TABLE OF CONTENTS

REPORTS OF THE STANDING COMMITTEES

AND OTHER COMMITTEES

As Considered by

The Council of the City of Toronto

on November 25, 26 and 27, 1998

STRATEGIC POLICIES AND PRIORITIES COMMITTEE

REPORT No. 24

1The 2008 Toronto Olympic Bid - November, 1998 Update Report

2Year 2000 Business Continuity Plan

3Administration of the Arts and Culture Grants Program in 1999

4Administration of Grants Program

5Economic Development Partnership Program- Final 1998 Grant Allocation Recommendations

6Issuance of Charitable Status by Revenue Canada

7Federation of Canadian Municipalities Actions to Protect Current Levels of Federal Payments in Lieu of Taxes

8Disposition of "Property Houses" Owned by the City of Toronto

9Tenant Tax Notification

10Other Items Considered by the Committee

City of Toronto

REPORT No. 24

OF THE STRATEGIC POLICIES AND PRIORITIES COMMITTEE

(from its meeting on November 17, 1998,

submitted by Mayor Mel Lastman , Chair)

As Considered by

The Council of the City of Toronto

on November 25, 26 and 27, 1998

1

The 2008 Toronto Olympic Bid - November, 1998 Update Report

(City Council on November 25, 26 and 27, 1998, adopted this Clause, without amendment.)

The Strategic Policies and Priorities Committee recommends the adoption of the following report (November 4, 1998) from the Commissioner of Economic Development, Culture and Tourism:

Purpose:

To update Council on Toronto's bid to host the 2008 Olympics and to respond to the various Council motions of March and July, 1998 and the Community Council motions from the special meetings held in September and October.

Financial Implications:

None arising from this report.

Recommendations:

It is recommended that Council:

(1)request the Strategic Transportation Planning Group to work in co-operation with TO-Bid to provide strategic direction and guidance on transportation issues related to the bid for the 2008 Olympic Games;

(2)request TO-Bid to involve the Strategic Transportation Planning Group in the preparation of the transportation component of the bid for the 2008 Olympic Games;

(3)direct the Commissioner of Economic Development, Culture and Tourism, jointly with the Commissioner of Community and Neighbourhood Services, to establish a staff working group to:

(i)prepare strategies to address issues of homelessness, tenant protection, neighbourhood plans and new affordable housing opportunities as a component of Toronto's Olympic bid; and

(ii)report to Strategic Policies and Priorities Committee as part of the update reports from the Commissioner of Economic Development, Culture and Tourism on the Olympic bid:

(4)request that TO-Bid continue to work with social planning agencies and that TO-Bid conduct a social equity impact and action plan, as outlined in this report;

(5)direct the Commissioner of Economic Development, Culture and Tourism to provide regular updates on the progress of the social equity impact and action plan; and

(6)adopt the terms of reference for the Olympic Task Force and request the Striking Committee select the members of the Committee.

Comments:

This report is one in a series of regular reports to Council on Toronto's bid to host the 2008 Olympics. Appendix 1 provides an update on the first phase of the public consultation process and a summary of the motions from the special Community Council meetings held in September and October and responses to the motions. Appendix 2 outlines responses to date to Council motions of March and July, 1998. This report consolidates a number of motions from Council directed to Strategic Policies and Priorities Committee, Urban Environment and Development Committee and Economic Development Committee regarding the Olympics.

Contact Name:

Joe Halstead, Commissioner, Economic Development, Culture & Tourism,

Telephone: (416) 395-6188, Fax: (416) 395-0388

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Appendix 1

Public Consultation Update

Staff were asked to initiate a public consultation process as a result of motions passed at the March4, 5 and 6, 1998 City Council, in its approval in principle of the City of Toronto bid to host the 2008 Olympic Games.

In August brochures were sent to 3000 ratepayer, cultural, sporting, advocacy, and special interest organizations in the City encouraging individuals and organizations to become involved with the Olympic bid. The brochure included the details on the Special Community Council meetings on the Olympic bid and encouraged people to attend and express their views.

In September special Community Council meetings were held in East York, York, Etobicoke, and Scarborough. Similar meetings were held in North York and Toronto in October. In total more than 500 people attended these meetings and 112 deputations were heard. In general the deputations focused on the following issues:

(i)financing the Olympics and the possibilities of a debt to the City taxpayers;

(ii)the need for improved transportation services;

(iii)the benefits the Games would bring for business and employment;

(iv)the benefits of the Games for improving the City's sporting and recreational facilities;

(v)the need to make the City and the Games accessible for the disabled;

(vi)the need to celebrate all aspects of the City through a cultural program;

(vii)concern about the inconvenience of the Games for residents and businesses in the City;

(viii)concern about the IOC bid process; and

(ix)concern that disadvantaged groups would see little or no benefit.

The motions from the Community Council meetings and the responses to the motions are summarized in this report.

The next step in the consultation is a set of six focus groups in November on the key areas interest - social equity, venues, environment, transportation, culture and finance. More than 500 invitations have been sent out to organizations with specific experience and expertise in these areas of interest. The focus groups are assisted by resource people and facilitators from across City departments and districts. TO-Bid staff and resource people are also participating. The purpose of the focus groups is to help draft the principles to guide the bid preparation.

In December open houses will be held to give the public the opportunity to review and comment on the principles. As a result of comments at Community Council meetings, the Principles will also be available at all Civic Centres and on the City's web site.

The following summarizes the motions from the Community Councils and the responses to the motions.

SUMMARY OF MOTIONS FROM THE COMMUNITY COUNCILS & RESPONSES
MOTIONS	RESPONSE
East York Community Council September 14, 1998
1.that City Council be requested to consider holding a referendum on the issue of the bid for the 2008 Olympics during the November 2000 municipal election	The bid must be submitted to the IOC before the summer 2000, therefore a referendum held with the municipal election in the fall of 2000 would be too late to influence the bid.
2.that City Council be requested to develop their own focus group which would be inclusive in nature and would be held in January 1999	The next phase of consultation is being developed and will take this request into consideration. Meanwhile, Council continues to be informed about the bid through every stage of the process and is being provided with quarterly progress reports. Many Councillors have also volunteered to participate on the various Olympic Bid committees and will be involved in an ongoing fashion.
3.that City Council be requested to hold more than two open houses which are geographically located to allow the greatest number of people to attend rather than host them only at the Metro Reference Library and that these open houses be held for more than two days	In order to provide more information to the public about the draft Olympic Principles, information about the Principles will be provided at all Civic Centres and on the City's website in addition to the two open houses. The public will be invited to submit their comments on the Principles.
4.that City Council be requested to consider as priority, a masterplan to develop a vehicular and public transportation system which can accommodate the Olympics	Addressed in Section 2.2 of this report. The Strategic Transportation Planning Group should be requested to consider the Transportation Master Plan.
5.that a questionnaire be prepared which shall gather public input and identify issues and areas of concern in their order of importance with respect to the Olympic bid	Public opinion and input is being solicited at every stage of the bid to ensure the bid reflects the views of the public. A public opinion poll will be conducted to formally determine the broader public's views on the bid.
York Community Council September 15, 1998
1.that City Council be urged to request the TO-Bid Committee to develop an arts and culture master plan within the context of the Olympic bid;	TO-Bid is establishing a Culture Committee which will determine the culture program to accompany the Games.
2.that City Council, in conjunction with the TO-Bid Committee, be requested to develop a transportation master plan, with an emphasis on public transit; and further that within that plan, a rapid transit link to the airport be developed, having regard to the construction of the Eglinton Subway;	Addressed in Section 2.2 of this report.
3.that City Council request the TO-Bid Committee to expand its present membership to include representatives from a broader cross-section of Toronto's multi-cultural and multi-racial community;	The Board of Directors of TO-Bid has been expanded to include more representatives and appropriately reflects the City's diversity.
4.that City Council be requested to consider holding additional public meetings on an ongoing basis at the Community Councils, as the TO-Bid Committee finalizes aspects of the process, with a view to apprising the public of its progress;	The next phases of the public consultation will include public meetings, open houses and other forums for public involvement in the bid prior to the final bid proposal being presented to City Council.
5.that the TO-Bid Committee give consideration to the use of lands at Eglinton Avenue West and Black Creek Drive, as a possible location for an Olympic event	This request is being forwarded to the City's Strategic Transportation Planning Group and to TO-Bid for consideration by its Sports and Venues Committee.
Scarborough Community Council September15, 1998
1.that City Council request TO-Bid to consider locating more major venues outside of the downtown core to relieve the stress on the city's transportation system and to spread the anticipated economic development spin-off benefits across the entire City of Toronto, provided this does not negatively impact the bid's potential for success;	Preliminary plans developed by TO-Bid have suggested that approximately 50% of the venues be located in Toronto and 50% of the venues be held outside of Toronto. This request will be forwarded to TO-Bid for consideration by its Sports and Buildings Committee.
2.to provide appropriate to-date cost data to City Council	Detailed financial information will be available prior to the final consideration of the bid by City Council. The City also has ongoing access to the financial status of the bid.
3.to provide assurance that the transportation needs will be brought before the appropriate standing committee of City Council	All issues regarding the Olympics are reported to Strategic Policies and Priorities Committee.
4.to expand access to multicultural and multiracial communities	TO-Bid is committed to an inclusive bid process and has established a Board of Directors which is reflective of inclusivity.
5.to report on the process, timing, and funding necessary to establish partnerships with community sports organizations in support of the Olympics	This request is being forwarded to TO-Bid for their consideration.
6.that City Council endorse the principle of equitable distribution of training facilities and such a plan be integrated with the service needs of the City at large	Current plans suggest the need for some 40 training facilities in Toronto. This request is being forwarded to TO-Bid for consideration by its Sports and Venues and its Legacy and Community Enhancement Committees.
North York Community Council October 21, 1998
1.the Olympic Committee explore the possibility of: (a)the Downsview Lands being considered as an additional venue for the 2008 Olympics; and (b)a rapid transit link to the airport;	This request is being forwarded to TO-Bid for consideration by its Sports and Venues Committee. The City has requested that the federal government pursue the planning for this connection.
2.the TO-Bid Corporation and City Officials open discussions with York University to explore the following possibilities: (a)locating part of the housing for the 2008 Olympics at York University; (b)extending the Spadina Subway line to York University, c)locating a sports venue on York University lands; (d)building practice facilities for competing athletes at local area schools.	This request is being forwarded to TO-Bid for their consideration. The extension of the Spadina subway should be considered in the preparation of the City's Official Plan and in the transportation master plan. This request is being forwarded to TO-Bid for consideration by its Sports and Venues Committee. This request is being forwarded to TO-Bid for consideration by its Sports and Venues and its Legacy and Community Enhancement Committees.
North York Community Council October 21, 1998
3.it is understood that no expropriation of student residences, or displacement of student residents on campus is to occur as a result of any Olympic-related activity on the York University Campus;	The development of a strategy to protect tenants and homeless persons will also include measures that will consider the needs of the students.
4.the TO-Bid Corporation and City Officials open discussions with the Toronto District School Board and the Toronto District Catholic Board with respect to the possibility of locating practice facilities for competing athletes at local area schools;	This request is being forwarded to TO-Bid for consideration by its Sports and Venues and its Legacy and Community Enhancement Committees.
5.the bid process include further dialogue with Toronto's approximately 120 ethnic cultures and that each of their particular concerns be expressed in the final bid submissions to Council and that the submissions also include a cultural strategy, such strategy to be forwarded to the IOC in June, 2000; and	The Culture Committee of TO-Bid will be preparing the culture component of the bid.
6.the inclusivity policy of the 2008 Olympic bid organization address accessibility for all persons with disabilities including persons with physical, vision and hearing impairments.	The Legacy and Community Enhancement Committee of TO-Bid is addressing access for the disabled community.
Toronto Community Council October 22, 1998
1.the possibility of the Olympic Village site being in the area south of South Parkdale, in such away which would relink South Parkdale to Lake Ontario	This request is being forwarded to TO-Bid for consideration by the Waterfront and Olympic Villages Committee.
2.the bid from the City of Toronto supporting a policy that a certain percentage of contracts be awarded to minority-owned companies, such a report to consider other methods of achieving the desired goals, such as requiring all employers to have Employment Equity practices and also other purchasing practices that should be implemented for the Olympic process	TO-Bid will be requested to adopt a purchasing and procurement policy consistent with the City's equal opportunity policies.
3.the Olympic Games process being fully bilingual from beginning to end	The Bid will be submitted to the IOC in French and English.

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Appendix 2

Response to Council Motions of March and July, 1998

For ease of reference, the Council motions of March and July, 1998 have been categorized into broad issue-related categories as set out in the following sections. These categories are also being used as the basis for the focus groups and the development of the guiding Olympic Principles.

2.1Social Equity:

Affordable Housing Strategy:

Staff were asked to report, in consultation with the Advisory Committee on Homeless and Socially Isolated Persons, on issues and mechanisms to ensure the Games do not negatively impact on the homeless, isolated persons and tenants. Council also asked for a report, to be submitted to the Economic Development Committee this fall, on a by-law and proposed strategy to ensure full protection for tenants and homeless persons during the hosting of the Olympic Games, particularly in the areas adjacent to potential facilities such as South Parkdale.

Strategy to Protect Tenants and Homeless Persons during the Olympic Games:

The City of Toronto is already facing a number of serious affordable housing issues, many of which have been described by in the Interim Report by the Mayor's Homelessness Action Task Force, such as a waiting list of 37,000 people for subsidized housing, and growing demand for emergency shelter space.

A number of strategies and activities are or will be underway to respond to these issues, and would be underway even without the impetus of preparing for an Olympic Bid. For example, the City recently approved a framework for an affordable housing supply strategy, undertaking affordable housing demonstration projects, examination of potential Official Plan amendments to improve protection of existing rental housing stock, and various eviction prevention programs including a rent bank pilot project. Furthermore, City Council at its meeting on October 28, 1998 recognized the current plight of the homeless by declaring homelessness a national disaster and calling for immediate action from the Provincial and Federal governments.

The Olympics can provide an opportunity to help achieve certain goals around affordable housing and respond to homelessness. It is also clear that the hosting of a successful Olympics that limits any undesired housing impacts, will require the development and implementation of tools and enhancements, in addition to those currently in place or under consideration to address issues of homelessness and the shortage of affordable housing supply.

Proper planning and management of an accommodation and housing strategy has been recognized as a critical component of Toronto's bid to host the 2008 Summer Olympic Games. This is best illustrated by the fact that Council has called on the organizers of the bid to develop a socially and financially responsible Olympics. Furthermore, City Council passed a series of motions at its meeting of July 9, 1998, related to housing and social equity. One of those motions requested a report on a by-law and proposed strategy to ensure full protection for tenants and homeless persons during the hosting of the Olympic Games, particularly in the areas adjacent to potential facilities such as South Parkdale.

In response to the request for a by-law and strategy to protect tenants and homeless persons it is recommended that a staff working group be formed to develop for City Council a comprehensive strategy for protecting tenants and homeless persons from potentially negative impacts of the Olympic Games, and at the same time develop a plan to maximize potential benefits of the Olympics for tenants, homeless persons, and local communities. The proposed strategy would be developed to build upon other corporate and Olympic initiatives already underway.

The strategy would be provided to Council by September 1999 to ensure Council has the information it needs to inform deliberations prior to finalizing Toronto's bid for the games in late 1999 / early 2000. This timing is consistent with timing of the social impact assessment which Council has also requested, and it is anticipated that some of the input received in the course of developing that assessment will relate to work which needs to be done on the strategy for protecting tenants and homeless persons.

In addition, staff has begun research and initial work on potential tools, including a review of work done by TO-Bid staff for the Advisory Committee on Homeless and Isolated Persons as outlined in the discussion paper Meeting the Accommodation and Housing Challenges of Toronto's 2008 Olympic Bid, May 8, 1998. There are a variety of issues that need to be addressed in any effort to develop the proposed strategy, including:

(a)The proposed strategy is being developed during the Olympic bid period and will need to be reviewed and refined after the decision is made in 2001 on the actual location of the 2008 Olympics;

(b)The specific legislative protections and enhancements proposed will need to be flexible to respond to a range of housing market conditions that may change over time and therefore cannot at the present time be accurately predicted;

(c)The ability to reliably predict attendance numbers and to develop a strong Olympic accommodation program will play a significant role in understanding the potential of undesired impacts on the local housing market; and

(d)The development of the strategy must be done in consultation with key stakeholders, this will ensure that the strategy provides the appropriate responses to the concerns raised and that there is a commitment by the various stakeholders to implement any proposed measures.

The strategy will address these issues by:

(e)Identifying a variety of tools to ensure the approach is flexible, responsive, and timely. Tools proposed would be based on legislation, such as by-laws which may be adopted by Council under existing enabling legislation and proposing new enabling legislation. The strategy would also identify non-legislative options which may include enhancements to existing City programs and proposing new City-led initiatives;

(f)Ensuring the strategy is comprehensive by linking it to other City initiatives (such as rent banks, emergency shelters, affordable housing supply initiatives, Official Planning Process, etc.) and other Olympic Bid initiatives (such as using the Olympic Village to achieve affordable housing supply goals, initiatives resulting from the social impact assessment);

(g)Consulting with community stakeholders, elected officials and others to define opportunities and concerns. Identifying partnerships which may be required to implement the tools, including discussions with senior levels of governments. For example, the Province will be asked to work in partnership with the City to identify specific mechanisms to ensure that the city has the regulatory and program mechanisms to protect and assist vulnerable tenants and homeless persons are prior to and during the Olympics;

(h)Conducting ongoing research, monitoring and analysis of the experiences of other cities which have hosted hallmark events, including monitoring of the 2000 Sydney Olympics, in an effort to identify "best practices" and "poor practices".

The strategy will be set out within the following framework:

(i)Protection of Tenants;

(ii)Housing for the Homeless and the treatment of homeless persons;

(iii)Impact on residential neighbourhoods adjacent to Olympic venues; and

(iv)Affordable Housing Supply.

If approved by Council, the strategy development process would begin with establishment the working group in November 1998 comprised of staff from Legal, Shelter, Support and Housing, Planning, Property Standards and other departments as required. In addition to regular meetings, the working group would liaise with staff of TO-Bid Corporation and with community agencies, neighbourhood groups, advocates for the homeless, and representatives of the senior levels of government. The proposed work plan contemplates initial research and stakeholders consultations to be conducted between November 1998 and May 1999. A full examination of legal, financial and program tools would be completed by March 1999. The working group would report back to Council by September 1999 proposing a strategy that consists of a series of recommended program and regulatory responses.

Social Impact Assessment Process:

TO-Bid staff were directed by Council to work with social planning agencies and City staff to determine the best method of developing a full social impact assessment process for the Games and that it be prepared within the next six months. In addition, TO-Bid staff were directed to work with social planning agencies to consider the opportunity and viability of establishing a social investment fund from the Games -- to be provided within the context of a financially responsible Games.

The 2008 Toronto Olympics and Paralympics: Shaping A Legacy of Social Equity:

When the Toronto's 2008 Olympic bid was approved in principle, City Council requested that a social impact assessment be conducted during the bid phase and that community planning agencies be consulted in the development of the assessment. A proposal for a social impact process has now been developed after discussions between the Community Social Planning Council of Toronto, the City of Toronto Social Development Department and the TO-Bid. This report provides an outline of the proposal to undertake a social equity impact and action plan.

Toronto's planned bid for the 2008 Olympics and Paralympics presents an opportunity to develop a unique approach to conducting a social impact assessment. Conditions exist that enable Toronto's bid to go beyond a traditional social impact assessment strictly concerned with mitigating anticipated negative social consequences from the preparation for and conduct of the Games. These conditions are:

(a)The multi-ethnic, multi-racial, and multi-cultural diversity of Toronto, already being highlighted as a major civic advantage for an international event of this importance.

(b)The widespread public concern in Toronto and Canada for the future of our children and youth in an extremely turbulent socio-economic environment.

(c)The sense of energy and purpose in shaping a new City at the outset of the 21st century, one that is both inclusive and equitable for all its residents.

These conditions suggest three clear objectives for a social impact assessment in Toronto's bid for the 2008 Olympics and Paralympics. They are:

(1)To assess the existing and anticipated impact of the 2008 Games on the social well-being of the City, with particular attention to the most vulnerable and marginalized parts of the community;

(2)To develop and implement plans that avert any negative social consequences for the City in preparing for and holding the Games in Toronto, especially for its most vulnerable and marginalized residents; and

(3)To maximize the opportunity presented by Toronto's Olympic bid to address the needs of the most vulnerable and marginalized and develop particular initiatives to support the needs of youth and ethno-cultural/ethno-racial minorities in the City of Toronto.

This approach to social impact assessment over the next decade could leave a strong legacy of "social equity" as a result of pursuing and securing the 2008 Olympics for the City of Toronto. The essential elements of this approach to social impact assessment would involve opportunities for community input into the Olympic process through community empowerment, participation and intervention.

(1)Empowerment: There must be outreach to the full range of community, organizations, sectors, and citizen stakeholders on social issues related to the Olympics. All should have input into defining how the Olympics could enhance the social well-being of the City. Particular efforts should be made, however, to actively involve youth and people from the many ethno-cultural and ethno-racial communities and groups across the City. This means outreach to people in their own languages and in culturally appropriate ways.

(2)Participation: In addition to outreach for identifying social issues and shaping a social vision for the Olympics, the process must include an "engagement strategy." Leadership from participant groups will be solicited and supported to develop further the ideas and proposals emerging from initial consultations.

(3)Intervention: Community reports on social impacts related to the Olympics will be produced by this initiative. The main outcome, however, will be action on social equity objectives identified in the research and consultative process. The mobilization of citizens and community groups would be directed toward the generation of concrete initiatives that advance the participation in civic life of people reflecting Toronto's full racial and ethnic diversity, and the development of the capacities, skills and talents of the City's youth. Community partnerships with the City and with the private sector would be promoted to help resource these initiatives.

It is proposed that the formulation and implementation of the social equity impact and action plan be undertaken in three phases leading up to the bid city decision in 2001.

Phase One:Visioning the Impacts and Opportunities

January 1999- August 1999

(a)Preparation, submission and approval of detailed work plan and approval by TO-Bid;

(b)Social trends/scenarios research projecting major social issues facing Toronto in the first decade of the new millennium with/without the Olympics;

(c)Future search -- outreach to the community for visioning on the desirable future state of the City -- open-ended discussion on the potential of the Olympics to contribute to or impede the realization of this vision for the City;

(d)Preliminary Social Impact Report;

(e)Selected consultations on the civic participation and social development opportunities presented by the Olympics for vulnerable and marginalized communities; and

(f)Final Social Impact Report on social impact and equity issues and strategic responses in bidding for and hosting the 2008 Olympics.

Phase Two:Social Impact and Equity Plan Development

Fall/Winter 1999

(a)Engage ethno-cultural/racial minority communities and youth as particular "stakeholders" in the potential for the Olympics to address equity issues(e.g. economic development, access to trades, and education for ethno-cultural/racial minorities; social-recreational programs, training, skill-building, and employment opportunities for youth);

(b)Plan and conduct stakeholders' strategy and design sessions to address anticipated social equity issues (based on "charette" workshop method used in architecture/urban planning fields) and plan for developing the opportunities with a multi-ethnic/racial/cultural and youth focus;

(c)Formulate concrete initiatives beneficial to stakeholders (ethno-cultural/racial minority communities and youth) associated with the Olympic bid and preparations;

(d)Secure commitment of public sector-private sector-community partnerships for action on proposed initiatives;

(e)Identify requirements and opportunities to resource concrete initiatives arising from the social impact and equity plan; and

(f)Incorporation of social impact and equity plan into Olympic bid as part of City Councils consideration of the final bid.

Phase Three:Plan Implementation and Monitoring

January, 2000 - June, 2001

(a)Begin implementing specific initiatives identified from the social impact and equity plan and track progress based on developed public-private-community sector partnerships; and

(b)Develop plans for sustaining these initiatives after the bid city decision is made in the Fall of 2001.

To ensure the appropriate organization and management of the plan an Olympics Social Impact and Equity Committee would be established. This Committee would include representatives of a community sector partner, a private sector partner, the City of Toronto Social Development Department and TO-Bid. The proposed Social Impact and Equity Committee would report to the TO-Bid on a regular basis through the Legacy and Community Enhancement Committee. Implementation of the proposal would be conducted by a community agency, which would assume responsibility for coordinating the research and field work for the Social Impact and Equity Plan. This agency would also convene and support a consortium of groups reflecting social equity concerns related to youth and racial/cultural diversity in Toronto:

Overall the proposed approach to social impact planning for the 2008 Olympics would generate a number of benefits which would distinguish the TO-Bid from its predecessors and competitors:

(a)A basic social impact assessment grounded in solid social trends research and public consultation would be completed nine years in advance of the event;

(b)The social equity focus on opportunities for youth and ethno-cultural/racial minorities would provide an opportunity to promote civic participation, inclusiveness, and the social well-being of the new city;

(c)Provides a unique opportunity to generate concrete projects and initiatives that are inclusive of the community and demonstrate the benefits of the Olympic initiative;

(d)Creates the opportunity for the Olympic social assessment to reinforce the efforts of the City of Toronto, as it proceeds with the formation of a Social Development Strategy for the new city; and

(e)Contributes to shaping a legacy of social equity in association with the 2008 Olympics.

TO-Bid has conducted initial research into other proposals to establish a social investment fund in connection with Olympic Games. Discussions have already begun with social agencies about the nature of a Toronto Olympic social investment fund. The next Olympic quarterly Council updates will report on the social investment fund options and a process for discussions with TO-Bid.

2.2Transportation:

Council has raised a number of issues regarding transportation requirements and legacies of the Olympics at the Council meetings in March and July, 1998 and at the Community Council meetings in September and October, 1998.

Transportation is major component in the bid for the Olympics and after the bid is won, for the hosting of the games. The success of the Olympics often parallels the success or failure of the transportation system to meet the demands. The 1996 Olympics in Atlanta are remembered for the transportation difficulties experienced by the athletes, the media and the visitors. Since the 1996 Olympics, cities competing for the Games must increasingly demonstrate that the transportation demands are understood and can be met.

The motions by Council and Community Councils to date are indicative of the range of transportation issues facing the City now and those anticipated should the bid for the 2008 Games be successful.

At the bid preparation stage the transportation focus is on:

(1)the transportation requirements of the venues to be included in the building and development plans;

(2)determining the scope and magnitude of the overall transportation demands of the Olympic, including those of the disabled community, and how the City can meet them; and

(3)the transportation requirements of the athletes, coaches and officials who will require secure, dedicated transportation.

In addition, at this stage, the major transportation improvements planned to be in place over the next ten years to serve the City's needs should be assessed to identify their impact on the bid and the potential benefits to the City as Olympic host.

City Olympic Office staff initiated discussions with the City's transportation operators in July about the bid and the transportation issues regarding the Olympics. The preliminary comments of Transportation Services, TTC, GO Transit and senior staff are:

(a)The Olympic Transportation Plans should rely on public transit to move visitors and the public;

(b)The public transit system could accommodate the transportation demands with proper planning and if sufficient priority is given to buses and streetcars on the road system;

(c)Additional bus fleets and appropriate driver training will be needed for the period of the Olympics;

(d)GO rail service could operate at peak service all-day provided that alternative routing for freight traffic is arranged;

(e)Providing accessibility for the disabled must be an essential part of the Olympic transportation plan; and

(f)Plans for construction of the new transportation infrastructure, such as the possible dismantling of the Gardiner Expressway, will require construction prior to 2008 and will need co-ordination with other construction projected related to the Olympics to ensure efficient and timely completion of all projects.

TO-Bid has commenced preliminary work on the transportation plan to host the Games and will be conducting further transportation analysis in 1999. TO-Bid has indicated that the transportation operators will be included in the preparation of the bid.

In order to ensure effective transportation planning for the bid for the Olympics and for hosting the Games, it is proposed that the City establish a framework for assessing proposed transportation projects as a coordinated effort amongst all of the transportation planning and operating agencies. Recently, the Strategic Transportation Planning Group (STPG) was established to ensure coordinated transportation planning and policy in the City. The STPG membership includes:

(a)the Executive Director of City Planning Division and Chief Planner for the City, Urban Planning and Development Services;

(b)the General Manager of Transportation Services, Works and Emergency Services;

(c)the Chief General Manager of the Toronto Transit Commission;

(d)the Executive Director of GO Transit; and

(e)the President of the Toronto Parking Authority.

The purpose of the STPG is to provide a coordinated approach to address complex transportation planning issues.

The STPG has identified the Olympics as one of its top priorities. The STPG should consider the requests from the Community Councils for a transportation master plan and the transportation legacies which could result from the Olympics. In addition, The STPG should provide direction and guidance to TO-Bid on the transportation assessment for the Olympic bid including:

(a)determining the transportation demands of hosting the Olympics;

(b)assessing the City's capability to meet the demands with existing infrastructure;

(c)compiling an inventory of planned and proposed transportation improvements;

(d)identification of those required desirable, should be advanced for the Olympics; and

(e)addressing Council requests transportation issues related to the Olympics.

The STPG should conduct this work with the other transportation operators in and around the City. As part of the public consultation on the Olympics, a transportation focus group is planned for mid-November and includes a broad cross-section of transportation agencies and advocates as well as groups representing the disabled communities to help develop principles to guide the transportation components of the bid.

At this preliminary stage there is support from Council and the public for a transit-oriented Olympic Games. The venues identified for the Olympics in the City are in locations with well-developed transportation systems. Staging the Olympics and providing efficient transportation to move the many athletes, visitors, and volunteers around the City would require extensive transit priority on the road network to greatly increase the transit service and capacity. TO-Bid is looking at past and future Olympic host cities to identify the most successful transportation practices for possible inclusion into the Toronto Olympic transportation plan.

2.3Other Motions:

Council Task Force:

The Commissioner of Economic Development, Culture & Tourism was requested by Councillor Ashton to submit a report to council through Economic Development Committee on the composition, mandate and Terms of Reference of a City Council Task Force to provide oversight and independent assessment in the areas of social and fiscal responsibility for the Olympic Games; the Members of such Task Force to be recommended by the Striking Committee.

In July 1998, City Council supported the establishment of a Task Force to provide oversight and independent assessment in the areas of social and fiscal responsibility for the Olympic Games. In March 1998, Toronto City Council gave preliminary approval to a socially and financially responsible bid for the 2008 Olympic games. Between March and July 1998, the re were financial and social concerns raised about the preliminary plans prepared by the Toronto Olympic Bid Corporation and the information contained in the April application to the Canadian Olympic Association. One report went so far as to predict a one billion dollar cost overrun from the Olympic Games.

At the present time, TO-Bid is preparing to undertake "due diligence" activities on all aspects of the bid. This work will test the assumptions of the initial application to the COA and is aimed at satisfying City Council that it can proceed with a plan to host the Olympics that is both socially and fiscally sound.

The proposed terms of reference for the Task Force are as follows:

(a)The Task Force is proposed to be formed as a sub-committee of the Strategic Policies and Priorities Committee;

(b)The membership will consist of five members of Council with a majority of members from the Strategic Policies and Priorities Committee. Members will be selected by the Striking Committee;

(c)The Task Force to ensure that they establish a procedure to provide further oversight and independent assessment of the social and fiscal aspects of the bid;

(d)The Task Force is to specifically review the final proposed bid budget and the assumptions concerning both operating and capital revenues and expenditures. A review of the social measures proposed as part of the bid is also to be undertaken. The Task Force is also to review the adequacy of any guarantees or commitments received in connection with the bid and Toronto's hosting of the Olympic Games;

(e)The Task Force is to meet as required, with a minimum of three meetings a year;

(f)The Task Force will report as part of the regular Olympic updates to the Strategic Polices and Priorities Committee;

(g)The Task Force will review the final bid proposal and provide recommendations to City Council concerning the financial and social aspects of the bid; and

(h)Resource support to the Task Force to be provided by the City Olympic Office and City staff.

Relationship of the Bid to the City's Official Plan Process:

The Commissioner of Urban Planning and Development Services was requested by Councillor Jones to submit a report to the Urban Environment and Development Committee on the possible impacts of the Olympic Bid on the new City of Toronto Official Plan process.

The Urban Planning and Development Services Department is currently mapping out a process for the new Official Plan for the City. The community consultation process of the Toronto Olympic Bid will reveal issues and concerns that will provide input into the Official Plan process.

2

Year 2000 Business Continuity Plan

(City Council on November 25, 26 and 27, 1998, amended this Clause by striking out and referring Recommendation No. (2) embodied in the confidential report dated November 22, 1998, from the City Solicitor, back to the Strategic Policies and Priorities Committee for further consideration, such recommendation to remain confidential in accordance with the provisions of the Municipal Act.)

The Strategic Policies and Priorities Committee recommends the adoption of the following joint report (November 3, 1998) from the Chief Administrative Officer, Chief Financial Officer and Treasurer and the Commissioner of Corporate Services:

Purpose:

The Year 2000 Business Continuity Plan outlines the following information as requested by Council at the July meeting:

(i)An inventory of priority one Year 2000 projects for the City of Toronto's Departments, Agencies, Boards and Commissions;

(ii)The estimated completion date for each project;

(iii)The planned budget required to ensure year 2000 readiness for each project;

(iv)The current status of each project;

(v)A status report from the Police and TTC on their Year 2000 program;

(vi)The amount and source of funding for the year 2000 program; and

(vii)The steps required to ensure due diligence in the implementation of Year 2000 solutions.

