2019 Draft Rate Supported Operating Budget and 2019 Draft Capital Budget and Forecast

Transcription

1 2019 Draft Rate Supported Operating Budget and 2019 Draft Capital Budget and Forecast Joint meeting of the Engineering and Public Works Committee (PW ) and Finance and Corporate Services Committee (FCS ) January 25, 2019 (FCS )

2 2019 Draft Water and Wastewater Budget at a Glance User Fees and Urban Service Area Charges increase for % Capital Budget for Year Capital Forecast Contributions to Reserves in Year Contribution to Reserves 10-Year Infrastructure Deficit $29.2M $128.1M $8.0M $103.3M ($14.5M) 2

3 Fiscal Impacts at a Glance Increase in Forecast Reserves after 10 years External Debt Repayment in 2019 External Debt Reduction Forecasted over 10 years (principal) Internal Debt Repayment in 2019 Internal Debt Forecasted over 10 years (principal) +$47.9 M $6.0 M ($39 M) $0.9 M +$28 M 3

4 2019 Draft Rate Supported Operating Budget WATER AND WASTEWATER

5 2019 Net Levy by Account Account Category Category 2019 Net Levy Increase/ (Decrease) Category Yr-over-Yr Change % Net Levy Impact Total Expenditures $656, % 5.6% Total Revenue Sources (113,744) 0.7% (1.0%) Net Levy Impact 542, % Assessment Growth (107,202) (0.9%) Net Levy Impact After Growth $435, % 1% levy = $117.6 k Net Levy below levy guideline of 4.4% 5

6 Rate & Property Tax Impact Monthly Impact on Typical Residential Household, as revised (20 cubic metres per month & house assessed at $300,000) Water Services Year-over-Year Increase (Decrease) User Fee $ $ % $ 0.17 Urban Service Area Charge $ $ % $ - Total $ $ % $ 0.17 Year-over-Year Wastewater Services Increase (Decrease) User Fee $ $ % $ (0.29) Urban Service Area Charge $ $ % $ 2.72 Combined Water & Wastewater Services Total $ $ % $ 2.43 Year-over-Year Increase (Decrease) User Fee $ $ % $ (0.12) Urban Service Area Charge $ $ % $ 2.72 Total $ $ % $ 2.60 Reference: FCS Water & Wastewater Treasurer s Report, page 17 6

7 Fixed User Fee: $ 0.07 Volumetric User Fee: (0.19) Urban Service Area Levy: 2.72 Total Monthly Increase: $

8 Historical Review of User Fees and Tax % Increases 8

9 How Do We Compare? 2018 Est. Avg. Household Income Ranking 2018 Est. Avg. Household Income 2018 Residential Water/ Wastewater Costs 200 m Water/ Wastewater as a % of Household Income 2018 Water/ Wastewater Burden Ranking Gravenhurst Low $83,879 $1, % High Huntsville Mid $94,047 $1, % High Bracebridge Mid $92,397 $1, % High Average $102,194 $1, % Median $95,406 $1, % Minimum $408 Maximum $2,090 9

10 Significant Budget Drivers Consumption Levels Water Consumption by Year Decline in consumption levels between 2005 and consumption is projected to be 2.7% above budget consumption target is unchanged at just under 2.67 million cubic metres. Consistent with three year average consumption. Cubic Metres 3,500,000 3,400,000 3,300,000 3,200,000 3,100,000 3,000,000 2,900,000 2,800,000 2,700,000 2,600,000 2,500,000 User Fee Rates decreased by 0.1% Year Reference: FCS Water & Wastewater Treasurer s Report, page 2 10

11 Significant Budget Drivers Total expenses, net of support services, are 2.3% above 2018 Personnel increases = 4.6% or $230k Materials & Supplies decreases = (3.2%) or ($145k) Purchased Services decreases = (3.3%) or ($78k) Finance Charges/Reserves increases = 4.5% or $647k Net Support Services decreases = (0.3%) or ($5k) Local Improvements decreases = (23.4%) or ($32k) 11

