GREATER VANCOUVER REGIONAL DISTRICT PERFORMANCE AND PROCUREMENT COMMITTEE

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1 GREATER VANCOUVER REGIONAL DISTRICT PERFORMANCE AND PROCUREMENT COMMITTEE REGULAR MEETING Friday, July 17, :00 a.m. 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. 1. ADOPTION OF THE AGENDA A G E N D A July 17, 2015 Regular Meeting Agenda That the Performance and Procurement Committee adopt the agenda for its regular meeting scheduled for July 17, 2015 as circulated. 2. ADOPTION OF THE MINUTES 2.1 April 15, 2015 Regular Meeting Minutes That the Performance and Procurement Committee adopt the minutes of its regular meeting held April 15, 2015 as circulated. 3. DELEGATIONS No items presented. 4. INVITED PRESENTATIONS No items presented. 5. REPORTS FROM COMMITTEE OR STAFF 5.1 Financial Performance Report as of May 2015 Designated Speaker: Phil Trotzuk That the Performance and Procurement Committee receive the report titled Financial Performance Report as of May 2015, dated June 26, 2015 for information. 1 Note: Recommendation is shown under each item, where applicable. P&P - 1

2 5.2 GVWD Borrowing Bylaw No. 248, 2015 Designated Speaker: Phil Trotzuk That the GVWD Board: a) approve a borrowing limit of $700,000. b) give first, second and third readings to Greater Vancouver Water District Borrowing Bylaw Number 248, 2015 and forward to the Inspector of Municipalities for approval. 5.3 GVRD Security Issuing Bylaw No. 1224, 2015 Regarding GVWD Borrowing Bylaw No. 248, 2015 Designated Speaker: Phil Trotzuk That GVRD Board: a) give first, second and third reading to "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015". b) forward "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015" to the Inspector of Municipalities for approval. 5.4 Amendment to Corporate Investment Policy Designated Speaker: Dean Rear That the GVRD Board approve the Corporate Investment Policy as presented in the report titled Investment Policy Update, dated June 16, Continuous Improvement Actions at Metro Vancouver Designated Speaker: Dean Rear That the Performance and Procurement Committee receive the report titled Continuous Improvement Actions at Metro Vancouver, dated June 25, 2015 for information. 5.6 AGLG Audit Topic 3: Capital Procurement Projects and Asset Management Programs Designated Speaker: Dean Rear That the Performance and Procurement Committee receive the report titled AGLG Audit Topic 3 Capital Procurement Projects and Asset Management Programs, dated July 3, 2015 for information. 5.7 Investment Position and Returns January 1 to April 30, 2015 Designated Speaker: Dean Rear That the Performance and Procurement Committee receive the report titled Investment Position and Returns January 1 to April 30, 2015, dated June 22, 2015 for information. P&P - 2

3 5.8 Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2015 Designated Speaker: Dean Rear That the Performance and Procurement Committee receive the report titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2015, dated June 26, 2015 for information Legal Expenditures Designated Speaker: Phil Trotzuk That the Performance and Procurement Committee receive the report titled 2014 Legal Expenditures, dated June 5, 2015 for information Tender/Contract Award Information April to June 2015 Designated Speaker: Tracey Husoy That the Performance & Procurement Committee receive the report titled Tender/Contract Award Information April to June 2015, dated June 26, 2015 for information Manager s Report Designated Speaker: Phil Trotzuk That the Performance and Procurement Committee receive the report titled Manager s Report, dated July 6, 2015 for information. 6. INFORMATION ITEMS No items presented. 7. OTHER BUSINESS No items presented. 8. BUSINESS ARISING FROM DELEGATIONS No items presented. 9. RESOLUTION TO CLOSE MEETING That the Performance and Procurement close its regular meeting schedule for July 17, 2015 pursuant to the Community Charter provisions, Section 90 (1) (i) as follows: 90 (1) A part of a meeting may be closed to the public if the subject matter being considered relates to or is one of more of the following: (i) the receipt of advice that is subject to solicitor-client privilege, including communications necessary for that purpose; P&P - 3

4 10. ADJOURNMENT/CONCLUSION That the Performance and Procurement Committee adjourn/conclude its regular meeting of July 17, Membership: Clay, Mike (C) Port Moody Jordan, Colleen (VC) Burnaby Baldwin, Wayne White Rock Brodie, Malcolm Richmond Coté, Jonathan New Westminster Fox, Charlie Langley Township Gill, Tom Surrey McEwen, John Anmore Meggs, Geoff - Vancouver Mussatto, Darrell North Vancouver City Reid, Mae Coquitlam Bell, Corisa Maple Ridge Smith, Michael West Vancouver P&P - 4

5 2.1 GREATER VANCOUVER REGIONAL DISTRICT PERFORMANCE AND PROCUREMENT COMMITTEE Minutes of the Regular Meeting of the Greater Vancouver Regional District (GVRD) Performance and Procurement Committee held at 9:00 a.m. on Wednesday, April 15, 2015 in the 2nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. MEMBERS PRESENT: Chair, Mayor Mike Clay, Port Moody Vice Chair, Councillor Colleen Jordan, Burnaby Councillor Corisa Bell, Maple Ridge Mayor Malcolm Brodie, Richmond Mayor Jonathan Coté, New Westminster (arrived at 9:02 a.m.) Councillor Charlie Fox, Langley Township Councillor Tom Gill, Surrey Mayor John McEwen, Anmore (arrived at 9:01 a.m.) Councillor Geoff Meggs, Vancouver (arrived at 9:01 a.m.) Mayor Darrell Mussatto, North Vancouver City Councillor Mae Reid, Coquitlam Mayor Michael Smith, West Vancouver MEMBERS ABSENT: Mayor Wayne Baldwin, White Rock STAFF PRESENT: Phil Trotzuk, Chief Financial Officer Carol Mason, Commissioner/Chief Administrative Officer Janis Knaupp, Assistant to Regional Committees, Board and Information Services, Legal and Legislative Services 1. ADOPTION OF THE AGENDA 1.1 April 15, 2015 Regular Meeting Agenda It was MOVED and SECONDED That the Performance and Procurement Committee: a) amend the agenda for its regular meeting scheduled for April 15, 2015 by adding on-table replacement Item 5.6, page Appendix D Page No. 1 Amendment to a Previously Reported Contract Sole Source Purchase Order No A; and b) adopt the agenda as amended. CARRIED P&P - 5

6 2. ADOPTION OF THE MINUTES 1.1 February 6, 2015 Regular Meeting Minutes It was MOVED and SECONDED That the Performance and Procurement Committee: a) correct the minutes of its regular meeting held February 6, 2015, on page 1 in Attendance, by replacing the name Corsica with the name Corisa ; and b) adopt the minutes as corrected. CARRIED 3. DELEGATIONS No items presented. 4. INVITED PRESENTATIONS No items presented. 9:01 a.m. Mayor McEwen and Councillor Meggs arrived at the meeting. 5. REPORTS FROM COMMITTEE OR STAFF 5.1 Draft Audited 2014 Financial Statements Report dated March 25, 2015 from Phil Trotzuk, Chief Financial Officer, presenting for approval the 2014 Audited Financial Statements for the Greater Vancouver Districts and the Metro Vancouver Housing Corporation. Members were provided a presentation on 2014 Metro Vancouver finances and the 2014 year-end financial results highlighting: the operations surplus; surplus results; and financial position, equity in capital assets, and liquidity as of December 31, Presentation material titled 2014 Metro Vancouver Finances is retained with the April 15, 2015 Performance and Procurement Committee agenda. 9:02 a.m. Mayor Coté arrived at the meeting. It was MOVED and SECONDED a) That the GVRD Board approve the Audited 2014 Consolidated Financial Statements for the Greater Vancouver Regional District, and receive for information the Metro Vancouver Housing Corporation Audited 2014 Financial Statements; b) That the GVS&DD Board approve the Audited 2014 Financial Statements for the Greater Vancouver Sewerage and Drainage District; c) That the GVWD Board approve the Audited 2014 Financial Statements for the Greater Vancouver Water District. CARRIED P&P - 6

7 Financial Results Year-End Report dated March 27, 2015 from Phil Trotzuk, Chief Financial Officer, updating the GVRD Board on financial performance for the year ending December 31, 2014 as compared to the 2014 annual budget. It was MOVED and SECONDED That the GVRD Board receive the report dated March 27, 2015 titled 2014 Financial Results Year-End for information. CARRIED 5.3 Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 290, 2015 Report dated March 6, 2015 from Dean Rear, Director, Financial Planning and Operations, bringing forward to the GVS&DD Board for consideration, a bylaw to meet the statutory requirements to use Development Cost Charges for funding of the growth capital program. It was MOVED and SECONDED That the GVS&DD Board: a) give first, second and third reading to Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 290, 2015 ; and b) pass and finally adopt Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 290, CARRIED 5.4 Semi-Annual Report on GVS&DD Development Cost Charges Report dated March 6, 2015 from Dean Rear, Director, Financial Planning and Operations, Financial Services, providing a report to the Committee on the 2014 GVS&DD Development Cost Charge revenues as required in the Board s policy. It was MOVED and SECONDED That the Performance and Procurement Committee receive the report dated March 6, 2015 titled Semi-Annual Report on GVS&DD Development Cost Charges for information. CARRIED 5.5 Status of Water, Liquid Waste and Solid Waste Capital Expenditures to December 31, 2014 Report dated March 6, 2015 from Dean Rear, Director, Financial Planning and Operations, providing a report on the status of the capital projects for Water, Liquid Waste and Solid Waste. Members were provided a presentation highlighting water utility capital projects including: the Seymour-Capilano Twin Tunnels Capilano shaft enclosures; Seymour-Capilano Twin Tunnels commissioning; Port Mann Water Supply Tunnel P&P - 7

8 (PMWST); PMWST north shaft valve chamber; Barnston/Maple Ridge Pump Station; Angus Drive Main; and Phase I of the Capilano Main No. 9; and liquid waste utility capital projects including: the Northwest Langley Wastewater Treatment Plant Phase IV upgrade; Gilbert Trunk Sewer No. 2; Burnaby Lake North Interceptor No. 2; and Annacis Island Wastewater Treatment Plant Stage 5 expansion ground improvement works. Presentation material titled Status of Utilities Capital Expenditures to December 31, 2014 Project Photos is retained with the April 15, 2015 Performance and Procurement Committee agenda. It was MOVED and SECONDED That the Performance and Procurement Committee receive the report titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to December 31, 2014, dated March 6, 2015 for information. CARRIED 5.6 Tender/Contract Award Information January to March 2015 Report dated April 7, 2015 from Tracey Husoy, Division Manager, Purchasing and Risk Management, Financial Services, informing the Committee about contracts, handled through the Purchasing Division, with a total anticipated value at or in excess of $500,000 (exclusive of tax). Members were informed that on page 3 of the report the reference to removal of asbestos by Hatch MacDonald Ltd. was an error. In response to questions, members were informed about the competitive procurement process for employee benefits, how contingency funds and legal costs are reflected in the budget, and general government costs. Comments were offered about exploring how legal costs are allocated and procured and what is included in general government as part of the budget. Request of Staff Staff was requested to report back to the Performance and Procurement Committee at its July 17, 2015 meeting with a breakdown of legal fees incurred by Metro Vancouver. It was MOVED and SECONDED That the Performance and Procurement Committee receive the report titled Tender/Contract Award Information January to March 2015, dated April 7, 2015 for information. CARRIED P&P - 8

9 5.7 Manager s Report Report dated March 24, 2015 from Phil Trotzuk, Chief Financial Officer, informing the Performance and Procurement Committee of the Committee s 2015 Work Plan, the George Ross Bequest Announcement and Recognition, the new budget and financial systems, and the Municipal Finance Authority. 6. INFORMATION ITEMS No items presented. 7. OTHER BUSINESS No items presented. Members were provided a presentation on Metro Vancouver s new financial system upgrades highlighting purpose, timing, key improvements, reporting structure, an example of budget entry and dashboard reporting features, and next steps. Presentation material titled Finance Systems Update is retained with the April 15, 2015 Performance and Procurement Committee agenda. It was MOVED and SECONDED That the Performance and Procurement Committee receive the report titled Manager s Report dated March 24, 2015 for information. CARRIED 8. BUSINESS ARISING FROM DELEGATIONS No items presented. 9. RESOLUTION TO CLOSE MEETING Members considered adding a resolution to close the meeting related to intergovernmental relations. It was MOVED and SECONDED That the Performance and Procurement close its regular meeting schedule for April 15, 2015 pursuant to the Community Charter provisions, Section 90 (1) (l) and 90 (2) (b) as follows: 90 (1) A part of a meeting may be closed to the public if the subject matter being considered relates to or is one or more of the following: (l) discussions with regional district officers and employees respecting regional district objectives, measures and progress reports for the purposes of preparing an annual report under section 98 [annual municipal report] of the Charter; and 90 (2) A part of a meeting must be closed to the public if the subject matter being considered relates to one or more of the following: (b) the consideration of information received and held in confidence relating to negotiations between the regional district and a provincial P&P - 9

10 10. ADJOURNMENT/CONCLUSION government or the federal government or both, or between a provincial government or the federal government or both and a third party. CARRIED It was MOVED and SECONDED That the Performance and Procurement Committee adjourn its regular meeting of April 15, CARRIED (Time: 10:13 a.m.) Janis Knaupp, Assistant to Regional Committees Mike Clay, Chair FINAL P&P - 10

11 5.1 To: From: Performance and Procurement Committee Phil Trotzuk, Chief Financial Officer Date: June 26, 2015 Meeting Date: July 17, 2015 Subject: Financial Performance Report as of May 2015 RECOMMENDATION That the Performance and Procurement Committee receive the report titled Financial Performance Report as of May 2015, dated June 26, 2015 for information. PURPOSE To present the Committee with an update on financial performance to the end of May 2015 including a projection to the end of the fiscal year. BACKGROUND Board policy requires that the Performance and Procurement Committee be provided, three times per year, an update on the actual financial performance of the Metro Vancouver Districts and Metro Vancouver Housing Corporation with the report on the year-end results also sent to the Board. This is the first of such reports for Year-to-date results as presented are based on the actual results for the first five months of the year with the main focus on the projections to year-end operations of the Metro Vancouver Districts and Metro Vancouver Housing Corporation are projected to be in an overall surplus position of $17.1 million as compared to budget. Throughout the course of a year, staff vacancies exist as a result of staff turnover, staff leaves, staff moving positions as coverage, promotion and so on. This leads to labour savings from vacancies until the positions are filled which results in surpluses to budget. HIGHLIGHTS Overall, the Districts and Housing Corporation are projecting a surplus position of approximately $17.1 million for the 2015 fiscal year. The overall projected surplus is mainly due to increased revenues in water, the deferral of some operating and capital projects, some staff vacancies, savings in miscellaneous operating costs and slightly lower debt service costs in the utilities. More detailed information by district and / or function is included in Attachment 1. P&P - 11

12 The breakdown of the overall $17.1 million projected 2015 surplus, by district/function is as follows: Regional District - $1.3 million Water District - $11.3 million Liquid Waste - $3.7 million Solid Waste - $0.2 million Housing - $0.6 million The projected operating surplus in the Regional District can be mainly attributed to the delay in some Regional Parks project initiatives, fewer Board and Committee meetings than planned, savings from staff vacancies as recruitment continues and some savings in miscellaneous operating costs. The Water District s projected surplus is largely the result of projected revenue from water sales in excess of budget estimates along with expenditure savings in system operating contingency, labour savings from staff vacancies and the delay and/or deferral of some projects. The Liquid Waste projected surplus in 2015 is primarily due to deferral of some minor capital and maintenance projects funded through operations. In addition, some projected savings in miscellaneous operating costs along with labour savings due to several staff vacancies are expected. Solid Waste is expected to be close to break even in Higher than expected waste flows, due to less than anticipated waste migration, combined with management of expenditures has the function projected at slightly better than budget. The Housing Corporation has a surplus net income position primarily due to higher than projected rental revenue. In addition to the above surpluses, corporate programs are also projecting a surplus position for 2015 of approximately $133,000 primarily due to staff vacancies savings as recruitment continues. ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS This report provides information on projected results for 2015 operations which, at this time, shows an overall year-end surplus of $17.1 million. This surplus would be available in future years to either avoid debt or pay for regional projects thereby reducing the funding requirements. Should circumstances change and this projected surplus increase or decrease, then more or less would be available to reduce future funding requirements. P&P - 12

13 SUMMARY / CONCLUSION The 2015 projected financial results for the Metro Vancouver entities and functions are favourable to budget. Attachments and References: Attachment Financial Performance as of May P&P - 13

14 ATTACHMENT 1 Greater Vancouver Districts 2015 Financial Performance As of May 2015 P&P - 14

15 Table of Contents Statement of Surplus/(Deficit) District Summaries Regional District Summary Water District Summary... 7 Sewerage & Drainage District Summaries Liquid Waste... 8 Solid Waste... 8 Housing Corporation Summary... 9 Corporate Programs Financial Indicators P&P - 15

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20 Greater Vancouver Districts 2015 Financial Performance District Summaries Greater Vancouver Regional District The Regional District at the end of May 2015 is in a surplus position of approximately $3.2 million. This surplus is due to the timing of actual expenditures being slower than that anticipated in the budget primarily in General Government, Regional Parks, and Air Quality. At this time, it is expected that the majority of the delayed expenditures will be incurred by year-end and the surplus will be reduced to close to $1.4 million due to savings from staff vacancies, savings in Board and Committee meeting costs and delay in some of Regional Park function s planned projects. 911 Emergency Telephone E911 is in a surplus position of $37,000 due to savings in E-Comm contract fees and timing of some expenditures. E911 is projecting a surplus of $18,000 by the end of the year as a result of contract fee savings. Air Quality At the end of May, Air Quality is in a surplus position of $637,000 primarily due to staff vacancies, a late start in some consulting studies, receiving permit fees earlier than expected and increased revenue from higher than expected registration of Non Road Diesel Engines. With the staff vacancies expected to be filled by September, the function is expected to be in a surplus position of $172,000 by year end due to position vacancies, to date, and Non Road Diesel Engine revenues. General Government General Government is in a surplus position of approximately $1.1 million at the end of May, due to the timing of expenditures. The Homelessness Partnering Strategy (HPS) program is currently in a surplus position of $448,000 due to the timing of projects and related funding. The HPS program is fully funded by the federal government and is expected on be on budget at year end. While the majority of the initiatives are expected to be completed by year end, General Government is projecting a surplus to $245,000 for 2015 due primarily to savings in Board and Committee meeting costs and unbudgeted interest income. Labour Relations Labour Relations is in a surplus position of close to $156,000 at the end of May due primarily to staff vacancies from staff on leave. At year end, Labour Relations is projecting a surplus of $220,000 due to continued staff vacancies. Regional Global Positioning System (GPS) At the end of May, the GPS function is under spent by approximately $170,000 due to the timing of expenditures. By year end, the function is forecasting revenues and expenditures to be near budget. P&P - 20

21 Regional Parks Regional Parks is in a surplus position at the end of May of approximately $872,000 due primarily to delays in hiring some seasonal staff, other staff vacancies, currently being recruited for, the deferral of some project related expenditures until later in the year and the deferral of some asset purchases and materials and supply expenditures to the summer and fall months. At this time, while it is expected that most delayed expenditures will be incurred by year end, Regional Parks is expected to be in a surplus position of $405,000 for the year. This is mostly due to some staff vacancies, in the early part of the year and the delay of Central Area s contaminated site study to Regional Planning As of the end of May, Regional Planning is in a surplus position of $173,000 primarily due to staff vacancies resulting from a redefining of focus and environmental planning. As these positions are expected to be filled in the latter part of 2015, Regional Planning is expected to be in a surplus position of $230,000 at year end. Electoral Areas Electoral Areas is currently in a surplus position of $41,000 due to a staff vacancy early in the year and timing of building permit fees received. Electoral Areas is expected to be in a surplus position of $30,000 by year end. Sasamat Volunteer Fire Department Sasamat Volunteer Fire Department is currently in a surplus position of $32,000 as a result of timing of actual expenditures being slower than budget. As most of these expenditures are expected to be incurred by year end, the function is expected to be close to budget. P&P - 21

22 Greater Vancouver Water District The Water District is in a surplus position of approximately $8.2 million as at the end of May. The District, however, is projecting this surplus to increase to $11.3 million by year end. Water District revenues to the end of May are $1.2 million greater than budget. Water consumption proved to be approximately 1% greater than budget to the end of May. Revised estimates indicate a projected revenue surplus of $8.2 million overall for The revenues are based on high water demands due to the unseasonably warm start to the summer as well as long term weather forecasts for the remainder of the summer and fall. Any increased demand will result in revenue increases. Water District expenditures are currently $7 million below budget due primarily to the planned implementation of several engineering and maintenance projects later in the year, operating staff vacancies, lower than anticipated leak repair costs and delays in commissioning of new capital facilities. It is expected that by year end that the final expenditure surplus will reduce to $3.1 million. This surplus is largely the result of savings in engineering and maintenance project costs, savings from staff vacancies and savings of the operating contingency. P&P - 22

23 Greater Vancouver Sewerage and Drainage District Liquid Waste Liquid Waste is anticipating a surplus of approximately $3.7 million primarily due to operational costs that are projected less than budget. The projected surplus can be split as follows: FSA $1.7 million, LIWSA $0.2 million, VSA $1.3 million, NSSA $0.3 million and Drainage $0.2 million. Operations costs year-to-date to the end of May 2015 are approximately $8.9 million under spent compared to budget due primarily to delays of some general operational expenditures for minor capital, maintenance, wastewater treatment, residuals along with several staff vacancies currently being recruited. Operations costs are projected to be $4.3 million under budget due primarily to some minor capital, maintenance and residuals program costs less than budget along with some labour savings from several staff vacancies. The minor capital projects for 2015 are expected to fall behind due to some unforeseen complexities in the project work. The movement of Biosolids from the Iona wastewater treatment plant is expected to be delayed and will be less than budget in the amount of approximately $650,000. The under expenditure will be offset by a lower than expected application of reserve funding due to some of the above noted delayed expenditures. Solid Waste The approved 2015 budget included a $4.5 million contribution from reserves to balance the budget based on expected continued migration of waste out of the Metro Vancouver solid waste system. The Solid Waste function is now expected to break even as a result of a combination of managing expenditures along with higher than anticipated waste flows realized primarily because of changes to the tipping fee structure implemented in April. A number of remaining uncertainties such as landfill closure liability, Vancouver Landfill operating costs, Wastech operating costs, along with any additional changes in waste flow will likely impact the final 2015 position compared to budget. P&P - 23

24 Metro Vancouver Housing Corporation (MVHC) As at May 31, 2015, the MVHC is in a surplus position of approximately $1.2 million. This is typical at this point in the year, as the timing of many operating expenses is more heavily weighted in the latter part of the year. As the delayed expenditures are incurred, the surplus is expected to decline to approximately $629,000 by year-end. Any surplus from operations is allocated to reserves each year, providing an important and essential source of funding for the long-term capital plan. Revenues for the first five months are $254,000 ahead of budget. This is mainly due to higher than budgeted rent increases with some tenant rent subsidies received in advance. The impact of the rent increases will result in a year-end revenue surplus of $427,000. Expenditures through May are approximately $1 million less than budget largely due to maintenance expenditures that are weighted more heavily in the latter part of the year as well as some labour surplus due to vacancies that have since been filled. As the delayed expenditures are incurred, the overall actual expenditures are expected to be $202,000 under budget by year-end. The 2015 capital program included an annual budget of $9.5 million for capital replacement expenditures and development. As at May 31, 2015, approximately $1.0 million was spent for capital replacement. With the preparation of project specifications now completed, the capital replacement program is expected to be on budget. For the development program, $409,000 was spent for the first five months. As MVHC expects to push the construction and related consulting costs to 2016, it is anticipated that $1.6 million of the $2.8 million budgeted will be spent in The 2015 MVHC capital and development programs are funded from reserves so they have no impact on operations. P&P - 24

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26 Corporate Programs Overall, Corporate Programs are in a surplus position of approximately $2.3 million for the first five months of This surplus is largely due to the timing of actual expenditures being slower than that anticipated and staff vacancies from turnover an delays in recruiting. As these delayed expenditures are expected to be incurred during the year, the overall projected surplus for Corporate Programs will be approximately $133,000 due primarily to staff vacancies to date in Corporate Strategies and Financial Services. Chief Administrative Office The CAO s Office is currently close to $36,000 under budget and is forecast to under budget by approximately $31,000 at year-end as a result of labour savings. External Relations External Relations is currently in a surplus position of approximately $765,000 due mainly to work on the advertising campaigns and some outreach initiatives to occur later in the year, and several temporarily vacant positions. The majority of this work is expected to be complete by year-end, leaving External Relations with a $175,000 surplus. Human Resources The Human Resources department is currently under budget by close to $290,000 due to several senior staff vacancies and delays in some recruitment initiatives. By year-end, Human Resources is projected to be on budget. Financial Services The Financial Services department is in a surplus position of approximately $360,000 to date due primarily to savings from labour savings from staff vacancies currently being recruited for and timing of expenditures being different from budget. The surplus for Financial Services is projected to be approximately $370,000 for 2015 due primarily to some staff vacancies. Legal and Legislative Services Legal and Legislative Services is currently in a surplus position of approximately $175,000 to date due to the timing of external legal services being different than anticipated in the budget and delayed expenditures in Information Management. As these services are expected to be incurred, Legal and Legislative Services is projected to be primarily on budget at year-end. P&P - 26

27 Corporate Services Corporate Services is currently in a surplus position of approximately $700,000 through May Building Operations and Corporate Safety, Security and Emergency Management services are currently in a surplus position of approximately $1.0 million primarily due to some head office maintenance and renovation projects to be incurred in the latter part of the year, lower contract price for contracted security services, and timing of safety training initiatives. Information Technology (IT) services are currently in a deficit position of $300,000. This is due to the purchase of new software occurring sooner than expected in the budget. IT is projected to be on budget for By end of year, Corporate Services is expecting a deficit of $443,000. Major projects including west wall remediation, elevator replacement and office renovation are expected to exceed budget by $479,000. Reduction in tenant rent is forecasted at $34,000 for the year. This is mitigated by some forecast savings $70,000 related to building debt, staff vacancies and contract security services in Corporate Safety, Security and Emergency Management services. The deficit in corporate services will be offset by savings in other corporate areas. P&P - 27

28 Greater Vancouver Districts Financial Indicators These ratios are intended to help indicate the Greater Vancouver District s financial ability to continue to provide services to the region on a sustainable basis. This involves evaluating a number of factors, including the ongoing ability to ensure revenues meet expenditures, ability to meet debt obligations, and the flexibility to address unexpected contingencies. Forecast ratios can help to identify potential financial problems in advance. 1) Municipal Property Tax and Levies / Total Revenue This ratio is a measure of the diversification of revenues. A high ratio indicates a reliance on property tax related levies / fees. A low ratio illustrates a greater range of revenues which is seen as beneficial. However, other revenue streams may not be sustainable or fluctuate more than tax requisitions Actual 2013 Actual 2014 Actual 2015 Budget 2015 Actual Total Property tax/levies $218,931, % $226,403, % $232,429, % $239,867, % $239,867, % Total Revenue** $631,850,995 $644,494,910 $653,970,533 $660,635,674 $668,471,750 The GVRD has a reasonably well diversified revenue base. Some revenue streams such as Water Sales and Solid Waste User Fees are subject to fluctuations during the year. 2) i) Debt Service Costs/ Total Revenue This is the percentage of revenue committed to payment of interest and principal on temporary and long-term debt for the regional, sewer, solid waste and water operations. A high percentage indicates greater use of revenues for the repayment of debt, and less ability to adjust to unplanned events and changing circumstances Actual 2013 Actual 2014 Actual 2015 Budget 2015 Actual Debt Service Costs $134,582, % $131,044, % $122,877, % $127,669, % $127,165, % Total Revenue** $631,850,995 $644,494,910 $653,970,533 $660,635,674 $668,471,750 ** 2015 Budget includes reserve and surplus carry-forward applications as approved by the Board. P&P - 28

29 2) ii) Interest Costs/ Total Revenue This is the percentage of revenue committed to payment of interest on temporary and long-term debt for the regional, sewer, solid waste and water operations. A high percentage indicates greater use of revenues for servicing interest on outstanding debt, and less ability to adjust to unplanned events and changing circumstances Actual 2013 Actual 2014 Actual 2015 Budget 2015 Actual Interest Costs $60,955, % $54,875, % $49,744, % $55,527, % $54,935, % Total Revenue** $631,850,995 $644,494,910 $653,970,533 $660,635,674 $668,471,750 Both debt service costs and interest costs as a percentage of revenue are down compared to current budget (and prior years with the exception of 2014) indicating less of revenues are required to service outstanding debt (principal and interest) and more is available to fund priority projects. 3) Operating Reserves/ Total Revenues Reserve levels are an indicator of financial strength since they provide the ability to meet unforeseen expenditures or revenue losses Actual 2013 Actual 2014 Actual 2015 Budget 2015 Actual Operating Reserves $93,564, % $74,092, % $77,547, % $46,635, % $63,034, % Total Revenue** $631,850,995 $644,494,910 $653,970,533 $660,635,674 $668,471,750 Projected operating reserve levels are slightly higher than that projected in the current budget but are down from the prior years reserve levels. The level of operating reserves remains adequate to meet potential unexpected contingencies. ** 2015 Budget includes reserve and surplus carry-forward applications as approved by the Board. P&P - 29

