CITY OF BRANTFORD FINANCIAL REPORT. For the year ended December 31, 2012

Transcription

1 2012 CITY OF BRANTFORD FINANCIAL REPORT

2 CITY OF BRANTFORD ELECTED OFFICIALS CITY COUNCIL Mayor Chris Friel Councillors Ward 1 Larry Kings Jan Vanderstelt Ward 2 John Utley Vince Bucci Ward 3 Dan McCreary Debi Dignan-Rumble Ward 4 Richard Carpenter Dave Wrobel Ward 5 Marguerite Ceschi-Smith David Neumann

3 CORPORATION OF THE CITY OF BRANTFORD INDEX Page FINANCIAL REVIEW 1-4 MANAGEMENT REPORT 5 INDEPENDENT AUDITORS REPORT 6 FINANCIAL STATEMENTS Consolidated Statement of Financial Position 7 Consolidated Statement of Operations 8 Consolidated Statement of Cash Flows 9 Consolidated Statements of Change in Net Financial Assets 10 Notes to the Consolidated Financial Statements Tangible Capital Assets - Continuity Schedule - Schedule 1 30 Segmented Information - Schedule

4 Financial Review (All dollar amounts are in thousands of dollars, except per capita figures and are extracted from the City of Brantford - Consolidated Financial Statements) As at December Revenue for current operations Taxation $120,514 $117,490 $116,469 $113,365 $109,572 Payments in lieu of taxes 3,280 3,352 3,319 3,324 3,291 Ontario grants 45,534 55,133 52,574 49,909 62,668 Other grants 13,928 18,861 20,411 5,500 3,728 Fees and services charges 72,519 73,223 71,059 66,683 64,283 Other 23,161 22,460 23,006 23,529 21,974 Total $278,936 $290,519 $286,838 $262,310 $265,516 Expenditures and Net Appropriations Current operations $230,027 $234,118 $226,357 $222,996 $218,923 Capital financing during the year Capital Expenditures during the year Annual Surplus 17,975 28,845 34,238 $9,601 $26,358 Accumulated net revenue (surplus) at the end of the year Reserves and Reserve Funds (Note 21) $83,937 $88,155 $65,839 $61,408 $70,264 Net Long Term Liabilities Total $42,754 $34,492 $36,667 $15,440 $15,416 Per capita Charges for net long term liabilities Interest and principal payments $4,505 $4,154 $2,438 $2,401 $2,421 Per capita Tax arrears -Total (prior to allowance) $14,285 $14,070 $13,252 $13,692 $10,288 -Per capita Percentage of current levy 9.05% 9.01% 8.43% 8.94% 6.84% Additional Information Population as at December 31st 94,586 93,650 94,493 93,399 92,317 Area in acres at December 31st 17,986 17,986 17,986 17,986 17,986 Employees - Continuous full time 1,204 1,262 1,212 1,215 1,199 Employees - Part time Number of households 39,268 38,876 38,475 38,184 37,983 Page 1

5 Financial Review (All dollar amounts are in thousands of dollars, except per capita figures and are extracted from the City of Brantford - Consolidated Financial Statements) As at December * 2008 Current Value Assessment by property class - taxable assessment upon which the year s rates of taxation were set Residential $6,190,122 $5,865,430 $5,532,305 $5,218,940 $4,852,397 Multi Residential 366, , , , ,240 Commercial 1,067, , , , ,314 Commercial - vacant 45,156 45,868 41,906 39,849 40,564 Industrial 373, , , , ,219 Industrial - vacant 30,354 27,989 26,904 24,728 20,982 Farmland/managed forest 5,389 5,332 5,033 5,415 5,439 Pipeline 20,493 19,956 19,253 18,537 17,795 Total $8,099,211 $7,656,411 $7,180,292 $6,722,536 $6,222,950 Tax Ratios Residential Multi-residential Commercial Industrial Farmland/managed forest Pipeline Total Taxable Assessment Per Capita $85,628 $81,756 $75,988 $71,977 $67,408 Commercial & Industrial Assessment as a percentage of total taxable assessment 18.72% 18.59% 18.20% 17.69% 17.37% Commercial and Industrial Taxes as a percentage of total taxes levied 37.95% 39.14% 39.84% 39.56% 39.50% * Year of Reassessment Page 2

6 Financial Review (All dollar amounts are in thousands of dollars, except per capita figures and are extracted from the City of Brantford - Consolidated Financial Statements) As at December * 2008 Rates of Taxation by Property Class (expressed as a percentage of current value assessment) Residential For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Multi-Residential For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % New Multi-Residential For general municipal purposes % % % For school board purposes % % % Total % % % Commercial For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Commercial - vacant For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Commercial-new construction For general municipal purposes % % % For school board purposes % % % Total % % % Commercial-new construction-vacant For general municipal purposes % % % For school board purposes % % % Total % % % Page 3

7 Financial Review (All dollar amounts are in thousands of dollars, except per capita figures and are extracted from the City of Brantford - Consolidated Financial Statements) As at December * 2008 Industrial For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Industrial - vacant For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Industrial-new construction For general municipal purposes % % % For school board purposes % % % Total % % % Industrial-new construction-vacant For general municipal purposes % % % For school board purposes % % % Total % % % Farmland/managed forest For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % Pipeline For general municipal purposes % % % % % For school board purposes % % % % % Total % % % % % * Year of Reassessment Page 4

