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Home My WebLink AboutFCS-16-167 - 2017 Operating Budget REPORT TO:Finance and Corporate Services Committee DATE OF MEETING:November 14, 2016 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:October 25, 2016 REPORT NO.:FCS-16-167 SUBJECT:2017 OperatingBudget RECOMMENDATION: For Discussion Note: Final approval of the 2017 Operating Budget will take place as part of Final Budget Day, scheduled for January 23, 2017. BACKGROUND: REPORT: Key Notes of the Operating Budget O - 1 The proposed tax supported budget includes growth funding that could be reallocatedin 2017 The City is increasingly exposed to rising Workplace Safety Insurance Board (WSIB) costs The proposed utility budgetsinclude increased investments in utility infrastructure Key Note # 1 – Other Levels of Government Cause More Than 50% of the Increase Cost increases controlled by the Region of Waterloo and Province of Ontario are causing more than half of the increases proposed in the 2017 City of Kitchener budget. Regional increases to water supply and sewage processing costs, and Provincial legislative changes for cap and tradeaccount for 52% of the total proposed increase. Key Note # 2 – Status Quo for Most Tax Supported City Services The proposed net tax levyincrease for 2017 is 1.75% and approximates the rate of inflation. The majority ofprograms and services supported by property taxesremain at current service levels, although there are requests for very limited enhancements to select City services. Enhancements to areas such as Customer Relationship Management (CRM) and the KitchenerMarket have been identified to Council through previous budget cycles or separate staff reports. Key Note #3 – Use of 2017 Growth Funding Each year the City forecasts net tax levy impacts for the next 10 years. The forecast includes cost increases to maintain existing services, new tax revenues from assessment growth, and additional costs related to new programs or facilities. For 2017, one of the previously identified growth costs was an additional operating budget of $109,000 for the expanded Doon Pioneer Park Community Centre (DPPCC). The expansion will not be completed in 2017, so the additional operating budget is not required in 2017. The $109,000 of operating funding has been allocated to DPPCC in the 2017 budget,in accordance with the prior forecast, and Council will have opportunity to decide if the funds remain in that facility, are repurposed to fund other operating items, or are removed from the budget. Key Note #4 – Increasing Exposure to Rising WSIB costs Legislation related to WorkplaceSafety Insurance Board (WSIB), specifically related to Firefighters, has changed in recent years and leaves the City financially exposed to cover its rising WSIB costs. The legislative changes, which are governed provincially, have made it easier for current and pastemployees to be covered for costs related to certain types of cancer as well as post-traumatic stress disorder (PTSD). The City maintains a WSIB reserve to help offset the cost of claims, but at the end of 2015 the reserve had a balance of $1.3M versus a calculated liability of $15M relating to current claims, let alone any new claims that may occur in the future. The proposed budget does not include increased funding for the WSIB reserve as it could not be accommodated within the inflationary increase budget guidelinebut staff believe any capacity for additional funding should be allocated to the WSIB reserve. O - 2 Examples include reallocating growth funding not needed in 2017 as mentioned above in Key Note #2, or additional assessment growth if the final figure is above the 1.25% assumed in the proposed budget. Further, Council should consider additional contributions to the WSIB reserve beyond to the staff-proposed budget. This issue will likely require a multi-year solution. Key Note #5 – Increased Investments in Utility Infrastructure As was indicated through the 2016 budget, investments in City owned utilities will again be the focus of the 2017 Operating Budget.The proposed increases in Water , Sanitary Sewer, and Storm Water are consistent with the rates presented to Council in August 2015 as part of the State of the Infrastructure Update. These levels of increase are required again in 2017 in order to fund Regional rate increases for water supply and sewage processing, increased replacement of capital infrastructure, and deferred maintenance activitiesin each of the utilities. Overview of the Tax Supported Operating Budget The proposed net tax levy increase for 2017is 1.75%and would amount to an additional $19 per year, or $1.58per month on the average Kitchener home (assessed at $291,000). The proposed tax rate increase includes cost increases related to collective agreements and utility rates, cost savings due to continuing low fuel prices, andadditional revenues from assessment growth, user fee increases and the anticipated strong performance of the City’s investment portfolio. An appendix to this report shows the tax supported operating budget in the same format as the variance report. Like the variance reports, comments have been provided for variances that are more than $50,000 and/or 10% compared to the prior year’s budget. And as requested by Council, projected results for 2016 have been included in this budget document. The proposed net tax levy increase for 2017 of1.75%balances the competing interests of affordability and sustainability as described below. Affordability in the Tax Supported Operating Budget Budget affordability means the budget approved by Council supports the strategic directions for financial management. Property taxpolicy has been a long standing part of the City’s Strategic Plan and is once again included in the 2015-2018 Strategic Plan approved by Council. Kitchener’s direction says the City will strive for competitive, rational and affordable taxation levels. To determine this, the City must consider the following when setting tax rates: Comparison to other municipalities; Inflationary factors, including those unique to municipalities; and Balance of service levels versus affordability O - 3 Comparison to Other Municipalities The City of Kitchener is already one of the most affordable cities in Ontario. It has one of the lowest tax burdens of large cities in Ontario, consistent with the other cities the Region of Waterloo. The graph below shows the 2015results of BMA’s annual tax burden analysis for the same bungalow property in each of Ontario’s largest municipalities. Kitchener holds the sixthlowest ranking in the province, meaning it is one of the most affordable cities in Ontario. Annual Tax Burden of a Bungalow in Large Ontario Municipalities (>100,000 people) Based on early indications, it is expected that Kitchener’s proposed tax rate increase of 1.75% will help it maintain its low tax burden amongst large Ontario municipalities, and will likely be the lowest proposed tax rate increase of allmunicipalities inthe Region of Waterloo. Inflationary Factors, Including Those Unique to Municipalities Theproposed 2017tax rate increase approximates the anticipated rate of inflation. Inflation considerations for setting tax rates are in two parts: Typical consumer inflation, represented by the Consumer Price Index (CPI) Unique municipal inflation, represented by the Municipal Price Index (MPI) Ontario CPI inflation to the end of Augustis 1.73% and is projected to be in that range at the end of the year. The following graph shows the cumulative tax rate increase during this term of Council which is below the cumulative rate of CPI inflation in Ontario. O - 4 This meansthe tax rate increases in this term of Council are affordablein that they are following the general trend of costs and incomes. Cumulative CPI Ontario Inflation versus Tax Rate Increase in This Term of Council In addition to CPI inflation, the City of Kitchener calculates a Municipal Price Index (MPI), which accounts for the fact that the “basket of goods” the City purchases is considerably different than the basket of goods used to calculate CPI inflation figures. For instance, the top three components of the CPI calculation are shelter, transportation and food which do not apply the same way to a municipality as they do an individual. The MPI calculation accounts for the different costs of a municipality such as staffing, operating supplies, and capital construction. The MPI figure for the 2017budget process is 1.92%, meaning that inflation pressures on the City of Kitchener budget are somewhathigher than the typical Ontario household.Rigorous budget review leading to savings, reductions, and efficiencies allows the City to deliver a budget below MPI. Balance of service levels versus affordability The proposed 2017tax rate reflects citizen preferences related to service levels and affordability. The proposed tax supported budget maintains existing City services at an increase near the rate of inflation. These preferences have been reaffirmed recently through citizen surveys conducted in 2012and 2013. In the summer of 2012 (as part of the 2013 budget process) the City commissioned a telephone survey of Kitchener residents regarding their opinions on tax rate increases and service levels. In the phone survey, the majority of respondents (62%) said they prefer an inflationary tax rate increase that maintains current service levels. As part of the 2013 Environics survey, a similar majority of respondents (61%) said the same O - 5 thing. While the 2012 phone survey did not reach enough residents to be considered statistically significant, the 2013 Environics survey interviewed more than 1,000 residents and the findings are statistically significant. The graph below shows that Kitchener citizens prefer increasing taxes at the rate of inflation in order to maintain existing services over other alternatives. Citizen Preferences Regarding Tax Increases and Service Levels Sustainability in the Tax Supported Operating Budget Budget sustainability means that the budget approved by Council is adequate tofund existing service levels and avoid deficits. Tax supported operating budget sustainability has been an ongoing issue within the tax supported budget for a number of years, but significant progress has been made in recent budgets. Sustainability willbe considered in terms of: History of operating deficits; Chronic deficits; and Status of the Tax Stabilization Reserve Fund History of Operating Deficits The City of Kitchener has had along history of operating deficits, but this trend ended in 2015 with a yearend surplus for the first time in 10 years.Further, the August 2016 variance report showed a projected surplus for 2016, so it appears current tax supported service levels are now adequately funded. For the decade prior to 2015, the City had finished eachyear with an operating budget deficit (before applying funds from one-time capital closeouts). In essence, the City’s operating budget wasnot truly balancedand the cost of providing services was larger than revenues to fund them.Over the course of several budgets, Council made eliminating ongoing operating deficits a priority, and chose to allocate funding to budget areas that were regularly over budget. Now that full funding levels appear to have been O - 6 achieved, Council needs to ensurethese efforts are not eroded by budget reductions which are not supported by underlying operating conditions. The table below shows the yearend history dating back to 2012. Deficits in the earlier years have been replaced by surpluses in recent years. Tax Supported Operating Budget ResultsBefore Capital Closeouts 2016 2012201320142015 (projected) (Deficit)/Surplus Before Capital -$0.51M-$0.44M-$0.32M$0.98M$0.72M Closeouts Chronic Deficits In previousbudgets, staff has highlighted a few select areas that have consistently produced negative variances and have been an ongoing contributor to annual operating deficits. These have included areas such as Bylaw fine revenues, water & electricity costs, and postage. As of the 2015 budget, all of the areas of chronic deficit previously identified have been addressed. This means that expected service levels for tax supported City services were fully funded and no deficit was expected in 2015. Positive yearend results in 2015 andprojected