A Letter From the Chairs Hello Councillors,

Welcome to the 2nd Annual Model City Hall Conference! It is our pleasure to welcome ​ you to this year’s Economics Committee. We are looking forward to seeing the excellent debate and expert resolutions that we know you have to offer. We have both been doing Model United Nations for many years, having actively participated in several conferences while also participating in external political endeavours. We are looking forward to seeing the diverse styles of debate sure to take place in this committee. The City of is the largest in Canada. As a mecca of business, trade, tourism and academia, the city has much to offer to its residents. In lieu of recent economic crises hampering Canadian growth, Toronto continues to remain strong in its Growth. Economics has been a pressing issue for not just Torontonians, but Canada as a whole. To avert collapse in the past, and to fund multi­billion dollar infrastructure projects, the City has indebted itself in the past. Many billions in loans and credit have been taken from banks and governments to account for over­budget spending. The two major issues councillors will be discussing in this committee are the issue of budget rebalancing and funds allocation, and the funding of the TTC. Both are controversial and wide issues to tackle. At current levels, the budget is not sustainable. Liberal spending is planned both in the immediate fiscal year, and the long term. Nearly 13% of funding for future projects comes from debt spending, and Toronto has yet to pay back most of its accrued debt. Councillors will be asked to assist in generating more revenue for the city, and perhaps reallocating, or extinguishing current expenses. There are many options to choose from in this regard, and creativity is welcome. The Toronto Transit Commission is the primary means of public transit in the city, and handles millions of passengers on a yearly basis. In recent years, the Commission has struggled to keep up with increasing demand, and has overspent by millions on nearly every expansion project. With fare hikes occurring on a yearly basis and little to no benefit to the consumer seen in some years, it is difficult to justify further spikes in fare. Councillors will be asked to address the issue at its roots, and resolve the current crisis. If you have any questions regarding the conference or this committee specifically, feel free to reach out to either of us over email or Facebook. We look forward to a lively and interesting debate, and hope you can make a definite change in the economic issues of today.

Regards, Liza Kanopatykaia [email protected] ​ ​ Drew Barot [email protected] ​ Chairs, Economics Committee Topic 1: Funding the TTC – Keeping Toronto Moving

Toronto is the biggest metropolitan city in Canada. However, the TTC does not meet ​ ​ the expectations of such a large city, being wildly low­functioning and underfunded. Toronto's population is growing exponentially and congestion in Northern GTA, Scarborough, Mississauga, and York Region areas is an increasingly severe problem. Existing infrastructure does not serve all of the people who travel in and out of the GTA and surrounding areas and will not be able to support the future projected growth of the areas or their populations. The GTA's population is growing at a rate unmatched by any other North American city and is 1 projected to increase by more than 44% over the next 25 years .​ ​

In the 4th quarter of 2012, the average daily ridership was 2.76 million passengers: 1,425,300 by bus, 271,100 by streetcar, 46,400 by intermediate rail, and 1,011,700 by subway and ridership will only continue to increase 2 .​ To accommodate this growth, your goal is to act as policy makers and properly allocate funds to keep Toronto moving. The average GTA commuter spends 82 minutes getting to and from work, producing gridlock that costs the economy $6 billion per year and is expected to grow to $15 billion by 2031 as the number of cars on the road rises 3 and both quality and quantity of transit decreases .​ ​ Your goal is to develop a comprehensive solution to cap the rising cost and existence of gridlock by allocating funds towards improvement of the TTC system on all fronts. Furthermore, examine current projects on the table and their funding as outlined in the City of Toronto Budget. How can money be better allocated from other areas of the budget for TTC improvements? The role the provincial government plays in the funding of the TTC must also be taken into account. According to the TTC’s 2014 budget highlights, the subsidy the TTC receives remains the lowest in North America at just $0.78 per ride. Meanwhile, Montreal 4 receives $1.16, Vancouver; $1.62, and York Region; $4.49 .​ ​ Your task is to examine solutions for Toronto’s transit lag in comparison to other fast­growing cities. Furthermore, examine Toronto’s partnership with the province, especially , and how it affects the TTC’s progress. Lastly, examine the allocation of funds within the TTC and devise solutions for better financial management. Should more be allocated for maintenance? Should the TTC invest more in building more routes, buses, trains, etc? Where will the money come from? It should be stressed that, as Toronto’s economic specialists, your job is not to create plans for the TTC, rather find ways to fund them using both internal and external means. It is up to you to get the TTC up and running and keep up with the ever­growing demands of its riders.

