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HomeMy WebLinkAbout2012-11-08 SpecialFINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 CITY OF KITCHENER The Finance and Corporate Services Committee met this date commencing at 9:06 a.m. Present: Councillor S. Davey - Chair Mayor C. Zehr and Councillors J. Gazzola, B. Vrbanovic, Y. Fernandes, K. Galloway, P. Singh, B. Ioannidis, F. Etherington and D. Glenn-Graham. Staff: J. Willmer, Chief Administrative Officer D. Chapman, Deputy CAO, Finance & Corporate Services M. May, Deputy CAO, Community Services J. Witmer, Interim Deputy CAO, Infrastructure Services R. Regier, Executive Director, Economic Development R. Bunn, Executive Director, Integrated Planning R. Gosse, Director, Legislated Services & City Clerk L. MacDonald, Director, Legal Services & City Solicitor R. Hagey, Director of Financial Planning J. Evans, Director of Revenue B. Johnson, Director of Accounting H. Gross, Director, Asset Management S. Berry, Interim Director of Operations M. Hildebrand, Director, Community Programs & Services C. Fletcher, Director, Facilities Management A. Pinard, Director of Planning W. Malcolm, Director of Utilities K. Kugler, Director of Enterprise T. Beckett, Fire Chief B. Korah, Manager, Development Engineering D. Schmitt, Manager, Environment & Urban Forest Project S. Allen, Manager, Engineering Design & Approvals D. Ritz, Supervisor, Design & Development J. Billett, Committee Administrator C. Goodeve, Committee Administrator D. Livingstone, Committee Administrator The purpose of this special meeting was to discuss the proposed Capital Budget and 10 Year Capital Forecast 2013-2022. FCS-12-175 - 2013 CAPITAL FORECAST 1. The Committee considered Finance and Corporate Services Department report FCS-12-175, dated October 23, 2012, and attached line-by-line listing of all projects in the Capital Forecast by Department / Division. Mr. D. Chapman provided opening remarks, stating that a capital budget provides for investment in assets which have a long-term benefit to the City. He described the approach used to develop the Capital Forecast, noting that new projects have only been added if another project with the same funding source was removed. He referred to recent discussions regarding needs versus wants and indicated that the 2013 Capital Budget reflects the identified needs of the community. He added that included in Report FCS-12-175 is a table highlighting a number of projects that have not been funded due to financial constraints. He stated that those items amount to approximately $200M in capital requirements that are supported by studies and master plans, but cannot be accommodated within the Capital Forecast. He suggested that if any funding were to become available this date, it is recommended that it be re-invested in those projects, which in most cases, have been previously approved by Council. With respect to process, Mr. Chapman advised that direction was taken from Council and the Corporate Leadership Team (CLT), public input was obtained and this Capital Budget and Forecast is fully supported by the CLT. BUDGET OVERVIEW Mr. Chapman then reviewed the funding sources for the Capital Forecast, advising that the total for 2013 is higher than that of 2012. He gave an overview of the significant changes including a decrease in the Capital Pool of $6M year over year of the Forecast, which is due to FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 161 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. one less year of Economic Development Investment Fund (EDIF). He noted that this is partially offset as a result of increased funding to mitigate the effects of the Emerald Ash Borer (EAB). He added that Enterprise has increased by $45M, which is attributed to gas pipeline infrastructure replacement as well as anticipated funding for water, sanitary and stormwater utilities. He indicated that growth related projects will be brought back into the Forecast by 2022; thereby resulting in an overall increase of $10M for Development Charges. He noted that ‘Other’ funding sources are unchanged from 2012. Mr. R. Hagey continued the presentation of the 2013 Capital Budget and Forecast, advising that with respect to the Capital Policy, the impact on the taxpayer each year is to be no greater than the rate of inflation. He stated that the increase in debt charges is limited to the rate of assessment growth; thereby, the debt charges increase combined with capital out of current is limited to the rate of assessment growth plus inflation. In response to questions related to process, Mr. Hagey advised that Council provides direction to the capital budgeting process through the approved capital funding guidelines, as well as by identifying priorities as part of the strategic planning process. He indicated that budgets are prepared and reviewed within each Department, as well as an internal review committee and CLT. Mr. Chapman elaborated that a number of requests submitted by various Departments could not be accommodated within the Capital Forecast as doing so would have exceeded the guidelines set out by Council. Councillor Y. Fernandes pointed out that the funding amounts for the Gas Investment Reserve Fund and the Hydro Investment Reserve Funds have remained static for the last two years and inquired as to how those amounts are determined. Mr. Hagey advised that Gas and Hydro Utility dividends are distributed between operating and capital budgets. Mr. Chapman stated that the dividends average approximately $13M per year; however, the gas dividend will be fixed going forward under the new rate model.He added that the allocation of the reserve funds is subject to Council direction, noting that the recommended increase in the transfer from the Gas Investment Reserve would be used to fund the removal of ash trees impacted by the EAB. The Committee continued its review of EDIF. Mr. Hagey advised that 2013 is the final year of this ten year fund. He