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7. CApital Funding Support for Ottawa hospitals – REVIEW OF policy of
reimbursing building and planning fees SOUTIEN
AU FINANCEMENT DES IMMOBILISATIONS DEs hôpitaux D’ottawa – Examen de la
poliTIQUE DE REMBOURSEMENT DE TOUS LES DROITS RELATIFS AUX BÂTIMENTS et AMÉNAGEMENTS |
2. That a group be formed, compromised of City staff, Provincial and City elected officials and hospital officials, to examine and propose other options to assist the hospitals towards their on-going capital needs and to report the results back to the Corporate Services and Economic Development Committee by the end of the third quarter.
RECOMMANDATIONS MODIFIÉES DU COMITÉ
1.
Que le Conseil examine sa politique
de remboursement des frais de permis de construire, et des droits de demandes
d'aménagement et du règlement financier des terrains à vocation de parc payés à
la Ville par les hôpitaux dans le cadre de projets d’immobilisations afin
d’inclure une disposition de réexamen qui stipule que, pour soumettre une
demande de remboursement, les frais de permis de construire et les droits de
demandes d'aménagement et le règlement financier des terrains à vocation de
parc doivent avoir été payés avant le 1er mars 2009; et
2.
Qu’un groupe, comprenant six membres du personnel de la Ville, des
représentants élus de la Province et de la Ville, et des représentants des
hôpitaux, sera formé en vue d’examiner et de proposer d’autres solutions afin
d’aider les hôpitaux dans leurs besoins continus en immobilisations, et qu’il
fera rapport quant aux résultats au Comité des services organisationnels et du
développement économique d’ici la fin du troisième trimestre.
DOCUMENTATION
1.
City Treasurer’s report dated 24 February
(ACS2008-CMR-FIN-0009).
Corporate Services and
Economic Development Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
24 February 2009 / le 24 février
2009
Jointedly submitted by/Soumis conjointement par:
Marian Simulik, City Treasurer, Trésorière municipale
and/et
Nancy
Schepers, Deputy City Manager/Directrice municipale adjointe,
Infrastructure Services and Community Sustainability/
Services
d’infrastructure et Viabilité des collectivités
Contact Person/Personne ressource : Marian
Simulik, City Treasurer, Trésorière municipale
(613) 580-2424 x14159, Marian.Simulik@ottawa.ca
That
the Corporate Service and Economic Development Committee recommend Council
revise its policy of reimbursing building permit, planning application and
cash-in-lieu of parkland fees paid to the City by hospitals for capital
projects to include a sunset clause stating that in order to apply for the
reimbursement, the building permit, planning application and cash-in-lieu of
parkland fees must have been paid prior to March 31, 2009.
Que le Comité des services organisationnels et
du développement économique recommande au Conseil d’examiner sa politique de
remboursement des frais de permis de construire, et des droits de demandes
d'aménagement et du règlement financier des terrains à vocation de parc payés à la Ville par les
hôpitaux dans le cadre de projets d’immobilisations afin d’inclure une
disposition de réexamen qui stipule que, pour soumettre une demande de
remboursement, les frais de permis de construire et les droits de demandes
d'aménagement et le règlement financier des terrains à vocation de parc doivent
avoir été payés avant le 1er mars 2009.
On October 7th, 2008 a report requesting the
reimbursement of building permit fees, planning application fees and payment
for cash-in-lieu of parkland for 2006 and 2007 construction projects totalling
$755,728.59 from the Ottawa Hospital was submitted to the Corporate Services
and Economic Development Committee. The
report identified that the reimbursement of building permit fees had to be
funded from the City-wide reserve because of changes in legislation related to
building fees.
As the intent of the original policy was to avoid an impact on taxation, while providing assistance to the hospital sector, the request was deferred and the City Manager was directed to provide a review of the policy of reimbursing building and planning fees to hospitals as a method of funding their capital projects. This report is intended to provide that review.
The
original report entitled Ottawa Academy of Hospital Executive, Capital Funding
Support, (ACS2001-CRS-FIN-004 dated September 24, 2001) presented a request for
City funding from the Ottawa Academy of Hospital Executive (Ottawa Hospitals)
to assist with their infrastructure renewal program. Included in this group are the Children’s Hospital of Eastern
Ontario, Queensway-Carleton Hospital, Royal Ottawa Heath Care Group, SCO Health
Service, Ottawa Hospital, University of Ottawa Heart Institute, Monfort
Hospital and Ottawa Regional Cancer Centre.
The total cost of the projects for which the hospitals were looking for funding
was estimated at $597.74 million. In
addition there was at least $93 million required for equipment, which the
Academy said, would be funded by the individual hospital foundations. The estimated provincial contribution was
$364.92 million. The balance, to be
raised locally was $232.82 million. The
general request was that the City provides 20% of the total funding requirement
or approximately $120 million over a ten-year period. The Ottawa Hospitals indicated that that amount was similar to
the regional municipal funding prior to 1990.
The
report was discussed on January 23, 2002 at City Council. This request could not be accommodated with
the City’s financial resources in 2002 and therefore the report discussed the
possibility of raising these funds either by way of a reduction to some City
services or programs or by an additional tax levy. Although Council did not approve an additional tax levy, it
confirmed its commitment to the quality of life of the community by partnering
with the Ottawa Academy of Hospitals to
tackle the financial challenge of raising $232 million locally and carried the
following motion:
WHEREAS the
Province of Ontario has indicated that the local hospitals are responsible for
raising $232 million out of their estimated total capital requirement of
$597.74 million over 10 years;
AND WHEREAS
the local hospitals have asked the City of Ottawa to participate in the local
fundraising effort to meet the Provincial target;
AND WHEREAS
Ottawa City Council believes that excellence in health care is an essential part
of our community’s quality of life, so is prepared to work in partnership with
Ottawa’s hospitals to tackle this financial challenge, without introducing a
property tax levy;
THEREFORE BE
IT RESOLVED THAT the Corporate Services and Economic Development Committee
recommend that:
1.
