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