STAFF REPORT

October 7, 2002

To: Policy and Finance Committee

From: Chief Administrative Officer

Subject: Candidate Projects: Canada Strategic Infrastructure Fund and Border Infrastructure Fund and the Status Report on Infrastructure Funding Programs

Purpose:

This report recommends priority projects for submission by the City of to the Canada Strategic Infrastructure Fund and Border Infrastructure Fund. A status report on City of Toronto’s participation in Provincial and Federal infrastructure funds is appended to this report for information.

Financial Implications and Impact Statement:

There are no financial implications to the City of Toronto arising from the recommendations of this report. Access to Federal infrastructure funding would relieve some of the City’s fiscal pressures. It would also enable the City to make progress on the maintenance and enhancement of its infrastructure.

Recommendations:

It is recommended that:

(1) Council submit a request to the Federal government through the Canada Strategic Infrastructure Fund for funding to maintain and modernize the infrastructure assets of the Toronto Transit Commission as follows: - Streetcar and Track Renewal and Replacement – $622 million over 10 years; - SRT Expansion and Modernisation – $133 million over the next 10 years; - Subway Fire Ventilation Upgrades – $250 million over 20 years; and - Easier Access Program – $270 million over 18 years;

(2) Council submit a request to the Federal government through the Border Infrastructure Fund for funding to the Toronto-Rochester Fast Ferry Project; - 2 -

(3) The Mayor communicate to the Prime Minister and Federal Minister responsible for Infrastructure: - that Toronto welcomes the Government of Canada’s commitment to a 10-year urban infrastructure strategy to accommodate long-term strategic initiatives essential to the competitiveness and sustained growth of cities as indicated in the Speech from the Throne on September 30, 2002; - that Toronto needs Federal participation in funding the Toronto Transit Commission capital program totalling $3.8 billion over the next ten-years to maintain and enhance infrastructure in Toronto; and - that the City of Toronto be included in consultation by the Government of Canada on major infrastructure funding initiatives;

(4) the Mayor and the Chair of the TTC request a meeting with the Honourable Allan Rock to articulate the needs of the City of Toronto for access to sustained, predictable sources of revenue;

(5) a copy of this report be sent to Prime Minister Jean Chretien, the Honourable Allan Rock, the Honourable David Collenette and all Toronto MPs and MPPs; and

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

Background:

The Federal Budget announced in December 2001 included the creation of the Canada Strategic Infrastructure Fund (CSIF) with a minimum federal commitment of $2 billion and the Border Infrastructure Fund (BIF) with funding of $600 million. In August 2002 the parameters for CSIF and BIF were released.

As announced in August 2002, the key features of the funds are as follows.

The Canada Strategic Infrastructure Fund (CSIF) • The Government of Canada will contribute up to a maximum of 50% of total eligible costs. • In Ontario, Quebec, Alberta and British Columbia the total eligible project costs will be at least $75 million to ensure that the projects are large-scale. • The projects can involve the Federal government with any combination of municipal, provincial and private partnerships. • The investment categories are: - Highway and Railway Infrastructure - Local Transportation Infrastructure - Tourism or Urban Development - Water or Sewage Infrastructure - Broadband - 3 -

The Border Infrastructure Fund (BIF) • The BIF supports the Smart Borders Action Plan to reduce border congestion and expand infrastructure over the medium term. The key features of the Border Infrastructure Fund are: - The Government of Canada will contribute up to a maximum of 50% of total eligible costs. - The fund will be implemented in cooperation with provincial, territorial and municipal governments, and other partners from the private and public sector on both sides of the border. - The categories for projects are: - Physical Infrastructure – to better facilitate flow of people and goods across the border; - Intelligent Transportation System Infrastructure – to monitor and improve flows at border crossings; and - Improved Analytical Capacity – to facilitate planning and policy development.

At its meeting on October 1-3, 2002, City Council adopted as amended Policy and Finance Committee Report no. 13 Clause no. 2 and in doing so directed the Chief Administrative Officer to coordinate the preparation of submissions to the Canada Strategic Infrastructure Fund and Border Infrastructure Fund in consultation with and on behalf of City departments, agencies, boards and commissions and report back to Council through the Policy and Finance Committee in October with recommendations on the proposals for submission. The Chief Administrative Officer was also requested to report on the status of the City of Toronto applications to provincial and federal infrastructure programs to the October Policy and Finance Committee.

Comments:

In September 2002 the Chief Administrative Officer convened a working group of staff from key departments and agencies to identify candidate projects to be considered for submission for funding. In addition to the stated parameters for each of the funds described above, the working group established the following additional City principles for candidate projects:

Broad-based and Strategic Support

Candidate projects should achieve a broad range of the City’s strategic objectives and priorities, i.e., as found in the Strategic Plan, Official Plan, Economic Development Plan, Social Development Strategy, etc.

Funding in Place

Funding is included in the 5-year Capital Budget. Projects that leverage funds in collaboration with other municipalities, private sector participants and the Province and have significant regional benefits. Sound Business and Financial Case Project costs are determined. Operational costs have been identified and can be accommodated. - 4 -

Ready-to-go

Achievable within program timeframes (the timeframes for the two funds have not yet been established). Major approvals are in place e.g. Environmental Assessment. Technical requirements are in place e.g. property acquisition, site availability, clean up, zoning, access.

Canada Strategic Infrastructure Fund (CSIF)

The City has enormous pressures on its capital budget affecting many capital projects across departments. Over the past few years the capital budget has included projects that are primarily required for health and safety and state of good repair. In order to keep debt and debt service charges contained the City has been deferring capital spending resulting in a growing backlog of maintenance and rehabilitation. Capital budget for expansion or enhancement projects has been minimal.

