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HomeMy WebLinkAboutFCS Minutes - 2019-01-14 - Capital Budget & 10-Year ForecastSPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 CITY OF KITCHENER The Special Finance and Corporate Services Committee met this date, commencing at 9:36 a.m. Present: Councillor S. Davey - Chair Mayor B. Vrbanovic and Councillors D. Chapman, K. Galloway-Sealock, J. Gazzola, B. Ioannidis, M. Johnston, S. Marsh, C. Michaud, D. Schnider and P. Singh. Staff: D. Chapman, Chief Administrative Officer M. May, Deputy CAO & General Manager, Community Services V. Raab, General Manager, Corporate Services J. Readman, General Manager, Development Services J. Lautenbach, Chief Financial Officer, Financial Services D. McGoldrick, General Manager, Infrastructure Services C. Bluhm, Executive Director, Economic Development R. Hagey, Director, Financial Planning H. Gross, Director, Engineering G. St. Louis, Director, Utilities D. Murray, Director, Technology Innovation & Services N. Lobley, Director, Parks and Cemeteries B. Cronkite, Director, Transportation Services R. Lusk, Director, Operations, Roads and Traffic C. Fletcher, Director, Facilities Management D. Fagerdahl, Manager, Financial Planning S. Allen, Manager, Design and Construction N. Gollan, Manager, Stormwater Utility J. Bunn, Manager, Council Committee Services/Deputy Clerk B. Powell, Project Manager, Facility Asset Management J. Rodrigues, Committee Administrator D. Saunderson, Committee Administrator 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10-YEAR FORECAST The Committee considered Financial Services Department report FIN-19-002, dated December 7, 2018, and attached line-by-line listing of all projects in the Capital Forecast by Department/Division. OVERVIEW BY CHIEF FINANCIAL OFFICER Mr. J. Lautenbach advised the 10-year Capital Forecast includes over 410 different projects, with a combined value of $1.1B and approximately $100M in 2019. He noted the 10-year forecast is a best practice in that it enables Council to adopt a long-term view and make project commitments that are aligned witCouncil considers a one-year capital budget, along with a 10-year forecast, which is adjusted annually. He indicated Council identifies capital priorities through a number of processes, including but not limited to: the Strategic Plan; the Development Charges By-law; and, various master plans. He stated once the priorities are identified, staff proposes a budget that best addresses the priorities in light of limited resources. He indicated regardless of how priorities are identified, they are often referred to the budget process to determine the specific timing of projects. He further advised the budget process is therefore not intended to revisit the details of the priorities, but rather to consider how to best manage the capital program as a whole. Mr. Lautenbach stated for 2019, overall reserve balances. He further advised the 2019 budget also makes key investments in the City Hall Outdoor Spaces and Protected Bike Lanes. BOARDS Centre in the Square (CITS) Councillor P. Singh entered the meeting at this time. Ms. B. Powell and Messrs. P. Salvini and J. Henning, Centre in the Square (CITS), were in attendance and responded to questions from the Committee. SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 - 8 - CITY OF KITCHENER 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10- In response to questions regarding possible sponsorship for CITS and if there could be an option to rename the facility, Ms. V. Raab advised staff would need to confirm with CITS whether there are any policies related to the renaming of the facility and who would benefit from the funds if sponsorship was an option. The Mayor advised it was his intention to bring forward a motion on Final Budget day related to any surplus funds achieved by CITS, be allocated for use on the capital project deficits. Kitchener Public Library (KPL) Ms. M. Chevreau, Kitchener Public Library (KPL), was in attendance and responded to questions from the Committee. She noted Issue Paper Cap-01 (Southwest Community Library) related to the construction of the southwest community library has been included for consideration. CAPITAL FUNDING SOURCES Mr. R. Hagey provided an overview of the funding sources for the 2019 Capital Forecast, advising the enterprises are the largest contributor to the capital program providing 58% of its funding to the capital program. He stated the City has a capital policy that limits the impact the capital budget can have on homeowners. He commented this year the capital contribution was increased by an additional $100,000. on top of the typical increase, but the total cost to ratepayers still remains within the rate of inflation. Mr. Hagey further advised the 2019 capital budget is fully funded, noting in future years there are small discrepancies that will balance as those years get closer. DEBT Mr. Hagey provided an overview of the current outstanding debt, noting debt had increased significantly up to 2013, followed by a steady decline beginning in 2014 as the Economic Development Investment Fund (EDIF) debt matured. $115M, will decrease to $71M at the end of 2018, and will be further reduced to approximately $30M over the next 10 years. He added debt per household would be within the low range by 2023. Mr. Hagey -to-reserve ratio has a target measure of 1:1, which means the City should have $1. in reserve for every $1. of debt. He stated the benchmark is projected to stabilize around the target rate of 1:1 for the next number of years. In response to questions, staff agreed to provide an approximate savings if the City borrowed from itself in 2019 to eliminate currently accrued debt. In response to further questions, Mr. Lautenbach advised the City will be undertaking a