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Home My WebLink AboutFCS - Capital Budget - Additional Issue PapersCITY OF KITCHENER 2012 BUDGET ISSUE PAPER ISSUE: C13 — Boathouse Exterior & Aud Dehumidification FUND: CAPITAL DEPARTMENT: Infrastructure Services PREPARER: Ryan Hagey, Manager /Interim Director of Financial Planning BACKGROUND: In November, reports were presented to Council related to the Boathouse Exterior (FCS -11 -204, T11 -080 Victoria Park Lake Improvements) and the Aud Dehumidification (INS -11 -089, The Aud Dehumidification and Building Controls). In each case, there was an identified funding shortfall for the work, so Council requested that both of these items be brought back as part of the 2012 budget deliberations with a potential funding strategy. RATIONALE / ANALYSIS: The funding shortfalls to be considered as part of the 2012 budget process are: Boathouse Exterior $250,000 Aud Dehumidification $350,000 TOTAL $600,000 Both of these items are time sensitive as they are related to work that will be happening in 2012. In the case of the Boathouse, combining the additional work with the work already planned will provide economies of scale and reduce disruption to the surrounding areas. In the case of the Aud dehumidification, the project was approved by Council on November 14. Staff have identified capital closeouts from 2011 as a potential funding source for the Boathouse Exterior and Aud Dehumidification projects. Normally, capital closeouts are used to fund new capital projects in the current capital budget, but in recent years, have been redirected to the operating fund to mitigate annual operating deficits. Based on recent information, staff anticipate that there will be capital closeouts available in 2011 beyond what is required to fund the operating budget deficit for two reasons: 1) An unanticipated fourth supplementary tax run will be issued this year by MPAC. This should result in a positive variance in that operating budget line, meaning the overall operating deficit should be lower than originally forecast, and fewer capital closeouts would therefore be required to balance the operating budget. A positive variance of at least $400,000 is anticipated. 2) Capital closeouts will be higher than originally anticipated, by year end. In November, an additional project has been closed out for just over $200,000, and this was not reflected in the closeouts number provided as part of the capital budget presentation which was based on earlier analysis. FINANCIAL IMPLICATIONS: Assuming that there is sufficient closeout funding to accommodate the additional costs of $600,000, there would be no negative impact to the tax base. There is still some risk this amount would not be achieved as year -end variances are still only projected, but staff will be able to provide better information prior to final budget day on January 19. RECOMMENDATION: That $250,000 for the Boathouse Exterior and $350,000 for the Aud Dehumidification project ($600,000 total) be funded from capital closeouts in the 2012 capital budget. 2011 -11 -16 CAP - 206 CITY OF KITCHENER 2012 BUDGET ISSUE PAPER ISSUE: C14 — Debt Graphs Net of Hydro Debt FUND: CAPITAL DEPARTMENT: Finance and Corporate Services PREPARER: Ryan Hagey, Manager /Interim Director of Financial Planning BACKGROUND: During the Budget Overview presentation on November 7, Council requested a "what if' scenario showing the impact of liquidating the City's note receivable from Kitchener - Wilmot Hydro, and netting that against the City's debt. RATIONALE / ANALYSIS: The City's note receivable from Kitchener - Wilmot Hydro is $71 M. At the end of 2011, the City's outstanding debt load will be $98M. For theoretical modeling purposes, staff have assumed a full liquidation of the note receivable at the end of 2011, and have netted these proceeds against the City's debt load. The attached debt graphs are for illustrative purposes only and reflect the netting of the Hydro debt proceeds against the City's debt. This netting would not actually be possible, as the City's debt payments are fixed at the time of issuance and cannot be altered. FINANCIAL IMPLICATIONS: None. RECOMMENDATION: For information only. 2011 -11 -16 CAP - 207 OMEz 6IOz 8IOz LIOz 9IOz 9107, � lOz B lOz ZIOz �Ioz 0Ioz 6002 8002 LOOz 9002 5ooz toot co 0 N i a a V U) °° °° �cz °° °° °° °° °° cz czN 0 O U U) ° N N U) ° ° O C)- ° O 0 � C 0 O N 0 0 .a 0 cz ° ° ° ° ° ° ° ° ° N ° Qcz � O ° ° ° ° O � _ O �� N �+ c pN �, �= U U) U OMEz 6IOz 8IOz LIOz 9IOz 9107, � lOz B lOz ZIOz �Ioz 0Ioz 6002 8002 LOOz 9002 5ooz toot co 0 N i a a V °° °° °° °° °° °° °° °° °° ° ° ° ° ° ° ° ° ° ° 0 0 0 0 0 0 0 0 0 ° ° ° ° ° ° ° ° ° ° ° ° ° ° ° ° ° ° F ! 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U -- cz 9002 LLJ U) U LO o LO o LO o LO o C'7 C'7 N N r r O O 74 74 N U OWZ a � V 6 LOZ N 8LOZ +� N O L lOZ Z —0 9 Wz; I � 9 l N U U) a� t, oM p 0) � o�m .— o Z lOZ U Q IIOZ 0 D O Wz; � p 60 02 � 0) 8002 .EZ p 0 LOOZ X cz 9002 LLJ C'3 6 soot o z tool CITY OF KITCHENER 2012 BUDGET ISSUE PAPER ISSUE: C15 —Financial Condition per Capita FUND: CAPITAL DEPARTMENT: Finance and Corporate Services PREPARER: Ryan Hagey, Manager /Interim Director of Financial Planning BACKGROUND: Debt and reserve information has been included as part of the 2012 capital budget package (pages CAP 32 — 39). The summarized version of this information is that debt levels are high and increasing while reserve levels are low. This information makes up part of the City's financial condition, but is not the entire picture. A more complete reflection of the overall City's financial health is the financial position per capita, which incorporates the City's significant investment in Kitchener - Wilmot Hydro. This measure is calculated as: Financial Assets - Liabilities Population Financial Assets are what the City owns Liabilities are what the City owes • Cash &Accounts receivable Accounts payable • Investments (including Hydro) Deferred revenues • Inventories Debt • EXCLUDES CAPITAL ASSETS Post employment RATIONALE / ANALYSIS: Kitchener compares favorably against other large Ontario municipalities (population over 100,000) in regards to the Financial Position per Capita for 2010 as shown in the graph below. Kitchener's value of $700 exceeds Cambridge ($606), Waterloo is ($576), and the group average ($184). This measure says that on a per person basis, Kitchener has $700 more in financial assets than it has in liabilities. $1,500 $1,000 $500 it All- $0 11 11 11 LJ11 I I I I I 1 1 ($500) LP ($1,000) ($1,500) ° ° �, ° m E ° E O E °� 0 CD > s� i� ° vi Y O Q= U U Y m> m 0 O � 2011 -11 -16 CAP - 212 benefits 2011 -11 -16 CAP - 212 II FINANCIAL IMPLICATIONS: I I RECOMMENDATION: For information only. 2011 -11 -16 CAP - 213