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HomeMy WebLinkAboutFin & Corp Svcs - 2006-01-30 SFINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date commencing at 9:05 a.m. Present: Councillor B. Vrbanovic -Chair Mayor C. Zehr and Councillors J. Smola, J. Gazzola, M. Galloway, G. Lorentz and C. Weylie. Staff: C. Ladd, Chief Administrative Officer P. Houston, General Manager, Financial Services & City Treasurer G. Sosnoski, General Manager, Corporate Services & City Clerk A. Pappert, General Manager, Community Services R. Browning, Interim General Manager, Development & Technical Services D. Chapman, Director of Financial Planning & Reporting K. Baulk, Director, Enterprise D. Quinn, Director of Utilities R. LeBrun, Manager, Financial Planning and Reporting J. Witmer, Director of Building S. Lewis, CEO Kitchener Public Library G. Hastings, Manager, Golf Courses R. Regier, Executive Director, Economic Development R. Gosse, Deputy City Clerk The purpose of this special meeting was to give final consideration to the 2006 Operating and Capital Budgets and the 10 year Capital Forecast 2006-2015. 1. FIN-06-004 -FINAL REVIEW OF 2006 OPERATING AND CAPITAL BUDGETS Ms. P. Houston provided the Committee with an overview, noting: the Household and City Consumer Price Index at 2% and 3.2% respectively; the Historical and Projected 2006 Tax Rate in comparison with inflation; the Assessment Growth for 2006 set at 4.08%; the Tax Levy Base of $77,975. resulting in a value of 1 % equalling $779,753.; the 2006 Tax Levy change with a potential 2006 Levy increase of 2.78% and the 10 year tax rate impact projection. Ms. Houston further advised that supplemental information regarding legislated changes between 1999-2006 has been updated and included in their package of material. In regard to the legislated changes, Councillor J. Gazzola raised questions regarding the reduction in development charges and the impact on the Fire Department regarding training and inspections. The Committee was advised that the impact on development charges reflects no longer charging back for soft services. In regard to the Fire Department certain inspections are not charged back on a cost recovery basis and new legislated standards for fire training have had a financial impact over and above the usual training budget. Ms. Houston advised that as part of the budget consideration a formal Public Meeting was advertised in regard to the Water and Sanitary Sewer Rates. Councillor B. Vrbanovic advised that Mr. Albert Norris was listed as a delegation but was not present. Accordingly, the Committee deferred consideration of the Water and Sanitary Sewer Rates until later in the meeting to allow Mr. Norris an opportunity to arrive. BOARDS Ms. Houston advised that the Centre In The Square Board has proposed a budget which represents an increase of 3% from 2005. She further advised that with respect to the Kitchener Public Library (KPL) an information paper has been prepared by the Library to respond to issues raised during the Operational Budget Review of January 16, 2006. On motion by Councillor G. Lorentz - itwas resolved: "That the 2006 Capital and Operating Budgets for the Centre In The Square in the amount of $1,249,375. be approved." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 28 - CITY OF KITCHENER BOARDS (CONT'D Ms. Houston advised that the Kitchener Public Library Board has revised the initial budget from approximately $7,756,000. to $7,719,000. Councillor Gazzola raised a concern regarding the Library requesting a budget greater than 3% when all other City departments have been mandated at 3%. He suggested that the original budget be further reduced to reach the 3% target. Ms. S. Lewis advised that although difficult, the Board made changes to the initial budget in order to find $47,000. but she was not confident that any more could be found. Mayor Zehr suggested that the Library Board made a concerted effort following the operational budget review and that the requested budget was appropriate. A motion by Mayor C. Zehr was brought forward for consideration to approve the 2006 Capital and Operating Budgets for the Kitchener Public Library in the amount of $7,718,540. A motion by Councillor J. Gazzola to amend the motion to change the budget amount from $7,718,540. to $7,669,540. was brought forward for consideration. Councillor Gazzola's motion was voted on by recorded vote and Lost, with Councillor Gazzola voting in favour and Mayor C. Zehr and Councillors J. Smola, B. Vrbanovic, M. Galloway, G. Lorentz and C. Weylie voting in opposition. Mayor C. Zehr's motion was then voted on by recorded vote, with Mayor C. Zehr and Councillors J. Smola, B. Vrbanovic, M. Galloway, G. Lorentz and C. Weylie voting in favour and Councillor J. Gazzola voting in opposition. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 Capital and Operating Budgets for the Kitchener Public Library in the amount of $7,718,540 be approved." CAPITAL BUDGET Ms. Houston provided an outline of the Capital Budget changes showing an adjusted total for 2006 of $76,624,000. and a 10 year forecast totalling $730,524,000. She then reviewed the Capital Pool Summary advising that as of this date the Capital Budget is balanced for 2006. Councillor J. Gazzola requested that the Kingsdale Community Centre construction project be moved forward in the 10 Year Capital Forecast from 2011 to 2009. Ms. Houston advised that a Budget Information Paper regarding the Kingsdale Community Centre was included in the package of material and it provided several options that Council could consider if choosing to change the project year. She further advised that there would be no Development Charge Funds available due to the timing of the project. Councillor Gazzola pointed out that in the Capital Pool Summary for 2006 there is a projected $1 M in capital close-outs and suggested that this be projected over to the 10 Year capital Forecast. He added that in looking at historical data, in almost every year there has been capital close-outs of approximately $1 M. Councillor Gazzola also raised a concern regarding the transfer from the Gas Utility into the Gas Investment Fund. He pointed out that the Reserve Fund Projection shows $8 M being transferred yet the Capital Pool Summary only showed $6 M being transferred and questioned why there was a difference. Ms. Houston advised that the $8 M transfer would be $6 M to Capital and $2 M for a Utility Capital Project which will be presented to Council during the year. She added that if the Utility Project was not approved then the $2 M would remain in the Reserve. Ms. Houston then reviewed the 10-15 year Issue for Debentures and Development Charges Projection for 2006-2015. Councillor Gazzola raised a concern regarding the deficit funding under the Development Charges Fund and questioned how the City will accommodate funding for items such as the Twin Pad Arena and new Fire Hall as early as 2007. Ms. Houston advised that the developers would have tofront-end some of the costs or these projects would have to be debentured. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 29 - CITY OF KITCHENER CAPITAL BUDGET (CONT'D) In regard to the Huron Business Park, Ms. Houston advised that the City has recuperated that expenditure and is now realizing benefits from this investment. Councillor G. Lorentz inquired if the spin-off benefits from development of the two universities in the Downtown could be tracked much like the economic benefits for the Huron Business Park. The Committee was advised that although more complex and difficult to rationalize, the spin-off benefits from the universities should be tracked and a process will be established to do so. Councillor Gazzola expressed concerns regarding the Information Paper on the Kingsdale Community Centre, noting that for each of the four scenarios the conclusion is that none of them are viable. He further stated that it would appear that this area of the community is now receiving an un-equal share of services. A motion by Councillor J. Gazzola was brought forward for consideration to move the Kingsdale Community Centre Construction Project in the 10 Year Capital Forecast from 2011 to 2009 and deferring a portion of the Consolidated Maintenance Facility Funding. In answer to questions, Ms. Pappert advised that the $240,000. proposed in 2006 for the Kingsdale Community Centre is to be used to fast track the business case for the construction project and $200,000. is for a portable at the existing Centre. Ms. Pappert explained that staff are recommending that the Business Case for the project and its timing be presented before fast tracking the project and based on the decision at that time it would be decided whether the purchase of the portable is necessary. Ms. Pappert added that it is intended to bring the Business Case back for the Committee's consideration later this year. A motion by Mayor C. Zehr was brought forward for consideration to defer the decision of moving the Kingsdale Community Centre project from 2011 to 2009 in the 10 Year Capital Forecast, to allow staff to complete a Business Case and present it to the Finance and Corporate Services Committee by no later than June 30, 2006. Councillor G. Lorentz inquired if a