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Decision Letter |
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Budget Committee |
| Meeting No. | 40 | Contact | Kelly McCarthy, Committee Administrator | |
| Meeting Date |
Wednesday, May 1, 2013 |
Phone | 416-392-4666 | |
| Start Time |
9:30 AM |
buc@toronto.ca | ||
| Location |
Committee Room 1, City Hall
|
Chair | Councillor Frank Di Giorgio |
| BU40.3 | ACTION |
Adopted |
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Ward:All |
| Net Income Sharing Agreement Renewal with the Toronto Parking Authority |
| Committee Decision | |
The Budget Committee recommends to the Executive Committee that:
1. City Council approve the net income sharing agreement between the City and the Toronto Parking Authority (TPA) for a three year period, effective January 1, 2013 on the following terms and conditions:
a. The net income available for distribution be defined as net income based on the TPA's annually audited financial statements;
b. The TPA pay to the City annually the greater of $37.0 million or 75% of net income earned by the TPA, subject to unforeseen circumstances which result in interruptions of service or any other unplanned occurrence which may have an adverse material effect on the net income as defined under the Income Sharing Agreement Net income includes gains or losses on the sale of properties and air rights but excludes income earned on rented properties which is paid into the Rented Properties Fund held by the City;
c. The 75% portion of gains/losses on the sale of properties/air rights payable to the City be reduced, if necessary, by the cost of replacement facilities (new and expanded parking spaces and/or commercial space) required under the purchase/sale agreement that exceeds the 25% portion retained by the TPA;
d. The TPA make monthly progress payments in the amount of $3.083 million to the City, for a total of $37.0 million annually;
e. Final settlement between the TPA and the City of the amount payable for the year (the difference between the City’s 75% share of net income and progress payments made by TPA) will occur once the Authority's actual net income for the year is confirmed by external Auditors and the audited financial statements are approved by the Toronto Parking Authority’s Board of Directors; and
f. The TPA, in consultation with the Deputy City Manager and Chief Financial Officer, review the TPA's capital funding requirements annually as part of the capital budget process.
2. City Council authorize appropriate City staff to prepare an income sharing agreement between the Toronto Parking Authority (TPA) and the City of Toronto, based on Recommendation 1 above and subject to the approval of the TPA's Board of Directors. |
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| Origin |
| (April 25, 2013) Report from the Deputy City Manager and Chief Financial Officer and the President, Toronto Parking Authority |
| Summary |
The purpose of this report is to update the net income sharing agreement between the City of Toronto (City) and the Toronto Parking Authority ( TPA or Authority) for net income generated from off-street and on-street parking operations and net gains on the sale of air rights for City properties managed by the Authority. The current net income sharing agreement with the TPA expired on December 31, 2012, with Council approving an extension until such time as Council considers an updated Income Sharing Agreement.
This report recommends that the net income sharing formula remains unchanged from the previous agreement, with the TPA continuing to pay the City a minimum of 75% of its net income for the year from on-street and off-street parking operations. The minimum payment to the City will increase from $30.0 million to $37.0 million, subject to unforeseen circumstances which result in interruption of service or any other unplanned occurrence which may have an adverse material effect on the net income as defined under the Income Sharing Agreement. This ensures that the City will receive a minimum payment of its 75% share on a more timely basis. By definition the City will continue to receive 75% of the net gain on the sale of air rights for properties managed by the Authority less, if necessary, the amount by which the cost of replacement facilities (new and expanded parking spaces and/or commercial space) exceeds the 25% portion retained by the TPA . Net gains on the sale of air rights are included in the Authority's net income. In addition, it is recommended that City staff prepare an income sharing agreement between the TPA and the City of Toronto. The income Sharing Agreement Renewal with the Toronto Parking Authority will take effect as of January 1, 2013 for a three year period ending December 31, 2015. |
| Financial Impact | ||||||||||||||||||||||||||||||||||||
The 2013 Approved Operating Budget anticipates that the City will receive $47.125 million in 2013 through income sharing with the Toronto Parking Authority (TPA), with future year payments of $48.073 million in 2014 and $49.039 million in 2015, as outlined in the table on page 3. These amounts reflect the recommended 75% of the forecasted net income earned by the TPA from off-street and on-street parking facilities over the next three years.
The TPA is projected to retain net income of $15.708 million in 2013 from off-street and on-street parking facilities. Additional net income of $16.024 million and $16.346 million is forecasted for 2014 and 2015, respectively. The retained net income will be used to fund the TPA's multi-year capital program.
Toronto Parking Authority Forecasted Payments from 2013 to 2015
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| Background Information |
| (April 25, 2013) Report with Appendix A from the Deputy City Manager and Chief Financial Officer and the President of the Toronto Parking Authority on Net Income Sharing Agreement Renewal with the Toronto Parking Authority (http://www.toronto.ca/legdocs/mmis/2013/bu/bgrd/backgroundfile-57748.pdf) (April 23, 2013) Report from the Deputy City Manager and Chief Financial Officer on Net Income Sharing Agreement Renewal with the Toronto Parking Authority - Notice of Pending Report (http://www.toronto.ca/legdocs/mmis/2013/bu/bgrd/backgroundfile-57950.pdf) |