The report also provides a status update on the following items recommended in the Year 2000 action plan which was approved by Council in July:

(i)The assignment of a member of Council to the Year 2000 project;

(ii)The Solicitor's Year 2000 liability report; and

(iii)The Purchasing Policy established by the Treasurer.

Funding Sources, Financial Implications and Impact Statement:

The City of Toronto Year 2000 Project report, which was adopted, as amended, by the Council of the City of Toronto at its meeting held on July 29, 30 and 31, 1998, outlined the Year 2000 issues facing the City of Toronto. The potential impacts of Year 2000 failures in the City's buildings, equipment and information and technology systems include:

(a)loss of life or personal injury to clients and/or staff due to accidents or diseases;

(b)loss of revenue due to an inability to bill and collect money and/or undercharging clients;

(c)impaired ability to deliver services to clients;

(d)increased cost due to reinstatement of manual processes and/or increased re-work;

(e)lawsuits against the City by clients and/or staff who suffered negative impacts; and

(f)loss of confidence in the City on the part of clients, staff and/or other partners.

The inventory process identified 84 priority 1 business functions with a high probability of failure due to Year 2000 issues. Of these business functions, it is estimated that at least 10 of them will have a significant financial impact. Examples of business functions with significant financial impact include property tax calculation, billing and payment processing of $4,600 million, water revenue calculation, billing and payment processing of $200 million and parking tag payment processing of $50 million. In addition to collecting revenue, there is also the ability to issue payments. Examples of these business functions include the ability to pay social assistance to the 91,637 active cases (1997) for an estimated total of $765.5 million and the ability to pay child care service providers an estimated $215million.

An estimate is not available on the potential cost of possible lawsuits against the City as a result of deaths and personal injuries or the costs of collateral damage caused by Year 2000 failures in external organizations.

In July, 1998, Council requested the Year 2000 Program Office to report back in November on specific work required to ensure business continuity through Year 2000 and the projected cost. This report outlines the work identified to date.

The Year 2000 Business Continuity Plan estimate of $149.6 million can be financed through various means. Of the total Year 2000 program costs, $12.4 million associated with water supply and water pollution control will be funded by water revenues. Borrowing for the entire program is within the Corporation's updated Debt and Financial Obligation Limit, and can be financed by the issuance of debentures, if required, for a term of up to 10 years.

The financing of the Year 2000 plan, if financed entirely through debentures, would add approximately $20 million in debt charges beginning in 2000/2001. The 1999-2003 Capital budget financing report being considered by the Budget Committee this month (November) includes recommendations for financing the entire capital budget including the year 2000 costs.

Recommendations:

It is recommended that:

(1)project approval in the amount of $149.6 million be approved for the ongoing management of the year 2000 Program and for ensuring that the Year 2000 solutions for priority 1 business functions and city wide initiatives are implemented.

(2)the Chief Financial Officer and Treasurer incorporate a financing strategy in the 1999 - 2003 Capital Budget capital financing plan scheduled to be before the Budget Committee in November, 1998.

(3)the Program Office report to the Strategic Policies and Priorities Committee by February 1999 on the funding requirements for business functions identified as priority 2 (important) and 3 (when time permits) and the implementation and testing of contingency plans and emergency preparedness plans;

(4)the Solicitor's Year 2000 liability report go forward, in camera, with this report;

(5) the Chief Financial Officer and Treasurer investigate acquiring the necessary insurance for all City employees with potential Year 2000 liability as addressed in the Solicitor's report;

(6)the Executive Director of Human Resources recommend a strategy for streamlining the administrative process relating to recruitment , compensation and retention of staff working on the Year 2000 project;

(7)the strategies for the City-wide initiatives for Year 2000 readiness as outlined in this report be approved;

(8)a contingency plan, approved by both the Operating Departments and the Year 2000 Program Office, be required for each business function identified as priority 1, even if it is Year 2000 ready;

(9)the Year 2000 office be directed to work with the Commissioner of Works and Emergency Services Department to develop and test an emergency preparedness plan specifically for Year 2000 failures;

(10)the transfer of funds from the City of Toronto to organizations, through means such as grants, be subject in each case to such organizations having a Year 2000 program in place;

(11)the Program Office be given the authority to recommend to the Year 2000 Steering Committee extension or re-negotiation or termination of contracts or entering into new contracts that affect priority 1 business functions to ensure that the re-tendering of goods and services and a possible change of suppliers not create a major disruption for business units doing remedial work on these priority 1 business functions thereby putting business continuity at risk;

(12)the Chief Administrative Officer be given approval to enter into agreements in support of the above for the full amount of expenditures, until June year 2000, reporting on a regular basis to the Strategic Policies and Priorities Committee;

(13)the Strategic Policies and Priorities Committee refer this report to Council for approval;

Comments and/or Discussion and/or Justification:

In July, the Year 2000 Program Office requested funds of $85 million dollars to inventory, assess, remedy, test and re-implement systems for Year 2000 readiness. The $85 million was based on an estimate of funds required for the Project Management Office, Departmental initiatives and corporately managed City-wide initiatives.

At the joint Corporate Services and Budget Committee meeting, it was recognized that significant funding would be required to ensure business continuity. The Program Office was granted $5.1 million to complete the inventory and assessment of the priority 1 business functions of the City and to report back on the cost to make these functions Year 2000 ready. This report documents the findings to date.

Of the $5.1 million approved, $4.9 million has been spent or committed leaving $0.2 million funds available. The following table outlines the expenditures to date:

The total projected cost for Year 2000 business continuity is $149.6 million.

During the inventory phase, Operating Departments were requested to identify their critical business functions. In the assessment phase, a business case was developed for each of these priority 1 business functions. The business case contains the results of the investigation and analysis on the current readiness of the systems, which support these critical business functions, and the recommendation on the most cost-effective fix required to ensure year 2000 readiness. As a result of these inventory and assessment steps, undertaken over the last 3 months, 84 priority 1 business functions have been identified and strategies have been recommended to remedy their year 2000 problems.

The projected cost of ensuring business continuity for the 74 Departmental business functions is $43million. In addition to the funds required for the Departmental business functions, $79.7 million is required to implement the 8 City-wide business functions which provide the enabling infrastructure for all of these systems and $7.5 million is required for the 2 Project Management Office business functions.

Of the projected $130.2 million required to fund the Project Management Office, the Departmental initiatives and the Corporate city-wide initiatives, it is projected that $106.7 million will be spent on fixing the problems and $23.5 million will be spent to confirm that the solution implemented will support business continuity through the year 2000.

With the year 2000 deadline fast approaching, the availability of resources with skills required to address the year 2000 issue is becoming more and more limited. In addition, the resources that are available, are demanding premium rates. Most organizations are looking at incremental rate increases or retention bonuses to retain the resources already on board.

A project contingency fund of $19.4 million, which is 15 percent of the projected estimate of $130.2million, has been included as part of the overall total budget. This will enable the Year 2000 Program to cover priority 1 projects where the assessment is not complete, such as the Fleet City-wide initiative, taxes where they have not been applied and scenarios where purchased services exceed the estimated totals. Any remaining funds will be applied towards business functions with a priority of 2 and 3 as they are identified. Expenditures from project contingency will be managed through a change order process with prior approval from the Year 2000 Steering Committee.

Budget Summary:

The Year 2000 Program Office was established in July 1998. Council has requested the Program Office to report monthly on the readiness status of mission priority 1 functions to the Strategic Policies and Priorities Committee. These functions include business, operational and information and technology systems for the City's Departments, Agencies, Boards and Commissions.

Project Management Office:

The Project Management Office of the Year 2000 Program is responsible for establishing the strategies, standards, processes, communications, contingency planning, and funds required to ensure that these priority 1 functions are Year 2000 ready.

The Project Management Office funding is broken into 2 components: $6.3 million for staffing and tools and $1.2 million for communications and training.

Each of the six Commissioners of the Operating Departments of the City of Toronto was requested to identify a dedicated Departmental Project Manager who would be given the authority to ensure business continuity through the year 2000 for that department, and for related agencies, boards and commissions. An Account Project Manager and a Quality Assurance Project Manager from the Year 2000 Project Management Office, are assigned to work with each of the Departmental Project Managers to ensure that a consistent and auditable approach is taken in the implementation of Year 2000 solutions.

The Project Management Office reviews every business case to ensure that what it proposes are solutions to year 2000 issues and not new Departmental initiatives. As a result, year 2000 funding only applies to upgrades or replacements of existing business, information and technology or operational systems.

Due Diligence:

The City of Toronto must demonstrate due diligence in addressing the Year 2000 issues. The City Auditor has provided guidelines which are emergency industry standards for due diligence. Attachment 2 is a copy of the Audit Guidelines developed by the City Auditor to ensure accountability. These guidelines address areas such as the establishment and role of the Steering Committee, the Project Office, the departmental program, the problem identification process, appropriate resourcing and funding, the creation of project plans and schedules, project execution, testing and contingency planning.

The City Solicitor submitted a report dated September 7^th, 1998, to the September 24^th Strategic Policies and Priorities Committee meeting on the potential liability of the City as it relates to year 2000 issues. The report was referred back requesting the Year 2000 Project Office, in consultation with the Chief Financial Officer and Treasurer (Risk Management), City Solicitor and City Auditor to report on the steps necessary to achieve due diligence. The Year 2000 Program Office has implemented the following actions, which address the City Auditor's guidelines, to demonstrate due diligence in the resolution of year 2000 issues and to mitigate these liabilities:

(1)Councillor O'Brien has been appointed to represent Council on the Steering Committee with the Commissioner of Corporate Services and the Executive Director of Information and Technology. The Steering Committee reports to the Strategic Policies and Priorities Committee on a regular basis;

(2)Project management structures with defined roles and responsibilities have been put in place;

(3)Year 2000 methodologies have been adopted and customized to meet the City of Toronto's requirements; these were developed by LGS for operational systems, and by IBM for information technology and business systems;

(4)Priority 1 business function identification and analysis processes have been established;

(5)Departmental project control framework is in place;

(6)External expertise and knowledge has been assigned to each project: a Quality Assurance Project Manager, from IBM and LGS, as appropriate, has been assigned to work with each Operating Department;

(7)A governance structure is in place that includes reporting to a Steering Committee, the Senior Management Team, Strategic Policies and Priorities Committee and Council;

(8)The City of Toronto's external auditor is included in the workplan;

(9)Benchmarking on key indicators such as project budget, structure of project, lessons learned, etc. has been conducted with similar public sector organizations, in some cases, was included: meetings with the City of Calgary, discussion with Ottawa/Carlton and meetings are planned with New York City;

(10)External review process by subject matter experts has taken place;

(11)Contingency planning processes have been established; and

(12)External partnership management processes form part of the workplan.

The Strategic Policies and Priorities Committee also requested the City Solicitor to consult with the Year 2000 Project Office to determine whether a case can be brought forward on a piece of equipment that fails, as to whether there is an obligation by the computer company. The City Solicitor will submit an addendum to the Solicitor's report to address this request.

This report recommends that the Solicitor's Year 2000 liability report go forward in camera with this report.

The Solicitor's report also indicated that the municipal officers may be subject to a statue that imposes liability upon directors and officers of a corporation for a breach of their duties under the statute. This report recommends the Chief Financial Officer and Treasurer investigate acquiring the necessary insurance for all City employees with potential Year 2000 liability.

Contingency Planning :

The City of Toronto is addressing high-impact priority 1 business functions first to ensure that they are Year 2000 ready. Even though every measure will be taken to ensure that the solutions implemented will make the business function Year 2000 ready, it is recommended that for each priority 1 high-impact business functions a contingency plan be required. In the cases where contingency plans may already exist, they will need to be reviewed to ensure that the planning assumptions are valid under the various Year 2000 scenarios. The plan should focus on acceptable workarounds to the existing automated solutions. For example, if the City was unable to generate social assistance payments, an acceptable alternative may be to generate payments based on the previous month's calculations and handle the differences through manual adjustments.

The funding for a contingency planner to identify/review contingency alternatives for each operating department is included in the estimates in this document. If further work is identified as necessary, the business units will be required to develop business cases to request any funding necessary to implement the alternative.

Emergency Preparedness:

The City of Toronto currently has an emergency preparedness plan that is maintained and tested on a regular basis. The Year 2000 Program office will be working with the Works and Emergency Services Department to ensure that the planning assumptions reflect the various Year 2000 scenarios. Upon clarification that the plan reflects the year 2000 issues, it is recommended that the City conduct a test of the plan for confirmation.

Communications:

A communications strategy has been developed that addresses specific objectives, scope, audience characteristics, and identifies specific areas that must be addressed such as training requirements, potential risks, and unique requirements. A Communications Plan to support the strategy addresses the tactical execution plans and specific deliverables, and identifies target dates for each deliverable within the scope of the entire project. The Communications Plan addresses the needs identified in the Communications Strategy.

The communications strategy document is attached as Attachment 3.

Reporting:

Every week, the Project Management Office hosts workshops which include training and development of team members and information sharing with the members of the Year 2000 project team.

On a weekly basis, each departmental project team reports on the status of each initiative to the Year 2000 Program Office. This information is consolidated to form a weekly corporate status report which is available for reporting to the Project Director and/or Senior Management Team of a regular basis.

The Year 2000 Project is a standing agenda item for the City's Senior Management Team and for the Strategic Policies and Priorities Committee. A progress report and a budget report will be forwarded to both meetings on a monthly basis, with a quarterly report to Council.

The Year 2000 Program will be required to enter into agreements to implement solutions to ensure year 2000 readiness on a timely basis to enable the City to meet the immovable deadline. These requests will be forwarded to the Year 2000 Steering Committee for review. Based on its recommendation, the Chief Administrative Officer will enter into the necessary agreements. This information will be reported to Council on a regular basis.

Human Resources:

Staff with City of Toronto business-specific knowledge and skills are limited. As the year 2000 draws closer, the demand on these staff will get higher and the cost to maintain them will rise as envisaged by many Year 2000 analysts and experts. The ability to retain staff once they have been trained will be difficult. In recognition that this project has a fixed target date, the Year 2000 Program Office requires a streamlined process to enable the recruitment of staff on a timely basis to ensure that business continuity is not negatively impacted.

The Year 2000 Program Office is requesting Human Resources to recommend a strategy for streamlining the administrative process relating to staff recruitment, staff retention and compensation to the Year 2000 Steering Committee as quickly as possible.

City-wide Initiatives:

Functions which are common to all operating departments, agencies, boards and commissions are being managed through the Year 2000 Program Office on a corporate City-wide basis. Since the problems are common, consistent solutions are being applied. Operating departments have been instructed to assume that the enabling infrastructure will be put in place to support their operational, business and information and technology solutions. Having one team performing the identification and assessment steps instead of six Departmental teams is saving a tremendous amount of time and effort. The Account Project Managers, assigned to each Department, work with the Corporate Project Managers to define the departmental requirements and provide adequate lead time and user-based information in order to implement a Year 2000 ready infrastructure. The six corporate City-wide initiatives are: networks, server platforms, desktops, facilities, fleet, and external partnerships and agreements. This report recommends that the following strategies for addressing these City-wide initiatives be approved and implemented.

The City of Toronto is undergoing a major transformation of its organizational structure, business processes, and service delivery model as the amalgamation of its constituent municipalities continues. A major challenge of this initiative is determining how to communicate effectively across departments and to our stakeholders.

Each former municipality had its own set of tools (work methods, staff, data, and computer systems) that it used for its daily business. As we try to amalgamate these disparate systems we are faced with support problems, training costs, licensing issues, and reduced efficiencies. To compound matters further, a number of computing devices are not capable of functioning beyond the year 2000 either because of their inherent design limitations or the restrictions of the software applications residing thereon.

In order to eliminate the vulnerability associated with year 2000 and, collaterally, to effectively advance our business vision, a common but flexible information and information technology infrastructure based on standards must be established. The City cannot afford to keep a multitude of products running where one will suffice. A common, standards-based infrastructure results in better service and lowers unit costs for all users.

The Year 2000 effort will necessitate the replacement or refurbishment of the City's computing infrastructure. In order to facilitate this process a set of working standards is being proposed to ensure business continuity and take the City into the next millennium. The Interim Information and Technology Standards, established by the Information and Technology Division of Corporate Services, outlines the proposed standards to be adopted in the Year 2000 implementation.

Networks:

Data:

The networks include the hardware and software and support requirements for all data and voice telecommunications. The projected cost to ensure that the data network is year 2000 ready is $5.5million.

The existing network facilities of the City of Toronto consist of various types of hardware and software that must be made Year 2000 ready. These network components have been acquired over a number of years and vary in complexity from simple end user connectivity equipment to large scale Multi-Protocol Routing Systems and Network Management Systems. Components have come from a variety of vendors and are in varying states of readiness for the Year 2000. This budget is an estimate of the costs associated with the assessment of current infrastructure components, the rationalization of Year 2000 compliance specifications, the process of repair and/or replacement of components to meet Year 2000 compliance and the testing/verification of current network functionality for the Year 2000.

The data network must be the first function that is tested and certified Year 2000 ready due to the configuration of the processing environment at the City of Toronto. The major application servers for City administrative systems and for many of its operational systems (e.g. property tax, parking tags), are located at the City Computing Center (703 Don Mills Road), and the client desk top equipment is distributed throughout the various civic centers and other buildings operated by the City. This places the network in the primary role of delivering service to the public by enabling every electronic transaction produced in the daily operations of the City.

A conservative figure of 15,000 client computers and servers was used to calculate the budget estimates for hub and switch equipment: 1,500 at North York, 1,500 at Scarborough, 2,000 at City Hall, 2,000 at Metro Hall, 1,000 at 703 Don Mills, 500 at East York, 500 at York, 500 at Etobicoke, 500 at Fire And Ambulance Headquarters, 100 at the Records Center and approximately 4,900 at various other buildings throughout the City. There are more than 450 buildings connected by the network throughout the City.

The router and switch component is based on replacement and upgrades both to hardware and software. Approximately fifteen percent of the cost is labour. The network management component is made up of two new processing platforms, the operating systems and management applications and again, fifteen percent labour costs. This component has operated continuously for the past six years without upgrades or additional costs. The other components of the network are minor maintenance issues and deletion of older services that will no longer be supported.

Voice:

The projected cost to ensure that the voice network is year 2000 ready is $4 million.

Similar to the data network the City has many and diverse voice telecommunication networks and systems that must be either replaced or made year 2000 ready. The telephone systems include integrated voice mail, interactive voice response (IVR), informational services, telephone interfaces to computer applications, cellular and pager services, and circuits used to control priority 1 systems such as traffic lights and alarm systems. There is a requirement to replace or upgrade the 7 voice mail systems and the 10 IVR systems and their circuits.

The majority of telephone services in the City are provided through Bell Canada's Centrex and plans are in place to ensure the system is Year 2000 compliant. The other services have been acquired by the various agencies and municipalities over time and comprise many and varied technologies. There are six private branch exchange (PBX) systems and approximately 200 key systems that have to be either upgraded or replaced. A complete inventory and possible replacement of all the hardware associated with the Centrex system has not been completed so the costs are not available at this time

Servers:

Included in this area are all the computing platforms which support business applications, databases and file and print services. These platforms collect, store, process and distribute all data in support of service delivery to the public. The primary clients are every current user connected to a server or mainframe within a City of Toronto department or any fully supported agency, board or commission.

Mainframe:

Currently the City of Toronto owns three mainframe computers in addition to the purchased mainframe services provided by EDS of Canada Limited. The EDS mainframe computing environment, which hosts all mainframe applications from the former Municipality of Metropolitan Toronto and the former City of Toronto, is the City's most significant processing platform. This platform has hundreds of programs and approximately 8.5 millions lines of application code in a variety of languages. The EDS mainframe hardware and operating system is Year 2000 ready. The City-owned mainframe hardware and operating systems are not Year 2000 ready. A significant effort and cost would be required to make these platforms ready. Therefore, the mainframe strategy is to migrate all essential mainframe applications and data currently running on the City-owned mainframes to either the EDS mainframe or to mid-range servers.

As EDS has significant knowledge of the City's existing mainframe environment, the intent is to leverage this knowledge to expedite the implementation of Year 2000 mainframe-based solutions. The mainframe strategy calls for the creation of a parallel mainframe computing environment at EDS in which the existing production applications and data can be converted and unit tested by EDS and then tested, using both regression and Year 2000 testing, by City staff to ensure business continuity.

The projected cost for all mainframe services is $15 million.

Mid-range servers:

In addition to the mainframe services, the City has 1100 mid-range server platforms running operating systems such as UNIX, NetWare and NT. The year 2000 readiness of the hardware and operating systems varies significantly. Wherever possible, the existing server assets will be leveraged and only those that may be deemed obsolete or too costly to repair will be replaced. Wherever necessary, operating systems and system products will need to be upgraded to a level, which is defined as year 2000 ready by the manufacturer. To minimize the effort required to migrate business applications that run on these server platforms, the proposed strategy is to replace server platforms with "like" platforms from the same manufacturer. Wherever multiple servers are being used for the same business function (e.g. one for each of the former Cities), if possible, the replacement platform will be consolidated to a larger platform and housed at the City of Toronto Data Center, instead of maintaining multiple, smaller platforms. The services required to migrate and consolidate or upgrade the platforms will be purchased from the manufacturers or their partners.

In order to permit the implementation of consolidated platforms, logical network changes have to be implemented to enable clients to access these platforms from any location. The plan for implementing these changes has been included in this business case. These revised architectures have been reviewed and approved by the Information and Technology division of Corporate Services and are incorporated in the Interim Information and Technology standards.

Priority will be given to platforms that support those functions deemed critical and high-impact. The implementation date for the installation of priority 1 systems is April 1999. Secondary systems will be replaced on a continuous basis after the April 1999 deadline until April 2000. As the implementation of both phases require a very aggressive schedule, a team consisting of seventeen technical and management staff is being established.

The projected cost for addressing the mid-range servers is $16.9 million.

Desktops:

Included in this area are all personal computing devices, including desktop computing hardware, operating system software and productivity tools used by City staff to access corporate, departmental or personal applications and data either stored either locally on their desktop computer or on a server platform. The primary client is every current user within the City's departments and its fully supported agencies, boards and commissions.

The existing desktop assets will be reused where applicable, and only those that are deemed obsolete or are too costly to repair will be replaced. Printer technology will be replaced accordingly.

The assumptions used are that all non-pentium machines and non-compliant Pentium clones must be replaced due to the cost and the time required to make these machines Year 2000 ready. Low-end pentiums will require minor hardware upgrades. All devices will be replaced where remedy cost will be more than $1,000.00. To reduce the cost of desktop replacement the monitors and keyboards from existing computers will be re-used wherever practical.

In most cases, the operating system needs to be upgraded to NT 4.0 for readiness. In some cases, this operating system upgrade forces mandatory hardware upgrades.

Through the inventory and assessment phase of this project, an automated inventory of all personal computers has been performed to identify the equipment currently deployed. To date the inventory is 90 percent complete and in excess of 13,000 devices have been identified.

The replacement desktops will conform to the Interim Information and Technology Standards. In addition to the standard desktop products, a Year 2000 testing and remediation tool will be rolled out to enable the Program Office to demonstrate the readiness of all desktops on an ongoing basis. This is required to ensure that if subsequent changes are made to a desktop, they do not make the desktop non-compliant.

Priority will be given to those systems deemed priority 1. Implementation date for the installation of priority 1 systems is April 1999. Secondary systems will be replaced on a continuous basis after the April deadline. A dedicated team of six technical and management staff will be established to oversee the implementation, with implementation services contracted from service providers. The strategy will be to use the City's vendors of record for these services.

The projected cost for addressing the desktop computing hardware is $20.8 million and the desktop computing software is $14.4 million.

Facilities:

Since the Year 2000 issues related to facilities (city buildings) are common to all departments and agencies, a strategy has been developed to ensure that all buildings used by the City are Year 2000 ready. There are close to 1700 City-owned buildings, and they contain between four and five thousand building systems that are either computer-operated or may contain embedded chips which might be vulnerable to a year 2000-related failure. The approach is to identify, then test, remediate if necessary, then certify all priority 1 building systems. Priority 1 building systems are those that may create life / safety risks, those which could cause $1 million or more of damage or revenue loss if they failed, and those which are required to operate if one or more of the City's essential business functions is to continue. Under this approach, for example, all fire alarm systems are priority 1, but elevators are only considered priority 1 if they are in a building of more then three storeys which houses a priority 1 business function or if the elevator is critical for access requirements. The project will also certify at least half of all City photocopiers and fax machines as year 2000 compliant. In addition, the project will work with landlords of the 225 premises leased by the City, and with the owners of other properties it uses under various agreements (such as the numerous Toronto District School Board premises used for daycare and recreation programs) to ensure that all those facilities considered priority 1 are certified as Year 2000 ready.

There are 3 business cases for Facilities: building systems for an estimated total of $1 million, faxes and other business machines for a total of $0.6 million and non-city-owned properties for a total of $0.3 million.

Fleet:

The vehicles of the City of Toronto provide a variety of essential and support services. Essential service vehicles include fire engines, police cars and ambulances. Support service vehicles would include vehicles used for snow and garbage removal and salt trucks. Then there are other vehicles used for general transportation. An inability to provide essential services could endanger lives.

Vehicles in all areas of the fleet typically contain one or more computer chips necessary to be able to run the vehicle. The computer chips may handle dates and if so, may not be able to do so after the millennium change.

There are over 5,000 vehicles, supporting at least 100 business functions in approximately 50 areas, which require evaluation to determine their degree of importance to the provision of essential or support services, and certification or modification to be Year 2000 compliant.

The process requires the separation of vehicles supporting essential services and estimation of the cost to make them compliant as a first priority. Vehicles serving other functions and vehicles will be examined after the first priority vehicles to estimate the cost of making them compliant.

The project covers, with varying degrees of direct involvement, the vehicles operated by the six operating departments of the City of Toronto, its agencies, boards, and commissions, and third party service providers. The assessment phase, which is partly complete, will deliver a detailed project plan, business cases, and cost estimates including resource plans and is targeted for completion by November 30^th. Funding for the remedy of fleet year 2000 problems will be provided out of the allocation of funds requested.

External Partners and Agreements :

In order to provide essential services the City is dependent on obtaining information and support from suppliers and other government agencies. To ensure that information and sources of supply are available through the year 2000, the External Partners and Agreements team will develop supplier compliance standards. A policy has been developed which requires that the purchase and acquisition of all goods and services by the City be contingent on the supplier demonstrating that both the supplier and its products are Year 2000 compliant.

To successfully conduct its normal business operations the City of Toronto relies heavily on the continued smooth delivery of services and supplies from external organizations, the Government of the Province of Ontario, Banks and other organizations (referred to collectively as external entities). External entities contribute to the management, supply or the operation of priority 1 services such as utilities, traffic control, health services, outsourced services, sewage treatment, water supply, ambulance supplies, and other City services. Most major external entities are adopting similar Year 2000 certification standards as the City. Unless certified to be Year 2000 compliant, many products and services may fail, or malfunction, temporarily or completely, or cause data to be corrupted, misinterpreted, lost or destroyed. The City of Toronto has both a civic and municipal responsibility to go through a Year 2000 certification due diligence process with its external entities to guarantee minimal impact on the daily smooth operation of the administration. Any routine service could be interrupted or even fail totally based on the failure of a third party supplier. Two examples of potential service failure where external entities are essential to service delivery are traffic lights, causing severe traffic disruption or even accidents resulting in bodily harm, and ambulances or fire engines being unable to respond to an emergency. The assurance that external entities are Year 2000 ready is therefore vital for the continued delivery of services by the City of Toronto to its citizens. It is estimated that there are in excess of 15,000 different business relationships in existence with external entities.

The City of Toronto provides financial grants to several organizations. The City of Toronto will require that organizations receiving financial grants have an appropriate year 2000 program in place to ensure that these organizations will be able to continue operating after the year 2000.

To govern the delivery of these services and to ensure a consistent management process of establishing Year 2000 compliance, a set of compliance guidelines has been compiled based on internationally approved industry standard. If an external entity is not Year 2000 ready it can possibly result in the failure of a business function for which City officials will be held responsible and accountable. The External Partners and Agreements Team will work with and employ the services of the Legal and Internal Audit departments to plan, manage and direct all Year 2000 related issues associated with these external entities. Specifically, the Partners and Agreements section will act as the Year 2000 central control point of review for all contracts, agreements and Year 2000 compliance certification for external entities doing business with the City. The result of the review may be a requirement to extend the existing term of a contract, re-negotiate the terms and conditions of an existing contract or terminate an existing contract and enter into new contracts for the terminated services. To fulfill this mandate, the External Partners and Agreements section is responsible for: collecting and inventorying all contracts and affected by year 2000 and providing Legal with a copy of the same where a year 2000 failure has been identified; managing all contracts and agreements for Year 2000 compliance; reviewing all Requests for Proposal before being issued; managing all communication with external entities as governed by the Communications Strategy; reviewing all compliance certificates issued by external entities; liaising with the provincial government of Ontario, external commissions and boards for which no contract exists; creating any new agreements and contracts that address year 2000 compliance. In addition, this section will also be responsible for tracking compliance for packaged "Off the Shelf" software.

The projected budget for addressing all partners and agreements is $1.2 million.

Agencies, Boards and Commissions:

In the July report, Council approved the recommendation that the Year 2000 Program Office also be responsible for the Year 2000 readiness of the agencies, boards and commissions of the City. Currently Agencies, Boards and Commissions liaise through Commissioners of the 6 operating departments. The Year 2000 Program Office works with the City's agencies, boards and commissions through the Project Managers of the department with which they are most closely associated to ensure that these authorities are aware of all year 2000 issues. For all but the largest of them, the priority 1 business functions for the agencies, boards and commissions will be included in the relevant department's Year 2000 program.

The Year 2000 Program Office will relate in different ways to different agencies, boards and commissions depending on their relationship to the City, their staffing and their size. A list of the agencies, boards and commissions with their proposed relationship to the Year 2000 Program Office is attached as Attachment 4. The three relationships described are full support, co-ordination and notification.

Full Support:

This applies primarily to smaller agencies, boards and commissions that rely on a City department for staff and equipment and are usually fully funded by the City. They will receive full support from the Program Office.

Co-ordination:

This relationship applies to agencies, boards and commissions that have their own staff and resources and tend to operate on an independent basis from the operating departments with which they are most closely associated. The largest commissions, the Police Board, the Toronto Transit Commission, and the Toronto Hydro Commission, have each taken responsibility for preparing and executing their own Year 2000 action plans and budget estimates. These Commissions have had their programs previously approved by Council. A status report has been submitted and reviewed by the Year 2000 Program Office and progress reports will be provided to the Program Office on a regular basis. These organizations will be subject to the same due diligence and audit requirements as the Operating Departments.

Notification:

There are a series of other authorities with which the City has a special relationship. The Year 2000 Project Office will contact each of these authorities, advise them of the City's workplan and offer advice if needed, but will play no direct role in ensuring their Year 2000 readiness.

Police:

The Project Management Office has received a status report (see attachment 5) from the Police outlining their initiative. At this point, the Police are requesting $1.7 million in their Capital Budget Submission for Year 2000. This will enable the Police to make their existing Financial System Year 2000 ready as Finance will not be in a position to roll out the SAP system by April, 1999. In the case of Police buildings, which are maintained by the City, actions required to ensure year 2000 readiness of their building systems form part of the City-wide year 2000 workplan rather than the Police action plan. The Project Management Office is recommending that these funds be approved, as requested.

Toronto Transit Commission:

The Project Management Office has received a status report (see attachment 6) from the TTC outlining their initiative. At this point, the TTC are requesting an additional $10.6 million in their Capital Budget Submission for year 2000. The Project Management Office is recommending that these funds be approved, as requested.

Toronto Hydro Commission:

The Project Management Office has received a status report (see attachment 7) from Toronto Hydro outlining their initiative. At this point, Hydro is not requesting any additional funding from the Year 2000 program office.

Departmental Initiatives:

Business functions:

Each Departmental team identified its business functions and assigned a priority to each. For each priority 1 business function, all system elements and interfaces were identified and prioritized based on the severity of the impact of not being ready.

Corporate priority-setting process:

The triage method approved by Council in July required each business function to be assigned a priority based on the type of impact and the probability of failure. As a result, each function is identified with a priority of 1 through 4:

1 = must be fixed

2 = important

3 = when time and resources permit

4 = no work required

This report deals primarily with the functions with a priority of 1, to enable the Corporation to focus on the business functions that must be fixed first. The team is continuing to identify and assess projects which fall into priority 2 and 3 category and will report back at the February 1999 Council meeting on the findings. The funding requested in this report is for the priority 1 projects that are identified in Attachment 8.

In order to assess the impact of the 84 business functions identified with a priority of 1, a severity factor of 1 through 8 was identified. The severity factors and some definitions and examples follow:

(1)Corporate-wide Initiatives:

Impacts on all other business, e.g. telephones, network, etc. These services are assumed to be in place by all operating departments either in support of their Year 2000 solutions or as a requirement for the contingency plans.

(2)Public Impact:

Significant immediate impact on a large segment of the public e.g. clean water.

(3)Financial/Legal Impact:

Significant expense, legal liability or an inability to collect revenue, e.g. property tax collection.

(4)Corporate Support/Staffing:

Significant impact on service provision or support for a function, e.g. payroll.

(5)Financial Management:

The ability to acquire products, pay suppliers and ensure financial stability of the corporation, e.g. accounting systems.

