authority to direct one or more member municipalities to pay money to GT Transit in respect of its capital requirements and it is assumed that these municipalities will probably be issuing debt to finance these contributions. Thus, it appears that the legislation is contemplating a two-stage procedure whereby the GTSB will require its members to issue debt to provide some initial start-up capital and will then enter the financial markets on its own behalf in the future after it has had an opportunity to establish some credibility with potential investors and the credit rating agencies.

Until it becomes clearer how the GTSB's role within the GTA is going to evolve, it should not have direct borrowing powers as these could bring instability to financial markets and impair the flexibility of member municipalities with respect to the issuance of debt. Therefore, it is recommended that the provincial government amend the proposed Greater Toronto Services Board Act by removing the GTSB's power to directly access financial markets. Instead, the Board should determine its capital financing requirements and request funding from the member municipalities which would have the flexibility to raise the funds from reserves, current operations or the issuance of debt. This method could create more flexibility for the members who would not be subject to paying future debt charges which they cannot control and could substitute various forms of capital depending upon their individual circumstances. This would require the GTSB to have some "levying powers" as provided for in the draft legislation..

Conclusions:

Numerous studies have concluded that there is a need to recognize that the GTA is an integrated and inter-dependent social and economic city-region. These studies have pointed to the need to coordinate the planning and development of infrastructure across the GTA. The proposed Greater Toronto Services Board Act represents the culmination of many years of research and much debate. The debate has been punctuated by many disagreements, some of them profound.

Milt Farrow attempted to reconcile these disagreements in his 1997 proposal for a GTSB. The draft Act provides for a more modest version of the GTSB than that proposed by Mr. Farrow. Comments by some municipalities suggest that even this compromise model goes too far for them.

The proposed GTSB may not be perfect, but it is a starting point and should be supported. It presents a window of opportunity to establish a representative political body that has a legislated mandate to begin to deal with GTA issues. It has taken many years to reach this stage. If the opportunity to create the GTSB is not grasped now, it may not be available for many more years. Yet the problems of uncoordinated growth and inefficient investment in the GTA and their implications for the City of Toronto and, ultimately, the entire city-region, will not disappear.

It is recommended that this report be forwarded to Mr. Alan Tonks, the Minister of Municipal Affairs and Housing, all Regional and Area Municipal Councils in the GTA and the Council of the Regional municipality of Hamilton-Wentworth as the City of Toronto's response to the proposed Greater Toronto Services Board Act.

Under the legislation, the Board is established as a corporation without share capital. It is not a municipality and is explicitly stated not to be a local board. While it is a corporation, only certain provisions of the Corporations Act (for example, relating to retention of documents and the keeping of records and accounts) apply. The objects of the Board are two-fold:

(a) to promote co-ordinated decision making among municipalities in the GTA, and

(b) to supervise the management of the Greater Toronto Transit Authority ("GT Transit") and allocate the costs of that authority, in accordance with the Act.

The Board's Powers other than in respect of the GT Transit:

As the explanatory notes to the draft legislation indicate, it is not intended that the Board be another level of government and it would not have direct taxation authority. Its powers in respect of the first object stated above, as enumerated in the draft Act, would be to:

(a) promote coordinated decision-making among and develop advisory strategies for municipalities within the GTA with respect to the provision of infrastructure and the optimal use of infrastructure;

(b) advise municipalities within the GTA with respect to making major infrastructure investments;

(c) act as a liaison among the municipalities within the GTA and between municipalities within the GTA and other municipalities, the Government of Ontario or the Government of Canada;

(d) facilitate the efficient and cost-effective resolution of matters of intermunicipal concern within the GTA, if asked to do so by the affected municipalities;

(e) provide a mechanism for the co-ordination of economic development within the GTA; and

(f) promote co-ordinated decision-making among and develop advisory strategies for municipalities within the GTA with respect to the administration and costs of their social assistance and social housing programs.

In general, as is clear from the list of enumerated powers, the powers are advisory or in the nature of facilitation and there is no ancillary approval function nor any other governmental by-law making or directory power which can implement any decision of the Board. While it is stated that the Board has the powers of a natural person for the purpose of carrying out its objects and authority (allowing it, for example, to enter into contracts relating to the above), this would not extend to any governmental power mandating actions to be taken by others. By explicit provisions, the natural person power is stated, among other matters, not to include the ability to incur a debt or to impose fees or charges unless specifically provided for.

The extent to which the Board's advisory strategies could be implemented, therefore, would be dependent on the extent to which such strategies are given recognition under other processes (for example, within Provincial policy statements or planning considerations by the OMB under the Planning Act).

The exceptions to the lack of any governmental by-law making powers of the Board are the statutory directives that the Board must pass by-laws relating to remuneration of the chair, reimbursement of members and a levy by-law against the City of Toronto and the Regions of Durham, Halton, Peel and York ("GTA municipalities") sufficient to cover the Board's operating costs. The levy is apportioned among the GTA municipalities and is separate from any levy in respect of GT Transit.

