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HomeMy WebLinkAboutFCS Minutes - 2019-11-25 - 2020 Operating BudgetSPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019CITY OF KITCHENER The Special Finance and Corporate ServicesCommittee met this date, commencing at 9:33a.m. Present:CouncillorS. Davey-Chair Mayor B. Vrbanovic andCouncillorsD. 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 R. Hagey, Director, Financial Planning M. Seiling, Director, Building K. Kugler, Director, Enterprise G. St. Louis, Director, Utilities N. Lobley, Director, Parks and Cemeteries B. Cronkite,Director, Transportation Services D. Fagerdahl, Manager, Financial Planning P. McCormick, Manager, Parking Enterprise J. Bunn, Manager, Council and Committee Services/Deputy City Clerk D. Saunderson, Committee Administrator S. Delaney, Committee Administrator 1.FIN-19-085-2020OPERATING BUDGET The Committee considered Financial ServicesDepartment report FIN-19-085, dated November 13, 2019, concerning the City’s 2020Operating Budget proposing a tax levy increase of 2.2%, together with nine Operating Budget Issue Papers. Councillor S. Davey advised the meeting held this date will be mostly for informational purposes, and the Capital Budget meeting will allow Council the opportunity tobring questions forward.He further noted the Final Budget meeting in January will provide the opportunity for Council to make decisionson the City budget. GENERAL OVERVIEW Mr. D.Chapman presented a general overview ofthe Operating Budgetand advised the 2020 budget advances thestrategicpriorities that have been previously set by Council.He notedthe budgetsupports goals and actions to advance these priorities, and identifiesa range of options for Council to consider,which are alignedwith theStrategic Plan. Mr. J. Lautenbach advised the 2020 Budget is made up of three components: Operating Budget; Capital Budget; and, reserve funds. He highlighted theStrategic Plan themesinclude: Great Customer Service; People Friendly Transportation; Environmental Leadership; a Caring Community; and a Vibrant Economy. He explainedthe available funding for Strategic Items in the Operating Budget, includeTier 2 Grants; the Urban Forest Strategy; the Affordable Housing Strategy; and, the Leisure Access card.Finally, Mr. Lautenbachadvisedincreasing the property tax rate by 2.2% and water utility rate by 4.4% will result in a total impact of $81 per house for 2020. BOARDS Kitchener Public Library (KPL) Ms. M.Chevreau, Kitchener Public Library (KPL), presented the KPL’s 2020budget and respondedto questions from the Committee.She advised the KPL intendsto put forward an operating increase request for 2021,forincreasedstaffing requirements and the provision of newservices. Councillor K. Galloway-Sealock requested staff prepare an issue paper with respect to SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019-49-CITY OF KITCHENER 1.FIN-19-085-2020OPERATING BUDGET(CONT’D) increasingfull-time staff by two positions at the KPL, from September to December, to be presented on Final Budget Day.Mr. Hageyadvised the completion of the issue paper would depend on how quickly the KPL can provide budget options. Centre in the Square (CITS) Messrs. P.Salvini, Chairand R. Sonoda, General Manager,and Ms. D.Daub, Director of Finance, Centre in the Square (CITS), were in attendance and responded to questionsfrom the Committee.Ms. Daubadvised the CITS anticipates needing additional funding of $111,311 from the City in 2020, noting Issue Paper OP 01 (Continuing Transitional Funding for Centre in the Square)outlines the request.She further requested any surplus funding be held in theCITS capital fundsreserve. The committee recessed at 10:45 a.m. and reconvened at 10:49 a.m., Chaired by Councillor S. Davey with all members present. TAX SUPPORTED OPERATING BUDGET Mr. Hagey advisedstaff considered the following when preparing the draft 2020 tax rate: municipalcomparisons;inflationary factors, including those unique to municipalities; and,a balancedlevel of service provided with taxpayer’s willingness and ability to pay. He further highlightedthe 2019 Regional Average Household Comparison, which identifiesKitchener as being an affordable city in which to live. In response to questions, Mr. Hagey advisedthat regarding taxes and services, citizens have indicated they are interested in increasing taxes only at the rate of inflation, and maintaining current service levels. Mr. Hagey acknowledged assessment growth which constitutes additional property tax revenue created by new development; redevelopment of existing properties; and, expansions to existing properties, which help to offset the costs of delivering programs and services. Members had questions with respect to Issue Paper OP02 (CommunityGrant Funding –Tier 1 & Tier 2). Responding to questions,Mr. May advised that the proposed 2020 budget already includes an inflationary increase of 1.9%, and should Council choose to provide additional funding on Final Budget Day, the funding should be directed to Tier 2.He further noted that staff will prepare an issue paper outlining the various options for the City to provide funding to those Neighbourhood Associations that require additional financial support. Members had questions with respect to Issue Paper OP03 (Sustainable Urban Forestry Strategy Implementation Options). Responding to questions,Mr. Lobley advised street trees are the primary focus and currently the City acts on a complaint-based approach.Mr. Lobley suggested if Option B is not approved, an additional