8

9 Millards Chartered Accountants P.O. Box 367, 96 Nelson Street Brantford, Ontario N3T 5N3 Telephone: (519) Facsimile: (519) INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of The Corporation of the City of Brantford We have audited the accompanying consolidated financial statements of the Corporation of the City of Brantford, which comprise the consolidated statement of financial position as at December 31, 2012, and the consolidated statements of operations, cash flows and change in net financial assets for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Corporation of the City of Brantford as at December 31, 2012, and the results of its operations, its changes in net assets and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. May 30, 2013 CHARTERED ACCOUNTANTS Licensed Public Accountants Millard, Rouse & Rosebrugh LLP Brantford Hagersville Simcoe Delhi Norwich Tillsonburg Page 6

10 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December FINANCIAL ASSETS Cash and short term investments (Note 5) 61,412,013 52,165,097 Investments (Note 6) 105,954, ,338,216 Taxes receivable 8,927,810 8,791,019 Accounts receivable 17,887,738 23,266,133 Investment in Brantford Energy Corporation (Note 8) 37,510,632 36,253,735 Note Receivable - Brantford Power Inc. (Note 8) 24,189,168 24,189,168 Note Receivable - Brantford Hydro Inc. (Note 8) 1,303,335 1,303,335 TOTAL FINANCIAL ASSETS 257,185, ,306,703 LIABILITIES Accounts payable and accrued liabilities (Note 9) 43,763,481 44,277,160 Deferred revenues - obligatory reserve funds (Note 10) 30,982,935 30,204,664 Vested sick leave (Note 11) 3,043,833 3,097,198 Post employment/retirement benefits (Note 11) 16,843,475 16,592,464 Accrued interest on long term liabilities 470, ,890 Landfill closure and post closure liability (Note 12) 13,634,153 14,425,911 Net long term liabilities (Note 14) 42,753,757 34,491,819 TOTAL LIABILITIES 151,492, ,475,106 NET FINANCIAL ASSETS 105,692, ,831,597 NON-FINANCIAL ASSETS Tangible Capital Assets (net) (Schedule 1) 709,925, ,661,750 Inventories and prepaid expenses (Note 2) 14,418,671 13,568, ,344, ,230,401 NET ASSETS 830,037, ,061,998 ACCUMULATED SURPLUS (Note 16) 830,037, ,061,998 The accompanying notes are an integral part of these financial statements. Page 7

11 CONSOLIDATED STATEMENT OF OPERATIONS As at December 31 Budget (Unaudited) REVENUES Taxation 123,651, ,793, ,841,955 User charges (Note 17) 62,403,288 60,000,069 60,982,647 Government Transfers 43,641,817 59,461,708 73,994,745 Rents and concessions 8,365,505 8,394,950 8,161,011 Investment income 1,232,200 1,215,650 1,127,424 Interest earned on reserves and reserve funds - 1,926,945 1,781,665 Recoveries from other municipalities 3,011,697 5,740,170 4,199,073 Casino revenue 3,300,000 3,385,645 3,354,275 Deferred revenue earned - 900,467 1,231,047 Provincial Offenses Act and other fines 2,298,050 2,030,268 1,997,451 Licenses and permits 2,447,945 2,093,758 2,081,837 Penalties and interest on taxes 2,100,000 2,084,240 2,155,340 Other (Note 18) 4,913,085 7,907,667 8,610,485 TOTAL REVENUES 257,365, ,935, ,518,955 EXPENSES General government 11,334,874 11,435,630 13,272,689 Protection to persons and property 52,322,832 51,225,841 49,238,619 Transportation services 23,479,190 26,809,641 28,944,012 Environmental services 27,847,765 28,013,100 30,799,204 Health services 6,304,434 6,405,490 5,069,585 Social and family services 69,236,305 71,261,598 73,052,824 Recreational and cultural services 24,759,117 24,985,982 23,571,960 Planning and development 5,094,911 7,405,966 5,721,387 Electrical utility services 5,234,158 2,483,898 4,447,327 TOTAL EXPENSES 225,613, ,027, ,117,607 INCOME BEFORE UNDER-NOTED ITEMS 31,751,654 48,908,328 56,401,348 OTHER INCOME/(EXPENSE) Contributed tangible capital assets 733,166 1,266,426 Loss on disposal of tangible capital assets (726,788) (987,477) Amortization of tangible capital assets (30,939,520) (27,835,430) (30,933,142) (27,556,481) ANNUAL SURPLUS FROM OPERATIONS 17,975,186 28,844,867 ACCUMULATED SURPLUS, BEGINNING OF YEAR 812,061, ,217,131 ACCUMULATED SURPLUS, END OF YEAR 830,037, ,061,998 The accompanying notes are an integral part of these financial statements. Page 8

