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HomeMy WebLinkAboutFCS-15-001 - 2015 Operating Budget Staff Reps ort T rc; Finance and Corporate Services Department www.kitchener ca REPORT TO: Finance and Corporate Services Committee DATE OF MEETING: January 5, 2015 SUBMITTED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353 PREPARED BY: Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353 WARD(S) INVOLVED: All DATE OF REPORT: December 15, 2014 REPORT NO.: FCS-15-001 SUBJECT: 2015 Operating Budget RECOMMENDATION: For Discussion Note: Final approval of the 2015 Operating Budget will take place as part of Final Budget Day, schedule for February 23, 2015 BACKGROUND: The budget is the City of Kitchener's annual financial plan, and is the primary basis of financial decision making. The budget process allows Council to prioritize the programs and services delivered by the City and sets direction for the work to be completed over the upcoming year as well as future years referenced in the budget forecast. The operating budget funds the day-to- day costs of the municipality such as salaries, utilities, and supplies. The objectives of this report are to: • Highlight the Key Issues in 2015 Operating Budgets • Provide an Overview of the Tax Supported Operating Budget • Provide an Overview of the Enterprise Operating Budgets REPORT: Key Issues in the Operating Budget During 2015 Operating Budget deliberations Council will be considering a number of items, but three key issues rise above the others. These three issues are the amount of the property tax increase, the potential to improve service levels through approving strategic initiatives, and the amount of the water & sanitary rate increase. Each of these issues is briefly highlighted below. Key Issue # 1 — Property Tax Increase The proposed tax rate increase for 2015 is 2.25%. Based on the measures used when considering tax rate increases, an increase of 2.25% is affordable. Kitchener already has one of OP - 1 the lowest tax burdens of all large municipalities in Ontario, so Kitchener citizens are paying less tax than if they owned the same property in most other Ontario cities. The proposed tax rate increase is slightly lower than the rate of inflation in Ontario and maintains existing service levels, which was the clear preference of Kitchener citizens based on the community survey conducted by Environics in 2013. Key Issue #2 —Strategic Initiatives Strategic initiatives are meant to enhance existing services, provide new services, or implement recommendations from master plans and audit reviews. Eight different strategic initiatives are proposed in the 2015 budget and could be funded by additional assessment growth revenue beyond what was assumed by staff as part of budget planning. This means that service levels for certain services could actually be enhanced within a tax rate increase below the rate of inflation. The proposed initiatives support Council priorities as recently identified thrgouh the business planning process. Key Issue #3—Water & Sanitary Rate Increase The proposed water & sanitary rate increase for 2015 is 9.9%. This increase is beyond the rate of inflation, but is required in order to keep sustain these essential services. There is considerable upward rate pressure put on these utilities due to decreased water consumption, rate increases at the Regional level well beyond the rate of inflation, and increased costs to maintain and replace aging infrastructure. Without a significant rate increase in 2015, these utilities will be in deficit. Tax Supported Operating Budget 1) Base Operating Budget The proposed tax levy increase for 2015 is 2.25%. A tax rate increase of 2.25% on the average Kitchener home (assessed at $269,000) would amount to $23.08, or just under $2 per month. In addition, since actual assessment growth (1.51%) exceeds the amount forecasted (1.0%), there are growth related tax revenues that have not been factored into the base operating budget. As was the case in 2014, staff are proposing a limited number of additions (Strategic Initiatives) that could be funded with the additional tax revenues. The Strategic Initiative items are detailed in the next section of the report. An appendix to this report shows the 2015 tax supported operating budget in the same format as the variance report. Like the variance reports, comments have been provided for variances that are more than $50,000 and/or 10% compared to the 2014 budget. As noted above, the proposed tax levy increase for 2015 is 2.25%. An increase of this amount balances the competing interests of affordability and sustainability as described below. Affordability in the 2014 Tax Supported Operating Budget Budget affordability means that the budget approved by Council responds to the current economic climate and supports the strategic directions for financial management. Locally, some changes within the industrial sector continue to cause some uncertainty in the economy, but smaller start-up companies continue thrive and make Kitchener an exciting place to invest. Despite any perceived uncertainty, workforce participation and employment levels in Kitchener are high. In addition, the construction of LRT is beginning in earnest, and is projected OP - 2 to dramatically change the physical and economic landscape of the region's three cities, the largest of which is Kitchener. Tax rate policy is explicitly referenced in Kitchener's Strategic Plan under the strategic directions for financial management. Kitchener's direction for fair taxation says that the City will strive for competitive, rational and affordable taxation levels. To determine this, the City must consider the following when setting tax rates: • Comparison to other municipalities; • Inflationary factors, including those unique to municipalities; and • Balance of service levels versus affordability Comparison to Other Municipalities The City of Kitchener is already one of the most affordable cities in Ontario. It has one of the lowest tax burdens of large cities in Ontario, and has the lowest tax burden amongst cities in the Region of Waterloo. The graph below shows the 2013 results of BMA's annual tax burden analysis for the same bungalow property in each of Ontario's largest municipalities. Kitchener now holds the third lowest ranking in the province, meaning it is one of the most affordable cities in Ontario. Annual Tax Burden of a Bungalow in the Large Ontario Municipalities (>100,000 people) $5,000 $4,500 .. $4,000 $3, 8 $3,500 $2,988 J'„182 ,m ... .... ��,0�0 . .... .... .... ..... $3,000 $2,500 .... .... .... .... .... .... .... .... .... . .... .... .... .... .... — .... ..... ..... .... .. — .... .... .... .... .... .... $1,000 ... .... .... ... A in HAI— `u... = a� �. » 0 » Ln Ln 0 W U C CdZ F� � it it 0 � U . 2 � p� ~ M i1 2 P C7 ~ 0 OP - 3 Inflationary Factors, Including Those Unique to Municipalities The proposed 2014 tax rate increase approximates the anticipated rate of inflation. Inflation considerations for setting tax rates are in two parts: • Typical consumer inflation, represented by the Consumer Price Index (CPI) • Unique municipal inflation, represented by the Municipal Price Index (MPI) In terms of CPI inflation, the proposed 2015 tax supported budget increase of 2.25% is below actual CPI inflation for January to October (2.3%). In addition to CPI inflation, the City of Kitchener calculates a municipal price index (MPI), which accounts for the fact that the "basket of goods" the City purchases is considerably different than the basket of goods used to calculate CPI inflation figures. For instance, the top three components of the CPI calculation are shelter, transportation and food which do not apply the same way to a municipality as they do an individual. The MPI calculation accounts for the different costs of a municipality such as staffing, operating supplies, and capital construction. The MPI figure for the 2015 budget process is 2.2%, meaning that inflation pressures on the City of Kitchener budget are approximating the typical Ontario household budget in 2014. Balance of service levels versus affordability The proposed 2015 tax rate reflects citizen preferences related to service levels and affordability. These preferences have been reaffirmed recently through citizen surveys conducted in 2012 and 2013. In the summer of 2012 (as part of the 2013 budget process) the City commissioned a telephone survey of Kitchener residents regarding their opinions on tax rate increases and service levels. In the phone survey, the majority of respondents (62%) said they prefer an inflationary tax rate increase that maintains current service levels. As part of the 2013 Environics survey, a similar majority of respondents (61%) said the same thing. While the 2012 phone survey did not reach enough residents to be considered statistically significant, the 2013 Environics survey interviewed more than 1,000 residents and the findings are statistically significant. The graph below shows that Kitchener citizens prefer increasing taxes at the rate of inflation in order to maintain existing services over other alternatives. Citizen Preferences Regarding Tax Increases and Service Levels ■2013 Environics 2013 Budget Increase taxes at the rate of 61% inflation to maintain services ' 62% Maintain taxes and possibly cut 23% services 30% Increase taxes to expand or improve services 8% Don't know/No answer ON 6% 0% OP - 4 Sustainability in the 2014 Tax Supported Operating Budget Budget sustainability means that the budget approved by Council is adequate to fund existing service levels and avoid deficits. Tax supported operating budget sustainability has been an ongoing issue within the tax supported budget for a number of years, but significant progress has been made in recent budgets. Sustainability will be considered in terms of: • History of operating deficits; • Chronic deficits; and • Status of the Tax Stabilization Reserve Fund History of Operating Deficits The City of Kitchener has a recent history of operating deficits. For the past number of years, the City has finished the year with an operating budget deficit (before applying funds from one- time capital closeouts). In essence, the City's operating budget is not truly balanced. The table below shows the history of operating deficits dating back to 2010 and includes the projected 2014 deficit based on actuals as of the last variance report. The average annual deficit over this time is $425,000. Tax Supported Operating Budget Deficits Before Capital Closeouts III III VIII III III II IF IIIIIIIIIIIIIIII�III III IIIIIIIIIIIIIIII�III IIIIII ' " Deficit Before -$0.48M -$0.24M -$0.51 M -$0.44M -$0.62M Capital Closeouts These deficits have over a number of years and through varying weather conditions and economic circumstances, which means the deficits are not temporary. Instead, the ongoing nature of the deficits points to the fact that there is a disconnect between the amount of funding provided to deliver services and the actual amount of work required to deliver expected service levels. These ongoing deficits must be addressed in order to ensure the City maintains a balanced budget in substance as required by Provincial legislation. Chronic Deficits Over the past few budgets, staff have highlighted a few select areas that have consistently produced negative variances and have been an ongoing contributor to annual operating deficits. Three of these areas are Bylaw fine revenues, water & electricity costs, and postage. In preparing the 2015 tax supported operating budget, staff have been able to fully fund the chronic deficits in each of these areas while still submitting a budget that is below the current level of CPI inflation. This means that, unlike recent budgets, staff do not expect actual 2015 tax supported operating results will end the year in a deficit position. This was a critical objective given the implications of the following section. Status of the Tax Stabilization Reserve Fund (TSRF) The City maintains a Tax Stabilization Reserve Fund (TSRF) which is used to fund any operating deficits (or receive funds from any operating surpluses) within the tax supported operating budget. As shown in the chart below, based on the projected operating deficit in 2014, the TSRF will be depleted at the end of the year. 0 P - 5 Summary of the Tax Stabilization Reserve Fund ui� I�.Iiil ' pig �IIII�IIII Vii pig � lug j°� � VIII � �•:a .w, � � u� .w, mom m� a umm uui�u m � � u Endin Balance $3,596,967 $1,695,198 $317,944 $32,282 Tar et Balance Minimum $4,749,802 $4,951,223 $5,104,543 $5,222,519 ..................................................................... .............................................................. ..................................................................................................................................................................................................................................................................................................................................................................... The reserve fund balance has decreased from $3.6M at the end of 2011 to a projected balance of $32,282 at the end of 2014. Significant funds have been drawn from the reserve fund over this time to help keep taxes low (improving affordability), but the funds have not been replenished (decreasing sustainability). 