Committee of the Whole Agenda

Transcription

1 1 Committee of the Whole Agenda The agenda for the Freestanding Committee of the Whole (Corporate Administration & Finance Committee - Budget) meeting to be held in the Council Chambers of the Municipal Hall, 8645 Stave Lake Street, Mission, British Columbia on Monday, October 23, 2017, commencing at 1:00 p.m. 1. CALL TO ORDER 2. ADOPTION OF AGENDA 3. CORPORATE ADMINISTRATION & FINANCE (a) Agenda Overview Presentation (b) Summary of Proposed 2018 Residential Utility Rates and 2017 Utility Rate Comparisons to Other Municipalities This report summarizes the District s proposed 2018 residential utility rates and provides a comparison to neighbouring municipalities 2017 utility rate information. No staff recommendation accompanies this report and Council action is not required. (c) 2018 Draft Water Utility Financial Plan Recommendations: Council consider and resolve: 1. That the Silverdale Fire Fighting Water Supply project with a budget of $100,000 be approved for inclusion in the draft Water Utility Capital Plan in 2018, with funding from the Water Capital Reserve Fund; and 2. That the 2018 draft Water Utility Financial Plan and the proposed water user rate increase of 1% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, (d) 2018 Draft Sewer Utility Financial Plan Recommendations: Council consider and resolve: That the 2018 draft Sewer Utility Financial Plan and the proposed sewer user rate increase of 4% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, Page 3 Page 6 Page 20

2 Freestanding Committee of the Whole Agenda October 23, (e) 2018 Draft Drainage Utility Financial Plan Recommendations: Council consider and resolve: 1. That the drainage utility operating spending to increase the ongoing transfer to the Drainage Capital Reserve Fund by $60,000 be approved for inclusion into the 2018 draft Drainage Utility Financial Plan; 2. That the draft Drainage Utility Capital Plan be updated to include the unfunded drainage capital project, Culvert Rehabilitation 7 th Avenue and Murray Street for $380,000 in 2018, with funded by $100,000 from the General Fund Accumulated Surplus and $280,000 from the Drainage Utility Capital Reserve; and 3. That the 2018 draft Drainage Utility Financial Plan and the proposed drainage levy increase of 4.6% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, (f) 2018 Draft Waste Management Utility Financial Plan Recommendations: Council consider and resolve: That the 2018 draft Waste Management Utility Financial Plan be presented for feedback at the upcoming public budget consultation meeting on November 20, Page 35 Page ADJOURNMENT

3 Finance Department Staff Report to Council 3 File: DATE: October 23, 2017 TO: FROM: SUBJECT: ATTACHMENT(S): Mayor and Council Kerri Onken, Deputy Treasurer/Collector Summary of Proposed 2018 Residential Utility Rates and 2017 Utility Rate Comparisons to Other Municipalities Appendix A Neighbouring Municipal 2017 Residential Utility Charges This report summarizes the District s proposed 2018 residential utility rates and provides a comparison to neighbouring municipalities 2017 utility rate information. No staff recommendation accompanies this report and Council action is not required. PURPOSE: This report is provided to summarize the District s proposed 2018 residential utility rates, and provides neighbouring municipalities 2017 utility rate information for comparison. DISCUSSION AND ANALYSIS: Separate reports are included on this agenda that discuss financial plans for the District s municipal utilities (water, sewer, drainage, refuse and recycling/composting), and any proposed rate increases. Note that the drainage levy is excluded from the analysis in this report, given that it is based on assessment value of the property not a flat-rate or usage-based charge. Additionally, the creation of a drainage utility is a fairly new concept, and many municipalities continue to collect funds for drainagerelated costs through general property taxes. To summarize the impact of the various utility financial plans on the vast majority of utility ratepayers, the following table summarizes proposed 2018 utility rates for a typical single-family residential home: Municipal Utility 2017 Flat-Rate Fee Proposed 2018 Flat-Rate Fee % Change $ Change Water $ $ % $4.92 Sewer $ $ % $15.84 Garbage $ $ % $0 Recycling/Compost $ $ % $0 Total* $1, $1, % $20.76 *Not all residences receive all 4 utilities, and small percentages are charged for water and sewer based on metered water usage. Included in the attached Appendix A is a comparison of utility rates in other municipalities. The majority of the municipalities listed are located within Metro Vancouver, which implemented a ban on organic materials from waste facilities in 2015.

4 4 As well, most of the municipalities noted are part of the Recycle BC program (previously referred to as Multi-Material B.C. a non-profit group which shifts the responsibility for end-of-life management of packaging and printed paper from governments and taxpayers to the businesses that produce these materials). For comparison purposes only and where applicable, staff have converted metered charges from cubic feet to cubic meter (m 3 ). FINANCIAL IMPLICATIONS: There are no financial implications directly associated with this report. The financial implications of the various utility financial plans are discussed in detail in separate reports included on this agenda. COMMUNICATION: No communication action is required. SUMMARY AND CONCLUSION: This report provides a summary of proposed 2018 residential utility rates, and provides a comparison to neighbouring municipalities 2017 utility rates. The details of the various utility financial plans are discussed in detail in separate reports included on this agenda. SIGN-OFFS: Kerri Onken, Deputy Treasurer/Collector Reviewed by: Kris Boland, Director of Finance Comment from the Chief Administrative Officer: Reviewed

5 5 Appendix A Flat Rate Water Mission's 2017 Residential Utility Charges & Proposed 2018 Residential Utility Charges Flat Rate Sewer Meter Water Meter Sewer Refuse Extra Refuse Stickers 2017 Actuals $ $ $1.25/m3 $1.0200/m3 $ $3.50 $ Included in recyling fee 2018 Proposed $ $ $1.26/m /m3 $ $3.50 $ Included in recyling fee Recycling Compost Flat Rate Water Flat Rate Sewer Chilliwack N/A N/A Neighbouring Municipal 2017 Residential Utility Charges Meter Water Meter Sewer Refuse * $89.16 flat rate + $0.46/m3 $ flat rate + $0.83/m3 $ Extra Refuse Stickers Yard Waste = $1.75 Refuse = $2.00 Recycling * Compost/Organics * Included in Refuse Rate Limited amounts of compost included in Refuse Rate Abbotsford N/A N/A $1.19/m3 $1.01/m3 $ $2.00 Included in Refuse Rate Included in Refuse Rate City of Langley N/A N/A $1.16/m3 + $75 fee $1.04/m3 + $75 fee $ $3.00 Township of Langley $ $ City of New Westminster * $ $ City of Maple Ridge $ $ City of Surrey * $ $ City of Port Coquitlam $ $ City of Port Moody * $ $ City of Coquitlam $ $ Flat Rate Averages $ $ No residential meters No residential meters No residential meters $0.9660/m3 + $66 base charge No residential meters No residential meters No residential meters No residential meters $ $3.00 Recycle BC picks up recycling curbside Included with Property Taxes (even if no refuse collection) Included in Refuse Rate Included in Refuse Rate No residential meters $ $4.00 Included in Refuse Rate Included in Refuse Rate No residential meters private provider $71.37 private provider $0.9899/m3 $ $5.50 Included in Refuse Rate Included in Refuse Rate No residential meters $89.25 No No residential meters No residential meters $ No $ No Not all Municipal utilities are created equal, such as: Surrey provides free meter installations to residential properties who request a water meter Municipalities may supply different sized garbage/compost containers for different rates. If different size carts are available - Refuse Rate is quoted on 120 L Cart * Refuse is collected bi-weekly and Recycling & Compost (Organics) is collected weekly * New Westminster, Surrey and Port Moody have bi-weekly recycling collection, alternating with refuse. 240 L Cart Included with Property Taxes - $10 if a 360 L Cart used Wst Mgmt = $33.00 Glass = $10.00 Provided by Recycle BC no charge to residents $70.11 (limited amount) $ Included in refuse fee

6 6 Finance Department Staff Report to Council File: DATE: October 23, 2017 TO: FROM: SUBJECT: ATTACHMENTS: Mayor and Council Kerri Onken, Deputy Treasurer/Collector 2018 Draft Water Utility Financial Plan Appendix A Water Utility Operating Budget (Draft) Appendix B Water Utility Capital Plan (Draft) Appendix C Unfunded Utility Capital Plan Appendix D Historical and Proposed Water Utility User Rates RECOMMENDATIONS: Council consider and resolve: 1. That the Silverdale Fire Fighting Water Supply project with a budget of $100,000 be approved for inclusion in the draft Water Utility Capital Plan in 2018, with funding from the Water Capital Reserve Fund, and 2. That the 2018 draft Water Utility Financial Plan and the proposed water user rate increase of 1% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, PURPOSE: The purpose of this report is to present the 2018 draft Water Utility Financial Plan, including proposed rate increases. BACKGROUND: As part of the District s annual financial planning process, staff have compiled a draft 2018 to 2022 water utility financial plan, a long-term capital plan, and proposed rate increases. Included in this plan are the costs of operating and maintaining the District s local water distribution system, as well as Mission s share of the regional water supply and treatment system (cost-shared with the City of Abbotsford). The regional financial plan is scheduled to be presented for consideration, at the November 9, 2017 Joint Shared Services Committee (JSSC) meeting, after which staff will follow-up with details to Council. Since the draft regional water financial plan has not been finalized yet, amendments to the District s water utility financial plan may be required. In the meantime, staff have included the draft regional financial plan in the District s financial plan for Council s consideration. DISCUSSION AND ANALYSIS: 1. Operating Financial Plan (Appendix A) The 2018 draft Water Utility Operating Financial Plan is attached as Appendix A, including a summary of the changes between the 2017 and 2018 plan. Significant changes to the operating financial plan for 2018 to maintain existing service levels include: Revenue: 1. $106,344 increase from new residential customers (metered charges); 2. $62,584 additional revenue from proposed 1% rate increase; 3. $56,872 increase in consumption plus new customers on commercial meters; 4. $56,100 increase from addition of Secondary Dwelling Units (flat-rate charges); and 5. $36,614 investment income increase (off-set by transfer to reserve see below). Page 1 of 8

7 7 Expenses: 1. $156,911 increase in regional operating expenses mainly for maintenance on various water sources (Details will be presented at the November 9, 2017 Joint Shared Services Committee (JSSC) meeting.); 2. $80,765 increase in wages, replacement equipment rates, contractual obligations and other operating impacts for the local water distribution system; 3. $43,657 increase in the administrative cost charge from general operating fund; and 4. $36,614 increase in investment income transferred to reserves (from above). The net impact of these changes to the 2018 water utility operating budget results in an increase to the transfer to the water capital reserve fund of $11,420, up from $2.97 million to $2.981 million (see page 2 of Appendix A). No operating spending packages for the water utility are being requested for the 2018 budget. However, the one capital project recommended for inclusion into the water capital plan does have an impact of $1,000 for maintenance on the water operating budget. 2. Capital Plan (Appendix B) The District s draft Water Utility Capital Plan, (including the proposed change outlined below for $100,000), is attached as Appendix B. A summary of the next five years of the draft Water Utility Capital Plan follows: CAPITAL PLAN Totals Cedar Valley Water DCC $ - $ 74,250 $ 561,000 $ - $ - $ 635,250 Water Capital - Local * 1,518,240 1,521,309 1,444,391 1,565,792 1,133,292 7,183,022 Water Capital - Regional 790, , , , ,257 3,414,099 Regional Water Supply DCC 121, ,512 1,633,817 1,449,821-3,365,750 Subtotal Water Utility Capital Plan $ 2,429,902 $ 2,698,298 $ 4,435,570 $ 3,376,804 $ 1,657,549 $ 14,598,121 * Includes proposed additional $100,000 to 2018, requiring Council approval There are no major changes to the local Water Utility Capital Plan over the previous year s capital plan. However, the following capital project is recommended for inclusion into the Water Utility Capital Plan with funding from the Water Capital Reserve Fund: Add the Silverdale Fire Fighting Water Supply project with a budget of $100,000 to install two water supply points in This would allow additional residences to qualify for reduced insurance coverage from the District s Superior Tanker Shuttle Service certification. Approving this capital project will increase the water operating budget by $1,000 annually for maintenance of the new supply points. Inclusion of this capital project is reflected in the table above. The Water Utility Capital Plan includes a previously approved ongoing $1 million annual infusion from the Water Capital Reserve Fund to replace aging water mains. With the budget for water main replacement, and the proposed new project, the District s Local Water Utility Capital Plan averages approximately $1.3 million per year over the next 11 years, and is funded primarily from the Water Capital Reserve Fund. STAFF REPORT TO COUNCIL Page 2 of 8

