HomeMy WebLinkAboutFIN-08-165 - 2009 Operating BudgetI L REPORT 74
Report To: Councillor B. Vrbanovic, Chair, and Members of
the Finance and Corporate Services Committee
Date of Meeting: December 8, 2008
Submitted By: Dan Chapman, General Manager of Financial Services
Prepared By: Roger LeBrun, Director of Financial Planning &Reporting (2339)
Ward(s) Involved: ALL
Date of Report: November 28, 2008
Report No.: FIN -08 -165
Subject: 2009 Operating Budget
RECOMMENDATION:
For discussion
BACKGROUND:
On Monday, December 8, 2008 the Finance and Corporate Services Committee will review the
2009 Operating Budget. This report and related attachments provide budget detail.
REPORT:
Consistent with the past approach to presenting budget information, the proposed agenda for
2009 Operating Budget discussion follows an issue -based City -wide format. The following
information is attached for review and reference:
• Hard copy of PowerPoint presentation
• City budget summary by Department and Object
• Budget Issue Papers
FINANCIAL IMPLICATIONS:
As detailed in the attached information
COMMUNICATIONS:
Notice of budget meetings and an invitation for public input has been advertised through the
Record and via the City's website.
1
ATTACHMENTS:
Budget Presentation
Budget Summary Reports
Issue Paper #1 —
Investment Income
Issue Paper #2 —
Leisure Access Fee Subsidy
Issue Paper #3 —Print
Shop Savings
Issue Paper #4 —
Market Savings
Issue Paper #5 —
Operations to Service Growth
Issue Paper #6 —
Centre in the Square Fringe Benefits Costs
Issue Paper #7 —
Winter Maintenance Budget Correction
Issue Paper #8 —
Kiwanis Park Budget Correction
Issue Paper #9 —Site
Plan and Development Review
Issue Paper #10
— Construction Engineering Project Delivery (Capital)
Issue Paper #11
— Mileage Rate
Issue Paper #12
— Gasworks Dividend
Dan Chapman, CA M PA
General Manager of Financial
Services
2
Roger LeBrun, CMA
Director of Financial Planning
& Reporting
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CITY OF KITCHENER
CONSOLIDATED SUMMARY BY OBJECT
EXCLUDING ENTERPRISES
EXPENSES
Salaries
Wages
Administrative Expenses
Equipment Reserve Charges
Boards
Debt Expense
Materials & Supplies
Professional & Contract Services
Rentals & Leases
Grants Paid
Promotional Costs
Repairs & Maintenance
Utilities/Taxes
Transfers to Other Funds
Internal Charges
Internal Recoveries
Sub-Total
REVENUES
General Levy
Other Taxation
User Fees
Grants Received
Rec. From Other Municipalities
Transfers from Other Funds
Sundry Income
Sub-Total
1
KiTc.r- FrvFR
2008 2009 $ %
Budget Budget Variance Variance
54, 347, 698
58, 724,487
413721789
8.05
2214171003
2314131445
5961442
2.66
417931146
510031806
2101660
4.40
614011179
616341939
2331760
3.65
917091572
14,161, 929
4521357
4.66
415761366
416231710
471344
1.03
419341753
510361779
1021026
2.07
316101033
410151413
4051380
11.23
112341005
114731131
2391126
19.38
215641564
216541307
891743
3.50
112531555
112781404
241849
1.98
8291191
7961644
(32, 547)
-3.93
512871380
512961640
91260
0.18
12, 573,402
13, 925, 323
113511921
10.75
311711473
314841263
3121790
9.86
(10, 526,146)
(11,153, 741)
(627, 595)
5.96
12711771174 134, 965,479 717881305 6.12
(87,177,343)
(8711771343)
0
0.00
(41302,139)
(41302,139)
0
0.00
(17,047,598)
(1811771731)
(11130,133)
6.63
(597,606)
(605,508)
(71902)
1.32
(214,957)
(217,825)
(21868)
1.33
(91461,350)
(91162,932)
2981418
-3.15
(81376,181)
(81494,870)
(1181689)
1.42
(127,177,174) (128,138, 348) (9611174) 0.76
NET EXPENSE (REVENUE) 0 618271131 618271131
PAGE 1
CITY OF KITCHENER
NET SUMMARY OF REVENUES AND EXPENSES
EXCLUDING ENTERPRISES n c,F
REVENUES
General Revenue (145,847,524) (145,711,278) 961246 -4.49
Net Revenue (Expense) 4 618271131 618271131
PAGE 2
2448
Budget
2449
Budget
$
Variance
%
Variance
NET DEPARTMENTAL EXPENDITURES
General Expenses
2619521656
2914221338
214691682
7.68
Mayor and Council
7791525
8481684
291155
3.74
Office of the Chief Administrator
612441183
615561269
3121486
5.44
Community Services
23, 899, 889
25, 279, 535
113791646
5.77
Corporate Services
1513251984
1611361264
8141276
5.29
Development & Technical Services
2919931221
3214421589
214491368
6.83
Financial Services
216121466
216921738
841672
3.49
Total Net Departmental Expenditures
14518471524
11215381449
617341885
6.36
REVENUES
General Revenue (145,847,524) (145,711,278) 961246 -4.49
Net Revenue (Expense) 4 618271131 618271131
PAGE 2
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #01 — Investment Income
FUND: Operating
DEPARTMENT: General Revenue
PREPARER: Bernita Stever, Senior Financial Analyst
BACKGROUND:
In the past, Council has requested details on the actual and projected operating fund investment
income. Due to the current economic uncertainty and the financial crisis, this paper will update
Council on projected investment income for 2009.
RATIONALE / ANALYSIS:
The investment income that has been earned and allocated to the operating fund over the last
five years is shown in the chart below. The figure for 2008 represents an estimate and the
figure for 2009 is the budgeted amount.
Due to the sub-prime mortgage in the United States, and the global financial and liquidity crisis,
interest rates have been very volatile during the year and have continued to fall since
September 2007. Short term rates were approximately 4.5% at the beginning of 2008 and have
fallen to approximately 2.4% currently. Following the lead of central banks worldwide, the Bank
of Canada is expected to cut rates in December. In 2009, Interest rates are expected to be
1.85%.
