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Description:
June 6, 2000
To: Policy and Finance Committee, City of Toronto
From: Chief Administrative Officer
Subject: Towards a New Relationship with Ontario and Canada

Purpose:
This report is intended to initiate a dialogue with the provincial and federal governments about a new relationship between the City of Toronto and the other orders of government. The report recommends a strategy in pursuit of that goal. The directions recommended in this report are achievable within the existing constitutional framework. The new relationships envisioned do not require secession or elevation of Toronto to provincial status. The report has been prepared with the participation of the Finance Department and the Legal Division. A set of background reports highlight challenges confronting Toronto, provide an overview of the legal framework for city government in Canada and Ontario and review the legal status and revenue sources available to other cities in Canada and internationally.

Financial Implications and Impact Statement:

There are no direct financial implications arising from the recommendations in this report. However, there are resource implications associated with components of the strategy, specifically communications requirements. These will be reported separately once a plan is developed.

Recommendations:

It is recommended that:
(1) Council endorse, in principle, the changes that the City of Toronto should be seeking in its relationships with the provincial and federal governments, including its request to be established as a Charter City, as set out in this report;
(2) Council endorse the strategy set out in this report to achieve the desired changes in the City of Toronto’s relationships with the provincial and federal governments;
(3) a Team Toronto, composed of a group of councillors, be established to provide advice to the Mayor and political guidance to staff on implementation of the strategy;
(4) the terms of reference for Team Toronto, set out in Attachment # 1, be adopted;
(5) a copy of this report be sent to the Prime Minister of Canada, the Premier of Ontario, the provincial Minister of Municipal Affairs and Housing, the federal Minister for the Greater Toronto Area, the Presidents of FCM and AMO, the leaders of the federal and Ontario official opposition parties and the heads of Council in the major cities in each Canadian province; and
(6) the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.

Background:

On May 9 – 11, 2000 Council debated Notice of Motion F and various amendments dealing with the need to redefine the legal relationship between the City of Toronto and the Province of Ontario. Council referred the main motion and all the amendments to the CAO and requested him to develop a comprehensive strategy to deal with the issues raised, including the issue of charter cities and other alternatives deemed appropriate to mitigate the transfer of responsibilities from the Province. This report responds to Council’s request.

The report outlines a set of initiatives to establish new relationships between the City of Toronto and the provincial and federal governments. The rationale for these new relationships and the legal framework within which they are achievable are discussed in Background Reports entitled “The Time is Right for New Relationships with Ontario and Canada” and “Powers of Canadian Cities- the Legal Framework” respectively.

Introduction:

In November 1999, City Council adopted Part 1 of Council’s Strategic Plan. A key goal in the Strategic Plan is long-term organizational sustainability. This includes ensuring that the City has “appropriate legislative authority, financial tools and organizational structures and processes to undertake its responsibilities and achieve goals that support and enhance the city’s quality of life within its financial capacity.” Movement towards this goal requires the redefinition of the City’s relationships with the provincial and federal governments. In order for these relationships to be redefined successfully, steps must be taken to stimulate a new spirit of understanding and cooperation between the Province and the City. This report and the directions within it have been prepared within that spirit.

What Do Torontonians Require From Ontario?

Toronto needs the Province to provide it with a legislative framework suited to the challenges faced by Canada’s largest urban centre, whose future depends on being able to compete successfully with nearby North American cities. Toronto is a vital component of the Ontario and Canadian economies. In a March 1999 report (“Reinvesting in Toronto: What the Competition is Doing”), Joe Berridge of Urban Strategies Inc. noted that the Toronto area generates nearly a quarter of Canada’s GNP. The report added that almost one third of GNP is generated within a one-hour drive of Toronto’s Pearson International Airport.

If Toronto is to continue to be a wealth creator that benefits Ontario and Canada in the face of severe competition from neighbouring North American cities in the context of NAFTA, the City requires:
- recognition as an independent, responsible and accountable order of government with power to act on local matters; and
- long-term financial sustainability.

Recognition as an Independent, Responsible and Accountable
Order of Government with Power to Act on Local Matters:

The City, as the major Canadian urban centre in a global economy warrants special recognition. This could best be achieved by the City obtaining its own Charter from the Province. Charter Cities have a long tradition in Canada, dating back to 1785 with Saint John, New Brunswick. For a fuller discussion, please see the Background Report entitled “Powers of Canadian Cities – the Legal Framework”.