Council will waive development charges on
hospital capital projects, on a case-by-case basis, subject to a city staff
report confirming that the projects fall within the scope of this 10-year
program;
2.
Council will remit permit fees paid to the City
on hospital capital projects, on a case-by-case basis, subject to a city staff
report confirming that the projects fall within the scope of this 10-year
program;
3.
Council will re-institute a development charge
on new growth to help hospitals cover the health care costs incurred by growth,
subject to provincial government approval;
4.
If all hospitals agree to participate, Council
will agree to administer and promote a program to allow Ottawa residents to
make a voluntary, tax-deductible contribution to the local hospitals for
capital projects; and
5.
Council will continue to work with the hospitals
to identify other possible sources of hospital capital outside of the normal
City revenues.
To date, City Council has exempted, waived or reimbursed to the Ottawa
hospitals approximately $16.7 million in fees or charges as well as $7.26
million in land transfers and capital grants to meet the challenge of raising
$232 million locally in support of the capital requirements of the local hospitals. Document 1 provides the details of the
contributions and support that the City has provided to date. Specifics with respect to each part of the
motion are identified below.
Paragraph
1: Waiver of development charges on hospital capital projects
When
the Development Charge By-law 2004-298 was adopted in 2004, subsection 7(p)
specifically exempted non-profit health care facilities including hospitals
from paying local development charges.
Subsequent to the enactment of the 2004 Development Charges (DC) By‑law
a request to waive the payment of development charges was no longer
necessary. Prior to the 2004 by-law
approximately $164,289 was reimbursed for development charges paid. Since the July 2004, the total development
charges waived total approximately $10.7 million.
Paragraph
2: Reimbursement of development related
fees owed on hospital capital projects
Pursuant to this motion, since January 2002
Council has approved the reimbursement of building fees (including building
permit fees and planning application fees) totalling approximately
$5.64 million.
Paragraph
3: Reinstatement of a development
charge on new growth to go directly to hospital capital projects
In
1997, the Harris government disallowed capital funding for hospital expansion in
the Development Charge Act, 1997, S.O. 1997, Chap 27 as amended, (DCA). Therefore reinstating this charge would
require the Provincial Government to amend the DCA. The Premier in September 2008 responded to a letter from the
Building Industry and Land Development Association indicating there would be no
changes to the DCA at this time.
Paragraph
4: Promotion of a voluntary
tax-deductible contribution to hospital capital projects
In 2004
this initiative was promoted through and included on the water bills. It resulted in donations totaling less than
$50,000 for the various hospital projects.
Paragraph
5: Other sources of support to hospital
capital projects
Council
approved reimbursements of cash-in-lieu of parkland payments totaling $185,572
to various institutions as detailed in document 1. Since the year 2001 the City has made a land transfer and other
Capital grant to hospitals totaling $7,257,157 as detailed in document 1.
Prior to June 2006, eligible capital hospital projects were cost shared
between the Province and the local hospital based on a 70 / 30% funding
formula. The Province paid 70% of all
construction costs as well as new and replacement equipment.
The
agreement to reimburse certain building and planning fees was the best solution
in 2002 as the City was not able to afford a direct grant however the City was
open to non-cash options. Reimbursing
the fees benefited the local hospitals in two ways:
·
From the City, 100% reimbursement of fees,
and
·
From the Province, approximately 70%
reimbursement of the fees when claimed as a construction cost.
This
approach allowed the hospitals to leverage the amounts paid to the City for
building permits and planning application fees to maximize the capital funding
available from the Province within the master plan approved by the
Province. In summary, for every $100
reimbursed by the City the hospital received approximately $70 from the
Province.
Under a new policy established in June 2006, the Province is now
responsible for 90 percent of the eligible construction costs (bricks and
mortar) and the balance is to be covered by the hospital. In addition, the hospitals are responsible
for the cost associated with the purchase of new and replacement
equipment. As per the original request,
equipment was to be funded by the hospital foundations. The City’s original contribution was for
building and renovations costs, which this funding formula change reduces.
Development
Charges
At the
time the policy was approved and up until 2004, reimbursement of development
charges was funded through the development charges capital account. The current DC by-law passed in 2004,
exempted hospitals from paying the charge.
The 2009 Development Charge By-law Review: Policy Framework report,
ACS2009-CMR-FIN-0009, on the Planning and Environment Committee agenda on
February 24, 2009 discusses the issue of non-statutory exemptions. Any decisions on exemptions for hospitals
should be made in the context of the new DC by-law in its entirety. Other non-profit hospital service
corporations can request a development charge exemption and Council would deal
with these on a case-by-case basis.
Cash in
lieu of Parkland
Reimbursements
of the cash-in-lieu of parkland fee were funded from the cash-in-lieu of
parkland reserves. The proposed
cash-in-lieu of parkland by-law was presented in report number
ACS2008-ICS-PLA-0242. The report does not
provide exemptions for hospitals but non-profit corporations can request a reimbursement
of this fee and Council would deal with these on a case-by-case basis. The reimbursement of the fee cannot be
funded from the cash-in-lieu of parkland reserve. For this reason, this report is recommending these reimbursements
be phased out according to the recommended sunset clause.
Planning
application fees
Reimbursements
of planning application fees are charged to the Planning and Growth Management
Branch revenue account. This Branch has
been directed by Council to move the development review process functions of
the Branch to full cost recovery, and in the last two years, planning
application fees have been raised substantially to achieve that goal. As reimbursing planning application fees to
hospitals impacts the Branch’s ability to achieve cost recovery, it is
recommended that these reimbursements be phased out according to the
recommended sunset clause.