2) Strategic Initiatives As noted above, there is additional projected new assessment revenue that was not factored into the base operating budget target. As was the case in the 2014 budget, staff are suggesting this funding be used for strategic initiatives instead of simply reducing the tax levy increase below 2.25%. Funding for strategic initiatives is meant to be used to invest in enhancements to existing services, provide new services, or implement recommendations from master plans and audit reviews. The 2015 operating budget includes eight strategic initiative options for Council's consideration that meet this criteria. The combined cost of the proposed strategic initiatives essentially matches the additional assessment growth revenues. This means that service levels for certain services could actually be enhanced within a tax rate increase below the rate of inflation. Ignoring assessment growth, if all of these strategic initiatives were approved by Council, it would increase the taxes on the average home (assessed value of $269,000) by $5.14. The table below summarizes the eight strategic initiative options and their impacts on the net tax levy. More details about each initiative can be found in the corresponding issue papers. OP - 6 Summary of Strategic Initiative Options L III mm VIIIIIIIIII m SI 01 Restoration of the Tax Stabilization Reserve Fund $200,000 0.19% $1.94 SI 02 Increased Urban Forest Maintenance $100,000 0.09% $0.97 e-Participation for Open Government SI 03 ($75,000 Operating, $60,000 already included in $75,000 0.07% $0.73 Ca ital S104 Health & Safety Compliance Resource $70,000 0.07% $0.68 ($70,000 tax/$10,000 enterprise) S105 Waterloo Region Economic Development Corporation $37,000 0.03% $0.36 Additional $120,000 in 2016 S106 Improve the City's Ability to Engage Volunteers in the $35,700 0.03% $0.35 Community SI 07 Increased Street Level Special Events Programming $23,588 0.02% $0.23 SI 08 Increased Funding for the Leisure Access Card TBD 0.00% $0.00 Note: The additional assessment growth revenue is approximately $533,000. Enterprise Operatin_q Budgets The City operates seven enterprises, which are self-sufficient business lines that raise their own revenues through user rates instead of being funded through property taxes. As part of the 2015 budget package, "Enterprise Overviews" have been provided for each of the enterprises. These overviews describe the main purpose of the enterprise, provide some benchmarking information, and describe recent challenges/successes. The seven enterprises are noted in the table below. Ileum m Vui � u RIIIIIII u" d�u m m Iliuiuu uum um • Golf Gas • Building Water Sanitary Sewer Parking Sanit ............................................................................................................................................................................................................................................................. Storm Water Rates for the enterprises listed on the left of the table have already been considered by Council as part of the annual user fee review (report FCS-14-133). The enterprises listed on the right are commonly referred to as the utilities and do not have their utility rates set until Final Budget Day (with the exception of Gas which happens mid-year). OP - 7 While each of the enterprises is managed separately as its own business line, one significant principle is followed by each of enterprises; namely ensuring financial sustainability. Each enterprise has its own stabilization reserve fund that is used to manage fluctuations in financial operating results from year to year. In years that end with positive results, the surplus funds are held in reserve and are used to fund deficits that may arise in future years. The general guidelines for managing these reserve balances is as follows: • If an enterprise has a positive stabilization reserve balance, the goal of staff is propose a budget (and any associated rate increase) to ensure the reserve does not become negative. • If the stabilization reserve balance is already negative, the goal of staff is to propose a budget (and any associated rate increase) that reduces/eliminates the deficit in each year of the forecast. Budget highlights and reserve balances for each of the seven enterprises are provided below. Golf Poor weather in 2014 negatively affected the financial performance of Golf and is resulting in a projected deficit of $174,000 by the end of the year. This result will worsen the stabilization reserve balance that was already in deficit. For 2015, staff have budgeted a 3% rate increase, and with normal weather in operations, expect see a positive result of$25,000 at the end of the year. The only significant 2015 budget change for Golf is a reduction of $55,000 (from $130,000 to $75,000) in the dividend paid to the City (i.e. tax base). The dividend amount is set to be in accordance with the Level Playing Field agreement signed between the City and the National Golf Course Owners Association, and represents the amount of property tax and income tax the golf courses would pay if they were held privately instead of being owned by the municipality. The divided has been decreased as a result of a reassessment that lowered the assessed value of the golf courses (thereby reducing their theoretical property taxes). Reductions to golf course assessments have occurred across the province. Budget Summary—Golf 2014 Projected Actual $174,000 deficit 2014 Accumulated Stabilization Reserve Balance $947,000 negative 2015 Budgeted Rate Increase 3% 2015 Budgeted Result $25,000 surplus Building Increased building permit activity in 2014 is causing a projected surplus of $1.3M by the end of the year. Staff believe the increased activity was caused primarily by builders moving to get their building permits before development charge increases at both the City and Regional level came into effect mid-year. For 2015, staff have budgeted a 1.5% rate increase to most fees and expect permit activity levels to be lower than in 2014 as building permit activity levels return to a slightly below normal level. This will result in an expected deficit of$782,000 at the end of 2015. OP - 8 Budget Summary— Building 2014 Projected Actual $1,353,000 surplus 2014 Accumulated Stabilization Reserve Balance $5,272,000 positive 2015 Budgeted Rate Increase 1.5% 2015 Budgeted Result $782,000 deficit Parking The 2014 projected deficit of $606,000 in Parking is slightly worse than budget. It is a result of flat/lower demand in most of the downtown parking garages instead of slight budgeted increases. In contrast to previous years, for 2015 staff have budgeted no increase to parking rates. The City's parking rates are higher than local and other benchmarks, so staff believe holding rates flat is the appropriate course of action to avoid a further reduction in demand The other significant item to note for 2015 relates to the funding of Parking's capital program. The majority of the projects in Parking's capital program will be funded by reserve over the next decade. The reserve funding will come from development charge recoveries and relates to parking garages that have already been built (Charles & Benton, Civic District), and could have been funded through development charges but were funded from non-growth sources instead due to a negative balance in the Development Charge Reserve Fund. More information on the development charges recoveries can be found in the 2015 Capital Budget report and package. Budget Summary— Parking 2014 Projected Actual $606,000 deficit 2014 Accumulated Stabilization Reserve Balance $1,751,000 ne ative 2015 Budgeted Rate Increase 0% 2015 Budgeted Result $77,000 surplus Gas In 2014, Gas Delivery is projecting a small deficit of$113,000 once it transfers a dividend to the Gas Investment Reserve. For 2015, Gas Delivery is expected to have a deficit of $5.6M after paying the dividend. The difference is largely caused by the increased need for capital funding. The primarily capital project in 2015 is the replacement of the utility billing system project which began in 2014 and will continue through 2015. Budget 2014 Projected Actual after transfer to Gas Investment Reserve $113,000 deficit 2014 Accumulated Stabilization Reserve Balance $5,744,000 positive 2015 Budgeted Rate Increase Set mid-year 2015 Budgeted Result (after transfer to Gas Investment Reserve) $5,586,000 deficit Water& Sanitary Significant deficits are projected for both Water ($4.3M) and Sanitary ($1.OM) in 2014. Water use was below budget in 2014, which affects both Water and Sanitary as both utilities are billed OP - 9 based on the amount of water consumed. In addition to lower revenues, expenses were higher in Water (related to increased number of water main breaks) and Sanitary (related to increased amount of sewage processing required). The poor financial results in 2014 will effectively eliminate the stabilization reserve funds for both utilities, meaning there is no longer any ability to absorb operating deficits in either utility. For 2015, both utilities have budgeted rate increases of 9.9%. An increase of this amount is beyond the rate of inflation, but is required given the state of the stabilization reserve funds and the ongoing financial pressures on the utilities due to reduced consumption, Regional rate increases well beyond the rate of inflation, and aging infrastructure. Each of these rate pressures is discussed in more detail below. Decreasing water consumption causes upward pressure on rates because some of the costs in the Water/Sanitary utilities are fixed, which means they do not vary based on how much water is consumed. Examples include the costs of capital replacement and legislative compliance. If less water is consumed, it means these fixed costs must be spread over less water, which causes an increase in rates. Over the past 10 years, water consumption in Kitchener has generally been declining, even though the city's population has been increasing. The graph below shows that water consumption was 22.6 million m3 in 2005, but is projected to be 19.8 million m3 at the end of 2014 (one cubic metre of water equals 1,000 litres). Water Consumption (m) 25,000,000 20,000,000 15,000,000 10,000,000 5,0�00,0�00 2005 2000 2007 2008 2009 2010 2011 2012 2013 2014 Regional rate increases cause upward pressure on City rates because the City purchases water and sewage processing from the Region and these costs account for more than 50% of the City's Water/Sanitary costs. In the past five years, the Region has consistently passed Water/Sanitary rate increases that are more than double the rate on inflation, and in 2013 was almost seven times (Water) or eight times (Sanitary) the rate of inflation. Simply passing these Regional cost increases through to Kitchener citizens results in rate increases beyond the rate of inflation, without even accounting for inflationary costs increases on the rest of the