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Corporate Services TO: Budget and Strategic Planning Committee

SUBJECT: Municipal Contribution to Joseph Brant Memorial Hospital

Report Number: CORPSERV-5-09 File Number(s):

Report Date: November 30, 2009 Ward(s) Affected: 1 2 3 4 5 6 All x

Date to Committee: December 8, 2009 Date to Council: December 14, 2009

Recommendation: Authorize the City Clerk to send correspondence about a municipal contribution toward the redevelopment of the Joseph Brant Memorial Hospital, as outlined in report CorpServ 4-09, dated November 30, 2009 and discussed at the Budget and Strategic Planning Committee Meeting on December 8, 2009: WHEREAS the Council of the City of Burlington recognizes the essential role of Joseph Brant Memorial Hospital as a key partner in sustaining a healthy city in the city’s 2007-2010 strategic plan Future Focus Seven (Responsive Community section 2.2.B) ; and WHEREAS the municipality of Burlington has relied on only one local hospital, Joseph Brant, since 1951 to serve its urban and rural residents; and WHEREAS Burlington residents have expressed their support of the hospital in the city’s 2008 Quality of Services survey and the November 2009 telephone survey conducted by Ipsos Reid; and WHEREAS the Ministry of Health and Long Term Care for the province of Ontario requires a community contribution toward the capital costs of any major hospital expansion; and WHEREAS there may be opportunities for the City of Burlington to financially contribute to the JBMH redevelopment through a range of options; and WHEREAS council would like to investigate these options in whole or in part before determining in 2010 how to finance a municipal contribution toward the JBMH, NOW THEREFORE, BE IT RESOLVED THAT:

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1. The City Clerk be authorized to send a letter of support for

the Joseph Brant Memorial Hospital phase 1 redevelopment, as outlined in the hospital’s October 27, 2009 presentation, to the Joseph Brant Memorial Hospital, with copies to Burlington’s MPPs and regional council, on behalf of the council of the City of Burlington.

2. The City of Burlington commits to a cash or in kind

contribution of not more than $__ m toward the Joseph Brant Memorial Hospital phase 1 redevelopment project, the terms and conditions of that funding to be outlined in a contribution agreement and memorandum of understanding between the two parties at such time as the Province of Ontario announces its approval and funding of the project.

3. The City of Burlington’s financial contribution be contingent on the JBMH staff and/or JBMH Board of Governors undertaking an enhanced communication and citizen engagement plan so that Burlington residents are aware of the hospital redevelopment plan, timing and impact, and have regular opportunities to discuss the hospital’s services, priorities and community needs.; and

Authorize the City Clerk to send a copy of the correspondence noted above and the results of the 2009 Ipsos Reid telephone survey to Burlington’s MPPs and local board chairs; and Authorize the Acting City Treasurer to present a by-law to council following approval of the 2010 budget regarding establishing a Joseph Brant Memorial Hospital Reserve Fund; and Direct the Executive Director of Corporate Strategic Initiatives to incorporate the municipality’s intentions regarding Joseph Brant Memorial Hospital in the next strategic planning process.

Purpose: x Address goal, action or initiative in strategic plan Establish new or revised policy or service standard Respond to legislation Respond to staff direction x Address other area of responsibility

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Reference to Strategic Plan:

Financial Management Responsive Community

Executive Summary:

Joseph Brant Memorial Hospital (JBMH) has requested that the City of Burlington contribute $60 million of the local share requirement for their phase 1 redevelopment. The report provides information that allows council to respond to the JBMH in December 2009 with a letter of support. JBMH staff have indicated that they would be forced to re-scope phase 1 or delay the project if the city committed less than $60 million. Staff at the Ministry of Health and Long Term Care indicate that JBMH will need to provide documentation to the ministry that shows that there is a viable local share plan and that its sources of revenue are achievable. The local share plan is expected to cover 10% of bricks and mortar ($30 million) and 100% of furniture, fixtures, equipment, parking, land and land-related costs ($90 million). The Ministry covers 90% of bricks and mortar and 100% of operating costs. The results of a telephone survey of 600 Burlington residents will be presented by Ipsos Reid at the committee meeting. This survey cost $21,000 plus GST, which is being shared 50-50 with JBMH. Council may choose to respond to JBMH with a letter of support and a commitment of $60 million or some other amount. Considering a lower amount for the municipal contribution could be based on a number of factors. Staff also suggest that the JBMH redevelopment plan be considered in the development of Burlington’s 2011-2014 strategic plan, since Future Focus Seven did not contemplate a financial contribution from the city toward hospital redevelopment. Staff feel that council is in a good position to document the community’s support for the JBMH redevelopment. There are benefits to the City of Burlington and the community from having an up-to-date hospital. Details of the city’s involvement will be documented in a contribution agreement and Memorandum of Understanding. Council is not expected to determine now how a municipal contribution will be funded as staff will be reporting back in the new year about the staff direction regarding use of hydro assets and development of parking facilities. The earliest that the “how” plan can be developed is in conjunction with the 2010 capital and

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current budget decisions. The JBMH local share plan reflects 38.5% of the gross cost, with half to be raised by JBMH though fundraising. The other half of the local share plan, 19%, has been requested from the City of Burlington. Regional staff reported that the local share can vary from 15% to 40% based on recent hospital projects in other jurisdictions. Other municipalities have contributed over five to 25 years. The report includes annual contributions over 10-year, 15-year, and 20-year scenarios, based on the $60 million request:

• Consistent tax levy each year • Phased in tax levy so that the third and subsequent years

are consistent. Two samples of municipal share plans are provided, making use of debt. No increased assessment has been included in any of the scenarios. Staff identified a dedicated tax levy as their preferred method of funding a municipal contribution. Public engagement should be a priority for the hospital and is expected to be one of the conditions associated with a municipal contribution. By supporting the project, the city bears some responsibility for engaging citizens and keeping residents informed. However a municipal contribution is funded, all residents and businesses in the city have a stake in the JBMH redevelopment and the amount of money requested is significant. Since the completion of construction is not anticipated until about 2020, this is a long-term project and commitment.