30 4) Total Municipal Taxes, Water, Sewer and Solid Waste Charges / Per Capita This indicator is a representation of the per capita cost impact of the regions tax payer supported services. These costs are passed on to the tax payer through our member municipalities. The 2015 population is assumed to increase at a rate of 1.5% over Actual Per Capita 2013 Actual Per Capita 2014 Actual Per Capita 2015 Budget Per Capita 2015 Actual Per Capita Total Tax Revenue *** $543,413,853 $225 $548,156,267 $224 $559,403,266 $226 $559,498,217 $223 $571,188,804 $227 Total Population **** 2,410,000 2,442,604 2,474,123 2,511,235 2,511,235 The projected increase in the actuals over the budget for 2015 is primarily a result of an increase in projected revenues for Water Sales and Solid Waste User Fees. ** 2015 Budget includes budgeted reserve, surplus carry-forward items or other additional reserve applications as approved by the Board. *** Total Tax Revenue defined as Regional District tax requisition, Water Sales, Sewer & Drainage Levy and Solid Waste User Fees. **** Based on Demographic Analysis Section, BC Stats, Ministry of Technology, Innovation and Citizens Services, Government of British Columbia, December P&P - 30

31 5.2 To: From: Performance and Procurement Committee Phil Trotzuk, Chief Financial Officer Date: July 9, 2015 Meeting Date: July 17, 2015 Subject: GVWD Borrowing Bylaw No. 248, 2015 RECOMMENDATION That the GVWD Board: a) approve a borrowing limit of $700,000. b) give first, second and third readings to Greater Vancouver Water District Borrowing Bylaw Number 248, 2015 and forward to the Inspector of Municipalities for approval. PURPOSE To provide the long term capital borrowing authority for the anticipated requirements of the next five years for the GVWD and to authorize the issuance of debenture debt for this purpose through the Greater Vancouver Regional District (GVRD) and the Municipal Finance Authority of British Columbia (MFA) in the aggregate amount of $700 million dollars. BACKGROUND The MFA is the financing agency for all of the municipalities and Regional Districts in B.C. except the City of Vancouver. It is also the financing agency for the Greater Vancouver Water District and Greater Vancouver Sewerage and Drainage District. The procedure begins with municipalities or greater boards such as GVWD passing a Borrowing Bylaw (or its equivalent) authorizing borrowing from the MFA on their behalf. Borrowing Bylaws are sent to the respective Regional Districts for inclusion in a Regional District Security Issuing Bylaw. Once all legal requirements (such as Inspector of Municipalities approval) are met, the borrowing and security issuing bylaws are forwarded to the MFA as the maximum accumulated borrowing authority and is drawn down over time based on borrowing. As an additional step for the GVWD, the Greater Vancouver Water District Act requires the recommendation of the Commissioner to the GVWD Board to undertake a program of borrowing. The MFA has two bond issues per year, one in the spring and one in the fall. The GVRD (Metro Vancouver) will secure long-term funding for its capital program in one or both of these issues depending on the level of capital spending / funding required. Metro Vancouver does not borrow in advance of spending but borrows when capital expenditures accumulate to such a level that longterm funding is beneficial relative to funding through working capital. Each spring and fall, borrowing requests are sent to the MFA. These request are reviewed by their Board of Trustees and upon approval, included in either the spring or fall bond issues. Net borrowing requirements are estimated annually based on the anticipated capital expenditure program and the required servicing of such debt is included in the annual budget. The estimates serve P&P - 31

32 as the base for the necessary borrowing authority. This authority is sought periodically as required, the last time being in GVWD BORROWING Staff seek Board approval for a block of borrowing authority in advance of any actual borrowing. This approach is required due to the significance and nature of capital spending. With the significance of the capital program, the GVWD is likely to require long-term funding during both MFA Bond issues. As a result, it is not operationally feasible to determine the borrowing requirements, get Board approval of the Borrowing and Security Issuing Bylaws, the necessary approval from the Inspector of Municipalities and the MFA in a timely way to meet the MFA deadlines for participation in their bond issue. The GVWD, with a significant capital program required to maintain, secure and expand current infrastructure to meet the demands of a growing region, estimates long-term borrowing needs of up to approximately $700 million over the next five years in order to help fund that program. Some of the major projects in the capital program are as follows: Major Planned GVWD Capital Expenditures ( ) Second Narrows Crossing (Tunnel) Annacis Main No. 5 (Marine Crossing) Tilbury Main Central Park Main Replacement Lulu Island Delta Main South Surrey Main No. 2 $297 M 168 M 71 M 70 M 64 M 56 M $726 M ALTERNATIVES 1. That the GVWD Board: a) approve a borrowing limit of $700,000. b) give first, second and third readings to Greater Vancouver Water District Borrowing Bylaw Number 248, 2015 and forward to the Inspector of Municipalities for approval. 2. That the GVWD Board provide alternative direction with respect to the borrowing limit as appropriate then give three readings to the Greater Vancouver Water District Borrowing Bylaw Number 248, 2015 and forward to the Inspector of Municipalities for approval. P&P - 32

33 FINANCIAL IMPLICATIONS Under alternative 1, which is recommended, staff will have the necessary authority to make prudent financing decisions as required. This will allow for the appropriate decisions regarding balancing the cost of financing with the associated financing risk. The inability to have the necessary flexibility to make the financing decisions would have an unfavourable financial impact. Should this authority be reduced or not granted as under alternative 2, the ability to make necessary financing decisions in a timely manner would be constrained which may have a negative financial impact. SUMMARY / CONCLUSION This Borrowing Bylaw, as recommended under alternative 1, provides the necessary authorization for the GVWD to long-term borrow funds as and when required up to a maximum of $700 million. Attachments GVWD Borrowing Bylaw No. 248, P&P - 33

34 GREATER VANCOUVER WATER DISTRICT BYLAW NUMBER 248, 2015 A BYLAW TO AUTHORIZE THE ISSUE AND SALE OF DEBT NOT TO EXCEED THE AGGREGATE PRINCIPAL AMOUNT OF $700,000,000 (CANADIAN) WHEREAS: A. It is requisite and expedient for the Greater Vancouver Water District (the District ) to issue and sell to the Greater Vancouver Regional District ( GVRD ) a debenture or debentures or other form of security or indebtedness, not to exceed the aggregate principal amount of $700,000,000 in lawful money of Canada in order to borrow money to be applied for the purpose of undertakings authorized by the Greater Vancouver Water District Act (the Act ) or for the purpose of discharging the payment of any matter or thing contemplated or authorized by the Act, including for the purpose of repaying or refunding either before or at maturity monies which have been borrowed by the District by the issue of temporary securities or other debentures or securities. B. A debenture or debentures or other form of securities, including treasury bills, notes, temporary debentures, or other form of obligation, or indebtedness, not to exceed the aggregate principal amount of $700,000,000 in lawful money of Canada, is required to be issued and sold to realize net the sum required for the purposes aforesaid. C. The Commissioner of the District has provided a report to the Board of the District in which she recommended for the purposes aforesaid the issue and sale to GVRD of a debenture or debentures or other form of security or indebtedness, not to exceed the aggregate principal amount of $700,000,000 in lawful money of Canada, and to enter into an agreement with GVRD all as provided below. NOW THEREFORE the Board of the District in meeting assembled of which and for the purpose of which due notice was given, ENACTS AS FOLLOWS: 1. For the purposes aforesaid and pursuant to the authority contained in the Act it shall be lawful for the District and the District is hereby authorized, with the approval of the Inspector of Municipalities, to borrow money by the issue and sale to GVRD of a debenture or debentures or other form of securities, including treasury bills, notes, temporary debentures, or other form of obligation, or indebtedness (the Debenture or Debentures ) not to exceed the aggregate principal amount of $700,000,000 in lawful money of Canada as hereinafter provided. 2. The Debenture or Debentures shall be dated and issued on such date or dates as the Commissioner of the District shall determine and shall bear interest at such rate or rates and shall be payable on such date or dates during its currency or their currencies all as the Commissioner may determine. The aggregate borrowing authorized by this bylaw may be effected by different series or types of Debenture or Debentures each bearing different dates, maturities and interest rates and having such characteristics all as determined by the Commissioner. Payments in respect of the P&P - 34

35 Debenture or Debentures shall be made to GVRD by the District by cheque or electronic funds transfer. 3. The Debenture or Debentures shall be issued in fully registered form without coupons and shall mature on such date or dates as the Commissioner shall determine. A debenture register shall be maintained at the head office of the District, or that of its Agent. 4. The Debenture or Debentures shall be payable as to principal and interest in lawful money of Canada or in such other currency as the Commissioner shall determine. 5. The District shall raise in each debenture year during the currency or currencies of the Debenture or Debentures a sum or sums sufficient in lawful money of Canada to pay interest and, if applicable, principal falling due from time to time on the Debenture or Debentures. 6. If the Debenture or Debentures are issued as a sinking fund debenture or debentures, a sinking fund shall be established by the District to retire or to assist in retiring the Debenture or Debentures at maturity and for such purpose the District shall raise in each debenture year during the currency or currencies of the Debenture or Debentures in accordance with the Act a sum or sums sufficient for such purpose in lawful money of Canada and deposit the same in the sinking fund or funds. In settling the sum or sums to be raised annually, the rate of interest on investments shall be estimated at 3.5% per annum, capitalized yearly. 7. The Debenture or Debentures, without limiting any other provision of this bylaw, may in the discretion of the Commissioner be issued subject to the District s option to redeem in whole or at any time or from time to time, any part of the Debenture or Debentures on any date in advance of the maturity thereof and upon such terms and conditions as the Commissioner may determine, subject to the place of redemption and the price (including any premium) at which the Debenture or Debentures may be redeemed being specified by the Commissioner. 8. The Debenture or Debentures shall be in such form as the Commissioner of the District shall approve. The Debenture or Debentures shall rank pari passu with all other general obligations of the District except as to sinking funds. 9. The Debenture or Debentures may be sold for such sum or sums whether the same is the par value or more or less than the par value thereof and on such terms and conditions as the Commissioner may determine. 10. The District shall and is hereby authorized to enter into an agreement with GVRD in form and substance approved by the Commissioner which provides, inter alia, that: (a) (b) the District will provide and pay over to GVRD the sums required to discharge its obligations in accordance with the terms of the Debenture or Debentures; and if the sums provided for in the Debenture or Debentures are not sufficient to meet the obligations of GVRD in relation to the financing, the deficiency is a liability of the District. P&P - 35

36 11. The Commissioner is hereby authorized on behalf of the District to do all such things and to execute, with or without the seal of the District, and deliver all such agreements, documents or instruments that may be necessary or desirable to give effect to this bylaw. Any such agreement, documents or instruments shall also be signed by any one of the Chair of the Board or the Treasurer of the District. 12. This bylaw shall take effect on the date it is passed and adopted. 13. This bylaw shall be cited as Greater Vancouver Water District Borrowing Bylaw Number 248, Read a first, second and third time this day of, Received the approval of the Inspector of Municipalities this day of, Passed and finally adopted this day of, Greg Moore, Chair Chris Plagnol, Corporate Officer P&P - 36

37 5.3 To: From: Performance and Procurement Committee Phil Trotzuk, Chief Financial Officer Date: July 10, 2015 Meeting Date: July 17, 2015 Subject: GVRD Security Issuing Bylaw No. 1224, 2015 Regarding GVWD Borrowing Bylaw No. 248, 2015 RECOMMENDATION That the GVRD Board: a) give first, second and third reading to "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015". b) forward "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015" to the Inspector of Municipalities for approval. PURPOSE To authorize a bylaw for the issuance of debenture debt through the GVRD and the Municipal Finance Authority of British Columbia (MFA) in the amount of $700 million dollars for the GVWD and to provide the long term capital borrowing authority for the anticipated requirements of the next five years. BACKGROUND The GVRD as a member of the MFA is the Board approved borrowing conduit of the Greater Vancouver Water District (GVWD). Through a separate agreement, the GVWD is financially responsible for all debt service costs associated with the debenture financing entered into on its behalf. Net borrowing requirements of the GVWD are estimated annually based on the requirements of the anticipated capital expenditure plan and serves as the base for the necessary borrowing authority. We estimate that our GVWD programs will have expenditures, requiring long-term financing, up to approximately $700 million over the next five years. SECURITY ISSUING BYLAW The attached bylaw, grants the necessary authority for the GVRD to borrow $700 million through the MFA on behalf of the GVWD. This authority is consistent with the borrowing authority included in GVWD Borrowing Bylaw 248, ALTERNATIVES 1. That the GVRD Board: a) give first, second and third reading to "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015". b) forward "Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015" to the Inspector of Municipalities for approval. P&P - 37

38 2. That the GVRD Board make adjustments to the authority as appropriate, and give first, second and third reading to Greater Vancouver Regional District Security Issuing Bylaw No. 1224, 2015 and that it be forwarded to the Inspector of Municipalities for approval, as amended. FINANCIAL IMPLICATIONS Under alternative 1, as recommended, staff will have the necessary authority to secure GVWD financing, as required, which will allow the necessary flexibility for the appropriate financial decisions to be made on a timely basis. Should this authority be reduced or not granted under alternative 2, the ability to make necessary financing decisions in a timely manner would be constrained which may have a negative financial impact SUMMARY / CONCLUSION This Security Issuing Bylaw, in conjunction with the approved GVWD Borrowing Bylaw, provides the necessary authorization for the GVRD to borrow up to $700 million on behalf of the GVWD as and when required. Attachments and References: Greater Vancouver Regional District Bylaw No. 1224, P&P - 38

39 ATTACHMENT GREATER VANCOUVER REGIONAL DISTRICT BYLAW NO. 1224, 2015 A BYLAW TO AUTHORIZE THE ENTERING INTO OF A FINANCING AGREEMENT WITH THE MUNICIPAL FINANCE AUTHORITY OF BRITISH COLUMBIA IN THE AMOUNT OF $700,000,000 WHEREAS the Municipal Finance Authority of British Columbia ("the Authority") may provide financing of capital requirements for regional districts by the issue of debentures, or other evidence of indebtedness of the Authority and lending the proceeds therefrom to the regional district on whose request the financing is undertaken; AND WHEREAS the Greater Vancouver Regional District ( The Regional District ) may finance undertakings of the Greater Vancouver Water District on request, on behalf of and at the sole cost of the Greater Vancouver Water District, pursuant to the provisions of the Greater Vancouver Regional District Regulation B.C. Regulation 173/90 as amended, the undertakings to be financed pursuant to the following bylaw adopted by the Greater Vancouver Water District board under the Greater Vancouver Water District Act: District Bylaw Amount Greater Vancouver Water District 248, 2015 $700,000,000 AND WHEREAS for the purpose of providing financing under the Greater Vancouver Regional District Regulation, the Greater Vancouver Regional Board may adopt a security issuing bylaw without adopting a loan authorization bylaw; AND WHEREAS the Regional Board, by this Bylaw, hereby requests that such financing be undertaken through the Authority; NOW THEREFORE the Regional Board of the Greater Vancouver Regional District in open meeting assembled enacts as follows: 1. The Authority is hereby requested and authorized to finance from time to time the aforesaid undertakings at the sole cost and on behalf of the Greater Vancouver Regional District, in Canadian Dollars or in such other currency or currencies as the Authority shall determine so that the amount realized does not exceed Seven Hundred Million Dollars $700,000,000 in Canadian Dollars and/or the equivalent thereto and at such interest and with such discounts or premiums and expenses as the Authority may deem consistent with the suitability of the money market for the sale of securities of the Authority; 2. Upon completion by the Authority of financing undertaken pursuant hereto, the Chair and Chief Financial Officer of the Regional District, on behalf of the Regional District and under its seal shall, at such time or times as the Trustees of the Authority may request, enter into and deliver to the Authority one or more agreements which said agreement or agreements shall be substantially in the form annexed hereto as Schedule "A" and made part of this Bylaw (such agreement or agreements as may be entered into, delivered or substituted hereinafter referred to as the "Agreement") providing for payment by the Regional District to the Authority of the amounts P&P - 39

40 required to meet the obligations of the Authority with respect to its borrowings undertaken pursuant hereto, which Agreement shall rank as debenture debt of the Regional District; 3. The Agreement in the form of Schedule "A" shall be dated and payable in the principal amount or amounts of money in Canadian Dollars, or as the Authority shall determine and subject to the Local Government Act, in such other currency or currencies as shall be borrowed by the Authority pursuant to Section 1 and shall set out the schedule of repayment of the principal amount, together with interest on unpaid amounts as shall be determined by the Treasurer of the Authority; 4. The obligation incurred under the Agreement shall bear interest from a date specified therein, which date shall be determined by the Treasurer of the Authority, and shall bear interest at a rate to be determined by the Treasurer of the Authority; 5. The Agreement shall be sealed with the seal of the Regional District and shall bear the signatures of the Chair and Chief Financial Officer; 6. The obligations incurred under the Agreement as to both principal and interest shall be payable at the Head Office of the Authority in Victoria and at such time or times as shall be determined by the Treasurer of the Authority; 7. During the currency of the obligation incurred under the Agreement to secure borrowing in respect of the Greater Vancouver Water District Bylaw 248, 2015, there shall be requisitioned annually an amount sufficient to meet the annual payment of interest and the repayment of principal; 8. The Regional District shall provide and pay over to the Authority such sums as are required to discharge its obligations in accordance with the terms of the Agreement, provided however that if the sums provided for in the Agreement are not sufficient to meet the obligations of the Authority, any deficiency in meeting such obligations shall be a liability of the Regional District to the Authority and the Regional District shall make provision to discharge such liability; 9. Pursuant to section 15 of the Municipal Finance Authority of British Columbia Act, at the request of the Treasurer of the Authority, the Regional District shall pay over to the Authority such sums and execute and deliver such promissory notes as are required to form part of the Debt Reserve Fund established by the Authority in connection with the financing undertaken by the Authority on behalf of the Regional District pursuant to the Agreement; P&P - 40

41 10. This Bylaw may be cited as Greater Vancouver Regional District Security Issuing Bylaw Number 1224, Read a first, second and third time this day of, Received the approval of the Inspector of Municipalities this day of, Passed and finally adopted this day of, Greg Moore, Chair Chris Plagnol, Corporate Officer P&P - 41

42 CANADA PROVINCE OF BRITISH COLUMBIA Schedule A Dollars A G R E E M E N T GREATER VANCOUVER REGIONAL DISTRICT The Greater Vancouver Regional District (the Regional District ) hereby promises to pay to the Municipal Finance Authority of British Columbia at its Head Office in Victoria, British Columbia, (the "Authority") the sum of ($ ) in lawful money of Canada, United States of America or United Kingdom together with interest thereon from the day of 20 at the rate of per annum calculated (annually/ semi-annually) in each and every year during the currency of this Agreement; and payments shall be as specified in the table appearing on the reverse hereof commencing on the day of 20, provided that in the event the payments of principal and interest hereunder are insufficient to satisfy the obligations of the Authority undertaken on behalf of the Regional District, the Regional District shall pay over to the Authority such further sums as are sufficient to discharge the obligations of the Regional District to the Authority. It is understood and agreed between the Regional District and the Municipal Finance Authority of British Columbia that any monies paid by the Regional District to the Municipal Finance Authority of British Columbia in or towards repayment of monies borrowed by the Municipal Finance Authority of British Columbia and loaned to the Regional District pursuant to this agreement that are not applied by the Municipal Finance Authority of British Columbia to the payment of principal or interest or invested pursuant to Section 14 of the Municipal Finance Authority of British Columbia Act shall be paid into a fund to be created and administered by the Municipal Finance Authority of British Columbia in accordance with the provisions of Section 15 of the Municipal Finance Authority of British Columbia Act. Dated at, British Columbia, this day of 20. IN TESTIMONY WHEREOF and under the authority of Bylaw No. 1224, 2015 cited as Greater Vancouver Regional District Security Issuing Bylaw No. 1224, This Agreement is sealed with the Corporate Seal of the Greater Vancouver Regional District and signed by the Chairperson and Treasurer thereof. CHAIR CHIEF FINANCIAL OFFICER P&P - 42

43 5.4 To: From: Performance and Procurement Committee Dean Rear, Director - Financial Planning and Operations Date: July 6, 2015 Meeting Date: July 17, 2015 Subject: Amendment to Corporate Investment Policy RECOMMENDATION That the GVRD Board approve the Corporate Investment Policy as presented in the report titled Investment Policy Update, dated June 16, PURPOSE To seek GVRD Board approval for amendments to the Corporate Investment Policy. BACKGROUND The Board approved Corporate Investment policy provides the guidelines for investment decisions. The primary objective of the policy is to ensure safety of capital but also provides for maintaining sufficient liquidity to meet operational requirements and to provide the highest return on investment possible after considering safety of capital and required liquidity. The defined limits outlined in the policy are reviewed on an ongoing basis and require adjustments from time to time due to market changes, operational needs or other administrative matters. This policy was last amended in June PROPOSED POLICY AMENDMENTS Since the economic downturn following the Financial Crisis of , bond yields have been on a downward trend and reached a historical low point in the first quarter of As illustrated in table 1 below, average yields for the Canada bonds with maturities of 3-5 years and 5-10 years have both declined by more than 300 bps since mid Despite a slight increase experienced in the second quarter of 2015, the bond yields remain volatile and it is not yet clear as to when the rates will turn and start moving in an upward trend. P&P - 43

44 Table 1 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Average Canada Bond Yields 3-5YR 5-10YR Given this challenging market of uncertainty and a prolonged period of low interest rates, we need to identify different ways to maximize our return while meeting the primary objectives of our policy to preserve capital and maintain liquidity. As part of this policy update, we also streamlined and refined the existing investment terms. The proposed changes to the Investment Policy are as follows: 1) To establish maximum limit of $200M for Canadian provinces or entities guaranteed by the Provinces rated AA- or better, previously without any limit. This achieves a more balanced portfolio based on the limits. The maximum dollar limits are also assigned in a systematic and hierarchical order based on risk, as the Provincial have the next highest limit after Canada s federal instruments. 2) To increase the maximum terms for Canada and Provincial bonds from 10 to 30 years to allow expanded selection of products with longer maturities and higher yields. Access to longer-term Canadian government bonds with maturities beyond 10 years up to 30 years will almost double the current number of investment options and will allow additional pick-up in yields up to and more than 60 bps. As illustrated in Table 2 below, the average yield by term ranging from 2 to 30 years for Provincial bonds increase as it moves further out the time curve. The maximum limit as a percent of total portfolio is set conservatively at 5% for all government instruments combined to reflect the interest rate risk in holding a longterm instrument. As we continue to carefully assess the economic conditions and the future of interest rates, we remain cautious and prudent in our approach. We plan to invest beyond 10 years when rates are higher and we are able to realize a significant gain in yield. P&P - 44

45 3) Increased maximum term for National Bank of Canada to 10 years from 5 years. National Bank of Canada is one of the top six largest banks in Canada and offers deposit notes that are competitively priced to the other major Canadian banks. Expanding the term beyond the current limit of 5 years up to 10 years, consistent with the other major banks, will allow access to more products with potentially higher yields. The dollar and percentage maximum will remain at the previously existing levels that are slightly below the top five banks to reflect the lower credit rating. 4) Increased maximum dollar limits for Manulife Bank and Canadian Western Bank. Manulife Bank and Canadian Western Bank offer attractive yields compared to the top six banks. To account to the lower credit rating compared to the major Canadian banks, the maximum term and dollar limit beyond 1 year remain unchanged. The increase in the dollar limit will only apply to short-term investments under 1 year to maximize our rate of return from highly liquid money market products. 5) To add to our list of qualified investment institutions, Prospera Credit Union and First West Credit Union. Each of these institutions will be allowed a maximum dollar limit of $25 million and a maximum term of 3 years, consistent with the other credit unions that we currently invest with. The short-term money market products from banks and governments currently trade at exceptionally low yields. As an example, a 3 month-term bankers acceptance in early June offered yields ranging between 0.80% and 0.85%. In comparison, a credit union s 90-day term deposit offered interest rates up to 1.60%. Expanding the use of credit unions term deposits will allow increased laddering of our short-term portfolio to mitigate interest rate risks while improving our overall rate of return. The credit unions have consistently offered significantly better yields than the banks and governments in the past. Another advantage of credit union term deposits is the flexibility to set our own maturity dates to meet specific cash flow needs. 6) Updated maximum percentage based on dollar limit as percentage of $400M, estimated lower end of the portfolio range, adjusted for other risks. The current maximum percentages were not proportionate to the dollar maximum over the total portfolio value. Each category at the institution level and overall category level were reviewed and assigned a limit based on the dollar maximum as a percentage of the lower end of the estimated portfolio value of $400M, and further adjusted to factor in other risks. This methodology achieves a consistent and systematic approach to building a balanced portfolio. 7) To update the wording for safekeeping of credit union investments as the credit union deposits are neither book-based entry nor physical transfer and therefore are maintained by the respective credit unions. This last proposed change regarding the safekeeping requirement of credit union investments is necessary as the current policy is outdated in definition and practice. P&P - 45

46 Table 2 4.0% Provincial Bonds Average Yield 3.5% 3.0% 2.6% 3.4% 3.2% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Ave Yield % Years The changes to the investment terms noted in (1) through (6) are also summarized in Attachment A to this report, as well as a summary table of all proposed changes and impact is included in Attachment B. These recommended changes will not materially impact the safety of capital or liquidity of the portfolio. A copy of the Corporate Investment Policy with a revised Appendix A, incorporating the above noted changes, is included as Attachment C. ALTERNATIVES 1. The GVRD Board approve the Corporate Investment Policy as presented in Attachment C. 2. The GVRD Board make adjustments to the Corporate Investment Policy as appropriate and approve the Corporate Investment Policy as amended. FINANCIAL IMPLICATIONS If the Board approves alternative 1, the proposed changes allow for increased return on investments by expanding available products and increasing maximum terms for high quality government bonds while also maintaining safety of capital. The total peak investment portfolio has been increasing ( $660 million; $648 million; $585 million) and the current limits have become restrictive for generating the highest return available. The proposed changes will not increase the risk to our capital. Not approving these proposed changes to increase investment terms and options will result in an opportunity cost of lost potential returns. P&P - 46

47 SUMMARY / CONCLUSION The corporate investment policy changes highlighted in this report increase our investing flexibility and as a result allow for access to greater investment returns while maintaining the conservative risk exposure appropriate for an organization of our nature. The changes as included under alternative 1 are recommended to the Board for approval. Attachments: Attachment A Proposed Investment Policy Adjustments June 2015 Attachment B Summary Table of Proposed Changes and Impact Attachment C Corporate Investments Policy No.3.08 Revised P&P - 47

48 P&P - 48

49 SUMMARY TABLE OF PROPOSED CHANGES AND IMPACT Proposed Change Set maximum limit of $200M for Canadian provinces or entities guaranteed by provinces rated AA- or better, previously without any limit. Increased maximum term for investments in Government instruments beyond 10 years up to maximum of 30 years. Increased maximum term for National Bank of Canada to 10 years from 5 years. Increased maximum dollar limits for Manulife Bank and Canadian Western Bank. Addition of two new BC Credit Unions: First West Credit Union and Prospera Credit Union. Updated maximum percentage based on dollar limit as percentage of $400M, estimated lower end of the portfolio range, adjusted for other risks. Updated safekeeping requirement for credit union investments. Impact Achieve a more balanced portfolio by limiting maximum dollar. Systematic and hierarchical ordering of limits based on risk. Next highest limit after Canada instruments. Increased products. Higher yields. Laddering of portfolio. Increased products beyond 5 years maturity with competitive pricing. Term consistent with rest of the major Canadian banks. Increased products. Higher yields. Laddering of portfolio, in particular the shorter term. Increased products. Higher yields. Laddering of portfolio, in particular the shorter term. Facilitate cash flow planning as we can set specific maturity dates. Consistent and systematic allocation of percentage maximums. Current and accurate description of safekeeping requirements. P&P - 49

50 ATTACHMENT C BOARD POLICY CORPORATE INVESTMENTS POLICY NUMBER: FN Effective Date: June 4, 2014 Approved By: GVRD BOARD PURPOSE To provide guidelines within which investment decisions are made to ensure safety of capital, adequate liquidity and a reasonable rate of return. APPLICATION This policy applies to all investments on behalf of the corporate entities. POLICY A. General Objectives: i) Safety of Capital This is the foremost objective of this policy. Prudent investments shall be chosen in a manner that ensures preservation of capital. Consideration therefore must be given to both credit and interest rate risk in all investment decisions. ii) Liquidity Investment portfolios will provide sufficient liquidity to meet the ongoing needs of all Metro Vancouver Districts and the Housing Corporation. Investment terms will be structured as much as possible to meet anticipated cash needs. iii) Yield Portfolios will be invested to produce the highest yield after first considering objectives i) and ii) above and within the investment guidelines in Appendix A. B. Standard of Care The standard of care to be applied by staff in carrying out their duties is that of a prudent person, in the context of the management of a diversified portfolio. This in turn translates as the exercise of discretion and judgment, in conformity with policies, with the purpose being investment, rather than speculation. The Employee Code of Ethics Policy requires performance to a high standard of integrity, and specifically forbids conflict of interest situations. 1 Replaces Policy No that was noted in the document adopted by the Board P&P - 50