12 Service Level Changes 2019 Expenditure Annualized Start Request FTE Impact Impact Date Impact $ $ Addition of one Operator 1-Mar $67,574 $81,089 Addition of two Summer 1-May $26,654 $26,654 Students - Operations Addition of one Summer 1-May $3,488 $3,488 Student - Administration Totals 1.81 $97,716 $111,231 12

13 2019 Draft Water & Wastewater Budget CAPITAL & FORECAST

14 Capital Financing - Water Total 10-year Draft Capital Budget & Forecast is projecting $49.1 million in gross expenditures ( $41.5) The largest source of funding continues to be from the internal reserve funds at $38.7 million ( $ 27.4) Continuing grants is Federal Gas Tax and total $7.5 million ( $10.4) Reference: FCS Water & Wastewater Treasurer s Report, page 18 Development Charges Revenue: $3.0 million in 2019 ( $2.2) Assumed 70% of growth study achieved No shortfalls in development charges revenue assumed in the 10-year forecast 14

15 Water: 2017 TCA Historical Costs Land & Site Improvements $5.9 Distribution $115.9 Treatment $64.4 Machinery & Equipment $33.5 Total Cost $

16 Water Projects 2019 Total Capital $11.5M Replacement/Upgrade/ Rehabilitation of Watermains: $3M HV North End Servicing (Earls Road) $1.4M Water Plant Rehabilitation: $6.7M Fairyview-Huntsville plant $4.8M Mactier, Bala, Port Severn Rehabilitations Muskoka Beach-Gravenhurst ($6.5M 2018) Reservoirs & Towers: $655K Plant Automation & Control (SCADA): $680K 16

17 Capital Financing - Wastewater Total 10-year Draft Capital Budget & Forecast is projecting $79.0 million in gross expenditures ( $94.0M) The projects for the Mountview and Golden Pheasant plants in Huntsville represent $32.3 million of total (total project cost of $41.9 million; $55.6M) Infrastructure Funding Deficit is $14.5 million ( $20.2M) Reference: FCS Water & Wastewater Treasurer s Report, page 22 Internal reserve funds are financing $40.3 million ( $38.7M) from Wastewater capital and Environmental reserves Borrowing from Debt Reduction is $8.1 million to finance Huntsville project ( $7.5M) Federal Gas Tax and OCIF are continuing grants and fund $15.4 million (2018 $26.0M) Development Charges Revenue is $0.7 million ($0.3M in 2018) 17

18 Wastewater Capital Expenditures by Category Scada 2% Repairs & Maintenance 8% Pumping Stations 7% Mountview 41% Plants 16% Replacement - Upgrades 21% Rehabilitation 5% Wastewater: 2017 TCA Historical Costs Land & Site Improvements $9.6 Collection $132.9 Treatment $87.2 Machinery & Equipment $65.4 Total Cost $

19 Wastewater Projects 2019 Total Capital $17.7M Pumping Stations: $2.7M Sewer Replacement/Upgrades/Rehab: $2.5M Wastewater Treatment Plants Rehab: $1M Lagoon Lane Headworks (2018 $6.7M) Mountview/Golden Pheasant: $9.8M (2018 $9.6M) Plant Automation & Control (SCADA): $828K Repairs & Maintenance: $760K 19

20 Cost Reduction Strategies Biosolids Disposal Feasibility Study Lagoon Rationalization Study Management of storm water inflow Management of water distribution system losses Implementation of energy audit recommendations New sewer use by-law and enforcement Innovative technology Tomahawk lining system for sanitary sewer infrastructure Plant automation and control (SCADA/PLC) 20

21 Cost Reduction Strategies con t Departmental Organizational Review Expediting the closure of the Mountview Treatment Plant and expansion of Golden Pheasant in Huntsville Capital cost reduction target for project is $20M Future operational savings 21

22 Cost Reduction Strategies con t Innovative Capital Project Delivery Peer reviews of design Innovative approaches Project Management by District staff, not consultants 22

