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Home My WebLink AboutFCS-15-027 - 2015 Budget Package - Final Budget Day Staff Report I r .R finance and Corporate Services Department wmkitchener.ca REPORT TO: Finance and Corporate Services Committee DATE OF MEETING: February 23, 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: February 17, 2015 REPORT NO.: FCS-15-027 SUBJECT: 2015 Final Budget Day RECOMMENDATION: For Discussion BACKGROUND: Council has received information about the 2015 budget in each of the reports listed below and their associated presentations: • FCS-15-001, 2015 Operating Budget • FCS-15-002, 2015 Capital Budget and 10-Year Forecast This final budget day material supplements the information provided previously and is primarily meant to: • Provide follow up information as requested by Council • Highlight any significant changes to the information presented during Operating and Capital discussions • Provide information required by the Municipal Act REPORT: Tax Supported Operatin_a Budget The starting point for final budget day discussions is a 2015 net tax levy increase of 2.25%, which is below the rate of inflation at the end of 2014. Council has options to reduce the final approved net levy increase as part of final budget deliberations, depending on the treatment of: • Additional assessment growth beyond what was contemplated in budget targets • Strategic initiatives During the operating budget presentation, Council received information regarding strategic initiatives that would, if approved, increase service levels in select areas. Issue papers for each of the previously identified strategic initiatives have been included in the final budget day FIN - 1 package. These proposals were scaled such that they would fit within the additional assessment growth room and have no impact on the proposed net tax levy increase of 2.25%. Council has already approved the inclusion of the Waterloo Regional Economic Development Corporation (WREDC) funding as part of the 2015 budget. Funding for the WREDC was presented as a strategic initiative during the operating budget, and as such, was a possible addition to the 2015 budget, but was not included in the proposed budget. With its subsequent direction, Council has already chosen to fund the WREDC as part of the 2015 budget. This has been referenced on the summary of strategic initiatives. The following issue papers have been updated since their original distribution: • SI 01 Restoration of the Tax Stabilization Reserve Fund — 2014 ending balance of Tax Stabilization Reserve Fund updated to reflect 2014 actuals • SI 06 Improve the City's Ability to Engage Volunteers in the Community — recommendation from the Safe & Healthy Community Group added per Council's request • SI 08 Leisure Access Card— information about costs and usage added per Council's request • SI 09 House of Friendship: Chandler Mowat Community Centre - added to reflect Council's direction to increase funding for House of Friendship during discussion of Tier 1 grants. If all of the strategic initiatives were approved, including new items identified by Council, the final approved net tax levy would be 2.28% which approximates the ending 2014 rate of inflation. The 2014 year-end closed on February 13. Preliminary year end variance figures for the 2014 tax supported operating budget have been provided and are attached to this report as part of the final budget day package. The full year end variance report will be presented to Council in March 2015 and will include commentary about significant variances as has been provided in the past. Tax supported operations ended the year with a deficit of $323,000, which is very close to the forecast deficit at the end of August ($621,000). Enterprise Operating Budgets All 2015 enterprise budgets remain unchanged from their original presentation. As well, all 2014 enterprise actuals are similar to their original presentation. Capital Budget and Forecast Two changes have been made to the capital forecast and are both highlighted in follow up issue papers included in the final budget day package. These two changes are summarized below: • The Centre in the Square capital budget has been adjusted to move additional funds into 2015, while leaving the total amount over the 10 year forecast the same. This was done to maximize the potential for matching funds from the Cultural Spaces grant program while not altering the total amount of funds allocated over 10 years. • Funding for the Snow Dump has been removed from the capital budget. Staff have been able to extend the lease on the current site until the middle of 2016. Additional information will be provided to Council in 2015 to facilitate a final decision. As part of this process, staff may request that some funding be advanced into 2015 to commence design and construction. FIN - 2 Information Required by the Municipal Act Regulation 284/09 of the Municipal Act titled "Budget Matters — Expenses" requires that before Council adopts the annual budget, it must first receive a report about "excluded expenses" and adopt that report by resolution. This resolution is included as part of the Final Budget Day resolution. Public Sector Accounting Board (PSAB) changes effective in 2009 require the annual Consolidated Financial Statements to be prepared using full accrual accounting. As a result, certain expenses are included in the financial statements that are not included in the budget. For the City of Kitchener these include amortization expense on tangible capital assets and post-employment benefit expense. Amortization expense on tangible capital assets of $37.4 million was recorded in the 2013 consolidated financial statements. This expense is meant to represent the rate at which the City is using up its assets (based on historical cost). It can therefore be used as a rough indication of what should be budgeted for replacement. Post-employment benefit expense, which includes sick leave, workplace safety and insurance benefits, and post-employment benefits in the 2013 consolidated financial statements was $3.8M ($31.7M —$27.9M) If these expenses were excluded in the financial statements, the 2013 accumulated surplus would increase by $41.2M (the combined amount of amortization expense and post- employment benefit expense). There is no impact on future tangible capital asset funding requirements based on the exclusion of these expenses. 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. FINANCIAL IMPLICATIONS: The financial impacts of the proposed 2015 City of Kitchener budget on the average homeowner are shown in the chart below. Impact on . - . 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 • .% FIN - 3 Assumptions: City Taxes: Current Value Assesment (CVA) of$269,000 (average CVA for Kitchener) 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 employed a suite of traditional and electronic engagement methods in an effort to effectively inform and consult citizens. Feedback was received through traditional methods (e.g. mail, phone call, public input session) as well as electronic methods (e.g. email, City's Face book/Twitter posts, interactive budget web page). ACKNOWLEDGED BY: Dan Chapman, Deputy CAO (Finance and Corporate Services) ATTACHMENTS: • City of Kitchener Statement of Operations for the twelve months ended December 31, 2014 (tax supported operating budget variances) • Presentation • Final Budget Day Issue Papers • Strategic Initiative Issue Papers FIN - 4 Schedule 1 Page 1 City of Kitchener Statement of Operations For the twelve months ended December 31,2014 2013 2014 2014 2014 2014 Actual Actual Budget Surplus/ YTD% as of December as of December as of December (Deficit) Variance CHIEF ADMINISTRATOR'S OFFICE ADMINISTRATION 923,280 915,488 943,126 27,638 2.9% CORPORATE COMMUNICATIONS 1,037,241 1,087,100 1,053,459 (33,641) -3.2% ECONOMIC DEVELOPMENT ARTS&CULTURE 292,390 316,199 317,156 957 0.3% ECONOMIC DEVELOPMENT 2,962,661 3,327,139 3,310,678 (16,461) -0.5% MARKET 233,468 213,259 254,902 41,643 16.3% SPECIAL EVENTS 759,895 756,580 761,695 5,115 0.7% ECONOMIC DEVELOPMENT 4,248,414 4,613,177 4,644,431 31,254 0.7% MAYOR&COUNCIL 1,082,104 1,108,420 1,135,462 27,042 2.4% CHIEF ADMINISTRATOR'S OFFICE TOTAL 7,291,039 7,724,185 7,776,478 52,293 0.7% COMMUNITY SERVICES DEPARTMENT ADMINISTRATION ADMINISTRATION 709,107 887,646 883,945 (3,701) -0.4% CORPORATE ADVERTISING REVENUE - - (15,000) (15,000) -100.0% ADMINISTRATION 895,063 887,646 868,945 (18,701) -2.2% BY-LAW ENFORCEMENT ADMINISTRATION 593,844 580,062 574,183 (5,879) -1.0% PARKING/NOISE 195,170 365,901 254,441 (111,460) -43.8% PROPERTY STANDARDS 860,109 900,372 863,485 (36,887) -4.3% BY-LAW ENFORCEMENT 1,649,123 1,846,335 1,692,109 (154,226) -9.1% COMMUNITY PROGRAMS&SERVICES ADMINISTRATION 392,006 395,204 395,913 709 0.2% AQUATICS AND ATHLETICS 1,212,436 1,377,332 1,265,748 (111,584) -8.8% COMMUNITY RESOURCE CENTRES 3,219,425 3,267,129 3,316,526 49,397 1.5% PROGRAM &RESOURCE SERVICES 1,612,236 1,678,500 1,703,910 25,410 1.5% VOLUNTEER RESOURCES 195,532 197,113 201,117 4,004 2.0% COMMUNITY PROGRAMS&SERVICES 6,631,635 6,915,278 6,883,214 (32,064) -0.5% ENTERPRISE SERVICES ADMINISTRATION 256,888 264,238 266,027 1,789 0.7% CEMETERIES (46,124) 60,288 (68,427) (128,715) -188.1% KMAC&ARENAS 172,401 427,320 609,868 182,548 29.9% ENTERPRISE SERVICES 383,165 751,846 807,468 55,622 6.9% FIRE ADMINISTRATION 2,502,437 2,491,450 2,399,562 (91,888) -3.8% ALARM MONITORING (110,960) (109,671) (79,673) 29,998 37.7% APPARATUS AND EQUIPMENT 998,860 1,103,780 1,082,096 (21,684) -2.0% PREVENTION 1,463,972 1,522,822 1,537,478 14,656 1.0% SUPPRESSION 24,274,890 24,656,543 24,952,210 295,667 1.2% TRAINING 476,607 521,329 526,975 5,646 1.1% EMPORARY FIRE RETRO - - - - 0.0% FIRE 29,605,806 30,186,253 30,418,648 232,395 0.8% PLANNING 1,291,979 1,183,388 1,202,873 19,485 1.6% COMMUNITY SERVICES DEPARTMENT TOTAL 40,456,771 41,770,746 41,873,257 102,511 0.2% FIN - 5 Schedule 1 Page 2 City of Kitchener