Although projects that provide a new attraction or expand a desirable service may attract funding from the CSIF, the City’s priority must continue to be funding to maintain existing assets and offset capital budget expenditures. The Toronto Transit Commission comprises one of the largest parts of the City’s capital budget. Last year the TTC capital budget (excluding the Sheppard Subway project) was $230 million primarily for state of good repair. The City funded $77 million of the budget including TTC contributions on the basis of Federal and Provincial governments providing 1/3, $77 million, each. The TTC and the City have repeatedly made the case that the Federal and Provincial governments must provide the City with sustained and predictable funding in order to keep the transit system in good working order.

Earlier this year the Provincial and Federal governments committed $76 million each to the TTC, including about $62 million each for transit fleet renewal. (Details are included in Appendix A: Status Report on Infrastructure Programs). But it isn’t enough. The City and TTC have significant investments in transit infrastructure that must be addressed through a predictable and sustained stream of funding year after year.

The candidate projects proposed for submission to the CSIF are all transit projects. Transit in Toronto has broad-based and strategic support. Toronto’s transit system is one of the City’s and the GTA’s strongest assets. As the hub of the inter-regional network serving the Greater Toronto Area, the TTC provides the most intensively used transit services with extensive integration with GO Transit and transit in adjacent municipalities. Transit planning and improvement initiatives in other municipalities in the GTA rely heavily on the TTC. Greater use of transit in the Greater Toronto Area is critical to addressing air-quality issues, smart-growth initiatives and federal green objectives. Improving and enhancing transit is a key thrust in the proposed City of Toronto Official Plan and the Greater Toronto Area Strategic Transportation Plan. Transit improvements are dependent on ensuring that the existing TTC system is maintained and modernized.

In considering the broad application of Federal funding to City transit infrastructure, the 10-year needs of the TTC must be considered. The TTC’s capital program amounts to an investment of - 5 -

$3.8 billion over the next 10 years to provide for the reinvestment and rehabilitation of physical infrastructure as well as the replacement of revenue vehicles. The significant portion of these needs relates to fixed rail systems (Subway, SRT and Streetcar) which are unique to a large City like Toronto. These rapid transit systems form the backbone of efficient local and inter-regional transit. While these infrastructure systems must be considered for long term funding and while they do comply with the City principles for candidate projects to be submitted under this fund, the parameters of the CSIF seem to preclude the general nature of subway infrastructure funding (in the order of $1.7 billion over 10 years). On this basis, and since it is anticipated that these needs can be addressed under other Federal programs as mentioned in the September 30th Speech from the Throne, the following four projects are recommended for submission to the CSIF. All four are important components of a TTC modernization. The City’s ability to move forward with these projects is contingent upon funding participation by other governments.

1. Save the Streetcars – $622 Million Over 10 Years

The TTC’s streetcar system is an integral part of the infrastructure that supports the high-density mixed-use character of the older part of the City of Toronto. The streetcar services are the most heavily used surface transit lines in the TTC’s system , carrying 270,000 passengers per day.

The TTC’s streetcar system is made up of 306 kilometres of streetcar routing on which 196 Canadian Light Rail Vehicles (CLRV’s) and 52 Articulated Light Rail Vehicles (ALRV’s) provide 11.7 million kilometres of service each year. The CLRV’s in use today entered revenue service between 1978 and 1982 and will reach the end of their normal 30-year design life in the next ten years. The vehicles are in generally good condition and the TTC plans to rebuild the streetcars in the current fleet, at a cost of approximately $1 million per vehicle, to extend the life of the vehicles by 10 to 15 years. This is a more cost-effective solution than replacing the vehicles by purchasing new cars at an estimated cost of $5 million per vehicle.

In conjunction with the purchase of the new CLRV fleet the TTC also undertook an aggressive track replacement program in the early 1980’s, rebuilding close to half of all of the track in the system. This track, replaced with old methodology has an average expected life of 15 years and is now over-due for replacement. Replacing this track, along with the associated reconstruction of switches, overhead wires, poles and power distribution system, is expected to cost $366 million over the next 10 years.

Failure to undertake this extensive modernization program would result in an ongoing deterioration in the quality of streetcar service provided in the City which would eventually lead to loss of ridership and, of necessity, replacement of the streetcars with bus services.

In total, including a number of required station and streetcar yard modifications, the cost to save the streetcar system in Toronto is expected to be $622 million over the next 10 years.

2. SRT Expansion and Modernisation – $133 Million Over the Next 10 Years

The Scarborough Rapid Transit (SRT) system began revenue operation in 1985 as a prototype “intermediate capacity transit system” to support the planned development of the Scarborough - 6 -

City Centre as a higher-density node. The 4km line carries 40,000 passengers per day with six four-car trains used for scheduled service at peak times. It provides high-speed rapid transit service connecting the Scarborough City Centre area with the Danforth subway terminal at and carries volumes of passengers far in excess of any practical alternative surface transit service operating in mixed traffic such as typical bus or streetcar service. The system is an integral part of the success of the Scarborough City Centre area in attracting higher- density office and residential development to this suburban location.

The success of the system in attracting passengers has resulted in the need for 16 additional vehicles at a cost of $72 million. In addition the structures and control systems used to operate the system are now approaching 20 years old and will require reconstruction or replacement over the next 5 to10 years. The expansion of the current fleet and refurbishment of the current system is the most cost-effective approach to accommodating existing and forecast future demand on the line.