positive results in2016 indicate that the current budget does not contain any significant areas of chronic deficit. One emerging area of potential chronic deficit is increasing exposure to Workplace Safety Insurance Board (WSIB) costs.Changes to the Workplace Safety and Insurance Act (WSIA), specifically as they relate to Firefighters, means the City is more exposed to claims from current and past Fire employees for certain types of cancer as well as post- traumatic stress disorder (PTSD). Under the WSIA, certain types of cancer and PTSD are presumed to be occupational illness for Firefighters caused by the nature of work they do. This means a claim for one of the qualifying cancers or PTSD is automatically approved and the City is required to pay the costs as determined by the WSIB.The list of qualifying cancers was increased in 2014, and coverage for PTSD was added in 2016, so the City is still in the early days of expanded WSIB coverage. The City maintains a WSIB reserve to help offset the cost of claims, but at the end of 2015 the reserve had a balance of $1.3M versus a liability relating to current claimsof$15M as calculated by the WSIB.This underscores the importance of increasing funding to the WSIB reserve. Status of the Tax Stabilization Reserve Fund (TSRF) The City maintains a Tax Stabilization Reserve Fund (TSRF) which is used to fund any operating deficits (or receive funds from any operating surpluses) within the tax supported operating budget. As shown in the chart below, the balance in the TSRF declined as the City experienced yearend deficits, but has increased as yearend O - 7 surpluses are closed out to the reserve.Given the balance of the TSRF is relatively small, is well below its minimum target level, and is used to fund significant unexpected operating coststhat would otherwise cause net tax levy increases, it is essential that Council hold to the principles of the approved Reserve Fund Policy and only use the TSRF as intended (funding year end deficits, not reducing the net tax levy). Summary of the Tax Stabilization Reserve Fund 2016 2012201320142015 Projected Ending Balance$1,695,198$317,944$338,611$1,790,919$2,146,862 Target Balance (Min)$4,951,223$5,104,543$5,222,519$5,402,760$5,552,420 Maintaining a balance in the TSRF is of critical importance to help avoid tax rate increases caused by deficits in prior yearsas prescribed in the Municipal Act. It is also important to maintain a balance in the TSRF going forward as it is planned to be the funding source for transitional costs incurred by Centre in the Square in 2017and possibly beyond. Use of Growth Funding in the 2017 Operating Budget As the City grows, new facilities are built, or service levels change there is a need to adjust funding levels for some services. These adjustments are projected each year as part of a 10-year tax rate forecast and adjusted each year. For 2017, the projected growth related costs for the following items: Growth ItemAmount Customer Relationship Management (CRM)$102,000 CLASS Software Upgrade$21,000 Doon Pioneer Park Community Centre (DPPCC)$109,000 Williamsburg Cemetery Phase II$48,000 Capital Policy Growth$104,000 Operations to Service Growth$350,000 Each of these items was identified in previous budget cycles and relates to a change in service delivery (CRM, CLASS Software Upgrade), a new facility (DPPCC, Williamsburg Cemetery), or growth within the City (Capital Policy Growth, Operations to Service Growth). In preparingthe 2017 budget,staff realizedthe funding planned for DPPCC would not be required in 2017. These funds will be used for increased operating and maintenance costs of the expanded building, which will not be completed until 2018. Thegrowth funds for DPPCChave still been included in the proposed budget,but could be reallocated to other priorities, or be removed from the budget completely. A combination of options is also a possibility. Each of the options is examined below. O - 8 Option #1 Leave funds in DPPCC The funds for additional operating and maintenance costs of the expanded DPPCC will be required in the near future, and leaving the funding in the 2017 budget will help alleviate budget pressure in 2018. Also, it is expected there will be a negative variance of $28,000 in the Kiwanis Park budget as the pool will be closed in 2017 for major rehabilitation. A surplus in the DPPCC budget would help offset a negative variancein the Kiwanis Park budget. Finally, any surplus in the DPPCC budget wouldhelp the City achieve an overall surplus in tax supported operations and would be closed out to the Tax Stabilization Reserve Fund. As noted earlier in this report, this reserve is well below its minimum target and it would be prudent to increase its balance to help avoid spikes in the tax rate caused by unexpected deficits in tax supported operations. Option #2 Reallocate funds to other priorities A small number of other priorities are being considered as part of the 2017 budget. The first is to increase funding to the City’s WSIB reserve to help offset the City’s increasing exposure to WorkplaceSafety Insurance Board (WSIB) costs. As noted in the Chronic Deficitssection of this report, changes to WSIB legislation, specifically related to Firefighters, could have considerable financial ramifications for the City. The City’s WSIB reserve is significantly underfunded meaning the anticipated claims against the City are unfunded and will ultimately resultin a tax rate increase.Building up this reserveis a necessity in light of the changes to legislation. A second consideration relates to additional services being provided by the Integrity Commissioner. These services were discussed by Council in October 2016 and staff were directed toreport on the budget implications ofincreasing the service levels provided by the Integrity Commissioner to Councillors. An increased level of service would require additional funding from property taxes. If DPPCC funds were reallocated to either of these priorities,the DPPCC funds would have to be added in to the 2018 budget. Option #3 Remove funds from the budget A final option is to simply remove the DPPCC funds from the budget completely. This would result in a tax rate increase of 1.66% instead of 1.75%, whichwould save the average homeownerjust under $1 per year. And like Option #2, if this was chosen the DPPCC funds would have to be added in to the 2018 budget, resulting in an additional budget pressure next year. Overview of Enterprise Operating Budgets The City operates seven enterprises, which are self-sufficient business lines that raise their own revenues through user rates instead of being funded through property taxes. As part of the budget package, “Enterprise Overviews” have been provided for each of O - 9 the enterprises. These overviews describe the main purpose of the enterprise, provide some benchmarking information, and describe recent challenges/successes. The seven enterprises are noted in the table below. City of Kitchener Enterprises GolfNatural Gas BuildingWater ParkingSanitary Sewer Storm Water Rates for the enterprises listed on the left of the table have already been considered by Council as part of the annual user fee review (report FCS-16-166). The enterprises listed on the right are commonly referred to as the utilities and do not have their utility rates set until Final Budget Day (with the exception of Natural Gas which happens outside of the budget process). While each of the enterprises is managed separately as its own business line, one significant principle is followed by each of enterprises; ensuring financial sustainability. Each enterprise has its own stabilization reserve fund that is used to manage fluctuations in financial operating results from year to year. In years that end with positive results, the surplus funds are held in reserve and are used to fund deficits that may arise in future years. The general guidelines for managing these reserve balances areas follows: If an enterprise has a positive stabilization reserve balance, the goal of staff is to propose a budget (and any associated rate increase) thatensuresthe reserve does not become negative, and ideally would achieve the minimum target threshold for the reserve. If the stabilization reserve balance is already negative, the goal of staff is to propose a budget (and any associated rate increase) that reduces/eliminates annual operatingdeficitsin each year of the forecast and returns the reserve to a positive balance withinthe 5-year forecast. Budget highlights and reserve balances for each of the enterprises are provided below. Golf Goodweather and special promotions in 2016 are projecting to help the Golf enterprise achieve a small surplus at the end of the year. The Golf stabilization reserve balance will remain in a negative balance, but is expected to improve in 2021 when some existing debt is paid off, resulting in lower principal and interest payments.It is not expected the accumulated deficit in Golf will be fully paid off until 2038 which is four years after all the Doon Expansion debt is paid off. The 2017 budget for Golf is largely status quo. Some fees are being increased by 2%, while others are being held flat to remain competitive. Overall, apositive result of $12,000 at the end of the yearis expected, which is in line with the 2016 budget and projected actuals. O - 10 Budget Summary –Golf 2016Projected Actual$14,000 surplus 2016Accumulated Stabilization Reserve Balance$918,000 negative 2017Budgeted Rate Increase2% 2017Budgeted Result$12,000 surplus 2017Accumulated Stabilization Reserve Balance$918,000 negative Building Increased building permit activity in 2016is causing a projected surplus of $1,586,000 by the end of the year. Low interest rates and consumer preference for the Waterloo Region have caused revenues to be higher than budget in all categories, especially single detached homes and industrial buildings. After consulting the Waterloo Home Builders Association (WHBA), staff has reduced 2017 building permit fees by 5%, and then is projecting no rate increase for the next few years. This was the preferred rate option by the WHBA, and will result in the stabilization reserve, which is above the maximum target level, to be drawn down within the target range by 2019. Budget Summary –Building 2016Projected Actual$1,586,000 surplus 2016Accumulated Stabilization Reserve Balance$7,754,000 positive 2017Budgeted Rate Increase-5% 2017Budgeted Result$281,000 surplus 2017Accumulated Stabilization Reserve Balance$8,147,000 positive Parking The 2016projected surplus of $382,000 in Parking is worse than budget as an expected land sale did not materialize. Increased monthly parking revenues have offset the lack of land sale revenue, but not completely. Consistent with the rate plan that began in 2015, staff have budgeted no increase to parking rates in 2017.Beginning in 2018, a 1.5% annual rate increase is expected. The 2017budget for Parking projects a surplus of $82,000 which will be applied against the negative balance in the Parking stabilization reserve balance. The reserve is projected to remain in a negative position across the forecast unless one of the following occurs: The dividend Parking pays to the City is reduced A surface parking lot is soldand funds are applied to the operating budget The costs of Cycling Masterplan and/or Traffic Demand Management (TDM) are funded by thetax basebeyond 2019 (so starts in 2020) O - 11 Budget Summary –Parking 2016Projected Actual$382,000 surplus 2016Accumulated Stabilization Reserve Balance$829,000 negative 2017Budgeted Rate Increase0% 2017Budgeted Result$82,000 surplus 2017Accumulated Stabilization Reserve Balance$760,000 negative Gas In 2017, Gas Delivery is projecting a deficit of $276,000 due to lower revenues caused by warmer than normal temperatures at the beginning of the year. For 2017, Gas Delivery is expected to have a surplus of $3.7M. The difference is largely caused by the decreased need for capital funding. Recent Gas budgets have included significant costs related to Light Rail Transit (LRT) and the replacement of the utility billing system. These projects are nearly complete,so the Gas capital program is returning to more typical levels in 2017. Budget Summary –Gas Delivery 2016Projected Actual $276,000 deficit 2016Accumulated Stabilization