Statement of Operations For the twelve months ended December 31,2014 2013 2014 2014 2014 2014 Actual Actual Budget Surplus/ YTD% as of December as of December as of December (Deficit) Variance FINANCE &CORPORATE SERVICES DEPARTMENT ADMINISTRATION 557,593 562,831 566,294 3,463 0.6% ACCOUNTING 1,269,125 1,094,759 1,114,520 19,761 1.8% FINANCIAL PLANNING 534,669 546,303 549,645 3,342 0.6% HUMAN RESOURCES 1,921,997 2,112,682 2,013,067 (99,615) -4.9% INFORMATION TECHNOLOGY 4,500,388 4,648,221 4,643,152 (5,069) -0.1% LEGAL 958,498 956,911 964,760 7,849 0.8% LEGISLATED SERVICES 1,170,957 1,000,737 1,108,389 107,652 9.7% REVENUE 387,671 552,548 557,624 5,076 0.9% SUPPLY SERVICES 390,749 463,439 491,313 27,874 5.7% FINANCE&CORPORATE SERVICES DEPT TOTAL 11,691,647 11,938,431 12,008,764 70,333 0.6% INFRASTRUCTURE SERVICES DEPARTMENT ADMINISTRATION 425,406 446,196 448,404 2,208 0.5% ASSET MANAGEMENT 179,882 607,745 620,060 12,315 2.0% ENGINEERING ADMINISTRATION 366,485 160,607 125,206 (35,401) -28.3% TRANSPORTATION SERVICES 3,458,465 3,560,251 3,600,417 40,166 1.1% FACILITIES MANAGEMENT 11,289,964 11,766,753 11,913,245 146,492 1.2% OPERATIONS ADMINISTRATION 4,582,337 4,646,467 4,382,863 (263,604) -6.0% REGION (79,410) (89,639) 12,063 101,702 843.1% SIDEWALK REPAIRS 728,125 849,028 849,028 - 0.0% DOWNTOWN MAINTENANCE 725,717 716,348 679,459 (36,889) -5.4% ENVIRONMENTAL SERVICES 2,757,050 2,856,287 2,830,563 (25,724) -0.9% MINOR IMPROVEMENTS/REPAIRS 774,868 816,358 876,322 59,964 6.8% ROAD MAINTENANCE 1,365,332 1,252,190 1,045,253 (206,937) -19.8% SANITATION 505,574 494,595 479,325 (15,270) -3.2% SIGN SHOP 29,801 64,163 39,231 (24,932) -63.6% SPORTSFIELDS,TRAILS&PARKS 1,075,934 1,068,630 1,036,782 (31,848) -3.1% TRAFFIC MAINTENANCE 341,320 339,153 347,310 8,157 2.3% TURF&RINKS MTCE 1,734,285 1,642,118 1,793,158 151,040 8.4% WINTER MAINTENANCE 5,357,822 6,702,798 5,333,637 (1,369,161) -25.7% OPERATIONS 19,898,755 21,358,496 19,704,994 (1,653,502) -8.4% INFRASTRUCTURE SERVICES DEPARTMENT TOTAL 35,618,957 37,900,048 36,412,326 (1,487,722) -4.1% NET DEPARTMENTAL EXPENDITURES 95,058,414 99,333,410 98,070,825 (1,262,585) -1.3% GENERAL EXPENSES GRANTS-CHARITABLE 2,528,011 2,012,575 2,017,404 4,829 0.2% KITCHENER PUBLIC LIBRARY 9,453,379 10,092,880 10,092,880 - 0.0% CENTRE IN THE SQUARE 1,400,000 1,904,330 1,400,000 (504,330) -36.0% OTHER 871,938 934,827 803,634 (131,193) -16.3% GAPPING (2,165,805) (2,205,766) (2,000,000) 205,766 10.3% DEBT CHARGES 3,822,407 3,869,844 3,908,237 38,393 1.0% CAPITAL OUT OF CURRENT 856,000 826,000 826,000 - 0.0% CONTRACT SERVICES 577,883 548,774 595,288 46,514 7.8% TRANSFERS TO RESERVES 10,198,899 8,208,436 8,202,518 (5,918) -0.1% TAX WRITEOFFS&REBATES 516,766 338,510 445,501 106,991 24.0% PROVISIONS-BAD DEBT ALLOWANCE 413,334 489,523 500,000 10,477 2.1% GENERAL EXPENSES TOTAL 28,472,812 27,019,933 26,791,462 (228,471) -0.9% TOTAL NET EXPENSES 123,531,226 126,353,343 124,862,287 (1,491,056) -1.2% FIN - 6 Schedule 1 Page 3 City of Kitchener Statement of Operations For the twelve months ended December 31,2014 2013 2014 2014 2014 2014 Actual Actual Budget Surplus/ YTD% as of December as of December as of December (Deficit) Variance GENERAL REVENUES TAXES GENERAL LEVY (102,090,819) (104,450,683) (104,450,373) 310 0.0% SUPPLEMENTARY TAXES/WRITE-OFFS (1,150,318) (997,666) (999,000) (1,334) -0.1% LOCAL IMPROVEMENTS (100,100) (57,572) (96,000) (38,428) -40.0% COMMERCIAL&INDUSTRIAL CAPPED - - - - 0.0% PAYMENTS IN LIEU (2,753,946) (3,789,044) (2,991,779) 797,265 26.6% (106,095,183) (109,294,965) (108,537,152) 757,813 0.7% OTHER REVENUE INVESTMENT INCOME (1,991,179) (2,338,288) (1,800,000) 538,288 29.9% PENALTIES AND INTEREST (3,076,360) (3,106,834) (3,320,000) (213,166) -6.4% CONTRIBUTION FROM ENTERPRISES (9,422,824) (9,616,709) (9,616,709) - 0.0% CONTRIBUTIONS FROM RESERVES (2,155,000) (1,200,000) (1,200,000) - 0.0% SUNDRY INCOME (139,297) (118,871) (88,426) 30,445 34.4% SOLAR ROOF (364,980) (354,943) (300,000) 54,943 18.3% (17,149,640) (16,735,645) (16,325,135) 410,510 2.5% GENERAL REVENUES TOTAL (123,244,823) (126,030,610) (124,862,287) 1,168,323 0.9% GRAND TOTAL 286,403 322,733 - (322,733) FIN - 7 co LL LO cn TOM p �U Z ,.. ui uui uu uu O � N LiIiiiiiiiiiiiiiii M aiiiiiiiiiii LiIiiiiiiiiiiiiiii o L um u LO.... ............. ,Ilms Y/� r /.,,',,Ff�� III�III�III0111�1�1111�11 W W L L O > a. a) 0 O — C oo CL •o — ._ }, t� •— CL CU =3 L L �--+ L L O •— � O O C� �-j to > O c ca }, a) O co w U c� iiiioo,,, r /.,,',,Ff�� III�III�III0111�1�1111�11 ............... 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VJ I°IIIIIIIII f0//////////// r /.,,',,Ff�� III�III�III0111�1�1111�11 VIII N LL O ■ O U) .... ........ ,Ilms - r /.,,',,Ff�� III�III�III0111�1�1111�11 co VIII N LL O 0 n�, Cl) W m O Q. O O �--+ C/) CU p .o _ c� c ca �� E o cn cn cn c- ry c a) L a) -0 -Cl) V E L) C� Z L O C) U yuq', .... .................. Ifs%//////// r ��III�III�III0111�1�1111�11 ............... Final Budaet Day -Issue Paper (IN Index Included in IP # Description Proposed Budget? BD01 Centre in the Square Capital Projects & Cultural Spaces Yes BD02 Water, Sanitary, and Storm Utility Rates Yes BD03 South District Park Yes BD04 District Parks - Upper Canada Park Yes BD05 Snow Dump Facility No BD06 Timing of the Strasburg Road (north section) and Trunk Sanitary Yes BD07 Development Incentives for Affordable Housing Units Yes BD08 Council Home Technology Yes BD09 Special Events Support for Neighbourhoods Outside Of Downtown Yes BD10 Fuel Prices Yes BD11 Mileage and Per Diem Rates Yes BD12 Public Input N/A FIN - 49 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD01 —Centre In The Square Capital Projects &Cultural Spaces FUND: Capital DEPARTMENT: Centre In The Square PREPARER: Sandra Bender, Centre in the Square BUDGET IMPACT: None BACKGROUND: The Centre In The Square (CITS) has a total of$71VI capital upgrades required over the next 4 years. This inventory list reflects the age of the building, as well as a number of deferred items. CITS conducted on an extensive review of the building and capital requirements starting in 2012, producing drawings, Health & Safety audit and an updated tech audit of the building. CITS has invested over$1.51VI from its own reserves since that time to work through the list of deferred items, in particular those tied to compliance and Health & Safety. This work has been reviewed by city colleagues. They have confirmed that the tech audit and work conducted to date substantiates an on-going extensive list of infrastructure upgrades for the City-owned building. The City and CITS will continue to work together to integrate an updated tech audit into the City's system from 2015 forward. CITS is eligible for matching funds from Cultural Spaces, a federal program providing infrastructure grants for arts facilities. The priorities under this program include items which 'green' the facility, improve AODA standards and upgrade production-related items. Eligible CITS projects includes: roofing, AODA washroom, dressing room infrastructure upgrades, loading doc renovations and LED lighting upgrade in public and production spaces. The City proposed a doubling of their capital funding to CITS starting in FY2015. This would commit approximately$510K per annum (increased annually for inflation)or$5.61VI over 10 years. CITS requested consideration for additional one-time resources to maximize the funding from Cultural Spaces. The proposal is to pull forward funds in order allocate $1.51VI in 2015, with $420K per annum in 2016 through to the end of the 10-year period (increased annually for inflation). This approach would leverage the maximum matching funds from Cultural Spaces while not altering the total amount allocated over the next 10 years. RATIONALE/ANALYSIS: In FY2015, CITS will invest $280K for upgrades tied to elevators and replace the original generator to meet compliance. These items are not eligible for support from Cultural Spaces. To maximize the matching funds from Cultural Spaces, while still managing the ongoing list of infrastructure repairs and replacements, it is proposed to pull forward $1.51VI in 2015 and adjust the following years to $420K (plus inflation). FINANCIAL IMPLICATIONS: The draft capital budget has been amended to reflect this accelerated cash flow, with no overall net adjustment to the CITS allocation. This acceleration has been accomplished by drawing $11VI from the tax capital reserve fund in 2015 and reducing the federal gas transfer in 2016 and beyond by an offsetting amount. FIN - 50 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER RECOMMENDATION: That Council ratify the allocation to CITS of$1.5M in 2015 and $420K in 2016 and beyond (increased annually by inflation). Please note: 1. The current capital requirements over the next 4 years are $7M. Leveraging cultural spaces funding in 2015 will maximize the City's spend; however, there is still +$4M of capital projects remaining for the next 3 years (2016-2018). 2. The building still carries a significant level of annual capital requirements from 2019 onwards due to age of the building (+/- $750K minimum). 