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HomeMy WebLinkAboutFin & Corp Svcs - 2009-05-11FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 CITY OF KITCHENER The Finance and Corporate Services Committee met in special session this date commencing at 10:40 a. m. Present: Councillor J. Smola -Vice-Chair Mayor C. Zehr and Councillors G. Lorentz, J. Gazzola, K. Galloway and C. Weylie. Staff: C. Ladd, Chief Administrative Officer D. Chapman, General Manager, Financial Services & City Treasurer T. Speck, General Manager, Corporate Services J. Willmer, Interim General Manager, Development & Technical Services P. Houston, General Manager, Community Services S. Adams, Director, Community & Corporate Planning R. Regier, Executive Director, Economic Development D. Murphy, Director of Engineering R. Gosse, Director, Legislated Services & City Clerk J. Witmer, Director of Operations K. Kugler, Interim Director, Enterprises C. Fletcher, Director, Facilities Management T. Hare Connell, Executive Director, People Services & Organizational Development J. Sheryer, Assistant City Solicitor S. Wright, Manager, Downtown Community Development R. LeBrun, Manager, Financial Planning & Supply Services G. Hastings, Manager, Golf Courses M. Petricevic, Manager, Projects/Energy Management C. Miller, Supervisor, Food, Beverage & Catering B. Steiner, Senior Environmental Planner C. Bluhm, Urban Investment Advisor A. Kotlarchuck, WSIB/Accommodation Co-ordinator J. Billett, Committee Administrator 1. FIN-09-060 -DRAFT DEVELOPMENT CHARGE BACKGROUND STUDY The Committee considered Financial Services Department report FIN-09-060, dated May 6, 2009 concerning a draft Development Charge (DC) Background Study and associated by-law. Mr. Stefan Kreczenowicz, Hemson Consulting, presented an overview of the draft DC Background Study. Rules for calculating a DC charge include preparation of a growth forecast delineating amount, type and location of development; a 10 year historic average service level for soft and hard services to establish a maximum allowable cap; preparation of a growth related capital forecast indicating intent to undertake capital works and costs subjected to benefits tests and discounted; and, an estimate of capital and operating cost impact. Mr. Kreczenowicz advised that charges are levied on a geographic basis by City-wide, suburban and central neighbourhoods. Growth forecasts are governed by the Provincial Growth Plan for the Greater Golden Horseshoe which provides that the Region of Waterloo will reach a population of 729,000 by 2031. The growth forecast to be achieved by Kitchener as established by the Region is 311,500. He noted that targets were not used in the 2004 studies and all population figures are based on Statistics Canada census data, with the figures in the growth plan including census numbers plus 4% to capture anyone missed by census. The method used starts with a population forecast for the Region and is then broken down based on acohort-survival model (ie. by age groups). He pointed out that migration levels have been set so that the Region will achieve its growth forecast. Mayor C. Zehr requested clarification of the migration rates. Mr. Kreczenowicz advised that historical migration rates are reviewed and assumptions made as to the level of migration going forward. He suggested that the artificial migration rates may actually be much higher; adding that the rates are artificial in the sense that it is a specified number to achieve by 2031 but as set, does not necessarily mean it will happen. Mayor Zehr referred to non-designated growth areas in the Provincial Places to Grow, questioning that if Kitchener grows faster than other geographic areas if there would have to be other planning policies to control growth and/or make it easier. Mr. Kreczenowicz concurred, advising that the Region is to expand in the west /southwest area where it is clear growth is desired. Mayor Zehr questioned the difference between now and the traditional model of determining growth rates as to the general effect on the DC by-law and rates. Mr. Kreczenowicz stated that it would be difficult to FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 76 - CITY OF KITCHENER 1. FIN-09-060 -DRAFT DEVELOPMENT CHARGE BACKGROUND STUDY (CONT'D) say; however, he suggested that when actual numbers are reviewed the form that growth will take will be seen and is quite different in this study from 2004. It was noted that intensification development will be higher than previously. He added that the number of households and the form they take drives land use planning and new infrastructure and in these economic times, growth forecasting is not easy to do. It is anticipated growth rates will drop by 30% in the next 2 years. This is not considered lost but rather displaced and is expected to be recouped over the long term forecast. A shift in the pattern of housing over the long term is also assumed, gradually moving from singles to more row housing which will be evident in part within the central neighbourhoods. Staff measure the City's capacity and the forecast numbers are numbers that can be accommodated in the Kitchener Growth Management