In view of the fluctuations experienced by the City over the past several years (both in terms of
rates and balances) staff recommends that the budget be maintained at the five-year average.
Nevertheless, maintaining this average when rates are anticipated to drop exposes the City to
the increased risk of an operating fund deficit at a time when a deficit cannot be funded
through the tax stabilization reserve fund. In 2009, operating fund investment income is
projected to be $1.41VI or $0.95M less than budgeted.
YEAR
BUDGET
ACTUAL
2003
(900,000)1
(11407,326)
2004
(11100,000)
(11221,908)
2005
(11100,000)
(11948,271)
2006
(11500,365)
(31141,373)
2007
(21196,576)
(31148,914)
2008
(21347,473)
(21447,473)
2009
(213471473),
* Actual is an estimate for 2008
FINANCIAL IMPLICATIONS:
If rate projections materialize as expected, the shortfall of investment income in 2009 relative to
budget could have a significant negative impact on the Tax Stabilization Reserve Fund
($0.95M). This underscores the importance of reducing the reliance on the tax stabilization
reserve fund as soon as possible.
RECOMMENDATION:
N/A
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #02 - Leisure Access — Second Year Phase -In to Fee Subsidy Budget
FUND: Operating
DEPARTMENT: Community Services — Community Programs & Services — Program
& Resource Services
PREPARER: Lori Palubeski, Manager, Program & Resource Services
BACKGROUND:
In 2004, Council directed staff to undertake a detailed long term review of the Leisure Access
Card and to develop a sustainable service delivery strategy. The review of the service was
completed in August 2006. Staff presented an update to Community Services Committee in
June 2007 (CSD -07 -023) and received approval to proceed with the recommendations that did
not have specific budget implications.
During 2008 budget deliberations, staff recommended a $60,000 increase to the fee subsidy
base budget to be phased in over three years ($20,000 per year starting in 2008 and ending in
2010). At that time, Council approved $20,000 for year one.
RATIONALE / ANALYSIS:
Fee subsidy increases have not been consistent with the inflationary rate of the Fees and
Charges schedule. As the direct programs fees increase annually, the fee subsidy allotments
for individuals have not increased accordingly resulting in an even larger gap and an increased
financial burden for families who live in our community. It is anticipated that the 2009 6%
increase in direct program fees will further strain the fee subsidy budget and will result in
additional barriers to program participation.
Access to quality recreation and leisure programs is an important determinant in the safety and
health of our community. Removing the economic barriers to program participation allows for
improved access, equity and inclusion.
The Leisure Access Strategy and the recommendation in this issue paper support the Strategic
Direction "Inclusive Communities" under the Theme "Diversity" in the City of Kitchener's
Corporate Plan. In addition, the Leisure Facilities Master Plan (2005) recommends that the
department embark on new policy development in several program and service areas which
include policy development as it relates to access, equity and inclusion. Also, "A Plan for a
Healthy Kitchener" (2006) recommends that the Corporation support staff in implementing
priorities from the LFMP which notes the development and implementation of a Leisure Access
strategy. Finally, the Safe and Healthy Advisory Committee's workplan identifies "Access,
Equity and Inclusion" as one of the theme areas for emerging action items.
FINANCIAL IMPLICATIONS:
$20,000 (operating) is requested for 2009.
RECOMMENDATION:
That $20,000 be designated to operating budget 621405 to accommodate the costs associated
with the second year of funding for the fee subsidy base budget. As recommended in the
Leisure Access Card strategy report (CSD -07 -023).
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #03 — Print Shop Annual Operational Savings
FUND: Operating
DEPARTMENT: Corporate Communications and Marketing
PREPARER: Michael May, Director of Corporate Communications & Marketing
BACKGROUND:
In July 2008, the city's internal print shop began using a new digitally networked imaging system
that replaced its outdated printing equipment which had been proving costly to operate and
maintain and was not able to respond to the growing customer demand for high quality, high
speed printing services. The cost of the new equipment was $381,391 and was funded through
the city's capital budget.
The new print shop equipment includes three black and white printers and one colour printer.
Starting in 2009 all staff will be able to request printing services of the print shop directly for their
work stations — eliminating the need to complete and submit environmentally unfriendly paper
print requisition forms.
FINANCIAL IMPACT:
The operations of the new printing equipment has improved the capabilities of the print shop
while at the same time reducing the annual operating and maintenance costs by a minimum of
$75,000 in 2008. Starting in 2009, the new print shop equipment will result in an operational
savings of $169,000 per year compared to the 2008 budget.
These operational savings will be realized through three major areas:
(1) Reduced maintenance costs —The newer equipment requires less maintenance than the
older equipment did, most of which was over 15 years old.
(2) Reduced supplies and materials —Fewer supplies such as ink and printing plates are
required to operate the newer, more technically advanced copiers.
(3) Reduced salaries and benefits — Through technological advances that make the new
equipment easier and more efficient to operate, the number of staff operating the Print Shop
has been reduced from five employees to two.
RECOMMENDATION:
None. For information.
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #4 - Your Kitchener Market - 2009 Operational Savings
FUND: Operating
DEPARTMENT: CAO; Economic Development
PREPARER: Kathy Weiss, Director Business Development
BACKGROUND:
During the preparation of the 2009 operating budget for the Kitchener Market, a review was
undertaken to identify opportunities for increased revenues and reduction in expenses.
FINANCIAL IMPACT:
The 2009 operating budget has been improved by approx. $108,000. These operational savings
will be realized through the following areas:
(1) Reduction in Part-Time Wages — .Elimination of positions for the Saturday Market has
resulted in savings of $52,000.
(2) Administration and Supplies Expenses — Elimination or reduction in administration expenses
has resulted in a savings of $33,500. This includes items such as staff parking,
memberships, uniform purchases etc.
(3) Increased Rental Income for upper level of Market —New Vendors and increased rental
fees for 2009 has resulted in additional revenue of $22,500
Moving forward, continual assessment of operating expenses for Your Kitchener Market will
occur with the intent of increasing revenues through new programming and decreasing
expenses as required.
RECOMMENDATION:
None. For information.
