WATER and WASTEWATER & TREATMENT DRAFT October 30, 2017

Transcription

1 WATER and WASTEWATER & TREATMENT DRAFT October 30, 2017

2 TABLE OF CONTENTS Recommendations... 1 WATER Multi-Year Summary - Water Water Operating Overview Water Staffing Changes Overview Water Capital Overview with Forecasts for Water Capital Forecast Water Multi-Year Reserve & Reserve Fund Overview Reconciliation of Tabled Water to PSAB Financial Statement Multi-Year Amendment Forms 1 Schedule Change and Overall Decreased Costs for Trunk Watermain Valve Chambers Schedule Change to Replace Watermain on Wharncliffe Road Schedule Change of Watermain Replacement on Wonderland Road Schedule Change for Medway-Wonderland Road Trunk Watermains Schedule Change to Watermain Installation on Southdale Road WASTEWATER & TREATMENT Multi-Year Summary - Wastewater & Treatment Wastewater & Treatment Operating Overview Wastewater & Treatment Staffing Changes Overview Wastewater & Treatment Capital Overview with Forecasts for Wastewater & Treatment Capital Forecast Wastewater & Treatment Multi-Year Reserve & Reserve Fund Overview Reconciliation of Tabled Wastewater & Treatment to PSAB Financial Statement Multi-Year Amendment Forms 6 Schedule Change in Elliot-Laidlaw Remediation Works Schedule Change in Dingman Creek Stream Remediation/Reclamation Works... 49

3 RECOMMENDATIONS ALL AMOUNTS REPORTED IN THOUSANDS ($000 S) Water and Wastewater & Treatment Multi-Year a) i. That the following actions be taken with regard to the Water capital budget amendment cases impacting the capital budget, it being noted that financing can be accommodated within the capital plan without impacting the Water rates. A. Changes to 2018 and 2019 of the multi-year budget period, representing a decrease of $14.6 million BE APPROVED, and B. Changes to the forecast period, representing an increase of $14.4 million BE APPROVED in principle. Capital Amendments Case # Description Total Lifecycle Renewal 1 EW Trunk Watermain Valve Chambers Rationale: Timing change to align with Transportation project. (500) (700) 1,015 (185) Source of Financing: Capital Rates 2 EW Wharncliffe Road Watermain Replacement Rationale: Timing change to align with Transportation project. (1,242) 1,242 - Source of Financing: Water Reserve Fund & Federal Gas Tax Growth 3 EW Westmount Pumping Station to Viscount Road High Level Water Reinforcement Rationale: Timing change to complete study work to inform the 65 (1,213) 1, Development Charges Study process. Source of Financing: City Services - Water Levies Reserve Fund 4 EW Medway-Wonderland Road Trunk Watermains Rationale: Timing change to allow for completion of 2019 Development Charges Servicing Studies. Source of Financing: City Services - Water Levies Reserve Fund (1,103) (9,928) 11,031-5 EW Summercrest Southdale High Level Rationale: Timing change to align with Transportation project. Source of Financing: City Services - Water Levies Reserve Fund Total Amendments Total Revenue Total Rate Impact (1,131) 1,131 - (2,669) (11,952) 14,436 (185) 2,669 11,952 (14,436) Note: Capital budget amendments reflect requested investment, it being noted that financing can be accommodated within the capital plan without impacting rates. Page 1

4 ii) That the following Water capital budget adjustments only impacting the forecast period BE APPROVED in principle, it being noted the changes to the forecast represent a decrease of $4.3 million. Description Total EW Springbank Reservoir 1 & 3 Protective Membrane Replacement Rationale: Replacement of the protective membrane as a result of condition assessment study undertaken in EW Meter Replacement Program - Annual Program Rationale: Reduction in the number of water meters to be replaced (4,800) (4,800) each year as a result of extended life expectancy of units. Total Adjustments - - (4,300) (4,300) Total Rate Impact Note: A budget amendment case is not required since these capital project adjustments do not impact the multi-year budget period. b) That the reconciliation of the tabled Water budget to the Public Sector Accounting Board financial statement budget BE RECEIVED for information. c) That, in accordance with section 291(4)(c) of the Municipal Act, 2001 as amended, the Water operating budget reflecting annual rate increases of 3% for the period BE READOPTED with no net change. d) That, in accordance with section 291(4)(c) of the Municipal Act, 2001 as amended, the following actions be taken with respect to the Water capital budget: i) The revised 2018 capital budget BE READOPTED in the amount of $xx; ii) The revised 2019 capital budget BE READOPTED in the amount of $xx; iii) The revised capital forecast BE APPROVED in principle in the amount of $xx. e) That the Water Reserves and Reserve Funds Overview BE APPROVED, it being noted projections are subject to annual review and adjustment. Page 2

5 f) i) That the following actions be taken with regard to the Wastewater & Treatment capital budget amendment cases impacting the capital budget, it being noted that financing can be accommodated within the capital plan without impacting Wastewater & Treatment rates. A. Changes to 2018 and 2019 of the multi-year budget period, representing a decrease of $1.7 million BE APPROVED, and B. Changes to the forecast period, representing an increase of $1.7 million BE APPROVED in principle. Capital Amendments Case # Description Total Lifecycle Renewal ES Elliot-Laidlaw Remediation Works Rationale: Timing change to coordinate with completion of 6 Dingman Creek Environmental Assessment. Source of Financing: Sewage Works Reserve Fund ESSWM-STMRM - Dingman Creek and Other Stream Remediation 7 Rationale: Timing change to coordinate with completion of Dingman Creek Environmental Assessment. Source of Financing: Sewage Works Reserve Fund Total Amendments Total Revenue Total Rate Impact (1,700) 1,700 - (1,796) 1,796 - (3,496) 1,796 1,700-3,496 (1,796) (1,700) Note: Capital budget amendments reflect requested investment, it being noted that financing can be accommodated within the capital plan without impacting rates. ii) That the following Wastewater & Treatment capital budget adjustments only impacting the forecast period BE APPROVED in principle, it being noted that the changes to the forecast represent an increase of $1 million. Capital Amendments Description Total ES Mud Creek East Branch Stormwater Increase Rationale: Revised cost estimates from the Mud Creek Stormwater Environmental Assessment. 1,000 1,000 Total Adjustments - - 1,000 1,000 Total Rate Impact Note: A budget amendment case is not required since these capital project adjustments do not impact the multi-year budget period. g) That the reconciliation of the tabled Wastewater & Treatment budget to the Public Sector Accounting Board financial statement budget BE RECEIVED for information. Page 3

6 h) That, in accordance with section 291(4)(c) of the Municipal Act, 2001 as amended, the Wastewater & Treatment operating budget reflecting annual rate increases of 3% for the period BE READOPTED with no net change. i) That, in accordance with section 291(4)(c) of the Municipal Act, 2001 as amended, the following actions be taken with respect to the Wastewater & Treatment capital budget: i) The revised 2018 capital budget BE READOPTED in the amount of $xx; ii) The revised 2019 capital budget BE READOPTED in the amount of $xx; iii) The revised capital forecast BE APPROVED in principle in the amount of $xx. j) That the Wastewater & Treatment Reserves and Reserve Funds Overview BE APPROVED, it being noted projections are subject to annual review and adjustment. Page 4