23 Reserves & Reserve Funds Discretionary and Obligatory Funds Budget Contribution Fund 2018 Budget 2019 Budget Water Operations Water Capital $3,727,265 $3,916,983 Wastewater Operations Wastewater Capital 3,867,649 4,099,708 Total $7,594,914 $8,016, Opening Balance Commitments Transfers In Interest Closing Balance Water Capital $2,679,895 ($5,659,050) $3,916,983 $62,978 $1,000,806 Wastewater Capital 2,744,705 (6,788,000) 4,099,708 64, ,914 Environmental 5,896,414 (7,296,960) 2,647, ,566 1,385,020 OCIF 1,171,135 (2,874,100) 2,663,508 27, ,065 Sustainable Infrastructure 652,228 (1,805,400) 1,832,035 15, ,190 Total $13,144,377 ($24,423,510) $15,159,234 $308,894 $4,188,995 Reference: CES Water & Wastewater Treasurer s Report, page 28 23

24 Reference: CES Water & Wastewater Treasurer s Report, page 30 24

25 Outstanding Debt Forecast $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ External - Water External - Wastewater Internal - Water & Wastewater 25

26 Asset Management at a Glance 2016 Replacement Value Good or Very Good condition Poor or Very Poor condition Annual Funding Shortfall Annual Capital Funding Increase Necessary $1.2 B 82% 9% $18.7 M 5.1% - 6.0% 26

27 Asset Management Plans Asset Management Policy (2019) Asset Management System (2020) Review Levels of Service ( ) In-depth reserve fund analysis Compliance with future regulations Resource assessment 27

28 Ontario Regulation 284/09 The 2019 Draft Water and Wastewater Budget has been prepared excluding: Amortization: Estimated at $5.6 million and $8.6 million for Water and Wastewater, respectively; and Post-employment benefits: nominal With Full Accrual Budgeting: Water has a net surplus of $264k ; and Wastewater has a net surplus of $1.4M Conclusion: contributions to reserves are not sufficient to replace assets at historical values, but are increasing each year 28

29 Service Level Changes 2019 Expenditure Annualized Start Request FTE Impact Impact Date Impact $ $ Addition of one Operator 1-Mar $67,574 $81,089 Addition of two Summer 1-May $26,654 $26,654 Students - Operations Addition of one Summer 1-May $3,488 $3,488 Student - Administration Totals 1.81 $97,716 $111,231 29

30 Questions?

31 RECOMMENDATION THAT the 2019 Report on Excluded Expenses Ontario Regulation 284/09 regarding expenses excluded from the 2019 Draft Water and Wastewater Operating Budget and Capital Budget and Forecast, as included in Report FCS , be approved. 31

32 RECOMMENDATION THAT the 2019 Draft Water and Wastewater Operating Budget and Capital Budget and Forecast as presented in Report FCS , be adopted; AND THAT the 2019 rate structure for water and wastewater services and miscellaneous charges, as included in Report FCS , be adopted and become effective March 1,

33 2019 Draft Rate Supported Budget SOLID WASTE MANAGEMENT

34 2019 Draft Budget at a Glance Average Net Levy increase Capital Budget for Year Capital Forecast Contributions to Reserves in Year Contribution to Reserves 2.0% $6.4 M $26.7 M $3.0 M $34.5M 34

35 2019 Net Levy by Account Category Account Category 2019 Net Levy Increase Department Yr-over-Yr Change % Net Levy Impact Total Expenditures $1,005, % 9.2% Total Revenue Sources (785,678) (17.7%) (7.2%) Net Levy Impact 219, % Assessment Growth (133,300) (1.2%) Net Levy Impact After Growth $86, % 1% levy = $109.7k Net Levy below guideline of 3.0% 35

36 Budget Drivers - Expenditures Personnel = $120,969 Materials & Supplies = $13,314 Purchased Services increase = $798,223 o Increase recycling processing fees = $275.7k o Recycling disposal fees of $93k o Mattress Diversion service level change $208k o Increase curbside collection contract = $118k o Increase remote bin, depot and transfer station lift and haulage contract = $127k o Increase Site Security $79k o o Decrease Consultant ($58k) Decrease leachate haulage = ($38.8k) 36