Water/Sanitary budgets. The graph bellows shows the magnitude of the Regional rate increases versus CPI (Ontario) inflation for the same year. OP - 10 Region of Waterloo Water/Sanitary Treatment Rate Increases Compared to CPI (Ontario) Inflation m Water in Sanitary 4.0% RE,,CPI Inflation 2010 2011 2012 2013 2014 Aging infrastructure causes upward pressure on City rates because it is more costly b» maintain and is more likely to fail. In 2014. the number of water mains breaks was well above average and can be attributed to aging infrastructure that was not resilient enough to fend off the effects of a colder than normal winter. Dealing with reactive maintenance instead of proactive replacement is not a cost effective way to deal with the problem as the maintenance costs can amount to 4096 of the costs to replace the main and actually correct the problem instead of covering it up for a time. The graph below shows that the average age of the City's Water system is getting older (average age of main is 34 years and is rieing), so costs are going to increase rather than decrease. Water Mains -Asset Installation Profile by Quantity E=Water Mains Average Age 100,000- 60,000 20 Year ���� ~~ ��� � �� ��N� Budget 2014 Projected Actual $4,327,000 deficit 2014 Accumulated Stabilization Reserve Balance $9,000 positive 2015 Budgeted Rate Increase 9.9% 2015 Budgeted Result $30,000 surplus Budget 2014 Projected Actual $1,011,07deficit 2014 Accumulated Stabilization Reserve Balance $412,000 2015 Bud eted Rate Increase 9 2015 Budgeted Result $177,000 deficit Storm Water Increased maintenance costs and reduced revenues due to lower than forecasted growth in 2014 are projected to result in a deficit of$3.1 M for the Storm Water utility. For 2015, a budgeted rate increase of 3% will result in a minimal surplus of $136,000. For 2015, the budgeted capital costs for the Storm Water are reduced from previous years as significant investments in Victoria Park Lake are no longer required. Budget Summary—Storm Water 2014 Projected Actual $3,154,000 deficit 2014 Accumulated Stabilization Reserve Balance $1,277,000 negative 2015 Budgeted Rate Increase 3% 2015 Budgeted Result $136,000 surplus ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Foundation: Efficient and Effective Government Goal: Financial Management Strategic Direction: Strive for competitive, rational and affordable taxation levels. OP - 12 FINANCIAL IMPLICATIONS: The financial impacts on the average homeowner are shown in the chart below. Impact on Homeowner Change Change 2014 2015 $ % City Taxes $1,026 $1,049 $ 23 2.25% Storm Water $ 121 $ 125 $ 4 3.00% Water $ 438 $ 481 $ 43 9.90% Sanitary $ 491 $ 540 $ 49 9.90% Natural Gas $ 854 $ 860 $ 6 0.70% Total $2,930 $3,055 $ 125 4.26% Assumptions: City Taxes: Current Assessed Value (CVA) of$269,000 Storm Water: property classified as Residential Single Detached Medium Water & Sanitary: water consumption of 250m3 Natural Gas: gas consumption of 2,100m3 COMMUNITY ENGAGEMENT: For the 2015 budget process, staff will again employ a suite of traditional and electronic engagement methods in an effort to effectively inform and consult citizens. Staff will receive feedback through mail or phone call, coordinate a public input session where citizens can address Council directly, post budget updates on the City's Facebook/Twitter pages, and establish a dedicated budget web page. The dedicated budget webpage will contain all public budget information as well as an interactive budget calculator. The interactive budget calculator allows residents to model different budget scenarios by choosing different budget scenarios and then allows them to see the impact on their projected tax bill in real time. Based on the array of public input opportunities, citizens will be able to provide their input by: • Writing/phoning City Hall • Attending the public input session planned for February 2, 2015 • Responding to the City's Facebook/Twitter posts about the budget • Completing the questions on the interactive budget website • Contacting their ward councillor ACKNOWLEDGED BY: Dan Chapman, Deputy CAO (Finance and Corporate Services) OP - 13 V 1 O U bA 6 N OO -o U N N O Y Y C Q -a U L u u O O U O T T N O L OJ 7 7 U . o o 3 v t t m v v v c x on E E m _ v a y 0 i i c N y O O_ O_ O OJ E c n O O -O E OJ OJ w w OJ C F D Y Y o N Y Y V O_ O ut ut OJ OJ o ut NO O N 7 O O > i C C .� C OJ C C OJ N o O -O O > O O -O C O U w f0 f0 f0 f0 f0 C C C OJ OJ N N j N OJ Y O_ O_ O O- O_ D- o f0 OJ N OU U O_ O O > O O OJ U U QJ QJ U U - -o -o -o Y OJ N aj N OJ -O (p N aj N OJ aj f0 N f0 f0 U N f0 f0 OJ i OJ OJ 7 i OJ OJ U N U U N N U U 0 0 0 0 0 0 0 o O o 0 0 0 0 0 0 0 0 o 0 0 o 0 0 0 o 0 o 0 0 0 0 o O O 7 N m co to .--� l0 m Ln Ln O m m lD .--� CO lD O N lD r` W r` lD r` lD r` 7 O Ol lD pip ate+ O r, r` r- M W 7 N I4 .-y r` .-y c0 -i N O .--i N to r- to r- Ol c0 O r` O r� Ol N Ol r� m m 7 �--� �--� �--� O O �--� �--� N m N m m m m N N N N � O N N Ln O Vl Ol Ln �--� m N N m Vy m W N n s e\° > p 'O 7 m 7 N O o Ln 7 w co m Ln Ol to O Ln N N Ol co to r, N O co Ol m lD m o N to co v v co o 0 0 0 0 0 to to 0 O r` co to ti to to Ln m a ti a N co m co r` co m bA m N lD W Lr 7 Lr r� lD r� c Lr N m c0 m cl O 7 N m N N c0 N 7 L' r` Ln m m r lD r` w r; r; Ln r; Z: to co m n r; r; .--i t o r; a� co o ri o r; co to r; a ri m of a ri t y-0 m .--� Ln �- to m N N N m m co N co co Ol m 7 N N Ln N N N N r� O N N N N V C m in vi O O O Ol N Ln to to N m m o N m Ol 7 Ln Ol co co m m co I� to r, Ln Ol Ol co N N to .--� O r, r, O Ol 7 to N to Ln Ol O r, r, N Ol to to to N co co r, Ln N r, to to 7 y c0 17 lD V1 7 cl O c-I a i --� N c0 17 17 N N m c0 r� O cl 7 a N N O N N 7 N N lD N j cu O to rV m co Ol Ol lA co Ln N Ln Ln r, Ol O m 0 7 rl .ti m O O 7 r, 7 m O rl .ti O C r'6 W to N .ti Ln to Ln 7 Ln O .-y Ol Ol Ol W r, O co .-y W O co r, m .--i Ln N CO O O to 7 7 O) O m N r� r� c-I 01 Ol CO V1 N Ol CO 7 N r� N O N lD CO lc N r� V1 Ln N Q m N m 7 N P, N N m N r` N N N Ln N N m to r, to co N Ln N W Ln O Ln m r, Ol Ol m r, Ol O r, to r, r` W co N m to co O Ln co N Ol Ln r, O Ol m to N 7 O 7 co N Ol O m Ol N N r, N N to to to r, Ol Ol Ol r, 7 'O y N 0 N to Ol to 7 zt N Ln O Lr N V1 m N Ol to m Ol N Ol 0 7 W 7 Lr lD O r� c0 Ol to a Y N m Ol r, l 7 N O Lr o O Lr Ln 7 N lD N V1 r� N m N O lD c0 (7 r� O) Ol N to N lD c0 txo O Y.0 7 7 Ln Ln to Ol m N co to r, to Ln Ol Ol to N O O Ol to lD O O Ol r` W 7 7 N .--� O) O m m N r, lD N c co co Ln N Ol lD m N m r� N oq N to W m O lD W Vl 7 N N CO .--i m' t.--i I, c-i .ti m' .-i lD' N' .--i .ti 7 O to Ol to oo N Ln N oo Ln O Ln m Ln Ol m co to O r, 7 r, r` W co N m to co O Ln co N Ln Ln r, O Ol m to P, 7 O 7 co 7 co O N 7 N N N N N N to to to r, Ol r, N r, 7 t 17 lD 7 7 lzt 17 O 17 .--� 7 7 .--� 17 r` Lr a c-I N O 7 c0 7 Lr lD O 7 N ll lD a N m m r� O 7 �--� t Vl w m loo 7 7 m N V1 V1 m m lD co Ol r, m N r, N lD co N bA 7 Ln .--� .--� Ln to 7 m I, W to r, Ln to Ol Ol to .--� O O co to lD O O Ol r` W m Ln N O -'a Ol O m m N r, lD N n W co Ln N co lD m N m r� N c0 N to co m O Vl Ol V1 7 N Q m 7.--i I, c-i .ti m' .-i lD' N .--i .ti 7 O N m N Z W W Q T V ~ W W W LL Q z V w w V b p w w a > z " z C N Z V W W W ~ W ~ O W c CC VI w CC IA Z fb BC W H (.7 07! 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Services Provided: Kitchener Golf operates golf properties and facilities at both Doon Valley and Rockway Golf Courses offering affordable recreational golf opportunities, as well as facilitated clinics, leagues, tournament and events. Kitchener Golf facilities are open from dawn to dusk seven days a week during the golf season, which can run anytime between March-November dependent upon weather. During the off season, the facilities can be utilized for special occasions and provide a park space for winter walking and cross country skiing. Benchmarking: The chart below outlines the prices at a number of privately owned public golf courses in the area. Kitchener Golf's prices are at the low end of the spectrum. Kitchener Merry Hill Cambridge Puslinch Elmira Primetime $45.25 $45.20 $56 $48 $52 Off-Peak $35 $39.55 $44 $44 N/A Primary Legislation: A Level Playing Field agreement signed with National Golf Course Owners Association states that municipal golf courses will pay a dividend to their municipality equal to the sum of property and income taxes. This ensures that municipal golf courses are not at an unfair advantage. The level of dividend has been updated for 2015 based on current calculations. Customer Base: Both courses are open to everyone. Recent Challenges: • The golf enterprise has an accumulated deficit of nearly$1M. The accumulated deficit will be addressed over many years based on dramatic cost reductions enacted in 2011 which will yield projected surpluses starting in 2015 and reduced debt costs starting in 2020. • Decline in current senior membership due to age and health. • Unpredictable change in weather with an increase in storms and rain • Increased environmental restrictions and constraints for maintaining golf courses • Pressures of new equipment technology for play on older golf course designs • Increased competition for discretionary spending and a decrease in time available to play. Aging infrastructure on the course and in the building structures Recent Successes: Stabilized golf operations at a break-even point for 2012-2013 after several years of operating deficits. OP - 17 CITY OF KITCHENER ENTERPRISE OVERVIEW Building Operating Model/Philosophy: The Building enterprise is responsible for the administration and enforcement of the Building Code Act and Building Code. The mandate of the Building enterprise is to ensure construction within the City meets the minimum requirements as detailed in the Building Code. Services Provided: The Building enterprise provides a majority of its services to external customers for building permit issuance and on-site inspections. Building also supports the AMANDA software system for the City. Benchmarking: The chart below outlines the total number of building permits issued over the past 5 years. TOTAL BUILDING PERMITS ISSUED 2010-2014 2500 2155 1885 1891 2000 1978 1972.... .... .... .... .... .... 1500 Industrial/Commerical 1000 111111111111 Institutional IIIIII Residential 353 .... 500 15 14 111::::k 35 2131 J, 0 11111 I I 2010 2011 2012 2013 2014 • 2014—January 1"to October 31" Primary Legislation: The Building enterprise is governed by the Provincial Building Code including referenced legislation such as Planning Act, Development Charges Act, and other construction standards. The main purpose of the Building Code is to ensure the buildings citizens work, live and play in are safe through the issuance of building permits and site inspections. Building permit revenues must only be used for the administration and enforcement of the Building Code. Customer Base: The majority of Building's customers are the private sector, and their experience in building regulations is diverse; from minimal to knowledgeable. Building's customers include single time users such as do-it-yourself home owners, repeat homebuilders, and non-residential applicants who build 1-2 times per year. The breakdown of Building's customer base is: • residential = 83% • industrial/commercial = 12% • institutional = 5% OP - 18 CITY OF KITCHENER ENTERPRISE OVERVIEW Recent Challenges: Although Building staff regularly monitor economic trends to forecast permit activity levels, it is difficult to predict permit activity because staff do not control when owners decide to build. Further, not every permit generates the same amount of revenue or work effort by staff. Another challenge is to be adequately resourced to meet Provincially legislated time frames for permit decisions and inspections. All municipal building officials must be Provincially qualified, which includes passing multiple examinations and training requirements, therefore laying off staff and re-hiring when busy is not a realistic option as it would increase costs, downtime, and liability (i.e. the risk of lawsuits & claims). Recent Successes: Building successes are attributed to a technically skilled professional staff with proven customer service skills. Customer feedback on Building staff