Reserve Balance$198,000 negative 2017Budgeted Rate IncreaseSet outside of budget 2017Budgeted Result $3,715,000 surplus 2017Accumulated Stabilization Reserve Balance$3,515,000 positive Water, Sanitary & Storm Water The budgets for these three utilities are linked together as they are the primary funding source for the City’s Accelerated Infrastructure Replacement Program (AIRP) which funds the capital replacement of the water and sewer infrastructure that is most in need of repair. This infrastructure was the subject of a special report and presentation (INS- 15-075, State of the Infrastructure Update) made to Council in August 2015. The conclusion of the report stated: A realistic and strategic approach to funding both capital replacement and preventative maintenance activities will ensure the reliability, safety and sustainability of existing and future assets for the City of Kitchener. To ensure a go-forward strategy to address the backlog and on-going replacement, substantial annual rate increases for both replacement and maintenance activities for an extended period of time will be required. The recommended rate increases for these utilities as noted in the State of the Infrastructure (SOTI) are consistent with the utility rate increasesapproved by Council in 2016, and proposed for the 2017 budget. The table below takes the proposed rate increases and divides them into subcomponents including: Regional Rate Increase – Impact on the utility rate of the change in Regional water/sanitary rates. This assumes the volumes or water/sewage processing remain constant year to year. O - 12 Capital (AIRP) – Impact of increased investment in the Accelerated Infrastructure Replacement Program (AIRP) which funds full road reconstruction capital work.. The increase will allow 13% more work to be completed this year which will continue to address the backlog of failing infrastructure. Maintenance – Impact of increased investment in maintenance activities for the utility. This includes deferred maintenance activities as well as moving to a more proactive maintenance program. Other – Impact of changes in the utility other than items mentioned above. Examples include changes to water/sewage processing volumes, changes to capital funding levels other than in the AIRP, and changes to net revenue/(expense). Proposed Utility Rate IncreasesBroken Into Component Parts Regional CapitalTotal Rate UtilityMaintenanceOther Rate Increase(AIRP)Increase Water1.1%2.6%2.0%1.9%7.6% Sanitary4.4%3.4%2.0%1.0%10.8% Storm Water0.0%5.6%2.0%1.6%9.2% Total2.5%3.4%2.0%1.4%9.3% Staff strongly recommends continuing with the rate increases outlined in the SOTI presentation for 2017. There are still a number of deferred maintenance activities that require additional fundingand there is still a significant backlog of capital replacement work needing to be constructed. Continuing with the proposed rate increases will improve the resiliency of these systems as it will allow for more proactive maintenance activities that will reduce the likelihood of unpredictable failure in the short term, and will lead to increased replacement of problem pipes over the long term.Staff are committed to review the continuing need for the rate increases outlined in the SOTI presentation as part of future budgets, but recommend continuing with them for 2017. Looking to the finances of these utilities, in 2016 Water is projecting a modest surplus ($561,000), while smalldeficits are projected for both Sanitary ($212,000) and Storm Water ($41,000). Water consumption has been below budget in 2016, which negatively affects both Water and Sanitary revenues since both utilities are billed based on the amount of water consumed. The revenue shortfall has been offset in Water due to savings in water main repairs caused by warmer than normal weather, but there has not been a similar savings realized in Sanitary. Storm Water revenues are very close to budget but maintenance expenses are projected to be over budget due to higher than expected repair volumes. Each of these utilities is projected to have a substantial negative balance in its stabilization reserve at the end of 2016,but is planned to be positive at the end of 2017. This is being achieved by funding portions of the 2017 capital program from the capital reserves for each utility. Without funding from the capital reserves, each of the utility stabilization reserves would be in a negative balance well into the forecast years. O - 13 Budget Summary –Water 2016Projected Actual$561,000 surplus 2016Accumulated Stabilization Reserve Balance$2,048,000 negative 2017Budgeted Rate Increase7.6% 2017Budgeted Result$2,444,000 surplus 2017Accumulated Stabilization Reserve Balance$367,000 positive Budget Summary –Sanitary 2016Projected Actual$212,000 deficit 2016Accumulated Stabilization Reserve Balance$232,000 negative 2017Budgeted Rate Increase10.8% 2017Budgeted Result$429,000 surplus 2017Accumulated Stabilization Reserve Balance$194,000 positive Budget Summary –Storm Water 2016Projected Actual$41,000 deficit 2016Accumulated Stabilization Reserve Balance$987,000 negative 2017Budgeted Rate Increase9.2% 2017Budgeted Result$1,007,000 surplus 2017Accumulated Stabilization Reserve Balance$6,000 postiive ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The recommendation of this report supports the achievement of the city’s strategic vision through the delivery of core service. FINANCIAL IMPLICATIONS: The financial impacts on the average homeownerof services provided to citizens by the City of Kitchener are shown in the chart below. The impacts are shown by budget (e.g. tax, water, sanitary, storm water, gas) as well as by level of government (City, Region, Province).It should be noted that the impacts attributed to the Region of Waterloo are only forthe additional costs of water supply and sewage processing that must be absorbed within City of Kitchener utility rates.Impacts related to changes in the Regional net tax levy are notincluded. The breakdown by level of government shows the City of Kitchener is responsible for $91 (or 48%) of the proposed increase, while the Region of Waterloo and Province of Ontario are responsible for $97 (or 52%) of the proposed increase. TheRegional portion of the impact relates to increased costs for supplying water and processing sewage. The Provincial portion of the impact relates to the costs of implementing cap and trade legislation for natural gas. O - 14 Impact on Homeowner Change 20162017$% Taxes $1,069$1,088$191.75% Storm Water $135$148$139.20% Water $420$452$327.60% Sanitary $483$536$5310.80% Subtotal (pre Gas) $2,107$2,224$1175.55% Gas $721$792$719.85% Total $2,828$3,016$1886.65% Impact by Level of Government City of Kitchener $913.23% Region of Waterloo $260.92% Provincial Carbon Tax $712.50% Total $1886.65% NOTE: not The budget impact attributed to the Region of Waterloo does include the impact to taxpayers related to changes in the Regional net tax levy.It only includes the additional costs of water supply and sewage processing that must be absorbed within City of Kitchener utility rates. Assumptions : City Taxes : Current Assessed Value (CVA) of $291,000 Storm Water : property classified as Residential Single Detached Medium 3 Water & Sanitary : water consumption of 204m 3 Natural Gas : gas consumption of 2,100m COMMUNITY ENGAGEMENT: Citizens have an opportunity to provide input about priority areas of the Operating Budget through a number of processes. Their input comes through public consultation efforts for comprehensive master plans (e.g. Leisure Facilities Master Plan), strategies (e.g. Neighbourhood Strategy, Customer Service Strategy), or specific projects (e.g. Kiwanis Park Pool). As part of those processes, staff considers the feedback received from the public as they make their recommendations and share it with Council when those recommendations are presented for approval. The budget is the process whereby Council affirms the various approved priorities and allocates funds to bring concepts into reality. O - 15 For the 2017budget process, staff will employ a suite of traditional and electronic engagement methods in an effort to effectively inform and consult citizens. Staff will proactively provide information about the budget process via media outreach, the city’s website and through Your Kitchener. Citizens are encouraged to provide their input by: Writing, emailing or phoning City Hall Attending the public input session planned for January 16, 2017 Responding to the City’s Facebook/Twitter posts about the budget Utilizing Engage Kitchener Contacting theirward councillor ACKNOWLEDGED BY: Dan Chapman, Deputy CAO (Finance and Corporate Services) O - 16 Golf Enterprise Operating Model/Philosophy: Kitchener Golf provides an affordable golf experience for all. Services Provided: Kitchener Golf operates golf properties and facilities at both Doon Valley and Rockway Golf Courses offering affordable recreational golf opportunities, as facilitated clinics, leagues, tournament and events. Kitchener Golf facilities are open from dawn to dusk seven days golf season, which can run anytime between April-November dependent upon weather. During the off season, the facilities can be utilized for special occasions and provide a public space for winter walking and cross country skiing. Benchmarking: The chart below outlines the prices at a number of privately owned public golf courses in the area. Kitchener Golfs prices are at the low end of the spectru Kitchener Merry Hill Cambridge PuslinchElmira Primetime $46$39 $44 $49 $53 Off-Peak $36$25 $34 $45 $40 Primary Legislation: A Level Playing Field agreement signed with National Golf Course Owners Associati that municipal golf courses will pay a dividend to their municip property and income taxes. This ensures that municipal golf courses are not at an unfair advantage. Customer Base: Both courses are open to everyone. Recent Challenges: Working around rapid transit construction and working on solutio Golf Course resulting from changes in the landscape to accommodate fu Increased competition for discretionary spending and a decrease in time available to play. Aging infrastructure of club houses, maintenance and storage buildings. Recent Successes: Renewed the partnership between Kitchener Utilities toprovide golf clubs and access to golf to local youth. Secured a donation for a 2017 youth focused golf program. Rolled out the new accessible golf cart at Doon Valley Golf Cour Introduced a spring special for a reduced golf fee for April tha play. O - 20 Building Enterprise Operating Model/Philosophy: The Building enterprise is responsible for the administration and enforcement of the Bui Code Act and Building Code. The mandate of the Building enterprise is to ensure construction within the City meets the minimum requirements as detailed in th Services Provided: The Building enterprise provides a majority of its services to eilding permit issuance and on-site inspections. Building also supports the AMANDA software sys and administers the final grading approvals for new low-rise residential buildings. Benchmarking: The charts below outline the total number of building permits isd fees collected over the past 6 years. st * 2016 Year-To-Date (YTD) January 1 to July 31st O - 21 Primary Legislation: The Building enterprise is governed by the Provincial Building Code including referenced legislation such as Planning Act, Development Charges Act, and other construction standards. The main purpose of the Building Code is to ensure the buildings citizens work, live and play in are safe through the issuance of building permits and site inspections. Building permit revenues must only be used for the administration and enforcement of t Customer Base: The majority of Buildings customers are the private sector, and regulations is diverse; from minimal to knowledgeable. Building users such as do-it-yourself home owners, repeat homebuilders, and non-residential applicants who build 1-2 times per year. The 2016 Year-To-Date (Jan. 1-July 31st) breakdown of Buildings customer base is 86% residential, 8% industrial/commercial and 6 Recent Challenges: Although Building staff regularly monitor economic trends to forecast permit activity levels, it is difficult to predict permit activity because staff do not control when owners