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HomeMy WebLinkAboutFin & Corp Svcs - 2007-04-16 SFINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date commencing at 10:05 a.m. Present: Councillor B. Vrbanovic -Chair Mayor C. Zehr and Councillors J. Smola, G. Lorentz, J. Gazzola, K. Galloway and C. Weylie. Staff: C. Ladd, Chief Administrative Officer P. Houston, General Manager, Financial Services & City Treasurer R. Browning, General Manager, Development & Technical Services A. Pappert, General Manager, Community Services D. Chapman, Director of Financial Planning & Reporting R. Gosse, Director of Legislated Services & City Clerk R. Regier, Executive Director of Economic Development K. Baulk, Director of Enterprise J. Willmer, Director of Planning D. Mansell, Director of Engineering M. Hildebrand, Director of Community Programs J. McBride, Director of Transportation Planning D. Quinn, Director of Utilities S. Adams, Director of Community & Corporate Planning M. Selling, Manager of Municipal Building Officials G. Hummel, Manager of Park Planning, Development & Operations T. Turner, Manager of Employee Strategies J. Billett, Committee Administrator The purpose of this special meeting was to give final consideration to the 2007 Operating and Capital Budgets and the 10 Year Capital Forecast 2007-2016. It was noted in the agenda that any recommendations from the Committee this date would be considered at the special Council meeting to be held immediately following this meeting of the Finance and Corporate Services Committee. 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS The Committee was in receipt of Financial Services Department report FIN-07-040, dated March 30, 2007 concerning the City's 2007 Operating and Capital Budgets. Ms. P. Houston provided an overview of the approach to budget preparation including strategic directions, key strategies and initiatives to increase efficiency and reduce costs. A comparison of the Household vs. City Consumer Price Index (CPI) was reviewed, showing an increase of 1.9% and 3.3% respectively. A comparison of municipal costs for an average household between Kitchener and the Cities of Waterloo and Cambridge was provided, showing that Kitchener remained lower in total costs in 2006 than the other two cities. Councillor J. Gazzola noted that the amount listed for Education is lower than in 2005 and was advised that the difference is a result of changes made to the budget and/or tax policies in 2006. Councillor J. Gazzola inquired how up-to-date the Municipal Property Assessment Corporation (MPAC) is in keeping the assessment rolls up to date with new assessment. Ms. Houston advised that MPAC is up-to-date to within 1 year or less for residential properties, with commercial / industrial properties taking longer to be added. She added that the budget figure of 2.5% for assessment growth is now final as the assessment rolls have been received from MPAC. Ms. Houston then reviewed the proposed 2007 tax levy of 3.42%, noting that the value of 1 in the Operating budget is equal to $799,247. It was noted that the projected 3.42% tax levy includes the "add" items that were deferred from the February 26, 2007 Finance & Corporate Services Committee operating budget meeting for further consideration this date and represent approximately 0.68% of the levy. The 10 Year Tax Rate Impact Projection for the years 2008 to 2017 were reviewed, ranging from 6.45% in 2008 to 1.45% in 2017. Mayor C. Zehr requested clarification of the impact of the Economic Development Investment Fund (EDIF) and was advised that annually the impact is roughly 1.25% but may fluctuate slightly as demonstrated in 2007 with EDIF at 1.22%. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $1 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) PUBLIC MEETING Pursuant fo fhe Municipal Acf 2001, a Notice of lnfenfion fo consider fhe City's 2007 Final Budget was published in The Record on January 5, 2007. On invitation, no member of the public came forward to address the Committee on issues related to the 2007 budget. FIN-07-042 - ESTABLISHMENT OF A RESERVE FUND - LOCAL ENVIRONMENTAL ACTION FUND tLEAF) The Committee then considered Financial Services Department report FIN-07-042, dated April 5, 2007 concerning establishment of a Local Environmental Action Fund (LEAF). It was noted that historically, environmental initiatives have been funded through the normal capital and operational budgeting process and the Strategic Plan for the Environment has been the mechanism for tracking results. Ms. Houston advised that an update of the Strategic Plan is already underway, and will be expanded to include development of the functionality of the Fund. She added that staff is recommending catalyst funding of $5 M ($2 M from Atria sale proceeds and $1 M per year over 3 years from EDIF); with long term investment strategies to be further investigated. Mayor C. Zehr spoke in support of establishing the fund, noting that all environmental initiatives under the fund will still require Council approval prior to proceeding and he was hopeful of leveraging the City's investment to gain partnerships to maximize potential of the fund. He added that it was prudent to take more time to establish criteria as to how the fund might be used and how it will fit within the scope of the Strategic Plan, emphasizing the importance of achieving visible results. Councillor J. Gazzola commented that he would like to see the fund used for special projects outside of what is already mandated and felt a more substantial dollar amount should be contributed from EDIF to the fund. Councillor B. Vrbanovic expressed appreciation for staff's willingness to pursue additional catalyst funding, including his proposal to develop a program to encourage matching