Certain provisions in the Municipal Act, Municipal Conflict of Interest Act and Municipal Freedom of Information and Protection of Privacy Act are made applicable to the Board. Examples are:

(a) powers to be exercised by by-law;

(b) the requirement for open meetings;

(c) delegation of administrative matters to committees or employees;

(d) fixing the fiscal year;

(e) retention of documents; and

(f) provision for issuance of debentures, making of investments and maintaining reserve funds.

In respect of the last example, the Board is by a specific provision deemed a municipality for the purpose of any the pertinent financial restrictions made by regulation under the Municipal Act.

Given the nature of the enumerated powers given to the Board under this part of the legislation, it is questionable why its powers must be exercised by by-law as opposed to resolution.

GT Transit and the Board:

Under Part II of the draft legislation, a two tier system for operation and supervision of the regional transit system is established. GT Transit is established by the proposed Act. Its powers are operational (for example, to acquire equipment and construct the system). The Board's powers are supervisory (for example, approving routes, frequency of service and establishing fares) as well as financial (e.g., approving GT Transit budgets, issuing debentures, levying the necessary funds from member municipalities).

The objects of GT Transit are listed as:

(a) To operate a regional transit system serving the regional transit area and serving other municipalities from time to time by agreement.

(b) To operate local transit systems within the regional transit area, or parts of such systems, under agreements between the Board and the municipality within which each local transit system is operated.

(c) To exchange information on operational and design matters and integrate services with other transit systems.

(d) To perform the duties and exercise the powers imposed or conferred on GT Transit under this or any other Act.

The Board's powers for the purpose of supervision are to:

(a) approve, with the modifications it considers appropriate, the annual operating and capital budgets submitted to it by GT Transit;

(b) apportion the costs of GT Transit, including the Board's cost of borrowing for the purposes of GT Transit, among the member municipalities;

(c) borrow money for, and pay such money to, GT Transit in respect of its capital requirements and issue debentures for the debt, subject to the Ontario Municipal Board Act;

(d) direct one or more member municipalities to pay money to GT Transit in respect of its capital requirements;

(e) provide for the design, construction and operation of the regional transit system;

(f) study, or cause to be studied,

(i) the design and operation of the regional transit system,

(ii) the fare structure and service schedules of the regional transit system, and

(iii) the operational integration of the regional transit system with local transit systems within or outside the regional transit area;

(g) approve the approximate location, routes and frequencies of the transit services to be provided;

(h) approve the fares that shall be charged for transit services;

(i) approve the fees that shall be charged for the provision of parking;

(j) enter into agreements with municipalities in the regional transit area with respect to the operation of local transit systems, or parts of such systems, within those municipalities; and

(k) enter into agreements with upper tier and single tier municipalities outside the regional transit area for the provision of transit services by GT Transit to those municipalities;

The power of the Board to apportion among the member municipalities, to issue debentures and to direct any member municipality to pay money to GT Transit in respect of its capital requirements requires a two-thirds vote of those present at a meeting.

For the purpose of carrying out its object, the Board may also:

(a) facilitate the operational integration of the regional transit system and local transit systems in the regional transit area; and

(b) facilitate the resolution of conflicts with respect to transit issues between GT Transit, municipalities and operators of local transit systems.

The Strategic Policies and Priorities Committee also submits the following resolution (March 11, 1998) addressed to The Honourable Mike Harris, Premier of Ontario, from the Regional Clerk of The Regional Municipality of Durham:

Honourable Sir, at their meeting held on March 11, 1998, the Council of the Regional Municipality of Durham passed the following resolution:

"That the following resolution passed by the previous Council (1994-1997) of the Regional Municipality of Durham on July 2, 1997, be reaffirmed by the 1997 - 2000 Council:

(1) That the Honourable Al Leach, Minister of Municipal Affairs and Housing, be advised that:

(i) The Region of Durham does not support the establishment of a Greater Toronto Services Board for the purpose of managing, delivering or generating capital for service infrastructure and, in essence, functioning as a form of government;

(ii) if the Province creates the Board, the Region of Durham recommends it be solely limited to providing long-term strategic planning; co-ordinating inter-regional servicing; providing a forum for discussion with all levels of government; and, resolving inter-regional disputes through facilitation and mediation. Accordingly, the Board's mandate must be directed to deal with inter-regional issues and not be involved with decision-making on the provision of local infrastructure;

(iii) if established, representation on the Executive Committee of the Board should be limited in number and include active involvement of the Province; and all GTA municipalities should be represented on the associated Advisory Committees;

(iv) Any proposed changes to a Greater Toronto Services Board's mandate and related enabling legislation must be subject to public consultation and due process;

(v) if established, the Region of Durham be assigned one additional member on the Executive Committee of the Greater Toronto Services Board; and

(2) that a copy of Joint Report No. 97-J-9 be sent to the Honourable Mike Harris, the Honourable Al Leach, all Durham MPP's, the Area Municipalities in the Region of Durham, the Regions within the Greater Toronto Area, and AMO."

Enclosed, for your information, is a copy of Report No. 97-J-9 as previously sent to you.

(A copy of the Report No. 97-J-9, referred to in the resolution dated March 11, 1998, from The Regional Municipality of Durham, has been forwarded to all Members of Council with the agenda of the Strategic Policies and Priorities Committee for its meeting on April 7, 1998, and a copy thereof is also on file with the City Clerk.)