CORPORATION OF THE TOWN OF WASAGA BEACH

Transcription

1 CORPORATION OF THE TOWN OF WASAGA BEACH COUNTY OF SIMCOE CONSOLIDATED FINANCIAL REPORT DECEMBER 31, 2016

2 DECEMBER 31, 2016 CONTENTS Management's Responsibility for the Consolidated Financial Report 1 Independent Auditor's Report 2 Consolidated Statement of Financial Position 3 Consolidated Statement of Operations 4 Consolidated Statement of Change in Net Financial Assets 5 Consolidated Statement of Cash Flow 6 Notes to the Consolidated Financial Statements 7 Schedule 1 - Schedule of Library Operations 22 Schedule 2 - Consolidated Schedule of Tangible Capital Assets 23 Schedule 3 - Consolidated Schedule of Segmented Tangible Capital Assets Schedule 4 - Consolidated Schedule of Segmented Tangible Capital Assets Schedule 5 - Consolidated Schedule of Segmented Revenues and Expenses 2016 Actual 26 Schedule 6 - Consolidated Schedule of Segmented Revenues and Expenses 2015 Actual 27 Schedule 7 - Consolidated Schedule of Segmented Revenues and Expenses 2016 Budget 28

3 MANAGEMENT'S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL REPORT The accompanying consolidated financial statements of the The Corporation of the Town of Wasaga Beach (the "Municipality") are the responsibility of the Municipality's management and have been prepared in accordance with Canadian public sector accounting standards established by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada, as described in Note 1 to the consolidated financial statements. The preparation of consolidated financial statements necessarily involves the use of estimates based on management's judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. The Municipality's management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded (in accordance with Canadian public sector accounting standards established by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada), and reliable financial information is available on a timely basis for preparation of the consolidated financial statements. These systems are monitored and evaluated by management. Council meets with management and the external auditor to review the consolidated financial statements and discuss any significant financial reporting or internal control matters prior to their approval of the consolidated financial statements. The consolidated financial statements have been audited by Collins Barrow SGB LLP, independent external auditor appointed by the Municipality. The accompanying Independent Auditor's Report outlines their responsibilities, the scope of their examination and their opinion on the Municipality's consolidated financial statements. Chief Administrative Officer Treasurer April 25, 2017 April 25,

4 COLLINS BARROW SGB LLP CHARTERED PROFESSIONAL ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Members of Council, Inhabitants and Ratepayers of the Town of Wasaga Beach: Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of The Corporation of the Town of Wasaga Beach, which comprise the consolidated statement of financial position as at December 31, 2016, and the consolidated statements of operations, change in net financial assets and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Municipality's preparation and fair presentation of the consolidated 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 Municipality'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 consolidated 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 consolidated financial statements present fairly, in all material respects, the financial position of The Corporation of the Town of Wasaga Beach as at December 31, 2016, and the results of its operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Collins Barrow SGB LLP Licensed Public Accountants Collingwood, Ontario April 25, 2017 This office is independently owned and operated by Collins Barrow SGB LLP. The Collins Barrow trademarks are owned by Collins Barrow National Cooperative Incorporated and are used under license. 2

5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER Financial assets Cash and cash equivalents (Note 6) 4,294,277 9,886,469 Short-term investments (Note 6) 13,413,407 11,112,000 Bond portfolio investments (Note 5) 29,038,142 18,678,611 Taxes receivable 2,428,403 3,132,376 Water and sewer billings receivable 1,071,393 1,015,616 Accounts receivable 1,505,550 2,601,979 Local improvements receivable (Note 7) 1,760,710 1,410,806 Note receivable from government business enterprise (Note 18) 3,593,269 3,593,269 Investment in government business enterprise (Note 18) 15,512,507 14,993,339 Land held for resale 356, ,500 72,974,158 66,780,965 Liabilities Line of credit (Note 6) - 120,000 Accounts payable and accruals 5,598,018 5,788,125 Developer deposits 2,995,398 3,924,927 Deferred revenue - obligatory reserve funds (Note 9) 13,347,620 8,706,261 Long-term liabilities (Note 11) 16,844,352 15,446,845 Employee future benefits (Note 13) 740, ,277 39,525,678 34,636,435 Net financial assets 33,448,480 32,144,530 Non-financial assets Tangible capital assets - net (Schedule 2 and Note 3) 236,725, ,975,428 Prepaid expenses 27,083 20, ,752, ,995,885 Accumulated surplus (Note 14) 270,201, ,140,415 Approved Mayor Date See accompanying notes to the financial statements 3

