COVID-19 Financial Update

This report details the work the City has been undertaking to address the expenses, loss of revenue, and the unprecedented financial challenges resulting from the pandemic. Current mitigation strategies and savings/offset are expected to collectively generate $542.8 million in total offset by year-end, comprised of $508.7 million in savings from workforce restraints, spending constraints and cost avoidance, and $34.1 million in added offsets available from budget variance. When considering the COVID-19 related financial impacts, partially reduced by savings/offsets, the City is projecting a 2020 budget shortfall across all City Programs and Agencies of $1.342 billion by year-end prior to the City's allocation of Safe Restart funding. The City has been engaging with their Federal and Provincial counterparts to obtain funding support for municipalities to offset projected deficits resulting from COVID-19 related financial impacts and longer-term commitment to support Toronto into 2021. On July 27, 2020 the Ontario government in partnership with the federal government announced $4 billion in financial support for Ontario's 444 municipalities as part of the Safe Restart Agreement and on August 12, 2020 the City of Toronto was provided with initial phase funding allocations under the agreement totalling $668.6 million, reducing the City's estimated 2020 shortfall to $673.1 million. The Mayor, City Manager and Chief Financial Officer and Treasurer continue to engage with their Provincial counterparts to confirm future phase Safe Restart funding that will be allocated to municipalities by the Province on a needs basis. The City is optimistic that further Safe Restart funding is forthcoming but there is still uncertainty about the extent to which it will offset the remaining 2020 budget pressures and likely shortfall for 2021. This report recommends the City Manager report to City Council later this year with an update on further funding received from the Safe Restart Agreement that would offset the remaining 2020 budget pressure and any further mitigation options required to address COVID-19 financial impacts.

3. City Council direct the City manager and Chief Financial Officer to continue to explore opportunities for budget efficiencies and offsets as part of the 2021 budget process to mitigate anticipated 2021 COVID-19 related financial impacts. 4. City Council direct the City Manager and Chief Financial Officer to engage with the Federal and Provincial Governments to obtain funding commitments to fully address remaining COVID-19 related financial impacts anticipated in 2021 to avoid reductions to transit service, service levels across all City operations and programs. 5. City Council approve the use of the Operating Variance Report for the Six Months Ended June 30, 2020 for the City's Phase 2 Safe Restart financial submissions. 6. City Council approve and increase to the Children's Services 2020 Operating budget by $47.5 million gross and $0.0 net, funded from the City of Toronto's allocation of Safe Restart Funding for the Child Care and Early Years' Sector. 7. City Council authorize the Mayor and the Chief Financial Officer and Treasurer to enter into and execute any agreements, including any amendments and extension of such agreements, with the Province of Ontario for funding under the Municipal Transit Enhanced Cleaning program on terms and conditions satisfactory to the City Manager, and in a form satisfactory to the City Solicitor. 8. City Council grant approval to receive and disburse funds from the provincial Municipal Transit Enhanced Cleaning program. 9. City Council authorize the Executive Director, Corporate Real Estate Management to negotiate, approve and enter into interest free rent deferral agreements with qualifying tenants and licensees, which permit for a rent deferral period that extends through December 31, 2020, including the requirement that such tenant or licensee had a lease or licence with the City of Toronto that was in good standing prior to April 1, 2020, such agreements to be in a form satisfactory to the City Solicitor.