Report: Business Board - February 02, 2022

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Via Virtual Meeting room

REPORT NUMBER 262 OF THE BUSINESS BOARD

Wednesday, February 2, 2022


To the Governing Council,
University of Toronto.

Your Business Board reports that it held a virtual meeting on Wednesday, February 2, 2022 at 5:00 p.m. with the following members:

Present:
Anna Kennedy (Chair), Sandra Hanington (Vice-Chair), Brian Lawson (Chair of the Governing Council, Meric Gertler (President), Scott Mabury, Vice-President, Operations and Real Estate Partnerships, Kelly Hannah-Moffat, Vice-President, People Strategy, Equity and Culture, Trevor Rodgers, Chief Financial Officer, Olenka Baron, Harvey Botting, David Bowden, Janet Cloud, Alicia Damley, Teodora Dechev, K. Sonu Gaind, Maureen Harquail, Thomas Hofmann, Paul Huyer, Sarosh Jamal, Amin Kamaleddin, Evan Kanter, Rajiv Mathur, David Regan, Nhung Tran, Ian Taylor, Geeta Yadav, Samra Zafar

Regrets:
Kathryn A. Jenkins, Sue Graham-Nutter, Danielle Skipp

Secretariat:
Sheree Drummond, Secretary of the Governing Council, Anwar Kazimi, Deputy-Secretary of the Governing Council, Patrick F. McNeill, Secretary

Non-Voting Assessors:
Cheryl Regehr, Vice-President & Provost,
David Estok, Vice-President, Communications,
Andrew Arifuzzaman, Chief Administrative Officer, UTSC
Heather Boon, Vice-Provost, Faculty and Academic Life
Christine Burke, Assistant Vice President, University Planning
Jeff Lennon, Executive Director, Institutional Planning & Budget Administration
Susan McCahan, Vice-Provost, Academic Program
Joshua Mitchell, Director, Real Estate,
Ron Saporta, Chief Operating Officer, Property and Sustainability
Susan Senese, Interim Chief Administrative Officer, UTM

In Attendance:
Alex Gillespie, Vice-President and Principal, UTM
Luke Barber, Executive Director (Interim) I&ITS & UTM Facilities Management & Planning
Alex Brat, Executive Director, Labour Relations
Carlos Carrillo Duran, Senior Planner, University Planning
Elizabeth Cragg, Director, Office of the VPOREP
Nadina Jamison, Chief Strategy Officer, Office of the President
Ihab Khalil, Executive Director, Strategic Operations and Finance, People Strategy, Equity and Culture
Anne McIllroy, Principal, Brook McIlloy
Chuck O’Reilly, President and Chief Investment Officer, UTAM
Brian Szuberwood, Executive Director, Capital Projects
Anca Vlasin, Business Officer, Campus & Facilities Planning


IN CAMERA ITEM 20(a) WAS RECOMMENDED TO THE GOVERNING COUNCIL FOR
APPROVAL. ITEMS 10, 14(a), 14(b) and14(c); AND IN CAMERA ITEMS 19(a) AND 20(b)
WERE APPROVED. ALL OTHER ITEMS ARE REPORTED TO THE
GOVERNING COUNCIL FOR INFORMATION

Pursuant to section 33(i) of By-Law Number 2,
items 18 to 20 were considered in camera.

OPEN SESSION

  1. Chair’s Remarks

    The Chair welcomed members and guests.
  2. Reports of the Administrative Assessors

    COVID-19 Update
    Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships presented an update on the COVID-19 response and related steps that had been implemented:
  • the vaccination clinic re-opened at the McCaul Street Exam Centre and at The Discovery Pharmacy in the Leslie Dan Faculty of Pharmacy;
  • the province’s GOVaxx bus had visited the UTM campus, and UTSC was once again partnering with the Scarborough Health Network and the Scarborough Ontario Health Team;
  • Utogether vaccine webpage had been updated;
  • Rapid Antigen screen testing continued to be limited in supply with respect to demand - 100K kits were distributed in the Fall;
  • for immediate needs the University had secured a supply for those with valid exemptions who were required to screen to come on campus;
  • the use of medical grade masks was being recommended for all employees, students, and visitors in common use areas, and would be made available to community members as supplies allowed (however, the was a limited number of medical masks available across the tri campus for those unable to secure them on their own);
  • UCheck and Ambassador Program would resume the week of February 7th - ability to upload booster (3rd COVID vaccine) was now possible;
  • University’s approach to ventilation as part of its Tri campus HVAC strategy had been both successful and functional – throughout the pandemic, efforts had been made to ensure that all buildings were functioning as they were designed to and better still with the shift to MERV 13 filters (allowed for ‘flushing’ air in buildings 2 hours before occupancy and upgrading to high-efficiency MERV 13 filters); and
  • access to broader instructional spaces expected – University would continue to engage with industry experts to continually assess its response

    There were no questions from members.