decide to build. Further, not every permit generates the same amount of revenue or work effort by staff. The challenge continues to be remaining adequately resourced to meet provincially legislated time frames for permit decisions and inspections. Permit activity continues at similar levels to 2015. It is important to note that not all inspections for a permit ar-off in the same year and do-it-yourself projects require more time to explain how to-do-it and how to-repair-it. Recent Successes: Building successes are attributed to a technically skilled professional staff with proven customer service skills. Customer feedback on Building staff services continues to be positive. Building enterprise processes are not stagnant, and evolve to meet the needs of the customers. Recent examples include Tuesday Night Express Service for do-it-yourself owner projects and maximizing use of technology such as Online Permit Applications The Building enterprise recognized the need to implement electronic plan review on large scale projects including high rise buildings. The implementation is e nd The Building enterprise administered the termite pilot project f year and took the lead on Canstruction Fundraiser for the Food Bank. Lastly, through ongoing and prudent financial measures including high activity levels the Building Stabilization Reserve remains positive and sustainable over the 5 year projection time frame including an unplanned economic downturn. O - 22 Parking Enterprise Operating Model/Philosophy: The Parking Enterprises goal is a self- funded, financially sustainable enterprise providing accessible and convenient parking in the downtown core at a fairIt is very important to the core as it helps the City achieve and balance its economic development growth management and transportation objectives. Services Provided: The Parking Enterprise manages and operates the Citys downtown , which currently consists of five parking garages, 19 surface lots, on-street meters and free parking spaces (totaling 3,539 spaces). It has direct responsibility for the operation, maintenance, capital rehabilitation and fiscal management of the Citys publi Benchmarking: The table below outlines current prices of monthly parking for s the downtown. The Citys monthly parking prices are at the high Primary Legislation: Not applicable. Customer Base: All garage and surface facilities are open to anyoneliving, working or visiting the downtown. The customer base currently includes 1,990 monthly parkers and over 425,000 daily customers per annum. The total number of monthly parkers has remained relatively stable year over year, but inventory has increased in the last four years by 1,129 spaces with the addition of two new garages and the Bramm Street surface lot. The percentage of mons over the current supply is approximately 56%. Recent Challenges: ION construction activity is affecting travel patterns in and around the downtown. The ION construction is scheduled to continue until the end of 2017 and may impact parking facilities immediately adjacent to construction zones along Charles and Duke In 2016, the Citys monthly parking rate of $154.87 + HST ($175.00) is within the downtown business area. Competitors in the downtown have not followed suit with the Citys aggressive parking rate increases and contribute to eroding the Citys market share. O - 23 Based on anecdotal evidence, staff anticipatesincreasing parking rates at this time will result in less overall revenue as current customers will seek out cheaper alternatives. Further parking rate increases are expected to continue to soften results as auto dependent customers search for cheaper parking. Increased parking rates also influence Downtown Kitcheners competitive advantage. High parking prices can directly impact current and future economic development in the downtown. The parking revenue assumptions contained in report INS-11-005 (January 5, 2011) have not been achieved as a result of lack of anticipated new demand from the private sector and timing lags in redeveloping surface lots (i.e. parking supply has not been reduced). Cash flow projections indicate the Parking Enterprise will be in a deficit position at the end of 2016 and will continue to be in deficit across future years of the foreca. Conflicting priorities and expectations exist within Parking including expectations to enhance revenues, support the economic development of the downtown, and promote a balanced transportation system. Parking is a component of The City of Kitcheners Transportation Master Plan (TMP) and it supports Transportation Demand Manageme can have an adverse effect on bottom line results. From 2010 to 2013 the City has adopted aggressive annual parking rate increases as its primary tool to affect parking demand and has developed TDM programs that assist downtown employees in shifting away from auto dependency. The Parking Enterprise is projected to have an accumulated deficit of $829,000 in its stabilization reserve at the end of 2016. The implementation of the Cycling Master Plan and the Transportation Demand Management initiatives was to be funde Enterprise, but could be in jeopardy based on the current financial performance of the enterprise. Recognizing the high priority Council has placed on these two pr the funding model was changed and the tax-supported capital budget is funding the programs until 2018. This change has been extended one more year to 2019 in order to assist the Parking Enterprise in reducing the accumulated deficit. In order to eliminate the current deficit, consideration should dividend paid to the City by Parking, (ii) transfer proceeds of the next downtown surface parking lot into the Parking stabilization reserve, or (iii) fund the cost of cycling and/or TDM programs from the tax-supported capital budget indefinitely. Recent Successes: The Parking Enterprise is projecting a year end surplus of appro382K. Overall the net parking revenues are tracking ahead of budget (excluding the land sale that did not materialize) as a result of fluctuations in demand throughout various parking lots and garages. O - 24 Gas Utility Operating Model/Philosophy: Provide customers with quality, dependable and economical distribution of natural gas. Provide prompt, cost effective and professional servicesrelated to rental water heaters, and appliance servicing. Promote conservation and to operate in an environmentally sensitive manner. Services Provided: Gas Supply: As a natural gas distributor in Ontario, Kitchener Utilities is default system supply option to its customers at cost. Kitchener Utilities purchases and manages the gas supply to meet customer requirements. Gas Distribution: As a natural gas distributor, Kitchener Utilities delivers natural gas to consumers. Work includes installing and replacing meters, underground pipe installation, services, response to gas emergencies involving gas line hits, gas odour, carbon monoxide, and line locates. This service area pays a fixed dividend to the City which is set of service approach. Regulatory Affairs: Ensuringcompliance with codes, rules and regulations imposed by government agencies and regulators. Appliance Service: Providing specialized services that focus on heating and cooling equipment inspection and maintenance, such as central air conditioning units, furnaces, hot water heaters, clothes dryers, fireplaces, pool heaters, ranges, etc. Conservation: Developing and promoting conservation programs which help customers save money and conserve energy. Water Heater Rentals & Service: Supply and service water heaters on a rental basis, including 24/7 service for repair and replacement of tanks. Benchmarking: While the population of Kitchener continues to grow, natural gas the past 10 years. The graph below shows that the volume of gas 33 fallen from 295,733,000 m in 2005, to 257,992,000 m projected for 2016. This can be attributed to efficiency improvements, a decline in large indust awareness, and weather. O - 25 Primary Legislation: Technical Standards and Safety Act 2000 Ontario Regulation 210/01 Oil & Gas Pipeline Systems Canadian Standards Association Z662-11 Pipeline Systems Essentials Code Canadian Standards AssociationZ246.1-09 Security Management for Petroleum and Natural Gas Industry Systems Code Canadian Standards Association B149.1-10 Natural Gas and Propane Installation Code Ontario Regulation 212/01 Gaseous fuels Ontario Regulation 184/03/215 Fuel industry certificates Measurement Canada Gas Meters Electricity and Gas Inspection Act Ontario Energy Board Gas Distribution Access Rule, Demand Side Management Guidelines, Code of Conduct, Storage and Transportation Access Rule Customer Base: Natural Gas: 69,000 Rental Water Heaters: 42,000 Recent Challenges: Increased customer level of service demands and expectations; financial constraints; aging infrastructure; security and emergency response; growth; evolving business model; climate change; stricter regulatory requirements; retirements of senior workforce shortages and gaps; utility support services. The Light Rail Transit (LRT) project has substantially increased workload through major relocation work, locates, valve operation and inspection service O - 26 Recent Successes: The unique partnership between Kitchener-Wilmot Hydro and Kitchener Utilities, in regard to conservation and public outreach, continues to allow Kitchener Utilities the flexibility to enhance existing program offerings and create new program opportunities that reflect evol market needs specific to Kitchener. These programs also help Kit gas, electricity, and water. Work has commenced on a new meter inventory management system. The new system, when implemented, will improve the management of gas meters, increase administrative efficiencies, as well as meet our regulatory requirements with Measurement Can Kitchener Utilities continues to expand the use of mobile technology in field operations related to gas emergencies. The technology provides the mobile work force with access to key field information required to address and locate areas impacted by an O - 27 Water Utility Operating Model/Philosophy: Provide customers with quality, dependable, and economical distribution of water. Promote conservation and to operate in an environmentally sensitive manner. Services Provided: Water Distribution: Monitoring, installing and repairing the network of water mains, meters and services to ensure a reliable and safe supply of water. Provide a bulk water facility. Conservation: Developing and promoting conservation programs which help customers save both money and conserve energy. Benchmarking: While the population of Kitchener continues to grow, water use h past 10 years. The graph below shows that the amount of water m 33 of Kitchener has fallen from 22,500,000 min 2005, to a projected amount of 18,959,000min 2016. This is attributed to a decreasein industrial demand, increased water efficiency measures, and greater conservation awareness. Metered Water (M3) 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 - 200520062007200820092010201120122013201420152016P Year Primary Legislation: Safe Drinking Water Act, 2002. Ontario Regulation 170/03 Drinking Water Systems Ontario Regulation 128/04 Certification of Drinking Water System Analysis Ontario Regulation 169/03 Ontario Drinking Water Quality Standard Ontario Regulation 188/07 Licensing of Municipal Drinking Water Systems O - 28 Customer Base: Water: 64,000 Recent Challenges: The primary challenge experienced by the Water utility is the aging infrastr This was highlighted as part of the State of the Infrastructure presentat portions of the water system are at or beyond their useful lives likely to fail and disrupt water delivery to citizens and busine projected for several years to address a backlog of capital repl maintenance activities. In addition, the Citys water rate is based 100% on water consumed, even thoug significant operating and capital costs to maintain the infrastructure that do not change based on the amount of water consumed. As noted in the graph above, f consumption has been declining. This means the fixed costs must r less water consumed, which puts upward pressure on the water rate. Finally, the Light Rail Transit (LRT) project has substantially increased workload through major relocation work, locates, valve