51 C. Investment Parameters Investments will at all times be governed by legislation, specifically the Community Charter Section 183 (copy attached as Appendix C). Short term investments (maximum term 365 days) are restricted to those with a minimum short term credit rating of R1Low as defined by Dominion Bond Rating Service (DBRS) or the Standard and Poor s (S&P) equivalent of A-1. Short term investments will be permitted in non-qualifying institutions when such investments are guaranteed by a qualified institution. An example of this would be an investment in a Credit Union in BC which is in turn guaranteed by the Province of BC. Long term investments must have at a minimum a long term credit rating of 'A-' by S&P or DBRS equivalent (A-low). Both our short term and long term investments are limited to primarily Government debt (provincial and federal) and Canadian financial institutions. The specific details of the qualified investments as well as the maximum permitted dollar values and portfolio percentages are listed in Appendix A. D. Investment Terms Short Term Investments will have a maximum term of 365 days and are restricted to terms listed on Appendix A attached. Long Term Investments are those with term exceeding 365 days. Long term investments will also be restricted to terms listed on Appendix A attached. E. Tendering Short Term Investments (under 365 days) Investments of terms greater than 15 days require at least three quotes from qualifying dealers. (See comments below concerning Long Term Investments as a potential exception to this rule) Long Term Investments (over 365 days) Long term investments do not necessarily lend themselves to direct comparison. Often there is difficulty in finding the same name or similar credit quality in exactly the same term. This requires that those responsible for long term investing are given and use considerable judgement in determining the investment choice. Where direct comparisons are possible between like or similar investments at least three quotes from qualifying dealers will be required. P&P - 51

52 Where direct product comparisons are not available, those responsible for investing must ensure that the offering under consideration is priced fairly. This can be done by verifying spread levels (over benchmark or equivalent term Canada bonds) obtained from two other dealers which support the offering being considered. These spreads should be recorded for subsequent review by internal audit. F. Safekeeping All investments will be held for safekeeping at either RBC Investor Services (our Safekeeping Agent), Royal Bank Capital Markets (RBC Dominion Securities), the Bank of Montreal, or at Clearing and Depository Services Inc. (CDS) for securities whose transfer is book-based rather than by physical delivery. However, Credit Union deposits are neither CDS book-based entry nor physical transfer and therefore will be maintained by the respective Credit Union. G. Review, Oversight and Reporting The statutory authority of the Treasurer for investment decisions is delegated to the Division Manager, Treasury and Business Processes and to the Treasury Manager, including any appointed in an acting capacity. While day to day investment operations are the responsibility of the Treasury Manager, the Division Manager, Treasury and Business Processes is responsible for its supervision, including review of internal control issues and policy enforcement. Summary reports on investment positions will be prepared monthly for the Treasurer. The Treasurer, Division Manager, Treasury and Business Processes, and Treasury Manager will meet quarterly (or more frequently as required) as an Investment Management Committee to review the investment activities as well as current investments issues. The Committee will establish the percentage split of the portfolio between long and short term investments as well as the average term of the portfolio based on existing market conditions and expected future conditions. A list of approved investments, based on the eligibility criteria, will be developed and maintained by the Division Manager, Treasury and Business Processes, subject to the approval of the Committee. While changes to the 'Approved List of Investments' outlined in Appendix A are subject to the Finance Committee's specific approval, any officer may immediately suspend a previously approved investment at any time on his own authority and, in fact, must do so when he has reason to believe it no longer meets the necessary requirements The officer will immediately advise the other officers connected with investment decisions. Quarterly, the ratings of all approved investments will be reviewed by the Division Manager, Treasury and Business Processes. Upon knowledge of a decrease in the credit rating of an approved investment to a level below the parameters outlined in this policy, the Division Manager, Treasury and Business Processes will immediately advise the Treasurer. As this rating is below the minimum acceptable credit rating, the investment position should be sold within a reasonable period of time. P&P - 52

53 A report will be presented to the Finance Committee as of April 30, August 31, and December 31 each year and will include a position statement, performance results compared to benchmarks, market comment and other relevant issues. The Regional District purchases investments with the intention of holding these until maturity and not with further trading in mind. As such, changes in market value become irrelevant to the actual return. For this reason we will not adjust the portfolio value based on changes in unrealized market value, but rather report investment performance based on actual return to maturity. Our short term investment performance will be compared to the benchmarks detailed on Appendix B. Finding a benchmark for our long term investments is difficult as most available benchmarks will reflect changes in market valuation. With this in mind, we will provide the benchmarks included on Appendix B as a reasonable general comparison to our long term investment performance. In addition to the audit activities and procedures performed annually by the external auditors, the internal audit group will review internal controls and ensure compliance with policy and procedures bi-annually. All changes to this policy require Finance Committee and Board approval. Appendices: Appendix A: Approved Investments (February 2008) (Updated December 12, 2011) Appendix B: Investment Performance Benchmarks Appendix C: Community Charter (Section 183) P&P - 53

54 Approved Investments (July 2014) *Includes Provincially guaranteed Financial Institutions P&P - 54

55 Investment Performance Benchmarks The benchmarks listed below are used as a guideline to assess the performance / investment returns on investments held. Short Term Investments Municipal Finance Authority Money Market Fund* Average One Month Banker's Acceptance Rate** Average Three Month Banker s Acceptance Rate** Long Term Investments Municipal Finance Authority Intermediate Bond Fund Municipal Finance Authority Long-term Bond Fund *Available on the MFA website **Calculated from the Bank of Canada website P&P - 55

56 Community Charter Section 183 Investment of municipal funds 183 Money held by a municipality that is not immediately required may only be invested or reinvested in one or more of the following: (a) securities of the Municipal Finance Authority; (b) pooled investment funds under section 16 of the Municipal Finance Authority Act; (c) securities of Canada or of a province; (d) securities guaranteed for principal and interest by Canada or by a province; (e) securities of a municipality, regional district or greater board; (f) investments guaranteed by a chartered bank; (g) deposits in a savings institution, or non-equity or membership shares of a credit union; (h) other investments specifically authorized under this or another Act. P&P - 56

57 5.5 To: From: Performance and Procurement Committee Dean Rear, Director - Financial Planning & Operations Date: June 25, 2015 Meeting Date: July 17, 2015 Subject: Continuous Improvement Actions at Metro Vancouver RECOMMENDATION That the Performance and Procurement Committee receive the report titled Continuous Improvement Actions at Metro Vancouver, dated June 25, 2015 for information. PURPOSE The purpose of this report is to provide an update for the Committee on Metro Vancouver s activities reviewing business processes to find and implement opportunities for improvement. BACKGROUND Efficient and effective business processes and internal controls are critical elements of successful local governments that provide services to growing communities in challenging environments with growing public expectations for accountability. Continuous examination of these processes and controls is essential in ensuring an organization is addressing changing business routines and moving toward best practices. Metro Vancouver has been proactive in managing controls and processes. When its business environment and expectations have changed, staff have moved to ensure controls are adjusted to reflect the new routines. The following summarizes the actions and opportunities that have recently been undertaken to examine and improve business processes. SYSTEM UPGRADES While new system projects are often driven by new technology or service changes by software vendors i.e. eliminating support, a key part of the implementation activities for new software is the examination of existing as is processes and then the development of to be processes. Not only do these activities make sure that the capabilities of the new software are fully taken advantage of, it ensures that the procedures and controls surrounding the system are efficient, effective and add value. Recent examples of systems based improvements at Metro Vancouver include: Human Resource, Payroll, Time Administration (HRPTA) System The purpose of this project was to replace the timesheet system that was no longer supported by the original vendor and was becoming incompatible with related systems. Improved processes through the implementation of the system include: Streamlined timesheets the previous system had a customized timesheet requiring full time entry for each exception day in addition to a code be entered for each day. The new P&P - 57

58 system has a streamlined entry process requiring one code for exceptions only in the biweekly period. The termination cheque process has been streamlined so that the system automatically calculates payouts from employee leave balances. Managers now have the ability to run a series of on-line reports which were previously paper based or onerous to run. The time entry and approval access is now position based requiring less system maintenance. The previous system relied on a departmental structure which required significant effort to maintain, particularly when departmental changes occurred. Financial Planning System (FPS) This project was undertaken to implement a dynamic budgeting financial planning system to improve reporting, analysis and decision making. Improved processes through the implementation of the system include: Automated upload of the budget to the Peoplesoft accounting system: o The process for creating details from the legacy budget system (PIP) and uploading them resulted in budgets not getting into Peoplesoft until approximately two months after Board approval. o This saves an estimated 300 hours of analyst time per year to focus on value added client support. On-line review, approval and promotion of budgets during the preparation process. Automated allocation of costs of support services to programs. These were previously calculated manually, requiring recalculations if a base budget was changed. Daily download of actual transactions for easy self-service budget to actual variance review by budget owners. Financial Management System (FMS) This is a current project which is also replacing the key financial procurement and accounting system that is not supported by the vendor and represents a significant risk if there is a critical failure. With the new implementation the expected improved processes include: Automated workflow for procurement, routing the approval of requisitions and purchase orders to staff who are required to review and approve them. Reduced reliance by departments using spreadsheets to recreate or enhance information to meet their needs. Significant time is spent by departments either modifying existing financial information into a format that meets their needs or recreating information that is not easily obtainable out of the system. Reduced manual paper processing such as that for employee reimbursement. P&P - 58

59 FORMAL PROCESS REVIEWS Purchasing Division Organizational Review In February of 2015 Metro Vancouver issued a Request for Proposals for a consultant to review the structure, practices and procedures of the Purchasing Division of the Financial Services Department. With a significant number of large and complex projects planned for the next 10 years, the Purchasing Division is seeking to improve service to client departments through effective and efficient processes carried out by resources allocated to meet future needs. The existing practice of the Purchasing Division is to provide services with a client based approach where a buyer is assigned to service the procurement needs of a particular operating department. Alternate service methodologies are being examined and considered, including focused procurement, which is an expertise based approach whereby purchasing expertise is assigned based on the expected complexities. Internal processes are also being evaluated as part of the analysis, to find ways to streamline procurement processes and find efficiencies therein. This includes looking for opportunities to consolidate supply agreements corporately to achieve efficiencies on both administration, e.g. reducing the number of purchase orders processed, and generate more favorable supply agreements. Business Risk and Advisory Services Group Following the report on Financial Services - Process Review and Improvement, in the past year the Business Risk and Advisory Services group has gone through a number of learning activities to gain an understanding of the Lean approach to continuous improvement. The methodology has many potential applications in the organization at all levels. Business Risk and Advisory Services has provided information presentations on Introduction to Lean Thinking to a variety of groups within the organization such as the Financial Services Management Team and the Metal and Fabrication Shop at the LCOC Operations Centre. While primarily focused on Financial Services, Lean tools such as Process Mapping, 5S, and Value Stream Mapping have been applied to processes such as LWS Flow and Rainfall Data Collection and the monthly cell phone charge review process, identifying pain points and opportunities to eliminate non-value added activities. Following reports and guidelines released by the Auditor General for Local Government (AGLG), the Business Risk and Advisory Services group has reviewed Metro Vancouver s approach to capital project planning and procurement with summarized results identified in a separate report on this agenda. Recommendations for other local governments and guidelines issued by the AGLG are opportunities for Metro Vancouver to examine its own processes. The development of the continuous improvement initiative has been incremental as time and resources permit. A more formal framework for a continuous improvement initiative is being developed by the Business Risk and Advisory Services group that will assist all groups to in seeking efficiencies for resource maximization and ensure that process activities either add value or are eliminated. P&P - 59

60 ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS The effects from continuous improvement initiatives have not yet been quantified. The workplan for the Business Risk Advisory Group includes the development of an approach to quantify and report the effects of improved processes. SUMMARY / CONCLUSION With increased public expectations to do more with less, many local governments are examining different ways to increase efficiency and effectiveness within their operations. Metro Vancouver undertakes process review through both formal and informal means, and is continuing to develop a formal continuous improvement approach utilizing lean methodologies P&P - 60

61 5.6 To: From: Performance and Procurement Committee Dean Rear, Director - Financial Planning & Operations Date: July 3, 2015 Meeting Date: July 17, 2015 Subject: AGLG Audit Topic 3 Capital Procurement Projects and Asset Management Programs RECOMMENDATION That the Performance and Procurement Committee receive the report titled AGLG Audit Topic 3 Capital Procurement Projects and Asset Management Programs, dated July 3, 2015 for information. PURPOSE To provide the Performance and Procurement Committee with an overview of how Metro Vancouver s business practices for capital planning and procurement compare to that examined by the Auditor General for Local Government under their Audit Topic 3. BACKGROUND Provincially, recognizing that local government in the province consists of over 180 local governments of vastly differing levels of size and sophistication, the Office of the Auditor General of Local Government (AGLG) was created with the stated purpose to conduct performance audits of the operations of local governments in order to provide local governments with objective information and relevant advice that will assist them in their accountability to their communities for the stewardship of public assets and the achievement of value for money in the operations. The initial service plan for the AGLG stated that the audit topics for its first series of reports would be: Audit Topic 1 - Achieving Value for Money in Operational Procurement Audit Topic 2 Local Government Performance in Managing Policing Agreements and Police Budget Oversight Audit Topic 3 - Learnings from Local Government Capital Procurement Projects and Asset Management Programs The AGLG has released three reports under this topic, two on the City of Rossland with the first issued in April of 2014 and the second issued in March of this year, and the most recent one on the District of Sechelt which was released in April of this year. As an example the key recommendations arising from the report on the District of Sechelt include: Requiring the preparation of a business case before approving a capital project. Developing clear policy on the delegation of authority to Council committees. Enhancing the transparency of decision-making. Developing a conflict of interest policy. Making appropriate use of Sechelt s senior staff in planning and monitoring projects. Undertaking a post-completion review of the wastewater treatment plant project. P&P - 61

62 Strengthening its procurement policy. Developing a systematic approach to managing the District s capital assets. In conjunction with the performance reports, the AGLG has released a Perspectives Series booklet addressing Audit Topic 3 titled Oversight of Capital Project Planning and Procurement. The booklet presents 26 questions for consideration for oversight of local government capital procurement and were developed through the lessons learned from the work done at the City of Rossland and the District of Sechelt. Audit Topic 3 has particular relevance for Metro Vancouver due to the capital intensive nature of its operations. METRO VANCOUVER STRUCTURE AND PROCESS While the relative number and size of capital projects at the City of Rossland and the District of Sechelt is vastly different than that at Metro Vancouver, the release of these reports offers the opportunity to review the recommendations and reflect upon the processes and controls in place at Metro Vancouver. To that end, the Business Risk and Advisory Services group undertook a review of the 26 questions for consideration that were highlighted in the AGLG booklet. Each question for consideration included suggested control criteria for capital planning, procurement and project management. A total of 127 control criteria were identified and used as a basis for the analysis. Key observations from the review by Business Risk and Advisory Services group include: Metro Vancouver has a governance structure in place with clear management accountability and responsibility. An integrated multi-year capital planning process exists that considers relevant factors such as infrastructure service delivery, risk management, demand and capacity, optimization and sustainability. This integrated multi-year capital planning process includes: o Screening level business case requirement with a risk rating methodology that is used for prioritizing capital projects. o Review and feedback solicited from member municipalities, Metro Vancouver senior management and executives; o Public and municipal consultation sessions; and o Committee and Board reviews and approval of the annual capital budget. There is regular reporting of capital expenditures during the year which includes the percentage of completion and the projected cost to complete the capital projects. There are capital project management guidelines to be used by project managers. A capital planning system development project is being contemplated to enhance the efficiency of the current process and strengthen decision making around capital priorities. The themes raised by the AGLG are considered fundamental characteristics of good governance and internal control which are an ongoing focus at Metro Vancouver, and although procurement controls and processes are considered strengths here at Metro Vancouver, there are always P&P - 62

63 opportunities for Metro Vancouver to act upon to further improve its policies and procedures. Opportunities for consideration include: Consider clarifying the provision of information to the Board and Committees related to governance and oversight of capital projects to ensure it is meeting their expectations. Ensure consistent interpretation and use of the policies related to procurement and capital project management through ongoing training and communication. Consider expanding the risk management process for capital planning, procurement and project management to involve other key departments and evaluation of the risk tolerance of senior management and the Board. Consider reviewing corporate policy on conflict of interest and code of ethics to ensure they meet or exceed public expectations. Consider a post completion technical review on high risk, high profile capital projects, including Board reporting information related to lessons learned. ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS Capital projects are a very significant part of Metro Vancouver s activities, the capital budget for 2015 is over $340 million. Reviewing the planning, procurement and management activities is consistent with a continuous improvement approach, finding ways to both strengthen controls and governance while seeking efficiencies. SUMMARY / CONCLUSION The AGLG has release two audit reports and a perspectives series booklet under their workplan for Audit Topic 3 - Capital Procurement Projects and Asset Management Programs. The reports on the City of Rossland and the District of Sechelt have included key recommendations to improve process and oversight. The Business Risk and Advisory Services group has reviewed Metro Vancouver practices against the key considerations set out in the AGLG booklet Oversight of Capital Planning Project and Procurement and found that Metro Vancouver has a solid planning, procurement and management process, with opportunities for continued improvement. Attachments and References: AGLG Perspective Series - Oversight of Capital Planning Project & Procurement P&P - 63

64 AGLG Perspectives Series Accessible Tools Audit Topic 3 Tool 1 (April, 2014) OVERSIGHT OF CAPITAL PROJECT PLANNING & PROCUREMENT Key Considerations for Local Government Council and Board Members Relating to AGLG Audit Topic 3: Learnings from Local Government Capital Procurement Projects and Asset Management Programs P&P - 64

65 Table of Contents 4 THE AGLG PERSPECTIVES SERIES 5 THIS BOOKLET 8 THE 26 QUESTIONS 10 THE ROLE OF COUNCIL/BOARD MEMBERS IN CAPITAL PROJECT PLANNING AND PROCUREMENT 1 What is the tone at the top? 2 How do council/board members participate in capital procurement? 12 DECISION-MAKING IN CAPITAL PROJECT PLANNING AND PROCUREMENT 3 What level of delegation of council/board powers to local government staff is appropriate? 4 What information should we as a council/board expect to see? 5 What comes to us for our review and approval? 6 What do we do if our staff doesn t have enough time or expertise to effectively manage a capital project? 7 Do our policies and procedures support sound practices by staff? 16 CAPITAL PROJECT PLANNING 8 Is the project included within our five year financial plan? 9 Should staff provide a business case for the project? 10 How accurate does a project budget need to be? 11 How might trade agreements affect our project? 18 PROCUREMENT 12 How do we contract for outside resources? 13 Why do we need a written contract? Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 2 P&P - 65

66 20 MANAGING RISKS 14 How does our local government assess project risks? 15 How do we protect against staff not following our policies? 22 CONFLICT OF INTEREST 16 How do we manage ethical requirements and the potential for conflict of interest? 17 What are our legal responsibilities relating to conflict of interest? 18 Do we have adequate conflict of interest and other ethical requirements for staff? 19 How do we hold contractors accountable for potential conflicts of interest? 26 ENSURING VALUE FOR MONEY 20 Does our local government carry out a post-completion assessment of capital projects? 21 How can we make sure our capital projects are successful and provide good value for money? 27 MONITORING AND REPORTING 22 How does our local government monitor and report on progress and changes? 23 How do we know expenditures are accurately reported? 24 Are project documents complete, accurate and readily available? 29 WHEN SOMETHING GOES WRONG 25 What happens if a project goes off the rails? 26 What do we do if our ethical rules are broken? 30 INFORMATION SOURCES AND RESOURCES 31 DEFINITIONS AND MORE DETAILED INFORMATION Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 3 P&P - 66

67 THE AGLG PERSPECTIVES SERIES The office of the Auditor General for Local Government (AGLG) was created through a law passed by the British Columbia Legislature in The AGLG was created to carry out performance audits of local government operations and provide them with information and advice. Our goal is to help local governments be accountable to their communities for how well they take care of public assets and achieve value for money in their operations. The AGLG Perspectives series of booklets is designed to help achieve this. These booklets complement our performance audit reports by providing local governments across the province with useful information relating to the topics we examine through our audits. Some AGLG Perspectives booklets will be written mainly for elected council and board members, others will be directed more to local government staff and some may be directed at the full range of people who take an interest in local government in British Columbia. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 4 P&P - 67

68 THIS BOOKLET We have written this booklet mainly for council and board members of British Columbia s local governments. Our goal is to help you carry out your oversight responsibilities in the area of capital project planning and procurement. This booklet highlights the kinds of information you should expect to receive for decision-making and monitoring in this area. It is not a comprehensive guide. Instead, it is a starting point for elected council and board members, especially those who have relatively little experience in dealing with local government capital project planning and procurement. This booklet is the first in a series to be informed by lessons learned in our performance audit work, in this case work to date on the topic Learnings from Local Government Capital Procurement Projects and Asset Management Programs. We will publish later installments dealing with other aspects of this topic. How to Use this Booklet This booklet presents questions you can ask yourself, fellow elected officials and staff to help carry out your oversight responsibilities. It summarizes good practices in the area of capital project planning and procurement. We have drawn these from our audit work to date and authoritative sources that are listed at the back of this booklet. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 5 P&P - 68

69 THIS BOOKLET Capital Procurement Capital procurement occurs when a local government pays someone from outside the organization to supply, build or improve a physical asset of lasting value, such as a building, vehicle, road or water system. Capital procurement follows from capital planning, which looks at the community s needs and compares them to the assets the local government already has in place and their condition. By comparing needs to the resources available, your local government can decide what capital procurement to undertake. Both capital planning and capital procurement are parts of capital asset management, the overall process of taking care of your local government s capital assets through their entire lifecycle, from their initial planning through to decommissioning at the end of their useful lives. The chart on the following page summarizes the types of information contained in this booklet. Why Capital Procurement Matters Capital procurement is important because the capital items local governments invest in are essential to providing vital services to the public and because local governments spend significant amounts of tax dollars on them. According to their annual financial reports, B.C. local governments owned $34 billion worth of assets in Because of the high value and importance of these assets, it is important for local governments to have controls in place to make sure they are purchased or constructed, delivered and managed cost effectively and that local governments receive value for the tax dollars invested in them. 1 municipal_stats2012.htm Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 6 P&P - 69

70 THIS BOOKLET Initiation Official Community Plan Five-year Capital Plan Service Needs Budgets and Sources of Finance Project Identification Link to strategic objectives Key Steps in Capital PROJECT Management Capital Project Management Planning and Budgeting Tendering and Award Business Case Analysis Service Needs Alternative Options (lease, renovate, defer) Scope, Schedule, Budget Risk Analysis Project Management Structure Full Life Cycle Costs and Benefits Procurement Strategy Solicitation (e.g.itt, RFEI, RFP) Conflict of Interest Consideration Evaluation Price, Timeline and Suitability Contract Preparation Negotiation Award Risk Management Execution Monitoring (Scope, Schedule, Budget) Risk and Change Management Cost Management Contract Management Reporting Documentation Finalization Post-Completion Review Scope, Schedule, Budget Outcome Review Technical Review or Audit What this Booklet Doesn t Cover This booklet focuses on capital procurement and the capital project planning directly related to it. It does not cover local governments overall capital planning and approaches to its management of capital assets. As a result, some issues that are important in local government capital asset management and capital planning are not covered here, including consultation with the public and stakeholders in the development of capital plans. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 7 P&P - 70

71 THE 26 QUESTIONS 1 What is the tone at the top? 2 How do council/board members participate in capital procurement? 3 What level of delegation of council/board powers to local government staff is appropriate? 4 What information should we as a council/board expect to see? 5 What comes to us for our review and approval? 6 What do we do if our staff doesn t have enough time or expertise to effectively manage a capital project? 7 Do our policies and procedures support sound practices by staff? 8 Is the project included within our five year financial plan? 9 Should staff provide a business case for the project? 10 How accurate does a project budget need to be? 11 How might trade agreements affect our project? 12 How do we contract for outside resources? 13 Why do we need a written contract? 14 How does our local government assess project risks? 15 How do we protect against staff not following our policies? 16 How do we manage ethical requirements and the potential for conflict of interest? 17 What are our legal responsibilities relating to conflict of interest? Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 8 P&P - 71

72 THE 26 QUESTIONS 18 Do we have adequate conflict of interest and other ethical requirements for staff? 19 How do we hold contractors accountable for potential conflicts of interest? 20 Does our local government carry out a post-completion assessment of capital projects? 21 How can we make sure our capital projects are successful and provide good value for money? 22 How does our local government monitor and report on progress and changes? 23 How do we know expenditures are accurately reported? 24 Are project documents complete, accurate and readily available? 25 What happens if a project goes off the rails? 26 What do we do if our ethical rules are broken? Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 9 P&P - 72

73 THE ROLE OF COUNCIL/BOARD MEMBERS IN CAPITAL PROJECT PLANNING AND PROCUREMENT 1 What is the tone at the top? Councils/boards and your senior staff set the tone for your local government. Your professionalism, integrity and ethical values establish a standard across the organization. These values allow you to lead by example and can guide and inform decision-making across all levels of your organization. Integrity in public procurement is built on the four pillars of: transparency good management compliance, monitoring and prevention of misconduct accountability and control You should ask yourself and your chief administrative officer what you are doing to support this commitment and how a local government s policies and practices address this. What are your senior managers doing on a daily basis to set an ethical and professional tone for the organization? Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 10 P&P - 73

74 THE ROLE OF COUNCIL/BOARD MEMBERS IN CAPITAL PROJECT PLANNING & PROCUREMENT 2 How do council/board members participate in capital procurement? Among other responsibilities, local governments must take care of their community s public assets. In doing this and other things, your council/board carries out the powers, duties and functions of your local government. Under the Community Charter, local governments may hire a chief administrative officer to be responsible for overall management and for reporting back to your council/board on your local government s operations. The Community Charter also provides for councils to delegate functions to staff. As a result, council and board members are generally not involved in the day-to-day operations of the local government. In capital procurement, this means your council/ board should approve all capital plans, including decisions on what capital projects your local government will undertake, overall budgets, schedules and sources of financing. Staff has responsibility for carrying out these projects consistent with your decisions and policies. Your policies should require staff to report back to you on their progress, so you can monitor how projects are going. You are responsible for the policies used to identify, procure and deliver these projects. In creating policies and monitoring how they are carried out, it is important that your board/ council account for the governance and oversight of these capital projects throughout their lifecycle. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 11 P&P - 74

75 DECISION-MAKING IN CAPITAL PROJECT PLANNING AND PROCUREMENT 3 What level of delegation of council/board powers to local government staff is appropriate? Ultimately, this is for your council/board to decide based on the relative importance and risk associated with various local government operations. From a legal perspective, your staff can only spend public money if your council/ board first gives them the authority to do so. This is called delegation. Delegation is done through a bylaw approved by your council/board. Delegation usually includes a dollar limit above which staff must come to your council/board for approval for a financial commitment. 4 What information should we as a council/board expect to see? To carry out your oversight responsibilities effectively, you need information. At the same time, it is important for you to allow staff to carry out their responsibilities efficiently. To balance these two priorities, your council/board will want to clearly identify your requirements for review, approval and other reporting in your procurement and capital project management policies. These policies should require staff to provide you with written information at key points throughout a capital project such as: initiation planning and budgeting tendering and award execution finalization Depending on the project size, there may be several points during each project where staff will bring you information and seek your approval. Over the life of the project, such reporting ought to include, at a minimum, periodic reports on project risks, key results achieved and actual costs compared to budget, vendor performance and overall contract management. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 12 P&P - 75

76 DECISION-MAKING IN CAPITAL PROJECT PLANNING AND PROCUREMENT 5 What comes to us for our review and approval? Your council/board should set out clear oversight requirements for staff to follow for all phases of a capital project. Staff should provide information to you in writing and include key decision points. These may include project budgets and sources of funds, initial requests, requests to proceed to tender, recommendations for contract awards, significant scope changes, budget increases above an identified amount and financial and non-financial progress reports. Your council/board should be responsible for approving the budget for all capital projects, requiring your staff to bring forward any proposed changes to the budget, scope or schedule for your consideration and approval. In addition, you may require council/ board approval for all individual contracts above a certain value, consistent with your procurement policies. 6 What do we do if our staff doesn t have enough time or expertise to effectively manage a capital project? Capital projects can be challenging and complex and they are inherently risky. Riskier projects require more project management expertise and other specialized areas of expertise such as contracting, scheduling, budgeting and cost control. Before approving any project, your council/board should be satisfied that it can be effectively managed. When your staff does not have the technical expertise and/or capacity to manage a project effectively, you should consider hiring a well-qualified project manager to help ensure the local government s interests are addressed throughout the project execution. It is often useful for staff to write a project charter that sets out the roles and responsibilities of all key players, including the role of staff in overseeing any outside project managers while the project is underway. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 13 P&P - 76