6 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31 Budget 2016 $ (Note 2) Actual Actual Revenues Net municipal taxation (Note 15) 19,112,257 19,414,403 18,240,910 Payments in lieu of taxation 463, , ,589 User charges 7,369,110 8,356,108 8,190,154 Government grants 2,943,730 3,085,568 2,677,745 Payments from other municipalities 205, , ,777 Contributions from deferred revenue - obligatory reserve funds (Note 9) 5, ,394 Investment (Note 5) 319, , ,856 Penalties and interest on taxes 450, , ,548 Other (Note 16) 2,244,170 1,973,224 1,683,903 33,112,010 34,292,323 32,499,876 Expenses General government 3,553,260 3,322,145 3,423,354 Protection to persons and property 8,661,490 8,970,155 8,095,634 Transportation 5,116,570 7,680,621 7,921,283 Environmental 3,868,420 6,814,259 7,331,885 Recreation and cultural 3,617,890 4,282,622 3,783,926 Planning and development 2,662,700 2,778,516 2,421,869 Health, social and family 63, , ,628 27,543,750 33,949,566 33,087,579 Net revenues (expenses) 5,568, ,757 (587,703) Other Grants and transfers related to capital User charges 2,783,400 1,376, ,283 Government grants 603, , ,023 Payments from other municipalities - 45,000 - Contributions from deferred revenue - obligatory reserve funds and other (Note 9) 4,650, ,754 4,321,816 Investment - 204, ,447 Other 200,000 13,052 4,880 Loss on disposal of tangible capital assets - (337,320) (567,686) Contributed tangible capital assets (Note 3) - 3,163,266 2,139,929 Income from government business enterprise (Note 18) 400,000 1,054, ,893 Landfill settlement (Note 4 (b)) ,952 8,637,810 6,717,955 8,845,537 Annual surplus (Note 17) 14,206,070 7,060,712 8,257,834 Accumulated surplus, beginning of year 263,140, ,140, ,882,581 Accumulated surplus, end of year (Note 14) 277,346, ,201, ,140,415 See accompanying notes to the financial statements 4

7 CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS FOR THE YEAR ENDED DECEMBER 31 Budget 2016 $ (Note 2) Annual surplus 14,206,070 7,060,712 8,257,834 Acquisition of tangible capital assets (15,516,210) (9,805,564) (23,444,938) Amortization of tangible capital assets - 6,843,340 7,222,842 Loss on disposal of tangible capital assets - 337, ,686 Proceeds on disposal of tangible capital assets - 38,034 48,470 Contributed tangible capital assets - (3,163,266) (2,139,929) Change in prepaid expenses - (6,626) 23,345 Change in net financial assets (1,310,140) 1,303,950 (9,464,690) Net financial assets, beginning of year 32,144,530 32,144,530 41,609,220 Net financial assets, end of year 30,834,390 33,448,480 32,144,530 See accompanying notes to the financial statements 5

8 CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED DECEMBER 31 Cash flows from (for): Operating activities Annual surplus 7,060,712 8,257,834 Non-cash items: Change in government business enterprise (Note 18) (519,168) (269,850) Amortization of tangible capital assets 6,843,340 7,222,842 Employee future benefits 90,013 89,336 Contributed tangible capital assets (3,163,266) (2,139,929) Loss on disposal of tangible capital assets 337, ,686 10,648,951 13,727,919 Changes in: Taxes receivable 703, ,473 Water and sewer billings receivable (55,777) 13,893 Accounts receivable 2,187,500 1,822,131 Local improvements receivable (349,904) 313,978 Accounts payable and accruals 387,753 (60,286) Developer deposits (929,529) 381,474 Prepaid expenses (6,626) 23,345 Net change in cash from operations 12,586,341 16,807,927 Capital activities Acquisition of tangible capital assets (9,805,564) (23,444,938) Proceeds on disposal of tangible capital assets 38,034 48,470 Accounts receivable related to tangible capital assets (1,091,071) (2,466,109) Accounts payable related to tangible capital assets (577,860) (758,690) Net change in cash from capital (11,436,461) (26,621,267) Investing activities Bond portfolio investments (10,359,531) (1,336,991) Short-term investments (2,301,407) 7,676,466 Net change in cash from investing (12,660,938) 6,339,475 Financing activities Long-term liabilities repaid (1,102,493) (1,049,996) Long-term liabilities assumed 2,500,000 13,800,000 Deferred revenue - obligatory reserve funds 4,641,359 (1,719,006) Line of credit (120,000) 120,000 Net change in cash from financing 5,918,866 11,150,998 Net change in cash position (5,592,192) 7,677,133 Cash and cash equivalents, beginning of year 9,886,469 2,209,336 Cash and cash equivalents, end of year (Note 6) 4,294,277 9,886,469 See accompanying notes to the financial statements 6

9 Nature of operations NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 The Corporation of the Town of Wasaga Beach ("the Municipality") is a lower-tier municipality located in the County of Simcoe, Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes, such as the Municipal Act, Municipal Affairs Act and related legislation. 1. Summary of significant accounting policies The consolidated financial statements have been prepared by management of the Municipality in accordance with Canadian generally accepted accounting principles for organizations operating in the local government sector as recommended by the Public Sector Accounting Board (PSAB) of The Chartered Professional Accountants of Canada. The focus of PSAB consolidated financial statements is on the financial position of the Municipality and the changes thereto. The consolidated statement of financial position includes all of the assets and liabilities of the Municipality. Financial assets are those assets which could provide resources to discharge existing liabilities or finance future operations. Accumulated surplus represents the financial position and is the difference between assets and liabilities. This provides information about the Municipality's overall future revenue requirements and its ability to finance activities and meet its obligations. Significant aspects of the accounting policies adopted by the Municipality are as follows: (a) Basis of consolidation The consolidated financial statements reflect the assets, liabilities, revenues and expenses of all committees of Council and the following organizations which are accountable to, and owned or controlled by, the Municipality: Corporation of the Town of Wasaga Beach Public Library Board All interfund assets and liabilities and sources of financing and expenditures have been eliminated. In addition, the consolidated financial statements include the consolidated operations of Geosands Inc. as disclosed in Note 18. This government business enterprise (GBE) is accounted for using the modified equity method. Under this method, the enterprise's accounting principles are not adjusted to conform with those of the Municipality and inter-organizational transactions are not eliminated. (b) Basis of accounting Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable. Expenses are recognized as they are incurred and measurable as a result of the receipt of goods or services and the creation of a legal obligation to pay. (c) Cash and cash equivalents Cash and cash equivalents include all cash balances and short-term, highly liquid financial instruments with a maturity of three months or less from the date of acquisition. (d) Land held for resale Land held for resale is stated at the lower of cost and net realizable value. Cost includes amounts for improvements to prepare the land for sale. 7