October 24, 2008
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #5 — Operations to Service Growth
FUND: Operating
DEPARTMENT: Community Services
DIVISION: Operations
BACKGROUND:
As a result of the growth of the City of Kitchener, Operations has had to utilize its staff and
equipment that were historically assigned to work for others to maintain the current service
levels. The functions that we have identified that require additional resources are in the winter,
turf and road patrol maintenance areas.
Since 2004, Operations has attempted to minimize the reliance on work for others by additional
funding. Without this additional funding, Operations would rely on revenues from work for
others to offset this funding shortfall or would simply have an over expenditure.
RATIONALE / ANALYSIS:
While the staff complement has remained the same, the City has grown. In order to bring our
funded staff to the appropriate complement to perform duties within the winter, turf and road
patrol maintenance areas, additional funding will be required to reduce the shortfall.
The service growth funding added to the savings as identified within Winter Report, CSD -08 -066
will allow for additional staff and equipment to meet the existing service level standards.
FINANCIAL IMPLICATIONS:
Pre - approved budget items in report CSD -08 -066 (increased winter maintenance offset
by savings by contracting out Cul -de -sac blowing during full plows):
PT to FT staffing for Winter Maintenance - $113,750 (1.7 FTE)
• Increase Equipment Reserve Charges (Winter) _ $57,000
• 20% Reduction of Overtime = ($107,250)
• Savings in staff wages = ($15,000)
• Savings in equipment reserve charges = ($15,000)
Net impact of pre - approval: $33,500
Other components of Growth Allocation:
• Roads Patrol (winter) - $21,500
• Increase in half FT Urban Forester = $401000 (.5 FTE)
• Increase in Turf Temporary Labourer = $90,000.00 (3 Temporary Labourers (1.75 FTE)
• Increase Equipment Reserve Charges (Turf) = $45,000
Additional increases proposed: $196,500
Total increase to the Operations (CSD) operating budget of - $ 230,000
RECOMMENDATION:
That Council approves funding to service growth of $230,000 for the Operations operating
budget in order for Operations (CSD) to be able to maintain the current level of service across
the City of Kitchener.
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #06 — Centre in the Square Fringe Benefit Costs
FUND: Operating
DEPARTMENT: Centre in the Square
PREPARER: Sharon McMorran, (Centre in the Square)
BACKGROUND:
As of January 1, 2008, the City of Kitchener transferred the task of processing payroll and
administering benefits for Centre In The Square employees to the Finance department at Centre
In The Square.
It was expected that once start up costs were taken into account, this transfer would be
seamless and that costs for all aspects of the operation would be the same as if the processing
had not been transferred.
Unfortunately, the costs of benefits have risen drastically and unexpectedly.
RATIONALE / ANALYSIS:
The Centre In The Square was required to enroll and pay WSIB premiums as a separate
workforce, and was unable to continue to experience the relief of Schedule 1 employers that
they had enjoyed under the City umbrella. Costs are expected to be approximately $25,000
annually.
The fringe benefit package, which mirrors that of the City of Kitchener, is now the total
responsibility of The Centre In The Square and ineligible for cost sharing with a large group as
has been the case in prior years. To June 30, 2008, the increase in benefits costs totaled
$56,350, (of which $12,300 was attributed to WSIB as outlined above). If extrapolated to the
whole year, total increases are expected to be approx $100,000 ($25,000 of which is WSIB).
Option #1:
The Centre In The Square is seeking relief from this by an increase in Operating grant of
$70,000 from the City to offset actual costs.
Option #2:
The additional costs of $70,000 are covered by the City of Kitchener fringe benefit funds in
2009. This would provide an opportunity for the Centre In The Square staff to work closely with
City staff to research market costs of alternate benefit packages and develop options for
creative re- design of the package offered to employees in future years at a reduced cost.
FINANCIAL IMPLICATIONS:
Option #1: $70,000 added to the operating grant annually.
Option #2: No impact on the general levy ($70,000 covered through City of Kitchener fringe
benefit funding for 2009).
RECOMMENDATION:
That Council approves funding of the identified shortfall to ensure that the fringe benefits can be
provided within the annual operating budget.
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #07 - Winter Maintenance Funding (Budget Correction)
FUND: Operating
DEPARTMENT: Community Services
DIVISION: Operations
BACKGROUND:
In August 2008, Council approved a series of recommendations contained within the Winter
Maintenance Report CSD -08 -066. The winter maintenance report was written to identify
process improvements, staffing requirements, contracting options and then funding realities to
ensure that the winter maintenance program can be efficient and effective.
In that report, the following recommendation was presented: "That the principle of budgeting
for winter maintenance based on a 5 year rolling historical average cost be maintained,
and the necessary adjustments to budget be referred to the 2009 Operating Budget
Process." Historically the Operations Division has had insufficient funds allocated toward
winter maintenance purposes. Given the uncertainty of the winter weather this shortfall can
become significant when winter conditions are then above the norm. The last 5 years have
identified that based on the actual activity experienced we have had on average a $420,000
annual shortfall.
RATIONALE / ANALYSIS:
The analysis has concluded that on average there has been an annual funding shortfall of
$420,000 associated with winter maintenance. To review where the shortfall needs to be
allocated, the $420,000 can be divided into the following four categories:
1. wages and benefits - $115,000
2. equipment reserve charges - $1151000
3. materials - $701000
4. contract services - $1201000
Total Cost: $420,000
FINANCIAL IMPLICATIONS:
• Option 1: Bring the annual operating budget into alignment by eliminating the shortfall of
$420,000 with the entire increase allocated in the 2009 budget.
• Option 2: Allocate $120,000 for contract services, $70,000 for material and $115,000
which represents 50% of the wages and benefits and equipment reserve charges for a
total cost of $305,000 to the 2009 budget and defer $115,000 which is the remaining
50% of the wages and benefits and equipment reserve charges to the 2010 budget.
• Option 3: Include only the contract service and materials $190,000 in 2009 and defer
the wages and benefits and equipment reserve charges $230,000 to the 2010 budget.
RECOMMENDATION:
That Council approves funding of the identified shortfall to ensure that the services that are
required to be delivered can be provided within the annual operating budget to meet our
minimum maintenance standards and address Council and constituent expectations related to
service standards.