operation and inspection service Recent Successes: Kitchener Utilities continues to enhance existing conservation a opportunities to assist our customers in reducing their water co program for showerheads was well received by customers. Kitchener Utilities continues to expand the use of mobile technology in field operations. Technology has enabled the mobile work force to better serve the needs of customers as well as attain better efficiencies in work processes. O - 29 Sanitary Sewer Utility (Wastewater) Operating Model/Philosophy: The Sanitary Sewer utility performs the service of removing wastewater generated in the cityin an efficient, cost effective, and environmentally responsible manner. The Sanitary Sewer utility also ensures this is done in compliance with legislative and regulatory requirements. Services Provided: The Sanitary Sewer utility performs a wide range of activities and programs that together supports the provision of safe and reliable collection of raw sewage generated within Kitchener and neighbouring municipalities, and its subsequent conveyance through 900 kilometers of pipes and 23 pumping stations to a Regional wastewater treatment facility, where the City pays the Region for ultimate treatment and disposal.Such activities and programs include: The Accelerated Infrastructure Replacement Program (AIRP) Pumping station rehabilitation and replacement The trenchless sewer rehabilitation program Trunk sewer replacement Spot repair program Pumping station maintenance Flow monitoring program Closed Circuit Television (CCTV) inspection program Flushing programs Emergency repair work Service connection blockage clearing Hydraulic modeling Condition and Risk assessment, scoring, and system analysis System for the remote control of and data acquisition from pumpi Benchmarking: The Utility is participating in the National Water and Wastewate looks at key performance indicators for municipalities across th gathered and will be processed to compare to previous years. Primary Legislation: Clean Water Act Environmental Protection Act Ontario Water Resources Act Environmental Assessment Act Customer Base: The owners, residents, and users of nearly all facilities in the city are generators of raw sewage. This would include nearly every residential, and every significant commercial, industrial, and O - 30 institutionalbuilding in the city. In total, this equates to over 60,000 customers billed for this service. Recent Challenges: Operational: Significant amounts of Kitcheners sanitary assets have reached, or are nearing, the end of their lifecycle. As these assets deteriorate, the need for ongoing, regular maintenance increases, resulting in a requirement for more funding and resources for preventative and corrective maintenance. The recently approved sanitary utility rate increase will result in improved budgets for both maintenance and replacement of sanitary infrastructure, and thus contribute to reduced risk to the utility. Budgetary: (1) Construction costs for replacement and rehabilitation of infrastructure from 2004 to 2016 were significantly greater than the CPI rate of inflation.(2) Unit costs of sewage processing have been, and are expected to, increase at rates well above the rate of inflation (these costs are controlled by the Region). Recent Successes: Capital Works: Furthering the goals of the Accelerated Infrastructure Replacement Program through the replacement of sanitary sewer mains and services: by the end of 2016, 5.23 kilometers of sewer main replacementare anticipated to have been accomplished along with 1.54 kilometres of sewer main rehabilitation. Capital Works: (1) Replacement of the Freeport sewage pumping station (SPS) is complete. Associated forcemain construction is now underway. The completion of this work will continue toward the lifting of a development freeze that has existed in this area fo (2) Construction of the new Doon South Sewage Pumping Station is now permitting the development of the Doon South Community Plan area. Analysis: (1) Development of a risk analysis software tool for use in the enhanced prioritization of remediation work to the sanitary sewer network. (2) Development of a flow analysis tool for use in analyzing the capacity of individual pipe sections within network for both existing and future proposed flows. Administration: (1) New cross border servicing agreements have been established with Woolwich Township and the City of Waterloo. (2) Transfer of the Township has occurred. O - 31 Stormwater Utility Operating Model/Philosophy: The Stormwater utility performs the service of treating and controlling stormwater gene in the city in an efficient, cost effective and environmentally legislative and regulatory requirements. Services Provided: The utility provides the necessary funding to operate, maintain, rehabilitate, replace an stormwater infrastructure across the City. The stormwater system is compris approximately 100 kilometers of open watercourses in 20 subwatersheds, 610 kilometersof sewers, 12,000 catch basins, 16,000 manholes, 65 hydrodynamic separators, 1,200 outfalls and 142 stormwater ponds with a total replacement value of $705M (2013). Services include new capital projects identified by the annual water qual conducted on local watercourses to determine where additional storm required to improve water quality. Other projects are required t parts of the City. In addition to discreet capital projects, anne established to address recurring activities. These include: SWM Monitoring Program Sediment Management Program Watercourse Improvement Program SWM Facility Retrofit Program Drainage Improvement Program SWM Infrastructure Implementation Program Accelerated Infrastructure Replacement Program (AIRP) Low Impact Development (LID) AIRP Sewer & Manhole Maintenance and Repair Watercourse/Bridge/Culvert Maintenance and Repair Street Sweeping Leaf Pickup Spills Finally, the utility also funds a credit program to provide an i owners to control stormwater at the source where it falls on priproperty. Benchmarking: The stormwater utility is finalizingan IntegratedStormwater Management Master Plan (ISWM- MP) to replace the 2001 SWM Policy I-1135. The master plan establishes goals and objectives as well as provides direction to the utility until the year 2030. There will be an a measuring progress against planned progress in the ISWM-MP. Additionally, the utility is participating in the National Water and Wastewater Benchmarking performance indicators for municipalities across the country. Data for 2015 is being gathered and will be processed to compare results to previous years. O - 32 Primary Legislation: There is existing legislation that dictates certain requirements which impacts almost every facet of the services the utility pro construction to operations and maintenance. The key pieces of legislation: Clean Water Act, Water Opportunities Act, Environmental Assessment Act, Ontario Water Resources Act, Canadian Environmental Protection Act, Canadian Fisheries Act, etc. Customer Base: Every property owner in the city that has impervious surfaces ons to the overall stormwater runoff that is managed by the municipality. In total this equates to over 70,000 customers billed for this service. Recent Challenges: Operational: The nature of storm events becoming more severe and intense du change has a direct impact to the stormwater management system, by either causing damage to, or exceeding the capacity of existing infrastructure in an unpredictable manner. Legislative: The new legislation for the Sewer Safety Inspections process, level of service that is now required for the locating of utilit taking place. Budgetary: (1) There is an existing backlog of legacy projects identified audits that still need to be completed. These can only proceed a Operations and maintenance requirements necessary to maintain the current service levels versus the current budget allocations for such activities. This the need for additional budget to facilitate the transition to a approach. (3) The ISWM-MP is currently underway to look at alternative strategies to enhanc the lifecycle of stormwater infrastructure to help address the l. Recent Successes: Operations and Maintenance: Operations staff removed over 3,750 tonnes of sediment from stormwater ponds in 2015/2016 returning them to their design condition to improve water quality. A total of 16 out of 146 ponds have now been cleaned out. Capital Works: (1) The construction of an overflow sewer in Rothsay Avenue increases the capacity of Kolb Creek and will reduce flooding onto private pro the road right of way. SWM Facility #6 upstream of the sewer is currently under constru (2) Sediment has been sampled in over 20 SWM ponds to complete chemical analysis and determine the correct disposal methodology based on the level of prepare for future works. (3) Environmental Assessments have been completed on both Idlewood Creek and Balzer Creek with detailed design and construction to follow. O - 33 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Percentage Increase Percent Operating Budget Issue Paper Index Included in IP # Description Proposed Budget? Op 01Continuing Transitional Funding for Centre in the SquareYes Op 02 Increasing Exposure to Workplace Safety Insurance Board (WSIB) Costs **No** Op 03 Enhancing Integrity Commissioner Services **No** Op 04 Implementing Customer Relationship Management (CRM)Yes Op 05 Implementing the Kitchener Market Strategic Plan Yes Op 06 Funding for Physician and Specialist Recruitment Programs Yes Op 07 Reallocating Creative Enterprise Initiative (CEI) Funding to Tier 2 GrantsYes Op 08Complying with Natural Gas Legislation Yes Op 09 Delivering Increased Full Road Reconstruction (AIRP) Yes Op 10 Increasing Water Maintenance Programs Yes Op 11 Increasing Sanitary Maintenance Programs Yes Op 12 Increasing Storm Water Maintenance Programs Yes Op 13Implementing the Storm Water Master PlanYes O - 104 ISSUE: Op 01 Continuing Transitional Funding for Centre in the Square FUND:Operating DEPARTMENT: Centre in the Square PREPARER: Deborah Daub, Director of Finance, CITS BUDGET IMPACT: $218,500 (included in Tax Stabilization reserve projection) BACKGROUND: In 2016, Centre In The Square (CITS) was allotted $250,000 for t change to Mandate B that became a new policy from the City of Ki This transition funding increased the total funding for CITS to $2,000,000 when it was added to the $1,750,000 operating grant that was approved for 2016. RATIONALE / ANALYSIS: The request reflects the decision taken by City Council in MarchMandate and the subsequent financial implications for CITS. As the new agreement between CITS and KWS is implemented over the next 2 4 years and to continue to make the necessary adjustments for the Mandate fiscally possible, CITS is asking fotransition funding with a decrease of $31,500 from the 2016 amount. This would amount to an additional transitional funding of $218,500. With the increase of our oper $1,781,500, this additional funding will leave the total funding matching the total amount received in 2016. FINANCIAL IMPLICATIONS: This money will continue the funding of the Front of House costs the Kitchener-Waterloo Symphony and the Grand Philharmonic Choir, that started will allow CITS to continue to work with other smaller arts pres Kitchener by working out a way to cover the costs of their usage Theatres at CITS. RECOMMENDATION: That approval be granted for additional transitional funding of disbursed from the Tax Stabilization Reserve Fund at the request of the CI Council being notified by email of the request, and that any surtional funding be returned to the City of Kitchener. O - 105 ISSUE: Op 02 Increasing Exposure to Workplace Safety Insurance Board (WSIB) Costs FUND:Operating (WSIB reserve funded through fringe benefits) DEPARTMENT: FCS Human Resources PREPARER: Michael Goldrup, Director, Human Resources BUDGET IMPACT: For Discussion(NOT included in budget) BACKGROUND: As a Workplace Safety and Insurance Board (WSIB) schedule 2 emplhe City of Kitchener pays the full cost of health care, lost time, and any benefits approved under a WSIB claim as well as an administrative fee to the WSIB. These costs are charged to a WSIB reserve that is funded from the fringe benefit rates. In 2008, Ontario Legislature passed a