comprehensive long-term financial planning review in 2019 and through that process staff will review the current practices related to debt and reserves, and will report back with any recommendations at that time. RESERVE FUNDS Mr. Hagey provided an overview of the existing reserve funds and reserve fund policy. He explained the policy sets minimum targets for each reserve fund and that overall the reserve balances are below the minimum targets. He noted there are reserve fund ratings identifying the health of the reserve in comparison to the minimum targets. Mr. Hagey provided an overview of the various reserves and how they project in comparison to their minimum and maximum targets. He further advised reserve balances are fairly static from 2017 through to 2019. He cautioned against relying on reserve funds to balance the budget. Mr. Hagey stated there is an Issue Paper Cap 02 (Reserve Continuity Schedule) regarding the reserve balances. Councillor K. Galloway-Sealock requested an Issue Paper for Final Budget day on the possibility of transferring $75,000. from the Hydro Utility Investment reserve to the operating budget. SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 - 9 - CITY OF KITCHENER 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10- DEVELOPMENT CHARGES (DC) Mr. Hagey presented an overview of the Development Charges (DC), noting the City undertook a review of the DC By-law in 2014. He stated the By-law has a maximum life of five years and is due to be updated in spring of 2019. He indicated there were two financial objectives when previously updating the DC By-law, which included ensuring cash flows were balanced, and maximizing the charges. He noted those two objectives were fully achieved and have helped to establish clear Capital Project priorities. Mr. Hagey advised at the end of 2018, the revenues were lower than anticipated at $8.2M rather than $15M budgeted in 2018. He indicated development charges will be increased through the DC By-law review in 2019, which will address any reserve deficits. In response to questions, Mr. Hagey advised Council is expected to review the new DC By-law over the course of several meetings in the spring with an anticipated approval date in May 2019. He indicated to ensure the City is eligible to collect development charges, a new By-law must be in force and effect by July 1, 2019. In response to further questions, he advised the Downtown Development Charges exemption is due to expire February 28, 2019. Councillor J. Gazzola left the meeting at this time. The Committee recessed at 11:31 a.m. and reconvened at 11:40 a.m., Chaired by Councillor S. Davey with all members present. CAPITAL BUDGET FORECAST INFORMATION Mr. Hagey introduced the Capital Budget Forecast Information. He explained new projects in the 10-year forecast have been identified with a check box; based on their estimates. He indicated changes over $50,000. will be highlighted in the PowerPoint presentation and noted Issue Papers have been prepared for any changes over $1M. MAJOR CHANGES FROM PRIOR YEARS & ISSUE PAPERS The Committee reviewed major changes from prior years, as well as the Issue Papers put forward as part of the 2019 Capital Budget, with particular regard to the existing Capital balances. GENERAL EXPENSE The Committee considered the General Expenses Capital Forecast contained on page C-96 to C-99 of the 2019 Capital Budget package. BOARDS The Committee considered the Boards Capital Forecast contained on pages C-100 to C-101 of the 2019 Capital Budget package. OFFICE OF THE CHIEF ADMINISTRATOR The Committee considered the Office of the Chief Administrator Capital Forecast contained on page C-102 of the 2019 Capital Budget package. FINANCIAL SERVICES The Committee considered the Financial Services Department Capital Forecast contained on pages C-103 to C-104 of the 2019 Capital Budget package. Mr. Lautenbach responded to questions from the Committee. SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 - 10 - CITY OF KITCHENER 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10- CORPORATE SERVICES The Committee considered the Corporate Services Department Capital Forecast contained on pages C-105 to C-109 of the 2019 Capital Budget package. COMMUNITY SERVICES The Committee considered the Community Services Department Capital Forecast contained on pages C-110 to C-120 of the 2019 Capital Budget package. In response to questions regarding a new arena proposed in the capital budget for RBJ Schlegel Park, Mr. M. May advised staff will be undertaking a review of the Leisure Facilities Master Plan in 2019 and if Council believes an arena is a capital budget priority, it would be identified at that time. DEVELOPMENT SERVICES The Committee considered the Development Services Department Capital Forecast contained on pages C-121 to C-147 of the 2019 Capital Budget package. Councillor J. Gazzola brought forward a motion to direct staff to complete an Issue Paper for Final Budget day to reduce the overall tax and utility rate increase to residents by 2%, noting it Councillor motion was then voted on and LOST on a recorded vote, with Councillors J. Gazzola and D. Chapman voting in favour; and, Mayor B. Vrbanovic and Councillors P. Singh, B. Ioannidis, M. Johnston, S. Davey, D. Schnider, C. Michaud, S. Marsh and K. Galloway- Sealock voting in opposition. The Committee recessed at 12:55 p.m. and reconvened at 2:50 p.m., Chaired by Councillor S. Davey with all members present. The Committee considered the Development Services Department Capital Forecast contained on pages C-148 to C-157 of the 2019 Capital Budget package. In response to questions, Mr. J. Readman agreed to circulate via email, a summary of changes to the storm water capital budget by project. Councillor J. Gazzola requested an Issue Paper for Final Budget day