
A Great Plan to Fix Toronto's Finances
I think Larry Tanenbaum and his blue ribbon panel did a great job of uncovering some revenue generation opportunities as well as savings in Toronto's books. Tanenbaum and his team did more in four months than David Miller has been able to after years in office. After claiming the city was responsible fiscal managers and having its house in order, this report shows that much more can be done. The recommendations of selling Toronto hydro to pay off Toronto's debt resulting in 450 million in interest savings a year should be taken very seriously. Other revenue generating options could put the city on firm financial footing well into the future. More power to the mayor's office and to a CFO who could look into the books of the cities 119 corporations and commissions would also be welcome and needed changes to the culture of Toronto city hall. These recommendations in combination with uploading from the provincial government gives Toronto an opportunity to be fiscally independent without the 1% of GST handout demanded in the past. David Miller should take these recommendations to heart and get his house in order. At that point he could go to Ottawa and ask for help with the infrastructure deficit and need to expand public transportation with full credibility.
One element I disagree with the report on would be toll roads. These roads have already been paid for by Ontario taxpayers and the motorist already pays a heavy tax burden at the gas pump. We cannot punish middle class commuters attempting to get to work in the city unless there is a legitimate practical public transportation alternative that is convenient. I am glad the province has already ruled this out.
Stephen Harper and John Tory should also both get on side with this plan for the city of Toronto's fiscal crisis. Now I hope Larry Tanenbaum puts this much planning into the future of the Leafs.
Great coverage on this issue from the Toronto Star
Thanks for reading...
Darryl
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Billions of dollars could be unlocked from assets, city advised
Business enterprises, holdings could be `monetized' through sale, leasing or partnerships, panel says
Feb 22, 2008 04:30 AM
john spears city hall bureau As the bank slogan says, Toronto is richer than it thinks.
The mayor's panel on city finances suggests the city could – if it wanted – unlock up to $3.5 billion from the business enterprises and other assets it owns.
And that doesn't even begin to touch the extra money that could be squeezed from Toronto's $17.9 billion real estate portfolio, much of it underutilized.
Turning assets into cash could allow the city to pay off its debts, the panel says – and relieve it of paying $440 million a year in principal and interest.
The panel is careful not to couch its recommendations in terms of a mass sell-off.
"Monetization" is the term it uses. That can mean a sale, but it can also mean turning assets into cash through leasing, forming partnerships or even increasing investment to generate new income.
Here are some opportunities:
Toronto Hydro. The utility that owns the wires delivering power to every home and office in Toronto.
The utility does make significant payments to the city: In 2006 it paid $46.2 million in dividends, and $60 million in interest on debt held by the city. But the panel says the potential is far bigger than that.
"By some estimates, Toronto Hydro could be worth $2.5 billion to $3 billion (before debt repayment of approximately $1.2 billion and taxes) if it were sold to another municipality, the province or the private sector," the report figures.
Even if the whole company isn't sold, sections could be chunked off. For example, one unit of Toronto Hydro owns the city's streetlights and markets energy-efficiency products; another unit, Toronto Hydro Telecom, has fibre-optic connections to 490 buildings. Neither is valued in the report, but Toronto Hydro paid the city $60 million for the streetlights in 2005.
Panel member Jim Stanford was swift to point out that selling isn't always the best option.
"You could do a partnership with outside investors," he said. "You could restructure the balance sheet of Toronto Hydro so the city gets to take more money out of it."
Toronto Hydro could even get into the business of generating renewable energy, he said – the corporation has already said it wants to explore a wind farm in Lake Ontario off the Scarborough Bluffs.
Opponents of hydro privatization were already warning yesterday that they'll jump into action if a sell-off occurs. Paul Kahnert, of the Ontario Electricity Coalition, said privatizing would lead to double-digit rate increases. And he warned that a private hydro utility would ignore important social issues such as protecting the environment.
The Toronto Parking Authority is a well-run business with respectable net revenue of $41.5 million in 2007, but the panel says more can be realized. One option: Turn it into an investment trust, meaning the city sells the revenue stream while continuing to own the real estate.