services continues to be positive. Building enterprise processes are not stagnant, and evolve to meet the needs of the customers. Recent examples include Tuesday Night Express Service for do-it-yourself owner projects and maximizing use of technology such as Online Permit Applications and Permit Status. Lastly through ongoing and prudent financial measures the Building Stabilization Reserve remains positive through the economic downturn and is projected to remain positive for the foreseeable future. This ensures that building permit fees remain stable consistent with customer preference, and are not subject to rate shocks during economic cycles. OP - 19 CITY OF KITCHENER ENTERPRISE OVERVIEW PARKING ENTERPRISE Operating Model/Philosophy: The Parking Enterprise's goal is a self- funded, financially sustainable enterprise providing accessible and convenient parking in the downtown core at a fair price. It is very important to the core as it helps the City achieve and balance its economic development growth management and transportation objectives. Services Provided: The Parking Enterprise manages and operates the City's downtown parking portfolio, which currently consists of 5 parking garages, 19 surface lots, on-street meters and free parking spaces, totaling 3,872 spaces. It has direct responsibility for the operation, maintenance, capital rehabilitation, and fiscal management of the City's public parking infrastructure. Benchmarking: The table below outlines current prices of monthly parking for surface and garage facilities in the downtown. The City's monthly parking prices are at the high end of the spectrum. Current Monthly Parking Fetes before HST Connpetitor Surface Garage Major 3rd party IPrivate Business $95„5,0, $11140, Independent (Parking;IProvider $1105.16 N/A Technology Area $125.100 N/A City of Waterloo $113„14 $146.41 Ciity of Kitchener $134.201 $154.87 Primary Legislation: Not applicable. Customer Base: All garage and surface facilities are open to anyone living, working or visiting the downtown. The customer base currently includes 1,610 monthly parkers and over 386,000 daily customers per annum working and visiting downtown Kitchener. The total number of monthly parkers has remained relatively flat year over year, but inventory has increased in the last three years by 1,170 spaces with the addition of two new garages and the Bramm Street Yards surface lot. The percentage of monthly customers over the current supply is approximately 50%. Recent Challenges: Conflicting priorities and expectations exist within Parking including expectations to enhance revenues, supporting the economic development of the downtown and promoting a balanced transportation system. Parking is a component of The City of Kitchener's Transportation Master Plan (TMP) and it supports Transportation Demand Management (TDM) initiatives that have an adverse effect on bottom line results. In the past four years, the City has adopted aggressive annual parking rate increases as its primary tool to affect parking demand and has OP - 20 CITY OF KITCHENER ENTERPRISE OVERVIEW developed TDM programs that assist downtown employees in shifting away from auto dependency. Continued work is required to complete the cycling network. In 2014, the City's monthly parking rate of$154.87 + HST ($175.00) is the highest being charged within the downtown business area. Competitors in the downtown have not followed suit with the City's aggressive parking rate increases, and have eroded the City's market share. Based on anecdotal evidence, staff anticipates increasing parking rates at this time will result in less overall revenue, as current customers will seek out cheaper alternatives. Further parking rate increases therefore will continue to soften results as auto dependent customers search for cheaper parking solutions other than TDM initiatives. Increased parking rates also influence Downtown Kitchener's competitive advantage. High parking prices directly impact current and future economic development in the downtown. The parking revenue assumptions contained in report INS-11-005 (January 5, 2011) have not been achieved as a result of lack of anticipated new demand from the private sector/new courthouse, and timing lags in redeveloping surface lots (i.e. parking supply has not been reduced). Cash flow projections indicate the Parking Enterprise will be in a deficit position at the end of 2014 and will continue for a number of years in the future. The Parking Enterprise has an accumulated deficit of$1.8M. The implementation of the Cycling Master Plan and the Transportation Demand Management initiatives was to be funded from the Parking Enterprise, but could be in jeopardy based on the current financial performance of the enterprise. Recognizing the high priority Council has placed on these two programs, the costs of TDM and Cycling will be funded from the tax-supported capital budget for the next three years so the programs will continue uninterrupted. The accumulated deficit will be eliminated within the 5-year projection. Recent Successes: Completion of the newly constructed Civic District garage comprised of 412 underground parking spaces on three levels. Key elements of the garage design include: • Pedestrian connection to the Regional Headquarters garage • Crime prevention through environmental design (CPTED) -cameras & panic alarms • Incorporates two access ramps to accommodate the linear nature of the garage and for expansion as future building sites develop • Expanded stairwells/elevators to accommodate user's ultimate destinations but also peak vehicular and pedestrian flows from the Centre in the Square performances Regional funding towards the installation of the Electric Vehicle (EV) charging station provided an opportunity for the City of Kitchener staff to pilot this service in August 2014. The provision of an EV charging station demonstrates that the City of Kitchener continues to provide leadership in green initiatives and embracing technological investments within the community. The Parking Enterprise will be providing its customers an easier way to pay for monthly parking by introducing pre-authorized payment options in 2015. OP - 21 CITY OF KITCHENER ENTERPRISE OVERVIEW Gas Utility Operating Model/Philosophy: To provide customers with quality, dependable, and economical distribution of natural gas. To provide prompt, cost effective and professional services related to rental water heaters, appliance servicing and appliance financing. To promote conservation and to operate in an environmentally sensitive manner. Services Provided: Gas Supply: As a natural gas distributor in Ontario, Kitchener Utilities is required to provide a default "system supply" option to its customers at cost. Kitchener Utilities purchases and manages the gas supply to meet customer requirements. Council recently approved a new gas purchase policy for gas supply. Gas Distribution: As a natural gas distributor, Kitchener Utilities delivers natural gas to consumers. Work includes installing and replacing meters, underground pipe installation, response to gas emergencies involving gas line hits, gas odour, carbon monoxide, and line locates. This service area pays a fixed dividend to the City which is set using a modified cost of service approach. Regulatory Affairs: Ensuring compliance with codes, rules and regulations imposed by government agencies and regulators. Appliance Service & Financing: Providing financing and specialized services that focus on heating and cooling equipment inspection and maintenance, such as central air conditioning units, furnaces, hot water heaters, clothes dryers, fireplaces, pool heaters, ranges, etc. Conservation: Developing and promoting conservation programs which help customers save money and conserve energy. Water Heater Rentals & Service: Supply and service water heaters on a rental basis, including 24/7 service for repair and replacement of tanks. Benchmarking: While the population of Kitchener continues to grow, natural gas use has been declining over the past 10 years. The graph below shows that the volume of gas consumed in Kitchener has fallen from 295,733,000 m3 in 2005, to 252,525,000 m3 through November 2014. This can be attributed to efficiency improvements, a decline in large industrial use, conservation awareness, etc. Gas Volumes (M3) 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 .:::. 2004. 2005 2006. 2007. 2008. 2009. 2010. 2011. 2.012. 2013. 2014. OP 22 CITY OF KITCHENER ENTERPRISE OVERVIEW Primary Legislation: � C"IC;iiC1:� Technical Standards and Safety Act 2000. Ontario Regulation 210/01 Oil & Gas Pipeline Systems Canadian Standards Association Z662-11 Pipeline Systems Essentials Code Canadian Standards Association Z246.1-09 Security Management for Petroleum and Natural Gas Industry Systems Code Canadian Standards Association B149.1-10 Natural Gas and Propane Installation Code Ontario Regulation 212/01 Gaseous fuels Ontario Regulation 184/03/215 Fuel industry certificates Measurement Canada —Gas Meters Electricity and Gas Inspection Act Ontario Energy Board —Gas Distribution Access Rule, Demand Side Management Guidelines, Code of Conduct, Storage and Transportation Access Rule Customer Base: Natural Gas: 69,000 Rental Water Heaters: 42,000 Appliance Financing: 600 Recent Challenges: Increased customer level of service demands and expectations; financial constraints; aging infrastructure; security and emergency response; growth; evolving business model; climate change; stricter regulatory requirements; retirements of senior experienced staff and related workforce shortages and gaps; utility support services. Recent Successes: The unique partnership between Kitchener-Wilmot Hydro and Kitchener Utilities, in regard to conservation and public outreach, allows Kitchener Utilities the flexibility to enhance existing program offerings and create new program opportunities that reflect evolving market needs specific to Kitchener. These programs also help Kitchener customers save natural gas, electricity and water. The continued partnership on the delivery of the Home Assistance Program saw an increase of 370% in program participation from last year, resulting in 39,303 cubic metres of gas savings for low income customers. More than 900 energy audits were performed this year with close to 10,650 energy-efficient measures installed in eligible customer homes across Kitchener. Kitchener Utilities completed an online natural gas service application form which streamlines the application process and automates the status of each application for each builder, contractor and homeowner. Mobile technology has enabled the Kitchener Utilities work force to better meet customer needs as well as streamline work processes. OP - 23 CITY OF KITCHENER ENTERPRISE OVERVIEW Water Utility Operating Model/Philosophy: To provide customers with quality, dependable, and economical distribution of water. To promote conservation and to operate in an environmentally sensitive manner. Services Provided: Water Distribution: Monitoring, installing and repairing the network of water mains, meters and services to ensure a reliable and safe supply of water. Conservation: Developing and promoting conservation programs which help customers save both money and conserve energy. Benchmarking: While the population of Kitchener continues to grow, water use has been declining over the past 10 years. The graph below shows that the amount of water metered and billed by the City of Kitchener has fallen from 22,500,000 m3 in 2005, to a projected amount of 19,800,000 m3 in 2014. This is attributed to decreased industrial demand, increased water efficiency measures, and greater conservation awareness. Metered Water (M3) 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 2005. 2006. 2007. 2008. 2009. 2010. 2011. 2012. 