TDSB and corporation overseeing $20 billion worth of its properties square off over transparency

The corporation that oversees billions of dollars worth of properties owned by the Toronto public school board is scrambling to replace board members after they resigned en masse last week in a row over transparency.

The Toronto District School Board wants more transparency and accountability, while its subsidiary — the Toronto Lands Corporation — wants more independence, but also raised concerns about a lack of transparency.

The resignation of all six citizen board members last Friday comes after the TDSB hired a consultant to review the TLC and implemented recommendations to boost accountability at the corporation, which manages a portfolio of more than 600 properties valued at nearly $20 billion.

“We learned that the TLC was conducting themselves without always seeking direction or approval from the TDSB,” said TDSB Chair Rachel Chernos Lin. “Sometimes, even disregarding or trying to work around policy and other requirements. And this raised some pretty substantial concerns for our board because they oversee roughly $20 billion in assets.”

“There was a lack of transparency and a feeling that there wasn’t accountability, necessarily, to the (TDSB) board.”

According to the TDSB, it didn’t know that the TLC went to the province’s Integrity Commissioner to get an exemption from a law that prohibits publicly funded organizations from retaining paid lobbyists and then hired a firm to lobby the government. That’s just one of the findings from the independent review, which has not been made public and which the Star has not seen.

The Star reached out this week to the six who resigned on Jan. 27, which is when they submitted a letter expressing frustration with the TDSB’s decision to alter the makeup of the TLC board and said they felt disrespected.

In an emailed statement, Brenda Patterson, who was the chair of the TLC board and among those to resign, disagreed with the TDSB’s characterization that they operated without transparency or accountability.

“(We) were committed to advancing and advocating for the modernization of Toronto public schools,” said Patterson, who sent the message to the Star on behalf of all six who resigned. “We provided the TDSB with regular information, updates and decision reports regarding the work of the TLC. Never once was the quantity or quality of that information raised with us.”

A spokesperson for the TLC wouldn’t comment on the issue and directed the Star to the TDSB, saying this doesn’t involve business operations by the corporation, but rather is a matter between the boards of both organizations.

The TDSB, Canada’s largest school board, became the owner of one of the biggest real estate portfolios in the City of Toronto following the amalgamation of seven smaller boards in 1998. The TLC, which was incorporated in 2008, effectively manages all of the TDSB’s real estate and property interests, totalling more than 5,000 acres. Initially it focused on the sale of properties, but its mandate expanded in 2018 to include the handling of all TDSB real estate and land use planning matters.

The work the TLC does is critical, both to the TDSB and the broader community. For instance, if a child-care operator wants to lease space in a TDSB property, or the city wants to lease a school pool, the TLC looks after those arrangements. It also works with development companies to see if they would like to partner with the TDSB and add a school to a new build, like what’s planned along the waterfront where an elementary school is part of the Sugar Wharf Condominiums under construction. Just recently, the TLC set out to sever part of the parking lot at Maplewood High School on Galloway Road, near Lawrence Avenue East, in order to sell it to Gabriel Dumont Non-Profit Homes Inc., which operates a nearby complex that provides affordable housing for Indigenous communities and is looking to expand.

The TLC doesn’t make decisions on its own, but rather makes recommendations to the TDSB’s trustees, who have the final say.

Until recently, the TLC — a wholly owned subsidiary of the TDSB — was governed by an independent 10-member board, comprised of four trustees and six citizens with expertise in areas such as real estate, community use and urban development.

Last summer, the TDSB hired third-party consultant Dentons LLP to conduct a review of the TLC board, looking into areas such as performance, operations, governance practices and accountability. The TDSB commissioned the review over concerns about accountability and transparency, although the board regularly reviews different departments. Chernos Lin said the TLC citizen directors threatened to resign before and during the review but didn’t.

The review led to a report in the fall. Chernos Lin told the Star it raised “serious issues around transparency and accountability,” which was a “significant concern” given the vast real estate portfolio of public assets.

Patterson, however, told the Star that there were “many instances” in which the independent reviewer commended the TLC board for its work.