8 The District continues to develop a comprehensive asset management program, and staff are currently implementing asset management software. This system will allow for projecting multi-decade capital funding needs, based on the life-cycle analysis of assets. This information provided is required to develop a more comprehensive capital plan for the District s water utility however; in the meantime the annual budget of $1 million to replace aging water mains is earmarked for any immediate pipe replacements that are required. For regional water infrastructure, comprehensive estimates of asset replacement costs for the current system are included in the financial plan. In terms of a new water source or other capacity improvements for the regional water system, staff are currently doing preliminary investigation work, and for financial planning purposes a total estimated construction budget of $51.2 million has been included in year 2023 of the Regional Water Supply Development Cost Charge (DCC) Capital plan ($6.2 Million estimated District of Mission s share). This estimate has been reduced from the $168 million estimated in last year s plan. Staff expect that the cost estimate and timing will be updated as the preliminary investigation work continues. Depending on the cost and timing of a major project, internal or external borrowing may be required. Staff will report back when information is available, and additional financial planning work will likely be required at that time. 3. Regional Financial Plan Further details on both the regional water operating and capital plans will be provided to Council in the coming months, following consideration of the plans at the November 9, 2017 JSSC meeting. 4. Reserve Projections Based on the financial plan as presented in this report, including the Silverdale Fire Fighting Water Supply capital project with a budget of $100,000, the following table shows projected year-end reserve balances in the water utility capital funds: 8 Projected Reserve Fund Balances Water Capital Reserve Fund $ 14,771,716 $ 15,784,152 $ 17,030,565 $ 18,600,016 $ 20,534,869 Water Operating Accumulated Surplus 1,013,037 1,033,298 1,053,964 1,075,043 1,096,544 DCC Reserve Funds 3,180,455 4,012,304 2,967,588 2,198,823 2,828,500 Water Utility Fund Totals $ 18,965,208 $ 20,829,754 $ 21,052,117 $ 21,873,882 $ 24,459,913 The water utility reserve projections shown in the above table reflect a strong financial position. However, the new water source project in 2023 that is included in the draft regional water capital plan results in the DCC Reserve Fund being forecast to have a significant shortfall in the funds required for the project. Based on current projections, the Water Capital Reserve Fund would have sufficient funds on hand to handle an internal loan to the DCC Reserve, which would be recovered through future DCC collections. Alternatively, the District could choose to borrow externally to fund this project. However, the timing and cost estimate for the new water source project is only preliminary at this point, and could change significantly as the preliminary investigation gets underway, so further financial planning will be required as this project budget and timing becomes more certain. Additionally, as the asset management system is in development, there is some uncertainty about the amount of funds required for maintenance and replacement of existing infrastructure; therefore, staff feels it is prudent to continue to build up reserve levels through modest rate increases. 5. External Debt The water utility has been entirely free of external debt since December As a result of capital reserves built up over the past number of years, the water utility financial plan does not anticipate any further external debt at this time; however, borrowing may likely be required in the future to support the development of future water system capacity and redundancy. STAFF REPORT TO COUNCIL Page 3 of 8

9 9 6. Internal Debt Internal debt is the result of loans made from the Water Capital Reserve Fund to various water utility (DCC) reserves. Repayment of these internal debts is dependent on DCCs collected during the year, as well as the need to proceed with additional DCC projects to support growth in advance of collecting the related DCCs. As at December 31, 2016, the outstanding internal debt in the water utility totals $331,048, no change from the prior year. There are currently no new internal loans anticipated in the water utility financial plan, and existing loans are being paid down annually based on any DCC collections during the year. As mentioned previously, internal borrowing may form a portion of the funding required for an eventual new water source. Internal debt is generally preferable to external debt, because instead of interest being paid to an external party, the interest is paid internally to other reserves within the District. 7. Regional Cost Sharing Mission s estimated share of the regional water utility costs for 2018, based on actual and projected water flows in each community, are as follows: Operating costs Non-growth-related capital costs 24.23% (estimated) 24.23% (estimated) Growth-related capital costs 12.16% The final cost sharing for 2018 operating and non-growth-related capital costs is dependent upon each community s actual water usage for the 2017 calendar year, therefore will not be available until early While this may have an impact on the 2018 budget, the amount is expected to be minimal. For growth-related projects, the cost sharing percentage is based on estimated growth in peak day water demand. Any deviation from estimated growth will result in a future transfer of costs between the municipalities to compensate for the difference, as per the approved cost-sharing methodology. 8. Rate Recommendations In order to continue to build water capital reserves and to keep pace with increasing costs, staff proposes a 1% rate increase in water user fees in 2018, and have included 1% increases annually thereafter in the financial plan for forecasting purposes. This is consistent with the ongoing annual rate increases that were proposed in the 2017 water utility financial plan. A 1% increase in annual water user rates equals approximately $5 for a single-family residential property that pays flat-rate water utility charges, which make up the vast majority of the water utility users. A 1% increase in annual water user rates equals approximately $4.25 for a multi-family residential property that pays flat-rate water utility charges. The following graph shows a 5-year history of water user rates for single-family residential flat-rate customers, including the proposed 1% rate increase for 2018: Water User Rate History $465 $475 $484 $489 $494 $ STAFF REPORT TO COUNCIL Page 4 of 8

10 In addition to the flat rate user fee increase, staff propose a 1% increase to the residential meter rate bringing the fee up to $1.26 per cubic meter and a 1% increase to the declining block rates for institutional, commercial and industrial metered customers. Appendix D provides further details on the proposed water user rates, including metered rates. FINANCIAL IMPLICATIONS: The financial implications of the draft water utility financial plan are discussed throughout this report. COMMUNICATION: Highlights of the District s financial plan, including reserve projections and proposed rate increases, will be communicated at the upcoming public budget consultation meeting on November 20, SUMMARY AND CONCLUSION: This report presents the draft 2018 water utility financial plan, including proposed rate increases. The water utility is currently free of external debt, and the proposed plan does not currently anticipate any further internal or external borrowing. The water utility capital reserves continue to maintain a very strong financial position, including ongoing investment in replacing aging infrastructure. However, with the recent advancement of preliminary investigation work for additional water supply capacity, and uncertainty as to the timing of an eventual project, there may be future challenges from a funding perspective. In order to keep pace with cost increases and continue to maintain healthy reserves, staff proposes a 1% annual rate increase for 2018, and have included 1% annual increases thereafter in the financial plan for forecasting purposes. SIGN-OFFS: 10 Kerri Onken, Deputy Treasurer/Collector Reviewed by: Kris Boland, Director of Finance Reviewed by: Tracy Kyle, Director of Engineering & Public Works Comment from the Chief Administrative Officer: Reviewed. STAFF REPORT TO COUNCIL Page 5 of 8

11 11 Appendix A Water Utility Operating Budget (Draft) 2017 to 2022 Operating Budget Water Utility Operations Operating Revenue Local Services Revenue 2017 Final Budget 2018 Draft Budget 2019 Forecast 2020 Forecast 2021 Forecast 2022 Forecast Sale of Services $ -62,778 $ -62,778 $ -63,284 $ -63,795 $ -64,312 $ -64,834 User Rates, Penalties & Levies -6,180,600-6,464,800-6,536,941-6,609,953-6,683,849-6,758,639 Investment Income -268, , , , , ,869 Recoveries -61,000-73,405-74,139-74,880-75,629-76,385-6,572,685-6,905,903-7,023,233-7,097,498-7,172,658-7,248,726 Regional Revenue Lease Revenue $ -12,140 $ -12,115 $ -12,115 $ -12,115 $ -12,115 $ -12,115 Miscellaneous Revenue -8,012-5,088-5,088-5,088-5,088-5,088-20,152-17,203-17,203-17,203-17,203-17,203 Total Operating Revenue $ -6,592,837 $ -6,923,106 $ -7,040,436 $ -7,114,701 $ -7,189,861 $ -7,265,929 Operating Expenditures & Transfers Local Services Expenses Administrative Cost Recovery $ 512,616 $ 527,795 $ 538,351 $ 549,118 $ 560,100 $ 571,302 Administrative Fee 941, ,655 1,005,368 1,025,475 1,045,985 1,066,905 Distribution System 728, , , , , ,044 Long-Term Debt ,183,575 2,307,998 2,354,157 2,401,241 2,449,265 2,498,251 Regional Expenses General Services $ 526,633 $ 581,762 $ 556,321 $ 569,163 $ 579,824 $ 590,727 Inspections 66,284 79,959 66,148 66,390 66,390 66,390 Lab Supplies, Sampling and Analysis 33,264 33,195 33,195 33,195 33,195 33,195 Maintenance 206, , , , , ,292 Treatment and Disinfection 56,330 56,214 56,214 56,214 56,214 56,214 Water Conservation 92,264 92,074 92,074 92,074 92,074 92,074 Utilities 126, , , , , ,772 Long-Term Debt ,107,168 1,264,079 1,196,721 1,214,166 1,229,673 1,245,664 Transfers to Reserves To Information Systems Reserve $ 30,110 $ 31,013 $ 31,944 $ 32,902 $ 33,889 $ 34,906 To Insurance Reserve 33,312 33,312 33,312 33,312 33,312 33,312 To Water Capital Reserve * 2,970,365 2,981,784 3,075,432 3,084,211 3,094,853 3,104,928 Interest Transferred to Reserves 268, , , , , ,869 3,302,094 3,351,030 3,489,557 3,499,294 3,510,923 3,522,015 Total Operating Expenditures & Transfers $ 6,592,837 $ 6,923,106 $ 7,040,435 $ 7,114,701 $ 7,189,861 $ 7,265, Actual/Projected Residential Flat-Rate Charge $494 $499 $504 $509 $514 $519 Actual/Projected Rate Increase 1% 1% 1% 1% 1% 1% * See summary of changes to transfer to Water Capital reserve next page STAFF REPORT TO COUNCIL Page 6 of 8

12 12 APPENDIX A Water Utility Operating Budget (Draft) Summary of Changes to 2018 Budget Revenue Changes New metered water residential customers (106,344) 1% rate increase in water rates for flat rate and metered customers (62,584) Increased consumption for industrial, commercial and institution metered customers (56,872) Increase in number of flat rate charges from new secondary dwelling (56,100) Investment income increase (offset below by transfer to reserves) (36,614) Increased to sale of services for local water distribution (14,705) Decrease to regional water distribution revenue 2,949 Subtotal - Revenue Changes (330,270) Expense Changes Increase to regional water distribution operating expenses 156,911 Increase to local water distribution operating expenses 80,765 Increase administrative cost recovery 43,657 Increase investment income transferred to reserves (offset above) 36,614 Increase transfer to information systems reserve 903 Subtotal - Expense Changes 318,850 Net Decrease to draft 2018 Water Operating Budget (11,420) Summary of Changes to Transfer to Water Capital Reserve Transfer to Water Capital Reserve Fund amount 2,970,365 Plus: Net Decrease to draft 2018 Water Operating Budget * 11,420 Proposed 2018 Transfer to Water Capital Reserve Fund 2,981,785 * Increase to the budget reduces the transfer to Water Capital Reserve Fund, decreases will increase the transfer to Water Capital Fund. STAFF REPORT TO COUNCIL Page 7 of 8

13 Appendix B WATER UTILITY CAPITAL PLAN (DRAFT) Local Water Utility Capital 13 LOCAL WATER UTILITY CAPITAL Total Pressure reducing station - Gill Avenue 160, ,680 Silverdale Fire Fighting Water Supply * 100, ,000 Bulk water supply to Wren/Highway 7 78,000 78,000 Third party work orders 100, , , , , , , , , , , , , , , , , , , ,000 2,000,000 Blowoff program 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11,698 11, ,950 Equipment - misc. 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 4,094 81,883 Flowmeters 16,488 16,488 16,488 16,488 65,952 Telemetry 18,599 18,599 37,198 Upgrading PRV 5,849 5,849 11,698 DCC review (see also #43077 & #98663) 22,500 17,500 23,625 18,375 24,806 19,294 26, ,147 Watermain condition assessment 100, ,000 Watermain replacement 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 11,000,000 Watermain upgrades (pressure related) 200, , , , ,000 Water model update (5-year cycle) 110, , , , ,000 Water Utility Master Plan (5-year cycle) 150, , , , ,000 Total Capital Projects 1,518,240 1,521,309 1,444,391 1,565,792 1,133,292 1,132,280 1,115,792 1,249,417 1,265,792 1,132,280 1,134, , , , , , , , , ,838 15,861,507 * Proposed addition to 2018, requiring Council approval Funding Sources Water Capital Reserve Fund 1,418,240 1,421,309 1,344,391 1,465,792 1,033,292 1,032,280 1,015,792 1,149,417 1,165,792 1,032,280 1,034,167 15, , ,086 15,792 15,792 35, , ,792 41,838 13,861,507 Recoveries 100, , , , , , , , , , , , , , , , , , , ,000 2,000,000 Total Funding Sources 1,518,240 1,521,309 1,444,391 1,565,792 1,133,292 1,132,280 1,115,792 1,249,417 1,265,792 1,132,280 1,134, , , , , , , , , ,838 15,861,507 18/10/2017

14 Appendix B WATER UTILITY CAPITAL PLAN (DRAFT) Regional Water Utility Capital 14 REGIONAL WATER UTILITY CAPITAL (Regional Cost) Total Contingency 500, ,000 Norrish WTP membrane replacement 1,484,000 2,404,000 1,923,000 5,811,000 Energy recovery facility 1,007,000 1,007,000 Pickup truck - JW214 33,000 33,000 Pickup truck 2 - JW207 24,000 24,000 Pickup truck 4 - JW208 25,000 25,000 Pickup truck 6 - JW215 28,000 28,000 Pickup truck 3 - JW216 21,000 21,000 Norrish Sand Filtration Replacement 738, ,000 Norrish WTP Dumper JW211 54,000 54,000 Norrish WTP Skimmer JW , ,000 Aging asset replacement 523,000 14,444, ,000 1,673,000 1,519,000 1,559,000 1,599,000 1,642,000 23,644,000 Aging asset replacement - Bell Road ammonia station 51,000 51,000 Aging asset replacement - Best PRV station 420, ,000 Aging asset replacement - Cannon's Pit ammonia station 46,000 46,000 Aging asset replacement - Downes Rd PRV station 49,000 49,000 Aging asset replacement - line valve chambers 409, ,000 Aging asset replacement - MacLure reservoir 270, ,000 Norrish Creek WTP lighting study to realize BCH efficiencies 25, , ,000 Norrish Creek WTP membrane tank lining 253, , ,000 Farmer 2 (upgrade or relocation) 568, ,000 Cannell Lake and Dickson Lake dams assessment/remedial works 375, ,000 Cannell Lake - Geotechnical Assessment and instrumentation 115, ,000 Wells infrastructure renewal - Marshall 1, 2, & 3 825, ,000 Bevan Wells EA Certificate amendment program 629, , , , ,978 1,344,890 Norrish Creek intake removal and gravel extraction 218, ,000 5,000 5,000 5,000 1,163,000 Norrish Creek increased maintenance 50,000 50,000 50,000 50,000 50, ,000 Co-op students 12,000 12,000 12,000 12,000 12,000 60,000 New project engineer 19,691 19,691 19,691 19,691 19,691 98,455 Seasonal staffing for water supply 56,000 56,000 56,000 56,000 56, ,000 Wells infrastructure renewal - Farmer 1, 2, & 3 1,120,000 1,120,000 Install Interconnect from Farmer Disinfection Station to Industrial Wells 445, ,000 Wells Infrastructure Renewal - Industrial A, B and C 482, ,000 Wells Infrastructure Renewal - Townline 1 & 2 1,145,000 1,145,000 Industrial A, Pine & Riverside wells (upgrade or relocation) 986, ,000 Install flow control and pressure sustaining valves at take-off points 5,974,000 5,974,000 Asset replacement - Cannell floating pump station #1 22,000 22,000 Asset replacement - MacLure cell #1 3,786,000 3,786,000 Asset replacement - MacLure cell #3 3,867,000 3,867,000 Total Capital Projects (Regional Cost) 3,260,669 3,888,669 3,286,669 1,490,669 2,163,669 20,418,000 2,404,000 1,007, ,605, ,000 1,673,000 3,786, ,923,000 1,519,000 1,559,000 1,599,000 1,642, ,910,345