7 MULTI-YEAR BUDGET SUMMARY WATER There are no operating budget amendments required for the Water budget as all of the budget pressures have been accommodated through efficiencies in operations or decreased transfers to reserves (Clean Water and Wastewater Fund staffing). There are five (5) capital budget amendments for this service area resulting in a $14.6 million decrease in the approved budget and a $10.1 million increase to the capital forecast adopted in the capital budget. These budget amendments are detailed beginning on page 21. In 2017, Civic Administration successfully applied for funding under the Clean Water and Wastewater Fund (CWWF) providing additional funding in the amount of $5.2 million towards water infrastructure. These previously approved budget changes are reflected in this document. Applications for Phase 2 of the program are anticipated in the fourth quarter of Details of projects eligible for Phase 2 funding have not yet been made available; therefore, the 2018 budget update does not include the impact of Phase 2 of the CWWF program. Phase 2 of the CWWF will substantially change the capital program (the 10 year forecast, the regulatory Financing Plan, and 20 year infrastructure plan). These plans and forecasts will require updating after the Phase 2 funding program is understood, applied for and approved in The capital program changes due to CWWF will also impact future operating budgets. Phase 1 of CWWF, totaling $41.4 million, is being managed as priority work, delaying other priorities. Hiring is currently underway for the new positions approved in second quarter of 2017 to respond to the long-term nature of the program and to address near-term succession planning challenges. Rebuilding capacity for the future, meeting the needs of the Rapid Transit program and responding to new technologies introduced through the infrastructure program will also be considered. Page 5

8 WATER OPERATING BUDGET OVERVIEW 2018 ANNUAL BUDGET UPDATE ($000 s) 2018 Update Summary Impact on Rates Net ($000's) Approved % Increase From Rates 3.0% 3.0% 3.0% 3.0% 3.0% $ 11 Approved Net 1 73,687 75,780 77,932 79,896 Cumulative Amendment $ - Revised Net 73,687 75,780 77,932 79,896 Incremental Net Increase/ (Decrease) Revised % Increase From Rates 3.0% 3.0% 3.0% 3.0% 3.0% $ 11 Subject to rounding Notes: 1) Amounts reported in the Approved Net include housekeeping budget adjustments. 2) Based on residential consumption impact of 165.4m 3 Average Annual % Avg. Annual Rate Payer Impact 2 SERVICE GROUPING Approved Net Amended Net 2019 Amended Net Engineering 7,599 1,748 1,847 2,290 2,293 8, Water Operations 57,160 13,771 14,308 14,620 14,841 57, Purchase of Water 93,607 22,608 23,202 23,684 24,113 93,607 0 General Administration 11,855 2,728 2,662 2,913 3,138 11,441 (414) Billings & Customer Service 10,379 2,514 2,564 2,618 2,673 10,369 (10) Financial Expenses 126,695 30,318 31,197 31,807 32, ,160 (535) WATER RATE SUPPORTED BUDGET 307,295 73,687 75,780 77,932 79, ,295 - Subject to rounding Note: 1) Amounts reported include housekeeping budget adjustments Approved Net Approved Net 1 Annual Update Revised Net Net Inc/ (Dec) Page 6

9 WATER STAFFING CHANGES OVERVIEW 2018 ANNUAL BUDGET UPDATE Full-Time Employees (FT) Full-Time Equivalents (FTE) Staffing Changes Total Approved Staffing Adjustment CWWF Staffing 2 Rationale: Staff resourcing to meet the demands of the Clean Water and Wastewater (CWWF) program as approved by Council, June 13, Cumulative Adjustment Revised Total Staffing Incremental Increase/ (Decrease) Notes: 1) Total Approved Staffing numbers include positions approved as part of the multi-year budget. 2) One full time (FT) position will be involved in planning and implementing Water and Wastewater & Treatment projects; the FTE of this position will be shared between Water (30%) and Wastewater & Treatment (70%). The largest pressure facing the Water Operating budget is the additional resourcing approved on June 13, 2017 to undertake the work required under the Clean Water and Wastewater Fund (CWWF) program. This increase to staff costs ($684 thousand and $561 thousand respectively) is being funded through the decreased reserve and reserve fund requirements in the future because of the 75% funding provided for capital works. Offsetting these increases are reductions in costs in three main areas, insurance premiums, utility costs (Hydro and Natural Gas based on 2017 estimates), and Financial Expenses. The change in Financial Expenses is primarily in transfers to reserves and reserve funds with annual contributions being reduced by $507 thousand in 2018 and $498 thousand in 2019 due to decreased future reserve and reserve fund requirements as a result of CWWF program funding. Page 7

10 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Capital Summary ($000's) Multi-Year Total Forecast Capital Plan Total Approved 42,564 40,778 35,348 41, , , ,321 Total Revised (submitted October 30, 2017) 42,564 40,778 32,679 29, , , ,836 Total Capital Expense Increase/ (Decrease) (2,669) (11,952) (14,621) 10,136 (4,485) Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) ,381 1,881 2,743 4,624 Other (O) Non-rate Supported (NRS) - - 2,169 10,571 12,740 (12,879) (139) Total Revenue Increase/ (Decrease) - - 2,669 11,952 14,621 (10,136) 4,485 Net Rate Impact Subject to rounding Note: 1) Includes budget amendments 1-5 supported by budget amendment cases and budget adjustments that do not require a budget amendment case since there is no impact to Page 8

11 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Lifecycle Renewal Capital ($000's) Multi-Year Total Forecast Capital Plan Lifecycle Renewal Approved 37,701 35,019 30,683 28, , , ,425 Lifecycle Renewal Revised 37,701 35,019 30,183 26, , , ,940 Increase/ (Decrease) - - (500) (1,942) (2,442) (2,043) (4,485) Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) 500 1,381 1,881 2,743 4,624 Other (O) Non-rate Supported (NRS) (700) (139) Total Revenue ,942 2,442 2,043 4,485 Net Rate Impact Amendments Multi-Year Amendments Amendment Case #1 Trunk Watermain Valve Chambers Rationale: Timing change to align with Transportation project. EW3577 Sunningdale Road (Richmond Street to Adelaide Street) EW3708 Trunk Watermain Valve Chambers (500) (700) (1,200) 900 (300) Source of Financing: Water Reserve Fund RF RF RF Amendment Case #2 EW3674 Wharncliffe Road Watermain Replacement Rationale: Timing change to align with Transportation project. (1,242) (1,242) 1,242 - Source of Financing: Water Reserve Fund & Non-rate Supported RF, NRS RF, NRS Total Amendments (Inc/ (Dec)) - - (500) (1,942) (2,442) 2,257 (185) Amendments - Business Cases Not Required (Inc/ (Dec)) (4,300) (4,300) Total Lifecycle Renewal Amendments (Inc/ (Dec)) - - (500) (1,942) (2,442) (2,043) (4,485) Page 9