funds from other investors. The following motion was Carried Unanimously on a recorded vote. On motion by Mayor C. Zehr - it was resolved: "That a Local Environmental Action Fund (LEAF) be established as a City Reserve Fund to provide funds for environmental initiatives as approved by Council from time to time; and, That catalyst funding of $5,000,000 be provided to this fund, $2,000,000 from the Hydro Capital Investment Fund in 2007, as a partial allocation of the net proceeds from the sale of Atria Inc. and $1,000,000 per year in each of the years 2008-2010 from the Economic Development Investment Fund (EDIF); and, That Staff be directed to pursue partnership opportunities with other levels of government, the community (corporations and individuals), and city-owned agencies to leverage our investment to its maximum potential; and, That guidance for the ultimate criteria for LEAF be developed through public consultations, (including direct input from the Environmental Committee) that are to be apart of the City's update to its Sfrafegic Plan for the Environment, and that part of those consultations aim to identify the current environmental priorities of Kitchener residents; and, That the updated Sfrafegic Plan for the Environment acknowledge and incorporate LEAF as a key tool for the optimization of the environment for Kitchener; and further, FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $2 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) FIN-07-042 -LEAF tCONT'D) That at the Council Strategy Session in April 2007, focus be given to providing high level direction with respect to tangible outcomes/success measures we wish to achieve through investments made through LEAF. In addition, identification and prioritization of first initiatives /projects for 2007 be considered and approved, in advance of the completion of the update to the Sfrafegic Plan for fhe Environmenf." BOARDS Mr. D. Chapman presented the proposed Operating budgets for the Centre in the Square (CITS) and Kitchener Public Library (KPL), at 2.5% and 4.4% increases respectively. Mr. Chapman advised that staff is satisfied that the proposed increases are true base increases with no expansion of services. A motion by Councillor J. Gazzola was brought forward for consideration to decrease the variance amounts between the 2006 and 2007 operating budget appropriations for CITS from $31,000. to $25,000. and for KPL from $340,000. to $290,000. Councillor J. Gazzola advised that he would not support more than an increase equivalent to the rate of inflation, expressing the opinion that the proposed decrease is minor and should have no impact on services. Ms. S. Lewis, CEO -KPL, reiterated that KPL's budget is to maintain existing services, advising that the proposed decrease would impact public services either by reductions in resources or in staffing levels. Mr. J. Grant, General Manager, CITS, advised that extensive revisions have already been made resulting in the budget proposed this date and pointed out that the majority of the proposed increase is to pay for increased water and hydro expenditures. Mayor C. Zehr advised that he would not support the proposed decrease as it may result in decreased service levels and pointed out that Councillor Gazzola had supported the CITS budget at the time it was reviewed by the Centre Board. Councillor Gazzola acknowledged his initial support of the CITS's budget; however, he advised that it was now his opinion that in context of the City's overall budget it did not fit within public expectation. Councillor B. Vrbanovic stated that he would have preferred that the proposal had come forward earlier, noting that opportunity had been provided at several past Committee meetings to put forward suggested reductions in the budget and in so doing, allow time for staff to investigate and provide information on which informed decisions could then be made. Councillor Gazzola advised that he had previously emphasized a desire to see the tax levy reduced to the rate of inflation at which time he had requested that staff be directed to provide further options for reductions in the budget. He was advised that staff had done all they could and that it would be up to Council to suggest any further reductions. Councillor Gazzola expressed his disagreement with this approach, as it was his opinion staff could have provided further options this date and should have been directed to do so. Councillor J. Gazzola's motion was then voted on and Lost on a recorded vote, with Councillor Gazzola voting in favour and Mayor C. Zehr and Councillors G. Lorentz, J. Smola, B. Vrbanovic, K. Galloway and C. Weylie voting in opposition. Councillor J. Gazzola requested to be recorded as opposed to the following motion. On motion by Mayor C. Zehr - it was resolved: "That the 2007 Capital and Operating Budgets for the Centre in the Square in the amount of $1,280,609, and for the Kitchener Public Library in the amount of $8,059,335., be approved." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $3 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) CAPITAL BUDGET Mr. D. Chapman outlined changes made as directed by Council, which includes advancement of the Kingsdale Community Centre project from 2011 to 2009 (Issue Paper 27). The changes have the impact of requiring an additional $1.2 M of capital pool funding over the next six years and it is recommended that they be funded through additional transfers from the Hydro Capital Investment Reserve Fund (Issue Paper 26). Mr. Chapman then referred to the Gas Capital Investment Reserve Fund Projection, noting the fund is shown to be in a deficit position in year 2010. He advised that staff is not recommending any adjustments at this time, preferring to monitor the fund and make recommendations in 2008 if concerns regarding its sustainability remain at that time. Councillor J. Gazzola inquired if the amount of $4.6 M listed in the Hydro Capital Investment Reserve Fund Projection for "Atria Sale Proceeds" is the actual amount received for the sale of Atria. Mayor C. Zehr advised that the sale has closed, the proceeds of which are with Kitchener Power Corporation, the shareholder of Atria, but there are a number of contingency matters to follow through before a final calculation of the sale proceeds. He anticipated that the final amount may be greater than estimated and expected transfer of the proceeds to the City to take place in 2007. Mr. Chapman then reviewed the 10-15 year issue for debentures and Development Charges Projection for 2007-2016. Councillor J. Gazzola raised concerns with the deficit position of the Development Charges fund. Mr. Chapman pointed out that Council has directed a review of the Development Charge refund policy which will be done in conjunction with a review of staging of development in 2007. Councillor K. Galloway inquired as to what the $2.5 M under the Consolidated Maintenance Facility was to be used for. Ms. P. Houston advised that this is part of a very large project and at this time, the funds were not specifically allocated but will be used for various needs, such as drawings /engineering. She added that Council approval will be required prior to any of the funds being expended. It was also noted that the funds can only be used for very specific projects under the Development Charges By-law and should any funds be moved to another project they would have to be replaced. Councillor G. Lorentz inquired as to the status of the Fire Station No.7 project, raising concerns in regard to potential contamination of the site by tanker trucks still parked on site belonging to the tenant. Mr. R. Browning advised that the project is moving ahead and agreed to provide a report on the status of the project. Councillor Lorentz asked that the Chief Administrator personally look into the project and in particular, the status of the arrangements between the City and the tenant. Mr. Chapman then reviewed the Economic Development Investment Fund (EDIF) advising that a deficit of $419,000. is shown at closing of year 2007, stemming from a large advance in the amount of $20 M to the School of Pharmacy project which was originally to be transferred over 2007-2008. He also noted that beginning in 2008, $1 M per year over a 3 year period has been included for the newly established Environmental Fund (LEAF). Councillor J. Gazzola inquired as to placement of the proceeds from the Centre Block lands. Ms. C. Ladd advised that those proceeds are slated for re-investment into public parking as approved by Council and documented in the Terms of Reference of the Request for Proposals. She added that until an actual proposal is approved the final dollar amount for the lands will not be known. OUTSTANDING CAPITAL ISSUES Issue Pager 26 -Funding for Council Changes to Capital Forecast Councillor J. Gazzola spoke in favour of his request to move the Kingsdale Community Centre Construction project forward in the Capital Forecast from 2011 to 2009, expressing the opinion that the project fits in with past practice of opening a new centre about every 2 years and staff have been able to show how the funds can be managed from the Hydro fund. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $4 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) CAPITAL BUDGET -OUTSTANDING CAPITAL ISSUES tCONT'D) Issue Paper 26 -Funding for Council Changes to Capital Forecast tCont'd) Mr. K. Baulk responded to questions concerning how the revised timeline for Kingsdale relates to other issues concerning decommissioning of the Doherty Arena, adaptive re-use of Doherty Arena as a community centre and lease of ice space at the Sportsworld complex. Mr. Baulk advised that the Doherty Arena may still be required to meet ice demand beyond construction of the new Hanson Avenue Twin Pad, if the City is unsuccessful in negotiating a long term lease for use of the Sportsworld complex. Mr. M. Hildebrand added that staff are also looking at other site options for Kingsdale including Wilson Park, noting that the issue of perma-frost under the Doherty Arena has yet to be dealt with although structurally the building has been deemed sound. Mr. Baulk advised that with the new timeline for Kingsdale staff will pursue negotiations with Sportsworld in the near term but cautioned that the decision of a long term lease rests with Sportsworld. Mayor C. Zehr requested clarification of the intended use of the $320,000. to be advanced in 2007 for Kingsdale and was advised these funds would be used for pre-design engineering and consultant fees, taking into account the requirements from the business case to determine if they fit within the Doherty Arena. Councillor Gazzola inquired as to the cost to rectify concerns with the Doherty Arena and was advised that the study indicates a range up to $1.75M. Councillor Gazzola expressed the desire to see the Kingsdale project move ahead, commenting that Sportsworld has demonstrated they are good corporate citizens and he could see no reason not to achieve a long term lease. Councillor B. Vrbanovic requested clarification of the funding sources for the amount proposed in 2007 and was advised that $49,000. is to come from Development Charges, with the remainder from Capital out of Current and will have an impact on the overall tax rate set for 2007. The following motion was Carried Unanimously. On motion by Councillor J. Gazzola - it was resolved: "That the changes to projects funded through the Capital Pool, as outlined in 2007 Budget Issue Paper #26, be approved and be funded through additional transfers from the Hydro