To modernise the SRT system and expand the capacity of the system to accommodate ridership growth is expected to cost $111 million over the next 10 years.

3. Subway Fire Ventilation Upgrades – $250 Million Over 20 Years

The original subway tunnel ventilation system, constructed between 1950 and 1978, was designed to provide general humidity and temperature control and to relieve the piston effect of air pressure in tunnels associated with the normal movement of trains. It was never designed to control the high heat and smoke migration resulting from tunnel fires. The TTC has experienced four major tunnel fires including the Union Station tail track in 1963, at Christie Station in 1976, at the Greenwood Wye in 1997 and at in 2000. These fires, and fires in other subway systems, led the National Fire Protection Association (NFPA) to develop standards for fire safety, initially in 1983, which have now been adopted, almost entirely, by the Ontario Building Code. The Sheppard subway line has been constructed to the NFPA standard but, in the remainder of the system, only 6.5% of the below-grade subway system has adequate ventilation in the event of a major fire.

The shortcomings of the tunnel ventilation system at the TTC have been acknowledged over the years with some modest improvements being implemented in the mid-1980’s. Following the 1997 fire at the Greenwood WYE, however, and the subsequent evaluations of the extent of the shortcomings of the current system, the TTC made a commitment to fully upgrade the fire ventilation system through the subway. The program primarily involves the installation of high- capacity bi-directional fans and related shafts, dampers and portal doors along with the upgrades required to power supplies and associated controls for all tunnelled sections of the subway. Also included is the construction of second exits at stations currently having only one acceptable means of egress.

TTC management believes that the deficiencies identified in the ventilation system represent an unacceptable level of risk to public safety and are committed to bringing the subway ventilation system into compliance with the revised Ontario Building Code. The program is expected to take 20 years to implement at a cost of about $250 million. - 7 -

4. Easier Access Program – $270 million Over 18 Years

In 1990, the then Metropolitan Toronto Council, and subsequently the Province of Ontario, endorsed the concept of making subway stations accessible to people with disabilities through the approval of the Easier Access Phase II program. This program involves making 21 key subway stations accessible, out of a total of 46 stations in the system. The subway station accessibility program primarily involves retrofitting stations with elevators but also involves the installation of accessible fare gates, doors and signage.

Significant progress has been made in improving access to services for people with disabilities throughout the broader community, of which the TTC is part. Allowing persons with disabilities to integrate as fully as possible into society in an independent way is seen as an important human right. Transportation accessibility is an important element of this integration. The Province of Ontario, through the adoption of the Ontarians with Disabilities Act in 2001, and the continuing interest of the Ontario Human Rights Commission in improved access to transit service, illustrates that there is a continuing expectation that improved access to transit services will be provided for people with mobility difficulties.

Providing improved accessibility features in subway stations benefits a wide range of people in the community including people with strollers and small children, seniors who have difficulty climbing stairs, along with people with mobility devices and those with visual impairments. With the increasing population of senior citizens in the community, the provision of accessibility features in the subway will continue to grow in importance.

Accessibility improvements have been completed at 13 stations, to date. Two other stations have been made accessible through other projects and all five of the stations on the Sheppard line are accessible. Plans are to complete the key stations accessibility program by 2007 at a further cost of $40 million and this project is currently included as part of the TTC’s base budget.

Construction of elevators and other accessibility features in all of the remaining subway stations in the system is expected to cost an additional $230 million but funding for this part of the project is not currently in the TTC’s approved base budget.

Border Infrastructure Fund (BIF)

Toronto-Rochester Fast Ferry Project – $5 Million

Establishing a regularly scheduled fast ferry service between Toronto and Rochester is a significant economic development opportunity to further link two of the most dynamic economies in the Great Lakes region. Ferry service would establish an important border crossing at the base of the City and would thereby increase our access to the business and tourism markets in upper New York State and along the eastern United States. - 8 -

On April 29, Mayor William Johnston and Deputy Mayor Jeff Carlson of the City of Rochester made a presentation to the Economic Development and Parks Committee on the Fast Ferry project. The Rochester representatives provided the Committee with an update on the status of the project noting that the New York State government was intending to provide financial assistance to the project. They also outlined Rochester’s plan with respect to the revitalization of their port facilities and waterfront district.

The Economic Development and Parks Committee recommended that City Council reiterate its endorsement of this project and include this initiative as part of the City’s waterfront revitalization project. The Committee also recommended that City Council request that the Provincial and Federal governments participate in the project as soon as possible.

Since then the State of New York has announced that it will contribute $14.4 million (US) in grants and loans to the operation. In addition, the City of Rochester has approved a $1.3 million (US) loan to the ferry operator. The New York jurisdictions have all noted the importance of continuing international support for the project and have urged the Canadian and Ontario Governments to also provide financial support to the project. The Toronto Waterfront Revitalization Corporation is currently consulting with its government partners with respect to support for the project.

The estimated economic benefits to all levels of government from having a fast ferry service across Lake Ontario are very significant and would justify government support for the project. The expected benefits from such an investment include: - Increased inter-regional mobility, improved access to markets, and benefits to travellers in terms of reduced travel times and costs. - Very significant resource savings and, in particular, reduced demand on the congested and environmentally sensitive highways in the Niagara Peninsula. Studies have shown that ships produce 33% less pollutants than diesel trains and 373% less than diesel trucks, when compared on a basis of tonne-kilometre per litre of fuel consumed. - The development of an increased level of industrial, social and cultural interaction between the economies of Southern Ontario and Northwest New York state and, in particular, between Toronto and Rochester. - Increased tourism from the Rochester area, New York State and the Eastern Seaboard along with the creation of opportunities to develop “two nation vacation” packages where visitors could fly into Toronto and visit our attractions and attractions in upper New York state such as the Finger Lakes, Cooperstown and Niagara Falls. - The direct benefits related to the creation of this new service industry would include new highly skilled full time jobs and the direct purchase of supplies and services.

