METRO VANCOUVER REGIONAL DISTRICT PERFORMANCE AND AUDIT COMMITTEE

Transcription

1 METRO VANCOUVER REGIONAL DISTRICT PERFORMANCE AND AUDIT COMMITTEE REGULAR MEETING Friday, July 7, :00 a.m. 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. 1. ADOPTION OF THE AGENDA A G E N D A July 7, 2017 Regular Meeting Agenda That the Performance and Audit Committee adopt the agenda for its regular meeting scheduled for July 7, 2017 as circulated. 2. ADOPTION OF THE MINUTES 2.1 April 13, 2017 Regular Meeting Minutes That the Performance and Audit Committee adopt the minutes of its regular meeting held April 13, 2017 as circulated. 3. DELEGATIONS 4. INVITED PRESENTATIONS 5. REPORTS FROM COMMITTEE OR STAFF 5.1 Corporate Allocation Policy Designated Speaker: Phil Trotzuk That the Performance and Audit Committee endorse the Corporate Allocation Policy as presented in the attached report, dated June 27, 2017, titled Corporate Allocation Policy. 5.2 GVS&DD Development Cost Charge Program Review - Update Designated Speaker: Dean Rear That the Performance and Audit Committee endorse the updated GVS&DD Development Charge rates and consultation plan as presented in the attached report, dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review - Update. 1 Note: Recommendation is shown under each item, where applicable. June 28, 2017 PAU - 1

2 Performance and Audit Committee Regular Agenda July 7, 2017 Agenda Page 2 of City of White Rock Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Designated Speaker: Dean Rear That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the City of White Rock in the amount of $2,062,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 to the Inspector of Municipalities for Certificate of Approval. 5.4 Township of Langley Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Designated Speaker: Dean Rear That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Township of Langley in the amount of $25,460,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 to the Inspector of Municipalities for Certificate of Approval. 5.5 Village of Lions Bay Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Designated Speaker: Dean Rear That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Village of Lions Bay in the amount of $460,900; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 ; and PAU - 2

3 Performance and Audit Committee Regular Agenda July 7, 2017 Agenda Page 3 of 4 d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 to the Inspector of Municipalities for Certificate of Approval. 5.6 Interim Financial Performance Report - May 2017 Designated Speaker: Dean Rear That the Performance and Audit Committee receive for information the report dated June 16, 2017, titled Interim Financial Performance Report - May Investment Position and Returns - January 1 to April 30, 2017 Designated Speaker: Dean Rear That the Performance and Audit Committee receive for information the report dated June 19, 2017, titled Investment Position and Returns January 1 to April 30, Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2017 Designated Speaker: Dean Rear That the Performance and Audit Committee receive for information the report dated June 12, 2017, titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, Metro Vancouver Banking Services Designated Speaker: Dean Rear That the Performance and Audit Committee receive for information the report dated June 18, 2017, titled Metro Vancouver Banking Services Tender/Contract Award Information March to May 2017 Designated Speaker: Roy Moulder That the Performance and Audit Committee receive for information the report dated June 23, 2017, titled Tender/Contract Award Information March to May Manager s Report Designated Speaker: Phil Trotzuk That the Performance and Audit Committee receive for information the report dated June 23, 2017, titled Manager s Report. 6. INFORMATION ITEMS 7. OTHER BUSINESS 8. BUSINESS ARISING FROM DELEGATIONS PAU - 3

4 Performance and Audit Committee Regular Agenda July 7, 2017 Agenda Page 4 of 4 9. RESOLUTION TO CLOSE MEETING That the Performance and Audit close its regular meeting schedule for July 7, 2017 pursuant to the Community Charter provisions, Section 90 (1) (i) as follows: 90 (1) A part of the meeting may be closed to the public if the subject matter being considered relates to or is one or more of the following: (i) the receipt of advice that is subject to solicitor-client privilege, including communications necessary for that purpose. 10. ADJOURNMENT/CONCLUSION That the Performance and Audit Committee adjourn/conclude its regular meeting of July 7, Membership: Walton, Richard (C) North Vancouver District Baldwin, Wayne (VC) White Rock Bell, Corisa Maple Ridge Brodie, Malcolm Richmond Coté, Jonathan New Westminster Fox, Charlie Langley Township Gill, Tom Surrey Jordan, Colleen Burnaby McEwen, John Anmore Meggs, Geoff - Vancouver Mussatto, Darrell North Vancouver City O Neill, Terry Coquitlam Smith, Michael West Vancouver PAU - 4

5 METRO VANCOUVER REGIONAL DISTRICT PERFORMANCE AND AUDIT COMMITTEE Minutes of the Regular Meeting of the Metro Vancouver Regional District (MVRD) Performance and Audit Committee held at 9:02 a.m. on Thursday, April 13, 2017 in the 2 nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia. MEMBERS PRESENT: Chair, Mayor Richard Walton, North Vancouver District Vice Chair, Mayor Wayne Baldwin, White Rock (arrived at 9:05 a.m.) Mayor Jonathan Coté, New Westminster Councillor Charlie Fox, Langley Township Councillor Tom Gill, Surrey Councillor Colleen Jordan, Burnaby Mayor John McEwen, Anmore Mayor Darrell Mussatto, North Vancouver City (departed at 10:58 a.m.) Councillor Terry O Neill, Coquitlam Mayor Michael Smith, West Vancouver (departed at 10:59 a.m.) MEMBERS ABSENT: Councillor Corisa Bell, Maple Ridge Mayor Malcolm Brodie, Richmond Councillor Geoff Meggs, Vancouver STAFF PRESENT: Phil Trotzuk, Chief Financial Officer Carol Mason, Chief Administrative Officer Agata Kosinski, Assistant to Regional Committees, Board and Information Services 1. ADOPTION OF THE AGENDA 1.1 April 13, 2017 Regular Meeting Agenda It was MOVED and SECONDED That the Performance and Audit Committee adopt the agenda for its regular meeting scheduled for April 13, 2017 as circulated. CARRIED Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 1 of 7 PAU - 5

6 2. ADOPTION OF THE MINUTES 2.1 February 2, 2017 Regular Meeting Minutes It was MOVED and SECONDED That the Performance and Audit Committee adopt the minutes of its regular meeting held February 2, 2017 as circulated. CARRIED 2.2 February 10, 2017 Special Joint Finance and Intergovernment Committee and Performance and Audit Committee Meeting Minutes 3. DELEGATIONS No items presented. It was MOVED and SECONDED That the Performance and Audit Committee receive for information the minutes of the Special Joint Finance and Intergovernment Committee and Performance and Audit Committee Meeting held February 10, CARRIED 4. INVITED PRESENTATIONS No items presented. 5. REPORTS FROM COMMITTEE OR STAFF 5.1 Draft Audited 2016 Financial Statements Report dated March 30, 2017 from Phil Trotzuk, Chief Financial Officer and Linda Sabatini, Division Manager, Finance Operations and Systems, seeking Board approval of the Audited 2016 Financial Statements for the Greater Vancouver Districts and the Metro Vancouver Housing Corporation. 9:05 a.m. Vice Chair, Mayor Baldwin arrived at the meeting. Phil Trotzuk, Chief Financial Officer, provided the Committee with a presentation outlining the Draft Audited 2016 Financial Statements and the 2016 Financial Results Year-End. Members suggested consideration be given to: Evaluating the increases in expenses for Electoral Area A Accounting for the large surpluses in the budget Deferred projects Presentation material titled 2016 Metro Vancouver Finances is retained with the April 13, 2017 Performance and Audit Committee agenda. Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 2 of 7 PAU - 6

7 It was MOVED and SECONDED a) That the MVRD Board approve the Audited 2016 Consolidated Financial Statements for the Greater Vancouver Regional District; b) That the GVS&DD Board approve the Audited 2016 Financial Statements for the Greater Vancouver Sewerage and Drainage District; c) That the GVWD Board approve the Audited 2016 Financial Statements for the Greater Vancouver Water District; d) That the MVHC Board approve the Audited 2016 Financial Statements for the Metro Vancouver Housing Corporation. CARRIED Financial Results Year-End Report dated April 6, 2017 from Dean Rear, Director, Financial Planning and Operations, updating the Board on financial performance for the year ending December 31, 2016 as compared to the 2016 annual budget. It was MOVED and SECONDED That the MVRD Board receive for information the report dated April 6, 2017, titled 2016 Financial Results Year-End. CARRIED Agenda Varied The order of the agenda was varied to consider a resolution to close the meeting at this point. 9. RESOLUTION TO CLOSE MEETING It was MOVED and SECONDED That the Performance and Audit close its regular meeting schedule for April 13, 2017 pursuant to the Community Charter provisions, Section 90 (1) (l) as follows: 90 (1) A part of a meeting may be closed to the public if the subject matter being considered relates to or is one of more of the following: (l) discussions with regional district officers and employees respecting regional district objectives, measures and progress reports for the purposes of preparing an annual report under section 98 [annual municipal report] of the Charter. CARRIED Adjournment The Performance and Audit Committee adjourned its regular meeting of April 13, 2017 at 9:54 a.m. to go into a closed meeting. Reconvene The Performance and Audit Committee reconvened its meeting of April 13, 2017 at 10:10 a.m. with the same members being in attendance. Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 3 of 7 PAU - 7

8 5.3 Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 303, 2017 Report dated March 10, 2017 from Dean Rear, Director, Financial Planning and Operations, requesting that the GVS&DD Board give first, second and third reading to Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 303, 2017, and pass and finally adopt Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 303, It was MOVED and SECONDED That the GVS&DD Board: a) give first, second and third reading to Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 303, b) pass and finally adopt Greater Vancouver Sewerage and Drainage District Development Cost Charge Reserve Fund Expenditure Bylaw No. 303, CARRIED Mayor Mussatto absent at the vote. 5.4 Performance and Audit Committee Terms of Reference Report dated April 6, 2017 from Carol Mason, Chief Administrative Officer, providing the Board with a revised Terms of Reference based on input received at the joint meeting on financial planning and oversight with the Finance and Intergovernment Committee. In response to questions, members were informed about performance tracking and the internal audit system. Members were invited to show reporting styles implemented by their local municipalities to provide as examples of possible future options for Metro Vancouver reporting metrics. It was MOVED and SECONDED That the MVRD Board receive for information the report dated April 6, 2017, titled Performance and Audit Committee Terms of Reference. CARRIED 5.5 Semi-Annual Report on GVS&DD Development Cost Charges Report dated March 10, 2017 from Dean Rear, Director, Financial Planning and Operations, presenting the Committee with a report on the 2016 GVS&DD Development Cost Charge (DCC) revenues and any implications on their adequacy, as required in the Board s policy. It was MOVED and SECONDED That the Performance and Audit Committee receive for information the report dated March 10, 2017, titled Semi-Annual Report on GVS&DD Development Cost Charges. CARRIED Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 4 of 7 PAU - 8

9 5.6 Status of Water, Liquid Waste and Solid Waste Capital Expenditures to December 31, 2016 Report dated March 17, 2017 from Dean Rear, Director, Financial Planning and Operations, reporting on the status of the capital projects for Water, Liquid Waste and Solid Waste. It was MOVED and SECONDED That the Performance and Audit Committee receive for information the report dated March 17, 2017, titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to December 31, CARRIED 5.7 Corporate Investment Procedures Report dated March 23, 2017 from Dean Rear, Director, Financial Planning and Operations, providing the Committee with information on the process for making corporate investment decisions. Dean Rear, Director, Financial Planning and Operations, provided the Committee with a presentation on corporate investment procedures, outlining corporate investment policy objectives, investing process, investment tendering, changes and improvements, and the government of Canada Bond yields versus Metro Vancouver internal rate of return. Presentation material titled Corporate Investment Procedures is retained with the April 13, 2017 Performance and Audit Committee agenda. It was MOVED and SECONDED That the Performance and Audit Committee receive for information the report dated March 23, 2017, titled Corporate Investment Procedures. CARRIED 5.8 Tender/Contract Award Information December 2016 to February 2017 Report dated April 5, 2017 from Phil Trotzuk, Chief Financial Officer, providing the Committee with information regarding to contracts, handled through the Purchasing Division, with a total anticipated value at, or in excess of, $500,000 (exclusive of taxes). On-table replacement page for Appendix A No. 15. to the April 5, 2017 report titled Tender/Contract Award Information December 2016 to February 2017 was provided and is retained with the April 13, 2017 Performance and Audit Committee Agenda package. Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 5 of 7 PAU - 9

10 It was MOVED and SECONDED That the Performance and Audit Committee receive for information the report dated April 5, 2017, titled Tender/Contract Award Information December 2016 to February CARRIED 5.9 Manager s Report Report dated April 4, 2017 from Phil Trotzuk, Chief Financial Officer, providing the Performance and Audit Committee with an update on the status of the Committee s key priorities within the 2017 Work Plan, MFA Spring Issue update, and presenting the Metro 2040 Performance Monitoring Dashboard. 10:58 a.m. Mayor Mussatto, departed the meeting. 10:59 a.m. Mayor Smith, departed the meeting. 6. INFORMATION ITEMS No items presented. 7. OTHER BUSINESS No items presented. Heather McNell, Division Manager of Growth Management, Parks, Planning and Environment, and Stephanie McCardle, Policy Coordinator, External Relations, Corporate Communications, provided the Committee with a presentation on the Metro 2040 Performance Monitoring Dashboard. Presentation material titled Metro 2040 Performance Monitoring Dashboard is retained with the April 13, 2017 Performance and Audit Committee agenda. It was MOVED and SECONDED That the Performance and Audit Committee receive for information the report dated April 4, 2017, titled Manager s Report. CARRIED 8. BUSINESS ARISING FROM DELEGATIONS No items presented. 9. RESOLUTION TO CLOSE MEETING This item was previously considered. Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 6 of 7 PAU - 10

11 10. ADJOURNMENT/CONCLUSION It was MOVED and SECONDED That the Performance and Audit Committee conclude its regular meeting of April 13, CARRIED (Time: 11:08 a.m.) Agata Kosinski, Assistant to Regional Committees Richard Walton, Chair FINAL Minutes of the Regular Meeting of the MVRD Performance and Audit Committee held on Friday, April 13, 2017 Page 7 of 7 PAU - 11

12 5.1 To: From: Performance and Audit Committee Phil Trotzuk, Chief Financial Officer Date: June 28, 2017 Meeting Date: July 7, 2017 Subject: Corporate Allocation Policy RECOMMENDATION That the Performance and Audit Committee endorse the Corporate Allocation Policy as presented in the attached report, dated June 27, 2017, titled Corporate Allocation Policy. The Performance and Audit Committee responsibilities as included in the Committee Terms of Reference includes the following: Reviewing financial policies and recommending to the Finance and Intergovernment Committee on proposed new policies and policy amendments The proposed Corporate Allocation Policy is presented to the Performance and Audit Committee for review and comment prior to consideration at the Finance and Intergovernment Committee on July 19, Attachment: 1. Finance and Intergovernment Committee Report: Corporate Allocation Policy, dated June 27, PAU - 12

13 To: From: Finance and Intergovernment Committee Carol Mason, Commissioner / Chief Administrative Officer Phil Trotzuk, Chief Financial Officer Date: June 27, 2017 Meeting Date: July 19, 2017 Subject: Corporate Allocation Policy RECOMMENDATION That the Board approve the Corporate Allocation Policy as presented in the report dated June 27, 2017, titled Corporate Allocation Policy. PURPOSE To seek Board approval of a Corporate Allocation Policy to provide a framework for establishing the appropriate allocation of costs incurred by centralized support services in delivering support services to all business activities of Metro Vancouver s four legal entities. BACKGROUND Metro Vancouver provides centralized support services that provide a benefit to all business activities of the Metro Vancouver four legal entities. These centralized services are delivered through six departments: Corporate Planning, Corporate Services, External Relations, Financial Services, Human Resources and Legal and Legislative Services. The Local Government Act requires that all costs incurred by a regional district in relation to a service, including the costs of administration attributable to the service, are part of the costs of that service. As such, rates, fees and charges must reflect the full cost of Metro Vancouver services to which they relate including those costs incurred by centralized support services. This policy serves to appropriately account for all costs of providing Metro Vancouver services and matching those costs with supporting revenues. Metro Vancouver currently has a defined process of apportioning these centralized support costs as part of the annual budget process, however, as the allocation of these costs have a direct impact on the rates, fees and charges recovered by Metro Vancouver, formalized Board direction on the allocation of these costs is appropriate. This report outlines the principles and methodology of the proposed policy to allocate these costs for Committee and Board consideration. CENTRALIZED SUPPORT SERVICES Centralized support services provide benefit to all business areas of Metro Vancouver and primarily include: corporate administration, information technology, building operations, corporate safety, corporate communications, financial oversight, staff-related services, in-house legal and information services PAU - 13

14 Corporate Allocation Policy Finance and Intergovernment Committee Meeting Date: July 19, 2017 Page 2 of 5 The total centralized support costs, net of revenues, included in the 2017 Metro Vancouver Budget is $54.8 million ALLOCATION PRINCIPLES AND METHODOLOGY Research and Analysis As part of the Corporate Allocation Policy development process, Metro Vancouver s current allocation rationale was examined along with the practices adopted by other local governments across Canada and the United States. These other local government entities included: Surrey, Richmond, Burnaby, Edmonton, Capital Regional District, York Region, Peel Region and local municipalities in Washington State. In addition, research was gathered on allocation methodologies from major utilities including: Enbridge Gas, Hydro One in Ontario and Alberta Utilities Commission. The practices adopted by other organizations show significant variations on the allocation of centralized support costs being based on the specific circumstances of those organizations. While there are differences in allocation methodologies used by other organizations, the methodologies include some common elements including that centralized support costs should be allocated directly to all benefiting entities and functions where direct benefits can be reasonably determined and in cases where proxies of benefits provided are used as an allocation basis, the establishment of the proxies should be documented including all relevant information on the process and rationale behind the allocation methodology. Metro Vancouver Allocation Principles In cases where it can be demonstrated and quantified that a Metro Vancouver service receives a specific direct benefit from a centralized service activity, the associated costs will be allocated directly to that service. These costs typically include, but are not limited to, costs related to programs such as Metro Vancouver s pooled fleet vehicles and equipment acquisitions, external legal counsel services and contracted security services. For the other centralized service activities, the Corporate Allocation Policy provides a framework that guides the apportionment of Metro Vancouver s centralized support costs to its four legal entities based on a reasonable approximation of services provided in supporting the entity s pursuit of both operational and strategic objectives. The methodology for approximating the level of service provided by each these centralized support services is guided by the following principles: Efficient the method and process of allocating net centralized support costs are easily administered, replicable and comprehensible Equitable net centralized support costs are apportioned fairly across Metro Vancouver services and to the extent possible, upholds a user-pay approach for the level of service provided Consistent net centralized support costs are allocated in a way that mitigates large fluctuations and ensures relative certainty, based on level of use Transparent net centralized support costs allocated to Metro Vancouver services are clearly identified PAU - 14

15 Corporate Allocation Policy Finance and Intergovernment Committee Meeting Date: July 19, 2017 Page 3 of 5 Within these guiding principles is the understanding that the approximate level of service provided to a Metro Vancouver service is often measured by the impact of two primary factors: (1) number of staff or (2) level of business activity. Those services with larger staff complements will require more centralized support in the areas of payroll, recruiting services, organizational support, benefit administration, IT computer support, training and head office building operations and therefore, will be allocated a higher proportion of these centralized support costs. Alternatively, services that incur significant capital expenditures and have broader business operations will require more centralized support in the areas of purchasing, accounts payable, debt management, budgeting, accounts receivable, legal, business applications and corporate planning and consequently, will be allocated a higher proportion of these centralized costs. To ensure the appropriate allocation of corporate costs, it is proposed that direct delivery services will be allocated a proportion of net centralized support costs based on their prior year operating budget using the parameters described above. Salaries and benefits will serve as indicators that reflect the number of staff supported while other expenditures will serve as indicators of the level of business activity. In cases where it can be demonstrated and quantified that a Metro Vancouver service receives a specific direct benefit from an activity, the associated costs are proposed to be allocated directly to that service. These costs typically include, but are not limited to, costs related to programs such as Metro Vancouver s pooled fleet vehicles and equipment acquisitions, external legal counsel services and contracted security services. ALLOCATION OF CENTRALIZED SUPPORT COSTS TO METRO VANCOUVER SERVICES Internal Service Delivery. The majority of Metro Vancouver services are delivered to members through an internal direct service model. This means that Metro Vancouver staff are engaged in the direct delivery of the service, including most or all of the operating and capital activities. These services include the following: Greater Vancouver Water District Greater Vancouver Sewerage and Drainage District (Liquid Waste and Solid Waste) Metro Vancouver Housing Corporation Metro Vancouver Regional District (Air Quality, Electoral Area, General Government, Labour Relations, Regional GPS, Regional Parks and Regional Planning) For these services, proportionate allocation of net centralized support costs is proposed to be apportioned based on the applicable prior year s operation budget excluding those budget items which inflate expenditures but have a lower overall impact on the requirement for centralized support services. These budget items include contributions to reserve, a portion of third party operating contracts and MVHC long-term mortgages and are adjusted for in order to better reflect the level of service provided by the centralized support services. PAU - 15

16 Corporate Allocation Policy Finance and Intergovernment Committee Meeting Date: July 19, 2017 Page 4 of 5 External Service Delivery For three Metro Vancouver Regional District services E911 Emergency Telephone, Regional Emergency Management and Sasamat Volunteer Fire Service an external service provider is used to deliver services to members through an external service delivery model. This means that Metro Vancouver staff are engaged to a lesser extent in the delivery of the service, its operating activities and its capital activities. For these services, the proportionate allocation of net centralized support costs is proposed to be apportioned as follows: E911 Emergency Telephone Service allocated net centralized support costs equal to 2% of its current year s operating program budget excluding contributions to reserve. This reflects the level of service associated with the administration of the E911 Telephone Service operating contract and routine finance support. Regional Emergency Management allocated net centralized support costs equal to 5% of its current year s operating program budget excluding contributions to reserve. This reflects the level of service associated with the overall administration of the program, purchasing support and accounts payable. Sasamat Fire Protection Service allocated net centralized support costs equal to 10% of its current year s operating program budget excluding contributions to reserve and large one-time asset purchases. This reflects the level of service associated with function management, fleet vehicle administration, procurement, accounts payable, payroll, budgeting and accounting. Based on the research undertaken in reviewing policy alternatives and the unique structure of Metro Vancouver in allocating costs, the following alternatives are presented for consideration. ALTERNATIVES 1. That the Board approve the Corporate Allocation Policy as presented in the report dated June 27, 2017, titled Corporate Allocation Policy. 2. That the Board approve the Corporate Allocation Policy in the report dated June 27, 2017, titled Corporate Allocation Policy with amendments. 3. That the Board receive for information the report dated June 27, 2017, titled Corporate Allocation Policy and provide alternate direction. FINANCIAL IMPLICATIONS The Corporate Allocation Policy does not have any impact on the overall amount of centralized support costs included in the budget. The policy does, however, have an impact on the total budgets including rates, fees and charges of individual legal entities and functions which is important as there are differences in the supporting membership of each entity and function. The approval of alternative one will ensure Metro Vancouver has in place a formal policy that accounts for the costs of providing centralized support services and that they are reflected appropriately to legal entities and functions. This will reduce annual budget fluctuations while enhancing financial management and long-term financial planning. PAU - 16

17 Corporate Allocation Policy Finance and Intergovernment Committee Meeting Date: July 19, 2017 Page 5 of 5 The approval of alternatives two or three will have varied financial implications which will need to be quantified accordingly. SUMMARY / CONCLUSION The allocation of centralized support costs to the Metro Vancouver legal entities is an important component in Metro Vancouver s financial planning process as enabling legislation requires that Metro Vancouver rates, fees and charges must reflect the full cost of the Metro Vancouver services to which they relate. The direct allocation or the allocation methodology, based on adjusted operating budgets, included in the policy is reflective of the level of service provided by centralized support services and incorporates the principles of efficiency, equitability, consistency and transparency Staff recommend that the Board approve alternative one with the proposed policy, as attached, to provide clear Board direction for the principles and methodology associated with the allocation of centralized support costs. Attachment: (Doc # ) Corporate Allocation Policy PAU - 17

18 BOARD POLICY CORPORATE ALLOCATION Effective Date: Approved By: PURPOSE To provide a framework for establishing the appropriate allocation of costs incurred by centralized support services in delivering support services to all business activities of Metro Vancouver s four legal entities. DEFINITIONS Centralized Support Services are services delivered by centralized departments to support all four Metro Vancouver legal entities and regional district functions through the following: Corporate Planning, Corporate Services, External Relations, Financial Services, Human Resources, and Legal and Legislative Services. Net Centralized Support Costs means expenditures incurred by centralized support services that are net of any costs allocated directly to a legal entity or function and any revenues generated by the centralized support service. Metro Vancouver Service refers to a service provided by one of the four legal entities to which costs of centralized support services are allocated. The legal entities include the Metro Vancouver Housing Corporation (MVHC), Greater Vancouver Water District (GVWD), Greater Vancouver Sewerage and Drainage District (GVS&DD), which includes the legal functions of Liquid Waste and Solid Waste, and the Metro Vancouver Regional District (MVRD), which includes the statutory functions of Air Quality, Electoral Area, General Government, Labour Relations, Regional GPS, Regional Parks, Regional Planning, E911 Telephone Service, Regional Emergency Management and Sasamat Fire Protection Service. POLICY The Local Government Act requires that all costs incurred by a regional district in relation to a service, including the costs of administration attributable to the service, are part of the costs of that service. As such, rates, fees and charges must reflect the full cost of Metro Vancouver services to which they relate including those costs incurred by centralized support services. This policy serves to appropriately account for all costs of providing Metro Vancouver services and matching those costs with supporting revenues. All costs incurred by centralized support services will be allocated to the benefiting Metro Vancouver service utilizing a methodology approximating the level of service provided. The methodology for calculating corporate allocation based on an approximation of service level is provided below Corporate Allocation Policy Page 1 of 4 PAU - 18

19 BOARD POLICY CORPORATE ALLOCATION PRINCIPLES Every Metro Vancouver service utilizes resources of centralized support departments to some extent in the delivery of that service. The extent of centralized support may range from providing simple contract administration or Metro Vancouver Board and Committee support services, to more extensive support that includes human resources, legal, legislative, communications, financial, information technology, building operations, emergency planning and corporate safety services. The methodology for approximating the level of service provided by each these centralized support services is guided by the following principles: Efficient the method and process of allocating net centralized support costs are easily administered, replicable and comprehensible Equitable net centralized support costs are apportioned fairly across Metro Vancouver services and to the extent possible, upholds a user-pay approach for the level of service provided Consistent net centralized support costs are allocated in a way that mitigates large fluctuations and ensures relative certainty, based on level of use Transparent net centralized support costs allocated to Metro Vancouver services are clearly identified Staffing and Business Activity Requirements Within the guiding principles defined in this policy is the understanding that the approximate level of service provided to a Metro Vancouver service is often measured by the impact of two primary factors: (1) number of staff or (2) level of business activity. For example, those services with larger staff complements will require more centralized support in the areas of payroll, recruiting services, organizational support, benefit administration, IT computer support, training and head office building operations and therefore, will be allocated a higher proportion of these centralized support costs. Alternatively, services that incur significant capital expenditures and procurement activity will require more centralized support in the areas of purchasing, accounts payable, debt management, budgeting, accounts receivable, legal, business applications and corporate planning and consequently, will be allocated a higher proportion of these centralized costs. To ensure the appropriate allocation of corporate costs, direct delivery services will be allocated a proportion of net centralized support costs based on their prior year operating budget using the parameters described above. Salaries and benefits will serve as indicators that reflect the number of staff supported while other expenditures will serve as indicators of the level of business activity. Lower Impact Activity Requirements Some budget items may inflate expenditures but have a lower overall impact on the requirement for centralized support services. These budget items include contributions to reserve, a portion of large third party operating contracts and MVHC long-term mortgages. In order to better reflect the level of service provided by the centralized support services, the calculation of apportionment costs in annual operating budgets will be adjusted for those budget items not requiring centralized support Corporate Allocation Policy Page 2 of 4 PAU - 19

20 BOARD POLICY Specific Direct Service Activity Requirements In cases where it can be demonstrated and quantified that a Metro Vancouver service receives a specific direct benefit from an activity, the associated costs will be allocated directly to that service. These costs typically include, but are not limited to, costs related to programs such as Metro Vancouver s pooled fleet vehicles and equipment acquisitions, external legal counsel services and contracted security services. METRO VANCOUVER SERVICES INTERNAL SERVICE DELIVERY The majority of Metro Vancouver services are delivered to members through an internal direct service model. This means that Metro Vancouver staff are engaged in the direct delivery of the service, including most or all of the operating and capital activities. For these services, the proportionate allocation of net centralized support costs shall be apportioned as follows: Greater Vancouver Water District (GVWD) The GVWD will be allocated a proportionate share of the net centralized support costs based on its prior year s operating budget excluding centralized support cost allocation and contributions to reserve. Greater Vancouver Sewerage and Drainage District (GVS&DD) Liquid Waste The Liquid Waste function will be allocated a proportionate share of the net centralized support costs based on its prior year s operating budget excluding centralized support cost allocation and contributions to reserve. Greater Vancouver Sewerage and Drainage District (GVS&DD) Solid Waste The Solid Waste function will be allocated a proportionate share of the net centralized support costs based on its prior year s operating budget excluding centralized support cost allocation, 80% of large third party operating contracts and contributions to reserve. The adjustment for a portion of third party operating contracts is to reflect that they require a lower level of service compared to other business activities. Metro Vancouver Housing Corporation (MVHC) The MVHC will be allocated a proportionate share of the net centralized support costs based on its prior year s operating budget excluding centralized support cost allocation, contributions to reserve and 80% of annual mortgage payments. Metro Vancouver Regional District (MVRD) The MVRD functions of Air Quality, Electoral Area, General Government, Labour Relations, Regional GPS, Regional Parks and Regional Planning will be allocated a proportionate share of the net centralized support costs based on their prior year s operating budget excluding centralized support cost allocation, contributions to reserve and large one-time asset purchases. METRO VANCOUVER SERVICES EXTERNAL SERVICE DELIVERY While the majority of Metro Vancouver services are provided through the internal service delivery model some regional services engage the use of an external service provider to deliver services to Corporate Allocation Policy Page 3 of 4 PAU - 20

21 BOARD POLICY members through an external service delivery model. This means that Metro Vancouver staff are engaged to a lesser extent in the delivery of the service, its operating activities and its capital activities. For these services, the proportionate allocation of net centralized support costs shall be apportioned as follows: E911 Emergency Telephone Service E911 Emergency Telephone Service will be allocated net centralized support costs equal to 2% of its current year s operating program budget excluding contributions to reserve. This reflects the level of service associated with the administration of the E911 Telephone Service operating contract and routine finance support. Regional Emergency Management Regional Emergency Management will be allocated net centralized support costs equal to 5% of its current year s operating program budget excluding contributions to reserve. This reflects the level of service associated with the overall administration of the program, purchasing support and accounts payable. Sasamat Fire Protection Service Sasamat Volunteer Fire Service will be allocated net centralized support costs equal to 10% of its current year s operating program budget excluding contributions to reserve and large one-time asset purchases. This reflects the level of service associated with function management, fleet vehicle administration, procurement, accounts payable, payroll, budgeting and accounting Corporate Allocation Policy Page 4 of 4 PAU - 21

22 5.2 To: From: Performance and Audit Committee Dean Rear, Director, Financial Planning and Operations, Financial Services Date: June 26, 2017 Meeting Date: July 7, 2017 Subject: GVS&DD Development Cost Charge Program Review - Update RECOMMENDATION That the Performance and Audit Committee endorse, in principle, the updated GVS&DD Development Charge rates and consultation plan as presented in the attached report, dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review - Update. The Performance and Audit Committee responsibilities as included in the Committee Terms of Reference includes the following: Overseeing the GVS&DD (Liquid Waste) Development Cost Charge program: Periodically reviewing the rates and recommending to the Finance and Intergovernment Committee on proposed new policies and policy amendments The proposed GVS&DD Development Cost Charge program amendments and consultation plan is presented to the Performance and Audit Committee for review and comment prior to consideration at the Finance and Intergovernment Committee on July 19, Attachment: 1. Finance and Intergovernment Report: GVS&DD Development Cost Charge Program Review - Update, dated June 23, PAU - 22

23 To: From: Finance and Intergovernment Committee Phil Trotzuk, Chief Financial Officer / General Manager, Financial Services Date: June 23, 2017 Meeting Date: July 19, 2017 Subject: GVS&DD Development Cost Charge Program Review Update RECOMMENDATION That the GVS&DD Board: a) endorse, in principle, the proposed changes to the Development Cost Charge Program with the rates as presented in Attachment 1 of the report dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review Update ; and b) direct staff to proceed with public and stakeholder consultation as presented in the report dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review Update. PURPOSE To present options and recommendations on the development cost charge (DCC) program rate adjustments for purposes of proceeding with consultation with the Province and community stakeholders. BACKGROUND The GVS&DD DCC program has been under review since In November of 2016 the initial results of the review, including the DCC program policy framework, proposed rate adjustments, and the transition plan for implementation of the program amendments for purposes of consultation was presented to the Utilities Committee and the Finance and Intergovernment Committee. At the November 25, 2016 meeting of the GVS&DD Board, the following motion was passed: That the GVS&DD Board direct staff to proceed with public and stakeholder consultation on the proposed changes to the Development Cost Charge Program following the adoption of the 5-year financial plan in March 2017, and direct staff to report back, prior to the consultation, on phasing of and potential strategies to mitigate the impact of the rate increases. Five year financial plan forecasts and scenarios were presented to the Board at a workshop in February 2017 and will be formally presented in October in conjunction with the 2018 annual budget. This report summarizes the options examined to mitigate the increase in the DCC rates, along with the impact of those options on the liquid waste levy, the overall 5-year financial plan and the household impact. EXISTING DCC RATES DCC rates established by sewer area are per unit for residential and per square foot for nonresidential. The existing DCC rates, in effect since 1997, are as follows: PAU - 23