3. CITS has approved to increase the Capital Reserve Fee (CRF) applied to each ticket from $2.25/ticket to $3.25/ticket. To date, the capital requirements have been funded by CRF, the City of Kitchener grant, and private funds donated to CITS. FIN - 51 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD02—Water, Sanitary, and Storm Utility Rates FUND: Operating and Capital DEPARTMENT: Finance and Corporate Services— Financial Planning PREPARER: Ryan Hagey, Director of Financial Planning BUDGET IMPACT: None BACKGROUND: During the 2015 Operating Budget presentation on January 5, staff were asked to provide different rate scenarios for Water, Sanitary, and Storm utilities, and identify the associated impacts of reducing the respective rates. RATIONALE/ANALYSIS: The proposed 2015 rate increases for Water and Sanitary are 9.9%, while Storm is 3%. While these increases are more than the rate of inflation, they are required just to maintain existing (deficient) service levels; it does not represent the cost of increasing service levels to a sustainable service level. Stabilization and capital reserves are depleted and are not available to offset the costs of these utilities. This means that all "financial" tactics outside of rate increases that would typically be used to maintain existing service levels have already been exhausted. The only way to reduce the proposed rate increase would be for Council to reduce service levels further. Most utility spending is either a flow-through from the Region (56%) or tied to legislated/maintenance requirements (16%). As a result, the only part of the budget that could potentially be reduced is the amount of funding spent on capital replacement (28%). Capital replacement is primarily accomplished through the Accelerated Infrastructure Replacement Program (AIRP), which replaces the water, sanitary and storm water infrastructure that is most in need of repair. An additional benefit of this work is that the roadway is also replaced and replaces older pavement with a brand new road. The graph to the right shows how '°° much infrastructure should be 600 replaced cumulatively in the next saa 80 years (blue line) versus how o E 00 much infrastructure will actually 2d0° r be replaced based on maintaining E aaa � tecyeeftelplacement E wo existing service levels (red line) a *"",CuirreintReplacement Any rate reduction below the aaa 9.9% increase recommended by staff would move the City further 1 - 1D as 30 4a 5 a 60 70 4a away from the lifecycle Years replacement requirements and is therefore not recommended. The City will need to focus its attention on closing the gap between the required and actual level of investment. This will require further rate increases, as is the reality facing all municipalities of similar age. FIN - 52 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER Impact of Rate Reductions: As noted above, any rate reduction would require reduced spending on AIRP projects. This would result in: • Increased failures. Examples include water main breaks, sewer backups, and increased flooding. This will disrupt service to customers in the form of no water until the water main is fixed, sewer backups into private property, or flooding on roads and private property. • Increased costs. Any immediate savings in capital spending will be offset by increased operating and maintenance costs as well as higher rates of inflow and infiltration in the sewer network. Further, the infrastructure will ultimately still have to be replaced, but the construction costs will only escalate over time. • Decreased revenues. With reduced replacement of water mains, the City will experience more water main breaks, which will result in less revenue for the City. When a main break occurs, the City must pay the Region for supplying the water, but since it is not delivered to a customer, the City will not receive revenue from billing a customer. FINANCIAL IMPLICATIONS: AIRP projects are funded by the Water, Sanitary and Storm utilities in fixed proportions. This means that a reduction in one of the utilities will trigger a corresponding reduction in each of the other utilities. For instance, the table below outlines what the resulting rate decreases would be if the Water rate was reduced by 1%, as well as the associated reduction to the annual increase on the average homeowner. AIRP Reduction to Utility Rate Funding Homeowner Reduction Reduction Increase ($000's) ($rounded) Water 1.0% $ 271 $ 4 Sanitary 1.3% $ 402 $ 7 Storm 2.1% $ 201 $ 3 Total $ 874 $ 13 Also requested during the 2015 Operating Budget presentation on January 5, was information on the proposed Water and Sanitary rate increases split into the Regional and City components. This is provided in the table below. III�IIIVIIIIIIII ui u�u uuui ui Iluuui ui1iuu`iuii uu ui u�u uuui ui Iluuui ui1iuu`iuii uu uulllllluui uuuuu uu uuu uu ui�u uu ui Iluuui ui1iuu`iuii uui Water 2.75% 7.15% 9.90% 0 0 Sanitary Sewer 4.500Y 5.40 RECOMMENDATION: That the proposed increases to the Water(9.9%), Sanitary(9.9%) and Stormwater (3%) utility rates be approved in order to maintain the existing level of investment in infrastructure replacement. FIN - 53 ISSUE: BD 03—South District Park FUND: Capital DEPARTMENT: INS - Operations PREPARER: Dan Ritz, Supervisor Design & Development (ext. 4348) BUDGET IMPACT: Refer to Financial Implications BACKGROUND: At capital budget review on January 12, 2015, staff was directed to provide information on: A. The viability of moving forward the opening of the South District Park to 2017, B. Swapping the funding sources of the park and the library(DC and Fed Tax Gas ), and C. Information about possible sponsorship opportunities. RATIONALE/ANALYSIS: A. Moving Forward the Opening of Park to 2017 Attached to this issue paper, staff has outlined two options for the development of the South District Park.This issue paper does not address the indoor recreation centre components. Strategy A—Two phases of development that align with the current 2015-2024 capital budget.The schedule is expeditious and achievable subject to any unforeseen delays. Phase 1 would address the planning, approvals/permits, major earth works, storm water management, roads/parking and sportsfields. Opening scheduled for the fall of 2018. Phase 2 would include site servicing, washrooms, playground, splash pad, skatepark, park landscaping, basketball courts, tennis courts and beach volleyball courts. Opening scheduled for the fall of 2022. STRATEGY A STRATEGY B u- '- � VON Phase 1 (2018) Phase 2 (2022) Phase 1 (2017) Phase 2 (2019) Phase 3 (2022) Strategy B—Three phases of development would require advancement of most of the $4.35M funding in 2017 to 2016 in order to award construction tenders in 2016.This schedule is aggressive and splits the development of Phase 1 from "Strategy A" into two phases to permit a staggered opening of the sportsfields. In 2017, a gravel parking lot and the double multipurpose fields would open,followed by an additional sportfield and completed road/parking system in 2019. Splitting the phases will most likely incur additional consulting & construction costs and would require additional public safety measures to open the site for public use while Phase 2 construction moves forward. In "Strategy B", Phase 3 would be identical to the Phase 2 shown in "Strategy A" above. FIN - 54 The table below summarizes the pros and cons of each of the proposed strategies. Strategy A Strategy B Pros *Fewer Phases (2 versus 3) *Partial sportfield amenities available by 2017 *No additional cost incurred *Schedule is expeditious, but achievable Cons •Sportfield amenities available in 2018 *Extra construction costs (split phases) *Phase 1 is aggressive, higher risk of error *Additional public safety measures required B. Advancement of Funding Sources In order for "Strategy B" to be realized, most of the proposed funding identified in 2017 of the capital budget ($4.35M)would need to be advanced to 2016 in order to award construction tenders and make payments for work completed in 2016. The funds budgeted in 2017 are$41VI from the Recreational Land reserve and $350,000 from the Federal Gas Tax reserve. There is capacity within the Recreational Land reserve to bring forward the $41VI into 2016, but the Federal Gas Tax reserve is fully allocated and would need to remain in 2017. It is likely that some of the payments for "Strategy B" would actually occur in 2017, so having the funding split over the two years is reasonable. Under this scenario, there is no need to adjust funding between the south branch library and the South District Park project. C. Sponsorship Opportunities Through work being completed as a part of the city's sponsorship strategy, staff has identified several components of the South District Park as high priorities for future naming rights and other potential partnerships.Those components include the individual sportfields and each of the indoor facilities (e.g. indoor turf facility, aquatics facility, and arena). Staff also believes there is significant potential for private sector interest in securing naming rights for the entire complex. FINANCIAL IMPLICATIONS: Strategy A— None. This is as the project is identified in the 2015 capital budget and forecast. Strategy B—The 2015 capital budget and forecast would be adjusted to bring forward $41VI of Recreational Land reserve funding from 2017 to 2016. As noted above, this reserve has capacity to accommodate the funding request in 2016. RECOMMENDATION: That Council approve Strategy A as presented in the 2015 capital budget and forecast, since this option results in less costs, less risk or error due to aggressive schedule, less disruption/public safety concerns during construction, and is more achievable than Strategy B. FIN - 55 ISSUE: BD 04— District Parks - Upper Canada Park FUND: Capital DEPARTMENT: INS -Operations PREPARER: Dan Ritz, Supervisor Design & Development (ext. 4348) BUDGET IMPACT: None BACKGROUND: At capital budget review on January 12, 2015, staff was directed to provide additional information on the challenges with Upper Canada District Park in comparison to other district parks, including baseball field capacity & needs across the city. This information is supplemental to CAP 09, found on page CAP-124 of the 2015 Capital Budget report FCS-15-002. There are four city-wide parks, 17 district parks, and approximately 110 neighbourhood parks located throughout the city. District parks are the City's principal location for sportfields and are used by residents across the city. RATIONALE/ANALYSIS: Addressing In-Efficiencies & Aging Infrastructure Several of the City's district parks are multi-diamond sportfield venues (2+ ball diamonds). They consist of Al and A2 ball diamonds, which are both of a high quality maintenance level, while the premier Al ball diamonds may also