It is recommended that Council request the Federal government to support the establishment of fast ferry service between Toronto and Rochester through the Border Infrastructure Fund by providing funding for the development of terminal facilities on this side of the lake estimated at $5 million. - 9 -

Process

At the Association of Municipalities of Ontario conference in August 2002, senior federal officials indicated that the CSIF will fund 15-20 large projects across the country. Federal officials have initiated discussions with the Province of Ontario regarding potential projects. The City of Toronto has not been invited to participate in these discussions nor has the Federal government approached the City directly about City participation in the fund. Yet again the potential for funding infrastructure in Toronto is being discussed without the City of Toronto at the table.

There is great concern that the funding for both CSIF and BIF will be determined through discussions between the Federal government and the Province of Ontario and that the City of Toronto will not have a direct opportunity to articulate its needs and provide federal decision- makers with an understanding of Toronto’s needs and priorities for funding. If the Federal government is intent on establishing an urban agenda, Toronto, as the largest city in the country, should have a place at the table with the Province and the Federal government.

In the Speech from the Throne on September 30, 2002 the Federal government committed to a new urban strategy involving a 10-year program for infrastructure. The program is to include a strategy for safe, efficient and environmentally responsible transportation. It is recommended that the Mayor and the Chair of the TTC meet with the Minister responsible for Infrastructure, the Honourable Allan Rock, to articulate the City’s needs for funding the projects and express interest in working with the Federal government in the development of a federal urban agenda that will address maintaining the health and vitality of the largest City in the country.

This report was prepared in consultation with TTC and Finance staff.

Conclusions:

The City of Toronto should have an opportunity to be at the table with the Provincial and Federal governments in discussions regarding major infrastructure investments and to reiterate that a sustained and predictable stream of funding is imperative if Toronto is to maintain its transit infrastructure. The Minister responsible for Infrastructure the Honourable Allan Rock should hear about Toronto’s needs from the Mayor directly.

It is recommended to Council that the City of Toronto submit the Streetcar Vehicle and Track Renewal, SRT Expansion and Modernization, Subway Fire Ventilation Upgrades, and Easier Access projects to the Federal government for funding through the Canada Strategic Infrastructure Fund. It is recommended to Council that the City of Toronto request funding from the Borders Infrastructure Fund for the Toronto-Rochester Fast Ferry project. - 10 -

Contact:

Anna Pace Senior Corporate Policy and Management Consultant Phone: 416-392-8117 Fax: 416-696-3645 Email: [email protected]

Vince Rodo General Manager – Executive and General Secretary Toronto Transit Commission Phone: 416-393-3914 Fax: 416-393-2068

Shirley Hoy Chief Administrative Officer

List of Attachments:

1. Federal and Provincial Infrastructure Programs – Overview and Status Report - 11 -

Federal and Provincial Infrastructure Programs Overview and Status Report

This overview accompanies a report on the new Canada Strategic Infrastructure Program scheduled for Policy and Finance Committee on October 17, 2002. As requested by Council, it provides information on the status of the City’s application to recent federal and provincial government infrastructure programs.

Context:

Federal and provincial governments have historically played a key, ongoing role in the development and maintenance of the infrastructure necessary for Toronto’s economic growth, social development, health and safety and environmental protection.

More recently, federal and provincial governments have taken steps to control spending and services, which have had significant impacts on the City’s capital program. These include downloading onto the City responsibility for certain capital intense programs (e.g. social housing), eliminating or severely cutting ongoing capital cost-sharing programs (e.g. public transit) and tightening regulations for City-delivered services (e.g. water and wastewater).

While suspending ongoing capital program funding, the federal and provincial governments have instituted a number of short to medium-term capital “partnership” projects, announced as supports for municipal infrastructure. These projects reflect federal and provincial priorities, but have had little municipal input in design or decision-making with varying results for the City.

The following outlines the City’s experience with these federal and provincial projects and outlines some upcoming federal infrastructure initiatives.

Ontario SuperBuild

As announced in the May 1999 Budget, the Ontario government created the SuperBuild Corporation to co-ordinate the province’s capital planning, priority setting and investment. Most SuperBuild spending has been allocated to address provincial-level capital priorities, such as provincial highways, hospitals, and colleges and universities. However, SuperBuild also includes several infrastructure “Partnership Initiatives” that potentially support local projects. As announced in the May 2000 Budget, these include the Millennium Partnerships ($1 billion), the Sports, Culture and Tourism Partnerships (SCTP - $300 million), and the Ontario Small Town and Rural Development program (OSTAR - $600 million, Toronto ineligible) - all amounts over 5 years.

SuperBuild Millennium Partnerships represents the province’s investment in Ontario’s major urban centres. Allocation of the initial $1 billion commitment included: $500 million for Toronto Waterfront Revitalization, $250 million for the Golden Horseshoe Transit Investment Partnerships (GTIP) and $250 million for strategic infrastructure projects in 8 large urban centres outside the GTA (i.e. Toronto ineligible). - 12 -

Canada-Ontario Infrastructure Program (COIP)

As outlined in the 1999 Speech from the Throne, the February 2000 Federal Budget provided $2.65 billion in federal funding over six-years for local infrastructure in two programs, namely “Infrastructure Canada” - $2.05 billion, and the “Strategic Highway Infrastructure Program” - $600 million.