(6)Maintenance/Support Services:

The ability to schedule the use and availability of resources. The ability to collect and distribute information regarding services e.g. fleet management, complaint management and work order issuance

(7)Information Management Systems:

The ability to provide access to important corporate information, e.g. public health, financial reporting, performance statistics.

(8)Administrative/Governance Systems:

Licensing systems, by-laws, Council minutes and agendas, etc.

The priority 1 business functions are at varying states of readiness. The table included as Attachment8 is a list of the priority 1 projects by department, their estimated "year 2000 ready" date, the estimated budget required to implement the year 2000 solutions and the current status of the systems.

The actual business cases provided for each priority 1 project approved by the Commissioner of the appropriate department, the Account Project Manager and the Quality Assurance Project Manager are all on file in the Clerk's Division. Due to the proprietary information in the business cases, this document is only available for review by City staff and councillors.

Conclusions:

Many of the services provided by the City to members of the public are essential, and therefore the potential impacts of not being year 2000 ready are significant. As a result, funding must be provided to mitigate the risk both to members of the public and corporately to the City. This requires demonstration of due diligence through adherence to audit guidelines and must focus resources on making the priority 1 business functions Year 2000 ready.

Contact Name:

Lana Viinamae, Director, Year 2000.

(Attachments 1 to 8 mentioned in the foregoing report were circulated to all Members of Council with the agenda of the Strategic Policies and Priorities Committee for its meeting of November17,1998, and copies thereof are on file in the office of the City Clerk.)

(City Council on November 25, 26 and 27, 1998, had before it, during consideration of the foregoing Clause, a confidential report (November 22, 1998) from the City Solicitor regarding Potential Year 2000 Equipment Failure Legal Actions, such report to remain confidential in accordance with the Municipal Act.)

3

Administration of the Arts and Culture Grants Program in 1999

(City Council on November 25, 26 and 27, 1998, adopted this Clause, without amendment.)

The Strategic Policies and Priorities Committee recommends the adoption of the recommendation of the Municipal Grants Review Committee embodied in the following transmittal letter (October 26, 1998) from the City Clerk:

Recommendation:

The Municipal Grants Review Committee on October 26, 1998, recommended to the Strategic Policies and Priorities Committee the adoption of the attached report (September 11, 1998) from the Commissioner of Economic Development, Culture and Tourism respecting the administration of the Arts and Culture Grants Program in 1999; subject to amending Recommendation No. (3) by adding the following new (c):

"(c)Caribana;"

The Municipal Grants Review Committee reports, for the information of the Strategic Policies and Priorities Committee having referred the report dated October 16, 1998, from Ms. Anne Collins, President, Toronto Arts Council, to the Commissioner of Community and Neighbourhood Services for inclusion in the consolidated budget report requested to be submitted to the next meeting of the Municipal Grants Review Committee to be held on November 20, 1998; and

Background:

The Municipal Grants Review Committee had before it the following reports and communications:

-(September 11, 1998) from the Commissioner of Economic Development, Culture and Tourism respecting the administration of the Arts and Culture Grants Program in 1999;

-(October 16, 1998) from Ms. Anne Collins, President, Toronto Arts Council, presenting options for the delivery of the cultural grants budget administered by the Toronto Arts Council;

-(September 15, 1998) from Mr. Gerald Smith, Lakeshore Arts;

-(September 15, 1998) from Mr. Silvio Sauro, Chair, Etobicoke Municipal Arts Commission;

-(October 21, 1998) from Ms. Joy Hughes, Cedar Ridge Studio Gallery;

-(October 22, 1998) from Ms. Claire Hopkinson, General Manager, Producer, Tapestry Music Theatre;

-(October 22, 1998) from Ms. Angela Lee, Program Director, Art Starts;

-(October 22, 1998) from Ms. Elizabeth Cinello;

-(October 22, 1998) from Ms. Wendy Lilly, Waterfront Trail Artists;

-(October 22, 1998) from Mr. Dirk McLean;

-(October 22, 1998) from Mr. Robin Collyer;

-(October 22, 1998) from Mr. Darren O'Donnell, Artistic Director, Mammalian Diving Reflex;

-(October 23, 1998) from Mr. Michael Thomas, Artist, Lakeshore Village Artists Co-operative in South Etobicoke;

-(October 23, 1998) from Ms. Rina Fraticelli, Wild Zone Films;

-(October 23, 1998) from Ms. June Callwood;

-(October 23, 1998) from Ms. Sarindar Dhaliwal;

-(October 23, 1998) from Mr. Andrew Harwood, Director, Mercer Union;

-(October 23, 1998) from Ms. Lorna Livey, Fifth Street Gallery;

-(October 23, 1998) from Ms. Rosa Maria Luza, Director, The Patron of Peruvian Arts;

-(October 23, 1998) from Mr. Cheuk C. Kwan;

-(October 23, 1998) from Lee Pui Ming; and

-(October 24, 1998) from Ms. Joan A. Pierre.

The following persons appeared before the Municipal Grants Review Committee in connection with the foregoing matter:

-Mr. Gerald Smith, Lakeshore Arts;

-Mr. Donald Moffat, Member of the Board, and Ms. Rita Davies, Toronto Arts Council;

-Mr. Michael Thomas, Artist, Lakeshore Village Artists Co-operative; and

-Councillor Joe Mihevc, York - Eglinton.

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(Report dated September 11, 1998, addressed to the

Municipal Grants Review Committee from the

Commissioner of Economic Development, Culture and Tourism)

Purpose:

To establish a process for the administration of Arts and Culture grants in 1999, pending the resolution of the structure for cultural services currently before the Special Committee to Review the Final Report of the Toronto Transition Team.

Funding Sources, Financial Implications and Impact Statement:

Extending the Toronto Arts Council's grant agreement for one year will require the funding of an administration grant to the TAC in the 1999 Operating Budget.

Recommendations:

It is recommended that:

(1)the Municipal Grants Review Committee's review of Arts and Culture grants policy be deferred until Council has given final consideration to the structure for the delivery of cultural services through the Special Committee to Review the Final Report of the Toronto Transition Team;

(2)for 1999, the Toronto Arts Council receive and review all arts and cultural grant applications City-wide, except those noted in Recommendation No. (3)

(3)for 1999, the Commissioner of Economic Development, Culture and Tourism receive and review grant applications from:

(a)the major five cultural organizations (Art Gallery of Ontario, Canadian Opera Company, National Ballet of Canada, Toronto Symphony Orchestra, and National Ballet School); and

(b)the local arts councils (Arts York, Arts Etobicoke, Scarborough Arts Council, and Lakeshore Arts);

(4)the Toronto Arts Council, as a condition of its administration grant, establish, in a manner satisfactory to the Commissioner of Economic Development, Culture and Tourism:

(a)a separate process for the review of grant applications from community-based arts and cultural organizations sensitive to the past practices of the former municipalities; and

(b)a plan for the further restructuring of its board of directors to increase the representation of persons with experience in the community arts sector;

(5)the grant agreement with the Toronto Arts Council be extended for a period of one year from the expiry of the current agreement on March 31, 1999; and

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

Council Reference/Background/History:

At its meeting of February 4, 1998, under Clause No. 1 of Report No. 1 of The Community and Neighbourhood Services Committee, City Council directed the Commissioner of Community and Neighbourhood Services to undertake the research and consultation necessary to develop an integrated Municipal Grants Policy, including revised grants policies for each service area.

Under the same clause, Council adopted interim measures for the administration of Arts and Culture grants. Under these measures, the Toronto Arts Council (TAC) was generally assigned responsibility for applications based in the former city of Toronto, while departmental staff administered grants from the rest of the city. The Etobicoke Municipal Arts Commission was given a role in reviewing applications originating in the former Etobicoke.

At its meeting of March 4, 1998, City Council established the Municipal Grants Review Committee with terms of reference that included, inter alia, steering "the development of an integrated Municipal Grants Policy for implementation in 1999 and, after consultation with the relevant Standing Committees, recommend approval of the policy to the Strategic Policies and Priorities Committee".

In addition to these actions, at its meeting of February 5, 1998, the Special Committee to Review the Final Report of the Toronto Transition Team referred those issues relating to the structure of the Toronto Arts Council, outlined in a communication (February 5, 1998) from the President, Toronto Arts Council, to the Chief Administrative Officer for consideration in a future report to the Special Committee.

In preparation for the development of a new policy for Arts and Culture grants, staff, in partnership with the Toronto Arts Council, has undertaken a public consultation program involving circulation of a discussion paper, public workshops, and interviews with past grant applicants. An advisory committee chaired by Councillor Ashton, and comprising community members, has supplemented the process.

Discussion:

Deferral of Consideration of New Policies:

The long-term structure for making Arts and Culture grants will be considered by Council through the Special Committee to Review the Final Report of the Toronto Transition Team based on a report from the Chief Administrative Officer. This report is scheduled to be before the Special Committee in November and Council in December. As that debate will have bearing on the future delivery of Arts and Culture grants, policy recommendations are not being forwarded to Municipal Grants Review Committee at this time.

Procedures for 1999:

While the long-term structural issues are debated elsewhere, an interim plan is needed so that planning for the delivery of the grants program in 1999 can get underway. This report recommends that the Toronto Arts Council be given responsibility for the administration of all grants in 1999 with two exceptions: five of the largest seven organizations, and the four local arts councils.

(a)Major Organizations:

In their submission to the Arts and Culture Grants Policy Review, the seven largest organizations recommended a phased approach to the expansion of responsibilities on the part of the Toronto Arts Council. In particular, they recommended that, for 1999, the five large organizations that were funded by the City directly continue to be administered in this way.

Prior to amalgamation, these organizations were funded solely by Metropolitan Toronto, under specialized criteria developed for major regional institutions. They are national institutions, large employers and contribute significantly to the tourism infrastructure of the City. The criteria used to evaluate these organizations go well beyond the artistic merit of the organizations, and include economic and tourism dimensions.

Accordingly, it is recommended that, for 1999, these organizations continue to be funded directly through the City and not through the arm's-length Arts Council.

(b)Local Arts Councils:

It is recommended that the four local arts councils continue to be funded by Council directly through the Department.

The local arts councils are membership-based service organizations that seek to enhance their communities by serving the needs of artists and arts organizations. Unlike the Toronto Arts Council, they are not funding bodies, and they do not make grants of any kind.

The criteria used to evaluate these organizations have historically been related to the quality of service to a geographic area, and not those related to artistic or cultural merit. The services they provide complement those provided by the Department through the Culture Division. As a result, it is recommended that these organizations continue to be funded directly by Council on the advice of the Commissioner of Economic Development, Culture and Tourism.

In its submission to the Arts and Culture Grants Policy Review, Arts Etobicoke recommended that the arts councils be funded under a purchase of service arrangement. The Department agrees with this approach, and intends to enter into discussions with the local arts councils to move toward purchase of service arrangements in time for the 2000 funding cycle.

(c)Conditions:

In expanding its role to administer grants City-wide, the Toronto Arts Council will inherit responsibility for a wide range of non-professional arts and cultural organizations. A number of these organizations have expressed concern that one single organization cannot embrace the administration of grants for both professional and non-professional activity.

As a result, it is recommended that the Toronto Arts Council undertake the development of a process that addresses these concerns, and that the TAC continue to restructure its Board to reflect all of the arts and cultural organizations that will fall under its jurisdiction.

(d)Extension of Agreement:

The Toronto Arts Council is an incorporated, not-for-profit organization that operates under the authority of a grant agreement originally established with the former City of Toronto. The agreement provides for, inter alia, Council to appoint five Councillors to a 26-member Board of Directors. The agreement establishes the "arm's-length" principle by delegating the authority to give final approval to grant allocations without further City Council approval. It establishes a series of accountability measures, including both quarterly and annual reports. The TAC's operating costs are paid by the City of Toronto through a grant.

The five-year term of the agreement expires on March 31, 1999. In view of the recommendations contained herein, it is recommended that the agreement be extended for a period of one year, pending resolution of the long-term structural issues by Council.

Conclusions:

Council will consider the long-term structure for the Toronto Arts Council through the Special Committee later this fall. In preparation for restructuring in this area, it is recommended that the Toronto Arts Council expand its function to the entire city in 1999. The Department will continue to administer grants to the major five organizations, and will also maintain responsibility for local arts councils with a view to moving towards purchase of service arrangements in 2000.

The Commissioner of Community and Neighbourhood Services concurs with this report.

Contact Name:

John Elvidge, Tel: 392-9046/FAX: 392-3355, john_d._elvidge@metrodesk.metrotor.on.ca.

4

Administration of Grants Program

(City Council on November 25, 26 and 27, 1998, adopted this Clause, without amendment.)

The Strategic Policies and Priorities Committee recommends the adoption of the recommendation of the Municipal Grants Review Committee embodied in the following transmittal letter (October 26, 1998) from the City Clerk:

Recommendation:

The Municipal Grants Review Committee on October 26, 1998, recommended to the Strategic Policies and Priorities Committee the adoption of the attached report (October 9, 1998) from the Commissioner of Community and Neighbourhood Services respecting the administration of the various grants policies and programs.

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(Report dated October 9, 1998, addressed to the

Municipal Grants Review Committee from the

Commissioner of Community and Neighbourhood Services)

Purpose:

To recommend procedures for the administration of grants policies and programs.

Funding Sources, Financial Implications and Impact Statement:

Not applicable.

Recommendations:

It is recommended that:

(1)the general responsibility for the administration of grants policies and programs be assigned to the department responsible for the policy area addressed by the grants program;

(2)the Commissioner of Community and Neighbourhood Services, in conjunction with the Commissioner of Economic Development, Culture and Tourism and the Chief Financial Officer and Treasurer be designated the lead commissioners for the purposes of administering corporate and residual grants policy matters;

(3)the terms of reference for a staff co-ordinating committee be adopted as presented in Appendix 1;

(4)the Commissioners of Community and Neighbourhood Services and Economic Development, Culture and Tourism, allocate part of the time of an existing position to serve as a departmental representative for a team to undertake the work related to corporate and residual grants policy matters; and

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

Council Reference/Background/History:

At its meeting of September 28, 1998, the Municipal Grants Review Committee considered the City of Toronto Grants Policy. It was indicated at that time that a report on various implementation issues associated with the policy would be submitted to the October 26, 1998, meeting of the Committee. One of these issues is the way in which grants are administered by staff.

Comments and/or Discussion and/or Justification:

Administration of Grants Policy and Programs:

Two options have been considered for the assignment of responsibilities for grants programs within the administrative structure.

(1)Create a centralized grants unit consolidating all existing grants staff and resources.

(2)Continue to administer grants at the appropriate divisional/departmental level, but designate one or more members of senior management responsible for co-ordinating corporate grants policy.

Creating a centralized grants unit offers benefits related to consolidating resources and such a unit can easily bridge the gap between corporate grants policy development and program-specific grants policy.

However, a centralized unit would lead to a fractured approach to policy and program delivery. In any given policy area, responsibilities would be split over two or more departments. For example, those staff handling recreation grants would be separated from those making recreation policy.

A centralized grants unit would result in fundamental changes to the job descriptions of City staff with grants administration experience. At present most grants staff combine their responsibilities with community development, research and policy tasks.

Practically speaking, a centralized grants unit would require political review of grants issues to be centralized in a Council grants committee. It may prove to be inefficient for such a unit to report to several different standing committees.

The principal benefit of continuing the current practice is the integration of grants programs with all other policy instruments used by the operating department. Furthermore, it allows staff resources to move more freely between grants administration, community development and policy development activities within the department.

Administration of Corporate and Residual Matters:

If grants policy and programs are administered at the departmental level, a mechanism will be needed to co-ordinate corporate-wide policy and those residual matters that do not naturally fall within the mandate of any one department. Furthermore, mechanisms are needed to ensure the sharing of information between programs and to explore opportunities for sharing of resources. Three measures are recommended in this report.

The first is the designation of members of the senior management team as leads for all corporate and residual matters. The majority of the grants programs are administered by the Commissioner of Community and Neighbourhood Services and Economic Development, Culture and Tourism. Between them, they account for 90 percent of the grants made through established programs. The Chief Financial Officer and Treasurer has an important role in the administration of line-item grants and in supporting the budgetary and accounting processes related to grants. Given this, it is recommended that these three commissioners assume the lead role for corporate and residual matters.

The second is the formalization of the grants managers work group to ensure co-ordination, sharing or resources, and the consistent application of practices and standards. Terms of reference are presented in Appendix 1.

The third measure is the designation of a small interdepartmental team of staff to undertake the work associated with corporate and residual grants policy matters. This team should include representation from the Community and Neighbourhood Services Department, the Economic Development, Culture and Tourism Department, and the Finance Department. The functions of this team should include:

(1)Policy Development - advising Council on corporate-wide grants policies.

(2)Co-ordination - leading the staff grants co-ordinating committee and providing secretariat support to the committee.

(3)Grants administration - reviewing, assessing and monitoring all grants outside of the established grants programs.

(4)Common standards development - liaising with the Legal Services and Audit Divisions, Finance Department, and Corporate Access and Privacy Office to develop and maintain administrative standards.

Conclusions:

The administration of grants programs should continue to be delivered by the appropriate department, division, or agency. However, three measures are recommended to ensure co-ordination and the elimination of duplication of effort: designation of lead commissioners for corporate and residual matters, continuation of the staff co-ordinating committee established following amalgamation, and the creation of a three-member staff team that will undertake the work required by corporate and residual policy matters.

Contact Name:

John Elvidge, Tel: 392-9046, E-Mail: john_d._elvidge@metrodesk.metrotor.on.ca.

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Appendix 1

Terms of Reference

City of Toronto Grants Co-ordinating Committee

Reports to:

(a)Commissioner of Community and Neighbourhood Services;

(b)Commissioner of Economic Development, Culture and Tourism; and

(c)Chief Financial Officer and Treasurer.

Membership:

(1)The committee shall comprise representatives of:

(a)each grants programs offered by City departments, agencies, boards and commissions;

(b)the Finance Department;

(c)the Audit Division; and

(d)the Legal Services Division.

(2)The committee shall be chaired by the Commissioner of Community and Neighbourhood Services or her designate.

Purposes:

(1)To ensure the sharing of information between programs, especially information related to common applicants.

(2)To develop and maintain City-wide grants administration practices and to explore opportunities for the sharing of resources.

(3)To advise senior management and Council on policies and initiatives that affect the charitable and not-for-profit sector as a whole.

5

Economic Development Partnership Program

- Final 1998 Grant Allocation Recommendations

(City Council on November 25, 26 and 27, 1998, amended this Clause by adding thereto the following:

"It is further recommended that the Chief Administrative Officer be requested to submit a report to the Economic Development Committee on the results of grant allocations under the Economic Development Partnership Program over the past few years.")

The Strategic Policies and Priorities Committee recommends the adoption of the recommendation of the Municipal Grants Review Committee embodied in the following report (October26,1998) from the City Clerk:

Recommendation:

The Municipal Grants Review Committee on October 26, 1998, recommended to the Strategic Policies and Priorities Committee the adoption of the attached report (October 15, 1998) from the Commissioner of Economic Development, Culture and Tourism recommending final 1998 grant allocations under the Economic Development Partnership Program.

Background:

The Municipal Grants Review Committee had before it the following report and communications:

-(October 15, 1998) from the Commissioner of Economic Development, Culture and Tourism recommending final 1998 grant allocations under the Economic Development Partnership Program;

-(October 23, 1998) from Ms. Jill Robinson, Canadian Hairdresser and Beautybeat Magazines, requesting the opportunity to appeal the decision regarding their grant request; and

-(October 26, 1998) from Mr. Phillip Vassell, WORD Magazine, expressing appreciation for the support received from the City of Toronto.

Ms. Jill Robinson, Canadian Hairdresser and Beautybeat Magazines, appeared before the Municipal Grants Review Committee to appeal the decision on their grant request.

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(Report dated October 15, 1998, addressed to the

Municipal Grants Review Committee from the

Commissioner of Economic Development, Culture and Tourism)

Purpose:

This report seeks approval for the Economic Development Partnership Program grant allocations totalling $42,500.00. The report provides information regarding this grant program, summarizes the current and final round of grant requests, and makes recommendations regarding allocations.

Source of Funds:

The allocations recommended in this report fall within the Council-approved 1998 Municipal Grants budget of $45,160,000.00. The total 1998 budget for the Economic Development Partnership Program is $337,000.00. On July 8, 9 and 10, 1998, Council approved grant allocations stemming from this program in the amount of $294,500.00, leaving $42,500.00 to be allocated further to the grant program's final application deadline of September 11, 1998.

Recommendations:

It is recommended that:

(1)Economic Development Partnership Program grants totalling $42,500.00 be allocated to five organizations, as set out in Appendices 1, 2 and 3;

(2)the disbursement of the Economic Development Partnership Program allocations be conditional on satisfying the Economic Development Partnership Program Guidelines and on project specific conditions set out in Appendix 3;

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

Comments:

The goal of the Economic Development Partnership Program is to facilitate the initiation or expansion of projects which will have substantial long term economic development benefits for the City of Toronto by contributing to the size of the local economy and/or to the generation of future economic growth and job creation. The primary purpose of the Partnership Program is to seed new initiatives and not to provide ongoing funding. Projects are phased out of the Program over a maximum period of five years, with funding reduced in the fourth and fifth year to 50 percent of the previous year's grant. The Municipal Grants Review Committee has received several overviews of the Partnership Program and directions recommended for 1999, as per my reports to the Committee dated May 29 and September 18, 1998.

The Economic Development Partnership Program is one of four grant programs administered by Economic Development in 1998. The Partnership Program comes from the former City of Toronto. For 1998, projects being considered for funding have to have been located within the boundaries of the former City of Toronto. Applications for funding were accepted three times this year, with the third and final application deadline being September 11, 1998.

The Partnership Program has an approved 1998 budget of $337,000.00. Of this amount, $294,500.00 has already been allocated to 14 organizations. There remains $42,500.00 with which to consider the final round of applications. Four applications for funding were received for the September 11, 1998 deadline. It is recommended that:

(a)project funding allocations be approved for three of the four projects: namely, the Women in Film and Television (WIFT) Mentor/Internship Program; the Green Tourism Association's Map Project; and the Word magazine initiated City Guide geared to African American tourists to the City;

(b)Canadian Hairdresser and Beautybeat Magazines' request for grant monies towards a beauty industry related youth job fair be turned down because the project is not targeted to the Partnership Program's eligibility criteria (job creation and the generation of economic growth); and

(c)to redress difficulties created this year for the Toronto Worldwide Short Film Festival and Cinematheque Ontario by the amalgamation process, these two organizations, previously funded for 1998, each receive an additional $5,000.00 in order to restore their funding to their 1997 levels.

Conclusions:

On July 8, 9 and 10, 1998, City Council approved the first two rounds of the Economic Development Partnership Program grant allocations totalling $294,500.00 (Item 13 of Appendix 3 of my May 21, 1998, report to the Municipal Grants Review Committee). This report seeks approval to allocate the remaining monies in the Partnership Program totalling $42,500.00 to the third and final round of applications.

The following information is appended to this report:

(1)summary of recommended and approved allocations for the Economic Development Partnership Program for 1998 (Appendices 1 and 2); and

(2)project summaries for the final round of applicants for 1998 and recommendations for funding (Appendix 3).

As noted in my previous reports to the Municipal Grants Review Committee dated May 29 and September 18, 1998, I am recommending that the Economic Development Partnership Program continue in 1999, subject to certain adjustments that have come out of Economic Development's service area grants review.

Contact Names:

Helen Bulat, Grant Programs, Economic Development, Tel: 392-7355

Brenda Librecz, Managing Director, Economic Development, Tel: 397-4700

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Appendix 1

1998 Economic Development Partnership Program Allocations

Applicant/Project1997 Cncl.199819981998Cncl.

ApprovedRequestedRecommendedApproved

AllocationBy ApplicantAs Per ThisAllocation

Report

Economic Development

Partnership Program:

(1) Women in Film and Television

(WIFT) Mentor/Internship

Program-$8,000.00$8,000.00

(2)Green Tourism Association -

Green Tourism Map Project-$10,000.00$10,000.00

(3)Word Magazine - Annual City

Guide emphasizing Black

Canadian Arts, Culture, Events

and Places of Interest-$15,000.00$14,500.00

(4)Cinematheque Ontariorequest an$5,000.00

additional

$5,000.00 to the

allocation already

approved (see

No. 16 below)

(5)Toronto Worldwide Shortrequest an$5,000.00

Film Festivaladditional

$5,000.00 to the

allocation already

approved (see

No. 13 below)

(6)Canadian Hairdressers Beauty

Beat Magazines - Youth Job

Fair as part of "Imagine", an

annual beauty products and

services trade show-$50,000.000 (turned down)

(7)Contact Photography Association-

Business Forum and

Photography Incubator-$35,000.00$20,000.00

(8)Riverdale Community

Business Centre - Tourism

Marketing Initiative-$25,000.00$10,000.00

(9)Heritage Skills Development

Centre/Co-op Bakery Project-$26,500.00$20,000.00

(10)Beaches International Jazz

Festival/Economic Impact and

Marketing Study-$70,000.00$15,000.00

(11)Festival Alliance Toronto

Project-$20,000.00$20,000.00

(12)Canadian Aboriginal Festival$20,000.00$50,000.00$20,000.00

(13)Toronto Worldwide$20,000.00$30,000.00$5,000.00$15,000.00

Short Film Festival

(14)Street Style/Leading-Edge

Fashion, Arts & Music Festival$50,000.00$50,000.00$50,000.00

(15)Toronto International Film

Festival$50,000.00$50,000.00$50,000.00

(16)Cinematheque Ontario$25,000.00$25,000.00$5,000.00$20,000.00

(17)Toronto Theatre Alliance/

T.O. TIX$16,000.00$16,000.00$16,000.00

(18)TABIA Marketing Project$25,000.00$25,000.00$25,000.00

(19)Toronto Tourism Awards$5,000.00$5,000.00$5,000.00

(20)Caribana$8,500.00$8,500.00$8,500.00

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Appendix 2

1998 Economic Development Partnership Program

Incorporating Recommendations of this Report

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Appendix 3

Summary of Applications and Recommendations

(1)Women in Film and Television (Wift) Mentor/Internship Program - First Year Applicant:

Women in Film and Television (WIFT), founded in 1984, is a non-profit organization helping women in the film and television industries build, advance and sustain their careers locally and internationally. WIFT has applied for grant monies from the Partnership Program to assist in initiating a Mentor/Internship Program. The Program will provide women with an opportunity at various levels of the film and television industry to gain experience and knowledge under the guidance of more senior professionals. The program is being created to address key challenges women in film and television face, such as, large numbers of self-employed, limited availability of effective professional development programs, the requirement to learn on the job and uncertainty over training related to new technologies. Program outcomes include enhanced networking and entrepreneurial skills, and greater career opportunities for women in the creative, business and technical areas of film and television production.

WIFT is seeking $8,000.00 or 25 percent of the total project budget of $32,420.00 in accordance with the funding criteria maximum established by the Partnership Program. Strategic support for sustainable local employment opportunities and small business development within the film industry can be viewed as one of many ways that Economic Development provides support for this key Toronto sector. I recommend that the WIFT Mentor/Internship Project receive a $8,000.00 allocation.

(2)Green Tourism Association Map Project - First Year Applicant:

The Green Tourism Association is a non-profit organization committed to establishing a thriving green tourism industry in Toronto. Its main activities are as follows: co-operatively marketing urban green tourism to tourists and local residents; greening the tourism industry and developing and supporting green tourism businesses. The Association has identified a number of key co-operative marketing initiatives that it intends to pursue over the next three years. They include, but are not limited to, a Green Tourism Info Centre; an Affiliation Package (CAA style) and a Green Tourism Map, Newsletter, Listings and Website. The Green Tourism Association is specifically seeking grant monies in the amount of $10,000.00 from the City to develop, produce, and distribute a Green Tourism Map of Toronto, which the Association views as being key to leveraging additional support for green tourism product development. The Green Tourism Map Project Budget is $112,175.00, $42,525.00 of which is based on in-kind contributions. The monies being requested for the Mapping Project fall within the maximum funding level set by the Partnership Program. This initiative falls within the Economic Development Partnership Program's mandate for 1998 to identify and sponsor local community economic development projects in the area of urban green tourism product development. I recommend that the Association receive a $10,000.00 allocation, but that disbursement of funds be contingent on Economic Development staff working with the Green Tourism Association to develop a Map prototype that very clearly identifies and articulates the activities, places and establishments that define a "green tourism experience".

(3)Black Canadian Arts/Culture/Events/ Places of Interest Toronto City Guide By Word Magazine - First Year Applicant:

The publishers of Word Magazine are seeking assistance from the Partnership Program for a tourism marketing initiative that is aimed primarily, but not exclusively, at black visitors to Toronto, especially the large numbers of African American visitors coming to Toronto. The focus of the marketing campaign would be the production and dissemination of a Toronto City Guide that places an emphasis on black Canadian arts, culture and places of interest. Sections will include historical sites, clubs, restaurants, galleries, museums, unique services, organizations and events. The guide would be published yearly and posted on the Internet. The publication would be supplemented with quarterly newsletters aimed at tourism industry professionals both locally and abroad, and would be supported in part via advertising and subscription sales.

This initiative fills a tourist information void that has been identified by African American and other visitors to this City who come here to experience Toronto's unique brand of multiculturalism and neighbourhood diversity. The project could also become a catalyst for greater participation by black businesses in the multi-billion dollar tourism economy.

The anticipated first year budget for this initiative is $59,000.00. Word Magazine is seeking an allocation that reflects the 25 percent of the total project budget funding maximum permitted by the Partnership Program. My recommendation is to allocate $14,500.00 towards this marketing initiative in one of Economic Development's key targeted sectors - the tourism industry.

(4)"Imagine" Youth Job Fair by Canadian Hairdresser and Beautybeat Magazines - First Year Applicant:

The publisher of Canadian Hairdresser and BeautyBeat magazines submitted an application requesting funding towards a youth job fair that is to form part of the Imagine Beauty show, an annual three-day beauty products and services trade show held in Toronto. The youth job fair is oriented to make youth aware of job opportunities in the beauty/hairdressing industry. Although the notion of organizing a youth job fair in association with a well established industry trade show has merit in terms of providing information for young persons interested in a career in this field, it does not meet the funding criteria set out in the Economic Development Partnership Program and does not represent one of Economic Development's targeted sectors. I am recommending that the request for support be turned down.

(5)Cinematheque Ontario - Fourth Year Applicant:

Recommendations for funding and a description of Cinematheque Ontario's activities were provided in Appendix 3 of my May 29, 1998, report to the Municipal Grants Review Committee, entitled "Economic Development Partnership Program and Festivals and Special Events Program - 1998 Allocation Recommendations". This report was approved by Council on July 8, 9 and 10 of this year. Although Cinematheque Ontario should have had its allocation reduced by 50 percent from the previous year, in accordance with Partnership Program guidelines, Cinematheque Ontario only received a $5,000.00 reduction from 1997. Subsequent to the approval of the May 29, 1998, report, the International Film Festival Group, on behalf of Cinematheque Ontario, requested that the approved 1998 grant allocation be restored to its 1997 level. In recognition of the delays and client uncertainty created by the need to develop a new amalgamated grant approvals process City-wide, I am recommending that Cinematheque Ontario receive this additional $5,000.00, thereby increasing the City's contribution in 1998 to a total of $25,000.00. It should be noted that Cinematheque Ontario will be subject to one of two funding criteria for 1999:

(i)the organization will either continue to be subject to the criteria established by the Partnership Program, and as such, be eligible for a final year of support at 50 percent of the grant monies received in 1998, that is $12,500.00, or

(ii)subject to Council endorsement, Cinematheque Ontario may be folded into a new program proposed by Economic Development to be named the "Key Sector Support Alliance Program", which will provide longer term ongoing support for select targeted sectoral initiatives, such as the International Film Festival Group, or be provided with ongoing support from the City through one of its other funding vehicles. The various options are being investigated by staff and will be reported on at a further date.

(6)Toronto Worldwide Short Film Festival - Fourth Year Applicant:

Recommendations for funding and a description of Short Film Festival activities was provided in Appendix 3 of my May 29, 1998, report to the Municipal Grants Review Committee, entitled "Economic Development Partnership Program and Festivals and Special Events Program - 1998 Allocation Recommendations". As noted in item 7 above, this report was approved by Council on July 8, 9 and 10 of this year. Although the Festival should have had its funding reduced by 50 percent from the previous year, in accordance with Partnership Program guidelines, the Short Film Festival only received a $5,000.00 reduction from 1997. Subsequent to the approval of the May 29 report, the Short Film Festival organizers requested that their 1998 grant allocation be restored to its 1997 levels. In recognition of the delays and client uncertainty created by the need to develop a new amalgamated grants process City-wide, I am recommending that the Short Film Festival receive this additional $5,000.00, thereby increasing their total grant allocation from the City for 1998, to $20,000.00. It should be noted that the Economic Development Partnership Program guidelines will need to be adhered to in 1999. In the case of the Short Film Festival, this would mean that the Festival would be in its final year of funding eligibility and be subject to the receipt of grant monies not exceeding 50 percent of the grant monies received in 1998, that is, $10,000.00.

6

Issuance of Charitable Status by Revenue Canada

(City Council on November 25, 26 and 27, 1998, adopted this Clause, without amendment.)

The Strategic Policies and Priorities Committee recommends the adoption of the recommendation of the Municipal Grants Review Committee embodied in the transmittal letter (October 26, 1998) from the City Clerk.