feature lighting and irrigation. Average booked hours over the 2012-2014 seasons (see chart below) vary in location due to several factors (infield size and surface, outfield size and quality, preferred orientation, parking, presence of accompanying park amenities and whether the ball diamond is lit). Ball Diamond Field Usage (2412-2014) (A O « 600 4$6 4$1 2 TO 450 M 500 14 3$4 FP 1= 400 333 �. . ..... © E 300 228 f0 200 oil, ca 100 %%%///iri C Location & Number(Al&Az Ball Diamonds) Figure 1: Average Hours per Ball Diamond Location Upper Canada District Park is the home of the Southwest Optimist Sportsfields. It is made up of five ball diamonds, the highest amount of ball diamonds per location in the park system. It has one of the lowest average bookable hours per diamond (186 hours average 2012-2014). FIN 56 The redevelopment of Upper Canada Park would address aging park infrastructure and improve insufficient ball diamond capacity/booking in comparison to other district parks supporting multi-diamond venues. Some A2 diamonds would also be upgraded to premier Al diamonds. While addressing growth and aging infrastructure is the primary driving force for the renewal of the Upper Canada Park the development also provides flexibility to address changing ball diamond inventory (i.e. loss of Fischer Park diamond) and partial capacity to bridge any unforeseen external factors (i.e. Budd Park redevelopment). Leisure Facilities Master Plan According to the 2013 Leisure Facilities Master Plan (LFMP) Update, the Ontario Baseball Association has undertaken an active promotional campaign for the sport and is reporting renewal of participation levels closer to the early 1990's. The LFMP also identified that the City develop long term asset management plans for the renewal, replacement and reuse of its aging leisure services infrastructure (rec. 36). The Southwest Optimist Sportfields were developed in 1986 and have not seen any recent or significant upgrades. Rather than bring on new ball diamonds, staff recommends upgrading existing diamonds (such as South West Optimist Sportsfields) through efficiencies (lighting, turf/field upgrades) to meet current growing need as identified in the LFMP. In comparison, the LFMP identified that the growth of soccer and multi-purpose fields is greater and should be addressed through bringing on new fields (such as the South District Park). The upgraded facilities at Upper Canada Park would also address constraints (no ball diamonds) identified in the approved South Kitchener District Park masterplan. Renewal of Upper Canada Park Upper Canada Park development will include upgraded ball diamonds, washrooms, parking lot, trails, connectivity to the community centre, skatepark, playground and park amenities. A full public consultation process with the neighbourhood and SW Optimist Club would occur during the masterplan stage in 2015.The park would be closed in fall of 2016 for construction and re- opened in the late spring of 2017 to minimize disruption to play. I The Upper Canada Park is located well in a continued growth area of the city. Improvements to both the Southwest Optimist Sportfields and the District Park amenities will provide improved service for both local neighbours and city-wide residents alike. FINANCIAL IMPLICATIONS: None. This is as the project is identified in the 2015 capital budget and forecast. RECOMMENDATION: That Council approves the Upper Canada Park (Southwest Optimist Sportsfields) project as presented in the 2015 capital budget and forecast. FIN - 57 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD05—Snow Dump Facility FUND: Capital DEPARTMENT: Infrastructure Services - Operations PREPARER: Jim Witmer, Director of Operations BUDGET IMPACT: Project has been removed from capital forecast BACKGROUND: During the 2015 Capital Budget presentation on January 12, staff were asked to provide information about the relationship with the Region around snow removal, including how other municipalities manage snow removal. RATIONALE/ANALYSIS: The City of Kitchener provides contracted services to the Region of Waterloo for sanding, salting, removal and hauling of snow on Regional roads within the City of Kitchener limits to ensure compliance with the Provincial Minimum Maintenance requirements. The Region does not have their own snow dump therefore the City handles this material at the site we use for our own purposes and the City bills the Region for the services we provide. The majority of snow requiring the use of the City's snow dump (75%) comes from City's streets and not Regional roads. The Cities of Cambridge and Waterloo also perform the same functions and remove snow from Regional roads and haul it to their own snow dumps. Each municipality has a snow dump capable of handling the anticipated snow accumulated from Regional roads and City streets within their own boundaries. In addition to the follow up information requested by Council, staff have had further discussions with the landowner of the current snow dump (land currently leased by the City). Staff have been able to secure permission to continue using this site as a snow dump for one additional year (to the middle of 2016), and as such have removed this project from the 2015 capital budget and forecast. Staff will bring additional information about this topic to Council in 2015 which may identify the need to advance funding in 2015. FINANCIAL IMPLICATIONS: Funds for a new snow dump facility have been removed from the 2015 capital budget and forecast. RECOMMENDATION: For information. [Project has been removed from 2015 capital budget and forecast] FIN - 58 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD06—Timing of the Strasburg Road (north section) and Trunk Sanitary Sewer Projects FUND: Capital DEPARTMENT: Infrastructure Services— Engineering PREPARER: Hans Gross, Director of Engineering BUDGET IMPACT: None BACKGROUND: During the January 12, 2015 capital budget discussion, staff were directed to provide information Huron South about the timing of three projects located in the same general area: the Strasburg Road extension :) A (north section) and two portions of a sanitary trunk sewer. Additionally, consideration of the 5s.� �t, impact of aligning all three projects = R6 � M x in the 2020-2022 timeframe was � sAis j 1r4 d requested. Since these are growth- P », related infrastructure, the Planning and Finance Divisions were 95 .- ,4 SA12 consulted regarding the Kitchener Growth Management Plan (KGMP) i 10A.- and Development Charges (DC) By- law. RATIONALE/ANALYSIS: 111010111 ::�� As shown on the adjacent figure, this issue includes 2 portions of the Highest! (Lowest same sanitary trunk sewer (SA13 0 ,c,,rcie,a,round uD#indicates Iairaft Approved and SA12 referred herein as "the Sewer") and one portion of the road extension (R6) that is from the current terminus of Strasburg Rd to the southern edge of Huron South. Other than the likely combined location of SA13 and R6, these projects are generally independent of each other. Both sewer portions are required to service lands to the west in Huron South along with the future Southwest District Park, while the road is to connect to lands to the south and would not include any trunk sanitary sewer towards the environmental area to the southeast. The KGMP establishes the sequencing of growth-related infrastructure, land use planning, development review, community infrastructure, and financial/DC projects. Previously approved KGMPs and Capital Budget Forecasts identified a timing of the Sewer being sooner than 2015 (provided development proceeded). In the 2011 KGMP, there were multiple growth areas requiring infrastructure and staff recommended that this Sewer be prioritized first. As a result of the status of DC reserve in 2012, Council approved delaying a number of projects until the FIN - 59 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER 2014 DC study was completed. As a result of this process, the Sewer was delayed but was one of the top priority projects once additional DC funds were available. In the Council approved 2013 KGMP, the Sewer timing was 2015 and the road extension (north portion) was 2016-17. In the Council approved 2014 DC By-Law, the timing of the three projects was approved as: • SA12 - South Strasburg Creek Sanitary Sewer Trunk, 2015-2016 • SA13 - Strasburg Road Trunk Sanitary Extension, 2015-2016 • R6 - Strasburg Road North, 2020-2022. Potential Impacts of Delaying the Sewer to Align with the Strasburg Rd North Timing: • The Sewer is required to service existing draft approved subdivisions • The lands in Huron South cannot become a Priority A in the KGMP until the Sewer is in place • The Sewer is an important growth-related project. A delay to 2020+ could have at least two "ripple effects": 1) development would be delayed, including the development of two elementary schools as well as all indoor facilities (e.g. indoor soccer, arena aquatics centre) at the South West District Park; and 2) the financial outlook for the DC reserve would be affected as the funds would not be spent out of the reserve until 2020, but any development dependent on the Sewer will not proceed, which will negatively impact DC revenues for all services (not just sewer). This could cause a delay in the timing of projects in other service areas (e.g. indoor/outdoor recreation). • Landowners, the School Boards and others have, and will, make financial decisions partially based on the approved timing These projects are fundamental in order to move forward with other projects in the future.The approved KGMP and DC By-law provide the sequence and timing for growth-related capital infrastructure. A change at this time would require re-evaluation of both approved documents. FINANCIAL IMPLICATIONS: Delaying the sanitary sewer projects for five years will mean those funds are not expended out of the reserve until 2020, but it will also mean that development, and the revenues generated by that