77 DECISION-MAKING IN CAPITAL PROJECT PLANNING AND PROCUREMENT 7 Do our policies and procedures support sound practices by staff? Your local government should have up-to-date procurement and capital project management policies and procedures. These should be reviewed on a regular basis to make sure they reflect current conditions and priorities. You should also have supporting tools and templates to guide your staff in these activities. Having strong policies and procedures is important; equally important is ensuring that staff understand and implement them in a consistent manner. A policy and procedures manual, based on clear strategic and procurement goals, should consider the following: Governance: relevant legislation and bylaws roles and responsibilities of elected officials, staff (including those with program, procurement and finance responsibilities) and contractors approval and authorization levels conflict of interest guidelines Risk Management: how to identify key financial and nonfinancial risks to the project through project planning, procurement and execution how to assess these risks how to manage these risks Planning: the process used to identify capital needs how to analyze delivery options business case development and analysis requirements for an implementation plan Procurement: requirements for open, fair and competitive public solicitation how a procurement option is to be selected tendering processes evaluation and award practices Contract Management: types of contracts preparation of contract documents supplementary conditions and schedules (insurance, performance bonds) legal considerations billings and payments use of contract amendments and change orders Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 14 P&P - 77

78 DECISION-MAKING IN CAPITAL PROJECT PLANNING AND PROCUREMENT 7 (cont d) Budget and Cost Management: requirement for project budget estimates at various phases in the project lifecycle cost-management mechanisms Monitoring and Reporting: standards for routine project monitoring and reporting reporting requirements, including financial, performance and risk-based reporting approval standards, including levels of authority, accountability and responsibility Project Evaluation: contractor evaluation requirements for post-completion assessment of project performance long-term performance of the asset, including the extent to which value for money was achieved Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 15 P&P - 78

79 CAPITAL PROJECT PLANNING 8 Is the project included within our five year financial plan? The Community Charter and Local Government Act both require that your local government prepare a five year financial plan each year, which includes the amount of money required for capital purposes. This rolling multi-year capital plan should be closely linked to your local government s operational plans and priorities. Generally, any capital requests from staff will need to be included in the plan. 9 Should staff provide a business case for the project? A business case sets the foundation for the project plan. It addresses the entire lifecycle of the asset, from the need being identified through to its ongoing operational costs. Business cases are key tools for accountability. Your policies should require your staff to provide one with every request for capital funding. The business case should be scaled to the size, value and complexity of the project and clearly show the link between the proposed expenditure and your local government s strategic objectives. A business case should include the service need, objectives, other alternatives considered (such as lease, renovate, defer, cancel), project risks, project management structure, schedule, monitoring and reporting, procurement strategy, performance measures and a budget that considers full lifecycle costs, including operations and maintenance. Business cases should also show the proposed sources of funding for the project and all associated costs, along with any conditions that may be attached to outside funding. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 16 P&P - 79

80 CAPITAL PROJECT PLANNING 10 How accurate does a project budget need to be? As the project becomes better defined, budget estimates can become increasingly accurate. The greater the accuracy of the project budget, the greater the opportunity for your local government to manage the project within your fiscal limits. Project budgets generally cover the costs of planning, design, engineering, construction and commissioning. Until a project is actually constructed, a cost estimate always represents the best judgment available at the time. Quantity surveyors, professional engineers, design consultants and the development of detailed specifications can all help develop a hard project budget. In addition, the use of contingency amounts can minimize the potential for cost overruns, if they are managed properly. You should require your staff to update project budgets and report this information to you when better or more current information becomes available. If there are cost savings from original estimates, your council/board will then be able to reallocate resources to other priorities. Similarly, where project costs are expected to increase, you should be aware of the implications of this for your capital plan and other capital projects. 11 How might trade agreements affect our project? Our provincial and federal governments have entered into several domestic and international trade agreements that could affect local governments. Some of these agreements include procurement-related obligations based on the principles of non-discrimination, openness and transparency and reflect a commitment to the effective management of public resources. You will want to make sure your staff gets legal advice on how trade agreements may affect your procurement planning and make sure your procurement policies reflect these requirements. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 17 P&P - 80

81 PROCUREMENT 12 How do we contract for outside resources? Hiring architectural, engineering, construction and other project management services can be critical to project success. The process of selecting a contractor is usually managed by staff, consistent with council/board decisions and procurement policies. Often, your council/board s involvement includes reviewing the results of the process and authorizing staff to enter into a contract. For major or complex projects, your council/board may ask staff to prepare a procurement strategy. This can include the timing, procurement method, evaluation and award processes and the key players to be involved. To ensure best value, procurement should be fair, open and transparent, using competitive processes such as tendering as much as is feasible. BC Bid is a useful tool to post local government procurement opportunities online. A public solicitation process involves advertising for vendors to submit bids or other information. Depending on the project, this might involve invitations to tender (ITT), requests for qualifications (RFQ) or requests for proposals (RFP). More complex projects may require a separate stage involving a request for expressions of interest (RFEI). Your policies should require staff to evaluate bids against the published requirements using clear criteria outlined in your policies. Criteria may include price, timeline and suitability and should result in best value for money for the local government. Your policies should require that staff fully document the evaluation process and its outcome in your local government s files. The evaluation process usually results in a staff recommendation to award the contract to the highest-ranked bidder. There are several different project delivery methods available, ranging from traditional design-bid-build to designbuild and public private partnership (P3) as well as the construction management approach. Typically, your local government would select a method based on factors such as complexity, capacity, urgency, risk tolerance and risk sharing. You should require your staff to show that they have done an analysis of the various options and the recommended solution is the one that best meets your needs and requirements. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 18 P&P - 81

82 PROCUREMENT 13 Why do we need a written contract? Contracts form the legal basis for work to be performed and payments to be made. A written contract is critical because it describes clearly what you are going to get and at what cost. Written contracts spell out the responsibilities of both your local government and the contractor you are dealing with. They help limit your risks and hold all parties accountable for their commitments. For example, risk can be allocated, through transfer and sharing, to a third party through a contract. The use of hold-backs through a contract can help assure resolution of deficiencies and completion within set timelines. The use of verbal contracts should not be permitted, as they leave your local government vulnerable to increased risk and liability. Your council/board should authorize staff to enter into contracts with successful bidders and require a written contract to be the outcome of all capital procurement processes. Your council/board may require staff to bring contracts above a certain dollar value for your approval before they are entered into. This should be covered in your procurement policies. You will want your lawyer to review written contracts including templates for routine contracts before they are signed. Contracts must be administered consistently with their terms and conditions. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 19 P&P - 82

83 MANAGING RISKS 14 How does our local government assess project risks? Every capital project carries some level of risk that needs to be managed in order to protect against unexpected impacts on the project s scope, schedule and budget. Risks range from general to stakeholder interests to specific project management and construction risks, as well as risks to your reputation. As part of planning, your staff should develop a detailed risk assessment and risk mitigation plan. Your council/board should require your staff to carry out ongoing risk management activities as a project takes place. One useful risk management tool is a risk register outlining project risks and how they will be treated. 15 How do we protect against staff not following our policies? There is always a risk that capital project management might happen differently from how your local government s policies say it should happen. This is called an exception. Exceptions can sometimes be justified by the unique circumstances of a situation, such as in emergencies. This is acceptable, as long as it is provided for in your local government s policies and procedures or is brought to your council/ board in advance for approval. At other times, exceptions may indicate fraud or deliberate failure to record transactions in order to conceal inappropriate activities. Your council/ board must be aware of the risks associated with this and to prevent abuse should make sure no one individual can control all key aspects of a transaction or event. It is important for your local government to have policy and procedures in place covering situations where it might be necessary to vary from your policies. Your policies should require staff to document cases where exceptions occur and report this to your council/board. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 20 P&P - 83

84 MANAGING RISKS 15 (cont d) Ways of doing this may include: maintaining a log of instances of exceptions requiring that exceptions be explained and reported to next level of authority preparing an action plan for resolution/remediation, approved by an individual with the appropriate level of authority reporting a summary of exceptions to the chief administrative officer and council periodically conducting a thorough audit of exceptions Examples of inappropriate management overrides may include: a manager requests that a payment be made to a vendor without adequate supporting documentation a manager approves the purchase of goods or services in the absence of a contract a manager approves a contract value exceeding the amount they are authorized to approve Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 21 P&P - 84

85 CONFLICT OF INTEREST 16 How do we manage ethical requirements and the potential for conflict of interest? A conflict of interest in capital procurement occurs when a member of the procurement team, or an advisor to the process, has either a personal or business relationship or interest that could be seen to bias their judgement or impartiality. Conflicts of interest, whether actual or perceived, are relatively common and can often be managed effectively. To do this, it is important to identify any potential conflicts of interest early in the procurement process and take timely and appropriate steps to address them. Your local government should include ethical requirements and conflict of interest provisions in your policies. You will also want to be certain that you have processes in place to ensure procurement team members and any advisors declare and resolve any actual or perceived conflicts of interest throughout the process. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 22 P&P - 85

86 CONFLICT OF INTEREST 17 What are our legal responsibilities relating to conflict of interest? Under British Columbia s Community Charter, council members are responsible for developing and evaluating your local government s policies and programs. You are also responsible for considering the well-being and interests of the community. Your local government should have policies, procedures and guidelines in place to help ensure council/board members act ethically. As a starting point, the Community Charter includes several requirements: Section 100 a requirement to declare a conflict of interest where they have a direct or indirect pecuniary interest in a matter under consideration. Section 101 a requirement to not participate in a meeting where a matter in which they have a direct or indirect pecuniary interest is under consideration. Section 102 a requirement to not attempt to use their office to unduly influence a decision of the municipality where they have a direct or indirect financial interest in a matter under consideration. Section 103 a requirement to not attempt to use their office to unduly influence a decision in which they have a direct or indirect financial interest. Section 105 restrictions on accepting gifts, fees or personal benefits connected in some way to their office. Section 106 a requirement to disclose any gift or benefit exceeding $250 or combined value of gifts over a 12 month period exceeding $250. Section 107 a requirement to disclose any contract where they have a direct or indirect financial interest. Section 108 a restriction from using insider information obtained during time on council for furthering a direct or indirect financial interest. In addition, the Financial Disclosure Act requires both elected officials and those employees designated by a local government to submit an annual Statement of Disclosure form identifying related parties and assets. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 23 P&P - 86

87 CONFLICT OF INTEREST 18 Do we have adequate conflict of interest and other ethical requirements for staff? It is important for your council/board to make sure you have effective policies and procedures to help ensure ethical conduct by staff. This includes a code of conduct addressing conflict of interest, illegal or improper payments, anti-competitive guidelines, insider information and fraud. Your policies and procedures will usually require training on these matters for new staff members and periodic acknowledgement by all employees (usually annually) of their awareness of and compliance with these requirements. In addition, you will want to make sure your local government has post-employment rules covering employees who have high levels of procurement responsibility. Such rules reduce the risk of former employees using confidential information they gained through their local government position for personal or commercial benefit. Post-employment rules usually prohibit employment with outside contractors and suppliers, with whom they have had substantial involvement, for a period after leaving the local government, typically one year. Your senior management should consistently communicate a commitment to integrity and ethics. This can be done through directives, training or other methods. Strong policies, procedures and leadership will help make sure all staff members have a clear understanding of ethical behaviour relating to vendors and suppliers, both for themselves and immediate family members. Your local government should have a system of controls in place to prevent and detect any violations of ethical behavior. Such a system could include: segregation of duties (the person receiving goods or services should be different from the person approving payment) clear written processes for authorizing and approving: > > projects > > contracts > > payments > > project deliverables > > satisfactory project completion post-employment conditions for senior staff other control activities relating to: > > reconciliation > > verification mechanisms to resolve any real or perceived conflicts Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 24 P&P - 87

88 CONFLICT OF INTEREST 19 How do we hold contractors accountable for potential conflicts of interest? In addition to elected officials and staff, it is also important for you to be aware of real or perceived conflicts of interest involving your contractors. This includes contractors involved in managing the procurement function for you and those that submit proposals to you through a procurement process. Useful tools for this may include disclosure requirements, vendor checks, performance bonds, insurance, clear documentation of contractual deliverables, contractor management and monitoring. In addition, a vendor complaint process can help identify unfair advantages during the bid process, as well as manage ongoing vendor relationships. Such a process allows your local government to track complaints and resolve issues related to conflict of interest and other unfair advantages. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 25 P&P - 88

89 ENSURING VALUE FOR MONEY 20 Does our local government carry out a post-completion assessment of capital projects? When your local government completes a capital project, a post-completion assessment can be useful in determining whether the project was carried out successfully, how contractors performed, the effectiveness of staff involved and whether you have achieved overall project objectives. Your staff should carry out post completion reviews of all major capital projects and document the results. These should be used to inform or finetune future decisions. At a minimum, such a review should look at scope, schedule and budget results and may also be expanded to include program outcomes. On a high-risk project, it may be advisable to contract for an independent technical review or audit to be done for the project. The results of such an assessment should, as a matter of course, be presented to Council. 21 How can we make sure our capital projects are successful and provide good value for money? The points covered in this booklet provide a foundation for successful capital projects. Your council/board can help ensure success by making sure your policies adequately cover the points described here and by diligently carrying out your oversight function. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 26 P&P - 89

90 MONITORING AND REPORTING 22 How does our local government monitor and report on progress and changes? Monitoring and reporting are key accountability mechanisms and are essential to sound financial and non-financial capital project management. As a key component of project planning, you will want to ensure that your local government has developed both a monitoring strategy and a reporting strategy focused on scope, schedule and budget as well as other critical information such as change orders, performance measures and risks unique to the project. Your senior staff should carry out project monitoring consistently and provide your council/board with routine progress reports as well as reports at key milestones, such as at the time of procurement decisions. You will want your staff to monitor budgets to compare actual costs to what was budgeted and the reasonableness of budget forecast assumptions. You will want reporting to be at the right level of detail for decision-making. Your council/board should require project summary reports from staff on a routine basis, such as monthly or quarterly. 23 How do we know expenditures are accurately reported? Sound financial management requires that staff track and report all project expenditures against the original estimated budget and any revisions to it that your council/board has approved. Your local government should have financial policies in place and identify and agree on reporting tools as part of project planning. You should require staff to provide financial updates to your council/board on a monthly basis. It is also important for a financial update to accompany any request for a budget increase, along with proper change orders or other written rationale. In all cases, your policies should only permit budget increases if they are approved in advance by your council/board. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 27 P&P - 90

91 MONITORING AND REPORTING 24 Are project documents complete, accurate and readily available? Strong documentation of processes, transactions, decisions and actions taken reduces risks of potential problems and of projects unfolding differently from original plans without good reason for doing so. Good documentation practices also promote accountability and make it easier to achieve value for money. Your council/board should ensure your chief administrative officer has strong documentation practices in place and that all key documents are kept on file and can be easily found. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 28 P&P - 91

92 WHEN SOMETHING GOES WRONG 25 What happens if a project goes off the rails? Capital projects can be large and complex, with many moving parts, and problems can occur for many different reasons. When a breakdown of internal controls such as a conflict of interest, unauthorized contracts or lack of contracts, or inappropriate payments occurs, your local government will need to react quickly. You should make sure your staff undertake several key steps immediately: ensure that any problem events are no longer occurring undertake an in-depth examination of what happened identify the cause of the breakdown determine the actions required to best address the problem, contain its impact and prevent the problem from happening again Your policies should require the chief administrative officer to report fully to your council/board on the issues, causes and actions associated with any such breakdown. When external forces affect a project, typically leading to unexpected changes to its scope, schedule and/or budget, you need to be confident that your staff is making sure the issues are addressed effectively. You should require your staff to bring any significant changes to scope, schedule or budget to your council/ board for approval. 26 What do we do if our ethical rules are broken? You should ensure that your chief administrative officer deals with situations where ethical standards are violated effectively and swiftly through remedial action or other intervention. Your policies should require your chief administrative officer to immediately provide your council/board with information, advice and guidance on situations where ethical standards have been violated. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 29 P&P - 92

93 INFORMATION SOURCES AND RESOURCES Documents BC Capital Asset Management Framework, State of Asset Management in B.C. BC Public Service Agency Human Resource Policies Capital assets held by B.C. local governments, 2012 Community Charter Guidelines to the Procurement Obligations of Domestic and International Trade Agreements Local Government Act Organisation for Economic Co-Operation and Development Principles for Integrity in Public Procurement Organizations Asset Management BC Association of Consulting Engineering Companies BC Association of Consulting Engineering Companies - Canada Association of Professional Engineers and Geoscientists of BC BC Bid Canadian Construction Association Canadian Construction Documents Committee CivicInfoBC Committee of Sponsoring Organizations of the Treadway Commission (COSO) Construction Specifications Canada Government Finance Officers Association of B.C. Local Government Infrastructure and Finance Branch, BC Ministry of Community, Sport and Cultural Development Local Government Management Association of B.C. Master Municipal Construction Documents Association Royal Architectural Institute of Canada Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 30 P&P - 93

94 DEFINITIONS AND MORE DETAILED INFORMATION Asset Management ISO Asset management is the coordinated activity of an organization to realize value from its assets, which involves balancing costs, risks, opportunities and performance benefits. Asset Management BC The State of Asset Management in B.C. An integrated approach involving planning, finance, engineering and operations to effectively manage existing and new infrastructure to maximize benefits, reduce risks and provide satisfactory levels of service to community users in a socially, environmentally, and economically sustainable manner. Public Solicitation Processes Request for Information (RFI) Used where the municipality has an idea and is looking for the best approach to execute it. The intent is to source technical or commercial data to possibly include in a follow-up process; this process does not lead directly to a contract. Request for Proposal (RFP) Used where the vendor is considered the expert, a high degree of flexibility is necessary and negotiations may be required. Evaluation is based on a set of agreed to evaluation criteria. This process usually leads to a written contract. Request for Qualification (RFQ) Used to establish the technical abilities of vendors and to determine whether they will be capable of providing the required goods or services. Used to create bid lists when the requirement is expected to be repetitive. This process does not result directly in a contract. Request for Expression of Interest (RFEOI, RFEI) Used to develop a list of potential bidders by gauging public interest in an expected future procurement. This process does not result directly in a contract. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 31 P&P - 94

95 DEFINITIONS AND MORE DETAILED INFORMATION Request for Standing Offer Used to solicit offers to provide goods and/or services as required at pre-arranged prices, under set terms and conditions. This process does not result directly in a contract. Request for Tender (RFT), Invitation to Tender (ITT) Used where goods or services are of high value and/or high risk, requirements and specifications are clearly defined, the local government is the expert and award criteria are heavily weighted to price. This process usually leads to a written contract. Trade Agreements New West Partnership Trade Agreement The New West Partnership Trade Agreement is an agreement signed in 2010 between the provincial governments of British Columbia, Alberta and Saskatchewan to provide access by vendors in each province to business opportunities across all three provinces. It is based on the principles of free movement of goods, services, investment and people within Canada. Agreement on Internal Trade The Agreement on Internal Trade (AIT) is an agreement that has been in force since 1995, intended to encourage interprovincial trade by addressing obstacles to the free movement of goods, services, investment and people within Canada. A significant part of the agreement relates to procurement and the elimination of local bias which may restrict equal access to business opportunities for all interested Canadian suppliers. Referenced Good Practices Master Municipal Construction Documents (MMCD) Master Municipal Construction Documents provide a framework for municipal infrastructure projects. MMCD Standard Specifications and Drawings have become widely accepted across British Columbia as tendering and contract administration tools for these projects. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 32 P&P - 95

96 DEFINITIONS AND MORE DETAILED INFORMATION The collective perspectives of government, consultants, contractors and owners have combined to create a fair, equitable solution to this often complex part of getting things done. The MMCD has been built on three primary principles: the language was developed through consensus among owners, contractors and consultants the documents were created under a mandate for fairness the documents are easy to understand and to use Canadian Construction Documents Committee (CCDC) The Canadian Construction Documents Committee is a national joint committee responsible for the development, production and review of standard Canadian construction contracts, forms and guides. Formed in 1974, the CCDC includes two owner representatives from each of the public and private sectors, as well as appointed volunteer members of the following four national organizations: Canadian Construction Association (CCA) Association of Consulting Engineering Companies-Canada (ACEC) Construction Specifications Canada (CSC) Royal Architectural Institute of Canada (RAIC) Cost Estimate Classifications The following definitions are derived from the Association of Consulting Engineering Companies BC and the Association of Professional Engineers and Geoscientists of BC. Until a project is actually constructed, a cost estimate represents the best judgement of the person preparing the estimate, drawing on their experience and knowledge and the information available at the time. Its completeness and accuracy is influenced by many factors, including the project status and development stage. Estimates have a limited life, and are subject to inflation and fluctuating market conditions. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 33 P&P - 96

97 DEFINITIONS AND MORE DETAILED INFORMATION The following estimates and their classification definitions are suggested for engineering projects. Class A estimate (±10-15%) A detailed estimate based on final drawings and specifications. It is used to evaluate tenders or as a basis of cost control during construction. Class B estimate (±15-25%) An estimate prepared after site investigations and studies have been completed and the major systems defined. It is based on a project brief and preliminary design and is used for obtaining project approval and for budgetary control. Class C estimate (±25-40%) An estimate prepared with limited site information and based on probable conditions affecting the project. It represents the total of all identifiable project costs and is used for program planning, to establish a more specific definition of client needs and to obtain preliminary project approval. Class D estimate (±50%) A preliminary estimate which, due to little or no site information, indicates the approximate cost of the proposed project, based on the client s broad requirements. This overall cost estimate may be derived from the costs of similar projects. It may be used in developing long term capital plans and for preliminary discussion of proposed capital projects. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 34 P&P - 97

98 DEFINITIONS AND MORE DETAILED INFORMATION Contracts Contracts impersonalize the relationship between the parties and provide a mechanism for anyone, on the local government side or the contractor side, to get an understanding of what was agreed to. In addition to scope and payments, the most important points to consider in a construction contract are: Insolvency what happens in the event that there is insolvency, either of the developer or the contractor? Risk who is to bear the risk of any delay or costs of actions that are either unforeseen or due to one party or the other? Ideally, risks should be allocated to the party best placed to manage the risk. Change Orders in what circumstances can the scope, budget or schedule be changed? Insurance what insurance needs to be in place to protect the parties? Dispute what are the mechanisms for dispute resolution? Warranty from the local government perspective, any warranty provisions should be included in the contract, as they could be needed ten years after completion. Oversight of Capital Project Planning & Procurement (AGLG Perspectives Series 3-T1, April 2014) 35 P&P - 98

99 AGLG CONTACT INFORMATION The AGLG welcomes your feedback and comments. Contact us electronically using our website contact form on or to share your questions or comments. You may also contact us by telephone, fax or mail: Phone: Fax: Mail: AGLG nd Street Surrey, BC V3R 0Y3 Printed on Reincarnation Matte - 60% Recycled Content & 60% Post-Consumer Waste. P&P - 99

100 P&P - 100

101 5.7 To: From: Performance and Procurement Committee Dean Rear, Director - Financial Planning and Operations Date: June 22, 2015 Meeting Date: July 17, 2015 Subject: Investment Position and Returns January 1 to April 30, 2015 RECOMMENDATION That the Performance and Procurement Committee receive the report titled Investment Position and Returns January 1 to April 30, 2015, dated June 22, 2015 for information. PURPOSE To report the investment returns pursuant to the requirements of the Investment Policy. BACKGROUND Policy requires that investment returns be reported to the Committee three times per year. This is the first report for Regular cash demands as well as our conservative investment strategy require that we maintain a high degree of liquidity in our investment portfolios. Our short term investments, those with terms of less than one year and the highest degree of liquidity, are used to meet our working capital requirements. Short term investments normally include Canada Treasury Bills, Provincial debt instruments, Bankers Acceptances and Credit Union Term Deposits. Long term investments initially have terms greater than one year. These investments normally include Canada, Provincial, and Canadian Bank bonds as well as Credit Union Term Deposits greater than one year. These are generally less liquid than our short term investments and are held for a higher overall rate of return and for funding requirements of a longer term perspective. Long term investments include those for the Cultural Reserve Fund, where revenues from these investments go to fund Metro Vancouver s annual contribution to cultural activities. OVERALL INVESTMENT RETURNS Table 1 P&P - 101

102 Benchmarks Our investment policy requires that we compare our actual performance indicated in the above table against specific benchmark returns. The selected benchmarks are consistent from period to period and are intended to be indicative of and comparable to each of our portfolios on an ongoing basis. The short term benchmarks are taken directly from the Bank of Canada and the MFA s website. Rates on the Bank of Canada s website are expressed as annual rates which need to be adjusted for our four month reporting period. They are therefore divided by three for an estimate over our four month period. The performance figures on the MFA Money Market Fund are taken directly from the MFA s website and are not adjusted. We use the MFA s Intermediate Fund and Bond Fund as benchmarks for both the Long Term Portfolio and the Cultural Reserve Fund. These two benchmarks must be considered together as the combination thereof more accurately reflects the term of our Long Term Portfolio than either of the two funds individually. However, in the daily operation of their funds the MFA faces many liquidity demands that we do not. Allowing for these cash demands can affect portfolio yield considerably. Short Term Investment Performance At April 30, 2015 our short term portfolio (terms of less than one year at the time of investment) held a total of $127.7 million dollars at historic cost and represented approximately 22.8% of our total investments. Looking at the days to maturity for all of our investments (combined short and long), those investments that will mature in the coming year account for approximately 49.5% of our total investments. Table 2 details performance during the period compared to our benchmarks. Table 2 Our short term portfolio performance exceeded all of our benchmarks in the period. A listing of our short term investments as at April 30, 2015 can be found on Schedule 1 on this report with expected maturities illustrated in the chart included in Schedule 4. The annualized estimate shown in Table 2 is calculated for comparison to benchmark. As shown in Schedule 1, the weighted average yield of the holdings in our Short Term Portfolio as at April 30 th was 1.76%. This compares favorably to the previous two reports, 1.70% reported as at December 31, 2014 and 1.61% as at August 31, 2014, and is due to a change in the approach to the management of the Short Term Portfolio with increased laddering and buying longer term instruments. P&P - 102

103 Long Term Investment Performance At April 30, 2015 our main Long Term Portfolio (terms greater than one year at the time of investment) held a total of $430.1 million (at cost) representing 76.8% of our total investments. This portfolio had a weighted average maturity of 2.6 years and a weighted average yield of 2.47% at April 30, This is comparable to the 2.49% reported as at December 31, A detailed listing of long term investments held on April 30, 2015 is located on Schedule 2 following this report with expected maturities illustrated in the charts included in Schedule 4. The Cultural Reserve Fund held $2.4 million (at cost) in fixed income investments (<1% of total investments) and had a weighted average yield to maturity of 5.45 years and a weighted average yield of 2.64%. A detailed listing of investments held in this portfolio is located on Schedule 3. Table 3 details performance during the period compared to our benchmarks. Table 3 The performance of both of our long term portfolios exceeded the returns of the MFA Intermediate Fund while our Cultural Reserve portfolio also exceeded the returns of the MFA Bond Fund. Our rate of return in January was higher compared to the other months due to a few selected bonds that were sold to take advantage of the increase in prices resulting in capital gains. The reported performance of the MFA Bond Fund exceeded our Long Term portfolio results due to mark to market adjustments showing exceptional yields in January, following the Bank of Canada s decision to cut the target overnight rate by 25 bps. The current average term on the MFA Intermediate Fund is 1.0 year while the MFA Bond Fund average term is 2.8 years compared to the average term on our Long Term portfolio of 2.6 years. Over the past few months, like the MFA Intermediate Fund our portfolio has also shifted to more corporate instruments as they offer higher yields. Funds such as the MFA s require a re-evaluation (mark-to-market) on a regular basis so that pricing reflects the current market value for those buying into the fund. Reduced yield levels in January resulted in mark-to-market increases for the MFA Bond Fund, with the overall effect being very positive periodic returns, and higher than the results in our Long Term portfolio. As our portfolios operate only for our organization, the fluctuations in market value by re-valuing the portfolios each period can be misleading as the effect of these changes on the stated returns are clearly unrealized. As a result we do not mark-to market our two long term portfolios. P&P - 103

104 Change in the Bank Regulatory Framework: Bail-In Regime In response to the financial crisis in 2008 which resulted in major banks around the world being bailed out by their governments, a change to the Canadian banking regulatory framework called the Bail-In Regime was announced by the Federal government in the 2013 budget. The Bail-In Regime aims to limit taxpayer exposure in the event of a failure of systemically important ( too big to fail ) financial institutions, by requiring the losses to be absorbed by the shareholders and creditors instead of the taxpayers. This will be achieved by requiring long-term bank bonds (senior notes) over 400 days to be converted to common shares if the bank becomes non-viable. The Bail-In Regime is applicable to the top six banks in Canada: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank, all of which are qualified institutions per our Corporate Investment Policy. There are a couple of potential outcomes that may impact our future portfolio and approach as a result of the Bail-In Regime. Firstly, senior notes may become more expensive as the costs to the banks for issuing debts are expected to rise. Secondly, the ratings on senior notes could be downgraded to reflect lower uplift for government support. Both Standard and Poor s and DBRS have reacted on the issue by changing the outlook of the Canadian banks long-term notes from stable to negative. However, even with a downgrade of one or two notches the ratings are expected to meet the minimum required ratings per our Corporate Investment Policy. The implementation date has yet to be disclosed. Until such date, new corporate issues are expected to be grandfathered. We will continue to assess the progress on the proposed Bail-In Regime to better determine how this will impact our investment strategy and portfolio. Going Forward The impact of the drop in oil prices appeared to be more front-loaded as bond yields started to rise again in the second quarter of the year following the rapid decline witnessed in late January, during which time the average yields on a 3-5 year Government of Canada bond decreased by more than 60 bps. In April, yields for the same bond rose by approximately 20 bps due to the increase in oil prices combined with more upbeat economic data from Canada and US. Despite the recent spike in yields, the rates are far below levels prevailing a year ago. At the end of April 2015, the average yield on a 3 5 year Government of Canada Bond was more than 60 basis points lower than what it was April of last year. The Bank of Canada announced at the last policy meeting on May 27 that the overnight rate will be held steady at 0.75%. Although the Bank of Canada is expected to hold the current rate through the end of the year, this could change if oil prices decline again, Greece defaults or the US economy weakens and the Feds delay their plans for a rate hike expected later this year. The bond yields will likely remain volatile over the next few months while we await the outcome on the Greece negotiations and the Feds next move. Longer term instruments still offer a marginal advantage over short term yields and staff continue to look for opportunities to invest longer term when we have material cash to do so. We remain cautious as with the decline and volatility in the yield curve, even out to our current term limit of 10 years, most products have yields of less than 3%. We continue to pursue the highest overall yield for our portfolio while maintaining safety of capital and liquidity as the key priorities. P&P - 104

