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FINANCE & ADMINISTRATION COMMITTEE MINUTES
MARCH 23. 1998
CITY OF KITCHENER
The Finance and Administration Committee met this date commencing at 10:25 a.m. under the
Chairmanship of Councillor J. Ziegler with the following members present: Mayor C. Zehr, Councillors T.
Galloway, K. Taylor-Harrison, Jake Smola, B. Vrbanovic, J. Haalboom, G. Lorentz and C. Weylie.
Others present: Mrs. J. Koppeser, Ms. L. MacDonald, Ms. P. Houston, Ms. L. Pasternak, Messrs. J.
Gazzola, L. F. Parkhouse, O. den Ouden, T. McCabe, J. Shivas, J. Witmer, S. Gyorffy, R. W. Pritchard,
T. Clancy and G. Sosnoski.
1. BY-LAW EXEMPTION -AMERICAN PIT BULL TERRIERS
Mr. Roy Aitchison was in attendance on behalf of the Rare Breed Club of Southwestern Ontario
and in support of his request for an exemption from Chapter 530 (Dogs) of the Municipal Code to
allow American Pit Bull Terriers to be brought into the City for a dog show to be held at the
Kitchener Memorial Auditorium on May 16 and 17, 1998. The Committee was also in receipt of
written submissions from Mr. Aitchison dated March 7 and 13, 1998.
Dr. G. Hess and Mr. W. Bonnell were in attendance on behalf of the K-W Humane Society.
Councillor B. Vrbanovic put forward a motion to take no action on the request, and argued that the
City should be consistent in its application of the by-law and that no exemptions should be
granted.
The motion by Councillor B. Vrbanovic was then voted on and Lost.
Councillor G. Lorentz put forward a motion to grant the exemption as requested, and he
subsequently accepted, as friendly amendments, suggestions that a list of the individuals who will
bring and handle the dogs be provided to the Humane Society in advance of the show, and that
the Pit Bull Terriers be muzzled and on a short leash when outside the Auditorium premises. The
motion was then voted on, as amended.
On a motion by Councillor G. Lorentz,
it was resolved:
"That notwithstanding the pit bull prohibitions in Chapter 530 (Dogs) of the Municipal Code,
and amendments, Council grant the request of Roy Aitchison, Rare Breed Club of
Southwestern Ontario, for an exemption to said Chapter to allow the showing of American
Pit Bull Terriers at the Kitchener Memorial Auditorium on May 16 and 17, 1998; and further,
That the above is subject to the operators providing the Humane Society, in advance of the
show, with a list of the individuals who will be bringing and handling the Pit Bull Terriers, as
well as this breed being muzzled and kept on a short leash while outside of the Auditorium
premises."
2. INSURANCE POOLING PROPOSAL
The Committee was in receipt of a report from P. Houston dated March 18 1998 outlining a
proposal for insurance pooling involving area municipalities and a written submission from the
Frank Cowan Company dated March 13, 1998.
Mr. David Reed, Vice-President, Frank Cowan Company Limited, appeared and advised that his
company offers insurance and risk management services to more than 600 municipalities in
Ontario and the Atlantic provinces, with Kitchener being its largest municipal client since 1991. He
introduced Mr. Robert Brown, a Consulting Actuary and Professor at the University of Waterloo
engaged by the Frank Cowan Company to review the pool proposal.
Mr. Robert Brown referred to his summary report which forms part of the written submission of the
Frank Cowan Company. He posed several questions to members of the Committee in regard to
the insurance pooling proposal which he urged them to consider before making a decision. He
characterized the regional risk pool as a small number of heterogeneous risks, noting that
Kitchener, being the largest partner in the pool, would be assuming 45 per cent
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CITY OF KITCHENER
INSURANCE POOLING PROPOSAL - CONT'D
responsibility for overall risk.
Mr. Brown suggested that to a great extent Kitchener would in fact be the insurance pool which
would be performing all of the work of an insurance company.
