Reserves and Reserve Funds Balance Overview

Transcription

1 Page 204

2 Reserves and Reserve Funds Balance Overview OBLIGATORY (1) < > PROJECTED PROJECTED OTHER PLANNED PROJECTED 000's BALANCE CONTRIBUTION INCOME DRAWS BALANCE 31-Dec-14 FROM TAX AND INTEREST (OUTFLOWS) 31-Dec-15 City Services 20,692-35,574 (36,975) 19,291 Parkland 1, (100) 1,433 TOTAL OBLIGATORY 21,792-36,007 (37,075) 20,724 CITY OWNED Capital Asset Renewal and Replacement (2) 47,442 18,924 5,968 (19,303) 53,031 Capital Asset Growth (3) 12,103 8,742 2,430 (14,544) 8,731 Specific Projects and New Initiatives (4) 36,206 14,415 4,203 (16,603) 38,221 Contingencies and Stabilization (5) 20,278 1,997 - (3,750) 18,525 Risk Management and Long Term Planning (6) TOTAL CITY OWNED (EXCLUDING OBLIGATORY) 72,372 2,595 2,183 (3,882) 73, ,400 46,673 14,784 (58,082) 191,776 NOTES: 1) Obligatory Reserve Funds Established to comply with legislation. Contributions and drawdowns are dictated by legislation. Page 205

3 2) Capital Asset Renewal and Replacement Established to provide funding for repair and maintenance of City assets Supports the principle of intergenerational equity. A balance must be maintained to ensure that the proper investment is made now so as to not leave future generations worse than current generation (those who use the asset will pay for the asset). Supports the principle of rationalization of city-owned assets. These reserve funds must be funded to proper levels to ensure cityowned assets do no deteriorate over time. 3) Capital Asset Growth Established to provide funding to new capital initiatives. Also supports the principle of intergenerational equity. Stabilizes the cost of purchasing major capital assets by spreading the cost over multiple years. Supports the principle of rationalization of city-owned assets. The reserve fund must be designed to have funding available when opportunities arise that are to the benefit of the City. 4) Specific Projects and New Initiatives Set up planned savings within the budget to fund projects or expenses either identified at the time the reserve is set-up or after. Allow the City to save for planned or unanticipated projects or expenses that may arise that does not have another funding source. Allow the City to use planned savings for projects that come forward without a funding source. 5) Contingencies/Stabilization Designed to act as cushions against operating budget contingencies, unforeseen events or one-time unanticipated expenses Designed to mitigate large swings in certain expenditures from year to year. These large swings are usually unanticipated during the budget process and are one-time in nature (e.g. they will not be occurring on a year-to-year basis). Allows the City to put aside funding each year for expenditures which only happen every four to five years. 6) Risk Management and Long Term Planning Designed to fund future obligations which are based on calculated estimations. Smooth the impact of potential large one-time claims against the City that arise. Page 206

4 CAPITAL ASSET RENEWAL AND REPLACEMENT OVERVIEW < > PROJECTED PROJECTED OTHER PLANNED PROJECTED 000's BALANCE CONTRIBUTION INCOME DRAWS BALANCE 31-Dec-14 FROM TAX AND INTEREST (OUTFLOWS) 31-Dec-15 Facilities - City 14,745 5, (3,104) 17,967 - Convention Centre 1, (696) 1,311 - Courts Administration Dearness Home (400) Library (670) Golf Courses (150) Parking (300) Material Recovery Sanitary Landfill Site 5,928 2, ,321 Energy Management 2, ,112 Federal Gas Tax 1, ,840 (3,800) 1,558 Social Housing i) Major Repairs 7, ,781 ii) LMHC Major Upgrades 1,354 2, (2,208) 1,390 Public Art Acquisition and Maintenance ,031 Vehicle Replacement - City 5,225 3, (3,786) 5,814 - Fire 2,111 1, (2,895) Police 2,523 1, (1,294) 2,697 TOTAL CAPITAL ASSET RENEWAL AND REPLACEMENT 47,442 18,924 5,968 (19,303) 53,031 Capital Asset Renewal and Replacement reserve funds support property tax supported infrastructure worth $4.2 billion with a current infrastructure gap of $50.2 million, and projected to increase to $405.5 million by Page 207

