EMT S MESSAGE Executive Management Team

Transcription

1 EMT S MESSAGE The City of Barrie is committed to providing a vast array of services to our growing community. Municipalities deliver key front line services such as police, fire, transit, recreation and cultural events, parks and operations, roads, snow removal, garbage collection, drinking water and wastewater, to name a few. The cost to provide these services and maintain our aging infrastructure is outpacing the rate of our revenues. This in turn puts pressure on the property tax base. Yet, only 10 cents of every tax dollar collected in Canada goes towards these important services. This year, the Executive Management Team (EMT) looked at what was needed to grow our city; effectively manage and improve our existing assets and to continue our efforts to achieve organization sustainability so we are prepared for growth and increased service delivery. EMT is recommending the following as key 2017 investment priorities: Continuing to address our infrastructure deficit Continuing to work towards financial sustainability Protecting the public, our assets and our environment with a focus on environmental protection Continuing to prepare for growth Better serving our customers and ensuring we meet Legislated requirements for accessibility through AODA compliance Supporting our staff and growing our talent so we can better deliver services Continuing to work towards greater automation by building our technology infrastructure and business systems Continue to focus on growing our economy With investments in these key areas in 2017, Barrie will be best positioned to advance Council s priorities and achieve the Plan for a Better Barrie. Please don t hesitate to contact any member of the Executive Management Team if you have questions. We look forward to Council s deliberations on the 2017 Budget. Executive Management Team Carla Ladd, CAO Patti Elliott-Spencer, General Manager, Community and Corporate Services Richard Forward, General Manager, Infrastructure and Growth Management Rhonda Bunn, Executive Director, Innovate Barrie Zvi Lifshiz, Executive Director, Invest Barrie Rebecca James-Reid, Executive Director, Access Barrie Ingrid Peters, Director of Legal Services Strengthened customer service, continuous improvement, strong financial management and accountability and, finding innovative ways to deliver services continues to be key priority areas for The organization is transforming to ensure we can best serve the community by improving our business systems, improved measuring and reporting and providing the proper technology tools to make things easier to do business with the City of Barrie. Investment in our workforce is essential- our staff is the engine behind all of the City s work and without staff we could not deliver services. Staff are working hard every day to find efficiencies and improve the way we deliver services. 1

2 BUSINESS PLAN OVERVIEW Introduction The City of Barrie s 2017 Business Plan and Budget sets out how the City recommends to allocate resources in 2017 to deliver essential and key city services at the level of service expected by the Community. The City s Business Plan and Budget is developed under a service-based approach that relates labour, materials and other costs to the services they are intended to support. Changes in budget requirements are driven by either the increased costs to maintain existing service levels or by increasing service levels through enhanced or new services. As in past years, it continues to emphasize the importance of improving the City s financial condition and recognizes that in order to address the City s current financial challenges decisions will need to be made that impact services and service levels today and in the future. The City is continuing to lay the foundation for a financially sustainable and responsible plan that addresses the needs of residents and business owners within the community. The City s budget includes three elements: A tax rate based operating budget ongoing programs and services funded primarily from a combination of property taxes, user fees and reserves. These services are delivered either by the City of Barrie or by one of the City s service partners. The Business Plan and Budget reflect the Budget Directions approved by City Council on June 27, 2016 established to guide the process and ensure a fiscally responsible business plan and budget. The guidelines recognized that the City faces many pressures in developing its business plan and budget. Costs to deliver existing services at current service levels are increasing for items such as utilities, the cost of materials and supplies, and labour. The City is moving into a high growth period and needs to set the financial foundation to manage costs driven by the growth anticipated over the next number of years while continuing to maintain current service levels and existing infrastructure, and to ensure long term fiscal sustainability. The Business Plan balances these pressures. Like all municipalities, the City has limited funding options to address cost pressures. To mitigate increases in property taxes and user fees, the City looks for efficiencies and savings that can be achieved by improving processes, but once these are exhausted there are only two choices increase taxes and user fees or reduce services. Included in this document are detailed performance plans for each department, which set out: services provided, major objectives and performance measures, as well as detailed cost information. This overview focuses on providing Council and the public an explanation of the major drivers contributing to the 2017 recommended Budget. A user rate based operating budget ongoing programs and services funded primarily from user fees and reserve funds, based on user rates intended to make the programs and services self-sustaining. The City currently has three user rate based operating budgets: Water, Wastewater, and Parking. A capital budget routine and non-routine projects designed to create, enhance or restore the service potential of the City s significant network of assets. The capital budget is funded from a combination of property taxes, development charges, debt issuance, grants, rates and reserves. 2

3 2017 Executive Management Goals The 2017 Business Plan and Budget contains comprehensive plans to address key goals for the corporation. These have been organized under each of the four main headings General Management, Strategic Focus, Organizational Culture, and Service Delivery. Detailed key performance indicators for each of these goals are found in each of the lead division or strategic portfolio sections. General Management To direct and coordinate the general management and operations of the Corporation in accordance with by-laws, policies and plans adopted by City Council to ensure delivery of the highest quality services at the best value for the citizens and businesses of Barrie. Reduce the risk of harm or loss of life by providing timely Fire and Emergency services and Building Code review and enforcement. Provide inclusive recreation facilities and programming that meets community needs and ensures all residents have the opportunity to participate. Inform and encourage individual compliance with and enforce community standards through the administration and enforcement of municipal by-laws and licensing to enhance the safety and quality of life in the community. Deliver advice, policy support and administrative services to City Council and the corporation for legislative, legal, real estate and financial services. Develop and maintain financial policies and plans that support Council s strategic goals and protect the City s creditworthiness and assets. Deliver quality operating and maintenance of municipal infrastructure, meeting service levels and ensuring regulatory compliance while striving for service improvements and operating efficiencies for all service functions. Provide for the balanced growth and development of the City through clear, comprehensive and sound implementation of land use planning policies and principles, and servicing strategies, in a financially responsible manner. Maintain, protect and enhance neighbourhoods through the application of zoning and land development standards. Provide total facility management for the City s valuable portfolio of facility and property assets through comprehensive facility asset management and maintenance strategies that contain costs while preserving the City s assets. Strategically manage the City s corporate assets, to minimize replacement costs over the long-term and to close the infrastructure deficit gap. Execute the delivery of the Capital Plan to achieve best value for the community. Comply with all forms of legislation and meet or exceed regulatory compliance with applicable Provincial/Federal legislation at all times. Develop the Centre for Continuous Improvement to include optimal allocation of resources, dashboard reporting and ensure alignment with Council s strategic goals. Strategic Focus To set the strategic focus of the organization that is aligned with Council s strategies and priorities. Develop a comprehensive Strategic Planning framework that aligns Council, the Community and the Organization. Increase corporate accountability within the organization at all levels. Implement strategies that support economic diversification through growth and development of new industry clusters. Increase economic resiliency through innovation and entrepreneurship and enable the economy to create a range of high quality career opportunities. Position Barrie as a premiere destination for business investment in Ontario Develop and build strong relationships with the business community to maximize opportunities for collaboration and efficient service delivery. Develop innovative communication and advertising strategies to build effective relationships internally and externally, to address public relations and marketing needs and to identify and encourage opportunities for proactive and positive media coverage. Extend the life of the landfill through enhanced waste diversion programs. 3

4 Strategic Focus Cont d Enhance through comprehensive transportation planning, an inter-connected community through access to and across the Highway 400. Provide a public transportation system that is a viable alternative to the automobile. Organization Culture To build a positive and passionate organization culture that is customer focused. Enhance Customer Service access options across multiple channels including counter, phone, and online opportunities. Develop an energetic and inspiring leadership group along with attracting and retaining top talent. Support a culture of continuous improvement, innovation and crossdepartmental communication through the use of standardized tools, templates and processes for change management and project management and build the capacity and capability in the organization through training and facilitation. Continue to lead the organization through project and change management initiatives for the Enterprise Resource Planning (ERP) implementation and future sustainment, the building permit application implementation, and computerized maintenance management implementations focused on delivering transformational business capabilities. Enhance network, computing and mobility environments to meet existing and new business requirements. Manage the corporation s investment in technology to ensure the total cost of ownership is minimized. Provide policy support and communication services to Council, the Office of the CAO and all other Divisions/Departments to assist them in their delivery of programs and services. Provide open and transparent communication to the public and staff on the decision making process associated with Council and Committee meetings. Grow the Innovatology program where innovation is encouraged and recognized. Foster organization-wide support of corporate communications to ensure proactive, consistent and meaningful communications with the community as well as within the corporation. Service Delivery To strengthen organizational capacity to more efficiently deliver service through the introduction of new tools (technology), process improvements and innovations in service delivery. Enhance the City s portfolio management framework to include optimal allocation of resources and ensure alignment with Council s strategic goals. Provide leadership and support on process improvement initiatives while building the capacity and capability in the organization through training. 4

5 5

6 How the City is Organized to Deliver These Services: The Executive Management Team is comprised of the Chief Administrative Officer, General Managers of Infrastructure and Growth Management; Community and Corporate Services; Executive Directors of Innovate Barrie, Invest Barrie and Access Barrie and the Director of Legal Services. EMT s mission is to build a customer focused organization responsive to the community where all staff understand and embrace their fundamental role as one of serving the community. Below is the organizational chart for the City of Barrie. 6

7 BUDGET AND FINANCIAL OVERVIEW Tax Based Operating Budget This following section is focused on the 2017 Tax Supported Budget. The user rate supported operating budgets and the capital budgets are discussed later in this document. The City faces many pressures in developing a fiscally responsible budget. To understand how these various pressures impact the recommended business plan and budget for Council s consideration, City staff have used a building block approach considering the costs of maintaining services, financing costs driven by capital initiatives and the City s financial policies, our Service Partners and new investments and service level recommendations. The following summarizes the components of the Business Plan and Budget recommended by staff for Council consideration. The cost to maintain existing service levels, including the impact of prior decisions Implementing approved financial policies for debt and reserve management related to financing of capital 1% for Dedicated Infrastructure Renewal Fund Service Partner Requests (Police, County of Simcoe, Library, Conservation Authorities, etc.) New Investment and Service Level Recommendations have been further categorized by area of investment: Infrastructure; Financial Management; Environmental Protection; Growth Management; Customer Service; Workforce; Technology Infrastructure and Business Systems. The following is a brief overview of each of the components in the 2017 Business Plan and Budget. Maintaining Existing Service Levels The City s cost to maintain service levels increases every year due to inflation, similar to the costs residents face. Prices may increase for hydro, gas and diesel which are significant components of the budget. Other materials and supplies increase in price. The City s labour costs are impacted by negotiated labour agreements. Revenue changes also can impact the net cost to deliver existing services. To mitigate these net cost increases staff look for efficiencies and process improvements, as well as new revenue options. Also included are increased costs due to new investments and enhanced service levels approved in the previous year s budget or throughout the year, where these services are only provided for part of To maintain the new service level, additional costs or benefits for the full year of service must be included in the 2017 Business Plan and Budget. Debt and Reserve Management The City has established financial policies for debt and reserve management that provide for the long-range financial sustainability of the City. The City s debt policy includes limiting annual debt servicing costs to 20 per cent of own source revenues, which is lower than the provincial limit of 25 per cent. Including existing debt, the proposed 2017 budget will bring the annual debt servicing costs to approximately 9% of the City s own source revenues. Tax funded debt servicing costs are budgeted to increase $1.4 million (0.56% tax rate increase) over This increase is inclusive of annualized and planned new debt. In order to reduce the City s reliance on debt and build appropriate capital reserves to support renewal needs, the City s financial policy framework identifies the need to increase the annual contribution to the tax capital reserve for new amortization costs. Amortization costs reflect the cost of infrastructure used up during a year, and how much funding that should be set aside on a yearly basis over the life of the asset to allow for eventual replacement of the asset. The proposed 2017 Business Plan and Budget includes increasing the contribution to tax for new amortization costs by $1 million or 0.4% on the average tax bill. 7

8 This amount was calculated by determining the 2017 amortization on new assets and deducting the portion related to debt funded assets (e.g. Transit Garage) and amortization on assets taken out of service. These adjustments were made in an effort to avoid double counting under the amortization method and brought the calculated contribution down to approximately $2 million. To reduce the 2017 tax rate impact, only 50% of this amount has been included in the base budget. Finally, the City contributes annually to various other reserves to provide funding for specific commitments and financial risks. The 2017 budget includes a net tax funded increase of $513 thousand (0.21% tax rate increase) for these contributions. The primary drivers of the increase include an additional $300 thousand contribution to the County of Simcoe Capital Reserve and a $200 thousand contribution to the Legal Contingencies Reserve, a newly proposed reserve for The following chart shows the estimated amortization expenses for taxsupported infrastructure in 2016 based on historical costs for the City of $29.8 million. The transfer to the capital reserve in 2016 was $25.9 million, leaving a gap of approximately $3.9 million. However, amortization expense is based on historical values. The FIA analysis undertaken by Watson & Associates Economists Ltd. identifies net tax supported non-growth capital expenditures (existing infrastructure) of approximately $1.37 billion over the next ten years, for an average annual amount of $74 million, resulting in an annual shortfall of close to $48 million. Combined, the year-over-year budget changes for debt and reserve management total $2.9 million or 1.17% to the average residential tax bill. Dedicated Infrastructure Renewal Fund The City of Barrie owns $1.6 billion in infrastructure, based on historical costs. The current dollar value of this infrastructure is considerably higher, at approximately $3.3 billion in replacement cost. The City s annual requirements for repairing and rehabilitating aging infrastructure is considerably higher than current funding levels resulting in a significant backlog in infrastructure renewal. The condition of infrastructure has a direct impact on service levels as well as the reputation of the City. To address the significant backlog in infrastructure renewal, in 2015 City Council approved the implementation of a Dedicated Infrastructure Renewal Fund, which requires an incremental 1% increase in taxes annually. This fund will be used to increase infrastructure rehabilitation for tax-supported infrastructure roads, sidewalks, storm sewers, parks, buildings, fleet and equipment. The 2017 Business Plan and Budget includes $2.5 million for the increase in the Dedicated Infrastructure Renewal Fund, which has a 1% impact on the property tax bill. Service Partners The City of Barrie has a number of Service Partners including the Barrie Police; County of Simcoe who provides long-term care, paramedic services, and social services; Conservation Authorities; and Library. These Boards, Municipalities, and Agencies have a legislated authority to establish Budgets and levy taxes through the City s tax rate. The City has limited ability to revise their requests. However, they comprise almost 31% of the property tax bill. An additional $1.1 million will be required from the tax levy to meet the funding requests of Service Partners in This will result in a 0.45% increase in the tax bill. 8

9 Impact of Proposed 2016 Budget The following table outlines the net tax budget changes for the cost to Maintain Current Programs at Current Service Levels, Debt and Reserve Management activities, the City s Service Partners, and Investment and Service Recommendations Budget Tax Rate Impact (A) Prior Year - Net Operating Expenditures funded by property taxes $ 208,262,826 Maintain current programs at current service levels: Economic Adjustments - Labour $ 4,282, % Economic Adjustments - Contracts $ 1,864, % Approved Investment & Service Recommendations $ 429, % Efficiencies & Cost Savings $ (1,146,000) -0.46% Revenue Changes $ (674,000) -0.27% Interfund Charges $ (65,000) -0.03% Utilities $ 256, % Other $ (37,600) -0.02% (B) Subtotal - Maintaining current programs at current service levels $ 4,908, % Debt & Reserve Management: Debt Management $ 1,402, % Reserves - Tax Capital Reserve (Amortization Method) $ 1,000, % Reserves - Other $ 513, % (C) Subtotal - Debt & Reserve Management $ 2,915, % (D) 1% Dedicated Infrastructure Renewal Fund $ 2,500, % (E) Subtotal - (B+C+D) $ 10,323, % (F) Service Partner Budget Requests $ 1,115, % (G) Subtotal - (E+F) $ 11,438, % (H) Realized Assessment Growth Benefit -1.00% (I) Subtotal - (G+H) $ 11,438, % Investment & Service Recommendations: Technology Infrastructure and Business Systems $ 117, % Customer Service $ 45, % Financial Management $ 89, % Environmental Protection $ 28, % Workforce $ 96, % Growth Management $ 96, % Subtotal - Investment & Service Recommendations $ 473, % (J) Current Year Net Expenditures funded by property taxes (A+I+J) $ 220,174, % 9

10 Property Tax Bill According to Statistics Canada, National Economic Accounts Division and the Association of Municipalities Ontario, Municipalities receive a very small portion of total taxes paid by an individual in Canada, when you consider sales tax, income tax and all other taxes paid to municipalities, Provincial and Federal Governments. For example, Ontario municipalities receive only 10 cents of every tax dollar raised in Ontario, while the Provincial and Federal governments receive 44 cents and 47 cents. In contrast to this, municipalities own 57% of the capital infrastructure, while the Provincial Government owns 41% of Infrastructure and the Federal Government only 2%. Allocation of Property Tax Bill In 2017, the proposed average residential property tax bill of $3,992 will fund the following programs: City Services $2,220 (55.5%), Education $541 (13.5%), and Service Partners $1,231 (31%). The education portion is determined by the Province of Ontario and for 2017 it s assumed there will be no change to the rate. The average commercial property tax bill contributes 41% of their tax dollar to education compared to a 14% contribution from residential. Commercial properties contribute proportionately less of their total tax payment to support municipal services. An Industrial property tax bill has the same breakdown as a commercial property tax bill. Commercial Property Tax Bill Residential Property Tax Bill Property Tax Bill Funds City Programs, Service Partners and Education City Services 38% Education 41% Service Partners 21% Education 14% Service Partners 31% City Services 55% To help taxpayers understand what the City Business Plan and Budget will mean to their total property tax bill, impacts are presented as a change to the total tax bill. This also makes comparisons to other municipalities easier, as some municipalities are separated cities and single tier, others two tier focusing on the total tax bill provides for apples to apples comparisons. % 10

11 Value for Your Property Tax Dollar Every day the residents and businesses of Barrie use City services and see their tax dollars at work. In a typical day most residents will use or witness most City services being provided - they will use clean water from their taps; use wastewater services by flushing or draining a shower; place garbage and recycling in containers for future pickup; walk on a sidewalk; drive on a road, in a car or a City of Barrie bus, which has stoplights, signage and street lighting. They may walk through a park, take a class at a community centre, or borrow a book from the Library. They will likely see a fire truck, or a police car or an ambulance pass by them, knowing if they need these services they are available 24 hours a day, 7 days a week. The City of Barrie delivers many of these valued and essential services. The County provides ambulance, homes for the aged, and social services. Barrie children attend elementary and high schools funded by the education portion of the property tax bill. The cost to an average home for all of these services is estimated at $3,992. When one considers the annual cost to the average household for natural gas, cable, hydro, this represents very good value. The average house in Barrie has an assessed value of approximately $302,000. In 2017, this average home will pay $3,992 in property taxes based on the proposed budget. Major services received and the total annual amounts paid per home for each are described on the following pages. 11

12 Police Services - $ hours a Day, 7 Days a Week availability, 365 Days a Year Current staffing complement is 237 sworn police officers and 105 civilians 60,637 calls for service with a 62.5% clearance rate Barrie Census Metropolitan Area designated as second Safest Metropolitan Area in Canada Fire & Emergency Services - $ hours a Day, 7 Days a Week availability, 365 Days a Year Responses to fires, motor vehicle accidents, ice rescues, tiered medicals, hazardous materials incidents and a variety of other technical rescues. Responded to 8,128 calls in 2016 with the first arriving truck on scene 93% of the time in less than 6 minutes Over 4,900 calls are medically related Comprehensive public education/fire prevention programs and Fire Code enforcement. Roads & Traffic Operations - $249 Maintenance of and snow cleared from 1668 lane kilometres of roads and kilometres of sidewalks Maintenance of kilometres of ditches Maintenance and operation of kilometres of storm sewers Maintenance of kilometres of watercourses, 18 kilometres of culverts, and 89 detention ponds Maintenance of 530 kilometres of wastewater collection sewers Maintenance and operation of 35 kilometres of Barrie Collingwood Railway Power supplied to 11,000 street lights and 246 traffic signals. Actions over 4,500 service requests annually Libraries - $113 2 library locations 6,450 annual service hours 3.2 million annual library engagements, 955,000 electronic library engagements 365,000 annual library visits (32,700 active borrowers) 20,300 annual program attendance No membership or user fees for all Barrie residents Access to computer workstations, wireless Internet, multilingual and special collections, community meeting spaces Services include online databases, courses, downloadable ebooks and multimedia, Information Barrie Recreation - $116 4 Community Centres, 7 Sport and Recreation Centres, 3 Gyms 43 Baseball Diamonds, 56 Soccer Pitches 8 Arena Ice Pads, 19 Outdoor Ice Rinks 37 Tennis Courts More than 2.0 million participant visits to recreation facilities Environmental Operations - $100 Over 53,000 households receive bi-weekly garbage collection, weekly organics collection, weekly blue and grey box collection and 34 weeks of yard waste collection curbside; Access to the City landfill 5 days per week; and Hazardous household waste drop-off at no charge on Saturdays Transit - $ million annual conventional transit trips and 47,000 annual specialized transit trips 194,000 transit vehicle in-service hours with 30 minute frequencies during peak periods and extended service hours to increase go train connections 12

13 Parks & Forestry - $84 Care of 34,000 street trees, 6,800 trees in parks and over 2,100 acres of City owned forest 127 parks totaling 812 acres in area, 2,450 acres of natural areas, 49 Gores, and 40 acres of boulevards Inspection and maintenance of 88 kilometers of public trails (including bridges, boardwalks, hard and natural surfaces) Inspection and maintenance of equipment and play areas at 114 playgrounds Maintenance of 452 planting beds (shrubs, perennials and annuals) and 183 planters (concrete or reservoir) Actions over 2,200 service requests annually Creative Economy - $36 Planned 4 multi-week startup acceleration programs with 88 entrepreneurs registered Hosted 21 startup, innovation and collision events with approximately 1,000 attendees Delivered 3 business workshops for creative entrepreneurs with 92 attendees Number of Attendees at City-run festivals (New Years, Celebrate Barrie, Winterfest, Canada Day, Culture Days, Rhythmfest) 87,000 Number of patron tickets purchased for Mady Centre 7,084 Number of patron tickets purchased for the Georgian Theatre 32, 701 Your tax bill also includes services provided by the County of Simcoe: $279 Paramedic Services - $96 per average household, Long Term Care - $13, Social Housing - $78, Ontario Works - $78, Children & Community Services - $34 Barrie Taxes Are Comparable The following table presents the total tax bill in 2015 on an average household basis. The total tax levy includes all levels of municipal government and education. Barrie s taxes are in the lower end of other major Ontario municipalities. The information in this chart is from the BMA Management annual Municipal Study database, which allows for the comparison of various municipal property tax-related benchmarks. * Source: 2015 BMA Municipal Study Overview of Tax Supported Operating Budget Changes to Maintain Current Service Levels The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $4.9 million or a Tax Rate Increase (TRI) of 1.96%. The following table sets out the main drivers in the cost to maintain existing service levels: 2017 Budget Tax Rate Impact Maintain current programs at current service levels: Economic Adjustments - Labour $ 4,282, % Economic Adjustments - Contracts $ 1,864, % Approved Investment & Service Recommendations $ 429, % Efficiencies & Cost Savings $ (1,146,000) -0.46% Revenue Changes $ (674,000) -0.27% Interfund Charges $ (65,000) -0.03% Utilities $ 256, % Other $ (37,600) -0.02% Subtotal - Maintaining current programs at current service levels $ 4,908, % 13

14 Economic Adjustments Labour The City has a largely unionized employment force where the City is required to negotiate labour agreements. In 2015, negotiations took place for both the Firefighters and CUPE unions. The 2017 budget reflects the current labour agreements, with a 1.5% increase for CUPE and non-union employees. Fire Services receives a 2.5% increase, given in two semi-annual increases. Benefit costs are expected to increase by approximately $1.4 million for 2017 with the most significant drivers being a 21.8% increase for health premiums and a 2.75% increase to cover anticipated escalation of costs for CPP, EI, life insurance, accidental death and disability, and OMERS. The provision for salary gapping has been increased by $100 thousand to $900 thousand for Salary gapping is a staff management approach to achieving savings through position vacancies. Staff believes this provision reflects the salary gapping likely to be achieved in a stable organizational environment. Finally, employee costs recovered from the capital fund have been decreased year-over-year by approximately $300 thousand to reflect anticipated project management requirements for The primary drivers of the reduction are the ERP project which is expected to go live in 2017 and recoveries for Right of Way Activity (ROWA) staff, which is actually covered by ROWA fees. Economic Adjustments Contracts Many of the services provided by the City require multi-year contracts with external businesses for the provision of services or purchase of materials. These contracts often contain provisions for the cost of inflation (e.g. CPI). While an adjustment for inflation is common; there are other adjustments that can be equally or more costly. The following table highlights some of the more significant contract adjustments affecting the City in 2017: The increased waste collection costs are spread across a number of services. The cost of Residential and Multi-Residential waste collection is expected to increase by approximately $584 thousand as a result of anticipated additional tonnage, the start of front end bin collection for multi-residential and the need for additional curbside audits (primarily multi-residential). The collection cost for solid waste is the cheapest per tonne while organics is the most expensive per tonne. The cost of contracted services for winter control are expected to increase as result of contract indexing, growth in the road network, enhanced minimum maintenance standards for sidewalks, and a new sidewalk winter control contract. The cost for the City's P3 transit agreement is expected to increase approximately $556 thousand for The majority of the increase, approximately $440 thousand, is the result of an inflationary increase linked to CPI. Contracted services for Storm conveyance maintenance in the areas of watercourse maintenance, ditching, and catch basin repair are not keeping pace with the rate of failure and the need for adequate drainage in existing and newly developed areas. The year-over-year budget increase of $123 thousand is intended to address this service gap. Contract Type 2017 Budget Increase Waste Collection $ 584,000 Winter Control $ 265,000 Transit $ 556,000 Storm Conveyance $ 123,000 14

15 Approved Investment & Service Recommendations Decisions made in prior years to implement new or enhanced services can have impacts on future budgets. In 2017, increased costs for prior year decisions have a pressure of $429 thousand, with a tax rate impact of 0.17%. Prior year investment and service level decisions include: Director of Internal Audit Strategy & Entrepreneurship Officer Supervisor of Business Planning, Budgets, and Performance Reporting Supervisor of Investment & Debt Management Maintenance Management Sustainment Permanent Staffing SAP Support Staff & Consultants Manager of Energy Supervisor of Transit Infrastructure & Compliance Canada s 150 th Anniversary Customer Contact Centre Development & Customer Information Advisor Efficiencies & Cost Savings Efficiencies and cost savings are expected to be realized in several areas for Budgeted fuel costs have been reduced year-over-year by $520 thousand as a result of lower fuel prices. Salt purchases for winter control have been reduced by $230 thousand resulting from the Salt Use Reduction Strategy and recent mild winters. In addition, budgeted costs for various supplies (e.g. caretaker supplies, stationary, field and other supplies) have been reduced by a cumulative total of $342 thousand. Overall, identified efficiencies and cost savings will offset the tax rate increase by 0.46% Revenue Changes The City relies on a diverse set of non-tax revenue sources to support municipal services. These revenue sources are expected to generate more than $42 million in Like any business, these revenue streams have their own unique set of risks and uncertainties that affect the amount of revenue realized and despite Staff s best efforts to accurately predict results more than a year in advance; adjustments are needed on occasion. Some of the City s revenue streams benefit from strong historical trends permitting consistent and reliable budgeting while others are much more susceptible to variables such as market forces or weather. New fees or fees associated with services that have undergone significant changes are especially susceptible to uncertainty as historical trends may be disrupted or non-existent. The 2017 budget contains several year-over-year adjustments to non-tax revenue sources, these adjustments result in a net benefit of $674 thousand that offset the tax rate increase by 0.27%. Recreation revenue has been increased by approximately $277 thousand for The increased revenue is expected to be realized through a modest increase in user fees of approximately 2.5% to 3% and an increase in the volume of pass sales. Payments in lieu of taxes (PIL) have been increased by $251 thousand to reflect actual expected receipts. PIL are received from properties owned by other levels government, colleges, hospitals, etc. Similarly, revenue from interest and penalties has been increased by $125 thousand for Revenue from an active investment approach has been increased by $181 thousand for However, the increase is offset by a reduction of $208 thousand resulting from a decrease to the interest rate on the note receivable from Barrie Hydro Holdings Inc. (BHHI). Transit fare revenue has been adjusted down by approximately $160 thousand to more accurately reflect current ridership trends. Current trends are indicating that while ridership is growing, more riders are moving from cash fares to the discounted pass fares. Revenue from parking tickets and fines has been increased approximately $141 thousand for 2017 based on historical trends. However, revenue from pet licenses has been decreased by $72 thousand reflecting the decision to adopt a lifetime pet license. 15

16 Interfund Charges Under the service based budget approach, costs are allocated to the services they support regardless of which department controls these costs. Costs related to administration and overhead are allocated to the rate supported services for water, wastewater and parking. In addition, certain costs billed to the City by Service Partners are covered by user rates where appropriate. Utilities Electricity and natural gas rates are expected to increase 4.6% and 5% in While electricity costs are expected to increase by approximately $449 thousand, natural gas costs are expected to decrease by approximately $206 thousand on reduced consumption estimates. Staff continue to investigate and execute energy conservation measures to help offset future rate increases. Total cost avoidance due to conservation efforts are expected to be approximately $320 thousand in Debt Management The City issued a $34.1 million debenture in February The incremental tax funded debt servicing cost associated with this debenture is approximately $674 thousand. A second debenture in the amount of $7.8 million is planned for the end of the 4 th quarter The incremental tax funded debt servicing cost associated with this debenture is approximately $177 thousand. Additional debentures planned for 2017 amount to $12.7 million. The 2017 tax funded debt servicing costs associated with these debentures are expected to be approximately $536 thousand. Projects included in planned 2017 debentures are listed in the Financial Condition section. Reserve Management The Dedicated Infrastructure Renewal Fund portion of the annual reserve contribution was approved by Council starting in the 2015 budget year and prescribes an annual increase to the reserve contribution equivalent to a 1% property tax increase for the average residential tax payer. For the proposed 2017 budget, the 1% increase represents approximately an additional $2.5 million. The City s proposed Tax supported budget includes a $29.8 million transfer to the Tax Capital reserve to support the Capital program. This transfer is based on the City s Financial Policies Framework and represents a $3.45 million increase over The increase over 2016 consists of a $2.5 million increase related to the Dedicated Infrastructure Renewal Fund, a $1 million increase related to amortization of capital assets, and a $50 thousand decrease related to the repayment of an internal loan through fundraising related to the Downtown Theatre. The City s operating budget includes transfers to other capital reserves such as the County of Simcoe Capital Reserve and the Development Charges Discounts & Exemptions Reserve; the transfer to the Development Charges Discounts & Exemptions Reserve has been held at 2016 levels for 2017 while the contribution to the County of Simcoe Capital Reserve has been increased by $300 thousand to $1.4 million. Forecasted details of the County of Simcoe Capital Reserve are provided in the Reserve & Reserve Fund section of the executive summary. At Council s direction, a Police Services Board Capital Reserve has been established for The contribution to this reserve is budgeted at $1.3 million. The contribution to this reserve does not necessarily result in a tax rate impact for 2017 because the Police Services capital program has historically been imbedded in the Board s annual budget request. The City s operating budget also includes contributions to various non-capital reserves. The 2017 budget includes an additional $200 thousand contribution to a proposed Legal Contingency Reserve and increased contributions of $25 thousand and $37.7 thousand to the Elections Reserve and Landfill Site Maintenance Reserve respectively. The 2017 Budget proposes the creation of a legal reserve to provide a funding source for increasing legal costs. 16

17 Service Partners The 2017 service partner base budget requests require an increase of $1.1 million to the tax levy. The main drivers of the net increase include the Barrie Police Service ($1.56 million) offset by a reduction to the County of Simcoe s operating levy which has been decreased by $600 thousand for The Police Budget increase is largely driven by salary and benefits costs. The 2017 increase also reflects the elimination of $88 thousand in Development Charge funding that will applied directly to the associated capital project where appropriate. Costs associated with the County s Capital Program have been moved to the Capital Fund to provide enhanced transparency. As these costs are funded from the County of Simcoe Capital Reserve and Development Charges there is no direct impact to the 2017 tax levy. However, as noted above, the contribution to the County of Simcoe Capital Reserve has been increased for 2017 (see the Reserve & Reserve Fund section of the executive summary). The County of Simcoe operating budget request includes increases for Land Ambulance of $163 thousand, Long Term Care of $79 thousand, Social Housing of $120 thousand, and Children and Community Services of $34 thousand. This is offset by a reduction of $1.3 million for the Ontario Works program as a result of continued increases in upload funding from the Province. The County s social housing budget includes $460 thousand to fund the City s share of an anticipated debt financed social housing project. These costs are funded by a combination of draws from the County of Simcoe Capital Reserve and Development Charges and therefore do not have a direct impact on the 2017 tax rate increase. 17

18 The following table shows the net impact to the tax levy and the year-over-year percentage change by service partner, including requested budget and other funding sources available. SERVICE PARTNERS & GRANTS Base Budget Change Report 2015 Actuals 2016 Budget In Year 2017 Requested Change in 2017 Requested Budget Forecast Budget to 2016 Approved Budget $ $ $ $ $ % Conservation Lake Simcoe Region Conservation Auth. $1,397,470 $1,336,562 $1,429,306 $1,284,624 ($51,938) -3.89% Authorities Water Rate $1,048,103 $1,002,422 $1,002,422 $963,468 ($38,954) -3.89% Tax Funded $349,367 $334,141 $426,885 $321,156 ($12,985) -3.89% Nottawasaga Valley Conservation Auth. $325,945 $335,484 $335,484 $358,912 $23, % Water Rate $45,600 $47,001 $47,001 $47,351 $ % Tax Funded $280,345 $288,483 $288,483 $311,561 $23, % Total - Tax Funded $629,712 $622,624 $715,368 $632,717 $10, % County of Long Term Care $981,324 $947,314 $1,063,000 $919,000 ($28,314) -2.99% Simcoe CoS Capital Reserve $104,538 $107,068 $120,000 $0 ($107,068) % Tax Funded $876,786 $840,246 $943,000 $919,000 78, % Ontario Works $4,993,919 $4,879,312 $4,400,064 $3,560,000 ($1,319,312) % CoS Capital Reserve $10,113 $24,064 $24,064 $0 ($24,064) % Tax Funded $4,983,806 $4,855,248 $4,376,000 $3,560,000 (1,295,248) % Paramedic Services $6,860,775 $7,508,224 $8,005,000 $6,123,000 ($1,385,224) % CoS Capital Reserve $769,561 $1,191,223 $1,285,800 $0 ($1,191,223) % DCs $395,348 $356,722 $857,200 $0 ($356,722) % Tax Funded $5,695,866 $5,960,279 $5,862,000 $6,123, , % Social Housing $6,824,784 $5,298,204 $6,670,000 $5,508,255 $210, % CoS Capital Reserve $82,516 $370,327 $899,500 $179,500 ($190,827) % Tax Capital Reserve $427,144 $0 $0 $0 $0 N/A DCs $1,796,990 $0 $385,500 $280,755 $280,755 N/A Tax Funded $4,518,134 $4,927,877 $5,385,000 $5,048, , % Contribution to County Capital Reserve $1,100,000 $1,100,000 $1,100,000 $1,400,000 $300, % Children and Community Services $2,030,400 $2,099,832 $2,100,000 $2,134,000 $34, % Simcoe County Museum and Archives $100,280 $105,996 $104,000 $106,000 $4 0.00% Total - Tax Funded $19,305,272 $19,889,478 $19,870,000 $19,290,000 ($599,478) -3.01% Lake Simcoe Lake Simcoe Regional Airport $452,429 $418,611 $418,611 $425,732 $7, % Regional Airport Total - Tax Funded $452,429 $418,611 $418,611 $425,732 $7, % Local Boards Barrie Police Services $47,489,484 $48,902,251 $48,902,251 $50,375,113 $1,472, % DCs $70,400 $88,000 $88,000 $0 ($88,000) % Tax Funded $47,419,084 $48,814,251 $48,814,251 $50,375,113 $1,560, % Barrie Public Library $7,096,612 $7,357,319 $7,357,319 $7,460,748 $103, % Tax Rate Stabilization Reserve $191,000 $200,000 $200,000 $200,000 $0 0.00% DCs $170,000 $50,000 $50,000 $50,000 $0 0.00% Tax Funded $6,735,612 $7,107,319 $7,107,319 $7,210,748 $103, % Total - Tax Funded $54,154,696 $55,921,570 $55,921,570 $57,585,861 $1,664, % Other Service Physician Recruitment $60,000 $60,000 $60,000 $60,000 $0 0.00% Partners & Tourism Barrie $207,300 $213,520 $213,520 $213,520 $0 0.00% Grants Total - Tax Funded $267,300 $273,520 $273,520 $273,520 $0 0.00% Simcoe Muskoka Simcoe Muskoka District Health Unit $1,613,925 $1,701,243 $1,701,243 $1,734,542 $33, % District Health Province of Ontario $0 $26,000 $26,000 $26,000 $0 0.00% Unit Total - Tax Funded $1,613,925 $1,675,243 $1,675,243 $1,708,542 $33, % Grand Total - Tax Funded $76,423,334 $78,801,045 $78,874,311 $79,916,372 $1,115, % 18

19 New Investments and Service Recommendations This component of the Business Plans includes a number of proposed new investments and service recommendations the Executive Management Team recommend for implementation. These new investments are required to ensure the City is able to deliver on Council s strategic plans and to meet the demands of growth. EMT has identified these new investments by the service objective, or theme, they support. These are Infrastructure; Financial Management; Public Safety and Asset Security; Environmental Protection; Growth Management; Customer Service; Workforce, and Technology Infrastructure. A listing of the new investments is provided by theme at the end of this section. The need for investment in each area is discussed below, with a total tax-supported cost of $473 thousand (0.19%) for Infrastructure Infrastructure is critical to support services that our residents require on a daily basis. The City has $3.3 billion in assets with an additional investment on the horizon of $3.1 billion in new assets and asset replacement over the next 20 years. The level of investment is huge, but essential, not only to support growth but to maintain and replace existing infrastructure. Taking care of existing infrastructure reduces the risk of asset failure which costs more than proactive maintenance and renewal. The City has the benefit of learning from the past growth boom that it is necessary to get infrastructure investments right from the start to avoid costly rehabilitation projects in the future. Financial Management In keeping with Council s priority for Responsible Spending, the City needs strong financial management. The long term financial plan and supporting policies need to be updated, to ensure growth does pay for growth, existing assets are maintained and the City has the ability to make strategic investments to make residents high quality of life even better. The City is in the process of improving financial systems and processes through automation which will help enhance reporting, provide more accurate data and forecasting and track progress through consistent measurement systems. The City must continue to put a focus on innovation to reduce costs and become more efficient. It is important that the City not only continue its current efforts and momentum but ramp them up to take maximum advantage of the opportunities that are being provided through automation and increased municipal revenues. The recommended investments in 2017 total $89 thousand for a junior internal audit position, with a tax impact of 0.04%. Environmental Protection The City of Barrie and its community is environmentally minded. Great strides have been made in taking proactive measures to improve waste diversion in the community to extend the life of the landfill. These efforts must continue to achieve significant cost avoidance for as long as possible. Programs to protect drinking water sources for the safety of the public need to continue. Laws passed by the Province of Ontario, make this the City s responsibility. Recommended investments in 2017 total $66 thousand with a tax impact of 0.01%. Growth Management Growth Management has been on the forefront of the City s agenda for the last several years. As growth occurs it will put considerable pressure on the City to provide the same services, at the same level, that current residents receive. To manage this more proactively than in the past, the City needs systems, processes and people to do it. Recommended investments in 2017 total $221 thousand, with a tax impact of 0.04%. 19

20 Customer Service As part of our efforts to improve customer service on Barrie Transit and to ensure compliance with the provincial Accessibility for Ontarians with Disabilities legislation, the recommended investment of $45,000 in 2017 will ensure hour parity for Specialized Transit service with the hours of conventional bus service. This will provide our specialized transit customers with improved service times. Recommended investments in 2017 total $45 thousand, with a tax impact of 0.02%. Workforce Investment in the City s workforce is essential City staff are the engine behind all of the city s work and without them the City could not deliver services. The City needs to invest in its staff through training, recognition, and planning for the future to address the upcoming retirement bubble to ensure the City has staff with the right skills and talent to enhance business systems and deliver services. Unfortunately investments in staff are often seen as being much less important than all the others but at the end of the day, a strong workforce is required to deliver services, undertake projects, solve problems and improve the organization through innovation. Recommended investments in 2017 total $109 thousand. Technology Infrastructure and Business Systems Finally, the City needs to continue investing in technology as a key tool to improve efficiency in delivering services to our residents. Council has supported a significant investment in technology and business systems so the City can achieve a much greater level of automation. These investments however need to be secured by ensuring appropriate resources to sustain and grow them. This investment is no different than ensuring there are resources to sustain infrastructure just as new kilometres of road require additional snowplows and drivers to clear them, as more automation is added, and networks expand, systems experts are required to maintain and further increase automation by maximizing the capacity of systems. Recommended investments in 2017 total $213 thousand, with a tax impact of 0.05%. 20

21 New Investment and Service Recommendations Themes Description Form FTE 2017 Budget 2018 Forecast 2019 Forecast 2020 Forecast Legislated # Impact Operating Capital Operating Operating Operating Infrastructure Maintenance Operator II 43 1 $0 $650 $1,503 $2,878 $9,274 Infrastructure Total 1 $0 $650 $1,503 $2,878 $9,274 Financial Management Transit Revenue Clerk Conversion 36 1 ($4,956) ($2,357) $317 $3,051 Internal Auditor $94,288 $5,420 $119,451 $126,772 $134,564 Financial Management Total 2 $89,332 $5,420 $117,094 $127,089 $137,615 Permanent Part Time Field Technician $37,634 $40,042 $42,652 $45,817 Environmental Protection Sustainable Waste Mgmt Strategy Waste Drywall Recycling Program 41 $28,750 $29,613 $30,501 $31,416 Environmental Protection Total 0.7 $66,384 $0 $69,655 $73,153 $77,233 Right Size Facilities 85 5 $126,015 $52,340 $146,887 $169,086 $181,318 Growth Management Growth Management Implementation - Development Services Field Supervisor 87 1 $95,185 $101,073 $107,343 $114,033 Growth Management Total 6 $221,200 $52,340 $247,960 $276,429 $295,351 Customer Service AODA Compliance - Specialized Transit Service Hour Parity 90 Yes $45,000 $47,250 $49,500 $52,000 Customer Service Total $45,000 $0 $47,250 $49,500 $52,000 Workforce Strategic Workforce Planning 59 1 $109,301 $116,113 $117,769 $119,450 Workforce Total 1 $109,301 $0 $116,113 $117,769 $119,450 Technology Infrastructure and Business Systems SAP Support Staff 46 2 $213,453 $227,502 $236,666 $240,043 Technology Infrastructure and Business Systems Total 2 $213,453 $0 $227,502 $236,666 $240,043 Grand Total 12.7 $744,670 $58,410 $827,076 $883,485 $930,966 Funding Sources Tax Levy / Tax Capital Reserve Water Wastewater / Wastewater Capital Reserve Parking Recovery from Capital Projects $473,381 $57,760 $523,865 $549,767 $573,734 $70,252 $74,810 $78,081 $80,473 $65,880 $650 $71,669 $76,248 $84,969 $10,673 $11,375 $11,833 $12,003 $124,485 $145,357 $167,556 $179,788 The new investments and service level recommendations provide for new programs and therefore identify new staff resources. The City provides services, and services are largely provided by people and therefore as we increase services, it is necessary in some cases to have staff resources to deliver them. The new investments and service recommendations for 2017 require 12.7 new permanent positions. Many of these positions are funded from sources other than property taxes, and therefore do not impact the tax rate. Of the 12.7 positions, only 5.98 require tax funding. Details on each of these staffing requests are provided in the New Investment and Service Recommendation appendix. 21

22 2017 OPERATING BUDGET - PERMANENT STAFF COMPLEMENT CONTINUITY (TAX BASE) Division/Department 2015 Total Approved Complement Total Approved Complement 1 Recommended Themes Impact Recommended Themes Complement Funding Source Recommended Complement FT PPT Total Tax Non-Tax 2 Water Wastewater Parking FT PPT Total Office of the Mayor & CAO Office of the Mayor & CAO Legal Services Infrastructure & Growth Management General Manager's Office Roads, Parks & Fleet Planning & Building Services Engineering Environmental Services Community & Corporate Services General Manager's Office Corporate Facilites Legislative & Court Services Finance Recreation Services Fire & Emergency Access Barrie Access Barrie Customer Service Marketing & Communications Transit & Parking Strategy Invest Barrie Invest Barrie Admin Business Development Department of Creative Economy Innovate Barrie Innovate Barrie Admin Centre for Continuous Improvement Human Resources Information Technology Total City Staff (Tax Bass) Note 1: Annual staffing numbers reflective of 2016 corporate reorganization Note 2: Non-tax funding sources include capital project recoveries and the conversion of casual positions with no tax impact. 22

23 Summary of Tax Operating Budget Expenses The 2017 requested Tax Operating budget represents an $8.9 million (3.0%) increase in gross expenditures and consists of the following breakdown of expenses. The 2017 requested Tax Operating Budget represents an $8.9 million (3.0%) increase in planned revenues and consists of the following sources of operating revenue. Debt Charges & Transfer to Reserves $65,096 21% 2017 Gross Expenditures - $305.9M ($000s) Salary & Benefits $89,639 29% Net Tax Levy $220,175 72% 2017 Sources of Operating Revenue - $305.9M ($000s) Interest & Investment Income $4,145 1% Transfers to other Boards, Municipalities, Agencies $78,451 26% Utilities $6,540 2% Minor Capital $1,760 1% General Operations $64,469 21% Intercompany Transfers $30,009 10% Other $2,773 1% Fees, S/C $18,269 6% Fines $9,115 3% License & Permits $7,995 3% Contribution from Reserves $7,011 2% Corporate Revenues $3,581 1% Other Government Funding $2,885 1% 23

24 The table below shows gross expenditures by service area and the net cost to the tax supported operating budget after inclusion of all other revenues and non-tax funding sources, as well as recommended new investments and services. CAO & MAYOR'S OFFICE Budget Base Budget Base Budget Change Net Change 2017 New Investments & Service Recommendations 2017 Requested Budget Requested Budget Change Net Change Gross Net Gross Net Gross Net % Gross Net Gross Net Gross Net % Office of the CAO 758, , , ,488 (90,747) (70,747) -9.6% , ,488 (90,747) (70,747) -9.6% Office of the Mayor 194, , , ,194 17,720 17, % , ,194 17,720 17, % Legal Services Department 2,540,661 1,581,353 3,095,617 1,701, , , % 0 0 3,095,617 1,701, , , % Internal Audit 76,006 76, , , , , % 93,408 93, , , , , % Total 3,569,376 2,590,068 4,160,592 2,765, , , % 93,408 93,408 4,254,000 2,859, , , % COUNCIL & COMMITTEES City Council 592, , , ,745 9,403 14, % , ,745 9,403 14, % Committees 68,125 68,125 71,225 71,225 3,100 3, % ,225 71,225 3,100 3, % Total 660, , , ,970 12,503 17, % , ,970 12,503 17, % ACCESS BARRIE Access Barrie Admin 308, , , ,344 97,026 97, % , ,344 97,026 97, % Customer Service 944, , , ,184 26,604 20, % , ,184 26,604 20, % Marketing & Comm. 884, , , ,112 79,277 74, % , ,112 79,277 74, % Transit & Parking Services 19,546,110 11,166,935 20,088,728 11,874, , , % 61,244 40,044 20,149,972 11,914, , , % Total 21,683,429 13,067,720 22,428,954 13,967, , , % 61,244 40,044 22,490,198 14,007, , , % INNOVATE BARRIE Innovate Barrie Administration 334, , , ,350 5,330 5, % , ,350 5,330 5, % Information Technology 7,451,867 6,117,097 7,745,281 6,541, , , % 3,940 3,940 7,749,221 6,545, , , % Human Resources 2,025,818 2,025,818 2,376,861 2,303, , , % 109,301 96,185 2,486,162 2,399, , , % Centre for Continuous Improvement 511, , , , , , % 213, , , , , , % Total 10,322,981 8,815,190 11,191,891 9,800, , , % 326, ,524 11,518,585 10,018,237 1,195,604 1,203, % INVEST BARRIE Invest Barrie Administration 521, , , ,270 55,213 55, % , ,270 55,213 55, % Business Development 1,140, ,231 1,232, ,365 91,834 (31,866) -3.7% 0 0 1,232, ,365 91,834 (31,866) -3.7% Department of Creative Economy 2,224,325 1,864,885 2,542,713 2,303, , , % 0 0 2,542,713 2,303, , , % Total 3,885,548 3,250,173 4,350,983 3,711, , , % 0 0 4,350,983 3,711, , , % COMMUNITY & CORPORATE SERVICES GM of Community & Corporate Services 343, , , ,649 1,608 1, % , ,649 1,608 1, % Building & By-law Services Finance Department 5,004,199 3,563,016 5,443,928 3,584, ,729 21, % 0 0 5,443,928 3,584, ,729 21, % Barrie Fire & Emergency Services 24,466,153 24,463,706 25,497,560 25,467,980 1,031,406 1,004, % ,497,560 25,467,980 1,031,406 1,004, % Legislative & Court Services 10,083,682 1,925,462 10,339,002 2,221, , , % ,339,002 2,221, , , % Recreation Services 15,840,598 7,159,429 16,271,090 7,383, , , % ,271,090 7,383, , , % Facilities Department 12,417,935 2,091,387 12,092,059 2,077,820 (325,876) (13,568) -0.6% 93,655 (3,060) 12,185,714 2,074,760 (232,221) (16,628) -0.8% Total 68,155,609 39,546,040 69,988,288 41,080,041 1,832,679 1,534, % 93,655 (3,060) 70,081,943 41,076,981 1,926,334 1,530, % INFRASTRUCTURE & GROWTH MANAGEMENT GM Infrastructure & Growth Mgmt 343, , , ,271 7,588 7, % , ,271 7,588 7, % Environmental Services 9,115,084 5,601,230 10,039,535 6,426, , , % 66,384 28,750 10,105,919 6,455, , , % Engineering Department 5,629,785 1,757,071 5,552,485 2,356,442 (77,299) 599, % 15,000 (0) 5,567,485 2,356,442 (62,299) 599, % Roads, Parks, & Fleet 29,244,806 25,385,015 27,694,632 26,324,362 (1,550,174) 939, % ,694,632 26,324,362 (1,550,174) 939, % Planning & Building Services 4,640, ,976 5,325, , , , % 0 0 5,325, , , , % Total 48,974,247 33,582,975 48,963,278 36,187,703 (10,969) 2,604, % 81,384 28,750 49,044,662 36,216,453 70,415 2,633, % DIVISIONAL TAX OPERATING 157,251, ,512, ,756, ,191,652 4,505,300 6,679, % 656, , ,413, ,568,318 5,161,685 7,055, % SERVICE PARTNERS & GRANTS County of Simcoe 20,838,882 18,789,478 18,350,255 17,890,000 (2,488,627) (899,478) -4.8% ,350,255 17,890,000 (2,488,627) (899,478) -4.8% Simcoe Muskoka District Health Unit 1,701,243 1,675,243 1,734,542 1,708,542 33,299 33, % 0 0 1,734,542 1,708,542 33,299 33, % Conservation Authorities 1,672, ,624 1,643, ,717 (28,510) 10, % 0 0 1,643, ,717 (28,510) 10, % Local Boards 56,259,570 55,921,570 58,235,861 57,585,861 1,976,291 1,664, % ,235,861 57,585,861 1,976,291 1,664, % Lake Simcoe Regional Airport 418, , , ,732 7,121 7, % , ,732 7,121 7, % Other Service Partners & Grants 2,002, , , ,520 (1,728,586) 0 0.0% , ,520 (1,728,586) 0 0.0% Total 82,892,457 77,701,045 80,663,446 78,516,372 (2,229,011) 815, % ,663,446 78,516,372 (2,229,011) 815, % CORPORATE TRANSACTIONS Corporate Expenses 56,912,267 39,119,811 62,879,668 44,611,255 5,967,401 5,491, % 0 96,715 62,879,668 44,707,970 5,967,401 5,588, % Corporate Revenues 0 (10,070,665) 0 (11,618,053) 0 (1,547,388) 15.4% (11,618,053) 0 (1,547,388) 15.4% Total 56,912,267 29,049,147 62,879,668 32,993,202 5,967,401 3,944, % 0 96,715 62,879,668 33,089,917 5,967,401 4,040, % TOTAL RECOMMENDED TAX OPERATING BUDGET 297,056, ,262, ,300, ,701,226 8,243,690 11,438, % 656, , ,956, ,174,607 8,900,074 11,911, % 24

25 Property Tax Revenue The annual property tax levy is shared across various classes of property. The levy for a particular property is calculated by multiplying the assessed value for the property, as established by the MPAC, by the appropriate tax rate for that property s class. The tax rates are calculated using the tax ratios established by Council each year. Tax ratios represent the relative tax burden across the property taxes in relation to the residential tax class. For example, a commercial tax ratio of 1.43 means that for every dollar of assessment, a commercial property will pay 1.43 times more than a residential property. The chart below illustrates the breakdown of the proposed 2017 tax levy supporting municipal services and service partners by major property class Tax Levy History of Tax Rate Changes Since 2001 and including the recommended 2017 plan, the average annual residential property tax increase for a typical home in Barrie has been 3.49%. % Increase Tax Rate Change Commercial Industrial Residential Multi-Residential Other Annual Tax Rate Average Tax Rate Residential 72% Commercial 22% Multi- Residential 3% Other 0% Forecasted Tax Rate Increases - Three Year Forecast In 2016, the City implemented a new budgeting system which provides the ability to produce multi-year operating forecasts. Over the coming year, City departments and service partners will continue to better understand the impacts of planned growth, including the operating impact of capital projects. Staff have made best efforts to provide a three year operating forecast for the 2017 Business Plan and will continue to refine the forecasting process to improve accuracy in future business plans. Industrial 3% Staff have attempted to capture expenditure and non-tax revenue trends for the next 3 years. Inflationary factors on key labour and operating contracts will continue to be drivers; as will tax funded reserve contributions needed to sustain capital renewal and replacement activities related to the City s aging infrastructure. Where possible, non-tax revenue sources (e.g. User fees) have been forecasted taking in to account anticipated sales volumes and pricing. 25

26 Estimated tax rate increases over the next three years are as follows: Estimated Tax Rate Increase 4.62% 5.07% 5.69% Growth driven increases to expenditures and revenue will also become a more significant factor in the coming years. As new homes and businesses are developed; related infrastructure such as roads, sidewalks, and parks will be constructed. Additional staff and equipment dedicated to services such as Waste Collection, Winter Control, Road Surface and Roadside Maintenance will be needed to maintain minimum maintenance standards and current service levels. For example, Fire Station #6 is expected to go into service in This will require an additional 20 firefighters as well as the cost to operate and maintain a new building and equipment. Other significant projects include: The First Responders Campus (2020), Highway 400 Overpass Harvie/Big Bay (2019). In addition, as rural lands become urbanized, additional stormwater resources to accommodate storm system expansion and maintenance will be required. These assets will need to be operated and maintained to meet Environmental Compliance Approvals issued by the Ministry of the Environment and Climate Change. Realized growth in property tax revenue resulting from real growth (e.g. new homes and businesses) will provide some relief to the tax rate. However the revenue often lags behind the expenditures User Rate Supported Operating Budget User-rate supported budgets include water, wastewater and parking services. staff are recommending 2016 rate increases of 2.5% for water and 5% for wastewater. The Financial Plan presents a 10 year horizon and relies on aggressive assumptions for Development Charge revenue. These increases are calculated based on the financial impact for an average residential rate payer for the calendar year with proposed rates effective May 1st, Water Operating Budget The annual Water Operating Budget reflects the cost associated with delivering safe drinking water to the community using a combination of ground and surface water supply, and a distribution network associated with reservoirs and pumping stations. The proposed 2017 Water Operations Budget reflects an additional $748.2 thousand in rate revenue to maintain current service levels and a rate increase of 2.5% ($7.95) for a typical household. The 2017 plan will focus the continuation of a number of maintenance, repairs and upgrades that will assist with increasing process efficiencies and the useful life of critical assets. Examples include the resurfacing of the Bayfield elevated water tower, remediation of additional water services prone to freezing, achieving compliance with the Backflow Prevention Program across the ICI sector, data management for water network modeling and performance assessment, and the movement toward LED lighting within the Surface Water Treatment Plant and other Water Operations facilities. Additionally, Water Operations staff will be continuing a research partnership with the University of Toronto exploring potential efficiencies within the operation of membrane treatment systems. The 2017 Business Plan and Budget reflect the water and wastewater financial plans that have been developed to provide existing and growth related service requirements. The plan for water complies with Financial Plans Regulation (O.Reg. 453/07) under the Safe Drinking Water Act for a full cost recovery operation. Although the legislation does not require a financial plan for wastewater services, it is encouraged so the City does prepare a similar plan to support long range financial planning. While the financial plans for water and wastewater were built with an annual rate increase of 2% and 3% respectively, 26

27 Water Rate Impacts Directly Controlled By City of Barrie Description 2017 Budget Rate Impact % 1 Prior Year Water Rate Revenue $ 24,871,229 Change Due To Consumption Estimates 2 Maintain current programs at current service levels: Economic Adjustments - Labour $ 120, % Economic Adjustments - Contracts $ 153, % Approved Service Level Changes $ 112, % Revenue Changes $ (91,100) -0.30% Interfund Charges $ (69,297) -0.23% Utilities $ 57, % Other $ 333, % Subtotal - Maintain current programs at current service levels $ 617, % Debt & Reserve Management Debt Management $ % (A) Contributions to Reserves $ 130, % Subtotal - Debt & Reserve Management $ 130, % Subtotal - Increase to water rate revenue before Investment & Service Recommendations $ 748, % Total Water Rate Revenue $ 25,619, % Investment & Service Recommendations: Technology Infrastructure and Business Systems $ 42, % Environmental Protection $ 18, % Workforce $ 8, % (B) Subtotal - Investment & Service Recommendations 3 $ 70, % Adjusted Contribution to Reserves (A - B) $ 59, "Rate Impact %" reflects the total impact on the water bill for an average rate payer. 2. "Change Due To Consumption Estimates" reflects rate change that is required to maintain revenue levels as consumption levels change. 3. Investment & Service Recommendations to be funded by reduction in reserve contribution rather than an increase to rates. 27

28 Changes to Maintain Current Service Levels The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $617 thousand or an impact to the water rate of 2.06%. This does not include the impact of financing policy decisions for debt and reserve management established in prior years. Economic Adjustments Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates. Economic Adjustments Contracts The 2017 budget includes a $72.5 thousand increase in the Advanced Metering Infrastructure system maintenance fees following the upgrade of the regional network interface in The budget includes $80 thousand to upgrade ten generators and fuel systems at the ground water wells and booster stations to meet current Technical Standards & Safety Act regulated standards. Approved Service Level Changes Annualization of partial water rate funding for permanent tax rate positions approved in the 2016 budget totaling $113 thousand. Revenue Changes The water operations branch has a number of non-rate revenue sources. These revenue sources are expected to generate $651 thousand in The key driver of the proposed increase in 2017 is $107 thousand in backflow prevention program revenues. The program is expected to be fully staffed for 2017 and revenue increases are expected from additional compliance with the ICI sector and an increase in the number of new backflow prevention testable devices and new facilities added to the backflow prevention program. Interfund Charges The 2017 budget includes a reduction of $69 thousand in interfund charges for tax rate services that are provided for the Water Operations Branch. The reduction is a result of less facility staff time allocated to maintenance at the Surface Water Treatment Plant. Corporate Facilities management annually reviews where staff time was required and utilized during the previous year and updates the budget allocation for the upcoming year. The bulk of the reduction in the water budget was transferred to the wastewater and environmental facilities. Utilities A modest overall utility budget increase of $57 thousand is driven by a significant reduction in the gas consumption budget ($70 thousand) due to conservation activities, but offset by electricity cost increases due to rate impacts of $122 thousand. Other The minor capital budget for operations at the Surface Water Treatment Plant was increased from $30 thousand to $310 thousand. A portion of the increase is to start to allow for necessary preventative replacement, modifications or upgrades to the equipment or processes. The majority of the increase is allotted to start a pre-payment program for the membrane replacement so when it s actually due for replacement a bulk of the expense is already paid for. The budget for the purchase of water meters and SmartPoint reading devices was increased $52 thousand to more accurately reflect the annual cost to purchase the materials associated with meter installations. The cost of the meters and devices are to be recovered through funds collected via permit fees associated with new water service installations and water service renewals Debt & Reserve Management The transfer to the water capital reserve is $130 thousand more than the amount budgeted in 2016 with an impact to the water rate of 0.43%. The increase in the transfer amount to the water reserve is needed to maintain the objective of a full cost service by building a reserve to a level that would accommodate replacement and renewal of water infrastructure. 28

29 Investment and Service Recommendations There are no new investments directly recommended by water operations in However, there is a financial impact of $70 thousand, or 0.23% on the water rate as a result of three recommended new investments proposed in other service areas. These include investments in technology, workforce and environmental protection. Water is selected as a funding source when there is a direct benefit of the service or investment for the water business and or protection of water sources. If these new investments are approved, they will be financed by reducing transfers to the water capital reserve. Water Rate Revenues The target for total water revenue is driven by the cost of providing the service. Factors impacting the rate increase for a typical household include: Total water revenue requirement and changes to assumptions for consumption, service connections, and growth. For a typical household that consumes 180 cubic metres annually, the annualized cost of water services in 2017 are estimated to be $326 ($318 in 2016). This represents a 2.5% increase over Residential Water Rates Bi-monthly Consumption 2016 Rates 2017 Rates 0-30 cubic metres $ per m3 $ per m cubic metres $ per m3 $ per m cubic metres $ per m3 $ per m3 > 90 cubic metres $ per m3 $ per m3 Fixed Charge by Service Size 16 to 19 mm General Service Water Rates Monthly Consumption 2016 Rates 2017 Rates 0-15 cubic metres $ per m3 $ per m3 > 15 cubic metres $ per m3 $ per m3 Fixed Charge by Service Size 13 to 19 mm to 32 mm mm mm mm mm mm mm , mm 1, , mm 1, ,

30 Staff Complement Currently, 68 staff members are required to directly support Water Operations. There are no new positions recommended in the 2017 operating budget Operating Budget Permanent Staff Complement Continuity (Water User Rate) Department Branch Total 2015 Approved Complement Total 2015 Approved Complement Recommended Themes Impact Recommended Complement Water Operations FT PPT Total FT PPT Total Wastewater Operating Budget The annual Wastewater Operating Budget reflects the costs associated with receiving, treating and discharging sanitary sewage complying with all applicable governing legislation. The proposed 2017 Wastewater Operations Budget reflects an additional $1.38 million in rate revenue to maintain current service levels and a rate increase of 5% ($22.06) for a typical household. Lower phosphorus discharge limits imposed by the Lake Simcoe Protection Act became effective on June 2 nd, The stringent effluent quality discharge limits require the Wastewater Operations Branch staff to operate the existing Wastewater Treatment Facility beyond design specifications to achieve an effluent quality that is compliant with Provincial approvals. Optimization efforts will continue through 2016 to assist with meeting performance objectives and additional staff time is anticipated to support related capital projects. Operational impacts are also anticipated due to Branch resource requirements associated with the Advanced Nutrient Removal Project. 30

31 Wastewater Rate Impacts Directly Controlled By City of Barrie Description 2017 Budget Rate Impact % 1 Prior Year Wastewater Rate Revenue $ 32,633,316 Change Due To Consumption Estimates 2 Maintain current programs at current service levels: Economic Adjustments - Labour $ 82, % Economic Adjustments - Contracts $ 3, % Approved Service Level Changes $ 43, % Revenue Changes $ 153, % Interfund Charges $ (286,163) -1.04% Utilities $ 120, % Other $ (71,997) -0.26% Subtotal - Maintain current programs at current service levels $ 45, % Debt & Reserve Management Debt Management $ (23,648) -0.09% (A) Contributions to Reserves $ 1,357, % Subtotal - Debt & Reserve Management $ 1,333, % Subtotal - Increase to Wastewater rate revenue before Investment & Service Recommendations $ 1,379, % Total Wastewater Rate Revenue $ 34,012, % Investment & Service Recommendations: Technology Infrastructure and Business Systems $ 42, % Environmental Protection $ 18, % Workforce $ 4, % (B) Subtotal - Investment & Service Recommendations 3 $ 65, % Adjusted Contribution to Reserves (A - B) $ 1,291, "Rate Impact %" reflects the total impact on the wastewater bill for an average rate payer. 2. "Change Due To Consumption Estimates" reflects rate change that is required to maintain revenue levels as consumption levels change. 3. Investment & Service Recommendations to be funded by reduction in reserve contribution rather than an increase to rates. 31

32 Changes to Maintain Current Service Levels The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $45.8 thousand or an impact to the wastewater rate of 0.17%. This does not include the impact of financing policy decisions for debt and reserve management established in prior years. Economic Adjustments Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates. Approved Service Level Changes Annualization of partial wastewater rate funding for permanent tax rate positions approved in the 2016 budget. Revenue Changes Revenue from non-rate revenue sources has been reduced from $189 thousand in 2016 to $36 thousand in the 2017 budget. The sewer surcharge revenue has been reduced by $83k to reflect the closure of the Vitality (Nestle) plant in No additional sewer surcharge agreements are anticipated in Leachate revenue has been reduced from $100 thousand to $30 thousand as the County of Simcoe leachate will be treated at the Collingwood Wastewater Treatment Facility commencing in Q and will use the Barrie Wastewater Treatment Facility as back up. Interfund Charges The 2017 budget includes a reduction of $286 thousand in interfund charges for tax rate services and staff resources that are provided for the Wastewater Operations Branch. Funding from non-tax rates is reviewed annually and in 2017 the funding model used for Environmental Compliance and Infrastructure Planning was updated resulting in a reduction in the funding from wastewater operations and an increase in the funding from water operations. Utilities Overall utility budget variance is driven by an electrical rate increase ($122 thousand), but slightly offset by water conservation activities allowing for a yearto-year reduction in the water/wastewater budget line. Other The development of a wastewater QMS/EMS framework and related elements was initiated in Q and updated costing confirmed that a $75 thousand reduction in consultants for related optimization works was possible in the 2017 Business Plan. Debt & Reserve Management The transfer to the wastewater capital reserve is $1.36 million more than the amount budgeted in 2016 with an impact to the wastewater rate of 4.92% due to the overall increase in wastewater revenues. The increase in the transfer amount will allow the reserve to accommodate its intended purpose of a funding source for infrastructure renewal and replacement. Investment and Service Recommendations Wastewater Operations has submitted a request for the addition of a Maintenance Operator II position in the 2017 budget funded from a corresponding reduction in the wastewater contracted service budget. There is a financial impact of $66 thousand, or 0.24% if put on the wastewater rate as a result of three of the recommended new investments proposed in other service areas that have an operating impact on wastewater. These include investments in technology, workforce and environmental protection. Wastewater is selected as a funding source when there is a direct benefit of the service or investment for the wastewater business. If these new investments are approved, they will be financed by reducing transfers to the reserve. 32

33 Wastewater Rate Revenues The target for total wastewater revenue is driven by the cost of providing the service. Factors impacting the rate increase for a typical household include: Total wastewater revenue requirement and changes to assumptions for; consumption, service connections, and growth. For a typical household that consumes 180 cubic metres annually, the annualized cost of wastewater services in 2017 are estimated to be $463 ($441 in 2016). This represents a 5% increase over Operating Budget Permanent Staff Complement Continuity (Wastewater User Rate) Department Branch Total 2015 Approved Complement Total 2015 Approved Complement Recommended Themes Impact Recommended Complement Residential Wastewater Rates Bi-monthly Consumption 2016 Rates 2017 Rates Wastewater Operations FT PPT Total FT PPT Total cubic metres $ per m3 $ per m cubic metres $ per m3 $ per m cubic metres $ per m3 $ per m3 > 90 cubic metres N/A N/A Fixed Charge by Service Size 16 to 19 mm General Service Wastewater Rates Monthly Consumption 2016 Rates 2017 Rates 0-15 cubic metres $ per m3 $ per m3 > 15 cubic metres $ per m3 $ per m3 Fixed Charge by Service Size 13 to 19 mm to 32 mm mm mm mm mm mm 1, , mm 1, , mm 1, , mm 1, ,

34 2017 Parking Operating Budget The 2017 Parking Operating Budget reflects the costs associated with the operations and maintenance of parking lots, parking structure and assets. The parking service is intended to be self-sustaining through user pay revenue. However, the current operating model for the service has proven unable to generate sufficient revenue to meet the cost of annual operations on an ongoing basis. Parking Rate Impacts Directly Controlled By City of Barrie Description Changes to Maintain Current Service Levels 2017 Budget Prior Year Parking Revenue $ 1,655,650 Maintain current programs at current service levels: Economic Adjustments - Labour $ (59,513) Economic Adjustments - Contracts $ 37,499 Approved Service Level Changes $ (2,224) Interfund Charges $ 33,384 Utilities $ (33,891) Other $ 31,062 Subtotal - Maintain Current Service Levels - Operations $ 6,317 Debt & Reserve Management Debt Management $ 27,401 Contributions from Reserves $ 114,032 Subtotal - Debt & Reserve Management $ 141,433 Increase to required Parking Revenue before Investment & Service Recommendations $ 147,750 Total Parking Rate Revenue $ 1,803,400 Investment & Service Recommendations: Technology Infrastructure and Business Systems $ 10,673 Subtotal - Investment & Service Recommendations $ 10,673 Recommended Contribution from Reserves $ 124,705 The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $6.3 thousand. This does not include the impact of financing policy decisions for debt and reserve management established in prior years. Economic Adjustments Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates. The reduction in labour costs for 2017 is a result of a position that was previously split between Traffic and Parking Operations now being allocated 100% to Traffic Operations in 2017 and a reduction in the overtime budget to that was previously needed when parking staff supported transit operations. Economic Adjustments Contracts The 2017 budget includes an increase of $37.5 thousand for contracted snow removal in from parking lots. Approved Service Level Changes Annualization of partial parking rate funding for permanent tax rate positions approved in the 2016 budget. Interfund Charges The fleet internal charge to the non-tax rate businesses is based on the maintenance and labour cost for the previous year s actual expenses. The three parking vehicles had considerable repairs in 2015 which is the basis for the 2017 budget. The repairs were costly jobs like body work and a transmission but the vehicles have low mileage and it was less costly to repair them then replace them at this time. The internal fleet charge should be reduced in 2018 to reflect more typical maintenance costs for the parking vehicles. Utilities A significant budget reduction of $33 thousand is driven by lighting efficiency improvements completed at the Parkade, reducing electricity consumption by nearly half. 34

35 Investment and Service Recommendations There are no recommended new investments for Parking Operations in The financial impact of $11 thousand is a result of the parking rate proposed as a funding source on one of the recommended new investments proposed in other service areas that have an operating impact on Parking. This includes an investment in technology. Parking rate is selected as a funding source when there is a direct benefit of the service or investment for the parking business. Revenues In 2017 the municipal parking system is anticipating base budget annual revenues of $1.53 million in operating revenue consisting of $1.1 million parking meters and $416 thousand from parking permits. This is an increase in parking operations revenue of $150 thousand from parking permit and special event revenue based on how this revenue is trending. Staff Complement Currently, 3 staff are required to directly support Parking Operations. There are no new positions recommended in the 2016 operating budget Operating Budget Permanent Staff Complement Continuity (Parking User Rate) Department Branch Total 2015 Approved Complement Total 2015 Approved Complement Recommended Themes Impact Recommended Complement Financial Condition Reserve Management As shown in the following table, the balance of the City s reserves and reserve funds at December 31, 2017 is projected to be $85.7 million. Of this amount $54 million is allocated for specific purposes or externally restricted (i.e. development charges, user rate capital and self-insurance funds). Overall the City s reserves and reserve funds are projected to increase (net) by $503 thousand or 0.59% by the end of 2017 Parking Operations 3 3 FT PPT Total FT PPT Total Of the $152.5 million in contributions to Reserves, 22% ($33.6 million) is from the operating budget, 14% ($21.3 million) is from user rates, 57% ($87 million) is from developers, and 7% ($10.6 million) is from other levels of government. 35

36 Reserve and Reserve Fund Continuity Schedule and Forecast Forecast 31-Dec-16 Additions Reductions Forecast 31-Dec Net Change 31-Dec-15 Reserve Funds Development Charges - Tax Based $ 33,269,066 24,384,523 $ 57,042,268 $ 30,391,702 $ 51,035, % Development Charges - Water (15,677,201) (21,979,193) $ 17,774,043 $ 18,288,779 (22,493,929) -2.34% Development Charges - Wastewater 3,609,658 (4,125,883) $ 12,590,946 $ 17,127,439 (8,662,376) % Parking (225,573) 207,572 $ 672,845 (465,273) % Wastewater Capital Reserve 5,908,125 6,589,174 $ 14,800,000 $ 8,852,783 12,536, % Wastewater Rate Stabilization Reserve 1,898,568 1,865,006 $ 117,500 1,747, % Water Capital Reserve 15,658,598 16,629,138 $ 5,800,000 $ 9,952,821 12,476, % Water Rate Stabilization Reserve 2,299,156 2,298,356 $ 22,500 2,275, % Provincial/Federal gas tax 11,896,522 4,954,682 $ 10,363,500 $ 15,839,154 (520,972) % Other 5,160,177 6,170,388 $ 334,149 5,836, % Total $ 63,797,096 $ 36,993,763 $ 118,370,757 $ 101,599,672 $ 53,764, % Reserves Tax Capital Reserve $ 30,992,360 23,821,870 $ 29,800,000 $ 47,371,257 $ 6,250, % County of Simcoe Capital Reserve $ 1,249, ,365 $ 1,400,000 $ 1,634,918 $ 299, % Other Program Specific 7,558,721 8,179,220 $ 1,541,825 $ 302,510 9,418, % Corporate 10,587,030 10,401,937 $ 1,413,813 $ 251,542 11,564, % Tax Rate Stabilization 6,059,156 5,242,039 $ 863,000 4,379, % Total $ 56,446,997 $ 48,179,430 $ 34,155,638 $ 50,423,227 $ 31,911, % Reserves and Reserve Funds $ 120,244,093 $ 85,173,193 $ 152,526,395 $ 152,022,899 $ 85,676, % The City s main capital reserves are described along with a five year forecast in the next section under Capital Reserves for costs. Program Specific Reserves are to be used to support the programs for which they were collected. They are expected to carry a December 31, 2017 year-end balance of $9.4 million and consist of primarily of: Landfill Development and Closure Reserves, Industrial Land Reserves, Marina Reserve, Building Code Reserve, and the Façade Improvement Reserve. Corporate Reserves are expected to carry a Dec 31, 2017 year-end balance of $11.6 million and consist of provisions for future employee payouts such as WSIB, Vacation, and Sick Leave. Finally, the financial policy framework identifies that the Rate Stabilization Reserves (Tax, Water, Wastewater) are to be utilized to provide rate stability by smoothing the effect of variable or unanticipated expenditures or revenues and to provide funding for one time or short term requirements. Best practices recommend that tax stabilization reserve balances should be equivalent to 5%-10% of operating expenses. The City s reserve is 2% of operating expenses. 36

37 Capital Reserve Forecasts The following section presents five year forecasts for the City s main capital reserves and reserve funds. These include Tax Capital Reserve, Development Charge Reserve Funds (DC s), Water and Wastewater Capital Reserve Funds, Federal Gas Tax Reserves, as well as the County of Simcoe Capital reserve. The continuity reserve tables below show the projected year-end balances of each reserve. The draws from reserves are captured from forecasts proposed in the 2017 Capital and Operating budgets developed with the City s new integrated budgeting tool Questica. The contributions to reserves are based on projected forecasts utilizing current trends, as well as financial policies, growth studies such as the Financial Impact Assessment Study (FIA), and the 2014 Development Charge background study. Development Charge Reserve Funds Development Charges are used to pay for new growth related infrastructure and any associated debt servicing costs. The City s proposed 2017 Capital Budget reflects the needed investment in new and existing infrastructure to support the City s planned growth. The required draw from DC reserves for 2017 is projected to be $47.8 M, an increase of $26.5 million over These draws assume that DC eligible expenditures will be funded with cash, directly from the DC Reserve Funds. For the 5 year forecast starting in 2017, it is projected the City will be drawing $295 million from the DC reserves to directly cash flow capital projects. Major projects planned during this period include the Mapleview Drive East new transmission watermain and road expansion, Mapleview Drive West sanitary forcemain twinning and Pumping Station 5 upgrades, McKay Road interchange at Highway 400, and the Harvie Road right of way expansion. Existing annual debt payments associated primarily with the Water Plant, Wastewater plant expansion, and the Bio-solids facility, will be drawing $89.4 million from DC reserves for the forecasted period. In addition, the proposed 5 year forecast will require borrowing up to $58 million of new DC funded debt. The new debt servicing costs are estimated to total $12.2 million from 2018 to Development Charge Reserve Funds Forecast Facts: Beginning Balance $ (1,720,554) $ 19,878,784 $ 8,873,942 $ 32,310,014 $ 6,830,620 Draws from Reserves 47,849,930 61,368,462 49,530,896 58,447,665 77,316,077 Annual Debt Payments (exisitng) 17,957,988 18,300,919 18,364,174 17,400,432 17,400,432 Annual Debt Payments (New) 0 597,435 2,212,179 4,155,367 5,185,576 Contributions to Reserves 95,723,023 92,094,505 96,465,281 96,973, ,753,426 Less: Credits earned for Developer Build Projects 8,315,766 22,832,530 2,921,960 42,449,240 16,282,435 Ending Balance $19,878,784 $8,873,942 $32,310,014 $6,830,620 $9,399,527 5 year average annual total draws from DC reserves $98 million 5 year average annual DC revenues $100 million 5 year average ending DC reserve balance $15.4 million 5 year forecasted new DC debt of $58 million Based on current development activity and projections from within the developer community, DC revenues for 2017 are projected to reach $95.7 million, an increase of $78 million over 2016 levels. DC revenues are identified in the table above as Contributions to Reserves and the 5 year total is $500 million In 2014, the City signed a Memorandum of Understanding (MOU) with the developer community related to development within the annexed lands. Included in the MOU are funding options which include entering into Development Charge Credit Agreements. Under such agreements, the developers would build and finance some of the needed growth infrastructure. Developers would receive development credits for the value of the work completed. In the table above, such credits are identified as Credits earned for Developer Build Projects and total $92.8 million for the 5 year period. 37

38 The MOU also includes additional contributions of revenue based on the type of unit being built. It is expected the City will begin collecting these revenues in 2018 and by 2021 will have totaled $32.9 million. These additional revenues will be used to fund growth related projects. Tax Capital Reserve The Tax Capital Reserve is the main funding source for all tax-supported, nongrowth related capital work. This includes, but is not limited to, all renewal work on roads, storm sewers/ponds, parks, facilities, landfill projects, and fleet, as well as most corporate need projects. This reserve also funds strategic projects the City implements. The tax capital reserve is also used to fund the non-dc eligible portion of growth projects, often referred to as benefit to existing. The required total draw from the Tax Capital reserves for 2017 is projected at $47.3 million, out of which $28.5 million is for new requested funding. Tax Capital Reserve Forecast Facts: Beginning Balance $ 23,821,870 $6,250,613 $15,028,217 $10,112,663 $5,718,041 Draws - previous Commitments 18,817,688 Draws from Reserves - Capital 28,553,569 22,522,395 38,715,554 40,694,622 43,664,716 Contributions to Reserves 29,800,000 31,300,000 33,800,000 36,300,000 41,700,000 Ending Balance $6,250,613 $15,028,217 $10,112,663 $5,718,041 $3,753,325 5 year average annual total draws $39 million 5 year average annual Contributions $34 million 5 year average ending reserve balance $7 million 5 year forecasted new Tax supported debt of $60 million Including previous commitments, the proposed 2017 capital plan 5 year forecast draws a total of $193 million from the Tax Capital Reserve. Some of the larger projects included in the plan are the renovation of the Operating Centre Building ($7.5 million); the new building development of First Responders Campus ($7.2 million); Harvie Rd. ROW Expansion Essa to Bryne ($5.4 million); Foster, Merrett, Garson, MacLaren and Yeates New Sanitary, Watermain and ROW Replacement ($5.3 million). Also over the next 5 year, a total of $104 million will be supporting the benefit to existing portion of growth related projects. The 2017 contribution to the Tax Capital Reserve is driven by the Reserve and Reserve Fund Management Policy which was updated in 2015 to include an annual contribution equivalent to a 1% increase on the average residential property tax bill; this contribution is referred to as the Dedicated Infrastructure Renewal Fund (DIRF). The tax based contribution for the proposed 2017 budget, has increased by $3.45 million for a total contribution of $29.8 million. Over the next 5 years starting in 2017, the total contribution to the tax capital reserve is forecasted at $172 million. Over the next 5 years, the average ending balance or uncommitted balance for the Tax Capital Reserve is $7.2 million. As result of this low average balance, in order to fund the proposed 2017 capital five year forecast, it is projected an additional $60 million of new tax supported debt will be needed. The next section of the executive summary discusses debt management and projected debt levels. The Tax Capital Reserve continuity does not reflect any additional incremental increases for the amortization method in forecast year 2018 and beyond. The balance in the reserve could be higher over time if the additional contributions are not used to reduce debt financing or perform additional works beyond what is currently reflected in the plan. 38

39 Water Capital Reserve Fund The Water Capital Reserve is used to fund water rate supported, non-growth related capital works (e.g. replacement of water pipes). The water rate reserve fund is projected to be an uncommitted balance of $12.5 million at the end of As with the wastewater capital reserve, this reserve has benefitted as a result of development charges being used to fund the debt servicing costs related to water treatment facilities (approximately $7.9 million annually). Wastewater Capital Reserve Fund The Wastewater Capital Reserve is used to fund wastewater rate supported, non-growth related capital work (e.g. replacement of sewer pipes). The wastewater rate reserve fund is projected to have an uncommitted balance of $12.5 million at the end of The wastewater rate reserve has benefited as a result of development charges being used to fund the debt servicing costs related to wastewater treatment facilities (approximately $8 million annually). Water Reserve Forecast Facts Beginning Balance $ 16,629,138 $ 12,476,317 $ 13,460,995 $ 13,133,146 $ 11,753,890 Draws - previous Commitments 2,416,180 Draws from Reserves - Capital 7,536,641 5,321,043 6,773,466 8,090,977 4,705,189 Contributions to Reserves 5,800,000 6,305,721 6,445,617 6,711,721 6,711,721 Ending Balance $12,476,317 $13,460,995 $13,133,146 $11,753,890 $13,760,422 5 year average annual draws from reserve $7.0 million 5 year average annual contribution to reserve $6.3 million 5 year average ending reserve balance $13.0 million Over the period 2017 to 2021, including previous commitments, the total draws from the water capital reserve are forecasted to be $34.8 million. Over the same 5 year period, total contributions are forecasted at $31.9 million. Wastewater Reserve Forecast Facts Beginning Balance $ 6,589,174 $ 12,536,391 $ 16,114,876 $ 18,896,941 $ 19,594,728 Draws - previous Commitments 5,631,349 Draws from Reserves - Capital 3,221,434 11,910,254 13,261,240 15,466,385 10,762,727 Contributions to Reserves 14,800,000 15,488,739 16,043,305 16,164,172 16,164,172 Ending Balance $12,536,391 $16,114,876 $18,896,941 $19,594,728 $24,996,174 5 year average annual draws from reserve $12.1 million 5 year average annual contribution to reserve $15.7 million 5 year average ending reserve balance $18.4 million Over the 5 year forecast period, including previous commitments, the total draws from the wastewater capital reserve are forecasted to be $60.2 million. Over the same 5 year period, total contributions are forecasted at $78.6 million. 39

40 Federal Gas Tax Reserve The Federal Gas Tax has been committed as a permanent transfer to municipalities. In addition to the amount allocated in the capital budget, Federal Gas Tax funds are being utilized in the operating budget. The City works towards an optimal balance between capital and operating when allocating the funding, which can be used up to 5 years after transfer to the municipality. Federal Gas Tax Forecast Facts Beginning Balance $ 4,178,937 $ (570,835) $ 246,183 $ (1,962,317) $ 982,173 Draws - previous Commitments 4,811,250 Draws from Reserves 8,212,022 7,850,455 11,208,500 6,055,510 7,394,032 Contributions to Reserves 8,273,500 8,667,473 9,000,000 9,000,000 9,000,000 Ending Balance $ (570,835) $ 246,183 $ (1,962,317) $ 982,173 $ 2,588,141 5 year average annual reserve draws $9.1 million 5 year average annual contributions $8.7 million 5 year average ending reserve balance $1.3 million While the table above projects over commitment of funds in 2017 and 2019, the 5-year average has an uncommitted balance of $1.3 million. In funding the City s Capital and operating budgets, city staff have maximized the full amount of expected Federal Gas Funds over the next 5 years. Including previous commitments, the total draw from this reserve between 2017 and 2021, is project to be $45.5 million. Over the same period, expected contributions are forecasted at $43.9 million. Some of the proposed 2017 projects identified to be funded from the Federal Gas Tax include the Partial Depth Road Resurfacing Program to restore and preserve road pavement condition at various locations selected each year ($2.5 million); the Glen Echo Drive and College Crescent Pavement Replacement - from Lonsdale to Nelson ($1.2 million); as well as the Centennial Park Expansion from the Marina at Toronto Street southerly to Hotchkiss Creek that includes renewed pathways, electrical, water fountain servicing, and irrigation ($620 thousand). County of Simcoe Capital Reserve The City of Barrie is party to an agreement with the County of Simcoe for the delivery of services for Long-Term Care and Senior Services, Paramedic Services, Social Housing and Community Services. As part of this agreement, the City contributes funding to the County s Capital plan on a prescribed basis. The County of Simoce Capital Reserve is maintained to fund the non-growth portion of County Captial Projects. Any growth related funding for the County projects, are funded from the City s DC reserves and the impact is reflected in the DC tables previously identified. Over the period 2017 to 2021, based on the County s capital forecast, the City will be drawing $14.4 million from the County s Capital Reserve. County of Simcoe Reserve Forecast Facts: Beginning Balance $ 534,365 $ 299,447 $ (1,261,658) $ (1,644,634) $ (1,875,585) Draws from Reserves - Capital 1,634,918 3,361,105 2,682,976 3,054,488 2,071,927 Contributions to Reserves 1,400,000 1,700,000 2,100,000 2,100,000 2,100,000 Ending Balance $299,447 ($1,361,658) ($1,844,634) ($2,599,122) ($1,847,512) 2016 contribution to this reserve $1.1 million 5 year average draw from this reserve $2.6 million 10 year average draw from this reserve $2.2 million Staff are recommending gradually increasing the annual contribution over the next three years from the current $1.1 million to $2.1 million. As a result, the 2017 operating budget includes a contribution increase of $300 thousand to the County of Simcoe reserve. The County will be issuing debt for the Collingwood Social Housing redevelopment, and the City will pay its proportionate share of the debt servicing costs. For 2017, the capital projects approved in the County of Simcoe Capital include the development of various paramedic stations, vehicle and equipment replacements, the Collingwood Social Housing redevelopment project and the acquisition and/or rehabilitation of other building components. 40

41 Debt Management Debenture issuance represents a key financing source for the City s capital plan. The projections shown in this section are based on the forecasted debenture needs identified in the 5-year capital plan. A significant portion of the City s debt has been incurred to finance growthrelated capital expenditures. The debt servicing costs associated with these expenditures are DC eligible and a significant amount of City s debt servicing costs will be funded from development charges. It is anticipated that $17.9 million of debenture principal and interest payments will be recovered through development charges in 2017 with this trend continuing in future years. Other sources that may be used for debt repayment include water, wastewater and parking user rates, provincial/federal gas tax revenues, property taxation and local improvements The City is planning a debenture issuance in June 2017 in the amount of $12.7 million for the projects in the table below. Standard and Poor s (S&P), a financial services company that offers services including credit ratings, data analysis and equity research to both the private and public sectors worldwide, recently affirmed the City s AA rating with a stable outlook The City s debt policy includes a total annual debt repayment limit of 20 per cent of own source revenues (e.g. property taxes). The first chart below shows the percentage of the City s own source revenue allocated to debt servicing costs relative to the maximum (20%) permitted by the City s financial policies (Provincial regulations permit 25%). The City is anticipating significant growth and development until 2031, and debt financing is one of the key tools used to ensure the infrastructure is in place to support growth. However, as shown in the chart, the City will remain within its total annual debt repayment limit each year. While the chart shows all debt servicing costs, compared to own source revenues, a large portion of the debt servicing costs are financed from Development Charges. Tax funded debt-servicing costs as a percentage of own source revenues is expected to be only 3% in Projects Debenture Amount WPCC Expansion Phase II $ 3,000,000 City Hall Parking Garage Rehabilitation $ 5,240,000 Cundles Road Project $ 1,209,864 Duckworth Street Project $ 2,782,699 Essa Road Project $ 459,576 Certain projects in this list will require a second debenture when final project costs are known to avoid over-debenturing the project. The annual principal and interest payment is estimated to be $1.3 million ($565 thousand in 2016 due to the timing of the planned debenture). Continued diligence in managing debt levels and maintaining adequate reserves will be required to ensure Barrie s financial condition meets creditor requirements for timely settlement of the City s obligations. The chart below provides the forecasted annual debt requirements for each of the next 5 years, separated into Tax, Water, Wastewater and Parking rate supported debt. 41

42 Sustainability Sustainability is the degree to which the City can maintain existing programs and meet existing creditor requirements without increasing its debt or tax burden. The rate of population growth since 2001 has placed more demands on services and capital expenditures. These growth-related capital demands are not funded by the City s own-source revenues, which has led to an increased reliance on debt. The change in each of the measures identified below reflects the City s plan to issue new debt in These measures indicate sustainability is declining, but at a slower rate than past years as it has levelled off. The Total Debt per Household measure is not reflective of the amount residential taxpayers will be required to contribute toward repayment of debt principal. This measure is simply a way of describing the City s debt relative to the size of the community. The chart below shows forecasted debt repayments of principal and interest in total over the next 5 years displayed by funding source. Sustainability Measures Forecast 2017 Budget Financial Assets to Liabilities Debt to Total Revenue Debt to Reserves Debt Per Household $3,198 $4,076 $5,047 $5,453 $5,423 $5,488 $6,044 $5,708 With the anticipated increases in debt, these measures will become less favourable in future years. This will create additional pressure on the tax levy given that it is the City s primary source of revenue. Continuing to rely heavily on the tax levy to meet future commitments may lead to future affordability challenges. In order to mitigate this pressure, the City has established an objective of increasing reliance on non-tax revenues. Flexibility Flexibility is the degree to which the City can increase its financial resources to respond to rising commitments by either expanding its revenues or increasing its debt burden. As the data in the following table shows, the municipal taxes as a percentage of household income is still within the City s affordability target of 4%. 42

43 Flexibility Measures Debt Charges to Total Revenue Municipal Taxes as a % of Household Income Total Municipal Revenue to Taxable Assessment Vulnerability 2016 Forecast 2016 Budget 3.82% 5.45% 6.48% 7.52% 7.36% 6.68% 6.66% 7.17% 3.40% 3.54% 3.50% 3.64% 3.55% 3.60% 3.66% 3.78% 2.07% 1.77% 1.95% 1.82% 1.96% 1.95% 2.01% 1.99% Vulnerability is the degree to which a government becomes dependent on (and therefore vulnerable to) sources of funding outside its control. The City has increased its reliance on funding from both the provincial and federal levels of government over time, which includes federal and provincial gas tax revenues. The operating programs that these revenues support are primarily transit, road and storm drainage renewal activities, lifecycle activities, capacity building, and landfill re-engineering. The risk of increased reliance on funding from other levels of government is that the City does not directly control or influence the amount or timing of such revenues. The Federal Gas Tax (FGT) has been declared a permanent program with committed funding levels until the end of the Federal 2015/16 fiscal year. Staff have not received any information indicating these programs will be discontinued. Therefore, staff have assumed these funding levels will continue beyond 2016 for planning purposes. As depicted in the table below, Infrastructure Stimulus Funding (ISF) impacted the City s vulnerability measures in 2010 and MTO funding in relation to the Duckworth-Cundles interchange has also impacted the 2014 to 2016 measures as well as contributed to the significant drop anticipated in the 2017 Budget figure. Vulnerability Measures Government Transfers to Total Revenue 2016 Forecast 2017 Budget 12.2% 11.4% 5.0% 6.1% 5.9% 6.4% 6.4% 4.9% 43

44 CAPITAL PLAN Introduction The City acquires, operates, maintains and renews assets to support the delivery of services to residents, businesses, partner agencies and visitors. Roads, bridges and sidewalks provide transportation networks to move goods and people, while water mains and treatment infrastructure ensure safe drinking water is available. Recreation centres and playgrounds are community gathering places where people learn, play, stay healthy and interact with one another. Fire trucks and snow ploughs are required to support emergency services and keep our city safe and accessible all year long. In total, the assets owned by the City amount to an estimated replacement value in excess of $3.3 Billion. The City uses a risk-based approach to capital planning that prioritizes and balances the City s needs in a sustainable manner. The need to build and acquire new infrastructure to service development is ongoing, all the while the City must simultaneously maintain, renew, rehabilitate and replace existing aging assets, particularly roads, facilities, sanitary/storm water drainage systems, fleet, and water supply and treatment systems. To ensure that the City manages its existing and future assets responsibly and is able to financially support future development, the application of leading asset management practices was a foundational element in the preparation of the Capital Plan. Council s Direction In June 2016, Council s direction for the capital budget was as follows: That staff prepare the 2017 Capital Budget with appropriate consideration of: Council s strategic goals; A risk based approach to project selection driven by the rehabilitation and replacement of existing assets, considering full lifecycle costs and the City s most critical needs; Master plans and infrastructure implementation plans, considering full lifecycle costs; and Availability of financial and staff resources to do the work. The objective was to deliver: 1 year approved Capital Budget (2017) with multi-year approvals in accordance with the capital control policy 4 year Capital Forecast ( ) 5 year Capital Outlook ( ) In 2009 the City developed a Corporate Asset Management Strategy focused on evidence-based decision making, risk management, and optimizing investment of limited financial resources to support service levels. Decisions about where to allocate capital and operating funds leverage data from computerized maintenance management systems like Cityworks, CFA and Archibus. Supplemented with increased asset condition assessments, this data is further used as input to risk calculations that consider both the probability and consequence of asset failure to prioritize investment decisions. 44

45 Capital Needs Prioritization A key element of a sustainable, coordinated capital program is the ability to compare competing needs and priorities across the corporation. Within the City s capital planning framework projects are analyzed and assigned scores depending on driving factors. In general, for projects that are addressing existing asset renewal and replacement needs, a Business Risk Exposure calculation is undertaken and used as one of many factors to prioritize the project when comparing it to other community needs. If the project is being driven by the need to expand existing services and assets or the provision of new services and assets, an Importance and Urgency calculation is undertaken and used to prioritize the project against all other needs. Scoring for each type of project is mapped on a four quadrant matrix. Projects for which funds are being requested in the Capital Plan have been identified to begin addressing the highest priority and most critical needs that the City of Barrie is facing over the next 5 years. In addition to the Business Risk Exposure and Importance/Urgency scoring, the following additional criteria and filters were considered: Resourcing: Each department reviewed their total work plan to ensure that the City has the resources to deliver the projects proposed to be committed for 2017 Readiness: The status of each project was reviewed to ensure that projects would be ready to proceed to the phase proposed to be committed for 2017, with a focus on delivering the plan as recommended Affordability: Funding for each of the five years was reviewed to ensure that the draws from tax capital and other reserves are affordable, with a focus on minimizing debt by relying on reserves, and maximizing use of the Dedicated Infrastructure Renewal Fund and the Federal Gas Tax Fund Growth principles: In 2009/10 Council endorsed 10 Principles for Growth and Planning for the Annexed Lands. The most applicable principle to capital planning is that municipal services be built at the same time or in advance of the issuance of occupancy. To this end, infrastructure projects are included as per the Infrastructure Implementation Plan, and facility projects to service the annexed lands are included to align with anticipated occupancy. The expectation is that the affordability of the growth projects will be monitored on an ongoing basis Capital Plan The total recommended capital budget for 2017 is approximately $111 million, including $80 million in new funding and $31 million that was approved previously, in a prior year s capital plan or through an in-year request in Capital costs associated with recommended service level change forms for 2017 account for $58,410. The City s Capital Project Financial Control Policy provides for multi-year approvals for capital projects where a single phase will be implemented over multiple years. Some of the projects being proposed for 2017 will be in the initial year of a multi-year phase. For these projects, City Council is approving the related future year budgets as well. The table below details the amounts recommended for approval for 2017, as well as the amounts that will be committed for as a result of approving the 2017 Capital Budget. The total funding to be approved through the 2017 process, including future year commitments is $116 million. A significant portion of these future commitments in 2018 represent design and property projects associated with the annexed lands such as trunk sanitary sewers, transmission water mains and the McKay Road/Hwy 400 interchange. Approximately one quarter of the funds to be committed for 2018 are for construction of sanitary servicing infrastructure on Mapleview Drive West to service the Salem area. Funding associated with future phases will be identified as a forecasted amount only, and will not be recommended for approval until that phase begins. Forecast amounts and timing will be revisited each year through the annual capital planning process, and are subject to change as new, better information is available. The grand total Capital Plan line represents the anticipated budget totals for all five years of the capital plan, including forecast amounts, previously approved funds and current budget requests. 45

46 Capital Plan Capital Plan Grand Total Previously Approved (Committed) $31,248,791 $6,777,000 $1,895,000 $448,000 $0 $40,368,791 New Capital Requests $79,792,609 $32,180,350 $4,351,900 $95,000 $55,000 $116,474,859 New Investment and Service Recommendations (associated with Operating Budget requests) $58,410 $0 $0 $0 $0 $58,410 Total 2017 Capital Budget $111,099,810 $38,957,350 $6,246,900 $543,000 $55,000 $156,902,060 Forecast $1,250,000 $138,570,580 $168,838,549 $209,069,511 $170,196,324 $687,924,965 Grand Total Capital Plan $112,349,810 $177,527,930 $175,085,449 $209,612,511 $170,251,324 $844,827,024 What s in the Plan? In previous capital plans project type has been used to differentiate between renewal investment, growth in the annexed lands, and additional capacity and capability (ACC) where ACC included new or expansion of existing assets within the former City boundary. Recognizing that most expansion or new assets are related to growth, the project types have been changed for the 2017 business plan. The investment in the capital plan has been classified into the following project types: Growth Pre-2010 Boundary: Capital investment that has a growth related component identified in the City s Development Charge (DC) Background Study and/or service area-specific Master Plans and is located within the pre-2010 City boundary. Growth Annexed Lands: Capital investment that has a growth related component identified in the City s Development Charge (DC) Background Study and/or service area-specific Master Plans and is located within the lands that were annexed on January 1, Renewal Annexed Lands: Major activity required to upgrade or rehabilitate an existing asset or replace an asset which has reached the end of its useful life, will be funded through rates, and is located within the lands that were annexed on January 1, Note that this new approach to classification requires that projects may be split between project types, as most growth projects include a benefit to existing or renewal of an existing asset. For example the current project to reconstruct Mapleview Drive East between Huronia and Country Lane will result in a widened road, and new sanitary trunk sewer, but will also see the renewal of a road which was in poor condition and required replacement. Additional capital investment is proposed in the following areas, which are difficult to classify into growth or renewal: Legislated: These projects are those that address capital requirements resulting from new legislation introduced by senior levels of government, or by noncompliance with existing legislation. Renewal Pre-2010 Boundary: Major activity required to upgrade or rehabilitate an existing asset or replace an asset which has reached the end of its useful life, will be funded through rates, and is located within the pre City boundary. 46

47 Partnerships, Studies and Technology: In previous years, studies have been funded through the operating budget, however for the 2017 Business Plan, one time studies requiring significant investment are being included in the capital plan. Partnerships include contributions to the County, College and hospital. Technology projects are those that that address capital requirements to renew existing technology assets and solutions, or implement new technology assets and solutions, to support services provided to the community. The pie chart below shows a breakdown of the total recommended budget by project type and investment area. Each of the pie charts included in this section represent the new budget requests through the 2017 capital plan, and the funds committed for 2017 in prior years. Renewal spending in the annexed lands amounts to very little, as most of the investment required is for expansion, and there are few existing assets in the annexed lands at this time. The growth spending in the pre-2010 boundary is attributed to some road widening projects such as Mapleview Drive (Huronia to Country Lane), Essa Road (Anne to Gowan), Harvie Road/Hwy 400 crossing (and associated projects on Big Bay Point and Bayview), Tiffin Street/Hwy 400 bridge replacement, as well as other projects such as the Centennial Park Expansion. The investment in renewal in the former boundary and growth in the annexed lands is very similar. Renewal investment within the former boundary is spread across a large number of projects in a variety of asset or service areas. Some of the largest investments are a $2.5 million road resurfacing program, Royal Oak Drive area servicing and reconstruction, the main library HVAC system; City Hall s parking garage, and the Operations Centre. Other significant renewal investment is associated with projects which are also receiving DC funding, such as the Mapleview Drive East and Essa Road projects noted above. In the annexed lands, projects to prepare for development are advancing, including design work and property acquisition for arterial road widening and water and sanitary servicing. Construction of infrastructure to provide sanitary servicing to the Salem area is a significant investment, as is work associated with the future McKay Road/Hwy 400 interchange. When comparing the 2017 budget requests with the Capital Plan, the relative investment in growth and renewal components are nearly identical. The biggest change in terms of percentage investment in one project type or investment area is with respect to legislated projects. The project known as WwTF Advanced Nutrient Removal is a $60 million legislated investment in the City s wastewater treatment facility (WwTF) to reduce phosphorus from entering Lake Simcoe. This project will be moving into the construction phase in

48 The pie chart below shows the total capital funding that is being recommended for approval in 2017, divided by asset class or major investment area. Partnerships represent contributions to the County of Simcoe, Georgian College and RVH. For the 2017 Business Plan, one time studies or projects of significant value are being captured in the capital plan rather than departmental operating budgets; these have been aggregated in the Corporate Studies & Projects portion of the chart. Infrastructure accounts for the majority of the City s $3.3 Billion in assets, so it isn t surprising that almost three quarters of the City s capital investment recommended in this capital budget is related to infrastructure. Many of the larger individual infrastructure projects are noted above relative to the investment by project type. Here the total investment in infrastructure has been separated into transportation, water, sanitary and storm infrastructure. 48

49 Several City buildings require significant renewal investment to protect the City s investment and support service levels. The 2017 budget request includes $2.2 million to rehabilitate the City Hall parking garage, $1.8 million for the main library HVAC system, and $1.5 million to initiate renovations at the Operations Centre. The fleet investment includes $1.2 million for an aerial platform truck approved in a prior year, $2.1 million for transit buses (to be offset by a PTIF grant), and $800k for an earth scraper to support the new landfill operations. The remainder of the fleet investment is replacement of smaller vehicles to support operations in various service areas throughout the City. Over half of the roughly $5.5 million in parks investment is attributed to the Centennial Park project currently underway. Other large park investments are Military Heritage Park, North Shore Trail Access Points, Loyalist Park, and playground and tennis court rehabilitation. The largest investments in the Technology area include $1 million for ERP sustainment and $1.9 million for servers and desktop software. Both of these technology investments are requested to be approved in 2017, but spending will be spread over 3 years. Beyond 2017, investment in the Buildings asset class increases significantly, from just 7% of the 2017 budget request to 18% of the 5-year plan. This increase is due to the construction of several new facilities to service the annexed lands, the most significant of which includes over $70 million for the First Responders Campus and $30 million for the first year of construction of Hewitt s Creek Community Centre. Additional facilities projects include a major renovation to the existing Operations Centre to address aging, deteriorated components as well as other renewal needs throughout the Buildings portfolio. The increase in investment in machinery and equipment is expected to increase from 2% of the 2017 budget request to 10% of the 5-year plan, and this is primarily due to the $60 million in improvements at the wastewater treatment facility (WwTF) to reduce phosphorus in Lake Simcoe. Investment in other areas will remain relatively the same in terms of percentage of the total plan, with infrastructure continuing to make up the majority of the capital spending. 49

50 How is the Plan Funded? The capital plan is funded from a variety of sources: the Tax Capital Reserve, user rates (water and wastewater), development charges, debentures, developer contributions, and provincial and federal government funding. The figure below depicts funding sources for the total budget request being recommended through this business planning process, and the proportions of each. 50

51 The gross investment in the Capital Plan increases throughout the five years, peaking in 2019 and This is primarily due to the mix of projects changing to include more construction work, which builds on the EA and design work that is included at the beginning of the five years. In 2020, much of the construction in the annexed lands is expected to be underway, including both infrastructure and facilities projects. As the mix of projects in the plan changes, and an increased percentage is to fund growth related projects, the DC draws increase. As the gross cost increases, but reserve draws remain relatively the same or increase but at a slower rate, the City must rely more heavily on debentures. 51