24 GVS&DD Development Cost Charge Program Review Update Finance and Intergovernment Regular Committee Meeting Date: July 19, 2017 Page 2 of 5 Sewer Area Single-Family Townhouse Apartment Non-Residential Vancouver $ 944 $ 826 $ 590 $0.443 sq ft Lulu Island $1,077 $ 942 $ 673 $0.505 sq ft North Shore $1,291 $1,129 $ 807 $0.605 sq ft Fraser $1,731 $1,515 $1,082 $0.811 sq ft As these rates were established almost 20 years ago, cost and growth conditions have changed significantly and they will not be sufficient to sustain funding requirements for the growth in the region, particularly in the Fraser Sewerage Area. The chart below illustrates expected DCC reserve balances for the next 10 years with the rates currently in place. PROPOSED DCC RATES A 30 year model was developed which projects the DCC s required to fund the Liquid Waste infrastructure expansion for population growth, in conjunction with the planned development within a given sewer area. This development includes the following types of land use: single-family detached, townhouses, apartments, and non-residential development. The DCC requirements are based on funding long-term debt for the growth related infrastructure expenditures and includes future funding on existing debt as well as funding for projected debt. The proposed DCC rates presented at the November 25 th GVS&DD Board meeting were calculated assuming the requirement of funding the principal portion only on growth related long-term debt based on the current financial model over the next 30 years. The calculated rates are as follows: Sewer Area Single-Family Townhouse Apartment Non-Residential Vancouver $1,811 $1,618 $1,072 $0.93 sq ft Lulu Island $2,214 $1,915 $1,388 $1.05 sq ft North Shore $2,300 $2,076 $1,416 $1.20 sq ft Fraser $5,428 $4,695 $3,530 $2.67 sq ft Attachment 1 illustrates these rates in comparison to the existing rates and also provides the anticipated household impact of the sewer levy for the years 2017 to Also shown is a chart illustrating anticipated DCC reserve balances. PAU - 24

25 GVS&DD Development Cost Charge Program Review Update Finance and Intergovernment Regular Committee Meeting Date: July 19, 2017 Page 3 of 5 These rates represent that best estimate of the funding required for growth related infrastructure and adheres to the principle of growth paying for growth. While these DCC s represent only a very small portion of the cost of new housing, these rates are a significant increase over the existing rates. It is imperative that the DCC rates be reviewed every three to five years in order to adjust for cost increases as necessary and avoid implementing such significant increases in the future. Varying the Assist Factor Initially, the DCC Review Committee recommended a phase-in period of three years due to the significance of the increase in rates, particularly in the Fraser Sewer Area (FSA). Expanding upon this concept, options for varying the assist factor, primarily within the Fraser Sewerage, were analyzed for additional consideration. An outcome of varying the assist factor in the FSA to reduce the DCC rate resulted in the DCC rate aligning more closely with the proposed rates in the other three areas (Vancouver, North Shore, and Lulu Island). However, this change also resulted in the FSA household rate increasing to offset this loss in DCC revenue. Under this option, the FSA household rate would become closer to the household rates in the three other sewer areas, which are higher primarily due to the fact that much of the growth infrastructure in those sewerage areas was constructed prior to the implementation of the DCC program. In three of the four sewerage areas (Vancouver, Lulu Island and North Shore), the majority of the Tier 1 infrastructure (trunk sewer lines, forcemains, interceptors, pump stations) is generally well established and sufficient to meet most growth needs. The bulk of development reflects infill projects that add capacity but do not trigger significant trunk upgrades. In fact, in two of the sewerage areas (North Shore and Lulu Island) there are no Tier 1 infrastructure projects within the planned DCC program. The FSA, however, is unique in that it includes significant growth development which requires the extension of trunk lines, new pump stations, new interceptors, as well as a river crossing. There are over 70 Tier 1 projects in the FSA DCC program. Despite the fact that significant growth is anticipated within this sewer area, the resulting burden on this one portion of the region is comparatively substantial. To illustrate the impact of varying the assist factor, the table below shows DCC rates with a 50% Assist Factor for Tier 1 Projects in the Fraser Sewerage Area. Sewer Area Single-Family Townhouse Apartment Non-Residential Vancouver $1,811 $1,618 $1,072 $0.93 sq ft Lulu Island $2,214 $1,915 $1,388 $1.05 sq ft North Shore $2,300 $2,076 $1,416 $1.20 sq ft Fraser $4,453 $3,852 $2,897 $2.19 sq ft As noted above, although there would be a decrease in the DCC charges for the FSA, there would be a corresponding increase in the levy with an estimated household impact of $6 (3.5% increase over the prior year) to pay for the growth projects not being covered by the DCC s collected. Several options for varying the assist factor were presented to RAAC on May 25 th. The original proposal retaining the 1% assist factor across all four sewerage areas, without any phase in period, was the preferred approach. PAU - 25

26 GVS&DD Development Cost Charge Program Review Update Finance and Intergovernment Regular Committee Meeting Date: July 19, 2017 Page 4 of 5 WAIVER OF DCC S FOR AFFORDABLE HOUSING The language for the waiver of DCC s with respect to affordable housing development is under review concurrently by the Housing Policy and Planning group. While it s expected to add clarity and be more effective than the waiver language in the existing bylaw, changes to the waiver language is not expected to materially alter DCC revenue available for funding growth GVS&DD infrastructure projects. CONSULTATION PROCESS The consultation process to date has involved feedback from the regional advisory committees of administrators, engineers, planning and finance. Good feedback was received and there was general support for the policy framework, the initial proposed DCC rates and the transition plan. Next steps in the consultation process include expanded dialogue with the Province, meetings with affected stakeholders including the Urban Development Institute and Greater Vancouver Home Builders Association, regional Boards of Trade and Chambers of Commerce, and the initiation of broad public outreach. The proposed Communications and Engagement process, to be initiated in late August through early November, is outlined as follows: 1. Meetings with stakeholders Host a series of public meetings in each of the four sewerage areas (1 each in Lulu, Vancouver, and North Shore, and 2 in Fraser) at which Metro Vancouver representatives from Finance and Liquid Waste Services will explain the proposed DCC Program and answer questions from the audience. (Late August through October) 2. Dedicated Web Page: Create an online portal that includes detailed information the DCC Program and its anticipated impact on overall development costs. 3. Distribution Lists Distribution of materials through the appropriate Metro Vancouver databases 4. Meeting(s) with the Province of BC Ongoing throughout consultation process. (September through Early November) Further, TransLink is currently in the process of examining the feasibility of DCC funding for certain transportation projects. As it is important to recognize the impact of the cost of regional charges, Metro Vancouver and TransLink have committed to work together, where practical, on joint public consultation. IMPLEMENTATION TIMELINE It is expected that the consultation process will wrap up in November, with the results and a new DCC bylaw being brought forward before the end of the year. Staff will consult with municipalities to establish an effective date of bylaw implementation that considers the implications to existing processes and communications materials provided to prospective developers. At this time the effective date is expected to be April 1, PAU - 26

27 GVS&DD Development Cost Charge Program Review Update Finance and Intergovernment Regular Committee Meeting Date: July 19, 2017 Page 5 of 5 ALTERNATIVES 1. That the GVS&DD Board: a) endorse, in principle, the proposed changes to the Development Cost Charge Program with the rates as presented in Attachment 1 of the report dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review Update ; and b) direct staff to proceed with public and stakeholder consultation as presented in the report dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review Update. 2. That the Finance and Intergovernment Committee receive for information the report dated June 23, 2017, titled GVS&DD Development Cost Charge Program Review Update and provide alternate direction. FINANCIAL IMPLICATIONS Alternative 1: If the Finance and Intergovernment Committee approves alternative 1, the report will be forwarded to the GVS&DD Board for approval. The cost of the public and stakeholder engagement and consultation process will be funded through the liquid waste function budget. Details of the DCC sewerage area rate structure, projected household impact and growth projects by sewerage area are included in Attachments 1 and 2. Alternative 2: If the Finance and Intergovernment Committee approves alternative 2, further analysis may be required to determine the resulting financial impacts. SUMMARY / CONCLUSION The GVS&DD DCC program has been under review since 2014 and in November 2016 the initial review results were presented to the Utilities Committee and the Finance and Intergovernment Committee. At the direction of the Board, since that time further work has been undertaken to build the proposed DCC rates into Metro Vancouver s long term financial plan which will be considered this fall as part of the 2018 annual budget and five year financial plan process. Although a variety of options were considered in the development of the proposed DCC rate structure, the Board principle that growth pays for growth has guided the recommendations presented in this report. The current proposed DCC rates as detailed in Attachment 1 represent the best estimate of DCC funding required for growth related infrastructure and adheres to the principle of growth paying for growth. It is recommended that the Board approve the recommendations as presented in alternative one, and that staff proceed to consultation with the public and key stakeholders on the proposed DCC rate structure. Attachments: 1. Proposed DCC Rates 2. Growth Projects by Sewerage Area PAU - 27

28 ATTACHMENT PAU - 28

29 Growth Projects by Sewerage Area ATTACHMENT 2 Project Estimated Cost Vancouver Sewerage Area Collingwood Trunk Sewer $ 5,090,000 Hastings Sanitary Trunk Sewer 13,300,000 Hastings Sanitary Trunk Sewer No. 2 30,000,000 Hastings-Cassiar Intake Connection 750,000 $ 49,140,000 North Shore Sewerage Area North Vancouver Interceptor - Lynn Branch Pre-build $ 3,500,000 Lulu Island Sewerage Area Lulu Island WWTP Digester No 3 $ 53,300,000 Fraser Sewerage Area AIWWTP Effluent Pump Station $ 61,000,000 AIWWTP Site Construction Layout 600,000 Albert Street Trunk Sewer 4,600,000 Annacis Outfall System 375,000,000 Annacis Stage 5 Expansion Phase 1 & 2 595,500,000 Burnaby Lake North Interceptor Cariboo to Piper Section 41,000,000 Burnaby Lake North Interceptor Phillips to Sperling Section 42,341,163 Burnaby Lake North Interceptor Piper to Philips Section 62,100,000 Burnaby South Slope Interceptor Main Branch 9,500,000 Burnaby South Slope Interceptor West Branch Extension 13,200,000 Cloverdale PS Upgrade 31,100,000 Cloverdale Trunk Sewer Upgrade 28,975,000 Glenbrook Combined Trunk Kingsway Sanitary Section 3,400,000 Golden Ears Forcemain and River Crossing 114,000,000 Golden Ears Pump Station 38,100,000 Langley Pump Station Upgrade 14,300,000 Lozells Sanitary Trunk Golf Course Section 22,150,000 Marshend Pump Station Capacity Upgrade 9,900,000 NLWWTP Ground Improvements Phase A 24,000,000 NLWWTP Ground Improvements Phase B 18,000,000 NLWWTP Liquid Stream Phase A 356,000,000 NLWWTP Liquid Stream Phase B 256,000,000 NLWWTP Solids Handling 126,000,000 North Road Trunk Sewer 7,000,000 North Road Trunk Sewer Phase 2 3,938,000 NSI 104th Ave Extension 6,800,000 NSI Flow Management 39,500,000 NWLWWTP Options 5,000,000 NWLWWTP Phase 1 44,728,793 Port Moody PS Upgrade 9,150,000 Port Moody South Interceptor Upgrade 3,450,000 Queensborough Pump Station Replacement 6,500,000 Rosemary Heights Pressure Sewer Upgrade 10,750,000 Sapperton Forcemain Pump Station Connections 5,500,000 Sapperton Pump Station 76,400,000 South Surrey Interceptor Johnston Section 65,350,000 Sperling PS Increase Pump Capacity 3,000,000 SSI - King George Section - Odor Control Facility (OCF) and Grit Chamber 13,500,000 Stoney Creek Trunk Upgrade 10,200,000 Surrey Central Valley Upgrade 60,800,000 $ 2,618,332,956 PAU - 29

30 5.3 To: From: Performance and Audit Committee Dean Rear, Director, Financial Planning and Operations, Financial Services Date: June 26, 2017 Meeting Date: July 7, 2017 Subject: City of White Rock Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 RECOMMENDATION That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the City of White Rock in the amount of $2,062,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 to the Inspector of Municipalities for Certificate of Approval. PURPOSE To consider the adoption of a Security Issuing Bylaw to authorize a borrowing request from the City of White Rock in the amount of $2,062,000 for the Fall 2017 MFA long term debt issue. BACKGROUND This report is being brought forward to introduce Metro Vancouver Security Issuing Bylaw No. 1247, 2017 and consider its adoption to authorize a borrowing request from the City of White Rock in the amount of $2,062,000 for water system infrastructure construction and improvement for inclusion in the Fall 2017 MFA long term debt issue. MUNICIPAL BORROWING REQUEST Request Details Under provincial legislation, municipal borrowing requests must be approved by the respective council by way of Loan Authorization Bylaw and Security Issuing Resolution. Such borrowings must then be approved by the MVRD Board and included in a MVRD Security Issuing Bylaw to move forward. Upon approval, the request is then considered by the MFA. All debt of the MVRD is a joint and several liability of the member municipalities. The City of White Rock Council adopted Loan Authorization Bylaw 2178 on February 20, 2017 in the amount of $2,062,000 for water system infrastructure and improvement. The City subsequently passed the required Security Issuing Resolution on May 29, 2017 to borrow the full amount authorized by the bylaw. PAU - 30

31 City of White Rock Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 2 of 3 The City of White Rock has requested that a portion of this borrowing be amortized over a shorter (10 year) period. This has been reflected in the pertinent details of the bylaw are summarized as follows: MVRD Member Member Bylaw Bylaw Purpose 1247, 2017 City of White Rock 2178 Water System Infrastructure Construction and Improvement 1247, 2017 City of White Rock 2178 Water System Infrastructure Construction and Improvement Borrowing Request Term $1,662, years $400, years $2,062,000 The loan authorization bylaw outlined above, has been reviewed by the Inspector of Municipalities and has received the necessary Certificate of Approval. The certificate is included in this report. Financial Analysis Per the latest data provided by the Province, as at December 31, 2016 the City of White Rock had a liability servicing limit of $10,532,604. This limit represents the maximum amount, as prescribed by the Province, that the City can annually pay for servicing debt. The estimated annual debt servicing costs proposed in this bylaw will be approximately $208,100. When combined with the existing debt servicing costs and additional liability servicing the total will be approximately $1,222,200 which is roughly 11.6% of the liability servicing limit. Additional information provided by the City of White Rock to assist in considering this request includes: a copy of their security issuing resolution the adopted Loan Authorization Bylaw along with Certificate of Approval the Amended Financial Plan Bylaw which includes the appropriate proceeds of borrowing and anticipated debt servicing costs 2016 Consolidated Financial Statements which includes a note summarizing accumulated surplus (Note 11) and reserve balances (Note 13) All of which are attached to this report. ALTERNATIVES 1. That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the City of White Rock in the amount of $2,062,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and PAU - 31

32 City of White Rock Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 3 of 3 c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 to the Inspector of Municipalities for Certificate of Approval. 2. That the MVRD Board receive for information report titled City of White Rock Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017, dated June 23, FINANCIAL IMPLICATIONS The City of White Rock intends to borrow $2,062,000 to fund Water System Infrastructure Construction and Improvement from the Municipal Finance Authority of BC. Although all member debt is a joint and several liability of all member municipalities, there are no direct financial implications for Metro Vancouver with adoption of the bylaw. Should the bylaw not be adopted, the City of White Rock would be unable to borrow funds as required for the purpose intended and would need to look for other funding sources, potentially causing undue financial challenges for the City. SUMMARY / CONCLUSION As set out in the Community Charter, the MVRD must adopt a security issuing bylaw in order to enable the City of White Rock to proceed with their borrowing request. In light of the joint and several liability of all member municipality debt, the review of borrowing requests is prudent given the role of the Regional District. Staff recommends consenting to the City of White Rock s borrowing and adopting the Security Issuing Bylaw as outlined in Alternative 1. Attachments 1. Metro Vancouver Regional District Security Issuing Bylaw No. 1247, City of White Rock - Additional Information PAU - 32

33 ATTACHMENT 1 Regional District Security Issuing Bylaw METRO VANCOUVER REGIONAL DISTRICT BYLAW NO. 1247, 2017 A BYLAW TO AUTHORIZE THE ENTERING INTO OF AN AGREEMENT RESPECTING FINANCING BETWEEN THE METRO VANCOUVER REGIONAL DISTRICT AND THE MUNICIPAL FINANCE AUTHORITY OF BRITISH COLUMBIA WHEREAS the Municipal Finance Authority of British Columbia (the Authority ) may provide financing of capital requirements for Regional Districts or for their member municipalities by the issue of debentures or other evidence of indebtedness of the Authority and lending the proceeds therefrom to the Regional District on whose request the financing is undertaken; AND WHEREAS the City of White Rock is a member municipality of the Metro Vancouver Regional District (the Regional District ); AND WHEREAS the Regional District is to finance from time to time on behalf of and at the sole cost of the member municipalities, under the provisions of Section 410 (formerly section 824) of the Local Government Act, the works to be financed pursuant to the following loan authorization bylaw: Member Loan Authorization Bylaw Number Purpose 2178 Water System Infrastructure Construction and Improvement 2178 Water System Infrastructure Construction and Improvement Amount of Borrowing Authorized Amount Already Borrowed Borrowing Authority Remaining Term of Amount of Issue Issue $2,062,000 $0 $2,062, years $1,662,000 $2,062,000 $1,662,000 $400, years $400,000 AND WHEREAS the Regional Board, by this bylaw, hereby requests such financing shall be undertaken through the Authority: NOW THEREFORE the Regional Board of the Regional District of Metro Vancouver in open meeting assembled enacts as follows: Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Page 1 of 5 PAU - 33

34 1. The Regional Board hereby consents to financing the debt of the City of White Rock in the amount of two million and sixty two thousand dollars ($2,062,000) in accordance with the following terms. 2. The Authority is hereby requested and authorized to finance from time to time the aforesaid undertakings at the sole cost and on behalf of the Regional District and its member municipalities up to, but not exceeding two million and sixty two thousand dollars ($2,062,000) in lawful money of Canada (provided that the Regional District may borrow all or part of such amount in such currency as the Trustees of the Authority shall determine but the aggregate amount in lawful money of Canada and in Canadian Dollar equivalents so borrowed shall not exceed $2,062,000 in Canadian Dollars) at such interest and with such discounts or premiums and expenses as the Authority may deem appropriate in consideration of the market and economic conditions pertaining. 3. Upon completion by the Authority of financing undertaken pursuant hereto, the Chair and officer assigned the responsibility of financial administration of the Regional District, on behalf of the Regional District and under its seal shall, at such time or times as the Trustees of the Authority may request, enter into and deliver to the Authority one or more agreements, which said agreement or agreements shall be substantially in the form annexed hereto as Schedule "A" and made part of this bylaw (such Agreement or Agreements as may be entered into, delivered or substituted hereinafter referred to as the "Agreement") providing for payment by the Regional District to the Authority of the amounts required to meet the obligations of the Authority with respect to its borrowings undertaken pursuant hereto, which Agreement shall rank as debenture debt of the Regional District. 4. The Agreement in the form of Schedule A shall be dated and payable in the principal amount or amounts of monies and in Canadian dollars or as the Authority shall determine and subject to the Local Government Act, in such currency or currencies as shall be borrowed by the Authority under Section 1 and shall set out the schedule of repayment of the principal amount together with interest on unpaid amounts as shall be determined by the Treasurer of the Authority. 5. The obligation incurred under the said Agreement shall bear interest from a date specified therein, which date shall be determined by the Treasurer of the Authority, and shall bear interest at a rate to be determined by the Treasurer of the Authority. 6. The Agreement shall be sealed with the seal of the Regional District and shall bear the signature of the Chair and the officer assigned the responsibility of financial administration of the Regional District. 7. The obligations incurred under the said Agreement as to both principal and interest shall be payable at the Head Office of the Authority in Victoria and at such time or times as shall be determined by the Treasurer of the Authority. 8. During the currency of the obligation incurred under the said Agreement to secure borrowings in respect of Water System Infrastructure Construction and Improvement Loan Authorization Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Page 2 of 5 PAU - 34

35 Bylaw, 2016, No. 2178, there shall be requisitioned annually an amount sufficient to meet the annual payment of interest and the repayment of principal. 9. The Regional District shall provide and pay over to the Authority such sums as are required to discharge its obligations in accordance with the terms of the Agreement, provided, however, that if the sums provided for in the Agreement are not sufficient to meet the obligations of the Authority, any deficiency in meeting such obligations shall be a liability of the Regional District to the Authority and the Regional Board of the Regional District shall make due provision to discharge such liability. 10. The Regional District shall pay over to the Authority at such time or times as the Treasurer of the Authority so directs such sums as are required pursuant to section 15 of the Municipal Finance Authority Act to be paid into the Debt Reserve Fund established by the Authority in connection with the financing undertaken by the Authority on behalf of the Regional District pursuant to the Agreement. This bylaw may be cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1247, READ A FIRST TIME this day of, READ A SECOND TIME this day of, READ A THIRD TIME this day of, PASSED AND FINALLY ADOPTED this day of, Greg Moore, Chair Chris Plagnol, Corporate Officer Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Page 3 of 5 PAU - 35

36 SCHEDULE "A" to Bylaw No. 1247, 2017 C A N A D A PROVINCE OF BRITISH COLUMBIA A G R E E M E N T Metro Vancouver Regional District The Metro Vancouver Regional District (the Regional District ) hereby promises to pay to the Municipal Finance Authority of British Columbia at its Head Office in Victoria, British Columbia, (the Authority ) the sum of two million and sixty two thousand dollars ($2,062,000) in lawful money of Canada, together with interest calculated semi-annually in each and every year during the currency of this Agreement; and payments shall be as specified in the table appearing below hereof commencing on the day of, 2017 provided that in the event the payments of principal and interest hereunder are insufficient to satisfy the obligations of the Authority undertaken on behalf of the Regional District, the Regional District shall pay over to the Authority further sums as are sufficient to discharge the obligations of the Regional District to the Authority. DATED at, British Columbia, this day of, 20. IN TESTIMONY WHEREOF and under the authority of Bylaw No. 1247, 2017 cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1247, This Agreement is sealed with the Corporate Seal of the Metro Vancouver Regional District and signed by the Chair and the officer assigned the responsibility of financial administration thereof. Chair Treasurer Pursuant to the Local Government Act, I certify that this Agreement has been lawfully and validly made and issued and that its validity is not open to question on any ground whatever in any Court of the Province of British Columbia. Dated, 20 (month, day) Inspector of Municipalities Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Page 4 of 5 PAU - 36

37 PRINCIPAL AND/ OR SINKING FUND DEPOSIT AND INTEREST PAYMENTS Principal and/or Sinking Fund Date of Payment Deposit Interest Total $ $ $ $ $ $ Metro Vancouver Regional District Security Issuing Bylaw No. 1247, 2017 Page 5 of 5 PAU - 37

38 Attachment CERTIFIED RESOLUTION The City of White Rock Council at their May 29, 2017 Regular Council meeting adopted the following resolution: WATER SYSTEM INFRASTRUCTURE CONSTRUCTION AND IMPROVEMENT LOAN AUTHORIZATION BYLAW NO SECURITY ISSUING RESOLUTIONS THAT Council: 1. Receives for information the May 29, 2017 corporate report from the Director of Financial Services, titled "Water System Infrastructure Construction and Improvement Loan Authorization Bylaw, 2016, No Security Issuing Resolutions;" 2o Approves borrowing from the Municipal Finance Authority of British Columbia, as part of the 2017 Fall Borrowing Session, one million six hundred sixty-two thousand dollars ($1,662,000) as authorized through Water System Infrastructure Construction and Improvement Loan Authorization Bylaw, 2016, No and that the Metro Vancouver Regional District be requested to consent to our borrowing over a ten (10) year term and include the borrowing in their Security Issuing Bylaw; and 3. Approves borrowing from the Municipal Finance Authority of British Columbia, as part of the 2017 Fall Borrowing Session, four hundred thousand dollars ($400,000) as authorized through Water System Infrastructure Construction and Improvement Loan Authorization Bylaw, 2016, No and that the Metro Vancouver Regional District be requested to consent to our borrowing over a thirty (30) year term and include the borrowing in their Security Issuing Bylaw. S~y City Clerk Dated: May 30, 2017 City Clerk's Office P: j F: City of White Rock Buena Vista Avenue, White Rock BC, Canada V4B 1Y6 \\4-llTEJ-:~O_LoCK \ ~C1-o~~~~. PAU - 38

39 THE CORPORATION OF THE CITY OF WHITE ROCK BYLAW2178 A Bylaw to authorize borrowing for constructing and improving water system infrastructure The CITY COUNCIL of the Coworation of the City of White Rock, in an open meeting assembled, ENACTS as follows: 1. The Council is hereby empowered and authorized to: a. undertake and carry out or cause to be carried out the construction and improvement of water system infrastructure including the following projects: i. Total Water Quality Management Project - Phase 2 Merklin ii. New Well - Oxford iii. Water Main Upgrade - Marine Drive, Vidal Street to Martin Street iv. Water Main Upgrade to Marine Drive v. Water Main Upgrade- Satuma Drive and Archibald Road b. borrow upon the credit of the Municipality a sum not exceeding $2,062, The maximum tenn for which debentures may be issued to secure the debt created by this bylaw is 30 years. 3. This Bylaw may be cited for all purposes as the "Water System Infrastructure Construction and hnprovement Loan Authorization Bylaw, 2016, No. 2178". RECENED FIRST READING on the RECEIVED SECOND READING on the RECEIVED THIRD READING on the RECEIVED the approval of the Inspector of Municipalities ADOPTED on the lz'h day of December, th day of December, th day of December, day of January, 2017 February, 2017 I herby certify that this lji ~ and correct copy of Bylaw No..,,.Of.."'i~{...,...::t:b..._. which has not been altered in any way. MAYOR Certified this..3c2._day of~ 2...Q.G- ~. CITY CLERK PAU - 39

40 BRmSH COLUMBIA Certificate of Approval Under the authority of the Local Government Act, I certify that Bylaw No. 2178, cited as the "Water System Infrastructure Construction and Improvement Loan Authorization Bylaw, 2016, No. 2178" of the City of White Rock has been lawfully and validly made and enacted, and that its validity is not open to question on any ground in any court of British Columbia. Dated this of day, 2017 PAU - 40

41 1.. THE CORPORATION OF THE CITY OF WHITE ROCK BYLAW2204 A Bylaw to amend the Financial Plan for 20 I 7 to 2021 WHEREAS the City Council of the Corporation of the City of White Rock is empowered by the provisions of Section 165 of the "Community Charter" to amend the Financial Plan for the fiveyear period ending the thirty-first day of December AND WHEREAS it is necessary for such Financial Plan to be amended The CITY COUNCIL of The Corporation of the City of White Rock in open meeting assembled, ENACTS as follows:- I. Schedule "A" and Schedule "B" attached to and forming part of the.. White Rock Financial Plan ( ) Bylaw, 2016, No. 2175", are hereby repealed and replaced by the Schedules.. A" and ' B" attached hereto and forming part of this bylaw. 2. This Bylaw may be cited for all purposes as the '"Financial Plan ( ) Bylaw. 2016, No. 2175, Amendment No. l, Bylaw No. 2204". RECEIVED FIRST READING on the RECEIVED SECOND READING on the RECEIVED THIRD READING on the ADOPTED on the 24th day of April, day of April, th day of April, 2017 gth day of May, 2017 I nerby certify that this l~~d w-ay-. - which has no Certlfted \his _li_day of~ ~ correct copy of Bytl~:e~~itered in an_y... Mayor City Clerk PAU - 41

42 City of White Rock Revenues: Bylaw 2204, Schedule A Municipal Property Taxes s $ 21,163,996 $ 22,072,616 s 22,920,794 $ Reglonal Library Levy , , BIA Levy 318, , , ,000 Sewor Parcel Tax 153, , , , ,500 Local Improvement Parcel Tax , Grant In Lieu of Taxes & Utlllty Levy , , , ,525 Development Cost Charges 2,652,500 1, 198, , , ,000 Fees & Charges 14, , ,235, ,993 Own/Other Sources 12,863, ,334 14,508, ,998 Government Grants 10,172,840 4,936,740 3, ,078, ,740 Total Revenue s 61,908,366 $ 52,321,422 $ 66,358,620 s 59,353,020 $ 55, Expenses: Interest on Debt 582, , , ,737 Other Munlclpal Purposes 36,717,326 35, , ,896,646 37,969,655 Amortization Expense 5,362,500 7,052,600 7,695,900 6,222, ,200 Total Exoenses -- s 42,662,189 s 42,908,409 s 44, $ 46,067,685 $ 47,325, Surplus Before Adju&tments $ 19,246,197 $ 9,413,013 s 21, $ ,335 $ 7,880,215 Adjustment for Non Cash Items: Amortization Expense 5, , , , Adjustment& for cash Items not recognized as revenues or expenses In the Statement of Operations: Tangible Capital Asset Expenditures (54, ) (25,014,000) ( ) (17,360,000) (8, ) Principal Payments on Capital Leases (21.900) (15,700) (4,500). Principal Payments on Long Term Debt ( ) (678,577) ( ) (955,000) (985,467) Debt Financing Received 5.209, ,000.. Transfer from Capital Works Raaerve 2,786, , ,000 75,000 Transfer from Land Salo Reserve 1,860, ,200. Transfer from Off-street Parl<ing Reserve 7, Transfer from Equipment Replacement Reserve 2, , , ,000 1,183,000 Transfer from Statutory Community Amenity Contribution Reserve. 4,646,000 5,618,500 3,027, Transfer from Sanitary Sewer Infrastructure Reserve 6, , , , ,000 Transfer from Memorial Park Temporary Reserve ' 2.700,000.. Transfer from Waterfront Parking Facility Temporary Reserve' 2,300,000. Transfer from Promenade Extension Temporary Reserve 1 250,000 1,650,000 1, Transfer from Non-statutory Community Amenity Contribution Reserve ,000.. Transfer from Other Reserves 20, ,645,648 2,745, , ,548 Transfer from Operating Funds 3,676,900 4,059,000 4,066,900 4,277, ,400 Appropriation from Surplus ,100 84,100 Transfer to Capital Works Reserve ( 1,066,200) (1,116,600) (1,315,900) (1,369, 100) (1,423,200) Transfer to Equipment Replacement Reserve (563,500) (619,900) (631,400) (643,100) (655, 100) Transfer to Statutory Community Amenity Contribution Reserve (4,600,000) (250,000) ( ) (3, ) (2,900,000) Transfer to Memorial Park Temporary Reserve ' (2,700,000)... Transfer to Waterfront Parking Faclllty Temporary Roserve 1 (2,300,000)... Transfer to Promenade Extension Temporary Reserve ' (250,000) (3,450,000). Transfer to Sanitary Sewer Infrastructure Reserve (799,294) (5,535,299) (4,832,205) (868,299) (942,799) Transfer to Other Reeerves (3,323,044) (3, ) (3,370,641) (4.354,364) (5.087,397) Transfer to Surplus (35,000) (35,000) (35,000) (35,000) (35,000) Transfer to Capital Fund& (3,676,900) (4.059,000\ 14,086, ,277,300) (4, 199,400) Financial Plan-Balance s - $. $. $. $. Notes: ' If Community Amenity Contributions are received prior to committing funds for the Memorial Park, Pier Washroom, Waterfront Parking Facllity and/or Extension of the Promenade to Coldlcutt Ravine project& the above transfers originated from the Sanitary Sewer Fund Infrastructure Reserve wlll be reduced or not required to that extent as the Community Amenity ContribuUons received wtll become the funding source. PAU - 42

43 ' I Financial Statements of THE CORPORATION OF THE CITY OF WHITE ROCK Year ended December 31, 2016 PAU - 43

44 MAYOR AND COUNCIL It is my pleasure to present The Corporation of the City of White Rock's Financial Statements for the fiscal year ended December 31, 2016 pursuant to Section 167 of the Community Charter. The statements have been prepared in accordance with the Canadian Public Sector Accounting Standards established by the Chartered Professional Accountants of Canada. The preparation and presentation of the Financial Statements and related information are the responsibility of management of The Corporation of the City of White Rock. This involves the use of management's best estimates and careful judgement. The City maintains a system of internal accounting controls designed to provide reasonable assurances for the safeguarding of assets and the reliability of financial records. KPMG LLP, the City's independent auditor, has audited the financial statements contained herein and their report accompanies the statements. Operating activities during the year contributed a surplus of $7,523,579. The total accumulated surplus was $138,858,384 as of December 31, This figure is comprised of reserves, the City's investment in tangible capital assets and other surplus funds. Net financial assets increased by $1,997,077 to $36,018,714 as of December 31, This is a positive indicator of the City's financial position. Debt, net of sinking funds, outstanding as of December 31, 2016 was $20,573,276, compared to $14,138,473 on December 31, It is comprised of long-term debenture debt in the amount of $14,354,276 and new interim financing of $6,219,000. Long-term debt of $14,250,000 is attributed to an advance payment on the purchase of property and assets of the local water distribution utility. The new financing is comprised of a temporary loan in the amount of $6,219,000 that was obtained to finance subsequent water system infrastructure construction and improvements. This temporary loan was converted to debenture debt in April In summary, the City ended the year 2016 in a sound financial position. S± K~rComm, CPA, CMA Director of Financial Services PAU - 44

45 . ' KPMG LLP Metro Tower I 4710 Kingsway, Suite 2400 Burnaby BC V5H 4M2 Canada Telephone (604) Fax(604) INDEPENDENT AUDITORS' REPORT To the Mayor and Council We have audited the accompanying financial statements of The Corporation of the City of White Rock, which comprise the statement of financial position as at December 31, 2016, the statements of operations, changes in net financial assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG LU'l 1s a Canadian limited liability pannersh1p and a member f11m of the KPMG network of 1ndeponde11t Member firms afhl1ated wllh KPMG 1mernat10nal Caoperahve t l\pmg lnternat101rnl ), a Swiss erh1ty KPMG Canada provides services to KPMG LLP PAU - 45

46 Corporation of the City of White Rock Page 2 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position ofthe Corporatio~ of the City of White Rock as at December 31, 2016 and its results of operations and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants May 8, 2017 Burnaby, Canada PAU - 46

