What the future holds for the agency—and what it needs to make its plans a reality.
As part of Torontoist’s election coverage, this week we’re focusing on important issues that haven’t received much attention during the campaign. Today, we look at the future of Waterfront Toronto and what the tri-partite agency needs to implement its plan.
In October 2000, the federal, provincial, and municipal governments announced that they would work to shape the future of Toronto’s waterfront, each contributing $500 million worth of assets to develop jointly the stretch of land fronting Lake Ontario, which had been neglected in its post-industrial history.
The announcement was heralded as a great step forward. The investment was substantial and would jumpstart infrastructure and development in an area that had the potential to be among the most valuable real estate in Canada. The agreement also had structural importance: the different levels of government were finally co-operating to revitalize an area that had long been the focus of political squabbling, and the management of waterfront revitalization would be given to an independent tri-partite agency, Waterfront Toronto.
Since its establishment, Waterfront Toronto has been lauded for the work it’s done. It has won international recognition for some of it public realm projects, and, since 2005, has overseen the following completed projects:
- Spadina, Rees, and Simcoe WaveDecks
- York Quay revitalization
- Martin Goodman trail and sidewalk extension
- Corus Quay
- The new George Brown College building
- Sugar Beach
- Sherbourne Common
- Marilyn Bell Park
- Mimico Waterfront Park
- Western Beaches Watercourse
- Port Union Waterfront Park
- Port Lands greening
- Cherry Beach sports fields
- Cherry Beach and Tommy Thompson Park improvements
Projects under development include Corktown Commons, Underpass Park, a promenade connecting Sugar Beach and Sherbourne Common, Queen’s Quay East, the Bayside development, and a TCH building with 243 affordable units.
But now the agency is at a critical juncture. In order to reach the next stage of its 30-year plan, it has requested two critical things—a revolving line of credit in the neighbourhood of $50 million, and $1.65 billion in funding for the next phase of its projects.
Revolving Line of Credit
A revolving line of credit is meant to improve short-term money flow and management. As part of Waterfront Toronto’s governance structure, it is unable to borrow money—and, as a result, it has to negotiate separate contracts for all the business it does. So if one agreement goes $1 million over budget and another goes $1 million under budget, it can’t shuffle money around to make the projects work. Instead, it has to renegotiate the contracts and wait for approval from various orders of government, which can take between six and 12 months.
The introduction of a revolving line of credit, then, would allow the agency to bypass this bureaucracy and make it better able to address needs as they arise.
The line of credit would essentially act as a high-limit credit card for Waterfront Toronto, addressing short-term cash-flow needs. While Waterfront Toronto has cash flow from signed contracts or various projects that are finished, those sources tend to be periodic and lack predictability. So rather than basing management decisions around cash infusions that come up on a two-to-three-year basis, the agency could access stable bridge financing through the line of credit until that cash can pay off the loan.
Backing for the line of credit would come from real estate collateral that Waterfront Toronto owns, and it has spoken to major banks about what it would take to make the line of credit possible.
However, Waterfront Toronto requires sign-off from all three orders of government in order to enact this change, which will come up in the second quarter of 2015 as the agency’s strategic review makes its way to council.
$1.65 Billion in Additional Capital
When Waterfront Toronto was formed, the $1.5 billion in original funding was meant to be seed money. As originally envisioned, the project was expected to cost $4.4 billion (in 2000 dollars) over 30 years.
By 2017, Waterfront Toronto’s original financing will run out, and it will need new funds to implement “Waterfront 2.0″—the next phase of its plans.
These plans include
- Don River naturalization and flood protection
- The East Bayfront LRT and streetscaping [PDF]
- Public realm improvements
- General infrastructure needs
Waterfront Toronto plans to make its funding pitches on a project-by-project basis, laying out the business case for each envelope of cash it requires.
For instance, the Don River naturalization and flood protection is a big-ticket item, and including the accompanying landscaping, is projected to cost $925 million. For this particular project, Waterfront Toronto would seek a greater proportion of funding from the federal government than from the province and City—that’s because disaster management is a federal responsibility, and it can make the case that investing in flood protection is a better longterm investment than reactively responding to flood damage, which can cost billions.
There’s also an argument to be made at the City level, because having flood protection would unlock usable land that would broaden the property tax base. The massive Unilever development, for example, requires such protection. It would also theoretically improve insurance rates for neighbouring businesses and residences.
For something like the East Bayfront LRT—which, including streetscaping and local improvements, would cost just over $500 million—Waterfront Toronto would seek more money from the provincial government, which more often funds capital transit purchases. The Liberal government referred to the Bayfront LRT in the latest budget, but it has not made any commitments to it; waterfront transit has been largely neglected by all levels of government since Transit City was disassembled.
The next council will have a major decision to make when it comes to the waterfront. It can choose either to follow through with its long-term plan and re-invest in the gains that the waterfront has seen over the past decade or to walk away from that plan and revert to the pre-2000 method of development.
Allowing Waterfront Toronto to move forward will require the approval of a revolving line of credit, and, more significantly, about $550 million of capital (assuming the various projects receive equal funding in the end). The business case for the return on investment is clear—Waterfront Toronto has so far delivered as much in increased tax revenues as it has spent.
Whether council is willing to invest in its own success is another question.