TTC Fare Hikes

In November 2015, the TTC board has voted to raise fares for people paying with cash or tokens. At the start of 2016, the fare jump added 25 cents to the cash fare and 10 cents to the price of adult tokens; changes which affect approximately 37% of all TTC riders. Even with the new fare increase, there is still a $41 million hole in the TTC budget which, if not filled, leaves the TTC with no option 5 than to cut services or increase fares yet again .​ It is no wonder then that the TTC is ​ considered to have the one of the most expensive fares in North America. For the 2011 operating year, the TTC had a projected operating budget of $1.45 billion. Revenue from fares covered approximately 70% of the budget, whereas the remaining 30% originated from the 6 city which has increased its subsidy from $411 million in 2013 to $428 million in 2015 .​ Your ​ goal, as a policy­maker, is to maintain the TTC's financial accessibility to all its riders by locating financial and political means in order to maintain the TTC's funding.

TTC Subway System

The Rocket is the very underfunded and under­appreciated crown jewel of the TTC. Presently, the system consists of four lines with Line One receiving the most attention in recent projects. The Yonge­University­Spadina line has recently undergone a major facelift, having Wi­Fi implemented on all stations of the Downtown "U" at no cost to the TTC. Furthermore, renovations have recently been completed. Mayor John Tory has announced the addition of more trains to Line One in order to cut down delays by 7 50% .​ The Mayor said that the addition ​ of a couple of new trains on the Yonge­University line last year helped reduce delays on the line by 25%. Delays were also reduced on Bloor­Danforth line by 9%, according to Tory. However, several highly­coveted expansion plans have been put on the back­burner. More specifically, in 2008, the draft Metrolinx Regional Transportation Plan, extension of the Yonge Subway line north from Finch Station to Richmond Hill Centre/Highway 7 in York Region 8 emerged .​ This plan provides the well­needed connection of the GTA and suburban Toronto ​ to the city. Similarly, Line One has been approved to be expanded to the city of Vaughan to create the Vaughan Metropolitan Centre 9 Station .​ Finally, the ​ Scarborough LRT revitalization and expansion has finally been hailed as a bottom­line plan. A one­stop subway extension from the Bloor­Danforth line along McCowan Rd. to Scarborough’s city centre and the addition of a 17­stop LRT that will 10 connect five underserved priority neighbourhoods all within a $3.56­billion price tag .​ ​ The aforementioned plans will connect the city of Toronto with the vital suburban ports of Richmond Hill, Thornhill, Markham, Vaughan, and Scarborough, providing easier flow of traffic, eased congestion, and better quality service. Your goal is to examine these and any other plans currently of the table and how they will affect the TTC and Toronto budgets. Your goal is to outline how much these plans would cost, their costs versus benefits, and where will the funding come from.

Streetcars & Buses

Toronto's above­ground services have come under extreme scrutiny from TTC's users. Recently, streetcars have come under massive fire due to the delay in production of brand­new streetcars and the added cost of these delays to the taxpayer, the city, and the province. In summer 2015, the route was the first to sport the new look followed by the . In 2016, the , , and are also 11 expected to receive the upgraded vehicles. All routes are expected to be upgraded by 2019 .​ ​ However, delays with the production company Bombardier have caused heated a situation between the TTC and Bombardier. Toronto, which has 10 new streetcars in service, was 12 supposed to have 20 in full use on the street by the end of 2015 and 23 in the city .​ This was ​ according to a revised schedule issued by Bombardier in July 2015. Under the original $1.25 billion order for 204 fully accessible, supersized cars, 73 should have been in Toronto by the 13 end of 2015. However, the city received less than 16 cars by the end of last year .​ ​ Furthermore, Bombardier provided the city with less­than functional cars. TTC CEO Andy Byford said that the first of the 204 new streetcars — price tag: $1.2 billion — were so flawed that the TTC simply couldn’t risk putting them into service because they would almost 14 certainly break down on Toronto streets .​ The TTC board will sue Bombardier for $50 ​ million, however, the TTC will not be barring Bombardier from its list of suppliers. Your goal is to examine the financial burden which Bombardier has caused the City of Toronto and Metrolinx while deriving a possible solution for the delay in production. In a similar fashion, earlier in February, 50 new TTC buses were out on transit routes 15 across the city as part of a $95 million investment approved by city council in 2015 .​ This is ​ yet another way that the city is attempting to alleviate congestion and gridlock in and out of the city. Your goal is to examine the current TTC situation in regards to congestion and gridlock within the TTC's above­ground services. Furthermore, examine the financial implication of gridlock and what is the cost versus benefit of potential plans to alleviate it.