12 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Lifecycle Renewal Capital ($000's) (continued) Amendments (Business Cases Not Required) Total EW1627 Meter Replacement Program - Annual Program Rationale: Reduction in Water Meter Replacement Program due to (800) (800) (800) (800) (800) (800) (4,800) extended life of new water meter. Source of Financing: Water Reserve Fund RF RF RF RF RF RF EW3583 Springbank Reservoir 1 & 3 Protective Membrane Replacement Rationale: New project to replace the protective membrane on the roof of Springbank Reservoir Cells 1 & 3. Source of Financing: Water Reserve Fund RF Total Lifecycle Renewal Amendments (Inc/ (Dec)) (800) (300) (800) (800) (800) (800) (4,300) Page 10

13 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Growth Capital ($000's) Multi-Year Total Forecast Capital Plan Growth Approved 3,443 4,472 3,325 12,483 23,723 30,426 54,149 Growth Revised 3,443 4,472 1,156 2,473 11,544 42,605 54,149 Increase/ (Decrease) - - (2,169) (10,010) (12,179) 12,179 - Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) Other (O) Non-rate Supported (NRS) 2,169 10,010 12,179 (12,179) - Total Revenue - - 2,169 10,010 12,179 (12,179) - Net Rate Impact Multi-Year Amendments Amendment Case #3 Amendments EW3658 Westmount Pumping Station to Viscount Road High Level Water Reinforcement Rationale: Timing change to complete study work to inform the 65 (1,213) (1,148) 1, Development Charges Study process. Source of Financing: City Services - Water Levies Reserve Fund NRS NRS NRS Amendment Case #4 EW3692 Medway-Wonderland Road Trunk Watermains Rationale: Timing change to allow for completion of 2019 (1,103) (9,928) (11,031) 11,031 - Development Charges Servicing Studies. Source of Financing: City Services - Water Levies Reserve Fund NRS NRS NRS Amendment Case #5 EW3675 Summercrest Southdale High Level Rationale: Timing change to align with Transportation project. Source of Financing: City Services - Water Levies Reserve Fund NRS NRS ` (1,131) 1, Total Amendments (Inc/ (Dec)) - - (2,169) (10,010) (12,179) 12,179 - Total Growth Amendments (Inc/ (Dec)) - - (2,169) (10,010) (12,179) 12,179 - Page 11

14 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Service Improvement Capital ($000's) Multi-Year Total Forecast Capital Plan Service Improvement Approved 1,420 1,287 1, ,097 4,650 8,747 Service Improvement Revised 1,420 1,287 1, ,097 4,650 8,747 Increase/(Decrease) Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) Other (O) Non-rate Supported (NRS) Total Revenue Net Rate Impact Page 12

15 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) CAPITAL BUDGET BY CLASSIFICATION Classification 2016 Approved 2017 Approved Annual Update 2018 Amended 2019 Amended Revised Increase/ (Decrease) Revised Forecast Increase/ (Decrease) Total Revised Ten Year Plan Lifecycle Renewal 37,701 35,019 30,183 26, ,661 (2,442) 182,279 (2,043) 311,940 Growth 3,443 4,472 1,156 2,473 11,544 (12,179) 42,605 12,179 54,149 Service Improvement 1,420 1,287 1, ,097-4,650-8,747 Total Expenditures ,564 40,778 32,679 29, ,302 (14,621) 229,534 10, ,836 Subject to rounding Notes: 1) Amounts reported in the Capital include housekeeping budget adjustments. 2) The Capital includes Non-TCA expenditures that will not result in the creation of a tangible asset (having physical substance). Non-TCA expenditures are reported annually through the Financial Statement reporting process. 3) Amounts reported include budget amendments 1-5. Page 13

16 WATER CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) CAPITAL BUDGET BY SOURCE OF FINANCING Source of Financing 2016 Approved 2017 Approved Annual Update 2018 Amended 2019 Amended Revised Increase/ (Decrease) Revised Forecast Increase/ (Decrease) Total Revised Ten Year Plan Rate Supported Capital Rate 18,823 19,764 20,000 20,100 78, , ,687 Debenture Reserve Fund 18,940 13,285 8,958 5,563 46,746 (1,881) 51,282 (2,743) 98,028 Other Sub-total Rate Supported 37,763 33,049 28,958 25, ,433 (1,881) 184,282 (2,743) 309,715 Non-Rate Supported Debenture Reserve Fund 2,907 2,438 1,876 1,957 9,178 (12,179) 34,704 12,179 43,882 Federal Grants 1,634 3,564 1,425 1,661 8,284 (561) 8, ,712 Provincial Grants - 1, , ,727 Senior Government Other ,120-2,800 Sub-total Non-Rate Supported 4,801 7,729 3,721 3,618 19,869 (12,740) 45,252 12,879 65,121 Total Sources of Financing ,564 40,778 32,679 29, ,302 (14,621) 229,534 10, ,836 Subject to rounding Notes: 1) Amounts reported in the Capital include housekeeping budget adjustments. 2) Amounts reported include budget amendments 1-5. Page 14

17 WATER CAPITAL BUDGET FORECAST 2018 ANNUAL BUDGET UPDATE ($000 s) Classification / Source of Financing 2026 Forecast 2027 Forecast Rolling Capital Plan CAPITAL BUDGET BY CLASSIFICATION Lifecycle Renewal 28,126 27, ,479 Growth 3, ,708 Service Improvement ,060 Total Expenditures 32,621 28, ,247 CAPITAL BUDGET BY SOURCE OF FINANCING Rate Supported Capital Rate 23,000 23, ,100 Debenture Reserve Fund 4,917 2,987 73,707 Other Sub-total Rate Supported 27,917 25, ,807 Non-Rate Supported Debenture Reserve Fund 3, ,313 Federal Grants 1,108 1,545 14,167 Provincial Grants Senior Government Other 420-2,960 Sub-total Non-Rate Supported 4,704 2,145 59,440 Total Sources of Financing 32,621 28, ,247 Subject to rounding Page 15

18 WATER CAPITAL BUDGET FORECAST 2018 ANNUAL BUDGET UPDATE ($000 s) The following section highlights major capital works contained within the periods of the 10 year rolling capital plan: Major Capital Works In Forecast 2027 Forecast LIFECYCLE RENEWAL EW Water Infrastructure Lifecycle Renewal 12,000 12,405 EW Main Rehabilitation 6,173 6,173 EW Main Replacement with Major Roadworks 2,800 2,800 EW Downtown Watermain Replacement 108 1,545 EW Meter Replacement Program 1,000 1,000 EW Burbrook Watermain Upgrade Phase II 1,000 - GROWTH EW Dingman-Wonderland Feeder Watermain A20 Phase II 2,576 - SERVICE IMPROVEMENT EW Watermain Extensions Page 16

