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HomeMy WebLinkAbout2012-01-19 SSPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 CITY OF KITCHENER Present: Councillor S. Davey - Chair Mayor C. Zehr and Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh. Staff: C. Ladd, Chief Administrative Officer D. Chapman, Deputy CAO, Finance & Corporate Services J. Willmer, Deputy CAO, Community Services P. Houston, Deputy CAO, Infrastructure Services J. Evans, Director of Revenue R. Hagey, Interim Director of Financial Planning B. Johnson, Director of Accounting R. Regier, Executive Director, Economic Development H. Gross, Director, Project Administration & Economic Investment R. Gosse, Director, Legislated Services & City Clerk J. Witmer, Director of Operations L. Johnston, Director, Corporate Communications & Customer Services S. Adams, Director, Community & Corporate Planning S. Turner, Director, By-law Enforcement M. Hildebrand, Director, Community Programs & Services C. Fletcher, Director, Facilities Management M. Seiling, Director of Building G. Murphy, Director of Engineering J. McBride, Director of Transportation Planning A. Pinard, Director of Planning W. Malcolm, Director of Utilities K. Baulk, Director of Enterprise R. Bunn, Director, Information Technology / Chief Information Officer T. Beckett, Fire Chief L. Baillargeon, Manager, Asset Optimization K. Kugler, Manager, The AUD & Community Arenas G. Hummel, Manager, Park Planning, Development & Operations J. Young, Manager, Special Events R. Willms, Supervisor of Administration D. Saunderson, Committee Administrator C. Goodeve, Committee Administrator J. Billett, Committee Administrator The purpose of this special meeting was to give final consideration to the 2012 Operating and Capital Budgets and the 10-Year Capital Forecast 2012-2021. It was noted that any recommendations from the Committee this date would be considered at the special Council meeting to be held immediately following this meeting. FCS-12-004 - 2012 FINAL BUDGET DAY 1. The Committee considered Finance and Corporate Services Department report FCS-12-004, dated January 6, 2012, concerning the City’s 2012 Operating and Capital budgets, together with budget issue papers for specific items. In addition, the Committee was in receipt this date of an addendum to the Final Budget Day agenda package, providing supplemental information to the presentation and issue papers originally circulated with report FCS-12-004. The Committee was also in receipt this date of correspondence from Mr. Harald Drewitz, dated January 17, 2012, concerning the impact of tax and user fee increases on the average homeowner. Each member of the Committee provided comments on the 2012 Budget process, expressing a desire to come to a sustainable and affordable level of taxation. DELEGATION Mr. H. Drewitz addressed the Committee, indicating an expectation that reductions would be approved to provide for a tax increase of no more than 1.9%. He expressed frustration that the “Impact to Homeowner” chart, found on page FINAL-25, was not circulated prior to Final Budget Day. He requested clarification as to why hydro rates were not included on that chart and asked how the inclusion of such information would have changed the overall projected SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 24 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. impact to the average homeowner. He expressed concerns regarding the Economic Development Investment Fund (EDIF) and questioned the tangible / intangible benefits realized by the City as a result of that investment. He suggested that Council cannot continue to use gas surpluses as a means of mitigating the annual tax increase. BUDGET OVERVIEW Mr. D. Chapman noted that the 2012 budget was developed based on three key themes, being: maintaining service levels; inflationary increases; and, sustainable budgeting. He added that the budget maintains existing service levels with no new programs or services proposed; nor, any new tax supported Full Time Employees (FTEs). He stated that the year to date average for the Consumer Price Index (CPI) was 3.2%, which takes into account all inflationary increases as of November 2011. He indicated that the proposed tax rate increase, excluding potential reductions, is 2.9% before EDIF, and 3.9% when the EDIF contribution is included. Regarding the need for sustainable budget practices, Mr. Chapman advised that for several years the City has experienced operating deficits, which have been subsidized by capital closeouts or through the Tax Stabilization Reserve Fund (TSRF). He gave an overview of the items that need to be addressed in the medium to short-term, to allow the operating budget to return to a balanced position. He pointed out that deficits are also projected in 2012 for the Golf, Parking and Storm Water Enterprises, adding that it is imperative that no action is taken that might worsen the position of those enterprises. He stated that a levy increase of approximately 6% has been forecasted for 2013, adding that deferring costs from 2012 to 2013 would only exacerbate the challenges facing that budget. He pointed out that almost $981,000. in costs were deferred from 2011 to 2012, which meant that this year’s levy started off with a 1% commitment. Mr. Chapman commented that the City’s financial position is sound, but certain benchmarks are becoming a concern, such as the high debt levels and low balances within reserves. He reviewed the City’s debt to reserve ratio, stating that for every $1 the City has in a reserve it has $5 worth of debt. He pointed out that this is five times higher than the existing benchmark and results in the City currently be ranked second last compared to municipalities with populations greater than 100,000. He noted that Kitchener is at risk of having the worst debt to reserve ratio in Ontario once the debt has been issued for the expansion of the Kitchener Memorial Auditorium (The Aud) and dependent upon the decisions made this date. He commented that if reserve levels are not improved, the City will have no provision in place to fund known future capital and operating costs. Mr. Chapman reviewed informational graphs depicting inflation (CPI and MPI) vs. tax rates over a 10 year cumulative. He gave an overview of a comparison of 2010 property taxes among municipalities with populations greater than 100,000, noting that Kitchener is ranked sixth lowest among comparative municipalities. Household comparisons demonstrating property taxes as well as utility costs for each city within the Region of Waterloo were shown, as well as a chart indicating the impact of the proposed tax levy on the average homeowner. Mr. Chapman advised that gas costs were included on these charts as it is considered reflective of the costs faced by the average household, given approximately 70% of properties in the City purchase their gas from Kitchener Utility. He pointed out that as hydro costs are controlled by a separate board which is outside the City’s control, those costs were not included in the chart. In response to questions regarding the debt to reserve ratio comparison for the cities of Kitchener, Waterloo and Cambridge, Mr. Chapman confirmed that only Kitchener has debt related to an investment fund, such as EDIF. He advised that it is his understanding that Cambridge has little to no debt. He added that Waterloo has debt, the majority of which relates to the construction of the RIM Park facility. He noted that for every $1 Waterloo has in a reserve, it only has $2 worth of debt. He indicated that if EDIF was removed from this comparison, Kitchener’s debt to reserve ratio would improve but would still be above the average. Councillor B. Vrbanovic requested clarification as to the benefits that the City has realized through EDIF. Mr. R. Regier advised that since 2004 there has been $156M invested in Downtown residential properties; $108M in commercial investments; and, over $300M in SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 25 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. institutional / public sector investments. He noted that this equates to over $600M in private / public sector investments in the Downtown that can in part be contributed to EDIF. He stated that the City is already beginning to see a rate of return in the form of tax payments from these new developments. He added that gradually the Municipal Property Assessment Corporation (MPAC) will be reassessing these new buildings, which will equate to increased tax revenues. He indicated that a comparison of the rate of assessment growth across the City to assessment growth in the Downtown, identified that property values in the Downtown are already $53M higher than what would have been statistically expected without EDIF. He noted as an example properties that are under or awaiting development, such as the City Centre, when completed would generate approximately $400,000. in additional tax revenues per year. He further advised that during the economic downturn in 2008/2009, Downtown Kitchener continued to see steady job growth. He noted that the average income of those new jobs was approximately $60,000. per year. Referring to Issue Paper BD08 - Water and Sanitary Reserves and Rate Increase Options, Mayor C. Zehr requested that information be provided later this date to show the potential effect on the “Impact to Homeowner” chart if water and sanitary rates were set at 4%. TAX SUPPORTED OPERATING Mr. R. Hagey reviewed graph’s demonstrating the following: City’s gross expenditures by cost elements (excluding Enterprises); net expenditures by Department (excluding Enterprises); and a chart breaking down an average property tax bill to show the allocation of tax dollars toward particular services. He reviewed the 2012 Tax Levy Change summary, noting that assessment growth had decreased from 1.82% to 1.81%. Accordingly, the tax levy before EDIF was increased from the previously presented 2.9% to 2.91%; and including EDIF, it is now 3.88% as opposed to the previously presented 3.87%. He pointed out that MPAC has advised municipalities to anticipate lower overall assessment growth for future years. He then reviewed the core complement increases, noting that there are no new tax supported FTE’s. He stated that all of the newly proposed positions would be funded through identified user fees and rates. BOARDS Centre In The Square A motion by Councillor Y. Fernandes was brought forward for consideration to reduce the 2012 appropriation to the Centre In The Square (CITS) from $1,398,851. to $1,371,449., as outlined in Issue Paper PR25, found on page OP-206. At the request of Councillor Fernandes, it was agreed that all motions put forward this date would be voted on by a recorded vote. Councillor D. Glenn-Graham inquired if it would be possible to freeze the wages of the CITS management staff; which would equate to a further reduction of $3,000. Councillor B. Vrbanovic advised that Boards are independent to Council and have the authority to determine the needs of their organization and how appropriations are spent. Accordingly, Council does not have the ability to pass a motion applying a wage freeze to a Board’s management staff. A motion by Councillor D. Glenn-Graham was brought forward to amend Councillor Fernandes’ motion to reduce the 2012 appropriation to CITS by an additional $3,000., for a total reduction of $30,402. Mayor C. Zehr advised that he could not support the proposed amendment for an additional reduction of $3,000. He added that given the Committee’s preceding discussion, the further reduction could be construed as ultimately imposing a freeze to management wages; thereby, interfering with the Board’s authority to manage their funds. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 26 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor J. Gazzola spoke in support of the additional $3,000. reduction, noting that the amendment does not include direction as to how funding should be used. Lost Councillor Glenn-Graham’s amending motion was then voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, Y. Fernandes and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, Z. Janecki, K. Galloway, B. Vrbanovic, P. Singh and F. Etherington voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr, and Councillors J. Gazzola, D. Glenn-Graham, Y. Fernandes, S. Davey, Z. Janecki, K. Galloway, B. Vrbanovic, P. Singh and F. Etherington voting in favour; and Councillor B. Ioannidis voting in opposition. On motion by Councillor Y. Fernandes - it was resolved: “That the 2012 appropriation for the Centre in the Square, in the amount of $1,371,499., be approved.” Kitchener Public Library A motion by Councillor B. Vrbanovic was brought forward for consideration to approve a 2012 budget appropriation to the Kitchener Public Library (KPL) in the amount of $9,115,000. A motion by Councillor J. Gazzola was brought forward to amend Councillor Vrbanovic’s motion to reduce KPL’s 2012 budget appropriation by $90,000. Ms. Ann Wood and Ms. Sabina Franzen, KPL, reviewed the impacts that the proposed reduction would have on KPL services. Ms. Franzen advised that library staff reviewed their budget and identified approximately $11,000. in potential reductions. She noted that any additional reductions beyond those already identified, would negatively impact such matters as their ability to buy new resources; staffing levels; customer service; and longer turnaround times to provide resources to the public. She noted that in previous years, KPL staff has received lower annual salary increases compared to City staff. She advised that in 2010, KPL’s resource budget was reduced by 11%, effectively lowering it to what was allocated in 2004. She added that their appropriation was increased by 2% in 2011; however, the Library has still not recovered from the reduction imposed in 2010. Councillor Vrbanovic advised that he was opposed to the proposed amendment. He stated that KPL’s budget is already below the level of inflation, which required them to find costs savings. He suggested that a further reduction would hinder their ability to effectively serve the community. Councillor Y. Fernandes spoke in support of the proposed amendment, indicating that in actuality, it represented a 1% increase over the funding provided to the KPL in 2011. She commented that what is being proposed is a reduction in KPL’s requested 2012 budget increase of 2.1%. Councillor K. Galloway advised that she was not in support of the proposed reduction as it would not allow the KPL to maintain its current service levels. She stated that the Library provides a free service to residents, the uptake of which has increased due to current economic conditions. She commented that any significant reduction to KPL’s budget could negatively impact the community. Mayor C. Zehr stated that he would not support the proposed amendment, cautioning that the proposed reduction would impact the future sustainability of the Library. Councillor F. Etherington also spoke in opposition to the proposed reduction, stating that the Library should not be looked to as a possible funding source to balance the City’s budget. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 27 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. A motion by Councillor P. Singh was brought forward to amend Councillor Gazzola’s amending motion to decrease the proposed reduction from $90,000. to $60,000. Councillor J. Gazzola accepted the proposed amendment of Councillor Singh as friendly. Councillor Singh suggested that a reduction of $60,000. would be less likely to jeopardize the daily operations of the Library. Carried Councillor Gazzola’s motion as amended was then voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, Y. Fernandes, Z. Janecki, P. Singh and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic, and F. Etherington voting in opposition. On motion by Councillor J. Gazzola - it was resolved: “That the 2012 appropriation for the Kitchener Public Library, in the amount of $9,055,000., be approved.” ENTERPRISES Golf Enterprises Mr. Hagey presented the Golf Enterprises 2012 budget, advising that for 2011 the projection remains relatively unchanged. He noted that no revisions have been made to the previously presented 2012 budget projections for this Enterprise. In response to questions, Mr. Hagey clarified that the Government Finance Officers Association (GFOA) recommends that most enterprises, with the exception of Building, should maintain a stabilization reserve balance of 10% to 15% of total revenues. He added that for the Golf Enterprise, this equates to a benchmark level of between $232,000. to $348,000.; however, at present this Enterprise has a deficit of $1.7M. He cautioned against increasing an enterprise’s dividend payment to off-set the tax levy in instances where a deficit is projected. He noted that such action would only serve to worsen the long-term financial viability of that enterprise. He pointed out that the Golf Enterprise typically produces a net profit, but as it is required to make an annual dividend payment of $130,000., the Enterprise usually only breaks even or runs a small deficit.Accordingly, any increase to its dividend would only compound the existing deficit. Building Enterprise Mr. Hagey presented the budget for the Building Enterprise, noting that the 2011 year-end excess revenue projections decreased from $755,000. to $730,000. He advised that by legislation, the City cannot take a dividend from this Enterprise. He stated that while the Building Enterprise cannot be used to subsidize the tax rate, it can be required to pay for the services that it uses. Accordingly, all reasonable expenses have been charged back to this Enterprise, which in 2011 equated to $768,000. in operating costs that did not have to be funded through the tax rate. Referring to the list of potential budget reductions found on page FINAL-82, Mr. Chapman commented that the 2012 budget contains an additional charge back to the Building Enterprise in the amount of $35,922. for administrative staff in the Community Services Department. Parking Enterprise Mr. Hagey explained that 2011 year-end projections have worsened slightly for the Parking Enterprise, with the deficit increasing from $324,000. to $360,000. Referring to Issue Paper OP-12, he reviewed the changes proposed for the 2012 Parking capital budget in which $50,000. would be shifted for both the Cycling Master Plan and the Transportation Demand Management (TDM) initiatives in the 10-year Capital Forecast from years 2012-2014 to years 2015-2017. He stated that this would subsequently decrease the Enterprise’s projected 2012 SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 28 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. deficit from $447,000. to $347,000. He added the structural garage repair provision of $150,000. in 2013 is also proposed to be spread back over future years of the Forecast. He pointed out that no existing capital funding would be eliminated; rather, the timing is proposed to be adjusted as a means of improving the short-term financial stability of the Enterprise. In response to questions as to the rationale behind enterprises having stabilization reserves, Mr. Chapman pointed out that the Parking Enterprise was projected to have a profit of $227,000. for 2011. However, due to the delayed opening of the Charles & Benton garage as well as changes in demand, the Enterprise had a loss of $360,000. for 2011. He noted that this equates to a one year budget variance of over $500,000., adding the impact of which could have been managed through a reasonable rate increase if the Enterprise had a stabilization reserve. However, as it stands, deferrals are proposed within its capital program just to maintain a reasonable funding level within the Enterprise. Mr. J. McBride clarified that the funding alternative put forward in Issue Paper OP-12, is due to the Parking Enterprise’s inability to reach its revenue targets for 2011, as well as the uncertainty in the uptake for the Charles and Benton garage. He added that revenues will also be impacted because the Civic District Parking Garage will be opening later than anticipated. He explained that general expenses are expected to increase by almost 20% in 2012 as a result of commencing the operation to the two aforementioned garages. He confirmed that the proposed deferral of $100,000. within the Capital Forecast would not put any of the City’s parking facilities at risk. He added that the deferrals are intended to support the development of the Enterprise’s reserves, as a means of lessening the impact when large capital repairs are required. He stated that from an environmental perspective the environmental impacts of both the Cycling Master Plan and TDM are about the same. Mayor Zehr expressed concern with deferring funding for the Cycling Master Plan and TDM, requesting clarification as to the impact the proposed deferral would have on those initiatives. Mr. McBride advised that the deferrals would delay the implementation of certain portions of the Cycling Master Plan, such as signage and/or route markings. He stated that certain aspects of TDM would also be delayed, such as social marketing aimed at encouraging people to stop using single occupancy vehicles. He confirmed that if the original proposed funding allocation was maintained, the Enterprise would have the resources necessary to proceed with implementing both items. Mr. Hagey indicated that both the Cycling Master Plan and TDM were each originally identified as having a budget allocation of $200,000. He stated that in accordance with the proposed adjustments, the capital budget allocation for each of these items would be reduced to $150,000. He clarified that if the proposed changes are approved, the Parking Enterprise’s projected deficit would be reduced to $347,000., which is resultant to shifting $100,000. from its 2012 capital program. Councillor P. Singh stated that while he agrees it would be unwise to increase the dividend from an enterprise that is operating in a deficit position, it was his opinion that the Parking Enterprise would be able to accommodate keeping its dividend at the 2011 level given the additional revenues that will be realized through operating the Charles and Benton parking garage. He further suggested that the Cycling Master Plan could be funded through the Local Environmental Action Fund (LEAF) to allow it to move forward while not impacting the Parking Enterprise. A motion by Councillor P. Singh was brought forward for consideration to have the original proposed allocation of $200,000. for the Cycling Master Plan be funded through LEAF and to maintain the Parking Enterprise dividend at the 2011 level of $2.313M. Mr. Chapman advised that when the Parking Enterprise was established in 2011 a dividend level of approximately $1.75M was identified as being sustainable. He added that at that time it was decided to increase the dividend in 2011 and 2012, but reduce it back down to a sustainable level for subsequent years. He stated that dividends are financed out of earnings, noting that the Enterprise is currently in a deficit position and there are no accumulated earnings. Accordingly, there is no basis for an increased dividend, adding that it is questionable whether the dividend originally proposed for 2012 can be accommodated. Mr. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 29 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Chapman pointed out that the adjustments to the capital program were proposed to maintain the commitment to the phase-out that Council approved last year when the dividend was increased on what was to be a one-time basis. Mr. Hagey clarified that Councillor Singh’s motion would reduce expenses in the Parking Enterprise by $200,000., as the cost of implementing the Cycling Master Plan in 2012 would be funded out of LEAF. He noted that as the dividend has also been proposed to be increased by $337,000.; overall, the motion would result in adding $137,000. to the Enterprise deficit. A motion by Councillor J. Gazzola was brought forward to amend Councillor Singh’s motion to undertake the proposed adjusted capital program for the Parking Enterprise, with a transfer of $150,000. from LEAF for the Cycling Master Plan and only increase the dividend from the proposed $1.976M to $2.126M. Councillor Gazzola stated that this would negate the additional impacts to the Parking Enterprise’s deficit in 2012. Councillor Singh accepted Councillor Gazzola’s proposed amendment as friendly. Clarification was requested regarding the Committee’s ability to consider allocating funds from LEAF to the Parking Enterprise, given that Council approved suspending the LEAF grant program, subject to a report coming forward by May 7, 2012 outlining LEAF funding options for 2013 - 2015. Mr. R. Gosse confirmed that in accordance with what was approved at the January 16, 2012 Council meeting, the only uncommitted funding from LEAF to be utilized in 2012 that is subject to final budget deliberations are for portions of the 2012 - 2015 park and trail capital projects. He indicated that to allocate any other funds from LEAF would require a motion to reconsider, which can only be put forward during a meeting of City Council. The Committee agreed to refer consideration of Councillor Singh’s motion, as amended, to the special Council meeting to be held later this date. Gas Works Utility Referring to Issue Papers BD-06 and BD-07, Mr. Hagey presented the budget for the Gas Works Utility. He advised that having one good year in the Utility should not form the benchmark for future projections, as the gas budget is susceptible to uncontrollable factors, such as weather and the economy. He noted that the demand for energy during the first half of 2011 was average; however, the second half of 2011 produced the lowest results over the past five years. He cautioned against using the positive results in one year to off-set the tax rate, as this surplus is only available on a limited basis while the expenses are ongoing. He noted that it is proposed that the one-time surplus in the Utility be held in City reserves to protect against future variability and uncertainty given the overall reserve shortfall. He stated that for 2012 and for all future years of the gas projection, the gross profit of the Gas Delivery company has been flat lined at 45%. He added that this is consistent with the market rate of return according to the Ontario Energy Board (OEB). He noted that staff intends to bring forward an analysis on gas rate options later this year, which could significantly impact the profitability of the Gas Utility. Mr. Hagey indicated that gas rates are approved annually in the spring to align with the end of the heating season based upon an approved Council Policy. Councillor J. Gazzola stated that previously the surplus for 2012 was estimated to be $17.5M which has since been reduced to $10.5M. Referring to Issue Paper OP-45, he noted that Gas revenues were anticipated to be $43M, which has since been lowered to $36M. He questioned the change in the gas projection since it was last presented. Mr. Chapman advised that when the operating budget was presented in December 2011, the gross profit margin of 54% and the 2012 budget was based on that level of gross margin. He stated that those projections did not include the actuals for November or December 2011. He noted that the results for those months were significantly different than what was forecast. He commented that staff’s approach to projecting gross margin has since changed as they have a valuation now for the Gas Utility. He added that this provides an improved means of estimating what the SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 30 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. rate of return should be in a given year and using this model, a gross margin of 45% has been projected for 2012 which is believed to be defensible based on OEB guidelines. Councillor Gazzola commented that $38M was budgeted in 2011 for the Gas Works Utility, which has been reduced to $36M for 2012 and suggested that a conservative approach was taken in creating the Gas Works Utility budget. He stated that in 2011 the Gas Work Utility had an estimated net income of almost $15M, while only anticipating $12.5M. He added that currently, staff is recommending a transfer of $8.794M from the Gas Capital Investment Reserve fund and suggested that it be reduced to $6.794M, to allow for a transfer of $2M to the Tax Stabilization Reserve Fund (TSRF). A motion by Councillor J. Gazzola was brought forward for consideration to transfer $2M from the Gas Capital Investment Reserve Fund to the TSRF. Mr. Chapman confirmed that funding within the Gas Capital Investment Reserve Fund can only be applied toward capital projects, while those in the TSRF can be used toward reducing the tax levy. A motion by Mayor C. Zehr was brought forward to defer and refer consideration of Councillor Gazzola’s motion until the end of this meeting. Mayor Zehr suggested that it was premature to consider such a transfer at this time, noting that these are usually considered once the full budget has been presented. Lost Mayor Zehr’s motion to defer was voted on by a recorded vote and , with Councillors D. Glenn-Graham, P. Singh, Z. Janecki, Y. Fernandes, J. Gazzola and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Vrbanovic, K. Galloway, B. Ioannidis and F. Etherington voting in opposition. Councillors K. Galloway and B. Vrbanovic expressed concerns regarding the transparency of the proposed transfer, and suggested that if those funds are intended to be used toward lowering the tax levy then that should be clarified prior to action being taken on Councillor Gazzola’s motion. Councillor Gazzola acknowledged that he intended later on to propose that a portion of the recommended transfer be used toward decreasing the tax levy. A motion by Councillor K. Galloway to amend Councillor Gazzola’s motion to only transfer $500,000. from the Gas Capital Investment Reserve Fund to the TSRF was voted on by a Lost recorded vote and , with Councillors D. Glenn-Graham, P. Singh, Z. Janecki, Y. Fernandes, J. Gazzola and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Vrbanovic, K. Galloway, B. Ioannidis and F. Etherington voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Councillors D. Glenn-Graham, P. Singh, Z. Janecki, Y. Fernandes, J. Gazzola and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Vrbanovic, K. Galloway, B. Ioannidis and F. Etherington voting in opposition. On motion by Councillor J. Gazzola - it was resolved: “That $2M be transferred from the Gas Capital Investment Reserve Fund to the Tax Stabilization Reserve Fund.” The Committee then recessed at 12:37 p.m. and reconvened at 1:25 p.m. with all members present. Water Utility & Sanitary Utility Mr. R. Hagey advised that the Region of Waterloo had confirmed its rate increases for 2012 at 6.9% for water and 7.9% for sanitary. Accordingly, there is no savings to be realized as a result of the Region’s decision as their approved rates match those used by City staff in initial SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 31 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. projections presented at the operating budget deliberations.Mr. Hagey advised that Issue Paper BD08 (Water and Sanitary Sewer Reserves and Rate Increase Options) provides different rate options and respective reserve transfers for each scenario; of which staff is recommending at least a 3.5% increase in water rates and 4% in sanitary rates, as anything less would result in the City subsidizing the Region’s wholesale rates. Mr. Hagey stated that the original rate increase of 6.9% for both water and sanitary is similar to what the City of Waterloo has approved and what is proposed by the City of Cambridge, adding that the impact of a lesser increase on transfers to the water and sanitary reserves is outlined in the issue paper. Councillor J. Gazzola referred to the projected actual for 2011 water supply costs at $17,385,000. in comparison to the proposed 2012 budget figure of $19,868,000 and questioned what the difference between the two is in percentage. He suggested it equates to more than a 6.9% increase and Mr. Hagey advised the rate increase is related to the 2011 figure. He added that water consumption in sanitary is not identical year to year, rising or falling dependent on experiencing a wetter than normal season or a dryer season. Mr. D. Chapman advised that the percentage difference for water supply costs is approximately 14% and is set based on trends over multiple years rather than one point in time. Mayor C. Zehr questioned the percentage at which point the City would be subsidizing the Region’s wholesale rate in both water and sanitary. Mr. Hagey advised that staff used 50% as a rough estimate, equating to 3.5% for water and 4% for sanitary as the minimum increase that would still allow the Region’s rates to flow through to the City’s customers. A motion by Mayor Zehr was