Toronto’s new Investment Board, with a portfolio of over $5.5 billion, has first meeting at city hall

Nov. 14, 2017

By Arianne Robinson

Toronto’s new Investment Board had its first meeting at city hall on Monday. The City of Toronto will be the first municipality in Ontario to operate under Ontario’s new prudent investor standard, set to take effect in 2018.

The purpose of the board is to invest in products that will give the city a higher income generation than the current portfolio.

“Those involved in investments are certainly living in interesting times,” said chair of the board, John Crocker, as he introduced the meeting. “We’re dealing with financial markets, equity markets in particular, that are at all time records. We’re dealing with interest rates that are at or near all time lows [and] inflation that nobody can find. And in this environment we are asked by our client, the citizens of Toronto, the City Council, to find investments that have no risk, low volatility, and will make money… I’m sure this group will be up to that challenge.”

The board consists of Matthew Flynn, Tanya Lai, Sharon Ranson, Mary Robinson, Pamela Steer, and Joe Farag (interim chief financial officer, City of Toronto).

The new Investment Board will not operate as an Ontario corporation but as a city board.

“The portfolio is a little over $5.5 billion in financial assets,” Randy LeClair, a senior investment analyst for the city, told the committee.

During a presentation assessing risk and return from consultant Morneau Shepell’s Benoit Labrosse and the draft investment policy from LeClair, members asked questions.

“On the real assets – maybe this is more directed to the city – would there be a consideration to doing joint partnerships with the city real estate board so that you’re not at odds with some of the investments?” Ranson asked.

“We may be overly biased towards real estate given the fact that the city owns billions of dollars of real estate assets,” Farag said. “There will be opportunities for joint ventures with the new real estate arm that has just been created by the city, or joint opportunities with others such as OMERS [Ontario Municipal Employees Retirement System] or other pension funds.”

Only time will tell whether the board of members will be able to do what it sets out to accomplish, with a number of variable factors at play.

“There’s this theoretical asset mix that comes out of a model like ours, and we end up putting a bit of special sauce on it – based on experience, based on market conditions and so on and so forth – and we come up with something that is more realistic,” Labrosse said during his presentation.

There is also the secret sauce that is the will of council, who represent and advocate for a number of interests, not to mention members of the public able to depute on topics that come to committees at city hall.

One member of the public, Derek Moran (recently mentioned in a Marcus Gee piece in The Globe and Mail) deputized five different times at Monday’s Investment Board meeting, speaking on topics ranging from the committee not being livestreamed in public, to what why he considers the new board unlawful, to his view of the relevant case law.