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HomeMy WebLinkAbout2011-11-07FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 CITY OF KITCHENER The Finance and Corporate Services Committee met this date commencing at 1:20 p.m. Present: Councillor J. Gazzola - Chair Mayor C. Zehr and Councillors S. Davey, B. Vrbanovic, Y. Fernandes, K. Galloway, B. Ioannidis, F. Etherington and D. Glenn-Graham. Staff: C. Ladd, Chief Administrative Officer D. Chapman, Deputy CAO, Finance & Corporate Services J. Willmer, Deputy CAO, Community Services R. Gosse, Director, Legislated Services & City Clerk R. Hagey, Interim Director, Financial Planning R. Regier, Executive Director, Economic Development C. Fletcher, Director, Facilities Management J. McBride, Director, Transportation Planning W. Malcolm, Director of Utilities T. Beckett, Fire Chief S. Allen, Manager, Engineer Design & Approvals D. Keelan, Manager, Aquatics & Athletics L. Palubeski, Manager, Programs & Resources K. Mick, Design & Approvals Engineer J. Billett, Committee Administrator INS-11-083 - PURCHASE ORDER EXTENSION 1. - CONSULTING SERVICES - HALL’S LANE RECONSTRUCTION The Committee considered Infrastructure Services Department report INS-11-083, dated October 24, 2011 requesting an extension to the Purchase Order for the Halls Lane Reconstruction project. Questions were raised concerning the substantive increase in the number of working days originally estimated for this project and the associated increase in costs. Mr. S. Allen explained that during the design phase the scope of the project changed as a result of requests from Kitchener-Wilmot Hydro, Bell Canada and Rogers Cable to have the City undertake improvements on their behalf as part of the Halls Lane project. Inclusion of the additional work has increased the number of estimated working days from 235 to 365 and in order for the consultant to continue through to completion of the project it is necessary to extend the purchase order. Mr. Allen further explained that the City will be seeking reimbursement of the costs of the additional work from the utilities as it is directly attributable to their plant works. He pointed out that to this end, the City has an agreement in principle and when the work is completed staff will provide the full costing and rationale to the utilities for reimbursement to the City. Councillor D. Glenn-Graham requested that staff investigate the condition of the road surface on Hall’s Lane between Ontario and Queen Streets to ensure safe travel of motor vehicles. Councillor Y. Fernandes raised concerns regarding the increase in consultant fees, questioning if it is a means to draw out unspent budget dollars and suggested that project estimates should be more carefully assessed and project budgets more stringently adhered to. Councillor F. Etherington questioned if the amount of increased working days is unusual. Mr. S. Allen expressed the opinion it is not a matter of being “unusual” but rather is an uncommon occurrence. He noted that many projects are assessed accurately and many come in under budget; however, this and the Grand River Slope Stabilization project also under consideration this date, are unique and largely complex. He added that it was not that the project was incorrectly assessed but rather that additional work was identified by outside agencies during the design phase that changed the scope of the project. Ms. C. Ladd commented that out of an annual $80M capital budget and hundreds of projects per year not many return requesting an extension. She added that over the past 3 years staff has been able to mitigate the City’s operating budget deficits in part through transfer of funds from capital close-outs resulting from projects that came in under budget. She stated that in a few cases due to the complexity of the project and some times unforeseen circumstances, FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 - 138 - CITY OF KITCHENER INS-11-083 - PURCHASE ORDER EXTENSION 1. - CONSULTING SERVICES - HALL’S LANE RECONSTRUCTION (CONT’D) there is a necessity to return to request consideration of an extension. Ms. Ladd noted that disciplines have been built into project management practices that have resulted in a more proactive approach and with only a few out of hundreds of projects per year coming back, was of the opinion that staff is doing a good job of project budgeting. It was noted that the first paragraph under the heading “Background” in report INS-11-083 incorrectly references the completion date of Phase 1 of the Halls Lane project as “December 2011” and should instead reflect a completion date of “May 2012”. Councillor J. Gazzola questioned the impact of not approving the requested extension. Mr. S. Allen advised that Phase 1 of the project could still be completed but without extension of the purchase order the City would not be in a position to complete the whole of the project. On motion by Councillor K. Galloway - it was resolved: “That Purchase Order #201033 to WalterFedy be extended for the additional amount of $305,049 plus applicable taxes for the Halls Lane Reconstruction project, with an estimated $170,590 to be recovered from external utilities.” INS-11-084 - PURCHASE ORDER EXTENSION 2. CONSULTING SERVICES - - GRAND RIVER EROSION CONTROL The Committee considered Infrastructure Services Department report INS-11-084, dated October 28, 2011 requesting an extension to the Purchase Order for the Grand River Slope Stabilization project. On motion by Councillor K. Galloway - it was resolved: “That Purchase Order #201645 to MTE Consulting Inc. be extended for the additional amount of $50,860 plus applicable taxes for the Grand River Slope Stabilization project.” INS-11-090 - CONTRACT EXTENSION - VACUUM