Background: Joseph Brant Memorial Hospital request to the City of Burlington On October 13, 2009, Peter Vankessel, Chair of the JBMH Board of Governors, sent correspondence to the City of Burlington including the following: “The very vital first phase of the redevelopment of JBMH requires $312 million in 2010 dollar terms, as supported by the business case we submitted to the Ministry of Health and Long Term Care in 2007. As you may know, approved hospital capital projects in the Province of Ontario are funded with a defined formula that requires a local share contribution. In the context of our plan, the local or community share is calculated to be $120 million. The JBMH Foundation

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commissioned a fundraising feasibility study undertaken by Inspire Inc. This study concluded that there is potential for the Foundation to raise up to a 50% share of the local contribution. At the request of the Board of Governors, I have been asked to formally request the City of Burlington to assist JBMH in funding the remaining $60 million of the local share requirement.” Burlington’s Working Group Council approved the formation of a working group to: • ensure that regular dialogue and updates continue between

the administration and governing bodies of the hospital, municipality and all elected provincial representatives in the Joseph Brant Memorial Hospital’s service area

• share all research that will help the working group develop recommendations to council about appropriate public consultation and financial support from the city

• help develop a co-ordinated communications plan to enable the parties to consult widely with the community about the level of civic contribution and the local share plan including but not limited to community fundraising, municipal debt and/or a dedicated tax levy

• seek citizen input on options for municipal contributions to the redevelopment of the local hospital during the city’s 2010 budget process.

Members of the working group to the end of November included Mayor Jackson, Councillors Craven and Goldring, the City Manager, Acting City Treasurer, Manager of Public Affairs, and Acting General Manager or Corporate Services.

Reference to the JBMH in Future Focus Seven

Council’s strategic plan (s. 2.2 B in Responsive Community) specifically references the city’s initiative to “advocate for their immediate and long term needs” and to work with JBMH to “secure additional lands for possible waterfront, municipal and hospital use.”

Halton Region

The Commissioner of Corporate Services and Regional Treasurer presented a report and a memo to regional council in October 2009 regarding hospital funding. In the December 1, 2009 Health and Social Services Committee agenda, the commissioner

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presented a report noting the nine year contribution agreement with McMaster University to establish the DeGroote School of Business’ Centre for Advanced Management Studies, a McMaster Affiliated Family Health Centre and a Teaching Affiliation with Joseph Brant Memorial Hopital. 2010 is the first year of the contribution agreement and the region has included $500,000 in the 2010 Tax Supported Budget as a result.

2010 Budget Directions

Staff have been directed to present capital and current budgets for 2010 that address council-approved scenarios C2 and C intentions respectively.

Discussion: Working Group The working group met on October 21, November 3 and 30. From December 1 forward, the working group membership will change to include Councillors D’Amelio and BSP Chair to be confirmed December 7, the new chairs of the two standing committees. Councillors Craven and Goldring have completed their appointment to this working group. Strategy/Process Staff’s primary intention is to provide information that allows council to respond to the JBMH in December 2009 with a letter of support. Staff have previously provided reports to committee and council that address financing options and other relevant information to assist with decision making about the amount of a municipal contribution. Linda Hunter, Manager, Capital Projects, at the Ministry of Health and Long Term Care, indicated that, as part of its submission to the Ministry, JBMH will need to provide documentation that it has a viable local share plan and that its sources of revenue are achievable. Related to a municipal contribution, Hunter indicated that the municipal correspondence would be directed to JBMH and that the Ministry is looking for the extent of commitment. Although there is no standard format for the correspondence, it would normally state commitment to an amount, and any conditions attached to the funding contribution. For example, the correspondence could indicate the timeframe for contributions, when payments might be expected, and what areas of the redevelopment project would or would not be included. The Ministry would not confirm other locations or projects being considered in the upcoming round of decision making and would not confirm that a timeline of mid-December was required for the city’s correspondence. As the JBMH project is in the early planning stages, having correspondence from the municipality with the city’s commitment (and not all of the funding details) seems to be fine for now. Details would be worked through. In 2009, council is not expected to determine how a municipal contribution will be funded.

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Staff will be reporting back to committee in the new year regarding the staff direction, so that council can develop its plan for how a municipal contribution will be funded. The earliest the “how” plan can be developed is in conjunction with the 2010 capital and current budget decisions. Public Consultation Telephone Survey Council directed staff to work in coordination with the JBMH to seek public input from Burlington residents about a municipal contribution and funding through a tax levy. As a result of this direction, a telephone survey of 600 Burlington residents has been completed. The results of the survey will be presented by Ipsos Reid at the Budget and Strategic Planning (BSP) Committee Meeting on December 8, 2009. As previously reported to committee, the response deadline requested by the JBMH and the survey timeline requested by Council meant that the survey was completed within a tight turnaround time. There has not been sufficient time for the survey results to be included within this report. The following survey questions were asked after completing standard screening:

1. The topic of today’s survey is the proposed redevelopment of Burlington’s Joseph Brant Memorial Hospital. First of all, how important do you consider the redevelopment of Joseph Brant Hospital to be? Would you say very important, somewhat important, not very important or not at all important?

