The City of Revelstoke

Transcription

1 The City of Revelstoke Annual Financial Report For the year ended December 31, 2009 Graham D. Inglis Director of Finance Phone: Fax: ginglis@cityofrevelstoke.com Website:

2 Index to 2009 Annual Financial Report Introductory Section Letter to Mayor and Council Report of the Director of Finance Page Financial Section Consolidated Financial Statements (audited) Auditors Report on the Consolidated Financial Statements 2 Consolidated Statement of Financial Position 3 Consolidated Statement of Operations 4 Consolidated Statement of Change in Nebt Debt 5 Consolidated Statement of Cash Flows 6 Summary of Significant Accounting Policies 7-9 Notes to Consolidated Financial Statements Supplementary Financial Information (unaudited) General fund Statements 1-6 Water Fund Statements 7-9 Sewer Fund Statements Electric Utility Fund Statements Trust and Reserve Fund Statements Investment in Revelstoke Community Forest Corporation 17 Investment in Revelstoke Community Energy Corporation 18 Cost Sharing Section Cost sharing programs with the Columbia Shuswap Regional District - Audited Financial Statements for the year ended December 31, 2009 Public Safety Building - Audited Financial Statements for the year ended December 31, 2009

3 Introductory Section

4 May 16, 2010 The Mayor and Council, City of Revelstoke, Box 170, Revelstoke, B.C., V0E 2S0 Your Worship and Members of Council, I have pleasure in submitting herewith the 2009 Annual Financial Report in accordance with Section 167 of the Community Charter. The preparation of the financial statements are the responsibility of management. The auditors responsibility is to express an opinion on the financial statements based on the results of their audit conducted in accordance with Canadian generally accepted auditing standards. Those audit standards require that the audit be planned and performed to obtain reasonable assurance as to whether the financial statements are free of material error. The purpose of the Annual Financial Report is to provide the reader with sufficient information to be able to gain an understanding of the financial position and results of the operations of the City. The report has been divided into the following sections: Introductory Section - Provides the reader with an overview of the results of the City for the year. Financial Section - Presents the audited financial statements for 2009 and unaudited supplementary financial information. Cost sharing section - Presents the audited financial statements for 2009 for the various cost sharing functions

5 Finally, I would like to take this opportunity of recognizing the support and hard work of Tania McCabe, in particular, as well as the finance staff in general in preparing this report. Yours truly, Graham D. Inglis, Director of Finance

6 THE REPORT OF THE DIRECTOR OF FINANCE FOR THE YEAR ENDED DECEMBER 31, 2009 Introduction I have pleasure in submitting my report for the year ended December 31, The purpose of this report is to provide some explanation and background to the results reflected in the city s financial statements. The audited, consolidated statements, have been prepared in accordance with PSAB requirements while the supplementary financial information has been presented in the traditional fund accounting format. The results On January 1, 2009 the City adopted revised Public Sector Accounting Standards 1000 (Financial Statement Concepts), 1100 (Financial Statement Objectives), 1200 (Financial Statement Presentation) and 3150 (Tangible Capital Assets). As a result of adopting these standards, the presentation of the consolidated financial statements has changed and the comparative numbers for 2008 have been amended also. The management statements have also changed to include non-tangible capital assets as an expense in the operating functions rather than being capitalized. PSAB 3150 requires that all municipalities account for and amortize tangible capital assets. When the city prepares its financial plan it treats project expenditures as fixed assets when they are funded from capital reserves. However, if these projects do not meet the criteria for being a tangible capital asset they cannot be capitalized as a fixed asset and must instead be expensed fully in the year. An example of this would be road resurfacing. At the end of 2009 the city s consolidated accumulated surplus was $44,592,404 ( $44,552,601). The accumulated surplus incorporates the amortized investment in tangible capital assets of $39,446,484 ( $38,477,115) as well as the city s statutory and future capital works reserve funds. It also includes the balance on current funds which fell from $994,337 at December 31, 2008 to $691,360 at December 31, At December 31, 2009 net debt amounted to $8,745,124 ( $6,585,277). This number is the excess of liabilities over financial assets and shows the extent to which future revenue is encumbered. The management statements for the General Fund show an operating deficit of $350,228 compared to a budgeted surplus of $61,898. This was largely due to snow removal costs exceeding budget by about $300,000 while building permit revenues were less than half of the budgeted $220,000. The general operating accumulated surplus was $42,040 at December 31, 2009.

7 The management statements for the utilities show a surplus of $86,372 for water for the year and a deficit of $39,121 for sewer. The accumulated operating surplus for water at December 31, 2009 was $472,965 and for sewer it was $16,169. Conclusion With the general operating and sewer operating accumulated surpluses being at such low levels, future deficits are unsustainable. Particular effort will have to be made in future years to avoid further deficits at least until operating surpluses are back to a healthier level. Graham D. Inglis, Director of Finance

8 Financial Section Consolidated Financial Statements (Audited)

9 Consolidated Financial Statements For the year ended December 31, 2009 Contents Auditors' Report 2 Consolidated Financial Statements Consolidated Statement of Financial Position 3 Consolidated Statement of Operations 4 Consolidated Statement of Change in Net Debt 5 Consolidated Statement of Cash Flows 6 Summary of Significant Accounting Policies 7-9 Notes to Consolidated Financial Statements 10-27

