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HomeMy WebLinkAboutFIN-10-074 - Financial Plan - Kitchener Water Distribution SystemREPORT Report To: Councillor B. Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee Date of Meeting: June 7, 2010 Submitted By: Dan Chapman, General Manager of Financial Services Prepared By: Sheri Brisbane, Supervisor of Financial Reporting Ruth-Anne Goetz, Senior Financial Analyst Angela Mick, Utilities Water Engineer Ward(s) Involved: All Date of Report: May 21, 2010 Report No.: FIN-10-074 Subject:Financial Plan – Kitchener Water Distribution System RECOMMENDATION: THAT the "Financial Plan – Kitchener Water Distribution System" be approved as it demonstrates of the financial viability of the Kitchener drinking water system in accordance with Ontario Regulation 453/07 (Financial Plans) under Subsection 30 of the Safe Drinking Water Act. BACKGROUND: The Drinking Water Quality Management Standard (DWQMS), under the Safe Drinking Water Act, 2002 andRegulation 188/07, required the City of Kitchener to become licenced to operate and maintain Kitchener’s Water Distribution System. The City was licenced on August 20, 2009. As a condition of the licence, a Financial Plan must be approved by resolution and submitted to the Province by July 1, 2010. The following reports have been submitted to council previously regarding the progress of the DWQMS and annual reports will continue to be submitted in the future: FIN-08-013 (Drinking Water Quality Management Standard) – a general information report outlining the requirements of the DWQMS and the Owner’s responsibilities/standard of care FIN-08-133 (Drinking Water Quality Management Standard) – required the endorsement of the DWQMS Operational Plan FIN-09-001 (Drinking Water Quality Management Standard) – Management Review Summary – an annual (2008) summary of the management review îí ó ï FIN-09-157 (Agreement for the Accreditation of the Operating Authority of Municipal Drinking Water Systems) – authorization of an agreement with the Canadian General Standards Board (CGSB) for the purpose of providing the City of Kitchener with an Accreditation to Operate the Municipal Drinking Water Systems FIN-10-06 (Drinking Water Quality Management Standard) – Management Review Summary (2009) – an annual summary of the management review. This report also highlighted: “The next requirement is for the development of a Financial