Plan (KGMP}. Mr. Kreczenowicz reviewed historic growth noting that according to the last census (2006} population has increased by 1.2 - 1.4% over the last 20 years, representing 2,000 to 3,000 persons per year. The number of housing units has seen steady growth and at a faster pace than population growth. The difference Is attributed to a decline in the average number of persons per household. Employment rates show an increase in the early part of the decade, dropping off in the last 2 years. In the last 20 years, housing patterns have been predominately singles /semis, slowing down in 2006 with an average of approximately 950 singles /semis per year over the last 5 years. The number of apartment units fluctuates with approximately 113 apartments in 2006-07. A City-wide growth forecast was reviewed which suggests a population growth from 205,000 currently to 299,000 by 2031. It was noted that the breakdown in number of housing units is not too different from previously. Housing patterns of singles /semis is expected to peak in 2016 and begin a decline as greenfield development areas deplete and reliance on rowhousing and apartments will have to rise to meet growth targets. Mayor Zehr referred to the Activity Rate column, asking if it is a factor of employment and population rates as a whole and Mr. Kreczenowicz concurred. Mayor Zehr referred to a recent staff report related to participation 1 employment statistics, questioning if there is correlation between this report and the growth rates. Mr. R. Regier advised that is not necessarily so but there may be an intrinsic relationship over the long term. He noted that the stats report is a reflection of a standard labour force survey, indicating changes in employment and unemployment. Mayor Zehr suggested that participation rates may become important given the current economy, and especially in Kitchener where unemployment rates have risen significantly. He raised concerns in respect to using an estimated population growth based on census data plus 4% in respect to determining whether the City is charging enough for DC rates or not. Mr. Kreczenowicz advised that the growth forecast has recognized a slow down in both population and employment growth and pointed out that over time, there will be opportunity to review and update rates within each 5 year period or earlier if deemed necessary. Mr. Kreczenowicz then reviewed the suburban and central neighbourhoods, advising the central neighbourhoods now include the downtown core which is a departure from the 2004 study. Development in the downtown core has previously been exempt from DC charges; however, it has been recognized that the demand on infrastructure and the financial implications suggest it is important to capture all development. The vast majority of development in the central neighbourhoods will be row housing and apartments. Household units in the suburban areas is expected to grow by approximately 15,000 by 2031, of which 12,500 singles /semis are anticipated and as greenfield areas are built out over the 20 year period approximately 8,700 apartment units will be needed to meet targets by 2031. Mayor C. Zehr referred to the `population in new households' figures, noting that in each 6 year period the figure drops substantially from the fifth year. Mr. Kreczenowicz advised that this is a result of averaging out between census periods. He added that the DC study is based on growth forecasts of 10 and 20 year periods rather than year to year. Mayor Zehr raised concerns that this would distort the final numbers and change the denominator if gradually stepped up or down. Mr. Kreczenowicz stated that the only way to change average population is through cash flow. The study assumes things will grow steadily but there will be fluctuation and this is why updates are required in each 5 year period. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 77 - CITY OF KITCHENER 1. FIN-09-060 -DRAFT DEVELOPMENT CHARGE BACKGROUND STUDY (CONT'D) An employment forecast was reviewed indicating a growth of 17,000 jobs over the next 10 year period City-wide, with 11,000 jobs in suburban areas and 5,600 in central neighbourhoods. By 2031, a growth of 33,000 jobs City-wide is anticipated, with 22,500 in suburban areas and 10,700 in central neighbourhoods. The employment rate is calculated per m2, estimating growth by floor space area and 1.2M m2 of new floor space City-wide is estimated by 2031. Draft DC rates were then reviewed, with the charge per capita at $3,100. per single/semi unit; $5,800. for central neighbourhoods; and $9,351. in suburban areas. Non-residential rates for suburban areas are derived at $41.73 per m2 of new development and at $21.42 per m2 in central neighbourhoods. Acomparison of the draft rates to current rates shows an overall decrease of 4% in central neighbourhoods and 7% in suburban areas; while, non-residential rates show an increase of 35% and 146% respectively. In comparison to upper tier and lower tier municipal DC rates per single detached unit, Kitchener ranks 4th lowest at $19,000. per unit; and combined with the Regional DC rate ranked 12th on the list (mid-range) at $26,500 per unit. Mr. Kreczenowicz