noted that the entire program is balanced with final revenues matching expenditures with an overall final balance of zero. In reference to the $857,000. EDIF projection for employment lands, Mr. R. Regier indicated that acquisition of strategic parcels as well as land redevelopment is part of the Economic Development Investment Strategy. In response to concerns regarding the parking subsidies to Wilfred Laurier University (WLU), Mr. Regier advised that the subsidy is tied to the current parking rate paid by students at the main WLU campus. He stated that under the current agreement, 175 parking spaces are allocated to WLU, but only 80 of those spaces are used. Questions were raised regarding the Creative Enterprise Incentive (CEI) for Arts Sustainability. Mr. J. Willmer indicated that CEI fosters new initiatives that enhance and grow the creative industry. He noted that funds are earmarked on a per capita basis to meet the funding gap identified by the Prosperity Council within the Region of Waterloo. He added that funding is allocated incrementally and should be calculated on a per capita basis rather than inflationary. Mr. Hagey advised that the calculation is based on population increase through 2021 and although the concept is still a dollar per capita, it is based on an estimated population increase. Mr. Willmer indicated that CEI is scheduled to make a presentation to Council in December 2012 to a report on private sector fundraising efforts. Mr. Hagey continued the review of the Capital Budget and Forecast with Development Charges, stating that there was a significant shortfall in Development Charges as identified during the 2012 Budget process. He advised that in October 2011, Council resolved to defer a number of projects to 2014 in conjunction with the enactment of a new Development Charges By-law. He noted that the priority of projects for 2013 remains unchanged from 2012 and will be reviewed as part of the new Development Charge Bylaw; therefore, projects in 2015 and FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 162 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. beyond are tentative based on the new By-law. He concluded by indicating that the Development Charges Reserve Fund shows a deficit of $7M in 2012, as well as a deficit of $9M in 2013; however, the Reserve is anticipated to return to a balanced position by 2014. Mr. Hagey reviewed the City’s overall debt in context of the 2013 Capital Budget and Forecast. He advised that trends of previous years remain with the total debt load projected to peak in 2013 and then decrease as the EDIF debt is retired. He stated that debt charges as a percentage of the tax levy are higher than the 5%-10% target and are anticipated to continue along that trend until 2021. With regard to debt per household, the target range of $400-$1000 is exceeded, but expected to come within range by 2015. Mr. Hagey stated that the current debt to reserve ratio exceeds the target range; however, as EDIF retires, the ratio is anticipated to come down to 1:1. Councillor S. Davey requested clarification regarding debt charges as a percentage of the tax levy. Mr. Hagey confirmed that although total debt is highest in 2013, it is projected to be reduced by 50% within the next ten years without any additional debt related tax levy increases. Mr. Hagey reviewed the current status of each of the City’s Reserve Funds. He stated that total Corporate Reserve balances are similar to 2012, but below the minimum target with a projected balance for 2013 of $7.4M. With regard to program specific reserves, he advised that a decrease is projected in 2013 based on the assumption that the remaining balance of the Local Environmental Action Fund (LEAF) will be disbursed. He noted that the other Reserve Funds in this category are unchanged. He indicated that in 2013, funds are budgeted to be transferred from the Tax Stabilization Reserve resultant to the year-end deficit for 2012. He stated that overall total reserve balances have declined for 2012 and 2013 with balances at half of minimum targets. He added that given the level of underfunding across most reserves, and the increasing debt position, it is imperative that balances be preserved through the budget process. Mr. Hagey agreed to provide detailed schedules for all of the City’s Reserves. The Committee then reviewed the major changes from prior years as well as the Issue Papers put forward as part of the 2013 Capital Budget. Mr. Hagey pointed out that the Budd Park Indoor Artificial Turf Replacement item listed on Page C-56 of the agenda should read that $91,000. is to be added in 2017, rather than 2022. At the request of Councillor J. Gazzola, Mr. Hagey agreed to provide a list detailing the City’s capital closeouts. Councillor B. Vrbanovic inquired into the funding allocation for Community Trails and questioned the potential to increase that allocation, given that trails have been identified as a priority by residents. Mr. Chapman advised that consideration is scheduled to be given to the future of LEAF at the November 26, 2012 Finance and Corporate Services Committee meeting. He added that one of the seven options that will be presented is the potential to use the remaining LEAF funding to support the City’s trails program. He acknowledged that the five year gap in trail funding could be addressed if all of the remaining funds were to be applied toward trails. He suggested that it would be prudent to hold off on adjustments to the trail th allocation pending the outcome of the November 26 meeting. In addition, Mr. Hagey further advised that parks and trails were identified as part of the Community Infrastructure Improvement Fund (CIIF) application submitted to the Federal Government, which is potentially an additional funding source for the trails program. He indicated that it is unclear as to when a decision will be made on the City’s CIIF application. Clarification was requested regarding the proposed allocation of $220,000. for an Alternative Fire Emergency Communication Centre. Chief T. Beckett advised that those funds have been requested for the development of a back-up site for Fire’s emergency dispatch services. He stated that it is required for business continuity purposes to ensure that services would continue to be provided should there be an emergency situation in which the primary communications centre can no longer be used. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 163 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. Councillor Fernandes asked that an Issue Paper be provided to elaborate on the need for an Alternative Emergency Communications Centre, as well as details on major equipment and fleet replacement for Fire Services. Questions were raised regarding the requested $350,000. for the restoration of the Schoerg Barn foundation and incorporation of that heritage feature into a future City park. Mr. D. Ritz explained that those funds were identified as part of a consultant’s report, which concluded that if the restoration work was not undertaken within the next four years the condition of the foundation would deteriorate to a point where it could no longer be used. He added that if the work is not pursued in 2013, then the site would need to be covered with a tarp to slow its deterioration. Mr. Chapman stated that as this project is proposed to be funded through the Park Reserve, there would be no impact on the tax base. He noted concerns regarding the City incurring maintenance costs if the restoration work was not pursued in 2013. Councillor Fernandes requested that an Issue Paper be provided to give a better understanding of the Schoerg Barn restoration as well as identifying possible funding partners; such as, the Ontario Heritage Trust. Questions were raised regarding the $3.15M funding added in 2013-2016 for the Region of Waterloo’s Light Rail Transit (LRT) project. Mr. W. Malcolm advised that this funding is required pursuant to the Public Service Works on Highways Act and represents the City’s portion of the costs to replace the gas infrastructure within the LRT corridor. He confirmed that the cost sharing formula is dictated by legislation and there would not be an opportunity to request an increased contribution from the Region. The Committee next reviewed the 2013 Capital Budget and Forecast for the Kitchener Public Library (KPL) and Centre in the Square. Ms. Sonia Lewis, KPL, addressed that Committee, advising that a portion of the funding identified in 2014-2016 was intended to be applied toward a new branch in the southwest area of the City. She added that consideration is being given to having the new branch integrated into the community centre proposed for that area. She noted that the funding allocation is currently a placeholder, pending the outcome of the Development Charges review scheduled to be undertaken in 2013. Mr. Chapman confirmed that it would be premature to adjust this funding allocation until the completion of the new Development Charges Background Study. The Committee then reviewed the listing of existing capital balances including encumbrances, as outlined in Issue Paper CAP 01 (Existing Capital Balances). Mr. Hagey noted that the unexpended balance for all capital projects, regardless of funding source, is approximately $19.7M. Councillor Fernandes spoke to the $38.5M balance remaining in the Engineering Capital account as of September 30, 2012 and questioned what happens with the remaining funds at year-end. Mr. Hagey advised that if there is a balance remaining in any Capital account at the end of a year, then those funds would typically remain with that account. He added that Engineering staff undertake a quarterly review of their Capital program, noting that several of the projects that contributed to the identified balance have since been closed out. Mr. Chapman further advised that if funds are left over in a project budget they may not be used for any purpose other than the one approved by Council. He added that the Purchasing By- law sets out thresholds for all purchasing activity that must be approved by Council. He stated that those checks and balances ensure that no significant expenditures are made for a particular project, which has not been approved by Council. He reiterated that funds may not be used for a purpose that is unrelated to the project to which they were allocated. He noted that if funds remain at the end of a project, they are returned to the original funding source and cannot be reallocated by that Department. He indicated that Engineering projects account for a majority of the City’s Budget and are primarily funded through the Utility Enterprises; therefore, any remaining funds would be returned to the Utility, which has a positive impact on future rates. Councillor P. Singh requested clarification regarding the $100,713. allocation identified for the 401 Signage. Mr. J Witmer advised that this funding was intended to be used toward the installation of new signage and agreed to report back as to the status of that project. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 164 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. Clarification was requested with respect to the $28,537. allocation to the Safe and Healthy Advisory Committee and whether it was related to the $55,376. earmarked for the CAP/Safe City Committee. Mr. M. Hildebrand advised that a portion of the $55,376. was granted by the Safe and Healthy Advisory Committee to the Safe City Committee for a youth program being undertaken by Programs and Resource Services staff. He noted that no additional funding has been requested for that program. Mr. Willmer advised that the $28,537. the is remaining balance of the over $30,000. allocated annually to the Safe and Healthy Advisory Committee. He agreed to provide further information as to whether the remainder of those funds have been committed for 2012. Questions were raised regarding the $212,000. identified for the Customer Service Strategy and how that may relate to the $93,000. allocated for the Corporate Plan. Mr. M. May advised that this account was established several years ago for Phase I of the Customer Service Strategy, and the funds are anticipated to be used toward Phase II; which is anticipated to commence in 2013. He noted that this account has acted as the funding source for initiatives arising from the Customer Service Strategy; such as, the redesign of the City’s website. Staff agreed to report back with information as to when this account was first created as well as an explanation of the Corporate Plan funding. The Committee then reviewed a listing of the approved tenders that are to be considered as part of the 2013 Budget process, as outlined in Issue Paper CAP 02 (Tender Tracker). Councillor Fernandes expressed concerns regarding the number of tenders that were over budgeted and questioned as to whether tighter controls were needed. Mr. H. Gross advised that the budget for engineering projects have a surplus of funds ranging from 15%-18%. He stated that for construction in 2013, estimates would have been revisited in August 2012; and at that point, typically only 30% of the design has been completed.He noted that this is partly due to the consultant only coming onboard in January. He added that with the design at 30%, the project budget is considered to be a Class “B+” estimate, which has a confidence level of approximately 30%. He noted that for standard reconstruction projects that level is lowered to 15%, as demonstrated by the majority of tenders. He indicated that several changes are anticipated to be implemented to improve that level of confidence; such as, endeavouring to have designs completed two years in advance of construction. He stated that this would enable staff to have design ready drawing that would have a level of confidence of approximately 10%. In addition, projects would start to be tendered in year one, but spread over a two year timeframe. He noted that this would allow for more accurate values to be used in year two of a project, as actual costs would be better known. Mr. Gross further responded that typically the tenders being received can have a high/low range of 10% to 20%. He stated that the standard industry practice for municipalities when setting out estimates is to be in the middle of that range. He noted to find that range, staff consider the average prices from the previous year and then apply indicators to make adjustments; such as, construction costs, energy costs, general industry workload, and availability of stimulus funding. He added that what is unknown is the methodology and approach the contractor is going to use. He stated that the City may have a standard way of doing a certain project; however, a contractor may employ a new innovative approach, which could result in a lower price. Further, the number of projects being tendered at a given time is unknown and typically, the busier it is the higher the pricing. He commented that staff uses the best available information to arrive at an appropriate budget for each project. The meeting then recessed at 12:05 p.m. and reconvened at 1:00 p.m. with all members present, except Councillor Z. Janecki. Mr. Hagey responded to earlier questions concerning the City’s CIIF application, advising that $1M was requested for projects related to upgrades to trail systems, improvements to the Centennial Stadium Track and Field and several other projects. Mr. Hagey noted that these are over and above the capital budget package. In regard to the capital balance of $100,713. shown for Operations - 401 Signage project, Mr. Hagey advised that since printing of the agenda, $90,000. has been closed out of the account and only a small balance now remains to deal with some finalization details of the signage project. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 165 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. Mayor C. Zehr questioned if the Region of Waterloo’s Waterloo Spur Line Multi-Use Trail project, which area municipalities are expected to cost share in, is included in the $1M requested from CIIF. Mr. Hagey advised it is not included and should it be chosen, he was not certain of the impact the Regional project will have to the City. He pointed out that at time of consideration the City was asked to give its endorsement to the Region of Waterloo as a project they would put forward under the CIIF. Mayor Zehr stated that he was not convinced the City should bear any cost in the Regional project and if chosen, further discussions with Regional staff would need to take place. Councillor Fernandes referred to the balance of $48,217. for the Homer Watson Pumping Station, questioning if there will be any remaining balance once closed. Mr. B. Korah advised that a balance figure is unknown at this time as staff is still in discussions with the contractor to resolve certain outstanding issues but he anticipated the account would be closed out by month end. Councillor Fernandes referred to the balance of $204,750. for Wards Pond / Strasburg Creek, questioning why funding remains in the account given the project concluded two years ago. Mr. S. Allen advised that under requirement of an Order of the Ministry of Environment (MOE) the City must undertake ongoing monitoring and the funds remaining are for any remediation work that may result from the monitoring process. Councillor Fernandes referred to the balance of $438,075. for Grand River Erosion Control, questioning if this is a specific project or general funding. Mr. Allen advised that work on the second phase of this project was completed this summer and the account balanced as to the end of September. He stated that outstanding payments are still to be made and any balance is expected to remain for a period of time to address any issues should they arise during the warranty period. The Committee then considered