Capital Investment Reserve Fund." Issue Paper 27 -Kingsdale Community Centre Construction On motion by Councillor J. Gazzola - it was resolved: "That as a result of advancing the funding for the Kingsdale Community Centre forward from the year 2011 to 2009, 10% of the existing Capital budget ($369,000.) be advanced in the Capital Forecast to the year 2007 to pay for costs associated with pre- design, engineering and consultant selection." Issue Paper 28 -McLennan Park Mr. G. Hummel advised that development of McLennan Park currently includes a 4 phased approach with funding in 2007, 2009, 2014 and 2015, having been condensed from a 20 year to a 10 year timeframe. He noted that by combining construction components together the park could be substantially completed in 2009, reducing the construction timelines to 3 years from 10. At the request of Councillor K. Galloway, it was agreed to amend the staff recommendation to provide direction to staff to pursue moving the leash-free area forward to 2007 and the comfort amenity station forward to 2008, within existing budget perimeters. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $5 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) CAPITAL BUDGET -OUTSTANDING CAPITAL ISSUES tCONT'D) Issue Paper 28 -McLennan Park tCont'd) On motion by Councillor J. Gazzola - it was resolved: "That the request to reallocate the 20 year Capital Forecast for McLennan Park to a nine-year forecast be approved; and further, That staff be directed to pursue moving the leash-free area component of McLennan Park forward to 2007 and the comfort amenity station forward to 2008, within existing budget perimeters." Issue Paper 29 -Mill Courtland Community Centre Expansion This issue paper was prepared in response to Council's direction to staff to consider the feasibility of moving the scheduled expansion forward in the Capital Forecast from year 2012 and to confirm completion of the remediation on the turf area located behind the Centre. Councillor G. Lorentz concurred with staff's recommendation to refer consideration of moving the project forward to the 2008 budget process, pending completion of the business case in late 2007. On motion by Councillor G. Lorentz - it was resolved: "That consideration of moving the proposed Mill-Courtland Community Centre expansion forward in the Capital Budget be referred to the 2008 Capital Budget process, pending completion of the business case in November 2007." Issue Pager 30 - Highway 401 Signaae It was noted that this project was approved in 2005 with $200,000. allocated for the design and construction of entrance features/signage along the Highway 401 corridor. Staff anticipate bringing forward a more detailed cost estimate in 2008 at which time additional funding may be requested. On motion by Mayor C. Zehr - it was resolved: "That Community Services and Communications staff continue to lead the design and location phase of the Highway 401 signage and features project and provide Council alternatives for consideration for implementation at a later date." Issue Paper 31 -Speaker's Corners Staff is requesting advancement of funding in the Capital Forecast from 2015 to 2010 for redevelopment of the Speaker's Corners to address concerns related to deterioration of the site; particularly in regard to the timber retaining wall along the western property limit and the impact failure of the wall would have to an adjacent property. Councillor J. Gazzola questioned why this project is not being considered in conjunction with the streetscape /landscaping study proposed for the downtown. Ms. A. Pappert advised that the adjusted timeline coincides with surface reconstruction of King Street and full reconstruction of Hall's Lane. Aligning the two projects will allow continuity of streetscape treatments and complement the objectives of the downtown streetscape master plan to "green the downtown". FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $6 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) CAPITAL BUDGET -OUTSTANDING CAPITAL ISSUES tCONT'D) Issue Paper 31 -Speaker's Corners tCont'd) On motion by Mayor C. Zehr - it was resolved: "That advancement of funds in the amount of $350,000. be approved in the Community Services Operations Division Capital budget from 2015 to 2010 for Speakers' Corners." Issue Paper 34 -Forest West Park Development This issue paper was prepared in response to Council's direction to staff to consider how redevelopment of the park could be funded to address concerns related to drainage / water- ponding on the site. Councillor G. Lorentz advised that this park had been poorly designed resulting in drainage problems creating water ponding on the site and area residents have expressed concerns regarding the West Nile Virus. He noted that staff estimate overall redevelopment of the park at $120,000 and asked that support be given to allow drainage tiles to be installed this year at a cost of $30,000., funded from the general Capital Contingency. The remainder of the works would then be referred to the 2008 budget process. Councillor K. Galloway inquired as to the feasibility of moving development of the Foxglove Park forward in the Capital Forecast from 2009, noting that the residential area has been occupied for the past 10 years but the park has not yet been completed. Mr. G. Hummel advised that staff is negotiating with the developer to fulfill requirements of rough grading but agreed to investigate further means to move the park development forward. On motion by Councillor G. Lorentz - it was resolved: "That $30,000. be allocated from the general Capital Contingency in 2007 for installation of drainage tiles in the Forest West Park to move water off-site and the remainder of the park development, as outlined in 2007 Budget Issue