10 ~BDO ~aak:uua::w=.~ lei, ZSO 837 SZZS Fax: 250 8] wvlw.bdo.c.a BOO Canada llp Fint Slr~t E PO Box 2100 Re'lelstol:e OC VOE 250 ((,Ilelda Auditors' Report To the Mayor and Councilors of the City of Revelstoke We have audited the consolidated statement of financial position of the City of Revelstoke as at December 31, 2009 and the consolidated statements of operations, change in net debt and cash flows for the year then ended. These consolidated financial statements are the responsibility of the City of Revelstoke's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the City of Revelstoke as at December 31, 2009 and the results of its operations, change in net debt and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Revelstoke, British Columbia April 16, 2010 BOO (~I\ilJ.l llp. '" (all;,(!li\illlmitcl! il.1blllt,. ptrultw.tl'p. 1\ ~ li,c n'tj.~f O! lido 1i\\(1Mtmn"l tlf1ll1l"tl. 1 LiK [Dmp:lfly linnl('d h1 ~u~.alll('{'. JI1l1 101l1r.. PilII 01 Ih(' rjl[ern~21l1"'11ll)(j IleIWI;II;'; CllaJ"~_"'oll'~n; 1l\'lm!I(,'r rirrn:;,

11 Consolidated Statement of Financial Position December Restated Isee Note 1) Flnancial assets Cash and cash equivalents Taxes receivable Accounts receivable Portfolio Investments (Note 2) Inventories for resale Investment in RCFC (Note 3) Investment in RtEC (Note 4) Deposit - Municipal Finance Authority $ 592,033 $ 736, , ,177 1,399, ,550 4,880,272 4,738, , ,489 3,691,633 4,191, , , , ,710 12,383,104 11,970,292 Liabilities Accounts payable and accrued liabllftles Deferred revenue (Note 6) Obligations under capital lease (Note 7) Net long term debt (Note 8) Reserve - Municipal Finance Authority Short-term borrowing - Municipal Finance Authority 2,022,224 1,813,266 2,284,798 1,927,134 1,555,729 1,063,141 14,120,969 13,106, , , ,000 21,128,228 18,555,569 Net debt Hon-flnanctal assets Tangible capital assets (Note 9) Prepaid expenses and inventories of supplies Equipment under capilallease (Note 1D) (8,745,124) (6,585,277) 50,886,070 49,327, , ,542 2,009,396 1,294,308 53,337,528 51,137,878 Accumulated surplus (Note 11) $44,592,404 $ 44,552,601 Contingent liabilities (Note 13) Director of Finance actompdnyin!il5umm,uy of significant ijccduntlna poltcll!1 ijnd no(i!s uc an IntL'iral part Dr these r1n;lod,,1 naleml!nls 3

12 Consolidated Statement of Operations Budget For the year ended December Restated (Note 15) (see Note 1) Revenue Taxation (Note 12) $ 9,513,223 $ 9,480,510 $ 8,397,983 Government grants - Conditional 1,502,519 1,738,488 1,216,801 Government grants - Unconditional 550, , ,480 User fees and service charges 3,311,300 3,314,014 3,762,565 Investment income 122, , ,059 Loss from RCFC (Note 3) - (499,972) (154,705) Loss from RCEC (Note 4) - (57,250) (68,109) Other 815, , ,401 15,814,342 15,252,635 14,996,475 Expenses General government 1,591,610 1,442,175 1,497,717 Protection services 3,047,745 3,002,089 2,346,337 Transportation services 4,420,600 3,372,866 4,076,868 Environmental services 346, , ,154 Health services 138, , ,965 Economic development services 1,382,700 1,533, ,197 Recreation and cultural services 2,737,435 2,655,052 2,768,929 Planning and development 896, , ,532 Sewer services 493, , ,803 Water services 662, , ,472 Interest 1,030, , ,050 16,748,462 15,212,832 15,128,024 Annual surplus (deficit) (934,120) 39,803 (131,549) Accumulated surplus, beginning of year, as previously stated 44,552,601 44,552,601 80,069,267 Prior period adjustment (Note 1) - - (35,385,117) Accumulated surplus, beginning of year, restated 44,552,601 44,552,601 44,684,150 Accumulated surplus, end of year $43,618,481 $44,592,404 $ 44,552,601 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements 4

13 Consolidated Statement of Change in Net Debt Budget For the year ended December Restated (Note 15) (see Note 1) Annual surplus (deficit) $ (934,120) $ 39,803 $ (131,549) Acquisition of tangible capital assets (9,108,250) (3,036,150) (3,028,974) Amortization of tangible capital assets 1,500,000 1,474,254 1,457,443 Loss on sale of tangible capital assets - 2, Acquisition of equipment under capital lease - (854,789) (798,307) Amortization of equipment under capital lease - 139,702 77,772 Actuarial adjustment on long term debt - - (83,030) (8,542,370) (2,234,326) (2,505,856) Acquisition of prepaid expenses and inventory of supplies - (12,500) (340,435) Use/consumption of prepaid expenses and inventory of supplies - 86, ,479 (340,435) Net change in net debt (8,542,370) (2,159,847) (2,846,291) Net debt, beginning of year (6,585,277) (6,585,277) (3,738,986) Net debt, end of year $ (15,127,647) $ (8,745,124) $ (6,585,277) The accompanying summary of significant accounting policies and notes are an integral part of these financial statements 5