Building
permit fees
Originally,
building permit revenues were used to reimburse the building permit fees. On July 1, 2005, the Building Code Statute
Law Amendment Act, 2002 and Ontario Regulation 305/03 took effect, which
necessitated changes on how the municipality administered and enforced the
Ontario Building Code Act and Building Code.
The new legislation required that the building permit fees cover only those costs associated with servicing building permits and enforcing the Act and Code. In essence, the new legislation required that building regulatory activities be revenue neutral. Thus, revenues could no longer be used to reimburse fees to the Ottawa hospitals in support of their 10 Year Capital Funding Program. This impact was discussed in the report presented to Council on June 22, 2005 entitled “Building Regulatory Changes – Impact of Building Code Statute Law Amendment Act and Ontario Regulation 305/05” (ACS2005-PGM-BLD-0010).
As a consequence of this change, the City-Wide Capital Reserve Fund has been identified as a funding source for reimbursing building permit fees for the hospitals on a case-by-case basis. As the City-Wide reserve is funded from taxation, this is contrary to the original motion (policy), which was not intended to impact property taxation. For this reason, the report is recommending that reimbursement of building permit fees to hospitals be phased out according to the recommended sunset clause.
The report is recommending that the commitment made for building permit, and planning applications fees paid by the hospitals by March 31st, 2009 be reimbursed as these institutions have not had prior notice of Council’s intent to review the policy and may have made financial decisions based on the previous Council commitment.
While the City–wide reserve is not currently in a surplus position, the City has land sales and capital closures which go to the reserve and which could be used to fund the reimbursement applications received from hospital for capital construction.
Following is a list of pending requests from hospitals for capital funding pursuant to the 2002 policy, including the report deferred in October 2008:
· Ottawa Hospital – General, Riverside and Civic Campuses - fees paid in 2006 and 2007 - $755,728.59 ($719,528.99 for building permit fees, $25,341.00 for planning application fees and $10,858.60 from Cash in lieu of Parkland). Refer to ASC2008-PTE-BLD-0034 deferred at CSEDC October 7, 2008. Not yet submitted, potential request for fees paid in 2008 – approximately $1 million.
There may be other potential requests from hospitals for eligible
capital projects. Reports for the
Queensway Carleton Hospital, the Montfort Hôpital and any other hospitals with
eligible reimbursement requests will be presented to Committee and Council for
approval once staff has received the request as per the policy.
No public consultation was undertaken.
The hospitals will be notified about the issue and the report.
There are no legal or risk management impediments to implementing the
recommendation in this Report.
Continued funding for the hospitals by reimbursing building, planning
and cash-in-lieu of parkland fees paid to the City on hospital capital projects
has not been provided for within any budget or forecast of the City. The outstanding reimbursements listed in
this report totalling approximately $2.7 million would come from City-wide
reserves. Individual reports are still
required to be presented to Council for authorization to reimburse these
funds.
Document 1 Details of City funding to Hospitals
The deferred report will be amended and resubmitted as per the decisions made by Council.
Funding Support for Hospital Capital Projects 2000 to date Document 1
|
|
Building Permit
Fees Reimbursed & Waived |
Planning
Approval Fees Reimbursed & Waived |
Development
Charges & Parkland Fees Reimbursed |
Land
Tranfers, Capital Grants & other |
Total by
Institution |
|
Ottawa Heart Institute |
58,411 |
0 |
5,894 |
0 |
64,305 |
|
Queensway Carleton Hospital |
783,370 |
7,860 |
105,341 |
0 |
896,571 |
|
Monfort Hospital |
2,022,398 |
10,485 |
0 |
0 |
2,032,883 |
|
Sisters of Charity |
433,650 |
18,931 |
57,261 |
0 |
509,842 |
|
Ottawa Hospital |
1,342,473 |
15,263 |
42,506 |
0 |
1,400,242 |
|
Royal Ottawa Healthcare Group |
92,460 |
0 |
0 |
657,997 |
750,457 |
|
Children’s Hospital of Eastern Ontario |
776,490 |
1,515 |
79,911 |
0 |
857,916 |
|
Rogers House |
40,500 |
8,690 |
0 |
0 |
49,190 |
|
Perley & RideauVeteran’s Health Centre |
19,934 |
8,600 |
58,948 |
0 |
87,482 |
|
Land lease for 599 Smyth Road to the Ottawa Hospital |
0 |
0 |
0 |
6,599,160 |
6,599,160 |
|
Development Charges waived since July 2004 |
|
|
|
10,709,669 |
10,709,669 |
Total |
$5,569,686 |
$71,344 |
$349,861 |
$17,966,826 |
$23,957,717 |
CApital Funding Support for Ottawa hospitals-
REVIEW OF policy of reimbursing building and planning fees
SOUTIEN AU FINANCEMENT DES IMMOBILISATIONS DEs hôpitaux D’ottawa -
Examen de la poliTIQUE DE REMBOURSEMENT DE TOUS LES DROITS RELATIFS AUX
BÂTIMENTS et AMÉNAGEMENTS
ACS2009-CMR-FIN-0009 city wide / À l’Échelle de la ville
Ms. Marian Simulik, City
Treasurer, spoke to a PowerPoint presentation, which served to provide
Committee with an overview of the report.
A copy of her presentation is held on file.
Councillor McRae wondered
what impact this report would have on non-profit long term care
facilities. Ms. Simulik indicated such
facilities were not affected because the current report dealt exclusively with
hospitals. Speaking to the issue of
Development Charges (DCs), she advised that unitl July of this year, non-profit
agencies continued to be able to come forward and request an exemption under
the current DC By-law.