Infrastructure Canada is the successor to the 1994-1999 Canada Infrastructure Works Program (CIWP), whose priority was economic stimulus and job creation. Under the CIWP, Canada/Ontario Infrastructure Works allocated funds to municipalities for projects, including several located in Toronto – e.g. the National Trade Centre, renovations to Harbourfront Centre, the Western Beaches Tunnel and various repairs to municipal roads, sewers and water mains.

Regarding Infrastructure Canada, of the nation-wide $2.05 billion Ontario was allocated $680.7 million over the next five years (federal approval by April 1, 2005), based on a formula giving equal weight to population and unemployment. Total investment is expected to be over $2 billion, including matching provincial funding of at least $680.7 million and contributions from municipal governments and non-governmental sources, such as public-private partnerships.

With Canada’s improving economy, Infrastructure Canada’s main priority is “green infrastructure”. Secondary priorities include local transportation, culture, recreation, tourism, affordable housing, rural and remote telecommunications and high-speed internet access for local public institutions.

The program is governed through federal-provincial agreements and managed by a joint committee headed by federal-provincial co-chairs. Under the Canada-Ontario Infrastructure Program (COIP) agreement announced in October 2000, the joint management committee for Ontario includes only federal and provincial designates, unlike some provinces that also include direct municipal representation.

Under the agreement, local governments and other nominees propose projects through Ontario SuperBuild, which in turn nominates applications to the joint committee for review and selection according to the agreement’s criteria.

In addition to municipal projects, up to 20 percent of the total approved project costs may be spent on projects directly nominated by the federal or provincial governments that are “strategic, cross-regional or multiparty in nature”. At least 15 percent must be devoted to projects in rural communities.

Ontario has chosen to restrict access to COIP through the three SuperBuild “Partnership Initiatives” - Millennium, SCTP and OSTAR. These provincial initiatives have their own criteria and funding of at least $1.9 billion, or $1.2 billion more than the $680.7 million committed by the province under COIP.

As one implication, affordable housing is effectively excluded from federal funding in Ontario because although COIP criteria include housing, the provincial SuperBuild initiatives don’t. - 13 -

Additionally, the province determines which SuperBuild approved projects, including those nominated by or owned by the province, are nominated for federal funding. Furthermore, not all municipalities receive federal funding because Ontario’s local projects are selected on a competitive, province-wide basis, rather than by per capita allocations to municipalities, as negotiated in Alberta.

New Federal Infrastructure Initiatives

Canada Strategic Infrastructure Fund

In the Federal Budget of December 2001, the government announced the creation of the Canada Strategic Infrastructure Fund (CSIF) with a minimum federal commitment of $2 billion and the Border Infrastructure Fund (BIF) with funding of $600 million. In August 2002 the parameters for CSIF and BIF were released.

Under the CSIF, Canada will contribute up to a maximum of 50% of total eligible costs for large- scale projects (at least $75 million), with involvement from any combination of provincial, municipal and or private partnerships. Investment categories are: local transportation (including transit), water and wastewater, tourism or urban development, highway and railway, and broadband.

The BIF supports the federal Smart Borders Action Plan to reduce border congestion and expand infrastructure over the medium term.

A Report to Policy and Finance Committee in October 2002 proposes candidate projects for the CSIF and the BIF.

2002 Federal Throne Speech

On September 20, 2002 the Federal Government Speech from the Throne noted that “modern infrastructure is key to the prosperity of our cities and the health of our communities. Working with provinces and municipalities, the government will put in place a ten-year program for infrastructure to accommodate long-term strategic initiatives essential to competitiveness and sustainable growth.”

With details to come, the Speech indicates new investment in safe, efficient and environmentally responsible transportation (e.g. transit) to reduce urban congestion and trade bottlenecks and extending investment in affordable housing targeted at cities where the need is most acute. This includes extending the Supporting Communities Partnership Initiative (SCIP) for the homeless (see below).

Comments:

This further federal involvement in infrastructure funding is welcome, particularly if it helps address the City’s priority, namely maintaining and modernizing existing assets, and if it results in predictable funding that allows the City to plan several years in advance. Substantial progress - 14 - on new federal infrastructure initiatives is not likely before the Federal 2003 Budget expected in February 2003, too late to assist the City with 2003 Capital pressures.

Experience with the various federal and provincial infrastructure programs outlined below demonstrates that one-off programs with competitive approval processes do not work as well as they could for cities. Toronto and other cities will need to communicate directly with the federal government about federal funding initiatives and be at the table in discussions between the Province and Federal government to ensure infrastructure investment best meets the needs urban communities.

1. Toronto Waterfront Revitalization

In November 1999 the City, provincial and federal governments jointly announced the Toronto Waterfront Revitalization Task Force, headed by Robert Fung. The Task Force released a strategic master plan in March 2000 to transform the Toronto Waterfront by creating prominent cultural institutions, new parks and green spaces and new, diverse and dynamic commercial, recreational and residential communities. In October 2000, the three levels of government committed $1.5 billion ($500 million each) to kickstart implementation of the plan.

The City approved creation of City Council’s Waterfront Reference Group in May 2001 as the waterfront renewal project’s link with Council. The Interim Toronto Waterfront Revitalization Corporation (TWRC) was incorporated by Ontario in November 2001, with a citizen Board of Directors announced the next month.