advised that Kitchener is moving from the lower range to mid- range but remains below the City's of Cambridge and Waterloo rates. Non-residential rates in this category place Kitchener at $75. per m2 and with Regional DC rates combined at $175 m2. Councillor J. Gazzola requested clarification of use of the word "calculated" in reference to the rates. Mr. Kreczenowicz explained that new rates have been calculated and presented this date but are not yet adopted by by-law. Council still has the option to lower and/or phase-in the rates as they deem appropriate. Mr. Kreczenowicz advised that stakeholder meetings have been held and where appropriate revisions to the rates were made. For those who submitted comments in writing, written responses are being prepared and will be sent out in the near term. He advised that next steps include releasing the draft DC Background Study for public review to be followed by a statutory public meeting on June 1, 2009 and passage of the DC by-law by Council on June 15, 2009. Councillor Gazzola inquired if all stakeholder issues had been addressed. Mr. Kreczenowicz advised that changes have been made where appropriate in response to stakeholder comments and over the coming weeks comments received as a result of public release of the documents will be responded to. He added that there are no major contentious issues that he is currently aware of. Mayor Zehr requested clarification as to how the intensification allowance is derived. Mr. J. Willmer advised that it derives from an estimation of what is required to upgrade facilities within the core. Mayor Zehr referred to the comparisons with other cities, raising concerns in respect to being compared to non-designated growth areas which are significantly different than Kitchener, such as the City of Woodstock. Mr. Kreczenowicz responded that Woodstock is different in that they separate water /wastewater rates and apply a special levy for those charges, as opposed to averaging them out over DC rates. 2. FIN-09-061- DEVELOPMENT CHARGE POLICY WHITEPAPER The Committee considered Financial Services Department report FIN-09-061, dated May 6, 2009 concerning a draft Development Charge (DC} Policy Whitepaper, which presents options for change in existing practices for both growth outlook and an overall approach to financing growth-related capital infrastructure. Mr. Stefan Kreczenowicz, Hemson Consulting, advised that the purpose of the Whitepaper is to bring focus to financial issues around implementation of the DC by-law and present options to mitigate financial risk. The paper speaks to how DC reserve funds should be managed and provides options for managing changes in timing of capital projects (ie. when and to what extent financing service agreements should be entered into or the City fund debt); and seeks direction on whether or not to continue with the exemption for downtown development. Mr. Kreczenowicz advised that the City's ability to fund growth-related capital programming is set out in the DC study. Financing has not been a problem over the past 5 to 10 years as FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11.2009 - 78 - CITY OF KITCHENER 2. FIN-09-061- DEVELOPMENT CHARGE POLICY WHITEPAPER (CONT'D growth remained high. The City is moving now into a period of slower /uncertain growth, as well as changes in the form growth takes, for which there will be risks that need to be addressed. The DC Act sets out rules for administering and reporting on DC revenues and requires the City to maintain a separate reserve fund for each service levied. It does provide for merging of reserve funds for all soft services requiring a 10% statutory discount and for all hard services into service categories, for purpose of administering the funds. The City is required to report annually on DC funds. Councillor J. Gazzola questioned if each capital project has to be a separate reserve. Mr. D. Chapman advised that tracking is by each service area for which each project is a component and in respect to cash flow can be managed across soft or hard service reserve funds. Mr. Kreczenowicz stated that alignment between projects and project costs may not always be exact. He pointed out that as growth fluctuates, revenues fluctuate accordingly and do not always match spending requirements. Large capital projects may result in a deficit, requiring borrowing which can be done through internal DC reserve funds or from non-DC reserve funds. The City has traditionally not borrowed from non-DC reserves and no change to this practice is recommended. Councillor Gazzola questioned the status of DC reserves. Mr. D. Chapman advised that DC reserves for hard services is in a surplus position, while soft services currently has a deficit. He added that overall he believed the reserves to be in a break-even position. Mr. Kreczenowicz commented that it is considered prudent for the City to continue its practice of not using non-DC reserve funding for borrowing purposes as to do so could undermine ability to finance other capital needs such as repair or replacement of City facilities. It was noted that the DC Act requires all borrowing costs to be factored into