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HomeMy WebLinkAboutFIN-07-131 - Referral of Projects to the 2008-2017 Capital Forecast - Financial Services DeptReport To: Councillor Berry Vrbanovic, Chair, and Members of the Finance and Corporate Services Committee Date of Meeting: November 5, 2007 Submitted By: Pauline Houston, General Manager of Financial Services Prepared By: Dan Chapman, Director of Financial Planning & Reporting Wards}Involved: All Date of Report: October 25, 2007 Report No.: FIN-07-131 Subject: REFERRAL OF PROJECTS TO THE 2008-2017 CAPITAL FORECAST -FINANCIAL SERVICES DEPARTMENT RECOMMENDATION: THAT the following capital projects be included in the 2008-2017 capital forecast for consideration by the Finance and Corporate Services Committee as part of the 2008 budget deliberations, as outlined in staff report FIN-07-131: POP/Remittance Processing $ 14,000 2008 $ 12,000 2012 $ 200,000 2017 Mailing/Stuffing Equipment $ 50,000 2008 $ 80,000 2013 Demand Side Management $1,395,000 2012-2017 Replace Relined Gas Mains $ 400,000 2010 Development Charges Study $ 90,000 2009 $ 90,000 2014 BACKGROUND: All new capital projects with budgets in excess of $50,000 are referred to the City's ten-year capital forecast by a resolution of Council. They are then evaluated during the budget approval process against all other project priorities and funding constraints. This report provides information and recommendations with respect to new project priorities for the Financial Services Department. REPORT: POP/Remittance Processin The City of Kitchener produces approximately 825,000 utility bills tax bills annually for payment. Approximately half are processed using either the large volume payment processor or through cashiers using the point of sale systems. Currently the City uses a customized point of sale product which has not been updated for several years. In 2005 the sole proprietor of the software was unavailable for a good portion of the year due to personal circumstances. Any software failures would have left the City without software support. Due to the risks associated with the ongoing support for this system, it is recommended that staff research and move to a new cashiering system with a modern, stable support system. The financial implication is that the purchase of the point of sale system was included in the 2007 budget at a cost of $160,000. Additional information received on the costing of this type of system has resulted in an additional request for $14,000 in the 2008 capital budget, $12,000 in the 2012 budget (upgrades to the batch payment system) and $200,000 in the 2017 budget. The $200,000 request has been included in the 2017 budget for replacement software due to the fact that the software acquired in 2008 will then be ten years old. The funding for these items are split between c/c and the utilities. Mailin.. /Stuffing Equipment In 2003, a replacement auto-mailer was purchased by the City. The monthly volumes were projected at around 60,000 items for normal volumes and 100,000 for peak volume months such as tax billing which occurs twice a year. A decision was made at that point in time to purchase a lower priced auto-mailer which was considered to be suitable. The machine is now in need of replacement as the service company has advised that the machine will not last much longer. This is due, in part, to the fact that volumes have increased by 25% compared to the volumes used when the City purchased the equipment. Staff is concerned that the City will be left without equipment to ensure all bills and other information is prepared for mailing on a daily basis. The financial implication is that the purchase of the auto-mailer is proposed to be moved from 2011 to 2008 with a total estimated cost of $50,000 rather than the $40,000 which was in the 2011 capital budget. In addition, $80,000 is budgeted in 2013 for future replacement/upgrade. The funding for this item is split between c/c and the utilities. Demand Side Mana..eq meet This program was included in the capital forecast in 2007 for 2007 through to 2011 at a funding level of approximately $200,000 (2007 dollars). The request this year is to extend the same level of funding throughout the forecast period to make this a permanent program. The purpose of the funding is to provide programs to customers to encourage energy conservation. Some examples of programs supported includes: thermostat program, BEEP, and other rebates. Staff continues to look for new initiatives to supplement the demand side management program, especially for industrial, commercial and institutional customers. The gas utility funds this capital project. Replace Relined Gas Mains This is a 10 year program that was started 8 years ago, to eliminate all of the relined gas mains in the system and replace them with standard new gas mains. As a result of materials and contractor cost increases, it is anticipated that the City will need to extend the program into 2010 at a cost of $400,000. The gas utility funds this capital project. Development Char_.es Study $90,000 is proposed for addition to the capital forecast in 2009 and 2014 to fund the staff and consulting costs associated with the preparation of new development charges background studies and by-laws. These by-laws and background studies must be prepared at least every five years as provided for under legislation. The cost of the preparation