47 ' I THE CORPORATION OF THE CITY OF WHITE ROCK Statement of Financial Position December 31, 2016, with comparative information for 2015 Financial Assets Cash and cash equivalents (note 2) $ 75,673,724 $ 66,846,579 Temporary investments (note 2) 4,908,698 4,928,565 Accounts receivable (note 3) 3,140,489 2,633,597 Loans receivable {note 4} 21,000 30,500 83,743,911 74,439,241 Liabilities Accounts payable and accrued liabilities (note 5) 6, 138, 120 6,735,502 Refundable performance deposits (note 2(b)) 8,569,173 7,113,041 Capital lease obligation (note 7) 42,066 62,958 Debt (note 8) 20,573,276 14,138,473 Deferred revenue {note 9} 12,402,562 12,367,630 47,725,197 40,417,604 Net Financial Assets 36,018,714 34,021,637 Non-Financial Assets Tangible capital assets (note 10) 102,029,614 96,599,808 Prepaid expenses 581, ,889 Inventories of sueelies 228, , ,839,670 97,313,168 Accumulated surplus (note 11) $ 138,858,384 $ 131,334,805 Commitments and contingencies (note 14) Water utility acquisition (note 18) See accompanying notes to financial statements. SANDRA RYLO, B. Comm., CPA, CMA Director of inancial Services PAU - 47

48 '. THE CORPORATION OF THE CITY OF WHITE ROCK Statement of Operations Year ended December 31, 2016, with comparative information for Budget (Note 1 (b)) Revenue: Property taxes: General purposes Regional library and fire protection levies. Business improvement levy $ 19,747, , ,000 20,929,748 $ 19,732, , ,702 20,913,577 $ 19,642,298 1,419, ,000 21,367,651 Receipts in lieu of taxes Development cost charges (note 9(a)) Sanitary sewer fees and parcel tax Drainage user fees Water user fees Sales of services and other revenue (note 17) Government grants Developers' contributions of tangible capital assets (note 1 O(b)) 15, ,700 3,505,906 2,046,400 3,700,400 17,939,705 1, 139,840 49,925,699 14,990 27,596 3,536,470 2,048,559 3,733,479 11,499, ,852 63,879 42,456,379 18,358 11,049 3,460,471 1,979, ,746 11,088, , ,373 39,367,505 Expenses: General government Protection services Transportation, engineering and operations Parks, recreation and cultural services Solid waste services Sanitary sewer system Drainage system Water system 7,857,851 10,139,427 5,899,881 8,013,179 1,137,600 2,577, ,500 3,003,765 39,472,245 6,607,044 9,954,682 5,056,465 7,311, ,707 2,077, ,642 2,377,049 34,932,800 6,001,336 9,995,432 5,322,158 7,095,413 1,111,759 2,073, , ,518 32,720,096 Annual surplus 10,453,454 7,523,579 6,647,409 Accumulated surplus, beginning of year 131,334, ,334, ,687,396 Accumulated surplus, end of year $141,788,259 $ 138,858,384 $131,334,805 See accompanying notes to financial statements. 2 PAU - 48

49 . ' THE CORPORATION OF THE CITY OF WHITE ROCK Statement of Changes in Net Financial Assets Year ended December 31, 2016, with comparative information for Budget Annual surplus $ 10,453,454 $ 7,523,579 $ 6,647,409 Acquisition of tangible capital assets (28,390,000) (9,635,518) (18,493,249) Contribution of tangible capital assets (63,879) (280,373) Amortization of tangible capital assets 5,022,500 4,237,467 3,810,631 Loss (gain) on disposal of tangible capital assets (479,051) 65,233 Proceeds on diseosal of tangible caeital assets 511,175 30,870 (12,914,046) 2,093,773 (8,219,479) Acquisition of prepaid expenses (581,847) (542,889) Acquisition of inventories of supplies (228,209) (170,471) Use of prepaid expenses 542, ,052 ConsumEtion of inventories of SUEEiies 170,471 70,402 Change in net financial assets (12,914,046) 1,997,077 (8,345,385) Net financial assets, beginning of year 34,021,637 34,021,637 42,367,022 Net financial assets, end of year $ 21,107,591 $ 36,018,714 $ 34,021,637 See accompanying notes to financial statements. 3 PAU - 49

50 THE CORPORATION OF THE CITY OF WHITE ROCK Statement of Cash Flows Year ended December 31, 2016, with comparative information for 2015 Cash provided by (used in): Operating: Annual surplus $ 7,523,579 $ 6,647,409 Items not involving cash: Amortization 4,237,467 3,810,631 Loss (gain) on disposal of tangible capital assets (479,051) 65,233 Developers' contributions of tangible capital assets (63,879) (280,373) Changes in non-cash operating working capital: Increase in accounts receivable (506,892) (760,324) Increase in prepaid expenses (38,958) (25,837) Increase in inventories of supplies (57,738) (2,069) Decrease in loans receivable 9,500 13,500 Increase (decrease) in accounts payable and accrued liabilities (597,382) 335,273 Increase in refundable performance deposits 1,456, 132 1,170,197 Increase in deferred revenue 34,932 1,789,011 Net change in cash from operating activities 11,517,710 12,762,651 Capital activities: Cash consideration for water utility acquisition (13,848,770) Cash used to acquire tangible capital assets (9,635,518) (4,356,905) Proceeds on disposal of tangible capital assets 511,175 30,870 Net change in cash from capital activities (9, 124,343) (18,174,805) Financing activities: New debt issued (note 8) 20,469,000 14,022,000 Principal payments on debt (14,034,197) (11,616) Principal pa:i:ments on capital leases {20,892~ {19,944) Net change in cash from financing activities 6,413,911 13,990,440 Investing activities: Change in temporary investments 19,867 4,025,810 Net change in cash and cash equivalents 8,827,145 12,604,096 Cash and cash equivalents, beginning of year 66,846,579 54,242,483 Cash and cash equivalents, end of year $ 75,673,724 $ 66,846,579 See accompanying notes to financial statements. 4 PAU - 50

51 . ' THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements Year ended December 31, 2016 The Corporation of the City of White Rock (the "City") is incorporated under the Local Government Act of British Columbia. The City's principal activities include the provision of local government services to residents, businesses and visitors of the incorporated area. 1. Significant accounting policies: The City follows Canadian Public Sector Accounting Standards as prescribed by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada, including the following significant policies: (a) Basis of presentation: The financial statements present the resources and operations including all accounts and funds of the City. All inter-fund transactions, assets and liabilities have been eliminated. (b) Budget reporting: The budget figures reported in the statement of operations represent the 2016 component of Financial Plan ( ) Bylaw, 2016, No. 2132, Amendment No. 1, Bylaw 2016, No adopted by the City Council on April 25, (c) Cash and cash equivalents: Cash and cash equivalents include short-term highly liquid investments with maturity dates within three months of acquisition that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. (d) Temporary investments: Temporary investments are recorded at cost which approximates market value and are comprised of term deposits. (e) Revenue: Revenue is recorded on the accrual basis and is recognized when it is earned and measurable. Revenue relating to future periods, including prepaid property taxes, government grants and certain facility upgrade contributions, are reported as deferred revenue and recognized as revenue when earned. (f) Development cost charges ("DCC's"): DCC's collected under the City's Development Cost Charge Bylaw, plus interest earned thereon, are recorded as deferred revenue. DCC's are recognized as revenue when related tangible capital assets are acquired. 5 PAU - 51

52 '. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Significant accounting policies (continued): (g) Expenses: Expenses are recorded on the accrual basis and are recognized as they are incurred. This is upon the receipt of goods or services and/or the creation of a legal obligation. Interest expense on debt and capital lease obligations is accrued to December 31, (h) Government transfers: Restricted transfers from governments are deferred and recognized as revenue as the related expenditures are incurred or the stipulations in the related agreements are met. Unrestricted transfers are recognized as revenue when received or if the amount to be received can be reasonably estimated and collection is reasonably assured. (i) Debt: Debt is recorded net of repayments and actuarial adjustments. U) 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. (i) Tangible capital assets: Tangible capital assets are recorded at cost which includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value, of the tangible capital assets, excluding land, is amortized on a straight-line basis over their estimated useful lives as follows: Asset Land improvements Buildings and facilities Machinery and equipment Roads and sidewalks Sanitary sewer infrastructure Storm sewer infrastructure Water system infrastructure Useful Life - Years 10 to to 50 2 to to to to 80 5 to 80 Leasehold improvements are amortized using the lesser of the remaining term of the lease, including all renewal terms, or the life of the asset. Annual amortization is charged commencing when the asset is available for use. Assets under construction are not amortized until the asset is put into productive use. 6 PAU - 52

53 '. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Significant accounting policies (continued): 0) Non-financial assets (continued): (ii) Contributions of tangible capital assets: Tangible capital assets received as contributions are recorded at their fair market value at the date of receipt and also are recorded as revenue. (iii) Arts and heritage assets: Arts and heritage assets are not recorded as assets in these financial statements as stipulated by PSAB standards. (iv) Interest capitalization: The City does not capitalize interest costs associated with the acquisition or construction of tangible capital assets. (v) Leased tangible capital assets: Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as leased tangible capital assets. All other leases are accounted for as operating leases and the related payments are charged to expenses as incurred. {vi) Inventories of supplies: Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost. (k) Employee future benefits: {i) The City and its employees make contributions to the Municipal Pension Plan. The Municipal Pension Plan is a multi-employer defined benefit pension plan. The City's contributions are expensed as incurred. {ii) Sick leave and post-employment benefits also accrue to the City's employees. The liability relating to these benefits is actuarially determined based on service and best estimates of retirement ages and expected future salary and wage increases. The liabilities under these benefit plans are accrued based on projected benefits prorated as employees render services necessary to earn the future benefits. 7 PAU - 53

54 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Significant accounting policies (continued): (I) Use of accounting estimates: The preparation of financial statements 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant areas requiring the use of management estimates relate to the determination of the value of developer contributed assets, useful lives of tangible capital assets for amortization, valuation of receivables, accrued sick and other post-employment benefits and provision for contingencies. Adjustments, if any, will be reflected in the financial statements in the period of settlement or change in the amount of the estimate. (m) Segment disclosures: A segment is defined as a distinguishable activity or group of activities of government for which it is appropriate to separately report financial information. The City has provided definitions of segments used by the City as well as presented financial information in segmented format (note 20). (n) Contaminated sites: Contaminated sites are a result of contamination being introduced into air, soil, water, or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. Liabilities are recorded net of any expected recoveries. A liability for remediation of contaminated sites is recognized when a site is not in productive use and the following criteria are met: (i) An environmental standard exists; {ii) Contamination exceeds the environmental standards; (iii) The City is directly responsible or accepts responsibility; {iv) It is expected that future economic benefits will be given up; and (v) A reasonable estimate of the amount can be made. The liability is recognized as management's estimate of the cost of post-remediation including operation, maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. 8 PAU - 54

55 .. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Cash and cash equivalents and temporary investments: Cash balances Cash equivalents: Money market securities and term deposits maturing within 90 days of inception MFA Money Market Fund Temporary investments consisting of term deposits maturing within 365 days of inception $ 60,173,846 $ 43,906,039 11,474,184 18,946,587 4,025,694 3,993,953 75,673,724 66,846,579 4,908,698 4,928,565 $ 80,582,422 $ 71,775,144 Cash equivalents and temporary investments, including the MFA Money Market Fund, have annual yields that range from 0.79% to 1.20% ( % to 1.35%). (a) Included in financial assets are cash and cash equivalents of $4,251,001 ( $4,046,293) that can only be used for the acquisition of tangible capital assets as provided for by the DCC Bylaw (note 9(a)). (b) Included in cash and cash equivalents is an amount of $8,569, 173 ( $7, 113,041) which consists of refundable performance deposits. 3. Accounts receivable: Property taxes $ 1,241,151 $ 955,233 Water user fees 970, ,051 Government grants 67,886 68,835 Amount secured by letters of credit 200, ,000 Water utility transition, due from EPCOR White Rock Water Inc. 329,213 Other 661, ,265 $ 3,140,489 $ 2,633, Loans receivable: The City had a loan receivable in the amount of $6,000 in 2015 from The White Rock Lawn Bowling Club (the "Club") to assist in financing the purchase and installation of the Club's artificial green. The loan was fully repaid in PAU - 55

56 .. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Loans receivable (continued): The City has a loan receivable in the amount of $21,000 ( $24,500) from The Peace Arch Curling Club to assist in financing the purchase and installation of kitchen equipment. The loan receivable bears a variable per annum interest rate which is the average annual rate of return the City has achieved on its investments in the twelve months preceding the anniversary date of the loan agreement. The remaining principal will be paid in six equal annual instalments. The interest is paid semi-annually. 5. Accounts payable and accrued liabilities: Trade accounts payable and other $ 2,907,105 $ 3,277,291 Due to governments and agencies 1,306,874 1,532,548 Post-employment benefits (note 6) 1,285,750 1,405,250 Other payroll liabilities 638, ,413 $ 6,138,120 $ 6,735, Post-employment benefits: The City provides certain post-employment and sick leave benefits to its employees. These benefits include accumulated non-vested sick leave, post-employment gratuity and lieu time benefits, and certain vacation benefits Accrued benefit obligation: Balance, beginning of year $ 1,423,500 $ 1,421,500 Immediate recognition of Work Safe BC benefits liability (139,900) (22,400) Current service cost 106, ,300 Interest cost 40,500 39,800 Benefits paid (161,600) (72,446) Plan amendment 37,300 (26,900) Actuarial loss (gain) 87,800 (16,354) Balance, end of :z::ear $ 1,394,500 $ 1,423, PAU - 56

57 ' I THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Post-employment benefits (continued): Accrued benefit obligation, end of year $ 1,394,500 $ 1,423,500 Unamortized net actuarial loss (108,750) (18,250) Accrued benefit liabilit:z'.. end of :z'.ear $ 1,285,750 $ 1,405,250 Actuarial gains and losses for accumulating benefits are amortized over the expected average remaining service period of the related employee group, commencing the year after the gain or loss arises. Post-employment liabilities are included in accounts payable and accrued liabilities. The significant actuarial assumptions used to determine the City's accrued benefit obligation are as follows: Discount rates Expected future inflation rates Expected wage and salary increases % 2.50% 2.58% % % 2.50% 2.58% % 7. Capital lease obligation: The City has financed certain equipment by entering into capital leasing arrangements. There are three capital leases repayable in monthly blended installments of $1,948 including principal and interest. Minimum lease payments due under the capital lease are: Year ending December 31 : 2017 $ 23, , ,539 Minimum capital lease payments 44,144 Less amounts representing interest 2,078 $ 42, PAU - 57

58 .. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Debt: Debentures, net of repayments and actuarial adjustments (a} Interim financing (b) 2016 $ 14,354,276 6,219,000 $ 20,573, $ 116,473 14,022,000 $ 14, 138,473 (a) Debentures: The City issues debt instruments through the Municipal Finance Authority ("MFA") to finance certain capital acquisitions. Repayments and actuarial adjustments are netted against related long term-debts. Details are as follows: Sinking Bylaw Maturity Interest Refinancing Authorized fund Number Pur~se date rate ~ear amount assets Sanitary Sewers-Local % n/a $ 224,580 $ 120,304 $ $ Improvement 2098 Water Utility Acquisition % , ,000 Advance Payment $ 14,474,580 $ 120,304 s 14,354,276 $ 116,473 * During the refinancing year the City will have the option to retire part or all of the debt early, or refinance the borrowing at a new interest rate. Total interest on the debenture debt for the year was $272,713 ( $13,363). As a condition of these borrowings, a portion of the debenture debt proceeds is withheld by the MFA in a Debt Reserve Fund. Amounts withheld for this purpose are as follows: Bylaw number Purpose Sanitary Sewers -Local Improvement Water Utility Acquisition Advance Payment Debt reserve fund $ 2, ,500 $ 144,746 These cash deposits are included as part of accounts receivable in the Statement of Financial Position. 12 PAU - 58

59 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Debt (continued): (a) Debentures (continued): Principal payments and actuarial adjustments on the outstanding debenture debt over the next five years and thereafter are as follows: Thereafter $ 288, , , , ,331 12,803,246 $ 14,354,276 (b) Interim financing: The City obtained a temporary loan in the amount of $6,219,000, at a variable interest rate, from the MFA to finance water system infrastructure construction and improvements. In April 2017, this temporary loan was converted to debenture debt for periods of ten and thirty years at an interest rate of 2.80% for the first ten years. After this time the City will have the option to retire part or all of the debt early, or refinance the borrowing at a new interest rate. 9. Deferred revenue: Property taxes Contributions for future capital works Development cost charges (a) Utility service connections Deferred revenue - facility upgrades Deferred revenue - building permits Other 2016 $ 3,646,498 1,217,410 4,251, , ,021 1,269, ,962 $ 12,402, $ 3,951,726 1, 152,590 4,046, , ,996 1,242, ,465 $ 12,367, PAU - 59

60 . ' THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Deferred revenue: (a) Development cost charges: Highwa:ts Drainage Parkland Total Balance, beginning of year $ 590,470 $ 733,737 $ 2,722,086 $ 4,046,293 Add: Amounts received 27,962 25, , ,044 Investment income 8,232 10,160 37,868 56,260 Deduct: Acquisition of tangible capital assets 4,586 3,451 19,559 27,596 Balance, end of ~ear $ 622,078 $ 765,543 $ 2,863,380 $ 4,251, PAU - 60

61 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued).~ Year ended December 31, Tangible capital assets: Cost: Buildings Machinery Roads Sanitary Storm Water Assets Land and and and Sewer Sewer System Under Land lm2rovements Facilities Egui2ment Sidewalks Infrastructure Infrastructure Infrastructure Construction Total Balance, beginning of year $ 9,594,395 $ 7,986,095 $ 30,673,574 $ 10,395,685 $ 39,250,883 $ 18,204,584 $ 19,980,807 $ 8,768,050 $ 7,486,787 $ 152,340,860 Additions 1,195, , ,000 1,231, , ,535 91, ,185 5,919,583 9,699,396 Transfers 22, , , ,030 23, ,079 5,440,461 (6,460,555) Disposals (392). (334,574) (65,487) (22,174) (21,421) - (444,048) Balance, end of year 10,812,203 8,286,867 30,898,574 11,454,022 39,955,119 18,509,667 20,230,245 14,503,696 6,945, ,596,208 Accumulated Amortization: Balance, beginning of year 5,193,097 11,601,636 6,080,385 18,174,025 6,151,305 8,459,818 80,786-55,741,052 Disposals (333,894) (54,966) (7,502) (15,563) - (411,925) Amortization expense 263,461 1,221, , , , , ,389 4,237,467 - Balance, end of year 5,456,558 12,822,675 6,553,251 19,052,528 6,430,832 8,757, ,175-59,566,594 Net book value, end of year $ 10,812,203 $ 2,830,309 $ 18,075,899 $ 4,900,771 $ 20,902,591 $ 12,078,835 $ 11,472,670 $ 14,010,521 $ 6,945,815 $ 102,029,614 Net book value, beginning of year $ 9,594,395 $ 2,792,998 $ 19,071,938 $ 4,315,300 $ 21,076,858 $ 12,053,279 $ 11,520,989 $ 8,687,264 $ 7,486,787 $ 96,599, PAU - 61

62 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Tangible capital assets (continued): (a) Assets under construction: Assets under construction have 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 was comprised of: Roads and sidewalks Sanitary sewers Storm sewers $ 63,879 $ 180,031 43,000 57,342 Developers' contributions of tangible capital assets $ 63,879 $ 280,373 (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. (d) Works of art and historical treasures: The City manages and controls various works of art and non-operational historical cultural assets including totem poles, sculptures and paintings located at City sites and public display areas. These assets are not recorded as tangible capital assets. (e) Write-down of tangible capital assets: There were no write-downs of tangible capital assets during the year. 11. Accumulated surplus: Non- Other Investment Statutory statutory surplus in tangible reserves reserves funds ca~ital assets Total (note 13(a)) (note 13(b)) (note 12) General Fund $ 11,390,650 $ 17,950,951 $ 4,563,711 $ 58,151,815 $ 92,057,127 Sanitary Sewer Fund 89,401 11,046,941 1, 107, ,677,928 24,921,386 Drainage Fund 7,454, ,320 11,796,014 19,768,865 Water Fund 1,773, , 100 (52,678) 2, 111,006 Total for 2016 $ 11,480,051 $ 38,226,007 $ 6,579,247 $ 82,573,079 $ 138,858,384 Total for 2015 $ 11,443,841 $ 32,494,426 $ 5,641,157 $ 81,755,381 $ 131,334,805 Included in the water fund investment in tangible capital assets is an adjustment in the amount of $1,758,828 for unspent debt proceeds which have been earmarked for use in future years. 16 PAU - 62

63 . ' '. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Investment in tangible capital assets: Tangible capital assets Deduct: Capital lease obligation Debt Deferred revenue - facility upgrades Add: Unspent debt proceeds 2016 $ 102,029,614 (42,066) (20' 573,276) (600,021) 1,758,828 $ 82,573, $ 96,599,808 (62,958) (14,138,473) (642,996) $ 81,755, Reserves: (a) Statutory reserves: The following reserves were established, by bylaw, in accordance with BC municipal legislation: General Fund: Land sale reserve Equipment replacement reserve Capital works, machinery & equipment reserve Off-street parking facilities reserve Local improvement reserve Sanitary Sewer Fund: Terry Road local improvement reserve 2016 $ 2,444,607 4,784,458 4,121,545 7, ,390,650 89,401 $ 11,480, $ 3,320,787 4,532,831 3,449,100 7, ,342, ,186 $ 11,443, PAU - 63

64 .. THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Reserves (continued): (b) Non-statutory reserves: General Fund: Infrastructure reserve $ 4,681,857 $ 4,637,313 Computer replacement reserve 170, ,550 Economic development reserve 99, ,390 Pier preservation reserve 202, ,369 Police equipment reserve 220, ,541 Roadworks reserve 3,005,537 2,448,352 Density bonus/amenity contribution reserve 998, ,566 Public art contribution reserve 6, , 108 Parking reserve 748, ,000 Community Works Fund agreement reserve 327, ,708 Secondary suite service fee reserve 880, ,864 Solid waste operating reserve 416,319 87,514 Other operating reserves 2,870,747 2,591,866 lncomglete asset imgrovement grojects 3,322,600 2,383,400 17,950,951 15,255,541 Sanitary Sewer Fund: Infrastructure reserve 10,668,241 8, 113,065 Pump station reserve 1,273,919 lncomglete asset imgrovement grojects 378, ,900 11,046,941 10,354,884 Drainage Fund: Infrastructure reserve 5,361,431 4,764,357 Operating reserve 25,000 25,000 lncomglete asset imgrovement grojects 2,068,100 1,471,600 7,454,531 6,260,957 Water Fund: Infrastructure reserve 1,430, ,344 Debt retirement reserve 3,209 Ogerating reserve 340, ,700 1,773, ,044 $ 38,226,007 $ 32,494, PAU - 64

65 ', '\., - THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Commitments and contingencies: (a) Borrowing liability: The City has a contingent liability with respect to debentures of the Greater Vancouver Sewerage and Drainage District and the Greater Vancouver Regional District, to the extent provided for in their respective Enabling Acts, Acts of Incorporation and Amending Acts. Management does not consider payment under this contingency to be likely and therefore no amounts have been accrued. (b) Third party claims: There are various lawsuits and claims pending by and against the City. The outcome of these claims is undeterminable and it is the opinion of management that final determination of these claims will not materially affect the financial statements of the City. (c) Lease Commitments: The City entered into a five year agreement, initially ending July 31, 2008, to lease certain parcels of real property from The Burlington Northern and Santa Fe Railway Company. Under the terms of this agreement, the City is committed to annual rent payments as well as the costs of all taxes, utilities, insurance, repairs and maintenance of the leased premises. This is accounted for as an operating lease. This agreement provides for renewal options consisting of three additional five year terms. In January 2013, the City exercised its second option to renew this lease for the five year term ending July 31, During this period, the City is committed to annual base rent payments of $400,000. The City has entered into various leases for office and other operating equipment. Total annual commitments for the next five years, net of applicable taxes, are approximately as follows: Year ending December 31: $ 33,442 31,526 17,617 11,245 2,811 $ 96, PAU - 65

66 ..., THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Commitments and contingencies (continued): (d) Agreements and contractual commitments: In addition to the leases described above, the City has entered into various agreements and contracts for services and construction with periods ranging from one to five years. These commitments are in the normal course of operations. (e) Debt agreement with the MFA: The City issues debt instruments through the MFA. As a condition of these borrowings the City is required to execute demand notes in connection with each debenture whereby the City may be required to loan certain amounts to the MFA. The debt agreement with the MFA provides that if at any time the scheduled payments provided for in the agreement are not sufficient to meet the MFA's obligations in respect to such borrowing, the resulting deficiency becomes the joint and several liability of the City and all other participants to the agreement through the MFA. The City is similarly liable on a contingent basis for the debt of other municipalities secured through the MFA. Details of the contingent demand notes are as follows: Bylaw number Pur~ose Sanitary Sewers - Local Improvement $ 7,364 $ 7, Water Utility Acquisition Advance Payment 180,771 $ 188,135 $ 7,364 These contingent demand loans are not recorded in the City's financial statements as they are not likely to be paid. (f) E-Comm Emergency Communications for Southwest British Columbia Incorporated ("E-Comm"): The City is a shareholder of the Emergency Communications for Southwest British Columbia Incorporated ("E-Comm"). The City receives services for the regional call centre for Greater Vancouver Regional District and the Wide Area Radio network from E-Comm. The City has two Class A shares (of a total 28 Class A and 23 Class B shares issued and outstanding as at December 31, 2016). As a Class A shareholder, the City shares in both funding the future operations and capital obligations of E-Comm (in accordance with a cost sharing formula), including any lease obligations committed to by E-Comm up to the shareholder's withdrawal date. Class B shareholders are only obligated to share in funding of the ongoing operating costs. The City has recorded its proportionate obligations. 20 PAU - 66

67 .....,,_ THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Commitments and contingencies (continued): (g) Municipal Insurance Association of British Columbia (the "Association"): The City is a participant in the Association. Should the Association pay out claims in excess of premiums received, it is possible that the City, along with the other participants, would be required to contribute towards the deficit. Management does not consider payment under this contingency to be likely and therefore no amounts have been accrued. 15. Pension plan: The City 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 administering the Plan, including investment of the assets and administration of benefits. The Plan is a multi-employer defined benefit pension plan. Basic pension benefits provided are based on a formula. The Plan has about 189,000 active members and approximately 85,000 retired members. Active members include approximately 37,000 contributors from local government and 140 contributors from the City. The most recent actuarial valuation as at December 31, 2015 indicated a $2,224 million funding surplus for basic pension benefits. The next valuation will be at December 31, 2018 with results available in Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate with the result that there is no consistent and reliable basis for allocating the obligation, assets and cost to the individual employers participating in the Plan. The City paid $1,174,500 ( $1,011,600) for employer contributions to the Plan in fiscal Collections for other governments: The City collects certain taxation revenue on behalf of other government bodies. These funds are excluded from the City's financial statements as they are not revenue of the City. Such taxes collected and remitted to other government bodies during the year are as follows: Province of British Columbia - school tax $ 11,588,672 $ 11,219,954 South Coast BC Transportation Authority - Translink tax 2, 110,615 2,114,382 Other regional bodies 752, ,906 $ , 175 $ 14,068, PAU - 67

68 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Sales of services and other revenue: Parking Parks, recreation and cultural services Licences and permits Solid waste services Utility service connection fees Density bonus/amenity contributions Interest and penalties Contributions toward tangible capital asset improvements Other $ 3,219,355 $ 3,202,849 1,607,602 1,573,413 1,633,607 1,614,452 1,567, , , , , , ,979 96,586 89,163 1,638,548 1,502,973 $ 11,499,977 $ 11,088, Water utility acquisition: On August 28, 2015, the City entered into an asset purchase agreement with EPCOR White Rock Water Inc. (the "vendor") to purchase the property and assets of the vendor which were used in the operation of the water distribution utility owned and operated by them. This agreement also required the City to assume certain obligations and liabilities related to the water distribution utility which provides water supply, treatment and distribution service within the municipal boundaries of the City of White Rock and within certain areas of the City of Surrey. As at December 31, 2015, the City paid cash of $13,848,770, in accordance with this agreement. The final purchase price is subject to negotiation and possible arbitration. Any adjustments as a result of this process will be recorded at the time of determination. As of the effective date of acquisition, which was October 30, 2015, the cash paid was allocated based on the estimated fair market value of the acquired assets and liabilities, as follows: Tangible capital assets including assets under construction Other assets Liabilities $ 14, 136, ,352 (744,926) $ 13,848, Comparative information: Certain components of the comparative information have been reclassified to conform with the financial statement presentation adopted in the current year. 22 PAU - 68

69 .....,... THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Segmented information: The City is a diversified municipal government institution that provides a wide range of services to its citizens, visitors and many others. In compliance with PS2700, Segment Disclosures, certain financial information is required to be reported for major activities involving these services. Each of these major activities is comprised of various City departments and/or divisions as noted below. General Government - Mayor and Council, Chief Administrative Officer, City Clerk, Financial Services, Human Resources, Planning and Development, and Information Services. These departments are responsible for many legislative, operational and administrative support services including but not limited to City Council bylaw and procedural matters, levying and collecting property taxes, hiring City staff, supporting the City's information technology infrastructure, preparing land use plans and approving new development in the City. Protection Services - Police, Fire, Building and Bylaw Enforcement (non-parking related). These departments are responsible for ensuring public safety and security, preventing crimes as well as enforcing various laws. Transportation, Engineering and Municipal Operations - Public Works, Engineering and Parking. These areas are responsible for providing and maintaining the systems that enable the community to use transportation facilities such as roads, sidewalks and parking lots. This category also includes management and administrative services of the City's Engineering and Municipal Operations Department. Parks, Recreation and Cultural Services - These areas are responsible for providing, facilitating the development of, and maintaining high quality parks, recreation facilities and cultural services such as the public library. Sol.id Waste Services - These services involve the City's garbage collection, green waste collection and recycling programs. Sanitary Sewer System - These services involve the provision and maintenance of all systems related to the distribution and disposal of sanitary sewage. Drainage System - These services include the provision and maintenance of all systems involving the distribution of storm water run-off in the City. Water System - These services include the provision and treatment of water supply, as well as the provision and maintenance of all other systems involving the distribution of water. 23 PAU - 69

70 THE CORPORATION OF THE CITY OF WHITE ROCK Notes to Financial Statements (continued) Year ended December 31, Segmented information (continued): Transportation, Parks, Engineering Recreation and and Solid Sanitary General Protection Operations Cultural Waste Sewer Drainage Water Government Services Services Services Services S~stem S~stem S~stem Adjustments Revenue: Property taxes: General purposes $ 19,732,564 $ $ $ $ $ $ - $ $ - $ 19,732,564 $ 19,642,298 Regional library and fire protection lellies (355) 869, ,311 1,419,353 Business imerovement le~ 311, , ,000 20,044,266 (355) 869,666 20,913,577 21,367,651 Receipts in lieu of taxes 14,990 14,990 18,358 Development cost charges 24,145 3,451 27,596 11,049 Sanitary sewer fees and parcel tax 3,536,470 3,536,470 3,460,471 Drainage user fees 2,048,559-2,048,559 1,979,649 Water user fees 3,733,479 3,733, ,746 Sales or services and other revenue: Parking 3,219,355 3,219,355 3,202,849 Parks, recreation, and cultural services - 1,607,602 1,607,602 1,573,413 Licences and permits 31,230 1,602,377 1,633,607 1,614,452 Solid waste services 1,567,670 1,567, ,917 Utility service connection fees 277, , , , ,450 Density bonus/amenity contributions - 640,000 Interest and penalties 956,301 11, , ,979 Contributions toward tangible capital asset improvements 7, ,160 11,271 15,600 18,800 96,586 89,163 Other 2,638,079 68, ,133 42,975 31,309 17,272 39, ,024 (1,770,336) 1,638,548 1,502,973 Government grants 499,235 35,973 82, , ,012 Developers' contributions of tangible caeital assets 63,879 63, ,373 24,215,593 1,706,701 3,714,648 2,614,158 1,598,979 3,858,840 2,436,333 4,081,463 (1,770,336) 42,456,379 39,367,505 Expenses: Salaries, wages and benefits 3,924,933 4,938,577 2,338,368 2,348, , , , ,917 (997,127) 14,679,082 13,651,803 Contracted services 1,255,014 4,441,648 1,433,285 2,889, ,106 1,749, , ,365 (534,325) 13,032,245 12,613,273 Supplies and other 1,116, ,937 39, , ,834 83,822 89, ,247 (238,884) 2,632,201 2,609,756 Amortization 339, ,520 1,244,832 1,300,008 94, , , ,494 4,237,467 3,810,631 Interest on debt 2,486 13, , ,805 34,633 6,638,354 9,954,682 5,056,465 7,311,881 1,232,189 2,479,592 1,213,994 2,815,979 (1,770,336) 34,932,800 32,720,096 Annual surplus (deficit) $ 17,577,239 $ (8,247,981) $ (1,341,817) $ (4,697,723) $ 366,790 $ 1,379,248 $ 1,222,339 $ 1,265,484 $ - $ 7,523,579 $ 6,647, PAU - 70.,'