DC rates to achieve full cost recovery of the works. Borrowing presents a higher financial risk and in periods of growth decline the City may be unable to finance works or make debt repayments. In this period of economic uncertainty, Mr. Kreczenowicz advised that the City should be mindful of the risk going forward, as compounded by a heavy capital problem with major expenditures in the first 2 years requiring a high level of borrowing in the short term. He reiterated that opening balances at end of 2008 place soft services in a deficit and hard services in a surplus. Mr. D. Chapman added that the deficit is in large part due to the Activa Sportsplex and Fire Station No.7 and is to be managed from excess capital across the 10 year window. Mr. Kreczenowicz reviewed reserve fund balances over the 10 year period, advising that in the next 5 year period the City is projected to be in a deficit position not exceeding $10M. He noted that in the 2004 study deficits of $45 to $50M had been forecasted which did not materialize due to continued high growth. The current study provides for a more conservative capital program due to economic uncertainty and is considered manageable over the next 5 year period. Efforts will be made to ensure timing of projects in the DC study balances the commitment to the Kitchener Growth Management Plan (KGMP) with financing ability to construct projects on time. It was also noted that changes in timing of projects can be made through the City's annual capital budget review. Mr. Kreczenowicz advised that circumstances may arise in which it may be deemed desirable to pursue alternative methods of financing. In such instances where the City is not in position to finance the works, there is option to enter into an agreement that would allow the developer to front-end the cost of capital works, or the City could issue debt. He stressed that the City is under no obligation to enter into such agreements or debt, nor to advance projects. Mr. Kreczenowicz commented that the advantages of servicing agreements provides completion of capital works at little or no immediate financial impact to the City; however, there will be additional operating costs and in the case of slower growth, may result in over-building and or under-used facilities that still have to be maintained. Recommendations were put forward for consideration, including: • use of the annual capital budget review to assess financial ability to carry out growth- related capital programs, to include: monitoring the rate /location / patterns of FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11.2009 - 79 - CITY OF KITCHENER 2. FIN-09-061- DEVELOPMENT CHARGE POLICY WHITEPAPER (CONT'D development, prioritization of projects, comparison of scope /timing of infrastructure, and continued reliance on past practice of internal borrowing; • use of servicing 1 financing agreements should include the practice of: specified terms and conditions; credits/refunds for services should be based on reasonable cost of capital works; creditslrefunds should be issued only against the service component of the DC to which the project relates; agreements should only be entered into for projects that could not otherwise be deferred and which are critical to planning objectives; the City should not commit to fixed refund repayment schedules which should be contingent on growth so cost of growth is borne by the developer; and a more conservative approach should be pursued to refund repayments by setting the repayment in a fixed year and be subject to DC funds on hand; • debt financing should only be considered for growth-related capital infrastructure critical to planning objectives and only when no developer is willing to front-end costs; if issued, provision should be made for covering risk of insufficient DC revenue to make repayments; and the term of any debt should, as a general rule, not exceed the life of the asset. At the request of Councillor J. Gazzola, Mr. D. Chapman agreed to provide Council with a brief synopsis of past servicing agreements. Mr. Kreczenowicz then referred to the City's current policy to exempt all downtown core development from development charges, and which is similarly exempt from all Regional development charges. He noted that continuation of the exemption would result in a total revenue loss of approximately $2.3M over the life of the new DC by-law. Reasons to continue the exemption included: economic development incentive which supports the objective to encourage knowledge clusters and wide range of development forms in the core; no significant direct growth-related capital costs have been identified as being required to service development in the short term; and the Economic Development Investment Fund extends to 2013, one year prior to expiry of the new by-law. Mr. Kreczenowicz advised that should the exemption continue, the City would be required to budget for the lost revenue. Mr. Kreczenowicz advised that consideration of the need for formal DC policies can be considered independently from the draft DC Background Study and DC By-law, and it is suggested consideration be in conjunction with the start of the 2010 capital