12 CONSOLIDATED STATEMENT OF CASH FLOWS As at December OPERATING Annual Surplus 17,975,186 28,844,867 Sources (Uses) of Cash: Taxes receivable (136,791) (987,744) Accounts receivable 5,378,395 (7,024,282) Accounts payable and accruals (513,679) 5,311,667 Contributed (Donated) tangible capital assets (733,166) (1,266,426) Deferred revenues - obligatory reserve funds 778, ,977 Employee benefits and interest 282,595 1,476,325 Landfill closure and post closure liability (791,758) 3,340,902 Inventories and prepaid expenses (850,020) (468,510) 21,389,033 29,365,776 Non cash charges to operations: Amortization 30,939,520 27,835,430 Loss on disposal of tangible capital assets 726, ,477 Gain on disposal of investments - (686) 31,666,308 28,822,221 Cash provided by operating transactions 53,055,341 58,187,997 CAPITAL Acquisition of tangible capital assets (47,225,962) (45,906,478) Proceeds on disposal of tangible capital assets 28,775 26,943 Cash applied to capital transactions (47,197,187) (45,879,535) INVESTING (Increase)/Decrease of investments (3,616,279) 623,640 Proceeds on disposal of investments - 7,786 (Increase)/Decrease of investment in Brantford Energy Corporation (1,256,897) (1,056,070) Cash provided by (applied to) investing transactions (4,873,176) (424,644) FINANCING Long term debt issued 11,000, ,000 Long term debt repaid (2,738,062) (2,575,366) Cash applied to financing transactions 8,261,938 (2,175,366) Net Change in Cash and Cash Equivalents 9,246,916 9,708,452 Opening Net Cash and Cash Equivalents 52,165,097 42,456,645 Closing Net Cash and Cash Equivalents 61,412,013 52,165,097 The accompanying notes are an integral part of these financial statements. Page 9

13 CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS For the year ended December Annual Surplus 17,975,186 28,844,867 Amortization of tangible capital assets 30,939,520 27,835,430 Contributed (Donated) tangible capital assets (733,166) (1,266,426) Acquisition of tangible capital assets (47,225,962) (45,906,478) Loss/(Gain) on disposal of tangible capital assets 726, ,477 Proceeds on disposal of tangible capital assets 28,775 26,943 Acquisition of inventory and prepaid expense (850,020) (468,510) Increase (Decrease) in Net Financial Assets 861,121 10,053,303 Net Financial Assets, Beginning of Year 104,831,597 94,778,294 Net Financial Assets, End of Year 105,692, ,831,597 The accompanying notes are an integral part of these financial statements. Page 10

14 The Corporation of the City of Brantford is a Municipality in the Province of Ontario, Canada. It conducts its operations guided by the provisions of provincial statutes such as the Municipal Act and related legislation. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements of the Corporation of the City of Brantford (the City ) are prepared by management in accordance with Canadian generally accepted accounting principles as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the period. Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements necessarily involves the use of estimates and approximations. These have been made using careful judgement. Actual results could differ from these estimates. Significant aspects of the accounting policies adopted by the City are as follows: (a) Reporting Entities (i) The consolidated financial statements include the assets, liabilities, revenues and expenses, of the City. The reporting entity is composed of all organizations, committees and local boards accountable for the administration of their financial affairs and resources to the City and which are owned or controlled by the City. These consolidated financial statements include: Brant and Brantford Local Housing Corporation Brantford Downtown Business Improvement Area Brantford Municipal Non-Profit Housing Corporation Brantford Police Services Board Brantford Public Library John Noble Home Inter-departmental and inter-organizational transactions and balances between these organizations have been eliminated. (ii) Effective January 1, 2002, the City entered into a service agreement with the Brant and Brantford Local Housing Corporation whereby the Housing Corporation transferred all operations to the City. The Housing Corporation has retained title to its physical assets in the capacity of bare trustee for the benefit of the City. (iii) Non-Consolidated Entities The following local boards, joint local boards, municipal enterprises and utilities are not consolidated: Brant County Health Unit Page 11

15 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Reporting Entities (continued) (iv) Accounting for School Board Transactions The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards are not reflected in the accumulated surplus of these financial statements. (v) Trust Funds Trust funds and their related operations administered by the municipality are not consolidated, but are reported separately on the Trust Funds statement of continuity and statement of financial position. (vi) Brantford Energy Corporation Brantford Energy Corporation is accounted for on a modified equity basis, consistent with the Canadian generally accepted accounting treatment for government business enterprises. Under the modified equity basis, the business enterprise s accounting principles are not adjusted to conform with those of the City, and inter-organizational transactions and balances are not eliminated. (b) Basis of Accounting (i) Accrual Basis of Accounting The consolidated financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the creation of a legal obligation to pay. (ii) Non-financial Assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the change in net financial assets for the year. (ii) a) Tangible Capital Assets Beginning in 2009, The City of Brantford adopted Public Sector Accounting Board (PSAB) Section Tangible Capital Assets. Under the new PSAB guidelines, tangible capital assets are to be recorded at their historical cost and amortized over their estimated useful life. Tangible capital assets are defined as non-financial assets with an estimated useful life greater than 1 year, held for use in the production or supply of goods and services, not held for resale, in continuous use, and valued in excess of an established financial threshold. The capitalization threshold for general assets is $5,000 and $25,000 for infrastructure assets. Individual tangible capital assets with lesser value are expensed and groups of similar assets, such as library books, fire hoses, or street signs, are recorded as pooled assets based on their year of acquisition. Page 12