71 5.4 To: From: Performance and Audit Committee Dean Rear, Director, Financial Planning and Operations, Financial Services Date: June 26, 2017 Meeting Date: July 7, 2017 Subject: Township of Langley Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 RECOMMENDATION That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Township of Langley in the amount of $25,460,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 to the Inspector of Municipalities for Certificate of Approval. PURPOSE To consider the adoption of a Security Issuing Bylaw to authorize a borrowing request from the Township of Langley in the amount of $25,460,000 for the Fall 2017 MFA long term debt issue. BACKGROUND This report is being brought forward to introduce Metro Vancouver Security Issuing Bylaw No. 1248, 2017 and consider its adoption to authorize a borrowing request from the Township of Langley in the amount of $25,460,000 for the purposes of overpass widening at 208 street and the construction of the interchange at 216 street for inclusion in the Fall 2017 MFA long term debt issue. MUNICIPAL BORROWING REQUEST Request Details Under provincial legislation, municipal borrowing requests must be approved by the respective council by way of Loan Authorization Bylaw and Security Issuing Resolution. Such borrowings must then be approved by the MVRD Board and included in a MVRD Security Issuing Bylaw to move forward. Upon approval, the request is then considered by the MFA. All debt of the MVRD is a joint and several liability of the member municipalities. The Township of Langley Council adopted Loan Authorization Bylaw 5232 on November 21, 2016 in the amount of $11,716,000 to undertake overpass widening at 208 street. The Township subsequently passed the required Security Issuing Resolution on May 8, 2017 to borrow the full amount authorized by the bylaw. PAU - 71

72 Township of Langley Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 2 of 3 The Township of Langley Council adopted Loan Authorization Bylaw 5233 on November 21, 2016 in the amount of $13,744,000 for construction of the interchange at 216 street. The Township subsequently passed the required Security Issuing Resolution on May 8, 2017 to borrow the full amount authorized by the bylaw. The details of the above mentioned bylaws are summarized as follows: MVRD Member Bylaw 1248, 2017 Township of Langley 1248, 2017 Township of Langley Member Purpose Bylaw 5232 Overpass Widening: 208 Street 5233 Construction of Interchange at 216 Street Borrowing Request Term $11,716, years $13,744, years $25,460,000 The loan authorization bylaws outlined above, have been reviewed by the Inspector of Municipalities and have received the necessary Certificates of Approval. The certificates are included in this report. Financial Analysis Per the latest data provided by the Province, as at December 31, 2016 the Township of Langley had a liability servicing limit of $50,527,721. This limit represents the maximum amount, as prescribed by the Province, that the Township can annually pay for servicing debt. The estimated annual debt servicing costs proposed in this bylaw will be approximately $1,563,600. When combined with the existing debt servicing costs and additional liability servicing the total will be approximately $8,691,100 which is roughly 17.2% of the liability servicing limit. Additional information provided by the Township of Langley to assist in considering this request includes: copies of their security issuing resolutions the adopted Loan Authorization Bylaws along with Certificates of Approval the Financial Plan Bylaw which includes the appropriate proceeds of borrowing and anticipated debt servicing costs 2016 Consolidated Financial Statements which includes a note summarizing accumulated surplus (Note 11) and reserve balances (Note 12) All of which are attached to this report. ALTERNATIVES 1. That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Township of Langley in the amount of $25,460,000; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and PAU - 72

73 Township of Langley Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 3 of 3 c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 to the Inspector of Municipalities for Certificate of Approval. 2. That the MVRD Board receive for information report titled Township of Langley Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017, dated June 23, FINANCIAL IMPLICATIONS The Township of Langley intends to borrow $25,460,000 to fund overpass widening at 208 street and the construction of the interchange at 216 street from the Municipal Finance Authority of BC. Although all member debt is a joint and several liability of all member municipalities, there are no direct financial implications for Metro Vancouver with adoption of the bylaw. Should the bylaw not be adopted, the Township of Langley would be unable to borrow funds as required for the purpose intended and would need to look for other funding sources, potentially causing undue financial challenges for the Township. SUMMARY / CONCLUSION As set out in the Community Charter, the MVRD must adopt a security issuing bylaw in order to enable the Township of Langley to proceed with their borrowing request. In light of the joint and several liability of all member municipality debt, the review of borrowing requests is prudent given the role of the Regional District. Staff recommends consenting to the Township of Langley s borrowing and adopting the Security Issuing Bylaw as outlined in Alternative 1. Attachments 1. Metro Vancouver Regional District Security Issuing Bylaw No. 1248, Township of Langley - Additional Information PAU - 73

74 ATTACHMENT 1 Regional District Security Issuing Bylaw METRO VANCOUVER REGIONAL DISTRICT BYLAW NO. 1248, 2017 A BYLAW TO AUTHORIZE THE ENTERING INTO OF AN AGREEMENT RESPECTING FINANCING BETWEEN THE METRO VANCOUVER REGIONAL DISTRICT AND THE MUNICIPAL FINANCE AUTHORITY OF BRITISH COLUMBIA WHEREAS the Municipal Finance Authority of British Columbia (the Authority ) may provide financing of capital requirements for Regional Districts or for their member municipalities by the issue of debentures or other evidence of indebtedness of the Authority and lending the proceeds therefrom to the Regional District on whose request the financing is undertaken; AND WHEREAS the Township of Langley is a member municipality of the Metro Vancouver Regional District (the Regional District ); AND WHEREAS the Regional District is to finance from time to time on behalf of and at the sole cost of the member municipalities, under the provisions of Section 410 (formerly section 824) of the Local Government Act, the works to be financed pursuant to the following loan authorization bylaw: Member Loan Authorization Bylaw Number Purpose 5232 Overpass Widening: 208 Street 5233 Construction of Interchange at 216 Street Amount of Borrowing Authorized Amount Already Borrowed Borrowing Authority Remaining Term of Issue $11,716,000 $0 $11,716, years $13,744,000 $0 $13,744, years Amount of Issue $11,716,000 $13,744,000 $25,460,000 AND WHEREAS the Regional Board, by this bylaw, hereby requests such financing shall be undertaken through the Authority: NOW THEREFORE the Regional Board of the Regional District of Metro Vancouver in open meeting assembled enacts as follows: 1. The Regional Board hereby consents to financing the debt of the Township of Langley in the amount of twenty five million four hundred and sixty thousand dollars ($25,460,000) in accordance with the following terms. Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Page 1 of 5 PAU - 74

75 2. The Authority is hereby requested and authorized to finance from time to time the aforesaid undertakings at the sole cost and on behalf of the Regional District and its member municipalities up to, but not exceeding twenty five million four hundred and sixty thousand dollars ($25,460,000) in lawful money of Canada (provided that the Regional District may borrow all or part of such amount in such currency as the Trustees of the Authority shall determine but the aggregate amount in lawful money of Canada and in Canadian Dollar equivalents so borrowed shall not exceed $25,460,000 in Canadian Dollars) at such interest and with such discounts or premiums and expenses as the Authority may deem appropriate in consideration of the market and economic conditions pertaining. 3. Upon completion by the Authority of financing undertaken pursuant hereto, the Chair and officer assigned the responsibility of financial administration of the Regional District, on behalf of the Regional District and under its seal shall, at such time or times as the Trustees of the Authority may request, enter into and deliver to the Authority one or more agreements, which said agreement or agreements shall be substantially in the form annexed hereto as Schedule "A" and made part of this bylaw (such Agreement or Agreements as may be entered into, delivered or substituted hereinafter referred to as the "Agreement") providing for payment by the Regional District to the Authority of the amounts required to meet the obligations of the Authority with respect to its borrowings undertaken pursuant hereto, which Agreement shall rank as debenture debt of the Regional District. 4. The Agreement in the form of Schedule A shall be dated and payable in the principal amount or amounts of monies and in Canadian dollars or as the Authority shall determine and subject to the Local Government Act, in such currency or currencies as shall be borrowed by the Authority under Section 1 and shall set out the schedule of repayment of the principal amount together with interest on unpaid amounts as shall be determined by the Treasurer of the Authority. 5. The obligation incurred under the said Agreement shall bear interest from a date specified therein, which date shall be determined by the Treasurer of the Authority, and shall bear interest at a rate to be determined by the Treasurer of the Authority. 6. The Agreement shall be sealed with the seal of the Regional District and shall bear the signature of the Chair and the officer assigned the responsibility of financial administration of the Regional District. 7. The obligations incurred under the said Agreement as to both principal and interest shall be payable at the Head Office of the Authority in Victoria and at such time or times as shall be determined by the Treasurer of the Authority. 8. During the currency of the obligation incurred under the said Agreement to secure borrowings in respect of Overpass Widening: 208 Street Loan Authorization Bylaw 2016 No and 216 Street Interchange at Highway 1 Loan Authorization bylaw 2016 No there shall be requisitioned annually an amount sufficient to meet the annual payment of interest and the repayment of principal. 9. The Regional District shall provide and pay over to the Authority such sums as are required to discharge its obligations in accordance with the terms of the Agreement, provided, Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Page 2 of 5 PAU - 75

76 however, that if the sums provided for in the Agreement are not sufficient to meet the obligations of the Authority, any deficiency in meeting such obligations shall be a liability of the Regional District to the Authority and the Regional Board of the Regional District shall make due provision to discharge such liability. 10. The Regional District shall pay over to the Authority at such time or times as the Treasurer of the Authority so directs such sums as are required pursuant to section 15 of the Municipal Finance Authority Act to be paid into the Debt Reserve Fund established by the Authority in connection with the financing undertaken by the Authority on behalf of the Regional District pursuant to the Agreement. This bylaw may be cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1248, READ A FIRST TIME this day of, READ A SECOND TIME this day of, READ A THIRD TIME this day of, PASSED AND FINALLY ADOPTED this day of, Greg Moore, Chair Chris Plagnol, Corporate Officer Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Page 3 of 5 PAU - 76

77 SCHEDULE "A" to Bylaw No. 1248, 2017 C A N A D A PROVINCE OF BRITISH COLUMBIA A G R E E M E N T Metro Vancouver Regional District The Metro Vancouver Regional District (the Regional District ) hereby promises to pay to the Municipal Finance Authority of British Columbia at its Head Office in Victoria, British Columbia, (the Authority ) the sum of twenty five million four hundred and sixty thousand dollars ($25,460,000) in lawful money of Canada, together with interest calculated semi-annually in each and every year during the currency of this Agreement; and payments shall be as specified in the table appearing below hereof commencing on the day of, 2017 provided that in the event the payments of principal and interest hereunder are insufficient to satisfy the obligations of the Authority undertaken on behalf of the Regional District, the Regional District shall pay over to the Authority further sums as are sufficient to discharge the obligations of the Regional District to the Authority. DATED at, British Columbia, this day of, 20. IN TESTIMONY WHEREOF and under the authority of Bylaw No. 1248, 2017 cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1248, This Agreement is sealed with the Corporate Seal of the Metro Vancouver Regional District and signed by the Chair and the officer assigned the responsibility of financial administration thereof. Chair Treasurer Pursuant to the Local Government Act, I certify that this Agreement has been lawfully and validly made and issued and that its validity is not open to question on any ground whatever in any Court of the Province of British Columbia. Dated, 20 (month, day) Inspector of Municipalities Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Page 4 of 5 PAU - 77

78 PRINCIPAL AND/ OR SINKING FUND DEPOSIT AND INTEREST PAYMENTS Principal and/or Sinking Fund Date of Payment Deposit Interest Total $ $ $ $ $ $ Metro Vancouver Regional District Security Issuing Bylaw No. 1248, 2017 Page 5 of 5 PAU - 78

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90 2016 Annual Report Financial Section For Fiscal Year Ending December 31 PAU - 90

91 TABLE OF CONTENTS INTRODUCTION Report from the Director of Finance 3 Independent Auditors Report 4 FINANCIAL STATEMENTS 7 Consolidated Statements 8 AUDITED NOTES TO THE 13 FINANCIAL STATEMENTS AUDITED SEGMENTED SCHEDULE 29 AUDITED SCHEDULES 33 Schedule 1: Debt and Agreements Payable 34 Schedule 2: Langley Centennial Museum 36 UNAUDITED STATISTICAL 37 INFORMATION PAU - 91

92 Report from the t Director,, Finance Division To Mayor Jack Froese and Council; I am pleased to present the 2016 Financial Statements and the audit report of our external auditors, KPMG LLP, Chartered Accountants. Pursuant to Section 167 of the Community Charter, these statements are prepared and presented to provide sufficient information for readers to understand the financial position and results of Township of Langley operations. Preparation of the consolidated financial statements is the responsibility of the management of the Township of Langley and Township Council. The financial statements and related information have been prepared in accordance with Canadian Public Sector Accounting Standards as prescribed by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada (CPA). Management is responsible for the accuracy, integrity, and objectivity of these statements and for implementing and maintaining a system of internal controls to safeguard Township assets and provide reasonable assurance that financial information is reliable. The role of our external auditors, KPMG LLP Chartered Accountants, is to conduct an independent examination, in accordance with Canadian generally accepted auditing standards, and to express their opinion on the financial statements. To provide reasonable assurance the financial statements are presented fairly, their examination includes consideration of Township systems of internal control and appropriate tests and procedures. The external auditors have full and free access to Township Council and staff. KPMG LLP has given the Township an unmodified audit opinion on the Township s financial statements, stating that in their opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Township as at December 31, 2016, and its consolidated results of operations, its change in consolidated net financial assets and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards. Township Net Financial Assets increased by $38 million to $84 million as at December 31, Increased Development Cost Charges receipts, gain on sale of land, property tax increase, and fees, rates and service charge increases contributed to the increase in financial assets. Total Tangible Capital Assets for the Township, at historical cost, net of accumulative amortization expense, amount to $1.35 billion. Capital asset additions for 2016 amount to $84.7 million. Each year developers construct capital infrastructure that is then contributed to the Township. For 2016, this contribution by developers amounts to $47.2 million or 56% of total capital asset additions. An additional $22 million or 26% of capital projects were funded from Development Cost Charge reserves. Under PSAB requirements, the annual surplus of $84.7 million includes surplus from operations and additional surplus from current investments in capital assets as follows: Surplus as a result of recognizing funds received for capital projects as income, net of amortization expense, without recognizing the related capital expense and Surplus as a result of recognizing the value of contributed capital assets from developers as revenue in the year the assets are put into service Accumulated Surplus balance of $1.43 billion (2015 $1.35 billion) is comprised of four categories as follows: Operating Surplus $89.01 million (2015 $78.80 million) Capital Surplus $28.13 million (2015 $23.80 million) Statutory Reserve $48.07 million (2015 $23.70 million) Investment in Tangible Capital Assets $1.27 billion (2015 $1.22 billion) The Township s economic goals include achieving fiscal stability and health, strengthening our economy, and investing in effective infrastructure. Our financial plans reflect these goals and this year s financial results are in line with financial plans approved by Council. KSinclair K. Sinclair CPA, CGA Director of Finance Debt and Agreements Payable balance increased slightly by $0.4 million to $77.2 million. Debt and Agreements Payable is repayable from a combination of Development Cost Charges, future land sales, and respective utility operating revenues. Township of Langley 2016 Annual Report PAU - 92 Financial Section 3

93 KPMG Enterprise TM Metro Tower I 4710 Kingsway, Suite 2400 Burnaby BC V5H 4M2 Canada Telephone (604) Fax (604) INDEPENDENT AUDITORS' REPORT To the Mayor and Council of the Corporation of the Township of Langley We have audited the accompanying consolidated financial statements of the Corporation of the Township of Langley, which comprise the consolidated statement of financial position as at December 31, 2016, the consolidated statements of operations, change in net financial assets and cash flows for the year then ended, and notes and schedules, comprising 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. Auditors 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 our 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, we consider internal control relevant to the entity'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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP. 4 Financial Section Township of Langley 2016 Annual Report PAU - 93

94 Corporation of the Township of Langley Page 2 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 consolidated financial position of the Corporation of the Township of Langley as at December 31, 2016, and its consolidated results of operations, its change in consolidated net financial assets and its consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants June 12, 2017 Burnaby, Canada Township of Langley 2016 Annual Report PAU - 94 Financial Section 5

95 FINANCIAL STATEMENTS Township of Langley 2016 Annual Report PAU - 95 Financial Section 7

96 Consolidated Statement of Financial Position As at December 31, 2016 (in thousands of dollars) FINANCIAL ASSETS Cash and cash equivalents (Note 3) $ 21,316 $ 25,610 Investments (Note 3) 223, ,302 Accounts receivable (Note 4) 38,944 41,056 Assets held for sale 2,643 1, , ,902 LIABILITIES Accounts payable and accrued liabilities (Note 5) 40,900 39,260 Deposits and prepayments (Note 6) 25,846 24,417 Deferred revenue (Note 7) 14,737 14,841 Development cost charges (Note 8) 43,801 46,383 Debt and agreements payable (Note 9) 77,247 76, , ,717 NET FINANCIAL ASSETS 83,646 45,185 NON-FINANCIAL ASSETS Inventories of supplies Prepaid expenses 1,531 1,473 Tangible capital assets (Note 10) 1,347,959 1,301,674 1,350,369 1,304,099 ACCUMULATED SURPLUS (Note 11) $ 1,434,015 $ 1,349,284 Contingencies and commitments (Note 14) See accompanying Notes to the Consolidated Financial Statements Karen Sinclair, CPA, CGA Director of Finance Jack Froese Mayor, Township of Langley 8 Financial Section Township of Langley 2016 Annual Report PAU - 96

97 Consolidated Statement of Operations For the year ended December 31, 2016 (in thousands of dollars) Budget (Note 2(a) and 20) REVENUE Property taxes $ 119,250 $ 119,092 $ 112,612 Fees, rates and service charges 58,824 69,274 64,999 Grants and grants in lieu of taxes 9,302 8,095 8,928 Service cost recoveries 4,040 4,148 4,262 Gain on disposal of assets - 14,615 9,051 Investment income 1,745 5,600 4,080 Local area service contributions 4, ,599 Contribution from development cost charges 59,798 21,832 11,327 Other developer contributions (Note 10(b)) 35,501 47,608 36,316 Other income 10,901 4,882 3, , , ,702 EXPENSES General government 25,581 22,960 21,003 Police protection 34,316 31,848 29,719 Fire protection 16,368 16,065 15,047 Facilities maintenance 7,598 7,814 6,117 Community planning and development 9,698 8,581 7,955 Recreation and culture 25,965 26,767 25,668 Parks 10,126 13,164 12,559 Transportation 26,404 40,372 29,718 Stormwater 6,128 8,972 8,415 Water 17,410 16,391 17,342 Sewer 10,847 12,035 11,122 Solid waste 5,716 5,784 5, , , ,345 ANNUAL SURPLUS 107,240 84,731 68,357 ACCUMULATED SURPLUS, beginning of year 1,349,284 1,349,284 1,280,927 ACCUMULATED SURPLUS, end of year $ 1,456,524 $ 1,434,015 $ 1,349,284 See accompanying Notes to the Consolidated Financial Statements Township of Langley 2016 Annual Report PAU - 97 Financial Section 9

98 Consolidated Statement of Change in Net Financial Assets For the year ended December 31, 2016 (in thousands of dollars) Budget (Note 2(a) and 20) ANNUAL SURPLUS $ 107,240 $ 84,731 $ 68,357 Acquisition of tangible capital assets (189,745) (37,583) (36,887) Developer contributed tangible capital assets (35,501) (47,159) (35,422) Reclassification of land held for resale - 3, Amortization of tangible capital assets - 33,195 31,536 Gain on disposal of tangible capital assets - (9,216) (490) Proceeds on disposal of tangible capital assets - 11, (118,006) 38,446 28,602 Acquisition of inventories of supplies (900) (879) (952) Acquisition of prepaid expenses (1,300) (1,531) (1,473) Consumption of inventories of supplies Use of prepaid expenses 1,300 1,473 1, (235) CHANGE IN NET FINANCIAL ASSETS (118,006) 38,461 28,367 NET FINANCIAL ASSETS, beginning of year 45,185 45,185 16,818 NET FINANCIAL ASSETS, end of year $ (72,821) $ 83,646 $ 45,185 See accompanying Notes to the Consolidated Financial Statements 10 Financial Section Township of Langley 2016 Annual Report PAU - 98

99 Consolidated Statement of Cash Flows For the year ended December 31, 2016 (in thousands of dollars) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Annual surplus $ 84,731 $ 68,357 Items not involving cash: Amortization of tangible capital assets 33,195 31,536 Gain on disposal of tangible capital assets (9,216) (490) Developer contributed tangible capital assets (47,159) (35,422) Change in non-cash operating working capital: Accounts receivable 2,112 (8,346) Accounts payable and accrued liabilities 1,640 (3,990) Assets held for sale 2, Deposits and prepayments 1,429 (697) Deferred revenue (104) (1,397) Development cost charges (2,582) 9,660 Inventories of supplies 73 (125) Prepaid expenses (58) (191) Net change in cash from operating activities 66,486 59,481 CAPITAL ACTIVITIES Cash used to acquire tangible capital assets (37,583) (36,887) Proceeds on disposal of tangible capital assets 11, Net change in cash from capital activities (26,239) (36,221) FINANCING ACTIVITIES Issuance of debt and agreements payable 5, Repayment of debt and agreements payable (5,169) (3,997) Net change in cash from financing activities 431 (3,797) INVESTING ACTIVITIES Change in investments (44,972) (53,021) CHANGE IN CASH AND CASH EQUIVALENTS (4,294) (33,558) CASH AND CASH EQUIVALENTS, beginning of year 25,610 59,168 CASH AND CASH EQUIVALENTS, end of year $ 21,316 $ 25,610 See accompanying Notes to the Consolidated Financial Statements Township of Langley 2016 Annual Report PAU - 99 Financial Section 11

100 AUDITED NOTES Township of Langley 2016 Annual Report PAU Financial Section 13

101 Notes to the Financial Statements Notes to the Consolidated Financial Statements For the year ended December 31, 2016 (in thousands of dollars) The notes to the consolidated financial statements are an integral part of the statements and explain the significant accounting policies and principles underlying the statements. They also provide relevant supplementary information and explanations. 1. OPERATIONS The Corporation of the Township of Langley (the Township ) is incorporated under the Local Government Act of British Columbia. The Township s principal activities include the provision of local government services to residents and businesses in the Township of Langley. These services include administrative, protective, transportation, recreational, parks, library, water, sewer, stormwater, solid waste disposal, and recycling. The general resources and operations of the Township are segregated into operating, capital, and reserve funds. The Community Charter of British Columbia. requires revenue and expenses to be in accordance with the five-year financial plan adopted annually by Council. The budget for each year of the plan must be balanced so that annual expenses do not exceed the total of revenue, transfers from reserves and surplus, and proceeds from debt. 2. SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of the Township are prepared in accordance with Public Sector Accounting Standards as prescribed by the Public Sector Accounting Board ( PSAB ) of the Chartered Professional Accountants of Canada. a) Basis of Consolidation The consolidated financial statements are comprised of the Township s Operating, Capital and Reserve Funds consolidated with Langley Facilities Society (the Society ). The Society, incorporated on March 12, 2009, was formed to operate the Langley Events Centre and is controlled by the Township. Other purposes of the Society include promotion of educational, recreational, heritage, and cultural activities and events within the Township of Langley. Ten Feet Sports and Entertainment Ltd., a whollyowned subsidiary of the Society, operates the Langley Events Centre. Interfund and inter-entity transactions, fund balances, and activities have been eliminated on consolidation. Budget Reporting The budget information presented in the consolidated financial statements reflects the 2016 budget component of the Township s Five-Year Financial Plan adopted by Council Bylaw No on February 29th, The Society and Ten Feet Sports and Entertainment Ltd. s operating budgets are also reflected in the total budget figures for the year. Operating Funds These funds include the General, Parks, Transportation, Stormwater, Water, Sewer, and Solid Waste Operating Funds. They are used to record the operating costs of the services provided by the Township. Capital Funds These funds include the General, Parks, Transportation, Stormwater, Water, and Sewer Capital Funds. They are used to record the acquisition costs of tangible capital assets. Reserve Funds Under the Community Charter, Township Council may, by bylaw, establish reserve funds for specified purposes. Money in a reserve fund, and interest earned thereon, must be expended by bylaw only for the purposes for which the fund was established. If the amount in a reserve is greater than required, Township Council may, by bylaw, transfer all or part of the amount to another reserve. Trust Funds These funds account for assets which must be administered as directed by agreement or statute for certain beneficiaries. In accordance with PSAB recommendations on financial statement presentation for local governments, trust funds are not included in the Township s consolidated financial statements. Trust funds administrated by the Township are presented in Note 19. b) Basis of Accounting The Township follows the accrual method of accounting for revenue and expenses. Revenue is recognized in the year in which it is earned and measurable. Expenses are recognized as they are incurred and measurable as a result of receipt of goods and services and/or the creation of a legal obligation to pay. c) Cash and Cash Equivalents Cash and cash equivalents consist of cash, highly liquid money market investments, and short-term deposits with maturities of less than 90 days at acquisition. 14 Financial Section Township of Langley 2016 Annual Report PAU - 101

102 Notes to the Financial Statements d) Investments Investments are carried at cost which approximates market value and are comprised of money market investments and bonds issued by Canadian Chartered Banks, Credit Unions, and/or government authorities. Most investments are held to maturity and temporary losses or gains in value are not recognized in the consolidated financial statements. Investments are written down if there is an other than temporary decline in value. e) Assets Held for Sale Assets held for sale includes properties which are ready and available to be sold and for which there is a market. They are valued at the lower of cost or expected net realizable value. 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. i) Tangible Capital Assets Tangible capital assets are recorded at cost which includes amounts directly attributable to acquisition, construction, development, or betterment of the asset. The costs of tangible capital assets are amortized on a straight line basis over their estimated useful lives as follows: Assets Useful Life (Years) Land improvements Building and building improvements Vehicles 8 25 Machinery and equipment 4 30 Roads infrastructure: - Base Surface Stormwater infrastructure Water infrastructure Sewer infrastructure Gravel pits are treated as land and as such are not amortized. Tangible capital assets are amortized in the year the asset is acquired or constructed and/or in the year of disposal. Assets under construction are not amortized until the asset is available for productive use. ii) Contributions of tangible capital assets Tangible capital assets received as contributions are recorded at their fair value at the date of receipt and the fair value of contributions are recorded as revenue in the year of receipt. iii) Natural resources Natural resources that have not been purchased are not recognized as assets in the consolidated financial statements. iv) Works of art and cultural and historic assets Works of art and cultural and historic assets are not recorded as assets in these consolidated financial statements. v) Interest capitalization The Township does not capitalize interest costs associated with the acquisition or construction of a tangible capital asset. vi) Inventories of supplies Inventories of supplies held for consumption are recorded at the lower of cost and replacement cost. g) Deferred revenue Deferred revenues represent licenses, permits, and other fees collected, but the related services or inspections have yet to be performed. These amounts will be recognized as revenue in the fiscal year the services are performed. h) Government Transfers Restricted transfers from governments are deferred and recognized as revenue as the related expenditures are incurred or the stipulations in the related agreement are met. Unrestricted transfers are recognized as revenue when received or if the amount to be received can be reasonably estimated and collection is reasonably assured. i) Employee Future Benefits The Township and its employees contribute to the Municipal Pension Plan. These contributions are expensed as incurred. Sick leave and post-employment benefits accrue to some Township employees. Accrued liabilities related to sick leave benefits are estimated based on actuarial calculations of years of service, retirement ages, and expected future salary and wage increases. These liabilities are accrued based on projected benefits as employees render qualifying years of service. Other post-employment benefits liabilities are recognized as a liability and expense in the period when the event occurs that obligates the Township to provide the benefit. j) Debt and Agreements Payable Municipal Finance Authority ( MFA ) debt is recorded net of related sinking fund balances. Interest on debt is recorded on an accrual basis. Land acquisition agreement debt is valued using a present value calculation of total future payments using a discount percentage that approximates the cost of borrowing through the MFA. Township of Langley 2016 Annual Report PAU Financial Section 15

103 Notes to the Financial Statements k) Liability for Contaminated Sites Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic, radioactive material or live organism that exceeds an environmental standard. Liabilities are recorded net of any expected recoveries. A liability for remediation of contaminated sites is recognized when a site is not in productive use and the following criteria are met: i) An environmental standard exists; ii) Contamination exceeds the environmental standards; iii) The Township is directly responsible or accepts responsibility; iv) It is expected that future economic benefits will be given up and v) A reasonable estimate of the amount can be made. The liability is recognized as management's estimate of the cost of post-remediation including operation, maintenance, and monitoring that are an integral part of the remediation strategy for a contaminated site. l) Use of Estimates The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect amounts reported, including post-employment benefits, allowance for doubtful receivables, fair value of developer contributions of tangible capital assets, useful lives of tangible capital assets, provision for contingencies, liability for contaminated sites, and future payments under land acquisition agreements. Revised estimates may be required, and adjustments will be made in the period that a change in estimate is made. Actual results could differ from estimates, and adjustments will be made in the year of final determination. m) Segment Disclosure A segment is defined as a distinguishable activity or group of activities of a government for which it is appropriate to separately report financial information to achieve the objectives of the standard. Financial information is presented in segmented format in Note Financial Section Township of Langley 2016 Annual Report PAU - 103

104 Notes to the Financial Statements 3. CASH, CASH EQUIVALENTS, AND INVESTMENTS Cash and cash equivalents are recorded at a cost of $21,316 ( $25,610). Investments with an initial maturity beyond three months are recorded at amortized cost of $223,274 with a market value of $220,421 (2015 amortized cost of $178,302 with a market value of $179,357). Investments maturing within one year of December 31, 2016 have interest rates ranging from 1.10% to 2.53%; within two to four years have interest rates ranging from 1.75% to 3.62%; within five to seven years have interest rates ranging from 1.75% to 3.40% and within eight to ten years have interest rates ranging from 2.50% to 3.37%. The following amounts are exclusive of Cemetery Funds (Note 19) Cash and cash equivalents $ 21,316 $ 25,610 Investments 223, ,302 $ 244,590 $ 203, ACCOUNTS RECEIVABLE Taxes $ 4,634 $ 5,767 Federal Government Provincial Government Municipal Finance Authority Other local governments 671 3,927 Other accounts 5,546 4,686 Accrued interest and others 2,875 3,173 Recoverable work in progress 1,505 1,278 Receivables secured letters of credit (a) 15,298 14,026 Local Area Service levies receivable (b) 7,024 6,932 $ 38,944 $ 41,056 a) Receivables secured letters of credit balance represents non-interest bearing securities for Development Cost Charge ( DCC ) amounts due from developers within two years. Monies collected upon negotiation of the letters of credit are restricted and can only be expended for DCC purposes (Note 8). b) Local Area Service levies receivable balance represents amounts due from property owners for specific Local Area Service projects in their neighborhood. Amounts realized upon collection of these receivables are restricted for use on local improvement projects. 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Trade and other liabilities $ 29,731 $ 29,729 Payroll liabilities 5,884 4,000 Employee future benefits (Note 17) 4,616 4,486 Collections for other authorities 669 1,045 $ 40,900 $ 39,260 Township of Langley 2016 Annual Report PAU Financial Section 17

105 Notes to the Financial Statements 6. DEPOSITS AND PREPAYMENTS The Township holds cash deposits received from depositors as security to ensure the satisfactory completion of works and other obligations. The Township also encourages the prepayment of property taxes and pays interest at rates prescribed by the provincial government Cash deposits held as security $ 11,925 $ 10,813 Prepaid property tax 13,921 13,604 $ 25,846 $ 24,417 The Township also holds irrevocable letters of credit in the amount of $49,759 ( $50,002) received from depositors as security to ensure the satisfactory completion of works within the Township. These letters of credit amounts are not reflected in the consolidated financial statements. 7. DEFERRED REVENUE Future works deposit $ 6,483 $ 5,973 South Coast British Columbia Transportation Authority 874 1,342 Government grant Langley School Board contribution (Note 13) 1,850 2,000 Trinity Western University contribution (Note 13) 2,158 2,333 Other 3,337 3, DEVELOPMENT COST CHARGES $ 14,737 $ 14,841 DCC are collected from developers to contribute to the capital costs associated with development. In accordance with the Local Government Act, these funds must be deposited into a separate DCC Reserve Fund. DCC amounts collected are deferred and are recognized as revenue in the year that related costs are incurred Roads DCC $ 19,219 $ 17,550 Drainage DCC 3,789 3,903 Park Land/Development/Interest DCC 7,441 13,908 Water DCC 9,191 7,388 Sewer DCC 4,161 3,634 $ 43,801 $ 46,383 DCC, beginning of year $ 46,383 $ 36,723 DCC spent in Operating Funds (4,813) (3,208) DCC spent in Capital Funds (17,019) (8,119) DCC collected (net) 18,545 20,392 Interest allocated DCC, end of year $ 43,801 $ 46,383 Investment in DCC consists of restricted investments as well as restricted accounts receivable. Investments $ 28,503 $ 32,357 Receivables secured letters of credit (Note 4) 15,298 14,026 $ 43,801 $ 46, Financial Section Township of Langley 2016 Annual Report PAU - 105

106 Notes to the Financial Statements 9. DEBT AND AGREEMENTS PAYABLE MFA debt, net of sinking fund deposits a) $ 27,923 $ 29,594 Agreements payable b) 14,024 17,522 Temporary borrowings c) 35,300 29,700 $ 77,247 $ 76,816 Estimated future payments on debt and agreements payable for the next five years and thereafter are: Principal Interest Total 2017 $ 2,868 $ 2,544 $ 5, ,114 2,849 6, ,088 2,831 6, ,217 2,816 7, ,256 2,776 7,032 Thereafter 57,704 $ 77,247 a) MFA Debt The Township obtains debt instruments through the MFA pursuant to security issuing bylaws under authority of the Community Charter to finance certain expenditures. Sinking fund balances managed by MFA are netted against related debt. Sinking Interest Gross Debt Fund Net Debt Rate Outstanding Balance Stormwater, Bylaw 3420, due % $ 1,675 $ 1,547 $ 128 $ 250 Stormwater, Bylaw 4752, due % 1, ,399 1,473 Stormwater, Bylaw 4829, due % 2, ,875 1,965 Water, Bylaw 3950, due % 1, General, Bylaw 4455, due % 3,250 1,155 2,095 2,244 General, Bylaw 4556, due % 11,000 3,909 7,091 7,596 Sewer, Bylaw 4750, due % 8,500 1,893 6,607 6,954 Transportation, Bylaw 4751, due % 8, ,392 8,700 b) Agreements payable $ 38,417 $ 10,494 $ 27,923 $ 29,594 Parkland, due % $ - $ 365 Parkland, due % - 2,000 Parkland, due % 1,084 1,217 Recreation facility, due % 12,940 13,940 $ 14,024 $ 17,522 c) Temporary borrowings As at December 31, 2016, the Township has secured temporary financing of $35,300 from the MFA for various capital projects to be paid over 20 years pending the issuance of debt instruments through the MFA pursuant to security issuing bylaws in The variable annual interest rate as at December 31, 2016 was 1.44% ( %). Township of Langley 2016 Annual Report PAU Financial Section 19