Mayor Zehr enquired as to the average size of an insurance pool, and Mr. Brown replied that in
the United States pools would be valued at approximately $20,000,000.00 Canadian, and
suggested that Kitchener may want to consider pooling when there are more participants.
Councillor Jake Smola enquired as to why the City's premiums increased in 1997 by 30 percent,
and Mr. Brown advised that rate decreases of 10 to 15 per cent can be expected this year. He
further advised that loss ratios were responsible for the dramatic increase and that these are now
falling. Mr. Brown further suggested that in participating in the pool, Kitchener would be
experimenting in this area which is a new and unique method of insuring.
Mr. James Milway, President and Chief Executive Officer, Frank Cowan Company Limited,
appeared and explained the differences between standard insurance and a pooling arrangement,
and argued that the proposed pool would not be more streamlined than the present arrangement.
He noted that currently his company works with a number of insurance companies which
collectively assume risk and negotiate with reinsurers. Mr. Milway pointed out that a three year
commitment to an insurance pool is not a guarantee of stability, and that the insurance and
underwriting loss cycles show that loss ratios will at some point become adverse and he
questioned the ability of the pool to effectively negotiate with reinsurers to the same degree as
major insurance companies. He also noted that between 1990 and 1994 insurance premiums
were flat or decreased and that in 1995 went up as a result of court decisions involving large
claims. He suggested that claim have been decreasing over the past two years and that premiums
will follow. Mr. Milway referred to Kitchener's 45 per cent risk in the pool, and noted that under the
current insurance plan Kitchener is a very small part of Frank Cown's entire municipal portfolio and
that there is no extreme, adverse impact in the event of a major claim by another client in the
portfolio. Under the pooling arrangement, Kitchener would be responsible for 45 per cent of the
cost of amounts between any other municipality's deductible and the $350,000.00 limit. He stated
that Kitchener would pay approximately $1.9 million in premiums for the pool as opposed to $1.65
million if the present arrangement with the Frank Cowan Company is renewed.
The Vice-President of Claims for the Frank Cowan Company appeared and outlined her expertise
in the area of municipal claims. Ms. Barbara Runstedler, Risk Manager Assistant, also appeared
and referred to the services provided by Frank Cowan in the area of risk management.
Councillor Galloway questioned why the Frank Cowan Company representatives were in
attendance this date, and Mr. Milway advised that the decision before Council is an important one
from his company's perspective, as joining a pool greatly reduces the likelihood of future insurance
business from the individual municipalities. Mr. Milway suggested that the longer a municipality is
in a pool the more difficult it is to leave, and that there are problems even if this occurs as the
municipality retains a percentage of the overall pool liability. He advised that he is not
categorically opposed to pools; however, they are risky vehicles which require an administrative
infrastructure.
Mr. Patrick Mahoney, Dion Durrell, Actuaries and Consultants, appeared and gave a presentation
on the proposed insurance pooling arrangement with area municipalities. He
stressed that he has been working with area Treasurers for some time on this
proposal and is recommending that the municipality enter into a pool for an initial
period of three years. Mr. Mahoney reviewed premium history and the different
options and methods of insurance. He noted that a pool has higher strategic control
and lower friction costs, and that premiums are more predicable due to direct
purchase. Mr. Mahoney reviewed the structure of the proposed pooling program
noting that it amounts to a three year insurance policy with annual premiums. He
stressed that the conditions for leaving the pool are virtually identical to any other
insurance policy. Mr. Mahoney recommended that the pool be financed at $1.5
million in order to pre-fund for the worst case scenario and subject to insurer
insolvency. He listed the insurance2. INSURANCE POOLING PROPOSAL
CONT'D
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CITY OF KITCHENER
companies which the pool would deal with, noting that all are among the largest insurers in the
world and most are licensed in Canada with Canadian operations. Mr. Mahoney gave an actuarial
update and cost comparison noting that currently aggregate costs Region-wide are $3.8 million
with a further $0.2 million in administrative costs. The maximum pool costs would be $3.4 million,
resulting in a $1.8 million surplus over the three year arrangement. Mr. Mahoney pointed out that
the main objective of the pool is stability of insurance premiums through a contribution to
surpluses. He noted that it is estimated Kitchener would pay approximately $1.7 million if it
insured through the Frank Cowan Company as opposed to $1.5 million through the pool, with
these figures including all administrative costs. He reviewed the proposed administrative structure
comprised of a local board of area Treasurers and two Risk Managers, one from Kitchener and
one from the Region.