Paper 34, be referred to the 2008 Capital budget process." ENTERPRISES Mr. D. Chapman advised that the Water Utility /Sanitary Utility /Water and Sanitary Sewer Rates were approved by Council on March 19, 2007. He added that adjustments have been made to the Golf Course enterprises to accurately reflect interest expense/miscellaneous amounts; the projections for the Building enterprise were revised to lesser amounts as a result of a projected decline in project activity in 2007; and the Gas Works Utility now includes the impact of inventory adjustments. Staff responded to questions concerning the Building Enterprise, advising that projected revenues are based on 2007 fee increases approved by Council in December 2006 less the projected decline in project activity. The projected transfers to the Building Reserve Fund are intended to stabilize the Enterprise in periods of economic down-turn, with a target of 1.5x expenses set to bring the Reserve Fund up to a level of 23.3% in year 2011. Councillor J. Gazzola inquired what the $270,000 in 2007 under Capital Close-outs represents. Mr. D. Chapman advised that the amount relates to renovations at City Hall which were completed under-budget and the account is now to close-out in 2007. Councillor Gazzola inquired how the reserve fund target balance is arrived at and Mr. Chapman advised that the amount shown is being used as a benchmark, noting that there is no reserve fund policy that stipulates target levels. Mayor C. Zehr questioned if it was necessary to raise the level of the Reserve Fund to that degree. Mr. M. Selling advised that as part of a study completed for the Building Enterprise, comparisons were undertaken which indicate that municipal target levels range from between 100 to 300%; however, there is no legislation to govern reserve fund target FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $7 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) ENTERPRISES tCONT'D) levels. Mayor Zehr asked that staff consider reviewing the target levels over the next year for further discussion during the 2008 budget process. Mr. D. Quinn provided explanation of the reduction in 2006 gross profit margins from 46.95% to 41.50% as it relates to inventory write-off and commented on the viability of maintaining a 47% projection across the board. He advised that while margins may be higher than estimated over time this should not be relied on due to variability of the market. On motion by Councillor J. Smola - it was resolved: "That the 2007 Operating budgets for municipal enterprises, as recommended by the administration, be approved." The Committee then recessed at 12:20 p.m. and reconvened at 1:10 p.m., with all members present. TAX SUPPORTED OPERATING BUDGET Mr. D. Chapman reviewed the "add" proposals valued at $1.2 M, noting that the total includes items deferred for further discussion this date. He advised that the 2007 tax levy at this time is 3.42%, including 1.22% for the Economic Development Investment Fund (EDIF). OUTSTANDING OPERATING ISSUES Issue Paper 6.1 -Transportation Demand Management tTDM) Mr. D. Chapman advised that staff were directed to remove this item from the operating budget and pursue discussions with other area municipalities as to the potential to share resources or utilize the Region of Waterloo's TDM Co-ordinator on a project basis. Based on the amended approach the 2007 budget request is being reduced to $50,000 for development of a TDM plan to be funded within the existing EDIF provision for Parking Solutions. Councillor J. Gazzola stated that he could not support the request as it was his opinion this was not an expenditure that should be paid for by local taxpayers. Mayor C. Zehr commented on the importance of a co-ordinated approach to address transportation demand management as it has direct impact on area municipalities. He added that the cost to develop the TDM plan has no impact to the 2007 tax levy as it is coming from existing funds in EDIF. Ms. C. Ladd advised that the Region of Waterloo, together with the Cities of Waterloo and Cambridge, has expressed an interest in developing a co-ordinated approach but at this time has insufficient funding. Staff is of the opinion it is appropriate to link efforts with the Region in this initiative and to move forward this year, is requesting funding to develop a TDM plan; a portion of which will involve further discussions with area municipalities in regard to shared services in support of TDM initiatives across the Region. Mr. J. McBride provided clarification of the intent of the TDM program, advising that the initial focus will be on the downtown core to reduce demand for new parking structures by shifting attitudes toward use of alternative modes of transportation. Councillor J. Gazzola suggested that the City begin by removing staff use of the parking garage in favour of public transit, which could be done without impact to the budget. Mayor C. Zehr commented that such an approach would require subsidization of transit riders which also has impact to the budget, and is why he favours a co-ordinated approach to gain an understanding of all of the implications associated with a TDM program. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $$ - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET- OUTSTANDING ISSUES tCONT'D) Issue Paper 6.1 -Transportation Demand Management tTDM) - tCont'd) On motion by Mayor C. Zehr - it was resolved: "That staff be directed to retain a contract employee or consultant for asix-month period at a cost of $50,000. to develop a Transportation Demand Management (TDM) plan for the City, including an assessment of opportunities to share services with the Region of Waterloo and other area municipalities, as well as initial short and long term priorities; and further, That the TDM plan be tabled with Council before, or during, the 2008 budget process to identify the resource requirements associated with the plan's priorities." Issue Paper 8.1 -Consultant Support -Development Process & Fee Review Mr. Chapman advised that during the operating budget review this item had been perceived as base funding fora "one-time" initiative and staff had been asked to find an alternate funding source. He clarified that the funds are being applied to the Performance Measurement & Internal Audit budget to augment existing annual funding for consultant support, representing an increase from $10,200 to $20,200. The existing funds are already committed for development of an enterprise risk management framework and the additional funds are required for review of the Development Process. Staff is requesting that the increased level of funding be maintained in future budgets as there is an ongoing need for such expenditures related to other audit projects. Mr. J. Willmer responded to questions, advising that use of an outside consultant will allow the work to be done this year and will add credibility to the review process as it relates to gaining public acceptance of appropriate fee levels. On motion by Mayor C. Zehr - it was resolved: "That the 2007 Internal Audit budget be increased by an amount of $10,000., to a total of $20,200. for the funding of external consultants required to assist in 2 internal reviews; and, That the additional $10,000. in 2007 be used to fund the Development Process review in the Planning Division of the Department of Development & Technical Services; and further, That the increased amount in the 2007 budget be carried forward to future years to fund the costs of external support for the performance measurement and internal audit function." Issue Paper 11.1 -Bridgeport Community Centre Operational Increase Mr. D. Chapman advised that Council had requested more detail in regard to the requested operational increase. In subsequent review, the Neighbourhood Association has advised that a minimum of $11,000 is required to meet needs in 2007. Accordingly, the original request of $20,000 has been reduced to $11,000. Mr. M. Hildebrand responded to questions, advising that the additional funding is required to cover costs associated with the facility being open longer to accommodate expanded programming. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - $9 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET- OUTSTANDING ISSUES tCONT'D) Issue Paper 11.1 -Bridgeport Community Centre Operational Increase tCont'd) On motion by Councillor J. Smola - it was resolved: "That the 2007 operating budget grant to the Bridgeport Community Association be increased by $11,000. as requested, increasing Index 621225 to $52,667." Humane Society Contract Mr. D. Chapman advised that at the April 2, 2007 Finance & Corporate Services Committee meeting contracts with the Humane Society were approved, in principle, and will be before Council for ratification at its meeting to be held later this date. Issue Paper 20.1 -Diversity Mr. D. Chapman advised that in response to concerns raised by Council, the initial request of $100,000. ($10,000 for corporate initiatives and $90,000 for an additional FTE to support community based initiatives), has been reduced to $25,000 ($10,000 for corporate initiatives and $15,000 for development of a Community Diversity Strategy). Ms. S. Adams explained that the funding will off-set costs associated with building corporate communications, largely through translation of corporate materials, as well as outreach programs in support of Neighbourhood Associations and staff training. Ms. T. Turner spoke to achievement of the Diversity in the Workplace Committee and future plans, including use of a not-for-profit organization to assist in verifying international credentials as they relate to the hiring process. It was noted that there is currently no in-house expertise in which to determine Canadian equivalency of international credentials. Ms. Turner added that many of the candidates are unemployed making it financially difficult to avail themselves of this type of service. Councillor J. Gazzola advised that he would not support the request as it was his opinion the Committee could do more without requiring additional funding, suggesting that the issue revolves around developing a quota system and is not the way in which the City should proceed. Ms. C. Ladd responded that this is not about developing quotas but rather is about breaking down barriers, noting that Kitchener has a large percentage of new Canadians. She explained that a portion of the funding will be used toward building a strategy which may see Kitchener in a supporting role to other organizations; the intent being to come back to Council with a more educated approach. Councillor K. Galloway advised that she was opposed to the request as it was her opinion there is already significant outside programming available and it is the responsibility of everyone in their everyday lives to understand and address issues of diversity. Mayor C. Zehr commented that as an employer the City has responsibility to deal with issues of diversity and that it is important to break down systemic barriers to ensure fair treatment in access to programs and employment opportunities. Councillors G. Lorentz and B. Vrbanovic spoke in support of the request, commenting on the importance of achieving access, equity and inclusion for all; and investing in future sustainability of the workforce. The following motion was Carried on a recorded vote, with Mayor C. Zehr and Councillors G. Lorentz, J. Smola, B. Vrbanovic and C. Weylie voting in favour and Councillors J. Gazzola and K. Galloway voting in opposition. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - 90 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET- OUTSTANDING ISSUES tCONT'D) Issue Paper 20.1 -Diversity tCont'd) On motion by Mayor C. Zehr - it was resolved: "That $25,000. ($10,000. for Diversity in the Workplace Committee organizational initiatives and $15,000. to develop a Community Diversity Strategy), be approved in 2007 for corporate and community focused efforts to address issues of access, equity and inclusion in the City of Kitchener as a community priority arising from `A Plan for a Healthy Kitchener 2007-2027'." Issue Paper 32 -Community Centre Comparisons This issue paper was provided as information in response to a request by Council for a comparison of Community Centres to better understand the cost per square foot per facility, staffing levels and detailed explanation of the proposed budget increase for the Chandler- Mowat Community Centre. Issue Paper 1 -Mileage On motion by Councillor G. Lorentz - it was resolved: "That the mileage rate per kilometre remain at $0.43 for the first 5,000 km and $0.39 for each additional km thereafter." Issue Paper 22 -Waterloo Region Green Solutions tFormerly REEP) On motion by Councillor G. Lorentz - it was resolved: "That $25,000. be allocated to the Waterloo Region Green Solutions (formerly known as the Residential Energy Efficiency Project, REEP) as part of the Environmental Committee's 2007 operating budget and that the approval be for atwo-year period to include $25,000. in each of 2007 and 2008." Issue Paper 23 - Budgeting for Net Supplementary Taxes Mr. D. Chapman advised that historically the City has not budgeted for net supplementary taxes, with any supplementary taxes earned in a given year becoming part of the operating surplus which, by Council policy, is transferred into the Tax Stabilization Reserve Fund to stabilize tax rate impacts in future years. As a financial planning tool this method is not as transparent and easy to understand for the public. Alternatively, staff is recommending that the City begin budgeting for net supplementary taxes in the amount $1.5M with an off-setting reduction to the contribution to operating from the Tax Stabilization Reserve Fund in keeping with the program to reduce reliance on the Tax Stabilization Reserve Fund for budget purposes over time. Mr. Chapman added that this approach will have no impact on the 2007 tax levy. Ms. P. Houston responded to questions, advising that this approach will result in lower year- end surpluses and may also produce a deficit; however, the purpose of this approach is to provide a clearer outline of where the funding comes from. Councillor J. Gazzola raised concerns with putting in an amount in one instance and taking it out in another, suggesting this is a "smoke and mirror" approach. Mayor C. Zehr disagreed, commenting that this approach is more accountable /transparent and will demonstrate that surpluses are related to supplementary taxes. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - 91 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET- OUTSTANDING ISSUES tCONT'D) Issue Paper 23 -Budgeting for Net Supplementary Taxes tCont'd) On motion by Councillor K. Galloway - it was resolved: "That $1.5 M in net supplementary taxes be budgeted in 2007 with an off-setting reduction to the budgeted contribution to operating from the Tax Stabilization Reserve Fund and the original program of reducing reliance on the Tax Stabilization Reserve Fund for budget purposes be continued." Issue Paper 24 -Investment Income Mr. D. Chapman advised that there is an opportunity to increase the budget for investment income in 2007, currently projected at $1.6 M. Staff is recommending an increase of $400,000 to raise the projection up to $2 M. Mayor C. Zehr inquired if there was room for any further latitude. Mr. Chapman stated that while investment income was in excess of $3 M in 2006 and yields are anticipated to be higher than $2 M in 2007, the average balance over the past 5 years is $1.8M. He cautioned that amounts beyond $2 M may not be sustainable and recommended not moving too far beyond the 5 year average. Councillor J. Gazzola noted yields in the past 2 years, expressing the opinion that the 2007 projection could be higher to more accurately reflect yields and lessen the impact on the 2007 tax levy. Mr. Chapman pointed out that the 2006 yield was significantly higher than the 5 year average and was not likely sustainable. Mayor C. Zehr advised that he would like to see an additional $200,000 (0.25%) added to the 2007 projection, for a total of $2.2 M. Councillor Gazzola advised that he would not support the suggested amount, preferring the 2007 projection be raised to $2.5 M. Councillor B. Vrbanovic noted that other than in 2006, no other yields were in excess of $2 M. On motion by Mayor C. Zehr - it was resolved: "That the 2007 budget for investment income be increased by $600,000. to $2.2 M." Issue Paper 33 -Potential Reduction -Internal Telephone Charges Mr. D. Chapman advised that during operating budget discussions, staff was asked to investigate the feasibility of reducing yearly departmental Telephone Reserve Fund charges in 2007. Staff is not recommending reductions in 2007 departmental budgets pending a comprehensive review in conjunction with a report on Customer Service Strategy to come forward later this year. On motion by Mayor C. Zehr - it was resolved: "That internal telephone charges for Departments not be reduced in operating budgets for 2007 and a comprehensive review of the Telephone Reserve Fund occur in conjunction with a report on the Customer Service Strategy to be brought forward to Council later this year." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - 92 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET tCONT'D) GRANT ALLOCATIONS At the February 26, 2007 Finance & Corporate Services Committee operating budget meeting, the Committee approved, in principle, economic development, capital and annual operating grants for 2007. Councillor J. Gazzola requested to re-visit the grant request for the Homer Watson House and Gallery, advising that he would like to adjust the amount awarded to bring it closer to what was originally requested. He suggested they be awarded a total of $188,000. in 2007. Mayor C. Zehr noted his previous concerns that the Gallery's requested increase solely relates to wage increases with no proposed change in complement and would result in an inequity of funding between the K-W Art Gallery and the Homer Watson House & Gallery. On that basis, he advised he would not support the full amount requested by the Gallery but was prepared to consider a further increase over what was originally proposed to be awarded. Councillor Gazzola reiterated his understanding that the City had supported a 5 year phase-in plan to address wage equity and asked for support of his proposed increase in funding. On motion by Councillor J. Gazzola - it was resolved: "That the 2007 operating budget grant to the Homer Watson House and Gallery be increased from $180,600. to $188,000." NET IMPACT TO TAX LEVY Mr. D. Chapman advised that as a result of the decisions made this date the projected tax levy is now at 3.08%, broken down to 1.22% for EDIF and 1.86% for operating which is below the rate of inflation. RESERVE FUND PROJECTIONS Councillor J. Gazzola advised that he would like to make a further reduction of $800,000 to lower the tax levy to 2% in keeping with the rate of inflation. He suggested that half the amount come from a further transfer from the Tax Stabilization Reserve Fund and the remainder from across Departmental budgets. It was his opinion that Departmental budgets could be reduced further given 2006 financial statements show 40 out of 70 cost centres having a surplus. A motion by Councillor J. Gazzola was brought forward for consideration to provide for an additional $400,000. to be transferred from the Tax Stabilization Reserve Fund to the 2007 operating budget and an additional $400,000. to be removed from across all Departmental budgets, for an overall reduction in the 2007 tax levy of $800,000. Ms. P. Houston advised that at the start of the 2007 budget process the estimated tax levy stood at 9% which was subsequently decreased by staff to 5.64% for initial presentation to Council and the public. She noted that the 2006 surplus in operating represents a net within 1 % of the budget, leaving little room for latitude. She added that all Departmental budgets were extensively reviewed by the Audit Committee and is an ongoing process. Councillor B. Vrbanovic stated that he could not support the motion as it was his opinion it was fiscally imprudent. He pointed out that a further transfer from the Tax Stabilization Reserve Fund would compound in future years, resulting in a significant deficit. It was his opinion, staff have acted on Council's direction and worked hard to bring forward a responsible budget and to approve the decreases as proposed would place the City in poor financial stead in future years. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES APRIL 16, 2007 - 93 - CITY OF KITCHENER 1. FIN-07-040 -FINAL REVIEW OF 2007 OPERATING & CAPITAL BUDGETS tCONT'D) TAX SUPPORTED OPERATING BUDGET tCONT'D) RESERVE FUND PROJECTIONS tCONT'D) Councillor Gazzola expressed confidence in staff to further reduce Departmental budgets, adding that the large decline in the Tax Stabilizaton Reserve Fund is the result of funds being transferred to the Joseph / Gaukel Street project, which in his opinion was not appropriate. He reiterated that the budget should be kept to the rate of inflation, including EDIF. Mayor C. Zehr commented that the budget as proposed was prudent and responsible, noting that Operating is at 1.86% which is below the rate of inflation. He pointed out that EDIF has always been intended as a separate, special levy and the City has been fortunate to be able to off-set the cost with other revenues. He added that within the 3.08% tax levy the City was also fortunate to be in a position to add a new initiative of value, being the LEAF Fund. Councillor B. Vrbanovic noted challenges that lay ahead in future years, pointing out that 2008 projections start at a 5.2% net levy before EDIF and to make excessive reductions now was in his opinion not good financial planning. Councillor Gazzola's motion was then voted on and Lost on a recorded vote, with Councillor J. Gazzola voting in favour and Mayor C. Zehr and Councillors G. Lorentz, J. Smola, B. Vrbanovic, K. Galloway and C. Weylie voting in opposition. RESERVE FUND BALANCES Councillor K. Galloway inquired as to the feasibility of transferring a smaller amount of $80,000. from the Tax Stabilization Reserve Fund this year. Mr. D. Chapman advised that while it could be accommodated it would lead to complete depletion of the fund by 2010-2011. He added that while depletion of the fund is slated for 2012, further transfers at this time would compound and if maintained going forward would create a significant deficit in the Fund. On motion by Councillor G. Lorentz - it was resolved: "That the net revenues/(expenditures) for Reserve Funds in 2007 as recommended by the administration, be approved." On motion by Mayor C. Zehr - it was resolved: "That an increase in the 2007 tax rate, excluding tax policy changes, at an estimate of 1.86%, and a special capital levy of a 1.22% increase in the 2007 tax rate to be allocated to the Economic Development Investment Fund, be approved." 2. ADJOURNMENT On motion, the meeting adjourned at 3:10 p.m. Janet Billett, AMCT Committee Administrator