Councillor McRae asked
the Treasurer to get back to Committee about what funding support the City
could provide to non-profit long term care facilities. Ms. Simulik suggested it would take a bit of
work but that she could get back to Committee within a month with a report
identifying what was the past practice and could be the policy going forward.
Councillor El-Chantiry
referenced a problem with respect to hospitals in neighbouring municipalities
whereby as much as 20% to 25% of their patients were from the City of
Ottawa. He wondered what the
municipality could do to help these facilities. Ms. Simulik indicated this went beyond her area of expertise and
she suggested putting the question to Dr. Cushman when he came forward to make
his presentation.
Councillor Desroches
referenced the $5.57M re-imbursed for building permits and he wondered if that
reflected the amount of work involved in administering those permits. Ms. Arlene Grégoire, Director of Building
Services, stated it was not. She
indicated the legislation did not require municipalities to attach specific
costs to each building permit because the database needed to do this would be
phenomenal, staff would have to be charging by the hour and it would require an
entire accounting system. Therefore,
the legislation only required that a municipality recover its total costs. She explained that overall, there would be some
projects subsidizing others. For
example, she noted that for small home-owner projects where the fee was $250,
the municipality was not recovering its costs.
By the same token, the municipality may not expend resources immediately
with respect to large projects but may do so later when there were lawsuits and
the City was paying out awards. She
noted that the larger the project, the larger the awards. Therefore in essence, the municipality was
also charging fees for future liabilities across the board.
Councillor Desroches
noted that Council had recently received a report with respect to cash-in-lieu
of parkland. He believed that account
was in significant surplus and he did not think it was likely the City would be
adding parkland in areas surrounding the hospitals. Therefore, he wondered if the municipality would have some
flexibility with respect to these fees.
Ms. Simulik confirmed that cash-in-lieu of parkland had been the subject
of a report considered by Council the previous week. She noted that the by-law passed by Council had a number of
specific exemptions, however these did not include hospitals. Further, she indicated the advice provided
by Legal Services staff was that, because the municipality was collecting
cash-in-lieu of parkland fees under the Planning
Act and because the legislation contained specific requirements in terms of
how much was to be collect, when it was to be collect and how it was to be
used, there was no ability to simply waive the by-law afterwards.
Responding to a follow-up
question from Councillor Desroches, Ms. Simulik reminded Committee that at its
previous meeting, Council had held one portion of the cash-in-lieu of parkland
item, which had to do with the distribution between the various ward
accounts. Therefore, she believed the
by-law itself would be listed on the next Council agenda for enactment.
Councillor Chiarelli
referenced the sunset date being recommended and noted that there were a number
of projects conceived and moved forward under the regime where the hospitals
were receiving re-imbursement. Therefore,
he inquired as to the quantitative impact some of these projects could be
facing. Ms. Simulik noted that in 2002,
Council had received a lit of specific projects that each hospital was
contemplating undertaking as part of a 10-year plan. She explained that Ms. Grégoire had reviewed that list to
determine which projects were already underway and was working with the
hospitals confirm the status of these projects. She noted that some projects may have fallen off the list and new
ones may have been added. However, she
maintained the 2002 policy specifically dealt with the requests that were
before Council at the time. Therefore,
if new projects had come on board since then, staff would not be recommending
them for re-imbursement or grant because they were not part of the original
list provided in 2002.
Responding to a follow-up
question from Councillor Chiarelli, Ms. Simulik acknowledged that in
structuring the financing for their projects, the hospitals would have built in
the idea that they would benefit from a waiving of the fees. For this reason, staff was recommending that
the capital funding support only be terminated as of the end of the month for
all those projects where decisions have already been made and this had been
built into their funding structure.
Councillor Chiarelli
inquired as to the potential financial impact for projects that could have
application fees submitted in the next four or five months or even within this
calendar year. Ms. Simulik submitted that
staff had no idea what the hospitals were contemplating beyond the projects
identified in the 2002 report. She
re-iterated that Ms. Grégoire was working with the hospitals to determine the
status of the various projects and had identified approximately $2M in this
report and approximately another $2M based on what was in the cue. Beyond that, staff did not know what the
hospitals would come forward with in six months or a year.
Mayor O’Brien referenced
the route cause of this issue, which was a regulatory change that eliminated
the City’s ability to forgive building permit fees directly and resulted in the
municipality having to come up with some other tax-supported means of providing
the financial support to the hospitals’ capital projects. He wondered if there had been any efforts,
either by the hospital community or the municipality, to try and convince the
Province to change this regulation. Ms.
Grégoire stated that the legislation was the Building Code Act and the regulations were the tools for
implementing the legislation. She indicated
there was no contemplation to exempt any groups from having to pay building
permit fees because the legislation had empowered municipalities to ensure
that, through building permit fees, the costs of enforcing the Act were borne by those causing the costs
to be incurred.
Dr. Robert Cushman,
Champlain Local Health Integration Network (LHIN), remembered being around
the table when the delegation from the hospitals had come looking for $120M in
capital funding support. It was very
obvious at the time that the City was not able to come up with such a
contribution and, recognizing the importance of hospitals, alternatives,
compromises and contingency plans were explored. He referenced the funding support that had been contributed by
the municipality over the ensuing years towards hospital capital projects and
stated that, while the amounts were significant, they did not come close to the
$120M. He recognized that the City had
made a significant contribution, but that the hospitals had been able to move on,
albeit with significant pressures. He
maintained that there was only one taxpayer and that this was in fact a joint
responsibility. He referenced some of
the many interfaces between the municipality and the hospitals and submitted
that because they shared many problems, they had to work on these
together. He referenced the funding
formula between the Province and the hospitals, noting that it was somewhat
better than it had been in the past but that there continued to be a
significant burden on hospitals. He
remarked that a lot of good work had been done, the hospitals had enjoyed
terrific relations with the municipality, a 10-year plan had been put in place
and was now approximately at year eight.