End Notes 1. For further information about Toronto's population growth and expansion see: Scallan, Niamh. "Density Toronto." Thestar.com. The Toronto Star, 19 Oct. 2012. Web. ​ ​ 2. For further information about ridership and growth, see Toronto Transit Commission Operating Budget Analysis Notes: City Budget 2012 http://web.archive.org/web/20130925221547/http://www.toronto.ca/budget2012/pdf/op 12_an_ttc.pdf See: TTC 2015 Budget https://www.ttc.ca/News/2015/February/020215_Board_Approves_Budget.jsp 2015 TTC and Wheel­Trans Operating Budgets: https://www.ttc.ca/About_the_TTC/Commission_reports_and_information/Commission_mee tings/2015/February_2/Reports/2015_TTC_AND_WHEEL_TRANS_OPERATING_BUDGETS.pdf 3. See "Density Toronto" 4. For TTC funding, see: Palisoc, Jennifer. "How Does the TTC's Funding Compare to Other Transit Agencies?"Globalnews.ca. Global News, 13 Nov. 2014. Web. ​ ​ 5. For information about cash fare raises, see: Moore, Oliver. "TTC to Raise Cash Fares, Freeze Cost of Monthly Metropass."Theglobeandmail.com. The Globe and Mail, 23 Nov. 2015. Web. ​ ​ 6. See: How does the TTC’s funding compare to other transit agencies? 7. See: CBC, News. "TTC Plans to Reduce Delays by 50 per Cent, Says Mayor John Tory." CBCnews. CBC/Radio Canada, 01 Feb. 2016. Web. ​ 8. See: Joseph, Simone. "Councillors Applaud next Step to Put Subway to Richmond Hill Back on Track."Yorkregion.com. Richmond Hill Liberal, 29 June 2015. Web. ​ ​ 9. See: "Vaughan Metropolitan Centre Station." TTC.ca. Toronto Transit Commission. Web. ​ ​ 10. For Scarborough LRT plan, see: Pagliaro, Jennifer. "New Scarborough Transit Plan ‘buys Peace in the Land’. "Thestar.com. The Toronto Star, 20 Jan. 2016. Web. ​ ​ 11. See: "New Streetcars Rollout Schedule." TTC.ca. Toronto Transit Commission Web. ​ ​ 12. See: Kalinowski, Tess. "TTC Considers Suing Bombardier after New Streetcar Delay." Thestar.com. The Toronto Star, 16 Oct. 2015. Web. ​ 13. See: Pagliaro, Jennifer. "TTC Chair: “I Just Want Our Damn Streetcars” Thestar.com. The ​ ​ Toronto Star, 29 July 2015. Web. 14. See: Kalinowski, Tess. "TTC Issues with Bombardier Streetcars Also Apply to Metrolinx Order."Thestar.com. The Toronto Star, 13 May 2015. Web ​ ​ 15. See: Wilson, Codi. "Fifty New TTC Buses out on Transit Routes across the City Today." CP24. N.p., 16 Feb. 2016. Web. 02 Mar. 2016. ​

Works Cited

CBC, News. "TTC Plans to Reduce Delays by 50 per Cent, Says Mayor John Tory." CBCnews. ​ ​

CBC/Radio Canada, 01 Feb. 2016.

Contributor, Guest. "Is the TTC the Priciest Transit System in North America?" Blogto.com. BlogTO, ​ ​

11 Dec. 2011. Web.

Joseph, Simone. "Councillors Applaud next Step to Put Subway to Richmond Hill Back on

Track."Yorkregion.com. Richmond Hill Liberal, 29 June 2015. Web. ​ ​

Kalinowski, Tess. "TTC Considers Suing Bombardier after New Streetcar Delay." Thestar.com. The ​ ​

Toronto Star, 16 Oct. 2015. Web.

