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HomeMy WebLinkAboutFCS Minutes - 2019-12-02 - 2020 Capital Budget & 10-Year ForecastSPECIAL FINANCE & CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019CITY OF KITCHENER The Special Finance and Corporate ServicesCommittee met this date, commencing at 9:35a.m. Present:CouncillorS. 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,EconomicDevelopment R. Hagey, Director, Financial Planning G. St. Louis, Director, Utilities N.Lobley, Director, Parks and Cemeteries B. Cronkite, Director, Transportation Services B. Lam, Director, Sanitary & Stormwater Utility D. Fagerdahl, Manager, Financial Planning S. Allen, Manager, Design and Construction B.Powell,Project Manager,Facility Asset Management C. Bennett, Corporate Sustainability Officer J. Bunn, Manager, Council &Committee Services/Deputy Clerk D. Saunderson, Committee Administrator S. Delaney, Committee Administrator 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST The Committee considered Financial ServicesDepartment report FIN-19-086, dated November 7, 2019, concerning the City’s 2020Capital Budget and attached a line-by-linelisting of all projects in the Capital Forecast by Department/Division. OVERVIEWBY CHIEF FINANCIAL OFFICER Mr. J. Lautenbachprovided opening remarks, and advised residents can comment on the proposed 2020 Budget. He noted today’s discussion will beon the Capital Budget, as well as the reserve and reserve funds, and stated that projects are identified and prioritized via asset replacement and rehabilitation needs, which are developed based on the Asset Management Plan. He acknowledged the State of the Infrastructure Report and identified the next major asset category as Facility Infrastructure, advising once the community benefit charge related to Bill 108 has been finalized, the forecast will be adjusted. Mayor B. Vrbanovic entered the meeting at this time. Mr. Lautenbach commented regarding the 10-year capital investments, noting the largest component is full road reconstruction at $442 million. He further advised the capital budget will address 90kms of underground infrastructure over a ten-year timeframe, and there is $3.5M in available funding for strategic items which,will provide Council with flexibility related to the level of investment. He outlined the 10-year capital funding sources, specifically the grants received from the federal government,and noted that progress has been made in addressing the facilities infrastructure gap, with $38M being allocated across the 10-year forecast. In response to questions about the 10-year capital funding sources, Mr. Lautenbach advised grant funding will be allocated across the ten-year time frame, specifically to the year 2028. He further stated in regards to putting money towards the facilities gap, the discussion on this topic will feed into the 2021 budget. In response to questions, Mr.D.Chapmanadvised that should the Capital Budget be only partially allocated, the transfer to Capital could be reduced to create room in the Operating Budget. SPECIAL FINANCE &CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019-55-CITY OF KITCHENER 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST (CONT’D) BOARDS Centre in the Square(CITS) Messrs. R.Sonoda, General Manager, and J. Henning, Director of Operations,and Ms. D. Daub, Director of Finance, Centre in the Square (CITS), were in attendance and responded to questions from the Committee.Mr. Henning advised a number of projects have been completed this year, most notably the lobby and washroom renovation at the KW Art Gallery;and,the bay street windows and siding project are nearing substantial completion. In 2020,a number of City- funded projects are planned,such as replacement of the 28 auditorium doors; replacement of the fire safety barrier; and,designfor the renovation of 12 bathrooms (scheduled for 2021/2022). CITSwill also continue to work with Facility Asset Management on a building condition assessment, and to integrate the Centre into the CityWorks program. In response to questions, Mr. Henning noted if grants are not awarded to CITS, alternate options for funding can be considered, but would require projectrescaling not deferral. In response toquestions,Ms. Daub noted the existing capital balances have already been fully allocated. Kitchener Public Library (KPL) Ms. M.Chevreau,Kitchener Public Library (KPL), was in attendance and no questions were asked. CAPITAL FUNDING SOURCES Mr. R. Hageyprovided an overview of the funding sources for the 2020 Capital Forecast, and addressed the possible ramifications associated with adjusting the Capital Budget. DEBT Mr. Hagey outlined the current outstanding debt, which includes funding the city has borrowed to complete capital projects. He outlined the debt charge as a percentage of the Tax Levy and advised the increased enterprise debt charges in 2022, 2025 and 2026 relate to aballoon payment on Rangers expansion debt, the Charles and Benton Parking garage, and the Civic District Parking Garage. In response to questions regarding the 1:1debt to reserveratio, Mr. Hagey stated it wouldbe Council’s prerogative as to whether or nottoincrease the debt,however this would notbe recommended by staff. He further advised thedraftdebt policy will be presentedto Council in 2020 in regards to internal borrowing. RESERVE FUNDS Mr. Hagey provided an overview of the existing reserve fundsand reserve fund policy. Members had questions with respect to Issue Paper Cap 01 (Reserve Continuity Schedule) and the Learning and Development reserve fund. Mr. Hagey advised the $150,000. transfer to the Operating Budget is for the provision of aone time training regarding indigenous relationships. Mr. Chapman advised the most significant cost in the first year will be program development and is hopeful that through partnerships,the cost will decrease. He further stated the $150,000. represents the high end of the cost, should the City need to develop its own training. Members had questions with respect to Issue Paper Cap 02 (Updating Stabilization Reserves). Responding to questions,Mr. Lautenbach advised the five hundred thousand dollarscomes from the tax stabilization reserve,andrepresents an initial starting point,which is set up to mitigate fluctuations,noting this reserve is not typically used as a funding source.He further made note of the million dollar transfer from the tax stabilization reserve to the weather events reserve, which was a recommendation arising from the long term financial plan. SPECIAL FINANCE &CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019-56-CITY OF KITCHENER 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST (CONT’D) DEVELOPMENT CHARGES (DC) Mr. Hagey presented an overview of theDevelopment Charges(DC),and expected impact of Bill 108 on both DC’s and Community Benefit Charges (CBC). The financial forecast for Development Charges includes a deficit anticipated for the end of 2019, but returns to a positive position in 2020, ongoing until 2023 and then a negative in 2024 and beyond. This may require some DC debt to be issued in 2024 and beyond if those projects are to be completed. In response to questions about Bill 108, Mr. Hagey advised the Development Charges rates were approved in 2019, and noted a CBC study will be completed in 2020. The committee recessed at 10:56 a.m. and reconvened at 11:06 a.m., Chaired by Councillor S. Davey with all members present. CAPITAL BUDGET FORECAST INFORMATION Mr. Hagey introduced the Capital BudgetForecast Information and noted the existing capital th balances are as of September 30, not year end. He outlined the investment options before Council, which are LoveMyHood, the Corporate Climate Action Plan, and Participatory Budgeting. Members had questions with respect to Issue Paper Cap 03 (Continued Support for Resident- Led Neighbourhood projects –Love My Hood). Responding to questions, Mr. M. May advised Option ‘A’is staff’s recommendation. He further noted between 2017 and 2019, 37 applications were turned down due to lack of funding, a value of about half a million dollars. Members had questions with respect to Issue Paper Cap 04 (Implementing the City’s Corporate Climate Action Plan). Responding to questions, Ms. C. Bennett advised the Corporate Climate Action Plan initiatives will be aligned with the Facilities Management Asset Removal Plan,to conduct building condition assessments alongside energy audits, ultimately offsetting the infrastructure gap. Members had questions with respect to Issue Paper Cap 05 (Continue Participatory Budgeting Community Engagement). Responding to questions,Mr. May advised consideration to targeting specific areas of the city