105 ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS Overall portfolio returns remain modest, a reflection of the priorities of preservation of capital and maintaining the necessary liquidity to meet operational requirements. SUMMARY / CONCLUSION Overall, investment performance for the period, while modest, met expectations, exceeding the returns on most of our benchmarks. Our portfolios hold quality investments and are reasonably positioned given our market expectations. Attachments: Schedule 1 Short Term Investments Schedule 2 Long Term Investments Schedule 3 Cultural Reserve Investment Schedule 4 Investment Maturity Charts P&P - 105

106 METRO VANCOUVER SHORT TERM INVESTMENTS AS AT APRIL 30, 2015 Schedule 1 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATUR ITY YIELD COUPON BLUESHORE FINANCIAL CREDIT UNION BLUESHORE 2.08% JUN25/15 5,000,000 5,000,000 Aug, Jun, BLUESHORE 2.08% JUL2/15 2,500,000 2,500,000 Aug, Jul, BLUESHORE JULY 16/ % 2,500,000 2,500,000 Jul, Jul, BLUESHORE 2.08% JUL16/15 2,500,000 2,500,000 Aug, Jul, BLUESHORE 2.08% JUL30/15 2,500,000 2,500,000 Aug, Jul, BLUESHORE 2.08% AUG 6/15 2,500,000 2,500,000 Aug, Aug, BLUESHORE 2.08% AUG 13/15 2,500,000 2,500,000 Aug, Aug, CANADIAN WESTERN BANK 20,000,000 20,000, CWB BDN 1.44% AUG 11/15 5,000,000 4,929,800 Aug, Aug, CWB BDN 1.40% AUG18/15 3,000,000 2,961,840 Sep, Aug, CWB BDN 1.42% AUG20/15 4,000,000 3,944,160 Aug, Aug, CWB 2.378% SEPT14/ ,000,000 5,038,450 Sep, Sep, CWB BDN 1.50% OCT8/15 2,000,000 1,970,520 Oct, Oct, CWB BDN 1.55% NOV24/15 3,000,000 2,954,340 Nov, Nov, CWB BDN 1.60% JAN5/16 2,500,000 2,460,725 Jan, Jan, CIBC 15.66% 24,500,000 24,259, % CIBC 2.2% MAY 22/ ,000,000 7,054,600 May, May, COAST CAPITAL CREDIT UNION 7,000,000 7,054, % COAST CAP TD 2.0% SEPT3/15 3,000,000 3,000,000 Sep, Sep, COAST CAP TD 1.90% OCT1/15 2,000,000 2,000,000 Oct, Oct, COAST CAP TD 1.90% OCT5/2015 2,500,000 2,500,000 Apr, Oct, COAST CAP 2.0% OCT15/15 2,500,000 2,500,000 Nov, Oct, COAST CAP TD 1.95% OCT29/15 2,500,000 2,500,000 Nov, Oct, COAST CAP TD 1.95% DEC 17/15 3,000,000 3,000,000 Jan, Dec, COAST CAP TD 1.80% FEB11/16 2,500,000 2,500,000 Mar, Feb, HSBC BANK CANADA 18,000,000 18,000, % HSBC BDN MAY 7/ % 4,000,000 3,949,960 May, May, HSBC 3.86% MAY 21/ ,498,000 2,555,504 Jun, May, MANUBANK 6,498,000 6,505, % MANUBANK BDN JUNE 10/ % 5,000,000 4,929,500 Jun, Jun, MANUBANK BDN 1.43% AUG 4/15 5,000,000 4,931,600 Aug, Aug, VANCITY SAVINGS CREDIT UNION 10,000,000 9,861, % VANCITY TD 1.95% AUG27/15 3,000,000 3,000,000 Aug, Aug, VANCITY TD 1.64% OCT5/15 2,500,000 2,500,000 Apr, Oct, VANCITY TD 1.68% OCT22/15 2,500,000 2,500,000 Apr, Oct, VANCITY TD 1.68% NOV19/15 2,500,000 2,500,000 Apr, Nov, VANCITY TD 1.70% JAN7/16 2,500,000 2,500,000 Apr, Jan, VANCITY TD 1.75% JAN14/16 2,500,000 2,500,000 Mar, Jan, VANCITY TD 1.70% JAN21/16 2,500,000 2,500,000 Apr, Jan, P&P Schedule 1: Page 1 of 2

107 METRO VANCOUVER SHORT TERM INVESTMENTS AS AT APRIL 30, 2015 Schedule 1 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATUR ITY YIELD COUPON VANCITY TD 1.75% JAN28/16 2,000,000 2,000,000 Mar, Jan, VANCITY TD 1.80% APR7/16 5,000,000 5,000,000 Apr, Apr, WESTMINSTER SAVINGS CREDIT UNION 25,000,000 25,000, % WSCU 1.91% JUL2/15 2,500,000 2,500,000 Aug, Jul, WSCU 1.91% JUL9/15 2,500,000 2,500,000 Aug, Jul, WSCU 1.95% JUL23/15 2,500,000 2,500,000 Aug, Jul, WSCU 1.95% JUL30/15 2,500,000 2,500,000 Aug, Jul, WSCU 1.95% AUG13/15 2,500,000 2,500,000 Aug, Aug, WSCU 1.90% SEPT3/15 2,000,000 2,000,000 Sep, Sep, WSCU TD 1.90% OCT 29/15 2,500,000 2,500,000 Nov, Oct, ,000,000 17,000, % TOTALS $ 127,998,000 $ 127,680,999 AVERAGES Mean Average Term: 141 Days Mean Average Yield: 1.78% Weighted Average Term: 134 Days Weighted Average Yield: 1.76% 100% P&P Schedule 1: Page 2 of 2

108 METRO VANCOUVER Schedule 2 LONG TERM INVESTMENTS AS AT APRIL 30, 2015 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATURITY YIELD COUPON ALBERTA, PROVINCE OF ALBERTA CAP FIN 3.05% JUNE 15/15 5,000,000 5,210,750 Apr, Jun, ALTA CAP FIN 3.05% JUNE 15/ ,000,000 5,230,500 Aug, Jun, BANK OF MONTREAL 10,000,000 10,441, % BMO 5.18% JUNE 10/ ,000,000 5,311,950 Aug, Jun, BMO 5.18% JUNE 10/ ,500,000 2,650,100 Aug, Jun, BMO 1.89% OCT 5/ ,000,000 5,000,600 Sep, Oct, BMO 3.103% MAR 10/ ,000,000 3,111,450 Jul, Mar, BMO 3.49 JUNE 10/ ,000,000 5,194,700 Aug, Jun, BMO FRN APR 10/17 3,000,000 3,000,000 Apr, Apr, BMO 2.24% DEC 11/ ,000,000 1,977,340 Jul, Dec, BMO 3.21% SEPT 13/ ,000,000 3,002,700 Sep, Sep, BMO 3.210% SEPT13/ ,000,000 5,203,900 Aug, Sep, BMO 2.84% JUNE 4/ ,000,000 5,079,750 Jun, Jun, BMO 3.40% APR23/ ,000,000 3,151,500 Aug, Apr, BLUESHORE FINANCIAL CREDIT UNION 41,500,000 42,683, % BLUESHORE TD 2.25% JUL6/17 2,500,000 2,500,000 Aug, Jul, BLUESHORE TD 2.25% JUL13/17 2,500,000 2,500,000 Aug, Jul, ,000,000 5,000, % BANK OF NOVA SCOTIA BNS 2.25% MAY 8/ ,000,000 5,052,500 Jul, May, BNS 2.10% NOV 8/ , ,892 Nov, Nov, BNS 2.74% JAN 12/ ,000,000 5,092,000 Aug, Dec, BNS 2.37% JAN 11/ ,000,000 4,910,000 Aug, Jan, BNS 2.462% MARCH 14/ ,500,000 2,500,000 Mar, Mar, BNS 2.462% MAR14/ ,000,000 3,030,420 Aug, Mar, BNS 3.27% JAN 11/ ,000,000 3,135,300 Aug, Jan, CANADIAN WESTERN BANK 28,400,000 28,685, % CWB 2.378% SEPT 14/ ,000,000 10,080,000 Aug, Sep, CWB JAN18/ ,000,000 3,074,310 Jan, Jan, CWB JUN26/ ,500,000 2,519,425 Feb, Jun, ,500,000 15,673, % CIBC CIBC 3.4% JAN 14/ ,809,000 1,872,442 Aug, Jan, CIBC 2.65% NOV 8/ ,000,000 5,077,350 Sep, Nov, CIBC 2.22% MAR 7/ ,000,000 5,048,750 Aug, Mar, CIBC 2.35% JUN24/ ,000,000 10,047,900 Aug, Jun, COAST CAPITAL CREDIT UNION 21,809,000 22,046, % COAST CAP TD 2.20% JUN15/17 2,500,000 2,500,000 Aug, Jun, COAST CAP TD 2.20% JUN22/17 2,500,000 2,500,000 Aug, Jun, COAST CAP TD 2.20% AUG3/17 2,000,000 2,000,000 Aug, Aug, ,000,000 7,000, % HSBC BANK CANADA HSBC 3.86% MAY 21/ ,000,000 5,123,000 Apr, May, HSBC 2.572% NOV 23/ ,000,000 2,006,000 Jun, Nov, Schedule 2: Page 1 of 3 P&P - 108

109 METRO VANCOUVER Schedule 2 LONG TERM INVESTMENTS AS AT APRIL 30, 2015 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATURITY YIELD COUPON HSBC 2.572% NOV 23/ ,000,000 2,008,800 Jun, Nov, HSBC 2.572% NOV 23/ ,500,000 1,516,500 Sep, Nov, HSBC 2.572% NOV23/ ,000,000 5,052,800 Nov, Nov, HSBC 2.901% JAN 13/ ,000,000 5,123,050 Jan, Jan, HSBC 2.901% JAN13/ ,000,000 5,130,300 Aug, Jan, HSBC JAN13/ ,000,000 3,096,150 Feb, Jan, MANITOBA, PROVINCE OF 28,500,000 29,056, % MANITOBA 4.30% MARCH 1/ ,000,000 3,295,050 Aug, Mar, MANUBANK 3,000,000 3,295, % MANUBANK FRN MAR14/16 5,000,000 5,014,600 Oct, Mar, MANUBANK 4.68% SEP12/ ,000,000 2,097,560 Mar, Sep, MANUBANK 2.383% OCT17/ ,000,000 5,081,500 Apr, Oct, BC MFA 12,000,000 12,193, % BCMFA 4.80% DEC 1/ ,000,000 5,545,000 Feb, Dec, BCMFA 4.15% JUNE 1/ ,000,000 5,475,700 Jun, Jun, NATIONAL BANK 10,000,000 11,020, % NATIONAL BANK 4.03% MAY 26/ ,000,000 5,274,700 Apr, May, NATIONAL BK 4.03% MAY 26/ ,000,000 3,165,300 May, May, NATIONAL 3.58% APR26/ ,000,000 5,152,500 Sep, Apr, NBC 2.019% APRIL 13/ ,000,000 5,016,700 Apr, Apr, NBC 2.794% AUG 9/ ,000,000 5,099,850 Apr, Aug, NATIONAL 2.794% AUG 9/ ,000,000 10,259,300 Aug, Aug, NEW BRUNSWICK, PROVINCE OF 33,000,000 33,968, % NEW BRUNS. 4.30% DEC 3/ ,000,000 5,427,700 Apr, Dec, NEW BRUNS.4.30% DEC 3/ ,000,000 5,433,000 Aug, Dec, NEW BRUNS 4.30% DEC 3/ ,000,000 5,419,000 Sep, Dec, NEWFOUNDLAND, PROVINCE OF 15,000,000 16,279, % NEWFOUNDLAND STRIP OCT 17/15 2,000,000 1,934,200 Aug, Oct, ,000,000 1,934, % NOVA SCOTIA, PROVINCE OF NOVA SCOTIA CPN 0.00%JUNE 1/15 1,000, ,530 Aug, Jun, NOVA SCOTIA 4.60% AUG 18/ ,000,000 3,331,350 Aug, Aug, NOVA SCOTIA 4.60% AUG 18/ ,000,000 5,549,900 Aug, Aug, ONTARIO, PROVINCE OF 9,000,000 9,837, % ONTARIO3.15% SEPT 8/ ,000,000 5,217,750 Apr, Sep, ONTARIO 3.15% SEPT 8/ ,000,000 5,238,500 Aug, Sep, ONTARIO 3.15% SEPT 8/ ,000,000 5,235,750 Aug, Sep, ONTARIO 4.40% MARCH 8/ ,000,000 5,461,500 Apr, Mar, ONTARIO 4.4% MARCH 8/ ,000,000 5,332,000 Sep, Mar, ONTARIO 2.1% SEPT 8/ ,500,000 2,432,250 Sep, Sep, ONT 3.15% JUNE2/ ,000,000 3,114,480 Aug, Jun, ONT 2.85%JUNE2/ ,000,000 4,022,880 Aug, Jun, ONT 7.5% FEB 7/ ,000,000 5,547,200 Aug, Feb, ONT STRIP FEB7/24 1,980,000 1,487,059 Sep, Feb, Schedule 2: Page 2 of 3 P&P - 109

110 METRO VANCOUVER LONG TERM INVESTMENTS AS AT APRIL 30, 2015 Schedule 2 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATURITY YIELD COUPON ONTARIO STRIP FEB7/24 3,000,000 2,244,000 Sep, Feb, QUEBEC, PROVINCE OF 43,480,000 45,333, % PQ COUPON JUNE 1/ % 5,000,000 4,763,900 Aug, Jun, QUEBEC 5.00% DEC 1/ ,000,000 5,561,750 Aug, Dec, QUE 3.5% DEC 1/ ,000,000 5,293,000 Aug, Dec, QUE 3.0% SEPT 1/ ,000,000 8,109,600 Aug, Sep, ROYAL BANK OF CANADA 23,000,000 23,728, % ROYAL BK 3.18% (FF) NOV 2/15/ ,000,000 4,047,600 Jan, Nov, ROYAL BK 3.18% (FF) NOV 2/ ,500,000 2,544,250 Aug, Nov, RBC 2.07% JUN17/ ,000,000 5,032,500 Sep, Jun, RBC 3.66 JAN 25/ ,000,000 5,233,800 Aug, Jan, ROYAL 2.364% SEPT 21/ ,000,000 4,978,450 Jul, Sep, RBC 2.26% MARCH 12/ ,000,000 4,909,250 Aug, Mar, RBC 3.77% MAR 30/ ,000,000 10,524,000 Aug, Mar, RBC 2.82% JULY 12/ ,000,000 2,983,050 Sep, Jul, RBC 2.89% OCT11/ ,000,000 5,126,450 Aug, Oct, RBC 2.77% Dec 11/ ,000,000 5,110,000 Aug, Dec, RBC 2.86% MAR 4/ ,000,000 5,031,500 Jun, Mar, RBC 2.86% MAR 4/ ,000,000 5,086,950 Aug, Mar, TORONTO DOMINION BANK 59,500,000 60,607, % TD (FF) 3.367% NOV 2/ ,000,000 4,087,600 Apr, Nov, TD (FF) 3.367% NOV 2/ ,500,000 1,549,350 Jul, Nov, TD 2.948% AUG 2/ ,500,000 2,570,500 Aug, Aug, TD 2.433% AUG 15/ ,000,000 5,029,500 Jan, Aug, TD 2.433% AUG 15/ ,000,000 5,028,000 Jan, Aug, TD 2.171% APRIL 2/ ,000,000 4,876,000 Aug, Apr, TD 2.447% APRIL 2/ ,000,000 4,992,000 Apr, Apr, TD 2.563% JUN24/ ,000,000 5,044,000 Aug, Jun, TD 3.226% JULY 24/ ,000,000 10,123,800 Aug, Jul, WESTMINSTER SAVINGS CREDIT UNION 43,000,000 43,300, % WESTMINSTER 2.27% JUL20/17 3,000,000 3,000,000 Aug, Jul, WESTMINSTER TD 2.27% JUL27/17 2,500,000 2,500,000 Aug, Jul, WESTMINSTER 2.27% AUG10/17 2,500,000 2,500,000 Aug, Aug, ,000,000 8,000, % TOTALS 418,689, ,086,938 AVERAGES % Mean Average Term: 2.46 Years Mean Average Yield: 2.16% Weighted Average Term: 2.61 Years Weighted Average Yield: 2.47% Schedule 2: Page 3 of 3 P&P - 110

111 METRO VANCOUVER CULTURAL RESERVE FUNDS (LONG TERM INVESTMENTS) AS AT APRIL 30, 2015 Schedule 3 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATURITY YIELD COUPON CIBC 2.65% NOV 08/ $ 715,000 $ 727,227 Feb, Nov, HSBC 2.938% JAN 14/ , ,813 Nov, Jan, , RBC MAR2/ , ,800 Mar, Mar, , TD JULY24/ , ,700 Jan, Jul, , TOTALS $ 2,395,000 $ 2,419,540 AVERAGES 2, Mean Average Term: 5.58 Years Mean Average Yield: 2.56% Weighted Average Term: 5.45 Years Weighted Average Yield: 2.64% P&P - 111

112 METRO VANCOUVER MATURITIES BY SECTOR Schedule 4 P&P - 112

113 METRO VANCOUVER MATURITIES BY SECTOR Schedule 4 - Continued P&P - 113

114 5.8 To: From: Performance and Procurement Committee Dean Rear, Director - Financial Planning & Operations Date: June 26, 2015 Meeting Date: July 17, 2015 Subject: Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2015 RECOMMENDATION That the Performance and Procurement Committee receive the report titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2015, dated June 26, 2015 for information. PURPOSE To report on the status of the capital projects for Water, Liquid Waste and Solid Waste. These capital projects are typically multi-year in nature; therefore, this report provides a comparison between the total project budgets and total projected expenditures to project completion. BACKGROUND The Capital Expenditure reporting process as approved by the Board provides for regular status reports on capital expenditures with interim reports sent to the Utilities and Zero Waste Committees in June and October and a final year-end report to the Committees and Board in April. The Performance and Procurement Committee is provided a summary report for all utilities capital on the same schedule. This is the first in a series of three reports on capital expenditures for In addition to this report, due to its size and complexity, a separate detailed update on the Lions Gate Secondary WWTP Upgrade Project is provided to the Utilities Committee and Board quarterly. The capital projects are separated into two types: Ongoing and Completed. Narrative information is provided describing key aspects of specific projects and each project is presented in the context of Total Projected Project Costs to Completion as compared to the Total Approved Budget. The approved budget represents the maximum expenditure authority extended by the Board. If it is projected that the total expected project expenditures will exceed the approved authority, additional approval will be sought from the Board. Appendix A contains summary financial information on Ongoing Projects and Completed Projects. The information presented is for Total Projected Completion which will generally cover multiple years. Capital project budgets typically include a minimum contingency of 10%. Individual project financial information is included as follows: Schedule 1 Water, Schedule 2 Sewerage and Drainage (Liquid Waste) and Schedule 3 Sewerage and Drainage (Solid Waste). Appendix B provides narrative information for specific projects. P&P - 114

115 ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS Ongoing Capital Projects: The Water District is projecting to spend $32.2 million (2.0 %) less than the approved total project budgets for those projects in progress and included in Schedule 1. The Sewerage and Drainage District (Liquid Waste) is projecting to spend $34.2 million (4.1 %) less than the approved total project budgets for those projects in progress and included in Schedule 2. The Sewerage and Drainage District (Solid Waste) is projecting to spend $3.0 million (9.9 %) less than the approved total project budgets for those projects in progress and included in Schedule 3. Completed Capital Projects: These are projects that have been completed during 2015, some of which may extend over multiple years. Overall the Water District and Sewerage and Drainage District (Liquid Waste) projects in this category are under spent by $1.3 million (16.7 %) and $0.02 million (2.2 %), respectively. Net capital expenditures, after applying available pay-as-you-go financing, are funded through longterm debt from the Municipal Finance Authority. This results in debt service costs, for the term on the debt, which must be funded annually through the water rate, sewer levy or tipping fee as appropriate. If capital expenditures are lower than budget for the year, the result is less required borrowing leading to a budget surplus due to savings in debt service costs. The surplus, by policy, will be applied to fund future capital expenditures thereby reducing the need to borrow. Any favourable variance to budget on capital projects is not redirected to other projects but is essentially dollars not spent. Each project proceeds on the individual project approved budget. SUMMARY / CONCLUSION This is the first in a series of three capital expenditure progress reports for The Board will see this information through individual reports through the Utilities and Zero Waste Committees. Both the Water District and Sewerage and Drainage District (Liquid and Solid Waste) were under or essentially on budget for those projects completed as at April 30, 2015 and are projecting the same for ongoing projects when they complete. Attachments and References: Appendix A: Capital Expenditure Summary Information as at April 30, 2015 Appendix B: Capital Project Status Information as at April 30, 2015 Schedule 1: Water District Capital Expenditures Schedule 2: Sewerage & Drainage District (Liquid Waste) Capital Expenditures Schedule 3: Sewerage & Drainage District (Solid Waste) Capital Expenditures P&P - 115

116 APPENDIX A Capital Expenditure Summary Information As at April 30, 2015 Ongoing Projects Total Projected Expenditures to Completion ACE/ Total Budget Projected Favorable Variance Water $1,609,018,347 $1,641,174,017 $32,155,670 Liquid Waste $795,963,905 $830,197,579 $34,233,674 Solid Waste $27,635,000 $30,660,000 $3,025,000 Total Ongoing Projects: $2,432,617,252 $2,502,031,596 $69,414,344 Completed Projects Total Actual Expenditures ACE/ Total Budget Favorable Variance Water $6,287,083 $7,550,000 $1,262,917 Liquid Waste $1,100,564 $1,125,000 $24,436 Solid Waste $0 $0 $0 Total Completed Projects: $7,387,647 $8,675,000 $1,287,353 P&P - 116

117 Capital Project Status Information April 30, 2015 APPENDIX B 1. GREATER VANCOUVER WATER DISTRICT (Water Services) Major GVWD capital projects are generally proceeding on schedule and within budget. The following capital program items and exceptions are highlighted: i) Drinking Water Treatment Program All of the major construction contracts for the Seymour Capilano Filtration Project are complete. Installation of the turbine/generator at the Capilano Energy Recovery Facility is complete and testing is underway. Commissioning of the twin tunnels for filtration of Capilano source water is complete with actual in service dates for the raw and treated water tunnels achieved in March/April 2015, respectively. Construction of the Coquitlam UV Disinfection Facility is complete and the facility is now in service. ii) Infrastructure Growth Program Pipe installation for the Maple Ridge Main (West) between the Barnston/Maple Ridge Pump Station and 232nd Street is complete. Construction of the flow meter chamber, pipe disinfection and tie ins to the existing GVWD system are scheduled to be complete by the end of June. Site restoration work continues. Construction of the Barnston/Maple Ridge Pump Station is approximately 90% complete. Ongoing delays in supply and delivery of major electrical equipment have continued to impact the project schedule. Connections to the existing Haney Main No. 3 and Barnston Island Main are scheduled for completion in early June, subject to water demand. The projected in service date is early August 2015, subject to confirmation of the schedule for completion of the BC Hydro permanent power connection. Conceptual design of the Annacis Water Supply Tunnel is now complete. Property acquisition for the shaft sites in New Westminster and Surrey continues. The RFQ for the next phases of design has been issued and has now closed. Responses are under review. Detailed design and property acquisition for Port Mann Main No. 2 (North) between the Cape Horn Pump Station and Reservoir near Mariner Way and the new Port Mann Water Supply Tunnel is complete. The pipe supply contract has been awarded to Ameron Pipe Co. The installation tender has been issued and is expected to close in late June. Construction of this water main is expected to start in fall P&P Page 1 of 5

118 Construction of the Angus Drive Main Phase 1 between West 33rd Avenue and SW Marine Drive in Vancouver is 98% complete. Construction of Phase 2, south of Marine Drive is 50% complete. Detailed design of South Delta Main No. 1 Replacement Phase 1 Pre build is complete and ready for tender. Detailed design of Phase 2 is 80% complete and to be issued for tender in July Confirmation of TFN funding is anticipated by September 1, Installation of the Highway No. 17 crossing is complete. iii) Infrastructure Maintenance Program Construction of the Kincaid and Delta Avenue sections of the Douglas Road Main is complete. Final tie ins are underway. Drilling of horizontal drains to replace the E2 drainage shaft near Cleveland Dam continues. Due to difficult ground conditions, the first drain is taking significantly longer than anticipated to complete. iv) Infrastructure Risk Management Program Construction of the Port Mann Water Supply Tunnel is approximately 70% complete. An intervention to remove an obstruction from the TBM screw conveyor was performed in late 2014/early 2015 and tunneling resumed at the end of March. The horizontal tunnel drive is scheduled for completion in June/July 2015, with overall project completion in fall Construction of the north shaft valve chamber continues. Preliminary design of Mackay Creek and Grouse Creek debris flow mitigation project is now substantially complete. An RFP for detailed design is expected to be issued in June Construction of Phase 1 of Capilano Main No. 9 within Capilano River Regional Park is 75% complete. Detailed design of the Phase 2 water main along Capilano Road between the Capilano River Regional Park upper parking lot and Edgemont Boulevard is complete and tenders have been issued for construction. The RFP for detailed design of the Second Narrows Water Supply Tunnel was issued in January and closed in mid March. The submissions have been reviewed and contract award is expected in June/July. Preliminary design of the new 22.5 ML (5 MG) Clayton Reservoir to replace the Clayton Tank in Surrey is 95% complete. Seismic upgrading of the Sasamat and Grandview Pump Stations is complete. v) Infrastructure Upgrade Program The construction tender for the new Lynn Valley Reservoir in the Lower Seymour Conservation Reserve was awarded to Maple Reinders Inc. Construction is scheduled to start in June P&P Page 2 of 5

119 Design of the new Tilbury Valve Chamber at the confluence of the Tilbury and River Road Mains in Delta continues. Design of Phases 1 and 2 of the Queensborough Main Ewen Avenue Replacement is complete and both phases have been issued for tender as part of the City of New Westminster s Ewen Avenue Road Improvements Project which closes in early June GREATER VANCOUVER SEWERAGE & DRAINAGE DISTRICT (Liquid Waste Services) Major GVS&DD liquid waste capital projects are generally proceeding on schedule and within budget. The following capital program items and exceptions are highlighted: i) Infrastructure Growth Program FSA Northwest Langley WWTP Phase l Upgrade The project expands treatment capacity with three new clarifiers, an activated sludge tank, a pumping station, and ancillary process and electrical equipment. The concrete works for the three clarifier tanks, the activated sludge tank, the pump station, and the two process/control buildings is nearing completion. The contractor is now focusing on the mechanical and electrical installation works. Substantial completion of the project is scheduled for December, FSA North Surrey Interceptor Port Mann Section Twinning Work on this project has been put on hold pending an East Fraser Sewer Servicing Study, expected to be complete by the end of FSA Burnaby Lake North Interceptor Construction is complete on the Sperling Section. Testing and some surface restoration are ongoing. The Request for Proposal for engineering services for the second phase of twinning has been awarded and preliminary design has started. FSA North Surrey Interceptor, 104th Avenue Section Pipe installation has been completed along the South Fraser Perimeter Road. Acquisition of right of way required for the final tie ins continues with the Ministry of Transportation and Infrastructure. FSA Annacis Island WWTP Outfall This project involves identifying solutions for the transient/surge scenarios that may occur on the wastewater collection and treatment plant influent system in the event of a power outage, and assessing measures to increase capacity of the outfall for growth. Route identification is complete and the regulatory framework has been identified. Preliminary design report has been received. The Request for Proposal for detailed engineering design has closed, and a recommendation for award will be brought forward to the Committee and Board for approval in July. ii) Infrastructure Maintenance Program LSA Gilbert Trunk Sewer Twinning Construction of Phase 1 of the twinning project is complete. Construction of a pre-build section of Phase 2 to coordinate with the adjacent residential development project has just started and this includes the tie ins for the first P&P Page 3 of 5

