As a result of a 2009 report from the Auditor General, City Council directed Strategic Partnerships to develop corporate “guidelines on the creation of endowment, or similar funds, to offset future maintenance and repair costs for new facilities” that result from partnerships (e.g. newly donated or sponsored physical assets). Often, community and corporate groups express an interest in providing new or enhanced assets to the City or undertaking a fundraising campaign for their development (e.g. a new or rebuilt neighbourhood playground). While divisions are usually keen to welcome such generosity, there are times when the cost of maintaining the new asset is overlooked or underestimated. As a result, an additional budget pressure is created. The purpose of the proceeding guidelines is to help divisions identify and address this issue before formally accepting the proposed offer or authorizing any forthcoming campaign.
The City has had little success to date establishing partnerships to cover ongoing operating costs. Partly this is because donors are more likely to fund new, higher profile improvements than ongoing maintenance and operations. But third-party funding is needed to mitigate against the on-going maintenance costs of donated assets. The objectives of such funding include:
Maintenance: A combination of any action carried out to retain a property in, or restore it to, an acceptable condition.
Properties: Hard assets including, but not limited to, facilities, real property and physical features (e.g. playgrounds, courts, etc.).
State of Good Repair (SOGR): A state wherein an asset is kept in or restored to a sound condition so that all of its life cycle needs (maintenance, rehabilitation, etc.) have been addressed.
Reserves and Reserve Funds: The City distinguishes between Reserves and Reserve Funds. A Reserve is funded by contributions from the operating budget at the discretion of Council, after provision for known expenditures. It has no reference to any specific asset and does not require the physical segregation of money or assets. Reserve Funds, on the other hand, are segregated and are restricted to meet a specified purpose. Furthermore, while earnings from Reserves flow to the operating budget as investment revenue, earnings from the investment of Reserve Funds must be allocated to and form part of the Reserve Fund. Accordingly, the City typically establishes Reserves for donations and Reserve Funds for maintenance purposes.
These guidelines are informed by external best practices as well as approaches currently utilized within the City. The fact is a number of City divisions and programs already consider the maintenance impact of newly donated assets to the City. For instance:
Council adopted a policy outlining a process to be followed when an individual or organization offers to donate to the City a gift of public art. The Public Art Program (PAP) procedure involves a written submission and an inter-divisional staff review of the gift. Given the responsibility of preserving hundreds of existing works across the City, the Division generally does not accept gifts of art which present an unreasonable maintenance burden. Accordingly, the staff committee evaluates the gift against a number of criteria including “the ease of maintenance and repair” as well as a “provision by the donor for ongoing maintenance of the work and cost of relocation and removal”. This provision equates to 5% – 10% of the art’s value, depending on the type of work, and is held in the City’s Public Art Reserve Fund. These funds help ensure that the maintenance requirements for that specific work are met in perpetuity. Incidental maintenance that is part of the City’s operating budget, including graffiti and site clean-up, are not funded from this account.
The Commemorative Tree and Bench Program allows the public to pay tribute to a loved one by donating and dedicating a park bench or tree in a City park. Donors have the option of a newly installed bench with plaque for $2,530.00, a metal plaque on an existing bench for $1,753.00, a newly planted tree with plaque, or a plaque at the base of an established tree, each for $738.00. The City will replace or repair the items, at no charge to the applicant, within two years of the installation date for plaques, five years of the planting date for trees, or ten years of the installation date for benches. Requests for repairs or replacements after the warranty period will be charged to the applicant.
Heritage Toronto’s Plaques and Markers Program (PMP) has, for almost 40 years, officially remembered key people, places and events which have shaped the City. Costs range from $550 – $5500, depending on the type and size of plaque, and are fully born by the applicant. The smallest of the Heritage Toronto plaques become the responsibility of the property owner, while the others remain property of Heritage Toronto. Plaque fees cover, among other expenses, the cost of research, plaque production and installation and, since 2005, contributions to a maintenance fund for those plaques which remain the property of Heritage Toronto. Generally, 10% of the fee is allocated to this “Plaque Maintenance Fund”, which the agency holds and administers. As a result, damaged or stolen plaques completed from January 2005 onward, and that belong to Heritage Toronto, are repaired or replaced by the agency at no charge to the applicant. Conversely, damaged or stolen plaques completed and installed prior to 2005 are only repaired and replaced according to the availability of time and finances since these plaques precede the establishment of the Fund.
i. Age – Donation of a new asset will likely require less maintenance in the short-term than property that is closer to its life-cycle expiration.
ii.Weather – Exposure to the elements has a material impact on the amount of maintenance required.
iii. Location – Maintenance costs may significantly be affected by the location of the asset. Property situated in a flood plain, for instance, or in other areas that are subject to environmental stresses will likely require greater than normal upkeep and repair. Likewise, certain sites may experience a higher incidence of vandalism than others.
iv. Design & Construction – Defects in design or faulty workmanship will produce higher maintenance costs. For purposes of quality control, it is therefore preferable for divisions, where feasible, to receive a cash donation and ensure construction of the asset to City standards rather than accept a finished product as an in-kind donation.
v. Usage – The greater the property’s usage, the greater the wear and tear. Likewise, misuse of the property will also contribute to higher maintenance costs.
vi. Material Quality – High quality and durable materials will help extend the expected lifespan of the asset and keep it in a state of good repair. Conversely, assets constructed with cheaper or sub-standard materials often require more frequent maintenance and may contribute to the asset having a shorter working life.
vii. Uniqueness – Assets that incorporate unique attributes (design, materials, features, amenities, etc.) will typically incur higher maintenance and replacement costs.
viii. Maintenance Standards – Maintenance costs will be informed by the level of maintenance performed. For example, due to resource limitations, if staff are limited to undertaking corrective maintenance (i.e. only fixing the asset when it breaks down or operates improperly) instead of preventative or planned maintenance, which attempts to keep the asset in a state of good repair throughout its useful life, maintenance costs will likely be higher.
Reserves and Reserve Funds – Establishment and Use of By-law No. 181-2000
Donations to the City of Toronto for Community Benefits Policy