10 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Summary of significant accounting policies (continued) (e) Bond portfolio investments Bond portfolio investments are recorded at cost plus accrued interest less amortization of purchase premium discounts. (f) 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. The change in non-financial assets during the year, together with the annual surplus, provides the consolidated change in net financial assets for the year. Tangible capital assets Tangible capital assets are recorded at cost, which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost of the tangible capital assets are amortized on a straight-line basis over their estimated useful lives as follows: Land improvements Buildings Machinery and equipment Vehicles Linear assets - 10 years to infinite life - 10 to 100 years - 2 to 25 years - 5 to 20 years - 3 to 100 years One half of the annual amortization is charged in the year of acquisition and in the year of disposal. Construction in progress is not amortized until the asset is available for productive use. Linear assets represent roads, bridges, sidewalks and water and wastewater infrastructure. (g) Deferred revenue Revenue restricted by legislation, regulation, or agreement and not available for general municipal purposes is reported as deferred revenue on the consolidated statement of financial position. The revenue is reported on the consolidated statement of operations in the year in which it is used for the specified purpose. (h) County and school boards The Municipality collects taxation revenue on behalf of the school boards and the County of Simcoe. The taxation, other revenues, expenses, assets and liabilities with respect to the operations of the school boards and the County of Simcoe are not reflected in these consolidated financial statements. (i) Segment disclosures Municipal services have been segmented by grouping activities that have similar service objectives (by function). Revenues that are directly related to the costs of the function have been attributed to each segment. Net municipal taxation revenue has been allocated to general government. 8

11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Summary of significant accounting policies (continued) (j) Taxation and related revenues Municipal tax billings are prepared by the Municipality based on assessment rolls issued by the Municipal Property Assessment Corporation. Tax rates are established annually by the Municipal Council, incorporating amounts to be raised for local services. A normal part of the assessment process is the issue of supplementary assessment rolls, which provide updated information with respect to changes in property assessment. Once a supplementary assessment roll is received, the Municipality determines the taxes applicable and renders supplementary tax billings. Taxation revenues are recorded at the time tax billings are issued. Assessments and the related municipal taxes are subject to appeal. Taxes are recorded at estimated amounts when they meet the definition of an asset, have been authorized and the taxable event occurs. For municipal taxes, the taxable event is the period for which the tax is levied. Taxes receivable are recognized net of allowance for anticipated uncollectible amounts. The Municipality is entitled to collect interest and penalties on overdue taxes. These revenues are recorded in the period the interest and penalties are levied. (k) Government grants Government grants are recognized in the consolidated financial statements as revenues in the period in which the events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met and reasonable estimates of the amounts can be made. Conditional government grants are recognized to the extent the conditions imposed on them have been fulfilled. Unconditional government grants are recognized when monies are receivable. Government grants for acquisition of tangible capital assets are recognized in the period in which eligible expenditures are made. Grants are recognized as deferred revenue when grant stipulations give rise to a liability. Grant revenue is recognized in the consolidated statement of operations as the stipulation liabilities are settled. (l) Revenue recognition Fees for water and waste water usage are recorded as user charges in the period service is provided. Connection fee revenues are recognized when the connection has been established. Subdivider contributions and fees for services (included in user charges and other revenues) are recognized over the period of service or when required expenditures occur if applicable. Investment income (other than on obligatory reserve funds) is reported as revenue in the period earned. Investment income earned on obligatory reserve funds is added to the fund balance and forms part of the respective deferred revenue balances. Revenue from the obligatory reserve funds is recognized in the year in which eligible expenditures are made. Other user charges, payments from other municipalities and other revenues are recognized as invoiced if collection is reasonably assured. 9

