HomeMy WebLinkAboutINS-2023-013 - Financial Plan - Kitchener Water Distribution System
Infrastructure Services Department www.kitchener.ca
REPORT TO: Community and Infrastructure Services Committee
DATE OF MEETING: October 30, 2023
SUBMITTED BY: Greg St. Louis, Director, Utilities, 519-741-2600 ext. 4538
PREPARED BY: Angela Mick, Manager, Quality Management and Water Programs
Greg Demacio, Manager, Financial Reporting and Analysis
Ruth-Anne Goetz, Budget Analysis
WARD(S) INVOLVED: All Wards
DATE OF REPORT: October 13, 2023
REPORT NO.: INS-2023-013
SUBJECT: Financial Plan Kitchener Water Distribution System
RECOMMENDATION:
That the "Financial Plan Kitchener Water Distribution System" be approved as it
demonstrates the financial viability of the Kitchener drinking water system in accordance
with Ontario Regulation 453/07 (Financial Plans) under Subsection 30 of the Safe Drinking
Water Act.
REPORT HIGHLIGHTS:
The key finding of this report that the drinking water system is financially viable.
The Financial Plan is aligned with the Council endorsed Water Infrastructure Program
This report supports the delivery of core services.
BACKGROUND:
The Drinking Water Quality Management Standard (DWQMS), under the Safe Drinking Water
Act, 2002 and Regulation 188/07, required the City of Kitchener to become licensed to operate
2009. As a condition of the license, a Financial Plan was approved by resolution and submitted
to the Province in 2010 (FIN-10-074), renewed in 2014 (INS-14-008) and 2018 (INS-18-029). A
renewal license application must be made by November 2023, a condition of which is an
approved updated Financial Plan covering the period from 2024-2029.
There have been numerous reports to Council regarding the DWQMS commencing in 2008,
including on-going annual Management reviews and the initial Financial Plan.
Financial information contained in the report is aligned with the 2024 Water Infrastructure
Program Summary and Rate Options presented to Council on October 2, 2023 (Report INS-
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
2023-437) and will be incorporated in the 2024 budget process. The amounts in the schedules
agree to the proposed operating forecast and proposedcapital forecast, with adjustments made
to comply with Public Sector Accounting Standards. For example, the capital forecast has been
allocated between amounts that will create tangible capital assets (included as additions of
tangible capital assets on Schedule 1 in the attached Financial Plan) and those costs to
maintain the capital assets (included as administration and other expenses in Schedule 2).
REPORT:
The requirements of the Financial Plan are outlined in Ontario Regulation 453/07 (Section 3) as
follows:
Details of the proposed or projected financial position of the drinking water system
Details of the proposed or projected financial operations of the drinking water system
nd
gross cash payments
Details of the extent to which the information described in the above relate directly to the
replacement of lead service pipes
The financial plan has been developed using Council-approved budgets, capital asset data and
other financial forecasts. The highlights of the Financial Plan are as follows:
An annual operating surplus and accumulated surplus is expected for each of the six
years covered by the plan, primarily as a result of the significant prior and ongoing
investment in capital assets
Cash flow
by the parent entity, the Corporation of the City of Kitchener. Significant decreases in
funds held by City of Kitchener are forecasted in 2025 and 2026 as a result of continued
spending on the Water Infrastructure Program (WIP).
In light of the above, the drinking water system is considered to be financially viable as
required by Ontario Regulation 453/07 (Financial Plans).
Refer to the attached Financial Plan for the detailed analysis.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
The recommendation has no impact on the Capital or Operating Budgets.
COMMUNITY ENGAGEMENT:
INFORM This report
council / committee meeting.
Regulations require the owner of the drinking-water system to:
Make the Financial Plan available, on request, to members of the public who are served
by the drinking water system without charge
Make the Financial Plan available to members of the public without charge through
publication on the internet
Provide notice advising the public of the availability of the Financial Plan
Provide a copy of the Financial Plan to the Ministry of Municipal Affairs and Housing
Staff will ensure that these requirements are met subsequent to Council approval.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports/authorities related to this matter, however the previous Financial
Plan report was INS-18-029.
APPROVED BY: Denise McGoldrick, General Manager, Infrastructure Services
ATTACHMENTS:
Attachment A Drinking Water Distribution System Financial Plan
+¨³¢§¤¤± 5³¨«¨³¨¤²
$±¨ª¨¦ 7 ³¤± $¨²³±¨¡´³¨® 3¸²³¤¬
&¨ ¢¨ « 0« ȨͱͲͺȃʹͱͲȩ
Municipal Drinking Water Licence 019-101
October 2023
P age 1 of 8
#¨³¸ ®¥ +¨³¢§¤¤± 7 ³¤± $¨²³±¨¡´³¨®
&¨ ¢¨ « 0«
TABLE OF CONTENTS
Section 1: Introduction .......................................................................................................................................... 3
Section 2: Regulatory Requirements .................................................................................................................... 3
Section 3: Forecasted Statement of Financial Position ....................................................................................... 5
Section 4: Forecasted Statement of Financial Operations ................................................................................. 6
Section 5: Forecasted Statement of Cash Flow ................................................................................................... 7
Section 6: Lead Services ....................................................................................................................................... 8
Section 7: Summary .............................................................................................................................................. 8
P age 2 of 8
#¨³¸ ®¥ +¨³¢§¤¤± 7 ³¤± $¨²³±¨¡´³¨®
&¨ ¢¨ « 0«
3¤¢³¨® ͲȀ )³±®£´¢³¨®
The Drinking Water Quality Management Standard (DWQMS), under the Safe Drinking Water Act,
2002 and Regulation 188/07, required the City of Kitchener to become licensed to operate and
The City was licensed on August 20, 2009 and as a
condition of the license, a Financial Plan was approved by resolution at that time. license
expires in 2024 and a requirement for renewal is a revised Financial Plan.