budget process. Mayor C. Zehr questioned if Mr. Chapman was comfortable with the draft rates and if the capital program is conservative enough to allow for any further slow downs in the economy. Mr. Chapman advised that he was comfortable with the recommendations, reiterating that the 2004 study projected a deficit of $45-$50M in last 5 year period which the City was able to manage and avoid. He stated that if all unfolds as projected the deficit will be manageable over the next 5 year period and will be monitored carefully on an annual basis. Mayor Zehr inquired if projects contemplated in the KGMP that may be slowed or impacted by high spike deficits have been integrated in the DC study. Mr. J. Willmer advised that these have been reflected in the DC study and the KGPM. Councillor G. Lorentz questioned that if there would still be opportunity to phase-in rates after adoption of the DC by-law on June 15. Mr. Kreczenowicz advised that the draft rates represent the maximum levy which Council is not obligated to implement fully or immediately. He stated that this is a difficult year to raise DC rates and a number of municipalities are choosing to defer rates until January 1St after adoption of their by-laws. He noted that from a financial perspective deferring to January 1St would not have a significant impact; however, typically phasing is only undertaken in instances of significant rate increases and any shortfall would have to be covered by the tax base. Mr. Chapman agreed that any phase-in or incentives would have impact to the tax base and advised that such programs should be determined in concert with approval of the DC by-law. Councillor Lorentz requested clarification in respect to the deficit, noting that commercial rates are doubling while all others are uniform. Mr. Willmer explained that in the past the study has been more arbitrary between residential and non-residential, which is now not the case. A FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 80 - CITY OF KITCHENER 2. FIN-09-061- DEVELOPMENT CHARGE POLICY WHITEPAPER (CONT'D) direct outcome of forecasting is an employment-residential proportionate share to service growth and corrects non-residential rates to what they should have been 5 years ago. Mayor C. Zehr questioned if there was means to phase-in rates by evening out what is lost in one year and building it in over years 2 to 5, without impacting the tax base. Mr. Kreczenowicz advised that this would be considered cross-subsidization which is not permitted by the legislation. Mr. vvillmer suggested that while there can be no cross-subsidization between residential and non-residential, if non-residential is deferred revenues could be recovered from a higher non-residential rate in the later years. Mr. Kreczenowicz was of the opinion this would still be cross-subsidization but agreed to obtain a more definitive answer to this issue. Mayor Zehr commented that notwithstanding, it may not be in the City's best interest to phase-in rates given the risk of no development occurring in the later years to off-set lost revenue in the earlier years. Mr. D. Chapman advised that it is intended to release the draft DC Background Study and DC by-law to the public on May 19, 2009 for review and comment. 3. CRPS-09-058 -PERMISSION FOR OUTDOOR GARAGE SALE - COUNTRY HILLS RECREATION ASSOCIATION - 100 RITTENHOUSE ROAD -JUNE 6, 2009 The Committee considered Corporate Services Department report CRPS-09-058, dated April 30, 2009 concerning a request to operate an outdoor garage sale. On motion by Councillor G. Lorentz - itwas resolved: "That the request of the Country Hills Recreation Association to hold an outdoor garage sale at 100 Rittenhouse Road on June 6, 2009 be approved, provided the necessary licence is obtained." 4. CRPS-09-059 -REQUEST TO SELL REFRESHMENTS - CHERRY PARK NEIGHBOURHOOD ASSOCIATION - CHERRY PARK - 84 STRANGE STREET -JULY 11, 2009 The Committee considered Corporate Services Department report CRPS-09-059, dated April 30, 2009 concerning a request to sell refreshments and merchandise at Cherry Park. On motion by Councillor G. Lorentz - itwas resolved: "That the request of the Cherry Park Neighbourhood Association to sell refreshments and arts and crafts at Cherry Park, 84 Strange Street on July 11, 2009 be approved, provided the necessary licence, including Health approval is obtained." 5. CRPS-09-060 -REQUEST TO HOLD SUMMER FUN DAY - CHANDLER MOWAT COMMUNITY CENTRE - 222 CHANDLER DRIVE -JULY 4, 2009 The Committee considered Corporate Services Department report CRPS-09-060, dated April 30, 2009 concerning a request to hold a barbecue and garage sale. On motion by Councillor G. Lorentz - itwas resolved: "That the request of Chandler Mowat Neighbourhood Association to hold a barbecue and garage sale at Chandler Mowat Community Centre, 222 Chandler Drive on July 4, 2009 be approved, provided the necessary licence, including Health and Fire approvals, is obtained." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 81 - CITY OF KITCHENER At the request of Councillor C. Weylie, it was agreed to refer Items 4 and 5 of the Consent agenda of this date to the Committee's 1:00 p.m. session to allow staff to be present to answer questions. This meeting recessed at 12:35 p.m. and reconvened at 1:15 p.m. with the following members present: Mayor C. Zehr and Councillors J. Smola, J. Gazzola, G. Lorentz, K. Galloway and C. Weylie. 6. CRPS-09-062 -REQUEST TO SELL REFRESHMENTS - CHERRY PARK NEIGHBOURHOOD ASSOCIATION - MOVIE NIGHTS -CHERRY PARK - 84 STRANGE STREET The Committee considered Corporate Services Department report CRPS-09-062, dated May 4, 2009 concerning a request to sell refreshments at Cherry Park. Councillor C. Weylie referred to the last paragraph of report CRPS-09-062 which suggests that proceeds from this event would go in part toward support of a community centre. She pointed out that a community centre for this Association is not in the City's capital forecast and asked that reference to same be removed. Mr. R. Gosse agreed to ensure that such reference is eliminated from all future reports concerning this Association. On motion by Councillor C. Weylie - itwas resolved: "That the request of the Cherry Park Neighbourhood Association to sell refreshments at Cherry Park, 84 Strange Street on June 12, July 11 and August 7, 2009 be approved, provided the necessary licence, including Health approval is obtained." 7. CRPS-09-063 -REQUEST FOR AMENDMENT TO LIQUOR LICENSING AGREEMENT - 2190042 ONTARIO INC. - 30 DUKE STREET WEST, UNIT 107 The Committee considered Corporate Services Department report CRPS-09-063, dated May 1, 2009 concerning an amendment to Council's resolution of March 23, 2009 regarding a Liquor Licensing Agreement with 2190042 Ontario Inc., 30 Duke Street West, Unit 107, to correct a clerical error. On motion by Councillor C. Weylie - itwas resolved: "That Condition #3 of the Council Resolution dated March 23, 2009 (Corporate Services Department report CRPS-09-028 -Application for a Liquor Licence Applied for by 2190042 Ontario Inc. (The Gig} at 30 Duke Street West, Unit 107), be amended by deleting "30%" and replacing it with "70% "." 8. CRPS-09-054 -REQUEST FOR PERMISSION TO OPERATE DOWNTOWN SIDEWALK PATIO FOR 2009 SEASON -DANDY'S - 85 KING STREET WEST The Committee considered Corporate Services Department report CRPS-09-054, dated April 22, 2009 concerning a request to operate a Downtown Sidewalk Patio in 2009. Councillor J. Smola advised that he had received a request this date from staff to have this matter deferred to the June 1, 2009 Finance and Corporate Services Committee meeting to allow the applicant, who is ill and unable to attend this date, an opportunity to address the Committee. On motion by Councillor K. Galloway - itwas resolved: "That the staff recommendation contained in Corporate Services Department report CRPS-09-054 (Permission to Operate Downtown Sidewalk Patio -Dandy's - 85 King Street West) be deferred to the June 1, 2009 Finance and Corporate Services Committee meeting." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11.2009 - 82 - CITY OF KITCHENER 9. CRPS-09-064 -APPEAL REFRESHMENT VEHICLE LOCATION - 932 VICTORIA STREET NORTH The Committee considered Corporate Services Department report CRPS-09-064, dated May 1, 2009 requesting direction in respect to an appeal of the Manager of Licensing's decision not to issue a licence to Mr. Dave Wilson to operate a refreshment vehicle at TA Appliance, 932 Victoria Street North. Mr. R. Gosse advised that the proposed location does not meet the distance separation requirements from other existing refreshment vehicles and places of refreshment. He confirmed that a written letter of objection was received from Arby's and a verbal objection was received from Quiznos, both of which are existing places of refreshment within the distance separation requirements. Mr. Dave Wilson spoke in support of his request, advising that the product he intends to sell is unlike any sold by existing businesses and he has been requested by TA Appliance to locate on their property to help promote sale of TA Appliance products (smokers). He suggested that his business would not be in competition with any other food related business in the area. Mr. Wilson responded to questions, advising that he previously operated at a location in the Township of Wilmot and had not talked with any of the businesses surrounding the newly proposed location. Councillor J. Gazzola requested clarification as to concerns of other businesses. Mr. Gosse advised that staff had notified affected businesses, being two refreshment vehicles and six places of refreshment and only the 2 businesses referred to earlier had responded. Mr. Gosse added that both objections indicated concern that competition is already high on Victoria Street and addition of the proposed refreshment vehicle would make it more difficult to compete. Councillor Gazzola inquired if the affected businesses have opportunity to locate a refreshment vehicle on their property and Mr. Gosse responded that they would provided zoning of the property would permit such use. Mr. Gosse also advised that refreshment vehicles pay only a licence fee which is not related in any way to the payment of property taxes. Councillor Gazzola inquired if Council had approved any other similar requests in instances where