107 Notes to the Financial Statements 10. TANGIBLE CAPITAL ASSETS Cost Balance at December Additions (net of transfers) Disposals and Reclass of Land Held for Resale Balance at December Land and improvements $ 488,119 $ 31,673 $ 4,629 $ 515,163 Building and building improvements 155,789 4, ,594 Vehicles, machinery and equipment 47,647 7,012 1,067 53,592 Parks infrastructure 74,600 5, ,290 Information technology 9,275 1, ,137 Roads 431,264 37, ,729 Stormwater 229,036 10, ,876 Sewer 125,061 6, ,675 Water 174,923 38, ,900 Assets under construction 74,343 (57,503) - 16,840 Total $ 1,810,057 $ 84,742 $ 7,003 $ 1,887,796 Balance at December Amortization Accumulated Amortization on Disposals Balance at December Accumulated amortization Land and improvements $ 1,636 $ 109 $ 21 $ 1,724 Building and building improvements 60,945 5, ,037 Vehicles, machinery and equipment 28,110 2,974 1,036 30,048 Parks infrastructure 39,541 3, ,637 Information technology 7, ,990 Roads 208,448 12, ,504 Stormwater 67,086 3, ,527 Sewer 30,902 2, ,900 Water 64,218 3, ,470 Total $ 508,383 $ 33,195 $ 1,741 $ 539,837 Net Book Value December Net Book Value December Net book value Land and improvements $ 486,483 $ 513,439 Building and building improvements 94,844 93,557 Vehicles, machinery and equipment 19,537 23,544 Parks infrastructure 35,059 37,653 Information technology 1,778 2,147 Roads 222, ,225 Stormwater 161, ,349 Sewer 94,159 98,775 Water 110, ,430 Assets under construction 74,343 16,840 Total $ 1,301,674 $ 1,347, Financial Section Township of Langley 2016 Annual Report PAU - 107

108 Notes to the Financial Statements Cost Balance at December Additions (net of transfers) Disposals and Reclass of Land Held for Resale Balance at December Land and improvements $ 474,379 $ 14,610 $ 870 $ 488,119 Building and building improvements 153,301 2, ,789 Vehicles, machinery and equipment 45,466 3,213 1,032 47,647 Parks infrastructure 72,639 2, ,600 Information technology 8, ,275 Roads 416,038 15, ,264 Stormwater 222,385 6, ,036 Sewer 121,660 3, ,061 Water 170,059 4, ,923 Assets under construction 55,567 18,776-74,343 Total $ 1,740,373 $ 72,309 $ 2,625 $ 1,810,057 Balance at December Amortization Accumulated Amortization on Disposals Balance at December Accumulated amortization Land and improvements $ 1,526 $ 110 $ - $ 1,636 Building and building improvements 55,773 5, ,945 Vehicles, machinery and equipment 26,305 2,826 1,021 28,110 Parks infrastructure 36,585 3, ,541 Information technology 6, ,497 Roads 197,770 10, ,448 Stormwater 63,546 3, ,086 Sewer 28,951 1, ,902 Water 61,234 3, ,218 Total $ 478,454 $ 31,536 $ 1,607 $ 508,383 Net Book Value December Net Book Value December Net book value Land and improvements $ 472,853 $ 486,483 Building and building improvements 97,528 94,844 Vehicles, machinery and equipment 19,161 19,537 Parks infrastructure 36,054 35,059 Information technology 2,115 1,778 Roads 218, ,816 Stormwater 158, ,950 Sewer 92,709 94,159 Water 108, ,705 Assets under construction 55,567 74,343 Total $ 1,261,919 $ 1,301,674 Township of Langley 2016 Annual Report PAU Financial Section 21

109 Notes to the Financial Statements a) Assets under construction Assets under construction having a value of $16,840 ( $74,343) have not been amortized. Amortization of these assets will commence when the asset is available for productive use. b) Other Developer Contributions Other developer contributions include contributed tangible capital assets and non-refundable deposit contributions used to fund capital. Contributed tangible capital assets have been recognized at fair market value at the date of contribution. Other developer contributions received during the year are as follows: Land and improvements $ 21,219 $ 9,889 Road infrastructure 15,740 12,305 Parks infrastructure Stormwater infrastructure 6,443 5,734 Water infrastructure 2,833 4,375 Sewer infrastructure 1,323 3,215 Equipment - 37 Total $ 47,608 $ 36,316 Developer contributed tangible capital assets $ 47,159 $ 35,422 Non-refundable deposit contributions to tangible capital assets Total $ 47,608 $ 36,316 c) Works of Art and Historical Treasures The Township manages and controls various works of art and non-operational historical cultural assets including buildings, artifacts, paintings, and sculptures located at Township sites and public display areas. These assets are not recorded as tangible capital assets and are not amortized. d) Write-down of Tangible Capital Assets There was no write-down of tangible capital assets during the year ( nil). 11. ACCUMULATED SURPLUS Accumulated surplus consists of individual fund surplus, reserves and reserve funds as follows: Operating Funds Capital Funds Statutory Reserve Funds (Note 12) Investment in Tangible Capital Assets (Note 13) General Fund $ 36,280 $ 6,532 $ - $ 523,986 $ 566,798 Parks Utility 24, , ,996 Transportation Utility 4,600 4, , ,826 Stormwater Utility 130 3, , ,085 Solid Waste Sewer Utility 7,361 4,012-93, ,408 Water Utility 16,101 8, , ,040 Statutory Reserve Funds ,073-48,073 Total for 2016 $ 89,008 $ 28,126 $ 48,073 $ 1,268,808 $ 1,434,015 Total for 2015 $ 78,796 $ 23,802 $ 23,729 $ 1,222,957 $ 1,349, Financial Section Township of Langley 2016 Annual Report PAU Total

110 Notes to the Financial Statements 12. STATUTORY RESERVE FUNDS The statutory reserve funds are used for the replacement or improvement of tangible capital assets. The Local Area Service Reserve Fund is used to fund the upfront costs of capital improvement projects initiated by property owners or Council and is repayable with interest by the property owners General Capital $ 963 $ 1,059 Stormwater Capital Sewer Capital 7,374 6,496 Water Capital 5,857 5,511 Infrastructure Renewal & Replacement 2,316 2,822 Fire Equipment Capital 2,897 1,703 Land Capital Reserve (deficit) (2,254) (12,654) Parkland Reserve 7,703 - Tax Sale Land Local Area Service 11,717 11,236 Off-Street Parking Debt Retirement 10,856 6,757 $ 48,073 $ 23, Reserve funds, beginning of year $ 23,729 $ 9,820 Contribution from operations 10,058 12,313 Other revenue and contributions 19,375 10,248 Interest allocated Used for capital and operating expenses (5,957) (9,511) Reserve funds, end of year $ 48,073 $ 23,729 Township of Langley 2016 Annual Report PAU Financial Section 23

111 Notes to the Financial Statements 13. INVESTMENT IN TANGIBLE CAPITAL ASSETS Balance, beginning of year $ 1,222,957 $ 1,179,239 Additions of tangible capital assets 84,742 72,309 Reclassification of land held for sale (3,134) (842) Proceeds on disposal of tangible capital assets (11,344) (666) Gain on disposal of tangible capital assets 9, Recognition of deferred revenue Amortization expense (33,195) (31,536) Cash from issuance of debt and agreements payable (5,839) (271) Repayment of debt and agreements payable 5,080 3,909 Balance, end of year $ 1,268,808 $ 1,222, Net book value of tangible capital assets $ 1,347,959 $ 1,301,674 Less: Debt and agreements payable (77,247) (76,816) Deferred revenue Trinity Western University (Note 7) (2,158) (2,333) Deferred revenue Langley School Board (Note 7) (1,850) (2,000) Add: Debt for non-capital expenses 1,875 1,965 Debt not spent on tangible capital assets Investment in tangible capital assets $ 1,268,808 $ 1,222, Financial Section Township of Langley 2016 Annual Report PAU - 111

112 Notes to the Financial Statements 14. CONTINGENCIES AND COMMITMENTS a) Loan agreements with the Greater Vancouver Regional District provide that if at any time the scheduled payments provided for in the agreements are not sufficient to meet the MFA s obligations in respect of such borrowing, the resulting deficiency becomes the joint and several liability of the Township and all other participants of the MFA. b) Various lawsuits and claims are pending against the Township. Applicable insured claims have been referred to Township insurers. Management believes the resolution of the insured and non-insured claims will not materially affect the financial position of the Township. c) The Township has significant future contractual commitments for capital acquisitions and completion of capital construction projects in progress. The Township records capital costs incurred to the end of the year as tangible capital assets. To provide for completion of capital projects in progress, unexpended money is set aside as a capital appropriation. d) The Township has entered into various agreements and contracts with other governments and businesses that extend beyond one year for the provision of operating services and supplies and facility rentals. Agreements and contracts may provide for annual increases or additional payments that may arise due to usage levels or other factors. The Township s five-year financial plan, updated and adopted annually by bylaw following public consultation, provides funding for these obligations. Services provided include policing, fire dispatch, emergency communications, library, animal protection and control, sewage disposal, solid waste and recycling, arena operations, planted area maintenance, tourism, economic development, photocopying, environmental, emergency preparedness and education, and Langley Facilities Society (Langley Events Centre) operations management. e) The Township, as a member of the Greater Vancouver Water District, the Greater Vancouver Sewerage and Drainage District, and the Greater Vancouver Regional District, is directly, jointly, and severally liable with other member municipalities for net capital liabilities of those authorities. f) The Township is a shareholder of the Emergency Communications for Southwest British Columbia Incorporated ( E-Comm ) whose services provided include: regional call centre for the Greater Vancouver Regional District; Wide Area Radio network; dispatch operations; and records management. The Township has three Class B shares (a total of 28 Class A shares and 23 Class B shares issued and outstanding as at December 31, 2016). Class B shares secures the Township s future access to the Wide Area Radio network from E-Comm. Class B shareholders are not required to cover E-Comm s financial obligations. 15. COLLECTIONS FOR OTHER GOVERNMENTS The Township collected and remitted the following amounts on behalf of other government organizations. These amounts are not included in the consolidated financial statements School District #35 $ 65,496 $ 64,126 Municipal Finance Authority 7 6 B.C. Assessment Authority 1,955 1,925 Greater Vancouver Regional District 1,796 1,796 South Coast British Columbia Transit Authority 12,443 12,433 $ 81,697 $ 80,286 Township of Langley 2016 Annual Report PAU Financial Section 25

113 Notes to the Financial Statements 16. MUNICIPAL PENSION PLAN The Township 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 administering the Plan, including investment of the assets and administration of benefits. The Plan is a multi-employer defined benefit pension plan. Basic pension benefits provided are based on a formula. As at December 31, 2015, the Plan has about 189,000 active members and approximately 85,000 retired members. Active members include approximately 818 contributors from the Township. The most recent actuarial valuation as at December 31, 2015 indicated a $2,224 million funding surplus for basic pension benefits. The next valuation will be December 31, 2018, with results available in Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate, resulting in no consistent and reliable basis for allocating the obligation, assets and cost to the individual employers participating in the Plan. The Township paid $5,406 ( $5,131) for employer contributions to the Plan, while employees contributed $4,629 ( $4,460) to the Plan in fiscal EMPLOYEE FUTURE BENEFITS The Township provides certain benefits to its employees upon retirement. Sick Leave benefit accrues to eligible employees who retire from service with the Township at the age of 65. Eligible employees shall be paid all their sick leave credit to a maximum of 75 days multiplied by the daily rate of pay at retirement. Employees who retire before the age of 60 shall have their benefit factored by the percentage of full pension awarded by the Municipal Superannuation Commission. Other post-employment benefits accrue to eligible employees as compensation related to additional hours worked beyond their contractual arrangement that are not payable until retirement, resignation or termination Accrued benefit obligation, beginning of year $ 3,936 $ 3,926 Current service cost Interest cost Long-term disability expense (49) 29 Actual benefits paid (223) (282) Amortization of actuarial adjustment (172) (168) Accrued benefit obligation, end of year 3,932 3,936 Unamortized actuarial gain Accrued sick leave benefit obligation, end of year 4,415 4,280 Other post-employment benefit liability Total Employee Future Benefits $ 4,616 $ 4,486 The actuarial gain will be amortized over a period of 12 years which is equal to the employee s average remaining service lifetime. The liability is recorded as part of accounts payable and accrued liabilities on the consolidated Statement of Financial Position (Note 5). Other Post-employment benefit liability is calculated based on hours worked and accrued interest for 2016 at 1.98% ( %). The Township s Sick Leave accrued liability is supported by a report from an independent actuarial consulting firm. Sick Leave liabilities were calculated as at December 31, The Actuary report is based on standard assumptions concerning salary scales, mortality rates, retirement age, and withdrawal rates at the following rates: Discount rate 3.30% 3.10% Expected future inflation rate 2.50% 2.50% Expected wage and salary inflation 2.50% 2.50% Expected wage and salary increases 2.58% % 2.58% % 26 Financial Section Township of Langley 2016 Annual Report PAU - 113

114 Notes to the Financial Statements 18. SIGNIFICANT TAXPAYERS The Township has a diverse residential, commercial, industrial, and agricultural property tax base and is not significantly reliant upon property tax revenue from any one large taxpayer. 19. TRUST FUNDS The Cemetery Care Trust Fund must be administered in accordance with the Cemetery and Funeral Services Act. In accordance with PSAB recommendations, trust funds are not included in the Township s consolidated financial statements. Assets Cash and investments $ 1,923 $ 1,773 Accrued interest receivable 5 5 $ 1,928 $ 1,778 Equity Balance, beginning of year $ 1,778 $ 1,635 Contributions Interest revenue Balance, end of year $ 1,928 $ 1, BUDGET DATA The budget data presented in these consolidated financial statements is based upon the 2016 operating and capital budgets approved by Township Council on February 29, Amortization was not contemplated on development of the budget and, as such, has not been included. Other entities includes the budget for the Society and its subsidiary, excluding inter-company transactions. The chart below reconciles the approved budget to the budget figures reported in these consolidated financial statements. Revenue 2016 Budget Operating Budget Bylaw $ 208,364 Capital Budget Bylaw 203,218 Other entities 3,743 Less: Transfer from other funds (81,026) Proceeds from new debt (30,901) Other (1) Total Revenue $ 303,397 Expenses Operating Budget Bylaw $ 208,364 Capital Budget Bylaw 203,218 Other entities 2,399 Less: Transfer from other funds (22,728) Capital expenditures (189,746) Debt principal payments (5,350) Other - Total Expenses $ 196,157 Annual Surplus $ 107,240 Township of Langley 2016 Annual Report PAU Financial Section 27

115 Notes to the Financial Statements 21. COMPARATIVE FIGURES Certain 2015 figures have been reclassified to conform to the 2016 consolidated financial statement presentation. 22. SEGMENTED INFORMATION The Township is a diversified municipal government that provides a wide range of services to its citizens, including: General Government Services Protective Services Facilities Maintenance Services Community Planning and Development Services Recreation, Culture, and Parks Services Engineering Services For management reporting purposes, the government s operations and activities are organized and reported by service areas. Service areas were created for the purpose of recording specific activities to attain certain objectives in accordance with regulations, restrictions, or limitations. Township services are provided by departments and their activities are reported in these service areas. Departments disclosed in the Segmented Information, along with the services they provide, are as follows: General Government Services General Government Services includes Corporate Administration, Legislative Services, Human Resources, and Finance. Corporate Administration is responsible for carrying out the direction, policies, and priorities set by Council and for providing recommendations to Council consistent with the needs of the community. Legislative Services department provides a secretariat for Council and its Committees. Human Resources provide assistance, advice, and guidance to both managers and employees in fulfilling roles and achieving and accomplishing their goals. The Finance Division manages the Township s financial resources and provides expert financial information, advice, and services while complying with the Community Charter and other legislated services. Facilities Maintenance Services The Facilities Maintenance Division of Engineering is responsible for maintenance on all Township facilities. Centralization of this function facilitates more effective prioritization of maintenance to protect significant assets critical for service delivery. Community Planning and Development Services The Community Planning and Development Division provides Council, internal divisions, and the general public with professional advice on community planning and development issues Community Development is also responsible for Bylaw Enforcement. Recreation, Culture, and Parks Services Recreation, Culture, and Parks is responsible for the management and provision of leisure services within the Township. Revenue and expenses of the Recreation and Culture section include operations of the Langley Facilities Society and Ten Feet Sports and Entertainment Ltd. Langley Facilities Society is a society controlled by the Township. It was formed to operate and provide strategic direction to Ten Feet Sports and Entertainment Ltd; the company who manages the operating the activities of the Langley Events Centre. Engineering Services The Engineering Division delivers municipal transportation, water, sewer, solid waste, and stormwater services. Transportation manages traffic and transportation systems to ensure safe, efficient mobility for pedestrians, cyclists, and vehicles. The Water, Sewer, and Drainage Utilities operate and distribute water and network sewer mains, storm sewers, and pump stations. Solid Waste includes waste management including recycling, collection, and disposal. Protective Services Protective Services includes the RCMP and Fire Departments. The RCMP protects and serves the citizens of Langley through the prevention and reduction of crime in partnership with the community. The Fire Department operates through seven fire halls located throughout the Township. Services are delivered through four main branches of the Fire Service. Professional expertise is provided in the area of fire prevention, emergency operations, fire safety, and emergency planning. 28 Financial Section Township of Langley 2016 Annual Report PAU - 115

116 AUDITED SEGMENTED SCHEDULE Township of Langley 2016 Annual Report PAU Financial Section 29

117 Consolidated Financial Activities - Segmented For the year ended December 31, 2016 (in thousands of dollars) Protective Service General Government Police Protection Fire Protection Facilities Maintenance Community Planning and Development REVENUE Property taxes $ 18,790 $ 27,461 $ 14,773 $ 6,852 $ 1,835 Fees, rates and service charges 2, ,357 Grants and grants in lieu of taxes 2,300 1, Service cost recoveries 223 2, Gain on disposal of assets 15, Investment income 3, Local area service contributions Contribution from development cost charges Other developer contributions 21, Other income (3,661) 2,470 1, ,187 34,553 16,388 7,655 10,815 EXPENSES Salaries, wages and benefits 12,764 7,450 13,355 2,644 6,805 Service and maintenance contracts 1, , RCMP contract - 23, Consulting & professional services 1, Insurance Material supplies & equipment Information systems maintenance 1, Aviation and vehicle fuel Advertising publications Utilities ,924 1 Sundry 1, Telephone & communications Regional District charges Municipal grants Debt interest payments Fiscal and other debt charges Internal cost recoveries (59) (161) 1 Amortization 1, , ,960 31,848 16,065 7,814 8,581 ANNUAL SURPLUS (DEFICIT) $ 37,227 $ 2,705 $ 323 $ (159) $ 2, Financial Section Township of Langley 2016 Annual Report PAU - 117

118 Recreation, Culture & Parks Engineering Recreation and Culture Parks Transportation Stormwater Water Sewer Solid Waste Reserve Funds $ 13,860 $ 10,168 $ 18,986 $ 6,367 $ - $ - $ - $ - $ 119,092 $ 112,612 9,145 6,188 1, ,763 13,908 6,649-69,274 64, , (13) - 8,095 8, ,148 4,262 - (9) 32 (318) (11) (81) ,615 9, (59) ,600 4, (58) ,599-14,896 5, ,832 11, ,740 6,443 2,833 1, ,608 36,316 2, ,882 3,528 26,101 32,225 46,399 13,854 24,137 15,548 6, , ,702 8,946 4,423 8,054 2,239 3,677 1, ,949 67,603 4,979 2,203 9, ,918-28,254 29, ,137 21,247 2, , ,098 6, ,480 1, ,687 5,188 1,055 1, ,619 13, ,788 1, ,785 1, ,995 3, , ,463 2, , ,877 5, ,679 13, ,966 1, (86) (170) (5,722) (144) (5,786) (8,224) 4,407 3,186 13,556 3,658 3,268 2, ,195 31,536 26,767 13,164 40,372 8,972 16,391 12,035 5, , ,345 $ (666) $ 19,061 $ 6,027 $ 4,882 $ 7,746 $ 3,513 $ 905 $ 933 $ 84,731 $ 68,357 Township of Langley 2016 Annual Report PAU Financial Section 31

119 AUDITED SCHEDULES Township of Langley 2016 Annual Report PAU Financial Section 33

120 Schedule 1 DEBT AND AGREEMENTS PAYABLE AS AT DECEMBER 31, 2016 (in thousands of dollars) MFA DEBT By-law Date of Issue Issued by Purpose Issue Rate Maturity DEBENTURE DEBT STORMWATER: 3420 April 24, 1997 M.F.A. Drainage % April 24, April 8, 2010 M.F.A. Drainage % April 8, April 4, 2011 M.F.A. Drainage % April 4, 2031 WATER: 3950 November 7, 2000 M.F.A. Langley Water Utility % December 1, 2020 ***4950 M.F.A. Langley Water Utility Temporary Borrowing ***4951 M.F.A. Langley Water Utility Temporary Borrowing TRANSPORTATION: 4751 April 8,2015 M.F.A. Transportation % April 8,2035 SEWER: 4750 April 8, 2010 M.F.A. Sewer % April 8, 2030 PARKS: 4455 November 2, 2007 M.F.A. Land Acquisition % December 1, November 2, 2007 M.F.A. Land Acquisition % December 1, 2027 Total debenture debt PROPERTY ACQUISITION AGREEMENTS GENERAL CAPITAL FUND: * Langley Facilities Society Recreation Centre 2.70% August 7, 2029 May 1, 2014 Land Acquisition 2.00% Paid in Full 2016 PARKS UTILITY FUND: ** January 3, 2006 Land Acquisition 4.00% January 3, 2026 May 1, 2014 Land Acquisition 0.00% Paid in Full 2016 Total agreements payable Total debt and agreements payable The Township issues long-term debenture debt instruments through the Municipal Finance Authority (MFA) pursuant to security issuing bylaws. Sinking Fund Reserve balances are managed by the MFA and are used to retire the debt instruments. For reporting purposes, the Township nets Sinking Fund Reserve balances against the related gross debt. The MFA Debt Reserve is composed of the Cash Reserves and Demand Note Reserves. The MFA retains these reserves in case any municipality defaults on their debt repayment obligations. Upon retirement of the debt and if no municipality has defaulted, the cash will be returned to the Municipality and the demand notes will be cancelled. *The Langley Facilities Society holds a BMO bank loan pertaining to the construction of the Langley Events Centre. The bank loan has been refinance with a fixed rate structure in The rate will expire in For estimation purposes, future principal and interest payments assume constant 2015 rates in effect for the duration of the loan. **Under this agreement, the vendors retained the right to operate the Redwoods Golf Course for 20 years (10 years remain). The vendors must contribute $100,000 annually to maintain and improve the property. The Township must contribute $50,000 annually. The Township is also required to make annual repayments at an amount that is variable based on annual property taxes. Interest rates on related debt are approximately 4 to 6%. ***As at December 31,2016, the Township has also secured temporary financing of $35,300,000 from the MFA for various capital projects to be repaid over 20 years pending the issuance of long term debenture securities in The variable annual interest rate as at December 31, 2016 was 1.44%. 34 Financial Section Township of Langley 2016 Annual Report PAU - 120

121 Estimated Net Sinking Sinking Fund Principal Interest Fund Net Debt Earnings Repayments Expense Net Debt Gross Debt Reserve $ 1,675 $ 1,547 $ 128 $ 71 $ 51 $ 76 $ 250 1, , ,473 2, , ,965 5,767 2,365 3, ,688 1, ,400-28, ,800 6,900-6, ,900 36, , ,112 8,700-8, ,700 8,700-8, ,700 8,500 1,893 6, ,954 8,500 1,893 6, ,954 3,250 1,155 2, ,244 11,000 3,909 7, ,596 14,250 5,064 9, ,840 73,717 10,186 63, ,300 1,958 59,294 12,940-1, , ,940-1, ,305 1, , ,000-2,000 1,084-2, ,217 14,024-3, ,522 $ 77,247 $ 371 $ 4,798 $ 2,330 $ 76,816 Township of Langley 2016 Annual Report PAU Financial Section 35

122 Schedule 2 LANGLEY CENTENNIAL MUSEUM STATEMENT OF FINANCIAL ACTIVITIES For the year ended December 31, 2016 (in thousands of dollars) REVENUE Donations, sales and programs $ 151 $ 128 BC Arts Council grant Transfer from Museum Reserve 5 3 Transfer from capital surplus 12 1 Federal grants - other Provincial grants - other 1 1 Other grants - - Township of Langley funding $ 799 $ 799 EXPENSE Salaries and benefits Program and events Exhibit maintenance Insurance Purchases for resale Office supplies and sundry Utilities Telephone and internet 3 3 Amortization expense 5 5 Grounds maintenance 6 5 Advertising 2 4 Travel 3 2 Building maintenance Artifact additions 5 3 Total operating expense Transfer to Museum Reserve $ 798 $ 799 MUSEUM RESERVE Balance, beginning of year $ 511 $ 484 Contribution from Museum operations Operating expense funded by the Reserve Fund (6) (4) Capital expenditure funded by the Reserve Fund (8) - Balance, end of year $ 521 $ Financial Section Township of Langley 2016 Annual Report PAU - 122

123 UNAUDITED STATISTICAL INFORMATION Township of Langley 2016 Annual Report PAU Financial Section 37

124 $140,000 $120,000 $120,000 $100,000 $100,000 $80,000 $80,000 $60,000 $60,000 $40,000 $20,000 $0 $0 Operating & Capital Revenue By Source to (Amounts in in $000's) (Source --Township of Langley) Taxation User Fees and Frontage Taxes Developer Contributions Fees, Charges & Other Taxation User Fees and Frontage Taxes Developer Contributions Fees, Charges & Other $50,000 Operating & Capital Expenses By Function to (Amounts in $000's) (Source - Township of Langley) $40,000 $30,000 $20,000 $10,000 $0 Police Fire Rec, Culture, & Parks Transportation Utilities Other $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Operating & Capital Expenses By Object to (Amounts in $000's) (Source - Township of Langley) Financial Section Township of Langley 2016 Annual Report PAU - 124

125 2016 TOTAL TOWNSHIP REVENUE (AMOUNTS IN $000'S) Taxation, 119,092 Fees, Charges and Other, 113,240 Developer Contributions, 21,832 Utility User Fees, 41, TOTAL TOWNSHIP EXPENSES (AMOUNTS IN $000'S) Other, 39,355 Police, 31,848 Fire, 16,065 Utilities, 43,182 Recreation, Culture, and Parks, 39,931 Transportation, 40,372 Township of Langley 2016 Annual Report PAU Financial Section 39

126 Building Permit Values to 2016 (Amounts in $000's) (Source - Township of Langley) $500,000 $450,000 $443,520 $400,000 $350,000 $300,000 $292,295 $312,454 $332,740 $313,652 $250,000 $200,000 $150,000 $100,000 $50,000 $ Net Development Cost Charge Receipts to 2016 (Amounts in $000's) (Source - Township of Langley) $25,000 $20,000 $20,392 $18,545 $15,000 $14,341 $15,176 $10,945 $10,000 $5,000 $ Financial Section Township of Langley 2016 Annual Report PAU - 126

127 Population Estimates to 2016 (Source - BC Stats 2016, Township of Langley 2012, 2013, 2014, 2015) 140, , , , , , , ,000 80,000 60,000 40,000 20, Township of Langley 2016 Annual Report PAU Financial Section 41

128 General Capital Reserve 2012 to 2016 (Amounts in $000's) Water Capital Reserve 2012 to 2016 (Amounts in $000's) $1,400 $6,100 $1,200 $6,000 $5,900 $1,000 $5,800 $800 $5,700 $5,600 $600 $5,500 $400 $5,400 $200 $5,300 $5,200 $ $5, Sewer Capital Reserve 2012 to 2016 (Amounts in $000's) Stormwater Capital Reserve 2012 to 2016 (Amounts in $000's) $8,000 $700 $7,000 $600 $6,000 $500 $5,000 $4,000 $3,000 $400 $300 $2,000 $200 $1,000 $100 $ $ Financial Section Township of Langley 2016 Annual Report PAU - 128

129 $3,500 Fire Capital Reserve 2012 to 2016 (Amounts in $000's) $14,000 Local Area Service Reserve 2012 to 2016 (Amounts in $000's) $3,000 $12,000 $2,500 $10,000 $2,000 $8,000 $1,500 $6,000 $1,000 $4,000 $500 $2,000 $ $ $300 Tax Sale Reserve 2012 to 2016 (Amounts in $000's) $12,000 Debt Reserve 2012 to 2016 (Amounts in $000's) $250 $10,000 $200 $8,000 $150 $6,000 $100 $4,000 $50 $2,000 $ $ Township of Langley 2016 Annual Report PAU Financial Section 43

130 Township of Langley Avenue Langley, British Columbia V2Y 3J1 General Information Finance Division tol.ca PAU - 130

131 5.5 To: From: Performance and Audit Committee Dean Rear, Director, Financial Planning and Operations, Financial Services Date: June 26, 2017 Meeting Date: July 7, 2017 Subject: Village of Lions Bay Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 RECOMMENDATION That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Village of Lions Bay in the amount of $460,900; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 to the Inspector of Municipalities for Certificate of Approval. PURPOSE To consider the adoption of a Security Issuing Bylaw to authorize a borrowing request from the Village of Lions Bay in the amount of $460,900 for the Fall 2017 MFA long term debt issue. BACKGROUND This report is being brought forward to introduce Metro Vancouver Security Issuing Bylaw No. 1249, 2017 and consider its adoption to authorize a borrowing request from the Village of Lions Bay in the amount of $460,900 the purposes of engineering, purchasing and constructing capital works for inclusion in for the Fall 2017 MFA long term debt issue. MUNICIPAL BORROWING REQUEST Request Details Under provincial legislation, municipal borrowing requests must be approved by the respective council by way of Loan Authorization Bylaw and Security Issuing Resolution. Such borrowings must then be approved by the MVRD Board and included in a MVRD Security Issuing Bylaw to move forward. Upon approval, the request is then considered by the MFA. All debt of the MVRD is a joint and several liability of the member municipalities. The Village of Lions Bay Council adopted Loan Authorization Bylaw 508 on December 6, 2016 in the amount of $3,000,000 for engineering, purchasing and constructing capital works. The City subsequently passed the required Security Issuing Resolution on May 16, 2017 to borrow $460,900 of that bylaw. PAU - 131

132 Village of Lions Bay Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 2 of 3 The details of the bylaw are summarized as follows: MVRD Member Member Bylaw Bylaw Purpose 1249, 2017 Village of Lions Bay 508 Engineering, Purchasing and Constructing Capital Works Borrowing Request Term $460, years The loan authorization bylaw outlined above, has been reviewed by the Inspector of Municipalities and has received the necessary Certificate of Approval. The certificate is included in this report. Financial Analysis Per the latest data provided by the Province, as at December 31, 2016 the Village of Lions Bay had a liability servicing limit of $740,439. This limit represents the maximum amount, as prescribed by the Province, that the City can annually pay for servicing debt. The estimated annual debt servicing costs proposed in this bylaw will be approximately $26,000. When combined with the existing debt servicing costs and additional liability servicing the total will be approximately $212,300 which is roughly 28.7% of the liability servicing limit. Additional information provided by the Village of Lions Bay to assist in considering this request includes: a copy of their security issuing resolution the adopted Loan Authorization Bylaw along with Certificate of Approval the Financial Plan Bylaw which includes the appropriate proceeds of borrowing and anticipated debt servicing costs 2016 Consolidated Financial Statements which includes a note summarizing accumulated surplus and reserve balances (Note 9) All of which are attached to this report. ALTERNATIVES 1. That the MVRD Board: a) pursuant to Sections 182(1)(b) and 182(2)(a) of the Community Charter, give consent to the request for financing from the Village of Lions Bay in the amount of $460,900; and b) give first, second and third reading to Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 being a bylaw to authorize the entering into an Agreement respecting financing between the Metro Vancouver Regional District and the Municipal Finance Authority of British Columbia; and c) pass and finally adopt Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 ; and d) forward Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 to the Inspector of Municipalities for Certificate of Approval. 2. That the MVRD Board receive for information report titled Village of Lions Bay Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017, dated June 23, PAU - 132

133 Village of Lions Bay Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Performance and Audit Committee Regular Meeting Date: July 7, 2017 Page 3 of 3 FINANCIAL IMPLICATIONS The Village of Lions Bay intends to borrow $460,900 to fund engineering, purchasing and constructing of capital works from the Municipal Finance Authority of BC. Although all member debt is a joint and several liability of all member municipalities, there are no direct financial implications for Metro Vancouver with adoption of the bylaw. Should the bylaw not be adopted, the Village of Lions Bay would be unable to borrow funds as required for the purpose intended and would need to look for other funding sources, potentially causing undue financial challenges for the City. SUMMARY / CONCLUSION As set out in the Community Charter, the MVRD must adopt a security issuing bylaw in order to enable the Village of Lions Bay to proceed with their borrowing request. In light of the joint and several liability of all member municipality debt, the review of borrowing requests is prudent given the role of the Regional District. Staff recommends consenting to the Village of Lions Bay s borrowing and adopting the Security Issuing Bylaw as outlined in Alternative 1. Attachments 1. Metro Vancouver Regional District Security Issuing Bylaw No. 1249, Village of Lions Bay - Additional Information PAU - 133