16 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of Accounting (continued) (ii) a) Tangible Capital Assets (continued) Tangible capital assets are recorded at cost which includes amounts directly attributable to the acquisition, construction, development or betterment of the assets. The cost is amortized on a straight-line basis over their estimated useful lives as follows: Buildings Vehicles: Transit buses Vehicles Computer hardware and software Other: Machinery and equipment Land improvements Waste, wastewater plants and networks: Underground networks Water and wastewater plants and facilities Transportation: Roads Bridges, culverts, etc years 12 years 5-15 years 4-15 years years years years years years years Expected useful lives are determined based on experience with the asset. Revisions to the estimates may be caused by upgrades or renewal expenditures that result in a change in the service level of the asset or may revise the life expectancy. These estimates and potential impairment of the tangible capital assets are reviewed annually. Amortization is calculated beginning in the month the asset is put into service. Assets under construction are not amortized until the asset is available for productive use. b) Contribution of Tangible Capital Assets Tangible capital assets received as contributions are recorded at their fair market value at the date of receipt. c) Leases Leases are classified as capital leases if they transfer substantially all of the benefits and risks incidental to ownership of property. Leased capital assets are recorded as tangible capital assets. d) Inventories Inventories held for consumption are not considered tangible capital assets. Page 13

17 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Basis of Accounting (continued) (iii) Government Transfers Government transfers are recognized in the financial statements as revenues in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met and reasonable estimates of the amounts can be made. (iv) Deferred Revenues - Obligatory Reserve Funds Deferred revenues represent developer and user charges, Federal and Provincial gas tax revenue, Federal and Provincial transit capital funding, move Ontario roads and bridges capital funding, and B-Home housing program which have been collected, but for which the related services have yet to be performed. These amounts will be recognized as revenues in the fiscal year the services are performed. 2 INVENTORIES AND PREPAID EXPENSES Inventories of supplies 242, ,911 Prepaid expenses 417, ,535 Land and rehabilitation costs 13,758,861 12,882,205 14,418,671 13,568, CONTRIBUTIONS TO NON-CONSOLIDATED JOINT BOARDS Further to Note 1(a)(iii), the following contributions which are included as an expense on the consolidated statement of operations were made by the municipality to these boards: Brant County Health Unit 2,119,327 1,598, TRUST FUNDS Trust funds administered by the Municipality amounting to $3,733,886 ( $3,609,467) have not been included in the consolidated statement of financial position nor have their operations been included in the consolidated statement of operations. Page 14

18 5. CASH AND SHORT TERM INVESTMENTS Short term investments are used by the City to invest excess cash until required to meet the City s current financial obligations Cash 8,105,127 30,860,311 Short term investments 53,306,886 21,304,786 61,412,013 52,165, INVESTMENTS The total investments of $105,954,495 ( $102,338,216) recorded on the consolidated statement of financial position at cost, having a market value of $107,551,396 ( $104,467,378) at the end of the year are comprised of the following: Canada 2,002,841 2,002,236 Provincial 4,578,927 6,982,889 Municipal - own 3,532,452 2,689,467 Municipal - other 11,620,334 12,635,325 Bank 84,219,941 78,028, ,954, ,338, BRANTFORD POWER INC. (BPI)/ CITY OF BRANTFORD RESTRUCTURING In December 2011, the City announced plans to restructure BPI to bring it in compliance with the Ontario Energy Board's Affiliate Relationship Code for Electricity Distributors and Transmitters. During 2012, the following restructuring activities took place: The City transferred a total of 55 positions, one effective January 1, 2012 and the remainder on April 1, 2012 impacting 52 permanent and 3 part-time or contract employees. The transfer of employees resulted in a reduction to the City s post employment benefit obligation of $1,276,000 including vested sick leave obligation of $163,000. This obligation was assumed by BPI. As a result the City transferred $198,905 plus interest from it s sick leave reserve fund to BPI. The City transferred $1,161,705 plus interest for IT and Customer Service Equipment from its reserve funds to BPI. The City also transferred ownership of certain assets including computer hardware and office furniture. Page 15

19 8. INVESTMENT IN BRANTFORD ENERGY CORPORATION In compliance with provincial legislation enacted to restructure the electricity industry in Ontario, Council approved the incorporation of the business of the former Brantford Hydro-Electric Commission ( the Commission ). Through its 100 per cent interest in Brantford Energy Corporation, the City retains its interest in the electricity business conducted by Brantford Energy Corporation s wholly-owned subsidiaries, Brantford Power Inc., Brantford Hydro Inc. and Brantford Generation Inc. The four companies are incorporated under the Ontario Business Corporations Act. Brantford Power Inc. provides regulated electricity distribution services, Brantford Hydro Inc. provides fibre optics networks, water heater rental and sentinel lighting services and Brantford Generation Inc. provides electricity generation. The notes receivable of $25,492,503 is made up of two notes. The Brantford Power Inc. note of $24,189,168 is payable, interest only, at 5.87% per annum, with principal due February 1, The Brantford Hydro Inc. note of $1,303,335 is payable, interest only, at 6.25% per annum, with principal due February 1, The City has the option to extend the maturity date for successive five year periods. The City also has the option to convert the principal sum of the notes into common shares of the corporation at a conversion ratio of $100 per common share. Page 16