37 Budget Drivers - Expenditures Finance Charges/Reserves increase = $45,474 o Reserve contribution increase = $51k o Finance charges decrease = ($5.1k) Net Service Charges increase = $22,740 o Fleet increase for additional leased unit and higher fuel costs = $33.5k o Support Services net decrease = ($10.4k) 37

38 Budget Drivers Revenues Revenue increase = $785,678 o Waste Diversion Ontario Grant increase $157k o Uniform rate for residential and commercial fees at $190 per tonne = net increase $298.8k o New Mattress Diversion Program user fee $26 per unit = $195k o Scrap metal increase due to market rates = $71k o MRF waste revenue decrease = $40k 38

39 User Fee Changes Uniform rate for residential and commercial fees at $190 per tonne Residential increase from $135 in 2018 (40.7%) Commercial increase from $175 in 2018 (8.6%) Mixed load fee introduced at $360 per tonne Why Change? Equity between residential and commercial sectors Financial sustainability as fee is full cost recovery Incents separation of loads thereby improving diversion rates and landfill life 39

40 Impact? User Fee Changes Highest fee among municipalities surveyed which ranged $75 to $160 per T Shifts burden from tax levy to people using the landfill 80% of residential tickets would see increase between $2.98 and $8.03 Mixed load fee will apply if more than 20% of load is divertible material 40

41 Service Level Changes 2019 Expenditure Annualized Start Request FTE Impact Impact Date Impact $ $ Director, Solid Waste 1-Apr $81,072 $121,656 Labourer for Mattress 1-Apr $22,061 $22,061 Diversion Addition of one Summer 1-May $3,490 $3,490 Student - Administration Totals 1.81 $106,623 $147,207 41

42 Engineering and Public Works (Proposed Structure) 42

43 Future of Waste Diversion in Ontario Waste-Free Ontario Act 2016 Building the Circular Economy Waste Diversion to 80% by 2050 (25% now) Extended Producer Responsibly (EPR) Zero Waste/Zero Greenhouse Gas Emissions 43

44 Waste Free Ontario Act

45 Extended Producer Responsibly The current Blue Box program is split approximately 50:50 between Municipalities and Producers. Under the new legislation, 100% of costs will be borne by the producers through EPR and they will oversee the program. The Ford Government has signaled support for EPR but has not announced the timing for the transition which was previously set at Municipalities lobbied for an accelerated timeline but were unsuccessful. Despite the uncertainty, many Municipalities have awarded long term contracts for recycling facilities and collection. 45

46 2019 Draft Capital Budget & Forecast 2019 Capital Budget = $6.4 million: o Rosewarne West cell #2 development $3.2M o Rosewarne West maintenance facility - $642k o New Huntsville Transfer Station - $500k o Beiers Transfer Station washroom/lunchroom - $200k o Decommissioning work at the Port Carling landfill - $500k o Decommissioning work at the Housey s Rapids landfill - $350k o Recycling Compactors at Rosewarne - $200k 10-year Capital Forecast = $27.7 million: o Cell development and gas collection, site closures, investment in compactors and transfer stations 46

47 Reference: FCS Solid Waste Management Treasurer s Report, page 11 47

48 District Cost Reduction Strategies Landfill cell geotextile membranes Overall Capital Reduction of $2.6M Centralized composting operations at Rosewarne (green bin organics and wastewater biosolids) Procurement for separate contracts: Curbside collection Bin service Recyclable material processing-under consideration Household hazardous waste Security services 48

49 Cost Reduction Strategies- cont d Increasing the Waste Diversion rate will: Extend the landfill life from 20 to 30 years or more Delay construction of new cells and a future landfill or alternate waste facility Corresponding reduction in capital, Reserve contributions and future closure costs 49

50 Cost Reduction Strategies- cont d Development of a Waste Management Strategy Bag limits, clear bags, mandatory diversion by-law Extending green bin service (IC&I and Residential) Reducing contamination of recyclable materials Bin Sites strategies education, compliance, enforcement and/or elimination Illegal dumping 50

