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HomeMy WebLinkAbout2015-11-30 - Special FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30. 2015 CITY OF KITCHENER The Finance and Corporate Services Committee met this date commencing at 9:03 a.m. Present: Councillor S. Davey-Chair Mayor B. Vrbanovic and Councillors F. Etherington, Y. Fernandes, K. Galloway- Sealock, J. Gazzola, B. loannidis, Z. Janecki, S. Marsh, D. Schnider, and P. Singh. Staff: J.Willmer, Chief Administrative Officer D. Chapman, Deputy CAO, Finance &Corporate Services M. May, Deputy CAO, Community Services J. Miller, Executive Director, Office of the CAO R. Hagey, Director, Financial Planning J. Rehill, Fire Chief H. Gross, Director, Engineering M. Seiling, Director, Building C. Fletcher, Director, Facilities Management W. Malcolm, Director, Utilities J. Readman, Director, Transportation Services D. Murray, Director, Information Services &Technology K. Kugler, Director, Enterprise D. Locke, Interim Director, Operations D. Ritz, Supervisor, Design & Development S. DiDonato, Manager,Arts&Culture S.Allen, Manager, Engineer Design &Approvals P. McCormick, Manager, Parking Operations C. Bluhm, Manager, Downtown Community Development N. Gollan, Manager, Stormwater Utility D. Livingstone, Committee Administrator D. Saunderson, Committee Administrator 1. FCS-15-165-2016 CAPITAL BUDGET The Committee considered Finance and Corporate Services Department report FCS-15-165, dated November 3, 2015, and attached line-by-line listing of all projects in the Capital Forecast by Department/Division. GENERAL OVERVIEW Mr. D. Chapman provided opening remarks, stating the objectives of the report are to summarize the 2016 Capital Budget Forecast; describe the new investment priorities for the 2016 Capital Forecast; and, summarize significant changes from the 2015 Capital Forecast. He indicated Council identifies capital priorities through a number of processes, including but not limited to: the Strategic Plan; the Development Charges by-law; and various master plans. He stated once the priorities are identified, staff propose a budget that best addresses these priorities in light of limited resources. He noted highest priority has been given to projects required to meet legislation, next priority has been given to the delivery of core services, and last priority are projects that address community priorities and enhance quality of life, such as investing in parks and trails. Councillor S. Marsh entered the meeting at this time. Mr. Chapman advised the 10-year Capital Forecast includes 463 different projects, with a combined value of $1.2 billion. He indicated the Capital Forecast is balanced, both financially and in priorities, noting there are identified funding sources for all projects included in the forecast, with high priority projects scheduled to be completed first. He encouraged members to consider the potential impacts adjustments in the 2016 Capital Forecast may have on future budgets. In response to questions, Mr. Chapman agreed to provide an Issue Paper on the City's capacity to leverage funding from other levels of government and accommodate that funding prior to Final Budget day. BOARDS FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30.2015 -79 - CITY OF KITCHENER 1. FCS-15-165-2016 CAPITAL BUDGET(CONT'D) Centre in the Square (CITS) Messrs. Bruce Gordon and Rob Sonoda and Ms. Deb Daub, Centre in the Square (CITS), presented an overview of the Centres' budget request for 2016. In response to questions, Mr. Chapman noted that a report was brought forward for consideration at the November 16, 2015 Council meeting on the increased funding for CITS and their requested increase was approved that date. He indicated that the Capital Budget agenda was previously circulated and it was not able to be removed in its entirety from the budget package. Kitchener Public Library(KPL) It was noted Ms. Mary Chevreau, KPL, was in attendance to respond to any questions related to the Capital funding request for the KPL. CAPITAL FUNDING SOURCES Councillor P. Singh entered the meeting at this time. Mayor B.Vrbanovic left the meeting at this time. Mr. R. Hagey reviewed the funding sources for the Capital Forecast, advising funding in the 2016 Capital Forecast is $1.213, which is an increase of about $190M compared to the 2015 Capital Forecast. He noted the Enterprise funding has increased by approximately$175M,with the majority of this increase arising from the Water, Sanitary, and Stormwater utilities which fund the replacement of water & sewer infrastructure. He stated the Capital Pool is essentially the same as last year, and noted the Capital Budget is balanced. Questions were raised regarding