2013 2014. Primary Legislation: Safe Drinking Water Act, 2002. Ontario Regulation 170/03 Drinking Water Systems Ontario Regulation 128/04 Certification of Drinking Water System Operator and Water Quality Analysis Ontario Regulation 169/03 Ontario Drinking Water Quality Standards Ontario Regulation 188/07 Licensing of Municipal Drinking Water Systems Customer Base: Water: 64,000 OP - 24 CITY OF KITCHENER ENTERPRISE OVERVIEW Recent Challenges: The primary challenges experienced by the Water utility in recent years are financial and relate to the water rate. The City's water rate is based 100% on water consumed, even though the utility has significant fixed costs that do not change based on the amount of water consumed (e.g. capital costs). As noted in the graph above, for the past decade water consumption has been declining. This means the fixed costs must be spread over less water consumed, which puts upward pressure on the water rate. In addition, Regional rates make up more than half of the cost of the Water utility and have been increasing by at least twice the rate of inflation in recent years. Meanwhile, the City- controlled costs of the Water utility have been limited to inflation or below, even though there is upward pressure on those costs relating to legislative compliance as well as infrastructure maintenance and replacement. In 2014, the combination of an extremely cold winter that caused a significant number of main breaks and a wet summer that resulted in less outdoor water use have reduced water consumption to the lowest point in the past decade. The water main breaks also increase costs as the mains must be repaired before service can be restored. The culmination of decreased revenues and increased costs in 2014 has caused a significant variance that will eliminate the stabilization reserve fund created to deal with deficits in the Water utility. Recent Successes: The unique partnership between Kitchener-Wilmot Hydro and Kitchener Utilities, in regard to conservation and public outreach, allows Kitchener Utilities the flexibility to enhance existing program offerings and create new program opportunities that reflect evolving market needs specific to Kitchener. These programs also help Kitchener customers save natural gas, electricity and water. Mobile technology has enabled the Kitchener Utilities work force to better meet customer needs as well as streamline work processes. OP - 25 CITY OF KITCHENER ENTERPRISE OVERVIEW Sanitary Sewer Utility(wastewater) Operating Model/Philosophy: The Sanitary Sewer utility performs the service of removing wastewater generated in the city in an efficient, cost effective, and environmentally responsible manner. The Sanitary Sewer utility also ensures this is done in compliance with legislative and regulatory requirements. Services Provided: The Sanitary Sewer utility performs a wide range of activities and programs that together supports the provision of safe and reliable collection of raw sewage, generated within Kitchener and its subsequent conveyance through 800 kilometers of pipes and 22 pumping stations to a Regional wastewater treatment facility, where the City pays the Region for ultimate treatment and disposal. Such activities and programs include: • The Accelerated Infrastructure Replacement Program (AIRP) • Pumping station rehabilitation and replacement • The trenchless sewer rehabilitation program • Trunk sewer replacement • Spot repair program • Pumping station maintenance • Flow monitoring program • Closed Circuit Television (CCTV) inspection program • Flushing programs • Emergency repair work • Service connection blockage clearing • Hydraulic modeling • Condition assessment, scoring, and system analysis • System for the remote control of and data acquisition from pumping stations (SCADA) Benchmarking: Sanitary sewer main rehabilitation or replacement statistics for 2013: City Rehabilitation Replacement Cambridge 3.0 kilometers 3.0 kilometers Waterloo 0 kilometers 0.2 kilometers Kitchener 1.9 kilometers 3.2 kilometers Primary Legislation: Clean Water Act Sustainable Water and Waste Water Systems Improvement and Maintenance Act Environmental Protection Act Ontario Water Resources Act Environmental Assessment Act OP - 26 CITY OF KITCHENER ENTERPRISE OVERVIEW Customer Base: The owners, residents, and users of nearly all facilities in the city are generators of raw sewage. This would include nearly every residential, and every significant commercial and industrial building in the city. In total, this equates to over 60,000 customers billed for this service. Recent Challenges: Operational: The height of some new buildings being constructed downtown threatens the integrity of radio communications for sewage pumping stations. Legislative: The new legislation for the Sewers Safety Inspection (SSI) process, and for an increased level of service that is now required for the locating of utilities prior to construction activities taking place. Budgetary: (1) Studies are underway to examine potential year-to-year variations in the discrepancy between volumes of water being sold and volumes of sewage being processed — and the effect this may have on revenues. (2) Constantly increasing unit costs of sewage processing (these costs are controlled by the Region). (3) Operations and maintenance requirements necessary to maintain current levels of service versus current budget allocations for such activities. Recent Successes: Capital Works: Furthering the goals of the Accelerated Infrastructure Replacement Program through the replacement or rehabilitation of sanitary sewer mains and services: from 2009 to the end of 2014, 29 kilometers of sewer main replacement and 9.5 kilometers of sewer main rehabilitation will have been accomplished. Capital Works: Replacement of the Freeport sewage pumping station (SPS) and associated forcemain is underway—and is currently running on time and on budget. The completion of this work will allow the lifting of a development freeze that has existed in this area for over a decade. Inspections: 228 kilometres of sanitary sewer main inspected in the past 6 years. The current city-wide inspection cycle is 19 years. The future target is to reduce this to 13 years. Maintenance: 53 spot repairs to sanitary sewer mains have been successfully performed in the past two years. Analysis: Last year's successful update to the sanitary sewer system hydraulic model, and its continued day-to-day usage as an important tool in the development approvals process. OP - 27 CITY OF KITCHENER ENTERPRISE OVERVIEW Stormwater Utility Operating Model/Philosophy: The Stormwater utility performs the service of treating and controlling stormwater generated in the city in an efficient, cost effective and environmentally responsible manner to comply with legislative and regulatory requirements. Services Provided: The utility provides the necessary funding to operate, maintain, rehabilitate, replace and build stormwater infrastructure across the City. The stormwater system is comprised of 100 kilometres of open watercourses, 700 kilometres of sewers, 10,000 catch basins and 100 stormwater ponds with a total replacement value of$705M (2013). Services include new capital projects identified by the annual water quality audit that is conducted on local watercourses to determine where additional stormwater controls are required to improve water quality. Other projects are required to address flooding in various parts of the City. In addition to discreet capital projects, annual programs are established to address recurring activities. These include: • Storm Infrastructure Maintenance Program • Watercourse Improvement Program • Storm Water Management (SWM) Pond Retrofit Program • Drainage Improvement Program • Storm Infrastructure Rehabilitation Program • Sewer & Manhole Maintenance and Repair • Watercourse/Bridge/Culvert Maintenance and Repair • Street Sweeping • Leaf Pickup • Spills Finally, the utility also funds a credit program to provide an incentive to private property owners to control stormwater at the source where it falls on private property with the intended result of a long term cost saving to the City due to less loading on the municipal stormwater system. Benchmarking: The stormwater utility is currently in the process of developing a Comprehensive Stormwater Management Master Plan (CSMP) to replace the 2001 SWM Policy I-1135. The master plan will establish goals and objectives as well as provide direction to the utility until the year 2030. There will be an annual process of measuring progress against planned progress in the CSMP. Additionally, the utility is now participating in the National Water and Wastewater Benchmarking Initiative which looks at key performance indicators for municipalities across the country. Data for 2013 has been gathered and is being processed at the time of writing this overview and results will be made available at a future date. OP - 28 CITY OF KITCHENER ENTERPRISE OVERVIEW Primary Legislation: � C"IC;iiC1:� There is existing legislation that dictates certain requirements for stormwater management which impacts almost every facet of the services the utility provides ranging from new construction to operations and maintenance. The key pieces of legislation include: • Clean Water Act, • Water Opportunities Act, • Environmental Assessment Act, • Ontario Water Resources Act, • Canadian Environmental Protection Act, • Canadian Fisheries Act, and • Various supporting Ontario Regulations, etc. Customer Base: Every property owner in the city that has impervious surfaces on their property that contributes to the overall stormwater runoff that is managed by the municipality. In total this equates to over 70,000 customers billed for this service. Recent Challenges: Operational: The nature of storm events becoming more severe and intense due to climate change has a direct impact to the stormwater management system, by either causing damage to, or exceeding the capacity of existing infrastructure in an unpredictable manner. Legislative:The new legislation for the Sewer Safety Inspections process, and for an increased level of service that is now required for the locating of utilities prior to construction activities taking place. Budgetary: (1) There is an existing backlog of legacy projects identified in previous stormwater audits that still need to be completed. These can only proceed as budget becomes available. (2) Operations and maintenance requirements necessary to maintain the current service levels versus the current budget allocations for such activities. This does not take into consideration the need for additional budget to facilitate the transition to a more preventative maintenance approach. (3) The CSMP is currently underway to look at alternative strategies to enhance the lifecycle of stormwater infrastructure to help address the looming deficit identified in the Asset Management Plan (2013). Recent Successes: Stormwater Facility Mobile Inspections: In 2014 the utility rolled out a mobile inspection platform to conduct inspections on every pond the city owns.This condition information is then used to identify necessary maintenance works and prioritize capital works based on the existing condition of the facility. Closed Circuit Television (CCTV) Inspection Program: The utility recently began inspecting the condition of existing storm sewers similar what the sanitary utility has done for several years. This condition information increases the level of confidence when making decisions on the prioritization of work. 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M wr 0 cz O Q � � 4— a Q Q U) Q Q + j 70 2 m �--+ CD Cn 7 +� M O 4) > z .