19 WATER MULTI-YEAR BUDGET RESERVE & RESERVE FUND OVERVIEW 2018 ANNUAL BUDGET UPDATE ($000 s) Reserves & Reserve Funds Plan Forecast Revised Projected Balance Water Reserve Fund 43,381 15,087 17,070 23,438 26,666 30,701 31,976 25,854 25,894 30,777 City Services - Water Levies Reserve Fund 16,426 10,107 12,670 14,469 13,672 2,562 5,534 8,096 5,336 2,443 Industrial Oversizing Water Reserve Fund 1, Industrial DC Incentive Program Reserve Fund 5,020 6,518 6,231 5,448 4,651 3,840 3,014 2,491 1,959 1,417 Lead Service Replacement Program Reserve Fund Water Customer Assistance Reserve Fund Efficiency, Effectiveness & Economy Reserve - Water 1,247 1,326 1,326 1,326 1,326 1,326 1,326 1,326 1,326 1,326 Total Water Revised Projected Balance 68,355 33,588 37,869 45,273 46,926 39,059 42,498 38,431 35,195 36,660 Subject to rounding Page 17

20 RECONCILIATION OF TABLED WATER BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET Ontario municipalities must adhere to Public Sector Accounting Board (PSAB) accounting standards and reporting requirements, however, with the introduction of PS1200 in 2009, the Province of Ontario enacted a regulation, Ontario Regulation 284/09, allowing for certain items to be excluded from their budgets, as long as it was disclosed. Typical PSAB items, such as costs related to amortization expense, postemployment benefit expense and solid waste landfill closure and post-closure expense can be excluded, however, the regulation does require that the municipality report to Council on the impact of these excluded costs prior to budget approval. The regulation requires that the report contain information regarding: 1. An estimate of the change in the accumulated surplus of the municipality to the end of the year resulting from the exclusion of any of those expenses; and 2. An analysis of the estimated impact of the exclusion of any of those expenses on the future tangible capital asset funding requirements of the municipality or local board. London s 2018 and 2019 draft Water operating budget as tabled, excludes the following expenses: 1. Expenses for the amortization of tangible capital assets, estimated to be $14.4 million for 2018 and $15.0 million for 2019, are excluded. The budget does include reserve fund contributions of $11.3 million for 2018 and $12.2 million for 2019 and pay as you go contributions of $20.1 million for 2018 and $20.2 million for 2019 for capital asset additions. 2. The budget does not contain the current year s post-employment benefit expense for early retirement and accrued sick leave, estimated to total $135 thousand for 2018 and $136 thousand for 2019, for employees that are eligible for these benefits. The Corporation's consolidated liability as at December 31, 2016 was $149.2 million. Reserve fund balances as of December 31, 2016 of $18.7 million are available to offset this obligation. 3. The City also makes contributions to an additional corporate reserve to offset the liabilities created from the post-employment expenses (point 2 above) and landfill closure and post-closure expenses depending upon generated surpluses, including personnel cost savings. The balance in this corporate reserve as of December 31, 2016 was $62.5 million. If the above items were included in the 2018 and 2019 budgets, the projected annual PSAB surplus would decrease. Table 1 on the following page shows the 2018 and 2019 draft Water operating budgets and the 2017 approved revised budget and Table 2 reconciles the surplus in PSAB format to the tabled Water operating budgets. Page 18

21 RECONCILIATION OF TABLED WATER BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET ($000 s) Table Revised 2018 Draft 2019 Draft REVENUES Property Tax Property Tax - Proposed budget increase Government Grants & Subsidies User Fees 75,626 77,778 79,742 Municipal Revenues - Other Municipal Revenues - Transfers from Capital Municipal Revenues - Transfers from Reserves and Reserve Funds Total Revenues 75,780 77,932 79,896 EXPENSES Personnel Costs 9,897 10,804 9,754 Administrative Expenses 2,375 2,442 2,510 Financial Expenses - Other Financial Expenses - Interest & Discount on Long-term Debt Financial Expenses - Debt Principal Repayments Financial Expenses - Transfers to Reserves and Reserve Funds 10,937 11,311 12,242 Financial Expenses - Transfers to Capital 19,854 20,090 20,190 Purchased Services 3,051 3,178 3,131 Materials & Supplies 25,740 26,302 26,818 Vehicle & Equipment 1,908 1,937 1,969 Transfers Other Expenses 2,704 2,868 2,927 Recovered Expenses (1,163) (1,480) (125) Total Expenses 75,780 77,932 79,896 NET SURPLUS (DEFICIT) Page 19

22 RECONCILIATION OF TABLED WATER BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET ($000 s) Table Revised 2018 Draft 2019 Draft PROJECTED NET PSAB SURPLUS 21,447 21,666 22,260 PSAB REPORTING REQUIREMENTS: Addback to revenues: Transfers from Capital Transfers from Reserves and Reserve Funds Deduct from expenses: Transfers to Reserves and Reserve Funds (10,937) (11,311) (12,242) Transfers to Capital (19,854) (20,090) (20,190) Debt principal repayments (338) (349) (360) PSAB adjustments: Capital program funding earned in year (1) (3,566) (1,845) (1,661) Capital projects not resulting in tangible capital assets (2) 5,383 3,088 2,767 Amortization (3) 13,789 14,390 15,016 Developer contributions of assumed tangible capital assets (4) (6,229) (5,824) (5,824) Loss on disposal of tangible capital assets (5) Obligatory reserve fund deferred revenue earned in year - DC, Gas Tax (6) (611) (681) (724) Employee future benefit liability (7) NET SURPLUS (DEFICIT) PER DRAFT BUDGET Footnotes and Assumptions 1) Represents capital revenue such as provincial and federal grants and other contributions. Does not include debenture financing, transfers from operating or reserve funds. 2) For PSAB purposes, expenses not considered to be part of the cost of a tangible capital asset are expensed as operating expenses although funded through capital. Estimated based on 9.45% of capital expenditure budget, based on 2016 actuals. 3) Represents the annual writedown of the tangible capital assets over the useful life of the asset. Estimated 4.35% annual increase based on actuals. 4) Contributed tangible capital assets are tangible capital assets that become the ownership of the City when a subdivision is assumed by the City. These assets are recognized at fair market value during the year of assumption. Estimate based on 6 year average of actuals. 5) When an asset is replaced prior to the end of its useful life, an adjustment must be made to expense the remaining book value. Amount fluctuates from year to year. Estimate based on 5 year average of actuals from ) Transactions recorded directly to reserve funds must be accounted for through the operating or capital fund. This includes recognition of development charge levies and federal gas tax earned in the year. 7) Represents the annual change in the estimated future costs of employee benefits. Estimate based on 8 year average. Page 20

23 AMENDMENT FORM CASE # 1 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE AND OVERALL DECREASED COSTS FOR TRUNK WATERMAIN VALVE CHAMBERS WATER SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $(500) $(700) $(1,200) Revenue $0 $0 $500 $700 $1,200 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 21

24 AMENDMENT 1: SCHEDULE CHANGE TO ALIGN WITH TRANSPORTATION PROJECT TIMING AND OVERALL COST REDUCTION Capital Table ($000 s) EW Sunningdale Road (Richmond Street to Adelaide Street) Expenditure Approved ,235 Cumulative Amendment Revised 0 0 1,350 Source of Financing Approved (1,235) Capital Rates Debenture Reserve Fund (115) Other Non Rate Supported Revised 0 0 (1,350) 2026 Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments Page 22