EXCAVATING 3. The Committee considered Infrastructure Services Department report INS-11-090, dated November 1, 2011 requesting an extension to the contract for vacuum excavating on gas and water infrastructure. On motion by Councillor K. Galloway - it was resolved: “That Contract Number 905535 be extended by $45,000 to cover vacuum excavating on gas and water infrastructure until the end of 2011.” CSD-11-149 - SELF CONTAINED BREATHING APPARATUS (SCBA) - PURCHASE 4. The Committee considered Community Services Department report CSD-11-149, dated October 18, 2011 requesting permission to waive the tender process and enter into negotiations with Draeger Safety Canada Limited for the acquisition of Self Contained Breathing Apparatus (SCBA) equipment. Fire Chief T. Beckett advised that existing SCBA equipment has been upgraded several times over its 20 year life span and has now reached a point that it can no longer be upgraded and remain in compliance with Occupational Health and Safety Act requirements. Following extensive review and testing of five manufacturers, Kitchener’s Evaluation Committee chose to recommend the SCBA equipment manufactured by Draeger Safety Canada Limited, who was FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 - 139 - CITY OF KITCHENER CSD-11-149 - SELF CONTAINED BREATHING APPARATUS (SCBA) - PURCHASE 4. (CONT’D) the overall highest in ranking. Fire Chief Beckett advised that this manufacturer is the only supplier of the recommended equipment and therefore, if tendered the City would receive only one bid submission. Accordingly, staff is recommending that the tendering process be waived and negotiations be entered into with Draeger for purchase of their SCBA equipment. Councillor Y. Fernandes questioned if the existing provider’s equipment was reviewed. Fire Chief Beckett advised that Interspiro was one of the manufacturers reviewed; however, the equipment they provided for testing was not certified and therefore, did not meet the required safety approvals. He noted that an opportunity was given to Interspiro to provide different equipment for testing but they chose instead to withdraw from the evaluation process. Councillor Fernandes questioned if the equipment of MSA could be used with the masks currently utilized by Fire Services staff. Fire Chief Beckett advised that SCBA equipment is not interchangeable and if used in piecemeal any warranty would be void. He added that Fire Services nationally are lobbying for changes that would permit interchanging of equipment as there is agreement within the service industry that this should be the case. Councillor Fernandes questioned the potential for the negotiated price with Draeger to exceed the quote given by MSA. Fire Chief Beckett responded that he hoped to negotiate lower pricing but suggested that should negotiations result in higher pricing the matter could be returned to the Committee for further consideration. Councillor S. Davey questioned that having waived the tendering process, if the negotiated contract would still come back to the Committee for review. Mr. D. Chapman advised that the City’s Purchasing By-law permits staff to negotiate in this instance and the negotiated contract would not come back for review save and except if the end result exceeds budgeted funding for the equipment. He added that the Purchasing By-law allows for anything over 10% of budgeted funding to be dealt with administratively. Councillor J. Gazzola questioned the impact of Kitchener independently negotiating with a differing manufacturer rather than continuing to negotiate jointly with the Cities of Waterloo and Cambridge. Fire Chief Beckett stated that while the outcome of negotiations is still unknown, he believed Kitchener could achieve similar pricing to that of Waterloo and Cambridge. On motion by Councillor D. Glenn-Graham - it was resolved: “That the tender process for the purchase of Draeger PSS 7000 Self Contained Breathing Apparatus (SCBA) from Draeger Safety Canada Limited be waived; and further, That Fire Services and Purchasing engage in negotiations with Draeger Safety Canada for the acquisition.” FCS-11-206 - 2012 BUDGET OVERVIEW 5. The Committee considered Finance and Corporate Services Department report FCS-11-206, dated October 31, 2011 which provides context for the upcoming 2012 budget deliberations. Mr. R. Hagey presented the budget overview, focusing on municipal budgeting fundamentals, the City’s financial position and the 2012 budget process. It was noted that the City’s overall financial position is sound and within the range of municipal comparators; however, debt is trending upwards to a high level while Reserves trend downward to low levels and these two trends must be addressed. To build Reserves and Reserve Funds annual budgeted contributions are recommended, as well as elimination of transfers out of the Tax Stabilization Reserve Fund, reduction and/or elimination of (projected) deficits in individual reserves and creation of stabilization and capital reserves for all enterprises. It was noted that the recommendation concerning creation of stabilization and capital reserves for all enterprises will be presented for discussion at the upcoming capital budget deliberations on November 17, 2011. To address debt trends it is recommended that no new debt be issued until debt to reserve ratios are in a more balanced position (1:1), with the exception of the annual capital budget provision in accordance with approvedpolicy and the capital forecast; as well as, FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 - 140 - CITY OF KITCHENER FCS-11-206 - 2012 BUDGET OVERVIEW (CONT’D) 5. previously approved business cases included in current projections (eg. EDIF, Civic District Parking Garage). It