12 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Summary of significant accounting policies (continued) (m) Pension plan The Municipality offers a pension plan for its full-time employees through the Ontario Municipal Employee Retirement System ("OMERS"). OMERS is a multi-employer, contributory, public sector pension fund established for employees of municipalities, local boards and school boards in Ontario. Participating employers and employees are required to make plan contributions based on participating employees' contributory earnings. The Municipality accounts for its participation in OMERS as a defined contribution plan and recognizes the expense related to this plan as contributions are made, even though OMERS is itself a defined benefit plan. (n) Other post-employment benefits Employee future benefits other than pension provided by the Municipality include medical, dental and life insurance benefits. These plans provide benefits to employees when they are no longer providing active service. Employee future benefit expense is recognized in the period in which the employees render services on an accrual basis. The accrued benefit obligations and the current service costs are calculated using the projected benefit method, prorated on service, and based on assumptions that reflect management s best estimates. The current service cost for a period is equal to the actuarial present value of benefits attributed to employees services rendered in the period. Past service costs arising from plan amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment. The excess of the net actuarial gains or losses over 10% of the accrued benefit obligation is amortized to expense over the average remaining service period of active employees to full eligibility. (o) Use of estimates The preparation of consolidated financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Significant estimates have been made of historical cost and useful lives of tangible capital assets and employee future benefits. Actual results could differ from those estimates. 2. Budget amounts The operating budget approved by Council for 2016 is reflected on the consolidated statement of operations, consolidated statement of change in net financial assets, as well as Schedules 1 and 7. The budgets established for investment in tangible capital assets are on a project oriented basis, the costs of which may be carried out over one or more years and, therefore, may not be comparable with the current year s actual expenditure amounts. 10

13 3. Tangible capital assets NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 Schedules 2, 3 and 4 provide information on the tangible capital assets of the Municipality by major asset class and segment, as well as for accumulated amortization of the assets controlled. The reader should be aware of the following information relating to tangible capital assets: (a) Construction in progress Construction in progress with a value of $4,980,421 ( $5,999,098) has not been amortized. Amortization of these assets will commence when the asset is put into service. (b) Contributed tangible capital assets Contributed tangible capital assets have been recognized at fair market value at the date of contribution. The value of contributed assets received during the year is $3,163,266 ( $2,139,929). (c) Tangible capital assets disclosed at nominal values Where an estimate of fair value could not be made, the tangible capital asset was recognized at a nominal value. Land is the only category where nominal values were assigned. 4. Contingencies (a) In the ordinary course of business, various claims and lawsuits are brought against the Municipality. No provision has been made for pending expropriations of land beyond the payments already made to affected property owners. Any payment made by the Municipality pursuant to claims, lawsuits or expropriations will be charged in the year of settlement. (b) In 1990, the Town's landfill site was taken over by the County of Simcoe and, as compensation, the County was accepting Town waste at a below market rate of $60 per tonne, adjusted annually for inflation. During the 2015 fiscal year the Town and the County agreed to a full and final settlement. (c) Annually, the Municipality is unable to estimate its Ontario Provincial Police adjustment. As a result, any adjustment is recorded in the year in which it is received or paid. 5. Bond portfolio investments Bond portfolio investments include fixed income federal, provincial and corporate bonds, rated by S&P at a risk level of AA or higher in accordance with the Municipality's investment policy. The bond portfolio investments balance is reduced by $43,373 ( $105,349) of purchase premiums. The bond portfolio investments have a cost of $16,081,515 (market value - $16,434,129) at December 31, 2016 ( cost of $18,783,960, market value of $19,271,890). Investment income earned on the portfolio during the year is $160,300 ( $115,552). Also included in investments are investments held in The One Investment Program. It is designed specifically for the municipal and broader Ontario public sector. The investments held within the Program are valued at their purchase cost. The investments include: a Bond Portfolio with a cost of $3,500,00 (market value - $3,488,017), a Universal Corporate Bond Portfolio with a cost of $4,500,00 (market value - $4,385,900) and an Equities Portfolio with a cost of $5,000,000 (market value - $5,479,482). 11

14 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Cash and cash equivalents and short-term investments Cash and cash equivalents and short-term investments total as follows: Cash and cash equivalents 4,294,277 9,886,469 Short-term investments 13,413,407 11,112,000 The total is comprised of unrestricted and restricted amounts as follows: 17,707,684 20,998,469 Unrestricted 4,360,064 12,292,208 Restricted - obligatory reserve funds 13,347,620 8,706,261 17,707,684 20,998,469 Cash and cash equivalents includes cash held in financial institutions. The 2015 balance included one cashable term deposit with a maturity date of March 4, 2016 earning an interest rate of 1.12% per annum. Short-term investments consists of a term deposit with a maturity date of August 3, 2017, earning an interest rate of and 1.17%. As well as 3 non-redeemable GICs with maturity dates of January 9, 2017, March 28, 2017 and December 16, 2017, earning interest rates of 1.60%, 1.50% and 1.40% per annum. The 2015 balance consisted of a non-redeemable GIC and an 18 month special rate GIC, with maturity dates of July 4, 2016 and March 28, 2017 earning interest ranging from 1.50% to 1.55% per annum, respectively. Cash equivalents and short-term investments are recorded at cost which approximates fair market value. The available line of credit has a limit of $2,000,000. Interest is paid on outstanding balances at a rate of prime less 0.75%. Restricted cash relates to obligatory reserve funds as described in Note 9 below. 7. Local improvements receivable Benefiting land owners of local improvements had the option to pay for their share of the cost in full or finance over increments of 5, 10, 15 or 20 years. Interest rates on the receivable balance range from 1.60% to 6.50% per annum. 8. Development and letters of credit As part of various developments, the Town has received letters of credit to cover the costs of completing these projects. Letters of credit held by the Town at December 31, 2016 were $10,143,491 ( $6,665,067). 12