    Update on Capital Projects
    Professor Mabury presented an overview of the current status of the construction market noting the following:
  • Toronto and the GTA still had 42% of all construction cranes across the entirety of USA and Canada;
  • construction tenders had been coming in very high (one tender almost double what it was estimated);
  • double-digit inflation and COVID-19 impact on staffing continued to be biggest challenges;
  • KPMG engaged to review the University’s construction delivery service methods and review its internal expertise;
  • Working Group created to address how to best adapt to changing market; and
  • University was exploring an idea to bring contractors and architectures much earlier into the process than had been done historically to remove some of the long term risk by adjusting how capital projects are executed.
  1. Final Report of the Working Group on the Future of the University of Toronto Asset Management (UTAM) Corporation and Administrative Response

    Professor Meric Gertler, President, spoke to the Final Report of the Working Group on the Future of the University of Toronto Asset Management (UTAM) Corporation and the Administrative Response. He noted that the rationale for the review was clear – the main motivating factor was management of pension assets moving to a new entity [the “UPP”]; the migration process was scheduled to be completed by end of March. President Gertler stated that UTAM had not been reviewed since 2009 when The Jackman Report was released. Since then, all of its recommendations had been implemented.

    President Gertler also commented on the findings of the Working Group:
  • UTAM’s current mandate continued to serve the University’s current and future needs – no changes were recommended; and despite impending reduction in assets under management, a strong case could nevertheless be made to maintain the size and structure of UTAM;
  • Working Group acknowledged many of the positive recommendations implemented and that the role of the UTAM Board had been clarified; the University’s senior administration was far more effectively represented on the UTAM Board than before;
  • Working Group recommended adoption of practices in line with good governance with respect to the Investment Committee’s role and membership (recommended fixed and renewable terms, with staggered terms, to ensure continuity and smooth transition);
  • the status of the President and key financial officers on the Investment Committee were to be formalized as ex officio members.

    The President concluded his report by stating that all the recommendations of the Working Group on the Future of the University of Toronto Asset Management (UTAM) Corporation had been accepted – consideration of their implementation would be undertaken in a timely manner.

    This item was presented for information and there were no questions from members.
  1. Reports on Debt:
    1. Debt Strategy - Annual Review

      Trevor Rodgers, Chief Financial Officer, noted that the current debt strategy had been approved by the Business Board in 2012. The two key questions examined when conducting the Annual Review were whether the Strategy was still prudent and whether it currently provided sufficient debt capacity to meet the University’s needs. The current review revealed that both questions were answered in the affirmative.

      Mr. Rodgers stated that based on projected financial factors such as total expenditures and expendable resources, the debt policy limit, determined using a 5% debt burden ratio, was projected to increase by an additional $481.8 million to $2,421.9 million by April 30, 2027. This increase in debt limit plus the reduction of $150 million allocation for pension, would provide a total unallocated debt of $631.8 million by 2027. Based on the current estimated timing of the debt requirement for capital projects under active consideration, the debt policy limit would deliver enough debt to support the University’s capital needs.

      In response to members’ comments and questions, Mr. Rodgers stated that the sinking fund was ahead of schedule primarily as a result of the recent positive investment results for the sinking fund in the long term capital investment pool; and that there was no significant change in debt structure between 2018-19 and 2020-21.