regarding information on the increased costs related to the Middle Strasburg Sanitary Sewer Trunk. Mayor B. Vrbanovic requested an Issue Paper for Final Budget day regarding information about increasing the additional budget for small scale traffic calming projects from $25K to $50K each year from 2019 to 2022 and how that would be funded. In response to questions, staff agreed to provide Council with the work plan for the Homer Watson House, particularly related to accessibility improvements to the facility. In response to questions, staff agreed to provide Council with information on the funding request from the Judo Club. The Committee recessed at 4:21 p.m. and reconvened at 5:36 p.m., Chaired by Councillor S. Davey with all members present. Councillor P. Singh declared a pecuniary interest with respect to the projects outlined within Development Services, as referenced: Engineering Capital Projects Full Reconstruction Kingsway to SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 - 11 - CITY OF KITCHENER 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10- , as members of his family own property in the vicinity of subject projects. Accordingly, he did not participate in any discussion or voting regarding those matters. INFRASTRUCTURE SERVICES The Committee considered the Infrastructure Services Department Capital Forecast contained on pages C-158 to C-172 of the 2019 Capital Budget package. In response to questions regarding Issue Paper Cap-04 (Rehabilitating City Hall Outdoor Spaces), specifically the capital pool funding source, Mr. Lautenbach advised staff identified this project as a priority during the budget process. He noted staff examined existing capital projects nearing close and the balance of the reserves in the capital forecast to determine what funds were available to fund this project. Councillor K. Galloway-Sealock requested staff include previous staff reports pertaining to City Hall Outdoor Spaces in the Final Budget day package. Responding to questions regarding the possibility of delaying the City Hall Outdoor Spaces project, Ms. C. Fletcher advised against delaying the critical infrastructure any further, noting it is a 4-year project involving all four sides of the building. She further noted the parking membrane might be jeopardized if the rehabilitation of the outdoor spaces was completed at different times. Councillor S. Marsh also requested an Issue Paper for Final Budget day regarding information on the possible operating budget savings once the City Hall Outdoor Spaces project is completed. Ms. C. Fletcher advised staff will also provide information on the sustainability aspects of the project in the Issue Paper. Following a conversation on the Huron Natural Area Redevelopment, Councillor K. Galloway- Sealock requested, and staff agreed, to provide a schedule of what items are complete in the Huron Natural Master Plan. In response to questions regarding community gardens, Mr. N. Lobley agreed to recirculate the staff report regarding the Community Garden strategy, noting the financial model is included in this report. Responding to questions regarding the Urban Forest Strategy, Mr. Lobley advised the allocated capital funding is for the public tree canopy. He further advised an Issue Paper will be brought forward regarding the private partnership with REEP Green Solutions Inc. for the private tree canopy. He advised he would examine implementing a storm water credit for the private tree canopy as part of the Urban Forest Strategy. In response to questions regarding McLennan Park Redevelopment, Mr. Lobley agreed to bring forward an Issue Paper to Final Budget day providing information on the cost of completing the paving of parking lots at McLennan Park. Mr. Hagey agreed to provide Council with an updated list of existing capital balances as of December 31, 2018. RESOLUTION The Committee then undertook a review of the action items arising from this meeting. On motion by Councillor B. Ioannidis - it was resolved: arising from the January 14, 2019 Special Finance and Corporate Services Committee meeting relative to the 2019 Capital Budget, as outlined in the chart below: SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 14, 2019 - 12 - CITY OF KITCHENER 1. FIN-19-002 - 2019 CAPITAL BUDGET AND 10- Division/Area Topic Action Update the existing capital balances as Capital Balances at December 31, 2018 Provide approximate savings if debt Debt was eliminated and the City borrowed FINANCIAL from itself in 2019. PLANNING Information about the impact of transferring an additional $75K from Reserves Hydro Utility Investment reserve to the operating budget. STORMWATER Provide summary of changes in Project Summary UTILITY Stormwater capital budget by project. Information regarding the increased Strasburg Sanitary SANITARY UTILITY cost related to Middle Strasburg Sewer Trunk Sanitary Sewer Trunk. Information regarding the cost of McLennan Park finishing the paving of the parking lots PARKS AND at McLennan Park. CEMETARIES Community Garden Recirculate the report about the Strategy Community Garden strategy. Information about increasing the TRANSPORTATION Small Scale Traffic funding for small scale traffic calming SERVICES Calming from $25K to $50K each year from 2019 to 2022 and how that would be funded. Information regarding the possible operating budget savings that could be realized once City Hall Outdoor Spaces project is completed. FACILITIES City Hall Outdoor MANAGEMENT Spaces Include the previous reports referred to in issue paper Cap 04 about the City Hall Outdoor Spaces as part of the Final Budget day document. 2. ADJOURNMENT On motion, this meeting adjourned at 6:37 p.m. D. Saunderson J. Bunn Committee Administrator Manager, Council and Committee Services/Deputy City Clerk J. Rodrigues Committee Administrator