Issue Paper CAP 03 (Emerald Ash Borer Strategy). Councillor J. Gazzola questioned how much funding had been set aside to date. Mr. J. Witmer advised that $175,000 was previously set aside in 2011-2012 to undertake a study to develop a plan of action and to inject some trees as infestation was already a reality. Mr. D. Schmitt added that this was a pilot project involving approximately 300 trees in the two Wards known to have infestation and some trees in Victoria Park that were considered to be of high value given their size. Mr. Schmitt noted that the proposed $4.3M is to be used both for removal of trees, as well as injections for those considered treatable and of high value. It was also noted that the plan will include measures to be taken for street trees and active park lands but will not include natural areas, save and except to address trees along the edges of trails that may pose a threat to public safety. Councillor Gazzola questioned how this epidemic compares to the Dutch Elm tree disease. Mr. Schmitt stated that similar circumstances have not been seen since the Dutch Elm epidemic, and suggested that the EAB is creating a comparable incident. Councillor F. Etherington questioned what if any action is being taken to develop an incentive program for residents who may be amenable to replanting lost trees on City boulevards at their own expense, as well as on their own property. Mr. Schmitt acknowledged that the premise has merit but further investigation is needed. He pointed out that most other cities are not pursuing incentive programs and if implemented here, it will create an administrative challenge for staff. He added that the City has already proceeded with new best management practices, suggesting that placing control over what and how trees are planted in the hands of residents should be avoided as it could create further long term challenges for the City. Mr. Schmitt stated that to his knowledge where incentives have been provided it has usually been spearheaded through non-profit organizations. Mr. J. Witmer added that staff is having difficulty in justifying an incentive program when the City itself is having difficulty in finding funding for the second phase of stumping and replanting of City trees. Mayor Zehr questioned if injections are an effective measure in retaining existing viable trees or if the trees will eventually die in any event. Mr. Schmitt advised that while it is new and experimental, all known research to date indicates that ongoing injection of viable trees is an effective solution for the long term. Mayor Zehr questioned that with the amount to be put into injections and not being proven technology, if it would not be better to remove all ash trees rather than incur injection costs over the next ten years; and thereby, fund replanting sooner so in ten years’ time new growth is already underway. Mr. Schmitt advised that the reason injections are proposed is two-fold in that, there is a desire to retain as much of the existing urban tree canopy as possible given retaining the largest of the trees where possible provides FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 166 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. the greatest environmental benefit. Secondly, results of ongoing research that may produce other control measures which could negate need for ongoing injections in the near term is speculative at this time. He added that if removal alone is undertaken costs will be higher and it has not been received favourably by citizens in communities that have chosen removal only. Mayor Zehr stated that it was also his desire to retain as much of the tree canopy as possible, suggesting that it may require annual reviews to be conducted and at the five year window a determination be made in respect to continuation of injections as a viable solution. Councillor Vrbanovic raised concerns with respect to loss of trees on private property, questioning the feasibility of working toward bulk purchase of the product used for injections with other area municipalities; and the potential for the City, in a cost effective manner, to make same available to private property owners. Mr. Schmitt advised that there is only one product available and the unit price paid is equivalent to that of other municipalities. He stated that there is no indication at this time that bulk buying will lower the cost given it is the only product on the market. He suggested that staff can take steps to investigate incentives; however, he pointed out that the focus to date has been on education of the public through publications which provide information to aid residents in identifying infestations and give encouragement to take appropriate action where found. Councillor Fernandes questioned the feasibility of implementing a tax credit program for private property owners to assist them in taking action, suggesting that partnerships be investigated with local nurseries. Mr. Chapman stated that ultimately it would remain a cost to the City in similar manner to incentives previously outlined by staff. He added that the Municipal Act is very specific in how taxation is to be applied and does not provide ability to apply a credit of this nature. Any financial assistance provided by the City he suggested would have to be done through implementation of an incentive program. Councillor Fernandes referred to several groups whose focus is on natural areas, questioning if any discussions have been held with them in respect to partnering, wherein persons could apply to them to help replace trees in City park lands. Mr. Schmitt advised that no discussions have been entertained to date and while it could be investigated, he reiterated that it will be a substantial challenge for the City to administer incentive programs, particularly if a number of groups are involved. Mr. Witmer added that part of the reason for separating the injections/removal process from the stumping/replanting