Implications for Toronto/Status:

In April 2001 Council approved four priority projects, namely: extending Front Street to Dufferin, building a second Union Station subway platform, naturalizing the mouth of the Don River and preparing the Portlands for revitalization. Total costs are $300 million of the $1.5 billion committed previously. Toronto’s $100 million share (one-third) is in the City’s 5-Year Capital Plan.

In June 2002, the three governments and the TWRC Chair announced that work on the projects had begun, including further public consultation and formal environmental assessment and other approvals. Provincial enabling legislation to create a permanent TWRC (Bill 151) has received Second Reading, and is expected to receive final reading in the Fall Session.

The Waterfront Revitalization initiative will continue to involve a highly complex partnership among the three levels of government and other sectors in keeping with the project’s scope and the multiple jurisdictions involved. In October 2002 the Waterfront Reference Group will consider the Central Waterfront Secondary Plan and the TWRC Revitalization Strategy to clarify priorities for government commitments and the phasing for the revitalization over the 25 years of the project. - 15 -

2. Transit Funding Programs

On September 27, 2001 the Province announced the Provincial Transit Vision to renew and expand transit. The Vision involves a $9 billion plan over 10 years based on a commitment of $3 billion in new Provincial funding under the new Transit Investment Plan, with an expected match of $300 million annually over the 10 years from the federal and municipal governments.

The Transit Investment Plan includes three components: the Golden Horseshoe Transit Investment Partnership (GTIP), the Ontario Transit Renewal Program and GO Transit Expansion Plan. The following outlines the status of the GTIP and Transit Renewal.

Golden Horseshoe Transit Investment Partnership (GTIP)

As noted earlier, the Province originally allocated $250 million over 5 years to GTIP through SuperBuild. The Transit Investment Plan increased the allocation for GTIP to $1.25 billion over ten years.

In December 2001 the Province initiated Round 1 of GTIP with a request for expressions of interest (REI) for projects that would provide: service intensification and extensions to existing inter-regional commuter rail corridors, new inter-regional commuter rail corridors for commuter rail, light rail, or bus transitways, improved regional transit hubs and gateway stations, and advanced transit technologies. Implications for Toronto/Status:

The TTC submission to the GTIP totalled $1.040 billion, consisting of 5 projects totalling $753 million included in the 2002-2006 Capital Budget and another 5 projects totalling $287 million that are not in the Capital Budget. Table 1 at the end of this report provides a listing of these projects.

In August 2002, the Province announced $13.3 million in GTIP funding to the City of Toronto and TTC for the short-term transit projects with an estimated total cost of $40 million listed in Table 2 at the end of this report.

The GTIP funding of $13.3 million will provide minimal improvements to TTC services and a limited contribution towards the TTC capital budget shortfall, of which only $1.5 million relates to 2002. About $4.9 million of the announced GTIP funding is for projects that are not included in the TTC 2002-2006 Capital Budget.

Ontario Transit Renewal Program

In February 2002 Ontario announced province-wide funding of $100 million for the first year of the Ontario Transit Renewal Program noting that “municipalities received their allocation based on the relative number of riders using their system because that determines fleet requirements”. Further, the Ontario Government indicated that it will consult on funding arrangements for 2003 and beyond. - 16 -

Implications for Toronto/ Status:

The initial $100 million was allocated to 65 municipalities across Ontario, of which the City of Toronto was allocated $62.3 million in 2002 for TTC capital.

Transit Funding Programs and Canada–Ontario Infrastructure Program (COIP)

As noted earlier, under COIP, federal funding is available to match provincial and municipal projects. In April 2002, the Federal government announced $76 million funding for the TTC. Funding of $62.3 million was committed immediately to match the Ontario Transit Renewal Program allocation for Toronto. Another $14 million was to be allocated later in 2002 when Provincial GTIP funding of $14 million is approved. As noted earlier the Province’s GTIP allocation to Toronto was $13.3 million announced in August 2002. To date the Federal government has not announced its commitment of the $14 million.

Comments:

The TTC 2002 Capital Program (excluding the Sheppard Subway Project) is $230 million consisting almost entirely of maintenance and health and safety projects. The City’s share of $76 million includes the TTC contribution towards projects. The TTC and the City are relying on the Province and the Federal Government to each fund 1/3. Although both the provincial and federal governments have publicly announced funding, the details of the eligibility rules for the funding have delayed the flow of funds to the City and the TTC. As the end of 2002 approaches, the funding arrangements for the 2002 Budget have not yet been resolved through these funding programs.

These difficulties illustrate that while provincial and federal funding is needed for transit, the process of year by year infrastructure program announcements is too unpredictable. The City and the TTC need predictable and sustainable funding, to enable cost-effective planning and financing of the long-term capital infrastructure requirements.

TTC and City staff are negotiating with the Province for a multi-year transit funding agreement.

3. Sports, Culture and Tourism Partnerships (SCTP) and COIP

As noted above, the SCTP was announced in the 2000 Provincial Budget as one of the SuperBuild Partnership Initiatives. The Province committed $300 million over 5 years to renew, improve and expand local public sport, recreation, culture and tourism facilities (the “Municipal Stream”) as well as major cultural and tourist attractions owned by provincial agencies and not- for-profit organizations (the “Provincial Stream”). The Province can also nominate projects for federal matching funding under the Canada-Ontario Infrastructure Program (COIP).

Municipal Stream applicants could apply only if the municipality was in compliance with the new Ontario Drinking Water Protection Regulation and if Council endorsed the project by resolution as the highest sport, culture and tourism infrastructure priority. - 17 -

Round 1 priority was public health and safety projects (Option 1). For new, expansion and renovation projects (Option 2) the municipality must affirm by resolution that it has no outstanding public health and safety (state of good repair) projects.