14 Consolidated Statement of Cash Flows For the year ended December Restated (see Note 1) Operating transactions Annual surplus (deficit) $ 39,803 $ (131,549) Items not involving cash Loss from subsidiary operations 557, ,814 Amortization 1,474,254 1,457,443 Loss on disposal of tangible capital assets 2, Amortization of equipment under capital lease 139,702 77,772 Changes in non-cash operating balances Taxes receivable (251,245) 3,312 Accounts receivable (661,408) 236,247 Prepaid expenses and inventories of supplies 74,480 (340,437) Accounts payable and accrued liabilities 208,958 (312,733) Deferred revenue 357, ,067 Actuarial adjustment on long-term debt - (83,031) 1,942,284 2,073,694 Capital transaction Acquisition of tangible capital assets (3,036,150) (3,028,974) Investing transactions Proceeds on disposition of portfolio investments 859,324 1,205,987 Acquisition of portfolio investments (1,000,770) (3,277,019) (141,446) (2,071,032) Financing transactions Proceeds from issuance of short-term debt 438,000 - Proceeds from issuance of long-term debt 1,500,000 1,725,000 Repayment of long-term debt (485,350) (423,798) Repayment of capital leases (362,201) (214,349) 1,090,449 1,086,853 Net change in cash and cash equivalents (144,863) (1,939,459) Cash and cash equivalents, beginning of year 736,896 2,676,355 Cash and cash equivalents, end of year $ 592,033 $ 736,896 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements 6

15 Summary of Significant Accounting Policies December 31, 2009 Management's Responsibility for the Financial Statements Basis of Consolidation The consolidated financial statements of the City of Revelstoke are the responsibility of management. They have been prepared in accordance with Canadian generally accepted accounting principles established by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. The City of Revelstoke (City) is a municipality in the Province of British Columbia and operates under the provisions of the Community Charter. The City provides municipal services such as fire, public works, planning, parks, recreation and other general government services. The consolidated financial statements reflect the assets, liabilities, revenue and expenses of all municipal organizations, committees and Boards which are owned or controlled by the City of Revelstoke. The following entities are owned or controlled by the City: Revelstoke Community Energy Corporation 100% Revelstoke Community Forest Corporation 100% Revelstoke Community Housing Society 100% The investments in Revelstoke Community Forest Corporation (RCFC), Revelstoke Community Forest Corporation Holding Company and Revelstoke Community Energy Corporation (RCEC), all of which are government business enterprises, are accounted for using the modified equity method. Under this method, the business enterprises' accounting principles are not adjusted to conform with those of the City. These subsidiaries have a fiscal year end of April 30 and their consolidated financial statements do not reflect any activity between the fiscal year end of each subsidiary and the fiscal year end of the City. The operations of the Revelstoke Community Housing Society, a nonprofit society over whose board of directors the City has control, have been consolidated. Cash and Cash Equivalents Portfolio Investments Management considers all highly liquid investments with maturity of three months or less at acquisition to be cash equivalents. Portfolio investments are recorded at 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. 7

16 Summary of Significant Accounting Policies December 31, 2009 Tangible Capital Assets Tangible capital assets are recorded at cost less accumulated amortization. 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. Contributed tangible capital assets are recorded at fair value at the time of the donation, with a corresponding amount recorded as revenue. Amortization is recorded on a straight-line basis over the estimated useful life of the tangible capital asset commencing once the asset is available for productive use. Amortization is recognized, as follows: Land not amortized Buildings years Equipment 5-25 years Roads and bridges years Water/sewer infrastructure years Projects in progress not amortized 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 City of Revelstoke, and the obligation, including interest thereon, is liquidated over the term of the lease. All other leases are accounted for as operating leases, and the rental costs are expensed as incurred. Collection of Taxes on Behalf of Other Taxation Authorities The City of Revelstoke collects taxation revenue on behalf of other entities. Such levies, other revenues, expenses, assets and liabilities with respect to the operations of entities are not reflected in these financial statements. The entities the City of Revelstoke collects taxation revenue on behalf of are as follows: Province of British Columbia - School Tax Columbia Shuswap Regional Hospital District Columbia Shuswap Regional District British Columbia Assessment Authority Municipal Finance Authority North Okanagan Regional Health District North Okanagan Regional Library Trust Funds Trust funds held in trust by the City of Revelstoke, and their related operations, are not included in these financial statements. The financial activity and position of the trust funds are reported separately. 8

17 Summary of Significant Accounting Policies December 31, 2009 Retirement Benefits Deferred Revenue Government Transfers Revenue Recognition Use of Estimates The City of Revelstoke's contributions due during the period to its multi-employer defined benefit plan are expensed as incurred. 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 consolidated statement of financial position. The revenue is recognized in the consolidated statement of operations in the year in which it is used for the specified purpose. Government transfers, which include legislative grants, are recognized in the financial statements in the period in which events giving rise to the transfers occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates of the amount can be made. Taxes are recognized as revenue in the year they are levied. Charges for sewer and water usage are recorded as user fees. Connection fee revenues are recognized when the connection has been established. Conditional grant revenue is recognized to the extent the conditions imposed on it have been fulfilled. Unconditional grant revenue is recognized when monies are receivable. Grants for the acquisition of tangible capital assets are recognized in the period in which eligible expenditures are made. Sales of service and other revenue is recognized when the service or product is provided by the City. The preparation of financial statements in accordance with Canadian generally accepted accounting principles 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. The accounts that are affected are accounts receivable and accrued liabilities. 9

18 Notes to Consolidated Financial Statements December 31, Change in Accounting Policy On January 1, 2009, the City of Revelstoke adopted revised Public Sector Accounting Standards: Section Financial Statement Concepts, Section Financial Statement Objectives, Section Financial Statement Presentation and Section Tangible Capital Assets. As a result of the adoption, the presentation of the consolidated financial statements changed from the prior year. The standards require the recognition of all nonfinancial assets including tangible capital assets and prepaid expenses as assets in the consolidated financial statements. In addition, revenue from contributed assets, and amortization on tangible capital assets was recorded in the Consolidated Statement of Operations. This change in accounting policy has been applied retroactively with the restatement of the prior period. The impact of adopting the tangible capital asset standard was as follows: Consolidated Statement of Financial Position 2008 Decrease in non-financial assets $ (35,516,666) Decrease in accumulated surplus $ (35,516,666) Grants $ (12,078) Total decrease in revenue (12,078) General government (61,130) Protection services 117,237 Transportation services 39,465 Health services (34,700) Recreational and cultural services 163,121 Sewer (1,862,552) Water 147,856 Total decrease in expenses $ (1,490,703) Increase in annual surplus $ 1,478,625 Decrease in opening accumulated surplus $ (35,385,117) 10