for participatory budgetinghas been given, andCouncil would assist by setting the criteria to identify target areas. The Committee recessed at12:14p.m. and reconvened at 1:01p.m., Chaired by Councillor S. Davey with all members present except for Mayor B. Vrbanovic and Councillor M. Johnston. CAPITAL FORECAST AND ISSUE PAPERS GENERAL CITY The Committee considered the General Expenses Capital Forecast contained on pagesC-100 to C-103 of the 2020 Capital Budget package.Mr. R. Hagey responded to questions from the Committee. OFFICE OF THE CHIEF ADMINISTRATOR The Committee considered the Office of the Chief Administrator Capital Forecast contained on pagesC-104to C-106of the 2020 Capital Budget package. FINANCIALSERVICES The Committee considered the Financial Services Department Capital Forecast contained on pages C-107 to C-112 of the 2020 Capital Budget package. SPECIAL FINANCE &CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019-57-CITY OF KITCHENER 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST (CONT’D) CORPORATE SERVICES The Committee considered the Corporate Services Department Capital Forecast contained on pages C-113 to C-131 of the 2020 Capital Budget package.The Committee also considered Issue Paper Cap06 (Transitioning to Office365), regarding transitioning the City to Microsoft Office365 in 2020. In response to questions regarding printshop equipment noted on page C-114 of the agenda package, Mr. Chapman advised the Internal Audit workplan report is scheduled to be presented at the December 16, 2019 Audit meeting, which includeda review of print shop services and likely will address any questions Council may have prior to Final Budget approval. COMMUNITY SERVICES The Committee considered the Community Services Department Capital Forecast contained on pages C-132 to C-157 of the 2020 Capital Budget package. Councillor M. Johnston re-entered the meeting at this time. Councillor D. Schnider questioned whether it would be possibleto impose a non-resident fee on Neighbourhood Association programming. Mr. May advised staff were currently in the process of reviewing which programs are subject to non-resident fees and whether more programs should beincluded. He further advised following the review, if staff believe changes should be made, a report would come back to Council in 2020. DEVELOPMENTSERVICES The Committee considered the Development Services Department Capital Forecast contained onpages C-158 to C-218 of the 2020Capital Budget package. The Committee also considered Issue Paper Cap07 (Queen Street Placemaking) regarding the reconstruction of Queen Street as per the Placemaking Plan approved by Council in 2017; Issue Paper CapP08 (Disaster Mitigation and Adaption Fund (DMAF) Grant regarding a merit-based program that will invest $2Bto support large-scale infrastructure projects to help communities better manage the risks of disasters triggered by natural hazards like storms; Issue Paper Cap09 (Converting Decorative Post-top Streetlights to LED) regarding converting decorative post-top streetlights to new LED lights; and, Issue Paper Cap10 (Maintaining Parking Garage Infrastructure) regarding waterproofing repairs within the City’s parking garages. Councillor P. Singh requested consideration be given to the Brownfield Tax Incremental Grant (TIG) Program and whether it can be shifted towards a self funding model for the 2021 budget. In response to questions, Mr. C. Bluhm agreed to follow up with Council on the Creative Hub and its current tenants. Mayor B. Vrbanovic re-entered the meeting at this time. Questions were raised regarding public engagement for the Gaukel Street Closure.Mr. J. Readman confirmed staff intend on using a wide range of public engagement methods,including but not limited to public meetings and the use of Engage Kitchener. He furtheradvised following the public engagement process,staff would be reporting back on options proposed for Gaukel Street. Councillor B. Ioannidis requested clarification on small scale traffic calming measures, specifically the flexi-delineators and how manywould be distributed for each ward in 2020.Mr. B. Cronkite advised each member of Council would have 10 flexi-delineators for 2020. He expressed caution with increasing that number as over saturation would decrease their effectiveness. In response to further questions,he agreed to