Kalinowski, Tess. "TTC Issues with Bombardier Streetcars Also Apply to Metrolinx

Order."Thestar.com. The Toronto Star, 13 May 2015. ​ ​

Kalinowski, Tess. "TTC Will Sue Bombardier over Late Streetcars | Toronto Star." Thestar.com. The ​ ​

Toronto Star, 28 Oct. 2015. Web.

Kalinowski, Tess. "World’s Best Ideas Sought to Tackle Gridlock, Transit Issues | Toronto

Star."Thestar.com. The Toronto Star, 23 June 2011. Web. ​ ​ Moore, Oliver. "TTC to Raise Cash Fares, Freeze Cost of Monthly Metropass."Theglobeandmail.com. ​ ​

The Globe and Mail, 23 Nov. 2015. Web.

"New Streetcars Rollout Schedule." TTC.ca. Toronto Transit Commission, n.d. Web. ​ ​

Pagliaro, Jennifer. "New Scarborough Transit Plan ‘buys Peace in the Land’. "Thestar.com. The ​ ​

Toronto Star, 20 Jan. 2016. Web.

Pagliaro, Jennifer. "TTC Chair: “I Just Want Our Damn Streetcars” | Toronto Star." Thestar.com. The ​ ​

Toronto Star, 29 July 2015. Web.

Palisoc, Jennifer. "How Does the TTC's Funding Compare to Other Transit Agencies?"Globalnews.ca. ​ ​

Global News, 13 Nov. 2014. Web.

Scallan, Niamh. "Density Toronto." Thestar.com. The Toronto Star, 19 Oct. 2012. Web. ​ ​

"Vaughan Metropolitan Centre Station." TTC.ca. Toronto Transit Commission, n.d. Web. ​ ​

Wilson, Codi. "Fifty New TTC Buses out on Transit Routes across the City Today." CP24. N.p., 16 Feb. ​ ​

2016. Web.

Topic 2: The City Budget – Funding for Today, and for Tomorrow

Essential to any city is a sound budget and financing system. In lieu of a near­collapsed national economy, Toronto seems to be powering through, funding multi­million dollar projects and continuing its expansion. This, however, comes with an added consequence for its residents. In the past 5 years, Torontonians have seen property costs skyrocket, along with rents. In addition, the price of property tax has increased drastically as well. As the budget rolls around amid mounting costs, councillors are left with a difficult choice: raise property taxes again, or make cuts to essential services? Ontario requires all municipalities to balance their budget. They may borrow, cut and tax how they see fit, but in the end, a balanced budget must be delivered. For a metropolis the size of Toronto, costs cannot be consolidated into a rolling yearly budget; therefore, two effective budgets are proposed on an annual basis: the Capital Budget, and the Operating Budget. Both regulate city finances over a fiscal period, but cover different areas.

The Operating and Capital Budget

The more immediate budget is the Operating Budget. This work dictates the immediate year ahead for Toronto, covering costs associated with day­to­day expenses for the city to operate, including parks and recreation, public health, city roads, garbage, delivery of safe drinking water, transit, police and other emergency services. This budget is fed primarily by property tax, accounting for 34% of revenue, and the rest is bought in through a variety of sources, including the Provincial government, rates, fines, and user fees. The budget of 2016 is split between social programs, transit, emergency services and parks/expansion. The total budget accounts for a flow of $11.7 billion. Debt is not a primary area on this budget, but a 6% financing cost, and 7% investments and borrowing revenue must be considered. Find the revenue and expense of the Operating Budget below.

Perhaps the more pressing issue is that of the Capital Budget. A 10­year strategy that includes major investments into the city, and funding of rate supported services, 14% is funded by debt. The budget entails major infrastructure and repair costs, public buildings, water and sewer facilities, parks and the TTC expansion. The budget is fueled by 37% of its revenue coming from rates from city users (like water rates) and 14% comes from the Operating budget. The remaining amount comes from charges and government investment into Toronto. A considerable amount (14%) comes from debt financing. The money for the 2016­2025 budget is planned to go into Transport (16%, Gardiner and road repair), Transit (31%, Scarborough and Eglinton expansion), Parks and Public Facilities (16%) and Rate infrastructure (37%, water and garbage). A massive $33.5 billion figure may seem daunting, but over a 10­year period, the amount is a small sample of the Operating Budget. The details of the budget are found below.