2. And before today, were you aware that there were plans to redevelop the Joseph Brant Memorial Hospital? 3. As you may know, there are plans to expand and renew the Hospital over the next few years, at a total estimated cost of $300+ million. Of that total, the Ministry of Health and Long Term Care requires that $120 million be raised locally. It is proposed that $60 million of the local contribution can be fundraised through the Hospital Foundation, and the hospital has asked the City of Burlington for the remaining $60 million. The City of Burlington is considering how to make this contribution toward the project. A special tax levy over 10 years is one option for collecting the $60 million municipal share. In light of this, how supportive would you say that you are of the proposed expansion and renewal of the Joseph Brant Memorial Hospital? Would you say you are very supportive, somewhat supportive, somewhat opposed or very opposed?

4. In order to collect $60 million over 10 years, a special tax levy could be collected. For example, a home with a Current Value Assessment of $300,000

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would pay $ 57.54 per year for 10 years and a home with a Current Value Assessment of $500,000 would pay $95.90 per year for 10 years.

In light of this information, how supportive would you say that you are of a special tax levy to fund the City’s contribution towards the expansion and renewal of the Joseph Brant Memorial Hospital? Would you say you are very supportive, somewhat supportive, somewhat opposed or very opposed? 5. Among other things, the overall project cost would add a new suite of 10 operating rooms, a new intensive care unit, 76 new inpatient beds, an enlarged and improved cancer unit, new diagnostic imaging and laboratory areas, enlarged parking facilities and an expanded outpatient surgical suite. The redevelopment would allow the hospital to meet current day ministry of health hospital design guidelines for infection prevention and control, make it more energy efficient and easier to navigate, reduce wait times, and introduce new technologies to the facility. In light of this information, how supportive would you say that you are of a special tax levy to fund the city’s contribution towards the expansion and renewal of the Joseph Brant Memorial Hospital? Would you say you are very supportive, somewhat supportive, somewhat opposed or very opposed?

Options Considered Staff have considered a number of options to best provide advice to committee and council. There are a number of ways that council can respond to the request for a municipal contribution, each of which is based on the request for $60 million:

1. In December 2009: a. Respond to the JBMH with a letter of support for the redevelopment and

supporting a $60 million municipal commitment OR b. Respond with a letter of support for the redevelopment and supporting a

municipal commitment of some other amount OR c. Respond with a letter of support without confirming a specific financial

contribution but identifying a range of financial commitment that the city is considering.

2. At the time of budget approval in February or March 2010:

a. Finalize a 2010 commitment leading to a $60 million contribution or some other level of contribution OR

b. Finalize a 2010 commitment without confirming a range of or maximum financial commitment to the JBMH project OR

c. Budget for a specified range of or maximum financial commitment in the 10-year capital forecast for 2010-2019.

3. During the 2011 strategic planning process: Establish council’s commitment to

the JBMH redevelopment project, including a specific financial commitment of $60 million or some other amount.

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It is important that council be aware of the impact of their decision to support the hospital with a municipal contribution. This is a development project that extends beyond the 2006-2010 council term, and falls within provincial jurisdiction. Staff note that the initiatives outlined in Future Focus Seven did not contemplate a financial contribution from the city toward hospital redevelopment. As a result, there is a recommendation in this report to incorporate the municipality’s intentions regarding JBMH in the next edition of the city’s strategic plan (FF 8). Staff feel that council is in a good position to document the community’s support for the phase 1 JBMH redevelopment based on the age of the hospital, the Ministry’s standards for hospital care, community input to date and the results of Ipsos Reid surveys. Due diligence regarding the financial request of $60 million The request from the JBMH is $60 m, matched by local fundraising through the JBMH. Considering a lower amount for the municipal contribution could be based on a number of factors:

• Community support for the JBMH, as demonstrated through Burlington’s Quality of Services survey and through the 2009 telephone survey and 2010 budget consultations

• Council’s strategic plan, Future Focus Seven, and other capital budget and current budget priorities

• Belief that the provincial government should bear more of the cost of hospital redevelopment since hospitals are a provincial Ministry of Health and Long Term Care responsibility

• Ability for more than $60 m to be fundraised by the JBMH • The City of Burlington’s capacity to levy taxpayers in Burlington given other

budget pressures. JBMH staff have indicated that if the city responded to their request for $60 m with a commitment less than that amount, the JBMH would be forced to re-scope phase 1 of the redevelopment project or delay the project. From Barrie’s experience, one of the pieces of documentation required by Infrastructure Ontario to ensure that construction begins is a letter of commitment from the city indicating the amount and timing of payments. Municipal Contributions to Ontario Hospitals In June 2006, the Province of Ontario introduced a new hospital capital cost share policy. It is now typical that hospital redevelopment projects require municipal contributions. The JBMH local share plan reflects 38.5% of the phase 1 redevelopment costs, half to be raised by JBMH through fundraising. Based on a $312 m phase 1

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redevelopment at JBMH, the hospital has requested 19% of the total cost from the City of Burlington. Staff are providing a variety of information about the experience of other municipalities in contributing toward their hospital redevelopments. Regional staff reported in CS-70-09 that the local share can share from 15% to 40% based on recent hospital projects in other jurisdictions. This information has been validated by reviewing related websites and by talking with key contacts at the relevant municipalities. See following table.