134 ATTACHMENT 1 Regional District Security Issuing Bylaw METRO VANCOUVER REGIONAL DISTRICT BYLAW NO. 1249, 2017 A BYLAW TO AUTHORIZE THE ENTERING INTO OF AN AGREEMENT RESPECTING FINANCING BETWEEN THE METRO VANCOUVER REGIONAL DISTRICT AND THE MUNICIPAL FINANCE AUTHORITY OF BRITISH COLUMBIA WHEREAS the Municipal Finance Authority of British Columbia (the Authority ) may provide financing of capital requirements for Regional Districts or for their member municipalities by the issue of debentures or other evidence of indebtedness of the Authority and lending the proceeds therefrom to the Regional District on whose request the financing is undertaken; AND WHEREAS the Village of Lions Bay is a member municipality of the Metro Vancouver Regional District (the Regional District ); AND WHEREAS the Regional District is to finance from time to time on behalf of and at the sole cost of the member municipalities, under the provisions of Section 410 (formerly section 824) of the Local Government Act, the works to be financed pursuant to the following loan authorization bylaw: Member Loan Authorization Bylaw Number Purpose 508 Engineering, Purchasing and Constructing Capital Works Amount of Borrowing Authorized Amount Already Borrowed Borrowing Authority Remaining Term of Amount of Issue Issue $3,000,000 $0 $3,000, years $460,900 AND WHEREAS the Regional Board, by this bylaw, hereby requests such financing shall be undertaken through the Authority: NOW THEREFORE the Regional Board of the Regional District of Metro Vancouver in open meeting assembled enacts as follows: 1. The Regional Board hereby consents to financing the debt of the Village of Lions Bay in the amount of four hundred sixty thousand and nine hundred dollars ($460,900) in accordance with the following terms. 2. The Authority is hereby requested and authorized to finance from time to time the aforesaid undertakings at the sole cost and on behalf of the Regional District and its member municipalities up to, but not exceeding four hundred sixty thousand and nine hundred dollars ($460,900) in lawful money of Canada (provided that the Regional District may borrow all or part of such amount in such currency as the Trustees of the Authority shall determine Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Page 1 of 5 PAU - 134

135 but the aggregate amount in lawful money of Canada and in Canadian Dollar equivalents so borrowed shall not exceed $460,900 in Canadian Dollars) at such interest and with such discounts or premiums and expenses as the Authority may deem appropriate in consideration of the market and economic conditions pertaining. 3. Upon completion by the Authority of financing undertaken pursuant hereto, the Chair and officer assigned the responsibility of financial administration of the Regional District, on behalf of the Regional District and under its seal shall, at such time or times as the Trustees of the Authority may request, enter into and deliver to the Authority one or more agreements, which said agreement or agreements shall be substantially in the form annexed hereto as Schedule "A" and made part of this bylaw (such Agreement or Agreements as may be entered into, delivered or substituted hereinafter referred to as the "Agreement") providing for payment by the Regional District to the Authority of the amounts required to meet the obligations of the Authority with respect to its borrowings undertaken pursuant hereto, which Agreement shall rank as debenture debt of the Regional District. 4. The Agreement in the form of Schedule A shall be dated and payable in the principal amount or amounts of monies and in Canadian dollars or as the Authority shall determine and subject to the Local Government Act, in such currency or currencies as shall be borrowed by the Authority under Section 1 and shall set out the schedule of repayment of the principal amount together with interest on unpaid amounts as shall be determined by the Treasurer of the Authority. 5. The obligation incurred under the said Agreement shall bear interest from a date specified therein, which date shall be determined by the Treasurer of the Authority, and shall bear interest at a rate to be determined by the Treasurer of the Authority. 6. The Agreement shall be sealed with the seal of the Regional District and shall bear the signature of the Chair and the officer assigned the responsibility of financial administration of the Regional District. 7. The obligations incurred under the said Agreement as to both principal and interest shall be payable at the Head Office of the Authority in Victoria and at such time or times as shall be determined by the Treasurer of the Authority. 8. During the currency of the obligation incurred under the said Agreement to secure borrowings in respect of Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016 there shall be requisitioned annually an amount sufficient to meet the annual payment of interest and the repayment of principal. 9. The Regional District shall provide and pay over to the Authority such sums as are required to discharge its obligations in accordance with the terms of the Agreement, provided, however, that if the sums provided for in the Agreement are not sufficient to meet the obligations of the Authority, any deficiency in meeting such obligations shall be a liability of the Regional District to the Authority and the Regional Board of the Regional District shall make due provision to discharge such liability. Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Page 2 of 5 PAU - 135

136 10. The Regional District shall pay over to the Authority at such time or times as the Treasurer of the Authority so directs such sums as are required pursuant to section 15 of the Municipal Finance Authority Act to be paid into the Debt Reserve Fund established by the Authority in connection with the financing undertaken by the Authority on behalf of the Regional District pursuant to the Agreement. This bylaw may be cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1249, READ A FIRST TIME this day of, READ A SECOND TIME this day of, READ A THIRD TIME this day of, PASSED AND FINALLY ADOPTED this day of, Greg Moore, Chair Chris Plagnol, Corporate Officer Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Page 3 of 5 PAU - 136

137 SCHEDULE "A" to Bylaw No. 1249, 2017 C A N A D A PROVINCE OF BRITISH COLUMBIA A G R E E M E N T Metro Vancouver Regional District The Metro Vancouver Regional District (the Regional District ) hereby promises to pay to the Municipal Finance Authority of British Columbia at its Head Office in Victoria, British Columbia, (the Authority ) the sum of four hundred sixty thousand and nine hundred dollars ($460,900) in lawful money of Canada, together with interest calculated semi-annually in each and every year during the currency of this Agreement; and payments shall be as specified in the table appearing below hereof commencing on the day of, 2017 provided that in the event the payments of principal and interest hereunder are insufficient to satisfy the obligations of the Authority undertaken on behalf of the Regional District, the Regional District shall pay over to the Authority further sums as are sufficient to discharge the obligations of the Regional District to the Authority. DATED at, British Columbia, this day of, 20. IN TESTIMONY WHEREOF and under the authority of Bylaw No. 1249, 2017 cited as Metro Vancouver Regional District Security Issuing Bylaw No. 1249, This Agreement is sealed with the Corporate Seal of the Metro Vancouver Regional District and signed by the Chair and the officer assigned the responsibility of financial administration thereof. Chair Treasurer Pursuant to the Local Government Act, I certify that this Agreement has been lawfully and validly made and issued and that its validity is not open to question on any ground whatever in any Court of the Province of British Columbia. Dated, 20 (month, day) Inspector of Municipalities Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Page 4 of 5 PAU - 137

138 PRINCIPAL AND/ OR SINKING FUND DEPOSIT AND INTEREST PAYMENTS Principal and/or Sinking Fund Date of Payment Deposit Interest Total $ $ $ $ $ $ Metro Vancouver Regional District Security Issuing Bylaw No. 1249, 2017 Page 5 of 5 PAU - 138

139 CANADA PROVINCE OF BRITISH COLUMBIA CERTIFIED RESOLUTION # (12A) The following resolution was adopted by Council at its Regular Meeting held on May 16, "THAT Council approve borrowing from the Municipal Finance Authority of British Columbia, as part of the 2017 Fall Borrowing Session, $460,900 as authorized through "Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016" and that the Metro Vancouver Regional District be requested to consent to our borrowing over a thirty (30} year term and include the borrowing in their Security Issuing Bylaw." I hereby certify the above to be a true copy of the resolution adopted by Council of the Municipality of the Village of Lions Bay on May 16, Dated at Lions Bay, British Columbia, this 6th day of June, Peter DeJong Chief Administrative Officer PAU - 139

140 THE MUN ICIPALIT Y OF THE VILLAGE OF LIONS BAY Infrastructure Master Plan Financing Loan Authorization Bylaw No.508, 2016 Adopted: December 6, 2016 PO Box 141, 400 Centre Road, Lions Bay, BC VON 2EO Phone: Fax: office@lionsbay.ca Web: of Infrastructure Master Plan Financin Loan Authorization B law No. 508, 2016 PAU - 140

141 Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016 Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016 A bylaw to authorize the borrowing of $3,000, for the purpose of engineering, purchasing, and constructing Capital Works in the Infrastructure Master Plan, as described in this bylaw WHEREAS the Village of Lions Bay commissioned an Infrastructure Master Plan to guide it in identifying existing and future risks to the condition, capacity and regulatory compliance of its water, sanitary, drainage and road infrastructure, and to guide infrastructure investment to manage those risks; AND WHEREAS the Council of the Village of Lions Bay has adopted the final version of the Infrastructure Master Plan on September 6, 2016, including its list of infrastructure projects for the Village of Lions Bay; AND WHEREAS the Village of Lions Bay wishes to max1m1ze the leverage of Federal and Provincial infrastructure grant funding by authorizing the borrowing of funds; AND WHEREAS it is deemed desirable and expedient to engineer, purchase, and construct infrastructure projects as identified in this bylaw (the "Capital Works"); AND WHEREAS the maximum amount to be borrowed for the purpose of engineering, purchase, and construction of the Capital Works, including provision for costs associated with the engineering, purchase, and construction of the Capital Works, is $3,000,000.00, which is the maximum amount of debt that may be created by this bylaw; NOW THEREFORE, the Council of the Village of Lions Bay in open meeting assembled, enacts as follows: 1. The Village of Lions Bay is hereby empowered and authorized to finance the engineering, purchase, and construction of the Capital Works described below, in accordance with the Infrastructure Master Plan on file in the office of the Municipality, and to do all things necessary in connection therewith, and without limiting the generality of the foregoing, to: (a) borrow upon the credit of the Village of Lions Bay a sum not exceeding Three Million dollars ($3,000,000.00) to fund the capital cost of engineering, purchase and construction of the Capital Works described below; and llpage PAU - 141

142 Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016 (b) acquire all such real personal property easements, rights of way, covenants, rights or authorities as may be necessary or desirable for, or in connection with, the Capital Works described below: Project Name Description of Capital Works Amount of Borrowing Safety and Replacement of water and stormwater distribution $1,993, security of network piping and valves on Bayview Road, water and Oceanview Road, Creekview Place, Highview Place, storm water Upper Bayview Road, Bayview Place, Centre Road, distribution Tidewater Way, and Kelvin Grove Way, including network associated road rehabilitative works. Safety and High priority rehabilitative and replacement works of $867, security of the Village's water storage system including structural water storage modifications, seismic upgrading, increased storage system capacity, and associated pipeworks to provide safe and adequate supply and meet requisite fireflows. Prioritized Includes rehabilitative works on fatigued asphalt and $139, road and moderate to high priority bridge repairs that have bridge repairs been unattended to since Total $3,000, The maximum term for which debentures may be issued to secure the debt created by this bylaw is 30 years. 3. This bylaw may be cited as "Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016". READ A FIRST TIME READ A SECOND TIME READ A THIRD TIME this this this day of day of day of September, 2016 September, 2016 September, 2016 APPROVED BY THE INSPECTOR OF MUNICIPALITIES this day of September, 2016 APPROVED BY THE ASSENT OF THE ELECTORS OF THE VILLAGE OF LIONS BAY this day of November, 2016 ADOPTED BY COUNCIL this day of December, 2016 ~' e'--lr.~ Mayor 2IPa ge I her~e a 'u:::?nd correct copy of lnfras~ ructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016 Peter DeJong, Corporate Officer PAU - 142

143 $ ( BRITISH OLUMBIA Certificate of Approval Under the authority of the Local Government Act, I certify that Bylaw No. 508, cited as the "Infrastructure Master Plan Financing Loan Authorization Bylaw No. 508, 2016" of the Village of Lions Bay has been lawfully and validly made and enacted, and that its validity is not open to question on any ground in any court of British Columbia. Dated this of day 2017 Deputy Inspector of Municipalities of British Columbia PAU - 143

144 THE MUNICIPALITY OF THE VI LLAGE OF LIONS BAY Five Year Financial Plan Bylaw No. 522, 2017 Adopted: May 5, 2017 PO Box 141, 400 Centre Road, Lions Bay, BC VON 2EO Phone: Fax: Web: PAU - 144

145 Five Year Financial Plan Bylaw No. 522, 2017 Page FIVE YEAR FINANCIAL PLAN BYLAW NO. 522, 2017 A bylaw to approve the Five Year Financial Plan forthe years inclusive Pursuant to the provisions of section 165 (1) of the Community Charter, the Municipal Council caused to be prepared a Five Year Financial Plan forthe period 2017 to 2021 inclusive and the Municipal Council of the Village of Lions Bay, in open meeting assembled, enacts as follows: 1. This bylaw may be cited for all purposes as " Five Year Financial Plan Bylaw No. 522, 2017". 2. The Five Year Financial Plan Bylaw No. 503, 2016 (adopted on May 10, 2016) is hereby repealed. 3. The Council does hereby adopt the Five Year Financial Plan for the years inclusive, for each year of the plan, as set out in Schedules A and B, attached to this Bylaw and forming a part thereof, as follows: Schedule A: Schedule B: Consolidated Financial Plan Statement of Objectives and Policies READ A FIRST TIME READ A SECOND TIME READ A THIRD TIME ADOPTED April 18, 2017 April 18, 2017 May 2, 2017 May 5, 2017 Certified a true copy of Five Year Financial Plan Bylaw No. 522, 2017 as adopted. Mayor ~ > Corporate Officer PAU - 145

146 Revenues Schedule A Consolidated Financial Plan Taxa tion 1,443,043 1,512,277 1,586,010 1,663,430 1,744,721 Parcel Taxes 10,585 10,585 10,585 10,585 10,585 Utility Fees and Rates 1,087,239 1,130,314 1,175,502 1,226,617 1,276,352 Fees, Licenses and Permits 152, , , , ,864 Small Community Grant 295, , , , ,000 Other Grants 2,602, ,682 1,090,952 1,582, ,306 Proceeds from Borrowing 460, , , , ,525 Net Proceeds from Land Sa les 3,219,250 6,000,000 Other 110, , , , ,195 Grand Total 9,381,188 10,670,519 5,101,539 5,821,631 4,646,548 Expenditures Amortization 507, , ,896 1,006,253 1,275,090 General Government 771, , , , ,918 Fire Services 310, , , , ,917 Bylaw Services 34,233 34,843 35,406 36,038 36,560 Public Works 458, , , , ,302 Planning and Development 120,925 61,156 57,703 53,323 53,826 Parks, Recreation and Facilities 207, , , , ,625 Solid Waste 184, , , , ,478 Sewer Fund 57,049 57,758 58,619 59,524 60,376 Water Fund 583, , , , ,355 Interest Payments 91, , , , ,229 Grand Total 3,326,097 3,344,410 3,547,339 3,835,387 4,155,676 lsurplus/(deficit) 6,055,091 7,326,109 1,554,200 1,986, ,872 Adjustments Required to Balance Financial Plan to Conform With Legislative Requirements Non-cash items included in Annual Surplus (Deficit) Amortization on tangible capital assets 507, , ,896 1,006,253 1,275,090 MFA Actuarial Gain on Debt (20,422) (23,456) (27,017) (30,983) (35,467) Cash surplus 6,542,163 7,922,881 2,306,079 2,961,514 1,730,495 Cash items NOT included in Annual Surplus (Deficit) Repayment of Debt Principal (109,521) (155,482) (168,374) (188,571) (199,631) Capital Expenditures (4,041,280) (2,864,743) (1,937,644) (2,523,000) (1,209,531) Transfer from (to) Surplus 134,338 53,795 Transfer to Gas Tax Fund (56,450) (56,450) (56,450) (56,450) (56,450) Transfer from (to) Reserves (2,469,250) (4,900,000) (143,611) (193,493) (264,883) I Financial Plan Balance (0) (0) PAU - 146

147 Village of Lions Bay Financial Statements For the year ended December 31, 2016 PAU - 147

148 Village of Lions Bay Financial Statements For the year ended December 31, 2016 Contents Management s Responsibility for the Financial Statements 2 Independent Auditor's Report 3 Financial Statements Statement of Financial Position 4 Statement of Operations 5 Statement of Change in Net Financial Assets 6 Statement of Cash Flows 7 Summary of Significant Accounting Policies 8-10 Notes to Financial Statements Schedule 1 - Combined Statement of Operations by Segment Schedule 2 - Combined Statement of Operations by Segment Schedule 3 - Tangible Capital Assets 20 PAU - 148

149 Management's Responsibility for the Financial Statements The accompanying financial statements of the Village of Lions Bay (the "Village") are the responsibility of management and have been prepared in accordance with Canadian public sector accounting standards as recommended by the Public Sector Accounting Board of the Chartered Professional Accountants Canada. A summary of the significant accounting policies are described in the summary of significant accounting policies which proceed the notes to the financial statements. The preparation of 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 Village's management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded in compliance with legislative and regulatory requirements, and reliable financial information is available on a timely basis for preparation of the financial statements. These systems are monitored and evaluated by management. Mayor and Council meet with management and the external auditors to review the financial statements and discuss any significant financial reporting or internal control matters prior to their approval of the financial statements. The financial statements have been audited by BDO Canada LLP, independent external auditors appointed by the Village. The accompanying Independent Auditor's Report outlines their responsibilities, the scope of their examination and their opinion on the Village's financial statements. Pamela Rooke, CPA, CMA Chief Financial Officer Peter DeJong Chief Administrative Officer May 2, PAU - 149

150 Independent Auditor's Report To the Mayor and Councilors of the Village of Lions Bay We have audited the accompanying financial statements of the Village of Lions Bay, which comprise the Statement of Financial Position as at December 31, 2016, the Statements of Operations, Change in Net Financial Assets and Cash Flows for the year then ended, and a summary of significant accounting policies, and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Village of Lions Bay as at December 31, 2016 and the results of its operations, changes in net financial assets and cash flows for the year then ended in accordance with Canadian public sector accounting standards. Chartered Professional Accountants Vancouver, British Columbia May 2, 2017 PAU

151 Village of Lions Bay Statement of Financial Position December Financial Assets Cash and cash equivalents Accounts receivable Grants receivable Liabilities Accounts payable Sick, overtime, wellness and vacation payable Deferred revenue (Note 1} Developer deposits (Note 2} Capital lease obligation (Note 3} Long- term debt (Note 4) Net Financial Assets $ 2,185,685 $ 244,295 33,588 2,463, ,778 86,518 25, ,000 52,320 1,197,868 1,773, ,867 1,544, , ,985, ,514 52,334 26, ,000 87,300 1,276,495 1,886,058 99,241 Non-Financial Assets Tangible capital assets (Schedule 3} Prepaid expenses 19,665,444 2,039 19,667,483 19,997,760 8,348 20,006,108 Accumulated Surplus (Note 9} $ 20,357,350 $ 20,105,349 Contingent liabilities and commitments (Note 6} Pamela Rooke CPA, CMA Chief Financial Officer Karl Buhr Mayor The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4 PAU - 151

152 Village of Lions Bay Statement of Operations Financial Plan For the year ended December (Note 7) Revenue (Schedule 1 & 2) Taxation (Note 5) $ 1,410,612 $ 1,407,804 $ 1,518,730 Utility user rates 1,033,030 1,031, ,322 Government transfers 707, , ,698 Sale of services 93, , ,657 Other revenues 87, , ,784 Loss on disposal of tangible capital assets - (15,285) - 3,332,295 3,197,927 3,144,191 Expenses (Schedules 1 & 2) General departmental expenses 2,191,158 2,044,564 1,975,037 Water system operations 981, ,450 1,072,012 Sewer system operations 109,593 84,912 79,883 3,282,000 2,945,926 3,126,932 Annual Surplus 50, ,001 17,259 Accumulated Surplus, beginning of year 20,105,349 20,105,349 20,088,090 Accumulated Surplus, end of year $ 20,155,644 $ 20,357,350 $ 20,105,349 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 5 PAU - 152

153 Village of Lions Bay Statement of Change in Net Financial Assets Financial Plan For the year ended December (Note 7) Annual surplus $ 50,295 $ 252,001 $ 17,259 Change in Tangible Capital Assets Acquisition of tangible capital assets (569,312) (173,191) (266,230) Amortization of tangible capital assets 553, , ,892 Loss on disposals of tangible capital assets - 15,285 - (15,525) 332, ,662 Change in Other Non-Financial Assets Net use of prepaid expenses - 6,309 5,728 Change in net financial assets for the year 34, , ,649 Net financial assets (debt), beginning of year 99,241 99,241 (171,408) Net financial assets, end of year $ 134,011 $ 689,867 $ 99,241 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 6 PAU - 153

154 Village of Lions Bay Statement of Cash Flows For the year ended December Cash provided by (used in) Operating transactions Annual surplus $ 252,001 $ 17,259 Items not involving cash Amortization expense 490, ,892 Loss on disposal of tangible capital assets 15,285 - Changes in non-cash operating balances Accounts receivable (12,024) 41,204 Grants receivable 174,570 (200,241) Developer deposits 9,000 9,500 Deferred revenue (1,198) 11,415 Accounts payable (40,736) (19,619) Sick, overtime, wellness and vacation payable 34,184 9,393 Prepaid expenses 6,309 5, , ,531 Capital transactions Cash used to acquire tangible capital assets (173,191) (266,230) Financing transactions Repayment of capital lease obligation (34,980) (33,947) Repayment of long-term debt principal (78,627) (75,681) (113,607) (109,628) Increase (decrease) in cash and equivalents during the year 640,815 12,673 Cash and equivalents, beginning of year 1,544,870 1,532,197 Cash and equivalents, end of year $ 2,185,685 $ 1,544,870 Supplemental information: Interest paid on long-term debt $ 90,241 $ 91,561 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 7 PAU - 154

155 Village of Lions Bay Summary of Significant Accounting Policies December 31, 2016 The Village of Lions Bay ("The Village") is a municipality in the province of British Columbia operating under the provisions of the Community Charter. The Village provides a wide range of services to the residents such as parks and recreation, fire and rescue, general government services, solid waste collection, and maintenance of roads, storm drainage, water and sewer infrastructure and facilities. The Village prepares its financial statements in accordance with Canadian public sector accounting standards using guidelines developed by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants Canada. Basis of Accounting The basis of accounting followed in these financial statements is an accrual method and includes revenues in the period in which the transactions or events occurred that gave rise to the revenues and expenses in the period the goods and services are acquired and a liability is incurred. The financial statements include the accounts of all funds of the Village. Interfund transactions and balances have been eliminated. Cash and Cash Equivalents Tangible Capital Assets Cash and cash equivalents include bank balances and bank term deposits or guaranteed income certificates with duration of less than three months. All amounts are held at Canadian chartered banks and are denominated in Canadian dollars. Tangible capital assets are recorded at cost less accumulated amortization and are classified according to their functional use. Cost includes all costs directly attributable to acquisition or construction of the tangible capital asset including transportation costs, installation costs, design and engineering fees, legal fees and site preparation costs. Amortization is recorded on a straight-line basis over the estimated life of the tangible capital asset commencing once the asset is put into use. Contributed tangible capital assets are recorded at fair value at the time of the contribution. Estimated useful lives of tangible capital assets are as follows: Land improvements Buildings Storm Sewer Equipment, furniture, and vehicles Infrastructure - water Infrastructure - sewer Roads Other 7 to 40 years 20 to 50 years 25 to 50 years 5 to 20 years 5 to 80 years 5 to 100 years 10 to 60 years 5 to 60 years 8 PAU - 155

156 Village of Lions Bay Summary of Significant Accounting Policies December 31, 2016 Revenue Recognition Taxes are recorded when they meet the definition of an asset, have been authorized and the taxable event occurs. Taxes receivable are recognized net of allowance for anticipated uncollectible amounts. Through the British Columbia Assessments appeal process, taxes may be adjusted by way of supplementary roll adjustments. The effects of these adjustments on taxes are recognized at the time they are awarded. Levies imposed by other taxing authorities, including the Greater Vancouver Regional District, are not included as taxes for municipal purposes. Charges for sewer, water usage and solid waste collection are recorded as user fees. Connection fee revenues are recognized when the connection has been established. Government transfers, which include legislative grants, are recognized in the financial statements when received if the transfer is authorized and any eligibility criteria are met, except to the extent that transfer stipulations give rise to an obligation that meets the definition of a liability. Transfers are recognized as deferred revenue when transfer stipulations give rise to a liability. Government transfer revenue is recognized in the statement of operations as the stipulation liabilities are settled. Sales of service and other revenue is recognized on an accrual basis. Leased Assets Use of Estimates 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 Village and the obligation, including interest thereon, is repaid over the term of the lease. All other leases are accounted for as operating leases and the rental costs are expensed as incurred. The preparation of financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. A significant area requiring management estimates relates to the useful life of tangible assets for amortization calculations. 9 PAU - 156

157 Village of Lions Bay Summary of Significant Accounting Policies December 31, 2016 Financial Instruments Deferred Revenue Contaminated Sites The Village's financial instruments consist of cash and equivalents, accounts receivable, grant receivable, accounts payable and long-term debt. Unless otherwise noted, it is management's opinion that the Village is not exposed to significant interest, currency or credit risk arising from these financial instruments. Funds received for specific purposes which are externally restricted by legislation, regulation or agreement and are not available for general municipal purposes are accounted for as deferred revenue on the statement of financial position. The revenue is recognized in the statement of operations in the year in which it is used for the specified purpose. Contaminated sites are a result of contamination being introduced into air, soil, water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. Liabilities are recorded net of any expected recoveries. A liability for remediation of contaminated sites is recognized when all of the following criteria are met: 1. an environmental standard exists; 2. contamination exceeds the environmental standard; 3. the Authority is directly responsible or accepts responsibility; 4. it is expected that future economic benefits will be given up; and 5. a reasonable estimate of the amount can be made. The liability is recognized as management s estimate of the cost of postremediation including operation, maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. There is no liability for contaminated sites recorded as at December 31, 2016 or PAU - 157

158 Village of Lions Bay Notes to Financial Statements December 31, Deferred Revenue Restricted cash donation $ 1,000 $ 1,000 Prepaid taxes 24,217 25,415 $ 25,217 $ 26, Developer Deposits Bylaw 330 requires an applicant for certain building permits to pay a damage deposit of $1,500 when the work is under $50,000 and $3,000 when the work is over $50,000. The deposit less any costs incurred by the Village in restoring or replacing any damaged works or property will be returned to the applicant. The total cash on deposit of $126,000 ( $117,000) has been reported as a liability because the deposits will be returned to the applicants at the completion of the project. Any portion of these deposits used for replacing damaged works or property will be taken into income by the Village in the period it is determined that restoration or replacement is required. 3. Capital Lease Obligation During 2013, the Village entered into three vehicle lease obligations with future payments requirements as follows: 2017 $ 37, ,408 Total future minimum lease payments 53,528 Less: Imputed interest at 5.38% (1,208) Present value of minimum lease payments $ 52, PAU - 158

159 Village of Lions Bay Notes to Financial Statements December 31, Long-term Debt Loan Authorization Bylaw No. 353 was adopted on January 20th, 2005 and gave approval for the Village to borrow up to $250,000 to assist in providing water services to the specified area of Brunswick Beach whose owners had opted to finance their share of costs over twenty years through a local parcel tax. The actual amount of the loan honoured was $114,000. The interest rate is 5.1% and the debt matures in The balance outstanding under this bylaw at year-end was $58,427 ( $64,139). Loan Authorization Bylaw No. 401 and 374 were respectively adopted on June 2, 2008 and September 19, 2006 and gave approval for the Village to borrow up to $800,000 and $600,000 to assist in providing construction improvements to the water system servicing the Village of Lions Bay. The interest rate is 5.15% and the debt matures in The balance outstanding under the bylaws at year-end was $966,798 ( $1,028,666). Loan Authorization Bylaw No. 380 was adopted on September 19, 2006 and gave approval for the Village to borrow up to $1,300,000 to assist in providing construction improvements to the Village of Lions Bay road system. In 2008, Council reduced the approved borrowing for the bylaw to $500,000 and $250,000 was borrowed. The interest rate is 5.15% and the debt matures in The balance outstanding under this bylaw at year-end was $172,643 ( $183,690). Repayments of debt to the Municipal Finance Authority of BC (MFABC) required in the next five years and thereafter are as follows: 2017 $ 81, , , , ,191 Thereafter 756,317 $ 1,197, PAU - 159

160 Village of Lions Bay Notes to Financial Statements December 31, Taxation Financial Plan (Note 7) General purposes $ 1,374,680 $ 1,371,873 $ 1,227,484 Collections for other tax authorities School Taxes - Province - 731, ,988 RCMP - 124, ,386 Regional District - 41,983 38,155 Greater Vancouver Transportation Authority - 194, ,570 Municipal Finance Authority British Columbia Assessment Authority - 37,184 34,598 1,374,680 2,501,682 2,283,296 Transfers to other tax authorities School Taxes - Province - 731, ,988 RCMP - 124, ,386 Regional District - 41,983 38,136 Greater Vancouver Transportation Authority - 194, ,570 Municipal Finance Authority British Columbia Assessment Authority - 37,184 34,598-1,129,809 1,055,793 Available for general purposes 1,374,680 1,371,873 1,227,503 Water utility parcel taxes 10,585 10, ,087 Sewer utility parcel taxes 25,347 25,346 24,140 $ 1,410,612 $ 1,407,804 $ 1,518, PAU - 160

161 Village of Lions Bay Notes to Financial Statements December 31, Contingent Liabilities and Commitments (i) The Village is responsible as a member of the Greater Vancouver Regional District for its portion of any operating deficits or capital debt related to functions in which it participates. (ii) The Village is a participant in the Municipal Insurance Association of British Columbia (the Association ). Should the Association pay out claims in excess of the premiums received, it is possible that the Village, along with the other participants, would be required to contribute towards the deficit. Management does not consider external payments under this contingency to be likely and therefore no amounts have been accrued. (iii) The Village is a shareholder and member of the Emergency Communications for British Columbia Incorporated ( E-Comm ) whose services provided include: regional call centre; Wide Area Radio network, dispatch operations; and records management. The Village has 1 Class A Share (Police and Fire) and no Class B Shares (Operations) (of a total of 28 Class A and 23 Class B shares issued and outstanding as at December 31, 2016) recorded at nominal cost. As a Class A shareholder, the Village shares in both funding the future operations and capital obligations of E-Comm (in accordance with a cost sharing formula), including any lease obligations committed to by E-Comm up to the shareholder s withdrawal date. (iv) Under borrowing arrangements with MFA, the Village is required to lodge security by means of demand notes and interest bearing cash deposits based on the amount of the borrowing. As a condition of these borrowings, a portion of the debenture proceeds is withheld by the MFA as a debt reserve fund. These deposits are held by the MFA as security against the possibility of debt repayment default. If the debt is repaid without default, the deposits are refunded to the City. The balance of the deposits and contingent demand notes are not included in the financial statements of the Village. (v) The Village is the subject to litigation in regard to employment matters. In addition, the Village is from time to time involved in other lawsuits. The Village vigorously defends any such claims. At December 31, 2016 there is not sufficient information available to allow the Village to make a reasonable estimate of the potential for loss, if any, resulting from outstanding matters. Accordingly, these financial statements contain no provision for such amounts. Amounts will be recorded in the financial statements in the period in which additional information becomes available that allows a reasonable estimate to be made. 14 PAU - 161

162 Village of Lions Bay Notes to Financial Statements December 31, Financial Plan Financial plan amounts represent the Financial Plan Bylaw adopted by Council on May 10, 2016 with adjustments for items accounted for differently under PSAB accounting standards. The Financial Plan Bylaw anticipated use of surpluses accumulated in previous years to balance against current year expenditures in excess of current year revenues. In addition, the Financial Plan Bylaw anticipated capital expenditures rather than amortization expense and repayment of debt during the year. The following shows how these amounts were combined: 2016 Financial Plan Bylaw surplus for the year $ - Add back: Capital expenditures 569,312 Repayment of Debt 96,102 MFA Actuarial Gain on Debt 17,506 Less: Budgeted transfers from accumulated surplus (78,838) Amortization (553,787) $ 50, Pension Plan The employer and its employees contribute to the Municipal Pension Plan (a jointly trusteed pension plan). The board of trustees, representing plan members and employers, is responsible for administering the plan, including investment of assets and administration of benefits. The plan is a multi-employer defined benefit pension plan. Basic pension benefits are based on a formula. As at December 31, 2015, the plan has about 189,000 active members and approximately 85,000 retired members. Active members include approximately 37,000 contributors from local governments. Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the plan. The actuary's calculated contribution rate is based on the entry-age normal cost method, which produces the long-term rate of member and employer contributions sufficient to provide benefits for average future entrants to the plan. This rate is then adjusted to the extent there is amortization of any funding deficit. 15 PAU - 162

163 Village of Lions Bay Notes to Financial Statements December 31, Pension Plan (con t) The most recent valuation for the Municipal Pension Plan as of December 31, 2015, indicated a $2,224 million funding surplus for basic pension benefits on a going concern basis. The next valuation will be as at December 31, 2018, with results available in Employers participating in the plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the plan records accrued liabilities and accrued assets for the plan in aggregate, resulting in no consistent and reliable basis for allocating the obligation, assets and cost to individual employers participating in the plan. The Village paid $52,723 ( $48,052) for employer contributions while employees contributed $52,918 ( $49,250) to the plan in fiscal Accumulated Surplus The components of accumulated surplus are as follows: Invested in tangible capital assets $ 18,415,256 $ 18,633,965 Reserve funds 783, ,567 Unrestricted amounts 1,158, ,817 $ 20,357,350 $ 20,105,349 The increase in reserve funds in the current year of $63,988 represents the receipt of $56,451 of unrestricted funds for Gas Tax Funding with the balance of $7,537 representing interest credited to reserve funds for the year. 10. Segmented Information The Village is a diversified municipal government institution that provides a wide range of services to its residents such as parks and recreation, maintenance of roads, fire and rescue, sewer and water utilities and solid waste collection. Key functional segments have been separately disclosed in Schedule 1. Following is a brief description of these segments and the activities they provide: 16 PAU - 163

164 Village of Lions Bay Notes to Financial Statements December 31, Segmented Information (con t) General Government This segment relates to the general administration of the Village. It also includes revenues and expenses such as property tax revenues, legal costs, etc. that cannot be directly attributed to a specific segment. Protective Services Protective Services is comprised of fire and rescue services, bylaw enforcement and emergency services. The fire and rescue department is responsible for providing fire suppression service, fire prevention programs, training and education and highway call-out services. The members of the fire department are volunteer fire fighters. Public Works Operation Public works and transportation is responsible for the maintenance of roads, storm drainage, water and sewer infrastructure and building facilities. Solid Waste Collection Solid waste collection consists of recycling services and waste collection. Planning and Development This segment includes building inspection, zoning and community planning such as land use master plan. Recreational and Cultural Services This service area provides services meant to improve the health and development of the residents. They include recreation programs in the community centre, maintenance of trails, parks and beaches. 11. Comparative Figures Certain comparative amounts have been reclassified to conform with the current year's presentation. 17 PAU - 164