15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Deferred revenue - obligatory reserve funds A requirement of the public sector accounting principles of the Chartered Professional Accountants of Canada is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as provincial legislation restricts how these funds may be used and under certain circumstances these funds may be refunded. The net change during the year in the restricted deferred revenue balances is made up as follows: Deferred revenue, beginning of year 8,706,261 10,425,267 New deposits: Government grants 558, ,791 Private sources 4,883,422 2,050,919 Investment income 154, ,494 Transfers to revenue (954,754) (4,460,210) Deferred revenue, end of year 13,347,620 8,706, Obligatory reserve funds: Development Charges Act 9,579,417 5,645,062 Recreational land 1,556,291 1,425,980 Federal and Provincial gas tax allocation 1,734,623 1,514,036 Building Code Act 477, ,183 13,347,620 8,706, Commitments The Town has entered into an agreement with Floyd Sinton Limited for the operation of the Town's buses. The Town will pay Floyd Sinton Limited $452,592 from 2016 to 2018 and $301,728 in The contract expires August 31, The Town renewed the servicing agreement with the Ontario Clean Water Agency to operate and maintain the Wasaga Beach Water Treatment Plant and Water Control Pollution Plant for a term of ten (10) years ending on December 31, 2025 with a renewal option for successive five (5) year terms. The Town will pay the Ontario Clean Water Agency $1,125,170 in 2017 and $1,125,170 plus an annual insurance and Consumer Price Index adjustment in subsequent years. 13

16 11.Long-term liabilities (a) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 Long-term liabilities consist of the following: Ontario Clean Water Agency (OCWA) debenture for construction of water and wastewater facilities. The debenture has an interest rate of 5.97%, repayable in monthly blended payments of $32,868 principal and interest, due November , ,645 OILC debenture for the West End Servicing Contract, 4.18% interest, semi-annual blended payments of $92,534 principal and interest, due September , ,233 OILC debenture for the purchase of a fire pumper truck, 1.84% interest, semi-annual payments of $60,000 plus interest, due September , ,000 Toronto Dominion bank loan for the purchase of beachfront properties, 3.163% interest, monthly blended payments of $33,310 principal and interest, due May ,607,617 6,793,967 OILC debenture for the purchase of beachfront properties, 3.28% interest, monthly payments of $23,000 plus interest, due July ,509,000 6,785,000 OILC debenture for the retrofit of Streetlights with LED light bulbs, 2.21% interest, semi-annual payments of $125,000 plus interest, due July ,500,000-16,844,352 15,446,845 14

17 11.Long-term liabilities (continued) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 (b) Principal, interest and total debt payments for the next 5 years are as follows: Principal Interest Total $ ,356, ,402 1,861, ,017, ,372 1,483, ,031, ,920 1,466, , ,568 1,145, , ,044 1,130,633 and thereafter 11,954,761 2,208,072 14,162,833 16,844,352 4,406,378 21,250,730 The above long-term liabilities issued in the name of the Municipality have been approved through by-laws. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs. 12.Pension agreements The employees of the Municipality participate in the Ontario Municipal Employees Retirement System ("OMERS"). Although the plan has a defined retirement benefit for employees, the related obligation of the Municipality cannot be identified. The Municipality has applied defined contribution plan accounting as it has insufficient information to apply defined benefit plan accounting. The OMERS plan has several unrelated participating municipalities and costs are not specifically attributed to each participant. Amounts paid to OMERS for 2016 were $868,863 ( $887,143) for current service. OMERS is a multi-employer plan, therefore any pension plan surpluses or deficits are a joint responsibility of Ontario municipal organizations and their employees. The most recent actuarial valuation of the Plan was conducted at December 31,

18 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Employee future benefits The Municipality pays certain post-retirement benefits on behalf of its retired employees, including extended health and dental coverage. The Municipality recognizes these post- retirement costs in the period in which the employees rendered the services. The accrued benefit obligation at December 31, 2016 of $1,176,081 and the net periodic benefit cost were determined by an actuarial valuation dated February 25, Actuarial valuations will be prepared every third year or when there are significant changes to the workforce. Information about the Municipality's obligation for employee future benefits is as follows: Accrued plan liability, beginning of year 650, ,941 Current service cost 49,415 47,629 Interest cost 42,389 40,598 Amortization of actuarial loss 41,009 41,009 Benefits paid for the period (42,800) (39,900) Accrued plan liability, end of year 740, ,277 Unrecognised actuarial loss 435, ,800 Accrued benefit obligation, end of year 1,176,081 1,127,077 The main actuarial assumptions employed for the valuation were as follows: (a) General inflation Future general inflation levels, as measured by changes in the Consumer Price Index (CPI), were assumed at 2.0% in 2014 and thereafter. (b) Interest (discount) rate The obligation as at December 31st, of the present value of future liabilities and the expense, was determined using an annual discount rate of 3.75%. This corresponds to the assumed CPI rate plus an assumed real rate of return of 1.75%. (c) Health care costs Health care costs were assumed to increase 8% in 2014, 7.8% in 2015, 7.5% in 2016 and thereafter. (d) Dental costs Dental costs were assumed to increase 4.0% in 2014 and thereafter. 16