inspection will still occur. The number of service requests by citizens is approximately 3,000 per year and the City hopes to build a more proactive service in the future.Ms. McGoldrick advisedthe City will look to take advantage of any tree planting programs that were highlighted during the recent federal election. Members had questions with respect to Issue Paper OP 04 (Affordable Housing Options). In response to questions,Mr.Readman advised the $700,000.requested would notnecessarily be specified for the City specifically, rather the funding would benefitthe entireRegion.He noted that we currently do not have any precedent for matching challenges within the community, however we can work with our Communications team to request donations from the public, and further noted that an email will be sent to the Mayor and Council, outlining the challenges and benefits concerning a matching strategy with the community, to match the City’s potential donation to ALLIN2020. CouncillorB.Ioannidis left the meeting at this time. A motion was brought forward by Councillor D. Chapman requestingstaff preparean issue paper indicating the cost and implications of building a 12-unit module complex on city property, done in partnership with the Homelessness & Housing Umbrella Group (HHUG). SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019-50-CITY OF KITCHENER 1.FIN-19-085-2020OPERATING BUDGET(CONT’D) Mayor B. Vrbanovicbrought forward a motion to defer Councillor Chapman’s motion until the March Finance and Corporate Services Committeemeeting, as the affordable housing task force is currently working on developing apolicy related to homelessness. Mayor Vrbanovic’s deferral was then voted on and was Carriedon a recorded vote, withMayor B. Vrbanovic and Councillors P. Singh, M. Johnston,S. Davey, D. Schnider, K. Galloway- Sealock and C. Michaud voting in favour; and Councillors J. Gazzola, D. Chapman and S. Marsh voting in opposition. Councillor B. Ioannidis was absentand accordingly did not vote. Members had questions with respect to issue paper OP 05 (Expand Leisure Access to Neighbourhood Association Programs). Responding to questions,Mr. Mayexplainedthe Leisure Access program is chronically underfunded, however despite the underfunding,nocitizenis turned away. At the request of the Committee, staff agreed to prepare an issue paper outlining the creation of funding in the range of $143,000., to expand the Leisure Access program to cover Neighbourhood Association programs, and how best to support those Neighbourhood Associations who may need additionalfunding. Members had questions with respect to issue paper OP 06 (Supporting City Services and Growth). Responding to questions,Mr. Hagey advised the recommendation is for 12 FTE positions, to be paid for through a mix of reallocating budgets and additional revenue. He further advised that an email will be sent to the Mayor and Council detailing the funding sources for the 12 FTE positions. The Committee recessed at12:47p.m. and reconvened at 1:36p.m., Chaired by Councillor S. Davey with all members present, except Councillor B. Ioannidis. ENTERPRISE OPERATING BUDGETS Mr. Hagey gave an overview of the financial positions of the City’s enterprises, advising only one of the seven enterprises are projected to have a negative stabilization reserve by the end of the year. He suggestedthe goal should be to have all enterprises to a positive position within the short-term planning horizon. Building Mr. M. Seilingprovided an overview of the Building enterprise, noting the 2019 projected actuals are higher than budget due to increasedbuilding permit revenues. Mr. Seiling attributed the increasedrevenue to the creation of the light rail transit system; downtown development charge exemptions; and, both the City of Kitchener and Region of Waterloo development charge background studies prompting development applications before rate increases. It was noted provincial legislation prohibits dividends from the Building enterprise. The Committee was in receipt of Issue Paper Op07 (Improving Scheduling of Building Inspections). In response to questions, Mr. Seiling advised Building revenue could not be used to fund a grant for the affordable housing project. TheCommittee requestedstaff to review the applicable legislation to determine if it would be permissible to waive building related fees with respect to affordable housing development. Golf Ms. K. Kuglerprovided an overview of the Golfenterprise, noting the budget forecast includesa small annual revenue over the next five years, while the stabilization reserve is projected to remain below the minimum for all the years of the forecast because of debt charges. Ms. Kugler explainedthe City is projected to receive a $75,000 dividend from the Golf enterprise for the next five years. SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019-51-CITY OF KITCHENER 1.FIN-19-085-2020OPERATING BUDGET(CONT’D) In response to questions, Mr. Lautenbach advised against allocating funds from the tax- stabilization reserve to eliminate the debt from the Golf enterprise, as funding the debt may be incompatible with the City’s obligations under the Level Playing Field agreement. In response to questions, Mr. Hagey indicated the Golf enterprise debt is fixed and cannot be renegotiated for a better rate of return. Parking Mr. B. Cronkiteprovided an overview of the Parking enterprise, indicating the launch of the ION light rail transit system in June 2019 will likely have an impact on travel and parking patterns. Mr. Cronkite