November 8, 1999
To: Policy and Finance Committee
From Chief Financial Officer and Treasurer
Subject: Toronto Police Service
Financial Evaluation of Establishment of a Fourth Collision Reporting Centre
Purpose:
To respond to Policy & Finance Committee's request that the Chief Financial Officer and Treasurer provide a financial
evaluation on the Emergency and Protective Services Committee's Report No.6 entitled, "Status Report Concerning
Establishment of a Fourth Collision Reporting Centre" and submit a report thereon.
Financial Implications:
There are no financial implications from the recommendation contained in this or previous reports on this issue.
Recommendations:
It is recommended that this report be received as information.
Council Reference/Background/History:
At its meeting of July 20, 1999, Policy and Finance Committee had before it a communication dated June 17, 1999 from
the City Clerk. This communication advised that at its meeting of June 9, 10 and 11, 1999, City Council struck out and
referred to the Policy and Finance Committee Clause No. 1 of Report No.6 of the Emergency and Protective Services
Committee for a financial evaluation. The Clause was entitled, "Status Report Concerning Establishment of a Fourth
Collision Reporting Centre". Policy and Finance Committee deferred consideration of this communication and requested
instead that the Chief Financial Officer and Treasurer conduct a financial evaluation of the proposal and report back to
Policy and Finance Committee.
Discussion:
As detailed in the "Historical Perspective" section of the September 23, 1999 report from the Chief Administrative Officer
(See Appendix A), Collision Reporting Centres (CRCs) were first implemented as a pilot project by Toronto Police
Services in 1994. Based on the success of the pilot, a total of three CRCs were established in the Greater Toronto Area.
Through the normal tendering process Toronto Police Services Board eventually contracted with Toronto West Accident
Support Services Limited and Toronto East Accident Support Services for operation of the additional two centres resulting
in the same individuals being responsible for operation of all three centres. Under the agreement, the expenses incurred by
the operator are to be recovered through the sale of claims processing services to the insurance industry. It is estimated that
on average 71 percent of the approximate 65,000 collision reports a year are filed which are charged at a rate of $37.00 per
claim or higher based on the services rendered. Expenses include two components: a) staffing requirements which relate to
the expenses for the 25 uniformed and civilian police personnel typically required at a collision centre; and, b) operator
expenses such as property taxes, overheads, vehicle pound service and staff requirements for initiation of insurance claims
processing.
Since early 1998, the possibility of establishing a fourth CRC in Toronto has been discussed. In line with this review, a
number of issues relating to operation of existing CRCs have also been examined where there now exists several reports as
well as other correspondence. Many of these can be found as appendices at the back of this report. This report, in turn, is
written to provide a financial evaluation of the fourth CRC proposal in concert with these previous briefings.
To properly evaluate this issue from a financial perspective, it was first established that both hard and soft costs must be
considered in the context of demand and supply. The hard costs include operator costs as well as staffing requirements for
Toronto Police Services and the OPP. The former is not precisely known while the latter is approximately $2.85 million
annually for each CRC including $1.8 million in payroll expenses as well as lease costs of $300,000 and $750,000 for
vehicle pound operation and insurance claims processing. As advised by the City of Toronto Solicitor there is a liability
associated with any attempt to reassign the current Toronto Police Services Board contract with the CRC operators to the
City of Toronto for the City to administer. The operators are further under no obligation given the currently existing
contracts to provide detailed accounting for their activities. This explains the lack of hard numbers for operator costs;
however, City of Toronto Audit staff have conducted independent analyses which suggest that no significant gap exists
between these costs and offsetting revenues gleaned from sales of services/space to insurance companies. The soft costs
relate to incremental increases in expenses relating to the administration of a fourth CRC for both the Operator and
municipal as well as provincial police services.
In terms of demand and supply, it is apparent that the existing three CRCs are able to accommodate the estimated 65,000
collisions experienced on an annual basis. It is therefore not clear at this time where demand is outstripping supply. Outside
of the legal ramifications, it is therefore premature to entertain a fourth centre from a strictly business point of view as it
would only increase Toronto Police Services' expenses while only reallocating revenue not generating revenues.
Conclusion:
Several reports and correspondence have been brought forward to various committees since early 1998 regarding the issue
of establishing a fourth Collision Reporting Centre in the Greater Toronto Area. As requested by Policy and Finance
Committee at its meeting of July 20, 1999 this report presents a financial evaluation of this proposal. The analysis concurs
with the recommendations of the Chief Administrative Officer for the City of Toronto that establishment of a fourth CRC
does not seem an economically prudent or viable option at this time.
Wanda Liczyk,
Chief Financial Officer and Treasurer
Contact Names:
Al Horsman 397-4532
Glenn Vollebregt 392-8095
Attachments:
Appendix A - September 23, 1998 CAO's Status Report on Establishment of Fourth CRC
Appendix B - November 17, 1998 City Auditor Report, "CRCs and their Profit Margin"
Appendix C - August 11, 1998 City Solicitor Report on Liability for Adding a CRC
