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Home My WebLink About2013-03-18 FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 CITY OF KITCHENER Present: Councillor S. Davey - Chair Mayor C. Zehr and Councillors D. Glenn-Graham, B. Ioannidis, Z. Janecki, Y. Fernandes, K. Galloway-Sealock, B. Vrbanovic, F. Etherington, P. Singh, and J. Gazzola Staff: J. Willmer, Chief Administrative Officer D. Chapman, Deputy CAO, Finance & Corporate Services J. Witmer, Acting Deputy CAO, Infrastructure Services M. May, Deputy CAO, Community Services R. Regier, Executive Director, Economic Development R. Bunn, Executive Director, Integrated Planning L. MacDonald, Director of Legal Services & City Solicitor C. Tarling, Acting Director, Legislated Services & City Clerk L. Johnston, Director, Corporate Communications & Customer Services M. Seiling, Director of Building S. Turner, Director, By-law Enforcement R. Hagey, Director of Financial Planning H. Gross, Director, Project Administration & Economic Investment C. Fletcher, Director, Facilities Management K. Kugler, Director of Enterprise B. Robinson, Director of Engineering C. Shantz, Assistant City Solicitor B. Wagner, Supervisor, Salary Administration J. Billett, Committee Administrator CSD-13-024 - NOISE EXEMPTION REQUEST 1. - CHICOPEE SKI CLUB - MARCH 23 AND 24, 2013 The Committee considered Community and Infrastructure Services report CSD-13-024, dated March 12, 2013, concerning a request for a noise exemption for the Chicopee Ski Club. It was noted in the agenda that any recommendation from this Committee will be considered at the special Council meeting to be held later this date. On motion by Councillor B. Ioannidis - it was resolved: That an exemption to Chapter 450 (Noise) of the City of Kitchener Municipal Code be granted to the Chicopee Ski Club for their Snow Cross Championships to be held on March 23 and 24, 2013, between the hours of 8:30 AM and 6PM. 2. The Committee considered Finance and Corporate Services Department report FCS-13-032, 012 budget, including: tax supported services; rate supported enterprises/utilities; and investments. Mr. H. Drewitz extended appreciation for Councils efforts in reducing expenditures under the -2012 and for keeping the average property tax rate increase to 1.39% in 2013. He expressed concerns, however, that a potential $1M deficit still has not been addressed and encouraged the City to achieve a zero budget variance in 2013 without use of capital close-outs or other accounting adjustments. Mr. Drewitz circulated a written submission containing a number of questions which he asked be responsed to by staff in the coming weeks. Mayor C. Zehr agreed that capital close-outs are not an ideal method to deal with deficits; however, he questioned if Mr. Drewitz was aware of the steps being taken toward improving budgets through progression in areas where the City was not budgeting enough and which have been gradually catching up. Mr. Drewitz acknowledged that improvements have been made, noting that in 2011 $1.2M in capital close-outs was used to off-set negative variances, whereas only approximately $500,000 was used in 2012. He expressed the view however, that with so FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 - 47 - CITY OF KITCHENER 2. many capital items he would expect reserves to be used against future capital deficits. Mayor Zehr noted that each capital account must be treated individually and the funds within individual capital accounts cannot be transferred to others. He pointed out that it is only when capital close-outs occur that those funds can then be used to off-set negative variances. Councillor Y. Fernandes requested clarification of Mr. Drewitz in respect to his question regarding supplementary taxes / write-offs relative to the industrial sector. Mr. Drewitz commented that the manufacturing base in the Region is changing, and more rapidly in Kitchener. He noted that the future is unknown, particularly in light of pending closure of the Maple Leaf plant that will result in decreased revenues; and in light of a number of small companies in the industrial basin it was his hope that they continue to be a going concern. Councillor Fernandes also requested clarification of his question on the Gas Works delivery charges. Mr. Drewitz stated that he would like to better understand why delivery expenses did not decrease similarly with the decrease in volume, questioning why the variance from budget is so high when gas supply is down. Councillor S. Davey referred to the concern in using capital close-outs to mitigate deficits, suggesting that it is appropriate to use same in the instance of a one time deficit. He added that an increase in supplementary taxes at approximately 6.7% late in the 2013 budget process was also used to off-set the deficit. Mr. R. Hagey presented an overview of the 2012 year-end results, noting that overall the year ended in good financial position. He pointed out that a summary of significant variances over $200,000, as well as variances in excess of $50,000 (or 10% of budget) was provided as outlined in the staff report. He noted that prior to capital close-outs the year-end tax supported operating budget deficit was at $513,000, and under Council direction was off-set by $568,000 in capital close-outs. This resulted in a small surplus of $54,000 which was transferred to the Winter Control Reserve Fund in accordance with Council policy. Mr. Hagey also advised that the Tax Stabilization Reserve Fund ended in a $1.7M balance, however, this