Hospital

Location

Gross Cost

Local Share

$

Local Share

%

Fund-raising

$

Fund-raising

%

Lower Tier

$ %

Upper Tier

$ %

Lower + Upper Tier

$ %

Southlake Regional Health Centre York and Simcoe $110.61 M

60 54.2 60 100 0 0 0 0

0 0

Tax levy to $38.9M completed project over 20+ years, should fundraising be insufficient (Aurora, Newmarket, etc.)

Brampton Civic In Peel $1,540 M Opened 2007

176 11.4 35 19.9 0 0

37 21

37 21 Parking & Interest $105 M also

Sarnia Blue Water Health In Lambton $319 M

76 23.8 - - 20 26.3 0 0

20 26.3

Balance of local share plan is from three capital campaigns (fundraising). Parking revenues will go toward operating costs and retail revenues go to foundation.

University Hospitals (3) In Kingston $370 M

50 13.5 - - .13 .3

16 32

16.13 32.3

Hotel Dieu, Providence Care and Kingston General Balance of local share plan is from a capital fundraising campaign or other sources.

Oakville - New In Halton Not yet tendered

530 ? 60 11.3 200 37.7 0 0

200 37.7

Dedicated tax levy TBA Want to receive $20M land in exchange for contribution Parking & Retail $270 M

JBMH Burlington In Halton $312 M

120 38.5 60 50 60 50 TBA TBA

0 0

60 50 TBA TBA

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Hospital

Location

Gross Cost

Local Share

$

Local Share

%

Fund-raising

$

Fund-raising

%

Lower Tier

$ %

Upper Tier

$ %

Lower + Upper Tier

$ %

Niagara Health System $759 M

116.9 15.4 25 21.4 39 33.4 21 18

60 51.3

AFP St. Catharines $31.2 M levy Thorold $4.3 M levy Niagara on the Lake $3.5 M levy $27.1 retail + $4.8 M grants also

Vaughan Campus of Care In York $1,200 M

350 29.2 0 0 80 22.9 122.4 35

202.4 57.8

Vaughan issued debt with tax levy for debt repayment York Region tax levy Balance of local share plan is from unknown source(s)

Woodstock General In Oxford $268.7 M

24 8.9 10 41.7 7 29.2 7 29.2

14 58.3

AFP – inc. 30 years of maint. & financing costs (in 2009 $) How funded? • Oxford tax levy • Woodstock racetrack revenues

Royal Victoria Hospital Barrie In Simcoe $400 M

107.5 26.9 35 32.6 52.5 48.8 20 18.6

72.5 67.4

Hydro dividends & one-time hydro dividend ($11.8 M) from equity share from merger

Staff have also validated the following information about hospitals in Hamilton:

Henderson General: • Construction costs $198 M • Estimated total project cost of $259.2 M including demolition, furniture,

equipment, permits, architectural and engineering fees, and transaction and project management fees.

Hamilton General: • Construction costs of $44 M • Estimated total cost $60.3 M including similar costs to those above but not

including site preparation work. The Region’s report indicates that Hamilton does not provide funding for hospital infrastructure.

Other hospital projects staff are aware of but do not have detailed information about include:

• North Bay $23.7 M • Windsor Regional $40 M, with $25 M municipal investment, within past 10 years,

according to JBMH presentation • Brantford $80 M • Guelph General $112 M, with $34.9 M municipal investment according to JBMH

presentation

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• Grand River $200 M, with $37 M municipal investment, within past 10 years, according to JBMH presentation

• Peterborough Regional $255 M project, with $29.5 M municipal investment, within past five years, according to JBMH presentation

• London $550 M • Trillium Health Centre, Mississauga: from Region’s report, “no municipal funding

assistance” • Belleville $820,000 pledge from municipality and $654,000 from Hastings.

While the City of Burlington does not have a policy regarding funding services that are the responsibility of the provincial government, there are benefits to the City of Burlington and the community from having an up-to-date hospital. As a result, the “no contribution option” was considered by the Executive Committee and is not recommended in Burlington, although it is one of many options available to council. Since the hospital fundraising target ($60 m) was established as a result of a fundraising feasibility study, hospital staff are not currently intending to increase that fundraising target. Burlington staff do note that while a large municipal contribution may make the public campaign easier to achieve, the ability to fundraise is a matter of judgement. For example, while Hamilton’s feasibility study indicated that the community could raise $30 m, they were able to raise $100 m. The City of Barrie’s council approved a financing plan for its contribution to Georgian College that “does not result in a reduction in any municipal services or service levels”. This care for municipal services and service levels has also been stated by members of Burlington’s council and is the basis for staff’s preference for a tax levy. Barrie’s agreement also noted “a reduction of the city’s contribution if changes occur in the scope of the project equal to or greater than $5 million.” In Halton Region, both regional government and local municipalities share responsibility for emergency services. Burlington provides fire prevention and control, while the region provides police, ambulance, and health and social services. As hospital redevelopment is or will be a priority in Oakville, Milton, and Halton Hills, consideration of the region’s role with each of its constituent municipalities is important. Regional staff have reported to regional council about a staff direction to investigate municipal taxation over a 20-year period (80% municipal taxation and 20% fundraising). Halton Region has provided funding previously to JBMH for a CT scanner, through a grant program that was in effect from 1975-1990. Development charge funding was provided during the period 1990-2004. At the October 6, 2009 meeting, some members of council expressed concern about a tax levy at the regional level as this would impact the same taxpayers as a Burlington tax levy. A variety of options have been considered to engage the Region of Halton, as they are responsible for health services in Burlington. There may be potential to ask the region to contribute to the furniture, fixtures and equipment portion of the costs outlined in the JBMH redevelopment plan.