The Committee reports having requested the Commissioner of Community and Neighbourhood Services to report directly to Council for its meeting on November 25, 1998 on the definition of a "social club" and how it could qualify for charitable status.

The Strategic Policies and Priorities Committee recommends the adoption of the recommendation of the Municipal Grants Review Committee embodied in the following transmittal letter (October 26, 1998) from the City Clerk:

Recommendation:

The Municipal Grants Review Committee on October 26, 1998, recommended to the Strategic Policies and Priorities Committee the adoption of the attached report (October 13, 1998) from the Commissioner of Community and Neighbourhood Services recommending support of the recommendations of The Panel on Accountability and Governance in the Voluntary Sector with regard to the issue of Charitable registration under the Income Tax Act, recognizing that some ethno-specific not-for-profit organizations may provide some economic benefits to some of its members.

--------

(Report dated October 13, 1998, addressed to the

Municipal Grants Review Committee from the

Commissioner of Community and Neighbourhood Services)

Purpose:

To report on the issues concerning charitable registration status from Revenue Canada.

Funding Source, Implications and Impact Statement:

There are no additional costs to the City.

Recommendations:

It is recommended that:

(1)the City Council support the recommendations of The Panel on Accountability and Governance in the Voluntary Sector and communicate to the Parliament of Canada that:

(a)the Federal Parliament develop a definition of "charitable" for purposes of charitable registration under the Income Tax Act, by establishing a parliamentary committee or a four-level task force (involving representatives of the federal, provincial, municipal and the voluntary sector);

(b)Parliament amend the Income Tax Act to incorporate the definition of "charitable";

(c)once developed the definition be reviewed by a parliamentary committee or task force every ten years and amended as necessary to meet changing circumstances; and

(d)the registration process be open and transparent; that all applications to and decisions regarding registration be considered public information;

(2)the Prime Minister of Canada, as well as the Premier of Ontario be advised of City Council's concerns respecting limitations of the Income Tax Act subsection 248(1) and associated common law interpretation, and specifically of the negative impact these limitations have on non-profit community organizations that serve specific immigrant and refugee communities;

(3)City staff work in co-ordination with public foundations, private foundations, the Panel on Accountability and Governance in the Voluntary Sector and other relevant bodies in identifying ways and means of assisting non-profit community organizations that do not have charitable tax status;

(4)City staff, in the process of recommending allocation of grants, take into consideration the hardships and disadvantages faced by non-profit community organizations which are not registered charities; and that this consideration form part of the formal practice in implementing the City's municipal grants policy;

(5)the City's municipal grants eligibility criteria for any of the City's grants programs, line-item grants, or ad hoc grants provide that it is not a requirement for an applicant to be a registered charity; and

(6)the appropriate City officials be authorized and directed to take the necessary steps to give effect thereto.

Council Reference/Background/History:

The Municipal Grants Review Committee, at is meeting of September 28, 1998, had before it a report, "City of Toronto Grants Policy". A deputation was made by the Hispanic Development Council concerning the grants policy. As a result, the Municipal Grants Review Committee directed the Commissioner of Community and Neighbourhood Services to report on the issues regarding Revenue Canada raised in the deputation by the Hispanic Development Council.

The Hispanic Development Council informed the Municipal Grants Review Committee that some ethno-specific non-profit organizations are experiencing difficulties in obtaining charitable tax status from Revenue Canada. The matter was investigated by staff of the Access and Equity Centre and the results are as follows.

To become a registered charity, an organization must apply under the Income Tax Act to Revenue Canada. The law governing charitable purposes has its roots in a 400 year-old English law of 1601 called the Statute of Elizabeth, as well as common-law. The tests set out in the 1891 Pemsel judgement, in use today, identifies four general categories of charitable purposes. For an organization to be registered as a charity, its purposes have to fall within one or more of the following categories:

(a) the relief of poverty;

(b)the advancement of education;

(c)the advancement of religion; and

(d)other purposes beneficial to the community as a whole that the courts have identified as charitable.

To qualify for registration under the Income Tax Act subsection 248(1) an organization must be established and operated for charitable purposes and it must devote all of its resources to charitable activities. The charity must be resident in Canada, and cannot have any income payable to benefit its members.

To fall within the fourth category, a charity has to meet a public benefit test. Under this test, an organization must show that:

(a)its activities and purposes provide a tangible benefit to the public;

(b)those people who are eligible for benefits are either the public as a whole or a significant section of it in that they are not a restricted group or one where members share a private connection such as social clubs or professional associations with specific membership; and

(c)the charity's activities must be legal and must not be contrary to public policy.

Revenue Canada, in its literature, states that "advocating the interests of a group is rarely charitable since a charity exists for the benefit of the whole of society, not just narrow sectional interests. Thus an organization that is constituted "to promote and defend the interests" of its members would not qualify as a charity. Professional associations and other societies that provide benefits to a restricted class of people are not considered as charitable." Revenue Canada rejected the application of the Coalition of Agencies Serving South Asians (CASSA) on the following grounds:

(i)promotion of a culture, or of an ethnic group, is not a charitable purpose;

(ii)that CASSA's fundamental goal is to advocate on behalf of the South Asian community, such advocacy is not considered to be a charitable purpose;

(iii)advocating or lobbying the government on behalf of the agencies it represents is considered political action which is not a charitable purpose; and

(iv)CASSA's member organizations, most of them, are not registered charities, therefore the assistance CASSA provides to its members cannot be considered as a charitable purpose.

Certain ambiguity exists as to how large and inclusive the community that benefits from a charity's activities must be, for example can the community that benefits be limited according to gender, ethnicity or language?

The Panel on Accountability and Governance in the Voluntary Sector:

The Panel on Accountability and Governance in the Voluntary Sector (PAGVS), chaired by Mr.EdBroadbent and established by the Voluntary Sector of Canada, in its discussion paper, "Canadians Helping Canadians: Improving Governance and Accountability in the Voluntary Sector" (May 1998) identified the following issues:

(a)there is no clear definition of charity or charitable for purposes of obtaining charitable registration under the Income Tax Act;

(b)the definition currently used has evolved as a result of court decisions;

(c)the costs of attaining a contemporary definition are falling on groups seeking to be included in the definition; and

(d)there is a lack of transparency of the registration process as well as the revokement process.

The PAGVS proposed the following recommendations:

The Parliament of Canada:

(a)develop a definition of charity by establishing a parliamentary committee or a four-level task force (involving representatives of the federal, provincial, municipal and the voluntary sector);

(b)debate and pass legislation amending the Income Tax Act; and

(c)even if set in legislation, the concept should be reviewed by a parliamentary committee or task force every ten years to meet changing circumstances.

The Ontario Law Reform Commission:

The Ontario Law Reform Commission in its working paper, entitled "A Report on the Law of Charities" (1996), discusses the difficulties with the current common-law definition of "charity". The Commission recommends against the adoption of a statutory definition of charity, and instead recommends a more liberal interpretation of the common-law definition. The Commission presents, as a rudimentary definition:

"a truly charitable act is that act whose form, actual effect, and motive are the provision of the means of pursuing a common or universal good to persons who are remote in affection and to whom no moral or legal obligation is owed."

Other Case Law:

Applicants who have been rejected by Revenue Canada can appeal, at their own cost, to the Federal Court of Appeal and ultimately to the Supreme Court of Canada. The PAGVS discussion paper cites the following two court decisions as examples:

(a)Polish Canadian Television Production Society (1987), with objects of advancing multiculturalism and, in particular, the Polish Canadian community was held not to be charitable. The Federal Court gave essentially no reasons for its decisions and declined to express a view as to whether such objectives are to be considered charitable within the terms of the Income Tax Act.

(b)The Vancouver Society of Immigrant and Visible Minority Women v. The Minister of National Revenue -Supreme Court challenge.

This community organization had applied for and been denied charitable tax status on the basis that its objectives and activities, which include advocacy, did not come within the common law definition of "charitable". The Society argued that the meaning attributed to the term "charitable" failed to take into account the inequality suffered by the immigrant and visible minority women it represented and its need to address that inequality in its work.

The Federal Court denied charitable status largely based on what the court characterized as indefinite and vague purposes and activities, which did not clearly identify the recipients as persons in need of charity as opposed to those in need of help. The court repeated the principle that laudable community services are not necessarily charitable at law and activities and objects of general public utility are not always charitable in the legal sense. The Society appealed to the Supreme Court of Canada, which has heard the appeal and has yet to release its verdict.

Definition in England and United States of America:

As British, American and Canadian laws have evolved from English common law, it is worthwhile to make a comparative review:

The British legislators are in the process of adopting a new public benefit test. The role of the British Charity Commissioners has become one of reflecting social values so that, for example, the amelioration of race relations is a proper object of charity in England, whereas in Canada it is still under consideration.

In the United States of America, Regulations to the Internal Revenue Code s.105(c)(3) state that the term "charitable" also includes the elimination of prejudice or discrimination, the defence of human and civil rights secured by law, and the efforts to combat community deterioration and juvenile delinquency.

Clearly, there is no one universal definition of charities. However, Britain recognizes the need for devising a new public benefit test and the United States of America has already instituted a more broader definition.

Limitations Imposed on Public Foundations:

A charitable foundation at law is only authorized to provide funds to organizations which are registered charities. For example, the United Way of Greater Toronto, a public foundation is authorized to provide funds only to those organizations that are registered charities, or to use funds to carry out its own charitable activities. As such, non-profit community organizations that are not registered charities, have limited access to this funding sources.

In view of this limitation, The United Way of Greater Toronto is exploring avenues of how it can assist such non-profit community organizations. City staff should work in co-ordination with the United Way and other public as well as private foundations in this regard.

Comments and/or Discussion and/or Justification:

There are over 75,000 registered charities in Canada, with approximately 6,072 registered charities located in Toronto based on 1995 Revenue Canada data. Over 50 percent are religious and educational institutions, and hospitals. Non-profit community organizations whose applications for charitable tax status have been rejected, suffer certain implications. Moreover, with annual fiscal restraints faced by each level of government, the non-profit community organizations have been receiving less and less grants from governments over a period of several years. The general directive has been that the community sector should raise funds from the broader community or the private sector. However, those non-profit community organizations that are not registered charities face certain limitations, as outlined below:

Implications of Not Being a Registered Charity:

(1)Ineligible for financial assistance from public and private foundations:

Ethno-specific organizations which are not registered charities cannot apply for funding assistance to public or private foundations. Under charitable law, public and private foundations are required to fund organizations that are registered charities. For example, the United Way of Greater Toronto is a major funder in Toronto, but ethno-specific organizations which are not registered charities cannot benefit from this funding source.

(2)Inability to obtain financial assistance from individual donors or private corporations:

Under the Income Tax Act, individuals or corporations receive an income tax deduction against submission of a charitable tax receipt. This serves as a good incentive for giving. Ethno-specific organizations which are not registered charities cannot provide a charitable tax receipt and thus experience limitations in raising funds through such individual donors or private corporations.

(3)Potentially ineligible for provincial and municipal relief from taxes:

Some provinces and municipalities will only grant certain licences or provide relief from provincial and municipal taxes to organizations that are registered charities under the Income Tax Act.

(4)Inability to benefit from special provisions under the Goods and Services Tax:

If the organization provides taxable goods and services, special provisions are available for registered charities under the Goods and Services tax rules.

(5)Inability to benefit from the Ontario Lottery Corporation:

Lottery dollars are generally available to registered charities only. There is approximately $100 million available through this source. Non-profit community organizations which are not registered charities do not qualify for this money.

In addition, the Province of Ontario, on cancelling its permanent charity casino initiative for which it had set up a $40 million Advance Fund, has advised that this $40 million will be distributed to registered charities, through a one-time funding this year. The City of Toronto's allocation amounts to $8.8 million. Non-profit community organizations which are not registered charities cannot get any of this money.

The implications of a non-profit community organization not qualifying as a registered charity are significant. It takes away from the legitimacy of such organizations. Without charitable status, organizations have very limited avenues to obtain funding. Without adequate funding, an organization cannot serve its community as required. It results in high staff turnover in these agencies and could result in the delivery of poor services. This, in turn, has a long term negative effect on the health of our communities.

Possible Remedies/Solutions:

The City could consider the following measures to ameliorate the disadvantage faced by those non-profit community organizations which cannot become registered charities:

(1)Advocate for a change in the definition of charitable law by supporting the proposed recommendations of The Panel on Accountability and Governance in the Voluntary Sector, and communicating this support to PAGVS, as well as to the Parliament of Canada.

(2)The Federal and Provincial government leaders be informed of the disadvantage encountered by non-profit organizations that are not registered charities.

(3)City staff work in co-ordination with public foundations, private foundations, The Panel on Accountability and Governance in the Voluntary Sector and other relevant bodies in identifying ways and means of assisting non-profit community organizations that do not have charitable tax status.

(4)City staff, in the process of recommending allocation of grants, should take into consideration the hardships and disadvantages faced by non-profit community organizations which are not registered charities, this to form part of a formal practice in implementing the City's municipal grants policy.

(5)As part of the City's municipal grants policy, the City include that there be no requirement in the eligibility criteria of any of its grants programs, line-item grants or ad hoc grants, for an applicant to be a registered charity.

(6)Staff to provide progress reports on this issue such that City Council is kept fully apprised of the situation.

(7)City Council, keep in mind that when it is addressing the tax reassessment for the year 2001, it has to define the word "similar" organization since Bill 16, "Small Business and Charities Protection Act, 1998" provides measures to protect charities and similar organizations from large property tax increases.

Conclusions:

The concerns raised by the Hispanic Development Council appear to be valid and legitimate. The Income Tax Act charitable law is based in a 400 year old statute, as well as common law. Both of these do not respond to the needs of the communities in our times. The Panel on Accountability and Governance in the Voluntary Sector has identified key shortcomings of charitable law and have proposed recommendations to effect reform of the definition. The City of Toronto can take action, at no additional cost to the City, to provide some remedies to non-profit community organizations as described in this report.

Contact Name and Telephone Number:

Cassandra Fernandes, Tel: 392-3834 .

7

Federation of Canadian Municipalities Actions to Protect

Current Levels of Federal Payments in Lieu of Taxes

(City Council on November 25, 26 and 27, 1998, adopted this Clause, without amendment.)

The Committee recommends the adoption of the report (October 27, 1998) from Councillor Layton.

The Committee reports having forwarded to the Chief Financial Officer and City Treasurer material filed by Councillor Saundercook respecting a Policy Report dated August 27, 1998 from AMO regarding National Consultation of Payments in Lieu of Taxes.

The Strategic Policies and Priorities Committee submits the following report (October27,1998) from Councillor Layton:

The most recent FCM Board of Directors dealt with several matters of importance to our municipality.

Federal Payments in Lieu of Taxes:

In Ontario, the elimination of the business tax and the revision of the property assessment system caused an increase in total federal payments in lieu of taxes in Ontario by approximately $100,000,000.00 (approximately $25,000,000.00 of these taxes would be paid to the City of Toronto). Initially, the federal government indicated that it might not be prepared to pay this significant increase. The FCM lobbied to ensure that these payments were made in full. In response, the federal government announced that the full payments would be made for 1998 while a consultation took place.

Attached is the "Submission of the FCM to the Minister of Public Works" concerning this matter. All indications are that the Minister intends to honour the past agreements developed with municipalities through the FCM in his final recommendations expected by the end of 1998. This is good news indeed.

However, some crown corporations "continue to be a law unto themselves, accountable to no minister and using their federal status to ignore both the spirit and the letter of the government's commitment to make payments in-lieu of property taxes" [quote by FCM President Claude Cantin]. Crown Corporations are not required to pay interest on late payments to municipalities and are not subject to the municipal payment review process intended to ensure fairness in the payments of property taxes on departmental properties. On some properties, some Crown Corporations are arbitrarily making no payments at all.

Our city is the home to many Crown Corporations and City Council should be fully aware of the status of the payments in-lieu of taxes from them. Consequently, I am submitting the following recommendation:

Recommendation:

(1)That the Treasurer report on the status of federal payments in-lieu in the City of Toronto, including a detailed account of the status of these payments from federal crown corporations.

(2)That the City of Toronto continue to endorse the efforts of the FCM to secure full payments in-lieu of taxes from the federal government and all of its agencies and corporations.

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(A copy of the submission by Mr. Claude Cantin, President, Federation of Canadian Municipalities, addressed to the Minister of Public Works and Government Services Canada for the National Consultation Rountable Meetings on the matter of Federal Payments In-lieu of Taxes, is on file in the office of the City Clerk.)

8

Disposition of "Property Houses" Owned by the City of Toronto

(City Council on November 25, 26 and 27, 1998, struck out and referred this Clause back to the Corporate Services Committee for further consideration at its meeting to be held in January, 1999.

Council also adopted the following recommendations:

"It is recommended that:

(1)the Chief Operating Officer of the Toronto Housing Company be requested to submit a report to the Corporate Services Committee, for consideration with this matter, on the number and type of houses that would have to be retained in the portfolio in order to allow the Company to rent as many units as possible to low income tenants; and

(2)none of the 'Property Houses' be sold until Council has considered the report of the Chief Operating Officer.")

The Strategic Policies and Priorities Committee recommends the adoption of the report (November 12, 1998) from the Chief Administrative Officer, subject to the addition of the following recommendation:

"(5)that no tenant is unwillingly evicted as a result of the adoption of this report without a further report being submitted to the Corporate Services Committee and Council".

The Committee reports for the information of Council, having:

(1)requested the Chief Administrative Officer to report to the Corporate Services Committee on locking the surplus funds into an account to be used for the expansion of, or provision of, crisis housing;

(2)should the Commissioner of Community and Neighbourhood Services identify needs for social housing, that a report be forwarded to the appropriate Committee for consideration; and

(3)the Chief Administrative Officer provide an information session to members of Council on all of the housing stock that the City has in its direct or indirect control, such session to focus on the organizational structure, who controls it, strategies, budget size, and amount required to bring the housing stock up to standard.

The Strategic Policies and Priorities Committee submits the following report (November12,1998) from the Chief Administrative Officer:

Purpose:

The purpose of this report is to provide the Strategic Policies and Priorities Committee with a series of over-arching recommendations on the sale of the property houses and the use of property assets to achieve affordable housing objectives.

Funding Sources, Financial Implications and Impact Statement:

Depending on the Strategic Policies and Priorities Committee's direction, the City may forego up to $10,000,000.00 in "Property Houses" sales over time.

Recommendations:

It is recommended that:

(1)Council retain the property houses portfolio as a City asset;

(2)Council adopt the October 26 report of the Commissioner of Corporate Services that was before the Corporate Services Committee on November 9, 1998 subject to the following amendments:

(a)the City continue the management arrangement it has with the Housing Company and that the mortgages which expire on December 1, 1998 be renegotiated and renewed for a period of up to one year;

(b)the Commissioner of Corporate Services be directed to work with the Housing Company to determine which properties could be declared surplus without undermining the balance of market rent required to support subsidized houses in the portfolio and the staff report's recommended process option 2, the "5 Category Process" be used to guide staff in making such determination;

(c)the revenue raised through sales of such surplus properties be put into a new "social housing" reserve fund to be maintained until such time as Council considers a Housing First strategy for the City;

(3)as soon as possible after the release of the report of the Mayor's Action Task Force on Homelessness, the Chief Administrative Officer work with the involved Commissioners to develop a policy for Strategic Policies and Priorities Committee's consideration on the sale of City assets to resolve the conflicting objectives of maximizing revenue from sale versus social housing objectives, the resulting report to include a Housing First policy option; and

(4)the Commissioner of Community and Neighbourhood Services report to the Community and Neighbourhood Services Committee with an analysis of the various strategies to gain the maximum benefit from City assets that are available to address the housing crisis.

Council Reference/Background/History:

The "Property Houses" portfolio consists of 60 properties, comprising 105 units, which were acquired/expropriated between 1930 and 1974 for parks purposes. These properties have never been used for park purposes and, in 1975, an informal arrangement was entered into with Cityhome for the management of the portfolio. In 1992, City of Toronto Council adopted a business plan which leased these properties to Cityhome. Twenty-two of the properties were leased for a term of 49 years and 28 of the properties were leased for a term of 25 years. The business plan included a $2.5 million rehabilitation program which was funded by a mortgage secured by the properties leased for 49 years. This business plan also included a process to rationalize the rent structure for these properties and to bring most of the rents up to low end of market levels by the end of 1997 and then to use the proceeds from market rents to create an internal subsidy pool so that below market rents could be applied to a number of units in the portfolio.

Of the 105 units, there are a total of ten vacant units of which four are single family homes and one is a two unit home. The balance of the vacant units are located within multi-family dwellings. A total of ten of the units are "assisted" housing units. Five of the properties, which contain a total of eight units are currently leased to social housing providers and, in the report from the Commissioner of Corporate Services, are recommended for retention by the City. The balance of the properties are currently rented at market, or near market, levels.

The mortgage balance due on December 1, 1998 is approximately $2,316,000.00. An amount of $759,000.00 from the initial advance remains unspent and there is an accumulated surplus of funds from the operation of the Property Houses in the amount of $498,000.00. If the balance of the initial advance and the surplus of funds were made available to satisfy a portion of the mortgage at maturity, the net amount required to fully discharge the mortgage is approximately $1,059,000.00 on December1, 1998.

Consideration of this Issue to Date:

At a Budget Committee meeting held on March 9, 1998, the Community and Neighbourhood Services 1998 Operating Budget was considered. The Commissioner of Corporate Services and the Interim Lead for Real Estate were requested to report to the Budget Committee for its meeting scheduled to be held on March 31, 1998, submitting recommendations respecting the disposition of the "Property Houses" after confirming with the Parks Department that these properties were not required for Parks purposes.

The Corporate Services Committee, on June 22, 1998, had before it a report (June 11, 1998) from the Commissioner of Corporate Services seeking City Council authority to declare 55 of the 60 "Property Houses" as surplus to the City's requirements and authorizing the sale of the properties. The Corporate Services Committee deferred consideration of the report and requested the Commissioner of Corporate Services to consult with the local City Councillors to explore a mutually beneficial arrangement for all of the subject properties and report to the Corporate Services Committee no later than October 9, 1998.

At its meeting of October 9, 1998, the Corporate Services Committee deferred consideration of this matter until its meeting to be held on November 9, 1998.

In the meantime, at its meeting of October 8, 1998, the Community and Neighbourhood Committee recommended to Council that, among other things, the 60 "Property Houses" in the former City of Toronto be retained by the amalgamated Toronto Housing Company. City Council at its meeting on October 28, 29 and 30, 1998 directed that vacancies be filled and that Clause No. 4 of Report No.10 of the Community and Neighbourhood Services Committee, headed 'Disposition of "Property Houses" Owned by the City of Toronto' be referred to the Strategic Policies and Priorities Committee for its meeting of November17, 1998.

The Corporate Services Committee at its November 9, 1998 meeting, considered an additional report by the Commissioner of Corporate Services, along with reports from the Commissioner of Community and Neighbourhood Services and the Housing Company. Various individuals and community group representatives spoke on this item. The committee recommended transferring the asset to the Housing Company and reaffirmed Council's decision to fill the vacant houses with people in need of family housing. The Committee also asked that any proposed sales be reported to Corporate Services and the Chief Administrative Officer's report on the disposition of the monies raised from the sales.

There are, therefore, two concurrent processes within two separate committees dealing with the same issue. This report attempts to merge these processes into one to be dealt with through the Strategic Policies and Priorities Committee.

Policy Context:

Council is faced with two competing priorities in this situation. On the one hand, the City is facing enormous financial pressures and has directed staff to sell real estate assets. On the other hand, the City is faced with an unprecedented rise in homelessness and a shortage of affordable housing supply.

The Mayor's Action Task Force on Homelessness will be reporting to Council within the next two months or so. It will propose to the City strategies for dealing with the immediate shelter needs of the homeless as well as longer term proposals to generate more supply of affordable rental housing.

In the meantime, the issue of the future of the "Property Houses" has been raised at two different Standing Committees of Council reflecting the two competing objectives described above.

The "Property Houses" issue also raises a broader policy question, specifically, to what extent should the social policy objectives of Council be met through the re-allocation of property or the revenues from the sale of property? The Community and Neighbourhood Services Committee has recommended a moratorium on sales of property that is residential or appropriate for shelter, and consideration of a "Housing First" policy. Earlier this year, Corporate Services staff proposed a process for the disposition of real property owned by the City that would allow for resolution of this kind of consideration.

The former Metro process ranked social housing needs equally with those of internal operating departments in considering the allocation of property, and in addition, before offering property on the open market, gave consideration to requests from cultural, race relations or community service organizations that supported a municipal program. The new City Council has directed that the review of sites include consideration of social objectives, circulation of surplus sites to the Council Strategy Committee for People Without Homes, and the potential alternative use of surplus property by non-profit organizations that support a municipal purpose.

Discussion:

As the background to this report demonstrates Council has been working in a number of parallel streams to address various and often conflicting pressures through 1998. At the beginning of the term, the Mayor and Council identified the housing shortage and the homelessness crisis as primary concerns. Council established a task force to provide Council with advice based on a thorough understanding of the issue. Council is also attempting to balance unprecedented demand on the resources it has available to deliver services to the community.

Before Council makes a long term decision on the property houses, it is recommended that it await the results of the report from Anne Golden, but proceed to deal with the property houses deemed surplus using the process recommended in the October 26, 1998, report from the Commissioner of Corporate Services. It is also recommended that a "social housing reserve" be created to earmark revenues from the sale of such surplus properties. It is further recommended that the property houses remain City assets until such time as a policy is developed that weighs all of Council's pressures and options. These actions will ensure Council keeps all avenues open until it has the information it needs to a make its decision.

As Council and its committees have worked through this issue, one outstanding question that needs to be addressed is whether or not Council has all of the information it requires to make informed decisions about how best to allocate its resources to address the chronic housing shortage. What is the best mix of housing and what strategies should the City employ to ensure it is providing maximum benefit for the resources available? While these questions may have been addressed by former Metro and City of Toronto Councils, this new Council should have the benefit of current information on best practices for management of housing to address this City's needs.

Conclusion:

This report attempts to reflect on the reports and discussions held to date on this complex issue and provide Council with a balanced and stepped approach that protects the City's assets, allows time for careful thought in terms of housing policy and asset management and at the same time addresses the immediate need to address the disposition of the property houses.

The Strategic Policies and Priorities Committee also submits the following transmittal letter (November 12, 1998) from the City Clerk:

Recommendations:

The Corporate Services Committee on November 9, 1998, recommended to the Strategic Policies and Priorities Committee and Council:

(A)the adoption of Recommendations Nos. (1) and (3) of the Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL) embodied in the communication (September 18, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL), viz:

"That the Board of Directors:

(1)recommend to the City of Toronto that the ownership of all the "Property Houses" be transferred at no cost to the new amalgamated Municipal Housing Company so that this portfolio can be used to provide affordable housing for families directly or through any sale proceeds;

(3) recommend that City of Toronto Council authorize the appropriate officials to take the necessary action to give effect thereto.";

(B)that the appropriate staff be requested to further explore the options for such housing stock in order to maximize its potential for social housing purposes, given:

(a)the extent of the current waiting lists for affordable family housing; and

(b)that City Council has previously advised the Minister of Municipal Affairs and Housing and the Chairs of the Boards of the Ontario Housing Corporation (OHC) and the Metropolitan Toronto Housing Authority (MTHA) of its opposition to the sale of the scattered houses owned by OHC in the City of Toronto;

(C)that existing tenants receive the right to purchase his/her own specific unit within any of the subject properties that are of the following type: a duplex, triplex or fourplex;

(D)that Corporate Services Committee and Council approval be required for any proposed sales; and

(E)that the Chief Administrative Officer be requested to report to the Corporate Services Committee on the disposition of any monies forthcoming from such sales.

The Corporate Services Committee reports, for the information of the Strategic Policies and Priorities Committee and Council, having requested the Commissioner of Corporate Services to submit a report to the Strategic Policies and Priorities Committee, when this matter is being considered, providing an economic analysis to determine on a unit basis which units should be sold in order to provide the optimum amount of affordable housing if such revenues were used for housing subsidies.

Background:

The Corporate Services Committee on November 9, 1998, had before it a report (October26, 1998) from the Commissioner of Corporate Services, recommending that:

(1)Option No. 2 as set out in the body of this report be adopted;

(2)subject to the Board of Cityhome passing a resolution to do so, the existing leases between Cityhome and The Corporation of the City of Toronto be terminated in the manner described in this report;

(3)City Council declare that, upon the leases having been terminated, the 55 houses owned by the City of Toronto, as set out in Appendix I, are surplus;

(4)notice to the public of the proposed disposition of the lands declared surplus be given;

(5)the Commissioner of Community and Neighbourhood Services be directed to continue to work with co-operative housing providers respecting their possible acquisition of some of the properties and to report back in the spring of 1999;

(6)the Commissioner of Community and Neighbourhood Services consult with the non-profit housing providers and community agencies and report further if any of these groups are interested in acquiring available properties prior to their sale on the open market;

(7)the Commissioner of Corporate Services be authorized to market those properties which the previous owners and/or tenants, non-profit housing providers and community agencies and co-operative housing providers do not wish to purchase through a real estate broker for a listing price to be determined in consultation with the listing broker;

(8)funds in the amount of $1,059,000.00 be allocated to discharge the existing mortgage and that the City Treasurer report directly to City Council on the appropriate source of these funds;

(9)the City Surveyor, in consultation with the Director, Development and Support, Parks and Recreation, be directed to prepare a survey of the north portion of 144 Balsam Avenue and that this portion of the property be retained by the City in fee simple or, if retention in fee simple results in contravention of the zoning by-law for the remainder of that property, that the City's use of the portion be effected by way of an easement;

(10)the property interest recommended for retention pursuant to Recommendation No.(9), be placed under the jurisdiction of the Parks and Recreation Division for park purposes;

(11)the Commissioner of Community and Neighbourhood Services, in consultation with the Commissioner of Corporate Services report directly to Council on an interim management arrangement for the Property Houses, pending sale;

(12)the Commissioner of Community and Corporate Services and the Commissioner of Corporate Services submit a joint report recommending policies governing the use of property assets to meet social objectives; and,

(13)the appropriate officials be authorized and directed to take the necessary action to give effect to the foregoing.

The Corporate Services Committee also had before it the following reports and communications:

(a)(June 11, 1998) from the Commissioner of Corporate Services, seeking City Council authority to declare the "property houses" in the former City of Toronto on attached Appendix I (save and except for those five properties currently leased to community based housing providers and also identified on attached Appendix I) as surplus to the City's requirements and authorize the sale of these properties on the open market; advising that the issue of allocation of funds will be addressed in a separate joint report from the Commissioner of Corporate Services and the Commissioner of Community Services recommending policies on the use of property assets to meet social objectives; that the total of the current value assessment for the 55 property houses recommended to be declared surplus in this report is $10,955,845.00; that pending sale of the properties, a loss in rental revenue will be incurred in the amount of approximately $10,000.00 per month as at July 1, 1998; and recommending that:

(1)subject to the Board of Cityhome passing a resolution to do so, the existing leases between Cityhome and the Corporation of the City of Toronto, for the property houses be terminated in the manner described in this report;

(2)City Council, by By-Law, declare that, upon the leases having been terminated, the 55 houses owned by the City of Toronto, as set out on the attached Appendix I are surplus;

(3)notice to the public of the proposed disposition of the lands declared surplus be given;

(4)prior to offering the properties for sale on the open market, the first right to purchase be given to the previous owners and/or current tenants, on the terms set out in the body of this report;

(5)the Commissioner, Corporate Services, be authorized to market those properties which the previous owners and/or tenants do not wish to purchase through a real estate broker for a listing price to be determined in consultation with the listing broker;

(6)the funds from the sale of the houses subject to the 25 year lease be deposited into an account to be used to satisfy the mortgage at maturity;

(7)the City Surveyor, in consultation with the Director, Development and Support, Parks and Recreation, be directed to prepare a survey of the north portion of 144 Balsam Avenue and that this portion of the property be retained by the City, in fee simple or by way of an easement, and placed under the jurisdiction of the Parks and Recreation Division for parks purposes;

(8)City Council endorse the tenant relocation plan as outlined in the report (October 26, 1998);

(9)the five properties currently being leased to community based housing providers, as identified within this report on Appendix I, be retained by the City to allow the current use of these properties to continue and the Commissioners of Corporate Services and Community and Neighbourhood Services determine the appropriate leasing arrangement for these five properties and report back thereon to the Corporate Services Committee;

(10)the Commissioner of Community and Neighbourhood Services advise social housing providers and the non-profit housing sector of the City's intention to dispose of the 55 properties set out in Appendix I and to report back if any of these groups are interested in acquiring any of these properties at market rates;

(11)the Commissioner of Community and Neighbourhood Services, review any particular needy or hardship situations and report, in consultation with the Commissioner of Corporate Services, on these situations;

(12)the Commissioner of Community and Neighbourhood Services and the Commissioner of Corporate Services submit a joint report recommending policies governing the use of property assets to meet social objectives; and

(13)the appropriate Civic officials be authorized to take the necessary action to give effect to the foregoing.

(b)(May 11, 1998) from the Commissioner of Corporate Services, seeking City Council authority to declare the "property houses" in the former City of Toronto on attached Appendix I (save and except for those four properties currently leased to community based housing providers and also identified on attached Appendix I) as surplus to the City's requirements, and authorize the sale of these properties on the open market; advising that the total of the current value assessment for the 56 property houses recommended to be declared surplus in this report is $11,134,845.00; and submitting recommendations in regard thereto.