was further recommended that investment in the Hydro Utility be maintained at least until debt to reserve ratios achieve a more balanced position. Mr. Hagey advised that the 2012 budget was prepared based on the budget guidelines presented in June 2011 and at this time, the maximum potential levy increase sits at 3.9%. He pointed out, however, that at Council’s request it is staff’s intent to provide a list of potential reductions up to a maximum of 2% that dependent on the outcome of deliberations, could reduce the potential levy increase to a range between 1.9% and 3.9%. Mr. Hagey stated that in premise the proposed 2012 budget is status quo, based on maintaining existing service levels, except for enhancements previously approved, and with no additional tax supported FTEs. An inflationary increase of 3% has been built in to user fees which will be considered this date and if approved, will become effective January 1, 2012. Mr. Hagey concluded with a request that any additional budget information that may be requested by Council during budget deliberations that would evoke substantive work be put to a vote to ensure the information is of importance to a majority of Council and that staff time is being used appropriately. In response to Mayor C. Zehr, it was agreed to provide an additional debt chart during budget deliberations that would include the City’s investment in its loan to the Hydro Utility to show its effect if applied to the debt figures. Councillor Y. Fernandes raised concerns that the proposal to vote on additional information requested by Council may inhibit or limit questions. Mr. Hagey advised that it is not intended to sensor or limit questions in any way but rather to provide a means for Council to bring clarity around issues that would require substantial work, that they are in fact something that Council as a whole feels strongly about. Councillor J. Gazzola commented that it is a fair request to make in context of issues that would take considerable time to produce the information requested and it should be left to staff to advise Council when a vote would be appropriate. Councillor Fernandes raised further concerns that adding the hydro loan investment to the debt charts would cause confusion. Mr. Hagey advised that the intent would be to produce a separate chart on a one time basis to show a netting of debt and the original chart would remain as a constant. Councillor D. Glenn-Graham questioned the feasibility of implementing a process that would more proactively engage the public, given issues experienced during the 2011 budget deliberations. Mr. D. Chapman advised that as part of business planning in Financial Planning public engagement in the budget process is being reviewed; however, at this time no change is proposed. He noted that in 2011 Council dealt with the introduction of two new Enterprises (Parking and Storm Water Management), as well as issues related to sustainable funding for the arts and culture sector, which had created some controversy; however, he pointed out that the 2012 budget as proposed is standard with no new enterprises being introduced and increases are within the rate of inflation which may yet be off-set by a list of potential reductions equating to up to 2%. He agreed that there is opportunity to improve public consultation, however, staff require time for adequate review and development of a new process and are comfortable with the proposed 2012 budget going forward under the current budget process. Councillor B. Ioannidis questioned the feasibility of including the value and/or appreciation of assets in the Hydro Utility. Mr. Hagey advised that the intent in providing an additional debt chart is to include only the City’s investment in Hydro’s debt to the City (ie. debt the City owns versus owes) which would not include value or appreciation of assets. He added that including the latter would infer the City has no debt given the total investment in Hydro is more than the City’s current debt load and it would not properly reflect the City’s financial position. FCS-11-186 - 2012 COMPREHENSIVE FEE REVIEW 6. The Committee considered Finance and Corporate Services Department report FCS-11-186, dated October 31, 2011 concerning a comprehensive review of proposed fees and charges for 2012. The list of fees includes all City fees and charges with the exception of Utility rates. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 - 141 - CITY OF KITCHENER FCS-11-186 - 2012 COMPREHENSIVE FEE REVIEW (CONT’D) 6. Mr. R. Hagey advised that fees and charges have primarily been increased by an inflationary amount equal to 3% in keeping with the 2012 budget guidelines and explanations have been provided in the staff report for proposed fee adjustments which are different than the 3% guideline. Mr. Hagey circulated this date revised tables to the fee schedule which highlight modifications to two specific fees as follows: the Cemetery Standard Installation fee is changed from $282.50 to $288.15 and the Parking Garage rate per ½ hour is changed from $1.55 to $1.50. It was noted that overall a 3% increase represents approximately $487,000 in additional revenue for the tax supported budget and every 1% increase would equate to approximately $163,000 in additional revenue. Councillor J. Gazzola questioned if fees and charges are being increased at the current rate of inflation. Mr. Hagey stated that he believed the current rate of inflation is closer to 2% and would confirm the exact rate to Council. Councillor K. Galloway referred to the 15% administrative charge proposed to be added to the Bulk Water Fill rate, questioning if staff have any concerns that they will see a drop in business. Mr. W. Malcolm advised that the existing fee imposed