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Memorandum of Understanding Details of the city’s involvement with the JBMH redevelopment will be documented in a Memorandum of Understanding (MOU). The Memorandum of Understanding would include a contribution agreement, subject to the approval of the City Solicitor and City Treasurer. The MOU would indicate, for example: that the city's funding will begin to flow to the hospital in a particular year and continue through to the completion of the project, in instalments supported by expenses incurred by JBMH. Conditions for deferral of payment would also be noted. Within the MOU, regular reporting from the JBMH to the City of Burlington would be noted, in part to ensure value for money and effective control over municipal funds.

Financial Matters: Numerous reports have outlined the financial challenges facing the city. Addressing the gap in funding for municipal infrastructure has been a priority for council and the 2010 budget process will continue to focus attention on existing and unmet capital needs. Making a contribution to the JBMH redevelopment project moves staff beyond the council-approved strategic plan and may impact the city’s operating and/or capital budget, affecting the city’s ability to move forward on city projects. Council is familiar with the information provided through:

• the Financial Health Report completed by BMA Management Consulting Inc. in 2006. There “are limited reserves currently available to support facility/building replacement” and there “are recognized shortfalls in some of the Corporate Reserves and Reserve Funds...”

• the finance report F-12-09 regarding Tangible Capital Assets Reporting (PSAB), which indicated that the replacement cost for the city’s existing assets as of 2008 was $1,671,461,032.15. Staff have reviewed the adequacy of the city’s renewal budget based on PSAB value and the 2009-2018 capital budget and forecast: 68% of actual renewal needs, and

• the City Manager’s report CM-14-09 where operating challenges, recession challenges and challenges for 2010 total $11.9 million.

A municipal contribution to the JBMH phase 1 redevelopment project could be funded in a number of ways. The pledge period can also be determined by council. Other municipalities have used from a minimum of five years to a maximum of 25 years. As Burlington’s capital budget and forecast are developed for a 10-year plan, staff have focused on that timeline and provided a snapshot of options for consideration in the new year. As the JBMH project is unlikely to begin construction sooner than 2015, 10-year, 15-year, and 20-year scenarios were considered. Within these options, tax levies, use of year end surplus funds, debt, and interest on reserve funds merit consideration. Timelines extending beyond the current term of council and beyond the 10-year capital budget plan are very difficult to predict. Staff are not in a position yet to recommend how best to apply a tax levy to fund a contribution to JBMH. Staff will consider the details of a contribution and MOU to ensure that the financial plan is well thought out and thoroughly reviewed. This work will include other options and continue into 2010 and future years.

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The following scenarios provide options for collection of $60 million in dedicated tax levies toward the JBMH phase 1 redevelopment. Scenario 1: Consistent tax levy contribution each year for a number of years In preparing the 2009 Ipsos Reid survey, an equal annual tax levy amount to generate $60 M at the end of 10 years –$19.18 per $100,000 CVA-resulted in the following:

Annual Tax Levy  $5,000,000 Per $100,000 CVA  $19.18/yr Per $250,000 CVA  $47.95/yr Per $300,000 CVA  $57.54/yr Per $500,000 CVA  $95.90/yr Per $750,000 CVA  $143.85/yr 

Scenario 2: Phased in tax levy contribution These tax levy amounts reflect phasing in the tax levy over three years, then maintaining a consistent tax levy for the third and subsequent years, in order to generate $60 million at the end of the identified time period.

Tax levy collected $300,000 CVA $500,000 CVA 15 year $2.4 million year one

$2.7 million year two $3.225 m in years 3-15

$37.11/yr. $61.85/yr.

20 year $1.5 m year one $2 m year two $2.5 m in years 3-20

$28.77/yr. $47.95/yr.

Staff have also prepared numbers based on sample commercial and industrial properties. For every $500,000 of commercial assessment, $12,323 is levied per year and for every $500,000 of industrial assessment, $19,020 is levied per year. The impact of the dedicated tax levy for the hospital depends on the amount being collected per year and the basis for phasing in of the levy. Based on some of the largest in Burlington, the impact of a $5 million contribution, phased in over three years and collected over 10 years could result in an annual increase of $7480, $7855, $15,140 or $30,699 for these sample properties. Staff suggest annual contributions to a reserve fund and have not prepared scenarios based on intermittent years of contribution. As long as JBMH has the necessary funds based on the timing outlined in a contribution agreement and in keeping with their progress on the project, the city can make use of various options, including the use of debt and collecting interest on the reserve fund.