(c)(May 25, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL), advising that the Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL) on May 25, 1998, during its consideration of a report (May 11, 1998) addressed to the Corporate Services Committee from the Commissioner of Corporate Services, headed "Sale of Property Houses", recommended to the Corporate Services Committee that it:

(1)defer consideration of the report (May 11, 1998) from the Commissioner of Corporate Services; and

(2)request the General Manager, Cityhome and the General Manager, MTHCL, to submit a joint report to the Corporate Services Committee, on alternative methods to retain these property houses for Social Housing purposes; and

that the Board of Directors also requested the General Managers to submit the aforementioned report to the Boards' Asset Management Committee for comment, prior to its submission to the Corporate Services Committee, if the Corporate Services Committee approves the foregoing Recommendations Nos. (1) and (2).

(d)(June 18, 1998) from Ms. Peggy Birnberg, Executive Director, Houselink Community Homes, advising that as a housing provider in the City of Toronto, they are greatly disappointed to learn that the Corporate Services Committee will be considering a proposal to sell selected City-owned residential properties; and stating that it is not in the interest of the citizens of Toronto to have a municipal government that treats a precious few units of housing as a revenue generating commodity and that it is in everyone interest that the municipal government demonstrates a willingness to fight against the trend of simple, short-term, money saving solutions, and to work with groups and organizations struggling to make this city more humane.

(e)(September 18, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL), advising that The Boards of Directors on September 14, 1998, recommended that the Corporate Services Committee recommend to Council the adoption of Recommendations Nos. (1) and (3) contained in the report (September 9, 1998) from the Acting Chief Operating Officer; and that The Boards of Directors also decided to advise the Corporate Services Committee that the Boards would appreciate the City's support of the request to have the ownership of these property houses transferred to the amalgamated Toronto Housing Company, and to allow staff to further explore the options for such housing stock in order to maximize its potential for social housing purposes, given:

(a)the extent of the current waiting lists for affordable family housing; and

(b)that City Council has previously advised the Minister of Municipal Affairs and Housing and the Chairs of the Boards of the Ontario Housing Corporation (OHC) and the Metropolitan Toronto Housing Authority (MTHA) of its opposition to the sale of the scattered houses owned by OHC in the City of Toronto.

(f)(September 9, 1998) from Councillor Sandra Bussin, East Toronto - Ward 26, requesting that the Committee consider the following:

"that existing tenants receive the right to purchase his/her own specific unit within any of the subject properties that are of the following type: a duplex, triplex or fourplex"

So that a tenant who wishes to purchase will have the option to purchase a single unit only.

(g)(August 21, 1998) from Ms. Kimberly L. Beckman, Davies, Howe Partners, advising that she has been retained by Ms. Sharron Sayliss, a resident of 1 Hubbard Boulevard for a number of years; that her client and a number of her neighbours are interested in purchasing the building located at 1 Hubbard Boulevard; and forwarding a proposal respecting the use of the buildings located in the area.

(h)(September 25, 1998) from Commissioner of Community and Neighbourhood Services, recommending that the Corporate Services Committee give serious consideration to the proposal of the Housing Company Board that would transfer ownership of the Property Houses to the Company for affordable housing purposes, prior to considering other options that would result in their sale to the tenants or others at market value.

(i)(October 7, 1998) from Councillor Jack Layton, Don River, recommending that:

(1)all vacant units in the City's "Property Houses" portfolio be immediately rented to households in the emergency shelter system and/or families and individuals on the City's Housing Connections waiting list;

(2)the City retain the ownership of all houses in the portfolio and that the City Housing Company manage this stock in a manner that maximizes the number of affordable units available for low-income families;

Or alternatively

(3)the City delay any decisions to sell units in the Property Houses portfolio for 12 months to facilitate the review of recommendations of the Mayor's Homelessness Action Task Force with regard to the use of municipal assets for the reduction of homelessness.

(j)(Undated) from the Commissioner of Corporate Services, forwarding Appendix 1, entitled "Property House Portfolio", Appendix 2, entitled "Property Houses Survey" and Appendix3 "Map Ref. No. GLSTR-B".

(k)(November 5, 1998) from Mr. Joe Hayes, registering concern respecting the process recommended for the sale of "Property Houses".

(l)(October 30, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL), advising that The Board of Directors of The City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of The Metropolitan Toronto Housing Company Limited (MTHCL) on October 26, 1998, during their consideration of a communication (October 9, 1998) from the City Clerk, advising of the action taken by the Corporate Services Committee on October 9, 1998, respecting City-owned property houses re-affirmed their decision made on September 14, 1998, with respect to the City-owned property houses, viz:

"The Boards of Directors recommended that the Corporate Services Committee recommend to Council the adoption of the following Recommendations Nos. (1) and(3) contained in the report (September 9, 1998) from the Acting Chief Operating Officer:

(1)recommend to the City of Toronto that the ownership of all the "Property Houses" be transferred at no cost to the new amalgamated Municipal Housing Company so that this portfolio can be used to provide affordable housing for families directly or through any sale proceeds;

(3) authorize the appropriate officials to take the necessary action to give effect thereto; and

decided to advise the Corporate Services Committee that the Boards would appreciate the City's support of the request to have the ownership of these property houses transferred to the amalgamated Toronto Housing Company, and to allow staff to further explore the options for such housing stock in order to maximize its potential for social housing purposes, given:

(a)the extent of the current waiting lists for affordable family housing; and

(b)that City Council has previously advised the Minister of Municipal Affairs and Housing and the Chairs of the Boards of the Ontario Housing Corporation (OHC) and the Metropolitan Toronto Housing Authority (MTHA) of its opposition to the sale of the scattered houses owned by OHC in the City of Toronto."

(m)(September 28, 1998) from Mr. Chris Papadatos and Mr. Harry Weisbaum, forwarding comments respecting the sale of Property Houses in Ward 26.

Mr. Derek Ballantyne, Chief Operating Officer, Toronto Housing Company, gave a presentation to the Corporate Services Committee respecting the Sale of "Property Houses".

The following persons appeared before the Corporate Services Committee in connection with the foregoing matter:

-Mr. Tom Clement, Executive Director, Co-operative Housing Federation of Toronto;

-Ms. Colleen Wagner;

-Mr. Gilmore on behalf of his wife, Aline Gilmore;

-Ms. Sherron Sayliss;

-Mr. John Alexander;

-Mr. John Deacon, and Mr. Carmel Hili, Toronto Christian Resource Centre;

-Mr. Geoffrey Hill;

-Ms. Dornellas, appearing on behalf of her father;

-Mr. Kenneth Pantlin; and

-Ms. Evan Wilson.

The following Members of Council appeared before the Corporate Services Committee in connection with the foregoing matter:

-Councillor Sandra Bussin, East Toronto;

-Councillor Tom Jakobek, East Toronto;

-Councillor Jack Layton, Don River; and

-Councillor Joe Pantalone, Trinity - Niagara.

--------

(Report dated October 26, 1998, addressed to the

Corporate Services Committee, from the

Commissioner of Corporate Services headed,

"Sale of Property Houses (Wards 20, 21, 23, 25

and 26, Former City of Toronto)")

Purpose:

This report responds to a request from the Corporate Services Committee, in connection with a previous report which dealt with the subject matter, dated June 11, 1998 from the Commissioner of Corporate Services and which was deferred at the meeting of the Corporate Services Committee on June 22, 1998.

In addition, City Council authority is being sought to declare the properties, known as the Property Houses, in the former City of Toronto as set out in Appendix I to this report (save and except for those five properties currently leased to community based housing providers as identified on attached Appendix I) as surplus to the City's requirements and authorize the sale of these properties in the manner described in Option No. 2 in this report.

Financial Implications:

The total of the current value assessment of the 55 Property Houses recommended to be declared surplus in this report is $10,955,845.00.

Should City Council elect to adopt Option No. 2, the sum of $1,059,000.00 will be required to discharge the mortgage as set out in this report.

Recommendations:

It is recommended that:

(1)Option No. 2 as set out in the body of this report be adopted:

(2)subject to the Board of Cityhome passing a resolution to do so, the existing leases between Cityhome and The Corporation of the City of Toronto be terminated in the manner described in this report;

(3)City Council declare that, upon the leases having been terminated, the 55 houses owned by the City of Toronto, as set out in Appendix I, are surplus;

(4)notice to the public of the proposed disposition of the lands declared surplus be given;

(5)the Commissioner of Community and Neighbourhood Services be directed to continue to work with co-operative housing providers respecting their possible acquisition of the some of the properties and to report back in the spring of 1999;

(6)the Commissioner of Community and Neighbourhood Services consult with non-profit housing providers and community agencies and report further if any of these groups are interested in acquiring available properties prior to their sale on the open market;

(7)the Commissioner, Corporate Services, be authorized to market those properties which the previous owners and/or tenants, non-profit housing providers and community agencies and co-operative housing providers do not wish to purchase through a real estate broker for a listing price to be determined in consultation with the listing broker;

(8)funds in the amount of $1,059,000.00 be allocated to discharge the existing mortgage and that the City Treasurer report directly to City Council on the appropriate source of these funds;

(9)the City Surveyor, in consultation with the Director, Development and Support, Parks and Recreation, be directed to prepare a survey of the north portion of 144 Balsam Avenue and that this portion of the property be retained by the City in fee simple or, if retention in fee simple results in contravention of the zoning bylaw for the remainder of that property, that the City's use of this portion be effected by way of an easement;

(10)the property interest recommended for retention pursuant to Recommendation (9), be placed under the jurisdiction of the Parks and Recreation Division for park purposes;

(11)the Commissioner of Community and Neighbourhood Services, in consultation with the Commissioner of Corporate Services report directly to Council on an interim management arrangement for the Property Houses, pending sale;

(12)the Commissioner of Community and Neighbourhood Services and the Commissioner of Corporate Services submit a joint report recommending policies governing the use of property assets to meet social objectives; and,

(13)the appropriate officials be authorized and directed to take the necessary action to give effect to the foregoing.

Background:

At a Budget Committee meeting held on March 9, 1998, the Community and Neighbourhood Services 1998 Operating Budget was considered. One of the recommendations put forward at this meeting was that:

the Commissioner of Corporate Services and the Interim Lead for Real Estate report to the Budget Committee for its meeting scheduled to be held on March 31, 1998 submitting recommendations respecting the disposition of the "property houses" after confirming with the Parks Department that these properties are not required for Parks purposes.

The Property House portfolio consists of 60 properties, comprising 105 units, which were acquired/expropriated between 1930 and 1974 for parks purposes. These properties have never been used for park purposes and, in 1975, an informal arrangement was entered into with Cityhome for the management of the portfolio. In 1992, City Council adopted a business plan which leased these properties to Cityhome. Twenty-two of the properties were leased for a term of 49 years and 38 of the properties were leased for a term of 25 years. The business plan included a $2.5 million rehabilitation program which was funded by a mortgage on the properties leased for 49 years. This business plan also included a process to rationalize the rent structure for these properties and to bring the rents up to low end of market levels by the end of 1997. Provisions were also made to provide rent assistance to eligible households which would otherwise face economic eviction (total of 10 eligible households). The 60 properties, together with a summary of relevant information, are set out on Appendix I.

In response to the Budget Committee's request, the Commissioner, Community and Neighbourhood Services, in consultation with the Commissioner of Corporate Services, submitted a report dated March 27, 1998, to the Budget Committee. In this report, a number of issues were identified for further consideration. Also contained in that report was a recommendation that the approach taken to dispose of these properties be similar to the one taken by the former Metro with respect to the sale of the Spadina corridor properties. Due to the initial deferral of this report, and the intervening adoption by City Council, at its meeting held on July 8, 9 and 10, 1998, of a somewhat different procedure for the Spadina corridor properties, the procedure followed in this report is similar to that which precedes the current procedure for the disposal of the Spadina corridor properties. Of note is the fact that the Spadina corridor properties will now be sold subject to existing tenancies and it is the intention of this report that the Property Houses be sold once vacant.

The Corporate Services Committee, on June 22, 1998, had before it a report (June 11, 1998) from the Commissioner of Corporate Services seeking City Council authority to declare 55 of the 60

Property Houses in the former City of Toronto, on Appendix I to the report, as surplus to the City's requirements and authorize the sale of these properties. The remaining five Property Houses are currently leased to community housing providers and should be retained.

The Corporate Services Committee:

(1)deferred consideration of the foregoing report and requested the Commissioner of Corporate Services:

(1)to report further thereon to the Corporate Services Committee no later than October9, 1998;

(2)in consultation with the local City Councillors, to explore a mutually beneficial arrangement for all of the subject properties;

(3)to review the Current Value Assessments (CVAs) respecting these properties; and,

(4)to identify clear guidelines as to what the City's specific criteria are for subsidized housing; and,

(2)directed that a copy of the aforementioned report be forwarded to the Homelessness Action Task Force, Chaired by Anne Golden, for comment thereon to the October 9, 1998 meeting of the Corporate Services Committee.

This report addresses the request by the Corporate Services Committee that staff, in consultation with the local ward councillors, explore a mutually beneficial arrangement for all of the subject properties and review the current value assessment respecting these properties. The identification of clear guidelines as to what the City's specific criteria are for subsidized housing is dealt with in a separate report from the Shelter Housing Support Division also before the Committee.

Comments:

The Interim Lead for Real Estate previously sought input into the disposal of the property houses from Parks and Recreation, City Legal, Cityhome and Housing Division staff. Comments have been provided as follows:

Parks and Recreation:

The Director, Development and Support, Parks and Recreation has advised that these properties were acquired to expand City parks adjacent to or abutting the subject sites, however, it has not been the policy of Parks and Recreation to endorse conversion to parks from housing. With the exception of the request set out below, Parks and Recreation is not opposed to the disposition of these properties at this time on the understanding that the properties will continue to be used for the current purposes. Should they be retained and consideration of future uses be contemplated, parks purposes should be considered as the primary alternative land use for the sites.

The north edge of the property at 144 Balsam Avenue currently accommodates a public path to Glen Stewart Ravine, as set out on Appendix II. Parks and Recreation has constructed a set of stairs to enable the public to access the ravine via this path and stairs. In order to accommodate the continued existence of this path and provide continued access to the stairs, the City should sever and retain ownership of sufficient space along the north boundary of this property for this to occur.

Legal Implications:

City Legal staff have provided advice respecting the disposal of the property houses. They have indicated that the City of Toronto and Cityhome are free to negotiate a surrender of the 25 year lease.

The City of Toronto and Cityhome could also negotiate a surrender of the 49 year lease, however, due to the mortgage, this surrender is significantly more complicated. The mortgage matures on December 1, 1998. It is a closed mortgaged for a principle sum of $2.5M at an interest rate of 8.5 percent. The mortgagor is Cityhome and the City of Toronto is the guarantor. This mortgage is secured by the 49 year lease. Given that this mortage matures on December 1, 1998, it would be prudent for Cityhome to renegotiate the mortage for an appropriate term and in a manner that will permit partial discharge as properties are sold.

Thirteen of the property houses were acquired by the City through expropriation. Consideration was paid prior to the enactment of the current Expropriations Act in 1968. Therefore, in terms of the requirements of the Expropriations Act, the City would be free to sell any of these properties that were expropriated.

The request from the Director, Development and Support, Parks and Recreation to sever and retain the north portion of 144 Balsam Avenue, may not be legally possible due to the impact that this could have on the remainder of the parcel of land. If this is the case, and the City cannot retain the fee, it is possible to achieve continued access to the ravine by means of an easement over the portion of land required.

Social Objectives:

In my June 11, 1998 report, I advised that, should City Council decide to sell the properties, the Commissioner of Community and Neighbourhood Services has proposed that five of the 60 properties be retained by the City and be made available to community-based housing providers. These five properties are currently leased to community housing providers at market, or slightly below market, rates.

It was further advised that, should City Council decide to proceed with the disposal of the remaining 55 Property Houses, Housing staff will determine the suitability of each property for use by community housing providers and, should any of the properties be deemed suitable, a report on the acquisition for this purpose will be submitted to the Corporate Services Committee. Housing staff wish to maintain this opportunity should City Council decide to proceed with Option 2 as set out in this report.

As noted in the Background section of this report, the Budget Committee requested staff to report on "whether monies generated from the potential sales of such properties should be reserved to realize important social objectives".

As requested by the Budget Committee, the Corporate Services Committee will, if Option 2 is approved, need to consider how the proceeds of sale will be allocated. There are a number of social objectives that could be met using the proceeds. The properties were originally purchased for parks purposes but have been used for many years to achieve housing objectives. A number of social priorities are also emerging in 1998, including the need to respond to homelessness and to children's issues. The issue of allocation of funds will be addressed in a separate joint report from the Commissioner of Corporate Services and the Commissioner of Community and Neighbourhood Services recommending policies on the use of property assets to meet social objectives. Should City Council adopt Option 2 in this report, the use of revenue from the sale of the Property Houses will be addressed in the policy report.

Resolution - Joint Board of Directors of Cityhome and the Metro Toronto Housing Company:

The joint Board of Directors of Cityhome and the Metro Toronto Housing Company also considered the matter of the Property Houses at their meeting of May 25^th, 1998 and asked Corporate Services Committee to defer consideration of the report dated June 22, 1998 in order that staff could report on alternative methods to retain all of the properties for social housing purposes.

Subsequently, at its meeting of September 14, 1998, the joint board passed a resolution that a recommendation be made to the City of Toronto that the ownership of all the Property Houses be transferred at no cost to the new amalgamated Municipal Housing Company so that this portfolio can be used to provide affordable housing for families directly or through any sale proceeds. The resolution is as follows:

"It is recommended that the Board of Directors:

(1)request the City that the ownership of all the "Property Houses" be transferred at no cost to the new amalgamated Municipal Housing Company so that this portfolio can be used to provide affordable housing for families directly or through any sale proceeds.

(2)forward a copy of this report, and together with any Board Resolutions related to it, to the Corporate Services Committee for their information at their meeting on October 9, 1998; and,

(3)authorize the appropriate Housing Company staff to take the necessary action to give effect thereto.

This report also directed that staff from Cityhome/MTHCL look at alternative methods to retain these houses for social housing purposes. Staff of the Shelter Housing Support Division are reporting separately on this matter".

Options:

Given the far reaching affects of any decision relative to the Property House portfolio, extensive consultation has taken place with City Departments, Ward Councillors and tenants. This consultation has resulted in the development of two options.

Option No. 1:

This first option is that City Council agree to the request of the Joint Board of Directors of Cityhome and the Metro Toronto Housing Company to convey the entire portfolio to the new amalgamated Municipal Housing Company at no cost.

Should City Council agree to this request and convey the portfolio, a number of issues must be addressed including; the City should be released from the mortgage as guarantor and further adjustments must be made to the mortgage which will reflect the Municipal Housing Company's status as owner and not lessee; costs in connection with the conveyance, including land transfer tax, if applicable should be borne by the Municipal Housing Company; the financial implications for the City is that the revenue from the sale of the 55 property houses will be foregone.

Option No. 2:

The second option addresses the Corporate Services Committee request to explore, in consultation with the local City Councillors, a mutually beneficial arrangement for all of the subject properties. This consultation process has revealed a general consensus that there are two objectives which must be met; to achieve revenues through the disposal of the Property Houses and to ensure that no tenants are de-housed. In some cases, these two objectives are opposing. A systematic approach has been developed that will serve to ameliorate this opposition.

This option identifies which properties may be sold in the near future, which should be retained for humanitarian reasons and sold in the future and those properties which should be retained and continued to be leased to community housing providers. This option also sets out the manner in which this should be carried out and, to the extent possible, takes into account the circumstances of the tenancies and the tenants' concerns. In addition, this Option sets out the manner in which the mortgage should be dealt with. Option 2 is as follows:

Analysis of Tenancies:

The Commissioner of Corporate Services was directed to, in consultation with the local City Councillors, explore a mutually beneficial arrangement for all of the subject properties. To this end, information was compiled relative to the current status of each property, specifically, the individual circumstances of each tenancy. A questionnaire (copy attached as Appendix III) was circulated to all tenants. A similar questionnaire was circulated by Councillor Pantalone's office to tenants in Ward 20. The data presented in this report represents a culmination of that collected by staff and of Councillor Pantalone's office. All of the affected Ward Councillors have been consulted. The information obtained through this process has resulted in the identification of five categories of properties. These categories take into consideration the requirements of the individual tenants in a specific manner.

A total of 88 questionnaires were distributed and 61 responses were received. Tenants were asked a number of questions including if they are interested in purchasing their home, if they are interested in purchasing but could not, whether they were interested in a co-operative arrangement, etc.

Five distinct categories of properties have been developed based on the tenant responses. A brief description of these categories, and the method of dealing with the properties in each category follows:

Category One:

Properties in Category One are those that were previously identified in the report of June 11, 1998, as being appropriate for retention and subleasing to community housing providers. These properties are currently leased to community housing providers. The total number of properties in this Category is five. The Commissioners of Community and Neighbourhood Services and Corporate Services should determine the appropriate tenure arrangement for these five properties and report back to the Corporate Services Committee thereon.

Category Two :

These are properties which are occupied by tenants that have expressed interest in purchasing. Should the original owner of any of the properties within the portfolio presently be a tenant in one of the property houses and, if this original owner has expressed an interest in purchasing, then this original owner shall have the first right to purchase the property which they originally owned at the appraised market value. Subject to the above, the existing tenant in any of the property houses having the longest tenure who has indicated an interest in purchasing, shall have the first right to purchase the property which they occupy at the appraised market value.

In the event that the property in question is a multi-family dwelling and more than one tenant is interested in purchasing, the first right will be granted to the tenant with the longest tenure. If the right is not exercised, the right will then be granted to the tenant with the second longest tenure and so on. A tenant, if any, that desires to purchase and is unable as a result of length of tenure, will be offered another available unit from the portfolio.

When a property is to be sold to an existing tenant, it will be offered to the tenant at the appraised market value at the time that the tenant expresses in writing his or her interest in purchasing the property. Written notification of intention to exercise said right shall be given to the City within 30 days after City staff have sent the initial letter advising of the possibility of purchasing the property. Tenants will be provided with the option to purchase the property in a personally-delivered letter from the Commissioner of Corporate Services or her designate enclosing a notice of appraised value, and within thirty days of receipt of the notice of appraised value from the City, the Tenant may deliver an Offer to Purchase the property at the current market value acceptable in form to City staff, subject to Council approval.

A number of tenants have expressed interest in pursuing the option of co-operative housing, should the existing tenant(s) be unable to purchase. If this is the case, these properties could be considered for inclusion in Category 4. If neither of these disposal options are realized, the property should then be made available to the balance of the pool of tenants that have expressed interest in purchasing. Finally, if the property remains available, it should be offered for sale on the open market. The total number of properties in this Category is 22.

Category Three:

Properties in Category Three are those that are currently vacant. Although it was anticipated that these properties could be offered for sale in the immediate future, in order to achieve a mutually beneficial arrangement, it may be necessary to delay their disposal. This is due to the fact that tenants, who wish to purchase the property in which they reside but are unable to do so because they do not have the longest period of tenure, can, alternatively, be offered an available unit from the portfolio. There are a total of 3 Category Three properties.

Category Four:

A number of tenants have expressed interest in pursuing a co-operative housing approach. In some cases, tenants have stated that this would be a second choice to purchasing as set out in Category Two, above. The Co-operative Housing Federation of Toronto has been working with a group of property house tenants to develop a proposal that they plan to present to the Corporate Services Committee. Further details are set out in the report from the Shelter Housing Support Division.

In order to determine if this is a viable option, additional work is required. The co-operatives require an estimate of the market value of the properties that will be under consideration for this type of use and additional time is required to allow for decision making by co-operatives and to provide assistance/information to tenants. It is anticipated that approximately six months time is necessary for further investigation. Should Council adopt Option 2, staff should be directed to report back in the spring of 1999.

It is noted that this category includes properties which are occupied by tenants who have advised that they are not interested in purchasing and who also are not interested in the co-operative alternative. This category also includes properties which are occupied by tenants that did not respond to the survey. The basis for inclusion in this Category is to flag these properties as being occupied in order that provision may be made for these tenants.

The total number of properties in Category Four is 17:

In addition to the alternative of co-operative housing, the possibility of converting some of the multi-unit properties to condominium ownership has been raised. Undertaking the task of converting property to condominium status entails a substantial investment in time and money. It is not in the City's best interest to do so. As an alternative, interested tenants may consider organizing and purchasing the multi-unit properties in question as tenants-in-common and converting to condominium after the closing.

Along similar lines, the possibility of the City converting these same multi-residential units to equity co-operatives has also been raised. This would also entail an investment of time and money on the part of the City. Further, this form of co-operative housing has, historically, been difficult to finance. Once again, interested tenants may consider organizing and purchasing the multi-unit properties as tenants-in-common and converting to equity co-operative after the closing.

Category Five:

Category Five properties are those that should be retained for humanitarian reasons. In some cases, tenants have been occupying their homes for an extended period of time (up to 50 years), are senior citizens, have raised their families in the homes or are ill. Requesting these tenants to move at this point in time would present hardship.

In some cases, the tenants have expressed a desire to purchase their properties and this avenue should be explored, however, should they prove unable to purchase, inclusion in this Category will ensure continued security of tenure.

Properties in this Category are recommended for retention by the City until they are no longer occupied by the current tenants. After these properties become vacant, they will be sold. If any property becomes vacant before submission of my report respecting co-operative housing providers in the spring of 1999, the property should be included in the subject matter of that report. Properties becoming vacant after the submission of the said report should be offered for sale in the following order of priority: firstly, to tenants who expressed at the outset an interest in purchasing; secondly, to community groups; and thirdly, on the open market. After a review of the survey results and consultation with the local Ward Councillors, it has been determined that there are a total of 13 properties in this Category.

Tenant Relocation Program:

City staff will attempt to ensure that no tenants will be de-housed as a result of the program. Steps may include relocation of tenants into vacant units located in buildings which are to be retained or sold to co-ops, etc. In addition, the Chief Operating Officer of the Toronto Housing Company will be requested to assist those tenants in finding alternate housing, either market housing or assisted housing, depending on the specific requirements of the households and the eligibility criteria which applies to households seeking RGI assistance. In order to minimize the level of uncertainty which may be created for tenants living in these units a notice outlining the available options will be sent to all tenants, and in addition, a Tenant Relations Officer within Cityhome has been assigned to work closely with the tenants to answer their questions and to facilitate a smooth transition.

The tenant relocation program will be focussed, initially, on the sale of properties to the existing tenants who have expressed an interest in purchasing but who are unable to do so because of the priority system described in this report.

If a tenant will be de-housed as a result of the program, every effort will be made by staff to relocate the tenant elsewhere within the portfolio. For instance, the availability of vacant units within properties to be purchased by co-operatives will be explored. Further, vacancies within properties to be retained by the City will be investigated.

When, and if, it has been determined that there is no interest from tenants, co-operatives or non-profit and community agencies, properties will then be offered for sale on the open market through a real estate broker in accordance with the broker selection process.

Throughout this process, an outside appraisal firm will be retained to provide appraisals of the market value of properties as required for establishing market value and/or sale price with the original owners and/or tenants or co-operative housing providers who may elect to purchase, with the cost of the appraisals being charged against the proceeds of sale.

In order to initiate the foregoing disposition and tenant relocation strategy, the 25 year lease and the 49 year lease must be surrendered by Cityhome. Arrangements for the transitional ongoing, day-to-day management of the properties will be arranged by the Commissioner of Corporate Services and the Commissioner of Community and Neighbourhood Services.

The 49 year lease secures an existing mortgage which presents further issues.

Existing Mortgage Secured by 49 Year Lease:

As previously stated in the Background section of this report, 22 of the property houses are leased to Cityhome under a 49 year lease. This 49 year lease secures a mortgage which, as of the due date of December 1, 1998, will have a payout balance of approximately $2,316,000.00. An amount of $759,000.00 from the initial advance remains unspent and there is an accumulated surplus of funds from the operation of the property houses in the amount of $498,000.00.

One approach to facilitate the disposal of these properties is for Cityhome to renegotiate the mortgage for an appropriate term and in a manner which will permit the ongoing partial discharge of the principle sum and the ongoing partial surrender of the 49 year lease as it relates to individual properties as they are sold. This is problematic in that it may be difficult to arrange for financing that with permit partial discharges. Further, there is an actual out of pocket expense which the City will incur each time a partial discharge is registered. The requirement to partially discharge the mortgage will also translate into an administrative cost as well as a loss in flexibility in marketing the properties.

The other option available to the City is to discharge the mortgage on the maturity date. The total funding required is $2,316,000.00 less the balance of approximately $759,000.00 unspent amount from the initial advance less the figure of approximately $498,000.00 which is the accumulated surplus of funds from the operation of the property houses. The net amount is approximately $1,059,000.00. While this option requires a capital amount of $1,059,000.00, it will result in greater flexibility in terms of, not only the mortgaging, but also in the release of the 49 year lease (the first option which contemplates partial discharges as properties are sold, also contemplates partial releases from the lease agreement between the City and Cityhome). Pursuing this option would also relieve the City of the costs associated with partially discharging the mortgage on an ongoing basis and the administrative costs involved.

Cityhome is supportive of the second option which contemplates the City discharging the mortgage at maturity. This is the course of action which I recommend.

Summary of Option No. 2:

Option No. 2 is predicated on extensive consultation with the existing tenants, local Ward Councillors and other interested parties. This option attempts to address the two objectives which have been identified through this consultation process; to achieve revenues through the disposal of the Property Houses and to ensure that no tenants are de-housed.

Option No. 2 has resulted in the identification of five categories of properties; those which should be retained by the City for use by community housing providers (currently in place); those which are currently vacant; those which are occupied by tenants who have expressed an interest in purchasing; those that are occupied by tenants who are unable to purchase and are interested in a co-operative housing approach (this also includes those tenants who are not interested in purchasing and are also not interested in co-operative housing as well as those tenants who did not respond to the survey); and, those properties occupied by tenants which should not be required to be relocated at this time for humanitarian reasons and where it is recommended that the properties be retained until vacated, at which time they should be sold. A disposition and tenant relocation plan has been outlined based, in part, on these five categories of properties.

Option No. 2 also addresses the manner in which the issue of the existing mortgage and the leases between the City and Cityhome should be dealt with. The leases should be surrendered by Cityhome and the mortgage should be discharged by the City at maturity with these funds being recovered by means of revenue achieved through sale.

Review of Current Value Assessments:

Appendix I to this report indicates the amount of the current value assessment of each property. This figure has been included to provide an indication of scale. As each property is identified as being a candidate for sale (ie., to tenants, co-ops or on the open market) an appraisal will be commissioned to serve as a basis for potential purchasers to investigate the feasibility of acquisition.

Conclusions:

The Property Houses were purchased for the purpose of expanding existing parks. They have been in the City's ownership for a number of years and will not be used for their intended purpose.

The majority of these properties are tenanted and given the length of time that some of the tenants have occupied their homes, and special circumstances surrounding some of these tenancies, a case by case investigation was carried out. Option 2, as set out in this report, results in an arrangement

which will be mutually beneficial to the majority of the tenants as it allows for the flexibility required while also furthering the City's interest of disposing of these properties. It is recommended that Option 2 be approved.

Contact Name:

Bonnie G. Duncan, Tel: 416-392-1861, Fax: 416-392-1880;

Email: bduncan.www.city.toronto.on.ca (cs98187).

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(Report dated June 11, 1998, addressed to the

Corporate Services Committee, from the

Commissioner of Corporate Services

headed, "Sale of Property Houses

(Multiple Wards - Former City of Toronto)")

Purpose:

To secure City Council authority to declare the "property houses" in the former City of Toronto on attached Appendix I (save and except for those five properties currently leased to community based housing providers and also identified on attached Appendix I) as surplus to the City's requirements and authorize the sale of these properties on the open market.

The issue of allocation of funds will be addressed in a separate joint report from the Commissioner of Corporate Services and the Commissioner of Community Services recommending policies on the use of property assets to meet social objectives.

Financial Implications:

The total of the current value assessment for the 55 property houses recommended to be declared surplus in this report is $10,955,845.00.

Pending sale of the properties, a loss in rental revenue will be incurred in the amount of approximately $10,000.00 per month as at July 1, 1998.

Recommendations:

It is recommended that:

(1)subject to the Board of Cityhome passing a resolution to do so, the existing leases between Cityhome and the Corporation of the City of Toronto, for the property houses be terminated in the manner described in this report;

(2)City Council, by By-Law, declare that, upon the leases having been terminated, the 55 houses owned by the City of Toronto, as set out on the attached Appendix I are surplus;

(3)notice to the public of the proposed disposition of the lands declared surplus be given;

(4)prior to offering the properties for sale on the open market, the first right to purchase be given to the previous owners and/or current tenants, on the terms set out in the body of this report;

(5)the Commissioner, Corporate Services, be authorized to market those properties which the previous owners and/or tenants do not wish to purchase through a real estate broker for a listing price to be determined in consultation with the listing broker;

(6)the funds from the sale of the houses subject to the 25 year lease be deposited into an account to be used to satisfy the mortgage at maturity;

(7)the City Surveyor, in consultation with the Director, Development and Support, Parks and Recreation, be directed to prepare a survey of the north portion of 144 Balsam Avenue and that this portion of the property be retained by the City, in fee simple or by way of an easement, and placed under the jurisdiction of the Parks and Recreation Division for parks purposes;

(8)City Council endorse the tenant relocation plan as outlined in this report;

(9)the five properties currently being leased to community based housing providers, as identified within this report on Appendix I, be retained by the City to allow the current use of these properties to continue and the Commissioners of Corporate Services and Community and Neighbourhood Services determine the appropriate leasing arrangement for these five properties and report back thereon to the Corporate Services Committee;

(10)the Commissioner of Community and Neighbourhood Services advise social housing providers and the non-profit housing sector of the City's intention to dispose of the 55 properties set out in Appendix I and to report back if any of these groups are interested in acquiring any of these properties at market rates;

(11)the Commissioner of Community and Neighbourhood Services, review any particular needy or hardship situations and report, in consultation with the Commissioner of Corporate Services, on these situations;

(12)the Commissioner of Community and Neighbourhood Services and the Commissioner of Corporate Services submit a joint report recommending policies governing the use of property assets to meet social objectives; and

(13)the appropriate Civic Officials be authorized to take the necessary action to give effect to the foregoing.