is to allow time during the first phase to consider options for incentives and to potentially optimize partnerships for the replanting phase. He further noted that this not only affects ash trees but also affects the City’s ability to address problems with any other types of trees and staff wants to ensure that all residents are treated equally to avoid conflict especially if action is accelerated for one type over another. Councillor Fernandes questioned the status of research into use of other natural pests to eliminate the EAB and whether a solution of this nature may be available sooner than five years’ time. Mr. Schmitt commented that use of other natural pests as a solution is purely speculative at this time and would require approval of senior levels of government, given that introduction of other natural pests can create other problems in and of itself. Councillor Fernandes questioned if Council should be lobbying senior levels of governments to approve alternative solutions not yet available in Canada. Mr. Schmitt advised that it is the company who produces the product that must initiate and go through the approval process, and if not felt to be of a sufficient market in Canada, they are not likely to bother. He added that there has been a lack of support to date from the Federal government to provide any kind of assistance to municipalities. Councillor Gazzola expressed support for the direction being recommended by staff, stating that it allows saving of viable trees and removal of lost trees; as well as to address unsafe conditions where present. He agreed that incentive programs should be explored in respect to replanting of trees, suggesting a method whereby residents could donate funds to replace City trees and receive a charitable tax rebate, while recognizing that the City would have to retain complete control over what is replanted. Councillor Gazzola further commented that the Federal government needs to look at some form of assistance for property owners in respect to tree replacement, perhaps similar to incentive programs previously implemented to stimulate the economy. Councillor S. Davey questioned if there will be need to continue efforts in perpetuity. Mr. Schmitt advised that some seed base will remain resulting in new growth of the species, FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 167 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. adding that albeit the population of ash trees will be at a much lower level, he expected that any new trees will continue to be attacked by the EAB. Councillor Davey expressed concerns with continual maintenance of the trees, suggesting that at some point a line must drawn, especially given this was a species that is not natural to the area but rather was introduced. He suggested that it may be more prudent to remove the trees and expressed concerns with introducing incentive programs when the City itself is finding it difficult to fund replanting. Councillor Davey expressed the view that any incentive program implemented should be on a cost recovery basis. Councillor Fernandes expressed interest in determining the level of support for staff’s recommendation to include $4.3M from the Gas Capital Investment Reserve Fund (GCIRF) in the 10 year Capital Forecast to provide for the injections/removal of ash trees due to the infestation of the EAB. Councillor Davey suggested that such determination should not be made in absence of consideration of other funding alternatives, such as LEAF. Councillor Fernandes stated that she viewed LEAF as a separate consideration to deal with replanting of trees given LEAF is geared toward sustainable, long term solutions; whereas, her question relates to the first phase involving injections/removal of trees. A motion by Councillor Y. Fernandes was brought forward for consideration to fund the proposed $4.3M identified by staff in the 10 year Capital Forecast from the Gas Capital Investment Reserve Fund to provide for the injections/removal of ash trees due to the infestation of the EAB. Councillor K. Galloway expressed the view that the motion was premature as there is still substantial discussion yet to take place in respect to the overall budget in terms of funding and where funding will come from. Councillor Gazzola commented that it is unlikely there is any member of Council not in favour of taking action to address this issue; however, he agreed that it would be unfair to decide at this time on funding, suggesting that it must be considered and must fit within the context of the overall budget. Mayor Zehr agreed that the motion is premature, suggesting that even without LEAF funding in the mix, members of Council may want to put their support for any funding proposed to come from the GCIRF toward other things they consider of higher priority as budget deliberations unfold. On motion by Mayor C. Zehr - it was resolved: “That consideration to fund the proposed $4.3M identified by staff in the 10 year capital forecast (2013-2022) for the injections/removal of ash trees due to the infestation of the be deferred to the Emerald Ash Borer from the Gas Capital Investment Reserve Fund, January 17, 2013 special Finance and Corporate Services Committee meeting for considerationas part of the overall 2013 final budget day deliberations.” The Committee then considered Issue Paper CAP 04 (Automatic Metering Infrastructure (AMI) Water Meters). Concerns were raised regarding the capital cost of $386,300. to expand installation of AMI technology into the areas of Deer Ridge and Mannheim versus a projected savings of only $8,000. in meter reading costs. Mr. Malcolm advised that the driving focus is the higher rate of accuracy of the AMI water meters. It was noted that existing water meters are not as accurate and can become even less so as they age resulting in lost revenues. Mr. D. Chapman acknowledged that there is no economic justification for the associative 50 year payback but where there is a need for new or replacement meters the City could look at the option of AMI technology. He noted that the issue with existing meters is the difference between the inside / outside pulsing mechanism wherein the inside pulse weakens over time, registering less than the outside device. The new technology provides one transmission signal straight through accounting for higher accuracy in readings. It was further noted that a business case is to come forward for consideration in the second or third quarter of 2013 prior to proceeding with the expansion of the pilot project and is expected to provide greater detail on results of the initial pilot project, as well as associative costing for the proposed expansion. The Committee then considered the 2013 Capital Budget Summary by Department. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 168 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. At the request of Councillor Vrbanovic, staff agreed to provide further explanation of the Environmental Remediation General Expense Account for final Budget Day. Councillor Vrbanovic referred to $21M shown in the Finance and Corporate Services’ capital budget for enhancement to the Tax/Utility System and questioned if reference to $21M in Report FCS-12-175 for implementation of a SAP billing system to replace the current Customer Information System (CIS) is over and above what is shown in the Capital budget. Mr. Chapman advised that the amount shown in the Capital budget is the cost for staff support of existing SAP / CIS systems and an additional $21M will be required to implement a new SAP billing system to replace CIS, if approved. He stated that even with the new system there will still be licensing costs and staff needed to support the system; however, there will be some rationalization of costs between the old and new. Councillor Vrbanovic questioned that in light of what may happen in respect to future use of Budd Park, if there is potential to move funding forward in the Forecast from 2015 and 2019- 2020 slated for additional synthetic turf fields. Mr. Witmer advised that staff is now reviewing current field locations with natural turf which may be candidates for quick conversion to synthetic, in the event Budd Park is no longer available to the City in 2014. He noted that the review is also tied to improvements required for the Centennial Stadium facility, suggesting that consideration of moving up funding for additional fields would be premature at this time but could perhaps be considered in the 2014 budget discussions. At the request of Councillor Vrbanovic, staff agreed to provide further explanation of the Re- surfacing of Various City Streets account under Infrastructure Services-Engineering and how the annual allocation is derived over the 10 year Forecast. It was further agreed to provide additional information for Budget Day as to how community trails could be funded if allocation is increased by $1M, $2M and/or $3M. OFFICE OF THE CHIEF ADMINISTRATOR Councillor P. Singh questioned if $112,000. budgeted under the Print Shop for photocopiers in 2013 could be delayed. Ms. L. Johnston advised that it is intended to undertake a Request for Proposals in June 2013 related to the service contract to maintain existing equipment and no new equipment is proposed until 2016. Councillor Gazzola questioned if economic incentive policies should be reviewed. Mr. Regier advised that the City’s Downtown Incentive program is currently being reviewed with a report to come forward in 2013 for discussion following community consultation on the findings of staff’s analysis. He added that the review is particularly important as the Downtown Incentive Program is a substantial component of the Development Charges By-law, which is also to be reviewed next year. FINANCE & CORPORATE SERVICES Councillor Gazzola questioned the feasibility of a pending report on enhancements to the Tax/Utility System coming back sooner than 2014. Mr. Chapman pointed out that the Committee previously gave direction to staff to come back in 2014, which is to be ratified at the November 19,2012 Council meeting, and advised that the purpose of the time in between is to allow staff to undertake further due diligence. He expected that the report would come forward in the fall of 2013 in time to be considered as part of the 2014 budget process. COMMUNITY SERVICES Councillor B. Ioannidis requested clarification of funding in 2013 under Heritage District Plans General. Mr. A. Pinard advised that existing practice provides that the City will pursue a new Heritage District every three to four years. Currently investigation is underway to identify a new area; however, this has slowed pending results of a cultural landscape survey to aid in informing the process. Mr. Pinard further explained that the budgeted amount is meant for implementation of recommendations coming out of an approved HCD Plan. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 169 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. Councillor Gazzola questioned why funding applied for the Budd Park Indoor Soccer facility is under both Community Programs and Services and Facilities Management. Ms. C. Fletcher advised that Facilities Management is responsible for maintenance of the overall building envelope, including such things as roof replacement and operation of inside mechanical equipment; whereas, Community Programs and Services is responsible for program functions within the building. Mr. Hildebrand added that a small general provision is required for programming maintenance, for such things as minor damage to the boards and/or turf areas, and rental of table / chairs, etc. Mr. Hildebrand noted that the new funding results from the City having taken over the facility from Kitchener Minor Soccer, and is to cover minor repairs associated with programming elements to maintain the facility in good repair. Councillor Gazzola questioned the funding for Urban Design