development, will not be received by the City. RECOMMENDATION: That the timing for the projects discussed in this issue paper remain as contained in the 2014 Development Charge By-Law and proposed 2015 Capital Budget. FIN - 60 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD07— Development Incentives for Affordable Housing Units FUND: Capital DEPARTMENT: CSD— Planning PREPARER: Michael May, DCAO Community Services (519-741-2200, ex. 7079) BUDGET IMPACT: Option #1 - None (RECOMMENDED) Option #2 - $65,000 increase to capital budget BACKGROUND: On December 8, 2014, City Council directed staff to add 12 projects to the 2015 business plan, including the consideration of incentives to encourage the inclusion of affordable housing units within new developments. On January 12, 2015, City Council directed staff to prepare an issue paper outlining options to complete this work. RATIONALE/ANALYSIS: In 2014, staff recommended, and City Council approved, a new Official Plan (OP) which broadened the City's development bonusing provisions to include affordable housing. In order to be able to implement those new bonusing provisions, the City must now incorporate that OP policy direction into its zoning regulations. To that end, staff is already working on the Central Stations Study Area Plan (a component of PARTS) which will deliver zoning for that area that implements the new bonusing provisions. A draft of that plan is scheduled to be completed by December 2015 with consideration by City Council in March/April 2016. It is possible these bonusing provisions may also be incorporated into other rapid station study areas as they are developed. Given City Council's interest in these types of incentives for affordable housing, staff believes there are two options for proceeding to augment work already underway through the Central Stations Study Area Planning process. Option #1 (Recommended) Staff could explore the use of these types of development incentives further by studying other municipal programs across Ontario to identify best practices, potential pitfalls with different approaches, and other issues City Council may want to consider more fully (e.g. coordination with existing regional programs, cooperation with neighbouring municipalities, potential for OMB appeals). Staff could complete this research and report back to City Council with the results in 2015. It may also be beneficial to ask Regional staff to make a presentation to City Council on their affordable housing implementation plan. To complete this work staff would look to engage the support of an individual with a planning background and knowledge, such as a co-op student or a graduate student. Option #2 City Council may choose to expedite the development of a comprehensive, formal incentive program for affordable housing units in 2015. This work would need to include research into best practices, public and stakeholder consultation, coordination with other municipalities within the region and with the Region, recommendations on governance of the program and the development of regulations that would be defendable at the Ontario Municipal Board. FIN - 61 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER Internally, the City has a limited number of staff who could complete this work. In 2015, those staff are already fully committed to other high priority projects identified by City Council, including: the development of Residential Infill Guidelines, a comprehensive review of the city's zoning bylaw, rapid transit station area planning, the creation of tower separation guidelines, and growth management initiatives. Given Planning staff's already heavy workload, if City Council wishes to proceed with Option #2 (as outlined above), an outside consultant would be required to complete this new body of work and an internal Planning staff person would need to be identified to manage the project, which would slow down progress on other priority projects (as listed above). FINANCIAL IMPLICATIONS: Proceeding with staff's recommended approach (Option #1) can be done within the Planning Division's existing budget and would therefore not require any additional funding. Should City Council wish to expedite the development of a comprehensive, formal incentive program for affordable housing units in 2015 (Option #2), beyond work already being completed by staff in this area, staff estimate an additional $65,000 would be required in the 2015 Capital Budget to fund the work of an outside consultant. RECOMMENDATIONS: That staff be directed to continue work already underway to incorporate the City's new bonusing provisions for affordable housing (as outlined in the City's Official Plan), into zoning regulations through the Central Stations Study Area Plan. That staff be directed to augment that work already underway by proceeding with Option #1 (as outlined above), which includes studying other municipal programs across Ontario and reporting back to City Council in 2015 with the results of that research and a number of other related considerations. FIN - 62 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD08—Council Home Technology FUND: Capital DEPARTMENT: Mayor &Council PREPARER: Roger LeBrun, Manager of Accounting BUDGET IMPACT: None BACKGROUND: During the 2015 Capital Budget presentation on January 12, staff were asked to provide information on the impact of reducing the Council home technology capital budget, including the history of budget and what it can be used for. RATIONALE/ANALYSIS: There are two funding envelopes available to members of Council for eligible expenditures limited to technology and home office costs directly related to exercising the responsibilities of an elected municipal official. 1) An annual operating funding envelope can be used to fund operating expenses such as cell phone usage, dedicated home office phone line, home internet access, paper and office supplies, and ink cartridges. The operating budget per member of Council for the last 4 years was as follows: Operating Budget History(per person) Year 1 2011 1 2012 1 2013 1 2014 Budget $ 3,675 $ 3,675 $ 3,130 $ 2,500 The average operating expenditure per Councillor for 2014 was $1,888 and the 2015 operating budget has tentatively been budgeted at $2,500 per Councillor. Any surplus funds at the end of the year are closed out the Tax Stabilization reserve fund. 2) A 4-year capital funding envelope can be used to fund relevant capital purchases such as cell phones, laptops, notebooks/tablets, desktop computers and office furniture (purchased in the first year of a term). The capital funding envelope for each member of Council for the last 4- year term was as follows: Budget Per Councillor $ 5,301 Total Budget $ 58,311 Actual Capital Expenditures $ 32,414 Unspent Capital Funds $ 25,897 Average Spent Per Councillor $ 2,947 The capital budget for the current 4-year term of Council has tentatively been budgeted at $5,753 per member of Council in the 2015 Capital Forecast. Any surplus funds at the end of the Council term are closed out to the Tax Capital reserve fund. FIN - 63 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER FINANCIAL IMPLICATIONS: If the Council home technology capital budget were reduced, the reduction in capital could result in a reduction of the annual tax levy (annualized) or it could otherwise be utilized to fund new, unbudgeted operating expenses. Options for potential annualized amounts that would be available to the tax base are shown in the following table: Optionl Option2 Option3 Option4 Option5 Option6 Potential Capital Budget per Councillor $ 3,000 $ 3,500 $ 4,000 $ 4,500 $ 5,000 $ 5,753 Total Capital Budget $ 33,000 $ 38,500 $ 44,000 $ 49,500 $ 55,000 $63,281 2015 Capital Budget Proposed $ 63,281 $ 63,281 $ 63,281 $ 63,281 $ 63,281 $63,281 Savings over 4Year Term $ 30,281 $ 24,781 $ 19,281 $ 13,781 $ 8,281 $ - Savings Annualized $ 7,570 $ 6,195 $ 4,820 $ 3,445 $ 2,070 $ - Savings Per Councillor,Annualized $ 688 $ 563 $ 438 $ 313 $ 188 $ - In each case, each member of Council would be required to ensure all capital related purchases were made within the amended budget since it is a hard cap and cannot be exceeded, as per Council Policy I-47. RECOMMENDATION: For information. FIN - 64 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD09 —Special Events Support for Neighbourhoods Outside Of Downtown FUND: Operating DEPARTMENT: Economic Development—Special Events PREPARER: Jeff Young, Manager of Special Events BUDGET IMPACT: None BACKGROUND: During the 2015 Operating Budget presentation on January 5, staff were asked to identify opportunities and ways of supporting neighbourhoods outside of the downtown with regard to special events. Last year, the Special Events (SE) team was involved with more than 100 events, which hosted more than 500,000 attendees throughout the city. The primary location for special events is typically downtown Kitchener. RATIONALE/ANALYSIS: Over the years the SE team has worked with a number of neighbourhood associations at varying levels to assist them in their events. Assistance has included event mentoring, staff, equipment (e.g. tents, tables, chairs, sound system) and printing services. SE staff have recently met with a variety of stakeholders to discuss ways of engaging with neighbourhood associations outside of the downtown. Through these discussions it was determined that special events would introduce a "Movie Night" offering to each ward as a means to engage with each individual community. For a nominal fee to cover staff costs, the event would include everything required to operate a successful event including screen, projector, sound system, promotional poster and DVD player. The neighbourhood associations would need to provide volunteers for any additional items they may require for the event (e.g. movie, popcorn, snacks, chairs) and make the community space available. In early 2015, SE staff will meet with District Facilitators and Resource Centre Coordinators