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Use of debt financing Staff have developed several scenarios to respond to the timing and costs presented by JBMH in October 2009. The tables below provide two samples of potential municipal share plans. Other samples could include more funding toward, for example, the parking facility and less toward furniture, fixtures and equipment. Sample Municipal Share: City paying all land and 22.73% of surgical suite costs Project Component Local Share Year City Share Land (100% municipal share) 3,000,000 2010 3,000,000 Surgical Suite Construction (remainder to reach $60 million) 5,500,000 2012 1,250,000 Parking Facility Construction (50% municipal based on 50% of local share)

13,500,000 2015 6,750,000

Furniture, Fixtures, and Equipment (50% municipal based on 50% of local share) 68,000,000 2018 34,000,000 10% of Construction Costs (50% municipal based on 50% of local share)

30,000,000 2019 15,000,000

60,000,000 Sample Municipal Share: City paying 50% of land and 50% of surgical suite costs

Project Component Local Share Year City Share

Land (50% municipal share)

3,000,000 2010 1,500,000

Surgical Suite Construction (remainder) 5,500,000 2012 2,750,000 Parking Facility Construction as above

13,500,000 2015 6,750,000

Furniture, Fixtures, and Equipment as above

68,000,000 2018 34,000,000 10% of Construction Costs as above 30,000,000 2019 15,000,000 60,000,000

One alternative is to issue debt which allows the city to finance $60 million over a 20- year period with debt charges. This would require a change to the existing council-approved debt guidelines. For the purpose of comparison, the following tables are based on 3% interest and 5% debt charge over ten years. No increases in assessment are included in any of the scenarios developed to date.

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The first table represents an equal distribution beginning in the first year.

  Reserve Fund Contribution  Expenditure  Debenture  Debt Repayment  Interest 

Reserve Fund Balance

2010  $0    $         3,000,000   $0  $0 2011  $3,775,000    $             388,514   $101,595  $3,488,081 2012  $3,775,000    $         1,250,000    $             388,514   $168,737  $5,793,304 2013  $3,775,000    $             388,514   $275,394  $9,455,184 2014  $3,775,000    $             388,514   $385,250  $13,226,920 2015  $3,775,000    $         6,750,000    $             388,514   $295,902  $10,159,309 2016  $3,775,000    $             388,514   $406,374  $13,952,169 2017  $3,775,000    $             388,514   $520,160  $17,858,815 2018  $3,775,000    $                         ‐     $      40,000,000    $             388,514   $637,359  $21,882,660 2019  $3,775,000    $         9,000,000    $         5,568,697   $332,669  $11,421,632 2020  $3,775,000    $         5,568,697   $288,838  $9,916,773 2021  $3,775,000    $         5,180,183   $255,348  $8,766,938 2022  $3,775,000    $         5,180,183   $220,853  $7,582,608 2023  $3,775,000    $         5,180,183   $185,323  $6,362,748 2024  $3,775,000    $         5,180,183   $148,727  $5,106,291 2025  $3,775,000    $         5,180,183   $111,033  $3,812,142 2026  $3,775,000    $         5,180,183   $72,209  $2,479,167 2027  $3,775,000    $         5,180,183   $32,220  $1,106,204 2028  $3,775,000          $         5,180,183   $0  ($298,979)

 Totals  $67,950,000   $17,000,000  $43,000,000  $55,686,967        

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The second table shows a phased in contribution in the first three years, with consistent contribution in the third year and forward: the tax levy (per $100,000 CVA) could be phased in over a three year period of:

$5/$100,000 CVA in year 1 $10/$100,000 CVA in year 2 $15/$100,000 CVA in year 3.

  Reserve Fund Contribution  Expenditure  Debenture  Debt Repayment  Interest  

Reserve Fund Balance

2010  $1,300,000    $         1,500,000   $39,000  $1,339,000 2011  $2,600,000    $             194,257   $112,342  $3,857,085 

2012  $3,900,000   $         2,750,000    $             194,257   $144,385  $4,957,213 

2013  $3,900,000    $             194,257   $259,889  $8,922,845 2014  $3,900,000    $             194,257   $378,858  $13,007,446 

2015  $3,900,000   $         6,750,000    $             194,257   $298,896  $10,262,085 

2016  $3,900,000    $             194,257   $419,035  $14,386,863 2017  $3,900,000    $             194,257   $542,778  $18,635,384 2018  $3,900,000    $      40,000,000    $             194,257   $670,234  $23,011,361 

2019  $3,900,000   $         9,000,000    $         5,374,440   $376,108  $12,913,029 

2020  $3,900,000    $         5,374,440   $343,158  $11,781,747 2021  $3,900,000    $         5,180,183   $315,047  $10,816,611 2022  $3,900,000    $         5,180,183   $286,093  $9,822,520 2023  $3,900,000    $         5,180,183   $256,270  $8,798,608 2024  $3,900,000    $         5,180,183   $225,553  $7,743,977 2025  $3,900,000    $         5,180,183   $193,914  $6,657,708 2026  $3,900,000    $         5,180,183   $161,326  $5,538,851 2027  $3,900,000    $         5,180,183   $127,760  $4,386,428 2028  $3,900,000          $         5,180,183   $0  $3,106,245 

Totals   $70,200,000   $18,500,000   $41,500,000  $53,744,399         Strategic Land Acquisition In 2007, Council approved the establishment of a Strategic Land Acquisition Reserve Fund (BP-44-07-01) for the purpose of strategic land acquisition including parkland. There will be a future policy report to committee about the use of these funds. 10% of annual park dedication receipts will be directed to the reserve at an estimate of approximately $200,000 per year. Interest is earned on this Reserve Fund annually. Funds deposited from the tax base and accumulated in this reserve fund do not have any restrictions related to the spending other than council’s authorization for specific amounts and purposes. Report Comserv 2-08, considered by Council on January 28, 2008, included the following information about capital funding: funding of $5,925,000 in 2013 towards Strategic Capital Initiatives and “acquisition of strategic lands would

