Towards a new relationship with Ontario and Canada
Report prepared by the Chief Administrative Officer, City of Toronto - June 6, 2000 (updated October 2001)

Purpose
Introduction
What do Torontonians require from Ontario?
What do Torontonians require from Canada?
What do Torontonians require from Ontario and Canada?
A Strategy to Achieve New Relationships With Ontario and Canada:
Conslusions

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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 support 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. 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.

Introduction: In November 1999, Toronto 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 match the City's needs;

• to recognize the uniqueness of the City in that, due to its need to hold its own against neighbouring North American cities, it requires tools 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:

• 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.

• 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.

• 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.

• 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.

• communicate the issues clearly and provide opportunities for public involvement (e.g. through an interactive Web site, 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.

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.

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