25 Capital Table ($000 s) EW3708 Trunk Watermain Valve Chambers Expenditure Approved Cumulative Amendment (500) (700) 900 Revised Source of Financing Approved 0 0 (500) (800) 0 Capital Rates (900) Debenture Reserve Fund Other Non Rate Supported Revised 0 (100) (900) Amendments 2026 Capital Gross Expenditure: $ Capital Gross Expenditure: $0 What is the reason(s) for the budget amendment(s)? These projects will be carried out in conjunction with Transportation projects TS Sunningdale Road widening from Richmond Street to Wonderland Road (2020), TS Sunningdale Road from Bluebell to Richmond (2022) and TS Sunningdale Road from Bluebell to Adelaide (2025). Project EW3577 is now scheduled as two phases rather than a single project in order to align it with the recommended phasing of the Transportation work. The effects of these amendments will reduce total project costs by $185 thousand; project costs have been updated to reflect anticipated needs based on the Sunningdale Road Improvements Environmental Assessment. Page 23

26 AMENDMENT FORM CASE # 2 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE TO REPLACE WATERMAIN ON WHARNCLIFFE ROAD WATER SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $0 $(1,242) $(1,242) Revenue $0 $0 $0 $1,242 $1,242 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 24

27 AMENDMENT 1: CONSTRUCTION SCHEDULE CHANGE TO ALIGN WITH TRANSPORTATION TIMING Capital Table ($000 s) EW Wharncliffe Road Watermain Expenditure Replacement Approved ,542 0 Cumulative Amendment 0 (1,242) 1,242 Revised ,242 Source of Financing Approved (1,542) 0 Capital Rates Debenture Reserve Fund 681 (542) Other Non Rate Supported 561 (700) Revised 0 (300) (1,242) 2026 Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments What is the reason(s) for the budget amendment(s)? Timing change to have the construction for this project done in conjunction with Transportation project TS1355 in the same area. Aligning the project schedules is beneficial to the City by reducing overall costs and causing less disruption to the public with lane/road closures. The reduction in these measures greatly outweighs the very small risk that the watermain breaks during The current project budget assumes efficiencies of completing the Watermain Replacement at the same time as the Transportation project. Completing the project in advance of Transportation would cause the project budget to approximately double. Page 25

28 AMENDMENT FORM CASE # 3 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE OF WATERMAIN REPLACEMENT ON WONDERLAND ROAD WATER SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $65 $(1,213) $(1,148) Revenue $0 $0 $(65) $1,213 $1,148 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 26

29 AMENDMENT 1: SCHEDULE CHANGE BASED ON ALIGNING STUDY WITH THE 2019 DEVELOPMENT CHARGES STUDY Capital Table ($000 s) EW Westmount Pumping Station to Expenditure Viscount Road High Level Water Reinforcement (3000) Approved ,213 0 Cumulative Amendment 65 (1,213) 1,148 Revised ,148 Source of Financing Approved 0 0 (135) (1,213) 0 Capital Rates Debenture Reserve Fund Other Non Rate Supported (65) 1,213 (1,148) Revised (200) 0 1, Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments What is the reason(s) for the budget amendment(s)? It is proposed that funding be allocated in 2018 in order to carry out a High Level Master Plan Update, or an update of infrastructure needs in the High Level Water Distribution system. This information will be used as supporting information for the 2019 Development Charges (DC) Background Study. It is anticipated that the timing of the works related to this project will be updated based on the outcomes of the High Level Master Plan Update, forecast to be completed in Page 27

30 AMENDMENT FORM CASE # 4 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE FOR MEDWAY-WONDERLAND ROAD TRUNK WATERMAINS WATER SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $(1,103) $(9,928) $(11,031) Revenue $0 $0 $1,103 $9,928 $11,031 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 28

31 AMENDMENT 1: CONSTRUCTION SCHEDULE CHANGE FOR WATERMAINS FROM ARVA PUMPING STATION TO NORTH LONDON AREA Capital Table ($000 s) EW Medway - Wonderland Road Trunk Watermains Expenditure Approved 0 0 1,103 9,928 0 Cumulative Amendment (1,103) (9,928) 11,031 Revised ,031 Source of Financing Approved 0 0 (1,103) (9,928) 0 Capital Rates Debenture Reserve Fund Other Non Rate Supported 1,103 9,928 (11,031) Revised 0 0 (11,031) 2026 Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments What is the reason(s) for the budget amendment(s)? The initiation of this project is being deferred by two years to follow the completion of the 2019 Development Charges (DC) Charges Background study as it is anticipated that the timing of this project will be updated based on the outcomes of the study. Page 29

32 AMENDMENT FORM CASE # 5 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE TO WATERMAIN INSTALLATION ON SOUTHDALE ROAD WATER SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $(1,131) $1,131 $0 Revenue $0 $0 $1,131 $(1,131) $0 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 30

33 AMENDMENT 1: CONSTRUCTION SCHEDULE CHANGE TO ALIGN WITH TRANSPORTATION PROJECT TIMING Capital Table ($000 s) EW Summercrest Southdale High Level Expenditure (2004) Approved 0 0 1, Cumulative Amendment (1,131) 1,131 0 Revised 0 1,131 0 Source of Financing Approved 0 0 (1,131) 0 0 Capital Rates Debenture Reserve Fund Other Non Rate Supported 1,131 (1,131) Revised 0 (1,131) Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments What is the reason(s) for the budget amendment(s)? This project will be carried out in conjunction with transportation project TS1407 to upgrade the road on Southdale Road between Wickerson Road and Bramblewood Place, for which the Environmental Assessment is currently underway. The timing of the Water Works needs to correspond to the most current status of the Transportation project; aligning the project schedules is beneficial to the City by causing less interruption for road users. Page 31

34 MULTI-YEAR BUDGET SUMMARY WASTEWATER & TREATMENT There are no operating budget amendments required for the Wastewater & Treatment budget as all of the budget pressures have been accommodated through efficiencies in operating areas or decreased transfer to reserves & reserve funds (Clean Water and Wastewater Fund staffing). There are two (2) capital budget amendments for this service area resulting in a $1.7 million decrease in the approved budget. These budget amendments are detailed beginning on page 47. There is also a $2.7 million increase to the capital forecast adopted in the approved budget. In 2017, Civic Administration successfully applied for funding under the Clean Water and Wastewater Fund (CWWF) providing additional funding in the amount of $25.6 million towards Wastewater & Treatment infrastructure. These previously approved budget changes are reflected in this document. Applications for Phase 2 of the program are anticipated in the fourth quarter of 2017 and will include the funding required to undertake the Lake Erie phosphorus reduction Domestic Action Plan s municipal actions for the City of London. Details of projects eligible for Phase 2 funding have not yet been made available; therefore, the 2018 budget update does not include the impact of Phase 2 of the CWWF program. Phase 2 of the CWWF will substantially change the capital program (the 10 year forecast, the regulatory Financing Plan and 20 year infrastructure plan). These plans and forecasts will require updating after the Phase 2 funding program is understood, applied for and approved in The capital program changes due to CWWF will also impact future operating budgets. Phase 1 of CWWF, totaling $41.4 million, is being managed as priority work, delaying other priorities. Hiring is currently underway for the new positions approved in the second quarter of 2017 to respond to the long-term nature of the program and to address near-term succession planning challenges. Rebuilding capacity for the future, meeting the needs of the Rapid Transit program and responding to new technologies introduced through the infrastructure program will also be considered. Page 32