19 14.Accumulated surplus NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 The accumulated surplus consists of individual fund surplus and reserves and reserve funds as follows: Surplus: Investment in tangible capital assets 219,881, ,528,583 General revenue (deficit) - (73,653) Land held for resale 356, ,500 Total surplus 220,237, ,811,430 Reserves set aside for specific purposes by Council Working funds 2,164,055 2,036,444 Government business enterprise 3,593,269 3,593,269 Contingencies 186, ,871 Insurance 96,271 96,271 Current purposes 1,861,904 1,709,972 Tax rate stabilization 2,995,891 2,843,278 Acquisition of tangible capital assets 23,115,303 21,436,496 Total reserves 34,013,564 31,902,601 Reserve funds set aside for specific purposes by Council Acquisition of tangible capital assets 437, ,045 Investment in government business enterprises (Note 18) 15,512,507 14,993,339 Total accumulated surplus 270,201, ,140, Net municipal taxation Net municipal taxation consists of: Taxation revenue 40,589,495 38,412,961 Amount levied and remitted to School Boards (9,333,376) (9,116,496) Amount levied and remitted to the County of Simcoe (11,841,716) (11,055,555) Net municipal taxation 19,414,403 18,240,910 17

20 16.Other revenues NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2016 Other revenues on the consolidated statement of operations consists of the following: Rents, concessions and franchises 966, ,260 Licences and permits 765, ,262 Fines 133, ,070 Donations, sale of publications and equipment 107,746 26, Annual surplus transferred to reserves 1,973,224 1,683,903 At the end of 2016 $378,874 of unspent funds were transferred to the working funds and tax rate stabilization reserves by council resolution. In 2015 $703,834 was transferred to the working funds and tax rate stabilization reserve. A reconciliation between adjusted annual surplus as transferred to reserves and recorded annual surplus as per the consolidated statements is reflected below. The need for this is generated by the actual recorded results complying with PSAB reporting requirements Recorded annual surplus as per consolidated statement of operations 7,060,712 8,257,834 Transfers to reserves/obligatory reserve funds (1,810,038) (2,288,286) Change in government business enterprise (519,168) (269,850) Amortization of tangible capital assets 6,843,340 7,222,842 Loss on disposal of tangible capital assets 337, ,686 Tangible capital asset additions (12,930,799) (25,536,396) Issuance of debentures 2,500,000 13,800,000 Principal payments on long-term liabilities (1,102,493) (1,049,996) Adjusted annual surplus 378, ,834 18

21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Government business enterprise (GBE) The following balances represent the consolidation of Geosands Inc., Wasaga Distribution Inc., Wasaga Genco Inc. and Wasaga Resource Services Inc. for the year ended December 31. The following operations are included in the consolidated statement of operations, accounted for on a modified equity basis: Notes Total assets 25,309,499 23,174,736 Total liabilities (a) (9,796,992) (8,181,397) Net assets 15,512,507 14,993,339 Common shares 2,745,596 2,745,596 Miscellaneous paid-in capital 5,175,468 5,175,468 Retained income 7,591,443 7,072,275 Investment in government business enterprise 15,512,507 14,993,339 Total revenues (b) 23,072,333 19,919,218 Total expenditures (22,159,080) (19,249,368) Net revenues for the year 913, ,850 Dividends (400,000) (400,000) Dividend refund 5,915 - Change in investment in government business enterprise equity 519, ,850 Income from government business enterprise: Change in investment in government business enterprise equity (c) 519, ,850 Dividends (d) 400, ,000 Interest on note receivable (e) 135, ,043 1,054, ,893 (a) Note receivable from Wasaga Distribution Inc. Geosands' liabilities include the note receivable from Wasaga Distribution Inc., repayable to the Town, in the amount of $3,593,269 ( $3,593,269), which has no fixed terms of principal repayment. Interest is determined on the principal amount outstanding on the 30th day following December 31st of each year in which principal is owing. The interest receivable in any given year was previously based on the Government of Canada 10 year bond rate posted by the Bank of Canada on December 31st of each year. During the year the note was amended to bear interest a the rate approved by the Ontario Energy Board (OEB) in connection with the the current decision and order issued by the OEB approving the electricity distribution rates that Wasaga Distribution Inc. is permitted to recover. Interest may be receivable in cash or in additional common shares issued by the government business enterprise. The interest rate during the year was 3.78% ( %). 19