who would be able to connect with the neighbourhood associations to determine their interest in the proposed program and to explore other opportunities to enhance existing programming in the neighbourhoods. The proposed program would work towards improving the quality of life for residents in each neighbourhood. FINANCIAL IMPLICATIONS: None. RECOMMENDATION: For information. FIN - 65 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD10— Fuel Prices FUND: Operating DEPARTMENT: Finance and Corporate Services— Financial Planning PREPARER: Ryan Hagey, Director of Financial Planning BUDGET IMPACT: None BACKGROUND: Staff have proactively revisited the assumptions used for preparing the 2015 Fleet budget to see what impact the changes in fuel prices and the weakening of the Canadian dollar would have on the Fleet budget. RATIONALE/ANALYSIS: The Fleet division is responsible for the maintenance and replacement of vehicles and equipment used by other City divisions. This includes purchasing fuel and parts, conducting repairs, as well as purchasing vehicles and equipment. In their role, Fleet regularly reviews the actual costs and forecast projections for the goods and services they provide. In recent forecast information, 2015 fuel prices are expected to be lower than originally budgeted, mainly due to lower oil prices. At the same time, 2015 parts are expected to be higher, mainly due to a weak Canadian dollar. The net result of this new information is that the Fleet budget may generate a positive variance in 2015 as shown in the table below. Reduced Fuel Prices $(392,000) Increased Parts Costs $ 167,000 Budget Difference $(225,000) Staff recommend that the fleet budget remain 'as is' for the following reasons: 1) The reductions are temporary Credible fuel forecasts for 2016 anticipate an increase of 15%-20% over 2015 rates. Analysts have concluded that current low prices will not be sustained. Reducing the budget now will almost certainly result in a budget increase in 2016. 2) The benefit of lower prices can be quickly eliminated by increased usage Even if the price of fuel remains below budget, consumption above the budgeted (5-year average) amount would result in a negative variance. 3)Savings in Fleet would be closed out the Tax Stabilization Reserve Fund(TSRF) As noted in strategic initiative issue paper SI 01, the TSRF is depleted and should be built back up. Any savings actually experienced in Fleet in 2015 would be closed out to the TSRF. 4) The transfer to the Equipment Replacement Reserve Fund may need to be increased The weak Canadian dollar will increase the cost of vehicles. If the weak dollar is sustained, the transfer to the Equipment Replacement Reserve Fund will need to be increased. FINANCIAL IMPLICATIONS: $225,000 equates to 0.21% in the tax-supported operating budget. RECOMMENDATION: That the Fleet budget remain as it is currently budgeted. FIN - 66 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD11 — Mileage and Per Diem Rates FUND: Operating DEPARTMENT: All PREPARER: Bonnie Saunderson, Senior Financial Analyst (519-741-2200 ext. 7115) BUDGET IMPACT: None BACKGROUND: To provide a comparison of the current mileage and per diem rates used by local municipalities. RATIONALE/ANALYSIS: Mileage Rate The following is a comparison of current mileage rates utilized by local municipalities to reimburse employees who use their personal vehicle for business purposes. Discussions with these other local municipalities indicate mileage rates will be held at 2014 levels with no increase. It is recommended that the City also maintain its mileage rate at 2014 levels. Municipality Rate/km City of Kitchener $0.50 First 5,000 kilometres $0.45 Over 5,000 kilometres City of Cambridge $0.51 First 5,000 kilometres $0.47 Over 5,000 kilometres City of Waterloo $0.46 Region of Waterloo $0.50 First 5,000 kilometres $0.47 Over 5,000 kilometres The 2015 tax exempt allowance rates as prescribed by the Department of Finance are $0.55/km for the first 5,000 kilometres driven, and $0.49/km for each additional kilometre. Per Diem Rates The following is a comparison of current per diem rates used by local municipalities. Municipality Breakfast Lunch Dinner Incidentals Total City of Kitchener $ 10 $ 15 $ 25 $ 14 $ 64 City of Cambridge $ 25 $ 30 $ 45 $ 20 $ 120 City of Waterloo $ 15 $ 25 $ 35 $ - $ 75 Region of Waterloo $ 12 $ 16 $ 30 $ 10 $ 68 It is recommended that the City increase its per diem rates to match the Region of Waterloo rate (from $64 to $68). The per diem rates have not been increased in the past five years. Over this time, cumulative CPI inflation has been 10.1%, which is more than the proposed increase in the per diem rates. FIN - 67 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER FINANCIAL IMPLICATIONS: Based on current usage, if the per diem rate was increased to match the Region of Waterloo rate, it would increase the City's annual costs by$852. No adjustment to the budget is proposed as: • The overall impact of these change is relatively small • The impact would be spread amongst a number of City divisions • The impact is based on actual use which may vary from year to year RECOMMENDATION: That the City of Kitchener's rate per kilometre remain at $0.50 for the first 5,000 kilometres driven, and $0.45 for each additional kilometre. That the City of Kitchener's per diem rates be increased to $68/day to match the Region of Waterloo ($12 for breakfast, $16 for lunch, $30 for dinner, and $10 for incidentals). FIN - 68 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER ISSUE: BD12 — Public Input FUND: Operating and Capital DEPARTMENT: Finance and Corporate Services— Financial Planning PREPARER: Ryan Hagey, Director of Financial Planning BUDGET IMPACT: None BACKGROUND: Public engagement is a key component of the annual budget process. Both traditional and electronic methods of engagement have been employed, allowing for a number of different input points into the budget process. The efforts taken and the corresponding results are summarized below. RATIONALE/ANALYSIS: Feedback Methods Feedback into the budget process can be made through traditional means such as mail, phone, or in person at the Public Input night. In addition, electronic feedback can be provided by email, responding to City of Kitchener Facebook and Twitter posts, or by using the interactive budget calculator webpage. Feedback Results 1) Interactive Budget Calculator Webpage In December, staff launched an interactive budget website that includes an online calculator to help residents understand the impact of budget changes on their property taxes. As of January 28, 10 residents had submitted their preferences for the options being considered by Council. The submissions and comments have been summarized and are attached to this issue paper. 2) Mail/Email Three letters were sent through traditional or electronic mail. These submissions have been attached to this issue paper. 3) Public Input Night On February 2, 2015, the City held a public input night where citizens could address Council. In total, 10 delegations spoke before Council on the following topics: • Timing of community centres in the capital budget &forecast (4) • Timing of Strasburg road and sanitary projects (2) • Limiting tax and user rate increases (2) • Funding for the Creative Enterprise Initiative (1) • Service levels related to snow clearing (1) FINANCIAL IMPLICATIONS: None. RECOMMENDATION: For information. FIN - 69 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER Interactive Budget Website Summary Voting Results: SIM S102 S103 04 S106 S107 S108 Urban No S105 Changes Tax Open Health& WREDC Volunteer Special Leisure Stabilization Forest Gov't Safety Engage Eve nts Access 1 N Y N N N N N N N 2 N Y Y N Y N Y Y Y 3 N Y Y Y Y N N Y Y 4 Y N N N N N N N N 5 N N N N N N N N Y 6 Y N N N N N N N N 7 N Y Y Y Y Y Y Y Y 8 N N N N N N Y N N 9 N Y Y Y N N N N N 10 N Y Y Y Y Y Y Y Y TOTAL , Comments: • I agree with John Gazzola's recommendation of a 1.75%increase. If city staff could keep to that increase residents might be more supportive of the wish list. I have reviewed the water rates in 1 Ontario and found that Kitchener rate is nearthe top of the list and will definitely be one of the highest water rates in Ontario if the suggested 9.9% increase is approved. 7%would be a much more reasonable rate. I believe that the additional content I flagged are valuable initiatives we should pursue as a proactive, innovative city. We have seen the costs of poor urban forest upkeep(Toronto, 2014 ice storm);we have seen the cost of exceeding operational budgets 2 (winter road maintenance) and we have seen how well street fairs and community events have been received by the city. Why not pay a few dollars more to ensure a bright, prepared future and an enjoyable, secure present?(I am of course speaking from a middle- class perspective and understand that some of the items I care about do not apply to all). 