35 WASTEWATER & TREATMENT OPERATING BUDGET OVERVIEW 2018 ANNUAL BUDGET UPDATE ($000 s) 2018 Update Summary Impact on Rates Approved % Increase From Rates 3.0% 3.0% 3.0% 3.0% 3.0% $ 14 Approved Net 1 89,720 92,525 95,415 98,182 Cumulative Amendment $ - Revised Net 89,720 92,525 95,415 98,182 Incremental Net Increase/ (Decrease) Revised % Increase From Rates 3.0% 3.0% 3.0% 3.0% 3.0% $ 14 Subject to rounding Notes: Net ($000's) 1) Amounts reported in the Approved Net include housekeeping budget adjustments. 2) Based on residential consumption impact of 165.4m 3 Average Annual % Avg. Annual Rate Payer Impact 2 SERVICE Approved Net Approved Net Approved Net 1 Annual Update 2018 Amended Net 2019 Amended Net Revised Net Net Inc/ (Dec) Wastewater & Drainage Engineering & Stormwater Engineering 11,656 2,951 2,954 3,738 3,723 13,366 1,710 Sewer Operations 35,552 8,673 8,878 8,963 9,097 35, Wastewater & Treatment Operations 80,581 19,296 19,869 20,857 21,339 81, General Administration 17,111 3,879 3,930 4,510 4,813 17, Billings & Customer Service 9,006 2,176 2,226 2,276 2,328 9,006 0 Financial Expenses 221,936 52,745 54,668 55,071 56, ,366 (2,570) WASTEWATER RATE SUPPORTED BUDGET 375,842 89,720 92,525 95,415 98, ,842 - Subject to rounding Note: 1) Amounts reported include housekeeping budget adjustments. Page 33

36 WASTEWATER & TREATMENT STAFFING CHANGES OVERVIEW 2018 ANNUAL BUDGET UPDATE Full-Time Employees (FT) Full-Time Equivalents (FTE) Staffing Changes Total Approved Staffing Adjustment CWWF Staffing 2 Rationale: Staff resourcing to meet the demands of the Clean Water and Wastewater (CWWF) program as approved by Council, June 13, Cumulative Adjustment Revised Total Staffing Incremental Increase/ (Decrease) Notes: 1) Total Approved Staffing numbers include positions approved as part of the multi-year budget. 2) One full time (FT) position will be involved in planning and implementing Water and Wastewater & Treatment projects; the FTE of this position will be shared between Water (30%) & Wastewater & Treatment (70%). The largest pressure facing the Wastewater & Treatment Operating budget is the additional resourcing approved on June 13, 2017 to undertake the work required under the Clean Water and Wastewater Fund (CWWF) program. This increase to staff costs ($1.5 million and $1.25 million respectively) is being funded through the decreased reserve & reserve fund requirements in the future because of the 75% funding provided for capital works. Offsetting these increases are reductions in costs in three main areas; insurance premiums, utility costs (Hydro and Natural Gas based on 2017 estimates), and Financial Expenses. The change to Financial Expenses is primarily in transfers to reserves and reserve funds with annual contributions being reduced by $1.26 million in 2018 and $1.1 million in 2019 due to decreased future reserve and reserve fund requirements as a result of CWWF program funding. Page 34

37 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Capital Summary ($000's) Multi-Year Total Forecast Capital Plan Total Approved 69, ,238 70,525 51, , , ,585 Total Revised (submitted October 30, 2017) 69, ,238 67,029 53, , , ,585 Total Capital Expense Increase/ (Decrease) (3,496) 1,796 (1,700) 2,700 1,000 Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) - - 3,496 (1,796) 1,700 (1,700) - Other (O) Non-rate Supported (NRS) (1,000) (1,000) Total Revenue Increase/ (Decrease) - - 3,496 (1,796) 1,700 (2,700) (1,000) Net Rate Impact Subject to rounding Note: 1) Includes budget amendments 6-7 supported by budget amendment cases and budget adjustments that do not require a budget amendment case since there is no impact to Page 35

38 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Lifecycle Renewal Capital ($000's) Multi-Year Total Forecast Capital Plan Lifecycle Renewal Approved 26,144 45,482 25,972 25, , , ,806 Lifecycle Renewal Revised 26,144 45,482 22,476 27, , , ,806 Increase/ (Decrease) - - (3,496) 1,796 (1,700) 1,700 - Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) 3,496 (1,796) 1,700 (1,700) - Other (O) Non-rate Supported (NRS) Total Revenue - - 3,496 (1,796) 1,700 (1,700) - Net Rate Impact Amendments Amendment Case #6 ES Elliot-Laidlaw Remediation Works Rationale: Timing change to coordinate with completion of (1,700) (1,700) 1,700 - Dingman Creek Environmental Assessment. Source of Financing: Sewage Works Reserve Fund RF RF Amendment Case #7 ESSWM-STMRM - Dingman Creek and Other Stream Remediation Rationale: Timing change to coordinate with completion of Dingman Creek Environmental Assessment. (1,796) 1, Source of Financing: Sewage Works Reserve Fund RF RF Total Amendments (Inc/ (Dec)) - - (3,496) 1,796 (1,700) 1,700 - Total Lifecycle Renewal Amendments (Inc/ (Dec)) - - (3,496) 1,796 (1,700) 1,700 - Page 36

39 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Growth Capital ($000's) Multi-Year Total Forecast Capital Plan Growth Approved 33,109 23,318 34,574 16, , , ,546 Growth Revised 33,109 23,318 34,574 16, , , ,546 Increase/ (Decrease) ,000 1,000 Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) Other (O) Non-rate Supported (NRS) - (1,000) (1,000) Total Revenue (1,000) (1,000) Net Rate Impact Amendments - Business Cases Not Required (Inc/ (Dec)) 1,000 1,000 Total Growth Amendments (Inc/ (Dec)) ,000 1, Amendments (Business Cases Not Required) ES Mud Creek East Branch Stormwater Increase Rationale: increase as a result of updated cost estimates within Mud Creek Stormwater Environmental Assessment. Source of Financing: City Services - Major SWM Reserve Fund Total 1,000 1,000 NRS Total Growth Amendments (Inc/ (Dec)) - 1, ,000 Page 37

40 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) Service Improvement Capital ($000's) Multi-Year Total Forecast Capital Plan Service Improvement Approved 10,258 31,438 9,979 9,662 61,337 94, ,233 Service Improvement Revised 10,258 31,438 9,979 9,662 61,337 94, ,233 Increase/(Decrease) Sources of Financing Capital Rate (CR) Debenture (D) Reserve Fund (RF) Other (O) Non-rate Supported (NRS) Total Revenue Net Rate Impact Page 38