22 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Government business enterprise (GBE) (continued) (b) Rent revenue Included in total revenue of the GBE is rental income from the Town of Wasaga Beach. In 2011, a lease agreement was entered into with Wasaga Distribution Inc., effective January 1, 2012 for the construction of a fire hall on a portion of the land owned by Wasaga Distribution Inc. The Municipality was charged rent of $23,232 for the first year. Rent will increase by the same percentage as the Consumer Price Index for the first ten years. On the eleventh year of the lease there will be a revaluation of rent based on fair market value. The term of the lease is forty years, including options for two extensions of twenty years. (c) Change in investment in government business enterprise equity Change in investment in government business enterprise equity represents the annual increase or decrease in the retained earnings of Geosands Inc., Wasaga Distribution Inc. and Wasaga Resources Services Inc., after eliminating any intercompany transactions between the three companies. The amount of change in retained earnings is calculated as the companies' annual net income, less any dividends paid to the Town. The amount retained by those companies is determined by their Board of Directors, in their anticipation of investments in property, plant and equipment and their cash requirements to effectively operate the companies. The Town only receives cash from the investment in the government business enterprise when dividends are declared as described in (d) below. (d) Dividends During the year the Town received $400,000 ( $400,000) cash in the form of dividends from Geosands Inc. The amount of dividends paid each year is determined by the Board of Directors of Wasaga Resources Services Inc., Wasaga Distribution Inc. and Geosands Inc. based on their annual earnings, their anticipated amount of investment required in property, plant and equipment and their available cash flow. (e) Interest on note receivable During the year the Town received $135,826 ( $148,043) cash in the form of interest from the note receivable from Wasaga Distribution Inc., as described in (a) above. 19.Trust funds Trust funds administered by the Municipality amounting to $201,886 ( $193,905) have not been included in the consolidated statement of financial position nor have their operations been included in the consolidated statement of operations. The trust funds are comprised of the following: Cemetery Pre-Need 37,170 38,766 Cemetery Perpetual Care and Maintenance 164, ,139 20

23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, Future accounting pronouncements The PSAB issued Section PS 3450, "Financial Instruments", which establishes recognition, measurement, presentation and disclosure standards relating to financial instruments such as receivables, payables, and equity instruments. The section is effective for governments for fiscal years beginning on or after April 1, 2019; the Municipality is required to adopt this section for its fiscal year beginning January 1, Earlier adoption is allowed. At this time, we are unable to determine if this accounting pronouncement would have a material impact. The PSAB issued Section PS 3041, "Portfolio Investments", which replaces Section PS The new section establishes recognition, measurement, presentation and disclosure standards relating to investments in organizations that do not form part of the government reporting entity. This section must be implemented upon the adoption of Section PS At this time, we are unable to determine if this accounting pronouncement would have a material impact. The PSAB issued Section PS 1201, "Financial Statement Presentation", which replaces Section The new section establishes reporting principles and standards for the disclosure of information in government financial statements. This section establishes the requirement of the Municipality's financial statements to include a statement of financial position, statement of operations, a statement of remeasurement gains and losses, a statement of change in net debt and a statement of cash flow. This section must be implemented upon the adoption of Section PS This pronouncement is not expected to have a material impact. 21

24 SCHEDULE 1 SCHEDULE OF LIBRARY OPERATIONS FOR THE YEAR ENDED DECEMBER 31 Budget Actual Actual $ (Note 2) Revenue Government grants 34,000 43,713 46,820 Contribution from municipality 490, , ,384 Copier, duplicating fees and miscellaneous 15,400 13,140 13,590 Donations 1, , , , ,401 Expenses Salaries, wages and benefits 477, , ,355 Services 6,910 6,720 8,096 Materials and supplies 46,360 61,993 44,018 Memberships and training 5,200 4,929 5, , , ,178 Annual surplus 5,500 3,530 5,223 Accumulated surplus, beginning of the year - 372, ,218 Accumulated surplus, end of the year - 375, ,441 The supplemental information provided above has been extracted from the records of the Municipality and is included in the consolidated statement of operations. See accompanying notes to the financial statements 22

25 Land Land Improvements SCHEDULE 2 CONSOLIDATED SCHEDULE OF TANGIBLE CAPITAL ASSETS FOR THE YEAR ENDED DECEMBER 31 Buildings Machinery and Equipment Vehicles Linear Assets Construction in Progress $ Cost Balance, beginning of year 31,051,657 9,319,769 49,676,420 9,870,303 10,326, ,560,849 5,999, ,804, ,362,044 Additions 2,246, , , , ,777 9,444, ,107 14,573,614 30,252,415 Disposals (95,261) - - (322,062) (196,748) (764,937) (1,604,784) (2,983,792) (6,810,225) Balance, end of year 33,202,471 9,964,120 50,355,961 10,000,787 10,650, ,240,129 4,980, ,394, ,804,234 Accumulated amortization Balance, beginning of year - 2,827,927 17,210,259 3,543,646 5,902,087 53,344,887-82,828,806 77,132,485 Amortization - 261,757 1,360, , ,842 3,811,541-6,843,340 7,222,843 Disposals (322,062) (180,735) (500,857) - (1,003,654) (1,526,522) Balance, end of year - 3,089,684 18,570,592 3,873,451 6,479,194 56,655,571-88,668,492 82,828,806 Net book value, end of year 33,202,471 6,874,436 31,785,369 6,127,336 4,170, ,584,558 4,980, ,725, ,975, Total 2015 Total See accompanying notes to the financial statements 23