for the cost of water is charged to contractors and landscape companies who use the site and is more than reasonable; and, therefore, he did not anticipate a reduction in clientele as a result of the proposed administrative fee. Councillor K. Galloway requested explanation of the new fee associated with internal issues wherein a problem determined to be within the homeowners scope of responsibility would be charged a fee for on-site investigation by City staff. Mr. Malcolm advised that this relates to customer inquiries regarding concerns with their water service and the intent is to recover the cost of on-site investigation in cases where the problem is found to be a responsibility of the homeowner. He added that staff will exercise discretion in charging the fee which may consist of a warning in a first instance and a charge thereafter for repeat visits. Councillor K. Galloway referred to the increase for annual lane swim passes for seniors, questioning the feasibility of phasing in the rate increase over a period of time. Ms. D. Keelan advised that this fee has been historically too low and the proposed increase is to bring the rate in line with other swim pass rates. She suggested, however, that if desired staff could look at a lesser increase this year and phasing in the full increase over time. Councillor J. Gazzola asked that staff review this request and provide information to Council prior to the November 14, 2011 Council meeting. Mr. R. Hagey noted that the proposed 2012 budget coming forward assumes the rate of fees st as presented with an effective date of January 1 and any delay or reduction in the proposed fees would have impact to the starting point of the tax supported operating budget. At the request of Councillor K. Galloway, staff agreed to provide additional information prior to th the November 14Council meeting concerning the difference between Affiliated and Non- Affiliated fees for the Centennial Stadium. Councillor K. Galloway requested clarification of removal of the fee for purchase of Council / Standing Committee minutes. Mr. R. Gosse advised that the fee has become redundant with availability of minutes on-line and requests for purchase of printed copies have not been received for quite some time. He added that should anyone request a printed copy staff would use the per page copy fee. Councillor B. Ioannidis requested clarification of the Gas Loss from Damages fee. Mr. W. Malcolm advised that this is a new fee to recoup loss of gas that escapes when a gas line is hit and the fee is based on size, material and length of time gas is emitted. At the request of Mayor C. Zehr, Ms. L. Palubeskie agreed to provide an estimate of what is anticipated to be over-expended in 2011 for the Leisure Access Card Program and what adjustments may need to be made for the program’s 2012 budget. Councillor F. Etherington referred to fees for Adult Entertainment Parlours and Alternative Massage Centres, questioning how these compare to other municipalities. Mr. R. Gosse FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 7, 2011 - 142 - CITY OF KITCHENER FCS-11-186 - 2012 COMPREHENSIVE FEE REVIEW (CONT’D) 6. advised that the City’s fees are based on cost recovery and are fairly close to the medians across the Province. Councillor J. Gazzola questioned if the City is legislated to maintain fees at cost recovery. Mr. Gosse advised that stipulation of cost recovery was removed from recent amendments to the Municipal Act; however, staff has generally maintained the rule as a guideline, along with looking at comparators to other municipalities. Councillor B. Vrbanovic requested that staff provide information on how these sectors compare to other municipalities. Councillor J. Gazzola questioned if Kitchener Market fees had now reached the top level of the phased-in increases previously approved and Mr. R. Regier advised that market fees attained the top level as at this year. Councillor Gazzola questioned the feasibility of increasing parking garage rates higher than what is proposed. Mr. J. McBride advised that the rates are already increasing in excess of the budget guidelines at 10% and is the most aggressive increase within the Region. He stated that the City saw a decrease in use in 2010-2011 which has been positive in respect to Transportation Demand Management and has reduced parking demand pressure; however, he expressed concerns with imposing a higher increase because of the impact it may have on downtown businesses and users. On motion by Councillor K. Galloway - it was resolved: “That the following recommendation as outlined in Finance and Corporate Services be referred for Department report FCS-11-186 (2012 Comprehensive Fee Review) further consideration to the November 14, 2011 Council meeting, pending additional information from staff to address questions raised by the Finance and Corporate Services Committee: ‘That the proposed fees and charges contained in the 2012 Comprehensive Fee Review attached to Finance and Corporate Services Department report FCS-11- 186, and as amended to change the Cemeteries Standard Installation fee from $282.50 to $288.15 and the Parking Garage Rates per ½ hour from $1.55 to $1.50, be approved; and, That the Manager of Cemeteries be directed to forward the Cemetery Tariff of Fees and Charges to the Ministry of Government Services - Cemeteries Regulation Unit for filing; and further, That Legal Services staff be directed to prepare the necessary by-laws to amend The City of Kitchener Municipal Code Chapters for fees and charges pertaining to licensing, planning applications, building permits and Committee of Adjustment applications.’” ADJOURNMENT 7. On motion, the meeting adjourned at 2:55 p.m. J. Billett Committee Administrator