Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The Royal Conservatory of Music has negotiated a deal with the Ontario government that significantly reduces the principal amount owing on an onerous multimillion-dollar loan while still keeping the loan on government ledgers.

Word of the agreement, reached Aug. 26 between the RCM and Infrastructure Ontario, a Crown agency, was announced quietly Friday afternoon. The conservatory had been seeking some form of debt relief from IO for more than three years but it's only been in the past 11 or 12 months that those discussions intensified.

What made the deal a necessity for the RCM was the steady year-by-year hike in its loan payment to IO. While the conservatory never failed to meet its annual obligation, it grew increasingly concerned that stepped-up payments would "challenge" the sustainability of its programs, services and future plans. In 2015 alone, it paid IO $4.5-million against an annual budget of about $46-million – putting "money where we [didn't] want to put it," as RCM president Peter Simon said in a brief interview.

Story continues below advertisement

IO has had the conservatory on its "watch-list" since at least early 2014 while the Auditor-General, in her report for that year, said the RCM had made "aggressive assumptions about donation revenues that have not materialized to date."

The new deal, in effect, supersedes an $83.625-million loan the conservatory obtained from IO in May of 2010, repayable over 20 years, to help meet costs related to construction of the $143.5-million Telus Centre for Performance and Learning. Opened in 2009, the centre includes the acclaimed concert space Koerner Hall plus numerous enhancements and additions to the 135-year-old McMaster Hall, the RCM's downtown home on Bloor St. West since 1963.

According to sources, the principal on the loan before the latest round of negotiations started was $82.4-million. With the Aug. 26 restructuring, that principal has been reduced by $30-million, or 36 per cent, to $52.4-million. Half of the $30-million is coming from an "absorption" by the Ontario government, with the balance, already raised and forwarded, an "upfront contribution" courtesy of RCM donors. Meanwhile, the restructuring gives the conservatory 31.5 years to extinguish the loan.

No details on repayment schedules and interest were provided. (Historically, IO rates have been lower than or comparable to those offered by a typical commercial bank. The RCM's Mr. Simon said the interest charged in the new deal is "better" than what IO had levied.) However, to ensure compliance with the new arrangement, the conservatory has to submit a five-year plan "to demonstrate its capacity to meet the scheduled payments" as well as provide an audited annual statement and pay a government-appointed independent third party "to monitor and provide regular reports on their progress."

The conservatory, which gained its autonomy from the University of Toronto's Faculty of Music in 1991, is not a Crown agency like the Royal Ontario Museum or a transfer-payment recipient like the Art Gallery of Ontario.

But in the spring of 2007, the McGuinty Liberal government, by order-in-council, agreed that the IO loan program, created in 2003 mainly to assist municipalities, could be accessed by the conservatory as part of a larger initiative "to provide infrastructure lending … to not-for-profit sectors that benefit the public." In July that year, the RCM received an unspecified IO loan, to be amortized over 10 years, for the Telus complex. (Later, as plans changed and costs increased, the loan grew and the pay-off period extended to 20 years.)

Mr. Simon said he was "really thrilled" by the restructuring and the support of the Ontario government. "We're able to put money into expansion and the development of new programs and growth," including a "fairly significant investment in making [the] transition to digital." He added that the RCM would soon announce a new chairman of its board of directors, replacing former TD Bank executive Michael Foulkes.

Story continues below advertisement

Tourism, Culture and Sport Minister Eleanor McMahon said in a statement the restructuring agreement recognizes the RCM's stature as "Canada's largest music and arts education institution" and its contributions to Ontario's multibillion-dollar cultural sector. "We are committed to working with its leadership to ensure that it is placed on a sustainable path forward."

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies