Bowen Island Municipality Financial Statements For the year ended December 31, 2015

Transcription

1 Financial Statements For the year ended

2 Financial Statements For the year ended Contents Management s Responsibility for the Financial Statements 2 Independent Auditor's Report 3 Financial Statements Statement of Financial Position 4 Statement of Operations 5 Statement of Change in Net Financial Assets 6 Statement of Cash Flows Schedule 1 - Statement of Operations by Segment Schedule 2 - Statement of Operations by Segment Schedule 3 - Reserve Fund Operations 33

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4 Tel: Fax: BDO Canada LLP 600 Cathedral Place 925 West Georgia Street Vancouver BC V6C 3L2 Canada Independent Auditor's Report To the Mayor and Councilors of Bowen Island Municipality We have audited the accompanying financial statements of Bowen Island Municipality, which comprise the Statement of Financial Position as at, the Statements of Operations, Change in Net Financial Assets and Cash Flows for the year then ended, and a summary of significant accounting policies, and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Bowen Island Municipality as at and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Other Matter Without modifying our opinion, we draw attention to Note 2 to the financial statements. which explains that certain comparative information for the year ended December 31, 2014 has been restated. Chartered Professional Accountants Vancouver, British Columbia May 9, 2016 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. 3

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6 Statement of Operations Fiscal Plan For the year ended December (Note 19) (Restated - Note 2) Revenue (Schedules 1 and 2) Taxation, net (Note 10) $ 3,952,656 $ 3,953,498 $ 3,797,513 Parcel taxes (Note 10) 790, , ,425 Grants in lieu of taxes 4,211 4,666 4,666 Utility connection fees and user rates (Note 16) 1,329,166 1,351,510 1,368,038 Government transfers - Federal (Note 15) 148,662 75,496 65,109 Government transfers - Provincial (Note 15) 444, , ,738 Other contributions (Note 15) 24,600 6,564 - Sales of services (Note 16) 144, , ,458 Other (Note 16) 247, , ,436 Contributed tangible capital assets (Note 15) - 6,200 2,449,707 7,086,227 7,150,242 9,504,090 Expenses (Schedules 1 and 2) General departmental expenses (Note 17) 5,670,736 5,365,634 5,041,429 Water systems operations 1,052, , ,169 Sewer system operations 338, , ,989 Library operations 260, , ,225 Debt interest 55,370 38,241 48,897 Loss (gain) on disposal of tangible capital assets - (5,080) 22,647 7,377,928 6,935,006 6,570,356 Annual Surplus (Deficit) (291,701) 215,236 2,933,734 Accumulated Surplus, beginning of year 63,404,950 63,404,950 60,471,216 Accumulated Surplus, end of year $63,113,249 $63,620,186 $ 63,404,950 The accompanying notes are an integral part of these consolidated financial statements 5

7 Statement of Change in Net Financial Assets Fiscal Plan For the year ended December (Note 19) Annual surplus (deficit) $ (291,701) $ 215,236 $ 2,933,734 Acquisition of tangible capital assets (2,051,761) (1,013,460) (946,891) Amortization of tangible capital assets 1,524,445 1,524,445 1,410,494 Net disposal of tangible capital assets - 11,110 22,647 Contribution of tangible capital assets - (6,200) (2,449,707) (527,316) 515,895 (1,963,457) Acquisition of prepaid expenses - (26,151) (40,577) Use of prepaid expenses - 40,577 35,120 Change in net financial assets for the year (819,017) 745, ,820 Net financial assets, beginning of year 5,434,667 5,434,667 4,469,847 Net financial assets, end of year $ 4,615,650 $ 6,180,224 $ 5,434,667 The accompanying notes are an integral part of these consolidated financial statements 6

8 Statement of Cash Flows For the year ended December Cash provided by (used in) Operating transactions Annual surplus $ 215,236 $ 2,933,734 Items not involving cash Amortization of tangible capital assets 1,524,445 1,410,494 Loss (gain) on disposal of tangible capital assets (5,080) 22,647 Contribution of tangible capital assets (6,200) (2,449,707) 1,728,401 1,917,168 Changes in non-cash operating balances Accounts receivable 37, ,504 Accounts payable and accrued liabilities (35,275) (71,223) Deferred revenue 19,301 (16,835) Prepaid expenses 14,426 (5,457) 1,763,961 1,938,157 Capital transactions Acquisition of tangible capital assets, net (901,974) (946,891) Proceeds on sale of tangible capital assets 16,190 - Cash applied to capital transactions (885,784) (946,891) Investing transaction Acquisition of portfolio investments, net (846,836) (1,270,935) Financing transactions Repayment of long-term debt (30,346) (26,244) Capital lease repayments (11,025) (4,530) (41,371) (30,774) Decrease in cash during the year (10,030) (310,443) Cash, beginning of year 597, ,642 Cash, end of year $ 587,169 $ 597,199 Supplemental information: Interest paid $ 38,034 $ 48,897 Equipment acquired under equipment financing $ 90,000 $ - Equipment acquired under capital lease $ 21,486 $ - The accompanying notes are an integral part of these consolidated financial statements 7

9 Bowen Island Municipality (the "Municipality") is an Island municipality in the province of British Columbia. The Municipality was established pursuant to an Order of the Lieutenant Governor in Council effective December 4, 1999 and operates under the provisions of the Community Charter. The Municipality provides municipal services such as fire, public works, planning, parks, recreation, library and other general government services. The Municipality owns and operates seven Local Area Services for Water and one Local Area Service for Sewer, each of which provide service to properties within a discrete geographic area, and which are funded by the properties within those boundaries. The Municipality prepares its financial statements in accordance with Canadian public sector accounting standards using guidelines developed by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada. Services, assets, liabilities, fund balances and reserves were transferred to the Municipality pursuant to the Letters Patent from the aforementioned Order-in-Council that incorporated the Municipality. The Municipality is a member municipality of the Greater Vancouver Regional District and of the Islands Trust and has various responsibilities to both entities. 1. Significant Accounting Policies (a) Cash and Cash Equivalents Management considered all highly liquid investments with maturity of three months or less at acquisition to be cash equivalents. (b) Portfolio Investments Portfolio investments other than derivatives or equity instruments quoted in active markets are recorded at amortized cost unless there has been a decline in the market value which is other than temporary in nature in which case the investments are written down to market value. The Municipality manages and records its pooled funds at market values, which approximate cost. (c) Financial Instruments The Municipality's financial instruments consist of cash, accounts receivable, portfolio investments, accounts payable and accrued liabilities and long-term debt. Unless otherwise indicated, it is management's opinion that the Municipality is not exposed to any significant interest, credit or currency risks arising from these financial instruments. (d) Non-Financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. 8

10 1. Significant Accounting Policies (Continued) (e) Tangible Capital Assets Tangible capital assets are recorded at cost less accumulated amortization and are classified according to their functional use. Cost includes all costs directly attributable to acquisition or construction of the tangible capital asset including transportation costs, installation costs, design and engineering fees, legal fees and site preparation costs. Amortization is recorded on a straight-line basis over the estimated life of the tangible capital asset commencing once the asset is put into use. Contributed tangible capital assets are recorded at fair value at the time of the contribution. Estimated useful lives of tangible capital assets are as follows: Land improvements Buildings Sewer treatment plant Equipment, furniture and vehicles Infrastructure - water Infrastructure - sewer Roads Other 15 to 30 years 20 to 50 years 15 to 56 years 8 to 20 years 5 to 100 years 5 to 100 years 10 to 75 years 10 to 60 years (f) Leased Assets Leases entered into that transfer substantially all the benefits and risks associated with ownership are recorded as the acquisition of a tangible capital asset and the incurrence of an obligation. The asset is amortized in a manner consistent with tangible capital assets owned by the Municipality and the obligation, including interest thereon, is repaid over the term of the lease. All other leases are accounted for as operating leases and the rental costs are expensed as incurred. (g) Deferred Revenue Government transfers and other funds received for specific purposes which are externally restricted by legislation, regulation or agreement and are not available for general municipal purposes are accounted for as deferred revenue on the statement of financial position. The revenue is recognized in the statement of operations in the year in which it is used for the specified purpose or the stipulation liability is settled. (h) Collection of Taxes on Behalf of Other Taxation Authorities The Municipality collects taxation revenue on behalf of other entities. Such levies, other revenues, expenses, assets and liabilities with respect to the operations of other entities are not reflected in these financial statements. 9

11 1. Significant Accounting Policies (Continued) (i) Revenue Recognition Taxes are recorded at estimated amounts when they meet the definition of an asset, have been authorized and the taxable event occurs. Annual levies for non-optional municipal services and general administrative services are recorded as taxes for municipal services in the year they are levied. Taxes receivable are recognized net of an allowance for anticipated uncollectible amounts, if necessary. Levies imposed by other taxing authorities are not included as taxes for municipal purposes. Through the British Columbia Assessment Authority's appeal process, taxes may be adjusted by way of supplementary roll adjustments. The effects of these adjustments on taxes are recognized at the time they are awarded. Charges for sewer and water usage are recorded as user fees. Connection fee revenues are recognized when the connection has been established. Sales of service and other revenue is recognized on an accrual basis. (j) Government Transfers Government transfers, are recognized as revenue in the financial statements when the transfer is authorized and any eligibility criteria are met, except to the extent that transfer stipulations give rise to an obligation that meets the definition of a liability. Transfers are recognized as deferred revenue if the transfer stipulations give rise to a liability. The transfer revenue is recognized in the statement of operations as the stipulation liabilities are settled. When the Municipality is deemed the transferor, the transfer expense is recognized when the recipient is authorized and has met the eligibility criteria. (k) Liability for Contaminated Sites Effective January 1, 2015, the Municipality adopted the new Public Sector Accounting Standard PS 3260, Liability for Contaminated Sites. The new standard can be applied retroactively or prospectively and the Town has elected to apply it prospectively. Under PS 3260, governments are required to accrue a liability for the costs to remediate a contaminated site. Liabilities are recognized when an environmental standard exists, contamination exceeds the standard, the government has responsibility for remediation, future economic benefits will be given up and a reasonable estimate can be made. Management has assessed its potential liabilities under the new standard including sites that are no longer in productive use and sites for which the Municipality accepts responsibility. There were no such sites that had contamination in excess of an environmental standard which required remediation at this time, therefore no liability was recognized on transition as at January 1, 2015 or at. 10

12 1. Significant Accounting Policies (Continued) (l) Use of Estimates The preparation of the financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. 2. Prior Period Adjustment In 2009, the Municipality adopted the provisions of Section 3150 of the PSAB Handbook and recorded the Municipality's tangible capital assets, net of related amortization, as nonfinancial assets. During 2015, the Municipality performed a further review and discovered additional parkland that was contributed to the Municipality in previous years and as a result, the inventory of tangible capital assets and the financial statements have been retroactively adjusted. The impact of this change was to increase tangible capital assets (land) and accumulated surplus by $2,671,004. The effect of the adjustments above are as follows: (restated) (previously (increase) reported) Tangible capital assets $ 57,929,706 $ 55,258,702 $ 2,671,004 Accumulated surplus $ 63,404,950 $ 60,733,946 $ 2,671, Accounts Receivable General GST receivable $ 58,688 $ 52,716 Taxes receivable 387, ,089 Interest receivable 14,587 18,217 Other accounts receivable 48,053 48, , ,146 Water User rates receivable 270, ,664 Sewer User rates receivable 91,510 89,133 $ 870,835 $ 907,943 11

13 4. Portfolio Investments MFA bond fund 4,779,328 3,778,244 MFA money market fund 1,498, ,503 First Credit Union term deposits 1,846,273 2,789,849 $ 8,124,432 $ 7,277,596 Bonds and money market funds include bank-issued notes, bonds and Provincial bonds and debentures. The current yield of the bond fund is 2.46% ( %) with maturities ranging from 2016 to The current yield of the money market fund is 0.85% ( %) and are redeemable at any time. The interest rates of the term deposits range from 1.50% to 2.10% ( % to 2.10%) and maturities range from February 2016 to September Deferred Revenue (a) Deferred Revenue The Municipality holds funds that have been received for a specific purpose or project that will take place in a future fiscal period. The amounts will be recognized as revenue when spent as specified or stipulation liabilities are settled. In the event that it is determined that the purpose for which the funds were received cannot be fulfilled, such funds will be returned to the contributor General Current Fund Civic facilities - Greenways donation $ 100,220 $ 100,220 Conservation initiatives - Bowen Island Conservancy 16,440 16,440 Killarney Lake/Hiker's Trail 10,000 10,000 Amenity donation - Traffic Calming Whitesails Drive 10,000 10,000 Economic development grant 9,000 - Recreation program fees 10,025 6,929 Donations 21,692 18, , ,478 Development Cost Charges - Parks 220, , , ,231 Water Current Fund Capital Expenditure Charges 324, ,579 $ 722,111 $ 702,810 12

14 5. Deferred Revenue (Continued) (b) Refundable Deposits Building Permit Deposits $ 241,820 $ 266,181 Subdivision Deposits 428, ,395 Miscellaneous Works Deposits 51, ,214 $ 721,928 $ 742,790 Bowen Island Municipality Building Bylaw No. 65, 2002 authorizes that applicants for building permits pay a deposit in the amount of 1% of the construction value. The deposit less any additional charges incurred after the permit issue date is refunded upon the conclusion of the permit process or when an occupancy permit is issued. Bowen Island Municipality Development Application Fees Bylaw 11, 2000, authorizes that applicants for various land development processes pay a deposit amount as described in the bylaw. The deposits are refundable under certain conditions as set out in the bylaw. The Municipality holds deposits under a variety of work permits that are refundable upon acceptable completion of works for which the permits were issued. Any portion of these deposits that is used for replacing damaged works or property or for the recovery of other expenses will be taken into income by the Municipality at such time as the amounts are charged. The above deposits are not included in the cash nor the liabilities of the Municipality. 13

15 6. Long-Term Debt Long-term debt (a) $ 122,714 $ 150,145 Interim financing (b) 2,000,000 2,000,000 Equipment financing (c) 87,085 - $ 2,209,799 $ 2,150,145 (a) Long-term debt: Purpose Maturity Interest Cove Bay Water Local Service Area (i) Bylaw 837 Queen Charlotte Hts % $ 122,714 $ 150,145 Long-term debt - future principal payments are as follows: 2016 $ 14, , , ,471 57,884 Estimated sinking fund earnings 64,830 $ 122,714 (b) Interim financing: Assent of the electors was obtained, through a referendum held April 30, 2005, for "Bowen Island Municipality GVRD Non-Parks Land Acquisition, Loan Authorization Bylaw No. 141, 2005". Loan Authorization Bylaw No. 141, provided the authority for the Municipality to borrow up to $2,035,623 to acquire approximately 38 acres of land from the Greater Vancouver Regional District. In the interim of processing the long-term debenture debt, the Municipality adopted a temporary borrowing bylaw (No. 171), later replaced by Bylaw 291 in December 2010, to finance the land acquisition. The proceeds from the sale of any such lands are to be used first to reduce or extinguish the principal balance of the temporary borrowing in relative portion to the amount of property sold. The temporary financing is planned to continue until such time as short-term interest rates rise significantly, or that the Municipal Finance Authority requires that the temporary loan be converted to long-term debenture debt. In the interim, interest-only payments will be made on the temporary borrowing. As at, the outstanding balance on the loan was $2,000,000 ( $2,000,000). The temporary borrowing bears interest at a floating rate. As at, the interest rate was 1.70% per annum ( %). 14

16 6. Long-Term Debt (Continued) (c) Equipment financing loan: During the year, an equipment financing loan was authorized by Council with Resolution No $90,000 was borrowed over a five-year term and bears interest at a floating rate. As at, the interest rate was 1.70%. Loan Number Maturity Interest MFA floating $ 87,085 $ - Future principal payments are as follows: 2016 $ 17, , , , ,862 $ 87, Capital Lease (a) Obligation under capital lease for equipment: The future minimum lease payments due under capital lease are as follows: 2016 $ 4, , , , ,500 Thereafter 1,125 23,625 Less: imputed interest (2,992) Present value of minimum lease payments $ 20,633 15

17 8. Tangible Capital Assets Land Land Improvements Buildings Sewer Treatment Plant Equipment & Furniture & Vehicle Water Infrastructure Sewer Infrastructure Roads Other 2015 Total 2014 Total Cost, beginning of year Additions Disposals Cost, end of year Accumulated amortization, beginning of year Amortization Disposals Accumulated amortization, end of year Net carrying amount, end of year $ 26,428,255 $ 606,339 $ 1,868,110 $ 2,740,601 $ 6,710,404 $ 13,029,819 $ 1,254,000 $ 20,172,885 $ 1,488,701 $74,299,114 $ 71,077,490-9, ,854 19, ,468 6,200 1,019,660 3,396, (106,159) (106,159) (174,974) 26,428, ,339 1,877,325 2,740,601 6,987,099 13,049,742 1,254,000 20,774,353 1,494,901 75,212,615 74,299, , , ,857 4,029,855 3,325, ,659 6,716, ,179 16,369,408 15,111,241-21,920 60, , , ,552 15, ,447 70,323 1,524,445 1,410, (95,049) (95,049) (152,327) - 195,390 1,034, ,634 4,329,304 3,588, ,552 7,298, ,502 17,798,804 16,369,408 $ 26,428,255 $ 410,949 $ 842,620 $ 2,115,967 $ 2,657,795 $ 9,461,064 $ 1,072,448 $ 13,476,314 $ 948,399 $57,413,811 $ 57,929,706 $2,449,707 of the total road capital asset additions in 2014 is comprised of the estimated fair value of Phase III Cape Roger Curtis contributed assets. 16

18 9. Accumulated Surplus The Municipality segregates its accumulated surplus in the following categories: (restated - Note 2) Current Fund $ 3,925,492 $ 3,671,833 Reserve Fund 4,511,315 3,963,728 Investment in tangible capital assets 55,183,379 55,769,389 $63,620,186 $ 63,404,950 (a) Current Fund The current fund consists of the following: General $ 2,238,327 $ 2,153,897 Water 1,495,025 1,340,254 Sewer 192, ,682 $ 3,925,492 $ 3,671,833 (b) Reserve Fund The reserve fund represents funds set aside by bylaw for specific purposes. Details of reserve funds are shown below: Section 496 of the Local Government Act Fire Protection Reserve Fund Bowen Island Bylaw No. 12, Originally transferred from Bowen Island Fire Protection District. Funds in this reserve are restricted for use as to fire protection purposes Carried forward $ 227,366 $ 211,351 17

19 9. Accumulated Surplus (Continued) (b) Reserve Fund Section 496 of the Local Government Act Brought forward $ 227,366 $ 211,351 Recreation and Other Community Use Reserve Fund Bowen Island Bylaw 17, Originally transferred from GVRD. Funds in this reserve are restricted for use as to capital works or equipment for Recreation and Community use. 824, ,330 Community Parks Reserve Fund Bylaw 16, Originally transferred from GVRD. Funds in this reserve are restricted for use as to capital works or equipment with respect to Community Parks. 564, ,080 Cove Bay Water System Reserve Fund Bowen Island Bylaw 19, Originally transferred from GVRD. Funds in this reserve are restricted for use as to capital works or equipment with respect to the Cove Bay Water System. 809, ,804 Mount Gardner Dock Reserve Fund Bowen Island Bylaw 18, Originally transferred from GVRD. Funds in this reserve are restricted for use as to capital works or equipment with respect to the Mount Gardner Dock. 39,976 39,093 Section 188 of the Community Charter Snug Cove Improvement Reserve Fund Bowen Island Bylaw No Funds in this reserve are restricted for use for the purposes of funding development and general improvements to Snug Cove. 154, ,953 Equipment Replacement Reserve Fund Bowen Island Bylaw No Funds in this reserve are restricted for use as to replacement of municipal mobile equipment. 119, ,670 Carried forward $ 2,739,434 $ 2,512,281 18

20 9. Accumulated Surplus (Continued) (b) Reserve Fund (Continued) Brought forward $ 2,739,434 $ 2,512,281 Section 188 of the Community Charter Roads Maintenance and Renewal Reserve Fund Bowen Island Bylaw No Funds in this reserve are restricted for use as to maintenance, renewal or construction of municipal road works. 520, ,795 Capital Replacement and Renewal Fund Funds in this reserve are restricted for the purpose of replacement or restoration of capital assets and infrastructure. 1,175, ,529 Community Works Reserve Fund Bowen Island Bylaw No Funds in this reserve are restricted for eligible expenditures as defined by the Community Works Fund Agreement (Gas Tax). 4,924 60,890 Other Parkland Reserve Fund Created under the authority of Section 921 (12) of the Local Government Act. Funds in this reserve are restricted for the purpose of acquiring parkland. 70,641 69,233 $ 4,511,315 $ 3,963,728 19

21 10. Taxation - Net Fiscal Plan General municipal purposes $ 3,899,228 $ 3,900,069 $ 3,744,119 Collections for other governments Province of British Columbia - school tax - 1,967,933 1,957,866 Islands Trust - 214, ,501 Greater Vancouver Regional District - 85,168 85,935 TransLink - 525, ,021 Municipal Finance Authority British Columbia Assessment Authority - 95,547 94,929 Police Tax - 314, ,910 3,899,228 7,102,630 6,922,590 Transfers Province of British Columbia - school tax - (1,967,933) (1,957,866) Islands Trust - (214,046) (214,501) Greater Vancouver Regional District - (85,168) (85,935) TransLink - (525,303) (526,021) Municipal Finance Authority - (316) (309) British Columbia Assessment Authority - (95,547) (94,929) Police Tax - (314,248) (298,910) - (3,202,561) (3,178,471) Available for general municipal purposes 3,899,228 3,900,069 3,744,119 Payments in lieu of taxes 53,428 53,429 53,394 $ 3,952,656 $ 3,953,498 $ 3,797,513 General parcel taxes Garbage $ 478,292 $ 478,728 $ 471,710 Community Parks 222, , ,400 Water parcel and other taxes 90,315 90,315 90,315 $ 790,907 $ 788,643 $ 781,425 20

22 11. Contingent Liabilities (a) (b) The Municipality is partially self-insured through the Municipal Insurance Association of British Columbia. Should the Association pay out claims in excess of premiums received, it is possible that the Municipality along with the other participants, would be required to contribute towards the deficit. The Municipality's debt instruments that originated with the Greater Vancouver Regional District are issued through the Municipal Finance Authority. A portion of the debenture proceeds is withheld by the Municipal Finance Authority as a debt reserve fund as a condition of these borrowings. These funds, which total $8,449 ( $8,306), are not reflected in these financial statements. The Municipality also executes demand notes in connection with each debenture whereby the Municipality may be required to loan amounts to the Municipal Finance Authority. The demand notes, which total $15,407 ( $15,407), are contingent in nature and are not reflected in these financial statements. (c) (d) From time to time, the Municipality may be named in lawsuits. At any given point in time, there may be a few lawsuits pending in which the Municipality is involved. It is considered that the potential claims against the Municipality resulting from litigation and not covered by insurance would not materially affect these financial statements. The Municipality is responsible as a member of the Greater Vancouver Regional District for its share of any operating deficits or long-term debt related to functions in which it participates. 12. Commitments Residential Garbage Pickup and Disposal The Municipality entered into an agreement for residential garbage pick up and disposal at an approximate annual cost of $584,000. The five-year agreement commenced on January 1, 2014 and expires on December 31,

23 13. Pension Plan The Municipality and its employees contribute to the Municipal Pension Plan (the "Plan"), a jointly-trusteed pension plan. The Plan's Board of Trustees, representing plan members and employers, is responsible for overseeing the management of the Plan, including investment of the assets and administration of the benefits. The pension plan is a multi-employer contributory pension plan. Basic pension benefits provided are defined. The Plan has about 185,000 active members and approximately 80,000 retired members. Active members include approximately 30 contributors from the Municipality. Every three years, an actuarial valuation is performed to assess the financial position of the Plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the Plan. The actuary's calculated contribution rate is based on the entry-age normal cost method, which produces the longterm rate of member and employer contributions sufficient to provide benefits for average future entrants to the Plan. This rate is then adjusted to the extent there is amortization of any funding deficit. The most recent valuation as at December 31, 2012 indicated a $1,370 million funding deficit for basic pension benefits on a going concern basis. The next valuation will be as at with results available later in Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year. This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate with the result that there is no consistent and reliable basis for allocating the obligation, assets and cost to the individual employers participating in the Plan. The Municipality paid $173,559 for employer contributions to the Plan in the year ended ( $152,924) while employee contributions totaled $143,147 ( $124,782). 22

24 14. Tax Exemptions Granted by Council Value of Value of Municipal Other Taxing Total Tax Authorities BC Camping and Recreation Guild for Christian Scientists $ 2,970 $ 2,209 $ 5,179 $ 5,016 BC Camping and Recreation Guild for Christian Scientists 1,264 1,998 3,262 3,195 BC Camping and Recreation Guild for Christian Scientists 2,851 4,506 7,357 7,064 BC Camping and Recreation Guild for Christian Scientists 5,122 8,097 13,219 12,879 BC Camping and Recreation Guild for Christian Scientists 2,209 1,643 3,852 3,733 Bowen Island Community Museum and Archives 1,100 1,889 2,989 3,111 Bowen Island Preschool and Community Day Care Assoc. 2,467 1,835 4,302 4,354 PAC #150 Royal Canadian Legion - Bowen Island 1,013 1,601 2,614 2,613 Rivendell Foundation 13,172 15,219 28,391 21,562 Seymour Bay Foundation (Bowen Island Golf Assoc.) 966 3,095 4,061 1,188 Smooth Stones Foundation Inc. for Cates Hill Chapel 1,756 2,775 4,531 4,783 Smooth Stones Foundation Inc. for Island Pacific School 2,217 7,193 9,410 10,270 The Roman Catholic Archbishop of Vancouver 1,089 1,721 2,810 2,978 The United Church of Canada 1,028 1,624 2,652 2,765 WCD Developments Ltd. Tir-na-nOg Theatre School Society 2,063 5,508 7,571 7,320 Properties held by Bowen Island Municipality ,085 $ 41,287 $ 60,913 $ 102,200 $ 110,916 23

25 15. Government Transfers and Other Contributions Fiscal Plan Government of Canada General Canada Day $ 600 $ 1,000 $ 150 Participaction Community Works Gas Tax 59,712 60,659 60,659 Human Resources Development Canada 7,000 3,776 3,550 Transport Canada 1, ,662 65,435 65,109 Capital - Innovations Fund 80,000 10,061 - Government Transfers - Federal $ 148,662 $ 75,496 $ 65,109 Province of British Columbia General Small communities protection grant $ 410,000 $ 424,750 $ 269,474 UBCM Caring Circle grant ,000 Asset management grant 10, , , ,474 Library Per-Capita provincial grant 11,000 10,425 11,331 Interlibrary loan grant 1, ,039 BC OneCard 7,400 7,400 7,400 Other miscellaneous grants 5,125 5,142 7,494 24,525 23,804 27,264 Government Transfers - Provincial $ 444,525 $ 448,554 $ 316,738 Other Contributions ICBC Road Improvement - 5,000 - Economic development 24, Miscellaneous grants 600 1,564-24,600 6,564 - Contributed tangible capital assets - 6,200 2,449,707 $ 24,600 $ 12,764 $ 2,449,707 24

26 16. User Fees, Sale of Services and Other Revenue Fiscal Plan User Fees Garbage decal sales and drop off fees $ 138,367 $ 144,993 $ 134,064 Fire and other service inspections 2,000 1,466 1,630 Recreation programs 168, , ,421 Turf field 6,500 7,448 6,786 Dock rentals 24,000 26,689 24,757 Library 6,766 5,834 6, , , ,053 Water 788, , ,929 Sewer 195, , ,056 $ 1,329,666 $ 1,351,510 $ 1,368,038 Sale of Services Building and development permits $ 132,400 $ 172,922 $ 167,024 Extraordinary cost recoveries 3,600 2, School tax administration fees 4,250 4,278 4,259 Driveway and fire department access permits 4,250 5,126 4,875 $ 144,500 $ 185,072 $ 176,458 Other Revenues Taxation, interest and penalties $ 73,000 $ 66,726 $ 80,407 Donations 9,000 10, ,776 Rental income 31,400 27,821 22,641 Bylaw fines 2,700 2,451 1,115 Other 23,900 35,551 32, , , ,382 Return on Investments Current Fund 70,000 53,041 87,706 Water Current Fund 35,800 43,769 33,687 Sewer Current Fund 1,200 1,852 1,073 Reserve Fund investment income - 87,948 96,586 $ 247,000 $ 330,040 $ 544,434 25

27 17. General Departmental Expenses Fiscal Plan General Government Council $ 141,952 $ 139,729 $ 122,429 Corporate services 719, , ,189 Community grants (Note 18) 143, , ,968 Insurance 21,371 20,553 23,075 Municipal hall rent, utilities and maintenance 113, , ,861 Other general government 110, , ,995 1,251,022 1,237,797 1,257,517 Protective Services Fire and emergency services 347, , ,221 Bylaw services 99, ,467 97, , , ,740 Roads, drainage and infrastructure 698, , ,065 Solid waste management 635, , ,996 Community and strategic planning 834, , ,204 Recreation and community services 579, , ,811 Community parks 245, , ,773 Amortization 979, , ,323 3,972,579 3,656,470 3,332,172 Total General Departmental Expenses $ 5,670,736 $ 5,365,634 $ 5,041,429 26

28 18. Assistance Granted to Community Organizations Bowen Island Arts Council $ 56,768 $ 51,319 Bowen Island Community Museum and Archives 29,000 29,048 West Vancouver School District #45 11,114 11,114 Bowen Island Caring Circle 7,000 14,346 Bowen Island Children's Centre - 1,500 Bowen Island Community Fair Association 1,000 1,549 Bowen Island Community Medical Clinic Association 6,000 2,764 Bowen Island Community School Association 1,600 - Bowen Island Family Place Association 9,600 9,683 Bowen Island Golf Association 400 1,500 Bowen Island Gymnastics Club 1,600 3,321 Bowen Island Heritage Preservation Association 5,600 1,400 Bowen Island Scouts Bowen Island Seniors Keeping Young 1,500 1,500 Bowen Island Steamship Days 4, Bowen Island Yacht Club 2,000 - Coast Animal Welfare and Education Society 1,600 2,168 North Shore Restorative Justice - 1,500 Snug Cove House Society 2, St. Andrew's Wesley Church Tir-na-nOg Theatre School Society 9,600 9,683 $ 150,882 $ 144,968 27

29 19. Fiscal Plan Fiscal plan amounts represent the Financial Plan Bylaw adopted by Council in April 2015 with estimates for amortization of tangible capital assets. The Financial Plan anticipated use of surpluses accumulated in previous years to balance against current year expenditures in excess of current year revenues. In addition, the Financial Plan anticipated capital expenditures but did not anticipate amortization expense. The following shows how these amounts were combined: Financial Plan Bylaw surplus for the year $ - $ - Add: Capital expenditures 2,051,761 4,732,217 Less: Budgeted transfers from accumulated surplus (819,017) (3,404,259) Amortization (1,524,445) (1,410,494) $ (291,701) $ (82,536) 20. Segmented Information The Municipality is a diversified municipal government institution that provides a wide range of services to its citizens such as fire, roads maintenance, recreation, library and garbage disposal. Distinguishable functional segments have been separately disclosed in the segmented information. The nature of the segments and the activities they encompass are as follows: General Government and Fiscal Services General government and fiscal services is comprised of Council and the related support services provided by the Administration and Finance departments, as well as all operations and maintenance costs relating to Municipal Hall and grants to community organizations. Fire and Emergency Services This service is comprised of fire protection and emergency services. The fire department is responsible to provide fire suppression service, emergency first response, fire prevention programs, training and education. The Municipality employs a chief and a part-time deputy chief. All other members are volunteers. Bylaw Services Bylaw Services provides response to bylaw infraction complaints, animal control, enforces parking regulations and oversees collection of moorage fees for Snug Cove and Mount Gardiner Docks. 28

30 20. Segmented Information (Continued) Roads, Drainage and Infrastructure This function, managed by the Public Works Department, is responsible for road maintenance, drainage and ditches, rock scaling, public wharf maintenance and municipal building maintenance and operations. Solid Waste Management This function, managed by the Public Works Department, is responsible for all solid waste disposal, green waste pickup and recycling. The service is provided by a subcontractor to the Municipality. Community and Strategic Planning Community and Strategic Planning services comprise land use development and planning, monitoring of construction activity through building permit regulation, as well as implementation of strategic plan initiatives as endorsed by Council. Recreation and Community Services This service area provides services meant to improve the health and well-being of the Municipality s citizens. Recreational programs include recreational sports activities, community events and operation of a youth drop-in centre. They are delivered at various facilities including the community school and teen centre. Community Parks This service consists of parks and field maintenance and operations, trail maintenance and maintenance of beach fronts and public access. Library The Municipality operates a municipal library located in Snug Cove. Water Utilities The Municipality oversees operations and administration of seven separate small water systems, ranging in size from 41 to 615 connections. Approximately 1,200 dwellings and businesses are serviced by municipality-operated water systems. Sewer Utilities The Municipality oversees operations and administration of a small sewer system. This system services approximately 90 connected dwellings and businesses in the Snug Cove area. 29

31 21. Expenses by Object Operations Capital Acquisitions 2015 Total 2014 Total Goods and services $ 2,460,361 $ 993,198 $ 3,453,559 $ 5,801,823 Labour 2,766,157 26,462 2,792,619 2,538,125 Debt charges - interest 38,241-38,241 48,897 Loss (gain) on disposal of capital assets (5,080) (5,080) 22,647 Grants to Community 150, , ,968 Total expenditures 5,410,561 1,019,660 6,430,221 8,556,460 Amortization expense 1,524,445-1,524,445 1,410,494 Total expenditures and expenses $ 6,935,006 $ 1,019,660 $ 7,954,666 $ 9,966,954 30

32 Schedule 1 - Combined Statement of Operations by Segment For the year ended General Gov't Fire & Other Roads Community Recreation & Fiscal Emergency Protective Drainage & Solid Waste & Strategic& Community Community Water Sewer Services Services ServicesInfrastructure Management Planning Services Parks Library Unallocated Utilities Utilities Actual Fiscal Plan Revenues General taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,953,498 $ - $ - $3,953,498 $ 3,952,656 Parcel taxes , , , , ,907 Grants in lieu of taxes , ,666 4,211 Utility connection fees and user fees - 1,466-26, , ,876 7,448 5, , ,599 1,351,510 1,329,166 Government Transfers Federal (Note 15) ,061 4, , , ,662 Provincial (Note 15) 424, , , ,525 Other contributions (Note 15) , ,946 24,600 Sale of services (Note 16) 4,278 2,376-2, ,922 2, , ,500 Other revenue (Note 16) 6,653 2,300 3,251 13,036 14,894-32,419 1,200 2, ,850 59,083 1, , ,000 Contributed tangible capital assets (Note 15) , ,200 - Total revenues 435,681 6,142 3,251 53, , , , ,248 32,139 4,212, , ,451 7,150,242 7,086,227 Expenses Operating Salaries & benefits 722, ,339 91, ,935 11, , , , , ,065 29,836 2,766,157 2,800,120 Travel, conventions, education and training 45,674 39, ,617-8,637 13,001 3,273 2,169-2, , ,787 Operation goods and services 38,890 8,706 3, ,919 8,209 4,144 16,526 31,373 13,256-89,142 4, , ,049 Communication & information systems 83,299 18, ,639-5,092 8, ,249-15,615 4, , ,402 Contract Services - professional 45,345 1,390 25,504 2, ,756-10, , , ,712 Contract services - operational , ,309 1,925 8,481 40,833 2,142-27,611 99, , ,047 Insurance and Licenses 20,553 11,541-31, ,618 1,640-21,621 3,599 92,457 97,701 Maintenance - buildings, equipment, infrastructure 18,533 34,063 1,115 26, , ,911-53,972 12, , ,904 Rents 77, , , , ,281 Utilities 7,019 13,375-9, ,054-26,785 15,422 78,776 78,750 Projects and planning - 3,868 1,500 9, ,513 6, ,644 2, , ,992 Other operational expenses 15,955 1, , , ,168-9,415-44,127 70,400 Debt interest 29, ,167-38,241 55,370 Grants to Community (Note 18) 150, , ,968 Loss on disposal of tangible capital asset 9, (14,190) (5,080) - Amortization 44, , , ,871 57,950 26, , ,479 1,524,445 1,524,445 Total expenses 1,298, , ,263 1,395, , , , , , , ,781 6,925,899 7,377,928 Excess (deficiency) of revenues over expenses $ (863,282) $ (456,187) $ (122,012) $(1,341,563) $ 23,263 $ (464,205) $ (363,259) $ (50,686) $ (222,490) $ 4,212,059 $ 35 $ (127,330) $ 224,343 $ (291,701) 31