> CY, 4—a N N U cz cz cz cz C 4- a O I cz ii /%,; • LL LL "I wr 0 �+ 0 0 O ^, W 70 U CZ -- m Q70 CD cz . _ 0 CD cz C: (3)4—a cz o _:3 ,E4- 0 0 (n cn E E a) 0a) 4-a DC U Oneratina Budget Issue Pager Index Included in IP # Description Proposed Budget? Op 01 Centre In the Square (CITS) Operating Budget N/A Op 02 Council Conference Budget (4 year term) N/A Op 03 Full Time Equivalent Staff Additions Yes OP - 105 CITY OF KITCHENER 2015 BUDGET ISSUE PAPERCIC; iCJ:� ISSUE: Op 01—Centre In the Square (CITS) Operating Budget FUND: Operating DEPARTMENT: Centre in the Square PREPARER: Sandra Bender- CEO BUDGET IMPACT: None BACKGROUND: The Centre In The Square embarked upon a Strategic Plan covering 2013-2016. The plan reset the direction of The Centre to proactively manage both commercial and non-commercial interests, to engage its audience within the broader community, and to secure a sustainable financial model to meet the growing financial requirements to operate and maintain the facility. One of the core principles of the Strategic Plan was to increase revenue stemming from the calendar management of premium dates. The Centre was to take full and final control of the calendar to ensure increased revenue to cover these growing operating costs and establish a market for The Centre with an audience base engaged through a broader programming structure. This direction would prioritize commercial clients and productions on weekends and over a 3 year period would migrate a portion of weekend dates, traditionally held by not-for-profit arts organizations to commercial shows and rentals. The issue of calendar management raised issues for the local arts sector and City in 2013 leading to an operational review in 2014. The Centre has been operating on a status quo basis (i.e. rental rates and dates) since 2012 around calendar management and is committed through to June 2016 on that basis. As such, The Centre has not been meeting its financial requirements to operate and maintain the facility. This will continue to result in further operating losses for The Centre in 2015 onwards without further subsidy from the City to manage the status quo. The Centre has been instructed to manage the status quo until the City finalizes their review of the building and current mandate given to The Centre. In the meantime, The Centre has taken steps to minimize costs and risks during this period, along with capping administrative costs which have been in effect since 2012. The priority has been placed on maximizing revenue through new streams which The Centre does control, including a new membership schemes, improved non-arts rentals, etc. while investing reserve funds in deferred maintenance and compliance requirements for the facility. The Centre has been able to deliver financial successes (i.e. John Legend,The Book of Mormon, etc.), but without an increased subsidy to sustain the status quo and/or the ability to move forward with calendar management, the growing operating, repair and maintenance costs of the venue outstrip the capacity of the organization to generate revenue from its primary source of activity. While the Strategic Plan included operating losses for 2013 and 2014 during this transitional period, 2015 was to deliver a breakeven scenario based on increased revenue generated from the calendar. At this stage, The Centre is uncomfortable with the status quo given the lack of clarity around future directions that may be applied to the organization. As such, The Centre is proposing a fixed costs budget to reduce the operating gap minimally. A loss of$643,000 is projected based on a fixed cost budget for 2015 as shown in the table below. OP - 106 CITY OF KITCHENER 2015 BUDGET ISSUE PAPERi IC; iC1:� RATIONALE/ANALYSIS: Operating Costs Operating Costs Status Quo Fixed Costs Revenue Performances CITS/Co-Presents $250,000 $250,000 Rentals $650,000 $650,000 KWS $158,400 $158,400 Other $15,000 $15,000 $1,073,400 $1,073,400 Other Revenue Other $314,900 $314,900 $1,388,300 $1,388,300 Expenses Admin & General $495,900 $411,700 Marketing & $207,920 $120,480 Programming Occupancy $797,000 $797,000 Salaries & Wages $2,102,369 $2,102,369 $3,603,189 $3,431,549 Net Profit/(Loss) $2,214,889 2,043,240 CoK Grant $1,400,000 $1,400,000 Net Profit/ (Loss) after Grant 8 .4"880 X04 „243 • Revenue target of$900K whether CITS or Rentals make up the majority(based on 54 dates at an average of $16K/show). Commercial rentals shows are an average of$20K/show;CITS Presents are an average of $14K/show and NFP shows are$4K/show. • Revenue from KWS is based on 48 dates confirmed at avg profit of$3.3K per show. • Highest risk area under expenses is tied to occupancy costs. The level of maintenance and repairs is significant. Weather can impact these numbers(snow removal,damage, increased heating). FINANCIAL IMPLICATIONS: The City's budgeted contribution to the CITS has been $1.4M since 2013. In 2013 and 2014, the City has reverted to the previous arrangement where the City and CITS evenly share yearend surpluses/deficits. Given the ongoing work related to the mandate of CITS, a deficit is projected for 2015. CITS requests that the yearend results for 2015 continue to be shared 50/50 between the CITS and the City, and that this arrangement be reviewed once the mandate work is completed in 2015. RECOMMENDATION: For information only. OP - 107 CITY OF KITCHENER 2015 BUDGET ISSUE PAPERCIC; iC1:� ISSUE: Op 02—Council Conference Budget (4 year term) FUND: Operating DEPARTMENT: Office of the Chief Administrator— Mayor and Council PREPARER: Dorothy McCabe, Chief of Staff BUDGET IMPACT: None BACKGROUND: On April 29, 2013, Council passed a resolution that amended how the funding envelope for conferences could be accessed by members of Council. Previously, the budget was an annual budget and pertained to all members of Council as a whole without any limit necessarily for any one person. It was amended to be a 4-year budget limit per member of Councillor to ensure that funding was allocated equitably amongst the individual members of Council. The Conference Policy has been amended to reflect the new criteria and spending restrictions, however, the budgeted amount allocated to each member of Council for conferences must be determined and approved at the start of each new term of Council for use during the four year term. RATIONALE/ANALYSIS: The funding limits that were proposed in the April 2013 resolution assumed that the existing annual limit would be maintained for each of the 4 years and distributed equally among the 10 Councillors with an increased amount for the Mayor, with no change required to the budget. FINANCIAL IMPLICATIONS: None. RECOMMENDATION: THAT for the 2014-2018 term of Council, each Councillor shall be allocated $14,500 from the Council Conference Budget for use during that term; AND HER THAT for the 2014-2018 term of Council, the Mayor shall be allocated $18,500 from the Council Conference Budget for use during that term. OP - 108 CITY OF KITCHENER 2015 BUDGET ISSUE PAPERCIC; iCJ:� ISSUE: Op 03— Full Time Equivalent Staff Additions FUND: Operating DEPARTMENT: Finance & Corporate Services Department, Financial Planning PREPARER: Debra Fagerdahl, Manager of Financial Planning BUDGET IMPACT: None BACKGROUND: Council approves all full time equivalent (FTE) staff additions. In the 2015 budget, 3 FTEs are being requested. All positions are fully funded and have no impact on the operating budget. RATIONALE/ANALYSIS: The proposed positions are outlined below. Program Assistant(0.5 FTE), Kitchener Market A Market Capacity Review Report was completed in March 2014 by the City's Internal Auditor to analyze work volumes and determine the optimal staffing level for the Kitchener Market. Report FCS-14-108, 2nd Quarter Audit Status Report was presented to council on June 30, 2014 with the recommendation to "create a part-time Program Assistant position". The need for the position is summarized in the conclusion of the report: "Staff are struggling with workload and feel the need to work through lunches, breaks and incur unpaid overtime in order to get the job done, to provide the best customer service they can, and have the market be a success. There is frequent turnover in the unit due to the demands of the work which contributes to the stress and workload. Something needs to be done before more staff burn-out and leave. It is recommended that in order for the market to continue and to grow in the future more resources are required. At a minimum more administrative support is required at this time." Event Attendant(1.5 FTE), Special Events The City of Kitchener through KEDS 2011-14 has the objective of supporting urban vitality by facilitating the development of special events throughout the annual calendar, and increasingly, in venues across the city. Each year more events require assistance from City staff. In 2014, more than 100 City of Kitchener sponsored events took place hosting approximately 550,000 attendees. With this in mind, Special Events hires part time staff each year at varying times to work alongside the full time event coordinators. As the number of events being supported by City staff continues to increase each year, the need and value of part time staff has increased. The part time staff assist the full time event coordinators at varying times throughout the year in the planning of logistics for events, setting up and taking down event sites, assisting in updating databases, corresponding with vendors, event research, etc. Without the support of part time staff the number of events conducted would be significantly reduced. OP - 109 CITY OF KITCHENER 2015 BUDGET ISSUE PAPERCIC; IC1:� Landscape Architectural Intern (1.0 FTE), Operations The Landscape Architectural Intern position was created as a one year contract in 2006 to address workload demands necessary in performing current and future tasks vital to the delivery of park and trail capital projects. With continued workload pressures and demand for additional park and trail programs, the position has been extended annually each year with support from Local Union #791 C.U.P.E. The current and forecasted workload recognizes that this position should be full time to keep pace with continued park &trail capital projects. The position has been and will remain fully funded through the existing park &trail capital program. Local Union #791 C.U.P.E. has permitted the extension previously but has provided notice that any further extensions are unreasonable and beyond the bargaining agreement for temporary positions. Should the position not be made permanent and the Local Union not support any additional one year extensions, the capital program for park and trail development would not be realized and a backload of projects would develop. FINANCIAL IMPLICATIONS: None. Funding for all of the positions exists in current budgets and has been reallocated to these priority positions. RECOMMENDATION: That the positions noted above be approved by Council. OP - 110 Strategic Initiatives Issue Paper Index Included in IP # Description Proposed Budget? SI 01 Restoration of the Tax Stabilization Reserve Fund No SI 02 Increased Urban Forest Maintenance No S103 e-Participation for Open Government No S104 Health & Safety Compliance Resource No S105 Waterloo Region Economic Development Corporation No S106 Improve the City's Ability to Engage Volunteers in the Community No S107 Increased Street Level Special Events Programming No SI 08 Increased Funding for the Leisure Access Card No OP - 111 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC; iC1:� ISSUE: SI 01— Restoration of the Tax Stabilization Reserve Fund FUND: Operating DEPARTMENT: General Expense PREPARER: Ryan Hagey, Director of Financial Planning BUDGET IMPACT: $200,000 OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: Begin to restore a balance in the Tax Stabilization Reserve Fund (TSRF) which will be depleted by the end of 2014. The TSRF is used primarily to fund operating budget deficits arising from unforeseen and/or extraordinary events. . BUDGET IMPACT: Funding of$200,000 is required to begin restoring a balance in the TSRF. This amount equates to approximately 0.1% of the total tax supported operating expenditures. RATIONALE/ANALYSIS: The City of Kitchener has a recent history of operating deficits. For the past number of years, the City has finished the year with an operating budget deficit (before applying funds from one- time capital closeouts). The average annual deficit over the past five years is $425,000. These have been a result of extraordinary events (such as record harsh winters, windstorms, losses at Centre in the Square, etc.) and also a budget that was not fully funded in non-discretionary areas like utility costs for municipal properties. Ongoing operating budget deficits, combined with budgeted transfers out of the reserve fund in order to reduce tax rate increases have put significant strain on the TSRF in recent years. As shown in the table below, the TSRF has gone from a balance