Background:

At a Budget Committee meeting held on March 9, 1998, the Community and Neighbourhood Services 1998 Operating Budget was considered. One of the recommendations put forward at this meeting was that:

the Commissioner of Corporate Services and the Interim Lead for Real Estate report to the Budget Committee for its meeting scheduled to be held on March 31, 1998 submitting recommendations respecting the disposition of the "property houses" after confirming with the Parks Department that these properties are not required for Parks purposes.

The "property house" portfolio consists of 60 properties, comprising 105 units, which were acquired/expropriated between 1930 and 1974 for parks purposes. These properties have never been used for park purposes and, in 1975, an informal arrangement was entered into with Cityhome for the management of the portfolio. In 1992, City Council adopted a business plan which leased these properties to Cityhome. Twenty-two of the properties were leased for a term of 49 years and 38 of the properties were leased for a term of 25 years. The business plan included a $2.5 million rehabilitation program which was funded by a mortgage on the properties leased for 49 years. This business plan also included a process to rationalize the rent structure for these properties and to bring the rents up to low end of market levels by the end of 1997. Provisions were also made to provide rent assistance to eligible households which would otherwise face economic eviction (total of 10 eligible households). The 60 properties, together with a summary of relevant information, are set out on Appendix I.

The Budget Committee, in considering a report dated March 27, 1998, from the Commissioner of Community and Neighbourhood Services, in consultation with the Commissioner of Corporate Services, requested the following:

(a)the Chief Administrative Officer submit a report to the Budget Committee and Corporate Services Committee in May, 1998 regarding:

(i)the disposition of property houses, determining which ones can be sold and how tenants who cannot afford to move can be accommodated; and

(ii)whether monies generated from the potential sales of such properties should be reserved to realize important social objectives; and,

(b)the Chief Administrative Officer and Commissioner of Community and Neighbourhood Services submit a confidential report to the Budget Committee on the following matters:

(i)a list of the City-owned properties that could be sold;

(ii)the names of the tenants;

(iii)the rent paid for such properties;

(iv)the 1996 assessed value of these properties;

(v)whether the properties are lakefront properties; and,

(vi)the disposition of funds from the sale of such properties.

This information is provided in Appendix I, with the exception of item (ii) the names of tenants which, under Freedom of Information legislation, cannot be released and item (vi) the disposition of funds from the sale of such properties, which will be the subject of a separate joint report from the Commissioner of Community and Neighbourhood Services and the Commissioner of Corporate Services recommending policies on the use of property assets to meet social objectives.

Comments:

The Interim Lead for Real Estate has sought input into the disposal of the property houses from Parks and Recreation, City Legal, Cityhome and Housing Division staff. Comments have been provided as follows:

Parks and Recreation:

The Director, Development and Support, Parks and Recreation has advised that these properties were acquired to expand City parks adjacent to or abutting the subject sites, however, it has not been the policy of Parks and Recreation to endorse conversion to parks from housing. With the exception of the request set out below, Parks and Recreation is not opposed to the disposition of these properties at this time on the understanding that the properties will continue to be used for the current purposes. Should they be retained and consideration of future uses be contemplated, parks purposes should be considered as the primary alternative land use for the sites.

The north edge of the property at 144 Balsam Avenue currently accommodates a public path to Glen Stewart Ravine, as set out on Appendix II. Parks and Recreation has constructed a set of stairs to enable the public to access the ravine via this path and stairs. In order to permit the continued existence of this path and provide continued access to the stairs, the City should sever and retain ownership of sufficient space along the north boundary of this property for this to occur.

Legal Implications:

City Legal staff have provided advice respecting the disposal of the property houses as set out on Appendix III. They have indicated that the City of Toronto and Cityhome are free to negotiate a surrender of the 25 year lease.

The City of Toronto and Cityhome could also negotiate a surrender of the 49 year lease, however, due to the mortgage, this surrender is significantly more complicated. The mortgage matures on December 1, 1998. It is a closed mortgaged for a principle sum of $2.5M at an interest rate of 8.5percent. The mortgagor is Cityhome and the City of Toronto is the guarantor. If Cityhome surrenders the 49 year lease in order to allow the disposal of the 22 properties held as security, the mortgagee may demand repayment of the full principal balance outstanding and can look to Cityhome and the City for repayment. This is likely since the termination of the lease would destroy the security of the mortgage. As an alternative, approval of the sale of the properties by the mortgagee could be sought and the mortgage could be paid down as the properties were sold. It is, however, highly unlikely that the mortgagee would agree to this arrangement without levying a penalty for early payment. The City would be incurring this additional cost. Accordingly, it would be prudent to market these properties with closing dates after the December 1, 1998, maturity date.

Thirteen of the property houses were acquired by the City through expropriation. Consideration was paid prior to the enactment of the current Expropriations Act in 1968. Therefore, in terms of the requirements of the Expropriations Act, the City would be free to sell any of these properties that were expropriated.

The request from the Director, Development and Support, Parks and Recreation to sever and retain the north portion of 144 Balsam Avenue, may not be legally possible due to the impact that this could have on the remainder of the parcel of land. If this is the case, and the City cannot retain the fee, it is possible to achieve continued access to the ravine by means of an easement over the portion of land required.

Social Objectives:

As noted above, the Budget Committee requested staff to report on "whether monies generated from the potential sales of such properties should be reserved to realize important social objectives."

The joint Board of Directors of Cityhome and the Metro Toronto Housing Company also considered this matter at their meeting of May 25th and will be forwarding recommendations directly to the Corporate Services Committee. The Board will be asking the Committee to defer this report and to ask staff to report on alternative methods to retain all of the properties for social housing purposes

The Commissioner of Community and Neighbourhood Services has proposed that five of the 60 properties be retained by the City and be made available to community-based housing providers. Four of the properties are currently leased to community housing providers and one is in the process of being leased. The leases are at market, or slightly below market rates.

Should the Committee decide to proceed with the disposal of the remaining 55 property houses, Housing staff will determine the suitability of each property for use by community housing providers and, should any of the properties be deemed suitable, a report on the acquisition for this purpose will be submitted to the Corporate Services Committee.

As requested by the Budget Committee, The Corporate Services Committee will need to consider how the proceeds of sale will be allocated. There are a number of social objectives that could be met using the proceeds. The properties were originally purchased for parks purposes but have been used for many years to achieve housing objectives. A number of social priorities are also emerging in 1998, including the need to respond to homelessness and to children's issues. The issue of allocation of funds will be addressed in a separate joint report from the Commissioner of Corporate Services and the Commissioner of Community Services recommending policies on the use of property assets, including revenues from the sale of the property houses, to meet social objectives.

Proposed Tenant Relocation Program:

The process which will be followed in the disposition of the properties will be similar to the process which was approved by the Council of the former Municipality of Metropolitan Toronto relative to the disposition of the Spadina Corridor properties and also includes the steps requested by the Commissioner of Community and Neighbourhood Services.

(1)should the original owner of any of the properties within the portfolio presently be a tenant in one of the property house, then this original owner shall have the first right to purchase the property, at the appraised market value, which they originally owned, notification of intention to exercise said right to be given to the City within 30 days, purchase to be concluded 60 days after notification by the original owner;

(2)subject to (1), above, the existing tenant in any of the property houses, shall have the first right to purchase their property which they occupy at the appraised market value, notification of intention to exercise the said right to be given to the City within 30 days, purchase to be concluded 60 days after notification by the tenant of intention to purchase;

(3)in the event that the property in question is a multi-family dwelling (i.e., the duplexes on Hubbard Blvd.) and both tenants are interested in purchasing, the first right will be granted to the tenant with the longest tenure. If the right is not exercised the right will be then be granted to the tenant with the second longest tenure and so on. A tenant, if any, that desires to purchase and is unable as a result of length of tenure, will be offered another vacant unit from the portfolio;

(4)in the event that the tenants elect not to acquire the property, then the property would be offered for sale through a real estate broker in accordance with the broker selection process also before your Committee today;

(5)in cases where existing tenants would not have the economic means to purchase the property, the General Manager of the Toronto Housing Company will be requested to assist those tenants in finding alternate housing, either market housing or assisted housing, depending on the specific requirements of the households and the eligibility criteria which applies to households seeking RGI assistance;

(6)those tenants which moved into the houses after 1992 are already paying a "low end of market rent" but they would not be eligible for RGI assistance. The General Manager of the Toronto Housing Company will, however, provide information to these tenants on available market units in developments managed by the Housing Company and assist these tenants in finding suitable accommodation;

(7)in order to minimize the level of uncertainty which may be created for tenants living in these units a notice outlining the available options will be sent to all tenants, and in addition, a Tenant Relations Officer within Cityhome has been assigned to work closely with the tenants to answer their questions and to facilitate a smooth transition; and,

(8)once the surplus properties and the time line for the disposition of the properties has been established, the General Manager of Cityhome and the Real Estate staff will work closely to co-ordinate the relocation plan for the specific units which will be affected.

Marketing Strategy:

The property houses should be marketed as they become vacant and the marketing program will be carried out in close association with the tenant relocation program. It is clearly to the City's benefit to market the properties as they become vacant and, in order to do so, it will be necessary to incur a degree of short term rental revenue loss. These losses will be incurred during the period of time that property is vacant, pending sale and conveyance. As of July 1, 1998, this loss will be approximately $10,000.00 per month. If it becomes apparent that any given property will not become vacant within a reasonable time, then marketing will commence on the basis that sale will be subject to existing tenancies.

With respect to the issue of the mortgage, in order to avoid any penalty associated with prepaying the mortgage (assuming that approval could be obtained from the mortgagee) it is recommended that the properties under the 25 year lease be marketed immediately with the proceeds deposited into an account to be used to satisfy the mortgage at maturity. Those properties which are subject to a mortgage should be marketed later in the year with closing dates to occur after the mortgage matures. The timing of the marketing of both groups of properties will be determined by occupancy status, as set out above.

In addition, consideration should be given to the possibility that the City may flood the market on any particular street. For instance, 16 of the properties are located on Crawford Street. Placing all of these properties on the market at the same time will result in lowering the selling price that may be achieved. It would not serve the City's interest to offer all of these properties at one time.

Bearing these factors in mind, it is recommended that the following steps be taken relative to the disposal of the property houses:

(1)surrender of the 25 year lease by Cityhome to the City, together with a commitment from Cityhome that it will also surrender the 49 year lease upon discharge of the mortgage and, that Cityhome will continue to assume day to day management of the property house portfolio until such time as each property is sold;

(2)retention of an outside appraisal firm to provide appraisals of the market value of properties as required as a component of the disposal process, as well as for establishing listing price and/or sale price with the original owners and/or tenants who may elect to purchase, with the cost of the appraisals being charged against the proceeds of sale;

(3)implementation of the Tenant Relocation Program as outlined in this report;

(4)retention of real estate brokers to market the properties and assist in the development of a marketing plan which takes into consideration the timing requirements vis a vis the properties which secure the mortgage, as well as ways that will ensure that the City does not flood the market on any particular street;

(5)an appropriate portion of the proceeds from sale be placed in an account designated to satisfy the mortgage financing;

(6)discharge mortgage on maturity; and,

(7)surrender of the 49 year lease.

Conclusions:

The property houses were purchased for the purpose of expanding existing parks. They have been in the City's ownership for a number of years and will not be used for their intended purpose. As such, with the exception of five of the properties which are currently leased to community housing providers at market rates, these properties should be declared surplus and sold on the open market.

The marketing strategy should take into account the occupancy status of each property and will be carried out in close association with the tenant relocation program as set out in this report.

Contact Name:

Bonnie G. Duncan, Tel: 416-392-1861, Fax: 416-392-1880

Email: bduncan.www.city.toronto.on.ca (cs98094.wpd)

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appendix 2 - glen stewart ravine

Appendix III

The following comments have been received from City Legal staff.

"I am replying to your memo of April 23, 1998 in which you requested my reply to the questions therein by April 29.

The legal implications associated with the sale of the property houses have been addressed as they apply to the mortgaged and the unmortgaged properties, respectively. The following comments/opinions are rendered based on the assumption that the properties would be sold by the City unencumbered by the Cityhome leases since the properties are presumably unmarketable when encumbered by these non-revenue producing leases.

The property houses may be divided into two groups; those held by Cityhome under 25 year leases from the City and unencumbered by mortgaging and those held under 49 year leases from the City and subject to a mortgage with a maturity date of December, 1998.

(1)(a)Unmortgaged properties - The City and Cityhome are free to reach an understanding for the surrender by Cityhome of its 25 year lease to the City. The City would then be free to sell the unmortgaged portfolio. However, the purchasers of this portfolio would be acquiring the properties subject to existing residential leases and the terms therein. Residential tenants are legally entitled to security of tenure.

Furthermore, such purchasers may be subject to greater restrictions in dealing with residential tenants (eg. rent increases) than Cityhome or the City. The program which has been implemented to raise the rents to market levels is something that non-governmental landlords may be prohibited from continuing, if rent increases exceed those permitted to private sector landlords.

(b)Mortgaged Properties - The above comments relating to the surrender of the 25 year unmortgaged leases apply as well to the surrender of the 49 year mortgaged leases. However, there are additional, more serious, legal and financial factors restricting the ability of Cityhome to surrender the mortgaged lease and for the City to accept such a surrender. This is set out in point No.2 below.

(2)The leasehold mortgage provides that the mortgagee may, at its option, demand repayment of the full principal balance outstanding if Cityhome surrenders the lease without the prior written consent of the mortgagee. Furthermore, the City is a guarantor of the mortgage loan. If the mortgage becomes due and payable, the mortgagee will likely look to the City as well as to Cityhome for payment. Even if the mortgagee permitted the sale of the property, the City's guarantee would remain in effect, a situation which would be unfeasible from both a financial and legal point of view. The legal difficulty arises out of the fact that the City may not guarantee the financial obligation of a commercial enterprise.

(3)Thirteen of the property houses were acquired by the City through expropriation. Consideration was paid prior to the enactment of the current Expropriations Act in 1968. Therefore, in terms of the requirements of the Expropriations Act, the City would be free to sell any of these properties that were expropriated."

--------

(Report dated May 1l, 1998, addressed to the

Corporate Services Committee from the

Commissioner of Corporate Services)

Purpose:

To secure City Council authority to declare the "property houses" in the former City of Toronto on attached Appendix I (save and except for those four properties currently leased to community based housing providers and also identified on attached Appendix I) as surplus to the City's requirements and authorize the sale of these properties on the open market.

Financial Implications:

The total of the current value assessment for the 56 property houses recommended to be declared surplus in this report is $11,134,845.00.

Recommendations:

It is recommended that:

(1)subject to the Board of Cityhome passing a resolution to do so, the existing leases between Cityhome and the Corporation of the City of Toronto, for the property houses be terminated in the manner described in this report;

(2)City Council, by By-Law, declare that, upon the leases having been terminated, the 56 houses owned by the City of Toronto, as set out on the attached Appendix I are surplus;

(3)notice to the public of the proposed disposition of the lands declared surplus be given in accordance with S.95-5 of the Municipal Code;

(4)prior to offering the properties for sale on the open market, the first right to purchase be given to the previous owners and/or current tenants, on the terms set out in the body of this report;

(5)the Commissioner, Corporate Services, be authorized to market those properties which the previous owners and/or tenants do not wish to purchase through a real estate broker for a listing price to be determined in consultation with the listing broker;

(6)the funds from the sale of the houses subject to the 25 year lease be deposited into an account to be used to satisfy the mortgage at maturity;

(7)the City Surveyor, in consultation with the Director, Development and Support, Parks and Recreation, be directed to prepare a survey of the north portion of 144 Balsam Avenue and that this portion of the property be retained by the City, in fee simple or by way of an easement, and placed under the jurisdiction of the Parks and Recreation Division for parks purposes;

(8)City Council endorse the tenant relocation plan as outlined in this report;

(9)the four properties currently being leased to community based housing providers, as identified within this report on Appendix I, be retained by the City to allow the current use of these properties to continue and the Commissioners of Corporate Services and Community and Neighbourhood Services determine the appropriate leasing arrangement for these four properties and report back thereon to the Corporate Services Committee; and,

(10)the appropriate Civic Officials be authorized to take the necessary action to give effect to the foregoing.

Background:

At a Budget Committee meeting held on March 9, 1998, the Community and Neighbourhood Services 1998 Operating Budget was considered. One of the recommendations put forward at this meeting was that:

the Commissioner of Corporate Services and the Interim Lead for Real Estate report to the Budget Committee for its meeting scheduled to be held on March 31, 1998 submitting recommendations respecting the disposition of the "property houses" after confirming with the Parks Department that these properties are not required for Parks purposes.

The "property house" portfolio consists of 60 properties, comprising 105 units, which were acquired/expropriated between 1930 and 1974 for parks purposes. These properties have never been used for park purposes and, in 1975, an informal arrangement was entered into with Cityhome for the management of the portfolio. In 1992, City Council adopted a business plan which leased these properties to Cityhome. Twenty-two of the properties were leased for a term of 49 years and 38 of the properties were leased for a term of 25 years. The business plan included a $2.5 million rehabilitation program which was funded by a mortgage on the properties leased for 49 years. This business plan also included a process to rationalize the rent structure for these properties and to bring the rents up to low end of market levels by the end of 1997. Provisions were also made to provide rent assistance to eligible households which would otherwise face economic eviction (total of 10 eligible households). The 60 properties, together with a summary of relevant information, are set out on Appendix I.

In response to the Budget Committee's request, the Commissioner, Community and Neighbourhood Services, in consultation with the Commissioner of Corporate Services, submitted a report dated March 27, 1998 to the Budget Committee. In this report, a number of issues were identified for further consideration. Also contained in that report was a recommendation that the approach taken to dispose of these properties be similar to the one taken by Metro Toronto with respect to the sale of their Spadina corridor properties. This report addresses the identified issues and establishes a disposal process taking into account the process utilized by Metro Toronto respecting the disposal of the Spadina corridor properties.

Comments:

The Interim Lead for Real Estate has sought input into the disposal of the property houses from Parks and Recreation, City Legal, Cityhome and Housing Division staff. Comments have been provided as follows:

Parks and Recreation:

The Director, Development and Support, Parks and Recreation has advised of the following:

"In response to your memorandum dated April 23, 1998, regarding the proposed disposal of the sites previously acquired for parks purposes, I have reviewed the subject properties and provide the following comments for your consideration. The 60 locations listed on the summary are related to ten different parks or ravines. A summary identifying the respective properties and the related park or ravine is attached for your information.

The March 27, 1998 report from the Commissioner, Community and Neighbourhood Services notes that these properties were acquired to expand City parks adjacent to or abutting the subject sites. The conversion of a number of these sites to parks use would be beneficial to the respective parks, unfortunately, this conversion would be at the expense of the available housing stock. It has not been the position of Parks and Recreation to endorse this type of conversion in previous discussions regarding these properties. This approach remains consistent at this time.

In this regard, with the exception of the request set out below, I advise that I am not opposed to the disposition of these properties at this time on the understanding that the properties will continue to be used for the current purposes. Should they be retained and consideration of future uses be contemplated, I would request that parks purposes be considered as the primary alternative land use for the sites.

The north edge of the property at 144 Balsam Avenue currently accommodates a public path to Glen Stewart Ravine. Parks and Recreation has constructed a set of stairs to enable the public to access the ravine via this path and stairs. In order to permit the continued existence of this path and provide continued access to the stairs, I request that the City sever and retain ownership of sufficient space along the north boundary of this property for this to occur."

Legal Implications:

City Legal staff have provided advice respecting the disposal of the property houses as set out on Appendix III. They have indicated that the City of Toronto and Cityhome are free to negotiate a surrender of the 25 year lease.

The City of Toronto and Cityhome could also negotiate a surrender of the 49 year lease, however, due to the mortgage, this surrender is significantly more complicated. The mortgage matures on December 1, 1998. It is a closed mortgaged for a principle sum of $2.5M at an interest rate of 8.5percent. The mortgagor is Cityhome and the City of Toronto is the guarantor. If Cityhome surrenders the 49 year lease in order to allow the disposal of the 22 properties held as security, the mortgagee may demand repayment of the full principal balance outstanding and can look to Cityhome and the City for repayment. This is likely since the termination of the lease would destroy the security of the mortgage. As an alternative, approval of the sale of the properties by the mortgagee could be sought and the mortgage could be paid down as the properties were sold. It is, however, highly unlikely that the mortgagee would agree to this arrangement without levying a penalty for early payment. The City would be incurring this additional cost. Accordingly, it would be prudent to market these properties with closing dates after the December 1, 1998, maturity date.

Thirteen of the property houses were acquired by the City through expropriation. Consideration was paid prior to the enactment of the current Expropriations Act in 1968. Therefore, in terms of the requirements of the Expropriations Act, the City would be free to sell any of these properties that were expropriated.

The request from the Director, Development and Support, Parks and Recreation to sever and retain the north portion of 144 Balsam Avenue, may not be legally possible due to the impact that this could have on the remainder of the parcel of land. If this is the case, and the City cannot retain the fee, it is possible to achieve continued access to the ravine by means of an easement over the portion of land required.

Social Objectives:

The Commissioner of Community and Neighbourhood Services has identified four of the 60 properties which should be retained by the City. These four properties are currently being leased to community based housing providers. These leases are at market, or slightly below market rates.

As the balance of the property houses are offered for sale, Housing Division staff will determine the suitability of each property for use by identified community groups and, should any of the properties be deemed suitable, a report on the acquisition for this purpose will be submitted to Corporate Services Committee.

Proposed Tenant Relocation Program:

The process which will be followed in the disposition of the properties will be similar to the process which was approved by the Council of the former Municipality of Metropolitan Toronto relative to the disposition of the Spadina Corridor properties and also includes the steps requested by the Commissioner of Community and Neighbourhood Services.

(1)should the original owner of any of the properties within the portfolio presently be a tenant in one of the property house, then this original owner shall have the first right to purchase the property, at the appraised market value, which they originally owned, notification of intention to exercise said right to be given to the City within 30 days, purchase to be concluded 60 days after notification by the original owner;

(2)subject to (1), above, the existing tenant in any of the property houses, shall have the first right to purchase their property which they occupy at the appraised market value, notification of intention to exercise the said right to be given to the City within 30 days, purchase to be concluded 60 days after notification by the tenant of intention to purchase;

(3)in the event that the property in question is a multi-family dwelling (i.e., the duplexes on Hubbard Blvd.) and both tenants are interested in purchasing, the first right will be granted to the tenant with the longest tenure. If the right is not exercised the right will be then be granted to the tenant with the second longest tenure and so on. A tenant, if any, that desires to purchase and is unable as a result of length of tenure, will be offered another vacant unit from the portfolio;

(4)in the event that the tenants elect not to acquire the property, then the property would be offered for sale through a real estate broker in accordance with the broker selection process also before your Committee today;

(5)in cases where existing tenants would not have the economic means to purchase the property, the General Manager of the Toronto Housing Company will be requested to assist those tenants in finding alternate housing, either market housing or assisted housing, depending on the specific requirements of the households and the eligibility criteria which applies to households seeking RGI assistance;

(6)those tenants which moved into the houses after 1992 are already paying a "low end of market rent" but they would not be eligible for RGI assistance. The General Manager of the Toronto Housing Company will, however, provide information to these tenants on available market units in developments managed by the Housing Company and assist these tenants in finding suitable accommodation;

(7)in order to minimize the level of uncertainty which may be created for tenants living in these units a notice such as the one in Appendix VI to this report, outlining the available options will be sent to all tenants and, in addition, a Tenant Relations Officer within Cityhome has been assigned to work closely with the tenants to answer their questions and to facilitate a smooth transition; and,

(8)once the surplus properties and the time line for the disposition of the properties has been established, the General Manager of Cityhome and the Real Estate staff will work closely to co-ordinate the relocation plan for the specific units which will be affected.

Marketing Strategy:

The property houses should be marketed as they become vacant and the marketing program will be carried out in close association with the tenant relocation program. If it becomes apparent that any given property will not become vacant within a reasonable time, then marketing will commence on the basis that sale will be subject to existing tenancies.

With respect to the issue of the mortgage, in order to avoid any penalty associated with prepaying the mortgage (assuming that approval could be obtained from the mortgagee) it is recommended that the properties under the 25 year lease be marketed immediately with the proceeds deposited into an account to be used to satisfy the mortgage at maturity. Those properties which are subject to a mortgage should be marketed later in the year with closing dates to occur after the mortgage matures. The timing of the marketing of both groups of properties will be determined by occupancy status, as set out above.

In addition, consideration should be given to the possibility that the City may flood the market on any particular street. For instance, 16 of the properties are located on Crawford Street. Placing all of these properties on the market at the same time will result in lowering the selling price that may be achieved. It would not serve the City's interest to offer all of these properties at one time.

Bearing these factors in mind, it is recommended that the following steps be taken relative to the disposal of the property houses:

(1)surrender of the 25 year lease by Cityhome to the City, together with a commitment from Cityhome that it will also surrender the 49 year lease upon discharge of the mortgage and, that Cityhome will continue to assume day to day management of the property house portfolio until such time as each property is sold;

(2)retention of an outside appraisal firm to provide appraisals of the market value of properties as required as a component of the disposal process, as well as for establishing listing price and/or sale price with the original owners and/or tenants who may elect to purchase, with the cost of the appraisals being charged against the proceeds of sale;

(3)implementation of the Tenant Relocation Program as outlined in this report;

(4)retention of real estate brokers to market the properties and assist in the development of a marketing plan which takes into consideration the timing requirements vis a vis the properties which secure the mortgage, as well as ways that will ensure that the City does not flood the market on any particular street;

(5)an appropriate portion of the proceeds from sale be placed in an account designated to satisfy the mortgage financing;

(6)discharge mortgage on maturity; and,

(7)surrender of the 49 year lease.

Conclusions:

The property houses were purchased for the purpose of expanding existing parks. They have been in the City's ownership for a number of years and will not be used for their intended purpose. As such, with the exception of four of the properties which are currently leased to community housing providers at market rates, these properties should be declared surplus and sold on the open market.

The marketing strategy should take into account the occupancy status of each property and will be carried out in close association with the tenant relocation program as set out in this report.

Contact Name:

Bonnie G. Duncan, Tel: 416-392-1861, Fax: 416-392-1880

Emailbduncan.www.city.toronto.on.ca (cs98072)

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appendix 2 glen stewart ravine

Appendix III

The following comments have been received from City Legal staff.

"I am replying to your memo of April 23, 1998 in which you requested my reply to the questions therein by April 29.

The legal implications associated with the sale of the property houses have been addressed as they apply to the mortgaged and the unmortgaged properties, respectively. The following comments/opinions are rendered based on the assumption that the properties would be sold by the City unencumbered by the Cityhome leases since the properties are presumably unmarketable when encumbered by these non-revenue producing leases.

The property houses may be divided into two groups; those held by Cityhome under 25 year leases from the City and unencumbered by mortgaging and those held under 49 year leases from the City and subject to a mortgage with a maturity date of December, 1998.

(1)(a)Unmortgaged properties - The City and Cityhome are free to reach an understanding for the surrender by Cityhome of its 25 year lease to the City. The City would then be free to sell the unmortgaged portfolio. However, the purchasers of this portfolio would be acquiring the properties subject to existing residential leases and the terms therein. Residential tenants are legally entitled to security of tenure.

Furthermore, such purchasers may be subject to greater restrictions in dealing with residential tenants (eg. rent increases) than Cityhome or the City. The program which has been implemented to raise the rents to market levels is something that non-governmental landlords may be prohibited from continuing, if rent increases exceed those permitted to private sector landlords.

(b)Mortgaged Properties - The above comments relating to the surrender of the 25 year unmortgaged leases apply as well to the surrender of the 49 year mortgaged leases. However, there are additional, more serious, legal and financial factors restricting the ability of Cityhome to surrender the mortgaged lease and for the City to accept such a surrender. This is set out in point No.2 below.

(2)The leasehold mortgage provides that the mortgagee may, at its option, demand repayment of the full principal balance outstanding if Cityhome surrenders the lease without the prior written consent of the mortgagee. Furthermore, the City is a guarantor of the mortgage loan. If the mortgage becomes due and payable, the mortgagee will likely look to the City as well as to Cityhome for payment. Even if the mortgagee permitted the sale of the property, the City's guarantee would remain in effect, a situation which would be unfeasible from both a financial and legal point of view. The legal difficulty arises out of the fact that the City may not guarantee the financial obligation of a commercial enterprise.

(3)Thirteen of the property houses were acquired by the City through expropriation. Consideration was paid prior to the enactment of the current Expropriations Act in 1968. Therefore, in terms of the requirements of the Expropriations Act, the City would be free to sell any of these properties that were expropriated."

--------

(Report dated September 9, 1998, addressed to

the Board of Directors, The Metropolitan Toronto

Housing Company Limited, from the Acting Chief

Operating Officer, Metropolitan Toronto Housing

Company Limited headed, "Disposition

of City-owned "Property Houses")

Recommendations:

It is recommended that the Board of Directors:

(1)request to the City that the ownership of all the "Property Houses" be transferred at no cost to the new amalgamated Municipal Housing Company so that this portfolio can be used to provide affordable housing for families directly or through any sale proceeds;

(2)forward a copy of this report, and together with any Board Resolutions related to it, to the Corporate Services Committee for their information at their meeting on October 9, 1998; and,

(3)authorize the appropriate Housing Company staff to take the necessary action to give effect thereto.

Background:

The "Property House" portfolio consists of 60 properties, comprising 105 units acquired/expropriated between 1930 and 1974 for parks purposes. The properties were never used for park purposes and in 1975, Cityhome took over the management of the portfolio. In 1992, City Council adopted a business plan which leased these properties to Cityhome. The lease terms are 49 and 25 years for 22 and 38 of the properties respectively. The business plan included a process to bring the rents up to low end of market levels by the end of 1997 and a provision to provide rent assistance to a number of low income households using the surplus from the portfolio. The Property Houses were managed conservatively by Cityhome, given that there was no City subsidy or reserve available. A $2.5 million mortgage on the 22 properties leased for 49 years was taken out to fund a rehabilitation program. Although major capital work was done on many of the buildings, the capital budget for repairs to the Property Houses is not substantial. The main purpose of the capital program was to provide short term capital funding to address immediate capital repair needs and minor improvements related to increasing rentability of the units at market rent levels.

At a City of Toronto Budget Committee meeting held on March 9, 1998, the Committee asked the Commissioner of Corporate Services to submit recommendations to dispose of the Property Houses. On May 11, the Commissioner of Corporate Services submitted to the Corporate Services Committee a plan detailing the process to sell the Property Houses.

At the Board of Directors meeting held on May 25,1998, the Board passed a resolution requesting that the Corporate Services Committee defer dealing with the City's Property Houses, and directing staff from Cityhome/MTHCL to look at alternatives methods to retain these houses for social housing purpose. At its meeting on May 11, 1998, the Corporate Services deferred its consideration of the issue until October 9, 1998. City staff have been asked to report on a "win-win approach", ie options that will serve the interests of the City and the existing tenants. City staff has been surveying tenants to determine their interest in purchasing the houses and seeking ideas on alternative community uses of the houses.

The current report presents the position of the municipal housing company; a separate report to the Corporate Services Committee outlining the issues described above is being prepared by city staff from the Property and Shelter Housing Support Divisions. A copy of the report prepared earlier this year by the Commissioner of Corporate Services outlining the City's reasons for wanting to sell the Property Houses, as well as providing a background on the Property Houses portfolio has been included in Appendix I for background information.

Discussion:

The proposal to sell the Property Houses and to take the proceeds into general revenue would result in a loss of affordable rental housing stock in the City. Based on information from Housing Connection's waiting list, the largest group (53.8 percent) in need of housing in the City is families. Of the 42,624 households registered in March 1998, 22,955 were families. Of these families, 39 percent required 3 bedroom units and 10 percent 4 bedroom units. The combined Toronto Housing Company (THC) portfolio contains only 5,086 family units (17.8 percent), predominantly 2 bedrooms. The number of 3+ bedrooms in the portfolio is only 1,784 units.

Although the existing family stock in the social housing portfolio is quite small, the more relevant information to consider is housing availability. The THC net turnover for families requiring RGI units is almost insignificant in relation to the size of the waiting list. In 1997, only 154 units (8 percent of THC net turnover) were available to house families. Only 55 of the 1997 units were 3+ bedroom. The gap between the growing trend of housing needs in the family group and the annual availability of RGI units for families is extremely large.