The reasons and purposes behind enacting a Charter specifically for Toronto are as follows:
- to allocate to Toronto the powers and responsibilities that the City requires, as the largest Canadian city and economic centre of Canada, which other smaller municipalities do not need;
- to recognize the uniqueness of the City in that, due to its need to hold its own against neighbouring North American cities, it requires different tools from other municipalities in areas such as taxation, incentives to business, areas of responsibility, etc.;
- to consolidate the huge volume of special legislation that the Province has given to the City over the years in recognition of its being different from other Ontario municipalities; and
- to have a “stand alone” piece of legislation that governs Toronto, recognizing that provincial policies and programs that are designed for province-wide application often do not fit the needs or operations of the City.
As illustrated by the examples of other Canadian Charter Cities, such as Montreal, Saint John and Vancouver, a Charter for Toronto would be “custom built” to meet the City’s unique responsibilities and needs. A Charter for Toronto would need to include the following:
- As in Newfoundland’s recently enacted “Cities Act”, recognition of Toronto as an “order of government” with the right to be consulted in advance on any provincial legislation, policy, program or other action that would impact the City. This would give the City the forum to have its unique considerations taken into account whenever provincial changes are being developed.
- Similar in concept to the U.S. Home Rule arrangement, the City would be granted similar powers to those afforded the Province in the Canadian Constitution, except that such powers could be exercised only with respect to local matters and only when they do not conflict with provincial or federal legislation. Alternatively, the Province would spell out clearly the City’s spheres of power and give the City natural person powers to act independently within these spheres. In either case, this type of provision would promote greater certainty as to the City’s capacities and would lead to greater efficiency for both the Province and the City: the City would not need the Province to enact special legislation to respond to changing realities, as now happens frequently.
- Confirmation that the Charter could be changed only by an amending statute, rather than regulation, which would promote the stability that is necessary to stimulate innovation and creativity in municipal government.
- The authority to conduct and attract business in innovative and more effective and efficient ways, such authority to include the following capabilities:
(i) incorporation of non-profit and business enterprises, which would facilitate public-private partnerships and involvement of the business sector in large infrastructure projects (as in the U.S. and U.K.);
(ii) easing of municipal “bonusing” restrictions to permit the City to grant special incentives in order to attract and retain commercial and industrial enterprises by, for example, tax incentives and credits, loan guarantees, etc. (as U.S. cities can do). Such incentives would be subject to rules ensuring transparency and open competition; and
(iii) ability to raise money on specific assets (like a mortgage) and to enter into modern financing agreements, such as sale and leaseback, which could free up capital for major infrastructure needs; and

- The ability for the City to initiate discussions and communicate directly with the federal government on matters of mutual interest, such as urban infrastructure, housing construction incentives and immigrant settlement.

Long-Term Financial Sustainability:

A new legislative framework would have the effect of broadening the City’s revenue base to ensure that financial resources match the City’s responsibilities. This could include:
- empowering the City to use a variety of revenue raising instruments, such as revenue bonds and asset backed securities;
- being allocated a dedicated share of existing provincial revenues such as gasoline taxes, retail sales tax, and vehicle registration fees (e.g. as in B.C., Alberta, Quebec, Michigan, Florida and New York); and
- advancing the discussion on what should be funded by the property tax (e.g. in all provinces except Ontario, welfare is not funded by the property tax).

What Do Torontonians Require From Canada?

In a new relationship, the federal government would formally recognize the importance of Toronto and other large urban centres in Canada through the development of a national urban agenda that spells out actions required to maintain the social, economic and environmental sustainability of Canada’s largest urban centres. Toronto should be able to deal directly with the federal government. This means:
- the ability to initiate negotiations and enter into direct funding arrangements with the federal government on matters of mutual interest; and
- direct participation in areas where federal policies or actions will impact the City.

What Do Torontonians Require From Both Ontario and Canada?

Toronto requires:
- tripartite funding agreements that focus on specific sites or urban renewal projects such as exist in Vancouver and Winnipeg (Toronto’s central waterfront could provide the focus for such an agreement); and
- a seat at the table when the federal and provincial governments are discussing issues and policies directly impacting Toronto (e.g. health, economic and labour market issues, criminal justice, and cultural policy).

A Strategy to Achieve New Relationships With Ontario and Canada:

In summary, Toronto is looking for new relationships with the federal and provincial governments. These relationships would be enshrined in a legal framework that recognizes Toronto as a responsible and accountable order of government with rights and responsibilities. The new relationship envisioned would not require secession or elevation to provincial status, both of which would entail insurmountable constitutional hurdles, as described in the Background Report entitled “Powers of Canadian Cities – the Legal Framework”.

The changes recommended in this report are premised on an assumption that new relationships between Toronto and the provincial and federal governments are achievable within the existing constitutional framework. The existing legal framework for the powers of Canadian cities is summarized in the Background Report entitled “Powers of Canadian Cities – the Legal Framework”.

The strategy of activities to achieve these new relationships is critical. It should include the following elements:
(a) Direct negotiations with the province:
- bilateral discussions between the Mayor and the Premier and key Cabinet Ministers;
- meetings with the provincial PC Toronto/GTA caucus; and
- establishment of an intergovernmental team of City and provincial staff to develop a common understanding of the ways and means to achieve the Charter City goal.

(b) Direct negotiations with the federal government:
- bilateral discussions between the Mayor and the Prime Minister and key Cabinet Ministers;
- meetings with the federal Liberal Toronto/GTA caucus; and
- establishment of an intergovernmental team of City and federal staff to contribute to the development of a national agenda on urban issues.