19 Notes to Consolidated Financial Statements December 31, Portfolio Investments Laurentian Bank, 4.45%, matures January 11, 2010 $ 125,000 $ 125,000 Bank of Nova Scotia, 4.4%, matures June 2, ,000 - Bank of Nova Scotia, 3.01%, matures September 27, ,296 - Bank of Montreal, 3.15%, matures September 26, ,893 - HSBC Financial Corp Ltd, 4.8%, matures April 13, ,284 35,284 CIBC, 4.95%, matures September 2, , ,440 CIBC, 4.4%, matures March 7, , ,916 Bank of Montreal, 4.6%, matures July 11, , ,000 Alberta Capital Finance Auth, 5%, matures December 2, ,180 - City of Toronto, 5.125%, matures September 25, ,405 - Municipal Finance Authority, 4.65%, matures April 19, , ,365 National Bank of Canada, 5.5%, matures November 15, ,401 - MFA Intermediate Fund, variable interest, on demand 1,059,680 1,021,064 MFA Money Market Fund, variable interest, on demand 37,601 1,028,409 MFA Short Term Bond Fund, variable interest, on demand 1,026,161 - Revelstoke Credit Union, Plan 24, variable interest, on demand 506, ,024 Province of Ontario, 6.15%, matured January 4, ,000 Bank of Montreal, 3.65%, matured August 17, ,297 Canadian Western Bank, 4.25%, matured August 16, ,700 Ontario Hydro, 4.02%, matured May 26, ,712 Province of Ontario, 4%, matured May 19, ,615 $ 4,880,272 $ 4,738,826 The market value of the City of Revelstoke's marketable securities was $4,941,576 ( $4,841,771). 11

20 Notes to Consolidated Financial Statements December 31, Investment in RCFC Holding Company Ltd. RCFC Holding Company Ltd. is 100% owned by the City of Revelstoke. The Company manages Revelstoke Community Forest Corporation, a wholly owned subsidiary, which manages a tree farm license near Revelstoke. The condensed supplementary financial information is as follows: Financial position Current assets $ 2,261,801 $ 3,341,178 Deferred charges 602, ,925 Other assets 1,800,000 1,875,000 Capital assets 2,590,043 2,606,018 Total assets $ 7,254,361 $ 8,417,121 Current liabilities $ 1,498,710 $ 1,801,725 Due to shareholder 564, ,318 Accrued silviculture 532, ,163 Deferred revenue 953, ,433 Long term debt 13,076 88,877 Total liabilities $ 3,562,728 $ 4,225,516 Total net assets $ 3,691,633 $ 4,191,605 Results of operations Revenue $ 4,557,157 $ 8,524,137 Cost of goods sold (4,235,337) (7,829,277) Logyard operations (173,504) (185,176) Administrative expenses (648,288) (664,389) Net loss for the year $ (499,972) $ (154,705) 12

21 Notes to Consolidated Financial Statements December 31, Investment in Revelstoke Community Energy Corporation Revelstoke Community Energy Corporation is a wholly owned subsidiary that was created for the purpose of creating thermal energy. The condensed supplementary financial information is as follows: Financial position Current assets $ 3,736,789 $ 3,938,459 Current liabilities $ 526,824 $ 471,921 Long-term debt 1,707,165 1,906,488 Shareholder's equity 1,000,011 1,000,011 Total liabilities $ 3,234,000 $ 3,378,420 Total net assets $ 502,789 $ 560,039 Results of operations Revenue $ 544,280 $ 567,320 Expenses (601,530) (612,415) Dividends - (23,014) Net loss for the year $ (57,250) $ (68,109) 5. Investment in Revelstoke Community Housing Society Revelstoke Community Housing Society is a society that was created for the purpose of developing affordable housing in Revelstoke. The City appoints the majority of the board members of the Society, giving it control. The condensed supplementary financial information is as follows: Financial position Current assets $ 313,075 $ 56,312 Deferred revenue 313,075 56,312 Total net assets $ - $ - Results of operations Revenue $ 112,269 $ 87,502 Expenses (112,269) (87,502) Net loss for the year $ - $ - 13

22 Notes to Consolidated Financial Statements December 31, Deferred Revenue Opening balance restated Contributions received Externally restricted investment income Revenue recognized Ending balance Federal Gas Tax Economic Development grants Tourism Infrastructure Small Community grant Traffic Fine Revenue Sharing Deferred Development Cost Charges Prepaid licenses & utilities $ 535,683 $ 530,417 $ - $ (228,983) $ 837, ,942 45,000 - (317,626) 233, , ,631 - (435,225) 267, , ,717-52, , , ,748 25,107 (513,132) 392, , ,340 - (153,515) 134,340 Other 38,803 24, (36,850) 26,328 $ 1,927,134 $ 2,017,788 $ 25,207 $ (1,685,331) $ 2,284,798 Federal Gas Tax The Community Works Fund Agreement (Gas Tax) funding is provided by the Government of Canada. The use of the funding is established by an agreement between the City and the Union of British Columbia Municipalities. Funding may be used towards designated public transit, community energy, water, wastewater, solid waste and capacity building projects. Tourism Infrastructure Program Tourism Infrastructure funding is provided by a 10% tax on hotel room rentals. It is collected by the Province of British Columbia and 3% is remitted to the City on a monthly basis. Expenditures from the Tourism Infrastructure program are restricted to those set out in the establishing Order in Council. 14