November 15, 2006
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #08 - Kiwanis Park
FUND: Operating
DEPARTMENT: Community Services
DIVISION: Aquatics and Athletics — Denise Keelan
BACKGROUND:
In 2008 the operation and funding for Kiwanis Park was taken over by the Community Services
Department. Historically, the Kiwanis club operated the park and paid for the major expenses
with their park revenues on a yearly basis. In early 2008, the club requested the city take over
the operations of the park mainly due to their lack of volunteers. In council report CSD-08-034,
council approved that the facility and its operations be managed by the Aquatics Division.
RATIONALE / ANALYSIS:
Kiwanis Park consists of a large lake like pool, change house and pool office building,
maintenance/chlorine building, ball diamond, large storage shed, two picnic shelter areas, upper
field area for field sports, 119 acres of grass, trees, and natural areas. For the 2009 and future
operating years staff are suggesting the operating budget for this facility be aligned with the
same principles that other aquatic facilities operate within.
The Aquatic division is prepared to operate the admission component of the park, staffing of a
supervisor and lifeguards, and administration of the park, rental and camp/lesson components.
Facilities Management's responsibility will include managing pool chemicals, building and repair
materials, hydro charges, and pool maintenance requirements. Parks Operations will maintain
the grass cutting, the road maintenance, waste management and tree care. Enhancements to
the park will include improved waste, recycling and aging tree maintenance.
FINANCIAL IMPLICATIONS:
Total operating costs for Kiwanis represents an increase of $38,676 from our current base
budget allocation.
RECOMMENDATION:
That council approve the recommendation to increase the base budget by $38,676 to allow the
city to operate Kiwanis Park.
ISSUE:
FUND:
DEPARTMENT:
PREPARER:
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
#09 - SITE PLAN AND DEVELOPMENT REVIEW
OPERATING
DTS - ENGINEERING SERVICES DIVISION
GRANT MURPHY, DIRECTOR ENGINEERING SERVICES
BACKGROUND:
The Development Engineering Section is responsible for the engineering review and approval of
new site plans and subdivision developments, to ensure that sufficient and adequate engineering
infrastructure is provided to service the lands being developed. A primary objective of the
Development Engineering Section is to review and approve site plans in a timely and expedient
manner.
A majority of this review activity relates to the effective management and quality control of the
stormwater run -off. This activity requires the comprehensive review of preliminary stormwater
management reports to ensure that targets established in sub - watershed studies are achieved in
order to protect the environment and protect property from flood conditions. Included in the site
plan and development review process are meetings with prospective developers and property
owners to discuss the City's requirements, review of potential zone changes, reviews for
condominium conversions. Following approval, staff work with engineering consultants to ensure
that the work has been performed according to City specifications and that monitoring is being
completed as required.
RATIONALE /ANALYSIS
In discussions with the building and land development industry, via the Waterloo Region Home
Builders Association, satisfaction levels have not been addressed in the last 24 months. These
delays during the reviewing process affect the effective delivery of the housing or building
product to meet market demand. Though there is an expected slow down in the industrial,
commercial sector, growth in the multi - residential and residential sector will remain steady,
during 2009. Based on an analysis, which considered the number of applications, their relative
complexity, and the required staff effort and the abovementioned industry expectations, it is
proposed that an additional staff resource be hired to address the project workload.
Alignment with City's Strategic Plan
The abovementioned activities align with the City's theme of "efficient and effective government ",
the strategic direction of providing "cost effective services" and supporting the initiative that
"Engineering will attempt to match current, and anticipated workload and divisional initiatives,
with an appropriate level of staff resources in a positive team environment that enhances
learning opportunities and project prioritization."
FINANCIAL IMPLICATIONS
Estimated annual costs for both of this position (salaries, benefits) are $ 80,000.00 and would be
funded through site plan and development approval fees.
During budget deliberations, staff recommended increasing site plan review and approval fees
by upwards of 40% to cover the operating expenses associated with the site plan and
development review process, which includes both planning and engineering tasks. As such, this
position will not affect the Engineering Services Division operating budget, significantly.
RECOMMENDATION
That Council approve hiring one (1) additional Engineering Technologist to complete site plan
and development reviews funded through increased user fees.
1 of 1
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #10 - CONSTRUCTION ENGINEERING PROJECT DELIVERY
FUND: CAPITAL
DEPARTMENT: DTS - ENGINEERING SERVICES DIVISION
PREPARER: GRANT MURPHY, DIRECTOR ENGINEERING SERVICES
BACKGROUND:
There are many infrastructure programs and projects related to roads, bridges, sewers,
stormwater management, watermains, pumping stations many of which include environmental
remediation. Most of these projects are planned well in advance, while others need to be
inserted into the capital forecast due to potential property damage or endangerment to the
public. Once these projects are scoped and approved; designed and tendered, it is the
responsibility of the Engineering Construction Section to ensure that they are successfully built
according to specification and budget.
A significant re- organization was completed in the Engineering Division during 2007, in order to
provide more effective management and coordination associated with infrastructure capital
programs. One of the new sections created was Engineering Construction which provides
quality assurance services (i.e. inspection) and project management for accelerated
infrastructure renewal projects, and annual program for sidewalks, road re- surfacing, and
trenchless sewer rehabilitation.
In early 2008, a roles and responsibilities review was completed by Human Resources to
identify gaps and opportunities to optimize resourcing in the Engineering Division. As a result
some activities were realigned based on expected workload. There also have been various
improvements accomplished in the construction services delivery process such as;
implementing a construction contractor evaluation procedure; implementing an engineering
consultant evaluation procedure; developing standardized customer relations communication
packages and utilizing project management software to monitor construction project status. As
such, the 2008 construction work plan has been very successful at achieving the projected
goals.
In September, a further review and assessment of the section's work plan from 2009 to 2012
was completed, focus on three main areas of concern:
1) the start -up and construction of projects related to the accelerated infrastructure renewal
program;
2) addressing emerging and unforeseen projects which are either customer driven or
weather dependent.
3) the completion of project commissioning and other warranty work related to a variety of
planned infrastructure projects.