However, he indicated his main concern was that they only found out
about this change in policy within the last seven or 10 days. Therefore, he felt the need to buy some
time, to put together a group to determine in the impact of this impending
decision and plan how to deal with the challenges in moving forward.
Mayor O’Brien referenced
the doctor’s statement with respect to finding out about this matter within the
last seven to 10 days. He noted that
the direction to staff to review the policy dated back to October 7, 2008 and
that, at the time, it had been a fairly high profile issue.
Dr. Cushman acknowledged that this may reflect the fact that he was not doing his homework. However, he felt the March 31 deadline was arbitrary and that the two groups would benefit from putting their heads together to review the issues.
Mr. Gerald Savoie, Hôpital Montfort, felt this was a very important issue for the hospital sector, which had always worked hand in hand with the City. He indicated the hospitals had always had a plan in terms of future needs and that cost figures were available. He remarked that they had not been offered a choice in terms of sitting down and looking at their future needs and the impact of the current report recommendation. He believed this was going down a road everyone would regret. In He advised that hospital representatives knew what other municipalities were doing in terms of support and that the City of Ottawa was lagging in comparison. He recalled that the former Regional Municipality of Ottawa-Carleton (RMOC) had funded up to one third of the entire construction costs of hospital projects. He referenced a $300M project at the Montfort Hospital and noted that, under the former RMOC policy, it would have represented a $100M burden to the municipality. However, under the currently policy, which was recommended to end as of March 31, the City was exposed to about $2M in fees and when development charges were factored in, the figure increased to approximately $5.7M. Therefore, he submitted that the City was getting a very good deal.
Mr. Savoie argued that hospitals were among the biggest employers in the region and that hospital employees paid taxes. Furthermore, he submitted that when other industries considered relocating, one of the first questions they asked related to the quality of local healthcare. For these reasons, he re-iterated his belief that the current recommendation was going down the wrong road. He maintained that at the end of the day, the burden shifted down to the citizens in terms of fundraising and local share. He believed this situation could cripple the hospitals and he asked that the City reconsider its position. In closing, he referenced the health hub, to be built in Orléans. He reported that the project was moving forward but the hospital would not be ready to submit a site plan request for it until the spring of 2010. Therefore, based on the revised municipal funding policy, the project would require an additional $3.3M in order to come to fruition.
Mr. Cameron Love, The Ottawa Hospital, expressed agreement with the previous speaker and offered some context from the perspective of The Ottawa Hospital. When the hospital started its development plan the City’s proposal in terms of reimbursing for fees was an essential piece in terms of how the hospitals would come up with the local share. As for The Ottawa Hospital, he advised that they had to raise about $150M to complete their ten-year plan. Although he could understand the City wanting to set a time limit, he referenced the March 31 date and indicated it would represent about an additional $2M, which the hospital would have to raise through the community. Further, he believed all the hospitals had been banking on being able to complete their 10-year plans. It is the premise on which they had built their capital plans, their financial strategies, their media relations campaign and their fundraising goals and to reconfigure all of these plans would create a series of challenges. On a go-forward basis, he expressed concerns with respect to development charges, and the fact that expansions were needed in healthcare in order to serve the community. Although many good services were provided, he referenced wait times for surgery and emergency access and submitted the only way to keep pace was through growth. In closing, he re-iterated that there was a 10-year plan and he felt it was important for the municipal to continue its commitment in that regard. However, he felt the parties need to sit down to talk about the next 10 years in terms of what the community’s needs would be and how those needs could be met in terms of the next phases of development.
Mr. Peter Thompson, Queensway-Carleton Hospital stated that the health and wealth of communities were intrinsically linked. He noted that hospitals were major employers and typically, a $100M hospital project would attract 40% of that amount in ongoing operating funding year over year, apart from the actual construction jobs. He advised that 80% of the operating costs related to salaries. He submitted that these were people who lived in the community, bought homes, supported businesses and paid taxes in the community. Therefore, he maintained that this was a small investment in the wealth of the community. Further, he remarked that Ottawa-area hospitals were also centres of innovation and partners in research for many local knowledge-based companies. He informed Committee that hospital planning was lengthy, with a typical cycle of 10 years. He indicated that the Queensway-Carleton had a significant project due to tender in September and that the Province required them to submit a 15-year plan showing how they would raise the local share. He felt the policy that had been in place at the City with respect to hospital capital support was a significant component of the hospital’s 15-year funding plan for the community share of the project. Therefore, he stated that the removal of this funding support would be very disruptive for projects that were well into their approval cycle. Like the previous speakers, he asked that the City stay the course on the original 10-year plan. He recalled that this was a puzzle in 2002 and the parties came up with a model that was innovative and fit the challenges of the day. He recognized that legislation had changed, as had the funding formula. As a result, the parties were once again faced with a puzzle. However, he was confident that with the right dialogue between the municipalities and the hospitals, another innovative solution could be found to ensure the health of the community.
Mr. Eric Dean, Queensway-Carleton Hospital, submitted that, if withdrawn, the funding being provided by the municipality would not end up on the Province’s doorstep. It would end up on the community’s doorstep through increased fundraising goals. Further, he maintained this was coming at a time when the economy was at an all-time low and fundraising goals were already extremely aggressive. He re-iterated that fundraising objectives had been developed based on the City’s policy to provide capital funding support through the waiver of fees and charges and it was a very difficult time for hospital foundations to recast those goals.