23 Notes to Consolidated Financial Statements December 31, Obligations under Capital Lease Obligations under capital lease reported on the Consolidated Statement of Financial Position is comprised of the following: Restated (see Note 1) (a) MFA, payable in monthly instalments of $ 3,018, including interest at 3.5%, due September 28, 2010 $ 29,258 $ 61,392 (b) MFA, payable in monthly instalments of $ 234, including interest at 3.75%, due October 28, ,520 4,963 (c) MFA, payable in monthly instalments of $ 969, including interest at 3.25%, due February 28, ,399 13,291 (d) MFA, payable in monthly instalments of $ 529, including interest at 4.0%, due December 28, ,865 18,773 (e) MFA, payable in monthly instalments of $ 667, including interest at 5.0%, due November 28, ,723 14,785 (f) MFA, payable in monthly instalments of $ 667, including interest at 3.75%, due November 28, ,459 12,192 (g) MFA, payable in monthly instalments of $ 879, including interest at 5.0%, due August 28, ,866 26,273 (h) MFA, payable in monthly instalments of $ 460, including interest at 5.0%, due August 28, ,345 13,751 (i) MFA, payable in monthly instalments of $ 460, including interest at 5.0%, due August 28, ,304 13,751 (j) MFA, payable in monthly instalments of $ 2,829, including interest at 5.25%, due September 28, , ,314 (k) MFA, payable in monthly instalments of $ 1,634, including interest at 5.0%, due January 28, ,380 55,913 (l) MFA, payable in monthly instalments of $ 972, including interest at 5.0%, due December 28, ,672 42,215 (m) MFA, payable in monthly instalments of $ 3,776, including interest at 5.0%, due January 28, , ,034 (n) MFA, payable in monthly instalments of $ 682, including interest at 5.0%, due January 28, ,063 30,188 15

24 Notes to Consolidated Financial Statements December 31, Obligations under Capital Lease (continued) (o) MFA, payable in monthly instalments of $ 621, including interest at 5.0%, due January 28, ,886 27,615 (p) MFA, payable in monthly instalments of $ 1,985, including interest at 5.0%, due April 28, ,284 94,111 (q) MFA, payable in monthly instalments of $ 776, including interest at 5.0%, due June 28, ,054 38,495 (r) MFA, payable in monthly instalments of $ 424, including interest at 5.0%, due June 28, ,261 21,034 (s) MFA, payable in monthly instalments of $ 472, including interest at 5.0%, due July 28, ,462 23,816 (t) MFA, payable in monthly instalments of $ 1,809, including interest at 5.0%, due July 28, ,685 93,924 (u) MFA, payable in monthly instalments of $ 3,181, including interest at 5.0%, due November 28, , ,311 (v) MFA, payable in monthly instalments of $ 2,742, including interest at 5.0%, due March 28, ,302 - (w) MFA, payable in monthly instalments of $ 185, including interest at 5.0%, due June 28, ,690 - (x) MFA, payable in monthly instalments of $ 3,845, including interest at 5.0%, due June 28, ,930 - (y) MFA, payable in monthly instalments of $ 599, including interest at 5.0%, due July 28, ,014 - (z) MFA, payable in monthly instalments of $ 1,639, including interest at 5.0%, due August 28, ,119 - (aa) MFA, payable in monthly instalments of $ 680, including interest at 5.0%, due October 28, ,611 - (bb) MFA, payable in monthly instalments of $ 2,386, including interest at 5.0%, due October 28, ,316 - (cc) MFA, payable in monthly instalments of $ 2,646, including interest at 5.0%, due December 28, ,827 - $ 1,555,729 $ 1,063,141 16

25 Notes to Consolidated Financial Statements December 31, Obligations under Capital Lease (continued) Obligations under capital lease are secured by the leased assets. Interest paid relating to the above obligations on capital leases was $18,215 ( $34,156). The future minimum lease payments for the next five years are: 2010 $ 489, , , , ,204 $ 1,555, Net Long Term Debt Restated (see Note 1) Municipal Finance Authority Bylaw 1641 Roads, 6.36%, due December 2020 $ 483,233 $ 515,627 Bylaw 1681 Roads, 5.491%, due June , ,957 Bylaw 1664 RCMP Building, 6.06%, due June ,073,512 2,143,708 Bylaw 1749 Roads, 4.575%, due December , ,300 Bylaw 1695 Aquatic Centre, 4.55%, due April ,143,119 3,237,655 Bylaw 1818 Eastern Access bridge, 4.52%, due April , ,993 Bylaw 1819 Airport Way, 4.65%, due April , ,000 Bylaw 1820 Powerhouse Road, 4.65%, due April , ,000 Bylaw 1875 Pearks Dr & Cleland Rd, 4.65%, due April , ,000 Bylaw 1615 Greeley Creek, 6.36%, due December ,199,543 2,346,994 Bylaw 1750 Arrow Heights Water, 4.575%, due December ,193,703 1,228,085 Bylaw 1877 Airport Way, 4.65%, due April , ,000 Bylaw 1904 Sewer Lagoon Upgrades, 4.9%, due April ,500,000 - $14,120,969 $ 13,106,319 17