120 phase work. This is expected to be completed by July. A Request for Proposal for design services for the remaining three phases of the project has closed. Overall completion of the project is scheduled for VSA Iona Island WWTP Solids Handling Upgrade This project involves improving the existing grit removal and sludge screening systems, increasing sludge thickening capacity, and improving the digester mixing systems. Detailed design is complete. The current site improvements and preload work is substantially complete. The main construction will be completed under two separate contracts, the tenders for which have been issued. Recommendations for award will be brought to the Committee and Board for approval in July. FSA Annacis Island WWTP Secondary Clarifier Corrosion Repair This project involves replacing 12 existing secondary clarifier mechanisms that have been damaged by corrosion. One mechanism was replaced in Manufacture of the equipment for the next 6 units is underway, with installation of 2 units scheduled for 2015 and 4 for The remainder of the units will be replaced in 2017 and The installation tender for the 2015 construction program closes in May. iii) Infrastructure Risk Management Program FSA Annacis Island WWTP Cogeneration System The project replaces the existing cogeneration engines with larger units in order to consume digester gas that is currently being flared, and to generate additional electricity and heat to reduce BC Hydro import. The cogeneration engines are being supplemented by diesel generators to provide a reliable stand-by power system during BC Hydro outage events. Preliminary design is underway with completion projected for the end of Evaluations of proposals for the supply of the cogeneration engines and the standby diesel gensets have been completed. It is anticipated that an award recommendation for supply of equipment will be submitted to the Committee and Board for approval in July iv) Infrastructure Upgrade Program FSA New Sapperton Pump Station Several workshops were held with the stakeholders to review the preliminary design. Detailed design is currently underway. Request for Proposals for equipment pre purchase for pumps, motors and starters will be issued in the summer. FSA Langley Connector and Carvolth Trunk Sewer Upgrading/Replacement Construction is 60% complete and is expected to be completed by the end of v) Annacis Stage 5 Expansion Program FSA Annacis Island WWTP Stage 5 Phase 1 This work involves expansion of treatment process units including primary sedimentation tanks, secondary clarifiers, solid contact tanks and odour control. Detailed design commenced in early 2014 and is currently 90% complete. The $47 million ground improvement contract was awarded in October 2014 and P&P Page 4 of 5

121 is approximately 30% complete. The $5 million solids contact blower contract was awarded in November 2014 and construction completion is scheduled for June The tender for the CDAC (control and lab) building was awarded in March 2015 and the contractor is mobilizing onsite. 3. GREATER VANCOUVER WATER DISTRICT SEWERAGE AND DRAINAGE DISTRICT (Solid Waste Services) Major GVS&DD solid waste capital projects are generally proceeding on schedule and within budget. The following capital program exceptions are highlighted: i) Landfills Program The Coquitlam Landfill (CLF) Gas Upgrades will be completed in the winter 2015/2016 to comply with the recent extension of the golf facility lease. The Phase 2 upgrade will be completed with the proposed development of the Coquitlam Transfer Station. ii) Waste-to-Energy Program Commissioning of the NOx Upgrade Project, to lower emissions to below MoE 2011 emission guidelines, was substantially completed in the first quarter of A draft Operational Certificate has been submitted to the province. Upgrades to the Scrubber system, Continuous Emission Monitoring system (CEMS), and the WTEF Gas Burner Replacement are potentially impacted by this approval. ii) New WTE Capacity Project (Material & Energy Recovery Facility) The procurement process for the New WTE Capacity Project was approved in October RFQ1 (Technology Only) was issued, and the short list of qualified technology respondents was announced in June The Potential Site Identification process has been initiated, and a public solicitation for sites was issued in July Public engagement and consultation programs will continue, and once potential sites have been identified, site specific consultation will be initiated. P&P Page 5 of 5

122 Water District Capital Expenditures As of Apr 30, 2015 Total Project Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Description Project Actuals Project Total Project Project Complete Project Schedule? Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments On-going Grand Totals 1,315,167,677 1,609,018,347 1,641,174,017 32,155,670 Completed Grand Totals 6,287,083 6,287,083 7,550,000 1,262,917 ON-GOING PROJECTS Drinking Water Treatment Cap Seymour Capilano Filtr Project North Vancouver 828,510, ,400, ,000,000 (3,400,000) (e) 99% 2015 Y Filtration Plant component completed over budget in A0163 Coq UV Disinfection Construct Coquitlam 95,198,884 96,500, ,000,000 13,500,000 (d)(f) 99% 2015 Y 923,709, ,900, ,000,000 10,100,000 Infrastructure Growth Cap A0036 Maple Ridge Main Stage II Maple Ridge 16,556,199 19,580,000 19,580,000 - (b) 95% 2015 Y A0140 Coquitlam Intake No 2 Coquitlam 582,197 3,130,000 3,130,000-19% 2016 Y A0164 Burnaby Mtn PS 2 Pre Design Burnaby 238, , ,000-80% 2016 Y A0171 Barnston Maple Ridge PS Pitt Meadows 40,301,708 46,500,000 46,500,000 - (c) 90% 2015 N Foundation design and equipment procurement delays. A0198 Sasamat PS Stage II Pre design Vancouver 174, , , ,000 (j) 99% 2015 Y A0199 Angus Drive Main PreDgn Design Vancouver 1,963,792 2,000,000 2,000,000-99% 2015 Y A0202 Port Mann Mn No 2 N Pre Design Coquitlam 485, , ,000-99% 2015 Y A0203 Seymour Main No 5 North North Vancouver 490,212 1,000,000 1,000,000-70% 2015 Y A0208 Annacis No5 Conceptual Design New West / Surrey 1,930,990 2,000,000 2,000,000-97% 2015 N Shaft site selection delays A0214 Port Mann Mn No 2 North Design Coquitlam 1,419,038 1,600,000 1,600,000-99% 2015 N Permitting and property acquisition delays. A0215 Port Mann Mn No 2 South PreDes Surrey 273, , , ,000 75% 2015 Y A0218 Kennedy Newton Main Surrey 94,213 1,000,000 1,000,000-9% 2015 Y A0219 Coquitlam Main 4 Cape Horn Pre Coquitlam 16,466 1,000,000 1,000,000-2% 2018 Y A0226 Angus Drive Main Construction Vancouver 19,989,586 28,000,000 28,000,000-75% 2015 Y A0237 S Delta Main No 1 Upgde Design Delta 655,583 1,750,000 1,750,000-50% 2015 Y A0241 Hellings Tank No 2 - Pre Des Delta 367, , ,000-46% 2015 Y A0243 Fleetwood Reservoir Pre-Design Surrey 341,367 1,300,000 1,300,000-26% 2015 Y A0247 Jericho Reservoir Pre Design Township of Langley 279,929 1,500,000 1,500,000-19% 2015 Y A0249 S Delta Main No 1 Pre build Delta 349,607 4,200,000 4,200,000-8% 2016 N TFN pursuing grant funding. A0251 Newton Pumping Improvements Surrey 134, , ,000-91% 2015 Y A0254 Port Mann Main No 2 N Constr Coquitlam 283,116 24,100,000 24,100,000-5% 2016 Y A0262 SDM1 12th to 28th Ave Constr Delta 39 11,700,000 11,700,000-0% 2016 N TFN pursuing grant funding. A0263 Hellings Tank No 2 Det Des Delta - 900, ,000-0% 2016 Y A0265 Fleetwood Res Detailed Design Surrey - 1,400,000 1,400,000-0% 2016 Y A0271 Comprehensive Water Plan Regional - 300, ,000-0% 2016 Y A0272 Port Mann Main 2 S Prebuild Surrey 41,978 2,000,000 2,000,000-10% 2015 Y A0276 Annacis Tunnel Prelim.Design New Westminster 13,816 8,000,000 8,000,000-5% 2016 Y A0277 Annacis Tunnel Detailed Design New Westminster - 28,000,000 28,000,000-1% 2018 Y 86,984, ,410, ,810, ,000 Infrastructure Maintenance Cap A0002 Des and Cons Remed E2 Shaft P1 North Vancouver 1,419,602 1,500,000 1,500,000-95% 2016 Y A0075 Phase 2Rem Cons E2 Drain CI Da North Vancouver 806, , ,000-95% 2016 Y A0134 Douglas Road Main 2 Stage 1 Burnaby 10,245,359 11,246,000 12,500,000 1,254,000 (a) 99% 2015 Y A0146 Douglas Rd Main 2 Stage II Burnaby 10,353,715 10,354,000 11,000, ,000 (a) 99% 2015 Y A0170 DRM2 13th Ave Section Pipes Burnaby 12,826,452 14,452,000 16,000,000 1,548,000 (a) 90% 2016 N Tie-ins being coordinated with Burnaby. A0181 DRM2 Kincaid Section Des Const Burnaby 9,293,992 12,300,000 12,300,000-80% 2016 N Tie-ins being coordinated with Burnaby. A0182 DRM2 Delta Sect Des Construt Burnaby 14,250,282 16,600,000 16,600,000-95% 2016 N Remaining tie-ins to be complete in A th Ave Main No. 3 Vancouver 12,975,850 13,900,000 13,900,000-99% 2015 Y A0192 Water Meter Upgrd 2011 Renewal Regional 341, , ,000-99% 2015 Y A0196 Re chlorination HVAC Upgrade Regional 436, , , ,000 (d) 99% 2015 Y A0200 Annacis 4 Scour Protect DesCon Regional 488, ,000 1,200, ,000 (a)(d) 99% 2015 Y A0207 DRM2 Still Creek Design Burnaby 162,795 1,600,000 1,600,000-10% 2016 N Delayed due to revised project priorities. A0211 E2 Shaft Phase 3 Test Wells North Vancouver 2,856,841 4,500,000 4,500,000-63% 2015 N Drilling delays due to ground conditions. A0212 Annacis 3 Scour Construction Regional 309, , , ,670 (a)(h) 99% 2015 N Permitting delays. A0217 SSU Serpentine Riv Xing Rehab Surrey 6, , ,000-5% 2015 N Delays in contract award. Waiting for MOTI approval. A0222 SCFP CW Chambers Roof Upgrade North Vancouver 470, , ,000-94% 2015 Y A0235 SCFP Storage Building North Vancouver 105,092 2,400,000 2,400,000-20% 2016 N Design delays; construction to commence June. A0236 WWB1 TFMR & MCC Replacement New Westminster 45, , ,000-5% 2016 Y A0244 Central Park WPS Starters Burnaby 120,975 2,100,000 2,100,000-6% 2017 N Proposals for engineering services under review. A0250 Douglas Rd Main 2 Van Heights Burnaby - 480, ,000-0% 2016 N Design delays. A0252 Cleveland Dam Drumgate Resurf North Vancouver 19,756 1,135,000 1,135,000-5% 2016 N Design delays. A0259 SCFP CW Roof Imp Phase 2 North Vancouver 26, , ,000-3% 2015 Y A0260 SCFP CW Cols Remediation Const North Vancouver 9,809 2,000,000 2,000,000-5% 2017 Y A0269 CDEA T505 Adit Upgrades North Vancouver 3, , ,000-1% 2015 Y A0273 Lynn Valley Main Replacement North Vancouver 5, , ,000-2% 2020 Y A Ave Main Replace Pre Des Vancouver 7,593 1,050,000 1,050,000-2% 2020 Y A0275 LCOC Building Envelope Repair Burnaby 81,274 1,800,000 1,800,000-5% 2015 Y A0281 SCFP Concrete Coatings Design North Vancouver - 250, ,000-1% 2020 Y 77,669, ,912, ,641,000 4,728,670 Infrastructure Risk Mgmt Cap A0160 Cleveland Dam ADAS Phase II North Vancouver 766, , ,000-99% 2015 Y A0162 P Mann Water Supply Tunnel Con Surrey/Coquitlam 162,317, ,000, ,000,000 14,000,000 (d) 70% 2016 N Shaft construction and tunnelling delays. P&P - 122

123 Water District Capital Expenditures As of Apr 30, 2015 Total Project Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Description Project Actuals Project Total Project Project Complete Project Schedule? Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments A0167 Second Narrows Water Tunnel North Vancouver/Burnaby 5,505,336 5,550,000 5,550,000-99% 2015 N Additional assessment undertaken. A0188 Seymour Falls Dam ADAS Ph II North Vancouver 164, , ,000-63% 2015 N Design delays. Construction being coordinated with other work at Seymour Falls Dam in A0193 Braid St Main No 2 Design New Westminster 397, , ,000-95% 2017 N Deferred to accommodate Queensborough Main replacement. A0209 Mackay Creek Mitigation PreDes North Vancouver 811,855 1,000,000 1,000,000-95% 2015 Y A0216 Capilano Mn No 9 Detail Design North Vancouver 1,300,251 1,300,000 1,300,000-99% 2015 Y A th Ave Main No. 2 Predesign Vancouver , ,000-0% 2020 N Project scope under review. A0223 Convert to Blk Sodium Hypochi Coquitlam 626,739 8,300,000 8,300,000-9% 2017 Y A0225 Capilano Main No9 Prebuild North Vancouver 4,582,594 6,000,000 6,000,000-85% 2015 Y A0231 Second Narrows Tunnel Det Dsgn North Vancouver/Burnaby 194,881 15,000,000 15,000,000-3% 2017 Y A0233 SCFP Filter Gullet Lining Des North Vancouver 266, , ,000-75% 2015 Y A0238 Coquitlam Gatehouse Coquitlam 254,361 1,600,000 1,600,000-16% 2016 Y A0239 Coquitlam Multi-Storage Coquitlam 174,669 1,300,000 1,300,000-13% 2016 Y A0240 Seismic Upgrade Constr 3 PS Vancouver/Surrey 596,403 1,000,000 1,000,000-66% 2015 N Project scope under review. A0242 Hellings Tank Seis Upg-Det Des Delta 178, , ,000-70% 2015 Y A0246 Clyton Reservoir Design Surrey 511,649 2,700,000 2,700,000-30% 2015 Y A0248 SCFP Filter Gullet Lining Cons North Vancouver 690,373 1,500,000 1,500,000-46% 2016 Y A0253 Cap Rd Ph 2 ADAS Piezometers North Vancouver 6, , ,000-5% 2016 Y A0261 Cap 9 North Construction North Vancouver 1,204,261 29,000,000 29,000,000-5% 2016 Y A0264 Helings Tank Seis Upg Constr Delta 1,915 4,500,000 4,500,000-0% 2016 Y A0267 CWTP Enhancements Design Coquitlam 7, , ,000-4% 2016 Y A0268 CWTP Enhancements Construct Coquitlam 85,922 2,300,000 2,300,000-4% 2016 Y A0270 Coq Intake Tower Seismic Upg Coquitlam 15,500 1,000,000 1,000,000-2% 2016 Y A0278 MacKay Creek Detailed Design North Vancouver - 1,000,000 1,000,000-0% 2016 Y A0279 Cambie Rich Crossing Des 1 Richmond 1, , ,000-0% 2016 Y A0280 Haney Main Crossing Des 1 Richmond 1, , ,000-0% 2016 Y 180,663, ,280, ,280,000 14,000,000 Infrastructure Upgrade Cap A0161 Capilano Power Feasibil Study North Vancouver 217, , ,000-87% 2015 N Coordinating with Joint Water Use Plan. A0175 Water Optimization Auto Instru Regional 1,380,265 2,368,000 2,368,000-58% 2017 N Delays in instrument procurement. A0183 Coq Comm Improvements Design Coquitlam , ,000-3% 2017 N Awaiting BC Hydro Fibre Duct Identification Phase A0195 CDEA GV series well upgrade North Vancouver 468, , ,000-63% 2015 Y A0224 CLD Seismic StabilityAssessmet North Vancouver 3, , ,000-1% 2016 N Delay in delivery of Seismic Hazard Assessment results A0232 Lynn Valley Watr Reservoir Des North Vancouver 971,794 1,500,000 1,500,000-80% 2015 Y A0234 Tilbury Valve Chamber Delta 200,315 3,900,000 3,900,000-15% 2016 N Design revisions. A0245 SCFP - Hydraulic Power Units North Vancouver 113, , ,000-22% 2015 Y A0255 Queensborough Ewen Rpl Design New Westminster 294, , ,000-80% 2015 Y A0256 Queensborough Ewen Rpl Const New Westminster - 5,500,000 5,500,000-0% 2015 Y A0257 SDM1 28th to 34B Ave Design Delta 31, , ,000-3% 2015 Y A0258 SDM1 28th to 34B Ave Const Delta - 10,300,000 10,300,000-0% 2016 Y A0266 Lynn Valley Wrt Stor Res Const North Vancouver 15,180 6,000,000 6,000,000-1% 2016 Y 3,698,012 33,443,000 33,443,000 - Infrastructure Boundary Main 5 Cap A0149 Boundary Rd Main No 5 Phase 3 Regional 35,791,770 36,500,000 39,000,000 2,500,000 (d) 98% 2015 Y 35,791,770 36,500,000 39,000,000 2,500,000 Infrastructure Relocation Cap A8000 South Fraser Perimeter Rd Regional 298, , ,079-95% 2016 Y A8001 Hwy 1 Widen and PM Bridge Twin Regional 1,737,980 2,024,743 2,024,743-86% 2016 Y A8002 N Fraser Perimeter Pitt R Brdg Regional 3,115,314 3,116,195 3,261, ,000 (g) 99% 2015 Y A8003 N Fraser Perim Lougheed Pitt M Pitt Meadows 25,793 26, , ,000 (g) 99% 2015 Y A8006 NFPR Coq New Westminster Regional - 50,000 50,000-0% 2017 N Project delayed by Translink. A St Hwy 1 Langley BusExch Township of Langley 1,843 2,000 50,000 48,000 (i) 99% 2015 Y A8008 Evergreen Line Regional 109, , ,000-55% 2017 N Project delayed by Translink. 5,288,266 5,973,017 6,400, ,000 Infrastructure Opportunity Prgm Cap A0191 Barnston MR PS energy generatn Pitt Meadows 335,402 2,500,000 2,500,000-15% 2018 N Project scope under review. A0221 S Delta Main 1 Ladner Trk Road Delta 1,028,011 1,100,000 1,100,000-99% 2015 Y 1,363,413 3,600,000 3,600,000 - Total On-going Projects 1,315,167,677 1,609,018,347 1,641,174,017 32,155,670 COMPLETED PROJECTS Infrastructure Maintenance Cap A0168 Cleveland Dam Elevator Replace North Vancouver 6,058,464 6,058,464 7,300,000 1,241,536 (a)(d) 100% 6,058,464 6,058,464 7,300,000 1,241,536 Infrastructure Risk Mgmt Cap A0177 Seis Upg Design 4 Pump Station Regional 228, , ,000 21, % 228, , ,000 21,381 Total Completed Projects 6,287,083 6,287,083 7,550,000 1,262,917 Notes: (a) (b) Competitive construction market resulted in a positive variance. GVWD share %: Maple Ridge share % (A0036 and A0152). P&P - 123

124 Water District Capital Expenditures As of Apr 30, 2015 Total Project Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Description Project Actuals Project Total Project Project Complete Project Schedule? Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments (c) (d) (e) (f) (g) (h) (i) (j) GVWD share %: District of Maple Ridge share %, City of Langley share 4.91%, Township of Langley share 41.82%. (A0171) Full contingency not required. Anticipated recoveries associated with the turbine supply (C-328), filtration plant (C-732) and tunnels completion (C-715) contracts are included in the projected final cost. Construction costs lower than estimated. MOT avoided highway construction impact on GVWD facilities resulting in savings on protective works. Reduction in scope. Project cost recovery from Province. Operational modifications completed under budget. No major work was required. P&P - 124

125 Sewerage and Drainage District Capital Expenditures Liquid Waste As of Apr 30, 2015 Total Projects Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Project Actuals Project Total Project Project Complete Project Schedule? Description Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments On-going Grand Totals 267,411, ,963, ,197,579 34,233,674 Completed Grand Totals 1,100,564 1,100,564 1,125,000 24,436 ON-GOING PROJECTS SD Infrastructure Growth Z0049 NLWWTP Phase 1 T2 Design Township of Langley 8,869,354 9,000,000 9,000,000-99% 2016 Y Z0050 NLWWTP Ph1 T2 Construction Township of Langley 26,042,370 55,300,000 55,300,000-47% 2016 Y Z0053 LGWWTP Interim CEPT Upgd Equip West Vancouver 1,268,237 1,300,000 1,300,000-99% 2015 Y Z0054 LGWWTP Interim CEPT Upgrd Con West Vancouver 1,144,054 1,320,000 1,320,000-99% 2015 Y Z0056 AIWWTP Outfall Surge Design Delta 2,123 3,000,000 3,000,000-0% 2017 N Project was delayed due to additional analysis to address unforeseen conditions. G0041 Sapperton Pump Station Design New Westminster 2,175,369 5,600,000 5,600,000-45% 2016 Y G0043 NSI Port Mann Twinning Surrey 9,548,161 12,671,000 20,600,000 7,929,000 (8) 46% 2018 N G0045 Bby Lk N Int Sperling Sect Des Burnaby 595, , ,000-99% 2015 Y G0046 N Nicomekl Trk Sewer No 2 Cons City of Langley 6,881,427 6,882,000 14,000,000 7,118,000 (1)(2) 99% 2015 Y G0049 SSI K George Section Constr Surrey 29,471,136 30,000,000 30,000,000-99% 2016 Y G0050 Katzie Pump Upgrade - Design Maple Ridge 18, , ,000 - (8) 9% 2017 N G0051 Katzie Genset - Assessment Maple Ridge 15,922 50,000 50,000 - (8) 32% 2017 N G0052 Sperling PS Pump Increase Burnaby 126, , ,000-99% 2015 Y G0055 NSI 104 Avenue Extension Surrey 3,289,939 6,800,000 6,800,000-90% 2016 N Awaiting property acquisition from Ministry of Transportation. G0056 Lulu Raw Sewage Pump Genset Richmond 1,999,511 2,130,000 2,900, ,000 (1)(2) 99% 2015 N Project complete. Claim submitted by engineer G0059 ANI Stg 8 Outfall Predesign Delta 2,381,558 3,000,000 3,000,000 - (2) 95% 2015 N Project was delayed due to additional analysis to address unforeseen conditions. G0060 Maple Ridge FM Design Surrey 72,437 1,400,000 1,400,000 - (8) 5% 2019 N G0061 NSI Roebuck Design Surrey 594,809 4,300,000 4,300,000 - (8) 14% 2018 N G0062 Sperling PS Increase Pump Cap Burnaby 28,302 3,000,000 3,000,000-2% 2017 Y G0063 Katzie PS Genset Design Maple Ridge 1, , ,000 - (8) 0% 2019 N G0064 Katzie PS Design Phase II Maple Ridge - 2,000,000 2,000,000 - (8) 0% 2019 N G0065 Bby Lk Int N Sperling Sect Con Burnaby 2,664,054 6,500,000 6,500,000-50% 2016 N Construction is nearing completion. G0066 Langley Pump Station Surrey , ,000-95% 2015 Y G0067 SSI Johnston Rd Section Surrey 543, , ,000-70% 2016 Y G0068 SW Marine Dr Int. Twinning Vancouver 16, , ,000-5% 2019 Y G0069 Marshend PS - Concept Design Burnaby - 125, ,000-80% 2016 Y G0070 Queensborough PS - Predesign New Westminster 77, , ,000-90% 2016 Y G0071 Hastings Sanitary Trunk Sewer Burnaby/Vancouver 76, , ,000-27% 2017 Y G0072 Collingwood Sanitary Trunk Vancouver 101, , ,000-31% 2017 Y G0073 Bby Lk N Int Philips Sect Burnaby 179,894 3,200,000 3,200,000-13% 2017 Y G0074 Langley PS Pre Design Surrey - 300, ,000-70% 2016 Y G0075 Marshend PS Pre design Burnaby - 1,000,000 1,000,000-25% 2017 Y G0076 Queensborough Pumb Stat Desg New Westminster - 1,500,000 1,500,000-0% 2017 Y G0077 Sapperton FM Connections New Westminster 4,488 1,000,000 1,000,000-1% 2018 Y G0078 North Road Trunk Swr Twinning Coquitlam 2, , ,000-1% 2017 Y G0079 SSI KGH OCF and Grit Chamber Surrey - 1,000,000 1,000,000-1% 2017 Y G0080 SSI Johnston Rd Pre Build Surrey - 18,000,000 18,000,000-0% 2016 Y 98,192, ,567, ,384,000 15,817,000 SD Infrastructure Maint Cap X0009 AIWWTP CCT ISO Gates Delta 500, ,000 1,000, ,000 (3) 99% 2015 Y X0013 LNG Control & Inst Replacement West Vancouver - 300, ,000-0% 2017 Y X0014 AIWWTP CDAC Comp Replacement Delta 153,872 1,500,000 1,500,000-10% 2019 Y X0016 IIWWTP Constr and Inst Replmt Richmond 73,892 2,750,000 2,750,000-5% 2019 Y X0018 NLWWTP 25kV Sub Repl Design Langley 114, , ,000-38% 2018 Y X0019 AIWWTP Clarifier Corr Ph 2 Delta 1,304,965 7,865,000 10,000,000 2,135,000 (1) 13% 2018 Y X0020 AIWWTP IPS Roof Replacement Delta 198, , , ,000 (3) 99% 2015 Y X0025 IIWWTP Cogen Ctrls Repl Design Richmond - 470, ,000-0% 2017 Y X0026 Iona Solids-Construction Richmond 52,046 26,000,000 26,000,000-0% 2018 N Delay in design completion. Contractors have been prequalified X0028 NLWWTP 25Kv Sub Repl Des P2 Langley 1, , ,000-0% 2017 Y X0029 AIWWTP Galleries CDAC Design Delta - 395, ,000-0% 2018 Y X0032 NLWWTP CDAC Upgrade Design Langley - 650, ,000-0% 2016 Y X0033 NLWWTP CDAC Upgrade Constructn Langley - 850, ,000-0% 2017 Y X0034 AIWWTP Clarifr Corrosn P2 Cons Delta - 12,000,000 12,000,000-0% 2018 Y X0037 IIWWTP Thickener 1 Refurb Richmond - 2,000,000 2,000,000-0% 2016 Y N0046 Cost Alloc Billing Network Regional 4,832,734 5,024,000 5,230, ,000 (3) 92% 2016 N Delay in CSA certification of proposed metering instrumentation. N0296 Gleneagles PS 2 5 Rehab Design West Vancouver 93,291 1,200,000 1,200,000-35% 2016 Y N0307 Iona WWTP 2006 MCC Replacement Richmond 664, , ,000 - (4) 98% 2015 N Consultant onboard; work proceeding. N0318 FSA Sewer Repair Regional 1,520,614 2,000,000 2,000,000-76% 2016 Y N0321 LGWWTP Control Instrument 2008 West Vancouver 281, , ,000-94% 2015 Y N0322 IIWWTP Control Instrument 2008 Richmond 466, , ,000-93% 2015 Y N0325 Gleneagles PS 1 Rehab West Vancouver 216,873 1,300,000 1,300,000-36% 2016 Y N0333 LGWWTP Dig 4 Refurbishment West Vancouver 6,850,553 6,857,000 7,360, ,000 (2) 99% 2015 Y N0336 IIWWTP 2009 MCC Replacement Richmond 1,223,648 1,375,000 1,375,000 - (4) 90% 2015 N Construction is near completion. N0337 LGWWTP 2009 MCC Replacement West Vancouver 399, , ,000 - (4) 50% 2016 N N0340 Lions Gate Ctrl and Instr Repl West Vancouver 131, , ,000-66% 2015 Y N0341 Iona Control and Instr Replace Richmond 214, , ,000-43% 2016 Y P&P - 125