Mr. Mahoney responded to statements made in the report of Mr. Robert Brown, and noted that
reinsurance markets have been extremely receptive to the pooling arrangement and their
underwriters have looked at the proposal and favor it and the related premium certainty. In
summary, he suggested that the main reasons for forming an insurance pool are to reduce costs,
mitigate risk and introduce administrative efficiencies.
Councillor G. Lorentz enquired as to the relative support from other area municipalities and Ms.
Houston replied that the Region of Waterloo has agreed, Woolwich Township has approved it at
the committee level and early indications are that both Cambridge and Wellesley will support the
initiative. She pointed that even if the smaller municipalities are not prepared to participate, there
may still be merit in proceeding.
On a motion by Councillor G. Lorentz,
it was resolved:
"That the Mayor and Clerk be authorized to execute all necessary documents, to the
satisfaction of the City Solicitor, relative to participation in an Insurance Pooling
Arrangement as of April 1, 1998 or as soon thereafter as is practical, with the above subject
to confirmation that the re-insurance placement is completed on terms substantially similar
to those outlined in the letter report of Dion Durrell and Associates (March 17, 1998) as
appended to the report of P. Houston (March 18, 1998) and involving a total cost of
approximately $1.5 million per year, including reinsurance protection as well as fronting
costs."
3. SALE OF MEDIA BINGO CARDS
The Committee was in receipt of a report from J. Koppeser dated March 17, 1998 in response to a
request from the Kitchener Pioneer Lions Club to sell media bingo cards.
Mr. Joe Runge, Kitchener Pioneer Lions Club, appeared in support of his organization's request
and noted that the Guelph Lions Club will hold the licence for the event, and have met the
guidelines set out by the Ontario Gaming Commission.
Mr. Chris Duncan, President of the Kitchener Pioneer Lions Club, appeared and advised that his
organization is expecting to receive approximately $160,000.00 in revenue which would be given
back to the community through various local initiatives.
Mr. Max Rausch, Charities Bingo Palace, expressed several concerns with the media bingo
proposal. He pointed out that the amount of revenue referred to is uncertain and unlikely based
on past revenue history. He noted that at present local charities operating out of the Bingo Palace
contributed approximately $200,000.00 a year to the City in licence fees, and noted that any new
gaming event will hurt bingo halls. He added that the prize board limit is also an issue and needs
to be addressed in conjunction with the City of Waterloo. Finally, Mr. Rausch suggested that there
should be a further letter from the Ontario Lottery Corporation endorsing this event.
Mr. James Facey, Bingo Country, appeared in opposition to the media bingo card proposal,
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SALE OF MEDIA BINGO CARDS - CONT'D
noting that the proposal suggests a $5,500.00 game, and given this amount the Lions Club should
be restricted to six such games per year. He pointed out that other local charities also distribute
bingo revenue within the community and suggested that the entire issue should be referred to the
Twin City Committee.
Mr. Larry Porter, first Vice-President of the Guelph Lions Club, appeared and advised that his
organization has been running video bingos for the past twenty years. Councillor Vrbanovic
enquired whether Mr. Porter had considered partnering with other local bingo organizations, and
he replied that this had not been considered as the target markets are different.