15 Appendix B WATER UTILITY CAPITAL PLAN (DRAFT) Regional Water Utility Capital 15 REGIONAL WATER UTILITY CAPITAL (Mission's Share) 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% Total Contingency 121, ,150 Norrish WTP membrane replacement , , , ,408,005 Energy recovery facility , ,996 Pickup truck - JW214-7, ,996 Pickup truck 2 - JW , ,815 Pickup truck 4 - JW , ,058 Pickup truck 6 - JW , ,784 Pickup truck 3 - JW , ,088 Norrish Sand Filtration Replacement , ,817 Norrish WTP Dumper JW , ,084 Norrish WTP Skimmer JW , ,090 Aging asset replacement , ,499, , , , , , ,857-5,728,943 Aging asset replacement - Bell Road ammonia station 12, ,357 Aging asset replacement - Best PRV station - 101, ,766 Aging asset replacement - Cannon's Pit ammonia station - 11, ,146 Aging asset replacement - Downes Rd PRV station - 11, ,873 Aging asset replacement - line valve chambers 99, ,101 Aging asset replacement - MacLure reservoir - 65, ,421 Norrish Creek WTP lighting study to realize BCH efficiencies - 6,058 42, ,461 Norrish Creek WTP membrane tank lining - 61,302 41, ,220 Farmer 2 (upgrade or relocation) , ,626 Cannell Lake and Dickson Lake dams assessment/remedial works 90, ,863 Cannell Lake - Geotechnical Assessment and instrumentation 27, ,865 Wells infrastructure renewal - Marshall 1, 2, & 3 199, ,898 Bevan Wells EA Certificate amendment program 152,644 38,763 38,763 38,763 56, ,868 Norrish Creek intake removal and gravel extraction 52, ,339 1,212 1,212 1, ,796 Norrish Creek increased maintenance 12,115 12,115 12,115 12,115 12, ,575 Co-op students 2,908 2,908 2,908 2,908 2, ,540 New project engineer 4,771 4,771 4,771 4,771 4, ,855 Seasonal staffing for water supply 13,569 13,569 13,569 13,569 13, ,845 Wells infrastructure renewal - Farmer 1, 2, & 3-271, ,376 Install Interconnect from Farmer Disinfection Station to Industrial - 107, ,824 Wells Infrastructure Renewal - Industrial A, B and C , ,789 Wells Infrastructure Renewal - Townline 1 & , ,434 Industrial A, Pine & Riverside wells (upgrade or relocation) , ,908 Install flow control and pressure sustaining valves at take-off poin ,447, ,447,500 Asset replacement - Cannell floating pump station # , ,331 Asset replacement - MacLure cell # , ,348 Asset replacement - MacLure cell # , ,974 Total Capital Projects (Mission's Share) 790, , , , ,257 4,947, , ,996-1,115, , , , , , , , ,857-13,789,386 Funding Sources Water Capital Reserve Fund 790, , , , ,257 4,947, , , ,115, , , , , , , , , ,789,386 Total Funding Sources 790, , , , ,257 4,947, , , ,115, , , , , , , , , ,789,386

16 Appendix B WATER UTILITY CAPITAL PLAN (DRAFT) Regional Water Utility DCC Capital 16 REGIONAL WATER UTILITY DCC CAPITAL (Regional Cost) DCC Eligible Total Joint water master plan 50% 306, , ,000 1,049,000 Gladwin transmission main 100% 8,289,000 8,289,000 New watermain - Gladwin Road to Page Road 100% 11,465,000 11,465,000 Remove restriction at Clayburn Creek crossing 100% 1,320,000 1,320,000 New watermain - Bevan Wells to Maclure Reservoir 100% 5,147,000 5,147,000 Third river crossing 100% 24,613,000 24,613,000 Cedar Street main from Best Ave to Hwy 7 100% 8,153,000 8,153,000 New supply - planning, approvals, design 100% 1,000,000 1,000,000 Construction and engineering services (water source) 100% 51,200,000 51,200,000 Total Capital Projects (Regional Cost) 1,000,000 1,320,000 13,436,000 11,771,000-59,353,000-24,613, , , ,236,000 Mission's share of growth-related projects (DCC eligible portion) 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% 12.16% Mission's share of non-growth related projects (DCC ineligible portion) 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% 24.23% REGIONAL WATER UTILITY DCC CAPITAL (Mission's Share) DCC Eligible Total Joint water master plan 50% , , , ,865 Gladwin transmission main 100% - - 1,007, ,007,942 New watermain - Gladwin Road to Page Road 100% ,394, ,394,144 Remove restriction at Clayburn Creek crossing 100% - 160, ,512 New watermain - Bevan Wells to Maclure Reservoir 100% , ,875 Third river crossing 100% ,992, ,992,941 Cedar Street main from Best Ave to Hwy 7 100% , ,405 New supply - planning, approvals, design 100% 121, ,600 Construction and engineering services (water source) 100% ,225, ,225,920 Total Capital Projects (Mission's Share) 121, ,512 1,633,817 1,449,821-7,217,325-2,992,941 63, , ,711,204 Funding Sources Regional Water Supply DCC Reserve Fund RWDCC 120, ,907 1,617,479 1,398,622-7,145,152-2,963,012 20, , ,448,278 Water Capital Reserve Fund - Assist Factor (1%) WCRF 1,216 1,605 16,338 14,127-72,173-29, ,840 Water Capital Reserve Fund - Benefit to Existing Population WCRF , , , ,086 Total Funding Sources 121, ,512 1,633,817 1,449,821-7,217,325-2,992,941 63, , ,711,204

17 17 Appendix B WATER UTILITY CAPITAL PLAN (DRAFT) Cedar Valley Water Utility DCC Capital CEDAR VALLEY WATER UTILITY DCC CAPITAL Total Emiry - north of Laminman 74,250 74,250 Laminman - west of Cedar to Emiry 233, ,750 Rosetta - east of Cedar to Hammond 302, ,500 Egglestone - west of Cedar 561, ,000 Right-of-Way - DTR to east end of Rosetta 190, ,400 DTR - Ferndale to Cedar 780, ,000 DTR - Tunbridge to Ferndale 624, ,000 DTR - Tunbridge to Harms 670, ,800 Total Capital Projects 0 74, , , , , , , , ,436,700 Funding Sources Cedar Valley Water DCC Reserve Fund 0 73, , , , , , , , ,402,334 Water Capital Reserve Fund , ,708 2,337 3, ,904 6, , ,366 Total Funding Sources 0 74, , , , , , , , ,436,700

18 Appendix C UNFUNDED UTILITY CAPITAL PROJECTS 18 Project Description Priority Class 2018 Capital 2018 Operating 2019 Capital 2019 Operating 2020 Capital 2020 Operating 2021 Capital 2021 Operating 2022 Capital 2022 Operating Total Capital 5 Years Total Operating Notes Water Utility Capital Silverdale Fire Fighting Water Supply 2 - Safety concern 100,000 1, ,000 1,000 Installation of two proposed firefighting water supply points in Silverdale. All the remaining Silverdale residents that did not receive the insurance savings from the District's Superior Tanker Shuttle Service certification will now qualify for that coverage and the annual associated savings. There is a risk for the properties that are not within 5 km's of a water supply. Watermain System Upgrades for Fire flow Improvements - increase existing budget & extend period * 3 - Protect existing infrastructure 800, , , ,000 1,000,000 4,200,000 - Upgrade watermains and Pressure Reducing Valves for fire flow improvements. Providing enough water pressure during fire incidents is crucial. This also allows the new developments without having to provide relatively expensive private pumps. Current program has a budget of $200,000 for four years, 2018 to Recommending increase the budget to $1,000,000 for the next 9 years, 2018 to Subtotal - Water Utility Capital 900,000 1, , , , ,000, ,300,000 1,000 * Watermain system upgrades project will be added to the Water Utility Master Plan report due October, 2018, for review and prioritizing G:\FINANCE\BUDGET\Budget 2018\2018 Utilities Core Tab: Unfunded Utilities Capital 18/10/2017

19 19 Appendix D Historical and Proposed Water Utility User Rates (proposed) Flat Rate Single Family Residential $ $ $ $ $ $ Flat Rate Multi-family Residential (per unit) Meter Rate Residential (per cubic meter) Meter Rate Institutional, Commercial, Industrial (per cubic meter) $ $ $ $ $ $ $1.19 $1.21 $1.23 $1.24 $1.25 $1.26 $ $ $ $ $ $ Declining to (depending on consumption)* $ $ $ $ $ $ Percentage Increase over Previous Year 2% 2% 2% 1% 1% 1% * declining block rate, rate decreases as consumption increases STAFF REPORT TO COUNCIL Page 8 of 8

20 20 Finance Department Staff Report to Council File: DATE: October 23, 2017 TO: FROM: SUBJECT: ATTACHMENTS: Mayor and Council Kerri Onken, Deputy Treasurer/Collector 2018 Draft Sewer Utility Financial Plan Appendix A Sewer Utility Operating Budget (Draft) Appendix B Sewer Utility Capital Plan (Draft) Appendix C Historical and Proposed Sewer Utility User Rates RECOMMENDATIONS: Council consider and resolve: That the 2018 draft Sewer Utility Financial Plan and the proposed sewer user rate increase of 4% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, PURPOSE: The purpose of this report is to present the 2018 draft Sewer Utility Financial Plan, including proposed rate increases. BACKGROUND: As part of the District s annual financial planning process, staff have compiled a draft 2018 to 2022 Sewer Utility Financial Plan, long-term capital plan, and proposed rate increases. Included in this plan are the costs of operating and maintaining the District s local sanitary sewer conveyance system, as well as Mission s share of the JAMES Wastewater Treatment Plant (cost-shared with the City of Abbotsford). The regional financial plan is scheduled to be presented for consideration at the November 9, 2017 Joint Shared Services Committee (JSSC) meeting, after which staff will follow-up with details to Council. Since the draft regional sewer financial plan has not been finalized yet, amendments to the District s Sewer Utility Financial Plan may be required. In the meantime, staff have included the draft regional plan in the District s financial plan for Council s consideration. DISCUSSION AND ANALYSIS: 1. Operating Financial Plan (Appendix A) The 2018 draft sewer utility operating financial plan is attached as Appendix A, including a summary of the changes between the 2017 and 2018 plan. Significant changes to the operating financial plan for 2018 to maintain existing service levels include: Revenue: 1. $171,123 increase from proposed 4% rate increase; 2. $60,574 increase from new residential sewer customers (metered charges); 3. $29,460 increase in investment income (offset by transfer to reserves); 4. $18,403 increase consumption for commercial metered customers; 5. $12,000 increase from Secondary Dwelling Units (flat-rate charges); and 6. $43,052 decrease to the regional sewer revenue. Page 1 of 8

21 Expenses: 1. $80,063 increase in administrative cost charge from general operating fund; 2. $62,627 increase in wages, equipment replacement, contractual obligations and other operating impacts for the local water distribution system; 3. $29,460 increase in investment income transferred to reserves; and 4. $46,484 decrease in regional operating expenses. The net impact of these changes to the 2018 sewer utility operating budget results in an increase to the transfer to the sewer capital reserve fund of $121,349, up from $1.332 million to $1.453 million (see page 2 of Appendix A). No operating spending packages for the sewer utility are being requested for the 2018 budget. 2. Capital Plan (Appendix B) The District s draft sewer utility capital plan is attached as Appendix B. A summary of the next five years of the draft Sewer Utility Capital Plan follows: 21 CAPITAL PLAN Totals Sewer Capital - Local $ 1,501,599 $ 976,783 $ 443,730 $ 483,730 $ 351,230 $ 3,757,073 Sewer Capital - Regional 616,334 2,275,314 1,472,348 1,324,657 1,198,399 6,887,052 Regional Sewage Treatment DCC 11,106 32, ,289 1,009,823 60,343 1,311,584 Subtotal Sewer Utility Capital Plan $ 2,129,039 $ 3,284,120 $ 2,114,367 $ 2,818,210 $ 1,609,972 $ 11,955,709 The local Sewer Utility Capital Plan remains substantially the same as 2017, with the following exceptions: 1. The extension to the trunk main east from Wren St. to river crossing has been postponed to 2032; 2. Penitentiary pump station has increased by $108,000 to $626,000 based on the sanitary sewer model results and recent pump station upgrades; and 3. Replacement of Falcon Pump Station increased by $162,000 to $500,000 based on a recent upgrade to a similar pump stations in Hatzic and includes upgrades to electric panel and SCADA systems. This plan includes a previously approved $304,135 annual investment from the Sewer Capital Reserve Fund on an ongoing basis to assess and replace the District s aging sewer mains. The District continues to develop a comprehensive asset management program, and staff are currently implementing asset management software. This system will allow for projecting multi-decade capital funding needs, based on the life-cycle analysis of assets. The information provided is required to develop a more comprehensive capital plan for the District s sewer utility, however in the meantime the annual budget of $304,135 for sewer main assessment and replacement is earmarked for any immediate pipe replacements that are required. For regional sewer utility capital plan, comprehensive estimates of asset replacement costs for the current system are included in the financial plan. The plan has a net increase of $339,000 (Mission s share) over the 2017 plan with changes due to updated costing, shifting of projects and a few projects added. 3. Regional Financial Plan The regional financial plan is scheduled to be presented for consideration at the November 9, 2017 Joint Shared Services Committee (JSSC) meeting, after which staff will follow-up with details to Council. Since the draft regional sewer financial plan has not been finalized yet, amendments to the District s Sewer Utility Financial Plan may be required. In the meantime, staff have included the draft regional plan in the District s financial plan for Council s consideration. STAFF REPORT TO COUNCIL Page 2 of 8