Real estate. The city also has extensive holdings through the TTC, the Toronto Economic Development Co. and its own offices and works yards. Sometimes, two agencies own adjacent properties, but don't get together to develop them. Other properties are simply fallow. Panel member Paul Massara points to the derelict bus terminal sitting on prime land at Yonge St. and Eglinton Ave.
The panel wants to put all the real estate holdings in the hands of a "senior officer for real estate."
"We believe the city could conservatively target $150 million annually from real estate development, sales, etc.," the panel said.
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Rescue plan for ailing Toronto
Tolls, taxes, asset sales and a culture change at city hall. Those are key ingredients of a blue-ribbon panel's plan to extricate Toronto from its chronic fiscal quagmire
Feb 22, 2008 04:30 AM
Royson James A panel of eminent Torontonians, linked in various ways to the mayor and who, as such, have no desire to embarrass him, say city hall can extricate hundreds of millions – billions even – from its $8.2 billion budget and massive operations.
The mayor sees this as a "ringing endorsement of our civil service."
The six-member group of experts says that after four months of nosing around city hall it has unearthed a treasure trove – enough to make the city fiscally stable well into the future.
The mayor says he'll look into it.
The business types say they were "most shocked" by the 119 boards, agencies and corporations the city owns but "has little say or control over their budgeting and decision-making."
The mayor says the report proves "the idea that this city is mismanaged" is nonsense. "It's not true."
Torontonians can read the recommendations and decide for themselves.
That Mayor David Miller interjected bald politics into the debate yesterday is a too-eager attempt to sugar-coat what can be interpreted as an indictment of his administration and others that went before.
Asked why a university president, a labour union economist, a financier, a paving magnate, a real estate executive and a non-profit executive can find so much buried money – after just four months of digging – the mayor stumbled through an answer, saying that's why he asked them to look.
In fact, the panel was forced on Miller. He asked the "experts" to look at the books after a torrent of criticism greeted his introduction of two unpopular taxes last year.
"First, get your house in order," ratepayers said. And some councillors refused to vote for the vehicle tax and land transfer tax measure until Miller called in fresh eyes to look at the city's entrails.
Miller relented. But he constituted a friendly enough group that wouldn't slam the city top to bottom and recommend massive changes, especially ones that would upset the unionized workers.
Yesterday, Miller said that when he established the panel he told them there would be two or three meetings. That, in itself, tells you how much stock he placed in this process. And it is a cautionary note about how seriously the recommendations might be greeted at city hall.
The panel's report is responsible, cautious to a fault and careful not to upset those who will have to implement the suggestions. Still, it found, after 200 meetings, the city can:
Squeeze $150 million a year in savings, starting next year; and earn $150 million annually through better real estate management.
Reap $3.5 billion from its holdings with Toronto Hydro, the parking authority and Enwave. This would eliminate the $2.6 billion debt and the $400 million we pay in principal and interest each year.
There's more, but that alone shows how much money Toronto might be sitting on. Do just some of the above and say goodbye to the annual embarrassing journey up to Queen's Park for a bailout.
So, who will drive this? Who will secure these savings and funds?
The panel, with its corporate view of the world, wants a "strong mayor" system where Miller hires and fires the chief administrative officer and is, by law, responsible for the budget.
It's hard to believe such a governance change can turn around the mindset at city hall. But the likes of Larry Tanenbaum believe so. The head honcho of the Leafs and Raptors says that, while the report he helped pen is not a ringing endorsement of the city's past, it is a "ringing endorsement of the future."
Everybody's a politician.
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Recommendations gain strong support
Feb 22, 2008 04:30 AM
Jim Byers City Hall Bureau The lefties said they loved it. The right-wingers rejoiced. The province said it sounded just fine.
The reaction to a wide-ranging expert panel report on how the city of Toronto works – and doesn't – came in for near-unanimous praise yesterday, from everyone from Mayor David Miller to his most vocal opponents at city hall.
But it's far from clear whether politicians have the stomach to make some of the changes the report envisions, including handing more power over to the mayor.