Improvements and whether it could be used to address infestation of the EAB. Mr. Pinard provided explanation of the program and expressed the view that the EAB project does not fit within the Council approved program criteria. He added that funding from the account has been committed to the Otto Street Reconstruction project in front of the Centre In The Square, which has not yet been paid out and which provided for $60,000. in street enhancements not covered under the normal road reconstruction program. He further noted that funding has also been committed toward a priority community trail connection from the Fairway Road extension to the Grand River Trail. At the request of Councillor Gazzola, Mr. Pinard agreed to provide Council with a copy of the Urban Design Improvements policy. INFRASTRUCTURE SERVICES Questions were raised regarding the requested 2013 allocation to Facilities Management for the Kitchener Operating Facility (KOF). Ms. Fletcher indicated that 2013 is the final year of funding for the KOF project, which integrated municipal operations into one consolidated site. She advised that although that project has been completed, capital funds are still required for such ongoing needs as paving repairs, interior renovations as well as future building maintenance. At the request of Councillor Gazzola, Mr. Chapman agreed to recirculate the final update on the KOF project. Referring to the funding allocation in the Operations Division related to active parkland, Councillor P. Singh requested that an Issue Paper be provided on the potential establishment of a general provision account for McLennan Park similar to the one created to address the ongoing needs at Victoria Park. Councillor K. Galloway commented that a number of parks across the City have identified needs, but lack ongoing funding. She requested that the Issue Paper be expanded to include information on how the City budgets for general park provision and how it could address outstanding needs of active parkland. Councillor Singh requested clarification of the Earth Week Program account, which shows a surplus of $19,857. in 2012 and yet $31,000. is being requested for 2013. Mr. Witmer agreed to provide details on the existing balance as well as the requested funding prior to final Budget Day. Councillor Fernandes questioned the Community Trail and Trail Repairs allocation, suggesting that Federal Gas Tax funding could be shifted from roads projects to trails development. She asked that the scope of the Issue Paper previously requested by Councillor Vrbanovic regarding community trails be expanded to include an analysis of dollar per kilometer of trails verses dollar per kilometer of roads utilizing Federal Gas Tax funding. Mayor Zehr requested clarification regarding the negative balance in the Accelerated Infrastructure Replacement fund. Mr. Gross responded that the negative indicates excess expenditures beyond the $20M cap and that the $1.5M is funded by Reserves. Mr. Chapman explained that the subtotal of the Accelerated Infrastructure Fund is the sum of the $4.3M allocated to Regional Roads and $15.8M to City Roads which equals approximately $20M over the 10 year Forecast. Additional questions were raised related to the anticipated financial position of the City upon the completion of EDIF. At the request of Councillor Singh, Mr. Hagey agreed to provide FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 170 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. charts illustrating the debt to reserve ratio as well as the financial position once EDIF is factored out prior to final Budget Day. On motion by Councillor B. Vrbanovic - it was resolved: “That staff be directed to report and / or take appropriate action on the following matters arising from the November 8, 2012 special Finance and Corporate Services Committee meeting relative to the 2013 Capital Budget, as outlined in the chart below: TOPICACTION ReservesProvide detail schedules for all reserves. Capital Closeouts Provide list of capital closeouts. Community Services Department Provide details on major equipment and fleet. - Fire Services Provide a more detailed explanation of Alternate Emergency Communication Centre (AECC). Schoerg Barn Provide a more detailed explanation of Schoerg Barn and investigate partnership possibilities. Chief Administrator’s Office (CAO) Provide explanation regarding Safe and Healthy Advisory Committee budget. Provide explanation regarding the Corporate Plan funding. General Expenses Provide details of Environmental Remediation - Environmental Remediation Fund. Infrastructures Services Department Provide total dollar amount in 2012 budget for - Engineering Surface Reconstruction and how staff developed this forecast. Community Trails Provide Issue Paper recommending how trails would be funded if increased to $1M, $2M, $3M and provide analysis of dollar per kilometer of trails versus dollar per kilometer of road utilizing Federal Gas Tax Reserve funding. Community Services Department Provide the policy for Urban Design - Planning Administration improvements. Infrastructures Services Department Recirculate final project update on Kitchener - Facilities Management Operating Facility (KOF). Infrastructures Services Department Provide information on how the City budgets - Operations for general park provisions and how it could address outstanding needs of Active Park Lands. Provide details regarding the existing balance of $20,000. for the Earth Week Program and 2013 current capital of $31,000. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 8, 2012 - 171 - CITY OF KITCHENER FCS-12-175 - 2013 CAPITAL FORECAST (CONT’D) 1. Debt to Reserve Update chart to exclude Economic Development Investment Fund (EDIF) and Kitchener Memorial Auditorium Complex (KMAC) Expansion debt.” ADJOURNMENT 2. On motion, the meeting adjourned at 4:01 p.m. C. Goodeve J. Billett D. Livingstone Committee Administrator Committee Administrator Committee Administrator