3 lNone. FIN - 70 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER • I was reviewing the budget when I saw the 10 million dollars forthe Southwest community library.The main explanation forthis is that the population to be served by a SW branch is projected to be 34,300 by 2017.That level exceeds the current population of areas served by Pioneer Park and Grand River Stanley Park community libraries.Just because it will service 34,300 residents,that doesn't mean that all of those residents wil I use that service. Has any kind of poll or survey been conducted by the KPLto see who would use this new library? The other comment is that South Kitchener is currently served by 4 the Pioneer Park Community Library. Living in the South Kitchener area (Bleams/Fischer-hallman) I would nevertravel to the Pioneer park community library as there are two other libraries that are a less than 10 minute bus ride away(Country Hills Community Library and Forest Heights Community Library). I understand that Libraries are used for more than just books but it might be betterto attach a library to an existing school or have it part of the new Sports complex that is going to be developed or even better use that 10 million dollars to setup free Wi-Fi for everyone in southwest Kitchener and then they will have access to all the information and learning materials that they will need. I have called to make regular parking complaints with regards to people parking theirvehicles overnight&sometimes fora couple of days on Strasburg Road. I am being told that now no one can come by until at least 8:30 AM Mon. to Fri as"we do not have the capacity to address these needs." It is unacceptable &if there is a need to fil l more by-law positions,then find the money to address these issues. In addition, not happy with a proposed 9.9% increase to 5 water&sewage! I can a great deal of pride with regards to saving water such as Iov-flotoilets, multiple rain barrels, HE steam washer, aerators, etc. but still get a storm water fee of($7.46/month) although we do receive a small discount of 20% (-$1.45) per month. On top of that,the rates for gas are unacceptable.They have skyrocketed. Council claims most is foraging infrastructure which may be correct howeverthis is poor planning as waiting to the last possible minute to raise funds through tax increases to address this concerns. How about we use some of this surplus money to repair some of the cities soccerfields?Some fields are in such bad shape that no one 6 wants to play on them already! Replace some of the nets! Do something to level out the fields better! Betteryet use that money to build more artificial turfs!, if not, use it to build the complex at Huron and Fischer Hallman. FIN 71 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER • In general I would like to see the city being proactive and responsible with tax money.There are likely many opportunities to save in the budget that may get lost at a high level view, and all employees should be looking for places to improve the city financials. However,these proposals all seem sensible to 7 implement immediately or in the short term. 1, 2,4 manage risk for the future and can reasonably be expected to save us money in the 10yeartime frame. 3, 6, 7, 8engage the community and could be expected to improve quality of life and potentially lead to more immigration. 5 could contribute to growing the region economically, Kitchener should reap benefits of any tech focus on the Waterloo Region due to our burgeoning downtown. Firefighters were awarded retroactive settlements of 3.04 per cent in 2012, 2.78 per cent in 2013 and 2.72 per cent in 2014.That's well above the inflation rate forthat period: inflation in Canada was 1.5 percent in 2012, one percent in 2013 and an estimated 2.1 percent in 2014. 8 The budget forthe Kitchener Fire Department eats up almost one- third of the city's total operating budget,with 97 percent of that cost made up of wages and salaries.That means less money for infrastructure and other essential services. Why is that? If the arbitration process by which these salaries are awarded is"broken" how are you going to fix it? 9 None. This interactive tool is quite useful for understanding the scope of new proposals and their impact. All of them amount to an average $6/year/household,which seems very reasonable, especially when you take into account the proactive nature on some of these to increase revenue in the future (WREDC) and prevent costs(urban forest maintenance). It would be interesting to see this approach used with the broader budget as a whole,and with a more 10 interactive way of reading the uses(PDFs are a terrible experience). I understand you have to be careful with the language used in the proposals, but I don't know if the language is plain enough for most people if you're looking to get engagement on these issues from every tax payer in the city. But this is a great first step. As a startup founder and home owner in Kitchener, I'm glad to see the city putting resources into creating a sustainable,forward-looking place Ito live. FIN - 72 CITY OF KITCHENER 2015 BUDGET ISSUE PAPER Mail/Email Submissions In regards to the 2015 budget. 2.25% is too much. With a 1.5% average increase in assessments and gas sales increase and increased user fees plus more homes and people. You should have enough to cover increases. You cannot continue to spend outside of our means. I couldn't run my household budget like this. FIN - 73 DEC 2 3 201k Budget 2015 Council Comments: Water Rates: 9.9% increase After reading the Record article,9.9%increase in water and sewer. I find it very distressing that a number of cost saving options have not been considered: • At present we have a 2 tiered water system,the Region is the distributor the city is the retailer, this is not cost effective.We have duplication in services, union staff and management.A ONE tiered system managed by the Region makes complete sense to most taxpayers why has this not been reconsidered by council? • In fact it was recommended by the former Mayor to investigate. • Council should look inward,there is a huge number of cost savings within the division that could be implemented that would result in cost savings,and 10%would be achievable. • Why does the council always recommend increases before they explore other options such as internal type savings? • Do we need a consultant to explore all options? • Has council become complacent, let's raise rates? • Businesses that are not supported by tax payers do not have this option,they must operate in an efficient manner, • Council should challenge all the divisions to provide cost savings in these tough economic times, 10%would be a starting benchmark. • ALL water related services should be under the REGION,this would also allow flexibility to minimize user rates over the region not just the city. PLEASE consider, Thanks Dec 2014. FIN - 74 2015 Budget,c/o Corporate Communications, Kitchener City Hall PO Box 1118 200 King St.W.2nd Floor Kitchener Ontario N2G 4G7 Re: Proposed 2015 Budget for the City of Kitchener Dear Sir or Madam, I have been a ratepayer in the City of Kitchener for a number of years.Although I am no longer a resident of the City, I own several residential rental buildings.As a City of Kitchener property owner and taxpayer,and a recent resident, I am very interested in the budgeting process. I would like to take the opportunity to express my gratitude to City staff for all of the work they do in managing the City's finances, and balancing the need for services with a desire to minimize where possible the burden to ratepayers. I am very impressed specifically that the tax increase proposed for this year is so modest while the City provides such exemplary services. One area where I would like to provide my input is the proposed increases to water rates. I have read that the proposal is to raise water and sewer rates by nearly ten percent. I understand that declining water consumption is presenting challenges to the water and sanitary systems, and that shortfalls must be recovered from users. I would suggest that, instead of an across-the-board increase that will impact those least able to withstand the increase,you consider the possibility of making changes to the way water and sewer rates are charged. In particular, I would make two suggestions: 1) That you consider introducing tiered water rates depending on consumption.This will serve to further encourage water efficiency, and ensure that water continues to be accessible to everyone.The City of Hamilton, for instance, uses a tiered system in which the rate per cubic meter is roughly half for consumption below ten cubic meters per month as it is for consumption above that threshold. In some other municipalities,three or more tiers may be used. Such a system would allow for the affordable access by everyone to the amount of water generally required for good health, and recovering more costs from users who use water beyond this quantity. 2) That you consider introducing a variable charge for water based on factors such as lot frontage or neighbourhood density. In many municipalities,there is a basic fixed charge for water and sewer services, which may vary by meter size or line size,to pay for a portion of the cost of the infrastructure of the system. Given that properties in areas of less density require more water and sewer infrastructure which must be maintained,these users should be required to pay more to cover these costs. This charge could take the form of a tiered flat fee charged on the utility bill and set based on lot frontage, neighbourhood density, or other factors that would generally indicate increased infrastructure.This would lead to a situation in which users pay for the infrastructure they use,ending the current situation in which there is an effective cross-subsidy from users in dense areas to users in areas of low-density. It could also potentially incentivize smart growth and intensification, serving other goals of the City of Kitchener and the Region of Waterloo. FIN - 75 When the Cities of Kitchener and Waterloo introduced stormwater rates and credits, part of the purpose was to charge different rates to different sized buildings in recognition that this was a contributing factor in how much stormwater a property produces.Another purpose of the credit policy is to encourage development which reduces run-off. In the same way, a water and sewer charge reflecting the increased burden that large properties in less-dense areas place on our infrastructure would incentivize development which does not, and would be a fair policy. I feel strongly that the 9.9%water and sewer rate increase, if imposed equally across the City,would create a substantial burden for many ratepayers. In my case,some of my tenants pay utilities themselves,and some have utilities included in their rent. In either case, renters will ultimately pay the input costs of their housing through their rent. For those Kitchenerites