"I have no idea who will drive the report," said Councillor Howard Moscoe, an ally of Mayor David Miller. "I imagine the mayor will pick some parts and bring them forward."
A panel of independent experts yesterday tabled a report that suggests a near-revolutionary overhaul of the city's operations.
Among other things, it calls for regional road tolls, selling off surplus city lands and giving the mayor a tighter rein on council.
Panel members said they want the report endorsed in its entirety and not to have politicians cherry-pick the lowest, sweetest fruit.
"We would hope, expect, that council can make decisions to take Toronto forward," said panelist Paul Massara, a Bay Street financier.
Panel members told the Star's editorial board they haven't considered asking the province to impose changes on the city if council balks at making the tough calls.
"If the councillors are going to be that parochial or whatever ... so be it," said panel member Larry Tanenbaum, chair of Maple Leaf Sports and Entertainment.
Miller said he "accepted the report in its entirety," but didn't specify what ideas he'll push for right away. The mayor said he's open to selling surplus real estate.
Councillor Denzil Minnan-Wong, like others of council's right wing, has always insisted there are savings to be found within the budget, including contracting out – an issue the report doesn't touch.
"I think the report's great," he said. "What it does show is there's a solution here we can look at to put ourselves on good financial footing."
With files from Kerry Gillespie
and Paul Moloney
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`Strong mayor' called key
Give mayor the power to hire and fire city manager and pay councillors on executive more, report says
Feb 22, 2008 04:30 AM
Paul Moloney city hall bureau Toronto would be better managed if the mayor had more power and was surrounded by a select group of well-paid councillors who helped to set city priorities
But for that to happen – and it could happen quickly – Toronto council must fully use the powers handed it under the new City of Toronto Act.
That's a key proposal from a blue-ribbon panel organized by Mayor David Miller in October to look at the city's books and identify savings.
Yesterday the panel offered up a wide range of ways for the city to cut costs but warned that little can be done without changing the way business is conducted at city hall.
"You have to get governance right before you're able to really bring in these other ideas and get them executed properly," said panel member Larry Tanenbaum.
The other ideas include finding ways to get more revenue from city-owned Toronto Hydro, the Toronto Parking Authority and Enwave, finding budget savings, and raising new money with tolls and fees.
Implementing them "means a strong mayor system," Tanenbaum said.
Mayor David Miller should be able to hire, fire and issue orders to the city manager, the city's top bureaucrat, who oversees a workforce of 37,000 direct employees and 13,000 more who work for city agencies, the six-member panel said.
The current system, whereby city manager Shirley Hoy reports to the entire 45-member council, is "unwieldy, difficult to operate, and diffuses accountability, authority and responsibility," the report said.
The result is that it's more difficult to get things done, panel chair Blake Hutcheson said. "The city needs to be able to set priorities," he said in an interview. "It's about trying to get a structure in place where our city can say, `These are the six things that matter,' as opposed to having 44 different (councillors) agendas."
It's not the first time Miller and council have been told they should support a strong-mayor system.
The recommendations echo those of the Governing Toronto Advisory Panel, a three-member body that reported in 2005 on how to better focus on civic priorities.
"I think we're all saying the same thing; you do need a strong mayor concept," said Martin Connell, who served on the 2005 panel.
However, council balked at endorsing the proposal in 2005.
Since then, the city has lurched from budget crisis to budget crisis – until Miller finally won a long struggle last year to introduce a controversial land transfer tax and vehicle registration fee. Still, the city has not yet settled its fiscal problems.
The provincial government does have the power to step in and force changes if city council won't.
Both governance reports call for higher pay for council's 13-member executive committee, which includes the councillors who chair key committees such as public works, planning and parks.
All councillors earn the same – almost $97,000 annually – but those on the executive deserve a significant raise, Connell said.
"It has to be based on the responsibilities that are attached to the job."
Nobody's asking for a raise, stressed Councillor Joe Mihevc, who chairs the community development and recreation committee. "I'm not asking for more money for my work," Mihevc said.
"However, it is a lot more work. I take some comfort in the panel noting that being chair of a committee is a substantial volume of work."