Round 1 program criteria and the application process were announced by Ontario in December 2000, without consultation with the City. Eligible applicants were invited to submit brief letters of intent by February 2, 2001, with a March 31, 2001 deadline for full applications. The province received over 460 applications in Round 1 requesting over $1.1 billion, exceeding the $300 million overall allocation.

Implications for Toronto/Status:

In January 2001 Council approved application to SCTP for a number of planned state-of-good- repair activities. Based on a compelling business case, the City subsequently focused its sole application on an urgent $12.5 million project to restore the exterior structure of Casa Loma. The application requested $4.1 million from the Province, matched equally under COIP by the Federal Government. The business case followed closely the SCTP grant criteria regarding health and safety priorities and the culture and tourism implications.

The Province notified the City in September 2002 that its application to SCTP had failed. The letter noted that the Province may not support further SCTP rounds and that the Federal Government would no longer accept SCTP project nominations under COIP.

A report to Economic Development and Parks Committee on Casa Loma’s maintenance requirements is expected for October 2002.

Comments:

Although both the provincial SCTP and the federal CIWP were intended to support local infrastructure, the City was not consulted in either program’s design, criteria or approvals process. Neither was there City input regarding federal-provincial negotiations and the subsequent COIP agreement on the process and management of the Infrastructure Canada initiative.

Further to the COIP agreement, municipal access to federal local infrastructure funding was limited to the “municipal stream” of the SCTP and, unlike some other provinces, there was no municipal input into the nomination process or program management. Moreover, under the COIP agreement allocations were made on a province-wide competitive basis, rather than allocated to municipalities on a per capita basis as under the former Canada/Ontario Infrastructure Works (COIW).

Although worthwhile national, provincial and regional institutions (e.g. Royal Ontario Museum, Art Gallery of Ontario etc.) located in Toronto received support through SCTP “provincial stream”, the City of Toronto’s only application has thus far failed to gain provincial or federal support. - 18 -

4. Federation of Canadian Municipalities Green Funds

The 2000 Federal Budget provided a total of $125 million to the Federation of Canadian Municipalities (FCM) establishing two funding programs, the $25 million Green Municipal Enabling Funds (GMEF) and the $100 million permanent revolving Green Municipal Investment Fund (GMIF). The funds’ objectives are improving air, water and soil quality and climate protection. Priorities include improving municipal building efficiency, public transportation, solid waste, water and wastewater and renewable energy.

The GMEF provides grants covering 50% of feasibility study costs, while the GMIF supplies loans and loan guarantees to improve the financial performance of proposed projects. Interest and fee income earned by GMIF loans are used to support innovative projects with payback periods in excess of ten years.

The programs’ application process involves submission to FCM of a summary Intent to Apply, followed by a detailed Application (if requested by FCM), assessment by an expert Peer Review Committee, examination and recommendation by the Green Municipal Funds Council and final approval by the FCM Board of Directors.

The Toronto Interdepartmental Environment Team (TIE) provides overall review of the City’s FCM application process. Projects are selected for submission by a TIE subcommittee, led by the CAO. Selection criteria include: the potential to advance the City’s Environmental Plan, correspondence to FCM’s criteria, project timing and readiness and availability of matching funding (e.g. existing operating budgets or the Toronto Atmospheric Fund).

The 2001 Federal Budget announced a doubling of the endowment to $250 million. FCM negotiations resulted in certain criteria changes and a more attractive interest rate for the Investment Fund.

Implications for Toronto/Status:

Under Council authority and the internal selection process described earlier, to date the City has submitted 15 applications requesting a total of $836,250 to GMEF and 5 applications to GMIF totalling $1,512,0000. The City is awaiting the outcome of 5 applications.

Successful applications to date include: Generating Methane from Waste for District Energy - $60,000 GMEF grant Toronto Zoo Biogas Cogeneration - $30,000 GMEF grant Deployment of Integrated Mobility System in the GTA - $41,250 GMEF grant Humber Arboretum Sustainability - $200,000 GMIF loan/grant

Table 3 at the back of this report outlines those projects accepted, rejected or under consideration. - 19 -

Comments:

The City’s participation in the FCM Green Fund has provided funding for several projects that have advanced its Environmental Plan. City participation has also supported local partnership development needed to achieve its environmental goals. However given the small, one-time amounts awarded and the complex application process, there has been relatively minimal impact on the City’s capital requirements related to environmental protection.

5. Social Housing

Historically all levels of government have supported the development of affordable housing infrastructure through various programs. These include: direct public financing, construction and operation of social housing, rent subsidies and supplements, loans and grants, provision of public land for development and various tax rebates.

In 1998, the Provincial government unilaterally downloaded social housing to Ontario municipalities as part of the province’s Local Services Realignment. The devolution to municipal administration also included federal social housing following a federal/ provincial social housing agreement in November 1999.

This has resulted in the City assuming sole responsibility for the administration of 95,000 social housing units, with an as yet unknown capital maintenance liability. In addition, there is currently little federal or provincial capital program support to help meet the need for at least 10,000 new affordable housing units over the next five years.

Currently there is limited federal capital housing support available through the Residential Rehabilitation Assistance Program (RRAP) and the Supporting Communities Partnership Initiative (SCPI).

The federal RRAP program provides financial assistance to homeowners and landlords to maintain or rehabilitate current housing stock for low-income Canadians, people with disabilities and Aboriginal people. In 2001 approximately $6 million in RRAP funding was available for projects in Toronto. The Federal government is currently reviewing the program, which is set to expire in April 2003.