report back as part of the 40km per/hour pilot program data about the flexi-delineators to provide a comprehensive response to the effectiveness of the traffic calming measures. Councillor S. Davey left the meeting at this time and Councillor P. Singhassumed the Chair. SPECIAL FINANCE &CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019-58-CITY OF KITCHENER 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST (CONT’D) In response to questions, Mr. Cronkite advised staff would be bringing forward a report in the first quarter of 2020 related to the use of Automated Speed Enforcement. Councillor S. Davey re-entered the meeting at this time and re-assumed the Chair. INFRASTRUCTURE SERVICES The Committee considered the InfrastructureServices Department Capital Forecast contained onpages C-219 to C-258 of the2020Capital Budget package. The Committee also considered Issue Papers Cap11 (Facilities Infrastructure Deficit Reduction) regarding the facilities infrastructure funding gap the plan to develop a Facility Infrastructure Program in 2020; Issue Paper Cap12 (Coordinating Watermain Replacements with the Region) regarding watermain infrastructure replacement in coordination with the Region; Issue Paper Cap13 (Replacing Gas Pipelines) regarding increasing the gas pipeline budget by $2M annually; and, Issue Paper Cap 14 (Revised Parks Capital Program) that provides context to the revised Parks Capital Program. Councillor P. Singh requested an issue paper related tothe possibilityof funding private property tree planting program through Reep Green Solutionsfromthe Gas Utility. RESOLUTION Councillor P. Singh declared a pecuniary interest with respect to Capital Projects 901002007 ‘5163-Ottawa Street -Charles to Expressway’; 701205129 ‘Stirling/Mausser’and, 901004056 ‘Dixon/Rockway’ as members of his family own property in the vicinity of the subject projects. Accordingly, he did not participate in any discussion or voting regarding those matters. Councillor K. Galloway-Sealock requested an issue paper on the impacts of increasingthe 2020 Gas Delivery dividend by $167,000. Councillor Galloway-Sealock requested a further issue paper that would provideoptions to reduce the operating net tax levy by not fully utilizingthe $3.5M allocated for Capital Strategic Initiatives. It was requested and agreed that in addition to the request regarding Issue Paper Cap04 (Implementing the City’s Corporate Climate Action Plan \[CorCAP\]) that further informationbe included regarding additional projects that could be completed if this project received $300,000. per year from2021-2023. All direction to staff related to the Capital projects as outlined in the declared conflicts wasvoted on andwasCarriedUnanimouslyon a recorded vote.In accordance with hisdeclared pecuniary interest, Councillor P. Singh did not participate in votingon those matters. The following motion was then voted on and wasCarriedUnanimouslyon a recorded vote. On motion by Mayor B. Vrbanovic - it was resolved: “That staff be directed to report and/or take appropriate action on the following matters arising from the January 20, 2020Special Finance and Corporate Services Committee meeting relative to the 2020CapitalBudget, as outlined in the chart below: SPECIAL FINANCE &CORPORATE SERVICES COMMITTEEMINUTES DECEMBER 2, 2019-59-CITY OF KITCHENER 1.FIN-19-086-2020CAPITAL BUDGETAND 10-YEAR FORECAST (CONT’D) Division/AreaTopicAction Prepare issue paper outlining: a.an alternate funding model for hybrid fleet conversions. Explore funding by operating savings as opposed to upfront capital contribution. DEVELOPMENT Sustainability b.additional projects that could be SERVICESOfficecompleted if funding above Option C noted in Issue Paper Cap 04 was approved. c.additional projects that could be completed if this project received $300,000.peryear from2021- 2023 Prepare issue paper regarding the Gas Utility funding private property tree INFRASTRUCTURE planting program through Reep. Gas Delivery SERVICES Prepare issue paper to increase the 2020 Gas Delivery dividend by $167,000. Prepare issue paper providing options to reduce the operatingnet tax levy by not GENERALTax Levy fully utilizing$3.5M allocated for Capital Strategic Initiatives.” 2.ADJOURNMENT On motion, this meeting adjourned at 2:47 p.m. D. SaundersonS. Delaney Committee AdministratorCommittee Administrator