      This item was presented for information

    2. Status Report on Debt

      The Status Report on Debt to January 31, 2022 was presented for information. Mr. Rodgers noted that the reduction in allocated debt was primarily a result of the UTSC Instructional Centre project, which no longer required debt financing as the project was fully funded from other sources.
  2. Forecast of University Financial Results at April 30, 2022, prepared as of January 19, 2022

    Mr. Rodgers noted that the forecast, which was presented annually to the Board for information, contained high-level projections of the net income and net assets of the University, including operating, ancillary, capital, and restricted funds. Although much of the annual activity, including student enrolment and faculty and staff compensation, were reasonably certain at that point in the year, there were still a number of uncertainties, including the Long-Term Capital Appreciation Pool (LTCAP) annual investment return. He reported net income for the year was projected to be $501 million, assuming a 6.5% investment return rate. A sensitivity analysis showed the impact of varying investment returns for LTCAP on net income and net assets at 1.0%, 3.0%, and 8.0% for the year. It also showed forecasted net income under all four scenarios. Net income was projected to range from $447 million (at 1.0% investment return) to $516 million (at 8.0% investment return). Net assets were projected to range from $8.5 billion (at 1.0% investment return) to $8.8 billion (at 8.0% investment return).

    Mr. Rodgers reported that the positive net income reflected the fact that spending on capital projects was not expensed in-year but rather added to capital assets and depreciated over time. Divisions were also setting aside contributions from current net income as a reserve for future capital project spending.

    This item was presented for information and there were no questions from members.
  3. Pension Plan Annual Financial Report for the Year Ended June 30, 2021

    Mr. Rodgers provided a brief report on the final Pension Plan Annual Financial Report for the Year Ended June 30, 2021 – the report had been approved by the Pension Committee at its meeting on December 9, 2021. He stated that in future years reports on status of the new University Pension Plan [the “UPP”] would be issued directly by UPP and their Board.

    This item was presented for information and there were no questions from members.
  4. Capital Projects Report to December 31, 2021

    Mr. Brian Szuberwood, Interim Executive Director, Capital Projects, Interim Executive Director, Capital Projects presented the Capital Projects Report for the period ending December 31, 2021. The presentation included a comprehensive list of capital projects under construction and in design.

    In response the members’ question, Professor Mabury and Mr. Brian Szuberwood, stated the following:
  • University, like many other large organizations undertaking massive capital projects, continued to experience challenges, such as financial overruns and delays, as a result of the impact of COVID-19 and related staffing impact and supply-chain issues – overall, University faired comparatively well because of contractual obligations and related costs associated with extension in construction times;
  • Robarts Library was essentially complete and expected to open shortly – training for security systems still to be scheduled; and
  • Total Project Cost increases would come back for approval based on provisions of Capital Projects and Planning Policy.
  1. Annual Report: Deferred Maintenance, 2020

    Ron Saporta, Chief Operations Officer, Property Services and Sustainability offered a presentation on the Annual Report on Deferred Maintenance.

    Mr. Saporta stated that in the fiscal year 2020-21, $32.0M was being invested in the deferred maintenance program on the St. George campus. As reported in the 2020 budget report, deferred maintenance funding remained a key budget risk for the institution. The current level of funding for the St. George campus would have to be increased to $61.9M to match the 1.45% average level of investment by our peers in Ontario. He added that the deferred maintenance budget was reviewed on an annual basis through the budget process. For the upcoming budget cycle, the Facilities and Services portfolio on St. George campus had submitted a 10-year budget plan to close the gap that included an additional $2.5M for fiscal 2021-22.

    Mr. Saporta stated that the deferred maintenance liability was significant and would have to continue to be managed strategically into the future. The University’s comprehensive deferred maintenance risk model focused on maintaining buildings to minimize the chance of an unforeseen problem having major consequences to the University’s academic and research mission and operating budget.

    This item was presented for information and there were no questions from members.
  2. University of Toronto Mississauga (UTM) Master Plan

    Professor Scott Mabury introduced the item, speaking to the master planning process as it related to the recently approved Capital Planning and Capital Projects Policy. He explained that the Policy gave significant profile and weight to master plans which set the stage for future capital projects on each of the three campuses

    Professor Alex Gillespie, Vice-President and Principal, spoke to UTM’s academic vision – she noted the significant growth experienced at the UTM campus over the past decade and the resulting increased physical infrastructure (new teaching and research facilities, etc.). Professor Gillespie stated that UTM was poised for a transformational decade and that it was the only comprehensive institution servicing Peel region.

    Ms Anne McIlroy, Principal of Brook McIlroy, (the firm engaged to consult on the plan), then presented the detailed plan. Ms McIlroy began her presentation by stating that the implications of ecology and topography were central to the Master Plan. The Plan reflected UTM’s primary commitment to indigeneity and promised extraordinary research and teaching ability in the future (E.g. Robotics Lab). Ms McIlroy concluded her presentation by showing an architectural rendering representing the comprehensive scope of action of the UTM Master Plan, which ranged from embracing ecology and strengthening community synergies, to enabling Indigenous placemaking and diversifying learning environments.