26 General Government SCHEDULE 3 CONSOLIDATED SCHEDULE OF SEGMENTED TANGIBLE CAPITAL ASSETS FOR THE YEAR ENDED DECEMBER 31, 2016 Protection to Persons and Property Transportation Environmental Recreation and Cultural Planning and Development Cost Balance, beginning of year 10,790,878 7,125,084 75,626, ,804,618 20,688,212 14,074, , ,805,136 Additions 83,272 45,405 5,345,511 7,080, , ,569-13,987,507 Disposals (99,198) (233,885) (879,609) - (163,314) (3,002) - (1,379,008) Assets in service, end of year 10,774,952 6,936,604 80,092, ,885,256 20,974,010 15,054, , ,413,635 Construction in progress 432-1,552,967 3,412,066 9,840 1,366 3,750 4,980,421 All assets, end of year 10,775,384 6,936,604 81,645, ,297,322 20,983,850 15,055, , ,394,056 Accumulated amortization Balance, beginning of year 859,206 2,554,127 31,140,564 41,585,266 6,193, , ,610 82,828,806 Amortization 124, ,509 2,598,873 2,878, , ,463 16,976 6,843,340 Disposals (3,937) (233,885) (601,552) - (161,279) (3,001) - (1,003,654) Balance, end of year 980,133 2,643,751 33,137,885 44,463,759 6,647, , ,586 88,668,492 Net book value, end of year 9,795,251 4,292,853 48,507, ,833,563 14,336,517 14,440, , ,725,564 Health, Social and Family Total See accompanying notes to the financial statements 24

27 General Government SCHEDULE 4 CONSOLIDATED SCHEDULE OF SEGMENTED TANGIBLE CAPITAL ASSETS FOR THE YEAR ENDED DECEMBER 31, 2015 Protection to Persons and Property Transportation Environmental Recreation and Cultural Planning and Development Cost Balance, beginning of year 10,822,886 7,096,559 66,642, ,605,003 20,475, , , ,538,615 Additions 22,918 60,979 10,603,645 3,511, ,137 13,877,320 3,690 28,409,199 Disposals (54,926) (32,454) (1,619,765) (311,895) (116,462) (7,176) - (2,142,678) Assets in service, end of year 10,790,878 7,125,084 75,626, ,804,618 20,688,212 14,074, , ,805,136 Construction in progress - - 1,291,240 4,692,360 15, ,999,098 All assets, end of year 10,790,878 7,125,084 76,917, ,496,978 20,703,710 14,074, , ,804,234 Accumulated amortization Balance, beginning of year 790,623 2,257,524 29,355,307 38,793,372 5,706,966 82, ,660 77,132,485 Amortization 123, ,057 3,049,473 2,843, , ,726 16,950 7,222,843 Disposals (54,926) (32,454) (1,264,216) (51,117) (116,633) (7,176) - (1,526,522) Balance, end of year 859,206 2,554,127 31,140,564 41,585,266 6,193, , ,610 82,828,806 Net book value, end of year 9,931,672 4,570,957 45,777, ,911,712 14,510,260 13,741, , ,975,428 Health, Social and Family Total See accompanying notes to the financial statements 25

28 General Government SCHEDULE 5 CONSOLIDATED SCHEDULE OF SEGMENTED REVENUES AND EXPENSES ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2016 Protection to Persons and Property Transportation Environmental Recreation and Cultural Planning and Development Health, Social and Family Revenues Net municipal taxation 19,414, ,414,403 Payments in lieu of taxation 481, ,392 User charges 216,608 31,796 1,172,794 6,006, , ,231 47,574 8,356,108 Government grants 2,581, ,507 12,500 74, ,000-3,085,568 Payments from other municipalities - 122, , ,634 Contributions from deferred revenue - obligatory reserve funds Investment 307, ,150 Penalties and interest on taxes 496, ,844 Other 28, ,710 62,550 29, , ,898 7,120 1,973,224 23,526,863 1,010,515 1,414,851 6,048, ,096 1,397,754 54,694 34,292,323 Expenses Salaries, wages and employee benefits 2,335,126 3,452,207 2,689,046 1,151,567 2,376, ,347 7,527 12,856,306 Interest on long-term liabilities - 7,601 25,582 56, , ,916 Materials and supplies 472, ,134 1,392,340 1,381, , ,845 73,371 4,945,811 Rents, financial expenses and external transfers 254,987 4,615, ,587 1,282, , ,463 3,375 7,814,724 Contracted services 134, , ,192 64, , , ,469 Amortization of tangible capital assets 124, ,509 2,598,874 2,878, , ,464 16,975 6,843,340 3,322,145 8,970,155 7,680,621 6,814,259 4,282,622 2,778, ,248 33,949,566 Net revenues (expenses) 20,204,718 (7,959,640) (6,265,770) (765,709) (3,443,526) (1,380,762) (46,554) 342,757 Other Grants and transfers related to capital User charges - - 1,504 1,375, ,376,848 Government grants ,523-18, ,838 Payments from other municipalities ,000-30, ,000 Contributions from deferred revenue - obligatory reserve funds and other , , , ,754 Investment , ,523 Other 13, ,052 Loss on disposal of tangible capital assets (95,261) - (240,023) - (2,036) - - (337,320) Contributed tangible capital assets 15, ,052 2,712, ,163,266 Income from government business enterprise 1,054, ,054, ,810-1,027,555 4,527, , ,717,955 Annual surplus (deficit) 21,192,528 (7,959,640) (5,238,215) 3,762,104 (3,268,749) (1,380,762) (46,554) 7,060,712 Total See accompanying notes to the financial statements 26