26 Notes to Consolidated Financial Statements December 31, Net Long Term Debt (continued) Principal repayments and sinking fund contributions relating to net long term debt of $14,120,969 outstanding are due as follows: Principal Sinking Fund Repayments Contributions Total 2010 $ 429,906 $ 119,201 $ 549, , , , , , , , , , , , ,148 Thereafter 5,478,601 5,640,053 11,118,654 $ 7,628,131 $ 6,492,838 $ 14,120,969 The gross interest paid relating to the above long-term debt was $866,181 ( $780,666). Included in the long term debt are outstanding debentures of $14,120,969 ( $13,106,319) secured by sinking fund assets with a carrying value of $2,729,206 ( $2,250,885). 18

27 Notes to Consolidated Financial Statements December 31, Tangible Capital Assets Cost, beginning of year Additions Disposals Completed Cost, end of year Accumulated amortization, beginning of year Amortization Disposals Write-downs Accumulated amortization, end of year Net carrying amount, end of year Land Buildings Equipment Roads and Bridges Water Sewer Projects in Progress $ 14,704,739 $10,943,732 $ 10,304,791 $ 23,673,734 $ 14,122,098 $ 7,825,678 $ 76,651 $ 81,651,423 78, , ,636 1,079, ,622 3,086,458 44,031 5,434, Total - - (25,936) - (409,322) - - (435,258) (2,386,831) (11,928) (2,398,759) $ 14,782,827 $11,148,071 $ 10,457,491 $ 24,753,469 $ 14,476,398 $ 8,525,305 $ 108,754 $ 84,252,315 $ - $ 2,133,260 $ 4,804,668 $ 15,981,283 $ 6,084,657 $ 3,320,527 $ - $ 32,324, , , , , ,730-1,474, (23,082) - (409,322) - - (432,404) $ - $ 2,257,103 $ 5,203,649 $ 16,463,371 $ 5,997,865 $ 3,444,257 $ - $ 33,366,245 $ 14,782,827 $ 8,890,968 $ 5,253,842 $ 8,290,098 $ 8,478,533 $ 5,081,048 $ 108,754 $ 50,886,070 19

28 Notes to Consolidated Financial Statements December 31, Tangible Capital Assets (continued) Cost, beginning of year Additions Disposals Completed Cost, end of year Accumulated amortization, beginning of year Amortization Disposals Accumulated amortization, end of year Net carrying amount, end of year Land Buildings Equipment Roads and Bridges Water Sewer Projects in Progress $ 14,172,512 $ 10,881,171 $ 10,173,972 $23,347,860 $ 13,983,519 $ 5,850,468 $ 225,160 $78,634, ,227 62, , , ,825 2,104,280 46,927 4,032, Total - - (12,213) (12,213) (679,246) (129,070) (195,436) (1,003,752) $ 14,704,739 $ 10,943,732 $ 10,304,791 $23,673,734 $ 14,122,098 $ 7,825,678 $ 76,651 $81,651,423 $ - $ 2,010,752 $ 4,362,509 $15,499,025 $ 5,798,221 $ 3,207,869 $ - $30,878, , , , , ,658-1,457, (11,424) (11,424) $ - $ 2,133,260 $ 4,804,668 $15,981,283 $ 6,084,657 $ 3,320,527 $ - $32,324,395 $ 14,704,739 $ 8,810,472 $ 5,500,123 $ 7,692,451 $ 8,037,441 $ 4,505,151 $ 76,651 $49,327,028 The net book value of tangible capital assets not being amortized because they are under construction (or development or have been removed from service) is $108,754 ( $76,651). Assets held under capital leases in the amount of $2,328,020 ( $1,473,231) with related accumulated amortization in the amount of $318,624 ( $178,923) are disclosed separately. The City of Revelstoke holds various works of art. These items are not recognized as tangible capital assets in the financial statements because a reasonable estimate of the future benefits associated with such property cannot be made. 20

29 Notes to Consolidated Financial Statements December 31, Equipment Under Capital Leases Cost, beginning of year $ 1,473,231 $ 674,924 Additions 854, ,307 Disposals - - Cost, end of year 2,328,020 1,473,231 Accumulated amortization, beginning of year 178, ,150 Amortization 139,701 77,773 Disposals - - Accumulated amortization, end of year 318, ,923 Net carrying amount, end of year $ 2,009,396 $ 1,294, Accumulated Surplus The City of Revelstoke segregates its accumulated surplus in the following categories: Restated (see Note 1) Investment in tangible capital assets $39,446,484 $ 38,477,115 Current Funds 691, ,337 Statutory Reserve Funds Equipment Replacement 185, ,478 Parkland Cash in Lieu 222, ,011 Land Sale Reserve 1,664,700 1,644,723 Community Centre Operating Reserve 200, ,000 Cemetery Care Reserve Fund 114, ,734 Electric Utility Reserve Fund 1,000,000 1,500,000 Reserve Funds for Future Capital Works Fire Capital Replacement 143,658 42,988 Recreation Capital Replacement 90,131 19,816 Cemetery Capital Replacement 6,475 3,993 Building Replacement 151,230 58,403 Police Station Capital Replacement 80,451 96,535 Sewer - 4,215 Water 552, ,003 Liability Self Insurance 42,920 40,505 Snow Removal - 50,745 $44,592,404 $ 44,552,601 The investment in tangible capital assets represents amounts already spent and invested in infrastructure and other non-financial assets. Reserve funds represent funds set aside by bylaw or council resolution for specific purposes. 21