The Interim Report of the Mayor's Homelessness Action Task Force (July 1998) identified families as being one of the "at-risk of becoming homeless" population groups. In 1996, families represented 46 percent of the people using hostels with more than 5,000 of these users being children. The Property Houses are ideally suited to serve families since over 70 percent of the units are two bedroom or larger. The chart below summarizes the number of properties and units by unit type, including the current number and type of subsidized rental units.

Options:

There are several alternatives to the simple disposal of the Property Houses. The underlying assumption of this report is that the very few larger units in the City's affordable social housing stock should be maintained. The current status of these 56 properties that 10 units are rented at RGI levels and 90 units at below market rent levels. In light of the current lack of affordable rental housing for families in the City, we propose that the City's objective in disposing its real estate assets should be, at a minimum, to maintain the level of the existing affordable rental housing.

It should be noted that selling the properties and re-investing the proceeds in social housing is an acceptable plan of action under this assumption. Perhaps one of the most compelling economic reason to consider selling the portfolio as part of a re-investment strategy is related to the concept of highest and best use in the valuation of real estate properties. From an appraisal point of view, the highest and best use of single family detached houses in the city core is owner occupied residential and not rental. Valuation of rental property is a function of the property's net operating income stream. Under current market conditions, this rental property value is much lower than the property as an owner occupied home. By selling these houses, the net proceeds would realize a higher gain than if the same number of units were sold as rental properties.

This report proposes that the ownership of houses be transferred at no cost to the new Toronto Housing Company to maximize the number of RGI units that can be rented to families directly or through any full or partial sale proceeds. The management of the portfolio or any new units built from its sale proceeds by THC will insure operating costs are maintained at cost effective levels and that all current or future RGI units would operate without municipal subsidies.

It is clear that the use of houses for rental is not the highest and best use of the asset from a financial perspective and that from a social perspective the dollars can be used to create new multi-residential family units. The alternatives that the housing company could consider are as follows:

(1)Keep the portfolio and increase the number of units receiving rental assistance generated from the portfolio's surplus funds;

(2)Sell the portfolio and use the funds to build new affordable and below market family housing units (2, 3 and 4 bedrooms); and

(3)Sell the portfolio and use the funds to redevelop affordable and below market family housing units (2, 3 and 4 bedrooms) on Housing Company existing properties.

Option 1:Keep the portfolio and increase the number of rental assistance using surplus funds from the portfolio.

The portfolio generated a surplus of about $240,000.00 in 1997 at current rent levels. The average rent for the portfolio is $ 747/mo, about $200 per month on the average below the low end market rents. In addition, there are still unused funds from the original $2.5 million mortgage for the rehabilitation program. The current finances of the portfolio is therefore sufficient to increase the number of rental assistance using surplus fund from the portfolio and continue with the rehabilitation program. The attached Appendix II shows the proforma and the maximum number of rental assistance under current rent levels and low end of market levels. Based on historical expenditure profile and allowing for an average reserve contribution of $2,500.00 per house, the following are the maximum number of rental assistance under current rent levels and low end of market levels:

Monthly Monthly Maximum

Rent AssistanceAssisted Units

Current Rent$800$47033

Low End of Market$1,020$62062

A review of the turnover statistics with the property manager indicates an average annual turnover rate of about 14 percent. Currently there are 9 vacant units of which one unit may required substantial capital repairs. It is therefore possible to increase the number of units receiving rental assistance from 10 to 33 within the next 12 months. At the current rate of increase, market levels can be achieved within the next 18 to 24 months. Given the current turnover rate, it should be possible to provide another 29 units with rental assistance within the same time frame.

Option 2:Sell the portfolio and use the funds to build new affordable and below market family housing units (2, 3 and 4 bedrooms).

While there are no recent appraisals done for each property, the attached Appendix I shows Current Value Assessment (CVA) for each property. Using assessment values as a proxy for market value is a very conservative approach. Nevertheless, the CVA for the portfolio is approximately $10.955 million. We will assume net proceeds from sales of $11.0 million. New housing can be developed using the proceed from sales and a mortgage on the development. The amount of mortgage is such that the rent can be kept at an affordable level. Therefore, the various possibilities will range from the building of 100 percent low end market units to 100 percent RGI units with the former yielding the highest number of units and the latter the least. At the other extreme of 100 percent RGI units, the development will not able to support a mortgage, and part of the proceeds from the sale would have to be set aside in order to provide ongoing rent-geared to income subsidies to some units in the development.

To support the work around the City's Affordable Housing Strategy, staff have developed estimates for construction and operating costs data for the various housing forms (walk up, townhouse, high-rise, shared single, rental hotel, etc). The following analysis uses these data to estimate the number of units that can be developed under the following two scenarios:

(a)A typical two, three and four bedrooms walk up development for family housing under various market and RGI rents combination; and

(b)50/50 market/RGI family housing development for three building forms (walk up, townhouse and high-rise)

The maximum number of units and the project financing for a typical two, three and four bedrooms walk up family housing development under various market and RGI units combination is shown in Figure 1 and Appendix III. For a project with 100 percent low end of market units ($1,040.00 per month), 145 units can be built using the $11.0 million from the sales plus an 8 percent mortgage of about $8.6 million for a total project cost of about $20 million. The debt ratio is about 44 percent. Construction cost per unit is estimated at $135,000.00. At the other end of the spectrum, only 66 RGI units can be built for a project cost of about $9.0 million. The remaining $2.0 million will be reserved to provide rental subsidies in order to maintain a RGI rent of $350.00 per month. This illustration demonstrates that the rental units provided by the Property Houses can be replaced in full if they are all low end of market units. At a 50 percent RGI units level, 46 RGI and 46 market units can be built for a total of 92 units.

The reason to use a walk up development for the above illustration is that this building form is found to be the most cost effective among three City standard building forms, namely, lowrise/walk up, townhouse and high-rise apartment buildings. Figure II and Appendix IV show the maximum number of units and the project financing at a 50/50 market/RGI ratio for typical lowrise/walk up, townhouse and high-rise apartment buildings. At this ratio, 92 walk up units can be built compared with 88 townhouse and 76 high-rise apartment units.

To summarize, a walk up development of up to 145 low end of market units may be built using the proceeds from selling the Property Houses plus appropriate mortgage financing. Mortgage financing may be used if affordable to maximize the total number of units built and, at the same time, to support the maximum number of RGI units on a self-financing basis. By reducing the number of market units, up to a maximum of 66 subsidized units can be created without external subsidies.

Option 3:Sell the portfolio and use the revenue to redevelop affordable and below market family housing units (2, 3 and 4 bedrooms) on the Housing Company's existing low density sites properties.

This option is identical to Option 2 with the exception of building on existing Housing Company land. By providing free land to the new development, the estimated construction cost of walk up building will be reduced by about $25,000.00 to $110,000.00 per unit. This assistance may also be in the form of City land. The Housing Company has a couple of low density projects nearing the end of the 50 years mortgage term. Redevelopment of these sites has been discussed.

Due to the lower construction cost, more units can be built under this option as illustrated in Figure III and Appendix V. For example, walk up project development of up to 216 low end of market units or a maximum of 78 subsidized units may be built using the proceeds from selling the Property Houses plus appropriate leverage or reserve. Linking the selling of the Property Houses with the redevelopment of Housing Company properties may be a strategic approach to deal with the lack of capital funding for redevelopment.

Conclusion:

It is clear from the waiting lists information that the need of affordable rental housing for families is currently greater in magnitude than any other group in the City. We believe it is urgent the City takes a position of leadership in the preservation of the existing affordable rental housing stock. The management or disposition of these houses must assist in addressing the current gap between supply and demand of affordable housing for families. All the options discussed above would increase the number of rent-geared-to-income family units while fulfilling "more affordable housing" - one of the nine strategies stated by the Mayor's Homelessness Action Task Force to break the cycle of homelessness.

The municipal housing company with over 220 properties (28,500 units) under management, has the expertise and commitment to ensure the public benefits are maximized while effectively levering these assets with a social objective. The scale of its operations ensures that existing tenants can be accommodated at no financial hardship and its community-wide approach to housing provides linkages with a wide variety of community agencies serving specific housing needs.

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appendix 1 property house portfolio

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appendix 1 end

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appendix 2

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appendix 3

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appendix 4

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appendix 5

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figure 1

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figure 2

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figure 3

(Report dated September 25, 1998, addressed

to the Corporate Services Committee from the

Commissioner of Community and Neighbourhood Services

headed, "Disposition of City-Owned Property Houses")

Purpose:

To comment on the issue of the future disposition of the City-owned property houses.

Funding Source, Financial Implications and Impact Statement:

The implications of options for disposition of the Property Houses are addressed in separate reports from the City's Housing Company and the Commissioner of Corporate Services.

Recommendation:

It is recommended that:

The Corporate Services Committee give serious consideration to the proposal of the Housing Company Board that would transfer ownership of the Property Houses to the Company for affordable housing purposes, prior to considering other options that would result in their sale to the tenants or others at market value.

Background:

At its meeting of June 22, 1998, the Corporate Services Committee deferred a report from the Commissioner of Corporate Services with regard to the sale of the City-owned Property Houses and asked staff to explore, in consultation with local Councillors, a mutually beneficial arrangement for all of the properties. Corporate Services staff have been leading this process and will be reporting on a proposed arrangement for the Property Houses.

At its May 25^th meeting, the Board of Directors of the City's Housing Company (joint Board of Cityhome and the Metro Toronto Housing Company) asked its own staff to look at alternative methods to retain the Property Houses for social housing purposes. This report was adopted by the Board on September 14, and the resolutions of the Board have been forwarded to the Committee for consideration on October 9^th.

This report provides comments from the perspective of Community and Neighbourhood Services on the proposals being put forward by the Housing Company and the Corporate Services Staff.

On June 22^nd, Corporate Services Committee also asked staff to "identify clear guidelines as to what the City's specific criteria are for subsidized housing". This report also responds to that request.

Comments:

At this time, there is significant pressure on the City to respond to affordable housing needs in creative ways. The interim report of the Mayor's Task Force on Homelessness indicates that more than 80,000 people in Toronto are currently at risk of becoming homeless because they pay more than 50 percent of their income on rent. The report also points out that the cost of providing permanent housing ($22-30 per day for a rental apartment) is much cheaper than short term emergency housing (e.g. $30-43 per day for a hostel; or $101.00 per day for a contracted motel room with meal allowance). At its July meeting, Council adopted in principle an affordable housing development strategy to be pursued in the coming months. This strategy involves using City-owned property and policy tools in partnership with private and community groups, to develop affordable housing demonstration projects. With this in mind, it is important to consider whether the property houses are an asset that could support this strategy.

As they are currently managed, the rents for most of these houses are set at or just below private market levels. At this time, ten households are paying below market rents (i.e. geared to income), with the costs being covered by rent revenues from the other houses. Under the business plan for these houses, with market rents increasing over time (and overall rent revenues became greater) it was intended that Cityhome provide more RGI assistance within the portfolio (up to 50 percent of the 105 units). From an affordable housing perspective, the question at this point is whether to proceed with this plan or to consider other ways to use this asset. There are a number of options that are discussed below.

In May, the Board of Directors of the Housing Company (i.e. the joint Board of Cityhome and the Metro Toronto Housing Company) asked its staff to look at alternative methods to retain the houses for social housing purposes. On September 14, Housing Company staff reported back to the Board on options to increase the affordable housing impact of this asset. The Board has decided to recommend to the Corporate Services Committee that ownership of the houses be transferred to the City's Housing Company. In light of the long waiting list for affordable family housing, the Board is arguing that it is in the best position to utilize the asset. As discussed below, this could include enhancing the existing business plan to help more low income families or selling properties in order to build new affordable housing on existing Housing Company property.

Staff of the Shelter Housing and Support Division of Community and Neighbourhood Services have also been considering other uses of the houses that could serve the community need for affordable housing. In August, staff canvassed a number of community agencies that have experience in providing affordable housing and sought their ideas for alternatives to open sale of the houses on the market. A number of ideas have been received and are discussed below.

(1)Use of the Houses/Proceeds by the City's Housing Company:

The City's Housing Company (i.e. Cityhome) currently manages the houses under two leases (25 years for some houses, 49 years for others) from the City of Toronto, based on a business plan adopted by the former City Council in 1992. As there are no non-profit program subsidies available, the business plan requires that all operating costs be covered by rent revenues on the 105 units. Since the properties are mortgage-free (except for a $2.5M renovation loan), it is possible to provide below-market rents to a number of households in need. These households pay a rent-geared-to-income (RGI) similar to households living in non-profit housing.

The Housing Company's report identifies ways to enhance the management of the houses to assist a greater number of households. These options include making better use of rent revenues so that more RGI subsidies could be provided to needy households. This is based on waiting list information showing that 22,955 families are waiting for RGI housing in Toronto, but only 154 subsidized units are becoming available each year through turnover.

Other options include selling some or all of the houses and using the proceeds to develop new housing, potentially on existing Housing Company sites. The analysis shows that, on land owned by the Housing Company, the proceeds from the sale of the houses (assumed to be approx. $11M) could be used to leverage the construction of 216 low end of market units or up to 78 subsidized units in a walk-up building. On October 9^th, the Board will be advising the Committee of its strong support for allowing the Housing Company the opportunity to further explore the options for this housing stock with a view to maximizing the potential for social housing purposes.

(2)Uses of the Property Houses by Existing Community Agencies:

The Shelter, Housing and Support Division has received a number of ideas from community agencies for other uses of the houses that would meet affordable housing needs:

Conversion to Non-Profit or Co-operative Ownership:

The Co-operative Housing Federation of Toronto (CHFT) has been working with a group of property house tenants to develop a proposal that they plan to present to the Corporate Services Committee. CHFT supports the sale of individual houses to existing tenants, where they can afford to buy them. However, they propose that, where tenants do not wish to buy, the houses be sold to a non-profit housing organization committed to providing ongoing rental housing. They specifically suggest that houses be sold to existing scattered unit co-operatives, or local non-profits, based on the tenants' preference. Should existing co-operatives not be interested, CHFT proposes to work with the tenants to form a new co-operative.

At the time of writing, CHFT was in the process of contacting tenants in all of the property house units to determine the extent of the interest in this proposal. We would expect that, by the time of the Corporate Services Committee meeting that they would have some indication of the level of interest in this proposal. Should the City pursue this approach, staff would work with CHFT to seek written confirmation of the preference of the individual tenants involved, before proceeding.

CHFT indicate that they cannot finalize the financing plan for purchase by cooperatives without knowing the sale price of the properties, or at least the appraised value. They propose that coops obtain 75 percent of the purchase value through conventional financing (bank or credit union) and suggest a number of alternatives for the remaining 25 percent. The alternatives for second mortgage financing include the Risk Underwriting Fund of the Co-operative Housing Federation of Canada, or depending on the retained earnings or equity of existing cooperatives. Should the rent revenues be insufficient to cover the costs, they suggest the City consider retaining the land and sell only the houses themselves to the co-ops, sell at a reduced value, or take back a second mortgage at a below-market interest rate. All of these options would reduce the immediate proceeds from sale of the individual houses involved. It should ne noted that the proposal as it stands does not attempt to increase the affordability of the houses, and additional funding may be required in order to rent the units at below market levels. Further analysis must be done to test the feasibility of the proposal.

Two cooperatives that have been working with the tenants on this proposal include Dufferin Grove Housing Co-op which owns properties (62 units) on Dovercourt Road, Melbourne Avenue and Sorauren Avenue, and Wood Tree Co-op which owns 47 single family homes in the Dufferin Davenport area.

We believe this proposal merits further analysis, should Council decide to reject the recommendations of the Housing Company Board. For those houses where tenants are interested in becoming co-op members, Housing staff would be prepared to work with CHFT and local co-ops to develop the proposal further and to help arrange financing of the purchases by co-ops.

Lease of Larger Houses to Community Agencies to Expand Existing Programs:

A number of community agencies are interested in obtaining individual property houses in order to expand the housing options for their clients and expand their existing programs. Generally, these are well-established groups with significant experience managing housing, and they are interested in leasing houses rather than buying them. For example, Yonge Street Mission already operates two houses under the City's Single Housing Opportunity Program, in partnership with Cityhome. As noted in our May report to the Committee, there are five houses currently leased to community groups.

The following agencies have expressed interest in leasing houses, at a market rent level (or a negotiated rent based on what their clients can afford). These are preliminary expressions of interest from agencies, and based only on a cursory review of the properties by their staff. In addition staff are aware of several other community agencies that are interested in obtaining City-owned property for housing purposes, through purchase or lease. For example, Homeplace Non-Profit Homes has requested that City-owned vacant residential properties be donated to the group for affordable housing; and they have specifically identified certain houses in the Spadina corridor for this program.

(i)Yonge Street Mission - interested in houses in the Cabbagetown or Riverdale areas to serve street youth who are participating in YSM's employment/education programs and able to maintain stable housing;

(ii)Toronto Association for Community Living - interested in leasing larger houses for developmentally handicapped who are currently living in unstable housing in the community (e.g. poor quality rooming houses);

(iii)Dixon Hall - seeking houses to integrate into a program for formerly homeless/shelter users Anglican Houses/Habitat Services - interested in large houses close to the existing John Gibson House program at 227A Crawford Street, to integrate into their existing programs serving individuals with mental health problems; and

(iv)Christian Resource Centre - looking for larger houses to accommodate single adults, comprising a mix of hard to house, economically disadvantaged and those more financially independent, as a joint venture with churches and private sector.

As there are no houses that are vacant and suitable for use by agencies, it is not possible to consider leasing houses to these groups at this time. However, we suggest that in those cases where the existing tenants and/or co-ops are unwilling or unable to buy houses, Housing staff be given the opportunity to examine the suitability of the house for community agency use (based on size and the proximity to existing agency programs) and to consult with the agencies that have expressed an interest to determine their interest in purchasing the houses before they are offered on the open market. Alternatively, should Council accede to the Housing Company's request to transfer ownership, the Housing Company could be requested to accommodate these agencies if possible, as it develops options for the houses.

(3)Co-Ownership or Conversion to Condominium:

It should be noted that one of the tenants in the fourplex units on Hubbard (1,3,5,7,13) and Wineva (2,4,6,8) has expressed an interest in creating a co-ownership or condominium arrangement for those units. Since the units have common furnaces, this may be worth exploring, provided that there is an interest among the other tenants. A number of issues need to be explored however. In the case of condominium conversion, the legal expenses may be significant and need to be identified. There are also issues related to the City's condominium conversion policies that need to be explored. In terms of co-ownership, it may be difficult to obtain private financing. We would suggest that the interest of the other tenants in this option be determined, and if they are willing, the tenants be requested to make a proposal demonstrating the feasibility of this approach.

Guidelines For Subsidized Housing:

Staff were also asked to "identify clear guidelines as to what the City's specific criteria are for subsidized housing". As noted above, the property houses do not operate under any social housing programs, nor do they receive any subsidies from such programs. Under the business plan adopted by the former City Council, the Housing Company (Cityhome) operates the houses on a break-even basis, and provides the equivalent of subsidized rents to a number of low income households (currently 10 households). In effect, the Housing Company lowers the rents on these 10 units to a level that the tenants can afford (i.e. 30 percent of household income), and covers the loss from the rent revenue of the other properties.

The business plan itself provides the guidelines for the provision of these rent "subsidies"; these are equivalent to the criteria for Rent-Geared-to-Income (RGI) subsidies in the non-profit program and other buildings operated by Cityhome or the Metro Toronto Housing Company. Rent levels are set according to the provincial RGI scale, and (with the exception of low income households who were already living in the houses when the business plan was put in place) any new low income households must be selected from the waiting list for social housing. In other words, the criteria for the "subsidized" housing units in this portfolio are equivalent to those of the non-profit housing program in general.

Conclusion:

In light of the pressures on the City to respond to affordable housing needs, the proposal from the City's Housing Company deserves serious consideration. We recommend that the Corporate Services Committee decide to recommend or reject this proposal in its entirety before considering other proposals to sell the houses at market value.

Contact Names:

Rob Cressman, Phone: 392-0601, Fax: 392-0548; Email: rcressma@toronto.ca.

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(Report dated October 7, 1998, addressed to

the Corporate Services Committee from

Councillor Layton headed, "Sale of Property Houses")

Purpose:

(1)To provide housing opportunities for some of the 40,000 households on the City of Toronto waiting list for affordable housing; and

(2)To ensure that the January 1999 recommendations of the Mayor's Homelessness Action Taskforce are not pre-empted by a Council decision to sell affordable housing.

Recommendations:

(1)That all vacant units in the City's "Property Houses" portfolio be immediately rented to households in the emergency shelter system and/or families and individuals on the City's Housing Connections waiting list;

(2)That the City retain the ownership of all houses in the portfolio and that the City Housing Company manage this stock in a manner that maximizes the number of affordable units available for low-income families.

or alternatively

(2)That the City delay any decisions to sell units in the Property Houses portfolio for 12 months to facilitate the review of recommendations of the Mayor's Homelessness Action Taskforce with regard to the use of municipal assets for the reduction of homelessness.

Background:

Evidence is mounting of an unprecedented housing crisis in the City of Toronto: 40,000 households languish on the City's waiting list, emergency shelters are operating beyond maximum capacity, and as of the beginning of October, the City has already had its first cold weather related death of a homeless individual.

As the dimensions of the crisis became clear, the City initiated a comprehensive review of homelessness programs and policies and has begun to chart a new course through the work of the Mayor's Homelessness Action Taskforce. In its interim report, the Taskforce identified the need for "a multi-year program for preserving existing stock and creating new supply that meets anticipated need for affordable housing" as one of its nine key strategies. While final recommendations will not be made until January of next year, the sale of the Property Houses would seem to be in direct contradiction of the key strategic directions already identified.

Insert Table/Map No. 1

appendix 1

Insert Table/Map No. 2

appendix 1 end

Insert Table/Map No. 3

appendix 3

The Strategic Policies and Priorities Committee also submits the following report (November17, 1998) from Councillor Layton:

Recommendations:

(1)That the recommendations of the Corporate Services Committee (November 12, 1998) be adopted; and

(2)That recommendation Number 4 of the Chief Administrative Officer's report (November12,1998) be adopted.

Note: Recommendations 1, 2 and 3 of the Chief Administrative Officer's report are contrary to the motions adopted by both the Corporate Services Committee and the Community and Neighbourhood Services Committee.

Comments:

(1)How can Council (i) declare a homelessness disaster; and (ii) condemn OHC for selling houses and then turn around and sell its own houses without a fully developed housing policy?

(2)Should the Chief Administrative Officer and the Strategic Policies and Priorities Committee over-ride the clear position of two Standing Committees?

(a)Corporate Services Committee on November 9th recommended transferring the asset to the Housing Company and reaffirmed Council's decision to fill the vacant houses with people in need of family housing.

(b)The Community and Neighbourhood Services Committee on October 8th recommended that the 60 property houses be retained by the amalgamated Toronto Housing Company.

I urge the committee to follow the eloquently expressed advice of Councillors Feldman, Chong, King, Sinclair and the many others who spoke at their respective committees.

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The Strategic Policies and Priorities Committee also had before it the following reports/communications, which were circulated to all Members of Council with the agenda of the Strategic Policies and Priorities Committee for its meeting of November 17, 1998, and copies thereof are on file in the office of the City Clerk:

-(May 25, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL);

-(June 18, 1998) from Ms. Peggy Birnberg, Executive Director, Houselink Community Homes;

-(September 18, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL);

-(September 9, 1998) from Councillor Sandra Bussin, East Toronto - Ward 26;

-(August 21, 1998) from Ms. Kimberly L. Beckman, Davies, Howe Partners;

-(Undated) Appendix 2, entitled "Property Houses Survey";

-(November 5, 1998) from Mr. Joe Hayes;

-(October 30, 1998) from the Corporate Secretary, Board of Directors of the City of Toronto Non-Profit Housing Corporation (Cityhome) and the Board of Directors of the Metropolitan Toronto Housing Company Limited (MTHCL);

-(September 28, 1998) from Mr. Chris Papadatos and Mr. Harry Weisbaum;

-Appendix 2, a Property Houses Survey Form attached to the report (October 7, 1998) addressed to the Corporate Services Committee from Councillor Layton; and

-Clause No. 4 Of Report No. 10 of the Community and Neighbourhood Services Committee headed, "Disposition Of "Property Houses" Owned By The City Of Toronto", which was struck out and referred by Council at its meeting of October 28, 29 and 30, 1998, to the Strategic Policies And Priorities Committee for further consideration in conjunction with the report to be submitted to the Committee by the Corporate Services Committee on a corporate-wide policy for the sale of 'Property Houses', with a request that this matter be considered by the Committee during the afternoon session of its meeting or at a subsequent meeting.

(City Council on November 25, 26 and 27, 1998, had before it, during consideration of the foregoing Clause, the following report (November 20, 1998) from the City Solicitor:

Purpose:

The purpose of this report is to advise on various financial and other implications if City Council adopts the recommendations contained in Clause No. 8 of Report No. 24 of The Strategic Policies and Priorities Committee or, alternatively, if it were to adopt the initial recommendations of the Corporate Services Committee to that Strategic Policies and Priorities Committee meeting.

Funding Sources, Financial Implications and Impact Statement:

If City Council adopts the recommendations of the Strategic Policies and Priorities Committee contained in Clause No. 8 of Report No. 24 of The Strategic Policies and Priorities Committee, the Cityhome leasehold mortgage loan will be extended for up to one year. Consequently, the City's guarantee of this mortgage loan will also have to be extended for the same period.

Alternatively, if Council does not adopt the recommendations of the Strategic Policies and Priorities Committee but, rather, determines to take the action in Clause No. 28(a) of Report No. 17 of The Corporate Services Committee relating to each individual tenant being given the right to purchase his/her specific unit within any duplex, triplex or fourplex building, the City and/or the proposed amalgamated housing company (the "Housing Company") could incur very substantial implementation costs unless such transactions were structured as set out in the body of this report.

Recommendations:

(A)In the event that City Council adopts the recommendations of the Strategic Policies and Priorities Committee in this matter, then it is recommended that:

(1)the City's guarantee of Cityhome's leasehold mortgage loan respecting the Property House portfolio be extended for the renewal period of the leasehold mortgage, such period not to exceed one year;

(2)the Commissioner of Corporate Services, prior to recommending, after consultations with the Housing Company, that any duplex, triplex or fourplex properties be declared surplus, obtain confirmation from the Commissioner of Urban Planning and Development Services that the proposed use of the property as ownership housing does not contravene any City policy respecting the conversion of rental housing; and

(3)the appropriate City officials be authorized and directed to take all necessary steps to give effect thereto.

(B)In the event that City Council determines to adopt the initial recommendations of the Corporate Services Committee in this matter, then it is recommended that:

(1)the properties comprising the City's Property House portfolio be declared surplus, conditional upon the Board of Directors of the Housing Company or the Board of Directors of Cityhome and of The Metropolitan Toronto Housing Company Limited agreeing to accept a conveyance of the portfolio on the terms set by City Council;

(2)prior to offering to tenants any duplex, triplex or fourplex building (or any portion thereof) within the Property House portfolio, the Housing Company obtain confirmation from the Commissioner of Urban Planning and Development Services that the proposed use of the property as ownership housing does not contravene any City policy respecting the conversion of rental housing;

(3)consideration only be given to those Offers to Purchase from the tenants of the duplex, triplex and fourplex buildings made collectively by all the tenants living in each such building, on the terms and conditions outlined in the body of this report; and

(4)the appropriate City officials be authorized and directed to take all steps necessary to give effect thereto.

Council Reference/Background/History:

At its meeting of November 9, 1998, the Corporate Services Committee recommended to Council, among other things, that the ownership of the Property Houses be transferred to the amalgamated Municipal Housing Company and:

"(C)that existing tenants receive the right to purchase his/her own specific unit within any of the subject properties that are of the following type: a duplex, triplex or fourplex."

Subsequently, at its meeting of November 15, 1998, the Strategic Policies and Priorities Committee recommended to Council the adoption of the report (November 12, 1998) from the Chief Administrative Officer which recommended that Council adopt the October 26, 1998 report of the Commissioner of Corporate Services that was before the Corporate Services Committee on November 9, 1998, subject to certain amendments, including the following:

"(a)the City continue the management arrangement it has with the Housing Company and that the mortgages which expire on December1, 1998 be renegotiated and renewed for a period of up to one year,

(b)the Commissioner of Corporate Services be directed to work with the Housing Company to determine which properties could be declared surplus without undermining the balance of market rent required to support subsidized houses in the portfolio and the staff report's recommended process option 2, the "5Category Process" be used to guide staff in making such determination;".

The Strategic Policies and Priorities Committee adopted the report of the Chief Administrative Officer, subject to certain other amendments which do not directly relate to the subject matter of this report.

Comments and/or Discussion and/or Justification:

(a)Adoption of Strategic Policies and Priorities Committee Recommendations

One of the recommendations of the Strategic Policies and Priorities Committee was that the Property Houses mortgage, coming due on December 8, 1998, should be renegotiated and renewed for a period of up to one year. This is a leasehold mortgage which was given by Cityhome and guaranteed by the City. The principal amount of the mortgage outstanding as of the December 1, 1998 due date will be approximately $2,316,000.00. The interest rate for the renewal term will be lower than the current original rate because of the substantial drop in rates that has occurred over the past five years. If the leasehold mortgage is to be renewed accordingly, then the City's guarantee will have to be extended for the renewal period, such period not to exceed one year.

A key recommendation of the Strategic Policies and Priorities Committee was that the October 26, 1998 report of the Commissioner of Corporate Services be adopted (subject to certain amendments which need not be discussed in the context of this report). That report contemplates the possibility of selling duplex, triplex and fourplex ("multiplex") properties to their tenants jointly, who would then be responsible for organizing the manner of their property tenure (for example, condominium ownership). There are six multiplex buildings within the Property House portfolio containing a total of 19 units. (In addition, there is one apartment building containing 17 units, but I am advised that the units in the apartment building will not be offered for sale.)

If any of the City's multiplex buildings are offered for sale in the manner contemplated, the intended conversion of these rental units to private ownership should not contravene any City policies. Policies respecting the conversion of rental housing, presently contained within the City of Toronto Official Plan, are currently the subject of review. Before any multiplex property is offered for sale to its tenants, the Housing Company should receive confirmation from the Commissioner of Urban Planning and Development Services that the proposed conversion of the property will not contravene City policies.

(b)Adoption of the Corporate Services Committee Recommendations

In the event that Council determines to adopt the recommendations of the Corporate Services Committee, then some further parameters on the transaction structure require delineation.

The conveyance of the Property House portfolio by the City to the Housing Company would constitute a disposition of surplus land and would therefore be subject to the provisions of By-Law No. 551-1998 governing the sale of real property. If City Council decides to carry out this conveyance, it should declare the Property House portfolio surplus, subject to the Board of Directors of the Housing Company or the Board of each of Cityhome and The Metropolitan Toronto Housing Company Limited agreeing to the City's terms of the transfer.

The Corporate Services Committee recommended that tenants in multiplex buildings receive the right to purchase their individual units. Again, before offering such units for sale, the Housing Company should obtain confirmation from the Commissioner of Urban Planning and Development Services that the proposed conversion of the property will not contravene City policies.

Recommendation No. (1)(C) of the Corporate Services Committee, namely, that individual units within the multiplex buildings be offered to their respective tenants on an individual basis, would require that the units first be made legally capable of being conveyed to each such tenant. This would have to be carried out by one of three legal methods, namely, creation of a condominium, an equity co-operative, or a co-tenancy. Because of the many issues and complexities involved in establishing individual unit ownership in multiplex buildings, I am recommending that the tenant/purchasers of multiplex buildings have full autonomy and responsibility in organizing their buildings in whatever way best suits their needs and preferences without Housing Company involvement. This would be accomplished by giving consideration to the actual sale of any multiplex property only after all the tenants in any such building jointly deliver an offer to purchase the entire property at a stipulated sale price. The offer would set out a closing date later than usual in order to give the tenants adequate time to agree upon the manner in which they would take title (that is, condominium, equity co-operative, co-tenancy) and to take all steps to arrange the necessary legal requirements and to enter into all necessary documentation between themselves. The cost of creating the legal entity to govern the property should be borne by the beneficiaries of the sale, the tenant/purchasers.

As each of these three options involves various legal complexities and entitlements, expenses, and potential property management issues, the tenants would have to decide at the outset which of these three methods to employ. This would entail a comparative examination of a multiplicity of factors such as the steps to be taken and documentation required for each method, the applicability of the City's rental housing conversion policies to each of the three conversion methods and the viability of obtaining mortgage financing with each method. The relative merits of all factors would then have to be weighed.

Although the establishment of condominium, equity co-operative or co-tenancy status differ in their technical details, similar issues would arise in each case. I will illustrate the nature of the process that would be undertaken by the tenants by reference to the process of creating a legal condominium. I will then discuss some differences in the case of equity co-operatives and co-tenancy. The process of creating a condominium would include the following steps:

(1)A detailed examination of each building would have to be made in order to determine which portion of the property should be registered under the Condominium Act as, respectively, residential units, parking units, common elements or exclusive use common elements (e.g. , shared use of common basements/yards or subdivision into individual entitlement areas?).

(2)Based on the decision reached as to how a multiplex property should be divided, an Ontario Land Surveyor would then have to survey the property and prepare a condominium plan, that is, a plan showing the division of the building into its various elements of units, common elements and other components, if any, at its several levels and through several cross sections.