the Department Requests in the Capital Pool and whether those requests can be broken down by percentage. Mr. Hagey advised the department requests are broken down by department then by project on Pages C-191 to C-206 of the agenda package. He noted in future years staff could include a chart demonstrating those that information broken down by percentage, adding he could circulate that information via email for the 2016 Budget. Mayor B.Vrbanovic re-entered the meeting at this time. DEVELOPMENT CHARGES (DC) Mr. Hagey presented an overview on Development Charges, noting the City undertook a review of the Development Charges (DC) By-law in Spring of 2014. He noted, there were two financial objectives in the 2014 DC By-law Update, which included ensuring cash flows were balanced and maximizing the charges. He noted those two objectives were fully achieved and have helped to establish clear Capital Project priorities, which means high priorities are fully funded in the 2016 budget and low priorities are only partially funded or are not funded at all in the 2016 budget. Mr. Hagey noted 2015 is the first full year of the new DC rates, and the projected revenues were lower than forecasted. He indicated the variance is not large enough to warrant action yet, but staff will be monitoring DC revenues and may need to discuss project deferrals as part of the 2017 Budget. He then provided a summary of Engineering projects and non-Engineering projects that were due to be funded in 2016 through DC. DEBT Mr. Hagey reviewed the City's overall debt in context of the 2016 Capital Budget and Forecast. He advised trends of previous years remain, with the total debt load peaking in 2013 and then decreasing as the Economic Development Investment Fund (EDIF) debt retired. He FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30.2015 _80 - CITY OF KITCHENER 1. FCS-15-165-2016 CAPITAL BUDGET(CONT'D) stated that debt charges as a percentage of the tax levy are higher than the 5%-10% target and are anticipated to continue along that trend until 2020. He noted a spike in debt charges in 2022 which relates to the Kitchener Memorial Auditorium expansion debt, which will be completely paid by the Kitchener Rangers Hockey Club. After 10 years, this debt will require a payment from the Rangers, or be refinanced and continue to show as Enterprise debt on the City's financial statements. He further advised with regard to debt per household, 2016 is the first year the City will be within the moderate range of debt per household as defined by the Province. Mr. Hagey stated the current debt to reserve ratio exceeds the target range; however, as EDIF retires, the ratio is anticipated to come down to 1:1 by 2020. The Committee recessed at 11:02 a.m. and reconvened at 11:12 a.m., Chaired by Councillor S. Davey with all members present. RESERVE FUNDS Mr. Hagey highlighted the Reserve Fund Policy, indicating the policy includes such principles as only using reserve funds for their intended purpose and maintaining positive balances in all reserve funds. He reviewed the five categories as well as the status of each individual reserve fund and their respective targets. He stated the total of all reserve funds are well below minimum targets and have been depleted, leaving no opportunity to fund deficits from Reserves in 2015. He noted Issue Paper Cap-01 (Reserve Continuity Schedule) has been included in the agenda package which shows a summary of each of the reserves, including: opening balances; projected revenues; projected expenses; projecting ending balances; and, minimum/maximum target levels. He further advised the debt to reserve ratios at the end of 2016 reserve balances are projected to be just under 50% of the minimum balance and members are encouraged to avoid using reserves to balance the budget. Questions were raised regarding the $250,000. transfer from Tax Stabilization Reserve Fund (TSRF) to the Centre in the Square (CITS) and whether it was noted in the agenda package. Mr. Hagey advised the Reserve schedule would need to be updated to reflect that transfer, and agreed to recirculate a revised schedule for Final Budget day. In response to questions, Mr. Hagey agreed to provide a reserve continuity schedule, similar to the format used in Issue Paper Cap-01, for the 2015 projected reserve balances. CAPITAL FORECAST INFORMATION Mr. Hagey provided an overview on how Capital Forecast information was compiled within the Budget Package. In addition, he provided specific details outlining how Class estimates were indicated within the Forecast for non-general provision projects in excess of$1 M. MAJOR CHANGES SINCE PRIOR YEAR& ISSUE PAPERS The Committee reviewed major changes from prior years as well as the Issue Papers put forward as part of the 2016 Capital Budget, with particular regard to the existing Capital balances. The Committee recessed at 11:49 a.m. and reconvened at 1:00 p.m., Chaired by Councillor S. Davey with all members present. GENERALEXPENSE The Committee considered the General Expenses Capital Forecast contained on page C-96 of the 2016 Capital Budget package. OFFICE OF THE CHIEF ADMINISTRATOR The Committee considered the Office of the Chief Administrator Department Capital Forecast contained on pages C-to C99 TO C-105 of 2016 Capital Budget package. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30.2015 -81 - CITY OF KITCHENER 1. FCS-15-165-2016 CAPITAL BUDGET(CONT'D) Mr. H. Gross was in attendance to respond to questions regarding the types of projects completed within the Environmental Remediation Capital Budget. Councillor J. Gazzola requested clarification on the 2016 Capital Budget balance for the Kitchener Market. In response, Mr. C. Bluhm agreed to provide information via email detailing the expenses to complete the washroom renovations at the Kitchener Market. FINANCE AND CORPORATE SERVICES The Committee considered the Finance and Corporate Services Department Capital Forecast contained on pages C-106 to C-110 of the 2016 Capital Budget package. COMMUNITY SERVICES The Committee considered the Community Services Department Capital Forecast contained on pages C-111 to C-122 of the 2016 Capital Budget package. Ms. C. Fletcher responded to questions regarding Issue Paper Cap-02 (Kiwanis Park Pool Renovation), advising should the budget for the renovation not be approved, $800,000. would be still be required to decommission, remove and dispose of the asphalt and infrastructure in a proper manner. INFRASTRUCTURE SERVICES With regard to the $750,000. Capital Budget for Iron Horse Trail Improvements, Mr. D. Ritz indicated the allocation was presented as Phase 1 of the Iron Horse Trail Master Plan Strategy which received Council consideration in November 2015. In addition, he agreed to provide a breakdown on the specific expenditures outlined in the Strategy prior to final budget deliberations. Mr. Ritz responded to questions regarding the South District Park Capital Budget allocation, contained on page C-131 of the Capital Budget Package. He advised that the South District Park Master Plan indicated $350,000. would be required for playground completion, and $250,000. would be required for the splash pad; however, Phase I of the Park does not include either amenity. Councillor K. Galloway-Sealock requested an Issue Paper regarding information and funding options for inclusion of the playground and splash pad into Phase 1 for South District Park. Mr. D. Locke responded to questions regarding Issue Paper Cap-04 (Grand River Park) wherein funding for the development of a Grand River Park is partially reassigned from the 2016 Major Sidewalk Repair budget in the amount of$160,000. and $250,000. from the 2016 Emerald Ash Borer program. He advised the current program could be completed with the funding as allocated within the 2016 proposed budget for major sidewalk repair; however, if additional repairs are directed, more funding would be required. Several members of the Committee expressed concern that the impact reassignment of $160,000. from the sidewalk repair program and directed staff to prepare a report with a comprehensive review of the sidewalk repair program outside of 2016 budget deliberations. The Committee considered Issue Paper Cap-10 (Emerald Ash Borer Update) highlighting the summary and forecast of the Emerald Ash Borer program. Mr. D. Locke advised that the original estimate in 2011 was $4.7M with an additional $2M for tree planting; however, it has been determined through efficient tendering the entire program could be completed for$4.7M. Councillor Y. Fernandes requested an Issue Paper with information regarding the impact of redirecting $250,000. from Grand River Park to the tree planting program, as this funding originally came from Emerald Ash Borer and should be diverted to support the tree canopy. The Committee considered Issue Paper Cap-05 (Water Distribution System Improvements). Mr. W. Malcolm responded to questions regarding the types of improvements that are required to the Distribution system and the overall impact of the improvements. With regard to the FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30.2015 -82 - CITY OF KITCHENER 1. FCS-15-165-2016 CAPITAL BUDGET(CONT'D) balance within the Capital Forecast, staff agreed to provide the existing capital balances schedule as at November 30, 2015 for the Water Utility. The Committee recessed at 2:40 and reconvened at 2:45 p.m.with