is well below the minimum threshold of $5M. He noted in regard to the 2013 budget, based on actual year-end budget expenditures, funds were reallocated to right size the budget and the corrections made do not have any impact or in any way increase the tax adjustment in 2013. Mr. Hagey then reviewed year- conclusion advised that the overall 2012 year-end results are consistent with projections made during the 2013 final budget deliberations. Councillor J. Gazzola raised concerns with two areas that have risen since finalizing the 2013 budget, and in particular with an accrual under General Expenses of $929,000 for contingent liabilities related to previous in-camera discussion. Councillor Gazzola questioned that in the interest of transparency, why indication could not be given to the public as to what this matter is about. Ms. L. MacDonald advised that if Council wished to pursue this line of questioning the discussion should be held in-camera. Councillor S. Davey questioned if Ms. MacDonald could answer in general terms as to why it is not possible at this time to be transparent. Ms. MacDonald suggested that it would not be possible to do so without divulging details and again, advised that discussion should take place in-camera. Mayor C. Zehr commented that the City is being transparent in reporting that there is an unresolved matter. He pointed out that when in negotiation of unresolved matters the negotiation is not carrie higher costs to the City. He noted that the City does not discuss labour negotiations publicly for this reason and similarly, Council should not publicly discuss unresolved civil matters. Mayor Zehr stated that Council has a financial and fiduciary responsibility to address these matters in a Councillor Gazzola maintained that his question was general in nature. He suggested that the public needs to know what is happening, and while he agreed that it is good accounting practice to provide for contingencies, the community should be apprised of why it is being done and why it would signal an admission of guilt. Councillor Gazzola then asked that by following good standard accounting practice if it is an admission of guilt. Mr. D. Chapman provided an excerpt from the Ontario Public Accounting Standards Handbook, which in his view suggests that the FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 - 48 - CITY OF KITCHENER 2. standard contemplates that highly sensitive information cannot be disclosed. Councillor Gazzola questioned why it could not be disclosed to shareholders, noting that law suits are a common practice in both the private a budget the dollar amount spoken of is not huge and rate payers should be given some more information than the line item. He commented that the line item of $1M and the $300,000 in pay equity adjustments is quite different from figures presented at budget and if these amounts did not have to be applied there would not have been need to off-set a deficit with capital close-outs. Councillor Gazzola then questioned that if this situation had been related to Enterprises should the accounting not be recognized within the Enterprise accounts rather than the tax supported operating accounts. Mr. Chapman advised that to respond to this question would require more detail than should be discussed in open session and suggested that this discussion should go in-camera. Councillor Gazzola advised that he would not pursue the question further. Councillor Gazzola then raised concerns as to why it has taken so long for the pay equity adjustments to be made given the legislation has been in place for some time. Ms. B. Wagner advised that this is not related to the originating pay equity compliance but rather the City has ongoing maintenance obligations to conduct regular reviews. She noted that to meet the ongoing obligation, Human Resources reviews job descriptions every 5 years, or may undertake reviews resulting from re-organizations and/or new assignment of work that adds significantly to a job. Ms. Wagner advised that the pay equity adjustments in Information Technology resulted from a re-organization. Councillor Gazzola raised concerns that the amount set aside for contingency liabilities, although discussed in-camera, was not authorized by resolution and questioned who had authorized the accrual. Councillor P. Singh raised concerns with the line of questions being asked and suggested that in the best interest of the Corporation and its shareholders that this discussion should take place in-camera. Carried The following motion was voted on by a recorded vote and , with Mayor C. Zehr and Councillors B. Ioannidis, Y. Fernandes, K. Galloway-Sealock, S. Davey, B. Vrbanovic, F. Etherington and P. Singh voting in favour; and Councillors Z. Janecki and D. Glenn-Graham voting in opposition. Councillor J. Gazzola declined to vote and in accordance with section -law his refusal to vote is recorded as a vote in the negative. On motion by Councillor P. Singh - it was resolved: -camera meeting be held immediately to consider a matter of solicitor-client The Committee then recessed at 1:20 p.m. and following an in-camera meeting reconvened at 1:47 p.m. with all members present. Councillor S. Davey commented that the issue of transparency is one shared by all members of Council and asked that the City Solicitor comment on why some matters must be taken in- camera. Ms. L. MacDonald advised that the City is limited in subject matter that can be discussed in- camera, citing examples of solicitor-client privilege, pending litigation or potential