22 4. Reserve Projections Based on the financial plan as presented in this report, the following table shows projected year-end reserve balances in the sewer utility: 22 Projected Reserve Fund Balances Sewer Capital Reserve Fund $ 11,226,892 $ 9,860,500 $ 9,786,431 $ 9,499,921 $ 10,142,164 Sewer Operating Accumulated Surplus 851, , , , ,705 DCC Reserve Funds 1,295,803 2,683,887 4,068,539 4,495,728 5,378,114 Sewer Utility Fund Totals $ 13,374,208 $ 13,412,931 $ 14,740,884 $ 14,899,281 $ 16,441,984 The sewer utility reserve projections shown in the above table reflect a strong financial position in the near future, but this is significantly reduced over the next 10 years due primarily to ongoing capital maintenance and replacement of infrastructure at the JAMES Wastewater Treatment Plant and the second river crossing project. Furthermore, information is currently lacking on the full extent of the costs to maintain and replace the District s existing sewer infrastructure. As new information becomes available during the development of the District s comprehensive asset management program over the next few years, increases in the Sewer Utility Capital Plan will likely be required. The ongoing financial impact of maintaining and replacing sewer utility infrastructure requires increasing annual transfers to capital reserve levels through ongoing rate increases in the coming years, in order to ensure the financial sustainability of the sewer utility. 5. External Debt The sewer utility has been entirely free of external debt since December As a result of capital reserves built up over the past number of years, the Sewer Utility Financial Plan does not anticipate any further external debt at this time. 6. Internal Debt Internal debt is the result of loans made from the Sewer Capital Reserve Fund to various sewer utility DCC reserves. Repayment of these internal debts is dependent on DCCs collected during the year, as well as the need to proceed with additional DCC projects to support growth in advance of collecting the related DCCs. As at December 31, 2016, the outstanding internal debt in the sewer utility totals $1,797,047, which is lower than $1,988,810 in the prior year. There are currently no new internal loans anticipated in the Sewer Utility Financial Plan, and the existing loans are being paid down annually based on DCC collections during the year. Any DCC projects that are required to occur before the internal loans are fully paid off are likely to delay the repayment of internal loans. Internal debt is generally preferable to external debt, because instead of interest being paid to an external party, the interest is paid internally to other reserves within the District. 7. Regional Cost Sharing Mission s estimated share of the regional sewer utility costs for 2018, based on actual and projected sewer flows in each community, are as follows: Operating costs 21.22% (estimated) Non-growth-related capital costs 21.22% (estimated) Growth-related capital costs 15.80% STAFF REPORT TO COUNCIL Page 3 of 8

23 The final cost sharing for 2018 operating and non-growth-related capital costs is dependent upon each community s actual sewer flows for the 2017 calendar year, therefore will not be available until early While this may have an impact on the 2018 budget, the amount is expected to be minimal. For growth-related projects, the cost sharing percentage is based on estimated growth in sewage flows and strength. Any deviation from estimated growth will result in a future transfer of costs between the municipalities to compensate for the difference, as per the approved cost-sharing methodology. 8. Rate Recommendations In order to maintain sufficient balances in the sewer capital reserves to fund significant ongoing capital maintenance and replacement of the local sewage conveyance system and at the JAMES Wastewater Treatment Plant, and to keep pace with increasing costs, staff proposes a 4% rate increase in sewer user fees in 2018, and have included 4% increases annually thereafter in the financial plan for forecasting purposes. This is consistent with the ongoing annual rate increases that were proposed in the 2017 Sewer Utility Financial Plan. A 4% increase in annual sewer user rates equals approximately $16 for a single-family residential property that pays flat-rate sewer utility charges, which make up the vast majority of the sewer utility users. A 4% increase in annual sewer user rates equals approximately $14 for a multi-family residential property that pays flat-rate sewer utility charges. The following graph shows a 5-year history of sewer user rates for single family residential flat-rate customers, including the proposed 4% rate increase for 2018: Sewer User Rate History 23 $354 $361 $368 $383 $398 $ In addition to the flat rate user fee increase, staff propose a 4% increase to the residential meter rate bringing the fee up to $ per cubic meter and a 4% increase to the declining block rates for institutional, commercial and industrial metered customers. Appendix C provides further details on the proposed sewer user rates, including metered rates. FINANCIAL IMPLICATIONS: The financial implications of the draft Sewer Utility Financial Plan are discussed throughout this report. COMMUNICATION: Highlights of the District s financial plan, including reserve projections and proposed rate increases, will be communicated at the upcoming public budget consultation meeting on November 20, STAFF REPORT TO COUNCIL Page 4 of 8

24 SUMMARY AND CONCLUSION: This report presents the draft 2018 Sewer Utility Financial Plan, including proposed rate increases. The sewer utility is currently free of external debt, and the proposed plan does not currently anticipate any further internal or external borrowing. The sewer utility capital reserves continue to maintain a very strong financial position, although further information is required to determine the ongoing investment required to maintain and replace aging sewer utility infrastructure. In order to keep pace with cost increases and continue to build up capital reserves to support maintenance and replacement of the local sewage conveyance system and at the JAMES Wastewater Treatment Plant, staff proposes a 4% annual rate increase for the 2018 financial plan. SIGN-OFFS: 24 Kerri Onken, Deputy Treasurer/Collector Reviewed by: Kris Boland, Director of Finance Reviewed by: Tracy Kyle, Director of Engineering & Public Works Comment from the Chief Administrative Officer: Reviewed STAFF REPORT TO COUNCIL Page 5 of 8

25 25 Sewer Utility Operations Operating Revenue Local Services Revenue Appendix A Sewer Utility Operating Budget (Draft) 2017 to 2022 Operating Budget 2017 Final Budget 2018 Draft Budget 2019 Forecast 2020 Forecast 2021 Forecast 2022 Forecast Sale of Services $ -66,231 $ -66,231 $ -67,054 $ -67,892 $ -68,747 $ -69,620 Local Improvement Levies -44,791-44,801-44,801-44,801-44,801-44,801 User Rates & Levies -4,191,500-4,453,000-4,638,150-4,831,058-5,032,050-5,241,470 Investment Income -209, , , , , ,496-4,511,558-4,802,528-4,988,500-5,182,246-5,384,095-5,594,387 Regional Revenue Disposal Fees $ -14,016 $ -12,732 $ -12,732 $ -12,732 $ -12,732 $ -12,944 Industrial Surcharge -292, , , , , ,072 Sumas System Contribution -20, , , , , , ,016 Total Operating Revenue $ -4,837,897 $ -5,085,815 $ -5,271,787 $ -5,465,533 $ -5,667,382 $ -5,883,403 Operating Expenditures & Transfers Local Services Expenses Administrative Cost Recovery $ 473,472 $ 505,240 $ 515,345 $ 525,652 $ 536,165 $ 546,888 Administrative Fee 905, ,926 1,005,645 1,025,757 1,046,273 1,067,198 Conveyance System 573, , , , , ,667 1,952,363 2,095,053 2,136,954 2,179,693 2,223,287 2,267,753 Regional Expenses General Plant Maintenance $ 73,117 $ 72,148 $ 72,997 $ 73,846 $ 74,694 $ 77,029 General Services 328, , , , , ,438 Wastewater Treatment Operations 628, , , , , ,566 Biosolids Management 115, , , , , ,161 Wastewater Testing and Analysis 135, , , , , ,198 1,281,063 1,234,579 1,222,696 1,239,461 1,277,655 1,297,392 Transfers to Reserves To Information Systems Reserve $ 30,110 $ 31,013 $ 31,944 $ 32,902 $ 33,889 $ 34,906 To Insurance Reserve 33,312 33,312 33,312 33,312 33,312 33,312 To Sewer Capital Reserve * 1,332,013 1,453,362 1,608,385 1,741,669 1,860,744 2,011,548 Interest Transferred to Reserves 209, , , , , ,496 1,604,471 1,756,183 1,912,137 2,046,379 2,166,441 2,318,262 Total Operating Expenditures & Transfers $ 4,837,897 $ 5,085,815 $ 5,271,787 $ 5,465,533 $ 5,667,383 $ 5,883, Actual/Projected Residential Flat-Rate Charge $398 $414 $431 $448 $466 $484 Actual/Projected Rate Increase 4% 4% 4% 4% 4% 4% * See summary of changes to transfer to Sewer Capital reserve next page STAFF REPORT TO COUNCIL Page 6 of 8

26 26 APPENDIX A Sewer Utility Operating Budget (Draft) Summary of Changes to 2018 Budget Revenue Changes: 4% rate increase in sewer rates for flat rate and metered customers (171,123) New metered water residential customers (60,574) Investment income increase (offset below by transfer to reserves) (29,460) Increased consumption for industrial, commercial and institution metered customers (18,403) Increase in number of flat rate charges from new secondary dwelling (12,000) Decrease in local sewer collection revenue 590 Decrease in regional sewer collection revenue 43,052 Subtotal - Revenue Changes (247,918) Expense Changes: Increase administrative cost recovery 80,063 Increase to local sewer collection operating expenses 62,627 Increase investment income transferred to reserves (offset above) 29,460 Increase transfer to information systems reserve 903 Decrease to regional sewer collection operating expenses (46,484) Subtotal - Expense Changes 126,569 Net (Decrease) to draft 2018 Sewer Operating Budget (121,349) Summary of Changes to Transfer to Sewer Capital Reserve Transfer to Sewer Capital Reserve Fund amount 1,332,013 Plus: Net Decrease to draft 2018 Sewer Operating Budget * 121,349 Proposed 2018 Transfer to Sewer Capital Reserve Fund 1,453,362 * Increase to the budget reduces the transfer to Sewer Capital Reserve Fund, decreases will increase the transfer to Sewer Capital Fund. STAFF REPORT TO COUNCIL Page 7 of 8

27 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Local Sewer Utility Capital 27 LOCAL SEWER UTILITY CAPITAL Total Extend trunk main east from Wren to river crossing 3,077,500 3,077,500 Sewer condition assessment/replacement 304, , , , , , , , , , , , , , , , , , , ,135 6,082,702 Penitentiary pump station/gravity main upgrade 626, ,000 Replacement of Falcon Pump Station 500, ,000 Equipment - misc. 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5,615 5, ,305 Mission Way pump station - replace pumps 35,093 35,093 Lougheed Highway pump station - replace pumps 40,941 40,941 Lift station upgrading 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5,849 5, ,975 SCADA monitoring 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18,131 18, ,491 DCC review (see also #43077 & #93005) 22,500 17,500 22,500 17,500 22,500 17,500 22, ,500 Flusher truck 620, ,553 Sanitary sewer model update (5-year cycle) 110, , , , ,000 Sanitary sewer master plan (5-year cycle) 60, , , , , ,000 Total Capital Projects 1,501, , , , , , , , , , , , , ,230 3,411, , , , , ,230 12,799,060 Funding Sources Sewer Capital Reserve Fund 1,501, , , , , , , , , , , , , ,230 3,411, , , , , ,230 12,799,060 Total Funding Sources 1,501, , , , , , , , , , , , , ,230 3,411, , , , , ,230 12,799,060