(3)An analysis would also have to be made of each building in terms of organizational matters to be set out in the documentation required by the Condominium Act, the following being but some few examples:

(i)common expenses: how the differing location, size and amenities of units within one building will be allocated as to the sharing of expenses in unequal percentages; and

(ii)maintenance and repairs: what work (replacing roofs, doors and windows, as well as the more frequent issues of painting and repairs to various portions of the building) may be carried out by the unit owners independently and what work will require the approval of all of the owners in the building.

(4)A dispute resolution process would have to be established for cases where the number of votes for or against a matter are equal.

The establishment of an equity co-operative would entail the incorporation of a corporation which would hold title to the building. Each tenant would purchase a share and would also enter into an agreement with the corporation for occupying his or her unit. Although a survey of the property would not be required, and the format of the documentation would be different than condominium documents, the process of analysing the property and allocating areas of exclusive use (that is, the units) and common areas and determining the various rights and obligations of the owners, including how costs are to be shared, would be similar to that in establishing a condominium.

Under co-tenancy (legally called a "co-tenancy" although it is actually an ownership situation under which co-owners are called "tenants-in-common") , all of the owners own the property in common and grant to each other rights of occupancy of the specific units. A co-tenancy agreement must be negotiated and executed among all the owners, also addressing the issues discussed above.

In addition to providing the tenant/purchasers with full control over the organization of their building, the sale of multiplex buildings on a joint basis as proposed by this report would avoid the situation in which some units in one building will be owned by tenants and some by the Housing Company. That is, unless all of the tenants jointly purchase the property, a situation could easily arise where some, but not all, of the tenants in a building would decide to purchase, leaving the Housing Company as a part owner of the building. It is conceivable that many tenants would not want to share ownership of a building with a corporate owner such as the Housing Company but would want to own with other individuals, with whom they have a greater commonality of interest.

Any such mixed ownership situations would also presumably be problematic for the Housing Company. In such cases, the Housing Company would own the unsold unit(s) in the building, and management of the unit(s) would be more complicated and possibly more expensive because of the requirement of sharing property management decision-making and administration with the other owners.

Leaving the organizational process to the tenants of each multiplex by offering to sell them their buildings collectively would not only give the residents full autonomy in an area which affects them vitally, it would also mean that the Housing Company and the City would not be expending enormous staff effort and other expenditures in the complicated process of devising property ownership relationships for private individual ownerships.

However, if there was an absence of agreement by all affected tenants, then it would make little sense to proceed with other than a traditional "single" buyer. If the tenants in any particular multiplex building fail to agree, or are unable/unwilling to implement any initial agreement having been reached among themselves, then the property as a whole should be offered for sale to the tenant having the longest tenure.

Conclusions:

If City Council adopts the recommendations of the Strategic Policies and Priorities Committee, certain steps will have to be taken as outlined above.

Similarly, if Council adopts the recommendations of the Corporate Services Committee, staff should obtain confirmation of non-contravention of City policies respecting the conversion of rental housing before any multiplex units are offered for sale to tenants. Also, City Council should declare the Property Houses surplus, subject to the Board of the Housing Company or the Boards of Cityhome and The Metropolitan Toronto Housing Company Limited agreeing to accept the conveyance on Council's terms. The best method for units in duplexes, triplexes and fourplexes to be offered for sale to their respective tenants is for the tenants to be given the opportunity to buy their buildings collectively, that is, such that each building will be able to be organized in the manner preferred by its tenant/purchasers, and the complications and consequent expenses which would otherwise arise would not be imposed upon the Housing Company.

Contact Name:

Stanley Emerson - Legal Services - 392-8736.)

9

Tenant Tax Notification

(City Council on November 25, 26 and 27, 1998, deferred consideration of this Clause to the next regular meeting of City Council to be held on December 16, 1998.)

The Strategic Policies and Priorities Committee recommends that:

(1)the Option titled "Group A" contained in the following report (November 13, 1998) from the Chief Financial Officer and Treasurer be approved as the method of notifying landlords and tenants of tax changes in 1998, which reads:

"Group A - Notices of Automatic Rent Reductions

(1)Mandatory - Multi-Residential$8,400.00

(2)Discretionary - Residential$106,326.00

Total$114,726.00

(2)the Chief Financial Officer and Treasurer be requested to prepare a uniform advertisement and notice of the tax changes for distribution to Members of Council to assist them in informing their constituents; and

(3)the appropriate civic officials be authorized and directed to take whatever actions are necessary give effect thereto.

The Strategic Policies and Priorities Committee submits the following report (November13,1998) from the Chief Financial Officer and Treasurer:

Purpose:

In response to the request by the Budget Committee, this report further clarifies the cost of the tenant tax notification program for 1998.

Recommendation:

That this report be received for information.

Background:

At its meeting on July 21 and 23, 1998, City Council adopted Clause 2 of Strategic Policies and Priorities Committee Report No. 13 entitled "Multi-Residential Property Class - Tax Policy Options." The report recommended, among other things, that all tenants be informed of any tax increases and decreases due to reassessment or tax policy changes by the City and that a plan for such notification be developed by the Chief Financial Officer and Treasurer and that a budget for this undertaking be produced and submitted to Council through the Budget Committee and Strategic Policies and Priorities Committee, after consultation with the Federation of Metro Tenants Associations ("the FMTA").

At its meeting on November 9, 1998, the Budget Committee had before it the report "A Tenant Tax Notification" (November 4, 1998). The Committee requested the Chief Financial Officer to report to Council to further clarify the options available with regard to notifiying landlords and tenants of tax changes and to break out the cost for both the mandatory requirements and the discretionary options. The Budget Committee also recommended the deletion of advertising costs. These costs have been removed from the figures contained in this report

Comments:

The table below sets out the cost of providing the mandatory and discretionary notices for all tenants and landlords in the residential and multi-residential property classes as requested by Council. There are six different notices that could be mailed to landlords and tenants, depending on the tax change experienced by the property. The Tribunal has approved a form for Notices of Automatic Rent Reductions (Items1 and 2 below) which must be used by the City. The estimated cost of the tenant tax notification program approved by Council at its meeting held on July 21 and 23,1998 is $429,054. These costs have been amended to exclude the media advertising costs as struck out by the Budget Committee. Appendix A has the details.

Contact Names:

Giuliana Carbone, 392-8065, Lynne Ashton, 397-4203, Paul Wealleans, 397-4208.

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Appendix A

Summary of Estimated Costs - 1998 Tenant Tax Notification
	# of Notices	Cost Component	Estimated Cost ($)	Estimated Cost Totals ($)
A. Notices of Automatic Rent Reductions
1.Mandatory Notices:
Under the TPA, the City is required to notify both landlords and tenants of multi-residential properties where the tax decrease is 1998 is more than 2.49%. Notices must be sent by December 15, 1998.	11,983	Printing and mailing	$8,400	$8,400
2.Discretionary Notices to Residential Landlords & Tenants who qualify for Automatic Rent Reductions
Rented properties in the residential property class (i.e., properties with less than 7 units) with tax decreases of more than 2.49% also qualify for ARR. The City is not legally required to send notices to this group.	137,223	Development of brochure, notification form, printing and mailing	$96,193
		Information lines for landlords and tenants	$10,133	$106,326
Group A - Total Number of Notices	149,206	Combined Cost - Items 1 & 2		$114,726
B. Notices of Tax Decreases Less Than 2.49%
3.Discretionary Notices to Multi-Residential Landlords and Tenants with Tax Decreases less than 2.49%
The City is not required to notify this group of landlords and tenants. Tax decreases of less than 2.49% do not result in automatic rent reductions for tenants. Tenants must apply for a possible rent reduction at a cost of $45.00, or negotiate a reduction with the landlord.	142,159	Development of brochure, notification form, printing and mailing	$109,978
		Information lines for landlords and tenants	$10,497	$120,475
4.Discretionary Notices to Residential Landlords and Tenants with Tax Decreases less than 2.49%
The City is not required to notify this group of landlords and tenants. Tax decreases of less than 2.49% do not result in automatic rent reductions for tenants. Tenants must apply for a possible rent reduction at a cost of $45.00, or negotiate a reduction with the landlord.	14,816	Development of brochure, notification form, printing and mailing	$11,462
		Information lines for landlords and tenants	$1,094	$12,556
Group B - Total Number of Notices - Items 3 & 4	156,975	Combined Cost - Items 3 & 4		$133,031
C. Notices of Tax Increases
5.Discretionary Notices to Multi-Residential Landlords and Tenants with Tax Increases
The City is not required to notify landlords and tenants of properties with tax increases. Where taxes increase, rents do not automatically increase. Landlords must apply to increase rents above annual guidelines.	126,771	Development of brochure, notification form, printing and mailing	$98,074
		Information lines for landlords and tenants	$9,361	$107,435
6.Discretionary Notices to Residential Landlords and Tenants with Tax Increases
The City is not required to notify landlords and tenants of properties with tax increases. Where taxes increase, rents do not automatically increase. Landlords must apply to increase rents above annual guidelines.	87,157	Development of brochure, notification form, printing and mailing	$67,427
		Information lines for landlords and tenants	$6,436	$73,863
Group C - Total Number of Notices - Items 5 & 6	213,928	Combined Cost - Items 5 & 6		$181,298
Group A, B and CTotal Number of Notices - Items 1 to 6	370,903	Total Cost of Items 1 to 6		$429,055
Costing of Other Combinations:
Group D Cost of sending notices to all landlords and tenants in multi-residential properties with tax decreases (Items 1 and 3)	154,142			$128,875
Group E Cost of sending notices to all landlords and tenants in multi-residential properties with tax increases or decreases (Items 1, 3 and 5)	280,913			$236,310

The Strategic Policies and Priorities Committee also submits the following transmittal letter (November 11, 1998) from the City Clerk:

Recommendation:

The Budget Committee on November 11, 1998 recommended to the Strategic Policies and Priorities Committee and Council the adoption of the report (November 4, 1998) from the Chief Financial Officer and Treasurer regarding tenant tax notification, subject to the following:

(1)deleting "Communications - Newspaper Advertisements" in "Appendix 'C' Summary of Estimated Costs - 1998 Tenant Tax Notification", at a savings of $24, 346.00; and

(2)the Chief Financial Officer and Treasurer providing a report to Council outlining all available options.

Background:

The Budget Committee on November 10, 1998, had before it a report (November 4, 1998) from the Chief Financial Officer and Treasurer regarding tenant tax notification.

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(Report dated November 4, 1998, addressed to the

City of Toronto Budget Committee from the

Chief Financial Officer and Treasurer)

Purpose:

This report provides information on the automatic rent reduction notices and notices of changes in municipal taxes which will be sent to all residential and multi-residential tenants for the 1998 tax year and requests that funds for this notification process be provided from corporate contingency.

Financial Implications:

In order to provide tax notices to all tenants, funds in the amount of $453,400.00 are required to be provided ($8,400.00 for mandatory notices and $445,000.00 for additional discretionary notices per Council's direction) from corporate contingency.

Recommendations:

(1)That Council approve the process for sending notices of 1998 property tax changes to all tenants as outlined in this report.

(2)That funds in the amount of $453,400.00 be provided from corporate contingency.

(3)That the funds in the amount of $453,400.00 be allocated for the increased level of service for annual tenant notification of tax changes and included in the Finance Department's 1999 Operating Budget if Council wishes to continue this extent of notification in 1999 and future years.

(4)That the appropriate civic officials be authorized and directed to take whatever actions are necessary to give effect to the foregoing.

Background:

At its meeting on July 21 and 23, 1998, City Council adopted Clause 2 of Strategic Policies and Priorities Committee Report No. 13 entitled "Multi-Residential Property Class - Tax Policy Options." The report recommended, among other things, that all tenants be informed of any tax increases and decreases due to reassessment or tax policy changes by the City and that a plan for such notification be developed by the Chief Financial Officer and Treasurer and that a budget for this undertaking be produced and submitted to Council through the Budget Committee and Strategic Policies and Priorities Committee, after consultation with the Federation of Metro Tenants Associations ("the FMTA").

Comments:

Under the provisions of the Tenant Protection Act ("the TPA"), the City is required to send notices of property tax decreases to landlords and tenants by December 15, 1998 where the tax decrease in 1998 is more than 2.49 percent. City Council adopted the recommendation of the Assessment and Tax Policy Task Force that the City expand the required level of service to notify tenants in all residential properties (including tenants occupying properties with less than seven units) of tax changes resulting from reassessment implemented in 1998. As a result, notices will also be mailed to tenants and landlords where the tax decrease is 2.49 percent or less (not an automatic rent reduction) and where taxes have increased (not an automatic rent increase; the landlord would have to apply for an above guideline increase).

Notices of Automatic Rent Reductions:

(1)The TPA provides for automatic rent reductions where:

(a)municipal taxes decreased by 2.49 percent or more; and

(b)there are seven or more units in the residential complex (i.e. multi-residential property tax class).

Municipalities are required under the Act to notify both landlords and tenants of these rent reductions. For 1998, the deadline for the City to provide these notices is December 15, 1998. Automatic rent reductions for eligible tenants would take effect January 1, 1999.

The Ontario Rental Housing Tribunal has produced a form that municipalities are required to use when notifying landlords and tenants about automatic rent reductions. A sample of the form to be sent to landlords is attached as Appendix B for information. A similar form must be used to notify tenants of automatic rent reductions. The Tribunal has also written a public information brochure entitled "Automatic Rent Reductions and Tax Decreases" for landlords and tenants but has not yet released the brochure for distribution. It is anticipated that this brochure will be reproduced by the City for inclusion with the Notices of Automatic Rent Reductions.

Capping tax increases at 2.5 percent in the multi-residential property class has significantly reduced the number of multi-residential properties that qualify for automatic rent reductions. Legislation requires that capping be funded within the property class and multi-residential properties with tax deceases have had their decreases reduced in order to fund the caps. There are 126 properties in the multi-residential property tax class (11,857 units) that received tax decreases of greater than 2.49 percent in 1998 (i.e. mandatory notices). The average 1998 tax decrease received by these properties is 3.16 percent, which will result in average automatic rent reductions of 0.63 percent.

There are 55,126 rented properties in the residential property class, (82,097 units) that received tax decreases of 2.49 percent or more in 1998. The average 1998 tax decrease received by these properties is 7.73 percent, which will result in average automatic rent reductions of 1.55 percent. Although only landlords and tenants of multi-residential properties are required to be notified under the Act, Council's direction in July 1998 will result in a total of 137,223 discretionary Notices of Automatic Rent Reduction being mailed by the City in 1998 to include other tenanted properties in the residential property class.

The cost of producing and mailing Automatic Rent Reduction notices is borne entirely by the municipality. The Tribunal has approved a form and produced a brochure, but will not be supplying the City with sufficient copies for all eligible tenants and landlords. As a result, the City must incur the expense of reproducing the forms and brochures for notices of tax decreases greater than 2.49 percent. The cost of producing and mailing 149,206 notices of Automatic Rent Reduction is estimated to be $104,593.00.

(2)Discretionary Notices - Tax Decreases Less Than 2.49 percent and Tax Increases:

In response to Council's direction, additional notices will be mailed to landlords and tenants of properties with tax decreases in 1998 of less than 2.49 percent. An information letter or brochure will be designed to inform tenants of the process by which they can have their rents reduced due to the decrease in taxes. Tax decreases of less than 2.49 percent do not result in automatic rent reductions. The tenant would need to either negotiate a reduction in their rent with their landlord, or must apply to the Tribunal for an order reducing their rent (the application fee is $45.00).

Notices are also to be mailed to landlords and tenants of properties that experienced a tax increase in 1998. Where taxes increase, rents do not automatically increase. Instead, the landlord would need to file an application with the Tribunal requesting a rent increase above the guideline (in 1998, the guideline is 3 percent). As part of filing the application, the landlord must pay a filing fee, and must provide information to tenants in the residential complex about the grounds for that application (including advising tenants that a property tax increase has occurred). In determining the rent increase to be allowed because of the property tax increase, the Tribunal is required to consider the portion of the tax increase which exceeds a certain percentage (three-year moving average inflation rate for municipal taxes and charges in Ontario; the rate for 1998 was 1.57 percent - O.Reg. 195/98).

There are no Tribunal-approved forms for notices of tax decreases less than 2.49 percent or tax increases. The Finance Department, in consultation with the Housing Division of the Community and Neighbourhood Services Department, will have to produce two separate forms and information packages to notify tenants of these tax changes.

The information packages will include information about landlord and tenant rights and obligations under the new TPA with respect to rent decreases and increases that may result from changes in municipal taxes. For tenants in multi-residential properties with tax increases, no tenant should face a large rent increase due to increases in municipal taxes since tax increases are capped at 2.5 percent for 1998, 1999 and 2000. However, there are tenants in residential properties whose rents may be affected by tax increases resulting from the reassessment since tax increases in the residential property class are phased-in, not capped. These tenants may also need to be informed of their rights under the TPA with respect to how these increases may impact on their rent (for example, tenants receiving tax increase notices need to understand that these notices do not mean that their rent automatically increases).

Discretionary Tenant Notices - Issues:

There are several issues that Council should be made aware of with respect to mailing the discretionary notices to tenants and landlords. There are limited benefits. Tenants receiving the notices of small tax decreases cannot automatically reduce their rent, and may need to file an application (at a cost of $45.00) to realize any benefit at all. This can be offset for sitting tenants with a maximum rent which is higher than the rent they currently pay. For example, the average rent for a two-bedroom unit in the City is $821.00 (1997). A tax decrease of 2.49 percent (the maximum amount on this type of notice) may result in a rent decrease of $4.00 per month; it would take almost a year of paying rent for the tenant to recover the cost of the application fee.

In addition, mailings to tenants in the former City of Toronto have resulted in confusion for many tenants, where feedback from tenants ranged from confusion as to whether the notice was a tax bill to be paid, there was incorrect data on the assessment roll or concerns that it was an inappropriate use of tax dollars.

A notice indicating that a unit has had a tax increase does not necessarily mean the tenant will receive an automatic rent increase, however, it is possible that recipients may draw that conclusion and tenants may end up paying more rent than they should. As mentioned earlier, the landlord cannot increase the rent automatically as a result of a tax increase. The landlord must file an application with the Tribunal, and as part of that process must provide notice to the tenants about the tax increase (likely the same information that would be on the notice of tax increase). In other words, if the City had opted not to send notices of Tax Increase, tenants would either be notified by their landlord about the increase as part of the application process, or tenants would not be notified because the landlord has decided not to increase the rent.

Tenanted properties in the residential class could experience large tax increases even with the phase-in, but landlords must apply to the Tribunal to increase rents above the guideline. Due to the capping of tax increases for properties in the multi-residential class, and the legislated method for converting tax changes to rent changes (multiply by 20 percent), the maximum impact of a tax increase on rent will be .5 percent and may be too small to warrant an extra allowance even if the landlord were to file an application with the Tribunal.

There are also concerns regarding the accuracy of the tenant information on the assessment roll. Due to the transient nature of tenants and the lack of regular tenant information updates by the Ministry of Finance's Regional Assessment Offices, the tenant information on the assessment roll is not accurate. As a result, the notices will include the name of the assessed tenant as set out on the roll but will also be addressed to the "The Occupant". It is anticipated, based on the experience in the former City of Toronto, that 10 percent of all tenant notices will be returned as undeliverable. It was not possible to determine whether the remaining notices were read by the tenant or discarded.

Tenant Notices - Proposed Process and Estimated Cost:

The estimated cost of providing the notices is set out below:

The average estimated cost per notice is $0.75, which includes postage, envelopes, paper, as well as the design and printing of three landlord and tenant information brochures. The notices will be produced and mailed by an outside printing firm, with data supplied by the City. A total of 520,109 notices will be mailed to landlords and tenants across the City at a total cost of $453,400.00. Of this amount, 100,462 notices will be mailed to owners/landlords and 419,647 notices will be mailed to tenants.

The information for the notices, including the names and addresses of both tenants and landlords, will be obtained from the 1998 Assessment Roll. The assessment roll includes individual tenant names and apartment unit numbers. However, due to concerns regarding the accuracy of this data, the notices will include the name of the assessed tenant as set out on the roll but will also be addressed to the "The Occupant".

Ontario Rental Housing Tribunal:

The Ontario Rental Housing Tribunal currently provides information to the public through local offices (former Rent Control Offices) at various locations in the Greater Toronto Area. These offices will continue to provide the client services similar to those provided by the former Rent Control Offices, including the provision of information regarding landlord and tenant laws, administration of applications concerning rent increases, rebates and landlord and tenant matters, and investigation of complaints about illegal rents or charges. The information is given to both landlords and tenants.

The Tribunal can be reached 24 hours a day by calling a toll-free number. Staff at the Tribunal have advised that they will be adding an additional line to respond to the influx of inquiries that will occur when municipalities across Ontario begin sending out the notices of automatic rent reduction to meet the December 15th deadline. It is recommended that all inquiries about automatic rent reductions be referred to the Tribunal.

Tenant Hotline:

It is anticipated that the mailing of these notices will generate a significant number of inquiries from tenants and landlords. Staff in the local tax offices can provide information regarding property tax changes. However, they do not have the expertise to provide detailed information about the new rules under the Tenant Protection Act or other tenant and landlord issues. In addition, the deadline for mailing the mandatory Notices of Automatic Rent Reductions of December 15, 1998 coincides with the mailing of the City's first supplementary billing and preparation for the 1999 interim billing. Due to CVA and the changes that have occurred for all taxpayers this year, tax office staff have been responding to an unprecedented number of inquiries relating to property tax issues. The additional task of providing information related to tenant/landlord issues will be onerous and will result in reallocating tax office staff to non-tax requirements.

Staff in the Housing Division of the Community and Neighbourhood Services Department are very knowledgeable about landlord and tenant issues, but the Division does not have the capacity to handle large-volume inquiries, nor does it have the tax information needed to respond to questions about changes to property taxes. The Division occasionally receives calls from tenants regarding landlord/tenant issues, but most calls are referred to the FMTA.

The City currently provides assistance to tenants through the funding of the Tenant Hotline Service which is administered by the FMTA. The primary function of the Tenant Hotline is to provide free information and counselling to tenants regarding their rights and obligations in their landlord and tenant relationships, and about any changes in the existing tenant-related legislation. The information and counselling given usually covers topics such as eviction, termination of tenancy by tenants, maintenance responsibilities, rent increases, discrimination, privacy and conversion and/or demolition of rental units. Other services provided by the Tenant Hotline include information/advice to tenants who wish to form a tenants' association, and referrals to specified agencies such as the four local Tribunal Customer Service offices, the City's property inspection office, and legal aid clinics.

The FMTA has advised that they are already fielding an overwhelming number of calls regarding the TPA and are not able to assist the City in responding to inquiries that will result from the mailing of the tenant notices. The FMTA has suggested that Tim Welch and Associates may be able to provide, on a fee for service basis, tenant communication services required. A proposal by this firm to provide tenant communication services has been submitted. Their proposal to provide these services, at an estimated cost of $27,520.00, is as follows:

(a)provide a dedicated tenant hotline services and hire two staff persons for a period of 8 weeks to provide information to tenants;

(b)conduct several tenant information sessions at various locations across the City;

(c)provide advice and assistance to the City in preparing forms and information packages; and

(d)provide a training session for councillors and their staff on the communication work being done, as well as an overview of the automatic rent reduction provisions of the TPA if requested.

Information for Landlords:

An increased number of inquiries at local area tax offices from landlords, particularly as a result of the discretionary notices, is also anticipated. As with tenant inquiries, if landlord inquiries venture into areas such as the application process, landlord and tenant obligations, and other matters not related to just the tax notices themselves, staff will have to refer the callers to either to the Tribunal or to an information and advocacy group. Landlord organizations, such as the Greater Toronto Apartments Association (GTAA), have already begun an education program for landlords about mandatory requirements under the TPA for property tax decreases. GTAA has advised that they are willing to handle landlord inquiries referred by City staff, however, they acknowledge that this will create additional work -- especially to revise existing education materials so as to include information about discretionary notices. The GTAA has advised that, with $10,000.00 funding from the City, they would also be able to provide the following consultation and inquiry services:

(a)hire one staff person for a period of 10 weeks following the City's mailing to respond to inquiries;

(b)revise existing educational materials and literature;

(c)prepare and mail a landlord fact sheet about the discretionary notices to be mailed to all landlords by the City;

(d)conduct one large public seminar for all landlords (not just members);

(e)put in a dedicated telephone line to answer inquiries; and

(f)provide advice and assistance to the City in preparing forms and information packages.

It is recommended that funding be provided in the amount of $37,520.00 for the tenant and landlord information services set out above. Also, as part of the notification process, staff will prepare and implement a communication strategy to ensure that landlord and tenant organizations and related stakeholders are aware of the notices, and can therefore be prepared for any calls they may receive. These groups include the Ontario Rental Housing Tribunal, Community Legal Clinics and Housing Help Centres. This will include newspaper advertisements in the major dailies, community newspapers and ethnic newspapers, informing landlords and tenants of this mailing. The estimated cost of these advertisements is $24,346.00.

Summary of Costs:

Appendix C summarizes the funding required to notify all tenants of the tax changes due to reassessment as set out in this report. The total cost of this notification is $453,400.00.

Tenant Tax Notices - 1999 and Future Years:

If Council requests that all tenants be notified of tax changes annually, funds in the amount of $453,400.00 should be allocated as an annual expenditure and included in the Finance Department's Operating Budget.

Conclusion:

City Council directed that tenants in all residential properties (including tenants occupying residential properties with less than seven units) be informed of tax changes resulting from reassessment implemented in 1998. In order to provide tax notices to all tenants, funds in the amount of $453,400.00 are required to provided from corporate contingency. In order to respond to the anticipated increase in landlord and tenant inquiries that will result from this mailing, it is recommended that tenant information services be provided by Tim Welch and Associates, and inquiry services for landlords be provided by the Greater Toronto Apartment Association on a fee for service basis. The cost of these services is $37,520.00 and is included in the total funds requested.

Contact Names:

Lynne Ashton 397-4203, Paul Wealleans 397-4208.

Insert Table/Map No. 1

appendix a - 1998 tenant tax notification - tennat tax notices

Appendix B

Sample Automatic Rent Reduction Form - Ontario Rental Housing Tribunal

Notice of Rent Reduction

Municipal Taxes Reduced

Rent Reduction

This rent reduction is allowed under section 136 of the Tenant Protection Act because the municipal property taxes for the residential complex have decreased.

Tenants do not need permission from the landlord or the Ontario Rental Housing Tribunal (the Tribunal) to reduce the rent by this amount. However, tenants and landlords should discuss the calculation of the dollar amount of the rent reduction before the rent is reduced.

Important

Information(1)[Name of municipality} is not responsible for deciding whether the amount of the rent reduction set out above is correct or whether the rent has been reduced by the correct amount.

(2)If the landlord or tenant believes the percentage rent reduction set out above is not correct, they have until March 31, 1999 to file an application with the Tribunal for an order to vary the amount of the rent reduction.

(3)If the rent the tenant pays is not reduced in accordance with this notice, the tenant can apply to the Tribunal for an order requiring the landlord to pay them a rebate. The tenant must apply by December 31, 1999.

(4)If the tenant has already received a Notice of Rent Increase effective after December 31, 1998, it may or may not take into account the rent reduction set out above. The tenant and landlord should discuss what the tenant is required to pay on the effective date of the Notice of Rent Increase.

(5)For information about how the rent reduction set out in this notice affects the rent for a rental unit, or about applying to vary the amount of the rent reduction, please call the Tribunal at 1-888-332-3234. For information about how the percentage rent reduction was calculated, please call [name of municipality] at [phone number].

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Appendix C

Summary of Estimated Costs - 1998 Tenant Tax Notification

(City Council on November 25, 26 and 27, 1998, had before it, during consideration of the foregoing Clause, the following communication (November 23, 1998) from the City Clerk:

Recommendation:

The Assessment and Tax Policy Task Force on November 20, 1998, recommended to Council the adoption of the recommendation contained in the report (November 11, 1998) from the Budget Committee, addressed to the Strategic Policies and Priorities Committee.

The Task Force reports having directed the City Clerk to advise Council that Recommendation No.1 contained in Clause No. 9 of Report No. 24 of The Strategic Policies and Priorities Committee is out of order in that Council has already decided in July of this year to notify all tenants.

Background:

The Assessment and Tax Policy Task Force on November 20, 1998, had before it a report (November 4, 1998) from the Chief Financial Officer and Treasurer regarding tenant tax notification.

The Task Force also had before it the decision from the November 17, 1998 meeting of the Strategic Policies and Priorities Committee.)

10

Other Items Considered by the Committee

(City Council on November 25, 26 and 27, 1998, received this Clause, as information, subject to:

(a)striking out and referring Item (c), entitled "Extending the Termite Control Program Across the City of Toronto", back to the Strategic Policies and Priorities Committee for further consideration; and

(b)striking out and referring Item (d), entitled "Court Ordered Recount in Scarborough Malvern- Ward 18", together with the additional documentation submitted by Councillor Berardinetti, back to the Strategic Policies and Priorities Committee for further consideration and report thereon to Council for its next regular meeting to be held on December 16, 1998.)

(a)Toronto Police Service - Air Service Business Case

The Strategic Policies and Priorities Committee reports having referred this matter to the Emergency and Protective Services Committee for further consideration together with the additional material filed by Councillor Chow.

(i)(September 25, 1998) from the City Clerk forwarding the action of the Budget Committee from its meeting held on September 23, 1998, and recommending that:

(1)the RCMP, OPP and the GTSB be formally approached to determine if there are opportunities for joint ventures;

(2)the Federal Government be requested to increase the Criminal Code penalties or create new offences when a person in a vehicle does not stop for the police; and

(3)the Provincial Government be requested to increase the Highway Traffic Act penalties or create a new offences when a person in a vehicle does not stop for the police.

(ii)(September 30, 1998) from Mr. Eric Greenspoon, President, Noisewatch conveying total disapproval of any police helicopter service in Toronto and requesting that the proposal for helicopters be rejected.

Detective Chief Steven Reesor was present at the Strategic Polices and Priorities Committee to answer questions.

(b)City Of Toronto Grants Policy

The Strategic Policies and Priorities Committee reports having deferred consideration of this matter to its next meeting on December15, 1998.

(October 26, 1998) from the City Clerk forwarding the action of the Municipal Grants Review Committee from its meeting of October 26, 1998, recommending to the Strategic Policies and Priorities Committee the adoption of the report (September 16, 1998) from the Commissioner of Community and Neighbourhood Services which recommends that:

(1)the City of Toronto Grants Policy be adopted as presented in Appendix 1;

(2)the Anti-Racism, Access and Equity Policy Guidelines be adopted as presented in Appendix2;

(3)the Commissioner of Community and Neighbourhood Services, in consultation with the appropriate officials, be directed to prepare the administrative guidelines described under Section XVI of the proposed policy for the review of the Municipal Grants Review Committee at its October meeting; and

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

(c)Extending The Termite Control Program Across The City Of Toronto

The Strategic Policies and Priorities Committee reports having received the report (November 6, 1998) from the Commissioner of Community and Neighbourhood Services for information.

(November 6, 1998) from the Commissioner of Community and Neighbourhood Services responding to Council's request of July 29, 30 and 31, 1998 to report to the Strategic Policies and Priorities Committee on extending former City of Toronto Termite Grants to all of the former municipalities in 1998, and recommending that the foregoing report be received for information.

(d)Court Ordered Recount In Scarborough Malvern - Ward 18

The Strategic Policies and Priorities Committee reports having received the report (November 12, 1998) from the City Solicitor and requested that the previously requested report from the City Clerk and the City Solicitor be expedited, and that this report also include suggested amendments to the Municipal Elections Act, which would provide, in appropriate circumstances, for reimbursement of costs to candidates involved in election recounts.

(November 12, 1998) from the City Solicitor forwarding a report responding to City Council's direction that the City Solicitor report on the fee requested by Mr. Ayres to prepare a report requested by City Council respecting the above-noted election recount and recommendations to amend the Municipal Elections Act, 1996, and recommending that the foregoing report be received for information.

(e)Renovations To Toronto City Hall

The Strategic Policies and Priorities Committee reports having referred this matter to the Budget Committee for consideration.

(November 16, 1998) from Mayor Lastman forwarding a report concerning the renovation costs to Toronto City Hall and recommending:

(1)a complete plan detailing the full scope of improvements, upgrades and renovations required at the Toronto City Hall site;

(2)full cost estimates for all such improvements, upgrades, renovations and additions being contemplated, including the real costs of restoring the east and west towers; repairing Nathan Phillips Square, and ensuring all conditions for occupancy are met;

(3)timelines and detailed plans for all expected moves into Toronto City Hall; and for the sale or lease of Metro Hall;

(4)cost estimates for staff relocation associated with the Metro Hall/City Hall move and square footage space available in both Metro and City Hall facilities;

(5)solid cost estimates on the longevity of any renovations or retrofits;

(6)that the Chief Administrative Officer be required to prepare said reports and report back to Strategic Policies and Priorities Committee; and

(7)suspension of any further expenditure on Toronto City Hall beyond those necessary to complete the originally authorized renovations until such reports are delivered.

(Councillor Balkissoon, at the meeting of City Council on November 25, 26, and 27, 1998, declared his interest in Item (d), entitled "Court Ordered Recount in Scarborough Malvern - Ward 18", embodied in the foregoing Clause, in that he is a City Councillor for Ward 18.)

Respectfully submitted,

MEL LASTMAN,

Chair

Toronto, November 17, 1998

(Report No. 24 of The Strategic Policies and Priorities Committee, including additions thereto, was adopted, as amended, by City Council on November 25, 26 and 27, 1998.)