Councillor B. Vrbanovic put forward a motion to refer the matter to the Twin City Committee for
consideration and report back to the respective City Councils by the third week in April.
Mr. Duncan expressed concern over a delay of this magnitude, and clarified the request to indicate
that the organization is only asking for permission to distribute the cards one day per week and
that this request is not dissimilar from the current arrangement involving Rainbow Bingo which is
operating with a prize board greater than the $5,500.00 maximum. Mrs. Koppeser replied that
Council had previously taken no action on the Rainbow request to sell tickets in the municipality.
Councillor B. Vrbanovic then amended his previous motion of referral to the Twin City Committee
so as to stipulate an expected response by the April 6, 1998 meeting of the Finance and
Administration. The motion was then voted on, as amended.
On a motion by Councillor B. Vrbanovic,
it was resolved:
"That consideration of the request of Mr. Joe Runge, Kitchener Pioneer Lions Club to sell
media bingo cards in Kitchener, be deferred pending a meeting of the Twin Cities
Committee to be convened as soon as possible, and that the request and any
recommendations/comments arising from this meeting be referred to the April 6, 1998
meeting of the Finance and Administration Committee."
RELOCATION OF ANABELLA'S MASSAGE STUDIO
The Committee was in receipt of a report from J. Koppeser dated March 17, 1998 outlining the four
proposed locations submitted by Mr. Randy Zivkovic.
Mr. Zivkovic appeared and indicated his preference for the Ardelt Avenue location, noting that his
second choice would be either of the King Street East locations. In response to a question from
Councillor Ziegler, Mr. Zivkovic advised that any of the locations submitted would be satisfactory
from his perspective.
Councillor Vrbanovic asked that Council consider this item in-camera on the basis of solicitor-client
privilege as he would like to obtain legal advice from Mr. Shivas.
The Committee then temporarily deferred consideration of the massage parlour relocation to deal
with the balance of its agenda.
HERB FAIR AND HANDWERK
The Committee was in receipt of a report from J. Koppeser dated March 17, 1998 in response to a
request from the Joseph Schneider House for an exemption from the City's Licensing By-laws as
they would relate to two events to be held at the House on May 2 and August 22, 1998.
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CITY OF KITCHENER
HERB FAIR AND HANDWERK - CONT'D
On a motion by Councillor G. Lorentz,
it was resolved:
"That the Herb Fair and Handwerk event to be held at the Joseph Schneider House on May
2 and August 22, 1998 be exempt from the City's Licensing By-laws."
FIRE FIGHTERS' MUSTER- DOON HERITAGE CROSSROADS
The Committee was in receipt of a report from J. Koppeser dated March 17, 1998 in response to a
request from the Doon Heritage Crossroads for an exemption from the City's Licensing By-laws as
they relate to an event to be held on May 23, 1998.
On a motion by Councillor G. Lorentz,
it was resolved:
"That the Firefighters' Muster to be held at Doon Heritage Crossroads on May 23, 1998 be
exempt from the City's Licensing By-laws."
EXTENSION OF USE - SIDEWALK PATIOS/HOT DOG CARTS
The Committee was in receipt of a report from J. Koppeser and L. MacDonald dated March 19,
1998 recommending the establishing of a licence fee for an extension of use involving the City
right-of-way and places of refreshment.
On a motion by Councillor B. Vrbanovic,
it was resolved:
"That Council be presented with a by-law to licence untravelled portions of highways, with
said by-law to establish a licence fee of $200.00 for an extension of use of a valid licenced
place of refreshment, the existing operation of which consists of 20 seats or more."
REGULATION OF PRIVATE SEWAGE SYSTEMS
The Committee was in receipt of Planning and Development Department report PD98/35 (J.
Witmer) dated March 11, 1998 recommending that the City enter into an agreement with the
Regional Municipality of Waterloo Health Unit for an interim period.