of the 2004 study (not including the OMB appeal) was approximately $70,000. The funding for this project is provided for through development charges revenue. FINANCIAL IMPLICATIONS: If supported, the capital projects proposed in this report will be referred to capital budget deliberations. They will then be evaluated against all other capital projects and funding constraints within the ten-year forecast CONCLUSION: Staff recommends that the projects referenced in this report be included in the 2008-2017 capital forecast for consideration by the Finance and Corporate Services Committee as part of the 2008 budget deliberations. Pauline Houston, General Manager of Financial Services Dan Chapman, Director of Financial Planning & Reporting KITCHENER PUBLIC LIBRARY Report To: Chair Vrbanovic and Members of Finance and Corporate Services Date of Meeting: November 5, 2007 Submitted By: Kitchener Public Library Board Prepared By: Sonia Lewis, CEO and Sabina Franzen, Senior Manager, Administration Ward(s) Involved: All Date of Report: October 30, 2007 Subject: REFERRAL OF PROJECTS TO THE 2008-2017 CAPITAL FORECAST RECOMMENDATION: THAT the following capital projects be included in the 2008-2017 capital forecast for consideration by the Finance and Corporate Services Committee as part of the 2008 budget deliberations: Forest Heights HVAC Unit $ 25,000 2013 KPL Accessibility Fund $131,000 2013-2017 Library Automation System Replacement $ 700,000 2013-2014 Main Library Boiler Replacements $ 65,000 2014 Main Library Variable Speed Drives $ 40,000 2014 Pioneer Park Furnace Unit $ 25,000 2017 Radio Frequency Technology $ 450,000 2012 Technology Upgrade $ 267,000 2015-2017 BACKGROUND: All new capital projects in excess of $50,000 are referred to the City's ten-year capital forecast by a resolution of Council. They are then evaluated during the budget approval process against all other project priorities and fund constraints. This report provides information and recommendations with respect to new project priorities for the Kitchener Public Library. REPORT: Kitchener Public Library's 2008-2017 capital forecast assumes the current Main Library will be renovated and expanded by 2010. As a result, significant repair and maintenance items which would be addressed through a major renovation have been excluded from this forecast. Should the renovation not proceed, there will be significant additional ongoing capital costs not currently reflected in the forecast. A brief description of each of the projects identified in this report's recommendation follows. Forest Heights HVAC Unit: This HVAC unit was installed in 1988 and will have reached the normal life expectancy by 2013 requiring replacement at a cost of $25,000. KPL Accessibility Fund: This funding will assist in responding to projects that will remove barriers to accessibility as per the 4ntarians with Disabilities Act, 2001 and the Accessibility for 4ntarians with Disabilities Act, 2005. It is recommended that $25,000 be allocated in 2013, $26,000 in each of 2014 and 2015 and $27,000 in each of 2016 and 2017 for a total over the five years of $131,000. Library Automation System Replacement: This project will provide funding for the replacement or a major upgrade of the system which was installed in 1992. The funds would be allocated as follows: $500,000 in 2013 and $200,000 in 2014. Please refer to the appended issue paper for project details. Main Library Boiler Replacements: The boilers were installed in 1994 and will have reached the normal life expectancy by 2014 therefore requiring replacement at a cost of $65,000. Given its life expectancy, this equipment will not be replaced during the Main Library renovation anticipated by 2010. Main Library Variable Speed Drives: The variable speed control drives for two air handler units installed in 1994 will require replacement in 2014 as they will have achieved a normal life expectancy. Given its life expectancy, this equipment will not be replaced during the Main Library renovation anticipated by 2010. The projected cost is $40,000. Pioneer Park Furnace Unit: The furnace unit is part of the original equipment when this library was built in 1989. A normal life expectancy will be reached by 2017 and equipment should be replaced at a cost of $25,000. Radio Frequency Technology: 4n June 11, 2007, Council approved the business case for the RFID and Automated Check-In Projects. At that time, Council decided that consideration of the additional $450,000 funding related to the automated check-in technology for the Main Library in 2012 be referred to the 2008 budget process. Please refer to the appended issue paper for project details. Technology Upgrade: This forecast assumes that: 1) a new Central Library will open in 2010 with a significant increase in the number of public PCs and 2) the first phase of the RFID implementation planned for 2008-2011 will add self-checkout workstations at all library locations. Computer hardware acquired for these two distinct projects needs to be replaced at minimum every 5 years. This results in a need for an additional $267,000 from 2015 to 2017. This is in addition to the base funding allocated to this line in previous forecasts. The new funding is allocated as follows: $90,000 in 2015, $90,000 in 2016 and $87,000 in 2017. FINANCIAL IMPLICATIONS: If supported, the capital projects proposed in this report will be referred to capital