In early 2008, Council approved two (2) additional construction project managers in order to
handle the expected workload for the accelerated infrastructure renewal program. However,
there is a concern that there are not sufficient resources to properly manage and inspect
unforeseen issues and project commissioning work (items 2 and 3). With a scarcity of
resources, then this will jeopardize how effectively the accelerated infrastructure renewal
program is executed.
RATIONALE / ANALYSIS:
There are increasing requirements for the Engineering Construction Section to oversee other
projects that will be needed in the coming year. A majority of the unplanned work is related to
dealing with a variety of drainage projects such as Stirling Avenue and Dumfries Street, 294
Veronica Drive (at Fairway Road), 72 Craig Drive and 48 King Street, the Edgehill Drive
stormwater outlet failure, mainly related to the excessive storm events in July and August, 2008.
Coupled with this, there are several larger scale stormwater management projects which will
require additional project management oversight, such as the Krizanderson SWM pond retrofit,
Forfar SWM pond retrofit, Resurrection SWM Pond retrofit, Shoemaker Greenway, Reach 2 & 31
the Highway 8 sanitary sewer crossing rehabilitation, bridge rehabilitation work, and the
Springdale pumping station replacement. These projects have been included in the 2009 capital
works plan, including the King Street reconstruction project, and as such there is a requirement
to add additional staff to the current complement.
Most construction projects require multiple years to be built and once built require follow up by
staff related to commissioning activities, warranty work, or customer claims. Examples of these
projects are Joseph and Gaukel (2003 to 2008), Victoria Street (2002 to 2008), Guelph Street
(2007 to 2010 projected), and Breithaupt Street (2008 to 2011 projected).
Quality Assurance — Inspection
For several years, the Engineering Services Division had an approved contract position (thru
vacancy management), which amounted to 0.9 FTE to complete construction inspection
activities. It is expected that the construction project workload, will not be decreasing in the long
term, and as such a request is being made to make this position permanent full -time (1.0 FTE).
Project Management
There will be a requirement for an additional construction project manager (1.0 FTE) to deal with
a variety of the larger scale projects, as mentioned above. It is expected that the construction
project workload, will not be decreasing in the long term.
Alignment with City's Strategic Plan
The abovementioned activities align with the City's theme of "efficient and effective
government", the strategic direction of providing "asset management" and supporting the
initiative that "engineering will provide leadership for an integrated replacement and
maintenance plan for the corporation."
FINANCIAL IMPLICATIONS:
Estimated annual costs (salaries, benefits) are $150,000.00 and would be funded through the
Capital budget. These positions will not have any material affect on the Engineering Services
Division operating budget.
RECOMMENDATION:
That Council approve hiring one (1) additional Construction Technician and (1) additional
Construction Project Manager in 2009 to complete projects related to council approved capital
projects; and that the 0.9 FTE contract position be discontinued.
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #11 - Mileage Rate
FUND: Operating
DEPARTMENT: Financial Services — Financial Planning & Reporting
PREPARER: Saleh Saleh, Senior Financial Analyst
BACKGROUND:
As part of the annual budget process, staff reviews the rate per kilometre paid to employees for using their
vehicles for business purposes. The rate is currently $0.44 per kilometre for the first 5,000 kilometres, and $0.39
per kilometre thereafter.
RATIONALE / ANALYSIS:
The cost to operate a vehicle is estimated to remain at $0.44 per km (calculations on following page).
The following table provides a comparison of mileage rates provided by municipalities:
Comparison of Area Municipalities $ per KM
City of Kitchener 0.44 First 5,000 km
0.39 Over 5,000 km
City of Waterloo 0.44
City of Cambridge 0.44
Region of Waterloo 0.45
City of Guelph 0.45 First 5,000 km
0.39 Over 5,000 km
City of Hamilton* 0.50 First 5,000 km
0.44 Over 5,000 km
*will be adjusted to the 2008 tax exempt allowance rate once published by Department of Finance
The tax exempt allowance rates are as follows:
2005 — $0.45 first 5,000 km and $0.39 over 5,000 km
2006 — $0.50 first 5,000 km and $0.44 over 5,000 km
2007 — $0.50 first 5,000 km and $0.44 over 5,000 km
FINANCIAL IMPLICATIONS:
N/A
RECOMMENDATION:
That the City of Kitchener's rate per kilometre remains at $0.44 for the first 5,000 kilometres, and $0.39 for each
additional kilometer.
Assumptions & Calculation of Annual Operating Costs for 2009
Assumptions
4,013
Capital Cost
25,566
Salvage Value
5,500
Depreciation, over 5 years
4,013
Insurance
1,561
Average annual interest, at 6.0%
818
Kilometres Per Year
24,000
Fuel Consumption
7.5 km per litre
Annual Fuel Consumption
3,200
Repair Allowance
17000
Fuel Cost ($ per I itre)
0.96
Annual Ot)eratina Costs
Depreciation
4,013
Insurance
1,561
1 me rest
818
Licence
75
Repairs
1,000
Fuel
3,072
10,539
Cost Per Kilometre 0.44
CITY OF KITCHENER
2009 BUDGET ISSUE PAPER
ISSUE: #12 — Gasworks Dividend
FUND: Operating
DEPARTMENT: Utilities
PREPARER: John Sonser, Senior Financial Analyst
BACKGROUND:
At the November 24, 2008 Finance and Corporate Services Committee meeting, Council directed
staff to prepare an issue paper outlining how the transfer to the Gas Capital Investment Reserve
Fund is arrived at. This issue paper also explains the rationale behind how the operating dividend is
affected by the volatility in the transportation benefit and what capacity exists for an increase in the
operating dividend.
RATIONALE / ANALYSIS:
The City of Kitchener tax payers benefit in two ways from the annual transfers from gasworks,
namely in the transfer to Capital Fund and the transfer to the revenue fund through by way of a
dividend.
Transfer to Gas Capital Investment Reserve Fund Calculation:
The premise behind the annual transfer from the gasworks operating account to the Gas Capital
Reserve Fund essentially states that in any given year Gasworks is to maintain an accumulated
net revenue position of 50% of the prior year's net revenue.