126 Sewerage and Drainage District Capital Expenditures Liquid Waste As of Apr 30, 2015 Total Projects Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Project Actuals Project Total Project Project Complete Project Schedule? Description Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments N0343 IIWWTP PA Tanks Infl Gate Repl Richmond 531, , ,000-99% 2015 Y Project complete; close account N0350 NW Interceptor Grit Chamber New Westminster 61, , ,000-24% 2017 Y N0352 VSA IIWWTP IPS VFD replacement Richmond 882, , ,000-99% 2015 Y N0358 AIWWTP Clarifier Corrosion Rep Delta 1,431,207 1,434,000 1,946, ,000 (1)(4) 99% 2015 N Phase 1 works substantially complete. N0360 IIWWTP HVAC upgrade Richmond 1,892,199 2,044,000 2,095,000 51,000 (4) 90% 2015 N Construction completed. N0361 Marshend PS Rehab Construction Burnaby 687,185 7,000,000 7,000,000-10% 2018 N Rehab delayed to coincide with Capacity Upgrade N0364 SSI Rehab Construction Surrey 712, ,000 3,000,000 2,287,000 (3) 99% 2015 Y N0365 AIWWTP MCC Replacement Delta 41,699 2,844,000 2,844,000-3% 2018 N Coordinating construction with AIWWTP Stage V project. N0366 IIWWTP 12kv Feeder Replacement Richmond 657, , ,000-85% 2015 N Construction more difficult than anticipated. N0368 AIWWTP Gas Compressor Repl Delta 183, , , ,000 (3) 35% 2017 Y N0376 Iona Jetty North Slope Repair Richmond 4,563,394 5,000,000 5,000,000-91% 2015 Y N0377 Gilbert Trunk Sewer Twinning Richmond 1,969,905 2,000,000 2,000,000-99% 2015 Y N0378 LGWWTP Gas Condensate Removal West Vancouver 1,034,284 1,300,000 1,300,000 - (6) 95% 2015 N Installation complete: system operational. N0383 AIWWTP GrvtyThckner DAFRepa Delta 1,040,119 2,000,000 2,000,000-60% 2016 Y N0384 Iona MCC pwr dist ass rep 2010 Richmond 53, , ,000-6% 2017 Y N0385 Lulu MCC and 012 replac Richmond 543, , , ,000 (1) 99% 2015 N Project complete N0387 Iona Solids Handling Design Richmond 4,008,335 4,500,000 4,500,000-99% 2015 Y N0390 Iona Inlet Modifications Richmond 177, , ,000-70% 2017 N Surge tower installed. Collecting data to determine effectiveness. N0393 AIWWTP TF Pump Refurbishment Delta 826, , ,000-97% 2015 Y N0394 NSI Scour Construction Regional 378, , , ,000 (3) 80% 2017 Y N0395 Gilbert Trunk Swr 2 Ph 1 Con Richmond 17,133,482 21,000,000 21,000,000-82% 2016 Y N0396 Iona MCC Pwr Dist Ass Rep Fut Richmond 309,277 1,965,000 1,965,000-16% 2017 Y N0397 LG WWTP Bar Screen Replacement West Vancouver 482, , ,000 - (6) 70% 2015 N Unforeseen field conditions delaying construction. N0398 AIWWTP WSS Line Replacement Delta 588, , , ,000 (4) 90% 2015 Y N0399 Lynn Sewage PS Upgrade North Vancouver 6,915,540 7,714,000 9,000,000 1,286,000 (1)(2) 99% 2015 Y N0411 Gilbert Trunk Swr No2 Ph2 Richmond 700,703 3,700,000 3,700,000-19% 2017 Y N0421 Royal Ave PS - Predesign New Westminster 19, , ,000-80% 2015 Y N0422 Jervis SPS MCC ACP Repl Design Vancouver 118, , ,000-98% 2015 Y N0426 Iona Grit System Upgrade Const Richmond 1,300,934 8,100,000 8,100,000-16% 2017 Y N0430 Gilbert Trunk Sewer Ph2 Const Richmond ,700,000 17,700,000-0% 2017 Y N0431 Jervis SPS MCC Repl Constr Vancouver - 650, ,000-0% 2015 Y 68,541, ,800, ,940,000 9,140,000 SD Infrastructure Risk Mgmt Cap X0007 AIWWTP Ammonia Removal ConcDes Delta 61, , ,000 - (4) 20% 2016 Y X0008 LIWWTP Ammonia Removal ConcDes Richmond 15, , ,000 - (4) 8% 2016 Y X0015 LIWWTP PE Bypass Gates Design Richmond 89, , ,000-59% 2015 Y X0017 AIWWTP Ammonia Removal PreDes Delta - 600, ,000 - (4) 0% 2017 N Project delayed due to delays in previous phase. X0023 AIWWTP Cogen Controller Repl Delta - 150, , ,000 (3) 25% n/a N One unit has been replaced. If the new congens are installed we will not be required to replace an additional 3 units. X0027 AIWWTP Cogen Prepurchase Delta ,000,000 25,000,000-0% 2019 Y X0031 LIWWTP Bypass Gate Constructn Richmond - 300, ,000-0% 2016 Y X0035 IIWWTP Sed Tank Eff Gates Cons Richmond - 1,000,000 1,000,000-0% 2015 Y N0056 FSA Easement Acquisition Progr Regional 1,074,758 1,500,000 1,500,000-72% n/a Y N0319 Jervis Planetarium Vancouver 6,765,095 6,766,000 9,000,000 2,234,000 (2) 99% 2015 Y N0331 Highbury Siphon Repair Const Vancouver 8,483,124 12,000,000 12,000,000-90% 2016 Y N0348 NLWWTP Outfall Township of Langley 126,429 1,500,000 1,500,000 - (8) 8% 2018 N Project scope under review. N0349 Highbury Overflow Facility Vancouver 19, , ,000-18% 2018 N Project scope under review. Awaiting results from IIWWTP capacity study. N0362 ISMP for Port Moody Coquitlam Regional 235, , ,000-94% 2015 Y N0373 8th & Balaclava Data Collect'n Vancouver 42, , ,000-42% 2015 N Delayed due to instrumentation sourcing / certifications. N0374 Coquitlam Interceptor Rehab Coquitlam 4,962,122 4,963,000 5,800, ,000 (1) 99% 2015 Y N0386 AWWTP S Cogen Floor Rehab Des Delta 41, , ,000-25% n/a N Project scope under review, likely to be cancelled. N0388 Highbury Air Mgt Facilities Vancouver 701,424 1,250,000 1,250,000-56% 2017 N Working with Vancouver Park Board to find location within Musqueam Park N0389 NW CSO Gates Design New Westminster 33, , ,000-4% 2018 N Project scope under review. N0409 AIWWTP SCL Flow Balance Design Delta 91, , ,000 - (4) 20% 2015 N Project was delayed but detailed design now underway. N0412 AIWWTP PST Wway Col Remed Des Delta 114, , ,000-38% 2015 Y N0413 AIWWTP Cogen Backup Power Des Delta 1,655,007 9,000,000 9,000,000-18% 2016 Y N0419 Sewer Seismic Upgrades Regional 146, , ,000-29% 2015 Y P&P - 126

127 Sewerage and Drainage District Capital Expenditures Liquid Waste As of Apr 30, 2015 Total Projects Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Project Actuals Project Total Project Project Complete Project Schedule? Description Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments N0423 VSA Emerg Backup Power Concept Vancouver 241, , ,000-80% 2016 Y N0424 IIWWTP Sed Tank Effluent Gates Richmond 120, , ,000-95% 2015 Y N0427 NW Interceptor Columbia Sect New Westminster 130, , ,000-19% 2017 Y N0428 Gleneagles Forcemain Replace West Vancouver 135, , ,000-41% 2017 Y N0432 8th Ave Interceptor Air Mngmt Vancouver - 500, ,000-0% 2017 Y N0433 SSI Delta Odour Control Study Delta - 650, ,000-0% 2017 Y N0434 Ocean Park TS Rehab Design Surrey - 403, ,000-0% 2017 Y 25,286,054 70,549,000 74,170,000 3,621,000 SD Infrastructure Upgrade Cap X0012 IIWWTP Redund 12KV Fdr-Design Richmond - 220, ,000-0% 2017 Y X0021 NLWWTP SBS Storage-Design Township of Langley - 250, ,000-0% n/a N Project scope under review pending results of pilot study. X0022 AIWWTP Protection Relay Design Delta 35, , ,000-22% 2016 Y X0024 All WWTP PQM Network Predesign Regional - 30,000 30,000-20% 2015 Y X0030 AIWWTP Protect Relay Purchase Delta - 595, ,000-15% 2016 Y X0036 IIWWTP Grit Chan Eff Gates Con Richmond - 1,610,000 1,610,000-0% 2017 Y X0038 All WWTP PQM Detail Design Regional - 140, ,000-0% 2016 Y X0039 All WWTP PQM Prepurchase Regional - 500, ,000-0% 2016 Y N0023 VSA Statutory Right of Way Vancouver 429, , ,000 - (7) 64% 2020 Y N0065 NW Sewer overflow Oper Impr New Westminster 1,164,577 1,209,000 1,300,000 91,000 (2) 95% 2018 Y N0066 New West Const CSO Storage Pro New Westminster 4,923,703 4,923,703 4,917,000 (6,703) 99% 2016 Y N0324 AIWWTP Gas flow Meter Replace Delta 45, , ,202-8% 2015 N No further work planned; close account N0334 Jervis FM Extension to 8Al Vancouver 7,295,146 7,307,000 9,000,000 1,693,000 (2) 99% 2016 Y N0344 Cloverdale SSO Treatment Surrey 16, , ,000-11% 2018 N Project scope under review. N0345 Katzie SSO Treatment Maple Ridge 200, , ,000-31% 2017 Y N0346 Lynn Creek SSO Treatment North Vancouver 12,359 13, , ,000 (9) 2% 2018 N N0367 Carvolth Sanitary Trunk Sewr 2 City of Langley 3,028,353 8,100,000 8,100,000-37% 2016 Y N0369 LIWWTP gas flowmeter repl Richmond 57, , ,000-30% 2015 N No further work planned; close account N0370 Sperling PS Station Upgrade Burnaby 482, , ,000-99% 2015 Y N0371 CDAC System migration planning Regional 256, , ,000-95% 2015 Y N0372 FSA Wastewater Meter Upgrades Regional 222, , ,000-37% 2017 N Delay due to project scope review / revision. N0400 IIWWTP Dig 4 Roof Replacement Richmond 133,837 1,500,000 1,500,000-9% 2019 N Construction aligned to coincide with other capital works. N0401 Sperling PS Upgrade Constructt Burnaby - 7,000,000 7,000,000-2% 2017 Y N0402 NSSA Wastewater Meter Upgrades Regional 17, , ,000-6% 2018 Y N0403 VSA-Wastewater Meter Upgrades Vancouver 254, , ,000-85% 2016 Y N0404 LISA-Waterwater Meter Upgrades Richmond 74, , ,000-25% 2018 Y N0408 NWL WWTP Sludge Dewatering Township of Langley 176, ,000 2,500,000 2,323,000 (9) 7% n/a Y N0410 AIWWTP Secondary Bypass Design Delta 68, , ,000 - (4) 15% 2015 N Project was delayed but detailed design underway. N0415 IIWWTP Interim Facility Plan Richmond 271, , ,000-99% 2015 Y N0416 Wastewater Trtmt Plan for FSA Township of Langley 116, , ,000-29% 2015 Y N0417 LIWWTP Second Incomer Feeder Richmond 127, , ,000-51% 2016 Y N0420 LGWWTP Sludge Thickener No.2 West Vancouver 529,873 2,900,000 2,900,000-18% 2016 Y N0425 IIWWTP Grit Effluent Gates Des Richmond 172, , ,000-90% 2015 Y N0429 SSI Delta Section Rehab Design Delta 14, , ,000-8% 2017 Y 20,126,780 42,947,905 47,785,202 4,837,297 SD Infrastruct Relocation Cap N8000 South Fraser Perimeter Rd Regional 316, , ,562 3,562 97% 2016 Y N8001 Hwy 1 Widen and PM Bridge Twin Regional 5,594,810 5,700,000 5,714,815 14,815 98% 2016 Y 5,911,373 6,030,000 6,048,377 18,377 SD Infr Sec Treat Upgrade Cap X0001 VSA IONA WWTP Upgrade Design Richmond 1,769,829 16,500,000 16,500,000 - (5) 11% 2018 Y X0002 NSA LG WWTP Upgrade Design North Vancouver 8,794,159 20,000,000 20,000,000 - (5) 44% 2020 Y 10,563,989 36,500,000 36,500,000 - SD Infr Opportunity Prgm Cap X0010 AIWWTP IPS VFD Replacements Delta 19,720 1,050,000 1,050,000-2% 2017 Y X0011 AIWWTP TF VFD Replacements Delta 21, , ,000-2% 2017 Y X0040 LIWWTP Biogas Clean up Richmond - 10,400,000 10,400,000-0% 2017 Y N0347 Sapperton Pump Stn Sewer Heat New Westminster - 200, ,000-0% 2018 N Coordinating with Sapperton PS upgrade and City of New Westminster schedule for District Energy system. N0379 VSA IRR Study Regional 151, ,000 1,000, ,000 (3) 99% 2015 Y N0380 VSA IIWWTP flared Biogas util Richmond 366, , ,000-99% 2015 Y N0381 LSA IRR Study Regional - 1,000,000 1,000,000-0% 2020 Y N0407 Evergreen LRTP Impacts Regional 554, , ,000-85% 2017 Y 1,112,347 15,070,000 15,870, ,000 SD Infr Annacis Stg 5 Exp Cap Z0048 Annacis Stage 5 Phase 1 Delta 33,063, ,500, ,500,000-14% 2019 Y Z0051 AIWWTP Stg 5 Ph 2 Pre Design Delta 3,543,677 5,000,000 5,000,000-73% 2017 Y Z0055 ANI Stage 5 Ph 2 Detail Design Delta 1,069,021 17,000,000 17,000,000-6% 2019 Y 37,676, ,500, ,500,000 - Total On-going Projects 267,411, ,963, ,197,579 34,233,674 COMPLETED PROJECTS P&P - 127

128 Sewerage and Drainage District Capital Expenditures Liquid Waste As of Apr 30, 2015 Total Projects Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Project Actuals Project Total Project Project Complete Project Schedule? Description Location To-Date Actuals Budget Variance Note Completion (Y/N) Comments SD Infrastructure Growth G0054 East Richmond PS Third Pump Richmond 223, , ,000 1, % 2015 Y 223, , ,000 1,972 SD Infrastructure Maint Cap N0300 Gleneagles PS3 Construction West Vancouver 877, , ,000 22, % 2015 Y 877, , ,000 22,464 Total Completed Projects 1,100,564 1,100,564 1,125,000 24,436 Notes: (1) Project will be completed under budget - savings due to competitive pricing. (2) Full contingency not required. (3) Reduction in scope. (4) Project is progressing now that new resources have become available. (5) Separate quarterly status reports for the Lions Gate Secondary Wastewater Treatment Upgrade project are being provided to the Utilities Committee and Board. (6) Design revisions and unforeseen site conditions. (7) Funds will be spent if/when opportunity arises. (8) Awaiting results of the East Fraser Servicing Study (9) Project cancelled. P&P - 128

129 Sewerage and Drainage District Capital Expenditures Solid Waste As of Apr 30, 2015 Total Projects Total Total Expected 8.8 Project Projected ACE / Projected Percent Year of Project on Program Project ID Project Description Project Location Actuals Project Total Project Project Complete Project Schedule? To-Date Actuals Budget Variance Note Completion (Y/N) Comments On-going Grand Totals 12,547,189 27,635,000 30,660,000 3,025,000 Completed Grand Totals ON-GOING PROJECTS SW Landfills Capital L0029 CLF LFG Upgrades Design Coquitlam 242, , ,000-97% 2015 Y L0033 CLF LFG Upgrade Construction Coquitlam 2,153,315 2,850,000 2,850,000-76% 2016 N Tender for construction anticipated in Q L0044 CLF LFG Upgrade Phase 2 Coquitlam - 300, ,000-0% 2017 N LFG work will be incorporated into development of site for replacement transfer station. L0049 Coquitlam Landfill Closure Coquitlam 52, , ,000-52% 2017 Y 2,448,549 3,500,000 3,500,000 - SW Transfer Station System Cap L0047 Coq Trans Sta Replacement Coquitlam 174, , ,000-22% 2018 Y L0048 NSTS Reconfiguration North Vancouver 66, , ,000-80% 2016 Y 240,945 1,300,000 1,300,000 - SW Waste to Energy Fac Cap L0020 NOx Reduction Project Design Burnaby 443, , , ,000 (2) 99% 2015 Y L0034 WTEF NOx Project Construction Burnaby 4,548,195 5,060,000 7,000,000 1,940,000 (2) 95% 2015 Y L0045 Scrubber - Design Burnaby - 1,500,000 1,500,000-0% 2015 Y L0046 CEMS Upgrade - Design Burnaby 110, , , ,000 (2) 99% 2016 Y L0050 Soot Blower Replacement Burnaby - 800, ,000-0% 2015 Y L0051 Diesel Generator Replacement Burnaby 88, ,000 1,000, ,000 (1) 40% 2015 Y L0052 Bottom Ash Processing Burnaby 195, , ,000-65% 2015 Y L0054 WTEF Gas Burner Replacement Burnaby - 1,600,000 1,600,000-0% 2016 Y 5,385,957 10,575,000 13,600,000 3,025,000 SW Infr Opportunity Prgm Cap L0040 CLF Landfill Gas Utilization Coquitlam 28, , ,000-11% 2016 N LFG Utilization potential will be reevaluated once transfer station development and any associated LFG works are in place. 28, , ,000 - SW Mgmt Plan Initiatives Cap L0042 New Waste to Energy Capacity Regional 4,443,661 12,000,000 12,000,000-37% 2021 Y 4,443,661 12,000,000 12,000,000 - Total On-going Projects 12,547,189 27,635,000 30,660,000 3,025,000 COMPLETED PROJECTS Total Completed Projects Notes: (1) Full contingency not required. (2) Reduction in scope. P&P - 129

130 5.9 To: From: Performance & Procurement Committee Phil Trotzuk, Chief Financial Officer Ralph G. Hildebrand, General Manager, Legal and Legislative Services / Corporate Solicitor Date: June 5, 2015 Meeting Date: July 17, 2015 Subject: 2014 Legal Expenditures RECOMMENDATION That the Performance and Procurement Committee receive the report titled 2014 Legal Expenditures dated June 5, 2015, for information. PURPOSE To provide the Performance & Procurement Committee with information regarding the legal expenditures incurred in BACKGROUND The Performance & Procurement Committee, at its April 15, 2015 meeting, requested a report on the legal costs incurred by the Metro Vancouver entities in the 2014 fiscal year. Metro Vancouver entities require legal expertise for a variety of ongoing issues including, but not limited to, litigation, contracting, bylaw review, personnel issues, and legislative compliance. This expertise is often of a very specific nature. When required, legal expertise is first sought from internal sources prior to engaging any outside third party legal resources. In the current environment and nature of business, Metro Vancouver has seen an increasing need to seek legal advice on a variety of issues. In order to avoid litigation risk, it is often prudent to retain proactive legal advice. This report will outline the 2014 legal expenditures incurred as well as the processes around the procurement and payment of such services. INTERNAL LEGAL SERVICES In November 1999, Metro Vancouver established an in-house legal department with the hiring of its first corporate lawyer. Currently Metro Vancouver employs a total of six in-house corporate lawyers including the Corporate Solicitor. In 2014, the cost of the in-house legal department was $938,562 ( $1,120,814). In-house legal was established as a budget savings measure when the need for legal expertise began to increase. The cost of internal legal expertise is significantly lower than the rates charged by outside legal firms. That being said, when legal expertise is required, in-house legal is consulted and outside legal is engaged as the situation warrants. As the services of outside legal firms is retained, an in-house lawyer is assigned to manage the process. P&P - 130

131 EXTERNAL LEGAL SERVICES As noted above, outside legal services are only retained after consulting with the in-house legal department. These services are retained when specialized legal expertise is either required or deemed to be more beneficial to Metro Vancouver, normally, in the areas of litigation/ arbitration and personnel issues. The outside legal expenditures incurred also include notary type services as required. A summary of the legal expenditures incurred are as follows: Function Water $ 1,219,720 $ 1,969,460 Solid Waste 714, ,208 Human Resources 205, ,389 Regional Planning 275, ,253 Housing 85,256 69,761 Liquid Waste 253,240 45,787 General Government 26,639 32,871 Regional Parks 56,121 8,880 $ 2,630,387 $ 2,722,220 The total legal expenditure incurred in 2014 represents 0.41% (same in 2013) of the Metro Vancouver Districts Budget. The majority of the legal expenditures for Water are associated with the twin tunnel contractor litigation and in Solid Waste with various third party contractor arbitration cases. The nature of the requirements regarding these services is often unpredictable in terms of both timing and effort involved. As a result, budgeting such expenditures is difficult; however, where requirements are known, such as ongoing litigation, estimates are included in the annual budget. EXTERNAL LEGAL SERVICES INVOICE REVIEW The in-house legal department is very engaged in ensuring the Metro Vancouver gets the best value for the retained outside legal services. Legal staff, prior to engaging outside legal services, will normally establish hourly charge rates for the services rendered and an overall budget cost of anticipated legal costs. Invoices remitted for payment for these services will be reviewed by the legal department and senior staff from the applicable operating department. This review will ensure that the appropriate charges are included. This invoice will then be forwarded to the Corporate Solicitor for additional review. Subsequent to this approval, invoices under $10,000 will be forwarded for payment, invoices in excess of $10,000 will be forwarded to the Chief Financial Officer for further review prior to payment. ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS In 2014, the total cost of legal services incurred by the Metro Vancouver entities, was $3,660,782 (In-house - $938,562; Outside - $2,722,220) or 0.56% of budget. P&P - 131

132 SUMMARY / CONCLUSION Legal expertise is very expensive and becoming an increasing part of everyday business. Metro Vancouver has taken several steps over recent years to mitigate the financial impact of retaining legal expertise, which include, not only establishing a more economical in-house legal department but also working with outside legal firms to secure the most favourable rates possible P&P - 132

133 To: From: Performance & Procurement Committee Tracey S. Husoy, Division Manager, Purchasing and Risk Management, Financial Services Department Date: June 26, 2015 Meeting Date: July 17, 2015 Subject: Tender/Contract Award Information April to May 2015 RECOMMENDATION That the Performance & Procurement Committee receive the report titled Tender/Contract Award Information April to May 2015, dated June 26, 2015 for information. PURPOSE To provide the Performance & Procurement Committee information with regards to contracts, with a total anticipated value at or in excess of $500,000 (exclusive of tax). BACKGROUND The Purchasing Division of Metro Vancouver awards contracts for goods, services and construction in accordance with the Officers and Delegation Bylaws 1208, 284 and 247, and the Procurement and Real Property Contracting Authority Policy adopted by Board of Directors on July 11, 2014, effective September 1, These Bylaws and Policy outline thresholds for competitive bidding and contracting authorities. Contracts in excess of $500,000 will be reported to the Performance and Procurement Committee to align with the thresholds outlined in the new Policy. Capital projects may result in the awarding of one or more contracts to complete the project. All contracts are always within budget authority. NEW CONTRACTS - $500,000 to $5,000,000 The following contracts were awarded during the months of April to May 2015: (Details attached as APPENDIX A) 1. Northwest Pipe Company $3,093,009 GVWD Supply and Delivery of Steel Pipe for Capilano Main No. 9 (Phase 2) 2. Maple Reinders Inc. $2,828,571 GVWD Lynn Valley Water Storage Reservoir Construction 3. Bollman Roofing & Sheet Metal Ltd. $704,450 GVWD Seymour Capilano Filtration Plant Clearwell Roof Improvements 4. AECOM Canada Ltd. $4,153,940 GVS&DD Consulting Engineering Services for the Design and Construction of Burnaby Lake North Interceptor No. 2 Phillips Section P&P - 133

134 5. Concord Excavating and Contracting Ltd. $1,950,000 GVS&DD Iona Island Wastewater Treatment Plant Lagoon Cleaning and Land Drying Services 6. BC Records Management Services $636,000 GVS&DD Record Centre Services 7. Opus DaytonKnight Consultants Ltd. $570,000 GVS&DD Northwest Langley Wastewater Treatment Plant 25kV Substation Replacement Project Engineering Services 8. Langley Concrete LP $1,305,065 GVS&DD Supply of Concrete Sewer Pipe for SSI Johnston Rd Colebrooke Rd. Pre-Build 9. Sandpiper Contracting Inc. $1,316,125 GVWD Installation of Port Mann Main No. 1 & 2 (South) South Fraser Perimeter Road to Surrey Road Section NEW CONTRACTS BOARD APPROVED The following contracts were authorized for execution by the GVS&DD s, GVWD s, GVRD s or MVHC s Board of Directors during the months of April to May 2015 (as such no further information is included in this report): 11. AECOM Canada Ltd. $15,700,000 GVS&DD Design Build Consulting Services for the Lions Gate Secondary Wastewater Treatment Plant 12. Arrow Transportation Systems Inc. $15,200,000 GVS&DD Utility Residuals Management Hauling Services for Iona Island and Northwest Langley Wastewater Treatment Plant Land-dried Biosolids The following previously reported contracts were amended during the months of April to May 2015: (Details attached as APPENDIX D) Value of Amendment(s) Total Amended Value of Contract 1. Maple Reinders Inc. $2,365,949 $19,507,931 Covers changed ground conditions, miscellaneous design changes and electrical equipment procurement delays. P&P - 134

135 ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS The contracts presented herein are within Board approved budget authority. SUMMARY / CONCLUSION The contracts presented herein were awarded in accordance with the Officers and Delegation Bylaws and the Procurement and Real Property Contracting Authority Policy and comply with competitive bidding laws and applicable legislation. Further, the competitive selection packages were carefully crafted by teams of subject matter experts resulting in the award of contracts that are fiscally responsible, and balance risk, economic, ethical and legal obligations. Attachments and References: APPENDIX A: Information with regard to newly awarded contracts APPENDIX B: APPENDIX C: Information with regard to Standing Offer Agreements (Nothing to Report) Contracts amended to a value of more than $500,000 but not previously reported to the Performance & Procurement Committee (Nothing to Report) APPENDIX D: Previously reported contracts that have been amended APPENDIX E: Competitive Selection Packages Anticipated to be Greater Than $500,000 (Issued but not awarded) P&P - 135

136 AWARD OF CONTRACT Appendix A Page No. 1 TENDER NO A contract was awarded April 2, 2015 for the GVWD. To: Northwest Pipe Company in the amount of $3,093,009 (exclusive of tax) for Supply and Delivery of Steel Pipe for Capilano Main No. 9 (Phase 2) The contract price is within the overall budget. 2. Two (2) firms were shortlisted as a result of RFQ No and invited to bid on Tender No Closing Date: March 10, Tenders received (exclusive of tax): Northwest Pipe Company $3,093,009 Ameron International $4,014, Tenders reviewed by: Contractual: Technical: Purchasing Division Staff Water Services Department Staff 5. Award was made to the lowest compliant bidder. P&P - 136

137 AWARD OF CONTRACT Appendix A Page No. 2 TENDER NO A contract was awarded April 10, 2015 for the GVWD. To: Maple Reinders Inc. in the amount of $2,828,571 (exclusive of tax) for Lynn Valley Water Storage Reservoir Construction The contract price is within the overall budget. 2. Tenders were invited by Metro Vancouver & BC Bid web sites and private invitation on January 28, Closing Date: March 26, Tenders received (exclusive of tax): Maple Reinders Inc. $2,828,571 Kingston Construction Ltd. $2,841,700 CEWE Infrastructure $2,971,000 HRC Construction (2012) Inc. $2,996,291 Deramore Construction Services Inc. $2,998,747 Giffels Westpro Constructors Inc. $3,069,300 Tybo Contracting Ltd. $3,139,390 Neelco Builders (2014) Ltd. $3,298,320 GCL Contracting & Engineering Inc. $3,469,800 NAC Constructors Ltd $3,482,000 C3 Integrated Solutions Inc. $3,483,417 Kenaidan Contracting Ltd. $3,557,000 Carver Construction Ltd. $3,574,803 Smith Brothers & Wilson Ltd. $3,588,710 Jacob Brothers Construction Inc. $4,357, Tenders reviewed by: Contractual: Technical: Purchasing Division Staff Water Services Department Staff 5. Award was made to the lowest compliant bidder. P&P - 137

138 AWARD OF CONTRACT Appendix A Page No. 3 TENDER NO A contract was awarded April 15, 2015 for the GVWD. To: Bollman Roofing & Sheet Metal Ltd. in the amount of $704,450 (exclusive of tax) for Seymour-Capilano Filtration Plant Clearwell Roof Improvements The contract price is within the overall budget. 2. Two (2) firms were shortlisted as a result of RFQ No and invited to bid on RFP No Closing Date: April 2, Tenders received (exclusive of tax): Bollman Roofing & Sheet Metal Ltd. $704,450 Marine Roofing (1966) Ltd. $752, Tenders reviewed by: Contractual: Technical: Purchasing Division Staff Water Services Department Staff 5. Award was made to the lowest compliant bidder. P&P - 138

139 AWARD OF CONTRACT Appendix A Page No. 4 RFP NO A contract was awarded April 16, 2015 for the GVS&DD. To: AECOM Canada Ltd. in the anticipated amount of $3,658,136 (exclusive of taxes) for consulting engineering services for the design and construction of Burnaby North Interceptor No. 2, Phillips Section. The total anticipated value of this contract is expected to increase by an additional $495,804 to $4,153,940 to account for issues identified during negotiations, as allowed for in the RFP, and an inflationary factor to be applied in the later stage of the contract term. The initial award is limited to the preliminary design at a cost of $987,272 and the subsequent phases of the work will be awarded subject to mutual agreement. The contract price is within the overall budget. 2. Two (2) firms were shortlisted as a result of RFQ No and invited to bid on RFP No Closing Date: January 13, Proposals received (exclusive of tax): Estimated Pricing for Common Level of Effort (25,400 Hours) Stantec Consulting Ltd. $3,611,006 AECOM Canada Ltd. $3,658,136 HDR $4,102, Proposals reviewed by: Contractual: Technical: Purchasing Division Staff Liquid Waste Services Department Staff 5. Award was made to the highest ranked proponent based on the evaluation criteria established in the RFP. P&P - 139

140 Appendix A Page No. 4 cont. 6. AECOM s proposal demonstrated a thorough understanding of the project scope and key issues. They presented a well thought out methodology and a schedule that meets with the stipulated dates along with appropriate staff availability. P&P - 140

141 AWARD OF CONTRACT Appendix A Page No. 5 RFP NO A contract was awarded April 23, 2015 for the GVS&DD. To: Concord Excavating Contracting Ltd. in the anticipated amount of $1,950,000 (exclusive of taxes) for Iona Island Wastewater Treatment Plant lagoon cleaning and land drying services over a four year term. The initial contract is for two years at a cost of $975,000 and the subsequent two years is subject mutual agreement of both parties. The contract price is within the overall budget. 2. Proponents were invited by Metro Vancouver & BC Bid web sites and private invitation on February 6, Closing Date: March 3, Proposals received (exclusive of tax): Estimated Cost Over Four (4) Years Delta Aggregates Ltd. $1,942,944 Concord Excavating Contracting Ltd. $1,950,000 Quantum Murray Ltd. $2,146,540 M2K Construction $2,681,300 Envirocon Environmental Services $2,742,504 Mission Contractors $3,154,852 Giffels Westpro Constructors $3,182,240 Kayden Industries $5,633, Proposals reviewed by: Contractual: Technical: Purchasing Division Staff Liquid Waste Services Department Staff 5. Award was made to the highest ranked proponent based on the evaluation criteria established in the RFP. P&P - 141