41 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) CAPITAL BUDGET BY CLASSIFICATION Classification 2016 Approved 2017 Approved Annual Update 2018 Amended 2019 Amended Revised Increase/ (Decrease) Revised Forecast Increase/ (Decrease) Total Revised Ten Year Plan Lifecycle Renewal 26,144 45,482 22,476 27, ,270 (1,700) 177,536 1, ,806 Growth 33,109 23,318 34,574 16, , ,917 1, ,546 Service Improvement 10,258 31,438 9,979 9,662 61,337-94, ,233 Total Expenditures , ,238 67,029 53, ,236 (1,700) 382,349 2, ,585 Subject to rounding Notes: 1) Amounts reported in the Capital include housekeeping budget adjustments. 2) The Capital includes Non-TCA expenditures that will not result in the creation of a tangible asset (having physical substance). Non-TCA expenditures are reported annually through the Financial Statement reporting process. 3) Amounts reported include budget amendments 6-7. Page 39

42 WASTEWATER & TREATMENT CAPITAL BUDGET OVERVIEW WITH FORECASTS FOR ANNUAL BUDGET UPDATE ($000 s) CAPITAL BUDGET BY SOURCE OF FINANCING Source of Financing 2016 Approved 2017 Approved Annual Update 2018 Amended 2019 Amended Revised Increase/ (Decrease) Revised Forecast Increase/ (Decrease) Total Revised Ten Year Plan Rate Supported Capital Rate 15,550 16,949 17,805 20,450 70, , ,073 Debenture (88) (88) (88) Reserve Fund 14,637 30,915 16,612 17,274 79,438 (1,700) 116,807 1, ,245 Other Sub-total Rate Supported 30,099 47,864 34,417 37, ,104 (1,700) 251,126 1, ,230 Non-Rate Supported Debenture 19,564 10,572 12,162 4,480 46,778-46,871-93,649 Reserve Fund 13,224 12,373 15,286 6,090 46,973-49,668 1,000 96,641 Federal Grants 4,500 19,767 4,500 4,500 33,267-27,000-60,267 Provincial Grants - 7, , ,533 Senior Government Other 2,124 1, ,181-7,084-12,265 Sub-total Non-Rate Supported 39,412 52,374 32,612 15, , ,223 1, ,355 Total Sources of Financing , ,238 67,029 53, ,236 (1,700) 382,349 2, ,585 Subject to rounding Notes: 1) Amounts reported in the Capital include housekeeping budget adjustments. 2) Amounts reported include budget amendments 6-7. Page 40

43 WASTEWATER & TREATMENT CAPITAL BUDGET FORECAST 2018 ANNUAL BUDGET UPDATE ($000 s) Classification/ Source of Financing 2026 Forecast 2027 Forecast Rolling Capital Plan CAPITAL BUDGET BY CLASSIFICATION Lifecycle Renewal 27,980 28, ,590 Growth 6,727 10, ,976 Service Improvement 12,945 13, ,824 Total Expenditures 47,652 51, ,390 CAPITAL BUDGET BY SOURCE OF FINANCING Rate Supported Capital Rate 21,350 21, ,424 Debenture Reserve Fund 14,962 15, ,264 Other Sub-total Rate Supported 36,312 37, ,688 Non-Rate Supported Debenture 3,047 7,400 73,960 Reserve Fund 3,529 2,629 77,202 Federal Grants 4,500 4,500 45,000 Provincial Grants ,000 Senior Government Other ,540 Sub-total Non-Rate Supported 11,340 14, ,702 Total Sources of Financing 47,652 51, ,390 Subject to rounding Page 41

44 WASTEWATER & TREATMENT CAPITAL BUDGET FORECAST 2018 ANNUAL BUDGET UPDATE ($000 s) The following section highlights major capital works contained within the periods of the 10 year rolling capital plan: Major Capital Works In Forecast 2027 Forecast LIFECYCLE RENEWAL ES Sewer Infrastructure Lifecycle Renewal 14,000 14,000 ES Specialized Sewer Repairs 4,500 5,000 ES Replacement Equipment at Wastewater Treatment Plants 2,200 2,200 ES Existing Ditches and Open Watercourses 2,200 2,000 GROWTH ESSWM-WO4 - SWM Facility-White Oaks No 4-4,400 ESSWM-NLP6 - SWM Facility-North Lambeth 2,400 - ES Old Oak 2 SWM Facility 416 2,100 SERVICE IMPROVEMENT ES Combined Sewer Separation 11,000 12,000 Page 42

45 WASTEWATER & TREATMENT MULTI-YEAR BUDGET RESERVE & RESERVE FUND OVERVIEW 2018 ANNUAL BUDGET UPDATE ($000 s) Reserves & Reserve Funds Plan Forecast Revised Projected Balance Sewage Works Reserve Fund 73,252 30,542 38,026 44,250 44,185 49,824 54,680 53,720 64,249 74,626 Industrial DC Incentive Program Sewer 3,339 4,087 4,154 3,129 3,095 3,060 3,024 2,569 2,106 1,634 Sewage Treatment Plant Capacity Industrial Oversizing Sewer 6,827 5,998 5,971 5,664 5,352 5,035 4,712 4,383 4,047 3,706 City Services - Sanitary Sewer 14,339 5,715 8,443 12,280 14,935 15,742 16,781 15,706 4,002 3,521 City Services - Major Storm Water Management 33,343 11,635 4,828 6,191 6,911 7,016 4,920 3,357 3,087 4,277 Efficiency, Effectiveness & Economy Reserve - Wasterwater & Treatment 2,141 2,299 2,299 2,299 2,299 2,299 2,299 2,299 2,299 2,299 Sump Pump, Sewage Ejector & Storm Private Drain Connection Disconnection of Sewer Cross Connection Loan Program Total Wastewater & Treatment Revised Projected Balance 133,926 60,973 64,430 74,534 77,511 83,723 87,177 82,809 80,579 90,866 Subject to rounding Page 43