all members present. Mr. H. Gross responded to questions regarding the Capital Road Reconstruction and Resurfacing program, pages C-141 to C-165 of the 2016 Capital Budget Package. He advised reconstruction on Regional Roads includes the cost of sidewalk installation paid by the Region of Waterloo, with ongoing maintenance and replacement being the future responsibility of the City of Kitchener. Mr. Gross indicated staff is currently in discussion with the Region of Waterloo regarding cost apportioning projects on Regional Roads and agreed to keep Council apprised. In addition, Mr. Gross agreed to follow up with Regional staff regarding the $200,000. required for sidewalk replacement on Ottawa St. from Highway 7 to Lackner Boulevard and whether the Region would provide funding. Mr. J. Readman responded to questions regarding the Community Led Traffic Calming Capital Budget and Forecast, noting the $10,000. allocation is consistent throughout the ten years of the forecast.At the request of Councillor S. Marsh, staff agreed to provide information for 2017 budget deliberations with consideration to potentially increasing funding for Community Led Traffic Calming. Councillor Gazzola left the meeting at this time. Mr. P. McCormick responded to questions regarding Issue Paper Cap-08 (Innovation District Parking), advising the funding is earmarked for future parking solutions anticipated to be needed in the downtown area. Mr. Chapman elaborated, stating the allocation in the Capital Forecast provides for inclusion in future Development Charge studies. At the request of Councillor Fernandes, the Committee was in receipt this date of a schedule for Recreation Land Reserve Fund detailing the projected balance for the years of 2015 to 2025. Mr. Hagey explained the target level for the reserve fund is $5M, noting the ending balances each year include projected building permit revenue of $750,000. With regard to a potential transfer to fund other parks, he stated the maximum transferable allocation is $500,000.; however, he emphasized that the available amounts are assuming $750,000. of revenue. With regard to future Budget packages, the Committee requested that any Capital Line items with outstanding balances be annotated with expenditures and anticipated completion date. RESOLUTION On motion by Councillor K. Galloway-Sealock- it was resolved: "That staff be directed to report and /or take appropriate action on the following matters arising from the November 30, 2015 special Finance and Corporate Services Committee meeting relative to the 2016 Capital Budget, as outlined in the chart below: Division Topic Action Provide an Issue Paper on the City's capacity Funding Options to leverage Federal funding if there was some new funding program announced as part of FINANCIAL the next Federal Budget. PLANNING Provide an updated reserve schedule for Tax Tax Stabilization Stabilization Reserve Fund (TSRF) based on Reserve Fund $250,000 transfer for Centre in the Square in 2016. FINANCE AND CORPORATE SERVICES COMMITTEE NOVEMBER 30.2015 -83 - CITY OF KITCHENER 1. FCS-15-165-2016 CAPITAL BUDGET(CONT'D) Division ' 'T6pic � Aetoh Provide a reserve continuity schedule for FINANCIAL Reserves 2015 with projected reserve balances, PLANNING similar to what is outlined in Issue Paper (CONT'D) Cap-01 Reserve Continuity Schedule). Capital Closeouts Provide the listing of 2015 tax supported capital closeouts. Provide project-specific details related to Trails the $750,000 allocation for the Iron Horse Trail Improvements. Provide an Issue Paper related to the Parks possible inclusion of the playground and splash pad into Phase 1 for South District Park. OPERATIONS Prepare a staff report, does not need to be Sidewalks through the 2016 budget process, providing a comprehensive review of the sidewalk repair program. Provide an Issue Paper outlining the Parks/Trees impact of redirecting $250,000 from Grand River Park to the tree planting program to support the tree canopy. Provide a schedule of the existing capital WATER Capital Balances balances for the Water Utility, as of November 30, 2015. Report back to Council if the Region of Waterloo agrees to fund the Sidewalk replacement on Ottawa Street from Highway 7 to Lackner Boulevard, which ENGINEERING Sidewalks has a budget of$200,000. Additionally, provide an update on discussions regarding Regional funding for sidewalk maintenance and replacement on Regional Roads. TRANSPORTATION Provide information in 2017 regarding the SERVICES Transportation potential increase of Community Led Traffic Calming funding. 2. ADJOURNMENT On motion, this meeting adjourned at 3:43 p.m. D. Livingstone D. Saunderson Committee Administrator Committee Administrator