AUDITOR'S REPORT: PARKS, FORESTRY AND RECREATION – CAPITAL PROGRAM – THE BACKLOG IN NEEDED REPAIRS CONTINUES TO GROW

January 23, 2009
Auditor General’s Office

Auditor's report on the backlog in Park, Forestry and Recreation capital projects.

The report notes that 95% of PFR capital project funding comes from debt. This can’t be sustained:

Excerpts:

P.19

With respect to debt funding, the City’s $2.5 billion of net debt in 2007 is projected to rise to $3 billion by 2013. In 2006, the City raised its debt service guideline from 10, to 15 per cent of property taxes and expects to reach this level by 2011. This means that for every dollar of property taxes, 15 cents will go towards making interest and principal payments on debt. The result of this is that it reduces the amount available for annual operating expenditures. In summary, it is unlikely that debt can be used any further to minimize the growth in the state of good repair backlog.

Section 37 and 45

Capital funding is also provided from development charges and funds secured in agreements under Section 37 and 45 of the Planning Act. While these are important sources of funds, they provide little relief for state of good repair problems. Development charges are restricted toward growth-related and enhancement projects and only very limited amounts received under the Planning Act may be directed toward repairs.

p.23 Park levies

7. '''Need to Review Approvals for Redirection of Cash-in-Lieu Payments for Parkland Dedication
''Interim cash-in-lieu payment allocation policy requires 25/25/25/25 per cent split'

One source of funding for new parkland comes from Section 42 of the Planning Act, which gives the City authority to require either land or cash payment for parkland purposes as a condition of development or redevelopment of land. In 1999, City Council adopted an interim policy on the allocation of cash-in-lieu payments that split funds equally between parkland acquisition and parkland development and further between district and citywide basis. This policy remains in place.

'100% cash-in-lieu payments redirected to one ward, contrary to Council policy'

Certain recommendations have been made at Community Council to redirect 100 per cent of cash-in-lieu payments toward a local ward, rather than the allocation split approved by Council. The recommendations submitted for Council approval did not indicate that the allocation was contrary to Council’s policy. While the recommendations were subsequently approved by City Council, there was no express approval for the waiver of the policy previously approved by Council. We have consulted with the City Solicitor and the City Clerk, who are reviewing this matter.

This is interesting because it’s very likely that the original intent of the law was exactly that the park levy funding should go near the new development. So it’s likely that the 1999 policy is the one that is outside the law.

Response from management re overriding policy:

http://celos.ca/wiki/uploads/Resources/backgroundfile-22121.pdf

p. 13-14 While it is reasonable to expect City officials to disclose when their reports contain recommendations that are contrary to policy, the City Clerk notes that many recommendations that vary or are contrary to policy are the result of motions moved by Members during debate.

It is not practical to prescribe the form of motions by amendment to the Council Procedures, nor is it practical to enforce such a rule. To require Members to include such a preface to their motions would require them—and the presiding officer—to know the contents of all City policies.

Further, the City Clerk is required by COTA to record all decisions and resolutions of Council and its committees without note or comment, so it not possible for the Clerk to annotate or comment on recommendations when transmitted from Community Councils to Council.

However, under existing Council Procedures, a City Official who wishes to bring additional information to Council’s attention when considering a committee recommendation may submit supplementary correspondence on the item and the Clerk will place it before Council.

P.21 Naming rights and advertising

Certain of the City’s Boards have generated substantial revenues from naming rights such as BMO Field, the Direct Energy Centre and the Sony Centre. However, the City has not actively pursued similar arrangements for City facilities, particularly parks and recreation facilities. The City needs to develop a coordinated plan in pursuing private funding, giving consideration to the revenue-generating opportunities of naming rights, and identify potential projects that would be appropriate for such funding.

Parks and Recreation Naming and Naming Policy approved in 2002 restrictive

According to a Parks and Recreation Naming and Renaming Policy, approved by Council in 2002, a park or recreation facility can only be named after an individual or group. The policy states that names which may be interpreted as an advertisement must not be used. Therefore, naming a park or facility after a corporate sponsor would be viewed as an advertisement and would not be allowed.

Revenue potential from naming rights

There is a potential to generate additional infrastructure funding through naming rights although the potential is likely limited given the current economic climate. Various plans to expand or build new facilities represent opportunities to attract this type of private funding. We recognize the reluctance to granting naming rights on City facilities, generally due to negative public perception or fear of potential loss of public control and the appearance of “selling out”. Research also indicates that private partnerships can be risky if entered into without adequate assurance that the City’s and, by extension, the public’s interests are protected.

However, with proper policies and procedures that ensure transparency and consistency in dealing with private funding arrangements, while protecting the interests of the City and the public, the City could benefit from private funds for capital projects.

Toronto Office of Partnerships to develop a naming rights policy

The Toronto Office of Partnerships is currently in the process of developing a naming rights policy for Council’s consideration. Policies already exist for donations and unsolicited bids and should be considered when developing the naming rights policy in order to ensure consistency.

Management comments:

It should be understood that the types of facilities built and managed by PFR are neighborhood and community oriented and not on a similar scale as a BMO Field, Direct Energy or Sony Centre, as referenced in the AG’s report. Therefore the potential for naming rights for revenue purposes may be limited. Also, while revenue from corporate naming rights or philanthropic donations may be forthcoming, private funding to replace or enhance current infrastructure as a substitute for core funding is a policy issue that needs to be determined by Council.

The implementation will follow approval by Council of a comprehensive Naming Rights policy.