20 8. INVESTMENT IN BRANTFORD ENERGY CORPORATION (continued) The following table provides condensed financial information in respect of the consolidated operations of Brantford Energy Corporation for the year ended December 31: As at December Current assets 37,162,013 30,957,118 Non-current assets 11,891,971 11,267,679 Property, plant and equipment 74,585,257 74,905,342 Total Assets 123,639, ,130,139 Current liabilities 18,049,642 15,581,543 Long term debt 58,234,516 55,174,469 Long term customer deposits and other liabilities 7,637,142 9,143,813 Post employment benefits 2,207, ,579 Total Liabilities 86,128,609 80,876,404 Net Equity 37,510,632 36,253,735 Results of Operations: Revenues 24,129,500 21,101,146 Operating expenses 21,989,035 18,101,455 Net Income 2,140,465 2,999,691 The City s investment is comprised of the following: Equity - Beginning of Year Common shares 23,895,512 23,895,512 Prior years accumulated net income 12,358,223 11,302,153 36,253,735 35,197,665 Net income for the year 2,140,465 2,999,691 Restructuring Effects 141,319 - Dividends (1,150,000) (1,800,000) Other Comprehensive Income (Loss) 125,113 (143,621) Change in equity for the year 1,256,897 1,056,070 Equity - End of Year 37,510,632 36,253,735 Notes receivable 25,492,503 25,492,503 Net Investment 63,003,135 61,746,238 Page 17

21 9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Trade payables 27,374,967 28,118,705 Deposits/Unearned revenue 10,646,501 11,749,075 Payable to the provincial and federal government 5,742,013 4,409,380 43,763,481 44,277, DEFERRED REVENUES - OBLIGATORY RESERVE FUNDS A requirement of the public sector accounting principles of the Canadian Institute of Chartered Accountants is that obligatory reserve funds be reported as deferred revenue. This requirement is in place as provincial legislation restricts how these funds may be used and under certain circumstances these funds may possibly be refunded. The balances in the obligatory reserve funds of the City are summarized as follows: Development charges 20,286,523 16,922,039 Subdivision contributions 2,315,109 2,248,663 Recreational land (The Planning Act) 93, ,136 Federal gas tax revenues 3,213,822 6,361,824 Provincial gas tax revenues 3,171,213 2,925,140 Provincial roads and bridges capital funding 33,869 33,722 B-Home Housing Program 128, ,921 Building Code Act 1,740,397 1,317,219 30,982,935 30,204,664 Page 18

22 11. POST EMPLOYMENT/RETIREMENT BENEFITS The City provides certain employee benefits which will require funding in future periods. Under the sickleave benefit plan, unused sick leave can accumulate and employees may become entitled to a cash payment when they leave the City s employment. The City also has obligations for amounts owing to former employees under the Workplace Safety and Insurance Board permanent partial disability pension and for amounts owing under various benefit programs. An actuarial valuation of future liabilities was completed in January 2013 and forms the basis for the estimated liability reported in these financial statements. The weighted average assumptions used in the valuation were as follows: Discount rate 4.00% 4.00% Average compensation increase 2.50% 3.30% Healthcare cost increases Initial rate 9.00% 6.45% Ultimate rate 5.00% 4.75% Grading period 15 years 3 years PostEmployment/Retirement Benefits Medical, Dental, Life Insurance Sick Leave Gratuity Benefits Disability Benefits Total Benefits 2012 Total Benefits 2011 Accrued Benefit End of Prior Year 24,193,733 3,243, ,264 28,059,286 25,011,470 Adjustment to Accrued Benefit Obligation at Jan. 1 (12,481,424) (391,126) 8,294 (12,864,256) (327,229) Accrued Benefit Obligation at Jan. 1 11,712,309 2,852, ,558 15,195,030 24,684,241 Current Period Benefit Cost 566, , ,392 1,154,328 Retirement Interest Expense 478, ,410 23, ,864 1,250,710 Estimated Benefit Payment (632,373) (359,895) (63,364) (1,055,632) (1,318,867) (Gains) Losses 2,288,874 Accrued Benefit Obligation as at December 31 12,124,792 2,793, ,149 15,509,654 28,059,286 Unrecognized Gains (Losses) 4,127, ,120-4,377,654 (8,369,624) Liability as at December 31 16,252,326 3,043, ,149 19,887,308 19,689,662 The City and the Brantford Public Library have established reserves to mitigate the future impact of these obligations, as disclosed in note 21. The balance at the end of the year is $3,592,716 ( $3,836,895). Page 19