Plan which is due in July 2010 – this plan will be brought forward to Council for approval” REPORT: The requirements of the Financial Plan are outlined in Ontario Regulation 453/07 (Section 3) as follows: Details of the proposed or projected financial position of the drinking water system Details of the proposed or projected financial operations of the drinking water system Details of the drinking water system’s proposed or projected gross cash receipts and gross cash payments Details of the extent to which the information described in the above relate directly to the replacement of lead service pipes The financial plan has been developed using Council-approved budgets, recently inventoried capital asset data and other financial forecasts. The highlights of the Financial Plan are as follows: An annual operating surplus and accumulated surplus is expected for each of the six years covered by the plan, primarily as a result of the significant prior and ongoing investment in capital assets Cash flow is balanced in 2010 and positive for the balance of the forecast – this cash flow is required to supplement funding for the accelerated infrastructure program and possibly the implementation of automated water meters depending on the outcome of the 2010 pilot project In light of the above, the drinking water system is considered to be financially viable as required by Ontario Regulation 453/07 (Financial Plans) Refer to the attached Financial Plan for the detailed analysis. FINANCIAL IMPLICATIONS: None COMMUNICATIONS: Regulations require the owner of the drinking-water system to: Make the Financial Plan available, on request, to members of the public who are served by the drinking water system without charge Make the Financial Plan available to members of the public without charge through publication on the internet Provide notice advising the public of the availability of the Financial Plan Provide a copy of the Financial Plan to the Ministry of Municipal Affairs and Housing Staff will ensure that these requirements are met subsequent to Council approval. îí ó î ACKNOWLEDGED BY: Dan Chapman, General Manager of Financial Services îí ó í Õ·¬½¸»²»® ˬ·´·¬·»­ Ü®·²µ·²¹ É¿¬»® Ü·­¬®·¾«¬·±² ͧ­¬»³ Ú·²¿²½·¿´ д¿² Ó«²·½·°¿´ Ü®·²µ·²¹ É¿¬»® Ô·½»²½» ðïçóïðï Ö«²» îðïð °¿¹» ï ±º é îí ó ì Ý·¬§ ±º Õ·¬½¸»²»® É¿¬»® Ü·­¬®·¾«¬·±² Ú·²¿²½·¿´ д¿² ÌßÞÔÛ ÑÚ ÝÑÒÌÛÒÌÍ Í»½¬·±² ïæ ײ¬®±¼«½¬·±²òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòí Í»½¬·±² îæ λ¹«´¿¬±®§ λ¯«·®»³»²¬­òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòí Í»½¬·±² íæ ß­­»¬­ñÔ·¿¾·´·¬·»­ñÒ»¬ Ü»¾¬ñÌ¿²¹·¾´» Ý¿°·¬¿´ ß­­»¬­òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòì Í»½¬·±² ìæ 못²«»­ñÛ¨°»²­»­ñÍ«®°´«­ñÜ»º·½·¬òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòë Í»½¬·±² ëæ λ½»·°¬­ ¿²¼ п§³»²¬­òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòë Í»½¬·±² êæ Ô»¿¼ Í»®ª·½»­òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòé Í»½¬·±² éæ Í«³³¿®§òòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòòé °¿¹» î ±º é îí ó ë Ý·¬§ ±º Õ·¬½¸»²»® É¿¬»® Ü·­¬®·¾«¬·±² Ú·²¿²½·¿´ д¿² Í»½¬·±² ïæ ײ¬®±¼«½¬·±² ̸» Ü®·²µ·²¹ É¿¬»® Ï«¿´·¬§ Ó¿²¿¹»³»²¬ ͬ¿²¼¿®¼ øÜÉÏÓÍ÷ô «²¼»® ¬¸» ¿²¼ ô ®»¯«·®»¼ ¬¸» Ý·¬§ ±º Õ·¬½¸»²»® ¾»½±³» ´·½»²­»¼ ¬± ±°»®¿¬» ÜÏÙÐÜÔÏÉÜÔÏòÔÉÚÕØÏØËiÊæÜÉØËùÔÊÉËÔÛÈÉÔÎÏêÄÊÉ»³ò ̸» Ý·¬§ ©¿­ ´·½»²½»¼ ±² ß«¹«­¬ îðô îððç ¸±©»ª»® ¿­ ¿ ½±²¼·¬·±² ±º ¬¸» ´·½»²½»ô ¿ Ú·²¿²½·¿´ д¿² ³«­¬ ¾» ¿°°®±ª»¼ ¾§ ®»­±´«¬·±² ¿²¼ ­«¾³·¬¬»¼ ¾§ Ö«´§ ïô îðïð øѲ¬¿®·± λ¹«´¿¬·±² ìëíñðé÷ò ̸» Ú·²¿²½·¿´ д¿² ¿°°´·»­ º±® ¿¬ ´»¿­¬ ­·¨ §»¿®­ ­¬¿®¬·²¹ ·² §»¿® îðïð øîðïðóîðïë÷ò Í»½¬·±² îæ λ¹«´¿¬±®§ λ¯«·®»³»²¬­ Ѳ¬¿®·± λ¹«´¿¬·±² ìëíñðé ®»¯«·®»­ ¬¸¿¬ º·²¿²½·¿´ °´¿²­ ·²½´«¼» ¬¸» º±´´±©·²¹æ Ü»¬¿·´­ ±º ¬¸» °®±°±­»¼ ±® °®±¶»½¬»¼ º·²¿²½·¿´ °±­·¬·±² ±º ¬¸» ¼®·²µ·²¹ ©¿¬»® ­§­¬»³ ·¬»³·¦»¼ ¾§æ ßò̱¬¿´ º·²¿²½·¿´ ¿­­»¬­ Þò̱¬¿´ ´·¿¾·´·¬·»­ ÝòÒ»¬ ¼»¾¬ ÜòÒ±²óº·²¿²½·¿´ ¿­­»¬­ ¬¸¿¬ ¿®» ¬¿²¹·¾´» ½¿°·¬¿´ ¿­­»¬­ô ¬¿²¹·¾´» ½¿°·¬¿´ ¿­­»¬­ «²¼»® ½±²­¬®«½¬·±²ô ·²ª»²¬±®·»­ ±º ­«°°´·»­ ¿²¼ °®»°¿·¼ »¨°»²­»­ Ûòݸ¿²¹»­ ·² ¬¿²¹·¾´» ½¿°·¬¿´ ¿­­»¬­ ¬¸¿¬ ¿®» ¿¼¼·¬·±²¿´ô ¼±²¿¬·±²­ô ©®·¬» ¼±©²­ ¿²¼ ¼·­°±­¿´­ Ü»¬¿·´­ ±º ¬¸» °®±°±­»¼ ±® °®±¶»½¬»¼ º·²¿²½·¿´ ±°»®¿¬·±²­ ±º ¬¸» ¼®·²µ·²¹ ©¿¬»® ­§­¬»³ ·¬»³·¦»¼ ¾§æ ßò̱¬¿´ ®»ª»²«»­ô º«®¬¸»® ·¬»³·¦»¼ ¾§ ©¿¬»® ®¿¬»­ô «­»® ½¸¿®¹»­ ¿²¼ ±¬¸»® ®»ª»²«»­ Þò̱¬¿´ »¨°»²­»­ô º«®¬¸»® ·¬»³·¦»¼ ¾§ ¿³±®¬·¦¿¬·±² »¨°»²­»­ô ·²¬»®»­¬ »¨°»²­»­ ¿²¼ ±¬¸»® »¨°»²­»­ Ýòß²²«¿´ ­«®°´«­ ±® ¼»º·½·¬ Üòß½½«³«´¿¬»¼ ­«®°´«­ ±® ¼»º·½·¬ ùØÉÜÔÑÊÎ×ÉÕØÙËÔÏÒÔÏÖÆÜÉØËÊÄÊÉØÐiÊÍËÎÍÎÊØÙÎË °®±¶»½¬»¼ ¹®±­­ ½¿­¸ ®»½»·°¬­ ¿²¼ ¹®±­­ ½¿­¸ °¿§³»²¬­ ·¬»³·¦»¼ ¾§æ ßòÑ°»®¿¬·²¹ ¬®¿²­¿½¬·±²­ô ¬¸¿¬ ¿®» ½¿­¸ ®»½»·ª»¼ º®±³ ®»ª»²«»­ô ½¿­¸ °¿·¼ º±® ±°»®¿¬·²¹ »¨°»²­»­ ¿²¼ º·²¿²½·¿´ ½¸¿®¹»­ °¿¹» í ±º é îí ó ê Ý·¬§ ±º Õ·¬½¸»²»® É¿¬»® Ü·­¬®·¾«¬·±² Ú·²¿²½·¿´ д¿² ÞòÝ¿°·¬¿´ ¬®¿²­¿½¬·±²­ô ¬¸¿¬ ¿®» °®±½»»¼­ ±² ¬¸» ­¿´» ±º ¬¿²¹·¾´» ½¿°·¬¿´ ¿­­»¬­ ¿²¼ ½¿­¸ «­»¼ ¬± ¿½¯«·®» ½¿°·¬¿´ ¿­­»¬­ Ýòײª»­¬·²¹ ¬®¿²­¿½¬·±²­ô ¬¸¿¬ ¿®» °®±½»»¼­ º®±³ ¬¸» ·­­«¿²½» ±º ¼»¾¬ ¿²¼ ¼»¾¬ ®»°¿§³»²¬ Üòݸ¿²¹»­ ·² ½¿­¸ ¿²¼ ½¿­¸ »¯«·ª¿´»²¬­ ¼«®·²¹ ¬¸» §»¿® ÛòÝ¿­¸ ¿²¼ ½¿­¸ »¯«·ª¿´»²¬­ ¿¬ ¬¸» ¾»¹·²²·²¹ ¿²¼ »²¼ ±º ¬¸» §»¿® Ü»¬¿·´­ ±º ¬¸» »¨¬»²¬ ¬± ©¸·½¸ ¬¸» ·²º±®³¿¬·±² ¼»­½®·¾»¼ ·² ¬¸» ¿¾±ª» ®»´¿¬» ¼·®»½¬´§ ¬± ¬¸» ®»°´¿½»³»²¬ ±º ´»¿¼ ­»®ª·½» °·°»­ò Í»½¬·±² íæ ß­­»¬­ñÔ·¿¾·´·¬·»­ñÒ»¬ Ü»¾¬ñÌ¿²¹·¾´» Ý¿°·¬¿´ ß­­»¬­ ß ­«³³¿®§ ±º ¬¸» ß­­»¬­ô Ô·¿¾·´·¬·»­ô Ò»¬ Ü»¾¬ ¿²¼ Ì¿²¹·¾´» Ý¿°·¬¿´ ß­­»¬­ ¿®» °®±ª·¼»¼ ·² ͽ¸»¼«´» ï ò Schedule 1 Statement of Financial Position - Water (in thousands) 201020112012201320142015 Financial Assets12,575 29,467 36,106 1 5,505 1 8,70923,722 Liabilities 1,5051,467 1,626 1,668 1 ,5441,585 Net Financial Assets11,108 27,841 34,438 1 4,000 1 7,16522,138 Non-financial Assets Tangible Capital Assets49,973 62,871 65,855 5 3,389 5 6,96959,914 Additions 4,2065,309 4,298 4,492 4 ,5814,109 -portion related to lead replacement48 5 0 5 1 - - - Donations576 638 654 5 90 6 06622 Disposals195 216 222 2 00 2 05211 Write-downs and Depr'n 1,180988 1,763 1,942 1 ,4011,575 Assets Under Construction829 396 647 8 95 6 52147 Inventory of supplies126 140 143 1 29 1 33136 Prepaid expenses36 3 7 3 8 3 9 4 041 Accumulated Surplus62,07168,450 74,957 8 2,374 91,289101,124 °¿¹» ì ±º é îí ó é îí ó è îí ó ç Ý·¬§ ±º Õ·¬½¸»²»® É¿¬»® Ü·­¬®·¾«¬·±² Ú·²¿²½·¿´ д¿² Í»½¬·±² êæ Ô»¿¼ Í»®ª·½»­ Ô»¿¼ ­»®ª·½»­ ¿®» ®»°´¿½»¼ ¿­ °¿®¬ ±º ®±¿¼ ®»½±²­¬®«½¬·±² °®±¶»½¬­ò ̸» Ý·¬§ ±º Õ·¬½¸»²»® Ü»ª»´±°³»²¬ ú Ì»½¸²·½¿´ Í»®ª·½»ÊùØÍÜËÉÐØÏÉ n úÜ°·¬¿´ ײº®¿­¬®«½¬«®» ɱ®µ­ ±«¬´·²»­ ¬¸» °®±°±­»¼ ®»½±²­¬®«½¬·±² °®±¶»½¬­ º±® ¬¸» ²»¨¬ ï𠧻¿®­ò ß´¬¸±«¹¸ ²±¬ ¿´´ ¬¸» ­¬®»»¬­ ½±²¬¿·² ´»¿¼ ­»®ª·½»­ô ¿´´ ±º ¬¸» ©¿¬»® ­»®ª·½»­ ¿®» ®»°´¿½»¼ º±® »ª»®§ ®»½±²­¬®«½¬·±² °®±¶»½¬ò Ú·²¿²½·¿´ ¼»¬¿·´­ ®»´¿¬·²¹ ¬± ¬¸» ®»½±²­¬®«½¬·±² °®±¶»½¬­ ¿®» ·²½´«¼»¼ ·² ͽ¸»¼«´» ï ò Ô»¿¼ ­»®ª·½»­ ¿®» ¿´­± ®»°´¿½»¼ ·²¼·ª·¼«¿´´§ ©¸»² ¬¸»§ ¿®» º±«²¼ ·² ¬¸» º·»´¼ô ·º ¬¸» º«´´ ®»½±²­¬®«½¬·±² °®±¶»½¬ ¸¿­ ²±¬ ¾»»² ·¼»²¬·º·»¼ ·² ¬¸» ½¿°·¬¿´ º±®»½¿­¬ ¿²¼ ·º ¬¸» ²»© ­»®ª·½» ½¿² ¾» ½±²²»½¬»¼ ¬± ¬¸» ½«­¬±³»® ­·¼»ò ̸» ¾«¼¹»¬ º±® ·²¼·ª·¼«¿´ ´»¿¼ ­»®ª·½» ®»°´¿½»³»²¬ ·­ ·²½´«¼»¼ «²¼»® ͽ¸»¼«´» ï ø°±®¬·±² ®»´¿¬»¼ ¬± ´»¿¼ ®»°´¿½»³»²¬÷ò Í»½¬·±² éæ Í«³³¿®§ ̸» Ú·²¿²½·¿´ д¿² ·²¼·½¿¬»­ ¬¸» ¼®·²µ·²¹ ©¿¬»® ­§­¬»³ ·­ º·²¿²½·¿´´§ ª·¿¾´» ¿­ ®»¯«·®»¼ ¾§ Ѳ¬¿®·± λ¹«´¿¬·±² ìëíñðé Ú·²¿²½·¿´ д¿²­ ¿²¼ «²¼»® Í«¾­»½¬·±² í𠱺 ¬¸» Í¿º» Ü®·²µ·²¹ É¿¬»® ß½¬ò ̸» Ú·²¿²½·¿´ д¿² ©·´´ ¾» ®»¯«·®»¼ ¬± ¾» «°¼¿¬»¼ ¿­ ¿ ½±²¼·¬·±² ±º ´·½»²½» ®»²»©¿´ò ̸» ½«®®»²¬ ´·½»²­» »¨°·®»­ ·² Ú»¾®«¿®§ô îðïìò °¿¹» é ±º é îí ó ïð