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According to the TDSB, the review outlined a number of findings. Among them, that the TDSB wasn’t aware the TLC contacted Ontario’s Integrity Commissioner seeking an exemption from the Lobbyist Registration Act — it prohibits publicly funded organizations from retaining paid lobbyists to lobby government — and then retained a firm to lobby the province.

Also without the TDSB’s knowledge, the TLC hired a consulting firm to help it develop a financial reporting system independent from the TDSB. And, the TLC retained law firms and a consultant to explore ways to avoid applying broader public sector executive compensation laws despite multiple warnings and direction from TDSB senior staff to stop, according to the TDSB.

The Star asked Patterson, in a followup email, about these findings but did not hear back before publication.

Recommendations were made by the consultant and TDSB staff to improve accountability. Among them is that two TDSB staff members join the TLC board in March, when the terms of two citizen directors were set to end. That then means the new TLC board would be comprised of four citizen members, four trustees and two TDSB staffers. It’s a short-term change, lasting 18 months, while the TLC board undergoes a transition period and implements recommendations from the review. Then, the original makeup of the board will be restored.

That change appears to have sparked the mass departure. In their resignation letter, obtained by the Star, the six citizen directors say they lost confidence in the TDSB’s support for the TLC board since it altered the configuration of the board. They also said adding the two TDSB staffers wasn’t a recommendation of Dentons, noting they supported the consultant’s suggestions.

“The altered composition of the TLC board does not represent the organization we were pleased to serve and undermines our ability to meet our fiduciary duties to the organization,” they write in the signed letter.

While the TDSB had a right to review their performance, they said it “lacked a fundamental transparency that compromised the results.” They say they didn’t know that TDSB staff “had ongoing concerns” about them, that recommendations of the review weren’t shared with them before being presented to the TDSB board, and, “most importantly,” that the TDSB’s additional recommendations weren’t shared in a timely manner.

“The lack of timely communication and responses to our requests for information, both during the review and at its conclusion, demonstrated a patent disregard and lack of respect for the knowledge and perspectives of the TLC board and specifically, the citizen directors,” they write.

Patterson told the Star via email that the six citizen directors “supported all the recommendations that came out of the review and had begun to implement many of them.” And, they agreed there needs to be better alignment between the two organizations, noting better communication, and clearer direction from the TDSB, including the level of service it expects, will help to better define roles and responsibilities.

“The forward thinking and bold work that was put forward by the (TLC) citizen board members, trustee directors and TLC staff is what is going to get new schools built in Toronto,” said Patterson. “We wish nothing but success for the TDSB and TLC with their modernization agenda.”

Shelley Laskin, who is one of the four TDSB trustees on the TLC board, is “disappointed” by the resignations. But on the other hand, she said, if they don’t want to be part of the change, or see value in improving the working relationships between the TDSB and TLC, then maybe it’s for the best.

“The relationship between the TLC and the TDSB is clear: They are our subsidiary. … And there were some significant issues,” said Laskin, who represents Ward 8 (Eglinton-Lawrence and Toronto-St. Paul’s).

She recalled that former Toronto mayor David Crombie, who was the original chair of the TLC board serving from 2008-2020, often said the two organizations need to work so closely together that there is no light between them.

“We should be working seamlessly together and aligned with each other,” said Laskin, who along with the other three trustees joined the TLC board in November. “Part of the reason for the review is that it wasn’t necessarily happening all the time. And now we need to get back there.”

“Our hope is that with implementing the recommendations we’ll get there. … The staff at the TLC is fantastic and they support our work, so we just need to make sure we have better communication and our strategies are completely aligned because it’s all to support students.”

Given the resignations, the two TDSB staffers — associate directors Stacey Zucker and Leola Pon — have now joined the TLC board, starting earlier than was scheduled for March. A special TLC board meeting was held Thursday night to discuss next steps. A third-party firm will begin a recruitment process looking for four citizen directors to join the board.

“There’s a lot of value in the land and the schools that we have,” said Laskin. “And we have a real responsibility for that as a school board, so we have to make sure that our subsidiary company is also functioning well. … Their work is critically important to the TDSB.”

Isabel Teotonio is a Toronto-based reporter covering education for the Star. Follow her on Twitter: @Izzy74

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