of modest means or on fixed incomes and who consume limited amounts of water to meet their basic needs,they may well be both the least able to afford such an increase and the least able to further reduce their consumption. By contrast, more affluent users who may consume water at higher rates in properties more burdensome in terms of infrastructure, may be able to reduce consumption, but will feel little incentive to do so as a result of this across-the-board increase. Thank you in advance for any attention you give to my input. I want to repeat my admiration for City staff for all of the hard work they do,and for Council members for the difficult decisions they take on behalf of residents and ratepayers. I am pleased that City staff and Council are interested in ensuring that our water and sanitary services are sustainable and fully-funded, and I understand that decisions to raise rates always risk unpopularity, even when they are necessary. I can understand the reason increased rates are necessary. My suggestion is that the need to increase rates also be taken as an opportunity to develop rates that are more progressive, more fair, and encourage responsible and sustainable use of our infrastructure, and sustainable development of future infrastructure. yours sincerely, FIN - 76 Stratec0c Initiatives Issue Paper Index Included in IP # Description Proposed Budget? SI 01 Restoration of the Tax Stabilization Reserve Fund - REVISED 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 - APPROVED Yes S106 Improve the City's Ability to Engage Volunteers in the Community - No REVISED S107 Increased Street Level Special Events Programming No SI 08 Increased Funding for the Leisure Access Card - REVISED No S109 House of Friendship: Chandler Mowat Community Centre No FIN - 77 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER ISSUE: SI 01— Restoration of the Tax Stabilization Reserve Fund - REVISED 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 Ending Balance $3,596,967 $1,695,198 $317,944 $338,611 Target Balance $4,749,802 $4,951,223 $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. FIN - 78 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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, cyclists 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. FIN - 79 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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. FIN - 80 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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 FIN - 81 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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. FIN - 82 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER ISSUE: SI 05—Waterloo Regional Economic Development Corporation - APPROVED 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. FIN - 83 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER ISSUE: SI 06— Improve the City's Ability to Engage Volunteers in the Community REVISED 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 Survey of City volunteers at a time. 30 re:time spent volunteering A 2010 survey of 132 current City of Kitchener 20 volunteers showed that 20.5% anticipated 10 volunteering less in the future. Volunteers with o %volunteering less %ex. ecting to minor Sports Associations and Neighbourhood than they did in the last volunteer less in the Associations were most likely to indicate they will 12 months next 5years spend less time volunteering in the future. The main reasons for decreased volunteering: FIN - 84 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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. This issue paper was presented to the February 2015 Safe and Healthy advisory committee for review and comment where the following was recommended and carried: "That the Safe & Healthy Community Advisory Committee support the request for a new part-time Coordinator of Volunteers position as outlined in Operating Budget Issue Paper 5106". ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Leadership and Community Engagement. FIN - 85 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER 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. FIN - 86 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER ISSUE: SI 08 Leisure Access Card - REVISED FUND: Operating DEPARTMENT: Community Services—Community Programs &Services PREPARER: LoriAnn Palubeski, Manager, Program and Resource Services BUDGET IMPACT: To be determined OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: At the Finance and Corporate Services Committee meeting January 5, 2015, the committee asked staff to provide detailed statistics and report on the Leisure Access Program, including: usage for the past 5 years, actual costs for the past 5 years, and the rationale for the program and how it was started. BUDGET IMPACT: To be determined. RATIONALE/ANALYSIS: The City of Kitchener has been providing financial subsidies for its direct programs since 1989. While the form and function of program fee subsidies has evolved with time and technology, the Corporation has a rich history in its efforts to reduce the financial barriers that some residents face when accessing our municipal recreation and leisure programs. This is the primary rationale for the program. The Leisure Access Card (LAC) as we know today undertook a significant review in 2006 resulting in a Council approved strategy and implementation plan. This process allowed staff to engage members of the community as well as our partners and make improvements to the service by designating the necessary resources, processes and supports thereby ensuring that our most vulnerable citizens had increased access to our programs. The provision of program fee subsidy, as a means to engage and include members of our community on low and fixed incomes, has received support in various corporate plans and strategies. For example, references to our role in ensuring inclusive access to and increased participation in municipal recreation and leisure services for specialized populations can be found in the Strategic Plan, both editions of the Leisure Facilities Master Plan, the Youth Services Strategy and the Older Adult Strategy. The research is consistent; access to quality recreation and leisure programs is an important determinant in the health of our community. Removing the economic barriers to program participation can allow for improved access, health, safety, engagement and inclusion of our citizens. As shown in the tables below, the Corporation continues to have an important role in ensuring access to public recreation and leisure opportunities as our community grows. The City has been implementing a multi-year funding plan to increase the budget for LAC. As part of that multi-year 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. The proposed 2015 LAC budget is $161,969. Reviewing the historical expenditures outlined in the table below, only 2014 experienced actual costs ($177,147) that FIN - 87 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER were greater than the LAC budget being proposed for 2015. If Council approves this increase, the City will have added $67,000 in funding to the LAC program since 2010. Usage and budget information for the past five years is outlined in the following tables: LAC— Historical Application/Use Profile: 2010 2011 2012 2013 2014 Children/Youth 940 1343 1539 1830 2338 Adults 850 1256 1335 1460 1899 Seniors 140 144 141 170 205 TOTAL: 1930 2743 3015 3460 4442 LAC— Historical Expenditures: 2010 2011 2012 2013 2014 2015 Budget $95,000 $105,000 $107,100 $123,921 $145,780 $161,929 Actual 140,594 122,706 145,286 153,390 177,477 Overage 45,594 171706 38,186 29,469 31,697 Jumpstart (14,249) (7,380) (26,792) (0) (29,130) NET: -$31,345 -$10,326 -$11,394 -$29,469 -$2,567 As noted above, staff has regularly been successful in securing funding assistance from private partners (e.g. Canadian Tire Jumpstart Foundation), and 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), the following motion was brought forward for consideration 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. FIN - 88 CITY OF KITCHENER 2015 BUDGET STRATEGIC INITIATIVES ISSUE PAPER ISSUE: SI 09— House of Friendship: Chandler Mowat Community Centre FUND: Operating DEPARTMENT: Community Services—Community Programs &Services PREPARER: Mark Hildebrand, Director Community Programs and Services BUDGET IMPACT: $11,696 tax OVERVIEW OF THE PROPOSED STRATEGIC INITIATIVE: At the Community and Infrastructure Committee meeting January 19, 2015, during deliberations for the Tier 1 Community Grants, House of Friendship requested an additional $21,696 to their Tier 1 grant to assist with their work at Chandler Mowat Community Centre. The following resolution was passed regarding Tier 1 grants (subject to final budget approval): That 2015 Community Grants Tier 1 in the amount of$1,610,773 be approved for community groups as outlined in Appendix A to Report CSD-15-003 including: Group Additional Funding Source Fund ing Ivuse o riern s ip an er Community Development Infrastructure Mowat Community IProgram) $10,000 Grant(CDIP) $11,696 Add to Base Budget(Tier 1) BUDGET IMPACT: An increase in funding of $11,696 to the House of Friendship Tier 1 grant has been referred to final budget deliberations. RATIONALE/ANALYSIS: The House of Friendship requested funding for an increase to the hours of the Program Coordinator position, located at the Chandler Mowat Community Centre, from part-time to full- time in order to provide greater capacity to: - leverage community resources by more than doubling the City's investment through donations, in kind resources and volunteers, - respond to increased needs and significant challenges in the Chandler Mowat community, and - maximize partnerships to provide needed supports. ALIGNMENT TO THE CITY OF KITCHENER STRATEGIC PLAN: This proposal is linked to the Community Priority of Quality of Life. FIN - 89