142 Appendix A Page No. 5 cont. 6. Concord s proposal demonstrated the best overall understanding of the project requirements. The technical portion of the proposal was detailed; they have a clear understanding of the equipment that is required to complete the project in an efficient and cost effective manner; their safety management plan and understanding of specific site hazards are well defined. The firm and staff have many years experience and have successfully undertaken and completed the same work for Metro Vancouver for many years. P&P - 142

143 AWARD OF CONTRACT Appendix A Page No. 6 RFP NO A contract was awarded April 23, 2015 for the GVRD, GVWD, GVS&DD and MVHC. To: BC Records Management Services Ltd. in the anticipated amount of $636,000 (exclusive of tax) based on historical usage for Record Centre Services for approximately seven (7) years. The initial contract is estimated to be $60,000 for the remainder of Subsequent extensions are subject to mutual agreement and the actual value limited to services rendered. The contract price is within the overall budget. 2. Proponents were invited by Metro Vancouver & BC Bid web sites and private invitation on March 19, Closing Date: April 9, Proposals received (exclusive of tax): Estimated Value for Comparison Purposes Iron Mountain $313,608 BC Records $370, Proposals reviewed by: Contractual: Technical: Purchasing Division Staff Legal and Legislative Services Department Staff 5. Award was made to the highest ranked proponent based on the evaluation criteria established in the RFP. 6. BC Records proposal demonstrated a greater understanding of the Corporation s requirements, was clearly superior with regards to meeting those requirements and did not take any exceptions to our general conditions. P&P - 143

144 AWARD OF CONTRACT Appendix A Page No. 7 RFP NO A contract was awarded April 17, 2015 for the GVS&DD. To: Opus DaytonKnight Consultants Ltd. In the anticipated amount of $551,000 (exclusive of taxes) for consulting engineering services for the design and construction of the Northwest Langley Wastewater Treatment Plant 25kV substation replacement project. The total anticipated value of this contract is expected to increase by an additional $19,000 to $570,000 as a result of a provisional item identified in the proposal. The initial award is limited to the preliminary design at a cost of $118,866 and the subsequent phases of the work will be awarded subject to mutual agreement. The contract price is within the overall budget. 2. Proponents were invited by Metro Vancouver & BC Bid web sites and private invitation on September 29, Closing Date: October 30, Proposals received (exclusive of tax): Estimated Total Cost For All Phases Opus DaytonKnight Consultants Ltd. $551,000 CH2M Hill Canada Limited $633,204 AMEC Americas Limited $610,625 Stantec Consulting Ltd. $658,399 CWA Engineers Inc. $557,020 ZE Power Engineering $572,584 Sacre-Davey Engineering Inc. $677,001 Ethan Engineering Inc. $708,780 Clean Energy Consulting Inc. $682,595 WSP Canada Inc. $980,725 SINAI Engineering $3,863, Proposals reviewed by: Contractual: Technical: Purchasing Division Staff Liquid Waste Services Department Staff P&P - 144

145 Appendix A Page No. 7 cont. 5. Award was made to the highest ranked proponent based on the evaluation criteria established in the RFP, whom coincidentally provided the lowest cost. P&P - 145

146 AWARD OF CONTRACT Appendix A Page No. 8 TENDER NO A contract was awarded May 19, 2015 for the GVS&DD. To: Langley Concrete LP in the amount of $1,305,065 (exclusive of tax) for Supply of Concrete Sewer Pipe for SSI Johnston Rd Colebrooke Rd. Pre-Build The contract price is within the overall budget. 2. Tenders were invited by Metro Vancouver & BC Bid web sites and private invitation on January 19, Closing Date: February 17, Tenders received (exclusive of tax): Langley Concrete LP $1,305,065 Ocean Pipe $1,327, Tenders reviewed by: Contractual: Technical: Purchasing Division Staff Liquid Waste Services Department Staff 5. Award was made to the lowest compliant bidder. P&P - 146

147 AWARD OF CONTRACT Appendix A Page No. 9 TENDER NO A contract was awarded May 22, 2015 for the GVWD. To: Sandpiper Contracting Inc. in the amount of $1,361,125 (exclusive of tax) for Installation of Port Mann Main No. 1 & 2 (South) South Fraser Perimeter Road to Surrey Road Section The contract price is within the overall budget. 2. Four (4) firms were shortlisted as a result of RFQ No and invited to bid on Tender No Closing Date: May 7, Tenders received (exclusive of tax): Sandpiper Contracting Inc. $1,361,125 Matcon Civil Constructors Inc. $1,697,575 Pedre Contractors Ltd. $1,747,000 JJM Construction Ltd. $1,995, Tenders reviewed by: Contractual: Technical: Purchasing Division Staff Water Services Department Staff 5. Award was made to the lowest compliant bidder. P&P - 147

148 Appendix D Page No. 1 AMENDMENT TO A PREVIOUSLY REPORTED CONTRACT TENDER NO PURCHASE ORDER NO Barnston/Maple Ridge Pump Station Construction for the GVWD 1. Name of Contractor: Maple Reinders Inc. 2. Date Contract Reported: April Original Anticipated Reported Value of Contract (inclusive of tax): $17,141, Amendment Number: Value of Amendment (exclusive of tax): $2,365, Amendment Type: Additional Work 7. Total Revised Anticipated Amended Value of Contract (inclusive of tax): $19,507, Budget Status: This contract is funded within the capital budget for this program. 9. Reason for Amendment to Contract: Amendment No. 01 covers changed ground conditions, miscellaneous design changes and electrical equipment procurement delays. P&P - 148

149 Competitive Selection Packages Anticipated to be Greater Than $500,000 (Issued but not Awarded) Appendix E As of June 26, 2015 Note: All proposed contracts listed below are within the project budgets approved by the Board of Directors Tender/RFP RFSO No Welding Inspection Services RFP No Consulting Engineering Services for the Design and Construction of Gilbert Trunk Sewer Twinning RFP No Supply and Delivery of Standby Diesel Engine Generator Annacis Island Wastewater Treatment Plant RFP No Supply and Delivery of Cogeneration System Annacis Island Wastewater Treatment Plant RFP No Project Management Services Water Design and Construction Projects RFP No Consulting Engineering Services for Detailed Design, Construction Engineering and Construction Management of Second Narrows Water Supply Tunnel RFP No Annacis Island Wastewater Treatment Plant Transient Mitigation and Outfall Consulting Engineering Services RFP No Electrical, Instrumentation, and Controls Consulting Engineering Services for Water Services Projects RFP No Central Park Pump Station Electrical Upgrade Closing Date June 5, 2014 February 12, 2015 March 5, 2015 March 5, 2015 March 12, 2015 March 19, 2015 March 31, 2015 April 16, 2015 April 14, 2015 P&P - 149

150 Appendix E Page No. 1 cont. RFP No Consulting Engineering Services for Various Sewer Projects Tender No Installation of Capilano Main No. 9 Phase 2 Tender No Storage Building at Seymour Capilano Filtration Plant RFP No Engineering Consulting Services for Liquid Waste Services Minor projects Tender No Annacis Island Wastewater Treatment Plant Secondary Clarifier Mechanisms Replacement RFP No Waste, Organics, and Recycling Collection Services for Metro Vancouver Tender No Iona Island Wastewater Treatment Plant Solids Handling Package 3 Digester Mixing Project RFP No Consulting Engineering Services for Four Major Odour and Corrosion Control Projects Tender No Lions Gate Wastewater Treatment Plant Construction of Sludge Thickener No. 2 System Tender No Installation of Port Mann Main No. 2 (North) Cape Horn Pump Stations to Fraser River Section Tender No Iona Island Wastewater Treatment Plant Grit Channel and Sedimentation Tank Effluent Gate Replacement Tender No Iona Island Wastewater Treatment Plant Solids Handling Upgrade Screening, Degritting and Thickening April 30, 2015 May 21, 2015 May 26, 2015 May 26, 2015 May 26, 2015 June 11, 2015 June 11, 2015 June 16, 2015 June 18, 2015 June 23, 2015 June 25, 2015 June 25, 2015 P&P - 150

151 Appendix E Page No. 1 cont. Tender No Installation of Port Mann Main No. 2 (North) Cape Horn Pump Stations to Fraser River Section Tender Hellings Tank Seismic Upgrade Construction Tender No South Surrey Interceptor Johnston Road Section Advance Works Colebrook Rd and King George Boulevard Crossing RFP No Biosolids Soil Design, Fabrication, Marketing, Sales and Distribution June 18, 2015 June 23, 2015 June 30, 2015 July 16, 2015 Morneau Shepell have been requested to conduct a competitive selection process for the extended health, dental and insurance benefits on behalf of the Corporation. P&P - 151

152 5.11 To: From: Performance and Procurement Committee Phil Trotzuk, Chief Financial Officer Date: July 6, 2015 Meeting Date: July 17, 2015 Subject: Manager s Report RECOMMENDATION That the Performance and Procurement Committee receive the report titled Manager s Report dated July 6, 2015 for information. 1. Performance and Procurement Committee Work Plan Update Attachment 1 is the updated 2015 Work Plan indicating the status of the Committee s key priorities. 2. MFABC Bond Ratings Standard & Poors AAA Moody s Aaa Fitch AAA Attachment 2; Standard & Poors MFABC Ratings Report 3. Liquid Waste Development Cost Charges (DCC) Review Metro Vancouver has initiated a full Review of the Liquid Waste DCCs that are charged by GVS&DD to assist in funding the cost of the region s major liquid waste infrastructure projects. The purpose of the Review is to establish four new set of rates, one for each of the four sewer areas in the region. The Review is being conducted in two stages: Stage I DCC Policy Basis. The first stage will identify and address the key policy questions that need to be considered when structuring DCCs. Such questions relate to the allocation of costs between existing population and new growth, choice of land uses and unit types to charge, exemptions to provide, time frame over which to apply the rates, and others. Stage II Determine Rates. In the second stage, Metro Vancouver will calculate the rates to apply. The calculations will take into account the DCC program of works, and the outcomes of the Review s first stage. An Interdepartmental Steering Committee, with representation from Planning, Parks & Environment, Finance, and Liquid Waste, has been struck to carry out the review. The Steering Committee will be guided by a DCC Review Committee made up CAOs, CFOs, Engineers and Planners from across the region (this Review Committee is in the process of being established). An experienced DCC consultant, Sherry Hurst of Leftside Consulting, will be assisting the Steering Committee throughout both stages of the project. Regular status reports will be provided to the Intergovernment and Finance Committee. Attachments: 1. Performance and Procurement Committee 2015 Work Plan 2. Standard & Poors MFABC Ratings Report P&P - 152

153 ATTACHMENT 1 Performance and Procurement Committee 2015 Work Plan Report Date: May 26, 2015 Committee Priority Status FEBRUARY: Review and Endorse Committee 2015 Work Plan Complete Review 2014 External Audit Plan Complete 2014 Results: Investment Review Position and Returns Complete Municipal Borrowing Requests for MFA Spring 2015 Issue Complete Tender / Contact Award Information Complete APRIL: 2014 Audited Financial Statements Complete 2014 External Audit Findings Report Complete Review 2014 Final Results: Operating Results vs Budget Complete Review 2014 Final Results: Capital Expenditures vs Budget Complete GVS&DD Development Cost Charges Revenue Fund Expenditure By law Complete Review 2014 Final Results: Development Cost Charges Collected Complete Tender / Contact Award Information Complete JULY: Review First 2015 Progress: Investment Review Position and Returns to April 30, 2015 Complete Review First 2015 Progress: Operating Results vs Budget to April 30, 2015 Complete Review First 2015 Progress: Capital Expenditures vs Budget to April 30, 2015 Complete Review First 2014 Progress: Development Cost Charges Collected to June 30, 2015 In Progress GVWD Loan Authorization Bylaw Complete Municipal Borrowing Requests for MFA Fall 2015 Issue (If Applicable) Complete Tender / Contact Award Information Complete NOVEMBER: Review Second 2015 Progress: Investment Review Position and Returns to August 31, 2015 Pending Review Second 2015 Progress: Operating Results vs Budget to August 31, 2015 Pending Review Second 2015 Progress: Capital Expenditures vs Budget to August 31, 2015 Pending Municipal Borrowing Requests for MFA Spring 2016 Issue (If Applicable) Pending Tender / Contact Award Information Pending P&P - 153

154 STANDARD & PO OR'S RATINGS SERVICES McGRAW HILL FINANCIAL ATTACHMENT 2 RatingsDirect Municipal Finance Authority of British Columbia Primary Credit Analyst: Bhavini Patel, CFA, Toronto (1) ; bhavini.patel@standardandpoors.com Secondary Contact: Stephen Ogilvie, Toronto (1) ; stephen.ogilvie@standardandpoors.com Table Of Contents Major Rating Factors Rationale Outlook Ownership And Legal Status: Nonprofit Entity With Province-Wide Taxing Powers Profile: Exclusive Long-Term Lender to LRGs Strategy: Narrow Focus On LRG Lending And Pooled Investment Program B.C. LRGs: Very Predictable And Well-Balanced Institutional Framework Risk Profile And Management: Excellent Asset Quality Mitigates Loan Concentration Risk Related Criteria And Research MAY 27, P&P I

155 Municipal Finance Authority of British Columbia Major Rating Factors Strengths: Issuer Credit Rating Taxing power AAA/Stable/ A-1 + Low-risk loan book Solid risk management Limited regulatory risk Robust liquidity Weaknesses: High single-name loan concentration in the Metro Vancouver area Reliance on domestic wholesale funding Rationale The ratings on the Municipal Finance Authority of British Columbia (MFABC) reflect Standard & Poor's Ratings Services' view of the authority's taxing power, low-risk loan book, solid risk management, limited regulatory risk, and robust liquidity. The ratings also take into account MFABC's high single-name loan concentration and reliance on wholesale funding. The authority provides low-cost financing to British Columbia's (B.C.) local and regional government (LRG) sector. It's the exclusive long-term lender to the sector, except to the City of Vancouver and the South Coast British Columbia Transportation Authority, which access the capital markets directly. Under provincial legislation, B.C.'s local governments (except Vancouver) must conduct all long-term borrowing through their regional districts, which interact directly with MFABC. Local governments within each regional district are jointly and severally liable for their regional district's debt, including their district's MFABC loan obligations. However, the regional districts themselves do not jointly and severally guarantee each other's debt, unlike the system-wide joint and several guarantee support mechanism we see with some Nordic municipal funding vehicles. Nevertheless, we believe MFABC's taxing power accomplishes similar ends to a system-wide joint and several guarantee (although not as timely), and is a key factor in the ratings. In particular, the authority has the unfettered ability to impose a province-wide levy on all taxable land and improvements ifneeded to replenish its debt reserve fund (DRF). This gives MFABC access to potentially significant capital to absorb loan losses, ultimately linking its loan book's credit quality to that of the LRG sector as a whole. The authority has not suffered a loan book default in its 44-year history, nor has it experienced a DRF deficiency. Accordingly, it has never enacted a special levy. Still, MFABC is registered as a claimant on local tax bills, which we believe would expedite its ability to collect on a special levy. It also holds a C$200 million committed bank facility that, along with its internal liquidity, would provide significant resources during the up-to-12 months it would need to collect additional funds from the tax base. MAY 27, P&P I

156 Municipal Finance Authority of British Columbia We believe MFABC's low-risk loan book is another key factor in the ratings. Its loan book directly covers the vast majority of B.C.'s LRGs. We assess the LRG sector as having excellent consolidated credit quality. This largely reflects the provincial government's strict LRG regulations. Local governments must obtain the acceptance of the public and other local governments within their regional districts before taking on debt; adhere to prescribed debt service ceilings; limit the use of debt proceeds to capital infrastructure; and adopt balanced annual operating budgets. We expect B.C.'s LRGs to retain their excellent consolidated credit quality during our two-year outlook horizon. MFABC also operates under well-established practices and policies that mitigate its exposure to interest rate, currency, counterparty, credit and liquidity risks, in our view. It's also immune from bank regulatory risks. Unlike Canada's scheduled banks, it's not subject to the regulatory oversight of the Office of the Superintendent of Financial Institutions. Nor must it abide by the Basel II or proposed Basel III framework. The ratings also take into account MFABC's high single-name concentration in the Metro Vancouver area. As of Dec. 31, 2014, Metro Vancouver accounted for nearly half the authority's total loans. This correlates with B.C.'s population distribution, where more than 60% live in Metro Vancouver. In our view, this concentration remains appropriate for the ratings because of Metro Vancouver's strong credit quality, together with the authority's province-wide taxing powers. We have used "Principles Of Credit Ratings" as our criteria foundation for our analysis of MFABC's creditworthiness. We consider MF ABC to be a public sector entity in light of its taxing power, lack of profit motive, and important public policy role through the delivery of low-cost loans to LRGs. MFABC does not have a banking license. Liquidity We believe MFABC has robust liquidity. At year-end 2014, its DRF, retention fund, sinking funds, and C$200 million credit facility total about C$2.8 billion, which well exceeds its annual debt service obligations. We expect this to be stable in the next two years, providing a significant cushion to absorb loan losses. We also believe this mitigates risks stemming from the authority's reliance on domestic wholesale funding and lack of pre funding activities. MFABC has a well-spaced debt maturity ladder and sinking funds that further mitigate debenture refinancing risk, in our view. We also believe the authority possesses strong brand name recognition in domestic capital markets. We expect it to maintain its strong market access over the coming years. MFABC holds C$250 million in dedicated committed and irrevocable credit facilities to backstop its C$500 million commercial paper (CP) program. Of note, the authority will be temporarily increasing its CP program by C$200 million for to fund increased regional hospital construction. We expect that issuance related to the CP increase will occur incrementally over the next year beginning in June In addition, MFABC's market interruption lines will also increase to 50% coverage as at June 1, We believe the authority has a proven ability to retain market access during market disruptions, such as In our view, this compensates for its lack of formalized last-resort access to central bank or repo financing. MAY 27, P&P I

157 Municipal Finance Authority of British Columbia Outlook The stable outlook reflects our expectation that MFABC's legislative and policy framework will remain untouched. We also expect B.C.'s LRGs to retain their excellent consolidated credit quality, with net new loan demand tracking close to historical levels of about C$250 million to C$350 million annually over the next two years. We further expect the authority to maintain robust liquidity and uphold its solid risk management practices. We could take a negative rating action if we foresee deterioration in the LRG sector's credit quality, including Metro Vancouver. A negative rating action could also occur if we expect deterioration in MFABC's legal and policy framework, or its taxing powers. In addition, the ratings could come under pressure if the authority pursues less stringent asset-liability management; or erodes its liquidity profile. Ownership And Legal Status: Nonprofit Entity With Province-Wide Taxing Powers MFABC was formed in 1970, after the province passed the Municipal Finance Authority Act (MFA Act). It effectively operates as an association of B.C. LRGs, with appointed local officials meeting biannually to, among other matters, approve the authority's proposed debenture issuances and elect its 10-member board of trustees. While a creature of provincial legislation, MFABC has an arm's length relationship with the government, with minimal direct linkages. The authority's debt is not subject to a provincial guarantee. MFABC has the legislative power to levy a tax on all B.C. taxable property and improvements, including in Vancouver, to replenish a DRF shortfall. In our view, this effectively links its credit quality with that of the LRG sector as a whole. We also believe this mitigates the risk related to the authority's low capitalization. MFABC has never suffered a loan loss, so has never drawn on its DRF. However, it collects a small levy from B.C. property taxpayers so that it can keep a presence on the tax roll. It also holds a dedicated C$200 million committed bank facility to cover liquidity needs during the up-to-12 months it would need to collect a levy increase. The authority is immune from bank regulatory risks. It does not have a bank license, and cannot take deposits. It segregates its pooled investment program from its lending operations, and reports the performance of this program using separate financial statements. Profile: Exclusive Long-Term Lender to LRGs MFABC is the central borrowing agency for financing LRGs' capital requirements in B.C. (see chart). It has no operations outside the province. Like other Canadian municipal funding vehicles, including the Ontario Infrastructure and Lands Corp., it issues debentures and CP in its own name and on-lends the proceeds to members on a cost pass-through basis. MAY 27, P&P I

158 Municipal Finance Autharit'y of British Columbia Municipal Finance Authority 01 British Columbia-Funding Structure Capilal Markets Debi Reserve Fund Bond proceeds 100%1 1ok debt reserve fund contribution MF ABC!Semiannual interest debt retirement Debi retirements Annual principal installments Sinking Fund 1% refunded with lnte-rest on loan maturity Loan proceeds 98.4 k Semiannual interest annual pcincipal installments Surplus earnings Members Standard a. Poor's Under the MFAAct.MFABC mu.st gve members access to a pooled investment fund. It only acts as a facilitator of this service. It contracts third-party professionals to make investment decisions. maintain custody of the assets. and pelform accounting functions. In our view. the authority has a very strong market position that fosters stability and predictability in its cash flows. The lending market for B. C. 's LR Gs is bifurcated into short-term (five years or less) and long-term. In the short-term market. MFABC competes fairly intensely with Canadian banks and credit unions. leveragng its competitive CP borrowing terms through an established Canadian dealer network and member outreach to carve out significant market share. It also dominates the much laiger long-term market. gven its legslatively enshrined role as the sole long-term lender to LRGs (excluding Vancouvel). The authority has thin profitability. a corollary of its nonprofit status. This contributes to its comparably weak capitalization relative to that of Nordic municipal funding vehicles. Low capitalization is acceptable for the rating because we expect any call on capital to be minimal by virtue ofmfabc's low-risk loan book We expect the authority's profitability to gj:ow modestly over the rating horizon. as the authority earns positive carry on unallocated short-term debt funds (it typically issues its full CP program limit irrespective of members' loan demand) and collects service fees on its popular pooled investment loan program. In MFABC's capitalization. as defined by its equity-to-assets ratio. decreased to 0.3% from 1.1% a year earlier primarily on mark-to-market losses on derivative contracts which arose from the substantial declines in interest rates. We expect thatthe authority's capitalization will stabilize once these contracts expire in the medium term. MAY 27, P&P

159 Municipal Finance Authority of British Columbia We also believe MFABC's sinking fund, retention fund, external credit lines, and taxing powers offer a very large cushion to bridge capital market outages and absorb loan losses. Strategy: Narrow Focus On LRG Lending And Pooled Investment Program We expect MFABC to retain its narrow business focus. Under the MFA Act, it's restricted from expanding its loan or pooled investment programs outside B.C. We do not expect it to introduce new business lines or open its loan program to other sectors, although we understand the MFA Act does not specifically preclude these. In addition, we assume its loan approval process will be fairly stable, with the authority continuing to benefit from the LRG sector's prudent legislative budgetary and debt restrictions. We also expect MFABC to retain its monopoly on long-term lending to LRGs, while preserving significant market share in the short-term lending market. As a result, we expect its loan book to increase in tandem with the LRGs' net borrowing needs, which we foresee being C$250 million to C$350 million annually over the next two years. We also assume it will continue to rely exclusively on its Canadian benchmark debenture program to fund long-term loans, and its CP program to cover short-term borrowing demand. However, with an expected increase in spending for regional hospital projects, MFABC is temporarily increasing its CP program limit to C$700 million for the next three years. B.C. LRGs: Very Predictable And Well-Balanced Institutional Framework We consider B.C.'s LRG system to be "very predictable and well-balanced," contributing to the sector's strong overall credit quality and MFABC's low-risk loan book. B.C.'s LRGs are subject to strict and comprehensive provincial legislation governing their financial and operating activities. They must pass balanced annual operating budgets, and limit debt serving to no more than 25% of sustainable revenues, excluding economically sensitive industrial property tax revenues. LRGs are also obliged to follow a multiphase borrowing process, which we consider to be among the strictest municipal borrowing protocols in Canada. Before borrowing long-term, they must obtain the approval of their residents and other municipalities within their regional districts. They must also obtain the approval of the Ministry of Community, Sport, and Cultural Development, which considers the legalities of borrowing proposals to ensure compliance with legislated borrowing limits. Borrowing proposals then go to the authority for final approval. Risk Profile And Management: Excellent Asset Quality Mitigates Loan Concentration Risk In our view, MFABC operates under well-established and straightforward policies and practices that mitigate its risk exposures. Its loan book has 100% industry risk concentration and, being confined to a single province, has high geographic concentration. Its loan book also has high single-name concentrations, with the largest obligor, Metro Vancouver, accounting for nearly 50% of total loans as of Dec. 31, 2014, and the top 10 accounting for more than 80%. We consider these suitable for the ratings in light of the LRG sector's excellent and stable credit quality. MAY 27, P&P I

160 Municipal Finance Authority of British Columbia The authority also maintains significant investments primarily related to its sinking funds, DRF, and retention fund. Under its investment policies, it can only invest in fixed income securities of the Canadian federal, provincial and municipal governments, as well as those of Canadian chartered banks and Canadian savings institutions. Under the MFA Act, it's prohibited from investing in equities. In addition, MFABC relies entirely on the domestic capital markets to fund loan commitments and rollover its debt obligations. Its sources of funds come from long-term debenture issuances -- usually one or two large liquid benchmark issues yearly -- and its CP program. Since its debt and investments are Canadian dollar denominated, it has no foreign currency exposure, and does not use currency swaps. On occasion, MFABC will enter short-term derivatives to secure a rate ahead of a planned debenture issue, but this is infrequent. To issue debentures, the authority must first obtain authorization from its appointed local government officials, who meet biannually. This arrangement precludes MFABC from prefunding activities. However, its well-spaced debenture maturity profile and use of sinking funds mitigate its debenture refinancing risk, in our view. In addition, the authority's loan commitments are contingent on its ability to access the capital markets. MFABC also possess strong brand name recognition in the domestic capital markets. In addition, it has a proven ability to retain market access during periods of severe market dislocations, such as To avoid foreign exchange and liquidity risks, the authority borrows strictly in Canadian dollars and matches the timing of funding on members' loans with the proceeds from the corresponding debt issuances. It also limits its exposure to interest-rate risk through broad duration matching of loans and debentures and, when duration matching is not possible, reset clauses embedded in its loan agreements. Any member with a loan term greater than that of the underlying debenture would be subject to a new lending rate commensurate with MFABC's new cost of funds at that time. The authority has entered forward interest swaps on behalf of members before, although it does not expect to continue doing this regularly. Table 1 Municipal Finance Authority of British Columbia -- Balance-Sheet Statistics --Year ended Dec (C$000s) Assets Cash and cash equivalents 70,404 60,050 84,680 88,681 Debt securities 3,006,309 2,506,485 2,360,258 2,127,731 Customer loans 4,615,594 4,659,144 4,762,073 4,905,457 Fixed assets All other assets 72,934 72,774 82,246 87,886 Liabilities Bank and short-term indebtedness 499, , , ,767 Long-term debt 6,732,257 6,526,539 6,321,363 6,220,746 Other liabilities 233, , , ,920 Equity Retained earnings 22,813 82,418 34, , ,976 1,690,504 4,957, , ,534 5,910, ,253 95,348 MAY 27, P&P I

161 Municipal Finance Authority of British Columbia Table 1 Municipal Finance Authority of British Columbia -- Balance-Sheet Statistics (cont.) Accumulated comprehensive income 276,919 8, ,532 37, ,076 Table 2 Municipal Finance Authority of British Columbia -- Income Statement Statistics --Year ended Dec (C$000s) Revenue Interest income 276, , , , ,740 Investment income 110, , ,224 82,560 75,196 Operating levy Other revenues 13,406 57, 654 6,470 1,953 1,834 Expenses Interest expense 281, , , , ,937 Administration 2,891 2,677 2,873 2,945 3,225 Other expenses 72,573 (2,3 11) 20,671 60,329 29,522 Profit 44, , ,146 47,398 83,297 Note: Negative expense values reflect gains on derivative instruments. Table 3 Municipal Finance Authority of British Columbia -- Ratio Analysis -Year ended Dec (%) Customer loans/ assets Profit/revenues Administration expense/ revenues Equity / assets Equity/customer loans Related Criteria And Research Related Criteria Principles Of Credit Ratings, Feb. 16, 2011 Ratings Detail (As Of May 27, 2015) Municipal Finance Authority of British Columbia Issuer Credit Rating Commercial Paper Local Currency Canada National Scale Commercial Paper Senior Unsecured Issuer Credit Ratings History 19-Mar-2008 Foreign Currency AAA/Stable/ A-1 + A-1+ A-1(HIGH) AAA AAA/Stable/ A MAY 27, P&P I

162 Municipal Finance Authority of British Columbia Ratings Detail (As Of May 27, 2015) (cont.) 29-Aug Feb Mar Aug Feb-2006 Local Currency AA+/Positive/ A-1+ AA+ I Stable/ A-1 + AAA/Stable/ A-1 + AA+/Positive/ A-1+ AA+ I Stable/ A-1 + *Unless otheiwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country. Issue and debt ratings could include debt guaranteed by another entity, and rated debt that an entity guarantees. MAY 27, P&P I

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