46 RECONCILIATION OF TABLED WASTEWATER & TREATMENT BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET Ontario municipalities must adhere to Public Sector Accounting Board (PSAB) accounting standards and reporting requirements, however, with the introduction of PS1200 in 2009, the Province of Ontario enacted a regulation, Ontario Regulation 284/09, allowing for certain items to be excluded from their budgets, as long as it was disclosed. Typical PSAB items, such as costs related to amortization expense, postemployment benefit expense and solid waste landfill closure and post-closure expense can be excluded, however, the regulation does require that the municipality report to Council on the impact of these excluded costs prior to budget approval. The regulation requires that the report contain information regarding: 1. An estimate of the change in the accumulated surplus of the municipality to the end of the year resulting from the exclusion of any of those expenses; and 2. An analysis of the estimated impact of the exclusion of any of those expenses on the future tangible capital asset funding requirements of the municipality or local board. London s 2018 and 2019 draft Wastewater operating budget as tabled, excludes the following expenses: 1. Expenses for the amortization of tangible capital assets, estimated to be $43.6 million for 2018 and $45.5 million for 2019, are excluded. The budget does include reserve fund contributions of $25.6 million for 2018 and $24.9 million for 2019 and pay as you go contributions of $18.1 million for 2018 and $20.8 million for 2019 for capital asset additions. 2. The budget does not contain the current year s post-employment benefit expense for early retirement and accrued sick leave, estimated to total $257 thousand for 2018 and $257 thousand for 2019, for employees that are eligible for these benefits. The Corporation's consolidated liability as at December 31, 2016 was $149.2 million. Reserve fund balances as of December 31, 2016 of $18.7 million are available to offset this obligation. 3. The City also makes contributions to an additional corporate reserve to offset the liabilities created from the post-employment expenses (point 2 above) and landfill closure and post-closure expenses depending upon generated surpluses, including personnel cost savings. The balance in this corporate reserve as of December 31, 2016 was $62.5 million. If the above items were included in the 2018 and 2019 budgets, the projected annual PSAB surplus would decrease. Table 1 on the following page shows the 2018 and 2019 draft Wastewater operating budgets and the 2017 approved revised budget and Table 2 reconciles the surplus in PSAB format to the tabled Wastewater operating budgets. Page 44

47 RECONCILIATION OF TABLED WASTEWATER & TREATMENT BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET ($000 s) Table Revised 2018 Draft 2019 Draft REVENUES Property Tax Property Tax - Proposed budget increase Government Grants & Subsidies User Fees 92,172 95,061 97,826 Municipal Revenues - Other Municipal Revenues - Transfers from Capital Municipal Revenues - Transfers from Reserves and Reserve Funds Total Revenues 92,525 95,415 98,182 EXPENSES Personnel Costs 14,992 16,310 16,827 Administrative Expenses 3,513 3,618 3,702 Financial Expenses - Other Financial Expenses - Interest & Discount on Long-term Debt 2,237 1,949 1,675 Financial Expenses - Debt Principal Repayments 9,828 9,406 9,554 Financial Expenses - Transfers to Reserves and Reserve Funds 25,351 25,608 24,899 Financial Expenses - Transfers to Capital 17,252 18,108 20,753 Purchased Services 3,408 3,716 3,562 Materials & Supplies 10,779 11,257 11,664 Vehicle & Equipment 3,283 3,361 3,421 Transfers Other Expenses 4,765 5,021 5,123 Recovered Expenses (2,883) (2,939) (2,998) Total Expenses 92,525 95,415 98,182 NET SURPLUS (DEFICIT) Page 45

48 RECONCILIATION OF TABLED WASTEWATER & TREATMENT BUDGET TO PUBLIC SECTOR ACCOUNTING BOARD (PSAB) FINANCIAL STATEMENT BUDGET ($000 s) Table Revised 2018 Draft 2019 Draft PROJECTED NET PSAB SURPLUS 41,860 38,846 40,818 PSAB REPORTING REQUIREMENTS: Addback to revenues: Transfers from Capital Transfers from Reserves and Reserve Funds Deduct from expenses: Transfers to Reserves and Reserve Funds (25,351) (25,608) (24,899) Transfers to Capital (17,252) (18,108) (20,753) Debt principal repayments (9,828) (9,406) (9,554) PSAB adjustments: Capital program funding earned in year (1) (9,225) (5,164) (5,164) Capital projects not resulting in tangible capital assets (2) 8,664 6,334 5,052 Amortization (3) 41,761 43,579 45,476 Developer contributions of assumed tangible capital assets (4) (24,424) (23,720) (23,720) Loss on disposal of tangible capital assets (5) 897 1,174 1,174 Obligatory reserve fund deferred revenue earned in year - DC, Gas Tax (6) (7,350) (8,184) (8,687) Employee future benefit liability (7) NET SURPLUS (DEFICIT) PER DRAFT BUDGET Footnotes and Assumptions 1) Represents capital revenue such as provincial and federal grants and other contributions. Does not include debenture financing, transfers from operating or reserve funds. 2) For PSAB purposes, expenses not considered to be part of the cost of a tangible capital asset are expensed as operating expenses although funded through capital. Estimated based on 9.45% of capital expenditure budget, based on 2016 actuals. 3) Represents the annual writedown of the tangible capital assets over the useful life of the asset. Estimated 4.35% annual increase based on actuals. 4) Contributed tangible capital assets are tangible capital assets that become the ownership of the City when a subdivision is assumed by the City. These assets are recognized at fair market value during the year of assumption. Estimate based on 6 year average of actuals. 5) When an asset is replaced prior to the end of its useful life, an adjustment must be made to expense the remaining book value. Amount fluctuates from year to year. Estimate based on 5 year average of actuals from ) Transactions recorded directly to reserve funds must be accounted for through the operating or capital fund. This includes recognition of development charge levies and federal gas tax earned in the year. 7) Represents the annual change in the estimated future costs of employee benefits. Estimate based on 8 year average. Page 46

49 AMENDMENT FORM CASE # 6 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE IN ELLIOT-LAIDLAW REMEDIATION WORKS WASTEWATER & TREATMENT SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $(1,700) $0 $(1,700) Revenue $0 $0 $1,700 $0 $1,700 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 47

50 AMENDMENT 1: SCHEDULE CHANGE TO COORDINATE PROJECT WITH COMPLETION OF DINGMAN CREEK EVIRONMENTAL ASSESSMENT Capital Table ($000 s) ES Elliot-Laidlaw Remediation Works Expenditure Approved 0 0 1, Cumulative Amendment (1,700) 1,700 Revised 0 1,700 Source of Financing Approved 0 0 (1,700) 0 0 Capital Rates Debenture Reserve Fund 1,700 (1,700) Other Non Rate Supported Revised 0 (1,700) 2026 Capital Gross Expenditure: $ Capital Gross Expenditure: $0 Amendments What is the reason(s) for the budget amendment(s)? The construction of the required stormwater management measures has been deferred until 2020 as it is subject to the completion of the Dingman Creek Environmental Assessment which is estimated to be completed in the first quarter of Page 48

51 AMENDMENT FORM CASE # 7 STRATEGIC AREA OF FOCUS: INITIATIVE: SERVICE(S): SERVICE LEAD(S): TYPE OF AMENDMENT: BUILDING A SUSTAINABLE CITY SCHEDULE CHANGE IN DINGMAN CREEK STREAM REMEDIATION/RECLAMATION WORKS WASTEWATER & TREATMENT SCOTT MATHERS COST DRIVER Amendment Rate Impact ($000 s) TOTAL Expenditure $0 $0 $(1,796) $1,796 $0 Revenue $0 $0 $1,796 $(1,796) $0 Net Requested Rate (Cumulative) $0 $0 $0 $0 $0 Net Incremental Rate $0 $0 $0 $0 $0 Annual Rate Impact % 1 0.0% 0.0% 0.0% 0.0% Note: 1) The rate impact is calculated using the approved budget. Page 49