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certainly be one of the potential uses of this funding”. Staff do not consider land for the JBMH redevelopment a “corporate” City of Burlington strategic need, however council can determine the relative priority of this property compared with the city’s other strategic land needs. JBMH staff have indicated that the land required for the redevelopment of the hospital is important to moving forward on the Ministry of Health and Long Term Care’s hospital priority list. Total Financial Impact The Ipsos Reid Survey has a total cost of $21,000 plus GST. The cost is being shared 50-50 by the hospital and the City. The local share plan (hospital fundraising and municipal contribution) of $120 million is calculated by the expenses they are expected to cover:

• 10% of bricks and mortar • 100% of furniture, fixtures, equipment, parking facilities, land and land-related

costs (see confidential appendix for further details). In order from largest to smallest, the costs are:

$68 m for furniture, fixtures and equipment (expected in 2018 after construction) $30 m for bricks and mortar (start of construction is expected to be in 2017) $16.5 m for parking, land and related costs (land required in 2010, parking constructed in 2015) $5.5 m for renovations to surgical program (planned for 2012).

The Ministry of Health and Long Term Care’s share covers:

• 100% of operating costs • 90% of bricks and mortar.

Source of Funding Staff identified a dedicated tax levy as their preferred method of funding a municipal contribution to the JBMH in Report F-49-09. A tax levy would be applied to all property classes, residential, commercial, industrial, etc. The Development Charges Act, 1997 excluded hospitals from the scope of services for which municipalities could impose development charges. Other Resource Impacts Hospital staff have indicated that the trigger for the municipal contribution is the decision of the Ministry of Health and Long Term Care to move the JBMH project to the next phase of planning (phase 2).

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Similar to other major projects, a significant investment of time is required for staff to work co-operatively with the JBMH staff on finances, communication and citizen engagement. In order to proceed, staff will now be developing:

• details of financing options for a municipal contribution • communications related to a dedicated tax levy • terms and conditions associated with a commitment to a municipal contribution • an MOU between the JBMH and the City of Burlington • general communications and information sharing with taxpayers.

Burlington is approaching residential greenfield buildout and revenues generated through assessment growth will not continue to grow as they have in previous years. It is worth noting that the hospital has identified this redevelopment as phase I. A second or more phases could follow. The city will need to consider whether or not the response to the 2009 request will provide context for a future request from the hospital for other phases of development or whether this is a unique situation, given the age of the JBMH and current needs. The intention of staff in completing this report is to proceed with decisions about the JBMH redevelopment as a one time occurrence, without comment about potential future phases and/or municipal responses. Use of Hydro Assets Several ideas have been suggested related to the use of Burlington’s hydro assets. While these will be reported on by staff in the new year, staff would like to point out that, as sole shareholder, hydro assets are municipal resources. Hydro funds have provided a significant stream of revenue to city capital projects either directly or through repayment of special circumstances debt and have provided a financial contribution to the current budget. Considering new ventures or alternative uses of hydro revenues has the potential to compromise future opportunities available to the city and will impact the city’s ability to fund capital projects. Executive Committee notes that if council were to, as shareholder, decide to transfer value from hydro to JBMH, in effect, the result is no different than cutting the city’s capital program directly. Parking Facilities The site being discussed is not part of the identified Downtown Parking Area and not a location where staff would be pursuing a parking facility at this time without the staff direction regarding the hospital redevelopment project. The site is too far from downtown and not central enough for current Beachway Park activity, although it is convenient for parking related to special events held in Spencer Smith Park. A stand alone parking facility and an integrated parking facility will be discussed with hospital staff. Developing a parking facility at this location is not anticipated to reduce the need for the second downtown parking facility. JBMH staff have indicated that about 500 additional parking spaces are needed as a result of the redevelopment. JBMH sets its own rates for their existing parking and parking revenues are one of the sources of revenue for JBMH, similar to many other

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hospitals. JBMH staff have not completed a market study which would be required before pursuing commercial or office uses on the first and/or second levels. City staff indicate that, in addition to soil testing and design studies, a market study would be necessary to test the commercial feasibility of other uses. A message of caution from the Executive Budget Committee Staff forming the EBC want to express caution to committee and council about the financial stress that a commitment of $60 million would cause for the municipality. EBC believes that the $60 million request seems high given the information provided about other hospital redevelopment projects. EBC suggests that a lower municipal contribution seems appropriate.

Communication Matters: Ipsos Reid Telephone Survey After presentation of the survey results to Budget and Strategic Planning Committee, the results will be posted to the city’s website. Citizen Engagement The JBMH has its own communication strategy and has been actively sharing information about the redevelopment with local boards and citizens. The hospital’s theme is: Best People, Best Care, Healthiest Community. To date, staff are aware that they have spoken to the Chamber of Commerce, Rotary Club, Burlington Economic Development Corporation (BEDC), with elected representatives, and are writing regular newsletters to their ‘ambassadors’ and a monthly Burlington Life article. It is the hospital’s role to deal with any reputational challenges due to historical issues. It is also important that the hospital engage residents in a meaningful way. Public engagement on this project should be a priority for the hospital. As part of the conditions associated with a municipal contribution to the project, there will be associated expectations, one of them being that an external facilitator conduct sessions where public input is welcomed. While the hospital redevelopment is not a City of Burlington project, it is clear that in order for the JBMH redevelopment to proceed, a municipal contribution is required. Leadership from the municipality stating its support of redevelopment at JBMH, combined with a financial commitment, will likely encourage others to contribute as well. By supporting the project, the city bears some responsibility for engaging citizens in dialogue about the project and keeping residents informed. A dedicated tax levy can be seen by taxpayers as an additional municipal tax. However a municipal contribution is funded, the JBMH redevelopment project holds a high level of community interest and the amount of money requested is significant. In June 2009, the city hosted a town hall meeting regarding the hospital. Approximately 50 people attended. The City of Burlington has featured a number of articles in the city publication, City Talk. Since the completion of construction is not anticipated until about 2020, this is a long-term project

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and commitment. The City of Burlington looks forward to recognition of its financial contribution and a visible role in celebrating milestones.