23 12. LANDFILL CLOSURE AND POST CLOSURE LIABILITY The City operates one primary landfill site, Mohawk Street landfill. The Mohawk site has capacity of approximately 13,345,000 cubic metres with approximately 7,677,173 cubic metres of capacity left. At current average fill rates, the site has a remaining operating life of approximately 60 to 70 years. It is estimated the total cost to close and maintain the Mohawk site and to maintain all other closed phases is approximately $32,101,858 with $13,634,153 recognized in the financial statements and $18,467,705 to be recognized as the capacity of the Mohawk site is used up. The City has not designated any assets to assist with the cost of closing and maintaining the landfill sites. Once the Mohawk site has reached full capacity it is estimated that post-closure activities would continue for approximately 100 years. 13. PENSION AGREEMENTS The City makes contributions to the Ontario Municipal Employees Retirement System ( OMERS ), which is a multi-employer plan, on behalf of all permanent, full-time members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2012 was $7,767,102 ( $6,984,648) for current and past service. 14. NET LONG TERM LIABILITIES (a) The balance of the net long term liabilities reported on the consolidated statement of financial position is made up as follows: Total long term liabilities incurred by the municipality, including those incurred on behalf of school boards, other municipalities and municipal enterprises and outstanding at the end of the year amounted to 42,753,757 34,491,819 (b) The net long term liabilities reported in (a) of this note are payable as follows: 2013 to 2017 After 2017 From benefiting landowners and user rates 11,775,535 27,762,708 From consolidated municipal enterprises 1,381,289 1,382,708 From the County of Brant 41, ,823 13,198,518 29,555,239 Page 20

24 14. NET LONG TERM LIABILITIES (continued) (c) Included in the long term liabilities are the Municipal Non-Profit Housing Corporation mortgages payable to the Canadian Mortgage and Housing Corporation for the corporation s properties; Beckett Project and Branlyn Meadows Project. The buildings are pledged as security for the mortgages. The mortgages are summarized as follows: Beckett Project 2.65% first mortgage loan to Canada Mortgage and Housing Corporation, due February 2015, payable in monthly installments of $19,270 on account of principal and interest 1,428,299 1,619,148 Branlyn Meadows Project 4.37% first mortgage loan to Canada Mortgage and Housing Corporation, due March 2018, payable in monthly installments of $10,023 on account of principal and interest 1,335,698 1,396,676 2,763,997 3,015,824 (d) (e) As at December 31, 2012, the City held $3,532,452 ( $2,689,467) of the net long term liabilities outstanding. The long term liabilities in (a) issued in the name of the Municipality have received approval of the Ontario Municipal Board for those approved on or before December 31, Those approved after January 1, 1993 have been approved by by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. 15. CHARGES FOR NET LONG TERM LIABILITIES Total charges for the year for net long term liabilities are as follows: Principal 2,738,062 2,575,366 Interest 1,767,065 1,578,122 4,505,127 4,153,488 Page 21

25 16. ACCUMULATED SURPLUS Accumulated surplus consists of the following: For the General Reduction of Taxation: City - operating fund 914, ,661 Brantford Downtown Business Improvement Area 38,757 43,876 Brantford Municipal Non-Profit Housing Corporation 41,318 30, , ,401 Capital fund balance 34,712,787 23,459,154 Brantford Energy Corporation net investment 63,003,135 61,746,238 Reserves 1,782,471 1,782,829 Reserve Funds 82,154,347 86,372,201 Invested in tangible capital assets 709,925, ,661,750 Invested in land inventory 13,758,861 12,882, ,337, ,904,377 Less: Unfunded liabilities 76,294,540 68,534, ,037, ,061, USER CHARGES User charges are comprised of the following: Environmental services 4,324,608 3,833,867 Electrical Utility Services 1,024,360 4,124,392 General government 4,084,646 4,740,414 Health services 368, ,129 Planning and development 501, ,076 Protection services 486, ,633 Recreation and cultural services 6,270,929 5,957,255 Social and family services 981, ,348 Transportation services 4,350,685 4,495,790 Water and wastewater 37,605,918 35,489,743 60,000,069 60,982,647 Page 22

26 18. OTHER REVENUES Other revenues received by the City are comprised of the following sources: Sale of non inventory items 1,809,364 2,513,799 Change in equity in Brantford Energy Corporation 1,256,897 1,056,070 Interest earned on Utility promissory notes 1,501,362 1,509,022 Dividend received from Brantford Energy Corporation 1,150,000 1,800,000 Donations 343, ,156 Transfer from trust funds 113, ,368 Other recoveries and rebates 1,732,705 1,330,070 7,907,667 8,610, EMPLOYEE COMPENSATION The Public Sector Salary Disclosure Act, 1996, requires municipalities to disclose annually the names, positions, salaries and taxable benefits of employees paid $100,000 or more in In 2012 the City of Brantford had 114 employees paid $100,000 or more in the calendar year. This information was published in the Brantford Expositor and can also be found on the Ministry of Finance website at: OPERATIONS OF SCHOOL BOARDS Further to Note 1(a)(iv), the taxation, other revenues and requisitions and the overlevies (underlevies) of the school boards are comprised of the following: Taxation and user charges 37,279,570 38,740,991 Requisitions 37,279,570 38,740,991 Overlevies (underlevies) - end of year - - Page 23