In response to a question from Councillor Galloway, Mr. Witmer advised that the alternative to
entering into the agreement would be for the City to immediately take responsibility for reviewing,
approving and administering private sewage systems as is being done in Cambridge and
Waterloo. He referred to the Region's plans to increase the fee from $300.00 to $800.00, noting
that in the view of City staff there is no rationale for such an increase and it will be reduced to
$300.00 when the City assumes responsibility at a later date.
Mr. Witmer requested an amendment to the staff recommendation to the effect that any agreement
signed by the Mayor and Clerk be to the satisfaction of the City Solicitor.
On a motion by Councillor G. Lorentz,
it was resolved:
"That notwithstanding the proposed changes to the Ontario Building Code Act and
Regulation relating to Part VIII, Private Sewage Systems, the City of Kitchener hereby
agrees to enter into an agreement with the Regional Municipality of Waterloo's Health Unit
for the continuation of the review, approval and administration of private sewage systems
for an interim period of one year ending March 1999; and further,
That the Mayor and Clerk be authorized to execute said agreements to the satisfaction of
the City Solicitor."
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CITY OF KITCHENER
10.
The Finance and Administrative Committee meeting then recessed at 12:55 p.m. and reconvened
at 2:20 p.m. under the Chairmanship of Councillor J. Ziegler with the following members present:
Mayor C. Zehr, Councillors Jake Smola, G. Lorentz, J. Haalboom, C. Weylie, T. Galloway and B.
Vrbanovic.
RELOCATION OF ANABELLA'S MASSAGE STUlDO (CONT'D)
On a motion by Councillor T. Galloway,
It was resolved:
"That no action be taken in regard to the four possible relocation options for Anabella's
Massage Studio outlined in the report of J. Koppeser dated March 17, 1998."
Councillor Ziegler referred to a letter circulated this date from the owners of body rub parlours in
the municipality referring to illegal adult entertainment parlours. J. Shivas and Licensing staff were
directed to investigate this complaint and report back to the Committee. Staff were also asked to
report on the possible licensing of escort services.
PRE-BUDGET APPROVAL RECONSTRUCTION/RESURFACING PROJECTS
11.
12.
13.
The Committee was in receipt of a report and recommendation from E. Kovacs dated March 18,
1998 concerning a request for pre-budget approval so as to reduce construction inconvenience to
the public and businesses.
On a motion by Councillor T. Galloway,
it was resolved:
"That the following projects as outlined in the report of E. Kovacs dated March 18, 1998, be
given pre-budget approval; namely, King Street East/Cedar Street reconstruction; Krug
Street reconstruction; Victoria Street storm and sanitary outlets; and, the City's 1998 Street
Resurfacing Program."
REFERRAL OF AGENDA ITEMS #4 AND #9
It was agreed that consideration of the report concerning selection of City representatives to
Regional Council be deferred and referred to a special meeting of Council to be held on March 30,
1998.
It was also agreed that consideration of the staff report pertaining to current Building Division staff
and Building Code requirements be deferred and referred to the April 6 Finance and
Administration Committee meeting.
INFORMATION ITEMS
The Committee was advised of the following corrections to the February 23, 1998 Finance and
Administration Committee minutes:
Page 29, Item #2 - Paragraph 1: reference in the last line to the March 23 deadline has been
corrected to reflect a March 13 deadline:
Page 32, Item #7: the recommendation relating to Item #6 was inadvertently duplicated for Item #7
and this motion has been replaced with the recommendation appearing on the March 2, 1998
report to Council as Clause #6.
NEXT MEETING
The next regularly scheduled meeting of the Finance and Administration Committee will be held on
Monday, April 6, 1998.
FINANCE & ADMINISTRATION COMMITTEE MINUTES
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CITY OF KITCHENER
14. ADJOURNMENT
On motion, the meeting adjourned at 2:25 p.m.
G. Sosnoski
Manager of Corporate Records
and Assistant City Clerk