The initial 2010 Financial Plan (019-301) applied to the six year period 2010 to 2015, the 2014 version
applied to 2014 to 2019, and the 2019 version applied to 2019 to 2024.
This Financial Plan applies to the six year period starting in year 2024 through to 2029, with year 1
being the year that the current licence will expire - 2024.
3¤¢³¨® ͳȀ 2¤¦´« ³®±¸ 2¤°´¨±¤¬¤³²
Ontario Regulation 453/07 requires that financial plans include the following:
Details of the proposed or projected financial position of the drinking water system itemized by:
A. Total financial assets
B. Total liabilities
C. Net debt
D. Non-financial assets that are tangible capital assets, tangible capital assets under
construction, inventories of supplies and prepaid expenses
E. Changes in tangible capital assets that are additions, donations, write downs and disposals
Details of the proposed or projected financial operations of the drinking water system itemized by:
A. Total revenues, further itemized by water rates, user charges and other revenues
B. Total expenses, further itemized by amortization expenses, interest expenses and other
expenses
C. Annual surplus or deficit
D. Accumulated surplus or deficit
P age 3 of 8
#¨³¸ ®¥ +¨³¢§¤¤± 7 ³¤± $¨²³±¨¡´³¨®
&¨ ¢¨ « 0«
Det
payments itemized by:
A. Operating transactions that are cash received from revenues, cash paid for operating
expenses and financial charges
B. Capital transactions that are proceeds on the sale of tangible capital assets and cash used to
acquire capital assets
C. Investing transactions that are acquisitions and disposal of investments
D. Financing transactions that are proceeds from the issuance of debt and debt repayment
E. Changes in cash and cash equivalents during the year
F. Cash and cash equivalents at the beginning and end of the year
Details of the extent to which the information described in the above relate directly to the
replacement of lead service pipes.
P age 4 of 8
.
8
of
5
7 ³¤± $¨²³±¨¡´³¨®
age
P
3¢§¤£´«¤ Ͳ
&¨ ¢¨ « 0«
provided in
#¨³¸ ®¥ +¨³¢§¤¤±
Position is
&®±¤¢ ²³¤£ 3³ ³¤¬¤³ ®¥ &¨ ¢¨ « 0®²¨³¨®
forecasted Statement of Financial
3¤¢³¨® ʹȀ A
.
8
of
6
3¢§¤£´«¤ ͳ
age
P
provided in
7 ³¤± $¨²³±¨¡´³¨®
&¨ ¢¨ « 0«
#¨³¸ ®¥ +¨³¢§¤¤±
&®±¤¢ ²³¤£ 3³ ³¤¬¤³ ®¥ &¨ ¢¨ « /¯¤± ³¨®²
forecasted Statement of Financial Operations is
3¤¢³¨® ͵Ȁ A
8
of
7
.
age
P
3¢§¤£´«¤ ʹ
7 ³¤± $¨²³±¨¡´³¨®
provided in
&¨ ¢¨ « 0«
#¨³¸ ®¥ +¨³¢§¤¤±
&®±¤¢ ²³¤£ 3³ ³¤¬¤³ ®¥ # ²§ &«®¶
forecasted Statement of Cash Flow is
3¤¢³¨® ͶȀ A
#¨³¸ ®¥ +¨³¢§¤¤± 7 ³¤± $¨²³±¨¡´³¨®
&¨ ¢¨ « 0«
3¤¢³¨® ͷȀ ,¤ £ 3¤±µ¨¢¤²
Lead services are replaced as part of road reconstruction projects. The City of Kitchener
Engineering Services Road & Utility Capital Forecast outlines the proposed reconstruction projects
for the next 10 years. Although not all the streets contain lead services, all of the water services are
replaced for every reconstruction project. Financial details relating to the reconstruction projects
are included in 3¢§¤£´«¤ Ͳ.
Lead services are also replaced individually when they are found in the field, if the full
reconstruction project has not been identified in the capital forecast and if the new service can be
connected to the customer side. The budget for individual lead service replacement is included
under 3¢§¤£´«¤ Ͳ (portion related to lead replacement).
3¤¢³¨® Ȁ 3´¬¬ ±¸
The Financial Plan indicates the drinking water system is financially viable as required by Ontario
Regulation 453/07 Financial Plans and under Subsection 30 of the Safe Drinking Water Act.
The updated Financial Plan is required as a condition of license renewal.
P age 8 of 8