The following example illustrates
the rationale:
2008
2009
Accumulated net revenue from 2008
Accumulated net revenue from 2007
(4,166,435)
(50% of 2007's Net Profit)
(1,731,062)
Net Revenue for 2008
(13,776,636)
et Revenue for 2009
(15,945,675)
Deduct Transfer to Revenue Fund 2008
De ansfer to Revenue Fund
(annual amount which increases by
2009 (annua unt which increases
inflation)
5,849,625
by inflation)
6,025,114
Deduct Accumulated Net Reve
Deduct Accumulated Net Revenue Ending
Ending Target (50% of 2008 Net
Target (50% of 2007 Net Revenue)
(1,731,062)
Revenue)
(6,888,318)
2008 Funds available for Gas Transfer to
2009 Funds available for Gas
Reserve Fund
(10,362,384)
Transfer to Reserve Fund
(497639305)
An Increase of $1, 000,000 in net revenue in any given year results in a $1,000,000 increase to
the Gas Capital Investment Reserve Fund(GCIRF) for that year and a $500,000 reduction in the
following year (conversely, a reduction to net revenue results in an equal reduction to the Gas
Transfer Reserve in the current year and a 50% increase to the reserve in the following year). In
the 3rd year, there is a corresponding increase in the transfer to the GCIRF of $500,000. The net
effect is that the GCIF will increase by $1,000,000 by the end of the 3rd year with any change in
net income flowing through to the GCIRF.
The net revenue figure includes the transfer to the Gas Capital Program but does not include the
transfer to the City Revenue Fund. Any increase in the budgeted transfer from the gasworks
operations to the City Revenue Fund in an effort to help reduce tax levy increases will be
deducted from the transfer to the Gas Capital Reserve Fund.
Due to the complex nature of this calculation and the potential volatility in the transfer due to
impacts such as the Joseph /Gaukel funding requirements as well as the volatility of the operating
margins, staff will be reviewing the methodology for this transfer and the GCIRF funding model in
2009.
Gas Dividend
Gross profit margins within the gas delivery program have ranged from approximately 40% to
45% in recent years. This margin, along with the margins in the other programs due to recent
pricing changes, have created an opportunity to increase the annual dividend from the gasworks
enterprise to the City's revenue fund. Staff is recommending an increase of $400,000 over the
2009 budgeted dividend of $6,025,114 (6.6% increase).
Gas "Transportation Benefit" Volatility:
The profitability within the Delivery Company can be significantly affected by "transportation benefit"
component of delivery. Currently, the Gasworks is able to secure favourable pricing of
transportation relative to the Trans Canada Pipeline (TCPL) costs. This benefit is projected to
decline over time as there is a convergence of price between the TCPL rate and the supplier rate
which will reduce the margin the City is currently realizing. As a result, the gross profit margin
within the delivery company is currently projected to decline. This benefit was expected to have
been eliminated by 2008, however, Gasworks is still in a position where there is a net gain. See
chart #1 below for the six year history of the transportation benefit. In light of this volatility, it would
be imprudent to significantly increase the operating dividend on a permanent basis.
FINANCIAL IMPLICATIONS:
As noted in the report.
RECOMMENDATION:
N/A
$2.75
$2.50
$2.25
$2.00
$1.75
$1.50
$1.25
o $1.00
$0.75
$0.50
$0.25
$0.00
-$0.25
-$0.50
-$0.75
Chart 1
CCKU Natural Gas Transportation
Time
1
TTT,I,c��1�
City Kitchener
in
City Hall, 200 King St. West
Community ervices
Y
P.O. Box 1118
Kitchener, ON N2G 4G7
Date: December 4, 2008
To: Mayor Carl Zehr and Members of Council
From: Pauline Houston, General Manager, Community Services
c: Carla Ladd, Dan Chapman, Mark Hildebrand, Michael May
Subject: Wilfrid Laurier University Swimming Pool Repairs
Background:
WLU has owned and operated a 50 -metre pool for the past 35 years. This pool is used by WLU
students, community based competitive swim clubs, as well as secondary school swim clubs.
This facility has become central to the competitive swimming programs in the region. There are
ten 50 -metre competitive pools in the Province of Ontario; the closest ones to Waterloo Region,
other than the WLU pool, are located in Etobicoke and London. The community based
competitive swim clubs account for approximately 300 of the participants using this facility on a
regular basis. Half of these participants are Kitchener residents.
In August 2008, the Chief Administrative Officers of Kitchener and Waterloo received the
attached letter from WLU Vice - President of Finance and Administration proposing that the cities
each contribute $1.1 million for a total of $2.2 million to cover the cost of the most pressing
infrastructure problems at the pool (i.e. replacing the HVAC system as well as a few other
problem areas). Laurier indicated they were prepared to cover any costs above the $2.2 million
plus the pool's annual operating costs of approximately $305,000.
Senior staff from Waterloo, WLU and Kitchener, along with Mr. John Whitney, met on several
occasions to assess potential funding options and partners and review the reasonableness of
the scope of repair costs. It was determined at a staff level that neither of the two cities had
capital funding capacity available to assist with this project. We also met with provincial MPP
John Milloy who indicated that the Province didn't have any funding available for this project.
City of Waterloo Asset Management staff reviewed the two consultants' reports and determined
that the highest priority /short term infrastructure issues would focus on life safety and health &
safety issues providing a band aid approach for a total approximate cost of $1.7 million, which
would not replace the aging HVAC system. Consequently, neither this investment nor the $2.2
million HVAC replacement investment alone would provide any guarantee or certainty as to the
length of time the pool life could be extended. It could be anywhere up to five years, but would
require careful day -to -day monitoring.