27 21. RESERVES AND RESERVE FUNDS The total balance of reserves and reserve funds of $1,782,471 ( $1,782,829) and $82,154,347 ( $86,372,201) respectively is made up of the following: Reserves set aside for specific purposes by Council: Library - sick leave 180, ,938 Library - other 1,601,482 1,617,891 Total Reserves 1,782,471 1,782,829 Reserve funds set aside for specific purposes by Council: Replacement of equipment 790,187 2,861,139 Sick leave 3,411,727 3,671,957 Insurance 2,528,848 2,099,097 Social housing 7,148,886 6,870,398 Protection services 1,442,666 3,302,918 Transportation 4,241,722 4,340,339 Wastewater 19,192,399 15,126,471 Waste disposal 3,012,347 2,971,527 Industrial development 2,269,328 2,345,642 Water 22,478,245 22,113,210 Brownfields 1,942,461 1,672,581 Contingencies 2,520,628 3,137,020 Other 11,174,903 15,859,902 Total Reserve Funds 82,154,347 86,372,201 Total Reserves and Reserve Funds 83,936,818 88,155,030 Page 24

28 22. CONTRACTUAL OBLIGATION - ONTARIO CLEAN WATER AGENCY (OCWA) In accordance with an operating service agreement between the Municipality and the Ministry of the Environment, the existing wastewater treatment plant is operated by the OCWA. The Municipality is obligated to meet all operating costs related to the plant. Included in the Consolidated Statement of Operations are the 2012 charges from the OCWA of $3,711,758 ( $3,409,234). Information received from the OCWA pertaining to the wastewater treatment plant indicated the following: Accumulated Net Operating Surplus (Deficit) Balance - Beginning of Year (25,286) 89,662 Deficit paid to (Surplus refunded by) OCWA 25,286 (89,662) Operating expenditures (3,663,279) (3,524,182) Payments made by the city 3,686,472 3,498,896 Balance - End of Year 23,193 (25,286) The accumulated net operating surplus (deficit) and reserve fund for capital expenditures indicated above are not reflected in the Consolidated Statement of Financial Position. Reserve Fund for Capital Expenditures Balance - Beginning of Year 110, ,148 Interest Capital Expenditures (110,617) Balance - End of Year - 110,429 In 2011, the reserve fund for capital expenditures was managed by OCWA. In 2012, OCWA closed the reserve fund and transferred the funds to the City s wastewater reserve fund for the City to manage. 23. BUDGET FIGURES Brantford City Council completes budget reviews for its operating and capital budgets annually. The approved consolidated operating budgets for 2012 are reported on the statement of operations and are not adjusted for full accrual accounting. For capital spending, budgets are set for individual projects and funding for these projects are determined annually and made by transfers from reserve funds and by the application of grants or other funds available to apply to capital projects. Page 25

29 24. COMPARATIVE FIGURES Certain of the prior year's figures, provided for purpose of comparison, have been reclassified to conform to the current year's statement presentation. 25. CONTINGENT LIABILITIES (a) Corporation of the City of Brantford (i) The City has been named as a defendant in an action regarding property development within the City of Brantford. The amount and nature of the possible outcome is not determinable at this time and as a result no provision has been made in the financial statements. (ii) The City has been named as a respondent in an attempt to have certain City by-laws set aside. The amount and nature of the possible outcome is not determinable at this time and as a result no provision has been made in the financial statements. (iii) An action has been commenced against the City alleging an ongoing duty to consult with aboriginal persons. The amount and nature of the possible outcome is not determinable at this time and, as a result, no provision has been made in the financial statements. (iv) Certain claims have been issued against the City related to property expropriation. The amount and nature of the possible outcome is not determinable at this time and as a result no provision has been made in the financial statements. (v) The City is the respondent to an appeal to the Ontario Municipal Board related to land development. Any settlement (if any) related to this appeal has not been determined and as a result, no provision has been made in these financial statements. (vi) An action has been commenced against the City related to outstanding costs associated with repair to an ongoing construction engagement. The amount and nature of any outcome cannot be determined at this time and as a result, no provision has been made in these financial statements. (vii) A claim has been filed against the City by an individual. The claim relates to the City s alleged involvement with a property developer and related corporations. The action is being defended by the City. (viii) A claim has been filed against the City by a corporation. The claim relates to procurement issues with respect to the Wayne Gretzky Sports Centre project. The action is being defended by the City. (ix) The City has been named in two Human Rights matters. The matters are being defended by the City. As the outcome of the claims cannot be determined at this time, no provision, if any, has been made in these financial statements. Page 26