Future development of the communications on the municipal contribution toward the JBMH project will include:

• subscription to the city’s web pages that feature JBMH information, such as FAQ and backgrounders

• opportunities for one or more joint public open houses, advertised in the Burlington Post and promoted through media. Open houses offer opportunities for residents to speak with members of Council and staff from JBMH and the City of Burlington

• focus group opportunities • direct notification to individuals expressing interest in continued involvement • media relations and print advertising • information provided through ward meetings, at the request of members of

council. At one or more drop-in sessions, a series of information stations can include:

• JBMH redevelopment phase I (describing the JBMH redevelopment plan and current needs)

• Planning and Design • Parking • Financial Matters.

Staff anticipate that residents will have a strong interest in being kept informed throughout the process. By the end of March 2010, the Province is expected to decide its priorities. That, in turn, will help shape the city’s hospital-based communications plan for 2010 and 2011. In the broadest sense, all residents and businesses in the city have a stake in the redevelopment of JBMH. It will be a hospital for everyone, and an asset to the community as a whole. CorpCom 04-07, considered by Council on October 1, 2007, proposed a public consultation and communication plan about the McMaster University project in Burlington. Staff from McMaster University and the City of Burlington worked collaboratively on public consultation and communications activities, ensuring that residents and stakeholders were engaged, informed and connected to the decision making process. McMaster University and the City of Burlington jointly funded the public consultation and communications plan. The total cost for the plan, including the public open house, was approximately $3,850. The city’s share of the cost was about $1,925. At this time, the following milestones for the JBMH project have been identified: NOVEMBER 2009 Milestone Initiate Ipsos Reid phone survey regarding JBMH Fall City Talk Mayor Jackson and Councillor Taylor comment about JBMH

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Budget 2010 consultations with local board/committee/ community group representatives (ads in advance)

November 28 Seek stakeholder and public input at budget meetings

DECEMBER 2009 December 2 and 3 Seek stakeholder and public input at budget meetings Milestone Municipal response to hospital request JANUARY TO MARCH 2010 Date TBA Distribution of Budget Books January 19/20 Standing Committee Meetings January/February TBD Capital Budget February 9/10/16/18/22 Standing Committee/Council Meetings March 2/3/9/11/22 Standing Committee/Council Meetings February/March TBD Current Budget Milestone Land needs addressed Milestone Ministry of Health and Long Term Care decision APRIL TO JUNE 2010

Finalize Memorandum of Understanding

Spring issue City Talk Council articles included Summer issue City Talk Advertorials in place of council articles due to election year

(JBMH has been asked to consider advertorials and/or inserts during 2010)

OCTOBER TO DECEMBER 2010 December 1 Inaugural Council meeting of new council Fall Issue City Talk Advertorials in place of council articles 2012 Renovations to surgical program TBA 2015 Parking constructed TBA 2017 Start of construction TBA 2018 Furniture, fixtures and equipment (after construction) TBA Staff will also be reporting back on the following staff direction at the time of the 2010 budget overview with: “ information about other opportunities for funding a portion of the municipal contribution to the Joseph Brant Memorial Hospital redevelopment plan including the following:

1. Development of a parking facility that combines public parking for waterfront and hospital purposes with potential commercial and other revenue-generating options

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2. Evaluate use of the city’s hydro assets to provide one time or multi-year funds toward the JBMH redevelopment and include the use of Burlington Hydro to meet the hospital’s long term energy needs

3. Use of year end surplus funds in one or more of the next ten years.”

Options for individuals to donate online, contributing to the municipal share, and options for city staff to use payroll deduction and/or choose the JBMH as one of its charities of choice are also being considered. Staff currently have a 2009 goal of $2.8 m to fundraise for the United Way.

Following approval of the recommendation in this report, finance staff will draft a by-law to establish a Joseph Brant Memorial Hospital Reserve Fund. Conclusion: The City of Burlington’s response to the request from JBMH for a municipal contribution to its redevelopment is important to Burlington residents. The contribution takes into account the aging population within Burlington, as well as community health and safety needs. The city is committed to continuing to offer a high quality of life for each person in Burlington. Respectfully submitted, Kim Phillips Acting General Manager of Corporate Services 905-335-7600 ext. 7747 Appendices: A. Confidential Appendix A

B.

Notifications: (after Council decision)

Name Mailing or E-mail Address

Approvals: *required

*Department Head City Treasurer General Manager City Manager

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To be completed by the Clerks Department

Committee Disposition & Comments

01-Approved 02-Not Approved 03-Amended 04-Referred 06-Received & Filed 07-Withdrawn

Council Disposition & Comments

01-Approved 02-Not Approved 03-Amended 04-Referred 06-Received & Filed 07-Withdrawn