A key issue in this budgets passing, and the budgets of the coming years, will be that of property tax. As the main source of income into the city treasury, it has come under scrutiny. Many councillors have urged that the Mayor’s office consider raising the Property Tax rate from its current amount. On the average home bought in 2015, at a price of $1 000 000 CAD, property tax for this year will be $7,056.04, split between the city, education, and transit expansion. Property tax increases are a controversial issue. A number of city residents have expressed concern over the rises, highlighting that they are disproportionately high as prices are inflated on property. Others argue that rises in the tax have little tangible benefit to them. Raising property tax is the easiest way of receiving more revenue for the city, but will sway voter opinions.

Delegates are tasked with a daunting duty. The councillors of Toronto must come to an agreement wherein the city can meet its immediate $11.7 billion Operating Budget, and eventually the $33.5 billion Capital Budget as well. Raises in property taxes, rates for water and parks, and raising the TTC fare are all feasible options. Creative options are also welcome. Issuing city bonds, structuring loans, privatizing city resources, and more. Below, delegates will find a 2014 breakdown of the city, financially. There are a number of considerations to be made, and sources of revenue and expense to be evaluated. Resize

Raising Property Taxes

The majority of Torontonians opt to automatically pay $3.978 billion. Mathematically, this means that the total value of property in Toronto must be an estimated $563.77 billion. This is calculated through a simple calculation: The real value of property in Toronto is well above this. The above calculation was done with a residential property rate, and does not factor in lower rates or higher rates on commercial and agricultural land. A current breakdown of property tax rates can be found below:

Raising the property tax rate leads to a number of consequences that must be considered. Tax rates must rise only when inflation of wages rise. At a 1% inflation rate and typical 0.9% rise in wages year over year, delegates must not raise the total property tax rate on residents to over 1%, meaning only a 0.3% increase may be done on residential property. Similarly, for other sections, a rise of up to 0.2% is permitted. Essentially, the committee will be limited in its power to raise taxes to the nearest round figure. For example, Industrial land can be raised from 2.82% to 3%, Commercial can be raised from 2.76% to 3%, and so on. Delegates must calculate how much revenue shall result from these rates.

Issuing City Bonds

The issuing of city bonds, debt financing, by a municipality is a fantastic way to raise capital quickly, but can easily overwhelm a city. In California, many municipalities released their own bonds, however when the governments were not able to pay back the principal, they defaulted and investors lost millions. Toronto, if they choose to release municipal bonds, could stand to raise millions, but it must be done in a way that is structured to pay investors back over time.

Privatizing City Assets

In recent months, a controversial decision by Ontario’s government has been to privatize Hydro One and offer equity to the public, has led to debate about governmental assets being privatized. The move was relatively successful, as the government saw their stake in the company go up by roughly 2% in just weeks. Privatization can also lead to higher levels of service, and often, cheaper long term operation (as municipal government does not need to pay union fees and pension). In Toronto, privatization has been arguably effective; the waste management services in Toronto were privatized in 2011, and saved the city millions in just a few months, nearly $11.3 million in 1 year.[1] Privatization of roads and highways in the city, notably the , would be a favourable option at this point. Looking at major financial burdens to the city in the coming years and privatizing them may solve the cities problems quickly; however, it is important to consider the effect of privatization, and the likely consequence of tolling.

Fare Hikes and Rate Hikes Increasing the price of the TTC fare or water rates is possible, but will be met with harsh criticism. It would, however, quickly route funding in. Ultimately, the decision is a broad one. Delegates should aim to reduce debt spending by at least 5%, and raise funds for future projects. Delegates must discuss what services and expenses are necessary, and what may be wasteful. Delegates are encouraged to criticize what future projects should be funded, and which should be scrapped.

[1] http://www.cbc.ca/news/canada/toronto/toronto­has­saved­11­9m­through­private­garbage­pickup­ 1.2466736