Roles and Options:
The City of Kitchener has a number of options to consider with respect to the role that we could
play in responding to the swimming club's request for assistance, either towards a short -term
solution or longer term solution to the situation. The options are:
1. Lead role as funder of the solution
2. Partner funder of the solution, conditional on other partners such as WLU, City of
Waterloo and private fundraising participating in the solution on a proportionate basis
Memo to Council - December 4, 2008 Page 2
3. Continue a facilitative role to assist the community groups to define the best solution,
with no funding role
4. No role
Some of the factors to consider in this decision include:
1. Fit with the City's community service mandate
2. Availability and priority of capital funding
3. Appropriateness of the level of investment
4. Responsibility for capital investments in university facilities in another municipality
Fit with the City's community service mandate
The City's role in providing recreation and leisure facilities has been to support and encourage
broad - based, active resident participation in leisure opportunities that supports improved
resident health, well -being and personal development. This historic direction has been
reinforced by the endorsement of the Leisure Facilities Master Plan. The provision of leisure
facilities targeted at competitive sports is primarily within the purview of higher levels of
government, especially the federal government or private investment.
Availability and priority of capital funding
As Council members heard earlier this week from Mr. Dan Chapman, General Manager of
Financial Services, the City's 10 year capital forecast is currently balanced, with no funding
capacity within the first 5 years of the forecast. Any consideration of a capital funding request
for this project would necessitate eliminating or deferring another project within the forecast. It
should also be noted that a recent report presented by Mr. Chapman, relating to the allocation
of the one -time provincial infrastructure grant, listed a number of large core service capital
projects that cannot be funded even with the full allocation funding of this grant.
Appropriateness of the level of investment
Assuming a City investment of $1.1 million and a life of the repairs at 5 years, the capital cost
per participant per year is approximately $1,500. If the life is only 1 year, the investment
equates to $7,500 per participant per year. By comparison, the investment in ice arenas for
minor hockey's 3,500 participants is equivalent to approximately $600 per participant per year,
based on an assumption that only minor hockey participants utilize ice arenas, which is a very
conservative assumption. (Note: Estimate based on $7 million per ice pad for 10 pads, with a
life of 35 years each.)
Conclusion
If Council chooses one of the funding roles above and allocates capital funding, given the
uncertainty around the length of time that an investment in WLU pool would actually extend its
life, consideration should be given to directing staff to further investigate and report back on the
feasibility of other long -term solutions before proceeding with the short -term WLU repair
solution.
Pauline Houston, General Manager
Community Services
Memo to Council — December 4, 2008 Page 2
Wilfrid Laurier r!_n C F Pk
University
AUG 18 1008
CAO'S 0!-r,,;_
August 18, 2008 4)
Forrrrdrd 1911
City of Waterloo
100 Regina Street South
Waterloo, ON N2J 4A8
ATTENTON: Simon Farbrother, CAO, City of Waterloo ✓ .
AND TO:
City of Kitchener
200 King Street West
P.O. Box 1118
Kitchener, ON N2G 4G7
ATTENTION: Carla Ladd, CAO, City of Kitchener
Dear Simon and Carla,
RE: Swimming Pool
I am writing to you with an urgent appeal to join Laurier in a collaborative approach to solve what
is clearly a community issue: the need to keep Laurier's 50 -metre pool open for local swim clubs
until a new competitive facility can be built in the area.
Laurier has provided the community with an excellent swim facility for 35 years, and we recognize
that it is central to competitive swimming in this region. In light of community concern over the
impending closure of our pool, we have re- visited the issue with our engineering consultants.
Based on these discussions, we believe the most pressing infrastructure problems can be
addressed on a short -term basis for $2.2 million.
This investment could keep the pool open for u! to five years, which would buy time for the
community to develop a longer -term solution. But we must be clear that this is not a long -term
solution and safety problems could arise at any time that would force us to close the pool on sJa
notice. The $2.2- million investment would allow us to replace the HVAC system and address
few other problem areas, but it does not address several significant repair issues, such as the
pool filtration system and the deteriorating building envelope. Consequently, the pool will
continue to require careful monitoring on a day - today basis.
Nonetheless, we believe that the $2.2- million investment is worth pursuing and we propose that
the cities of Waterloo and Kitchener each contribute $1.1 million to this project, spread if
necessary over a number of years. Laurier is prepared to cover any costs above $2.2 million.
We will also continue to pay the pool's operating costs, which amount to approximately $305,000
competitive swimming pool until a new facility is built; it solves
will ultimately fall on city recreation facilities; and it generates I
university are seen to be co- operating to serve the whole com
Vice - President: Finance and Administration
Wilfrid Laurier University, Waterloo, Ontario, Canada N2 3C5 (519) 884 -1970 Fax: (519) 886 -8645
Memo to Council — December 4, 2008 Page 2
I want to assure you that we are not simply trying to keep our pool open with municipal dollars. If
the pool was only used by the university, we would shut it down now. The fact is, given the
financial pressures on universities today, Laurier can no longer justify paying all the costs needed
to maintain and operate a facility that is primarily used by the local community. Laurier has been
a generous community partner for many years, and we would like to remain so, but the university
can no longer afford to foot the entire bill.
Unfortunately, given the state of our pool's infrastructure, we must make some critical decisions in
the next two weeks. We ask that you share our proposal with your respective councils, as you
see fit, and provide us with a response by Friday August 22, 2008.
We would be happy to share our engineering reports with you and discuss the proposal at any
time.
Sincerely,
Jim Butler
Vice- President: Finance and Administration
Wilfrid Laurier University
ad
c.c.: Dr. M. Blouw, President
5- Dec -08
Ms. Janet Billett
City of Kitchener
By E -mail
Janet. biIlett@kitchener.ca
Dear Janet:
Enclosed is a copy of my presentation to City Council, December 1 st
To preface my comments today, again, we are a tenant at WLU. As such, we are not privy to all of their
inner financial reporting, budgeting, or forecasting. However, we are experienced at pool operations; we
know our facility well — and its failings. Further, we have studied the WLU sponsored engineering reports
to understand that extending the life of the pool can be accomplished with alternate approaches to those
outline by the engineering firms involved.
The parts of the $2.2M project that must be addressed immediately are the pool leak and HVAC systems
replacement. We believe that many of the targeted repairs may be accomplished in a staged manner
once these major issues are repaired. As well, we believe that there are cost savings available to WLU to
reduce this proposed $2.2M budget.
For the sake of securing financing for a 5 year bridge to a new solution, let's use a $2.OM budget.
WLU is confident that the Board of Governors will approve a new debt instrument in the amount of $2.OM.
