This document provides information for municipalities, hub proponents and the general public on the financial tools municipalities may use to support the creation and financial sustainability of new community spaces. The focus is on three tools:
- Small Business Programs/Business Incubators
- Municipal Capital Facilities Agreements
- Municipal/City Services Corporations
Background information on each of the tools will be provided, including the legislative/regulatory framework for their use and case study examples.
Background on Municipal Financial Tools
Municipalities have access to financial and other tools that can be used within a community hubs context to promote the provision of services, facilities, and community development goals. Some of the tools are listed below.
In some cases, municipalities may provide financial assistance to commercial enterprises through these tools – even though municipalities are generally prohibited from providing direct or indirect financial assistance to commercial enterprises (see section 106 of the Municipal Act, 2001 and section 82 of the City of Toronto Act, 2006 and the legislation generally for more information).
Small Business Program/Business Incubators
Municipal small business programs (often referred to as small business incubators) can be used by municipalities to support the development of small business incubator hubs. Through these programs, municipalities may provide for the establishment of counselling services and certain financial incentives to small businesses operating or proposing to operate in the municipality.
Legislation: Section 108 of the Municipal Act; Section 84 of the City of Toronto Act (other legislation may also apply).
Regulations: There is no small business incubator regulation under the City of Toronto Act; Possible future regulation under the Municipal Act
 Bill 68 has been passed by the Ontario Legislature which contains legislative amendments that provide for a Minister’s regulation-making authority for small business programs under the Municipal Act, 2001. If passed, the future regulation may enable a municipality meeting certain requirements to offer financial incentives to small businesses or incubators without ministerial approval.
Case Study: Innovate Kingston – Kingston, ON
The City of Kingston partnered with Innovate Kingston (a collection of IT business entrepreneurs) to establish a “Small Business Accelerator Program” focused around information and communication technology (ICT) in the former Portsmouth Town Hall. The program provides an opportunity for ICT small businesses to co-locate in one facility and access mentorship, networking opportunities, and below-market rental space and services.
Through the small business incubator program, the City provided:
- A refurbished space with reduced rent for eligible small businesses
- Annual operating services that cost up to approximately $25,000/year including:
- Utilities, phone, internet connection
- Maintenance and repairs
Municipal Capital Facilities Agreements
Municipalities may choose to deliver a range of facilities through municipal capital facilities agreements with other entities including other public bodies, the private sector, not-for-profit organizations and indigenous groups. These agreements may be seen within a hubs context as a tool municipalities have to assist with flexible financing and provision of their capital facilities. For example, in some cases municipalities may decide to exempt such facilities not owned by the municipality from taxation.
Common examples of facilities that may be provided through such agreements include community centres, affordable housing, parking facilities and facilities used for cultural, recreational or tourist purposes.
Legislation: Section 110 of the Municipal Act; Section 252 of the City of Toronto Act (other legislation may also apply).
Regulations: O. Reg. 603/06: Municipal and School Capital facilities – agreements and tax exemptions under the Municipal Act, 2001; O. Reg. 598/06: Municipal and School Capital facilities – agreements and tax exemption under the City of Toronto Act, 2006 (other regulations and legislation may also apply).
Case Study: YMCA, Balsillie Family Branch – Peterborough, ON
The YMCA of Central East Ontario is a charity that is dedicated to promoting healthy communities in a clean and safe environment. The YMCA Balsillie Family Branch provides programs and facilities for families and individual of all ages and abilities, including recreational facilities, access to volunteer opportunities and afterschool programs.
With a municipal capital facilities agreement, the City of Peterborough:
- Contributed $1.75M to the facility’s capital cost
- Exempted the YMCA from all development charges (savings of $150,000)
- Exempted the facility from property taxes
- Guaranteed the mortgage up to $7.25M
Municipal/City Services Corporations
A municipality may establish a municipal/city services corporation for most services that it could deliver itself. Such a corporation may be established both individually by the municipality or in partnership with certain other public sector organizations. A municipal or city services corporation may issue shares to anyone including a non-public entity, with limited exceptions. Certain municipal financial assistance to business may be possible in connection with a municipal/city services corporation.
Legislation: Section 203 of the Municipal Act; Section 148 of the City of Toronto Act (other legislation may also apply).
Regulations: O. Reg. 599/06: Municipal Services Corporations; O. Reg. 609/06: City Services Corporations (other regulations and legislation may also apply).
Case Study: Toronto Pan Am Sport Centre – Toronto, ON
The Toronto Pan Am Sport Centre (TPASC Inc.) is a sports and recreation centre that is a legacy from the Pan Am and Parapan Games held in 2015. The City of Toronto established a corporation with the University of Toronto in order to jointly manage and operate the facility.
In connection with the City Services Corporation, the City:
- Provided a line of credit guarantee jointly with the University on behalf of TPASC Inc.
- Streamlined the management of TPASC through one corporation