33 Schedule 2 - Combined Statement of Operations by Segment For the year ended General Gov't Fire & Other Roads Community Recreation & Fiscal Emergency Protective Drainage & Solid Waste & Strategic& Community Community Water Sewer Services Services ServicesInfrastructure Management Planning Services Parks Library Unallocated Utilities Utilities Actual Fiscal Plan Revenues General taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,797,513 $ - $ - $ 3,797,513 $ 3,801,751 Parcel taxes , , , , ,785 Grants in lieu of taxes , ,666 4,211 Utility connection fees and user fees - 1,630-24, , ,421 6,786 6, , ,056 1,368,038 1,283,571 Government Transfers Federal (Note 15) , , ,109 83,600 Provincial (Note 15) 269, , , , ,832 Other contributions (Note 15) Sale of services (Note 16) 4,259 1,850-3, , , ,850 Other revenue (Note 16) 16,094 1,250 3,365 8,702 47,613 25,848 26, ,200 14, ,033 48,137 1, , ,761 Contributed tangible capital assets (Note 15) ,449, ,449,707 - Total revenues 289,827 4,730 3,365 2,486, , , , ,386 47,714 4,113, , ,129 9,504,090 6,832,961 Expenses Operating Salaries & benefits 719, ,536 75, , , ,479 86, , ,659 31,666 2,510,912 2,599,635 Travel, conventions, education and training 47,518 21,399 1,271 7,704-7,828 16,514 2,000 1,802-6, , ,470 Operation goods and services 44,726 10,953 1, ,829 4,844 5,236 18,118 40,367 12,289-92,123 2, , ,888 Communication & information systems 80,201 25, , ,873-7,332-11,822 3, , ,220 Contract Services - professional 52,118-6,887 5,526 3, ,655-30, ,407 1, , ,250 Contract services - operational 6, , ,578-83,370 32, ,795 95, , ,999 Insurance and Licenses 23,075 4,640-18, ,461 1,452-17,936 1,966 78,023 90,036 Maintenance - buildings, equipment, infrastructure 21,440 37,268 4,606 24, ,886-5,877-47,592 16, , ,988 Rents 76, , , , ,400 Utilities 8,073 17,064-4, ,889-23,449 12,016 69,637 73,150 Projects and planning - 2, ,570-71,386 15, , ,080 Other operational expenses 20,865 2,904 6, ,626 2, ,504-19,039-61,242 69,159 Debt interest 35, ,751-48,897 53,751 Grants to Community (Note 18) 144, , ,968 Loss on disposal of tangible capital asset , ,803-22,647 - Amortization 42, , , ,403 56,635 26, , ,244 1,410,494 1,410,494 Total expenses 1,322, ,976 97,518 1,298, , , , , , , ,989 6,570,356 6,916,488 Excess (deficiency) of revenues over expenses $(1,032,868) $ (456,246) $ (94,153) $ 1,187,627 $ 44,392 $ (255,333) $ (358,976) $ 59,133 $ (192,511) $ 4,113,871 $ 43,658 $ (124,860) $ 2,933,734 $ (83,527) 32

34 Schedule 3 - Reserve Fund Operations For the year ended Fire Recreation Mount Snug Cove Capital Community Department and Other Community Cove Bay Gardner Improvement Equipment Roads and Parkland Renewal and Works Reserve Equipment Comm. Use Parks Water Dock Fund Replacement Infrastructure Investments Replacement Fund Balance, beginning of year $ 211,351 $ 817,330 $ 544,080 $ 681,804 $ 39,093 $ 101,953 $ 116,670 $ 495,795 $ 69,233 $ 825,529 $ 60,890 $ 3,963,728 $ 3,297,661 Interest 4,701 18,452 12,049 15, ,302 2,449 10,663 1,408 18,403 1,375 87,948 96,586 Transfers from (to): Current Fund 70,000-17, ,728-50,000 85, , ,789 60,659 1,262,004 1,186,812 Capital Fund (58,686) (11,220) (9,253) (12,343) - - (85,000) (485,708) - (22,155) (118,000) (802,365) (617,331) Balance, end of year $ 227,366 $ 824,562 $ 564,139 $ 809,452 $ 39,976 $ 154,255 $ 119,684 $ 520,750 $ 70,641 $ 1,175,566 $ 4,924 $ 4,511,315 $ 3,963,728 33