With the projected opening date for the much-anticipated Student Commons in about a year’s time, the University of Toronto Students’ Union (UTSU) is forecasting approximately $300,000 in operational deficits within the first year of its opening.
The plans for a student-run centre on UTSG has been in the works since 2007, when students voted in favour of implementing a levy to fund the construction of the Student Commons. The location at 100 Devonshire Place, which is currently home to the Goldring Centre for High Performance, was originally chosen for the Student Commons. The site for the Student Commons was later moved to 230 College Street, where the John H. Daniels Faculty of Architecture, Landscape, and Design is currently located.
Eight years after the approval of the levy, the Student Commons Agreement, which defines the terms of the UTSU’s use of the building, received approval from Governing Council in February 2015 and was signed by the union in April 2015.
“So, over a number of years, it was successive years, very collegial, very cooperative discussion, negotiations involving successive student leaders and their staff, various people from the university side, myself, individuals from planning, Sheila Brown, Chief Finance Officer,” said U of T Vice-President University Operations Scott Mabury, describing the process of negotiating the Student Commons agreement.
However, UTSU Vice-President Internal and Services Mathias Memmel, who assumed office this year, believes that the contract was negotiated “too quickly” and thinks that the project constitutes a sizeable financial burden on the union.
The Costs
“The most interesting thing in [the Student Commons Agreement] is the costing of what each party is required to do,” said Memmel.
Under the Student Commons Agreement, the UTSU is required to pay a net-assignable square metre (NASM) cost. The union is charged approximately $200 per square metre of usable space in the building. The money will go towards building maintenance and utilities.
In addition to the NASM costs, the union is also required to pay for a building manager and security services. According to Memmel, “in a normal situation, the university would appoint a building manager.”
Mabury told The Varsity that these aspects of the agreement were supported by the union during discussions with the university.
“We’ll ensure that the building itself functions as it should be doing, but there were a number of things that the students wanted to manage of their own and we were inclined to approve that desire,” he said.
In addition, the UTSU is also required to pay a $200,000 yearly licensing fee for 25 years.
“Something like that is essentially a surcharge on top of rent and what we’re already paying for the use of the space,” said Memmel.
“There’s no service that is provided by the university… for the $200,000 annually.”
Mabury justified the licensing fee and explained that the fee is standard practice for all third-parties occupying a building on campus: “The university owns the ground, the university owns the building, but it’s common to expect some form of license fee for accessing the property. It reflects the fact that it’s not an academic function building going in there.”
Mabury also noted that the fee was non-inflationary and is similar to the agreement the university has with University of Toronto Schools, the independent secondary school that occupies the university’s property on 371 Bloor Street West.
Memmel feels that the union had not done adequate financial planning for this project in previous years: “Essentially, the real incompatibility for us is, to our knowledge, no one has actually sat down and crunched the numbers when it comes to the NASM costs, which the UTSU pays for, as well as the services that we have to provide.”
Memmel continued, “No one has sat down until now to really determine, is this possible and feasible? From our perspective, we’re kind of left with reverse engineering what has been done or not done and then also, we’re stuck with decisions that people have been without having enough information or education to make those decisions.”
Mabury stated that he has never heard of concerns during his discussions with the union. “It’s just more of getting it right,” he said. “How much does the referendum allow, how to make sure we design a building with the architects that meets the space needs for the students to serve as a resource for students at the University of Toronto.”
Managing a deficit
Anticipating that the money from the Student Commons operational levy alone would not be enough to keep the building afloat, a number of UTSU administrations had discussed the idea of generating profit from food services, but did not have a concrete business plan for the building, according to Memmel.
“If we proceed with the current plan, the Student Commons will post a deficit of approximately $300,000 in its first year of operation,” reads a portion of Memmel’s July executive report.
Memmel expressed doubts about the profitability of running food services: “And now we’re left trying to see, does that actually work and make sense? Basically the bottom line is, no, food services can’t actually cover — the building’s cost cannot rest on food services to offset them”
Before Memmel took office, the union began to work with Kaizen, a food consulting agency that has worked on the campus previously. The union has also reached out to Anne Macdonald, Director of Ancillary Services at U of T, and Vice-Provost Students Sandy Welsh for advice.
Mabury recognized that there may be challenges in a business plan for the Student Commons: “That’s not surprising to me in any kind of planning and strategizing about what is wanted in the Student Commons. I would expect those to evolve and become more firm and specific as the date of occupancy gets near and they will iterate to what’s actually deliverable based on the resources they have at hand.”
Memmel also explained that previous UTSU administrations had anticipated small deficits in the initial years of operation of the Student Commons and had set aside $50,000 of the UTSU’s operating budget each year to eventually go towards the operation of the building once it opened. These cash reserves were not officially earmarked to go towards the projects. “It’s one of the things that we’ve sorted out this year is that we’ll actually have cash reserves and we’ll start setting things aside that are for reserves and not for, you know, the money leaf blower,” he said.
Because these cash reserves were not properly differentiated with the rest of the union’s money, they were spent on “a number of unexpected expenses,” according to Memmel. “Obviously, we feel that some of those are unjustified and unsuitable and we’re hoping to reclaim some of those funds.”
The UTSU is currently in litigation against its former Executive Director, Sandra Hudson. The union alleges that in April 2015, Hudson was improperly issued a severance payment totalling nearly a quarter of a million dollars.
“Money that could’ve been used to offset the cost of the Student Commons’s first few years of operation was spent of severance and the end of April 2015,” said Memmel.
The Future
The move-in time for Student Commons is Fall 2017, at which point, the John H. Daniels Faculty of Architecture, Landscape, and Design will move into One Spadina Crescent. The union has struck a Student Commons working group comprising of Memmel, President Jasmine Denike, and Executive Director Tka Pinnock.
Memmel called the state of the Student Commons “a dumpster fire, but one that we’re putting out.” He added that the union plans to continue working with Kaizen and is looking into partnering with “existing facilities and catering operations in the cities, even with the university.”
“Really, the goal is by the end of first semester, we have our operating business plan in place and we know what we have to do to make that building viable,” Memmel continued. “Second semester is basically preparing the organization as a whole to move into that space.”
Mabury expressed optimism for the union’s plans for the building. “The students have been very strategic and smart,” he said. “They are investing in very wisely, I think, in design elements and mechanical systems that are highly efficient that will make that building cheaper to operate going forward than it has been in the past.”