land sales/purchases. She pointed out that the reason for limiting subject matter is to remain as transparent as possible. Ms. MacDonald stated that she and Ms. Shantz provided legal advice to Council in-camera on the issue raised by Councillor Gazzola, which is allowed and which is being done for the protection of the Corporation. Councillor Davey added that thereby protection is also being afforded to the community. Councillor B. Ioannidis requested clarification of higher than budgeted expenses related to downtown garbage collection given a reduction in pick-up locations. Mr. Witmer advised that the City acquired a new garbage truck for downtown and parks, and the added expenditures relate to administrative costs. FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 - 49 - CITY OF KITCHENER 2. Councillor Y. Fernandes questioned why savings are not evident given an earlier start to minor improvements / repairs. Mr. J. Witmer advised that this does not generate savings as it is work that is carried out annually in any event. In this case, the work was started earlier in the season due to milder winter conditions that provided opportunity to reassign winter maintenance staff to perform the work and as a result, funds from those budgets were utilized earlier in the season than normal. Councillor Fernandes questioned if the tax write-offs under General Expenses that are related to the industrial sector is one particular site or multiple sites. Mr. R. Hagey advised that it relates to a number of sites, the largest of which is the Maple Leaf Foods plant which results from a reassessment of the plant by the Municipal Property Assessment Corporation (MPAC). Councillor Fernandes referred to the loss of revenue in the Building Enterprise due to a slow down in permit issuance, questioning why savings are not evident on the operational side. Mr. M. Seiling advised that the Building Code stipulates that the Building staff must make timeframe decisions in regard to permit issuance and/or construction inspections and experienced staff is needed to ensure legislated requirements are met. He pointed out that the legislation allows creation of a reserve fund which allows the City to maintain staffing levels during economic turn-down; however, staff do undertake to look at opportunities to reduce staff costs where feasible by not filling certain vacancies, such as maternity leaves. Councillor Fernandes requested clarification of the transfer to capital being less than budget for the Storm Sewer Utility. Mr. H. Gross explained that this is due to projects that did not go ahead as anticipated, one of which was a deferral by the Region of Waterloo of the Edgehill / Baxter Storm Sewer Outlet, now slated for 2017. Councillor Fernandes questioned if there is a way to pass on savings to consumers given the Gas Works is trending higher revenues than expected. Mr. wherein a decision was made to separate transportation from the delivery component and the higher revenues are as a result of this. He noted that this will be captured at time consideration is given to setting new rates and Council will have discretion at that time. In response to Councillor Z. Janecki, Mr. Hagey agreed to provide further detail as to the factors associated with the cause of deficit in Operations-Administration and, in particular, as it relates to vehicle supplies. Councillor Janecki requested clarification of the payment of taxes related to Budd Park. Mr. J. Willmer advised that the City owns only a small portion of the Park and pays taxes on 2 other portions. Mr. D. Chapman added that this is an assessment issue, noting that MPAC views those lands as commercial rather than recreational. Councillor Janecki requested clarification of the capital close-outs related to Engineering works for Belmont Avenue and Westmount Road. Mr. Chapman advised that the funds referred to are simply unused funds at completion of the road projects. Councillor P. Singh questioned if the fee revenue generated for Budd Park / sportfields is higher or lower than the taxes being paid. Mr. Willmer stated that the fees generate less revenues than the taxes being paid but noted that maintenance costs of the fields must also be taken into account. Councillor Singh questioned that if fees were not charged or discounted if that would negate having to pay taxes. Mr. D. Chapman advised that he would provide further details on revenues / expenses and tax information for Budd Park for clarification of Council. Councillor Singh questioned the feasibility of passing on the surplus in the Storm Sewer Utility to consumers. Mr. Hagey advised that while a surplus was achieved in net revenue (expense), the stabilization reserve fund ended 2012 in a deficit of $1.4M and the surplus has been applied against that deficit. He added that the deficit is accumulative and it is not anticipated to break even until 2017. Councillor S. Davey requested clarification of the favourable increase between November and December 2012 for short term yield on investments and Mr. Hagey advised that this is related to adjustments made resulting from year-end accruals. Councillor J. Gazzola questioned the feasibility of treating Enterprise investments like long term investments for purpose of earning higher interest. Mr. Hagey advised that the stabilization reserve funds for Enterprises are structured as cash accounts to meet short term demands on an as needed basis; whereas, long term investments are typically held over multiple years. A motion by Councillor P. Singh was brought