5 CAPITAL ASSET GROWTH PROJECTED PROJECTED OTHER PLANNED PROJECTED 000's BALANCE CONTRIBUTION INCOME DRAWS BALANCE 31-Dec-14 FROM TAX AND INTEREST (OUTFLOWS) 31-Dec-15 Industrial Oversizing 1, (1,235) 358 Industrial Land 3,303 1,892 1,341 (2,879) 3,657 Industrial DC Incentive 3,000 1, (3,547) 919 Institutional DC Incentive 1,300 3, (3,652) 790 Commercial DC Incentive 1, (824) 1,117 Residential DC Incentive 1,479 1, (2,407) 978 Non-Growth Works Arising from Development Agreements TOTAL CAPITAL ASSET GROWTH ,103 8,742 2,430 (14,544) 8,731 Note: The Projected Contribution from Tax for the Industrial DC Incentive, Institutional DC Incentive, and Residential DC Incentive reserve funds includes an allocation of $2.95 million of 2015 assessment growth funding. This was necessary to support the projected draws from these reserve funds. Background (see additional information under Assessment Growth Business Case #1): These reserve funds were approved by Council on October 14, They were necessary because of changes to the way the City is financing Development Charge (DC) exemptions which was approved with the new Development Charges (DC) By-law on August 4, Page 208

6 Previously, when an industrial or institutional building permit is issued and the developer receives a DC exemption, no transfer is made to the City Services Reserve Fund (CSRF) for the exempted DCs. When an infrastructure project related to the industrial or institutional development is constructed, the growth share of the project is paid for through capital budget contributions (capital projects) rather than the DC funds in the City Services Reserve Fund. The capital budget approach has historically been the City s means of financing its industrial and institutional exemptions. Going forward, all former DC exemptions will be provided through grants under a Community Improvement Plan (CIP). The change results in a more transparent and equitable method, an improved strategic approach to providing incentives, and allows additional flexibility for program management and enhanced monitoring. In addition to Council s DC incentives, the Development Charges Act requires exemptions that must be funded by taxpayer-supported contributions, including buildings owned by a school board; municipal buildings; and, industrial additions <50% (the City extends this exemption to cover all industrial building additions). These newly established reserve funds will be funded annually with the funding previously committed to capital projects and will pay the exempted development charges into the City Services Reserve Fund at the time a building permit is issued. With this new structure, the industrial or institutional growth share of all infrastructure projects related to industrial development going forward will be paid from the City Services Reserve Fund. This is a building permit-based approach and it is consistent with the approach used currently for the Downtown and Old East Village residential DC exemptions. The budgeted draws from these reserve funds are estimates based on forecasted growth. The draws for the industrial and institutional incentives are based on Council-approved Altus growth forecasts. For the Residential DC Incentive, the budgeted draws are estimates based on an average annual apartment growth in the Downtown and Old East Village areas over the past 5 years. It should be noted that these budget figures are estimates the Council-approved direction for the programs requires the City to pay for the DCs for any qualifying development. Therefore, actual cost of the programs will vary, depending on the amount of annual growth in the DC discounted categories Downtown Residential, Industrial, Institutional, and Commercial. Page 209

7 The budgeted draws for all DC Incentives is $14.6 million. Capital funding carried forward from the old financing method was $9.3 million, creating a gap of $5.3 million. The increase is partly a result of an increase in the investment in infrastructure to serve Industrial and Institutional development (both in terms of areas being serviced and cost of growth infrastructure) and an increase in the cost of the program to incent residential development in the Downtown and Old East Village programs. Civic Administration recommended a contribution of $2.95 million from 2015 assessment growth to close the gap, recognizing that a gap of $2.35 million remains. If requests for building permits in 2015 exactly match the growth projections included in the DC Background Study, then the Corporation will not be able to transfer the entire required funding to the DC reserve funds in However, given the amount of budgeted capital funding being carried forward, the lumpy nature of development and slower than anticipated growth due to challenges in the local economy, staff are of the opinion that fully funding contributions to the DC incentive reserve funds for 2015 will not be required. Capital Funding Through Old Financing Method (Carry Forward): $9.30 M Budget Estimate for DC Incentives: $14.60 M Required Contribution to DC Incentive Reserve Funds: $5.30 M 2015 Budget Request Assessment Growth Business Case Funding Request: Contribution Shortfall (Program Funding Risk): $2.35 M $2.95 M According to the 2014 DC By-law (section 26.4) and the proposed program guidelines for the Downtown and Old East Community Improvement Plans, the Corporation can delay funding the DC reserve funds for DC exemptions until funding is available. Development Finance and Financial Planning & Policy will monitor the balances and adjust future year contributions to the DC Incentive reserve funds accordingly. Page 210