brought forward for consideration to increase the water rates by 3.5% and sanitary rates by 4% in 2012. Mayor Zehr commented that the intent is to continue to maintain the level of service and not subsidize the Region’s wholesale rates. The impact to the homeowner is a reduction from $28. to $14. for water and from $30. to $17 for sanitary. Mayor Zehr suggested that this is an area that is easiest to make change while still recovering the City’s costs and providing flow through of the Region’s wholesale rate. He stated that the proposed increase is more modest and more palatable for the ratepayer in substantially reducing the impact to households. A motion by Councillor Gazzola was brought forward to amend Mayor Zehr’s motion to limit the rate increase for both water and sanitary to 2.9% in keeping with the Consumer Price Index (CPI). Councillor Gazzola maintained that a 2.9% increase would still result in a surplus position at year-end allowing monies to be put toward the Accelerated Infrastructure Replacement Program (AIRP) and the normal capital program. He noted that water rates have increased by 206% and sanitary by 303% over the recent past and suggested the City owes it to ratepayers to bring the rates in at the rate of inflation. Councillor Gazzola raised concerns with infiltration rates at 20% to 40% stating that it is unacceptable that the City is having to treat storm water at such levels and efficiencies are needed. Councillor B. Vrbanovic questioned the impact to the water and sanitary reserves at the proposed 2.9% increase. Mr. Hagey advised that the City can still fund its operating and capital program at that level but the amount left over to build the reserves would be less. At 2.9% the transfer to the water utility reserve would be approximately $583,000 and to the sanitary utility reserve approximately $2.261M; whereas, at 3.5% the transfer to the water utility reserve would be approximately $650,000 and at 4% the transfer to the sanitary utility reserve would be approximately $2.6M. Mr. D. Chapman stated that staff is not attempting to build reserves for the sake of doing so, pointing out that the City’s AIRP has a shortfall of which the water and sanitary share is $106M. The intent to build these capital reserves is to address that backlog and only in replacing that old infrastructure will the City be able to fully address the issue in sanitary related to infill / infiltration of storm water. Councillor Z. Janecki requested clarification of the percentage applied to infill / infiltration. Mr. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 32 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Hagey advised that staff budget at 20% but past experience has been closer to 40% and is at about 30% for 2011. Councillor Janecki questioned if an incentive program to encourage buildings to disconnect from the sanitary system still continues and how many buildings are still involved. Mr. G. McTaggart advised that the program is still ongoing; however, it is primarily for those homes with sump pumps hooked up to the storm sewer system. He indicated that it would be a much more onerous program to disconnect and reroute every house with a form of storm water collection.Mr. McTaggart added that many other cities have decided to pay the sewage treatment as a less expensive option. In response to Councillor Vrbanovic, Mr. Hagey further clarified revenues to expenses related to the proposed rate increases and at 2.9% noted that the capital reserve would have a zero balance. Mr. Hagey gave further explanation as to how the zero balance is arrived at and acknowledged that dependent on the rate increases in 2013 monies may be available for transfer to the reserves at that time. Mayor Zehr commented that the rates he has proposed represents lower rates that are still responsible and allows the AIRP to continue at an equitable level. He suggested that to go further in reducing rates will erode ability to maintain the AIRP, adding that the program helps on the cost side by assisting in addressing the issue of infill / infiltration. Mayor Zehr further noted that the rates proposed do not subsidize the wholesale rate and this is a sustainable approach going forward. Councillor Gazzola stated that the rate he has proposed does not take away from the AIRP, suggesting it leaves all money there to advance AIRP, as well as the normal capital program. He noted that his intent is to reduce slightly the amount going into surplus, expressing the view that there is a need to slow down some on what the City is saving. Councillor Gazzola’s amending motion to provide a 2.9% rate increase for both water and Lost sanitary was then voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki and Y. Fernandes voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. Carried, The following motion was voted on by a recorded vote and with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, Z. Janecki and Y. Fernandes voting in opposition. On motion by Mayor C. Zehr - it was resolved: “That the 2012 Water Utility rates be increased by 3.5% and the 2012 Sanitary Utility rates be increased by 4%.” Storm Water Utility Mr. Hagey advised that the Utility revenues are lower due to the 10% decrease in rates approved by Council which came into effect in the spring of 2011. In response to Councillor P. Singh, Mr. Hagey advised that the Utility will be in a deficit position at year-end of approximately $1.3M and notwithstanding the proposed 3% rate increase in each of the next 5 years, the Utility is expected to remain in an accumulated deficit position until 2016. Mr. Hagey advised that the only recourse to address the deficit is either through rate increases or expense reductions. REVIEW OF OUTSTANDING ISSUE PAPERS BD12 - Impact of Salary Freeze - Council Salaries Councilllor B. Vrbanovic commented that while he had some concern in putting Council salaries further behind in economic increases, it was his opinion that when the Corporation is SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 33 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. being asked to take significant budget cuts it would be appropriate for Council to demonstrate a willingness to assist in reducing some of their impact. He noted, however, that the process put in place by a Citizen’s Committee had determined that there should be gradual increases rather than a sudden large adjustment. A motion by Councillor B. Vrbanovic was brought forward to freeze Council salaries in 2012 at the 2011 level and continue the 1/3 tax free benefit for the balance of the Council term. Mayor Zehr asked that the motion be taken in two separate parts. Carried The following motion was voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Mayor C. Zehr voting in opposition. On motion by Councillor B. Vrbanovic - it was resolved: “That 2012 salaries for the Mayor and Councillors remain at the 2011 level.” Mr. D. Chapman advised that it was his understanding that the second part of the motion dealing with the 1/3 tax free benefit requires public notice to be given and that a separate report on this issue would be coming forward for consideration at a later date. Accordingly, Councillor B. Vrbanovic withdrew the second part of his motion, asking instead that staff bring forward a report on the matter at an appropriate future date. BD13 - Impact of Salary Freeze - Senior Management A motion by Councillor Y. Fernandes was brought forward for consideration to reduce the 2012 salary increase for Senior Management (Grade 12 and above) from 1.75% to 1%. Councillor B. Vrbanovic questioned how this impacts the pay equity system. Ms. B. Wagner advised that the pay equity system affects Grades 11 and under. The City has no choice but to compensate all positions within those grades, whether unionized or not, at the same level which has been established at a 1.75% increase. Within Grades 12 and up, she advised that there are no unionized employees so there is more flexibility in establishing economic increases. She pointed out; however, that there are other considerations in that there has been a decrease in compensation rates to this group over the last couple of years. She stated that in 2006 a market comparison was conducted which demonstrated a need to increase salaries to levels that would compare with the market and there will be challenges in recruiting and retaining qualified staff at a competitive level if a salary freeze continues. Ms. Wagner advised that market increases during the same timeframe have been at 2% and with the exception of the City of London, all municipalities are increasing at market performance levels. Councillor Vrbanovic questioned if salaries in all other municipalities in the Region are continuing to rise while Kitchener is staying back. Ms. Wagner advised that over the last 3 years, cities in the Region (including Guelph) have all increased salaries for this group which is making it difficult to compete in the job market. Councillor Vrbanovic questioned if it is the experience that salaries are unfairly compared between the public versus private sector and in fact, in some instances in the public sector it is the junior, entry levels that are at higher market value than the senior positions. Ms. Wagner concurred that lower level positions in the public sector often receive higher compensation than the private sector but in senior positions the base rate lowers between public and private sectors due to bonus / performance systems that raise private sector salaries in excess of their base rates. Councillor B. Vrbanovic requested clarification of the impact to senior management salaries over the past 2 years. Ms. Wagner advised that in 2010 their salary increase was reduced from 2% to 1% and in 2011 their salaries were frozen, while unionized employees received salary increases of 3% in each year. Councillor Vrbanovic questioned if this could mean some of the lower unionized positions are beginning to bump up against the lower end of senior management positions. Ms. Wagner stated that recent compression of grades is creating SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 34 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. some issues with employees earning more than the managerial position because of their eligibility to accumulate overtime. She pointed out that Grade 12 and up positions are not compensated for overtime either through pay or time in lieu but are putting in many extra hours of work over and above their normal work day. A motion by Councillor J. Gazzola was brought forward to amend the motion to provide that in 2012 the salaries for Senior Management (Grade 12 and above) be frozen at the 2011 rates. Councillor Y. Fernandes accepted Councillor Gazzola’s amendment as friendly. Councillor B. Vrbanovic spoke against the motion, commenting that there is a need to compensate senior staff and by continuing to freeze their salaries, Council could be setting precedent for good staff to consider leaving for higher paying jobs in the private sector. He suggested that Council cannot continue to ask senior staff to do more at less pay. Councillor Gazzola stated that he was looking at a salary freeze for just one more year, suggesting that senior levels of government should have taken action to effect same but failed to do so and it now falls to Council to take a hard stance. He stated that senior staff is paid well, noting that the list of salaries at a high range which is published is substantial and while this action is tighter for them they are not in fear of loosing a job. Councillor Gazzola stated that it is not a reflection on staff but does have an impact to the tax rate and it is not uncommon in the past for salaries to be frozen for 2 to 3 years. Councillor D. Glenn-Graham commented that a salary freeze should be supported, acknowledging that senior staff work extra-ordinarily hard but should not be compared to the private sector as those who choose to work in the public sector do so because they care about the community. He added that job stability should count for something and this is a temporary measure that senior staff should take the lead on, in addition to Council. Councillor B. Vrbanovic suggested that it is unfair to use this group of employees because they have no organized representation, commenting that the City has already lost good people and raised concerns with the kind of message being sent. He stated that there is no rationale behind the salary freeze other than the simple fact that Council can impose it, adding that this group is putting in lots of overtime work because they believe in the community and are doing so without compensation. Councillor Vrbanovic stated that Council needs to be fair and responsible toward this group as it needs to retain people to actually do the work. Councillor Y. Fernandes commented that staff receive good benefits and retirement plans which should also be taken into consideration and is a form of compensation still received notwithstanding a freeze on salaries. Councillor K. Galloway expressed frustration that Council in passing the motion is paying lip service in saying they appreciate the work senior management does but is again giving them a 0% increase. She stated that Council should take steps to keep the knowledge and training of staff here and not further erode staff morale. Councillor Galloway reminded that the City is not able to compete with other Cities where salaries have increased and disagreed that the intent is only one more year as it continues to be raised each year. Ms. C. Ladd suggested that if Council wanted to take a strong stance, the time to do so was in giving direction for negotiations with unionized groups. She stated that this gives the appearance of picking on one group who get zero perks and is expected to be here overtime without compensation. She added that in the event of a strike this is the group that will remain to support continued provision of services. Ms. Ladd stated that staff have picked the public sector as a career for specific reasons that has little to do with salary compensation and suggested that there is no job stability anywhere any more, noting recent lay-offs in Guelph. She acknowledged that benefits received are good but are still far behind what other Cities are providing and Kitchener now has a reputation of being one of the lower paying Cities, including benefits. Ms. Ladd expressed frustration at comments that suggest how good staff have it and urged Council not to further penalize the hardest working group; in particular, as it exacerbates circumstances wherein unionized staff reporting to managerial staff end up making more. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 35 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Mayor C. Zehr reminded that this is exactly the type of situation that gave rise a number of years ago to a major adjustment for staff across the board and suggested Council is in danger of this happening again in future. He questioned, that having heard the issues around compression of the grades, why any staff would consider taking on a higher, non-unionized position. He stated that there has to be an element of fairness and another reduction or freeze has no sense of fairness nor will it encourage high morale. Mayor Zehr suggested that saying Council is leading the way is meaningless given the potential to loose more staff that will have to be replaced and potentially at a higher rate of pay. He commented that not only is there potential for loss of persons but for the knowledge and experience that goes with them, suggesting that a freeze at this time would be punitive and sends the wrong message. Mayor Zehr reminded that Council not only has the roll of responsibility to those they were elected by but also has responsibility as an employer to be a fair and responsible employer. He stated that this group should not be disregarded for political expediency and it would be short sighted in terms of what the Corporation may stand to loose. Councillor S. Davey concurred that a salary freeze should not continue for senior management given the greater issue of falling behind market competitiveness, as well as those issues related to compression of grades. Councillor Fernandes’ motion as amended to provide that 2012 salaries for Senior Management (Grade 12 and above) remain at the 2011 level, was then voted on by a recorded Lost vote and , with Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki and Y. Fernandes voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. BD09 - Tier 1 Grant - tri-Pride Community Association Inc. Councillor K. Galloway requested clarification as to why the grant recommended is in-kind support only. Ms. R. Willms advised that the recommended in-kind support is based on last years grant plus the normal 2% increase for Tier 1 groups. She stated that this group did not submit the required information to enable a decision to be made in respect to their request for a larger grant of around $9,000.; and accordingly, they were advised that they could appeal staff’s recommendation to Council , which they have done. Councillor Galloway questioned if it makes any difference whether the grant approved is in-kind or cash. Ms. Willms advised that it would make no difference because monies are transferred in either case. Carried, The following motion was voted on by a recorded vote and with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour. Councillor J. Gazzola was not present at this time and accordingly did not vote. On motion by Councillor K. Galloway - it was resolved: “That the tri-Pride Community Association Inc. receive a 2012 grant of $1,126 (cash) for their annual festival.” BD10 - Benefits for Part-Time / Temporary Employees Councillor B. Ioannidis raised concerns regarding mandated provision of benefits to part-time / temporary employees. Ms. B. Wagner advised that OMERS regulations mandate the Corporation to offer pension benefits to employees in this group who have worked 700+ hours in the two years prior to their enrolment.She added that employees must maintain those hours of work in order to continue to be eligible for benefits and the City must pay a portion of the benefit costs for those enrolled. BD11 - Credit Card Agreement Councillor Y. Fernandes stated that it was her understanding that Neighbourhood Associations have expressed some concerns of potential hardship relative to use of credit cards for on-line community centre registrations. Ms. D. Campbell advised that a pilot program was established SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 36 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. this year with 4 Neighbourhood Associations for on-line registrations, with whom there was significant discussion prior to the start of the pilot. An agreement for the pilot period only was entered into in which it was agreed there would be shared expenses for the credit card fees for those paying on line and for some of the salaries for the increased staff wages. She advised that the costs have not yet been built into the budget and what Council is seeing is only the additional revenue received through the pilot. She added that staff will be evaluating the pilot and at this time she has not heard any concerns from the Neighbourhood Associations that it is posing a hardship for them; however, she was aware that they have been identifying ways to manage the increase in fees and/or manage their program fees to incorporate the additional fees from use of credit cards. 2012 CAPITAL BUDGET Mr. R. Hagey highlighted changes to the Capital budget, including: addition of $9.6M for the Kitchener Memorial Auditorium Complex (KMAC) expansion and a $2.55M reallocation of funding from existing projects to the KMAC dehumidification project, in 2012-2013; addition of $250,000 for the Victoria Park Boathouse exterior renovations, for a total funding of $500,000; adjustments to the 10 Year Capital Forecast based on results of a Fleet equipment review, including $2.8M in Reserve Funding in 2012 and a funding increase of $6.8M over the 10 year forecast; and $236,000 from Development Charges for final asphalt of Wabanaki Drive in 2013. Mr. Hagey advised that the Funding by Source chart summarizes last year, what was originally presented for 2012 and where it is now, with the difference in 2012 figures being the highlighted changes to the Capital budget. He added that capital closeouts for 2012 originally at $350,000 are now at $950,000 as shown in the Capital Pool Availability chart, with the additional $600,000 added to fund the Victoria Park Boathouse and the KMAC dehumidification projects. Mr. Hagey advised that the Gas Capital Investment Reserve Fund (GCIR) represents the updated projection based on profitability in the gas forecast and there is no change to projections for the Hydro Capital Investment Reserve (HCIR) Fund. It was noted that a copy of Kitchener-Wilmot Hydro’s dividend policy was provided in Issue Paper BD20. A change to the Economic Development Investment (EDIF) Fund projection was noted in that where previously there was a surplus projection there is now a line added for Employment Land Development with allocations of $350,000 in 2012 and $359,000 in 2013. Mr. Hagey advised that these funds have been earmarked for investments in strategic land acquisitions, as presented earlier to Council as part of the City’s updated Economic Development Strategy. Councillor Y. Fernandes questioned the status of parking subsidies received by Wilfrid Laurier University students attending St. Jerome’s School of Social Studies. Ms. C. Ladd advised that the agreement entered into with the University was written without indication of a fixed end date, nor does it specify the arrangement is to be in perpetuity. She stated that staff is in discussions with the University to either reduce the number of spaces provided to achieve savings for the City or decrease the rate paid by the City. Ms. Ladd noted that it is her understanding that the rate students pay on campus is the subject of recent negotiations and may have bearing to the City’s negotiations with the University. Mr. R. Regier added that staff have not received a current update from the University in respect to the situation on campus or how that will impact the downtown spaces but will update Council when more is known. He stated that the agreement will require tweaking regardless, as the Centre Block parking garage is scheduled to start construction this year and will require students currently parking on that site to be displaced to alternate parking arrangements. He indicated that through that process there may be some opportunity to achieve savings for the City. Councillor Fernandes questioned the feasibility of Council giving some direction in this regard. Mr. Regier advised that Council cannot arbitrarily change the existing agreement without consent of the parties to the agreement and therefore, would require the University to be signators to any change proposed. Councillor Fernandes questioned if it may be time to reduce downtown development incentives given the progress made in attracting more business to the core. Mr. Regier agreed that it may be appropriate to revisit the incentive policy but suggested that the time to do so would be during the next review of the Development Charges By-law. He added that staff will be preparing an analysis of downtown development for the review which will assist in making an informed decision. Mr. Regier further pointed out that there are existing projects, such as the SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 37 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Centre Block, for which the City has committed to financial arrangements including development charge exemptions that by agreement must be honoured. Councillor P. Singh questioned if there is any room for flexibility in adjusting the amounts added for Employment Land Development. Mr. Regier advised that the funding is tight to achieve what is needed and in particular, the City is challenged to position itself for redevelopment of the Bramm Street Yards site to take place over the next 5 to 10 years. Investment in background work is needed given the complexity of redevelopment of the site and if the City is to move forward expeditiously, the funding is needed. Ms. Ladd also reminded Council of a recent education session on the value of investment dollars, noting that the $709,000 is all staff has in seed dollars for investment in employment lands. She stated that if the funding is lost it will have a longer term impact and urged Council to consider the value that a small amount of seed money can bring to the community if well invested. Councillor J. Gazzola questioned if a resolution had been passed by Council to direct EDIF surplus funds to Employment Land Development. Mr. D. Chapman advised that Mr. Hagey had previously highlighted that this action resulted from presentation of the Kitchener Economic Development Strategy and any resolution concerning the matter is being sought as part of the budget approval this date. Development Charges Projection Mr. Hagey noted that overall projections for 2011 are marginally worse following receipt of results for the last half of the year. He noted that the only change is the addition of the Wabanaki Drive development and notwithstanding, the DC reserve projections are expected to be in a surplus position in 2014 which is in line with the next Development Charges By-law review. Councillor Z. Janecki raised concerns with the proposed work for the Block Line Road extension to Courtland Avenue relative to the route proposed for the Region’s Light Rail Transit (LRT). Mr. G. Murphy advised that City staff is working closely with Regional staff in reviewing the Block Line Road intersection as it relates to the LRT and potential roundabout. He stated that staff is confident that they are proceeding with the work under a reasonable approach and the work is important to do now as it has been on the books for some time and will enable an additional right-of-way for the community to use once work begins at the intersection of Ottawa Street South and Homer Watson Boulevard. BD28 - Prioritization of Recreation Facilities A motion by Councillor K. Galloway was brought forward for consideration to provide that recreational facilities as listed in the 2012 - 10 Year Capital Forecast be changed to reflect the following priorities: Doon Pioneer Park Community Centre Expansion, Mill-Courtland Community Centre Expansion and the South-End Community Centre; South-End Library; South-End District Park; South-End Pool; and South-End Arena; and that staff be directed to make the South-End Community Centre a top priority in the next Development Charge Background Study review without moving timing for either of the Doon Pioneer Park Community Centre Expansion or Mill- Courtland Community Centre Expansion. Councillor Galloway stated that while the motion has no impact to 2012 funding, its purpose is to set priorities for the future and to help the community understand where these projects are going in terms of priority listing. Mayor Zehr questioned if Councillor Galloway had reviewed the funding allotments to determine how the change in priorities may impact the Development Charges budget. Councillor Galloway stated that she envisioned this would be part of the review of the next Development Charges By-law. Councillor B. Ioannidis requested clarification as to where the artificial turf project is relative to the projects being ranked. Mr. R. Hagey advised the artificial turf project is distinct and is not included in this ranking, being further out in the forecast. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 38 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor Y. Fernandes questioned what is to be achieved through the change in priority ranking. Councillor Galloway stated that the purpose is to set the priority of these facilities moving forward to help the community understand what is needed. She added that she is not attempting to move the South-End Community Centre ahead of the Doon Pioneer Park or Mill Courtland Community Centre expansions but rather to make the South-End Community Centre next in-line followed by the remainder of the facilities as proposed. Councillor Fernandes raised concerns that the ranking suggests the South-End Community Centre is to be built without partnering with the pool or library facility. Councillor Galloway acknowledged that the development plan envisions a multi-use centre but still requires completion of a study. She added that it is her understanding that there is opportunity to complete the Community Centre and build on a library at a later date when funding is available. Councillor Fernandes also raised concerns that new facilities add additional operating costs and suggested that there needs to be an understanding of what the operational costs would be before new facilities are built. Mr. D. Chapman advised that through the Development Charges review, the background study would show operating costs associated with proposed new capital facilities. Councillor B. Vrbanovic commented that in terms of what is proposed it makes good sense to move the South-End Community Centre earlier on. He added that the motion simply asks staff to benchmark these projects and has no impact to capital or operating budgets as they exist within this term of Council. Councillor J. Gazzola commented that it is difficult to change priorities without knowing all the details, suggesting this is not the time to do so as once settled it may be harder to deal with re- prioritization later on. Councillor Vrbanovic commented that Council has in several instances given direction today on reprioritizing the capital budget without full details and the proposed priority ranking gives staff direction as to how to build on the 2013 budget and beyond. A motion by Councillor Y. Fernandes was brought forward to defer consideration of Councillor Galloway’s motion to a time prior to 2013 budget deliberations. A discussion was undertaken in respect to the timing of deferral and Councillor Fernandes suggested that the deferral be to the June 18, 2012 Standing Committee meetings. Councillor Fernandes’ motion to defer this matter to the June 18, 2012 Standing Committee Lost, meetings was then voted on by a recorded vote and with Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, Y. Fernandes and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, Y. Fernandes and S. Davey, voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That recreational facilities as listed in the 2012 - 10 Year Capital Forecast be changed to reflect the following priorities: 1. a) Doon Pioneer Park Community Centre Expansion b) Mill-Courtland Community Centre Expansion c) South-End Community Centre 2. South-End Library 3. South-End District Park 4. South-End Pool 5. South-End Arena; and further, SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 39 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. That staff be directed to make the South-End Community Centre a top priority in the next Development Charge Background Study review without moving timing for either of the Doon Pioneer Park Community Centre Expansion or Mill-Courtland Community Centre Expansion.” BD25 - Market Place Acoustics Councillor P. Singh referred to the Business Case for the Market acoustics project, commenting that on seeing the projected 2012 revenues and proposal to recoup investment over 5 years, he did not believe this to be a proficient business plan. A motion by Councillor Singh was brought forward for consideration to remove the $100,000 allocation for the Market Place Acoustics project from the Capital budget. Councillor S. Davey questioned the effect of this action. Mr. Hagey advised that this project is to be funded from capital closeouts and the proposed action would simply reduce the figure for capital closeouts from $950,000 to $850,000. Councillor Singh questioned if the $100,000 could be diverted to have an impact on the tax levy. Mr. D. Chapman advised that it could not as it is a one time savings from 2011 and would either increase the surplus for 2011 or reduce the projected deficit. Councillor Singh inquired if it could be used to accomplish what was earlier attempted under LEAF regarding funding for the Cycling Master Plan. Mr. Chapman advised that the only way to achieve a savings to the tax levy is if a $100,000 reduction is made across all 10 years of the Capital Forecast and if not, there would be shortfalls of $100,000 in each year of the Capital Forecast. Councillor Singh questioned if the $100,000 taken out of the capital closeouts could be used for the Cycling Master Plan and Mr. Chapman concurred. Councillor Singh inquired how that would help the tax base. Mr. Chapman stated it would not and if anything it would reduce the projected deficit in parking by $ 100,000. Councillor Singh modified his original motion to provide that the $100,000 to be taken from capital closeouts be reallocated to the Cycling Master Plan