Mr. George Weber, Royal Ottawa Hospital, supported his colleagues in terms of what they had said. He indicated he did not envy the City’s job but maintained that the hospitals were also facing difficult times. He noted that during difficult economic times, caseloads increased in the mental health sector and when they had to cut back, it affected operations, public health, social services and ambulance services. Therefore, he submitted that for the City, it would be short-term gain for long-term pain because of the linkages between the hospitals and municipal services. Furthermore, he advised that mental health was not an area with a lot of appeal for fundraising so it was not easy for the Royal Ottawa to raise its share. He appreciated what had been done in the past to exempt the hospital from development charges and permit fees, however he was concerned because they had a plan coming forward for a new phase-3. He believed the proposal needed to be rethought and indicated the hospitals were prepared to help in terms of discussion and looking at the impacts on the long-term.
Dr. Cushman summarized the comments and concerns expressed in terms of the interfaces involved, the long-term impact of the proposed change in municipal support, the importance of the healthcare sector and the fact that hospitals were major sources of local employment. Furthermore, he submitted that Ottawa was competing with other major centres in terms of attracting people to this city because of the good healthcare jobs and the availability of quality healthcare.
Councillor Cullen indicated he was a member of the Council that dealt with the request from the hospitals with respect to the capital program that came out of the Provincial restructuring. The report currently before Committee stated that, at the time, Council decided not to go the property tax route because primary healthcare was not a municipal responsibility. Instead, Council decided to waive a number of fees and charges which, over the years, have amounted to some $24M. Therefore, he submitted that the municipality had done its part to the tune of $24M with respect to the hospital restructuring. He noted that a number of years had passed and he wondered what was left to do, and how much it was expected to cost in terms of municipal contribution, to complete the original 10-year restructuring plan. Dr. Cushman submitted that the answer to the Councillor’s question was the reason more time was needed; to put together a comprehensive list of projects that would be affected and really understand the impact of the policy change.
Councillor Cullen maintained this was to be within the context of the 10-year hospital restructuring plan because, if hospitals wanted the municipality to continue to contribute to capital programs in the longer term, that was a separate issue. Therefore, he re-iterated his question as it related to the original 10-year plan. Mr. Savoie submitted that it was not only about what was left in the original 10-year plan. It was about what the community needed going forward. He argued that the community needed proper healthcare support. He acknowledged that the municipality had given a certain support, which was welcome. However, he maintained the need to work together to ensure that the community remained viable. He indicated it was not just about the restructuring plan because many other projects had flowed since. Adding to this, Dr. Cushman noted that, for the past 15 or 20 years, people had been talking about facilities in Orléans. He indicated this was starting to come to fruition. He remarked that it typically took a decade for services to catch-up with needs and that the sands had shifted in terms of costing formulas. He referenced the City’s $24M contribution to the hospitals and noted that when the restructuring took place, public health went from 25% to 50% on the City’s tax base and that this had since reversed. He recommended some caution when talking about accounting changes and expressed a need to really look at the mount of money put into the system and work together to deal with the challenges.
Councillor Cullen re-iterated that Committee was dealing with a report that recommended a sunset provision for a special policy put in place to deal with a 10-year restructuring plan and the hospital representatives wanted time to sit down and look at the numbers in terms of outstanding issues for restructuring, which he felt was reasonable. He recalled that the Council of the day had decided to review the applications on a case-by-case basis and he believed he was hearing, at least from some of the hospital representatives, that they would like to see a constant policy of subsidization from property taxpayers to fund a Provincial responsibility. He referenced the delegations’ comments with respect to the many interfaces between healthcare and municipal services and he submitted that the $24M the City had contributed to date towards hospital capital projects could have gone a long way towards supportive housing, towards helping the Police Service, towards community support agencies dealing with seniors aging in place, towards expanding public health in low-income communities. He maintained that instead, the money had been diverted to facilities that the direct responsibility of the Provincial government. Dr. Cushman remarked that there was some restructuring. However, he maintained a lot of the capital projects had to do with dated physical plans and capital infrastructure. Secondly, he stressed that the hospitals and the municipality were in this together and that it was a very complex issue. He expressed fear with respect to the March 31 deadline because he believed there would be some collateral damage. He re-iterated his belief with respect to a need to go back to the drawing board and come up with an assessment of the short-term and long-term costs and implications.
Councillor Desroches supported the notion of providing more time to have discussions and see if there were opportunities to resolve this. However, he maintained that the City’s primary responsibility related to municipal infrastructure, whether transit, roads or the other things that result in Ottawa enjoying a great quality of life. He referenced arguments made by some of the speakers with respect to attracting doctors and nurses to Ottawa and he wondered how important municipal infrastructure was to the hospital community. Dr. Cushman acknowledged that it was very important. He submitted this was another reason for the hospitals and the municipality to work together and to have a comprehensive approach. Adding to this, Mr. Savoie suggested hospitals were part of the public infrastructure and that punting the ball back and forth between the Province and municipality left hospitals caught in the middle. He maintained that the City had always supported public infrastructure, including its hospitals, and it should continue to do so.
Councillor Deans agreed that hospitals were big employers and important to the community and she believed everyone respected the work they did. However, she stated the issue came down to who should pay for the bricks and mortar of hospitals and whether it should come from the property tax base. She recalled that when the issue came up in 2002, hospitals were responsible for raising $232M and she asked how much had been raised to date. Each hospital representative responded as follows: Montfort, $10M; Royal Ottawa, $10M; Bruyère, $21M or $22M; The Ottawa Hospital, $100M; Queensway-Carleton, $20M.
Dr. Cushman noted that the Children’s Hospital and the Heart Institute were not represented at the meeting, therefore their figures were not available.
Based on the figures provided by the representatives and the City’s $24M contribution since 2002, Councillor Deans estimated that the hospitals had met their goal.
Speaking for The Ottawa Hospital, Mr. Love explained that when they laid out their financing plan, their fundraising goals were net of the municipal contribution.