8 SPECIFIC PROJECTS AND NEW INITIATIVES OVERVIEW < > PROJECTED PROJECTED OTHER PLANNED PROJECTED 000's BALANCE CONTRIBUTION INCOME DRAWS BALANCE 31-Dec-14 FROM TAX AND INTEREST (OUTFLOWS) 31-Dec-15 Animal Welfare Benefit AODA 1, ,318 Child Care & Early Childhood Development 5, ,761 Civic Investments 6,022 1,099 1,306 (3,917) 4,510 Community Improvement Program - Grant 2, (1,751) 1,355 Community Improvement Program - Loan (400) 751 Social Services 2, ,152 Creative City Economic Development 4,252 8, (6,075) 7,547 Effectiveness, Efficiency and Economy 7,636-1,500 (3,700) 5,436 Home Ownership Housing Support Services Misc. Property Acquisition 1, ,395 New Affordable Housing 1,267 2, (760) 2,557 Technology Services Woodlot Acquisition 2, ,968 TOTAL SPECIFIC PROJECTS AND NEW INITIATIVES 36,206 14,415 4,203 (16,603) 38,221 Page 211

9 PROJECTED RESERVES AND RESERVE FUND BALANCES OBLIGATORY 000's PROJECTED < PROJECTED BALANCE > BALANCE 31-Dec City Services 20,692 19,291 17,110 18,033 15,170 11,374 Parklands 1,100 1,433 1,876 2,230 2,694 5,421 TOTAL OBLIGATORY 21,792 20,724 18,986 20,263 17,864 16,795 CAPITAL ASSET RENEWAL AND REPLACEMENT Facilities - City 14,745 17,967 23,072 28,647 34,845 74,820 - Convention Centre 1,327 1,312 1,812 1,384 1, Courts Administration Dearness Home Library Golf Courses Parking Material Recovery Sanitary Landfill Site 5,928 8,321 10,771 13,438 16,575 22,977 Energy Management 2,057 2,112 2,168 2,225 2,284 2,672 Federal Gas Tax 1,518 1,558 1,599 1,641 1,684 1,971 Social Housing i) Major Repairs 7,087 7,781 8,494 9,226 9,977 14,920 ii) LMHC Upgrades 1,354 1,390 1,427 1,465 1,504 1,759 Public Art Acquisition & Maintenance 910 1,031 1,155 1,282 1,412 2,269 Vehicle Replacement - City 5,225 5,815 5,652 5,860 6,680 3,569 - Fire 2, ,361 1,668 2,237 - Police 2,523 2,697 1,452 1,396 1,368 1,013 TOTAL CAPITAL ASSET RENEWAL AND REPLACEMENT 47,442 53,032 60,061 70,081 81, ,877 Page 212

10 PROJECTED RESERVES AND RESERVE FUND BALANCES 's CAPITAL ASSET GROWTH PROJECTED < PROJECTED BALANCE > BALANCE 31-Dec Industrial Oversizing 1, Industrial Land 3,303 3,657 5,866 7,593 9,366 4,962 Industrial DC Incentive 3, ,054 Institutional DC Incentive 1, ,264 Commericial DC Incentive 1,013 1, Residential DC Incentive 1, ,039 Non-Growth Works Arising from Development Agreements ,026 TOTAL CAPITAL ASSET GROWTH 12,103 8,732 9,597 11,164 12,976 9,625 SPECIFIC PROJECTS AND NEW INITIATIVES Animal Welfare Benefit AODA 1,318 1,318 1, Child Care & Early Childhood Development 5,612 5,761 5,914 6,071 6,232 7,291 Civic Investments 6,022 4,510 3,286 2, ,806 Community Improvement - Grant 2,456 1, ,245 Community Improvement - Loan ,062 1, Social Services 2,096 2,152 2,209 2,268 2,328 2,724 Creative City Economic Development 4,252 7,547 8,956 11,727 13,532 34,926 Effectiveness, Efficiency and Economy 7,636 5,436 6,936 8,436 9,936 11,436 Home Ownership Housing Support Services Misc. Property Acquisition 1,465 2,395 3,350 4,330 5,336 11,959 New Affordable Housing 1,267 2,557 3,881 5,240 6,635 15,817 Technology Services ,556 2,610 3,692 4,535 Woodlot Acquisition 2,633 2,968 3,312 3,665 4,028 6,414 TOTAL SPECIFIC PROJECTS AND NEW INITIATIVES 36,206 38,222 42,960 49,434 55, ,840 GRAND TOTAL CITY OWNED 95,750 99, , , , ,342 Page 213