and the parking dividend be increased by $100,000. Councillor Singh accepted the suggestion of Councillor S. Davey to reallocate the $100,000 to the TSRF instead of specifying a project at this time as a friendly amendment. Ms. C. Ladd asked Council to consider the fact that the project for which the funding is proposed to be taken is a revenue generating project. She noted that large Corporate organizations, such as RIM, are coming to the Market bringing lots of exposure and commented that moving the funding for a one time tax reduction to a program that is not revenue generating puts the City further behind. She urged Council to consider that the one time benefit of a small reduction in the tax levy will jeopardize future revenue every year going forward that the acoustic problem remains unaddressed. Councillor Singh stated that he did not want to see more dollars going into the Market without substantial payback and suggested that in the short term putting the dollars back into the tax base would be more of a benefit. Mayor Zehr spoke against the motion, stating that a 4.5 year payback period is reasonable and if the funding is not provided, the Market will still have the problem with the space not being used to its fullest potential.He stated that the acoustics problem needs to be addressed and pointed out that revenue generated from a useable space is a sustainable source of funding into the levy; whereas, the proposed one time transfer is not. Councillor Gazzola requested clarification as to what happens with the remainder of funding coming from capital closeouts. Mr. Hagey advised that it is estimated that $1.4M will remain in capital closeouts at year end which is intended to be used to address the 2011 year-end deficit. Councillor Gazzola stated that the year-end deficit is estimated at $970,000 and questioned what is to happen with the remaining $400,000 in capital closeouts. Mr. Hagey advised that the remainder would stay in the capital account to be used to fund future capital SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 40 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. projects or build the reserve. Councillor Gazzola questioned what derives the estimated $22,400 in Market net revenue. Mr. R. Regier advised that the revenue is obtained from rental of Market space, adding that staff has seen an uptake of interest in use of Market rental space, citing examples of recent events. Councillor Gazzola questioned if the Market will increase its revenue by the estimated net revenue for the Market space rentals this year. Mr. Regier advised that the redesign and construction to address the acoustics problems will not be in place until mid-year; however, he stated the annual impact to increased rental revenues is estimated to be in the $25,000 range. He added that these rentals occur during mid-week and have added benefit of drawing persons to the Market during slow periods in its operation. Councillor Gazzola inquired if it is possible to reduce the amount from capital out of current by $100,000 from $881,000 to $781,000. to achieve what Councillor Singh has proposed. Mr. Chapman advised that this could be done by updating the 10 year projection to show a 0.1% levy increase as of 2013 to fund the balance of projects that would not be funded if it is to be a permanent reduction. Councillor B. Ioannidis stated that he would not support the motion given the Market project is revenue generating. He pointed out that the estimated revenue to be generated on the initial investment equates to a 22.4% rate of return and even if at half that rate, it represents a good deal. Lost Councillor Singh’s motion was then voted on by a recorded vote and , with Councillors J. Gazzola, Z. Janecki, Y. Fernandes, S. Davey and P. Singh voting in favour; and Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in opposition. BD04 - New Eco Event Councillor Glenn-Graham encouraged the Committee to support the revised proposal for hosting a new Eco Event in Downtown Kitchener. He noted that the Event would not conflict and/or compete with similar events held in the City of Waterloo and would help to animate the Downtown core. Councillor Vrbanovic stated that while he is supportive of the City hosting more events throughout the summer months, funding to support the creation of a new Eco Event is not available at this time. He suggested that the possibility of hosting the proposed Eco Event could be considered as part of the analysis that is being undertaken on the LEAF grant program. Carried Unanimously The following motion was voted on by a recorded vote and . On motion by Councillor B. Vrbanovic - it was resolved: “That the revised proposal for a new Eco Event, as outlined in Final Budget Day Issue Paper BD04, be deferred and referred for consideration as part of the LEAF funding options, which will be coming forward to the Finance and Corporate Services Committee by no later than May 7, 2012.” BD24 - Safe and Healthy Advisory Committee (SHAC) Budget Ms. S. Adams advised that in recent years, funds within the Safe and Healthy Community Advisory Committee (SHAC) capital account have almost entirely been used to provide grants toward community safety and crime prevention. She added that over the years, the account has experienced surpluses ranging from $6,000. to $15,000., with a surplus of $7,000. anticipated for 2011. She noted that any funds remaining in the account at year-end are transferred back to the tax support operating budget. A motion by Councillor K. Galloway was brought forward for consideration to reduce the 2012 allocation to the SHAC Budget from $36,000. to $33,000. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 41 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. A motion by Councillor Y. Fernandes was brought forward to amend Councillor Galloway’s motion to further reduce the 2012 allocation to the SHAC Budget by an additional $3,000. Councillor Vrbanovic acknowledged that while there is room to reduce this budget, he cautioned against making a sizeable permanent decrease. He advised that as the former Vice-Chair of SHAC, he is aware that its budget is often used to address small unfunded neighbourhood safety concerns that arise throughout a given year. He indicated that he would prefer to see year-end surpluses continue to be transferred back into the operating budget rather than having to reallocate funding in the future for those neighbourhood initiatives. Lost, Councillor Fernandes’ amending motion was then voted on by a recorded vote and with Councillors D. Glenn-Graham, Z. Janecki, Y. Fernandes, J. Gazzola and S. Davey voting in favour; and Mayor C. Zehr and Councillors B. Vrbanovic, K. Galloway, P. Singh, B. Ioannidis and F. Etherington voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors D. Glenn-Graham, P. Singh, Y. Fernandes, S. Davey, B. Vrbanovic, K. Galloway, B. Ioannidis and F. Etherington voting in favour; and Councillors Z. Janecki and J. Gazzola voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That the 2012 allocation to the Safe and Healthy Community Advisory Committee (SHAC) Budget be reduced from $36,000. to $33,000.” BD32 - Consulting Activity At the request of Councillor Y. Fernandes, Mr. Hagey agreed to provide additional information on the projects that were grouped as items costing less than $20,000. BD30 - Fleet Replacement Equipment Purchases Questions were raised regarding some of the vehicles identified for replacement in 2012. Mr. Chapman advised that annually the Equipment Review Committee examines each Department’s needs with consideration being given to the age, life cycle, utilization, service type, reliability, current condition, historical maintenance and repair costs of each unit recommended for replacement. He stated that in instances where the cost benefits analysis determines that the funding needed to restore or maintain a vehicle exceeds depreciation charges, those vehicles are subsequently proposed for replacement. He confirmed that Divisions are billed for all equipment costs including depreciation charges, which in turn pays for the replacement of that equipment over the course of its depreciated life cycle. Councillor J. Gazzola raised concerns with respect to the addition of new equipment which he looks upon as new FTEs. Ms. P. Houston advised that additional staff is already included in the budget for growth, citing an example of McLennan Park wherein new temporary staff is hired to maintain the park and those staff require equipment to carry out their duties. Mr. Chapman added that these are staffing costs Council deliberated on in 2011, for which Council elected to defer some costs and what is being dealt with is the annualization of the deferred costs in 2012. Mr. Chapman further noted that these relate to the amounts shown in the growth adjustments presented earlier. Councillor Y. Fernandes questioned the impact to the reserve if only half of the proposed new equipment is purchased. Mr. D. Chapman advised that more of the reserve funds would be used, noting that the costs to the City will be higher in continuing to maintain equipment beyond its effective useful life. He added that all projections for replacement vehicles indicate that the costs to maintain are higher than to purchase new. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 42 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. DEBT Mr. Hagey advised that the graphs provided include additional debt for the KMAC expansion and dehumidification project; as well as adjustments to DC funded projects. Total debt outstanding is expected to reach $110M in 2012-2013 and Mr. Hagey pointed out that the Auditorium expenses have been shown separately to illustrate its debt impact. Debt charges as a percent of tax levy is expected to peak at about 15% in 2014 and is well above the maximum benchmark of 10%. Debt per household is expected to peak at $1,200 in 2012-2013 and is above the maximum benchmark of $1,000 per household. Debt to reserve ratio is expected to peak at 5:1 in 2013 and is well above the benchmark of 1:1. A graph was illustrated showing Kitchener’s debt to reserve ratio in 2010 at 3:1, having the second highest debt to reserve ratio at that time among the larger municipalities and the group average was close to the benchmark ratio of 1:1. Mr. Hagey stated that if no action is taken to make change, Kitchener will likely have the highest ratio among larger municipalities in the Province. RESERVES Mr. Hagey advised that essentially reserve balances remain the same as first presented, with the only significant change in the Gas Capital Investment Reserve Fund related to profitability expectations of the Gas Utility in 2011-2012. The 2012 ending balance is reduced by almost $8M and the reduction in the Gas Capital Investment Reserve Fund has dropped the overall reserve balance from $22.5M to $14.5M. Mayor C. Zehr inquired if the 2012 allocations from the Local Environmental Action Fund are included and Mr. Hagey confirmed that the approved allocation of $350,000 has already been built in to the tax supported operating budget and is no longer shown in the reserve. Mayor Zehr requested clarification regarding the Sick Leave Reserve Fund which shows it remaining at the 2011 level. Mr. Hagey stated that it is based on projections and informed by actuarial investments, and as no revised estimates have been received no change has been made. 2% POTENTIAL TAX SUPPORTED REDUCTIONS AND RELATED ISSUE PAPERS Mr. Hagey advised that at Council’s request, staff have provided items of potential reduction options of up to 2%, together with corresponding issue papers outlining risks associated with each potential reduction. Mr. Hagey referred to Issue Paper PR26 which proposes a potential reduction of $215,722 in base budget adjustments, presenting a detailed listing of the items that comprise the reduction amount and noted two additional Issue Papers included in the budget package being, BD40 (Your Kitchener Publication) and BD41 (Property Tax Administration Fee). Reduction Items - PR7, PR8, PR9, PR11, PR12 and PR13 - Community Services - Various A motion by Councillor Y. Fernandes was brought forward to take no action on the following: increase fee for Leadership Program (PR7); reduction of one camp staff for Kiwanis Park (PR8); reduced hours on June weekdays for Kiwanis Park (PR9); elimination of Neighbourhood Association Program grants (PR11); reduced Neighbourhood Association printing (PR12); and Community Centre closures (PR13). At the request of Councillor K. Galloway, Councillor Fernandes agreed to remove PR7 (Increased Fee for Leadership Program) from her motion to allow it to be dealt with separately. Carried Unanimously. The following motion was then voted on by a recorded vote and On motion by Councillor Y. Fernandes - it was resolved: “That no action be taken on the following: reduction of one camp staff for Kiwanis Park (PR8) reduced hours on June weekdays for Kiwanis Park (PR9) elimination of Neighbourhood Association Program grants (PR11) SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 43 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. reduced Neighbourhood Association printing (PR12) Community Centre closures (PR13).” Reduction Item PR10 - Community Services - Movie Licences Carried The following motion was voted on by a recorded vote and , with Mayor C. Zehr and Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillor Z. Janecki voting in opposition. On motion by Councillor D. Glenn-Graham - it was resolved: “That no action be taken to eliminate Movie Licences (PR10).” Reduction Item PR1 & Issue Paper BD40 - Office of the Chief Administrator - Your Kitchener In response to Councillor B. Vrbanovic, Ms. A. Bailey clarified the various types of content and number of pages used for each in production of the Your Kitchener newsletter. Councillor Vrbanovic asked that in respect to what is proposed if the same number of pages would be used for advertising. Ms. Bailey advised that it is proposed that the 12 pages currently used for Councillor columns would be done through the Kitchener Citizen newspaper and the balance of space in Your Kitchener would still be available to promote the City, including businesses and events in each Ward. A motion by Councillor J. Gazzola was brought forward to approve Option 1-ii (4 page pop-up bi-monthly insert, process colour at $24,960 annually for a savings of $37,240), as outlined in Issue Paper BD40 (Your Kitchener Publication). Councillor B. Vrbanovic spoke against the motion, commenting that Your Kitchener was established as a venue to ensure the City could communicate information to residents about City initiatives and services. He suggested that to cut it down to 24 pages would simply reduce the newsletter to advertising space with no opportunity to communicate about City initiatives. He stated that it is important to ensure citizens continue to receive information about what is happening in the City and suggested that the proposed reduction would be a disservice to the community and moves away from accountability and transparency principles. Councillor J. Gazzola advised that he is recommending this option as a compromise, originally having contemplated Option 3 to discontinue Your Kitchener. He suggested that with Kitchener Citizen and Kitchener Post having wide circulation, in addition to media coverage, there is sufficient venue to keep citizens informed. He added that Your Kitchener should not be used as a marketing tool for Councillors, expressing the view that those columns are all written in a positive manner, presenting only one side of the issues. Councillor F. Etherington agreed that there are sufficient venues to disseminate information, suggesting that as Your Kitchener is distributed among flyers it more often ends up going straight to the recycle box than being read. He also agreed that the newsletter provides only happy news without any criticisms of issues. A motion by Councillor B. Vrbanovic was brought forward to amend the main motion to provide that Option 1 - i (4 page pop-up monthly insert, process colour at $49,920 annually for a savings of $12,280) be approved. Councillor Vrbanovic commented that Your Kitchener is an important vehicle to communicate with citizens and many Ontario cities, including the Region of Waterloo, have their own mechanisms to do so. Mayor C. Zehr supported the amendment, commenting that Your Kitchener is used to communicate Corporate decisions made collectively, and it is the Councillor columns that presents opportunity for members of Council to give opposing views or their support for an issue. He suggested that it would have an adverse impact without those pages to talk about SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 44 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. City initiatives and disagreed that the paper goes directly to recycling as it is a differing size of paper from junk mail. Councillor K. Galloway expressed the view that the number of pages could be decreased given ability for Council to still write a column for the Kitchener Citizen. She advised that she liked the savings of the Option 1 - ii and if approved, asked that staff be creative in use of advertising to minimize the space taken by advertisements. Councillor Vrbanovic’s motion to amend the main motion to provide approval of Option 1 - i Lost was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors B. Ioannidis and B. Vrbanovic voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, F. Etherington and P. Singh voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Mayor C. Zehr voting in opposition. On motion by Councillor J. Gazzola - it was resolved: “That Option 1-ii (4 page pop-up bi-monthly insert, process colour at $24,960 annually for a savings of $37,240), be approved, as outlined in Issue Paper BD40 (Your Kitchener Publication).” Reduction Item PR2 - Office of the Chief Administrator - Holiday Parking Subsidy A motion by Councillor Y. Fernandes was brought forward to reduce the number of Saturdays with subsidized parking from 7 to 3 for a savings of approximately $22,650, as outlined in Issue Paper PR2. A motion by Councillor D. Glenn-Graham was brought forward to amend the main motion to provide a reduction in the number of Saturdays with subsidized parking from 7 to 4 for a savings of approximately $17,000. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in favour; and Councillors J. Gazzola, Z. Janecki, Y. Fernandes, S. Davey and P. Singh voting in opposition. On motion by Councillor D. Glenn-Graham - it was resolved: “That a reduction in the number of Saturdays with subsidized parking from 7 to 4, be approved, for a savings of approximately $17,000 (PR2).” Reduction Item PR3 - Office of the Chief Administrator - Downtown Ambassador Carried The following motion was voted on by a recorded vote and , with Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic F. Etherington and P. Singh voting in favour; and Mayor C. Zehr and Councillor Z. Janecki voting in opposition. On motion by Councillor Y. Fernandes - it was resolved: “That the Downtown Ambassador Program be reduced from $10,470 to $7,500 (PR3).” SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 45 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Reduction Item PR4 - Community Services - Part-Time Wages - By-law Enforcement A motion by Councillor K. Galloway was brought forward for consideration to take no action to reduce part-time wages in By-law Enforcement, as outlined in Issue Paper PR4. Councillor P. Singh questioned how serious an impact it would have on service levels if the reduction was approved. Mr. S. Turner advised that part-time wages is used for a variety of reasons, such as filling shift absences due to sick leave and vacations, or to assist with special projects such as the Doon / Conestoga College coverage. The impact of the reduction would be dependent on the number of shifts lost, with the dollar amount proposed representing about 100 shifts / year. He stated that this would have an impact on revenues from parking fines and may increase complaints resulting from evening / weekend callers who may not receive service. Councillor Singh questioned what kind of enforcement would be impacted in regard to Conestoga College. Mr. Turner stated that at peak times when it is known that there may be certain activities occurring at the College of an unwelcome nature in the neighbourhood, there is increased coverage for parking and evening coverage for noise related issues. He noted that lower Doon presents challenges in regard to response times given its distant location and a commitment has been made to lower Doon residents to have that added coverage. Councillor K. Galloway inquired as to how the Division is coping in terms of staffing overall. Mr. Turner advised that they are experiencing challenges and a self-imposed service level review is currently underway in respect to response times and staff coverage, the results of which will be coming forward for review in the spring. Councillor F. Etherington was of the view that By-law Enforcement is an area that is over worked and he would not support the potential budget reduction. Councillor Galloway’s motion to take no action was then voted on by a recorded vote and Lost , with Mayor C. Zehr and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, Y. Fernandes, S. Davey and P. Singh voting in opposition. A motion by Councillor Z. Janecki was brought forward for consideration to reduce part-time wages in By-law Enforcement by $25,138 ($20,111 in wages and $5,027 in fringe benefits), as outlined in Issue Paper PR4. Councillor Galloway commented that this is an area that provides an important function and requires continued support. She pointed out that lower Doon will not see the same level of support and she was not willing to support a reduction that would not meet current standards. She stated that the reduction did not make sense as it will impact safety and security, as well as have an adverse impact on revenue generation. A motion by Councillor K. Galloway was brought forward to amend the main motion to provide a reduction in part-time wages in By-law Enforcement of $138. Councillor B. Ioannidis spoke in support of the amendment, commenting that the majority of constituent complaints relate to By-law Enforcement matters and this is an area where staffing is needed most. Carried The following motion was voted on by a recorded vote and , with Mayor C. Zehr and Councillors B. Ioannidis, Y. Fernandes, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, and S. Davey voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That part-time wages in By-law Enforcement be reduced by $138 (PR4).” SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 46 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Reduction Item PR5 - Community Services - Recreation Program Grants A motion by Councillor F. Etherington was brought forward to take no action to reduce Recreation Program grants by $13,900, as outlined in Issue Paper PR5. Mayor C. Zehr requested if an update on 2011 data is available. Ms. L. Palubeski advised that in the Older Adult Program there was about half by year-end; in 2010 the Youth Program was at approximately $4,000; and the Children’s Program has not changed from what was reported in the issue paper, being $3,500. A motion by Mayor C. Zehr was brought forward to amend the main motion to provide a reduction in Recreation Program grants of $4,900. Mayor Zehr commented that the proposed reduction will still leave $9,000 which is sufficient to cover off all grants given for the years 2009, 2010 and 2011. Councillor D. Glenn-Graham supported the amendment as a responsible and balanced approach. Carried The following motion was voted on by a recorded vote and , with Mayor C. Zehr and Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic and P. Singh voting in favour; and Councillor F. Etherington voting in opposition. On motion by Mayor C. Zehr - it was resolved: “That the Recreation Program Grants be reduced by $4,900. (PR5).” Reduction Item PR6 - Community Services - Summer Playground Programs A motion by Councillor F. Etherington was brought forward to take no action to close 5 summer playground programs for a net reduction of $17,391, as outlined in Issue Paper PR6. Councillor B. Vrbanovic supported the motion, suggesting in that some programs are not doing well, there may be other locations where programs should be starting such as in new and developing areas of the City and this would present an opportunity to do so. A motion by Councillor Y. Fernandes was brought forward to amend the main motion to provide a reduction of $8,000 in the summer playground programs. Councillor S. Davey requested clarification as to what the dollar amount would equate to in number of playgrounds. Ms. Palubeski advised that a 50% reduction would equate to closure of approximately 3 summer playground programs and she would like the opportunity to consider which programs would be impacted. Mayor C. Zehr commented that he was concerned with the issue around declining registrations to where very few attended the Alpine playground in 2011 and the Queen Elizabeth playground was closed. He expressed the view that there is some room for reduction and questioned what elimination of the Alpine and Queen Elizabeth playgrounds would equate to in dollars. Ms. Palubeski advised that the cost per program is approximately $3,500. A motion by Mayor Zehr was brought forward to amend Councillor Fernandes’ motion to provide a reduction of $7,000 in the summer playground programs. Councillor Fernandes accepted the Mayor’s proposal as a friendly amendment. Councillors P. Singh advised he could not support the amendment, commenting that notwithstanding declining registrations in some cases, these programs are essential, well utilized and an important part of the community. Councillor B. Vrbanovic added that it is important to invest in youth programming at the front end to lessen the chance of having to deal with higher costs later on related to policing, the criminal justice system, prisons and added health care expenses. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 47 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor J. Gazzola supported the reduction, stating that if interest resumes staff can come back to request additional funding. Councillor Fernandes added that there are many alternatives for youth activities during the summer, pointing out that summer playgrounds only operate for half a day making daycare an issue for some parents. Councillor Davey also agreed that there are better ways to support youth than through declining programs. Carried The following motion was voted on by a recorded vote and , with Mayor C. Zehr and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki, Y. Fernandes and S. Davey voting in favour; and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. On motion by Councillor Y. Fernandes – it was resolved: “That the Summer Playground Program be reduced by $7,000. (PR6).” Reduction Item PR7 - Community Services - Leadership Program Carried Unanimously. The following motion was voted on by a recorded vote and On motion by Councillor K. Galloway - it was resolved: “That the Leadership Program fee be increased by 20%, from $404. to $484.80 (PR7).” Reduction Item PR14 - Community Services - City Hall Ice Rink A motion by Councillor B. Vrbanovic was brought forward for consideration to take no action to delay the opening of the City Hall ice rink by 2 weeks until approximately December 1, 2012, as outlined in Issue Paper PR14. Councillor Vrbanovic commented that the rink is the best used investment made in building the new City Hall and is one of the few options citizens can do that is affordable. Councillor Y. Fernandes questioned if a temperate winter increases operational costs to maintain the ice surface. Ms. K. Kugler advised that this winter season has been untraditionally warm and utility costs are not yet available for evaluation. Councillor Fernandes questioned if there is opportunity to delay opening by one week and/or judge opening/closing of the rink based on how weather is trending. Ms. Kugler stated that timing is a factor, noting that it relates to safety of installation and having something effective in place for high traffic periods such as pre-holiday celebrations and March break when school children are looking for activities. She added that this is primarily the only outdoor facility they can use when the weather is inconsistent. Councillor D. Glenn-Graham agreed that it would make sense to base opening on weather trends and while he would support taking no action he would like staff to look for efficiencies based on weather. In response to Councillor B. Ioannidis, Ms. Kugler advised that refrigeration equipment is used to maintain the ice surface which allows skating to continue in warmer temperatures, with rainfall being the only element that impedes ability to maintain the ice surface. Councillor S. Davey supported taking no action as it is a free activity for citizens and is well used especially in warmer weather. Carried Unanimously. The following motion was voted on by a recorded vote and On motion by Councillor B. Vrbanovic - it was resolved: “That no action be taken to delay the opening of the City Hall ice rink in 2012 (PR14).” SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 48 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Reduction Item PR15 - Community Services - City-Owned Festivals A motion by Councillor Y. Fernandes was brought forward for consideration to eliminate the Tooney Tuesdays City-owned festival for a net reduction of $10,000, as outlined in Issue Paper PR15. Councillor Fernandes stated that Tooney Tuesdays is shown as the most costly per attendee and while having activities and entertainment during the day is an attraction to those working in the downtown, it is hard to gage the cost of attendees. Councillor B. Ioannidis spoke against the motion, commenting that this is one of the only events that involves children and if discontinued it was his view it would be a disservice to the community. Councillor D. Glenn-Graham commented that the New Years eve event in 2011 branded as a Blues theme was well received and there was some thought of expanding to close off King Street and license a tent. He questioned if increased funding would be required to expand that celebration. Mr. J. Young advised that it would be dependent on the scope of expansion but agreed that the 2011 event was successful and there is opportunity to consider expansion of the event. A motion by Councillor D. Glenn-Graham to amend the main motion was brought forward for consideration to provide that the $10,000 reduction for Tooney Tuesdays be reallocated to expand the New Years Eve event to allow closure of King Street and a licensed tent. Councillor K. Galloway commented that this will cut another youth program that also involves fundraising for a local charity that will stand to lose as well. She noted that the event is televised on Rogers Cable TV bringing lots of exposure to the downtown and was of the view that this event presents good value for the money. Councillor B. Vrbanovic stated that he could not support cutting a youth event in support of an adult event with alcohol. Councillor Vrbanovic also raised concerns that the City is not doing a good enough job in attracting corporate sponsorships and questioned how this can be changed to grow events and decrease tax subsidization through partnering. Mr. J. Young advised that there is opportunity to garner sponsorships but it requires further review. Councillor Vrbanovic stated that he would look to staff to bring back a report on this matter with an action plan. Councillor F. Etherington also spoke against reductions in the Special Events budget, stating that every one of the programs helps to revitalize the downtown and is healthy for the downtown. Mayor C. Zehr also agreed with comments that it is not appropriate to cut funding for a youth event in favour of an adult event with alcohol. Councillor J. Gazzola suggested that the proposed reduction would provide incentive to staff to work on obtaining sponsorships and to be creative in offering events in a way that does not cost the taxpayer. Councillor Gazzola advised that he could support the reduction but would prefer not to specify which event should be cut. Councillor Fernandes questioned the feasibility of transferring $10,000 from the Victoria Park ice reserve for the Tooney Tuesdays events and still retain a $10,000 reduction. Mr. D. Chapman advised that this action would be inconsistent with Council’s resolution as to how the funds in that fund are to be used. Ms. P. Houston added that the decision of Council relates to adding new winter rinks in neighbourhoods which the funding has been used for in the past. She noted that funding has not been allocated in 2012; however, the transfer would not be a sustainable reduction because this is a reserve fund and Council would only be making a one time contribution to Tooney Tuesdays. Councillor P. Singh stated that Council did go through this exercise several weeks ago when a decision was made to fund an ice rink on the Salvation Army property in Ward 6 and there are still hard costs associated with setting up these rinks regardless, so it is difficult to budget. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 49 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Mr. D. Chapman clarified that Council committed those funds to construction of 4 outdoor ice rinks, not all of which have been constructed yet but for which approval has been given. Councillor D. Glenn-Graham’s amending motion was then voted on by a recorded vote and Lost , with Councillor D. Glenn-Graham voting in favour; and Mayor C. Zehr and Councillors J. Gazzola, B. Ioannidis, Z. Janecki, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. Councillor P. Singh requested clarification of the Downtown Live - Civic Square event. Mr. R. Regier advised that the objective is to animate King Street to draw employees out of office buildings during their lunch time and after working hours to participate in the urban lifestyle of the downtown (ie. restaurants / retail). Mr. Regier advised that an ambitious plan is underway to expand and increase corporate support and expressed the view that this program is an important element of the downtown atmosphere that provides good positioning to assist in promoting the brand expansion of the downtown. A motion by Councillor J. Gazzola was brought forward to amend the main motion to provide a reduction of $10,000 from City-owned Festivals and it be left to staff to make determination as to the specific program that will be affected. Lost Councillor Gazzola’s amending motion was then voted on by a recorded vote and , with Councillors J. Gazzola, Z. Janecki, Y. Fernandes, S. Davey and P. Singh voting in favour; and Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in favour; and Councillors J. Gazzola, Z. Janecki, Y. Fernandes, S. Davey and P. Singh voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That no action be taken to eliminate one major City-owned festival (PR15).” Reduction Item PR16 - Finance and Corporate Services - REEP Allocation Councillor F. Etherington disclosed a pecuniary interest and abstained from all discussion and voting concerning this matter as he is currently participating in the programming conducted by the Waterloo Region Green Solutions - REEP. Councillor P. Singh disclosed a pecuniary interest and abstained from all discussion and voting concerning this matter as a family member is currently participating in the programming conducted by the Waterloo Region Green Solutions - REEP. Councillor B. Vrbanovic commented that this is an organization that continues to do great work and should continue to be supported to achieve their environmental program goals and to enhance their ability to leverage dollars from other funding sources. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, K. Galloway and B. Vrbanovic voting in favour; and Councillors J. Gazzola, Z. Janecki, Y. Fernandes and S. Davey voting in opposition. Recorded Pecuniary Interests and Abstentions: Councillor F. Etherington as he is currently participating in the programming conducted by the Waterloo Region Green Solutions - REEP. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 50 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor P. Singh as a family member is currently participating in the programming conducted by the Waterloo Region Green Solutions - REEP. On motion by Councillor B. Vrbanovic - it was resolved: “That no action be taken to discontinue the $27,500 annual allocation to Waterloo Region Green Solutions - REEP through the Environmental Committee operating budget.” Reduction Item PR17 - Finance and Corporate Services - Property Tax Administration Fee A motion by Councillor B. Ioannidis was brought forward for consideration to establish a 2012 operating budget for property ownership changes totalling $185,000 and to add a $35 fee for property ownership changes (Property Tax Administration fee) to the 2012 Fees and Charge Schedule (PR17). Mayor C. Zehr raised concerns with a fee being applied to a simple name change or changes related to a spouse. Mr. D. Chapman advised that the fee will not apply in the instance of a name change or where a joint owner is removed from the tax roll. Carried Unanimously. The following motion was then voted on and On motion by Councillor B. Ioannidis - it was resolved: “That a 2012 operating budget be established for property ownership changes totalling $185,000 and a $35 fee for property ownership changes (Property Tax Administration fee) be added to the 2012 Fees and Charges Schedule (PR17).” Reduction Item PR18 - Infrastructure Services - Sidewalk Infill Capital Program A motion by Councillor P. Singh was brought forward for consideration to reduce the budget for the Sidewalk Infill Capital Program by $150,000 per year (PR18). Mayor C. Zehr requested clarification of the impact to programming resulting from the proposed reduction. Mr. G. Murphy advised that each year a certain amount of capital funding is set aside for sidewalk infill which currently has a backlog of work to address. He stated that a decision was made in 2011 to reduce funding in the program and reallocate the reduction amount to the sidewalk repair program because of changes in Ministry of Transportation standards concerning such things as sidewalk deflections, cracks, etc. The amount proposed for reduction in Issue Paper PR18 actually relates to a proposal to reignite the Sidewalk Infill program in which staff originally was seeking $300,000 but instead has proposed reducing that amount to $150,000. Carried Unanimously. The following motion was then voted on and On motion by Councillor P. Singh - it was resolved: “That the budget for the Sidewalk Infill Capital Program be reduced by $150,000. per year (PR18).” Reduction Items PR19 & PR20 - Infrastructure Services - Energy Consumption and Corporate Leases Carried Unanimously. The following motion was voted on by a recorded vote and SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 51 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. On motion by Councillor B. Ioannidis - it was resolved: “That the 2012 budget be reduced as follows: $10,000 in efficiencies in energy consumption (PR19) $10,000 added revenue resulting from a review of corporate leases (PR20).” Reduction Item PR21 - Infrastructure Services - Sportsfield Maintenance Carried, The following motion was voted on by a recorded vote and with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, J. Gazzola, S. Davey, Y. Fernandes, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillor Z Janecki voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That no action be taken on the proposed reduction in sportsfield maintenance (PR21).” Reduction Item PR22 - Infrastructure Services - Turf Maintenance A motion was brought forward by Councillor K. Galloway to take no action on the proposed reduction in turf maintenance. Councillor Fernandes expressed support for this reduction but suggested that the total amount of savings be reduced from $180K to $150K. Mr. J. Witmer advised that staff could not support a reduction in this area as it is not sustainable and further reduces the level of service. He explained that the goal is to provide proper turf maintenance on a 3 week cycle, whereas the proposed reduction will reduce the service to a 4 week cycle. Mayor C. Zehr pointed out that Operations has been under budgeted for many years which contributes to their deficit. A motion by Councillor Y. Fernandes to amend Councillor Galloway’s motion to provide a Lost, reduction of $150,000 from turf maintenance was voted on by a recorded vote and with Councillors J. Gazzola and Y. Fernandes voting in favour; and Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Z. Janecki, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. Carried, The main motion was then voted on by a recorded vote and with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, J. Gazzola, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors Y. Fernandes and Z Janecki voting in opposition. On motion by Councillor K.Galloway - it was resolved: “That no action be taken to reduce the 2012 turf maintenance budget (PR22).” Reduction Item PR23 - Infrastructure Services - Operations Temporary Labour Hiring Carried, The following motion was voted on by a recorded vote and with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, Y. Fernandes and Z Janecki voting in opposition. On motion by Councillor K.Galloway - it was resolved: “That no action be taken to delay hiring of temporary seasonal staff in Infrastructure Services – Operations (PR23).” SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 52 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Reduction Items - Additional Councillor S. Davey advised that Councillors Etherington and Singh wished to bring forward additional recommendations for potential budget reductions. The following motion by Councillor F. Etherington was brought forward for consideration: “WHEREAS the Mayor and 10 Councillors are each allocated a total allowance of $5,000 a year in operating and capital expenses for home and office technology costs that adds up to a total of $55,000 being budgeted but unused in most years; BE IT RESOLVED that the operating allowance for home office technology allowed the Mayor and each Councillor be reduced from $3,675 to $2,675 a year.” Councillor D. Glenn-Graham suggested it would be beneficial to know how much was spent in operating costs in 2011, before a decision is made. Mr. Hagey advised that staff could provide the known costs but time is required to gather the information. Councillor P. Singh advised that he had intended to introduce a motion to direct staff to hire a part-time person on a one year contract for the Office of the Mayor and Council at a cost of approximately $18,300. He suggested that in light of Councillor Etherington’s motion perhaps this could be an amendment to allocate the savings towards the part-time staff. Councillor Etherington pointed out that, whereas his motion deals with savings, Councillor Singh’s motion will add new costs; and therefore, it was his opinion the two motions should be dealt with separately. Councillor Davey suggested, and it was agreed, that this matter be deferred to later in the meeting to allow staff to provide the requested information regarding the 2011 balance in the home and office technology operating fund. The following motion by Councillor F. Etherington was brought forward for consideration: “WHEREAS Councillors are allowed to attend three conferences a year; BE IT RESOLVED that other than the Mayor and Councillor B. Vrbanovic, Councillors be allowed to attend two instead of three conferences a year.” Mayor Zehr pointed out that not all Councillors attend three conferences per year and in most years the conference budget is under spent. He suggested therefore, that there may not be any savings as a result of the proposed change. Lost, Councillor Etherington’s motion was then voted on by a recorded vote and with Councillors F. Etherington, D. Glenn-Graham and K. Galloway voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, S. Davey, B. Vrbanovic, P. Singh J. Gazzola, Y. Fernandes and Z Janecki voting in opposition. Reduction Item PR26 - General - Base Budget Reductions Carried Unanimously. The following motion was voted on by a recorded vote and On motion by Mayor C. Zehr – it was resolved: “That the proposed base budget reductions of $215,722, as outlined in Budget Issue Paper PR26, be adopted (PR26).” Reduction Item PR27 - General - Confidential Items Councillor K. Galloway advised that she would like to bring forward a motion to take no action on the proposed reduction in the Fire Services budget. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 53 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor D. Glenn-Graham advised that he would like to bring forward a motion to approve Option ‘A’ in the proposal but would like staff to explain the option. Mr. J. Willmer advised that Option ‘A’ proposes to take one of the two aerial apparatus from service thereby reducing 8 FTEs in Fire Services. Mr. Willmer further advised that this item was being proposed as part of the requested 2% reduction but is not being recommended. Fire Chief T. Beckett advised that removing the aerial apparatus will impact fire safety due to increased response times and loss of an aerial apparatus. He added that with one aerial device it will have to be located at Fire Headquarters and therefore, it will take longer to travel to a fire and will have an impact on other stations. Chief Beckett explained that the Station Location Study undertaken by the City, was able to determine the best locations for 7 stations, which was a reduction from the anticipated 10 stations. As well, the locations for the two aerial apparatus was determined which included using one of them as the second response vehicle rather than a pumper, out of Station No. 2. In answer to questions, Chief Beckett explained that while there is no specific standard with st respect to response times, Council did approve response times of 7 minutes for 1 unit and 12 minutes for 15 firefighters on scene if required, to be achieved within the 90 percentile. He added that these times are considered the industry’s best practice and conforms with the National Fire Protection Association Standard 1710. Councillor Glenn-Graham advised that he would not be bringing forward a motion to approve Option ‘A’. Councillor P. Singh advised that he would like to bring forward a motion to approve Option ‘B’. Mr. Willmer advised that this option will change a service level and may cause issues. He explained that currently when a platoon on duty is reduced below 37 firefighters, enough off- duty firefighters are called in on overtime to maintain the minimum of 37. What is being proposed is to reduce the minimum staffing level from 37 to 35 which will reduce the number of staff being paid overtime resulting in savings in the overtime budget. Mr. Willmer added that this happens approximately 20% of the time and the proposal is not being recommended. Councillor K. Galloway advised that the proposed savings of $204,000 equals approximately $2.00 of the taxes paid on an average home, adding that this amount is not enough to put the community at risk. She added that if the 20% of time that staffing levels fall below 37 is reduced, then the savings will also be reduced and therefore, there is no guarantee that the City will see a reduction of $204,000. Councillor J. Gazzola pointed out that the current service level is being achieved 90% of the time and therefore, the City is not 100% risk free. He added that he would not want to risk public safety and expressed the view that the proposal is not any greater a risk to public safety. Carried, The following motion was voted on by a recorded vote and with Councillors Z. Janecki, D. Glenn-Graham, J. Gazzola, S. Davey, Y. Fernandes and P. Singh voting in favour; and Mayor C. Zehr and Councillors B. Ioannidis, K. Galloway, B. Vrbanovic and F. Etherington voting in opposition. On motion by Councillor P. Singh - it was resolved: “That Option’B’ (PR27) to reduce the minimum active staffing level per Platoon in Fire Services from 37 firefighters to 35, be approved to effect a $204,000 reduction in Fire Services.” Reduction Items - Additional Councillor S. Davey advised that staff now have the information requested regarding the Councillor’s home office technology operating budget and the Committee then dealt with Councillor F. Etherington’s motion as previously tabled. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 54 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Mr. R. Hagey advised that the operating budget was set at $40K for 2011 and as of this date, approximately $20K has been spent. Mr. Hagey pointed out that not all invoices have been submitted. Councillor F. Etherington’s motion to reduce the Councillor’s home office technology operating Lost, budget by $1,000. was voted on by a recorded vote and with Councillors B. Vrbanovic, F. Etherington and D. Glenn-Graham voting in favour; and Mayor C. Zehr and Councillors Z. Janecki, B. Ioannidis, J. Gazzola, S. Davey, K. Galloway, Y. Fernandes and P. Singh voting in opposition. A motion by Councillor P. Singh to hire a part-time staff person on a one year contract for the Office of the Mayor and Council at an estimated cost of $18,000 and to transfer $11,000 from the Councillor’s home office technology budget to the staffing budget, was voted on by a Lost, recorded vote and with Councillors P. Singh, S. Davey, B. Ioannidis and F. Etherington voting in favour; and Mayor C. Zehr and Councillors Z. Janecki, B. Vrbanovic, J. Gazzola, K. Galloway, Y. Fernandes and D. Glenn-Graham voting in opposition. Councillor J. Gazzola advised that he would like to introduce a motion to require the amount leftover from closeout of capital accounts when known be transferred to the Tax Stabilization Reserve Fund (TSRF). Mr. D. Chapman advised that a motion is not required as aside from what has been committed to the Capital Forecast this date, the balance will automatically be closed out to the operating budget and therefore, to the TSRF. Councillor Gazzola requested confirmation that the 2011 surplus is $412,000. Mr. Chapman advised that the $412,000 is an estimate and cannot be relied upon as there are still invoices outstanding that may have impact to the final dollar figure. Councillor Y. Fernandes questioned the balance remaining in the Gas Capital Investment Reserve Fund (GCIR). Mr. Chapman advised that, based on Councillor Gazzola’s earlier motion to transfer $2M from the gas reserve to the TSRF, the projected balance in the gas reserve for 2012 is $761,000. Councillor Y. Fernandes stated that she would like to consider a transfer of $200,000 from the Tax Stabilization Reserve Fund to fund implementation of the Cycling Master Plan and questioned if the proposed action would keep the dividend in the Parking Enterprise budget. Mr. D. Chapman advised that if Council is interested in using some of the funds in the TSRF to reduce the tax rate, the simpler way would be to identify the amount of funds they wish to transfer to the tax supported operating budget. Councillor J. Gazzola requested clarification in respect to what has transpired with the Parking Enterprise budget. Mr. Chapman advised that staff is still working on the premise of the original projections, with funding for TDM and Cycling still in tact. He stated that no deferral of the structural provision has been made but is something that staff could report back on as part of the interim report. He reiterated that if there is interest in making an adjustment to effect the dividend and the tax levy using the TSRF it was his opinion it is too convoluted a path to go through an enterprise in deficit and suggested that the most transparent way would be to deal directly with the TSRF and operating budget. Councillor Gazzola suggested that in respect to the capital changes brought forward earlier by staff that at minimum the $100,000 be moved back into 2012 and the $150,000 for structural repairs be moved from 2012 out further into the forecast. Mr. Chapman advised that those recommendations were presented as an alternative, pointing out that Council has taken no action and the original projection is what is currently included in the budget. A motion by Councillor J. Gazzola was brought forward to move $150,000 for capital structural repairs from 2013 to further out in the 10 Year Capital Forecast to effect postponement of certain capital expenditures. Mr. Hagey advised that the alternative recommendations had consisted of adjustments to TDM, Cycling and structural garage repairs, noting that Councillor Gazzola’s motion would leave TDM and Cycling funding in tact but defer the structural repair provision in 2013 to later SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 55 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. years in the Capital Forecast. Mr. Hagey added that this action would have no impact to 2012 but will impact future years of the forecast. Mayor C. Zehr clarified that his earlier question regarding any risk in moving the $150,000 structural provision from 2012 over to 2013 was answered with no and that answer did not relate to moving it out further without risk.He suggested that as the proposed action has no effect in 2012 that it would not be appropriate to make an adjustment at this time. Councillor K. Galloway suggested that this matter be deferred to the 2013 budget deliberations at which time Council will have a better understanding of the Parking Enterprise, noting that there may be need for other deferrals and all should be looked at in context of each other. Carried The following motion was then voted on and , with Mayor C. Zehr and Councillors B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki and Y. Fernandes voting in opposition. On motion by Councillor K. Galloway - it was resolved: “That consideration of adjustments to the Parking Enterprise capital program be deferred and referred to the 2013 budget deliberations.” Councillor Y. Fernandes proposed that the Block Line Road project listed in years 2012 and 2013 in the Development Charges (Engineering) projections be moved to years 2013 and 2014. She suggested there will be opportunity to work simultaneously with the Region of Waterloo at time of the LRT construction. Councillor Fernandes expressed the view that to spend $4M in 2012 would be foolhardy and would mean that the subject area would be tied up in construction between the City’s project and the Region’s LRT for approximately 3 years. Mr. J. Willmer stated that Engineering staff do work closely with Regional staff to ensure design and construction projects are harmonized so dollars are not wasted. He reminded that the work on Block Line Road is needed to provide an alternate traffic network on Regional roads so they are not severely disrupted when the Homer Watson Boulevard intersection is reconstructed, which is timed in advance of the LRT construction, and is why there is little flexibility in the timing of the Block Line Road construction. Councillor Z. Janecki questioned if that portion of the Development Charges (DC) would have impact to the tax levy. Mr. Chapman advised that the project is to be funded entirely from Development Charges and any adjustment to timing or amount would have no impact to the tax base. In response to further questions, Mr. Chapman advised that if bumped a year it would improve things; however, he pointed out that the goal by the end of 2014, going into 2015 is to be in a balanced position and that objective can be achieved either way. Councillor Janecki inquired if there is any 2012 capital project that could be deferred for one year, that is not DC related, and be used to reduce the tax levy. Mr. Willmer stated that staff has taken the approach to minimize the amount taxpayers pay for construction projects, with the majority of costs funded through the Utilities instead of the tax base. He pointed out that the taxpayers contribution is minimal and related to such things as sidewalk infill and traffic calming, and budgets for those areas have already been reduced. Mr. Chapman added that the majority of 2012 projects are entirely DC funded, and for the few having capital out of current funding typically it is the 10% statutory reduction for soft service projects. He stated that any adjustment would have far greater impact on park and trail development than on any savings to be achieved in the tax supported budget. A motion by Councillor P. Singh was brought forward for consideration to provide a 0% increase in 2012 for storm water rates instead of a 3% increase. Councillor Singh expressed the view that it would be unfair to increase these rates after only 1 year of establishing the Utility and saw no benefit in clawing back the 10% reduction given. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 56 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor K. Galloway commented that the purpose of the 10% reduction last year was to lessen the impact and provide for roll out of the rates over a longer period of time. She added that it was clear and transparent that a 10% reduction would be made to achieve savings and increases of 3% would then be made in each of the next 3 years. Councillor Galloway pointed out that the Storm Water Utility is already in a deficit, suggesting that if Council keeps doing this to its Utilities the long term stability of the City will be at risk. She stated that a 3% increase is reasonable and while there may be room to reduce the tax levy yet it should not come from within this Utility. Mayor Zehr agreed that it had been made clear that in order to make the reduction in 2011 there would have to be 3% increases over the following 3 years so as not to jeopardize the entire program. Councillor D. Glenn-Graham also agreed, noting that there will be lots of opportunity to revisit incentives for the program and suggested this is not the time to entertain those discussions. Councillor Y. Fernandes commented that she had not been prepared to support the staffing requests for the Storm Water Credit Policy, which was not resolved at Committee and suggested that this would be an appropriate time to resolve the issue of additional hires for the program. Ms. J. Billett advised that the recommendations pertaining to the Storm Water Credit Policy, including the staffing requests, had been deferred for further consideration to the January 30, 2012 Finance and Corporate Services Committee meeting and were not part of the discussions for today. Mr. D. Chapman added that notwithstanding all those positions were presented at budget, it would be appropriate to remove the two related positions to storm th water from draft resolution #11, given that matter has been deferred to January 30. A motion by Councillor Y. Fernandes to amend Councillor Singh’s motion by reducing the 3% increase for storm water rates in 2012 to 2% instead of 0%, was voted on by a recorded vote Lost and, with Councillors Z. Janecki, Y. Fernandes and S. Davey voting in favour; and Mayor C. Zehr and Councillors J. Gazzola, D. Glenn-Graham, B. Ioannidis, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in opposition. Councillor Singh’s motion to reduce the 3% increase for storm water rates in 2012 to 0%, was Lost then voted on by a recorded vote and , with Councillors J. Gazzola, Z. Janecki and P. Singh voting in favour; and Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic and F. Etherington voting in opposition. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Y. Fernandes, S. Davey, K. Galloway, B. Vrbanovic and F. Etherington voting in favour; and Councillors J. Gazzola, Z. Janecki and P. Singh. On motion by Councillor K. Galloway - it was resolved: “That the storm water rate schedule as specified in Appendix A of Infrastructure Services Department report INS-12-001, be approved and come into effect on March 1, 2012.” Councillor P. Singh referred to the line item related to Employment Lands in the EDIF projections, to which reference was made in respect to that funding concerning redevelopment of the Bramm Street Yards. He questioned if a decision is being made to allocate those funds to the Bramm Street Yard redevelopment this date as he may have a pecuniary interest to declare in that he owns property in the subject area. Mr. D. Chapman advised that the provision in EDIF is for a program of work related to Employment Lands and at this time is not tied to a specific project, so no decision is being made this date in respect to the Bramm Street Yard redevelopment. A motion by Councillor J. Gazzola was brought forward for consideration to transfer an additional $900,000 from the Tax Stabilization Reserve Fund to the tax supported operating budget. SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 57 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. Councillor Gazzola commented that the proposed transfer would leave a balance of approximately $1.1M in the reserve; however, there is to be approximately $400,000 in capital closeouts coming into the reserve which will raise the balance to around $1.5M. Councillor K. Galloway referred to Councillor Gazzola’s earlier motion to transfer monies from the Gas Capital Investment Reserve (GCIR) to the Tax Stabilization Reserve (TSRF), and raised concerns that the manner in which the $900,000 is now proposed to be taken from that amount is not transparent.Councillor B. Vrbanovic commented that he has not ever experienced such short sighted decisions as being made this date, with the most concerning the reduction to Fire Services. He stated that the proposed amount to be transferred could jeopardize long term financial stability and while he was prepared to see some monies transferred from the TSRF it must be a sustainable amount. Councillor Y. Fernandes commented that Councillor Gazzola was asked earlier and had acknowledged that his intent in moving funding from reserve to reserve was to take some of those funds from the TSRF later this date to reduce the tax levy; and was therefore, transparent. Mayor C. Zehr expressed concerns regarding sustainability of the proposed action. He stated that staff has advised that the $400,000 surplus projection is not a final figure as there are still outstanding invoices against that amount. He stated that the same amount proposed to be taken from the TSRF has to be sustainable across all years of the Capital Forecast and staff has been working toward reducing reliance on the TSRF. He suggested that to take out $900,000 compounds the problem and unless the exact same amount is available year to year there will be double the problem come 2014 when Council will not want a lot of increase to the tax levy because of an election year. He suggested the proposed amount is not sustainable and Council has a responsibility to the taxpayer to look toward long term stability in addition to the current year. Mayor Zehr suggested that at most he could support a $500,000 transfer from the TSRF and to go beyond that would put long term stability at risk. A motion by Mayor C. Zehr was brought forward to amend the main motion to provide an additional transfer of $500,000 from the Tax Stabilization Reserve Fund to the tax supported operating budget. Mr. D. Chapman advised that the amount proposed by Councillor J. Gazzola would increase the transfer from the TSRF to $1.35M and the amended amount by Mayor Zehr would increase the transfer to $955,000. Councillor Gazzola stated that the amended amount is not a great deal less and would have had to be taken out of the GCIR in any event. He stated that while he would prefer a smaller transfer from the TSRF, the reductions made to the tax levy thus far had not brought the tax rate to his target of below 2%. Councillor Galloway suggested that a direct transfer from the GCIR would have been more transparent and is actually more sustainable, raising concerns that the TSRF has to constantly be replenished whereas, the GCIR has a revenue stream coming in. She stated that while she also wants to relax the impact to the taxpayer it must be done in a sustainable manner in the long term so it does not hamper ability to move forward with community building. Carried The following motion was then voted on by a recorded vote and , with Mayor C. Zehr and Councillors B. Ioannidis, S. Davey, K. Galloway, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors J. Gazzola, D. Glenn-Graham, Z. Janecki and Y. Fernandes voting in opposition. On motion by Mayor C. Zehr - it was resolved: “That an additional $500,000 be transferred from the Tax Stabilization Reserve Fund to the tax supported operating budget.” SPECIAL FINANCE AND CORPORATE SERVICES COMMITTEE JANUARY 19, 2012 - 58 - CITY OF KITCHENER FCS-12-004 - 2012 FINAL BUDGET DAY (CONT’D) 1. FINAL RECOMMENDATIONS - 2012 BUDGET The Committee agreed to advance its recommendations pertaining to the 2012 budget, based on decisions made this date, for Council’s consideration at its special Council meeting to be held immediately following, and from which the end result is summarized in brief below: a 2012 department operating budget, resulting in a 2012 levy for general purposes of $90,015,682; a increase in the 2012 tax rate, excluding tax policy changes, at an estimate of 1.41%; and, a special capital levy of $9,008,780 which results in approximately a 0.97% increase in the 2012 tax rate to be allocated to the Economic Development Investment Fund, with the understanding that this levy represents the ninth year of the 10-year investment program as per the projection included in the budget day presentation to Council. ADJOURNMENT 2. On motion, this meeting adjourned at 7:39 p.m. D. Saunderson C. Goodeve Committee Administrator Committee Administrator J. Billett R. Gosse Committee Administrator City Clerk