165 Village of Lions Bay Schedule 1 - Combined Statement of Operations by Segment For the year ended December 31, 2016 Park General Protective Public Works Solid Waste Planning and Recreation Water Sewer Government Services Operation Collection Development and Culture Utility Utility Actual Financial Plan (Note 7) Revenues Taxation $ 1,371,873 $ - $ - $ - $ - $ - $ 10,585 $ 25,346 $ 1,407,804 $ 1,410,612 Utility user rates and connection fees , ,865 44,822 1,031,686 1,033,030 Government transfers 352, , , , ,613 Sales of services 5,167 45,779 1, ,955 24, ,746 93,835 Other revenues 47,717 69, , ,654 87,205 Loss on disposal of tangible capital assets (15,285) (15,285) - 1,762, ,769 1, ,111 32,955 29, ,769 70,768 3,197,927 3,332,295 Expenses Operating Goods and services 160, , , ,645 21,082 70, ,564 40,226 1,143,745 1,425,064 Labour 502, , ,882-45, , ,722 14,961 1,221,718 1,212,908 Amortization 309, ,939 29, , , , , , ,645 66, , ,225 84,912 2,855,685 3,191,759 Interest , ,225-90,241 90, , , , ,645 66, , ,450 84,912 2,945,926 3,282,000 Excess (deficiency) in revenues over expenses $ 788,980 $ (178,638) $ (334,627) $ 1,466 $ (33,298) $ (146,057) $ 168,319 $ (14,144) $ 252,001 $ 50, PAU - 165

166 Village of Lions Bay Schedule 2 - Combined Statement of Operations by Segment For the year ended December 31, 2015 Park General Protective Public Works Solid Waste Planning and Recreation Water Sewer Government Services Operation Collection Development and Culture Utility Utility Actual Financial Plan (Note 7) Revenues Taxation $ 1,227,503 $ - $ - $ - $ - $ - $ 267,087 $ 24,140 $ 1,518,730 $ 1,521,604 Utility user rates and connection fees , ,356 41, , ,545 Government transfers 370,145 14, , , ,698 1,054,104 Sales of services 7,577 53, ,734 22, , ,350 Other revenues 40,879 73, ,445 14, ,784 81,301 1,646, , ,080 24,734 45,214 1,024,577 65,304 3,144,191 3,432,904 Expenses Operating Goods and services 117, , , ,539 5,224 80, ,718 36,247 1,372,585 1,685,522 Labour 449, , ,438-18, , ,071 15,237 1,148,894 1,100,184 Amortization 335, ,710 28, , , , , , ,539 24, , ,499 79,883 3,035,371 3,289,908 Interest , ,513-91,561 91, , , , ,539 24, ,141 1,072,012 79,883 3,126,932 3,381,469 Excess (deficiency) in revenues over expenses $ 743,392 $ (169,674) $ (340,789) $ (3,459) $ 730 $ (150,927) $ (47,435) $ (14,579) $ 17,259 $ 51, PAU - 166

167 Village of Lions Bay Schedule 3 - Tangible Capital Assets For the year ended December 31, 2016 Land Buildings Equipment & Furniture & Vehicles Land Improvements Water Sewer Roads Storm Sewer Other WIP - General 2016 Total 2015 Total Cost, beginning of year $ 11,115,625 $ 2,112,010 $ 1,704,265 $ 195,678 $ 6,861,987 $ 761,302 $ 4,357,566 $ 101,450 $ 81,801 $ 64,130 $ 27,355,814 $ 27,089,584 - Additions - 27, ,727 34, , ,230 Disposals - - (7,520) - (13,413) (20,933) - Cost, end of year 11,115,625 2,112,010 1,723, ,678 6,960, ,715 4,357, ,450 81,801 64,130 27,508,072 27,355,814 Accumulated amortization, beginning of year - 681, ,668 65,619 2,434, ,163 2,557,765 76,048 11,453-7,358,054 6,844,162 Amortization - 48, ,970 9, ,939 29, ,721 1,242 1, , ,892 Disposals - - (5,170) - (478) (5,648) - Accumulated amortization, end of year - 730,137 1,125,468 74,790 2,584, ,888 2,665,486 77,290 13,089-7,842,628 7,358,054 Net carrying amount, end of year $ 11,115,625 $ 1,381,873 $ 598,328 $ 120,888 $ 4,375,821 $ 223,827 $ 1,692,080 $ 24,160 $ 68,712 $ 64,130 $ 19,665,444 $ 19,997, PAU - 167

168 5.6 To: From: Performance and Audit Committee Dean Rear, Director - Financial Planning & Operations Date: June 16, 2017 Meeting Date: July 7, 2017 Subject: Interim Financial Performance Report - May 2017 RECOMMENDATION That the Performance and Audit Committee receive for information the report dated June 16, 2017, titled Interim Financial Performance Report - May PURPOSE To present the Committee with an update on financial performance with projections through to the end of the fiscal year. BACKGROUND The Performance and Audit Committee Terms of Reference require that the Committee be provided, three times per year, an update on the financial performance of the Metro Vancouver Districts and Metro Vancouver Housing Corporation with the report on the year-end results also sent to the Board. This is the first report for 2017 and is based on operating experience through the end of May. OPERATING RESULTS Financial Services staff work with departments to review and understand their financial operating results through to the end of the reporting period to establish revenue and expenditure trends and identify issues to be considered in projecting results from operations through to the end of the year. This information forms the basis for the explanations and trend analysis of key financial indicators as provided in Attachment 1. Staff make best efforts to accurately predict year end results, however this is the first financial performance report for the year and the limited information makes it challenging to confidently project expenditures and revenues through to the end of the year. At a high level, key trends for 2017 so far include: Higher than anticipated volumes in Solid Waste Services. Water sales trending at less than budget. Deferral or delay of some projects/initiatives resulting in lower spending. Increasing retirements and employee turnover. With these and other factors taken into consideration, the Districts and Housing Corporation are projecting a combined surplus from operations of approximately $12.9 million for 2017, as broken down in the following table: PAU - 168

169 Interim Financial Performance Report - May 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 2 of 3 $ Millions Revenues Projected Surplus/(Deficit) Operating Expenditures Projected Surplus/(Deficit) Total Projected Surplus/(Deficit) Regional District $ 0.1 $ 1.2 $ 1.3 Water District (2.4) Sewerage & Drainage: Liquid Waste Services (1.4) Solid Waste Services 8.3 (1.7) 6.6 MV Housing Corporation $ 5.5 $ 5.9 $ 12.9 Regional District: The projected operating surplus in the Regional District can be mainly attributed to underspends in staffing with vacancies currently being recruited in Regional Planning, Air Quality, Labour Relations, and Regional Parks. As well, there have been fewer Board & Committee meetings than anticipated. Some planned expenditures have been deferred or delayed, including legal costs and miscellaneous operating and project initiatives. Water District: The Water District is projected to have a small surplus of $1.5 million for 2017, with the delay/deferral of some operating projects, reduced operational expenditures for water treatment and distribution, and staff vacancies being largely offset by projected water sales which are trending slightly below budget. Liquid Waste: The projected operating surplus of just under $1.0 million is primarily due to the cancellation of some minor capital work, some underspends in quality control due to delays in filling some temporary vacancies, as well as some miscellaneous operational planning and administrative costs coming in less than budget. Solid Waste: Higher than expected waste flows combined with management of expenditures has led to projected results being better than anticipated when compared to the approved 2017 budget. The expected net operational gains will increase the projected 2017 surplus to close to $6.6 million, whereas the budget planned for a contribution to reserves from a generated surplus was $4.9 million. MV Housing Corporation: The projected surplus net income position is primarily due to higher than expected rental revenues combined with projected operating expenditure levels less than budget. In addition to the above projected surpluses, Corporate Programs are anticipated to be surplus to budget by approximately $1.0 million due primarily to a controlled reduction of head office repairs and maintenance and staff vacancies currently being recruited. PAU - 169

170 Interim Financial Performance Report - May 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 3 of 3 FINANCIAL INDICATORS The table below summarizes the list of 2017 projected financial indicators highlighting Metro Vancouver s ability to provide services to the region on a sustainable basis. The projections are compared to 2016 actual results. Detail calculations are included in Attachment Actual Projected Municipal Property Tax and Levies/Total Revenue 36.6% 37.6% Debt Service Costs/Total Revenue 17.9% 19.4% Interest Costs/Total Revenue 6.6% 8.5% Operating Reserves/Total Revenue 10.9% 9.2% Total Municipal Taxes, Water, Sewer and Solid Waste Charges Per Capita $233 $239 ALTERNATIVES This report is provided for information. No alternatives are presented. FINANCIAL IMPLICATIONS This report provides summary information on 2017 projected operational results which, at this time, shows an overall surplus to budget of $12.9 million. Board policy sets out the use of operating surpluses. Any surplus finally accounted for at year end would be first used to avoid or pay down debt. Should this not be feasible due to the nature of the function, then the surpluses will be used for one-time future expenditures or to reduce future tax requisitions, levies or fees to the member municipalities. SUMMARY / CONCLUSION The 2017 projected financial results for the Metro Vancouver entities and functions are either on or surplus to budget. Attachments: Projected Financial Performance as of May PAU - 170

171 ATTACHMENT 1 Metro Vancouver Districts 2017 Projected Financial Performance As of May 2017 June 2017 PAU - 171

172 Table of Contents Statement of Surplus/(Deficit) District Summaries Regional District Summary Water District Summary... 5 Sewerage & Drainage District Summaries Liquid Waste... 6 Solid Waste... 6 Housing Corporation Summary... 7 Corporate Programs... 8 Financial Indicators PAU - 172

173 Page 1 Metro Vancouver Districts Statement of Surplus (Deficit) For the period ending May 31, 2017 DISTRICT / CORPORATION 2017 Year End Projection Projected Annual* Year End Year End % Variance Budget Forecast Variance to Budget Regional District Revenue 65,570,380 65,680, , % Expenditure 65,570,380 64,384,255 1,186, % Surplus (Deficit) - 1,296,361 1,296,361 - Water District Revenue 265,082, ,662,702 (2,420,223) (0.9%) Expenditure 265,082, ,143,696 3,939, % Surplus (Deficit) - 1,519,006 1,519,006 - Sewerage and Drainage District Liquid Waste Revenue 236,257, ,844,250 (1,413,650) (0.6%) Expenditure 236,257, ,874,779 2,383, % Surplus (Deficit) - 969, ,471 - Solid Waste Revenue 94,396, ,698,469 8,302, % Expenditure 94,396,195 96,124,849 (1,728,654) (1.8%) Surplus (Deficit) - 6,573,620 6,573,620 - MV Housing Corporation Revenue 41,083,767 42,005, , % Expenditure 41,083,767 39,424,199 1,659, % Surplus (Deficit) - 2,581,407 2,581,407 - Consolidated Surplus (Deficit) - 12,939,865 12,939,865 - * 2017 Budget includes reserve and surplus carry-forward applications as approved by the Board. PAU - 173

174 Metro Vancouver Districts Regional Function's Surplus (Deficit) For the period ended May 31, 2017 Page Year End Projection Projected % Annual* Year End Year End Variance Budget Forecast Variance to Budget FUNCTION E911 Emergency Telephone Revenue 4,187,876 4,187, % Expenditure 4,187,876 4,187, % Surplus (Deficit) % Air Quality Revenue 10,251,794 10,255,069 3, % Expenditure 10,251,794 10,079, , % Surplus (Deficit) - 175, , % General Government Revenue 6,176,153 6,176, % Expenditure 6,176,153 5,965, , % Surplus (Deficit) - 211, , % Labour Relations Revenue 2,703,516 2,703, % Expenditure 2,703,516 2,640,516 63, % Surplus (Deficit) - 63,000 63, % Regional Emergency Management Revenue 397, , % Expenditure 397, , % Surplus (Deficit) % Regional GPS Revenue 370, ,719 7, % Expenditure 370, ,719 50, % Surplus (Deficit) - 57,000 57, % Regional Parks Revenue 36,233,073 36,328,034 94, % Expenditure 36,233,073 35,850, , % Surplus (Deficit) - 477, , % Regional Planning Revenue 3,771,769 3,771, % Expenditure 3,771,769 3,520, , % Surplus (Deficit) - 251, , % Electoral Area Revenue 582, , % Expenditure 582, ,568 57, % Surplus (Deficit) - 57,000 57, % Sasamat Fire Protection Service Revenue 895, ,912 5, % Expenditure 895, , % Surplus (Deficit) - 5,000 5, % Regional Surplus (Deficit) - 1,296,361 1,296,361 0 * 2017 Budget includes reserve and surplus carry-forward applications as approved by the Board. PAU - 174

175 Page 3 Metro Vancouver Districts 2017 Financial Performance District Summaries Metro Vancouver Regional District Through May, the timing of actual expenditures has been slower than that anticipated in the budget, particularly in General Government, Regional Parks, Regional Planning, Air Quality, and the Labour Relations functional areas. It is expected that the majority of the delayed expenditures will be incurred by year-end and the surplus to budget will be approximately $1.3 million for the year, which will be due primarily due to staff vacancies as recruitment efforts continue, lower than expected legal costs and Board & Committee meeting costs than anticipated. E911 Emergency Telephone E911 is projecting to be on budget by the end of the year. Air Quality Air Quality is projected to be in a surplus to budget position of approximately $175,000 by year end primarily due to unfilled positions currently under recruitment. General Government General Government is expected to finish the year with a majority of its initiatives complete. The function is projecting a surplus of close to $211,000 expected primarily due to savings from Board and Committee meetings. Labour Relations Labour Relations is seeing lower than expected expenditures on legal costs due to settlements without arbitration, as well as some deferred consulting costs due to the timing of deliverables. A surplus to budget of close to $63,000 is projected for the year due to these factors and ongoing recruitment. Regional Emergency Management (REM) Regional Emergency Management is forecasted to be on budget at year end. Regional Global Positioning System (GPS) With miscellaneous under expenditures and higher than expected subscriptions, GPS is forecasting a surplus to budget of close to $57,000. Regional Parks While the beginning of the year has seen lower than expected expenditures from the deferral of some project related costs until later in the year as well as unused legal expense budget for land title claims at the Colony Farm, Regional Parks is expected to finish the year with a modest surplus of $477,000. Most of the delayed expenditures are expected to be incurred by year end, however, the legal expenses for the land title claims at Colony Farm are anticipated to be largely unspent, and revenues are expected to be $95,000 over target, mostly due to filming revenues increasing due to a lower Canadian dollar. PAU - 175

176 Page 4 Regional Planning For Regional Planning, while some project delays have resulted in lower consulting expenditures to date, these are expected to be spent by year end, and current vacancies are expected to be filled throughout the year resulting in a projected surplus of close to $251,000. Electoral Areas Electoral Areas is expected to finish the year with a surplus to budget close to $57,000 due to primarily to salary underspends. Sasamat Fire Protection Service The function is projecting to be surplus to budget at year end by around $5,000 due to an unexpected and unbudgeted grant amount from BC Hydro received in early PAU - 176

177 Page 5 Greater Vancouver Water District Water District revenues to the end of May came in at about $2.3 million less than budget. Water consumption levels were approximately 3.7% less than budget through the end of April. It is estimated that the revenue shortfall will increase slightly, to approximately $2.4 million by yearend, assuming consumption levels stay close to that budgeted for the remaining months. Should the weather in the remaining part of this year vary from expectations, water consumption and therefore water sales could be impacted. Water District expenditures are currently trending lower than budgeted due primarily to the planned implementation of several operations and maintenance projects occurring later in the year along with the lower than anticipated demand for water resulting in reduced operational expenditures for water treatment and distribution. By year-end expenditures on operations are expected to be below budget by approximately $3.9 million, largely the result of savings in engineering and maintenance project costs, lower expenditures for water treatment, and underspends from position vacancies under recruitment. The Water District is currently projecting an overall operating surplus to budget of approximately $1.5 million by year end. PAU - 177

178 Page 6 Greater Vancouver Sewerage and Drainage District Liquid Waste Through to the end of May, the function is seeing some delays in operational expenditures for residuals costs, maintenance and minor capital work along with debt service costs slightly lower than budget year-to-date offset by industrial discharge revenues being slightly behind expected revenue levels. Projecting to year end, Liquid Waste is anticipating a surplus to budget of approximately $1.0 million. The main contributor to this is expected lower operating expenditures of $2.4 million from reduced minor capital work costs due to the cancellation of several projects (to mitigate some unbudgeted operating costs elsewhere in the function), quality control costs less than budget due to delays in the hiring of some temporary and auxiliary staff, and some miscellaneous operational planning and administrative costs being slightly less than budget. Solid Waste Higher than expected waste flows combined with management of expenditures has led to projected results being higher than anticipated when compared to the approved 2017 budget. The function is expecting that the net operational gains will result in a projected 2017 surplus of close to $6.6 million, compared to a budgeted surplus of $4.9 million for the year. The increased waste flows and revenues received thereon are primarily related to new materials being delivered into the regional system that were previously disposed of at either remote landfills or at a local construction and demolition waste landfill. Increased expenses are primarily related to increased contingency landfill quantities - waste that cannot be managed at the functions Wasteto-Energy Facility or at the Vancouver Landfill and is being shipped to remote landfills for disposal. PAU - 178

179 Page 7 Metro Vancouver Housing Corporation (MVHC) MVHC is expecting to be surplus to budget approximately $2,580,000 by year-end. Revenues for the first five months are ahead of budget due to higher than budgeted net rental revenues, tenant rental subsidies received in advance and fewer vacancies. The year-end revenue surplus is projected to be more than budget by approximately $921,000. Expenditures through May are trending less than budget due to maintenance efficiency gains, the timing of some expenditures as compared to budget, and position vacancies. The overall actual expenditures are expected to be approximately $1,659,000 less than budget by year end as maintenance efficiency gains and position recruiting continues. The 2017 Housing Capital Replacement program annual budget was $6,974,446. As at the end of May, approximately $1,210,000 had been expended for capital replacement and the program is expected to be on budget at year end. With respect to Housing Capital Development, to date $287,000 of the $5,650,000 budget has been spent, primarily on site preparation for the Heather Place redevelopment. The year-end forecast for the program is $3,300,000 due to the delay in permit approval, with the balance to be spent in the subsequent year. PAU - 179

180 Page 8 Corporate Programs Corporate Programs are anticipating a surplus to budget of approximately $1.0 million due primarily to a controlled reduction of head office repairs and maintenance and staff vacancies currently being recruited. Corporate Planning The function is forecast to be on budget by year end. External Relations Currently dealing with the timing of expenditures, External Relations is forecast to be surplus to budget by approximately $40,000 by year end primarily due to the timing of position recruitment. Human Resources Though May, the Human Resources department has been trending underspent due to legal fees and timing of training and other costs. By year end, the department is expected to be on or very close to budget. Financial Services The Financial Services department is underspent to date primarily due to existing staff vacancies held unfilled until the implementation of the new Financial Management System (FMS) and other positions currently under recruitment. The department is expected to be surplus to budget $389,000 at year end. Legal and Legislative Services Legal and Legislative Services is currently trending underspent for the year due to delayed expenditures regarding the Information Management program and ongoing recruitment. The department is projecting a surplus of close to $136,000 by year end. Corporate Services Corporate Services is forecasting a $600,000 surplus to budget by year end primarily due to Building Operations underspending at Kingsway and Kathleen. Only the necessary repairs are being undertaken as we await the move into Metrotower III before the end of the year. Metrotower III operations is expected to finish the year on budget. The Corporate Safety, Security and Emergency Management division programs have been trending underspent due primarily to the seasonal nature of expenses but the division is expected to be close to budget at year end. As well, Information Technology (IT) services has been underspent to date due to the timing of consulting and software purchases for major projects such as the FMS, and infrastructure and desktop replacement purchases, however IT is expected to finish the year close to budget. Homelessness Partnering Strategy (Program under Administration) The Homelessness Partnering Strategy (HPS) program, funded 100% by the federal government, is projecting to spend the entire 2017 budget. PAU - 180

181 Metro Vancouver Districts Financial Indicators Page 9 These ratios are intended to help indicate the Metro Vancouver Districts financial ability to continue to provide services to the region on a sustainable basis. This involves evaluating a number of factors, including the ongoing ability to ensure revenues meet expenditures, ability to meet debt obligations, and the flexibility to address unexpected contingencies. Forecast ratios can help to identify potential financial problems in advance. 1) Municipal Property Tax and Levies / Total Revenue This ratio is a measure of the diversification of revenues. A high ratio indicates a reliance on property tax related levies / fees. A low ratio illustrates a greater range of revenues which is seen as beneficial. However, other revenue streams may not be sustainable or fluctuate more than tax requisitions Actual 2015 Actual 2016 Actual 2017 Budget 2017 Projected Total Property tax/levies $232,429, % $239,867, % $250,542, % $266,131, % $266,131, % Total Revenue** $653,970,533 $666,212,758 $684,548,274 $702,391,167 $707,891,643 The MVRD has a reasonably well diversified revenue base. Some revenue streams such as Water Sales and Solid Waste User Fees are subject to fluctuations during the year. 2) i) Debt Service Costs/ Total Revenue This is the percentage of revenue committed to payment of interest and principal on temporary and long-term debt for the regional, sewer, solid waste and water operations. A high percentage indicates greater use of revenues for the repayment of debt, and less ability to adjust to unplanned events and changing circumstances Actual 2015 Actual 2016 Actual 2017 Budget 2017 Projected Debt Service Costs $122,877, % $121,415, % $122,585, % $138,718, % $137,185, % Total Revenue** $653,970,533 $666,212,758 $684,548,274 $702,391,167 $707,891,643 **2017 Budget includes budgeted reserve, surplus carry-forward items or other additional reserve applications as approved by the Board. PAU - 181

182 Page 10 2) ii) Interest Costs/ Total Revenue This is the percentage of revenue committed to payment of interest on temporary and long-term debt for the regional, sewer, solid waste and water operations. A high percentage indicates greater use of revenues for servicing interest on outstanding debt, and less ability to adjust to unplanned events and changing circumstances Actual 2015 Actual 2016 Actual 2017 Budget 2017 Projected Interest Costs $49,744, % $46,884, % $45,154, % $63,919, % $60,385, % Total Revenue** $653,970,533 $666,212,758 $684,548,274 $702,391,167 $707,891,643 Both debt service costs and interest costs as a percentage of revenue are down compared to current budget indicating less of revenues are required to service outstanding debt (principal and interest) and more is available to fund priority projects. 3) Operating Reserves/ Total Revenues Reserve levels are an indicator of financial strength since they provide the ability to meet unforeseen expenditures or revenue losses Actual 2015 Actual 2016 Actual 2017 Budget 2017 Projected Operating Reserves $77,547, % $71,660, % $74,874, % $48,612, % $65,417, % Total Revenue** $653,970,533 $666,212,758 $684,548,274 $702,391,167 $707,891,643 Projected operating reserve levels are slightly higher than that projected in the current budget but are down from the prior years reserve levels. The level of operating reserves remains adequate to meet potential unexpected contingencies. **2017 Budget includes budgeted reserve, surplus carry-forward items or other additional reserve applications as approved by the Board. PAU - 182

183 4) Total Municipal Taxes, Water, Sewer and Solid Waste Charges / Per Capita Page 11 This indicator is a representation of the per capita cost impact of the regions tax payer supported services. These costs are passed on to the tax payer through our member municipalities. The 2017 population is assumed to increase at a rate of 1.5% over Actual Per Capita 2015 Actual Per Capita 2016 Actual Per Capita 2017 Budget Per Capita 2017 Projected Per Capita Total Tax Revenue *** $559,403,266 $225 $571,024,515 $227 $595,144,960 $233 $613,215,889 $236 $619,269,842 $239 Total Population **** 2,481,148 2,516,560 2,558,029 2,596,399 2,596,399 The projected increase in the actuals over the budget for 2017 is primarily a result of an increase in projected revenues for Solid Waste User Fees. ** 2017 Budget includes budgeted reserve, surplus carry-forward items or other additional reserve applications as approved by the Board. *** Total Tax Revenue defined as Regional District tax requisition, Water Sales, Sewer & Drainage Levy and Solid Waste User Fees. **** Based on Demographic Analysis Section, BC Stats, Ministry of Technology, Innovation and Citizens Services, Government of British Columbia, December PAU - 183

184 5.7 To: From: Performance and Audit Committee Dean Rear, Director - Financial Planning and Operations Date: June 19, 2017 Meeting Date: July 7, 2017 Subject: Investment Position and Returns January 1 to April 30, 2017 RECOMMENDATION That the Performance and Audit Committee receive for information the report dated June 19, 2017, titled Investment Position and Returns January 1 to April 30, PURPOSE To report investment performance and related information for receipt by the Performance and Audit Committee. BACKGROUND Metro Vancouver s Corporate Investment Policy requires that an investment update report be presented to the Committee three times per year. This is the first report for INVESTMENT CATEGORIES Short term investments, those with terms of less than one year at the time of investment and have the highest degree of liquidity, are used to meet working cash requirements. These normally include Provincial debt instruments, Bankers Acceptances and Credit Union Term Deposits. Regular cash demands as well as policy objectives require that a high level of liquidity is maintained in short term investment portfolios. Long term investments have terms greater than one year at the time of investment. These investments normally include Canada, Provincial, and Canadian Bank bonds as well as Credit Union Term Deposits greater than one year. These are generally less liquid than short term investments and are held for a higher overall rate of return and for funding requirements of a longer term perspective. Cultural Reserve investments are long term investments whose revenues have been set aside to fund Metro Vancouver s annual contributions to cultural activities. PAU - 184

185 Investment Position and Returns January 1 to April 30, 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 2 of 5 OVERALL INVESTMENT RETURNS Table 1 Benchmarks The selected benchmarks are provided as a reasonable general comparison and are intended to be indicative of and comparable to each of the portfolios on an ongoing basis. These benchmarks are consistent from period to period such that trending of results is possible. The Corporate Investment Policy requires that we compare actual investment performance against specific benchmark returns. Short term benchmarks are taken directly from the Bank of Canada and the Municipal Finance Authority (MFA). Rates from the Bank of Canada are expressed as annual rates which need to be adjusted to a four month reporting period. They are divided by three for an estimate over the four month period. The performance figures on the MFA Money Market Fund are not required to be adjusted. MFA s Intermediate Fund and Bond Fund benchmarks are used as benchmarks for both the long term portfolio and the Cultural Reserve portfolio. These two benchmarks must be considered together as the combination more accurately reflects the terms of the long term portfolio than either of the two fund benchmarks individually. However, in the daily operation of their funds the MFA faces many liquidity demands that Metro Vancouver does not. Allowing for these cash demands can affect portfolio yields considerably. Short Term Investment Performance As at April 30, 2017, the short term portfolio held a total of $133.4 million dollars (at historic cost/book value) and represented approximately 24.2% of total investments. Looking at the days to maturity for all investments (combined short and long), those investments that will mature in the coming year account for approximately 49.8% of total investments. A listing of all short term investments as at April 30, 2017 can be found on Schedule 1 of this report with expected maturities illustrated in the charts included in Schedule 4. Table 2 details performance during the period compared to benchmarks. PAU - 185

186 Investment Position and Returns January 1 to April 30, 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 3 of 5 Table 2 Short term portfolio performance exceeded all of our benchmarks in the period. The estimated annualized yield of 1.44% as shown in Table 2 is comparable to 1.46% reported at the end of December 31, The weighted average term for the Short Term portfolio at the end of April was 171 days compared to 125 days as at December 31, Long Term Investment Performance As at April 30, 2017, the long term portfolio held a total of $416.5 million (at historical cost/book value) representing 75.4% of all investments. The annualized yield of 2.19%, shown in Table 3, is calculated for comparison to benchmark. Overall, this return is consistent with the results reported in the previous period of 2.25% given the decline in yields as shown in Table 4. A detailed listing of long term investments held on April 30, 2017 is located on Schedule 2 following this report with expected maturities illustrated in the charts included in Schedule 4. The Cultural Reserve portfolio held $2.2 million (at historical cost/book value) in fixed income investments (approx. 0.4% of total investments), and had a weighted average term to maturity of 6.2 years compared to 6.5 years as at December 31, 2016 and an estimated annualized yield 2.70%. A detailed listing of investments held in this portfolio is located on Schedule 3. Table 3 details performance during the period compared to our benchmarks. The performance of the long term portfolios in this reporting period exceeded the returns of the MFA Intermediate Fund but fell short against the MFA Bond Fund. The MFA Bond Fund experienced higher returns, especially in the months of February and April, as bond yields were pushed lower due to growing skepticism over the US government s ability to implement their pro-growth and pro-inflation policy changes. Significant fluctuations in the MFA funds are due to mark to market adjustments over the course of the year. PAU - 186

187 Investment Position and Returns January 1 to April 30, 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 4 of 5 Table 3 The weighted average term for the long term portfolio at the end of April is 2.9 years compared to 3.2 years at the end of December, 0.9 years for the MFA Intermediate Fund and 2.8 years for the MFA Bond Fund at the end of December. Like the MFA Intermediate Fund, our portfolio remains focused on corporate securities as they offer an attractive yield advantage over the government issued securities. Investment Holdings and Limits Schedule 5 lists the investments by counterparty as percentage of the total portfolio and the maximum limits per the policy. The BC Credit Union holdings have been temporarily increased from 27.3% as at December 31, 2016 to 40.5% at the end of April 2017 (50% limit), of which 94% was shortterm set to mature within 1 year, in order to take advantage of higher yields on short-term maturities that will be used to fund immediate cash needs. Overall, the portfolio remains well diversified and positioned comfortably within the limits. Going Forward The uncertainty surrounding potential impact of the US administration s policy changes continued to influence the market in The US Federal Reserve raised the fed fund target rate by 25 basis points in March and then in June by another 25 basis points to a range of 1.00% to 1.25%. The market is anticipating at least one more rate hike before the end of the year. The Bank of Canada held their overnight target rate steady at 0.50%. The Canadian economy showed strengthening with strong employment numbers and job growth. The market is now pricing in the possibility of a rate hike by the end of 2017 and another increase before the end of next year. The Canada yield curve has risen slightly compared to April of last year but has decreased and flattened since the beginning of the year as shown in Table 4. Since December 2016 to the end of May 2017, the benchmark Government of Canada bond yields decreased by 21 basis points for average 3-5 year bonds and 39 basis points for average 5-10 year bonds. PAU - 187

188 Investment Position and Returns January 1 to April 30, 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 5 of 5 Table 4 We continue to ladder portfolio maturities across the curve in order to minimize interest rate risks and remain focused on pursuing the highest overall yield for our portfolio while maintaining safety of capital and liquidity as the key priorities. ALTERNATIVES This is an information report. No alternatives are presented. FINANCIAL IMPLICATIONS Overall portfolio returns remain modest, a reflection of the priorities of preservation of capital and maintaining the necessary liquidity to meet operational requirements. SUMMARY / CONCLUSION Overall, investment performance for the period, while modest, met expectations, exceeding the returns on most of our benchmarks. Our portfolios hold quality investments and are reasonably positioned given our market expectations. Attachments: Schedule 1 Short Term Investments Schedule 2 Long Term Investments Schedule 3 Cultural Reserve Investment Schedule 4 Investment Maturity Charts Schedule 5 Investment Holdings and Maximum Limit PAU - 188

189 METRO VANCOUVER SHORT TERM INVESTMENTS AS AT APRIL 30, 2017 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE SCHEDULE 1 DAYS TO MATU RITY YIELD COUPON BANK OF MONTREAL BMO 2.39% JUL12/ ,000,000 5,060,850 Aug, Jul, BMO 5.45% JUL17/ ,000,000 8,320,960 Aug, Jul, ,000,000 13,381, % BLUESHORE FINANCIAL CREDIT UNION BLUESHORE 1.75% APR19/18 2,500,000 2,500,000 Apr, Apr, ,500,000 2,500, % COAST CAPITAL CREDIT UNION COAST CAP 1.70% NOV2/17 2,000,000 2,000,000 Nov, Nov, COAST CAP 1.55% NOV20/17 4,000,000 4,000,000 Feb, Nov, COAST CAP 1.55% NOV23/17 3,000,000 3,000,000 Feb, Nov, ,000,000 9,000, % FIRST WEST CREDIT UNION FIRST WEST CU 1.75% MAY4/17 2,500,000 2,500,000 May, May, FIRST WEST CU 1.75% MAY11/17 2,500,000 2,500,000 May, May, FIRST WEST TD 1.60% SEP28/17 2,500,000 2,500,000 Oct, Sep, FIRSTWEST TD 1.60% OCT3/16 2,500,000 2,500,000 Oct, Oct, ,000,000 10,000, % PROSPERA CREDIT UNION PROSPERA 1.50% JUN1/17 2,500,000 2,500,000 Aug, Jun, PROSPERA (CASHABLE DEC13/16) 1.45% AUG15/17 4,500,000 4,500,000 Aug, Aug, PROSPERA TD 1.55% AUG31/17 2,000,000 2,000,000 Sep, Aug, PROSPERA TD 1.55% OCT5/17 2,500,000 2,500,000 Oct, Oct, PROSPERA (CASHABLE APR25/17) 1.45% JAN25/18 3,000,000 3,000,000 Jan, Jan, PROSPERA (CASHABLE JUN1/17) 1.45% FEB1/18 3,000,000 3,000,000 Feb, Feb, PROSPERA 1.55% (CASHABLE SEP27/17) MAR30/18 11,000,000 11,000,000 Mar, Mar, ,500,000 28,500, % VANCITY SAVINGS CREDIT UNION VANCITY 1.50% (CASHABLE OCT6/16) JUL8/17 5,000,000 5,000,000 Jul, Jul, VANCITY TD 1.60% MAY25/17 2,500,000 2,500,000 Jul, May, VANCITY 1.55% SEP28/17 5,000,000 5,000,000 Mar, Sep, VANCITY 1.55% OCT3/17 5,000,000 5,000,000 Mar, Oct, VANCITY 1.55% OCT9/17 5,000,000 5,000,000 Mar, Oct, VANCITY 1.55% OCT13/17 5,000,000 5,000,000 Mar, Oct, VANCITY 1.55% NOV2/17 5,000,000 5,000,000 Mar, Nov, ,500,000 32,500, % WESTMINSTER SAVINGS CREDIT UNION WSCU TD 1.51% MAY18/17 2,500,000 2,500,000 Aug, May, WSCU TD 1.51% MAY25/17 2,500,000 2,500,000 Aug, May, WSCU TD 1.51% JUN8/17 2,500,000 2,500,000 Aug, Jun, WSCU TD 1.51% JUN29/17 2,500,000 2,500,000 Aug, Jun, WSCU 1.59% NOV16/17 2,500,000 2,500,000 Mar, Nov, WSCU 1.59% NOV30/17 2,500,000 2,500,000 Mar, Nov, WSCU 1.59% DEC7/17 2,500,000 2,500,000 Mar, Dec, WSCU 1.58% DEC14/17 5,000,000 5,000,000 Mar, Dec, WSCU 1.58% JAN4/18 5,000,000 5,000,000 Mar, Jan, WSCU 1.58% FEB8/18 5,000,000 5,000,000 Mar, Feb, WSCU 1.58% FEB15/18 5,000,000 5,000,000 Mar, Feb, ,500,000 37,500, % TOTALS $ 133,000,000 $ 133,381, % Weighted Average Term: 171 Days PAU - 189