bill to introduce presumpt firefighting personnel under the Workplace Safety and Insurance relationship between the types of chemicals firefighting staff c known to cause cancer, 10 cancers were listed in the WSIA that a occupational illness caused by the workplace. This presumptive coverage means that the claim is automatically approved and can include coverage for health ca- economic loss awards, home care services and funeral service exp Coverage for these cancers is retroactive to 1960 and cases that were previouslydenied for coverage can be resubmitted. The costs are often approved back to the date of accident (origi diagnosis) and interest is charged to these benefits in arrears e fee. In 2014, the province expanded the presumptive coverage to include 5 more cancers. These new cancers become eligible for coverage over a 3-year period from 2014 to 2017. Each year a new cancer is added. In 2016, the province once again expanded presumptive coverage to include Post-Traumatic Stress Disorder (PTSD) for first responders. This change took effect immediately and is retroactive two years prior to the legislation being passed. To date, the City of Kitchener has had 13 cases approved under p in addition to cases in the Fire department of occupational illn Workplace Safety Insurance Board (WSIB) prior to the presumptive legislation being passed. The costs of WSIB claims are highly unpredictable in nature as each case is unique. Inability to predetermine when new cases may emerge and factors such as lengt treatment, stage of the disease when diagnosed, whether the person succumbs to the disease, and if there is a spouse can greatly impact the potential cost o Payments include ongoing monthly payments as well as one-time lump sum payments. Health and Safety and Wellness, programs, policies and practices the workplace over the last several years to continuously improv strategies to mitigate future costs of claims related to these p increased air monitoring practices, decontamination protocols, hygiene protocols, cancer awareness training and screening information. Kitchener is a leading organization in the O - 106 development in programs to prevent PTSD. PTSD awareness campaigns, mental resilience training, increased psychological preventative therapy benefits and critical incident stress protocols have been updated and implemented in the Fire Department. Traditionally the strategies employed to reduce workplace exposure such as respiraction and bunker gear were thought to sufficiently mitigate the exposure to cance service. The understanding of the causes of illness in firefighting is beby various parties to determine all potential causes. This has resulted in greater understanding of the exposures to cancer causing agents, contributing factors to stress. Continued improvement will continue occur as new information about potential risk in the fire profession emerges over time. RATIONALE / ANALYSIS: As noted above, WSIB claim costs are difficult to predict, both Citys recent history (2014-2016) of new presumptive claims is shown below. 2014: 1 claim totaling <$10,000 2015: 2 claims totaling <$15,000 2016: 2 claims totaling > $ 700,000 Through review of known previous cases its estimated that 7 mor re-submitted in 2016 and 2017. It is estimated at least two of these cases could be a high cost claim such as the ones in 2016. There is also the potential for new claims to emerge based on a new illness diagnosis or through an expansion of presumptive cov. WSIB has assessed the City of Kitcheners future liability of all claims currently to be $15M. This includes all of the claim liability for current City of Kitchene This has increased $2M from 2014 to 2015. This amount will continue to increase as the numbers of new claims are approved and costs increase to the Corporation. Based on this the changes to legislation introducing potentially new financialreview of the reserve funding has occurred. History of WSIB Liability and the WSIB Reserve O - 107 The City of Kitchener is not alone in the challenge to fund WSIB claims. Other municipalities have similarly begun to consider appropriate funding in their bu have chosen to increase their reserves through an injection of funds or increase annual funding to build a reserve over time depending on the future liability arent funding models. Recently other Municipalities including London, Ottawa, Windsor, Stratford and Sarnia have increased funding for these types of claims in their budget processes. FINANCIAL IMPLICATIONS: At the end of 2015, the WSIB reserve actual closing balance was $1.3M versus WSIBs $15M assessment of liabilities for current claims. The minimum target balance for the WSIB reserve based on analysis completed in 2014 is $6.3M, although this figure will not yet in impact of the recent changes to legislation and claims received.) . RECOMMENDATION: That growth funding of $109,000, meant for the Doon Pioneer Park Community Centre expansion but not required in 2017, be allocated to the WSIB reserve fund on an ongoing basis. That any final 2017 assessment growth revenue, in excess of the allocated to the WSIB reserve on an ongoing basis. O - 108 ISSUE: Op 03 Enhancing Integrity Commissioner Services FUND:Operating DEPARTMENT: Finance & Corporate Services Legislated Services PREPARER: Christine Tarling, Director of Legislated Services & City Clerk BUDGET IMPACT: For discussion (NOT included in budget) BACKGROUND: Integrity Commissioner (IC) services were discussed at the Finan Committee meeting on October 3, 2016 (report FCS-16-150 Integrity Commissioner Optional Services Follow-up). Council requested staff to report on the budget implications of members of Council with access to the provision of legal advice Interest Act (from an independent lawyer of the Council members Code of Conduct formal advice and consultation services (from the Citys Integrity Comm their needs might dictate in addition to education and training Commissioner. RATIONALE / ANALYSIS: The budget of the Office of Mayor and Council (formerly Legislated Services) contains a $2,000 annual provision for the IC which reflects the extremely low level of activity for the IC si 2009. The hourly rate quoted by the Citys IC is $250, which equates to 8 hours of serviceand is sufficient to provide for periodic education and training. Depe of future Code of Conduct complaints, there is likely not suffic investigations much less an increase in service level to include additional advisory services to Council. Thus, any increase in service level will require an increase in the budgetbut it is unknown at this point what the level of consumption will be by members of possible some members may not use any of the additional advisory services at all while others may consume their allotted amount. Using the Region of Waterloo model of allocating each member a fixed annual limit of $5,000 would enable each Council member to use his/her allocated amount as needed. Consumption of services would be monitored and the annual operating budget adjusted over time based on usage. FINANCIAL IMPLICATIONS: The addition of advisory services provided by the IC as well as the provision of Municipal Conflict of Interest Act advice by independent legal counsel has not been included in the proposed budget, so any increased service level would result in rate. On the assumption the annual limit per Councillor for these additional services will be $5,000 (consistent with the Region of Waterloo) Council should set aside a budget based on the anticipated usage of the service. If the usage is anticipated t budget could be maintained at the current level of $2,000 and ansed on occasional usage would result in a deficit. Given the relatively low value of this item, it would not be recommended to establish a separate reserve to stabilize these e Instead, any O - 109 differences from the budget would be included in the overall ann supported operations and be closed out using the Tax Stabilization Reserve Fund. The following table shows the budget required based on varying levels of IC utilization: Average Equivalent Hours Total Budget Average amount used Funding %of Service per Council Increase Needed per Council Member Member @ $250/Hr. 25% $1,250 5 hours$13,750 50% $2,500 10 hours$27,500 75% $3,750 15 hours$41,250 100%$5,000 20 hours$55,000 RECOMMENDATION: That members of Council be permitted to access Code of Conduct advisory services from the Integrity Commissioner and Municipal Conflict of Interest Act legal advice from an independent lawyer up to a limit of $_________ peryear per member of Council; and, That an increase in the Mayor and Councils operating budget of _________ be approved for 2017 to fund the anticipated cost of these new services; and further, That staff be directed to prepare a policy for Council approval which will govern the consumption of these new advisory services. O - 110 ISSUE: Op 04 Implementing Customer Relationship Management (CRM) FUND:Operating DEPARTMENT: CAO -Corporate Contact Centre / FCS - Information Technology PREPARER: Jana Miller Executive Director of Office of the CAO Dan Murray Director of Technology Innovations and Services BUDGET IMPACT: $101,966 in 2017(included in budget) Additional $101,966required in 2018 BACKGROUND Through the 2015 budget process, Council approved the required f Corporate Customer Service Strategy Phase 3 which recommended that the City acquire and implement the LAGAN Customer Relationship Management (CRM) softwing the licensing partnership with the Region of Waterloo. Through that support resources were approved for a two-year period for the implementation phase of the software including: 1 Senior Developer in Information Technology 1 Business Analyst in the Corporate Contact Centre In October 2016, staff completed the initial launch of the new C Management (CRM) software, bringing the Office of the Mayor and Council, the Corporate Contact Centre and the Bylaw Division successfully on to the system. The CRM is a powerful software tool that was always envisioned would one day serve a wide range of City business lines and services. Its launch is now the foundation for required ongoing development and enhancements to build out its full capability and enable its expansion to services across the City as well as the development of a comprehensive, CRM-powered online/eservices portal. Although citizens themselves will never see or touch the CRM dire and enhancement of the system will have substantial benefits to them which also support the Citys approved customer service goals. Some of the benefits citizens will experience from this work include: More consistency to their customer experience across some of the most publicly- accessed service areas at the City. Fewer transfers and more complete responses the first time. Easier access to City services/greater choice in access channels through the development of a one-stop-shop online customer service/e-service portal where they can access a wider variety of e-services in a single place, with an eventual single login. Ability to easily check the status of their inquiry or service r(via online portal interactions) including close the loop email notifications to the citi Ability to personally track their service interactions with the and for City staff to view individual contact history and provide service from where an issue was left off. O - 111 The ongoing work to develop and enhance the CRM system was anticipated in the original 2015 budget paper approved by Council. The paper indicated that, based on other municipalities experience and best practices suggested by the CRM software vendor, it was anticipated that there would be a need for the two CRM support positions to become permanent in the future. The positions were originally funded through the CRM capital acc at the end of 2017, while the work to support, develop and enhance the CRM will be ongoing, permanent work moving forward. The positions were not requested on a full-time permanent basis in 2015 as staff felt it prudent to validate their need once initial CRM implementation was complete. RATIONALE / ANALYSIS: With the implementation phase of the CRM completed in October 2016 and the subsequent work plan emerging, it is clear that ongoing staff resources are required, as expected, to support, maintain, and enhance the new CRM