30 Notes to Consolidated Financial Statements December 31, Taxation - Net Budget Restated (Note 15) (see Note 1) Property taxes and payments-in-lieu $ 9,513,223 $ 9,480,510 $ 8,397,983 Collections for other governments Province of British Columbia - school tax 3,098,400 4,147,137 3,952,158 North Okanagan Regional Health District 60, , ,708 Regional Hospital District 40,000 34,601 33,298 Columbia Shuswap Regional District 250, , ,561 Municipal Finance Authority British Columbia Assessment Authority 66, ,619 95,785 Libraries 180, , ,996 13,208,223 14,726,936 13,296,714 Transfers Province of British Columbia - school tax (3,098,400) (4,147,137) (3,952,158) North Okanagan Regional Health District (60,000) (250,139) (216,708) Regional Hospital District (40,000) (34,601) (33,298) Columbia Shuswap Regional District (250,000) (456,995) (375,561) Municipal Finance Authority (100) (299) (225) British Columbia Assessment Authority (66,000) (106,619) (95,785) Libraries (180,500) (250,636) (224,996) (3,695,000) (5,246,426) (4,898,731) Available for general municipal purposes $ 9,513,223 $ 9,480,510 $ 8,397,983 22

31 Notes to Consolidated Financial Statements December 31, Contingent Liabilities (a) The City is responsible, as a member of the Columbia Shuswap Regional District, for its portion of any operating deficits or capital debt related to functions in which it participates. (b) The municipality and its employees contribute to the Municipal Pension Plan (the plan), a jointly trusteed pension plan. The board of trustees, representing plan members and employers, is responsible for overseeing the management of the pension plan, including investment of the assets and administration of benefits. The pension plan is a multiemployer contributory pension plan. Basic pension benefits provided are defined. The plan has about 158,000 active members and approximately 57,000 retired members. Active members include approximately 33,000 contributors from local governments. Every three years an actuarial valuation is performed to assess the financial position of the plan and the adequacy of plan funding. The most recent valuation as at December 31, 2006 indicated a surplus of $438 million for basic pension benefits. The next valuation will be as at December 31, 2009 with results available in The actuary does not attribute portions of the surplus to individual employers. The City paid $384,911 ( $336,450) for employer contributions to the plan in fiscal (c) The City is the defendant in various lawsuits. In the opinion of management, the overall estimation of loss is not determinable. These claims have not been provided for in the financial statements. Settlement, if any, made with respect to these actions would be expected to be accounted for as a change to expenditures in the period in which realization is known. 23

32 Notes to Consolidated Financial Statements December 31, Funds Held in Trust At the year end, the City of Revelstoke held $114,038 ( $108,734) in trust for the cemetery. These funds are not included in these financial statements. 15. Budget The Financial Plan (Budget) By-Law adopted by Council on May 15, 2009 was not prepared on a basis consistent with that used to report actual results (Public Sector Accounting Standards). The budget was prepared on a modified accrual basis while Public Sector Accounting Standards now require a full accrual basis. The budget figures anticipated using surpluses accumulated in previous years to reduce current year expenditures in excess of current year revenues to $Nil. In addition, the budget expensed all tangible capital expenditures rather than including amortization expense. As a result, the budget figures presented in the Consolidated Statements of Operations and Consolidated Change in Net Debt represent the Financial Plan adopted by Council on May 15, 2009 with adjustments as follows: 2009 Financial Plan (Budget) Bylaw surplus for the year $ - Add: Capital expenditures 9,108,250 Principal repayments 382,188 Budgeted transfers to reserves 1,845,465 Less: Budgeted transfers from reserves (5,833,215) Amortization (1,500,000) Proceeds from debt (3,886,000) Funding from DCCs (1,025,000) Budgeted transfer from prior years accumulated surplus (25,808) Budget deficit per Consolidated Statement of Operations $ (934,120) 24

33 Notes to Consolidated Financial Statements December 31, Segmented Information The City of Revelstoke is a diversified municipal government institution that provides a wide range of services to its citizens such as transit, public housing, police, fire and water. 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 This item relates to the revenues and expenses of the operations of the City itself and cannot be directly attributed to a specific segment. Protective Protection is comprised of police and fire protection services. The police services work to ensure the safety and protection of the citizens and their property. The fire department is responsible for providing fire suppression service, fire prevention programs, training and education and rescue services Transportation This department provides a number of services including road and storm sewer maintenance, snow removal, building maintenance, transit, city planning, maintenance and enforcement of building codes and review of all property development plans through its application process. Environmental Environmental services consist of providing waste disposal to citizens. Public Health Health services consist of the management of the cemetery. Economic Development This department provides sustainable community economic development programs and services as well as support for economic business retention and development initiatives. Recreation and Culture This department provides services meant to improve the health and development of the City's citizens. Recreational and cultural programs like swimming and skating lessons are provided at the arena, aquatic and community centres. Water This service provides the municipality's drinking water. This service ensures the City's water system meets all provincial and federal standards. Sewer This service processes and cleans sewage and ensures the City's sewer system meets all provincial and federal standards. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The revenues and expenses and equity in government business enterprises that are directly attributable to a particular segment are allocated to that segment. Amounts that are directly attributable to a number of segments have been allocated on a reasonable basis as follows: Taxation, fees allocated to those segments that are funded by these amounts and user charges based on the total expenditures for the year Grants based on percent of budgeted expenses 25

