November 3, 1999
To: Policy and Finance Committee
From: City Clerk, Planning and Transportation Committee
Subject: Licence Fee Equalization Fund
Recommendations:
The Planning and Transportation Committee at its meeting on November 1, 1999 recommended to Policy and
Finance Committee and Council, that the attached report (October 18, 1999) from the Acting Commissioner, Urban
Planning and Development Services be adopted, and as the recommendations inherent therein refers to the
establishment of a reserve fund, the Committee referred this matter, and the Committee's action with respect
thereto, to the Policy and Finance Committee for its meeting on November 10, 1999 for subsequent submission to
Council.
Background:
At its meeting on November 1, 1999, the Planning and Transportation Committee gave consideration to the report (October
18, 1999) from the Acting Commissioner, Urban Planning and Development Services, reporting on the feasibility of
re-establishing a licence fee equalization fund to facilitate the cost recovery model, and the possibility of building a by-law
enforcement program into the cost recovery model for licensing and recommending that:
(1) a licence fee equalization fund be re-established; and
(2) the reserve be maintained at no more that 15% of the average of the annual operating budget for licensing activities
over the preceding 5 years.
The Committee's action is as noted.
City Clerk
Christine Archibald/la
Item 7
cc: John DiLallo, Manager, Budget Services Division, Finance Department, 7th Flr., E.T.
Don Altman, Manager, Treasury & Financial Services, Finance Department, 5th Flr., E.T.
Paul Chenery, Manager, Budget Services, Finance Department, 7th Flr., E.T.
_________
(Report dated October 18, 1999, addressed to the
Planning and Transportation Committee from the
Acting Commissioner of Municipal Licensing and Standards)
Purpose:
The Acting Commissioner of Urban Planning and Development Services was requested to submit a report to the Planning
and Transportation Committee on the feasibility of re-establishing a licence fee equalization fund to facilitate the cost
recovery model, and the possibility of building a by-law enforcement program into the cost recovery model for licensing.
Financial Implications and Impact Statement:
Based on model predictions, the Licensing component of the Municipal Licensing and Standards Division (Taxi Unit and
Business and Trades Licensing) will operate on a cost recovery basis, as allowed by law. However, there is currently no
dedicated reserve to accommodate unpredicted fluctuations in revenue.
Recommendations:
It is recommended that:
(1) That a licence fee equalization fund be re-established.
(2) That the reserve be maintained at no more that 15% of the average of the annual operating budget for licensing
activities over the preceding 5 years.
Background:
I was asked to "report on the feasibility of re-establishing a licence fee stabilization reserve to facilitate the cost recovery
model, and the possibility of building a by-law enforcement programme into the cost recovery model for licensing".
Comments:
Licence fee equalization fund.
Such a reserve existed until the budget process for 1998, at which time was removed. At the time the reserve had built up
to approximately $5 million, or half the annual budget the Metro Toronto Licensing Commission.
Since market conditions can be subject to significant changes even in the short term and since, once annual licence fees are
set there is now no fund to draw on, a downturn in the market with consequent reduction in in-year fee revenue could cause
significant problems. Thus, it is recommended that the equalization fund be re-established with the provision that it does
not accumulate to more than 15% of the average annual budget.
As reported at the time of setting the licence fees for the year 2000, it will be necessary to develop a new model for
estimation of fees. The model would not only reflect the new organizational structure, but should also be more flexible in
terms of modelling a number of "what if" scenarios. Such a model, together with careful monitoring of revenue intake
through a year, would allow for appropriate fee adjustments to maintain the equalization fund at no greater than the
recommended 15% level.
Cost recovery model for by-law enforcement.
In an earlier report, we recommended to Council that the Province be approached to amend legislation to allow for the
licensing of multi unit residential rental accommodation. This licencing would allow for cost recovery for activities related
to such licensing, including the licence requirement that any such buildings comply with the Property Standards By-law of
the City.
With respect to a more general cost recovery model for by-law enforcement, this is being considered in development of the
harmonized by laws and in light of available enabling legislation. The basic model would be that, for any enforcement
activity by the division subsequent to a specified compliance date, the costs would be billed to the offending party. For
example, if an apartment building owner failed to take steps required in Order to Comply by the required date, all
inspection costs and related administrative costs incurred by the division subsequent to that date would be billed to the
owner until compliance is achieved.
For non life/safety issues, the York section of the West District did implement a further variation on this approach just
prior to amalgamation. If, for example, a complaint was received about long grass, a letter was sent to the owner of the
subject property, indicating the complaint had been received, and stating that, if indeed the situation was in violation of the
by-law, the owner had up until a specified date to take corrective action, and an inspection would be conducted one day
after that date. Further, the owner is advised that if a violation is found to exist at the time of the inspection, the cost of the
inspection would be billed to the owner, together with any subsequent inspections up to the time of compliance.
We believe that the approaches outlined above provide for optimum cost recovery in respect to the by-law enforcement
activities.
Conclusions:
A licence fee equalization fund should be established to accommodate unpredicted variation in revenues.
Opportunities for cost recovery are being considered in the development of harmonized by-law.
Contact:
Harold Bratten James Ridge
Acting Executive Director Acting Commissioner
Municipal Licensing and Standards Municipal Licensing & Standards
Tel.: 416-392-8768 Fax: 416-392-8805