28 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewer Utility Capital 28 REGIONAL SEWER UTILITY CAPITAL (Regional Cost) Total Odour, Replace biofilter media 280, , , ,000 1,435,000 General, replace cover on biosolids storage tent (green) (15 year cycle) 62,000 92, ,000 General, Replace building roofs 63,000 68,000 74,000 80,000 86,000 93, , , ,000 Refurbish centrifuges 120,000 65,000 70, ,000 General, replace blue tent 31,000 31,000 Solids, removal of belt filter presses 84,000 84,000 Solids, clean and repair digester #1 1,289,000 1,671,000 2,960,000 Odour, downdraft trickling filter #1 and #2 study 77,000 77,000 Headworks, relocate hydrocyclone #1 and add hydrocyclone #2 to BFP room 206, ,000 Primary, upgrade and relocate scum dewatering system 320, ,000 General, upgrade bypass pipe from PST to disinfection channel 1,076,000 1,076,000 Solids, replace WBS thickener #1 227, ,000 Solids, cleaning and repair digester #2 1,323,000 1,715,000 3,038,000 Odour control for pasteurization tank #2 3,163,000 3,163,000 Disinfection, add UV disinfection to channel #1 1,942,000 1,942,000 General, asset replacement, grit tanks #1 and 2 - misc 253, ,000 General, asset replacement, Clarifier #2 process mechanism and valve 978, ,000 General, asset replacement, misc - septage receiving equipment 1,425,000 1,425,000 General, asset replacement, central HVAC systems in screenings area 460, ,000 General, asset replacement, North-South gallery - misc. 230, ,000 General, asset replacement, sedimentation tank #4-7 influent gates 277, ,000 General, asset replacement, TF#1 misc 230, ,000 General, asset replacement, TF#1 ventilation fans and ducting 467, ,000 General, asset replacement, misc - raw sludge pumps, primary effluent 811, ,000 General, asset replacement, sed tank #1 collector drive and mechanism 236, ,000 General, asset replacement, sed tank #2 collector drive and mechanism 236, ,000 General, asset replacement, misc 332, , , , , ,000 9,398,000 10,213,000 11,805,000 3,536,000 1,731,000 40,090,000 General, asset replacement, PEP station #1 - misc 177, ,000 General, asset replacement, digester #2 misc 4,082,000 4,082,000 General, asset replacement, misc - primary effluent pumps, lab 145,000 1,342,000 1,487,000 General, asset replacement, influent screw pump #2 594, ,000 General, asset replacement, clarifier #4 process mechanism 1,057,000 1,057,000 General, asset replacement, influent screw pumps #1, 2 - electrical misc 746, ,000 General, asset replacement, influent screw pump #1 594, ,000 General, asset replacement, waste sludge thickener 311, ,000 General, asset replacement, boiler #2 616, ,000 General, asset replacement, boiler #2 - electrical misc 249, ,000 General, asset replacement, sed tank #4 - misc 255, ,000 General, asset replacement, biofilter blowers 255, ,000 General, asset replacement, TF#2 media 3,165,000 3,165,000 General, asset replacement, TF#2 misc 255, ,000 General, asset replacement, misc - primary effluent pump, biofilter 857, ,000 General, asset replacement, digester #1 - structural 1,831,000 1,831,000 General, asset replacement, influent channel 590, ,000 General, asset replacement, sed tank #4 & 5 - collector drive and mechanism 262, ,000 General, asset replacement, sed tank #6 & 7 - collector drive and mechanism 262, ,000 General, asset replacement, TF#2 ventilation fans and ducting 531, ,000 General, asset replacement, north-south gallery - structural 1,963,000 1,963,000 General, asset replacement, disinfection system 1,343,000 1,343,000 General, asset replacement, digester #2 structural 1,878,000 1,878,000 General, asset replacement, headworks screen #2 337, ,000 General, asset replacement, SCT #1 aeration system and misc 514, ,000 General, asset replacement, SCT #2 aeration system and misc 514, ,000 General, asset replacement, diesel emergency backup generator 672, ,000 General, asset replacement, misc - splitter box #1, 2, 3 gates, influent 1,161,000 1,161,000 General, asset replacement, TF#1 - structural 5,648,000 5,648,000 General, asset replacement, clarifier #1 - structural 887,000 2,625,000 3,512,000 General, asset replacement, JWC screenings convenyor and compactor 275, ,000 General, asset replacement, clarifier #3 misc 139, ,000 General, asset replacement, effluent pump station - structural 708, ,000 General, asset replacement, clarifier #2 - structural 3,534,000 3,534,000 General, asset replacement, siloxane system 246, ,000 General, asset replacement, outfall pipe 6,264,000 6,264,000

29 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewer Utility Capital 29 General, asset replacement, primary gallery incl. influent channel 726,000 3,057,000 3,783,000 General, asset replacement, biofilter tent - structural 204, ,000 General, asset replacement, screenings and chemical feed building 4,381,000 3,911,000 8,292,000 General, asset replacement, grit tank #1 - structural 519, ,000 General, asset replacement, grit tank #2 - structural 519, ,000 General, asset replacement, diesel generator sound proof cover 299, ,000 General, asset replacement, septage station - misc 1,102,000 1,102,000 General, asset replacement, influent screw pump #3 732, ,000 General, asset replacement, influent screw pumps #3 & 4 - electrical misc 918, ,000 General, asset replacement, road/hardstand 2,354,000 2,354,000 General, asset replacement, biosolids storage tent - structural 146, ,000 General, asset replacement, TF#2 - structural 4,860,000 4,860,000 General, asset replacement, clarifier #1 - yard piping and valves 785, ,000 General, asset replacement, SCT#1 - structural 1,178,000 1,178,000 General, asset replacement, TF#1 yard piping 471, ,000 General, asset replacement, centrifuge #1 1,548,000 1,548,000 General, asset replacement, centrifuge #2 1,548,000 1,548,000 General, asset replacement, centrifuge misc 1,002,000 1,002,000 General, asset replacement, biosolids room - electrical misc 765, ,000 General, asset replacement, boiler #1 761, ,000 General, asset replacement, engine room - electrical misc 322, ,000 General, asset replacement, sed tank #3 collector drive and mechanism 322, ,000 General, asset replacement, east-west gallery - structural 1,773,000 1,773,000 General, asset replacement, grit tank #3 - structural 583, ,000 General, asset replacement, generating engine #1 1,488,000 1,488,000 General, asset replacement, disinfection channel 2,627,000 2,627,000 General, asset replacement, clarifier #2 yard piping and valves 827, ,000 Trickling filter #1 media (3 cells) 1,300,000 1,300,000 1,334,000 3,934,000 Digester #3 floating cover 2,583,000 2,583,000 Digester #3 misc 2,112,000 2,599,000 2,897,000 9,534,000 17,142,000 Digester #1 misc 3,978,000 3,978,000 Digester #1 floating cover 1,433,000 1,433,000 Digester #2 floating cover 1,470,000 1,470,000 General, densification of existing site 18,895,000 18,895,000 Replace cover on biosolids (large white) tent (15 year cycle) 137, ,000 Replace cover on biosolids (small white) tent (15 year cycle) 96,000 96,000 Replace odor control and biofilter tent cover 66,000 66,000 Contingency 500, ,000 Solids contact tank cleaning and diffuser replacement 227, , , ,000 Odour, Odour control of headworks area 1,156,000 1,156,000 Pickup truck #2 (10 year cycle) JS305 25,000 25,000 General, source control monitoring pickup truck #3 (10 year cyc 29,000 29,000 Environmental Tech vehicle (10 year cycle) JS202 26,000 26,000 Environmental Tech vehicle (10 year cycle) JS304 26,000 26,000 Primary, add water-tight isolation gate 514, ,000 General, Misc repairs to concrete tanks and channels 528, , , , , , , , , , , , , , , , , , , , ,000 14,030,000 Condition assessment - JAMES plant assets 211, , , , ,000 1,389,000 Solids, cleaning and repair digester #3 2,775,000 3,597,000 6,372,000 Solids, refurbish pasteurization tanks 600, , ,000 2,055,000 Secondary, add isolation valves to clarifiers #1 & #2 671, ,000 Secondary, install filter fly spray system 415, ,000 Secondary, study to relocate walkway on top of TF 22,000 22,000 New Utilities Planning Engineer (1 FTE - JAMES Plant portion) 32,802 32,802 32,802 32,802 32, ,010 New Project Engineer (1 FTE - JAMES Plant Portion) 19,692 19,692 19,692 19,692 19,692 98,460 Odour, Recirculation Foul Air Piping to TF#1/#2 2,144,000 2,144,000 Odour, Improve Pasteurization Tank Odour system 1,171,000 1,171,000 Total Capital Projects (Regional Cost) 2,904,494 10,722,494 6,938,494 6,242,494 5,647,494 8,557,000 11,601,000 9,951,000 11,775,000 29,256,000 12,211,000 11,671,000 8,841,000 9,159,000 9,313,000 11,012,000 12,121,000 15,332,000 12,494,000 14,893,000 5,664, ,000 1,839, , ,315,

30 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewer Utility Capital 30 REGIONAL SEWER UTILITY CAPITAL (Mission's Share) 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% Total Odour, Replace biofilter media , , , , ,506 General, replace cover on biosolids storage tent (green) (15 yea , , ,678 General, Replace building roofs - 13, , , , , , , , ,812 Refurbish centrifuges , , , ,111 General, replace blue tent , ,578 Solids, removal of belt filter presses - 17, ,825 Solids, clean and repair digester # , , ,112 Odour, downdraft trickling filter #1 and #2 study , ,339 Headworks, relocate hydrocyclone #1 and add hydrocyclone #2-43, ,713 Primary, upgrade and relocate scum dewatering system - 67, ,904 General, upgrade bypass pipe from PST to disinfection channel , ,327 Solids, replace WBS thickener #1-48, ,169 Solids, cleaning and repair digester # , , ,664 Odour control for pasteurization tank # , ,189 Disinfection, add UV disinfection to channel # , ,092 General, asset replacement, grit tanks #1 and 2 - misc - 53, ,687 General, asset replacement, Clarifier #2 process mechanism an - 207, ,532 General, asset replacement, misc - septage receiving equipmen - 302, ,385 General, asset replacement, central HVAC systems in screening - 97, ,612 General, asset replacement, North-South gallery - misc. - 48, ,806 General, asset replacement, sedimentation tank #4-7 influent g - 58, ,779 General, asset replacement, TF#1 misc 48, ,806 General, asset replacement, TF#1 ventilation fans and ducting - 99, ,097 General, asset replacement, misc - raw sludge pumps, primary - 172, ,094 General, asset replacement, sed tank #1 collector drive and me , ,079 General, asset replacement, sed tank #2 collector drive and me , ,079 General, asset replacement, misc , , , , , , ,994,256 2,167,199 2,505, , , ,507,099 General, asset replacement, PEP station #1 - misc , ,559 General, asset replacement, digester #2 misc , ,200 General, asset replacement, misc - primary effluent pumps, lab 30, , ,541 General, asset replacement, influent screw pump # , ,047 General, asset replacement, clarifier #4 process mechanism , ,295 General, asset replacement, influent screw pumps #1, 2 - electr , ,301 General, asset replacement, influent screw pump # , ,047 General, asset replacement, waste sludge thickener , ,994 General, asset replacement, boiler # , ,715 General, asset replacement, boiler #2 - electrical misc , ,838 General, asset replacement, sed tank #4 - misc , ,111 General, asset replacement, biofilter blowers , ,111 General, asset replacement, TF#2 media , ,613 General, asset replacement, TF#2 misc , ,111 General, asset replacement, misc - primary effluent pump, biof , ,855 General, asset replacement, digester #1 - structural , ,538 General, asset replacement, influent channel , ,198 General, asset replacement, sed tank #4 & 5 - collector drive an , ,596 General, asset replacement, sed tank #6 & 7 - collector drive an , ,596 General, asset replacement, TF#2 ventilation fans and ducting , ,678 General, asset replacement, north-south gallery - structural , ,549 General, asset replacement, disinfection system , ,985 General, asset replacement, digester #2 structural , ,512 General, asset replacement, headworks screen # , ,511 General, asset replacement, SCT #1 aeration system and misc , ,071 General, asset replacement, SCT #2 aeration system and misc , ,071 General, asset replacement, diesel emergency backup generato , ,598 General, asset replacement, misc - splitter box #1, 2, 3 gates, in , ,364 General, asset replacement, TF#1 - structural ,198, ,198,506 General, asset replacement, clarifier #1 - structural , , ,246 General, asset replacement, JWC screenings convenyor and com , ,355 General, asset replacement, clarifier #3 misc , ,496 General, asset replacement, effluent pump station - structural , ,238 General, asset replacement, clarifier #2 - structural , ,915 General, asset replacement, siloxane system , ,201

31 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewer Utility Capital 31 General, asset replacement, outfall pipe ,329, ,329,221 General, asset replacement, primary gallery incl. influent chann , , ,752 General, asset replacement, biofilter tent - structural , ,289 General, asset replacement, screenings and chemical feed build , , ,759,562 General, asset replacement, grit tank #1 - structural , ,132 General, asset replacement, grit tank #2 - structural , ,132 General, asset replacement, diesel generator sound proof cove , ,448 General, asset replacement, septage station - misc , ,844 General, asset replacement, influent screw pump # , ,330 General, asset replacement, influent screw pumps #3 & 4 - elec , ,800 General, asset replacement, road/hardstand , ,519 General, asset replacement, biosolids storage tent - structural , ,981 General, asset replacement, TF#2 - structural ,031, ,031,292 General, asset replacement, clarifier #1 - yard piping and valves , ,577 General, asset replacement, SCT#1 - structural , ,972 General, asset replacement, TF#1 yard piping , ,946 General, asset replacement, centrifuge # , ,486 General, asset replacement, centrifuge # , ,486 General, asset replacement, centrifuge misc , ,624 General, asset replacement, biosolids room - electrical misc , ,333 General, asset replacement, boiler # , ,484 General, asset replacement, engine room - electrical misc , ,328 General, asset replacement, sed tank #3 collector drive and me , ,328 General, asset replacement, east-west gallery - structural , ,231 General, asset replacement, grit tank #3 - structural , ,713 General, asset replacement, generating engine # , ,754 General, asset replacement, disinfection channel , ,449 General, asset replacement, clarifier #2 yard piping and valves , ,489 Trickling filter #1 media (3 cells) 275, , , ,795 Digester #3 floating cover , ,113 Digester #3 misc - 448, , , ,023, ,637,532 Digester #1 misc , ,132 Digester #1 floating cover , ,083 Digester #2 floating cover , ,934 General, densification of existing site ,009, ,009,519 Replace cover on biosolids (large white) tent (15 year cycle) , ,071 Replace cover on biosolids (small white) tent (15 year cycle) , ,371 Replace odor control and biofilter tent cover , ,005 Contingency 106, ,100 Solids contact tank cleaning and diffuser replacement , , , ,702 Odour, Odour control of headworks area , ,303 Pickup truck #2 (10 year cycle) JS , ,305 General, source control monitoring pickup truck #3 (10 year cyc 6, ,154 Environmental Tech vehicle (10 year cycle) JS202 5, ,517 Environmental Tech vehicle (10 year cycle) JS , ,517 Primary, add water-tight isolation gate - 109, ,071 General, Misc repairs to concrete tanks and channels - 112, , , , , , , , , , , , , , , , , , , ,553 78, ,977,167 Condition assessment - JAMES plant assets , , , , , ,746 Solids, cleaning and repair digester # , , ,352,138 Solids, refurbish pasteurization tanks 127, , , ,071 Secondary, add isolation valves to clarifiers #1 & # , ,386 Secondary, install filter fly spray system - 88, ,063 Secondary, study to relocate walkway on top of TF 4, ,668 New Utilities Planning Engineer (1 FTE - JAMES Plant portion) 6,961 6,961 6,961 6,961 6, ,805 New Project Engineer (1 FTE - JAMES Plant Portion) 4,179 4,179 4,179 4,179 4, ,895 Odour, Recirculation Foul Air Piping to TF#1/# , ,957 Odour, Improve Pasteurization Tank Odour system , ,486 Total Capital Projects (Mission's Share) 616,334 2,275,314 1,472,348 1,324,657 1,198,399 1,815,795 2,461,731 2,111,602 2,498,656 6,208,124 2,591,174 2,476,586 1,876,060 1,943,540 1,976,219 2,336,746 2,572,077 3,253,450 2,651,227 3,160,295 1,201,900 78, , ,760-48,660, Funding Sources Sewer Capital Reserve Fund 616,334 2,275,314 1,472,348 1,324,657 1,198,399 1,815,795 2,461,731 2,111,602 2,498,656 6,208,124 2,591,174 2,476,586 1,876,060 1,943,540 1,976,219 2,336,746 2,572,077 3,253,450 2,651,227 3,160,295 1,201,900 78, , ,760-48,660,744 Total Funding Sources 616,334 2,275,314 1,472,348 1,324,657 1,198,399 1,815,795 2,461,731 2,111,602 2,498,656 6,208,124 2,591,174 2,476,586 1,876,060 1,943,540 1,976,219 2,336,746 2,572,077 3,253,450 2,651,227 3,160,295 1,201,900 78, , ,760-48,660,744