34 Notes to Consolidated Financial Statements December 31, Segmented Information (continued) For the year ended December 31 General government Protective Transportation Planning and development Environmental Public Health Economic Development Recreation and Culture Water Sewer Eliminations 2009 Total Revenue Taxation $ 998,403 $ 2,117,842 $ 2,680,861 $ 556,577 $ - $ 94,509 $ 1,026,709 $ 1,898,928 $ - $ 106,681 $ - $ 9,480,510 Government grants 613, , ,361 1,147, , ,295,821 User fees and service charges 310,778 1, , ,496 37, ,880 1,304, ,934 (778,712) 3,314,014 Investment income 122, ,288 Income from government business enterprises (557,222) (557,222) Other 183, , , ,550-59,001 1, ,224 1,671,027 2,553,287 3,262, , , ,803 2,187,715 2,909,057 1,363, ,561 (778,712) 15,252,635 Expenses Salaries and wages 990,567 1,200,734 1,435, , , , ,916 1,359, , ,932-6,366,635 Supplies and services 451,607 1,827,935 2,374, , ,781 41,729 1,426,798 1,333, , ,742 (778,712) 7,891,090 Interest 57, , , , ,548 95, ,107 1,499,210 3,180,169 4,025, , , ,916 1,541,714 2,851, , ,571 (778,712) 15,212,832 Net surplus (deficit) $ 171,817 $ (626,882) $ (763,081) $ (123,397) $ (99) $ 118,887 $ 646,001 $ 57,612 $ 444,955 $ 113,990 $ - $ 39,803 26

35 Notes to Consolidated Financial Statements December 31, Segmented Information (continued) For the year ended December 31 General government Protective Transportation Planning and development Environmental Public Health Economic Development Recreation and Culture Water Sewer Eliminations 2008 Restated (see Note 1) Total Revenue Taxation $ 1,441,325 $ 1,454,920 $ 2,608,612 $ 484,328 $ - $ 101,033 $ 509,924 $ 1,693,175 $ - $ 104,665 $ - $ 8,397,982 Government grants 1,154,410 73, , ,931 95,487 65,526-1,753,281 User fees and service charges 307,833 1, , ,365 19, ,599 1,340, ,580 (283,100) 3,762,565 Investment income 385,345-5, ,644-10, ,059 Other 194,390 3, , ,740-70, , ,402 Income from government business enterprises (222,814) (222,814) Other 3,260,489 1,532,619 3,716, , , , ,664 2,383,349 1,506, ,156 (283,100) 14,996,475 Expenses Salaries and wages 970,339 1,002,731 1,339, , ,043 80, ,083 1,240, , ,912 (281,010) 5,514,904 Supplies and services 527,378 1,369,106 2,742, , ,111 41, ,212 1,546, , ,091 (2,090) 8,234,168 Interest 674, ,548 19, ,050 2,172,403 2,371,837 4,081, , , , ,197 2,786,929 1,230, ,819 (283,100) 15,128,024 Net surplus (deficit) $ 1,088,086 $ (839,218) $ (365,433) $ (45,376) $ (43,789) $ (1,544) $ 8,467 $ (403,580) $ 275,501 $ 195,337 $ - $ (131,549) 27

36 Financial Section Supplementary Financial Information (Unaudited)

37 Financial Statements December 31, 2009 Contents General Fund Statements Balance Sheet 2 Operating Surplus and Equity in Capital Assets 3 Operating Revenues and Expenditures 4 Departmental Expenditures 5 Fiscal Services 6 Water Fund Statements Balance Sheet 7 Operating Surplus and Equity in Capital Assets 8 Operating Revenues and Expenditures 9 Sewer Fund Statements Balance Sheet 10 Operating Surplus and Equity in Capital Assets 11 Operating Revenues and Expenditures 12 Electric Utility Statements Balance Sheet 13 Transactions 14 Trust and Reserve Fund Statements Balance Sheet 15 Transactions 15 Investment in Revelstoke Community Forest Corporation 17 Investment in Revelstoke Community Energy Corporation 18 1

38 General Fund Statements Balance Sheet December Assets Operating Fund Cash and temporary investments $ 146,116 $ 479,194 Accounts receivable 1,588, ,308 Due from other funds 1,744,186 1,957,010 Inventory 386, ,403 Deposit - Municipal Finance Authority 412, ,996 4,277,709 4,225,911 Capital Fund Cash 471, ,736 Accounts receivable 2,547 2,547 Land held for resale 115, ,489 Equipment under capital lease 2,009,396 1,294,308 Capital assets (Note 2) 37,326,490 36,174,121 39,925,867 37,808,201 $ 44,203,576 $ 42,034,112 Liabilities Operating Fund Accounts payable $ 1,677,449 $ 1,787,204 Due to other funds 753, ,612 Deferred revenue 1,334,624 1,095,581 Reserve - Municipal Finance Authority 412, ,996 Reserve for future expenditures 57, ,250 Surplus 42, ,268 4,277,711 4,225,911 Capital Fund Accounts payable 438,000 - Due from other funds 127,428 18,677 Deferred Revenue 555, ,110 Obligations under capital lease (Note 3) 1,555,729 1,063,141 Long-term debt (Schedule 2) 8,837,328 9,131,240 Reserve for future expenditures (Note 5) 617, ,920 Equity in capital assets 27,794,344 26,812,113 39,925,865 37,808,201 $ 44,203,576 $ 42,034,112 2

39 General Fund Statements (continued) Operating Surplus and Equity in Capital Assets December Operating Surplus Balance, beginning of year $ 392,268 $ 467,029 Surplus (deficit) for the year (350,228) (74,761) Balance, end of year $ 42,040 $ 392,268 Equity in Capital Assets Balance, beginning of year $ 26,812,113 $ 44,539,658 Contributions received for acquisitions of capital assets Own funds - capital out of revenue 128, ,360 - reserve 861, ,669 Cost sharing grants 556,113 12,078 For retirement of capital lease obligations 362, ,350 For retirement of long-term debt 244, ,682 Amortization (1,167,696) (1,136,120) PSAB adjustment - (17,445,775) Capital disposals at NBV (2,855) (789) Balance, end of year $ 27,794,344 $ 26,812,113 3