    This item was presented for information and there were no questions from members.

OPEN SESSION CONSENT AGENDA

On a motion duly moved, seconded, and carried

YOUR BOARD APPROVED

THAT the consent agenda be adopted.

  1. Report of the Previous Meeting

    Report Number 261 of the Business Board, November 24 , 2021, was approved.
  2. Business Arising from the Report of the Previous Meeting

    There was no business arising from the Report of the previous meeting.
  3. S&P Global Ratings Report - University of Toronto (November 22, 2021)

    The report was received for information.
  4. Health and Safety Requirements: (October 1 to December 31, 2021)

    The report was received for information.
  5. Human Resource Policies (minor amendments):
    1. Amendment to the University of Toronto Health and Safety Policy

      On motion duly made, seconded and carried

      IT WAS RESOLVED

      THAT the minor amendments to the University of Toronto Health & Safety Policy be approved, effective February 15, 2022.

    2. Amendments to the Policy with Respect to Workplace Harassment

      On motion duly made, seconded and carried

      IT WAS RESOLVED

      THAT the minor amendments to the Policy with Respect to Workplace Harassment be approved, effective February 15, 2022.

    3. Annual Review of the Policy with Respect to Workplace Violence

      On motion duly made, seconded and carried

      IT WAS RESOLVED

      THAT the University of Toronto Policy with Respect to Workplace Violence, a copy of which is attached to the Memorandum dated January 14, 2022, from Professor Kelly Hannah-Moffat, Vice-President, People Strategy, Equity and Culture, be confirmed in its current form without amendments.
  6. Report 145 of the Audit Committee, December 1, 2021

    Report Number 145 of the Audit Committee dated December 1, 2021 was received for information.
  7. Date of the Next Meeting – Tuesday, March 15, 2022 at 5:00 p.m.

    The Chair advised members that the next meeting would be Tuesday, March 15, 2022 at 5:00 p.m.
  8. Other Business

    There were no items of other business.

THE BOARD MOVED IN CAMERA

  1. In Camera Reports of the Administrative Assessors

    Property Matter
    Professor Scott Mabury provided an update on a property matter.
  2. Collective Agreements and Memorandum of Agreement:
    1. Collective Agreement between the Governing Council of the University of Toronto and the Canadian Union of Public Employees Local 3902, Unit 6 (January 1, 2022 – December 31, 2024)

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Kelly Hannah-Moffat, Vice-President, People Strategy, Equity & Culture, as outlined in the memorandum dated January 11, 2022, regarding the new Collective Agreement between the Governing Council of the University of Toronto and the Canadian Union of Public Employees Local 3902, Unit 6 (January 1, 2022 – December 31, 2024).
    2. Collective Agreement between the University of Toronto and the United Steelworkers, Local 1998 - Casual Unit (July 1, 2020 - June 30, 2023)

      The Collective Agreement between the University of Toronto and the United Steelworkers, Local 1998 - Casual Unit (July 1, 2020 - June 30, 2023), was received by the Board for information.
    3. Tentative Memorandum of Agreement between the University of Toronto and the University of Toronto Faculty Association (UTFA) (July 1, 2020 to June 30, 2023)

      The Tentative Memorandum of Agreement between the University of Toronto and the University of Toronto Faculty Association (UTFA) (July 1, 2020 to June 30, 2023), was received by the Board for information.
  3. Capital Project: Report of the Project Planning Committee for the Retail and Parking Commons at the University of Toronto Scarborough (UTSC)
    1. Financing Requirement

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 24, 2022, regarding the financing of the Retail and Parking Commons at the University of Toronto Scarborough (UTSC), capital project.
    2. Execution of the Project

      On motion duly made, seconded and carried

      YOUR BOARD APPROVED

      The recommendation of Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships, as outlined in the memorandum dated January 24, 2022, regarding the execution of the Retail and Parking Commons at the University of Toronto Scarborough (UTSC), capital project.


The Board returned to open session.


The Chair thanked members for their attendance and participation in the Board meeting.

The meeting adjourned at 6:49 p.m.

February 4, 2022