highlighted the 2019 projected actuals are higher than budgeteddue to increased demand for on-street parking and monthly parking in all garage facilities. He noted further gains were achieved in the Bramm Street surface lot due to third party parking arrangements with adjacent property owners. The Committee requested an issue paper regardingtheimpact of increasing parking dividend paid to the city by $100Kper year, $50K per year, or a one-time transfer, includinginformation on Parking Enterprise debt (amount, maturity date, etc.). Gas Works Utility Mr. G. St. Louis provided highlights of the Gas Delivery Utility, including capitalizing on road reconstruction projects toincreasegas pipeline replacements for City and Regional roads; implementing a new meter inventory management system (MIMS) to improve accuracy and reduce manual data entry; and, introducing a $250.credit for customersthat upgrade furnaces to a higher efficiency models. Mr. St. Louis indicated 2019 actuals are better than budgeteddue to cooler than normal weather. The Committee was in receipt of Issue Paper Op 08 (Maintaining Gas Meter Infrastructure). Mr. St. Louis provided an overview of the Gas Supply Utility noting,as Gas Supply rates operate as a flow-through to customers,it is not permitted to provide a dividend to the tax base. Similar to Gas Delivery, he noted Gas Supply 2019 actuals are projecting favourable to budget due to cooler than normal weather. Mr. Chapman advised against increasing the Gas Works utility dividend, and suggested if there was a desire to explore the dividend calculation further, an in-camera discussion would be recommended. Mayor B. Vrbanovic left the meeting at this time. Water, Sanitary and Stormwater Utilities Ms. D. McGoldrickprovided an overviewof the Water Infrastructure Program (WIP)review, noting Council endorsed a 5-yearphase-in of maintenance funding increases.The Committee was in receipt ofIssue Paper Op 09 (Maintaining Water & Stormwater Infrastructure). Ms. McGoldrick explained the combined rate for Water, Sanitary, and Storm Water is 4.4%. The Committee requested staffto include in the Water Utilities rate report,stormwater rates from 2011 to current (both % and $ amount). Water Utility Ms. McGoldrick highlighted the projected2019 results are favourable compared to budgeted due to higherconsumption of water; lower administration costs due to staff vacancies; and, a decrease in the number of water main breaks.Ms. McGoldrick explained the Water Stabilization Reserve remains positive and the balance continues to grow but does not meet the minimum balance within the forecast.It was noted provincial legislation prohibits dividends from the Water Utility. SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019-52-CITY OF KITCHENER 1.FIN-19-085-2020OPERATING BUDGET(CONT’D) Sanitary Utility Ms. McGoldrick presented the Sanitary Utility, indicating the projected 2019 results are favourable compared to budgeted, which can be attributed in part to sewer surcharge volumes being higher than budgeted, consistent with the water utility; and, net savings in expenses due to delays in repair and maintenance work. It was noted provincial legislation prohibits dividends from the Sanitary Utility. StormwaterUtility Ms. McGoldrickadvised the2019Stormwater Utility results were favourable compared to budgeted, and contributed to the success tolowermaintenance costs due to delays.It was noted provincial legislation prohibits dividends from the Stormwater Utility. RESOLUTION The following motion was voted on and was Carried Unanimously on a recorded vote. Mayor B. Vrbanovic and Councillor B. Ioannidis were absent and accordingly did not vote On motion by Councillor K. Galloway-Sealock- it was resolved: “That staff be directed to report and/or take appropriate action on the following matters arising from the November 25, 2019 Special Finance and Corporate Services Committee meeting relative to the 2020Operating budget, as outlined in the chart below: Division/AreaTopicAction Send an email outlining challenges and benefits around a matching strategy with Affordable the community, to match the City's potential Housing donation to ALLIN2020 related to affordable housing. Prepareanissue paper regarding additional funding for incremental staff at Library for Sept to Dec 2020 (with full annual funding in 2021). Kitchener Public FINANCIAL Include a recommendation on how this Library PLANNING could be funded, and a calculation of what KPL's grant would be using the 2 year average of CPI (2.2%) instead of the 2019 amount (1.9%). Full Time Sendanemail detailing funding sources for Equivalent (FTE) the 12 FTEs listed in OP-6 issue paper. Positions Prepare an issue paper that outlines Neighbourhood COMMUNITY options for the City to provide funding to Programs & SERVICESNeighbourhood Associations that require Services additional financial support. As part of the Water Utilities rate report, INFRASTRUCTURE Storm Waterinclude stormwater rates from 2011 to SERVICES current (both % and $ amount). SPECIAL FINANCE & CORPORATE SERVICES COMMITTEE MINUTES NOVEMBER 25, 2019-53-CITY OF KITCHENER 1.FIN-19-085-2020OPERATING BUDGET(CONT’D) Prepare an issue paper regardingthe impact of increasing parking dividend paid to the city by $100K/year, $50K/year, or a PARKINGParking Dividend one-time transfer. Also include information on Parking debt (amount, maturity date, etc.).” ADJOURNMENT On motion, this meeting adjourned at 3:38p.m. S. DelaneyJ.Bunn Committee AdministratorManager, Council and Committee Services/Deputy City Clerk