190 METRO VANCOUVER LONG TERM INVESTMENTS AS AT APRIL 30, 2017 SCHEDULE 2 CONTRACT NUMBER AND SECURITY DESCRIPTION MATURITY AMOUNT COST DATE PURCHASED MATURITY DATE DAYS TO MATURITY YIELD COUPON BANK OF MONTREAL BMO 2.24% DEC 11/ ,000,000 1,977,340 Jul, Dec, BMO 3.21% SEPT 13/ ,000,000 3,002,700 Sep, Sep, BMO 3.210% SEPT13/ ,000,000 5,203,900 Aug, Sep, BMO 2.84% JUNE 4/ ,000,000 5,079,750 Jun, Jun, BMO 3.40% APR23/ ,000,000 3,151,500 Aug, Apr, BMO STEP-UP NOTE AUG26/ ,000,000 2,000,000 Aug, Aug, ,000,000 20,415, % BLUESHORE FINANCIAL CREDIT UNION BLUESHORE TD 2.25% JUL6/17 2,500,000 2,500,000 Aug, Jul, BLUESHORE TD 2.25% JUL13/17 2,500,000 2,500,000 Aug, Jul, BLUESHORE TD 1.90% SEP7/17 5,000,000 5,000,000 Jul, Sep, BLUESHORE 1.91% APR5/18 2,500,000 2,500,000 Aug, Apr, BLUESHORE 1.71% APR6/18 2,500,000 2,500,000 Mar, Apr, BLUESHORE 1.77% APR9/18 11,000,000 11,000,000 Mar, Apr, BLUESHORE 1.77% APR11/18 6,000,000 6,000,000 Mar, Apr, BLUESHORE 1.77% APR12/18 6,000,000 6,000,000 Mar, Apr, BLUESHORE 1.77% APR13/18 3,000,000 3,000,000 Mar, Apr, BLUESHORE 1.83% OCT3/18 14,000,000 14,000,000 Mar, Oct, BLUESHORE 1.98% JAN10/19 2,500,000 2,500,000 Aug, Jan, BLUESHORE 2.02% AUG22/19 2,500,000 2,500,000 Aug, Aug, ,000,000 60,000, % BANK OF NOVA SCOTIA BNS 2.37% JAN 11/ ,000,000 4,910,000 Aug, Jan, BNS 2.462% MARCH 14/ ,500,000 2,500,000 Mar, Mar, BNS 2.462% MAR14/ ,000,000 3,030,420 Aug, Mar, BNS 2.130% JUN15/ ,000,000 5,107,250 Aug, Jun, BNS 2.090% SEP9/ ,000,000 5,102,500 Aug, Sep, BNS 3.27% JAN 11/ ,000,000 3,135,300 Aug, Jan, BNS 2.873% JUN4/ ,000,000 4,065,200 Aug, Jun, ,500,000 27,850, % CANADIAN WESTERN BANK CWB JUN26/ ,500,000 2,519,425 Feb, Jun, CWB 3.077% JAN14/ ,500,000 4,587,075 Aug, Jan, CWB GIC 2.10% AUG8/19 2,500,000 2,500,000 Aug, Aug, CWB GIC 2.10% AUG22/19 2,500,000 2,500,000 Aug, Aug, ,000,000 12,106, % CIBC CM 2.35% OCT18/ ,000,000 5,078,650 Apr, Oct, CIBC 2.22% MAR 7/ ,000,000 5,048,750 Aug, Mar, CIBC 2.35% JUN24/ ,000,000 10,047,900 Aug, Jun, ,000,000 20,175, % COAST CAPITAL CREDIT UNION COAST CAP TD 2.20% JUN15/17 2,500,000 2,500,000 Aug, Jun, COAST CAP TD 2.20% JUN22/17 2,500,000 2,500,000 Aug, Jun, COAST CAP TD 2.20% AUG3/17 2,000,000 2,000,000 Aug, Aug, COAST CAP 1.75% MAY24/18 2,500,000 2,500,000 Feb, May, COAST CAP 1.75% MAY31/18 2,500,000 2,500,000 Feb, May, ,000,000 12,000, % FIRST WEST CREDIT UNION FIRST WEST CU 1.75% MAY18/17 2,500,000 2,500,000 May, May, FIRST WEST CU 1.75% JUN1/17 2,500,000 2,500,000 May, Jun, FIRST WEST CU TD 2.15% JUL4/19 2,500,000 2,500,000 Jul, Jul, ,500,000 7,500, % PAU - 190

191 Schedule 2 (Cont'd) HSBC BANK CANADA HSBC OCT4/ ,000,000 5,235,000 Jun, Oct, HSBC 3.558% OCT4/ ,000,000 5,127,650 Jul, Oct, HSBC 2.078% NOV26/ ,000,000 5,041,400 Jul, Nov, HSBC 2.938% JAN14/ ,000,000 5,185,450 Aug, Jan, HSBC 1.816% JUL7/ ,000,000 4,971,850 Jul, Jul, HSBC 1.816% JUL7/ ,500,000 2,496,150 Aug, Jul, HSBC 2.449% JAN29/ ,500,000 2,559,250 Aug, Jan, HSBC 2.908% SEP29/ ,000,000 5,231,750 Aug, Sep, HSBC 2.908% SEP29/ ,000,000 5,227,800 Aug, Sep, ,000,000 41,076, % MANITOBA, PROVINCE OF MANITOBA STRIP SEP5/25 2,400,000 1,971,384 Aug, Sep, MANITOBA STRIP MAR5/30 5,000,000 3,472,650 Aug, Mar, MANITOBA STRIP MAR5/31 3,000,000 2,002,290 Aug, Mar, ,400,000 7,446, % MFA BC BCMFA 4.80% DEC 1/ ,000,000 5,545,000 Feb, Dec, BCMFA 4.15% JUNE 1/ ,000,000 5,475,700 Jun, Jun, ,000,000 11,020,700 NATIONAL BANK NBC 2.794% AUG 9/ ,000,000 5,099,850 Apr, Aug, NATIONAL 2.794% AUG 9/ ,000,000 10,259,300 Aug, Aug, NACN 2.404% OCT28/ ,000,000 5,141,800 Aug, Oct, NATIONAL BANK 1.809% JUL26/ ,000,000 1,000,000 Jul, Jul, ,000,000 21,500, % NEW BRUNSWICK, PROVINCE OF NEW BRUNSWICK STRIP JUN3/23 1,700,000 1,493,841 Aug, Jun, ,700,000 1,493, % NEWFOUNDLAND, PROVINCE OF NEWFOUNDLAND STRIP FEB5/22 1,100, ,900 Aug, Feb, NEWFOUNDLAND STRIP APR17/23 2,300,000 2,022,850 Aug, Apr, NEWFOUNDLAND STRIP APR17/26 1,100, ,510 Aug, Apr, ,500,000 3,874, % NEWFOUNDLAND HYDRO NFLD HYDRO STRIP JUL14/22 950, ,900 Aug, Jul, NFLD HYDRO STRIP AUG27/26 1,200, ,160 Aug, Aug, ,150,000 1,783, % NOVA SCOTIA, PROVINCE OF NOVA SCOTIA STRIP DEC1/25 1,400,000 1,142,988 Aug, Dec, ,400,000 1,142, % ONTARIO, PROVINCE OF ONTARIO 2.1% SEPT 8/ ,500,000 2,432,250 Sep, Sep, ONT 3.15% JUNE2/ ,000,000 3,114,480 Aug, Jun, ONT 2.85%JUNE2/ ,000,000 4,022,880 Aug, Jun, ONT 7.5% FEB 7/ ,000,000 5,547,200 Aug, Feb, ONT STRIP FEB7/24 1,980,000 1,487,059 Sep, Feb, ONTARIO STRIP FEB7/24 3,000,000 2,244,000 Sep, Feb, ,480,000 18,847,869 PROSPERA PROSPERA TD 1.80% JUN14/18 3,000,000 3,000,000 Aug, Jun, PROSPERA TD 1.80% JUN28/18 3,000,000 3,000,000 Aug, Jun, ,000,000 6,000, % 2.65% 4.52% PAU - 191

192 Schedule 2 (Cont'd) QUEBEC, PROVINCE OF QUEBEC STRIP SEP21/22 2,300,000 2,064,319 Aug, Sep, QUE 3.5% DEC 1/ ,000,000 5,293,000 Aug, Dec, QUE 3.0% SEPT 1/ ,000,000 8,109,600 Aug, Sep, QUEBEC STRIP SEP21/24 4,800,000 4,066,080 Aug, Sep, QUEBEC STRIP MAR21/26 5,000,000 4,012,500 Aug, Mar, QUEBEC STRIP APR1/30 4,900,000 3,395,749 Aug, Apr, ,000,000 26,941, % QUEBEC HYDRO QUE HYDRO STRIP AUG26/23 1,400,000 1,221,626 Aug, Aug, ,400,000 1,221, % ROYAL BANK OF CANADA ROYAL 2.364% SEPT 21/ ,000,000 4,978,450 Jul, Sep, RBC 2.26% MARCH 12/ ,000,000 4,909,250 Aug, Mar, RBC 3.77% MAR 30/ ,000,000 10,524,000 Aug, Mar, RBC 2.82% JULY 12/ ,000,000 2,983,050 Sep, Jul, RBC 2.89% OCT11/ ,000,000 5,126,450 Aug, Oct, RBC 2.77% Dec 11/ ,000,000 5,110,000 Aug, Dec, RBC 2.35 DEC9/ ,000,000 5,142,450 Jul, Dec, RBC 2.86% MAR 4/ ,000,000 5,031,500 Jun, Mar, RBC 2.86% MAR 4/ ,000,000 5,086,950 Aug, Mar, RBC 4.93% JUL16/ ,000,000 5,939,900 Jul, Jul, RBC 4.930% JUL16/ ,000,000 6,207,500 Aug, Jul, ,000,000 61,039, % TORONTO DOMINION BANK TD 2.433% AUG 15/ ,000,000 5,029,500 Jan, Aug, TD 2.433% AUG 15/ ,000,000 5,028,000 Jan, Aug, TD 2.171% APRIL 2/ ,000,000 4,876,000 Aug, Apr, TD 2.447% APRIL 2/ ,000,000 4,992,000 Apr, Apr, TD 2.563% JUN24/ ,000,000 5,044,000 Aug, Jun, TD 3.226% JULY 24/ ,000,000 10,123,800 Aug, Jul, ,000,000 35,093, % VANCITY CREDIT UNION VANCITY TD 1.65% OCT12/17 3,000,000 3,000,000 Aug, Oct, ,000,000 3,000, % WESTMINSTER SAVINGS CREDIT UNION WESTMINSTER 2.27% JUL20/17 3,000,000 3,000,000 Aug, Jul, WESTMINSTER TD 2.27% JUL27/17 2,500,000 2,500,000 Aug, Jul, WESTMINSTER 2.27% AUG10/17 2,500,000 2,500,000 Aug, Aug, WSCU TD 1.55% AUG24/17 2,500,000 2,500,000 Aug, Aug, WSCU TD 1.55% AUG31/17 2,500,000 2,500,000 Aug, Aug, WSCU TD 1.55% SEP14/17 2,000,000 2,000,000 Aug, Sep, ,000,000 15,000, % TOTALS 417,030, ,529, % Weighted Average Term: 2.9 Years PAU - 192

193 PAU - 193

194 METRO VANCOUVER SCHEDULE 4 MATURITIES BY SECTOR AS AT APRIL 30, 2017 PAU - 194

195 METRO VANCOUVER MATURITIES BY SECTOR AS AT APRIL 30, 2017 Schedule 4 - Continued PAU - 195

196 METRO VANCOUVER SCHEDULE 5 INVESTMENT HOLDINGS AND LIMITS AS AT APRIL 30, 2017 (% of total portfolio) Corporate Policy Investments Limit as at April 30, 2017 Canada 100.0% 0.0% Provinces rated AA- or better by S&P (or equivalent) British Columbia 50.0% 0.0% Saskatchewan 50.0% 0.0% Manitoba 50.0% 2.0% Subtotal Provinces rated A- or better by S&P (or equivalent) Alberta 30.0% 0.0% New Brunswick 30.0% 0.3% Ontario 30.0% 3.3% Quebec 30.0% 5.7% Nova Scotia 30.0% 0.3% Newfoundland 30.0% 1.2% Prince Edward Island 30.0% 0.0% Subtotal 50.0% 10.8% Municipal Finance Authority of BC 15.0% 1.8% Government Term years 5.0% 2.3% SCHEDULE I/II BANKS Bank of Montreal 20.0% 6.0% Bank of Nova Scotia 20.0% 5.0% CIBC 20.0% 3.6% Royal Bank of Canada 20.0% 10.6% TD Bank 20.0% 6.5% HSBC Bank Canada 15.0% 7.3% National Bank of Canada 15.0% 3.8% Manulife Bank 15.0% 0.0% Canadian Western Bank 15.0% 2.2% BC CREDIT UNIONS Vancity 20.0% 6.4% CoastCapital 20.0% 3.8% Westminster Credit Union 20.0% 9.5% Blueshore 20.0% 11.3% First West 20.0% 3.2% Prospera 20.0% 6.2% Subtotal 50.0% 40.5% BC Credit Union Long 2-5 years 30.0% 5.9% Caisse Central Desjardins 5.0% 0.0% PAU - 196

197 5.8 To: From: Performance and Audit Committee Dean Rear, Director, Financial Planning and Operations Date: June 12, 2017 Meeting Date: July 7, 2017 Subject: Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2017 RECOMMENDATION That the Performance and Audit Committee receive for information the report dated June 12, 2017, titled Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, PURPOSE To report on the status of the capital projects for Water, Liquid Waste and Solid Waste. These capital projects are typically multi-year in nature; therefore, this report provides a comparison between the total project budgets and total projected expenditures to project completion. BACKGROUND The Capital Expenditure reporting process as approved by the Board provides for regular status reports on capital expenditures with interim reports sent to the Utilities and Zero Waste Committees prepared by the respective departments in June and October and a final year-end report to the Committees and Board in April. The capital projects are separated into two types: Ongoing and Completed. Narrative information is provided describing key aspects of specific projects and each project is presented in the context of Total Projected Project Costs to Completion as compared to the Total Approved Budget. The approved budget represents the maximum expenditure authority extended by the Board. If it is projected that the total expected project expenditures will exceed the approved authority, additional approval will be sought from the Board. Appendix A contains summary financial information on Ongoing Projects and Completed Projects. The information presented is for Total Projected Completion which will generally cover multiple years. Capital project budgets typically include a minimum contingency of 10%. Individual project financial information included as follows: Schedule 1 Water, Schedule 2 Sewerage and Drainage (Liquid Waste) and Schedule 3 Sewerage and Drainage (Solid Waste). Appendix B provides narrative information for specific projects. The Performance and Audit Committee is provided a summary report for all utility capital including the respective appendices and schedules. PAU - 197

198 Status of Water, Liquid Waste and Solid Waste Capital Expenditures to April 30, 2017 Performance and Audit Committee Regular Committee Meeting Date: July 7, 2017 Page 2 of 2 ALTERNATIVES This report is provided for information. No alternatives are presented. FINANCIAL IMPLICATIONS Net capital expenditures, after applying available pay-as-you-go financing, are funded through longterm debt from the Municipal Finance Authority. This results in debt service costs, for the term of the debt, which must be funded annually through the water rate, sewer levy or tipping fee as appropriate. If capital expenditures are lower than budget for the year, the result is less required borrowing leading to a budget surplus due to savings in debt service costs. The surplus, by policy, will be applied to fund future capital expenditures thereby reducing the need to borrow. Any favourable variances to budget for approved capital projects is not redirected to other projects but is essentially dollars not spent. Each project proceeds on the individual projects approved expenditure budgets. Ongoing Capital Projects: The Water District is projecting to spend $31.4 million (3.4 %) less than the approved total project budgets for those projects in progress and included in Schedule 1. The Sewerage and Drainage District - Liquid Waste Services is projecting to spend $34.8 million (1.8 %) less than the approved total project budgets for those projects in progress and included in Schedule 2. The Sewerage and Drainage District - Solid Waste Services is projecting to spend $2.5 million (6.8 %) less than the approved total project budgets for those projects currently in progress and included in Schedule 3. Completed Capital Projects: These are projects that have been completed during 2017, some of which may have extended over multiple years. Overall, the Water District and Sewerage and Drainage District - Liquid Waste projects in this category are under spent by $0.6 million (13.3 %) and $0.3 million (2.7 %) respectively. SUMMARY / CONCLUSION This is the first in a series of three capital expenditure progress reports for The Board will see this information through individual reports to the Utilities and Zero Waste Committees. Both the Water District and Sewerage and Drainage District were under or essentially on budget for those projects completed as at April 30, 2017 and are projecting the same for ongoing projects when they complete. Economic Impact While a significant investment in infrastructure for the GVWD and GVS&DD, the projects identified in Schedules 1 and 2 represent approximately 5,770 person years of employment and, over their life (development and construction) and make up approximately $506 million of the Gross Domestic Product of the region. Attachments: Appendix A: Capital Expenditure Summary Information as at April 30, 2017 Appendix B: Capital Project Status Information as at April 30, 2017 Schedule 1: Water District Capital Expenditures Schedule 2: Sewerage & Drainage District - Liquid Waste Capital Expenditures Schedule 3: Sewerage & Drainage District - Solid Waste Capital Expenditures PAU - 198

199 APPENDIX A Capital Expenditure Summary Information As at April 30, 2017 Ongoing Projects Total Projected Expenditures to Completion ACE/ Total Budget Projected Variance Water $889,346,622 $920,789,822 $31,443,200 Liquid Waste 1,919,356,977 1,954,144,377 34,787,400 Solid Waste 34,500,000 37,000,000 2,500,000 Total Ongoing Projects: $2,843,203,599 $2,911,934,199 $68,730,600 Completed Projects Total Actual Expenditures ACE/ Total Budget Variance Water $3,857,069 $4,450,000 $592,931 Liquid Waste 12,488,312 12,830, ,688 Solid Waste Total Completed Projects: $16,345,381 $17,280,000 $934,619 PAU - 199

200 Capital Project Status Information April 30, 2017 APPENDIX B 1. GREATER VANCOUVER WATER DISTRICT (Water Services) Major GVWD capital projects are generally proceeding on schedule and within budget. The following capital program items and exceptions are highlighted: i) Infrastructure Growth Program Coquitlam Intake No. 2 A new intake, transmission tunnel and treatment facilities are proposed at the Coquitlam Reservoir to increase the supply and transmission capacity from this source. Options for the intake, conveyance and treatment facilities are being assessed under the project definition work. The goal is to complete the Project Definition Report by early Barnston/Maple Ridge Pump Station This project comprises design and construction of a new pump station to provide water to Maple Ridge via Haney Main No. 2 and Maple Ridge Main West, and to Langley and Surrey via the Barnston Island Main. Construction of the pump station is complete and the pump station is operational. Port Mann Main No. 2 (North) This 2.5 km long 1.5 m diameter steel water main will twin the existing Port Mann Main to meet growing water demand south of the Fraser River. Construction of the new main between the Cape Horn Pump Station and Reservoir near Mariner Way and the new Port Mann Water Supply Tunnel continues. Trenchless crossings of the Mary Hill Bypass, Lougheed Highway, and CP Rail lines are complete and installation of the watermain at these crossings is underway. Pipe installation in Colony Farm has been delayed to summer A request for additional funding will be brought forward to the Utilities Committee and Board in May. South Delta Main No. 1 Replacement This project comprises replacement of the existing water main with a new main on 52nd Street from 12th Avenue to 28th Avenue (Phases 1 and 2), and on 53rd Street from 28th Avenue to 34B Avenue (Phase 3). Phase 1 pipe installation adjacent to the new Tsawwassen Mills Mall is complete. Phase 2 pipe installation has been completed north of Highway 17 with the section south of Highway 17 to commence in May and be completed by September Phase 3 is currently under design. Fleetwood Reservoir Phase 1 of the Fleetwood Reservoir project includes a 13.6 ML reservoir, chamber, piping, access building and associated work located at Meagan Ann MacDougall Park in the City of Surrey. The conceptual/preliminary design was completed in March Detailed design is in progress and is scheduled to complete in summer Annacis Water Supply Tunnel A 2.3 km long, 4.5 m diameter water supply tunnel is required under the Fraser River to meet growing water demand south of the Fraser and to provide increased system resiliency. Preliminary design was awarded to Hatch Corporation and work began in January Preliminary design is now substantially complete and PAU - 200

201 detailed design is expected to commence in July. Property acquisition for the shaft sites in New Westminster and Surrey continues. Capilano Main No. 5 (Stanley Park Section) This 1.4 km long steel water main will replace the existing Capilano Main No 4 through Stanley Park to meet growing water demands and provide increased system resiliency. Preliminary design is currently underway with the assessment of route options and construction methods. Public engagement on the preferred option is planned for summer/fall Jericho Reservoir Phase 1 of the Jericho Reservoir project includes a ML reservoir, chambers, piping and associated work located in the Township of Langley. The conceptual/preliminary design was completed in June Detailed design is in progress and is scheduled to be complete in August ii) Infrastructure Maintenance Program Douglas Road Main No. 2 Still Creek Section This project comprises approximately 2.5 km of 1.5 m diameter steel pipe with trenchless crossings of Highway 1, Still Creek and the BNSF rail line. The project team has engaged multiple stakeholders including the City of Burnaby and private landowners to determine the water main alignment. Preliminary design is anticipated to be complete in mid Cleveland Dam Drum Gate Resurfacing Project Recoating of the Cleveland Dam drum gate commenced in August 2016, however extreme weather conditions in mid-october 2016 triggered activation of the project s storm management protocol which required the contractor to demobilize and reactivate the drum gate for full operational service. The remaining work has been deferred to summer/fall Additional funding to complete the work was approved by the Board in March Fisherman s Trail Bridge Crossing Project - Associated Engineering is finalizing detailed design for a new suspension bridge to cross the Seymour River and a vehicular bridge to cross Canyon Creek at the north end of Riverside Drive. Tendering for the construction of the bridges is anticipated for summer E2 Shaft Replacement The E2 Shaft, which has controlled ground water pressures in the East Abutment of Cleveland Dam since the 1950 s is nearing the end of its service life and needs to be replaced by a system of horizontal drains. Up to six (6) production drains may be required. A contract to drill up to three (3) production drains was awarded to Jensen Drilling and work began in October The second of these three production drains is now complete. iii) Infrastructure Risk Management Program Port Mann Water Supply Tunnel The 1 km long, 3.5 m diameter water supply tunnel under the Fraser River between Coquitlam and Surrey is required to replace the aged and vulnerable Port Mann Main No. 1 marine crossing. Construction of the Port Mann Water Supply Tunnel is now complete and the tunnel went into service in mid-february. Only landscaping at the shaft sites remains to be completed. PAU - 201

202 Braid Street Main No. 2 This project consists of 2 km of 600mm diameter ductile iron pipe that will replace the existing Braid Street Main in the City of New Westminster. Detailed design is nearing completion and construction is anticipated to commence in fall Coquitlam Bulk Sodium Hypochlorite Conversion This project comprises the conversion of the existing gaseous chlorine storage, feed, and injection systems with a new liquid sodium hypochlorite storage and feed system. The remaining work will be postponed to November 2017 as the existing gas system needs to remain in operation during the peak summer period. Work is scheduled for completion in 2 nd quarter Second Narrows Water Supply Tunnel A 1.1 km long, 6 m diameter water supply tunnel is required under Burrard Inlet, between North Vancouver and Burnaby, to increase the reliability of supply in the event of a major seismic event and provide additional long term supply capacity. Detailed design is progressing well and is scheduled to be completed by late summer Permitting discussions are now underway with District of North Vancouver and City of Burnaby. The procurement process for construction is expected to commence in late summer Capilano Main No. 9 This project comprises construction of approximately 1.9 km of 2.1 m diameter steel water main with associated appurtenances on Capilano Road in the District of North Vancouver. Installation of Capilano Main No. 9 was completed in March 2016 and the new water main was put into service in May Construction of the crossover chamber on Edgemont Boulevard commenced in November 2016 and is scheduled for completion in June Mackay Creek Debris Flow Mitigation Detailed design for this project was awarded to BGC Engineering Inc. Detailed design is progressing well, with 90% design drawings due in May. Tenders for the construction work are scheduled to be issued in Fall Marine Crossings Phase 1 Conceptual Design In the fall of 2015 an assignment was awarded for Phase 1 conceptual design for two new marine water supply crossings; Cambie Richmond crossing of the north arm of the Fraser River between Vancouver and Richmond and the Haney Main crossing of the Pitt River between Port Coquitlam and Pitt Meadows. Draft conceptual design reports are now complete and under review. Clayton Reservoir This project includes a new 22.5 ML water reservoir located at 72 nd Avenue and 190 th Street in Surrey that will increase the storage capacity, meet current seismic standards and replace the existing Clayton Tank. Construction is well underway with completion anticipated by summer iv) Infrastructure Upgrade Program Queensborough Main Ewen Ave Replacement This project consists of replacing the existing Queensborough Main No. 1 with 2 km of new 600mm diameter ductile iron pipe. Phases 1 and 2 of the work are substantially complete with tie ins to the existing system anticipated to be completed in fall PAU - 202

203 2. GREATER VANCOUVER SEWERAGE & DRAINAGE DISTRICT (Liquid Waste Services) Major GVS&DD liquid waste capital projects are generally proceeding on schedule and within budget. The following capital program items and exceptions are highlighted: i) Infrastructure Growth Program FSA Burnaby Lake North Interceptor Construction of the twinning of the Sperling Section including final repaving was complete in Preliminary design of Phase 2 (Sperling to Phillips Ave) and Phase 3 (Phillips to Piper Ave) and stakeholder engagement are underway. Alignment alternatives within Burnaby Lake Park and tunneling option under Winston Street were investigated. An assessment of alignment alternatives was completed including traffic, environmental and business disruption impacts and constructability challenges and a recommendation to select Winston Street Tunneling as a preferred option was made. Preliminary design of the preferred alignment will be finalized in 2017, to be followed by detailed design. FSA South Surrey Interceptor Johnston Road Section Construction of the twinning of Phase 1 started in March 2017 and includes installation of approximately 625m of 3050mm diameter corrosion resistant concrete sewer pipe, including appurtenances, in grade supported condition. Phase 1 is scheduled to be complete by the end of Phase 2 detailed design is underway and is scheduled to be complete by the end of 2017, to be followed by construction in FSA Annacis Island WWTP Outfall This project involves identifying solutions for the transient/surge impacts that may occur in the wastewater collection and treatment plant influent system in the event of a power outage, and assessing options to increase capacity of the outfall to support growth. Pre design work completed on the outfall recommends a single new 4m diameter tunneled outfall, approximately 1 km long at a depth of 40m. The Stage 1 Environmental Impact Assessment, including diffuser design/dilution modelling reports, has been reviewed by the Ministry of Environment. Detailed design of the outfall is about 60% complete. Construction is scheduled to start in 2019 and be completed in ii) Infrastructure Maintenance Program LSA Gilbert Trunk Sewer Twinning Construction of Phase 1 is substantially complete. Preliminary design work for Phases 2, 3 and 4 (from Hollybridge Road to the Lulu Island WWTP) is complete. Staff and the City of Richmond analyzed timing of adjacent City works, and developed a project schedule with Phase 2 construction starting in 2018, followed by Phases 3 and 4. The detailed design is underway, and will be completed by early VSA Iona Island WWTP Solids Handling Upgrade This project involves improving the existing grit removal and sludge screening systems, increasing sludge thickening capacity, and improving the digester mixing systems. Refurbishment of the existing sludge thickener was initiated in October 2015 and was completed on schedule by April 2016 and is back in full operation. Construction of the new Screening, Degritting and Thickening facility is 95% complete, with deficiency rectification underway, and Owner Commissioning scheduled for PAU - 203

204 May/June The digester mixing contract started in November 2015, and is expected to be complete in Digester No. 4 gas proofing work is complete and the digester is back in service. The contractor is currently working on Digester No. 2. FSA Annacis Island WWTP Secondary Clarifier Corrosion Repair This project involves replacing 12 secondary clarifier mechanisms that have been damaged by corrosion and are at the end of their useful life. This project also includes the installation of 12 new influent flow balancing gates, and replacement of 3 existing secondary bypass gates. Four mechanisms have now been replaced and work to replace the next three units and install 3 influent flow gates and bypass gates is underway. This work is expected to be complete by Fall A contract is being prepared for the 2018 and 2019 timeframe, in co-ordination with the Stage 5 Expansion construction. The remainder of the units will be replaced in iii) Infrastructure Risk Management Program FSA Annacis Island WWTP Cogeneration System This project replaces the existing cogeneration engines (cogens) with larger units in order to utilize increased digester gas production expected when Stage 5 Expansion is complete to generate additional electricity and heat to offset BC Hydro and natural gas import. The cogens are being supplemented by stand by diesel generators (SDG s) to provide a reliable backup power system during BC Hydro outage events. Detailed design is about 95% complete. Award of the pre purchased cogens and SDG s occurred in 2015, following Board approved, and this equipment will be delivered in 2018 for installation. Constructability and installation strategies have been developed and reviewed with stakeholders. Four (4) construction bidders have been pre-qualified to perform the removal of the existing cogens and installation of the cogens and SDG s. The scope will also include supply and installation of new or modified electrical and air handling systems as well as ground improvements and structural upgrades to the existing cogen building. Construction tender documentation and drawings are presently being prepared for release in June with an anticipated award date in October. Project completion is anticipated to be in the summer of iv) Infrastructure Upgrade Program FSA Sapperton Pump Station Construction is well underway following contract award in September Work is expected to be substantially complete in mid As of April 30, the shoring system, consisting of 320 interlocked concrete piles and excavation for the new pump station structure, is in progress. FSA Sperling Pump Station - The Sperling Pump Station Upgrading Project provides for a totally refurbished and expanded pump station by upgrading the existing aging and under capacity facility. NAC Constructors Ltd. is the successful tenderer and started construction in February Various chambers and a micro-piling system for the new building are being constructed at present. The project is expected to complete within 2 years. PAU - 204

205 FSA Carvolth Trunk Sewer Remobilization of contractor to site confirmed. The remaining scope of work for this project involves approximately 180m of open cut trench construction of 900 mm dia. PVC complete with installation of a manhole, chamber and bypass. Following completion of the new sewer, the existing portions of the old system will be abandoned. Anticipated completion date for this work is July VSA Iona Island WWTP Temporary Biosolids Dewatering Facility The Iona Island Wastewater Treatment Plant (IIWWTP), located in Richmond adjacent to the Vancouver International Airport, provides primary treatment from about 600,000 residents from the City of Vancouver, the University Endowment Lands, and portions of Richmond and Burnaby. The IIWWTP must be upgraded to secondary treatment levels by 2030 as required by regulations and the approved Metro Vancouver Integrated Liquid Waste and Resource Management Plan. Decommissioning of the existing digested sludge lagoons and biosolids land drying area must occur prior to the construction of the new secondary treatment plant. In order to decommission the digested sludge lagoons and drying beds, a temporary mechanical dewatering facility will be needed to dewater on-going production of biosolids. A feasibility study has been conducted by Black & Veatch that recommended the use of centrifuge technology and the delivery of the project using a design-build (DB) methodology. An Owner s Engineer RFP will be issued in May with an anticipated award date in July. The Owner s Engineer will assist MV in developing the conceptual design further, establish the siting of the facility, prepare the DB project documents, and ensure compliance to the DB contract. The target facility completion date is December v) Annacis Stage 5 Expansion Program FSA- Annacis Island WWTP Stage 5 Expansion Phase 1 This work involves expansion of treatment process units including primary sedimentation tanks, secondary clarifiers, solid contact tanks and odour control facilities. The $252 million construction contract has been executed between Metro Vancouver and Graham and AECON Joint Venture in April Construction of the three-story CDAC and Laboratory Building under a separate contract with Kenaidan is 95% complete. PAU - 205

206 3. GREATER VANCOUVER SEWERAGE & DRAINAGE DISTRICT - Solid Waste Services Major GVS&DD solid waste capital projects are generally proceeding on schedule and within budget. The following capital program exceptions are highlighted: 1) Landfills Program The completion of the Coquitlam Landfill (CLF) Gas Phase Upgrade for the north half of the landfill is underway and expected to be completed in April, The scope for any Phase 2 collection system upgrade (for the south half of the landfill) will be determined from an assessment to be completed in A new control room is required and this work is also planned for ) Waste to Energy Program The Bottom Ash Processing project received approval from the GVS&DD Board in October Approval to proceed with construction of the project has been given to Covanta. Completion of the work is scheduled for the end of PAU - 206

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