30 25. CONTINGENT LIABILITIES (continued) (b) Brantford Energy Corporation (i) General Liability Insurance - The Company has obtained general liability and enhanced directors and officers insurance coverage from the Municipal Electric Association Reciprocal Insurance Exchange ( The MEARIE Group ) expiring January 1, The MEARIE Group is an insurance reciprocal whereby all members through the unincorporated group share risks with each other. Members of the MEARIE Group are assessed a premium deposit at policy execution. Should the group experience losses that are in excess of the accumulated premium deposits of the members combined with reserves and supplementary insurance, members would be assessed a supplementary or retro assessment on a pro-rata basis for the years in which the Company was a member. As at December 31, 2012, the Company has not been made aware of any additional assessments. Participation in MEARIE covers a three year underwriting period which expires on January 1, CONTRACTUAL OBLIGATIONS AND COMMITMENTS (a) Corporation of the City of Brantford (i) Grand Erie District School Board (GEDSB) Through an agreement in 2001, the City purchased TB Costain School from the GEDSB. The school is operated as a community centre under the direction of the City s Parks and Recreation department. The agreement expires July 25, 2014 with the purchase price of $265,000 (upper limit) or the amount may be used as a credit against the purchase of City lands by the GEDSB. (ii) Wilfrid Laurier University Through an agreement in 2011, the City has committed a grant for the development of a new Academic Centre. The grant in the amount of $1,300,000 is to be paid to the University in annual instalments. The remaining amount will be paid as follows: $150,000 for year 2013, $175,000 for years 2014 to 2017 and $150,000 for the year 2018 (iii) St. Joseph s Health Care System Through an agreement in 2011, the City has committed to subsidize $3,327,683 for the operation of the St. Joseph s Lifecare Centre until The remaining amount of annual subsidy will be paid as follows: $870,996 for year 2013, and $714,695 for the year (iv) Stedman Community Hospice Through a resolution of City Council in 2011, the City has committed to provide the Stedman Community Hospice $1,200,000. The funds can be used by the Hospice for capital purposes only. The remaining amount will be paid as follows: $240,000 for years 2013 to Page 27

31 26. CONTRACTUAL OBLIGATIONS AND COMMITMENTS (continued) (v) Brant Community Healthcare System Through a resolution of City Council in 2012, the City has committed to provide the Brant Community Healthcare System $750,000. The funds are to be used towards the post-graduate residency program. The remaining amount will be paid as follows: $300,000 for year 2013 (vi) Kiwanis Field Through a resolution of City Council in 2012, the City has committed to provide the Kiwanis Field project $400,000. The funds are to be used towards the new track and field facility. The amount will be paid as follows: $150,000 for year 2013, and $125,000 for years 2014 to 2015 (vii) Financing Leases The City has entered into financing leases for various equipment, vehicles, and properties with annual lease payments as follows: ,742, ,405, ,256, ,230, ,226, to ,198,340 (b) Brantford Energy Corporation (i) The Company has contracted Wajax Power Systems (Wajax) to design and build the LFG facilities for a fixed amount of $13,193,446. In addition, the contract provides for Wajax to provide operation and maintenance services for a period of ten years beginning with the commercial operations of the facilities. The Company also has an option to extend the term of these services for an additional ten years. (ii) The Company has also entered into an agreement with the City allowing the Company access to the Mohawk Street landfill to install, operate and maintain a landfill gas collection and utilization system. This agreement expires August 22, (iii) Smart Meter Initiative The OEB had mandated that the Company is to bill Time of Use Prices using Smart Meter electricity meters and the Provincial Meter Data Management/Repository effective July The Company was granted an extension of the effective date to December The Company has installed approximately 37,185 (December 31, ,134) Smart Meters as of the end of 2012 and anticipates having installed a total of 37,240 Smart Meters upon completion of its mass deployment. Page 28

32 27. FUTURE ACCOUNTING CHANGES Public Sector Accounting Handbook section 3260 Liability for Contaminated Sites, applies to fiscal years beginning on or after April 1, This standard requires that the City recognize a liability for remediation of contaminated sites when contamination of a site, for which the City is directly responsible or accepts responsibility, exceeds an existing environmental standard and a reasonable estimate of the remediation costs can be made. The City is in the process of establishing an inventory of contaminated sites and evaluating if it will be required to recognize a liability for remediation of any of the sites. Page 29

33 Tangible Capital Assets - Continuity Schedule SCHEDULE 1 For the year ended December 31, 2012 Land Land Improvements Building Machinery & Equipment Infrastructure Assets Under Construction 2012 Total (incl WIP) 2011 Total (incl WIP) Total Historical Cost: Balance: Beginning of year 35,746,622 43,848, ,640,818 69,508, ,693,636 20,957,454 1,187,395,901 1,148,152,861 Add: Additions during the year - 6,981,548 1,247,779 4,053,355 18,026,361 25,928,122 56,237, ,234,827 Less: Disposals during the year - 110,409 27,654 2,579,285 1,637,550 8,278,036 12,632,934 83,991,789 Balance: End of year 35,746,622 50,720, ,860,943 70,982, ,082,447 38,607,540 1,231,000,132 1,187,395,899 Accumulated Amortization: Balance: Beginning of year 155,312 21,519, ,329,425 37,669, ,060, ,734, ,814,165 Add: Amortization expense 14,540 2,070,570 6,139,851 5,813,230 16,901,329-30,939,520 27,835,430 Less: Accum amort on disposals - 72,161 27,652 2,117,966 1,381,555-3,599,334 6,915,446 Balance: End of year 169,852 23,517, ,441,624 41,365, ,580, ,074, ,734,149 Total: NET BOOK VALUE 35,576,770 27,202, ,419,319 29,617, ,502,376 38,607, ,925, ,661,750 Page 30