system as outlined above. Based on what staff havelearned during the implementation, and the future volume of work anticipated to get the full benefit of this product, staffareconfident in validating that the two staff positions currently supporting the implementation on a contract basis are the most cost effective way to achieve continued progress on the vision for CR As part of this validation, the existing staffing complement was reviewed to determine if there is capacity available. With substantial training and time required to become fluent in supporting the CRM software system and no available capacity within current staff resources, it is not possible to achieve a reasonable level of support for the platform with existing resources. Staff has also concluded that external consulting resources cannot be effectively leveraged to perform this work. Without approval of these positions, the ability to provide subs to citizens and to the Citys Customer Service Strategy and E-Services Strategy will be severely impacted. FINANCIAL IMPLICATIONS: The total operating budget for these permanent positions is $203,932/year, however, 50% of the 2017 salary ($101,966) will be funded from the CRM capital budget. The remaining 50% will be included as part of the 2018 operating budget. RECOMMENDATION: That to support continued advancement of the Citys Customer Ser-Services Strategies, one Senior Developer (IT) and one Business Analyst (Corporate Contact Centre) be approved on a permanent, full-time basis, with a 2017 budget impact of 101,966. O - 112 ISSUE: Op 05 Implementing the Kitchener Market Strategic Plan FUND:Operating DEPARTMENT: CAO Economic Development PREPARER: Kim Feere, Market Manager BUDGET IMPACT: None (funded from existing budgets) BACKGROUND: The Kitchener Market has experienced substantial growth both in customer visits (650,000/year) as well as its annual variety of programs and eveThe Kitchener Market Strategic Plan is about to launch, which will offer a clear direction for growth and a plan to strengthen the role of the Kitchener Market as an urban public market. RATIONALE / ANALYSIS: As popularity of the Kitchener Market continues to grow, existin meet increasing demands of patrons, vendors, and staff. The list below highlights some of growth and upcoming challenges at the Market. Growth and Development of the Market The annual Saturday customer visits havegrown from 497,120 in 2012 to 571,324 in 2015 (15% increase) The Saturday vendor count in lower markethas grown from 70 in 2013 to 80 in 2015 (14% increase) The upper level International Food Court has seen an increase in foot traffic of 310% since 2011 Cooking classes, rentals and internal events have grown by a colsince 2011 Full time staff count is 4.5 with the part-time casual staff count ranging from 12-14 Staff to manager ratio is traditionally 10:1 for the City of Kitchener, but is 18:1 at the Kitchener Market In 2017, two planned capital projects will require additional op 1.Upper level market washroom renovation as a result of market gro 2.Market floor repairs as a result of an aging building One additional staff member and a realignment of the current stais requiredin order to better maintain and expand the Kitchener Market operati A new supervisor for the Kitchener Market will create a direct contact for staff for and provide operational support so that the manager can spend time on busine and revenue generating activities. Duties of the New FTE Supervisor Position On page 9 ofthe 2014 Market Capacity Review, it was identified that a supervisor role would be responsible for the day to day management of staff, scheduling a. The work would include: Alleviate workload from the manager, allowing for more time to b planning, programming and sales O - 113 Provide a directpoint of contact, decision makingand operational supportduring busy periods such as the Saturday markets, leading to more efficient resolution and better customer service Providing more capacity for coverage of the increased number of events and bookings including Sundays, second shifts, and 5 day childrens camps FINANCIAL IMPLICATIONS: The total annual cost for a supervisor position for the Kitchener Ma$96,633. For 2017 the cost will be $72,475 since this position is expected to start April 1, 2017, with the remaining $24,158 being required in 2018. The funding for this position has been found completely within the existing Kitchener Market and Economic Development bu funding is required. RECOMMENDATION: That one supervisor position be approved for day to day management of staff, scheduling, and decision making at the Kitchener Market, to be funded from within existing budgets. O - 114 ISSUE: Op 06 Funding for Physician and Specialist Recruitment Programs FUND:Economic Development Reserve DEPARTMENT: CAOs Office - Economic Development PREPARER: Brian Bennett, Manager Business Development BUDGET IMPACT: For Discussion ($10,000 included in Economic Development reserve projection) BACKGROUND: Since 2005 when 40,000 local residents were without a family physician, the Cities of Kitchener and Waterloo have each contributed $20,000 annually to the Chamber of CommerceFamily Physician and Grand River/St Marys Hospital Specialist Recruitment and Retention Programs. RATIONALE / ANALYSIS: Ensuring that families have access to a family doctor falls withthe Citys talent attraction and retention initiatives. The Chamber of Commerce uses funding from the Kitchener and Waterlooto leverage private sector funding to meet their $145,000 budget number of families without a physician has reduced to 15,000, 25% of the physicians are retirement age, not all new physicians practices carry a full case load, and population growth will continue, therefore there is still a need for ongoing recruitment. During the 2016 budget process, the Chamber of Commerce and local hospitals requested continuing funding of $20,000 until 2018. As the number of residents without a family physician has reduced, staff are recommending a reduction in the Citys funding to $10,000 to be shared between the Chamber of Commerce and local hospital recruitment programs, with the specific allocation to be determined by the parties. FINANCIAL IMPLICATIONS: Annual funding of $10,000 has been budgeted from the Economic Development Reserve until 2018, which has no impact on property taxes. However, this reserve has no ongoing funding source, which means physician/specialist recruitment can only be funded the near term. If Council intends to continue providing funding for physician a ongoing basis, these costs should be added to the operating budget. RECOMMENDATION: Annual funding of $10,000 for the Chamber Family Physician and Grand River/St Marys Hospital Specialist Recruitment and Retention Programs be allocated from the Economic Development Reserve for 2017 and 2018. O - 115 ISSUE: Op 07 - Reallocating Creative Enterprise Initiative (CEI) Funding to Tie Grants FUND:Operating DEPARTMENT: Economic Development, Office of the CAO PREPARER: Silvia Di Donato, Manager, Arts & Culture BUDGET IMPACT: None (reallocating existing budget) BACKGROUND: In previous budgets, the City provided core operating funds to Creative Enterprise Initiative (CEI) in service to emerging small or mid-sized arts organizations. This was known as the CEI Operating Grant and in 2016 the amount of this grant was reduced to $46,000. CEI will no longer be in operation as of December 2016, so this funding should be reallocated or removed from budget. RATIONALE / ANALYSIS: Staff recommends the $46,000 be permanently re-allocated to the Tier 2 Community Investment Fund as part of the 2017 Operating Budget. This allocation is consistent with the philosophy outlined in reports CAO-15-001, Arts & Culture Sustainability Fund 2015; and CAO- 15-038 Creative Enterprise Initiative 2016 Funding; which recommended reallocation of funds tosupport arts and culture initiatives through Tier 2 Community Grants. The policy grant is intended for assistance to organizations/groups that pr Kitchener for the common good of residents. Only organizations/groups prov municipal services in the areas of arts and culture/special even community support and development will be considered for funding Distinct benefits are derived from transferring this amount to the Tier 2 grant process: 1.The Tier 2 grant process is already in place for effective and e the fund to the intended recipients, the community of small, emerging an-sized organizations as originally allocated for CEI. 2.The Tier 2 grant fund needs to be replenished, as some qualifying organizationshave graduated to Tier 1, taking their previous allocation with them to the next level. FINANCIAL IMPLICATIONS: None. Existing funds would simply be reallocated between budget RECOMMENDATION: That $46,000 of the former CEI Operating Grant be re-allocatedto theTier 2 Grant budget and distributed through existing Tier 2 grant processes. O - 116 ISSUE: Op 08 Complying with Natural Gas Legislation FUND:Operating DEPARTMENT: Infrastructure Services - Utilities PREPARER: Barry Nash, Manager Customer Relations (Utilities) BUDGET IMPACT: $70,689 (included in budget) BACKGROUND: As a municipal owner of a natural gas distribution system, the City of Kitchene responsibility to ensure there is a dedicated response function infractions downstream of the gas meter. The codes identify that all gas appliances must be insafe working order and the utility has the responsibility to disconti are unsafe. During an audit by the Technical Standards and Safety Authority Kitchener Utilities required improvements to its handling of non-compliance with homeowners, builders and contractors to comply with Regulation 212/01, B149.-15. TSSA requires a distinct position to be identified as accountable for the compliance proc RATIONALE / ANALYSIS: Currently, the compliance responsibilities do not reside with one position, but are spread across a number of already full positions, with unsatisfactory results. This setup has proven to be inefficient and ineffective, exposing the Utility to risk. A dedicated administrator is required to ensure compliance and improve customer service. Duties will include the following: Schedule inspections with homeowners and builders. Administration of TSSA initial and final inspection procedures. Technical assistance to enquiring contractors and homeowners. Promotion of public safety information. Coordination of TSSA administration and communication. FINANCIAL IMPLICATIONS: The total cost for a Utilization Administrator is $70,689 and ha 2017 Gas Utility budget. RECOMMENDATION: That one Utilization Administrator position be approved in order to comply w legislation. O - 117 ISSUE: Op 09 Delivering Increased Full Road Reconstruction (AIRP) FUND:Operating DEPARTMENT: INS Department Engineering Services Division PREPARER: Hans N. Gross, P. Eng. Director of Engineering BUDGET IMPACT: None (funded by capital projects) BACKGROUND: As part of the State of the Infrastructure (SOTI) presentation t noted the City is lagging behind on capital replacement of under storm sewer infrastructure located in the road right of way. This work is completed under the Citys Accelerated Infrastructure Replacement Program (AIRP). T SOTI was to increase AIRP spending by 13% each year, for the nex the 2016-2025 Capital Budget andForecast that included a 13% annual increase to AIRP spending in each year of the forecast. This level of investment is required to keep the Citys head above water related to aging underground water and sewer infrastructure. RATIONALE / ANALYSIS: Full road reconstruction (AIRP) projects are managed by the Engineering Construction Group which currently consists of 12 staff as follows: One (1) Manager One (1) Design & Construction Project Manager Three (3) Engineering Construction Project Managers Four (4) Engineering Construction Inspectors One (1) Corridor Management Technologist completes surveys and access agreements One (1) Sewer Locator responds to requests for all sewer locates One (1) Program Assistant The project managers and inspectors have, up to 2015, managed all of the annual engineering projects and programs. In 2016, a consultant was retained to pro management services due to insufficient staff for the scheduled The annual 13% increase of the AIRP budget means that one additional reconstruction