(c) Collaboration with municipal associations:
- seek AMO endorsement and assistance in lobbying the provincial government for changes in municipal legislation; and
- seek FCM endorsement and assistance in lobbying the federal government for a national agenda on urban issues and changes in the relationship between the federal government and Canada’s major cities.

(d) Collaboration with other large cities in Ontario and across the country:
- initiate a dialogue with large cities in Ontario to share experiences and establish common ground for negotiations with the province; and
- initiate a dialogue with major cities in all Canadian provinces to share experiences and establish common ground for negotiations with the federal government.

(e) Stimulate public interest and civic engagement in the issues and proposed solutions:
- communicate the issues clearly and provide opportunities for public involvement (e.g. through an interactive website, printed materials, TV and radio phone-in shows); and
- host a summit of experts and stakeholders, including academics, municipal leaders from major cities across Canada, constitutional experts, municipal and urban affairs writers, business leaders and others.


Implementing the Strategy – Establishment of Team Toronto:

The strategy to achieve new relationships with the other orders of government includes a variety of activities involving numerous participants. The Strategy requires focussed political attention in support of the Mayor, who would lead the direct dialogue with the federal and provincial governments on behalf of the City. The Policy and Finance Committee is responsible for the City’s overall governance and intergovernmental issues. However, it would be difficult for the Committee to deal with the day-to-day implementation details of the strategy. Therefore, it is recommended that a Team Toronto, made up of a group of councillors, be appointed to provide advice to the Mayor and political guidance to staff on key components of the strategy. It is further recommended that the terms of reference for Team Toronto, set out in Attachment # 1, be adopted.

Conclusions:

Toronto is seeking new relationships with the federal and provincial governments. These relationships would be enshrined in a legal framework that recognizes Toronto as a responsible and accountable order of government with rights and responsibilities. As illustrated in the Background Report entitled “Comparison of Powers and Revenue Sources of Selected Cities”, there are many precedents for the type of changes that Toronto is seeking.

The changes recommended in this report are achievable within the existing constitutional framework. The new relationships envisioned would not require secession or elevation to provincial status, both of which would entail insurmountable constitutional hurdles.

A redefinition of the City’s status is necessary to ensure that Toronto has the powers and sources of revenue necessary to meet the challenges facing the City in the twenty-first century. This report outlines a set of changes that the City should seek in its relationships with the other orders of government. A strategy for achieving these changes is also described.

It is recommended that Council endorse, in principle, the changes that the City of Toronto should be seeking in its relationships with the provincial and federal governments. It is further recommended that Council endorse the strategy to achieve these desired changes. It is also recommended that Council establish a Team Toronto, made up of a group of councillors, to provide advice to the Mayor and political guidance to staff on key components of the strategy.

Contacts:

Rosanna Scotti
Director of Strategic & Corporate Policy
Tel: 392-8637 Fax: 696-3645

Phillip Abrahams
Senior Corporate Management & Policy Consultant
Tel: 392-8102 Fax: 696-3645

Joan Taylor
Senior Corporate Management & Policy Consultant
Tel: 392-4995 Fax: 696-3645

Mary Ellen Bench
Director of Muncipal Law
Tel: 392-7245 Fax: 392-1017

Elizabeth Waight
Solicitor
Tel: 392-7221 Fax: 392-1017

Len Brittain
Director of Treasury & Financial Services
Tel: 392-5380 Fax: 397-4555

(Signed)
Michael R. Garrett
Chief Administrative Officer
***
Attachment #1

Implementing the Strategy to Achieve a New Relationship with Ontario and Canada - Terms of Reference for Team Toronto

Purpose:

To provide advice to the Mayor and political guidance to staff on the strategy to achieve new relationships with the other orders of government.

Responsibilities:

The Mayor will lead the direct dialogue with the federal and provincial governments on behalf of the City. The role of Team Toronto will be to advise the Mayor and provide assistance and guidance on activities contained within the strategy. The development of formal City Council policies and positions on intergovernmental issues and the consideration of related reports and public deputations would continue to take place through the appropriate standing committees and Council.

Method of Operation:

Team Toronto can be called together on short notice. It will meet on an informal basis and will not be a formal committee receiving support from the City Clerk or preparing reports to Council.

Reporting and Sunset Date:

Team Toronto will continue until the end of the term of the current City Council. The need to continue Team Toronto will be reviewed at the beginning of the new term of Council.

Membership:

Team Toronto shall be composed of the Mayor or his designate and up to six members of Council recommended to Council by the Mayor. Members of Team Toronto will represent linkages to AMO and FCM, linkages to the provincial and federal governments, involvement in key intergovernmental issues and familiarity with legislative and legal processes. Team Toronto will also include representation from the Policy and Finance Committee and the Budget Advisory Committee.

Staff Support to Team Toronto:

The Strategic & Corporate Policy Division in the Chief Administrator’s Office will provide staff support to Team Toronto with involvement from the Legal Division and Finance Department as required.
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