budget deliberations. They will then be evaluated against all other capital projects and funding constraints within the ten-year forecast. ATTACHMENTS: Radio Frequency Technology Phase 2 -Automated Check-In Issue Paper Library Automation System Replacement Issue Paper Sonia Lewis CEO Kitchener Public Library Sabina Franzen Senior Manager, Administration Kitchener Public Library KITCHENER PUBLIC LIBRARY 2008 CAPITAL BUDGET ISSUE PAPER ISSUE: LIBRARY AUTOMATION SYSTEM REPLACEMENT FUND: KITCHENER PUBLIC LIBRARY CAPITAL BUDGET DEPARTMENT: KITCHENER PUBLIC LIBRARY PREPARER: LESA BALCH, SENIOR MANAGER, SERVICE DEVELOPMENT BACKGROUND: The integrated library automation system supports the core functionality of the library and includes: bibliographic system to order, receive and catalogue materials search system to view all items owned by the library customer management system to manage customer information delivery system to manage requests and circulation of materials Vendors also offer many additional products that interface seamlessly with their core software, providing libraries options such as e-commerce, digitization of materials, and all-in-one searching of the library catalogue, the Internet and online databases. RATIONALE /ANALYSIS: Kitchener Public Library last went to the marketplace with an RFP for an integrated library system in 1991. The contract with our current vendor was signed in April 1992. In 2001, KPL began a three year process of upgrading the current integrated library system modules used by staff and customers to a graphical interface. The vendor market has changed considerably since 1991. Many integrated library system companies have been purchased by competitors, consolidating the marketplace. By going out to tender in 2013, KPL has an opportunity to test the market to ensure that our current software and vendor are the right fit for our staff and customers, providing the technology needed to support new initiatives that best serve the residents of the City of Kitchener. There is the possibility that KPL will determine to stay with our current integrated library system vendor, but that decision needs to be considered after 21 years of using and upgrading the same system. FINANCIAL IMPLICATIONS: KPL is requesting $500,000 in 2013 and $200,000 in 2014 in capital funding. This funding is for the cost of a new integrated library system. RECOMMENDATION: The Kitchener Public Library Board recommends capital funding of $500,000 in 2013 and $200,000 in 2014 for a new integrated library system. KITCHENER PUBLIC LIBRARY 2008 CAPITAL BUDGET ISSUE PAPER ISSUE: RADIO FREQUENCY TECHNOLOGY PHASE 2 -AUTOMATED CHECK-IN FUND: KITCHENER PUBLIC LIBRARY CAPITAL BUDGET DEPARTMENT: KITCHENER PUBLIC LIBRARY PREPARER: LESA BALCH, SENIOR MANAGER, SERVICE DEVELOPMENT BACKGROUND: In its 2006-2015 and 2007-2016 capital forecasts, KPL identified the need to introduce RFID (Radio Frequency Identification) technology throughout the library system. RFID allows libraries to place a single microchip tag on every book, CD and DVD in the library that will both identify and secure the items. The first phase of the RFID project will occur from 2008-2011, when all library items will be tagged with an RFID chip and self-checkout will be implemented at all library locations. Phase two of the project involves implementing automated check-in at the Main Library only, where the turnover of materials is the greatest. Both phases of the project are outlined in the RFID Business Case presented to Finance and Corporate Services Committee on May 28, 2007. RATIONALE /ANALYSIS: From 2000 to 2006, KPL experienced a 41 % increase in the circulation of books, audiovisual materials and other resources. KPL has a resource collection of over 620,000 items with an annual circulation of 2 million items. KPL's collection and circulation continue to increase. Current staffing levels and technology in use at KPL do not have the capacity to absorb an ever increasing flow of materials. RFID technology will allow KPL to manage increasing circulation and growing collections with greater efficiency, reliability and security. At the same time, it puts KPL on track to provide technologically advanced service to our customers that is fast and easy to use. While RFID technology will be installed at all KPL locations, automated check-in is planned only for the Main Library to handle the larger number of volumes at that facility. However, this benefits customers throughout the library system because of the faster turnaround on requested items coming from or passing through the Main Library. Automated check-in presorts materials and reduces the amount of materials handling, benefiting both library staff and customers. Automated check-in results in fewer motions and less materials handling, reducing the risk of repetitive strain injuries and thereby offering improved ergonomics for staff. Customers benefit as automated check-in helps to get the materials back on the shelves more quickly and available for check-out. FINANCIAL IMPLICATIONS: Automated check-in requires capital funding of $450,000 in 2012. This allows for implementation at the Main Library where the greatest volume of materials is handled. RECOMMENDATION: The Kitchener Public Library Board recommends capital funding of $450,000 in 2012 to implement automated check-in at the Main Library, as phase two of the previously approved RFID ro'ect.