32 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewage Treatment DCC Capital 32 REGIONAL SEWAGE TREATMENT DCC CAPITAL (Regional Cost) DCC Eligible Total Secondary, Add TF/SC unit #3 100% 20,449,000 20,449,000 Electrical SCADA upgrades 50% 60, , , , , , , , ,000 2,845,000 Influent, Add #4 screw pump 47% 1,012,000 1,012,000 AMWSC Wastewater System Master Plan 50% 306, , , , ,000 2,012,000 Solids, add digester #4 100% 1,632,000 6,701,000 8,333,000 Secondary, add pump #2 to PEP station #2 100% 623, ,000 Secondary, add pump #3 to PEP station #2 100% 787, ,000 Centrate, add 8 cells centrate bioreactor 47% 4,191,000 4,191,000 Solids, add pasteurization system #2 100% 9,074,000 9,074,000 Odour, cover #1 to #2 TF and ducting 50% 13,258,000 13,258,000 Odour, add odour scrubber 100% 3,102,000 3,102,000 Electrical, add 500 kw standby generator #2 47% 539, ,000 Solids, add centrifuge #3 and extend dewatering building 100% 5,294,000 5,294,000 Headworks, add screen #4 and washer compactor 100% 751, ,000 Headworks, add grit tank #4 & #5 100% 1,010,000 1,010,000 Secondary, add 1 pump to RBS pump station #3 100% 884, ,000 Electrical, add 500 kw standby generator #3 47% 699, ,000 Secondary, Add secondary clarifier #5 100% 5,308,000 5,308,000 Effluent, twin existing river section of outfall 100% 6,928,000 6,928,000 Primary, Add #8 and #9 primary sedimentation tanks 47% 8,765,000 8,765,000 Odour, Odour (H2S) Audit - moved from general 50% 56,000 59,000 62,000 65,000 69,000 73,000 76,000 81,000 85,000 89,000 94,000 99, ,000 General allowance for boreholes drilling for west expansion are 100% 59,000 59,000 General, Fill in Half of the West Lagoon - moved from general 100% 3,781,000 3,781,000 General, remove sludge from West Lagoon - moved from gener 50% 630, ,000 Electrical, Add electrical feeder line #2 - moved from general 47% 1,002,000 1,002,000 Odour, cover #1 to #7 primary tanks and ducting 50% 3,529,000 3,529,000 Odour, Cover #3 TF and ducting 50% 6,891,000 6,891,000 Secondary, Add Pump #4 to PEP Station #2 100% 895, ,000 General, Densification of the West Expansion Area 100% 13,952,000 13,952,000 Odour, Cover #8 to #9 primary tanks and ducting 50% 1,064,000 1,064,000 Odour, Cover Centrate Tanks #1 to #8 50% 1,528,000 1,528,000 Solids, Add Digester #5 100% 2,791,000 11,454,000 14,245,000 Odour, Odour Control for Trickling Filter #4 100% 7,501,000 7,501,000 Secondary, Add TF/SC unit #4 100% 22,502,000 22,502,000 Total Capital Projects (Regional Cost) 60, ,000 1,071,000 5,414, ,000 62,000 1,978,000 65,000 1,099,000 4,853,000 19,471,000 19,894,000 5,695,000 1,170,000 1,002,000 21,751,000-3,187,000 14,178,000 3,618,000 7,786,000 19,429,000 41,457, , ,283,000

33 Appendix B SEWER UTILITY CAPITAL PLAN (DRAFT) Regional Sewage Treatment DCC Capital 33 Mission's Share of Growth Related Projects - FLOW (DCC eligible portion) 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% Mission's Share of Growth Related Projects - LOAD (DCC eligible portion) 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% 15.80% Mission's Share of Non-Growth Related Projects (DCC ineligible portion) 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% 21.22% REGIONAL SEWAGE TREATMENT DCC CAPITAL (Mission's Share) DCC Eligible Total Secondary, Add TF/SC unit #3 100% ,230, ,230,942 Electrical SCADA upgrades 50% 11,106 21,657-59,047 60,343-63, , , , , ,610 Influent, Add #4 screw pump 47% , ,967 AMWSC Wastewater System Master Plan 50% , , , , , ,422 Solids, add digester #4 100% ,856 1,058, ,316,614 Secondary, add pump #2 to PEP station #2 100% , ,434 Secondary, add pump #3 to PEP station #2 100% , ,346 Centrate, add 8 cells centrate bioreactor 47% , ,569 Solids, add pasteurization system #2 100% ,433, ,433,692 Odour, cover #1 to #2 TF and ducting 50% ,454, ,454,056 Odour, add odour scrubber 100% , ,116 Electrical, add 500 kw standby generator #2 47% , ,645 Solids, add centrifuge #3 and extend dewatering building 100% , ,452 Headworks, add screen #4 and washer compactor 100% , ,658 Headworks, add grit tank #4 & #5 100% , ,580 Secondary, add 1 pump to RBS pump station #3 100% , ,672 Electrical, add 500 kw standby generator #3 47% , ,522 Secondary, Add secondary clarifier #5 100% , ,664 Effluent, twin existing river section of outfall 100% ,094, ,094,624 Primary, Add #8 and #9 primary sedimentation tanks 47% ,636, ,636,653 Odour, Odour (H2S) Audit - moved from general 50% - 10,366-10,921-11,476-12,032-12,772-13,512-14,068-14,993-15,734-16,474-17,399-18, ,072 General allowance for boreholes drilling for west expansion are 100% - - 9, ,322 General, Fill in Half of the West Lagoon - moved from general 100% , ,398 General, remove sludge from West Lagoon - moved from gener 50% , ,613 Electrical, Add electrical feeder line #2 - moved from general 47% , ,100 Odour, cover #1 to #7 primary tanks and ducting 50% , ,218 Odour, Cover #3 TF and ducting 50% ,275, ,275,524 Secondary, Add Pump #4 to PEP Station #2 100% , ,410 General, Densification of the West Expansion Area 100% ,204, ,204,416 Odour, Cover #8 to #9 primary tanks and ducting 50% , ,946 Odour, Cover Centrate Tanks #1 to #8 50% , ,833 Solids, Add Digester #5 100% ,978 1,809,732-2,250,710 Odour, Odour Control for Trickling Filter #4 100% ,185,158-1,185,158 Secondary, Add TF/SC unit #4 100% ,555,316-3,555,316 Total Capital Projects (Mission's Share) 11,106 32, ,289 1,009,823 60,343 11, ,874 12, , ,825 3,328,201 3,145, , , ,100 3,450, ,850 2,624, ,692 1,416,934 3,142,572 6,550, ,281 28,898,274 Funding Sources Regional Sewage Treatment DCC Reserve Fund RSDCC 4,693 13,531 83, ,233 25,496 4, ,416 5, , ,264 2,319,012 3,106, ,449 88,226 73,665 3,362, ,863 1,108, , ,941 2,829,012 6,484,704 47,865 23,373,567 Sewer Capital Reserve Fund - Assist Factor (1%) SCRF , , ,462 6,822 23,425 31,376 8, ,959-4,968 11,201 2,858 6,858 28,576 65, ,099 Sewer Capital Reserve Fund (Benefit to Existing Pop.) SCRF 6,366 18, , ,537 34,589 6,578 36,605 6,897 36, , ,764 7,745 42, , ,691 54,641-9,019 1,504, , , ,984-64,933 5,288,608 Total Funding Sources 11,106 32, ,289 1,009,823 60,343 11, ,874 12, , ,825 3,328,201 3,145, , , ,100 3,450, ,850 2,624, ,692 1,416,934 3,142,572 6,550, ,281 28,898,274

34 34 Appendix C Historical and Proposed Sewer Utility User Rates (proposed) Flat Rate Single Family Residential $ $ $ $ $ $ Flat Rate Multi-family Residential (per unit) Meter Rate Residential (per cubic meter) Meter Rate Institutional, Commercial, Industrial (per cubic meter) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Declining to (depending on consumption)* $ $ $ $ $ $ Percentage Increase over Previous Year 2% 2% 2% 4% 4% 4% * declining block rate, rate decreases as consumption increases STAFF REPORT TO COUNCIL Page 8 of 8

35 35 Finance Department Staff Report to Council File: DATE: October 23, 2017 TO: FROM: SUBJECT: ATTACHMENT(S): Mayor and Council Kerri Onken, Deputy Treasurer/Collector 2018 Draft Drainage Utility Financial Plan Appendix A Drainage Utility Operating Budget (Draft) Appendix B Drainage Utility Capital Plan (Draft) Appendix C Unfunded Utility Capital Plan RECOMMENDATION(S): Council consider and resolve: 1. That the drainage utility operating spending package to increase the ongoing annual transfer to the Drainage Utility Capital Reserve Fund by $60,000 be approved for inclusion into the 2018 draft Drainage Utility Financial Plan. 2. That the draft Drainage Utility Capital Plan be updated to include the unfunded drainage capital project Culvert Rehabilitation 7 th Avenue and Murray Street for $380,000 in 2018 funded by $100,000 from the General Fund Accumulated Surplus and $280,000 from the Drainage Capital Reserve Fund. 3. That the 2018 draft Drainage Utility Financial Plan and the proposed drainage levy increase of 4.6% for 2018 be presented for feedback at the upcoming public budget consultation meeting on November 20, PURPOSE: The purpose of this report is to present the 2018 draft Drainage Utility Financial Plan, including proposed levy increase. BACKGROUND: As part of the District s annual financial planning process, staff have compiled a draft 2018 to 2022 Drainage Utility Financial Plan, a long-term capital plan, and proposed levy increase. The District established the drainage system as a self-funding utility during the 2016 financial planning process, which ultimately resulted in the existing budget for drainage operations and capital projects moving out of the general fund and into its own utility fund. The corresponding decrease that resulted in the general property tax levy was offset by a new drainage levy. The District s drainage system is responsible for managing all aspects of stormwater within its jurisdiction, including snow and rainfall related stormwater runoff. The purpose of the drainage system is to convey stormwater runoff flows to its downstream destination while preventing flooding, ditch/creek erosion, and water-quality degradation. The drainage system infrastructure includes ditches, dikes, creeks, culverts, storm sewer pipes, storm sewer manholes, catch-basins, stormwater management ponds, underground tanks, pump stations, service connections, and other facilities. Page 1 of 8

36 36 Mission, like other municipalities, is facing new challenges to manage its aging drainage infrastructure. Structurally deteriorated storm pipes and culverts, higher stormwater runoff rates due to growth and urbanization, and meeting more stringent environmental regulations are examples of these challenges that often require drainage infrastructure upgrades. Failure to have adequately maintained drainage infrastructure can result in personal and public property damage, injury, or loss of life. Culverts that are blocked or collapsed can cause significant damage until that water eventually drains into its downstream conveyance system (i.e. a stream, a pipe, or a receiving body of water). DISCUSSION AND ANALYSIS: 1. Operating Financial Plan (Appendix A) The 2018 draft Drainage Utility Operating Financial Plan is attached as Appendix A, including a summary of the changes between the 2017 and 2018 plan. Significant changes to the operating financial plan for 2018 to maintain existing services include: Revenue: 1. $24,000 increase in drainage levy revenue from properties developed in 2016, (higher assessment from new construction in 2016 than estimated) 2. $9,936 increase in drainage levy to maintain existing services, represents a 0.66% levy increase (see (A) on Appendix A); and 3. $3,138 increase in investment income, offset by an increased transfer to reserves; Expenses: 1. $19,711 increase in administrative cost charge from the general operating fund; 2. $14,225 increase to cover wage increases; and 3. $3,138 additional investment income transferred to capital reserve. The changes noted above that are required to maintain existing service levels for the drainage utility, before considering the spending package request, have a net impact of 0.66% on the drainage levy (see (A) on Appendix A). Operating Spending Package Request There is one spending package proposed for the drainage utility operating financial plan. An increase of $60,000 in the annual transfer to the Drainage Capital Reserve Fund is requested. This would increase the total transfer to $290,000 per year. This spending package is being requested to build up the Drainage Capital Reserve Fund balance, which will provide funding towards ongoing infrastructure maintenance and replacement costs. Additional details on drainage utility reserve balances and capital plan are provided later in this report. This spending package would require a 3.94% increase to the drainage levy. 2. Drainage Utility Capital Plan (Appendix B) The District s draft Drainage Utility Capital Plan is attached as Appendix B. The Plan includes projects for both the general drainage capital and Cedar Valley DCC projects. There is one capital project on the Utility Unfunded Capital Project list for drainage that staff are recommending to include in the Drainage Utility Capital Plan, Culvert Rehabilitation at 7 th Avenue and Murray Street for $380,000 in 2018 (see details next page). A summary of the next five years of the draft Drainage Utility Capital Plan follows and includes the unfunded capital project: STAFF REPORT TO COUNCIL Page 2 of 8