51 Cost Reduction Strategies- cont d Staff driven waste diversion initiatives: Discontinuance of burial of biosolids Mattress diversion program Grinding clean wood - use as landfill cover Landfill cell tarping Increased landfill compaction Grinding of all waste to increase compaction Community Partnerships (Habitat for Humanity ReStore, Diabetes Canada) 51

52 Cost Reduction Strategies- cont d Reduce Landfill Leachate disposal costs by future extension of the sanitary sewer system rather than contracting tanker trucks Purchase compactors to save haulage costs 52

53 2019 Draft Budget Levy Distribution 2019 Draft Solid Waste Budget Levy Distribution Total Cost per Unit Grouping Curbside Noncurbside Disposal/diversion Total Cost 4,433,456 2,033,128 4,723,322 Direct cost Allocation Serviced units plus method overhead Total units Municipality Units Curbside Non- Disposal/ All Units curbside diversion # $ $ # $ $ $ Bracebridge 7,941 1,041, ,933 13, ,978 2,117, Gravenhurst 7, , ,888 12, ,052 1,964, Huntsville 9,522 1,248, ,049 15,688 1,009,213 2,450, Georgian Bay 1, , ,586 8, ,346 1,594, Lake of Bays ,608 8, , , Muskoka Lakes 7, , ,063 15, ,253 2,256, Total 33,806 4,433,456 2,033,128 73,423 4,723,322 11,189, Budget 34,156 4,291,272 1,856,858 73,423 4,822,233 10,970, Levy Incr/ (Decr) (350) 142, ,270 (98,911) 219,

54 $200 Waste Management Cost per Unit $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Bracebridge Gravenhurst Huntsville Georgian Bay Lake of Bays Muskoka Lakes Curbside Non-Curbside Disposal & Diversion Average 54

55 Municipality 2018 versus 2019 Levy distribution 2018 Levy 2019 Draft Levy Increase/(Decrease) from 2018 Levy $ % $ % $ % Bracebridge 2,110, % 2,117, % 6, % Gravenhurst 1,912, % 1,964, % 51, % Huntsville 2,424, % 2,450, % 25, % Georgian Bay 1,495, % 1,594, % 99, % Lake of Bays 803, % 807, % 3, % Muskoka Lakes 2,224, % 2,256, % 32, % Total 10,970, % 11,189, % 219, % Impact to Property Assessed at $300,000 Municipality 2018 $ 2019 Draft $ Annual $ Increase/ (Decrease) Bracebridge (1.80) Gravenhurst Huntsville (0.75) Georgian Bay Lake of Bays (0.45) Muskoka Lakes

56 Ontario Regulation 284/09 The 2019 Draft Solid Waste Management Budget has been prepared excluding: Amortization: estimated at $2.1 million Future landfill closure & post closure costs not recognized: estimated at $1.3M Net deficit with Full Accrual Budgeting is ($290k) Contributions are sufficient Remediation costs for all of the closed landfills are being evaluated 56

57 Service Level Changes 2019 Expenditure Annualized Start Request FTE Impact Impact Date Impact $ $ Director, Solid Waste 1-Apr $81,072 $121,656 Labourer for Mattress 1-Apr $22,061 $22,061 Diversion Addition of one Summer 1-May $3,490 $3,490 Student - Administration Totals 1.81 $106,623 $147,207 57

58 Questions?

59 Recommendation THAT the 2019 Report on Excluded Expenses Ontario Regulation 284/09 regarding expenses excluded from the 2019 Draft Solid Waste Management Operating Budget and Capital Budget, as included in Report FCS , be approved; 59

60 Recommendation THAT the 2019 Draft Solid Waste Management Operating Budget and Capital Budget and Forecast as presented in Report FCS , be adopted; AND THAT the 2019 rate structure for solid waste management services and miscellaneous charges as outlined in Report FCS , be adopted and become effective March 1,