of$3.6M at the end of 2011 to a projected balance of$32,000 at the end of 2014. This amount is woefully short of the minimum target balance of$5.2M, and exposes the possibility that a tax rate increase in a future year may be automatically required to fund the deficit from the previous year. Up to now, deficits have been funded through the TSRF, but that will not be a viable option based on the minimal projected balance. A proactive contribution to the TSRF in 2015 will help to avoid a shock to tax rate increases in the future. Summary of the Tax Stabilization Reserve Fund Target B alance V $4,749,802 $41951,223 23 $5,104,543 $5,222,519 Minimum ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Effective and Efficient Government foundation of Financial Management. OP - 112 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC; iC1:� ISSUE: SI 02— Increased Urban Forest Maintenance FUND: Operating DEPARTMENT: Infrastructure Services—Operation PREPARER: Greg Hummel, Manager Park Planning, Development and Operations BUDGET IMPACT: $100,000 OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: Increasing the focus on proactive maintenance of street trees from structural pruning, street raising and timely stumping will minimize the number of complaints from residents as well as support the quality of street trees. This issue paper has been developed in response to the recent strategic session in which Council members identified urban forest maintenance as a high priority for this term. BUDGET IMPACT: Funding of$100,000 would allow for additional temporary labourers and other outside services to proactively deal with Urban Forest Maintenance. RATIONALE/ANALYSIS: The City of Kitchener has an existing street tree inventory numbering approximately 60,000 trees. Additional to the street trees is over 800 hectares of natural/hazard and park lands that are covered with trees and forest that needs additional maintenance to ensure quality and safety for residents of Kitchener. The inventory needs cyclical maintenance to ensure safe passage beneath the trees for pedestrians, cyclist and trucks/automobiles. The street raising process needs to be completed every 3 to 5 years to ensure that the limbs are not obstructing safe passage or hindering views. The Operations division receives more than 1,800 service requests each year to address obstructions from boulevard trees. New street trees are being proactively maintained through structural pruning when available resources allow. The new approach to pruning establishes acceptable growing patterns for the trees. By promoting structurally sound limbs to grow, the impact of severe wind, snow or ice storms diminishes. This maintenance program takes more time initially, yet over the long term growth of the tree, will require minimal maintenance in later years. This time invested early is more labour intensive but as the tree grows, the need for severe street tree raising in the future is reduced. This early pruning minimizes equipment costs, fuel costs and the impact on the environment in later years. Additional resources would also be available to address the immediate needs of stumping as trees are removed from our inventory. Presently stumps are removed approximately one year after the branches and stems are removed. Additional resources would be directed to assist with the immediate stumping and the required tree replacement could happen within a growing season meeting the service level requests of our residents. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This initiative is linked to the Community Priority of Environment. OP - 113 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiC1:� ISSUE: SI 03— E-Participation as part of Open Government FUND: Operating DEPARTMENT: Chief Administrator Office—Corporate Communications and Marketing PREPARER: Jana Miller, Executive Director, Office of the CAO BUDGET IMPACT: $135,000 ($75,000 Operating, $60,000 already included in Capital) OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: In February 2014, Council endorsed the staff report on Open Government that included recommendations for open data and e-participation as key components of the 2014 work. The E-Participation Executive Summary Report was endorsed by Council on September 15, 2014. This consultant's report provided direction on the establishment of an e-participation program/strategy for the City of Kitchener and identified technological and staff resourcing considerations that require funding if the report recommendations are to be achieved. The report directed staff to bring forward associated funding requirements through the 2015 budget process as a potential strategic addition. BUDGET IMPACT: As noted in the consultant's report approved by Council on September 15, 2014, it is imperative that resourcing for enhanced e-participation/community engagement be sustainable. There are three distinct resourcing requirements related to the acquisition of technology, its implementation and ongoing sustainability of an e-participation program, including: 1. Business Solution Acquisition $40,000 (included in the capital budget) -addresses the need to acquire technology solution to support e-participation 2. Initial Implementation Support $20,000 (included in the capital budget) -addresses the need for subject matter expert support and training for the initial year 3. Staff Resourcing $75,000 (one full time equivalent or 1 FTE) -addresses the enhanced services from communications, and the need for a dedicated internal expert to monitor, manage, grow and maintain this initiative across the organization RATIONALE/ANALYSIS: E-Participation is an integral component of the participatory principle in the City of Kitchener's Open Government Framework. Implementing e-participation technology and strategy support the City's Open Government Action Plan with a focus on being more participatory. An e- participation initiative will enhance Kitchener's longstanding tradition of community engagement, making it easier for citizens to participate in the decisions of Council and to engage in two-way dialogue. An adequately resourced e- participation community engagement program will enhance decision making, service delivery and build trust with citizens. It will also respond to calls from citizens for increased electronic engagement. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: E-participation is one component of the City of Kitchener's Open Government Action Plan and is linked to the Community Priority of Leadership and Community Engagement. OP - 114 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiC1:� ISSUE: SI 04— Health and Safety Compliance Resource FUND: Operating DEPARTMENT: Finance & Corporate Services— Human Resources PREPARER: Michael Goldrup, Director Human Resources BUDGET IMPACT: $80,000 ($70,000 tax/$10,000 enterprise) OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: An increasingly complex regulatory and compliance environment necessitates an increase in corporate health and safety resources to both implement and manage the ongoing changes. This is a proactive risk management strategy to ensure that lost time remains well managed and the corporation does not increase its exposure to Ministry of Labour fines and orders. BUDGET IMPACT: This initiative requires one additional full time equivalent (1 FTE) with a total cost of$80,000. The cost of this position will be shared between the tax supported budget ($70,000) and the enterprise budgets ($10,000). RATIONALE/ANALYSIS: In 2014 a review of the City's health and safety function was completed. Through this review it was confirmed that the City faces a dramatic increase in legislated health and safety compliance obligations. It was also confirmed that the City does not currently possess the capacity or capability to satisfactorily address these obligations. This issue paper will highlight four key areas: 1. Recent changes to legislation— Recent major changes to the Occupational Health and Safety Act require the City to create programs, increase communications and expand staff training. Some examples include: • Violence in the Workplace Legislation, which requires policy, training, investigation/reporting processes and a 'violence in the workplace coordinator' • Noise in the Workplace Legislation, which requires proactive identification of noise sources, proactive identification of staff who are exposed to levels of noise prohibited by legislation, coordination of abatement plans and provision of required personal protective equipment and training • Other examples include Mandatory Training for workers and management, Confined Space Regulation and Musculoskeletal Disease Prevention 2. Pending legislation -The Ministry of Labour has introduced a prevention branch mandated to improve safety in Ontario. With this change many new priorities have been identified by the Ministry of Labour that will be acted upon through legislative changes. These will create new programs of work for the City. Some examples include: • Major changes to the Workplace Hazardous Materials Information System(WHMIS) Regulation • New legislation specifying new requirements for working at heights • New legislation requiring basic mandatory safety training for workers performing construction work OP - 115 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiC1:� 3. Changing Ministry of Labour inspection and enforcement practices— Increasingly rigorous inspections have placed a higher demand on staff to create compliance plans and initiate changes to assist the Corporation with compliance, and also to respond to Ministry of Labour inquiries, inspections and orders. 4. Corporate Health and Safety Strategy—the strategy (2011) was based on a gap analysis audit of the City of Kitchener Health and Safety program based on an industry standard for managing safety and compliance. Initial work to implement the strategy has shown success as evidenced through reduced lost time, improved safety culture, and greater focus on proactive risk management. The City lacks the resources to keep the implementation of the strategy moving. What does the City need: Current technical health and safety resources are insufficient to address an increasingly complex regulatory and compliance landscape, with only half of an FTE dedicated to this function currently. Benchmarking data suggests that an organization the size of Kitchener should have two FTEs dedicated to this role. The City needs to invest in specialized health and safety resources to implement and manage recent/expected changes to legislation, respond to the expectations of Ministry of Labour inspectors, and further the implementation of the Corporate Health and Safety Strategy. What will happen if the City doesn't meet the needs: Without adequate resources behind the management of legislative changes and the ongoing safety program, the City will be exposed to potential fines, stopped work, or orders for compliance. There is also the risk that the City will be unable to provide suitable records and proof of reasonable management of safety, a due diligence defense in the case of prosecution. Consider the impacts of two recent case studies - in 2013, City of Ottawa was fined $80,000 as a result of a worker falling off a truck box causing a fracture. Also in 2013, the Corporation of the Township of Essa was fined $50,000 as a result of a worker sustaining an arm injury while changing attachments on a salt spreader. The City's current lost time hours per employee per year rate is 1.22 which compares favourably to the municipal benchmark of 2.33. Based on industry standard accident causation models for costs of injury to an organization, the cost to the City of reverting to the municipal benchmark would be more than 3x the cost of the proactive investment outlined in this issue paper. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Effective and Efficient Government foundation of Organizational Governance. OP - 116 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiCJ:� ISSUE: SI 05—Waterloo Regional Economic Development Corporation FUND: Operating DEPARTMENT: Chief Administrator Office— Economic Development PREPARER: Jeff Willmer, CAO Rod Regier, Executive Director of Economic Development BUDGET IMPACT: $37,000 in 2015, Additional $120,000 in 2016 OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: As reported to the joint meeting of all municipal councils in June 2014, and Kitchener Council August 25 2014 (Report CAO-14-037), the creation of a new regional economic development corporation has been approved in principle. The mandate of the organization will include: - Management of the regional economic development strategic plan and coordination with other stakeholders (new function); - Investment attraction to the Waterloo Region; - Liaison with Provincial and Federal government efforts to attract industry and grow key sectors of the economy; - Marketing and promotion of the region; - Key sector development activities (new function); -Talent development and people attraction (working with partners); - Data and research to support regional economic development activities; - Coordination and collaboration of Area Municipal efforts in retaining and supporting the expansion of"regional scale" businesses (new function); and -Annual reporting to the Regional and Area Municipal Councils. BUDGET IMPACT: Funding of$37,000 is required in 2015, with an additional increase of$120,000 required in 2016. RATIONALE/ANALYSIS: Canada's Technology Triangle (CTT) will continue its work throughout 2015 and conclude operations at the end of 2015. The new Waterloo Regional Economic Development Corporation (WREDC) will start up in mid-2015 and be fully operational by January 1, 2016. Total municipal funding for CTT in 2014 is $954,000. Total municipal funding for the new WREDC is estimated at $2M/year for 2016 and beyond. Kitchener's contributions for 2014-2016 are estimated as follows: 2014 $163,000 (CTT only) 2015 $200,000 (CTT plus partial year of WREDC) - $37,000 increase 2016 $320,000 (WREDC only)—further $120,000 increase ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Development. OP - 117 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC; iC1:� ISSUE: SI 06— Improve the City's Ability to Engage Volunteers in the Community FUND: Operating DEPARTMENT: Community Services Department—Volunteer Resources Section PREPARER: Janice Ouellette, Facilitator of Volunteer Resources and Community Engagement BUDGET IMPACT: $35,700 OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: Respond to the changing trends in how and why people are volunteering in our community by improving the City's ability to develop partnerships with other community organizations and expand upon existing volunteer opportunities within the City. BUDGET IMPACT: Improving the City's ability to engage volunteers in the community will require the addition of a part-time (0.5FTE) Coordinator of Volunteers. The total cost of this new part-time position is $35,700 (including salary, fringe and some minimal administrative expenses). RATIONALE/ANALYSIS: The City's Volunteer Resources section is currently responsible for coordinating the contributions of 2,000 direct and 4,000 indirect volunteers in roles which serve seniors, youth and inclusion programs, special events, as well as neighbourhood association and minor sport group boards. This strong volunteer base allows the City to provide its current level of service and programing to the community at a much lower cost than if staff were required to fulfill these roles. In addition to coordinating these volunteer opportunities, the Volunteer Resources section is also responsible for fostering volunteerism within the City, providing training to City staff and engaging thousands of residents through events such as Festival of Neighbourhoods, Earth Day and community engagement initiatives such as City Hall 101 information sessions and tours. While the city's current level of service and staffing in this area has been adequate in the past, changing trends in where, how and why people are volunteering requires a more proactive and robust approach going forward. Kitchener has already begun to see a significant and growing number of residents that no longer want to make long-term, weekly volunteer commitments for years at a time. A 2010 survey of 132 current City of Kitchener Survey of City volunteers volunteers showed that 20.5% anticipated 30 re:time spent volunteering volunteering less in the future. Volunteers with 20 minor Sports Associations and Neighbourhood 10 Associations were most likely to indicate they will 0 Rio volunteering less %expecting to spend less time volunteering in the future. than they did in the last volunteer less in the 12 months next 5 years OP - 118 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiC1:� The main reasons for decreased volunteering: 1) lack of time —e.g. too busy due to family, school and work commitments (cited by 65% of respondents); and 2) no desire to make a long term commitment but rather interested in one time/event/project episodic based volunteering either individually or as a family/group/corporation (41% of respondents). The findings of this survey are consistent with similar trends across North America. In the face of these changes, maintaining the status quo in terms of the city's current level of service in this area will result in a decline in volunteering, as has been experienced in other Canadian cities. This decline in volunteerism would result in higher costs to the municipality to offer the same level of programs and services as it does today. Recognizing the changes of how and why people are choosing to volunteer, city council approved the Volunteer Services Strategy (2010). The strategy recommended that, "to maintain a vibrant volunteer sector, the City must reach out to new sectors of the community (new Canadians, Zoomers, corporations); must better understand and respond to the motivations for volunteering, including a greater emphasis on personal growth and skill development, and must overcome barriers associated with time constraints and overcommitted lifestyles". To help support these objectives, the strategy recommended the addition of a part-time (0.5FTE) Co-ordinator of Volunteers. This new part-time position would allow the City to play a much stronger role in developing partnerships with other community organizations and expanding existing volunteer opportunities to reflect the new reality of how people want to volunteer. The new part-time volunteer coordinator will help staff across the corporation, in various city facilities and with other community groups to redesign and develop volunteer opportunities that appeal to those who are looking for flexible and skills-based volunteer opportunities that appeal to various ages and groups. The individual would also assume responsibility for the coordination of existing community engagement and informal volunteering opportunities, such as: Festival of Neighbourhoods, Kitchener in Bloom, Earth Day and City Hall 101 tours. Shifting these coordination responsibilities to the new position would allow the City, through more efficient and effective use of the existing Facilitator of Volunteer Resources, to play a much stronger role in outreach and partnership development, fostering volunteerism and capacity- building in the community and expanding existing volunteer opportunities to reflect the new reality of how people want to be involved in their community. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Leadership and Community Engagement. OP - 119 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiC1:� ISSUE: SI 07— Increased Street Level Special Events Programming FUND: Operating DEPARTMENT: Chief Administrator Office— Economic Development PREPARER: Cory Bluhm, Manager Downtown Development Jeff Young, Manager Special Events BUDGET IMPACT: $23,588 tax OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: With the recent success of street-level programming (e.g Art Markets, Food Truck Festivals, Summer Lights, Night\Shift, Days of#KWAwesome, etc.), Economic Development is under increased community pressure to grow this style of programming. Street-level event programming is a growing North American trend. It differs slightly from traditional festivals—events tend to be shorter (1 day/night), are more organic in nature (i.e. a collection of community groups coming together, often not experienced event organizers), and occur on streets or in parking lots as opposed to Civic Square or Victoria Park. These events tend to be niche specific, but often targeted at the key demographics of the Downtown. As such, they are playing an even more influential role in the growth/improvement of Downtown's brand and image. BUDGET IMPACT: Funding of$23,588 ($5,440 to Downtown Development and $18,148 to Special Events) is required to expand street level programming in 2015 and beyond based on the City's experience in 2014. RATIONALE/ANALYSIS: On average, a street-level event (including all program costs, fees, internal charges, and revenues), costs between $1,000-$5,000 depending on the scale and scope or programming. An increase in funding of$23,588 would enable Economic Development to deliver up to five additional street-level events per year, which would represent up to a 50% increase in programming. In most cases, a large portion of this funding is reinvested in the community as it pays for local musicians, artists, exhibiters, etc. who perform as part of the event. It also returns to the City by way of licensing fees and cost recovery for internal services. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Dynamic Downtown. OP - 120 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPERCIC;LiCJ:� ISSUE: SI 08— Increased Funding for the Leisure Access Card FUND: Operating DEPARTMENT: Community Services—Community Programs & Services PREPARER: Michael May, DCAO Community Services Department BUDGET IMPACT: To be determined OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: Increase funding for the Leisure Access Card (LAC) to allow more low-income residents to participate in recreational programs across the city. BUDGET IMPACT: To be determined. RATIONALE/ANALYSIS: Over the past several years, the City has been implementing a multi-year plan to increase the budget for LAC. As part of that multi-year funding plan, staff has recommended an 11% increase ($16,000) to the program budget from 2014 to 2015. The average actual cost of the LAC program for the past five years (2010-2014) is $148,000, while the proposed 2015 LAC budget is $161,969. Only 2014 has seen actual costs greater than the proposed 2015 budget for LAC. If Council approves this increase, the City will have added $67,000 in funding to the LAC program since 2010. Regardless of budget, no one who qualifies for the LAC program and has requested assistance has ever been denied access to the LAC program due to a lack of funding. Staff has regularly been successful in securing funding assistance from private partners (e.g. Jumpstart) or have sought out funding within existing budgets to offset any cost overrun related to LAC. During the Finance and Corporate Services Committee's deliberations on 2015 user fees (December 8, 2014), Councillor Etherington gave notice of his intention to bring forward the following motion as part of the 2015 budget process: Whereas demand for Kitchener's Leisure Access Card program providing subsidies for seniors, children, single mothers and other adults who cannot afford Kitchener's recreation programs continued to increase in 2014 and is expected to go still higher in 2015 and, Whereas the program serving low-income families experienced a$16,000 shortfall in 2014 after its budget was exhausted and, Whereas assistance from private funders is increasingly precarious in today's economy where residents still feel the impacts of unemployment, Be it resolved that, in addition to the recommended$16,000(11 per cent) increase for the Leisure Access Card program in 2015, an additional$10,000 be budgeted for the program. This means the total budget increase for the program in 2015 will be$26,000, increasing the total LAC budget to approximately$172,000. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Quality of Life. OP - 121