Councillor Deans recognized the need to have an assessment of the financial situation. She also felt the problem stemmed from the Provincial policy requiring so much money to come from the local community. However, she agreed with Councillor Cullen’s assessment that the delegations seemed to be looking for the City to be funding partners on a go forward basis whereas she would have expected them to come forward to thank the City for the $24M contribution to date. She believed the municipal contribution had become an expectation. Dr. Cushman re-iterated his belief that the hospitals and the municipality were in this together. He argued that the City was a creature of the Province, as were the hospitals, and that both did their best to provide for the needs to local residents. He submitted that there was a 10-year commitment based on a number of assumptions, some of which had changed, and he re-iterated the need to do an analysis and a needs assessment before moving forward. He maintained that they were asking for time to work out a solution. They were not asking for a blank cheque.
Councillor Deans
indicated her problem with agreeing to more time was that it created an
expectation that the City would be funding partners. She felt that was not what should be taken away from today’s
discussion because at the end of the day, the fundamental question remained
whether or not it was appropriate for local property taxes to pay for the
bricks and mortar of hospitals. She
maintained that if the City took on things outside its mandate, it had less
money to do good work in areas within its mandate.
Councillor Wilkinson
believed everyone appreciated the importance of hospitals to the community and
she hoped the speakers did not think that if the City did not give them money,
it meant Council did not support the hospitals. She noted that the City had as serious, if not more serious,
financial problems than the hospitals.
She referenced Dr. Cushman’s earlier comments with respect to the
funding formula for public health and she argued that the municipality should
not be paying a penny for public health.
She reported that Ontario was the only province in Canada where
municipalities had to pay for public health, public housing and social
services. Therefore, every municipal
taxpayer paid hundreds of dollars on those services. She suggested this was part of the reason why the City was in its
current financial situation. She
remarked that hospitals had 90% of their capital projects funded by the Province. She advised that, not only did the City not
get that level of funding for its capital projects, it did not even get that
level of funding support for public health, public housing and social programs. She surmised that this was the
difficulty. It was not that the City
did not want to help. It was that the
City was having difficulty determining whether it could help. Dr. Cushman recognized the City’s financial
challenges and re-iterated that the hospitals also faced financial
challenges. He repeated earlier
statements in terms of there being only one taxpayer, the current economic
climate and the need to work together to come to some compromise. He noted that there were two years left on
the 10-year plan drawn up in 2002 and he suggested that to cancel it within a
month, without assessing the impact, would be premature.
Speaking to Dr. Cushman’s
statement that he only found out about this matter within the last couple of
weeks, Councillor Wilkinson referenced the report that was before Committee in
October 2008, the direction given to staff at that time to review the policy
and report back, and she noted that some hospital representatives were in
attendance at the aforementioned meeting.
Councillor Wilkinson
noted that a motion would be coming forward to recommend the creation of a
working group to look at the issue. She
referenced the March 31 date and wondered if an extension of that date, to give
the working group time to report back, would solve some of the delegations’
problems. Dr. Cushman responded
affirmatively.
Councillor Wilkinson
inquired as to any projects that could be coming forward with building permit
applications in the near future. Mr.
Love indicated The Ottawa Hospital had one project that would be at the building
permit stage before the end of the year and two more at the beginning of the
following fiscal year. Mr. Weber
reported that the Queensway-Carleton had a significant project scheduled to
come for permit submission in July. Mr.
Savoie advised that, by the end of this year, the Montfort would be ready to
submit a site plan application and request for the Orléans Health Hub.
Councillor Wilkinson
wondered when Kanata would get a health hub, noting this had been the subject
of discussions for several decades. Dr.
Cushman indicated there was a recognized need and he reported that there had
been discussions with the Queensway-Carleton Hospital. However, he explaiend that because of the
locations of hospitals in neighbouring communities, they had to be very strategic
in terms of whether they would locate such a facility.
Councillor Bloess
referenced the similarities between the current debate and the one that took
place in 2002. He noted there was a
commitment made in 2002 and he believed the municipality should live up to that
commitment. He indicated he would
support the motion coming forward to strike a working group because he felt
there was a need to put something in place to give the hospitals some level of
comfort as opposed to the looming deadline.
However, he remarked that provincial funding formulas had never worked
and he wondered how this could be addressed.
Dr. Cushman acknowledged that this was a challenge and he noted that
there was one party not at the table; the Province. However, he felt that it came back to the notion of the
hospitals and the municipality working together to gather some solid
information and develop a strategy to move forward.
Councillor Hume indicated
he was having trouble following the delegations’ arguments. He noted that Development Charges, which
represented the vast majority of the fees, were not currently on the table
because they were the subject of a separate process and would be decided in the
coming months. On that topic, he
believed the exemption for hospitals, and for other non-profit organizations,
would continue. Secondly, he remarked
that the municipality supported hospitals in other ways and no changes were
proposed to the leases or other arrangements currently in place. Therefore, he submitted that what was
actually on the table was but a small portion of the municipality’s support for
hospitals. Dr. Cushman acknowledged the
Councillor’s points and re-iterated the importance of having a clear
understanding of the impacts of the report recommendation currently before
Committee.
Councillor Hume
referenced the sunset clause contained in the report recommendations and
wondered how bound Council would be by it should the working group come forward
with some compromise. Ms. Simulik
indicated the March 31 date was not a limiting factor in terms of what Council
may want to do in the future. This was
a Coucil policy decision and therefore Council could amend it.
Councillor Hume noted
Council may want to keep the referenced sunset date because it may want to look
at some other mechanisms for providing support and if so, the policy would be
in place, if it was approved as recommended.