37 37 CAPITAL PLAN Totals Drainage Capital $ 495,000 $ 132,500 $ 115,000 $ 225,000 $ 167,500 $ 1,135,000 Cedar Valley Drainage DCCs * 50, , , ,000 1,922,400 Subtotal Drainage Utility Capital Plan $ 545,000 $ 233,500 $ 957,400 $ 225,000 $ 1,096,500 $ 3,057,400 * Restricted Revenue * Includes proposed additional $380,000 to 2018, requiring Council approval The general Drainage Utility Capital Plan remains substantially the same as However, the following changes have occurred in the Storm Drainage DCC Capital (Area B Cedar Valley): 1. Detention ponds D4, E4 and E5 have been pushed out from 2018 to 2020 postponing the budget of $842,400 by two years. 2. Detention pond C has been pushed out by one year from 2022 to 2023 postponing the budget of $1.755 million by one year. Both of these deferrals are development driven. Recent development around these detention ponds indicates that the projects can be delayed. There is one capital project on the Utility Unfunded Capital Project list for drainage that staff are recommending to include in the Drainage Utility Capital Plan, Culvert Rehabilitation at 7 th Avenue and Murray Street for $380,000 in 2018 funded between the Accumulated Surplus Fund for $100,000 and the balance of $280,000 from the Drainage Capital Reserve Fund. The General Fund Accumulated Surplus has a projected unappropriated balance of $4.6 million and a minimum recommended balance of $3.6 million. Approving this capital project would reduce the Drainage Utility Capital Reserve in 2018 as the projected balance for this reserve as at December 31, 2018 is $324,382 without operating or capital spending packages. The District continues to develop a comprehensive asset management program, and staff are currently implementing asset management software. This system will allow for projecting multi-decade capital funding needs, based on the life-cycle analysis of assets. The information provided is required to develop a more comprehensive capital plan for the District s drainage utility, however in the meantime a number of specific projects related to drainage infrastructure condition assessment and replacement were added to the budget in 2016 to address any known critical infrastructure needs. 3. Reserve Projections Based on the current financial plan (without the operating and capital spending package requests included), the following table shows projected year-end reserve balances in the drainage utility: Projected Reserve Fund Balances Without Spending Packages Approval Drainage Capital Reserve Fund $ 324,382 $ 429,345 $ 554,082 $ 570,213 $ 644,743 DCC Reserve Funds 992,687 1,072, ,244 1,013, ,206 Drainage Utility Fund Totals $ 1,317,069 $ 1,502,177 $ 1,361,325 $ 1,583,916 $ 927,949 STAFF REPORT TO COUNCIL Page 3 of 8

38 38 Should both the operating spending package to increase the transfer to drainage reserve of $60,000 and the capital spending package of $380,000 in 2018 funded between the Accumulated Surplus Fund for $100,000 and the balance of $280,000 from the Drainage Capital Reserve Fund be approved by Council, the following table shows the projected year-end reserve balances in the drainage utility: Projected Reserve Fund Balances With both Operating and Capital Spending Packages Approval Drainage Capital Reserve Fund $ 102,182 $ 263,301 $ 445,317 $ 519,873 $ 653,996 DCC Reserve Funds 992,687 1,072, ,244 1,013, ,206 Drainage Utility Fund Totals $ 1,094,869 $ 1,336,133 $ 1,252,560 $ 1,533,576 $ 937,202 The low balance in the Drainage Capital Reserve Fund reflects that both this reserve and the drainage utility itself are new and being developed. The creation of the drainage utility was approved during the 2016 financial planning process, as the first step towards establishing ongoing funding for the District s drainage system, and it will take time for the reserve to become sufficient to sustain the utility s infrastructure in the long-term. As a result, future levy increases to increase the annual transfer to the capital reserve are likely required. Including the additional $60,000 transfer to the Drainage Capital Reserve Fund proposed as a spending package, the table above shows the capital reserve increasing modestly over the coming years. However, updates to the District s drainage model and the creation of a drainage master plan over the next couple of years, in addition to ongoing work on the District s asset management system, will most likely identify priority projects that are required to maintain the functionality of the drainage system, which are not currently reflected in the capital plan. In terms of the DCC reserve, the balance is dependent on future DCC collections, and the timing and need to build further growth-related infrastructure. Staff will continue to monitor the financial impact of maintaining and replacing drainage utility infrastructure, and the impact on rates in the coming years, in order to ensure the financial sustainability of the drainage utility. 4. External Debt The drainage utility does not have any outstanding external debt, and none is currently anticipated in the financial plan. 5. Internal Debt As at December 31, 2016, the outstanding internal debt in the drainage utility (Cedar Valley Drainage DCC) totals $261,608, down from $388,930 in the prior year. The current amount outstanding is the result of a loan from the Major Capital Reserve Fund to the Cedar Valley Drainage DCC reserve, related to a property purchase for the Gaudin Creek realignment project. Repayment of this internal debt is dependent on DCCs collected during the year, as well as the need to proceed with additional DCC projects to support growth in advance of collecting the related DCCs. There are currently no new internal loans anticipated in the Drainage Utility Financial Plan, and the existing loans are being paid down annually based on DCC collections during the year. However, there are a number of significant projects remaining to be constructed in the Cedar Valley Drainage DCC program, therefore certain projects may be required to occur before the internal loans are fully STAFF REPORT TO COUNCIL Page 4 of 8

39 39 paid off, which would delay the repayment of internal loans and could require further internal borrowing. To a large extent, these projects are dependent on development occurring in certain catchment areas in Cedar Valley. Internal debt is generally preferable to external debt, because instead of interest being paid to an external party, the interest is paid internally to other reserves within the District. 6. Levy Recommendations Since the drainage utility was recently established during the 2016 financial planning process, there is a lack of historical drainage levy increase data. Previous rate increases were built into property tax rate increases, and blended in with other services that are funded directly by property taxes. Ongoing funding for the drainage utility is based on a drainage levy which is multiplied by the assessed value of the property, similar to property taxes. The 2017 drainage operating budget did include one spending package for a total increase of $30,000 to increase the amount transferred to the capital reserve. This spending package plus the increase in expenditures to maintain existing services in 2017 resulted in a $74,457 increase to the drainage operating budget. This increase represented a 4.9% increase and impacted the average 2017 residential tax notice by $4.70. In order to continue to build up the balance in the Drainage Capital Reserve Fund, staff have submitted a spending package for Council s consideration to increase the 2018 annual transfer by an additional $60,000 for a total of $290,000. Based on the 2018 revenue and expense changes to maintain existing service levels (0.66% impact on the drainage levy), and the proposed spending package (3.94% impact on the drainage levy), staff are recommending an overall 4.6% increase in the 2018 drainage levy. This increase would impact the average homeowner by increasing the drainage levy by $4.70 for FINANCIAL IMPLICATIONS: The financial implications of the draft Drainage Utility Financial Plan are discussed throughout this report. COMMUNICATION: Highlights of the District s financial plan, including reserve projections and proposed rate increases, will be communicated at the upcoming public budget consultation meeting on November 20, SUMMARY AND CONCLUSION: This report presents the draft 2018 Drainage Utility Financial Plan, including proposed levy increase. The drainage utility is currently free of external debt, and the proposed plan does not currently anticipate any further internal or external borrowing. The Drainage Utility Capital Reserve Fund does require additional resources to maintain and replace critical drainage infrastructure, therefore staff have submitted a spending package to increase the transfer to the reserve for Council s consideration. There is one capital project on the Utility Unfunded Capital Project list for drainage that staff are recommending to include in the Drainage Capital Plan with funding from the General Fund Accumulated Surplus Fund and the Drainage Capital Reserve Fund. STAFF REPORT TO COUNCIL Page 5 of 8

40 40 Additional information will become available in the next few years as to the funding levels required to maintain and replace aging drainage utility infrastructure, and staff will review the financial implications as this information becomes available. In order to keep pace with cost increases to maintain existing service levels, and continue to build up capital reserves to support maintenance and replacement of drainage infrastructure, staff propose a 4.6% increase in the drainage levy for the 2018 financial plan, which would impact the average homeowner by $4.70. SIGN-OFFS: Kerri Onken, Deputy Treasurer/Collector Reviewed by: Kris Boland, Director of Finance Reviewed by: Tracy Kyle, Director of Engineering and Public Works Comment from Chief Administrative Officer: Reviewed STAFF REPORT TO COUNCIL Page 6 of 8

41 41 Appendix A Drainage Utility Operating Budget (Draft) Summary of Changes to 2018 Budget Budget Dollars Potential Tax Impact Revenue Increases (-) or Decreases (+) Investment income increase $ -3, % Offset by transfer to reserve New construction/development revenue estimate (NCR) -24, % Additional drainage levy revenue new construction Total Revenue Increases over Prior Year $ -27, % Expenditure/Transfer to Reserve Changes Administrative cost recovery 19, % Contractual increases - CUPE wage increase 14, % Investment income transferred to capital reserve 3, % Revenue from investments above Total Expenditure Increases over Prior Year $ 37, % Subtotal - To Maintain Existing Services $ 9, % (A) Spending Package for Council's Consideration * Increase transfer to drainage capital reserve 60, % To support capital plan Subtotal $ 60, % Net Proposed Changes $ 69, % (B) 2017 Vancouver CPI Estimate = 2.0% Estimated $ Impact on Average Tax Notice - using average home value of $560,500 (2017) To Maintain Existing Services $ 9,936 $0.67 (A) Net Proposed Changes $ 69,936 $4.70 (B) * Requires Council's Approval STAFF REPORT TO COUNCIL Page 7 of 8

42 42 Appendix A Drainage Utility Operating Budget (Draft) 2017 to 2022 Operating Budgets Drainage Operations 2017 Final Budget 2018 Draft Budget 2019 Forecast 2020 Forecast 2021 Forecast 2022 Forecast Operating Revenue Drainage Levy $ -1,596,389 $ -1,620,172 $ -1,652,576 $ -1,685,627 $ -1,719,340 $ -1,753,727 Diking Levy -121, , , , , ,890 Recoveries -61,115-61,115-61,726-62,343-62,966-63,595 Interest on Investments -2,095-5,233-3,895-6,013-8,263-9,629 Total Operating Revenue $ -1,781,489 $ -1,808,410 $ -1,840,087 $ -1,875,873 $ -1,912,459 $ -1,948,841 Operating Expenditures & Transfers General Administration $ 61,335 $ 62,494 $ 63,744 $ 65,019 $ 66,319 $ 67,645 General Administration Fee 518, , , , , ,627 Drainage Operations 969, , ,350 1,012,195 1,032,438 1,053,089 1,549,394 1,573,177 1,599,262 1,625,814 1,652,843 1,680,361 Transfers to Reserves To Drainage Capital Reserve Fund * $ 230,000 $ 230,000 $ 236,930 $ 244,046 $ 251,353 $ 258,851 Interest Transferred to Reserves 2,095 5,233 3,895 6,013 8,263 9, , , , , , ,480 Total Operating Expenditures & Transfers $ 1,781,489 $ 1,808,410 $ 1,840,087 $ 1,875,873 $ 1,912,459 $ 1,948, Actual/Projected Rate Increase: 4.9% 4.5% 2.0% 2.0% 2.0% 2.0% * Does not include $60,000 operating spending package request for 2018 STAFF REPORT TO COUNCIL Page 8 of 8

43 Appendix B DRAINAGE UTILITY CAPITAL PLAN (DRAFT) General Drainage Utility Capital 43 GENERAL DRAINAGE UTILITY CAPITAL Total DCC Review 22,500 17,500 23,625 18,375 24,806 19,294 26, ,147 Drainage model update (5-year cycle) - flow monitoring/calibration 110, , , , ,000 Drainage Master Plan (5-year cycle) 150, , , ,000 10th Ave. storm pipe installation 65,000 65,000 4th Ave. storm pipe installation, Birch St to Cedar St. 50,000 50,000 Culvert Rehabilitation at 7 th and Murray * 280, ,000 Culvert Rehabilitation at 7 th and Murray * 100, ,000 5th Ave. storm pipe installation, James to Horne 110, ,000 Raise Lane Creek pump station 115, ,000 Raise Chester Creek pump station 115, ,000 Total Capital Projects 495, , , , , , , ,000 18, , , , ,000 26, ,877,147 * Includes the proposed addition to 2018 for Culvert Rehabilitation at 7th and Murray for $380,000, requiring Council approval Funding Source Drainage Utility Capital Reserve Fund 395, , , , , , , ,000 18, , , , ,000 26,047 1,777,147 General Fund Accumulated Surplus 100, ,000 Total Funding Sources 495, , , , , , , ,000 18, , , , ,000 26, ,877,147