The federal SCPI was originally a time-limited (currently three-year, ending September 2003) federal initiative targeted at alleviating and preventing homelessness. The September 2002 Federal Throne Speech announced intention to extend SCPI beyond 2003. The Speech also announced federal intention to establish a 10-year, targeted infrastructure program focused on transportation and affordable housing. More specific information is expected in the 2003 Federal Budget.

In addition, in November 2001 the federal government and all provinces and territories reached a bi-lateral Framework Agreement aimed at creating affordable housing. Ontario’s allocation of total federal funding of $680 million is $245 million. Federal contributions are to be matched by capital or non-capital provincial contributions in cash or in kind or by third party contributions, - 20 - such as municipalities and the non-profit/ philanthropic sectors. Ontario has agreed to contribute $57 million, consisting of $20 million in PST rebates and $37 million in other housing-related expenditures. Implementation details further to a federal-provincial implementation agreement and the implications for Toronto have not been announced.

Implications for Toronto/Status:

Toronto’s allocation under SCPI is $53 million of the nationwide $305 million. The City administers SCPI under a December 2000 Community Plan for Homelessness in Toronto, co- ordinated with the City’s Let’s Build program.

The City’s strategy in Let’s Build is to lever additional funding from other levels of government and the private and non-profit/ philanthropic sectors. Under the Community Plan, Council has allocated SCPI funding envelopes and targets for 2001-2003, including $21.2 million for transitional housing capital, $10.6 million for emergency shelter capital and $5.3 million for various small capital improvements.

Let’s Build co-ordination has also accessed RRAP conversion loans, federal GST rebates, provincial PST rebates in addition to sponsor group and fundraising contributions. A detailed Progress Report on Let’s Build is expected for Council Community Services Committee in October 2002.

With respect to the 95,000 units of social housing administered by the City of Toronto, the state of repair is currently being assessed to determine the size of the current and future capital deficit. A report to Council is expected in 2003.

Comments:

After 10-years of withdrawing from new affordable housing supply programs, the anticipated re- entry of federal and provincial government funding is welcome. However as result of cutbacks and downloading, there is a significant backlog both in the creation of new housing as well as an as yet unknown capital maintenance deficit in the current social housing stock.

Building on the progress made by Let’s Build, there is also a need for well-supported local administration of the various federal and provincial programs to ensure effective and efficient program delivery, tailored to address local needs.

Given the magnitude to the housing challenges facing the City of Toronto it is essential that the provincial and federal government provide distinct housing programs with dedicated funding. Housing initiatives are a unique municipal activity and should be funded over and above a general infrastructure program. - 21 -

TABLE 1 TTC PROJECTS INCLUDED IN THE EXPRESSION OF INTEREST FOR GTIP FUNDING

Project Total Cost

Projects included in the TTC’s 2002-2006 Capital Budget

Accommodating Ridership Growth– vehicle fleet expansion and $483.1 M replacement Station modifications to improve customer service 8.9 Studies of transit priority .6 Signal priority on major routes 12.0 Transit technology innovation 248.7 Total $753.0 M

Projects not included in the 2002-2006 Capital Budget Easier Access station improvements $220.0 M Rapid Transit Expansion Plan 5.0 Yonge Street Bus Rapid Transit 7.0 York University-Steeles Bus Rapid Transit 42.5 Signal Priority on inter-regional bus routes 7.5 Diesel-electric hybrid bus evaluation __4.6 Total $286.6 M

TABLE 2 – TTC PROJECTS RECEIVING – GTIP FUNDING

Project GTIP Funding Total Cost Expansion of Park ‘n Ride facilities at Finch, 3.08 M 9.23 M Downsview, Kennedy and Kipling Stations Improvements to the transit vehicle tracking 4.17 12.50 system Study of Bus Rapid Transit from the Spadina 0.07 0.20 Subway to York University Improvements and Study of Bus Rapid Transit 2.33 7.00 on Yonge Street Station improvements at Kennedy, Finch, and 1.13 3.40 Dundas West Stations TTC Transit Priority on inter-regional routes 2.50 7.50 Total $13.28 M $39.83 M - 22 -

TABLE 3 STATUS OF CITY OF TORONTO APPLICATIONS* TO FCM GREEN MUNICIPAL FUNDS - SEPTEMBER 2002

Green Municipal Enabling Fund (GMEF) Round Project Title Requested Funding Awarded 2000 Generating Methane from Waste for District $60,000 Yes - $60,000 Energy grant 2000 Feasibility Study for Air Quality Monitoring $6,250 No 2000 Retrofit of Ashbridges Bay Treatment Plant $75,000 No 2000 Waste Heat Recovery from Beare Landfill for $20,000 No Toronto Zoo 2000 Transportation Management Assoc. (TMA) $50,000 No Pilot 2001 Toronto Zoo Biogas Cogeneration Project $30,000 Yes - $30,000 grant 2001 Supporting the Deployment of Integrated $50,000 Yes - $41,250 Mobility System in the GTA grant 2002 Green Gooderham and Worts Complex $100,000 Under consideration 2002 Indoor Air Biofiltration & Energy $50,000 Under Conservation consideration 2002 LED Traffic Signal Lamp Conversion Pilot $100,000 Under Project consideration 2002 Digital Green Building – Rackhouse $100,000 Under consideration

Green Municipal Investment Fund 2000 Humber Arboretum Sustainability Study $95,000 Yes - $200,000 loan/grant 2000 Hybrid Vehicle Fleet Pilot Project $28,000 No 2001 Appliance Renewal Program – Phase 1 $1,289,000 Under consideration

* Full Applications only.