Based on the Treasurer’s
comments, Councillor Hume remarked that Councillor Chiarelli’s motion, if
approved, would not constrain Council from revisiting the decision currently
before Committee, should that be a recommendation coming out of the working
group. Therefore, he indicated he was
prepared to support both, Councillor Chiarelli’s motion and the staff
report.
Responding to a question
from Councillor El-Chantiry with respect to how other municipalities were
dealing with this issue, Dr. Cushman indicated he had not looked at it
recently, though he had seen some press in recent weeks about one municipality.
He advised that this could be reviewed, though he cautioned that comparing
municipalities was often like comparing apples to oranges.
Dr. Cushman addressed an
earlier question from Councillor El-Chantiry with respect to neighbouring
municipalities and submitted that although it was true that Ottawa residents
sometimes went to neighbouring jurisdictions’ hospitals, the reverse was also
true. Further, he explained that
because of the congestion in downtown hospitals, there was a movement afoot to
look at building additional services in outlying facilities.
Councillor Chiarelli read
a motion into the record calling for the formation of a group, comprised of
City staff, Provincial and City elected officials and hospital officials, to
exmaine and propose other options to assist the hospitals towards their
on-going capital needs and to report the results back to the Corporate Services
and Economic Development Committee by the end of the third quarter.
Councillor El-Chantiry
proposed a friendly amendment to direct that the group look at other
jurisdictions for best practices.
Mayor O’Brien suggested
this amendment was not necessary because he believed the group would do this as
a matter of course.
Councillor Wilkinson
referenced the timelines for a report back from the group referenced in
Councillor Chiarelli’s motion and she introduced a motion to change the sunset
date from March 31 to August 31 so that any projects that were in the works and
were part of the previously noted 10-year plan could go forward.
Councillor Cullen felt it
was appropriate to form a working group to look at this issue and report
back. However, he questioned the
appropriateness of having elected officials participate on this working group. He felt it would be better served at the
staff level because he would want the report to come from the basis of
expertise as opposed to politics.
Councillor Chiarelli
noted the last time this was done, elected officials ended up being brought
in. Therefore, his motion called for
their involvement from the beginning.
Speaking to the item,
Councillor Cullen re-iterated that he was supportive of setting up a working
group that would come back with information and having a fulsome debate at
Committee. He referenced the parameters
of the debated insofar as property taxes being regressive and the health care
system being a provincial responsibility.
He acknowledged Councillor Hume’s point about development charges being
a separate issue and he underlined the benefit of these matters come forward on
a case-by-case basis. He felt this
allowed the hospital sector to justify why they were coming to the property tax
base for the subsidy as opposed to a policy approach whereby the municipality
would be taken for granted as a revenue stream for a responsibility that was
not within its mandate. As for looking
into what other municipalities were doing, he remarked that there were over 400
municipalities across the province and that, although there had been occasions
when a municipality had seen fit to support a particular hospital project, by
and large they did not contribute directly to the capital programs of
hospitals, knowing full well that this was a Provincial responsibility.
Mayor O’Brien indicated
Committee would vote on Councillor Wilkinson’s motion first and he asked for a
staff comment on same. Ms. Simulik
re-iterated that the date made no difference because this was a policy decision
of Council and Council could change its policy. Further, she re-iterated that if the working group came back with
a recommendation that the municipality fund all hospital projects, the City
could do so retroactively.
Councillor Wilkinson
maintained the reasoning behind her motion was to give the hospitals some sense
of security and to correspond with the timing of the report back from the
working group proposed in Councillor Chiarelli’s motion.
Based on the staff
comment, Mayor O’Brien submitted that the date made no difference he
recommended that Committee vote against the motion.
Moved by Councillor M.
Wilkinson
That the date in the
recommendation be extended to August 31, 2009 so that the Committee report
reviewing alternate funding sources can report to Committe and Council prior to
that date.
LOST
YEAS (1) : M.
Wilkinson
NAYS (9) : R.
Bloess, R. Chiarelli, D. Deans, E. El-Chantiry, P. Hume, R. Jellett,
M. McRae, S. Desroches, Mayor O’Brien
Councillor Cullen
re-iterated his concerns with respect to having elected representatives on the
working group.
At this juncture,
Committee voted on the motion introduced by Councillor Chiarelli.
Moved by Councillor R.
Chiarelli,
WHEREAS the Province still requires hospitals in the City of Ottawa to
raise 10% of their capital funding requirements locally;
AND WHEREAS the City of Ottawa will be ending the reimbursement of
building permit, development application and cash-in-lieu of parkland fees for
projects where the fee has not been paid prior to March 31, 2009;
AND WHEREAS there may be other ways in which the City and the Province
can help support the hospitals’ capital fund requirements;
THEREFORE BE IT
RESOLVED that a group be formed, compromised of City staff, Provincial and City
elected officials and hospital officials, to examine and propose other options
to assist the hospitals towards their on-going capital needs and to report the
results back to the Corporate Services and Economic Development Committee by
the end of the third quarter.
CARRIED
Committee then voted on
the item as amended.
1. That
the Corporate Service and Economic Development Committee recommend that Council
discontinue its policy of reimbursing hospitals for building permit and
planning application fees; and
2. WHEREAS
the Province still requires hospitals in the City of Ottawa to raise 10% of
their capital funding requirements locally;
AND WHEREAS the City of Ottawa will be ending the reimbursement of
building permit, development application and cash-in-lieu of parkland fees for
projects where the fee has not been paid prior to March 31, 2009;
AND WHEREAS there may be other ways in which the City and the Province
can help support the hospitals’ capital fund requirements;
THEREFORE BE IT
RESOLVED that a group be formed, compromised of City staff, Provincial and City
elected officials and hospital officials, to examine and propose other options
to assist the hospitals towards their on-going capital needs and to report the
results back to the Corporate Services and Economic Development Committee by
the end of the third quarter.
CARRIED
as amended