project will be added each yearcompounding annually. In addition to the AIRP ramp-up, the Engineering Construction Group is now responsible for managing the construction of development charge projects. Based on the increasing workloadwithin the Engineering Construction Group, one new Engineering Construction Project Manager is required. This represents an 8% capacity increase against a 13% workload increase. Failure to augment resources wnal external consultants. As the AIRP develops further,staffing needswill be reviewed. FINANCIAL IMPLICATIONS: None. The costs of this position will be funded from the releva RECOMMENDATION: That one Engineering Construction Project Manager be approved in order to deliver increased road reconstruction capital work. O - 118 ISSUE: Op 10 Increasing Water Maintenance Programs FUND:Operating DEPARTMENT: Infrastructure Services - Utilities PREPARER: Tammer Gaber, Manager Operations (Utilities) BUDGET IMPACT: $589,000 Water Utility(included in budget) BACKGROUND: Kitchener Utilities staff are responsible for the maintenance of critical water distribution infrastructure including watermains, valves and hydrants. The maintenance programs associated with this infrastructure are Reactivemaintenance requires substantial staff resources, often outside hours, to respond to infrastructure failure. As assets deterior liability risk increase, the impact of this operating model becocant. There is a need from a financial, regulatory and risk perspective to shift to th preventative/proactive maintenance programs. The recommended program changes described below are supported by asset management principles and industry est practices. The issue of water infrastructure maintenance has been brought forward to Council as part of the Drinking Water Quality Management Standard (DWQMS) Management Reviews annually from 2011-2015 as well as part of the State of the Infrastructure (Plannin- 2032) presentation in 2015. To address the backlog maintenance issue, additional funds were requested. RATIONALE / ANALYSIS: Watermain maintenance has beenbacklogged by: ION Construction in 2015 and 2016. The volume of work coordinating shut down and isolation of watermains was unprecedented. This work occurred yeund. Difficult winters in 2014 and 2015 resulted in a large number ofresponses to watermain breaks and frozen services. Fundingis required toaddress the backlog of water infrastructuremaintenance and move toa proactive maintenanceprogramin the following areas: Water Valves Water Valves need to be checked and operated regularly to ensure they are in order. Repair or replacement of the valve occurs if it is not in proper of a reconstruction project. The target is to check/operate 33 system valves annually. Currently staff is achieving approximately half of the target as the program is reactionary rather than proactive/preventative. Watermain Cleaning A comprehensive watermain cleaning program needs to be accelerated. Without a comprehensive and sustained program there is an increase in discolouredwater calls and decreased customer confidence in the system. O - 119 2017 Work Plan Valve Operation, Inspection and Replacement There are approximately 2,000 valves as part of the water distribution system. The focus will be on the backlog of water valve inspection and replacements. It is anticipated that 55-60 valves will be repaired, operated or replaced. The cost estimate for this work is $550,000-$600,000. FINANCIAL IMPLICATIONS: The State of the Infrastructure report (2015) recommended that 2% of the water rate increase go towards funding increased maintenance activities. Additional $589,000 have been built into the budget from the water utility. RECOMMENDATION: For information. O - 120 ISSUE: Op 11 Increasing Sanitary Maintenance Programs FUND:Operating DEPARTMENT: Infrastructure Services Operations, EnvironmentalServices PREPARER: Dan Locke, Manager of Storm and Sanitary Maintenance BUDGET IMPACT: $882,000 Sanitary Utility (included in budget) BACKGROUND: The City of Kitcheners sanitary operations staff are responsibl infrastructureincluding sanitary sewer pipes, laterals, manholes and pumping stations. The maintenance programs associated with this infrastructureareprimarily reactive in nature. Reactive maintenance requires substantialstaff resources, often outside of normal operating hours, to respond to infrastructure failure. As assets deterioratewith age, and regulatory/liability risk increases, the impact of this operating model becomes significant. There is a need from a financial, regulatory and risk perspective to s preventative/proactive maintenance programs. The recommended program changes described below are supported by asset management principles and industry best p RATIONALE / ANALYSIS: The purpose of this funding request is to address the backlog of sanitary maintenance and inspection works, increase the service level, and move to proactive maintenancein the following activity areas: Sanitary pipe and manhole casting repair There is increasing pressure to respond to sanitarylateral and main defects requiring repair. For example, the number of sewer repairs increased by 18% in 2016. In addition, the complexity of excavations is increasing due to other underground infrastructure conflicts. These conflicts delay excavation using conventional backhoe equipment and has created a demand for the use of vacuum excavation technology. Funding has been allocated for the additional use of vacuum excavations. The outcomes of this program is anticipated to be increased effi decreased time spent on excavations and down time associated with hauling, thereby increasing the number of repairs the City is able to respond to. Manhole and pipe inspection and cleaning program Currently the inspection frequency of sanitary sewer mains is onten year frequency. Prior to the camera inspection, the pipes are flushed to ensure there is no debris/blockage in the pipe to impede the camera movement througThe intent of this funding is to initiate a zoom camera inspection pilot study to evaluate the potential benefits of increasing the frequency of pipe inspections, perform manhole inspections at the same time, and reduce the length of pipe flushed prior to CCTV inspection. The outcome of this program is anticipated to decrease the number of main blockages and the potential for back-up of wastewater into basements. In addition, an enhanced inspection program will decrease liability associated with insur O - 121 FINANCIAL IMPLICATIONS: The State of the Infrastructure report (2015) recommended that 2% of the sanitary sewer rate increases were to go towards funding increased maintenance activ additional maintenance funds in 2017 of $882,000. The allocation of the funding is as follows: Sanitary pipe and manhole casting repair - This program requires 2.5 Sewer Maintainers and additional funding requirements are $536,700. Manhole and pipe inspection and cleaning program - This programs additional funding requirements are $345,300. RECOMMENDATION: That 2.5 Sewer Maintainers be approved to shift to a preventative maintenance program. O - 122 ISSUE: Op 12 Increasing Stormwater Maintenance Program FUND:Operating DEPARTMENT: Infrastructure Services Operations, EnvironmentalServices PREPARER: Dan Locke, Manager of Storm and Sanitary Maintenance BUDGET IMPACT: $294,000 StormwaterUtility (included in budget) BACKGROUND: The City of Kitcheners stormwater operations staff are responsi critical infrastructure including stormwater management facilities, inlet and outlet str, manholes, sewer pipes, culverts, ditches, watercourses. The maintenance programs associated with this infrastructureareprimarily reactive in nature. Reactive maintenance requires substantialstaff resources, often outside of normal operating hours, to respond to erosion, flooding and property damage conce intensify and become more frequent and assets deteriorate with age, the impact of this operating model becomes significant. There is a need from a financial, regulatory and risk perspective to shift to the development of preventative/proactive maintenance programs. The recommended program changes described below are supported by the Integrated Stormwater Management Master Plan, asset management principles, regulatory requirements and industry best practices. RATIONALE / ANALYSIS: The purpose of this funding request is to increase the service land move to proactive maintenance in the following activity area: Storm inlet/outlet inspections and maintenance (primarily sedime removal) The City of Kitchener is responsible for the maintenance of 1426 o structures. In accordance with the Ontario Water Resources Act and associated o Environmental Compliance Approvals for these structures, the City is requir remove sediment and ensure that they are in good operating condition. There is currently a backlog of approximately 470 service requests related to o deficiencies identified through a one-time inspection that occurred in 2014. In addition to addressing this backlog, an ongoing inspection program will be o initiated to identify and prioritize inlets/outlets requiring re removal activities. The outcome of this program will be better conveyance of stormwaed o back-ups/flooding, regulatory compliance, reduced risk of litigation and improved stormwater service to customers. In addition, by removing accumulated sediment more frequently at inlets and outlets of stormwater management facilities the lifespan of the facilityincreases and the frequency at which the facility requires cleaning out decreases. O - 123 FINANCIAL IMPLICATIONS: The State of the Infrastructure report (2015) recommended that 2% of the stormwater rate increases were to go towards funding increased maintenance activ additional maintenance funds in 2017 of $294,000 from the stormwater utility. The allocation of the funding includes 2.5 FTEs (one Heavy Equipment Operator and 1.5 Sewer Maintainers) RECOMMENDATION: That one Heavy Equipment Operatorand 1.5 Sewer Maintainers be approved to shift to a preventative maintenance program. O - 124 ISSUE: Op 13 Implementing the Stormwater Master Plan FUND:Operating DEPARTMENT: INS Department Engineering Services Division PREPARER: Hans N. Gross, P. Eng. Director of Engineering BUDGET IMPACT: None (funded by capital projects) BACKGROUND: The City of Kitchener Integrated Stormwater Management Master Plan (ISWM-MP) was completed in May 2016 as presented in report INS-16-047 and was by endorsed by City Council on May 30, 2016. One of the resolutions of this report was THAT staff be directed to develop an Implementation Plan, with an operations and maintenance strategy, resource requirements, and supporting poli-laws as set-out in staff report INS-16-047 Staff has presented the implementation plan to Council in November 2016, which inclu priorities broken down into three categories: Immediate Term Implementation Priorities Medium Term Implementation Priorities Long Term Implementation Priorities RATIONALE / ANALYSIS: The ISWM-MP provides a clear vision of the work needing to be done for th order to achieve the goals of the ISWM-MP, permanent staff resources are required. These include oneDesign & Construction Project Managerand one Engineering Technologist. The work to be undertaken by the two new positions includes: Development of municipal pollution prevention, operations & maintenance programs. Create market based strategies and pilot programs to incentivize management practices on private properties. Provide design support for the implementation of low impact deve within the municipal right-of-way projects in the AIRP and create new design standards and specifications. Manage stormwater management pond rehabilitation projects. Manage watercourse rehabilitation and erosion control projects. Develop the urban flood management strategy and further refine the hydraulic modelling to identify constraints in stormwater infrastructure. These two positions have previously been filled on a contract basis, but are required permanently, based on the findings of the ISWM-MP. FINANCIAL IMPLICATIONS: None. The costs of this position will be funded from the releva RECOMMENDATION: That one Design & Construction Project Manager and one Engineering approved in order to implement the findings of the Integrated Stormwater Management Master Plan. O - 125