Our goal then would be to secure $400,000.00, each year, for a five year period. (Interest calculated at
0 %)
Since our presentation, our ROW membership has met to discuss a pledge drive. We will be asking WLU
to launch a pledge drive on their Home Page and the sub -Page for Gifting to the University as well.
We are tallying the pledges from all parents and friends of our club. The Einwechters, Dan and Caroline,
and Tracy and I have donated $100K each over the 5 year terms. Further, the club is donating $20K this
year, with the plan of matching that amount over the 5 year term as well. We are at $60K, of the $400K
annual forecasted and we know many others are lining up with their pledge forms — many will be
substantial.
We believe a $100K annual sponsorship from both Cities and the Region would close the gap and
provide, at minimum, another 5 years of pool life at WLU.
A hearty thank you for your consideration...
Best regards,
Chris Bennett
REGION OF WATERLOO WATERSPORT ALLIANCE, 404 -30 DUKE ST W, KITCHENER, ON, N2H 3W5,(519) 574 -3133
Region of Waterloo Swim Club
Presentation to Kitchener City Council
Monday, December 1, 2008
Thank you Mayor Zehr, and Council, for this opportunity to address you this evening on
the matter of aquatic facilities.
My name is Chris Bennett, a resident of Kitchener, and a parent member of the Region
of Waterloo Swim Club.
We appreciate the time allotted to us tonight and I hope to be economical with my
comments. A written submission of our address tonight will be provided as well.
Our presence here is a show of support for our home pool, in fact, our home of 32 years.
The WLU pool has been home to the Region of Waterloo Swim Club, 2 Syncro teams, a
Masters' Swim Club, and a water polo team ... of course, the pool is closing on
December 31 st.
WLU's pool has been a productive venue as The ROW Swim Club has produced 14
Olympians, 8 Olympic medals, along with world champions, PanPacs, and Common
Wealth champions. So good is our community's high performance reputation that my
family, and many others have strategically moved from our other communities to live,
work, and swim in K /W.
Beyond competitive aquatic athletes, WLU has also been a home to many of our
community members who know the value of fitness.
In fact, a full 60% of the WLU pool time was consumed by the community- not the
University.
The loss of a pool is not a facility loss in simple terms, our club has benefited from the
support of a Olympic calibre coach in Dean Boles. The years it has taken to build a
club, to find the talent to run it, and, the dollars invested to grow it ... are all quickly lost.
Starting from scratch is more than worrisome... starting over once pool time is found will
require a major rebuilding one that will take many years if not decades.
We have asked for help from our newly elected MP's in K/W and surrounding area- We
did contact the Honourable Harold Albrecht who then contacted the Secretary of
State -- we did receive a somewhat positive response from the Secretary's office stating
that WLU may be entitled to monies to help. However, as current events may suggest,
we have exhausted all avenues of support -we are told the cupboard is bare.
50% of our membership are Kitchener residents, and as the WLU pool has been a part of
the City's Master Aquatic plan -we are pressing our message once again.
To that point, I'd like to read an excerpt from one comment submitted, a rather pointed
one, but nonetheless written by a community member passionate about aquatics "... "It
is with great frustration that I read this petition and information about the WLU pool
being shut down. Both my children had the privilege of using this facility, one swimming
to a National level and the other doing Synchro to an international level. The Synchro
swimmer had to leave home and her community to pursue her sport goals because the
access to pools in the KW area was insufficient. I worked on a group trying to get a pool
built in Downtown Kitchener but it was eventually turned down by Kitchener City
Council. Waterloo neglected to include a pool at the RIM Recreation site because the
pool was being planned for downtown Kitchener. It is time that the two cities got
together and provided the appropriate water facilities for their communities for both
the recreational and competitive needs. It was stated then that there was not enough
pool facility in the cities, so to lose a pool rather than gain an extra one will be a major
blow to the aquatics programs..."
As a forward thought, without diminishing the crisis surrounding the elimination of a
current facility, I urge Council to be thoughtful as they move forward with Consultants
and their studies to measure our community's needs .... user groups - competition
oriented club.... should be consulted in the area of facility design opportunities.
As an example, our Harry Class proposal is one we're excited about ... the prospect of
compressed air structure over a beautifully maintained pool would provide an instant
50 meter competition facility.
However, let me turn to WLU's plea for financial assistance:
The university has left it on the table that if $2.2 million can be found to keep the pool in
operation for the next 5 years until a better aquatic solution can be realized, the
university has agreed they would continue paying for the $300K annual operating costs.
Would Council consider sharing in a $440,000.00 /yr financial support commitment over
a 5 year term?
We are asking the same of The City of Waterloo, the Region, and seeking Federal
money under the Building Canada fund. Further we are asking our own membership to
contribute as well, including the immediate donation from our growth and
development fund of $24K.
In summation ... a few short quotes from Dr. Susan Vail, York University, pulled from York's
2005 study of community athletics.
"Sport involvement, shows improvements in health, academic performance and
adjustment later in life."
"both female and male athletes have higher grades, higher education aspirations and
less school - related discipline problems"
"participating athletes show a significantly reduced inclination toward smoking or drug
use"
"Early activity in sport reduces ....(full page of maladies) ... at mid -life and senior years."
"Self esteem, depressive symptoms, all, are alleviated through sport and athletic
involvement"
Dr. Vail's study goes on to examine the social and economic spin -off benefits of sport -
at all ages.
As an example of the economic impact resulting directly from sport and active
recreation, the Berrett study conducted for the city of Edmonton in 2001 revealed that
$540M was injected into the local economy. Although we are a smaller centre, the
magnitude of sport, as an economic driver in the community, must not be dismissed.
To that point, in recent news, the Claude Robillard Pool in Montreal is embarking on a
$10 million refurbishing project. The club had to find pool time around the city which
was not a problem, and, Montreal is supporting those clubs affected by paying for the
added pool rent ($100k) during the 9 month shutdown.
To finish, we must commend the great work of your staff as they try the almost
impossible - that is - to find our club and others the extra pool time from their existing
facilities - they are passionate and we sincerely than them tonight. Again, Mayor Zehr
and Council, we appreciate your interest and attention, and we look forward to your
support.