site has been selected for the proposed Community Centre. Ms. Pappert responded that although there are potential locations a site has not been finalized and the Business Case will address the issue. Councillor Lorentz suggested that the Kingdale Community Centre Project be moved to 2009 in order to set a goal for staff and Council. Councillor M. Galloway suggested that the project is an important issue but deferral until June 30th would allow staff to deal with all the issues and a decision could be made by Council based on the Business Case. Mayor C. Zehr's motion to defer was then voted on by recorded vote, with Mayor C. Zehr and Councillors B. Vrbanovic, M. Galloway and C. Weylie voting in favour and Councillors J. Smola, J. Gazzola and G. Lorentz voting in opposition. On motion by Mayor C. Zehr - itwas resolved: "That the decision to move the Kingsdale Community Centre project from 2011 to 2009 in the 10 Year Capital Forecast be deferred until a Business Case is presented to the Finance and Corporate Services Committee by no later than June 30, 2006." A motion by Councillor C. Weylie was brought forward for consideration to adopt the 2006 Capital Budget as presented. Councillor Gazzola requested that the Kitchener Public Library Capital Budget be dealt with separately as he felt there was insufficient information regarding the WI-FI or Customer Survey projects. The portion of Councillor Weylie's motion dealing with the Kitchener Public Library 2006 Capital Budget was then voted on and Carried. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 30 - CITY OF KITCHENER CAPITAL BUDGET (CONT'D) Councillor J. Gazzola requested to be recorded as opposed to the approval of the Library Capital Budget. The balance of Councillor Weylie's motion was then voted on. On motion by Councillor C. Weylie - itwas resolved: "That the 2006 Capital Budget and 10 Year Capital Forecast: 2006 - 2015 as recommended by the administration, be approved." ENTERPRISE OPERATING BUDGETS (;nlf ('.ni ircpc Ms. Houston referred to an Information Paper outlining changes made to the Golf Courses Operating Budget since the January 16 Budget Review meeting and information on what the Golf Courses would pay in property l income taxes if they were a private course. Councillor Gazzola questioned why the proposed administration cost for the Doon Golf Course was increasing by 10% whereas Rockway Golf Course is less than 3%. K. Baulk advised that the administration costs are based on actual costs from 2005 but may also include additional costs for staff progressions. On motion by Councillor G. Lorentz - itwas resolved: "That the 2006 Operating Budgets for the Golf Courses as recommended by the administration, be approved." Buildin_. Division Ms. Houston advised that the issue regarding the additional staff resource for the AMANDA System, discussed at the January 16 Budget Review meeting, has been included in the proposed 2006 Operating Budget for the Building Enterprise. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 Operating and Capital Budgets for the Building Enterprise as recommended by the administration, be approved." Gas Works Utility Councillor Gazzola raised a concern with respect to the proposed gross profit under gas delivery and other programs, suggesting that the figures were too conservative. Ms. Houston advised that in 2005 the utility benefited from reduced transportation costs which may increase in 2006 and in the future. Mr. D. Quinn also advised that the utility is impacted by weather changes such as the warm January 2006 which will reduce the gross profit, and therefore, suggested the conservative approach is necessary. In regard to the Gas Capital Investment Reserve Fund, Councillor Gazzola raised a concern regarding the transfer into the Gas Capital Investment Reserve Fund of $6 M yet an expenditure of $8 M for 2006. Ms. Houston advised that there may be an additional capital project of approximately $2 M in 2006 and staff would be coming forward with a report later in the year. Mayor Zehr suggested that the expenditure be reduced to $6 M with the $2 M difference remaining in the fund and Council could deal with the additional project when the report is submitted. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 31- CITY OF KITCHENER ENTERPRISE OPERATING BUDGETS (CONT'D) On motion by Councillor M. Galloway - itwas resolved: "That the 2006 Operating and Capital Budgets for the Gas Utility as recommended by the administration, be approved; and further, That the expenditures in the Gas Capital Investment Reserve Fund for 2006 be reduced to $6 M." Councillor B. Vrbanovic questioned Councillor J. Gazzola regarding a previous comment he made to staff whereby Councillor Gazzola stated he did not believe staff regarding the figures put forward concerning the Gas Utility budget. Councillor Vrbanovic asked if Councillor Gazzola had in fact meant to say that he did not agree with the figures put forward. Councillor Gazzola concurred with the interpretation. Water and Sanitary Utilities Councillor B. Vrbanovic advised that a public meeting under the Municipal Act must be held to allow anyone to speak to the proposed water and sanitary sewer rates. He further advised that Mr. Albert Norris was listed as a delegation to speak but was not in attendance. Councillor Vrbanovic then asked if anyone else wished to speak on the proposed rates. Mr. Andy Hook asked if the water and sewer rates were based on consumption and if so, why he was still receiving a bill when the water to the residence he owns has been turned off for several months. Mr. D. Quinn advised that the billings are based on consumption but there is an administrative cost to keep the account open regardless if there is any consumption of water. Mr. Hook stated that in many of the older neighbourhoods the water and sewer rates are increasing each year yet there is very little benefit to these neighbourhoods in comparison to newer neighbourhoods where services are being installed. He added that in his opinion, a fee increase was not necessary. Mr. Quinn responded that the City is currently in a two year infrastructure renewal program to improve services which will benefit all areas of the City. No other persons responded to an invitation to speak on the proposed water and sanitary sewer rates. The following motion was voted on and Carried Unanimously, on a recorded vote. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 Water Utility and Sanitary Utility Budgets as recommended by the administration be approved; and further, That the 2006 water rate be set at $1.1112 per cubic metre and the sanitary sewer rate be set at $1.0879 per cubic metre." RESERVE FUNDS P. Houston advised that there were four proposed new Reserve Funds, being: Building Enterprise Reserve Fund; Business Parks Reserve Fund; Federal Gas Tax Reserve Fund; and, Gas Capital Investment Reserve Fund. She further advised that policies for each of the four funds have been included in the package of material which require consideration. A motion by Mayor C. Zehr was brought forward for consideration to adopt policies with respect to establishing Reserve Funds for the Building Enterprise, Business Parks, Federal Gas Tax and the Gas Capital Investment. Councillor Gazzola stated that he could not support the Gas Capital Investment Reserve Fund policy and requested that this be voted on separately by a recorded vote. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 32 - CITY OF KITCHENER RESERVE FUNDS (CONT'D The portion of Mayor Zehr's motion dealing with the Gas Capital Investment Fund policy was then voted on separately by recorded vote, with Mayor C. Zehr and Councillors B. Vrbanovic, C. Weylie, J. Smola, M. Galloway, and G. Lorentz voting in favour and Councillor J. Gazzola voting in opposition. The balance of Mayor Zehr's motion was then voted on. On motion by Mayor C. Zehr - itwas resolved: "That the policies with respect to the Building Enterprise Reserve Fund, Business Parks Reserve Fund, Federal Gas Tax Reserve Fund and the Gas Capital Investment Reserve Fund be adopted." On motion by Councillor J. Smola - itwas resolved: "That the 2006 Reserve Funds Budget as recommended by the administration and amended this date be approved." GRANTS On motion by Councillor C. Weylie - itwas resolved: "That the 2006 capital grant to the Hospice of Waterloo Region in the amount of $30,000. be approved." On motion by Mayor C. Zehr - itwas resolved: "That the 2006 capital grant to the Community Justice Initiatives in the amount of $30,000. be approved." In regard to the request from the Kitchener Alliance Community Homes for a capital grant, Mayor C. Zehr advised that he agreed with the staff recommendation not to support the application as it is primarily a housing initiative which is a Regional responsibility. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 capital grant request from Kitchener Alliance Community Homes in the amount of $35,000. be denied." Mayor C. Zehr advised that additional information was submitted by Communitech Technology Association regarding their grant application and that staff now support the requested amount. Councillor Gazzola raised a concern suggesting that the Association should be fully supported by the private sector. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 Economic Development Grant to Communitech Technology Association in the amount of $35,000. be approved." Mayor C. Zehr advised that additional information from Theatre and Company has been submitted showing that their budget targets are being met based on the business case they presented and he suggested that the grant be approved as requested. Councillor Galloway raised a concern advising that their financial statement shows a healthy surplus in 2005 and a reserve of $3.2 M of unrestricted funds. He questioned why the City would continue funding the theatre. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 33 - CITY OF KITCHENER GRANTS (CONY' D) The following motion was voted on by a recorded vote, with Mayor C. Zehr and Councillors J. Smola, B, Vrbanovic, G. Lorentz and C. Weylie voting in favour and Councillors J. Gazzola and M. Galloway voting in opposition. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 annual operating grant to K-W performing Arts Association /Theatre and Company in the amount of $54,200. be approved." In regard to the grant request from K-W Opera, Councillor Galloway suggested that the recommended grant of $5,358. be approved. Mayor Zehr advised of his motion at the January 16 Budget Review meeting which would have approved the $5,358. grant, with an additional $2,142. to be divided by the number of planned performances held and paid when each performance is given. Mr. D. Chapman stated that K-W Opera has advised that four performances will be held at the Centre In The Square in 2006. On motion by Mayor C. Zehr - itwas resolved: "That the 2006 operating grant to the K-W Opera in the amount of $7,500. be approved as follows: $5,358. to be paid in the usual manner and $2,142. divided by the number of planned performances held in the City of Kitchener to be paid when each performance is given." On motion by Mayor C. Zehr - itwas resolved: "That the 2006 operating grant to the Contemporary Art Forum Kitchener and Area (C.A.F.K.A.) in the amount of $19,000. be approved." OUTSTANDING ITEMS Mayor Zehr suggested that the Investment Income Account contained in the proposed budget is too conservative based on historical data and projected interest rates. He proposed that the budget amount be increased by $150,000. Councillor Gazzola advised that in looking at the five year average for the Investment Income Account, the increase could be as high as $350,000. A motion by Mayor C. Zehr was brought forward for consideration to increase the Investment Income Account by $150,000. A motion by Councillor J. Gazzola to amend the motion to increase the Investment Income Account by $350,000. was voted on and Lost. A motion by Councillor M. Galloway to amend the motion to increase the Investment Income Account by $200,000. was voted on and Lost. On motion by Mayor C. Zehr - itwas resolved: "That the Investment Income Account in the 2006 budget be increased by $150,000." A motion by Mayor C. Zehr was brought forward for consideration to increase the Penalty and Interest Account by $200,000. A motion by Councillor J. Gazzola to amend the motion to increase the Penalty and Interest Account by $250,000. was voted on and Lost. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES JANUARY 30, 2006 - 34 - CITY OF KITCHENER OUTSTANDING ITEMS (CONT'D) On motion by Mayor C. Zehr - itwas resolved: "That the Penalty and Interest Account contained in the 2006 budget be increased by $200,000." On motion by Mayor C. Zehr - itwas resolved: "That the Hydro Dividend to the City of Kitchener in 2006 be increased by $250,000." Mayor C. Zehr suggested that a transfer from the Tax Stabilization Fund of $400,000. would be an acceptable amount for this budget. Councillor G. Lorentz advised that a transfer of $413,639. would result in a zero percent increase in the operating budget. A motion by Mayor C. Zehr was brought forward for consideration to approve a transfer from the Tax Stabilization Fund in 2006 in the amount of $413,639. A motion by Councillor J. Gazzola to amend the motion to increase the transfer from the Tax Stabilization Fund to $600,000. was voted on and Lost. On motion by Mayor C. Zehr - itwas resolved: "That a transfer from the Tax Stabilization Fund in 2006 in the amount of $413,639 be approved." Ms. Houston advised that the Operating Budget at this time would have a zero percent increase and the Capital Budget would result in a 1.65% increase in taxes relative to the Economic Development Investment Fund. 2. ADJOURNMENT On motion, the meeting adjourned at 1:30 p.m. R. Gosse Committee Administrator