forward for consideration to direct each FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 - 50 - CITY OF KITCHENER 2. Department Head to identify any chronic negative variances within their respective Departmental budgets and provide suggestions and/or options as to how they may be dealt with; and that the information be included in the next quarterly Variance Report coming in mid-June 2013. In response to concerns raised regarding the need for this information outside of the budget process, Councillor Singh expressed the view that some form of control is needed to mitigate chronic negative variances and it was his opinion having an earlier discussion regarding this matter will better assist Council in preparing for the next budget discussions. Carried Unanimously. The following motion was voted on and On motion by Councillor P. Singh - it was resolved: That each Department Head be directed to identify any chronic negative variances within their respective Departmental budgets and provide suggestions and/or options as to how they may be dealt with; and that this information be included as part of the next quarterly Variance Report to come forward for consideration of the Finance and Corporate Services Committee in mid-June 2013. 3. The Committee considered Chief Administrat Office report CAO-13-010, dated March 11, 2013, concerning the status of departmental service priorities and corporate projects for the period September to December 2012. Councillor B. Ioannidis requested a status update on the recorded meetings and web-streaming of Council meetings project under Legislated Services. Ms. C. Tarling advised that due to a key staff absence this project has been slightly delayed; however, a timeline is now in place and it is anticipated commencement of a single camera operation will take place at the August 2013 meeting and use of multi-cameras will commence in October. Councillor Y. Fernandes requested clarification of the Culture Plan II implementation relative to arts and culture development / downtown multi-use arts centre; and the partnership with Morogoro Tanzania, under Economic Development. Mr. R. Regier advised that the Culture Plan II implementation approach was modified as a result of the Creative Enterprise moving forward with their cultural mapping project. The intent is to await completion of the mapping project so an integrated approach can be taken that will provide a more Region-wide perspective. Mr. Regier advised that the Morogoro partnership was established to run from 2010 to 2015. The project is mid-way and will wrap up by end of 2014, and will then be followed by an evaluation process in early 2015. He noted that the latest mission in January included training of Morogoro staff in local economic practices and staff is excited to see the local progress being made there. Councillor Fernandes asked as to the feasibility of staff preparing a cost benefit analysis for the Morogoro project. Mr. J. Willmer expressed concerns in using staff resources to do so at this time given the project will not end until early 2015 and there is an obligation to see the partnership through. Councillor Davey suggested that staff provide a brief overview of staff time and costing in an email to members of Council. Councillor B. Vrbanovic stated that this initiative was approved by Council and is fully funded through the Canadian International Development Agency (CIDA) as delivered by the Federation of Canadian Municipalities and other than staff time, there is no cost to the City. He suggested that rather than staff recreating a report, the original report presented to Council be re-circulated which he suggested should have sufficient details as requested. Councillor K. Galloway-Sealock added that this project is a community based partnership, and the benefits to the City and community are many in the experiences that are brought back to be shared. Councillor Fernandes raised concerns in proceeding with pilot projects related to Cityworks as it was her understanding the program is not performing as expected. Ms. C. Fletcher advised that she was unaware that the program is not working, noting that 4 Divisions are very reliant on the program and offered to provided additional information on the merits of Cityworks. Councillor FINANCE AND CORPORATE SERVICES COMMITTEE MARCH 18, 2013 - 51 - CITY OF KITCHENER 3. Fernandes advised that her concerns relate to comments in report INS-13-008 (Drinking Water Quality Management Standard) to be considered later this date, which suggests Cityworks does not have all the inspection and data entry functionality required to support DWQMS maintenance programs. Ms. Fletcher advised that this is only a very small aspect of what the program is used for and overall it remains a viable product. Councillor Fernandes requested explanation for the delay in completing Phase 2 of the pilot project for the Automated Vehicle Locator / Global Positioning System program. Mr. J. Witmer advised that the delay resulted from changing from one vendor to another and the change over in equipment taking longer than anticipated. Councillor J. Gazzola questioned if the service priorities status report could be accessed digitally so members of Council can follow project progress. Ms. R. Bunn advised that the Centre is currently working on putting a process in place to provide more immediate updates and this will be made available for access in the near future. ADJOURNMENT 4. On motion, this meeting adjourned at 2:45 p.m. J. Billett, AMCT Committee Administrator