44 Appendix B DRAINAGE UTILITY CAPITAL PLAN (DRAFT) Storm Drainage DCC Capital - Area B Cedar Valley 44 STORM DRAINAGE DCC CAPITAL - Area B (Cedar Valley) Total Culvert - Area A, DTR west of Ferndale 198, ,738 Culvert 1 - Area B, DTR west of Pavillion 134, ,000 Culvert 2 - Area B, Rosetta east of Cedar 121, ,625 Culvert - Area E, Tunbridge west of Emiry 50,000 50,000 Trunk Storm Sewer - Area A, DTR to Pond A 495, ,000 Trunk Storm Sewer - Area B, north of Pavillion to Pond B 669, ,000 Trunk Storm Sewer - Area C, Vishloff to Pond C 101, ,000 Detention Pond B - north-east of Pavillion Place 2,527,000 2,527,000 Detention Pond C - Emiry north of Laminman 1,539,000 1,539,000 Detention Pond D1 - Cedar south of Tunbridge 1,755,000 1,755,000 Detention Pond D2 - Cedar north of Tunbridge 300, ,000 Detention Pond D3 - east of Nottman, north of Dalke 929, ,000 Detention Pond D4 - south of Tunbridge, east of Nottman 516, ,000 Detention Pond E4 - west of Cedar, south of Tunbridge 204, ,000 Detention Pond E5 - north of Tunbridge, Emiry to Cedar 122, ,400 DTR Ditch Improvements - north and south of Tunbridge 468, ,000 Gaudin Creek South Realignment 2,265,000 2,265,000 Total Capital Projects 50, , , ,000 2,010, ,738 2,334,000 2,934, , ,527, ,394,763 Funding Sources Cedar Valley Drainage DCC Reserve Fund 49,500 99, , ,710 1,990, ,751 2,310,660 2,904, , ,501, ,270,816 General Capital Reserve Fund 500 1,010 8, ,290 20,106 1,987 23,340 29, , , ,947 Total Funding Sources 50, , , ,000 2,010, ,738 2,334,000 2,934, , ,527, ,394,763

45 Appendix C UNFUNDED UTILITY CAPITAL PROJECTS 45 Project Description Priority Class 2018 Capital 2018 Operating 2019 Capital 2019 Operating 2020 Capital 2020 Operating 2021 Capital 2021 Operating 2022 Capital 2022 Operating Total Capital 5 Years Total Operating Notes Drainage Utility Capital Culvert Rehabilitation 7th/Murray 2 - Safety concern 380, ,000 - Re-assessing the current level of structural deterioration and fix the problems. The culvert at this location conveys upstream rainfall runoff to Lane Creek next to the Fire Hall. The structural integrity of this culvert has been a serious concern over the last decade or so. If not addressed, there is a possibility of the culvert collapsing, which could result in a sink hole. Subtotal - Drainage Utility Capital 380, ,000 0 G:\FINANCE\BUDGET\Budget 2018\2018 Utilities Core Tab: Unfunded Utilities Capital 18/10/2017

46 46 Finance Department Staff Report to Council File: DATE: October 23, 2017 TO: FROM: SUBJECT: ATTACHMENTS: Mayor and Council Kerri Onken, Deputy Treasurer/Collector 2018 Draft Waste Management Utility Financial Plan Appendix A Waste Management Utility Operating Financial Plan (Draft) Appendix B Waste Management Capital Plan (Draft) Appendix C Unfunded Capital Plan (Draft) Appendix D Proposed 2018 Landfill Tipping Fee Rate Increases RECOMMENDATIONS: Council consider and resolve: That the 2018 draft Waste Management Utility Financial Plan be presented for feedback at the upcoming public budget consultation meeting on November 20, PURPOSE: The purpose of this report is to present the 2018 draft Waste Management Utility Financial Plan, including a review of proposed rate increases. BACKGROUND: As part of the District s annual financial planning process, staff have compiled a draft 2018 to 2022 Waste Management Utility Financial Plan, a long-term capital plan, and provided a review of proposed rate increases at the landfill. This financial plan provides for the operating and capital requirements of the following facilities and services: 1. Curbside collection of garbage, recyclable materials, and compost; 2. Environmental stewardship initiatives, including wildlife conflict reduction, hazardous waste collection and cleanup, litter management including Adopt-A-Block, promotion of public awareness, and waste reduction; 3. The Mission Landfill (Minnie s Pit), including the onsite compost processing facility; 4. The Mission Recycling Depot, located on Mershon Street; and 5. The joint Abbotsford/Mission Recycling Depot (AMRD) and primary processing facility, located on Valley Road in Abbotsford. DISCUSSION AND ANALYSIS: 1. Operating Financial Plan (Appendix A) The 2018 draft Waste Management Utility Operating Financial Plan is attached as Appendix A, including a summary of the changes between the 2017 and 2018 plan. Significant changes to the financial plan for 2018 to maintain existing service levels include: Revenue: 1. $407,985 new annual fee from Recycle BC as part of joining the program; 2. $200,000 transfer from reserves to purchase new recycling bins (see below); Page 1 of 8

47 47 3. $102,000 increase in revenue due to increase in disposal tonnage at the landfill site; 4. $100,000 new revenue due to change in accounting method for cardboard baling services at AMRD this is offset by increase in AMRD expenses; and 5. $47,376 increase in revenue from new homes joining the curbside refuse program. Expenses: 1. $200,000 increase to purchase new recycling bins funded by reserves (see above); 2. $189,538 increase due to changes in sorting practice at AMRD required by Recycle BC and changes required by third-party to reduce contaminated product levels; 3. $110,000 increase to curbside collections for glass collection; 4. $100,000 increase due to change in accounting method for cardboard baling services at AMRD this is offset by increase in AMRD revenue above; and 5. $74,338 increase to landfill contract settled in The net impact of the changes to the 2018 Waste Management Utility Operating Budget results in an increase to the transfer to the refuse reserve fund of $126,521, up from $144,942 to $271,463 (see page 2 of Appendix A). The operating costs for AMRD are shared between the City of Abbotsford and the District of Mission. With increased recycling products from Mission due to the new curbside glass collection (Abbotsford does not offer curbside glass collection), our share is estimated to increase to approximately 24% from 23% in This increase has been built into the Waste Management budget. No operating spending packages for the waste management utility are being requested. Recycle BC (formally Multi-Materials British Columbia [MMBC]) In a report to Council February 6, 2017, staff indicated that there could be a projected $339,500 budget savings by joining the Recycle BC program (formally MMBC). At the time of calculating the projected net savings associated with joining the program, only the Recycle BC collection incentive and the curbside cost impacts to the collection program were clearly known. The impact to the AMRD facility and sorting processes were not known. Once the processing contract with Green by Nature was signed, operational changes and contamination expectations were made clear, which have resulted in higher processing costs. At the same time, markets for the non-recycle BC commodities were requiring lower contamination levels, which also has resulted in higher processing costs. The net budget savings is now estimated to be $115,000 in The AMRD is still early into the new operating regime and it is expected that opportunities for optimization and cost savings will be realized over the next several years. The net overall program savings are currently insufficient and too uncertain to reduce the recycling and composting collection levy in The potential for reducing the collection levy will be re-evaluated in Capital Plan (Appendix B) The Waste Management Capital Plan is made up of two components: the Landfill Capital Plan, and the AMRD Capital Plan (details in Appendix B). The primary funding source for both of these capital plans is the Refuse Reserve Fund, although any closure activities related to the landfill are funded from the landfill closure and post-closure liability account. A summary of the next five years of the draft Waste Management Capital Plan follows: CAPITAL PLAN Totals Landfill Capital Improvements $ 72,000 $ 72,000 $ 72,000 $ 72,000 $ 72,000 $ 360,000 Abbotsford/Mission Recycling Depot AMRD 53,922 56,760 20,812 18,920 58, ,066 Subtotal Waste Management Capital Plan $ 125,922 $ 128,760 $ 92,812 $ 90,920 $ 130,652 $ 569,066 * Includes proposed additional $5,676 in AMRD to 2018, requiring Council approval STAFF REPORT TO COUNCIL Page 2 of 8

48 48 There is one capital project on the Utility Unfunded Capital Project list for waste management that staff are recommending for inclusion into the AMRD Capital Plan with funding from the Refuse Reserve Fund. See below for details. Landfill Capital Plan The Landfill Capital Plan provides for the development and subsequent closure of various landfill cells, leachate treatment, and miscellaneous capital items that are required to support the ongoing operation of the landfill. The Landfill Capital Plan is prepared over the same horizon as the expected life of the landfill, which is currently estimated to extend to approximately The Landfill Capital Plan has been updated for 2018, and is based on the 2015 Landfill Design, Operations and Closure Plan (DOCP), which was approved by Council at the Regular Meeting on May 2, While relatively smooth over the next seven years, starting in 2025 major landfill construction projects are forecasted to start that will impact the Refuse Reserve balance (see Appendix B). There is also the construction of a landfill gas recovery system that is required under environmental regulations once the landfill begins generating methane at sufficient quantities that is slated in There are no new major projects in the Landfill Capital Plan over the coming five years. AMRD Capital Plan The AMRD Capital Plan provides for capital upgrades and replacements at the joint recycling facility located on Valley Road in Abbotsford, which is cost-shared with the City of Abbotsford (currently Mission s share is approximately 18.92%). This plan is prepared on a 20-year horizon, and was last updated in September 2015, jointly with the City of Abbotsford (partner) and Abbotsford Community Services (operator). Further updates are expected on this plan, and staff will report back as necessary. There is one capital project on the Utility Unfunded Capital Project list for waste management that staff are recommending for inclusion into the AMRD Capital Plan with funding from the Refuse Reserve Fund (see Appendix C). A 27 year old Krause incline conveyor belt at AMRD requires rebuilding to continue safe efficient operation. The total cost is estimated at $30,000 with Mission s share at $5,676. There remains some uncertainty in terms of the AMRD capital plan, due to ongoing developments with the Recycle BC program implementation, which could have a significant impact on the District s curbside recycling and recycling depot programs. As a result, this plan will likely require a comprehensive review, once all the implications of the new program are known. In the meantime, staff have left the status quo plan in place for 2018, and significant capital projects planned to upgrade the AMRD recycling facility remain on hold. The capital budget for AMRD is shared between the City of Abbotsford and the District of Mission with the share percentage based on a three year rolling average. With increased recycling products from Mission due to the new curbside glass collection (Abbotsford does not offer curbside glass collection) starting in 2017, our share is estimated to increase starting in This will not be known until early in 2018 at which time staff will provide an update. 3. Reserve Projections Based on the financial plan as presented in this report, including rebuilding the Krause incline conveyor belt capital project with a budget of $5,676, the following table shows projected year-end reserve balances in the Waste Management Utility Refuse Reserve Fund: Projected Reserve Fund Balances Refuse Reserve Fund $ 955,757 $ 1,161,224 $ 1,398,483 $ 1,633,851 $ 1,825,330 STAFF REPORT TO COUNCIL Page 3 of 8

49 49 The projections currently indicate a good financial position for the Refuse Reserve Fund over the next few years; however, these funds are being built-up for significant expenditures that are planned to occur starting in 2025 related to construction and development of future landfill stages and the construction of a required landfill gas recovery system slated in In order to maintain a healthy Refuse Reserve Fund balance, the annual transfer from Waste Management operations should be on average approximately $400,000 per year. 4. Debt There is currently no external or internal debt outstanding related to the waste management utility. 5. Rate Recommendations In order to maintain a healthy Refuse Reserve Fund balance, the annual transfer from Waste Management operations should be on average approximately $400,000 per year. The 2018 transfer from waste management operations to the Refuse Reserve Fund is projected at $271,463 rising to approximately $335,000 annually thereafter. The Refuse Reserve Fund is being built-up for significant expenditures that are planned to occur related to construction and development of future landfill stages and the construction of a landfill gas recovery system. While there has been some budget savings from the Recycle BC program, these are starting out lower than anticipated and are being offset by increases in other waste management budget items. In order to maintain a healthy transfer to the Refuse Reserve, staff are recommending no changes in 2018 for both curbside garbage collection and curbside recycling/compost collection rates. The following graph shows a 5-year history of curbside refuse collection and recycling/compost collection user rates for single-family residential customers in the curbside collection area, which make up the majority of waste management utility revenues: Waste Management User Rate History Refuse Recycling/Compost $128 $130 $130 $130 $130 $130 $162 $165 $165 $165 $165 $ The most recent rate increases for single-family residential customers in the curbside collection area occurred in 2013 and 2014, and in both cases the increase was 2%. Staff are recommending various increases in landfill tipping fees, in order to keep pace with the rates charged by competing garbage transfer stations, landfill operations inflation, as well as to deter certain types of waste from outside the District which require additional handling. These proposed fee increases were discussed at the September 19, 2017 budget meeting along with other changes to the District s Fees and Charges and are shown in Appendix D attached for information purposes. STAFF REPORT TO COUNCIL Page 4 of 8

50 50 To briefly summarize the proposed increases in Appendix D: Garbage tipping rates are proposed to increase approximately 2% to 3.13%; and Out-of-District materials that require special handling are proposed to increase 23.08%, in order to deter this type of waste. The primary reason for this significant rate increase is to preserve landfill airspace for Mission residents, and to comply with Ministry of Environment and Fraser Valley Regional District requirements that the landfill is to only receive waste from within the regional district. In terms of future rates, staff have included 2% annual rate increases in future years of the financial plan for forecasting purposes, mainly to keep pace with inflation. These future rate increases are reviewed each year during the financial planning process as new information becomes available. FINANCIAL IMPLICATIONS: The financial implications of the Waste Management Utility Financial Plan are discussed throughout this report. COMMUNICATION: Highlights of the District s financial plan including reserve projections will be communicated at the upcoming public budget consultation meeting on November 20, SUMMARY AND CONCLUSION: The 2018 draft Waste Management Utility Financial Plan is presented in this report. An updated DOCP for the landfill was prepared and approved in 2015, and this DOCP is now fully reflected in the long-term financial plan. There currently remains some uncertainty regarding ongoing developments in the Recycle BC program (the old MMBC recycling program), and any changes that occur to the curbside recycling and recycling depot programs may have an impact on future waste management utility rates. At this time, staff are not recommending any changes to curbside refuse collection rates or curbside recycling/compost collection rates. SIGN-OFFS: Kerri Onken, Deputy Treasurer/Collector Reviewed by: Kris Boland, Director of Finance Reviewed by: Tracy Kyle, Director of Engineering & Public Works Reviewed by: Barry Azevedo, Manager of Environmental Services Comment from Chief Administrative Officer: Reviewed. STAFF REPORT TO COUNCIL Page 5 of 8