objections had been received. Mr. Gosse advised that one location at the Sunrise Centre on Ottawa Street South had been approved, notwithstanding one objection received. Mr. Gosse added that the purpose of the distance separation requirement is to deter proliferation of refreshment vehicles in any one area and Victoria Street is an area that has substantive existing food businesses. In response to Mayor C. Zehr, Mr. R. Gosse advised that generally competition is not a determining factor in considering these requests. Mayor Zehr suggested that it was more a matter of determining a level playing field. Councillor J. Gazzola questioned if TA Appliance would need a permit to sell a food product that ties into their business. Mr. R. Gosse advised that providing the zoning of the property permits such use, they could operate a place of refreshment but it would have to physically be part of their business premise and they would have to obtain a licence to operate. Councillor Gazzola questioned if approval was given, if it could be revoked at a later time. Mr. Gosse advised that once approved, a decision to revoke the licence would require appropriate rationale. Councillor Gazzola referred to annual renewals and Mr. Gosse advised that once a licence is approved by Council, renewals are automatic provided there is no concern with operation of the business. A motion by Councillor G. Lorentz was brought forward for consideration to deny the request to operate a refreshment vehicle at 932 Victoria Street North. Councillor Lorentz commented that Council has in the past approved locations where no objections have been raised or a particular need has been determined. In the instance of Victoria Street, he suggested that there are sufficient places of refreshment and to allow this request would result in an injustice to existing businesses. He suggested that the applicant investigate alternative locations for which he could make new application for a licence to operate. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 83 - CITY OF KITCHENER 9. CRPS-09-064 -APPEAL REFRESHMENT VEHICLE LOCATION - 932 VICTORIA STREET NORTH (CONT'D) On motion by Councillor G. Lorentz - itwas resolved: "That the request from Mr. Andrew Head, Dryden, Smith & Head Planning Consultants Ltd. on behalf of his client, Mr. Dave UVilson, to permit Mr. UVilson to operate a refreshment vehicle at TA Appliance, 932 Victoria Street North, be denied as this location does not meet the required distance separation between existing Refreshment Vehicles and Places of Refreshment." 10. CRPS-09-057 -LICENSING TRIBUNAL DECISION - SPREITZER MEATS LTD. The Committee considered Corporate Services Department report CRPS-09-057, dated April 24, 2009 concerning a decision of the Licensing Tribunal on the matter of an application to renew a business licence for Spreitzer Meats Ltd. Councillor C. UVeylie referred to Condition #1 of the decision, which requires suspension of the business licence for a period of 45 days, inquiring as to the date on which the suspension is to begin. Mr. R. Gosse advised that this matter is to go forward to the special Council meeting to be held later this date and should Council ratify the decision of the Licensing Tribunal, the suspension of the business licence would commence this date and all other conditions would also apply. Mayor C. Zehr inquired as to actions that could be taken and/or consequences applied should the business continue to operate during the 45 day suspension. Mr. Gosse advised that the business owner could be charged for operating under a suspended licence and a second Tribunal hearing convened to determine if it is desired to revoke the licence or apply more conditions. Ms. J. Sheryer added that if the conditions of approval are not followed, the business owner could be charged under the Provincial Offences Act, which would result in Court proceedings and potential fines. Councillor G. Lorentz noted that the business owner had Legal Counsel who was given clear indication during the Tribunal proceedings that the City would not tolerate any other violations. Councillor J. Gazzola questioned if the business is closed now. Mr. Gosse advised that a 2009 license to operate has not been issued to the business but due to some confusion in regard to health approvals received, the owner was still operating at the time of the hearing. The matter of operation was cleared up during the hearing with the owner's Legal Counsel. Councillor Gazzola inquired if the business had opened since the hearing. Ms. Sheryer referred to a subsequent report (CRPS-09-066) to be considered by the Committee this date, in which staff is requesting the 2009 business license for Spreitzers Meats Ltd. be referred to a licensing hearing. In this regard, she advised that matters of evidence subsequent to the original hearing should be reviewed at the new hearing. On motion by Councillor G. Lorentz - itwas resolved: "That the Decision of the Licensing Tribunal attached to Corporate Services Department report CRPS-09-057, on the matter of the application to renew a business licence under Chapter 563 (Meats) of the Municipal Code for Spreitzer Meats Inc., 128 Bedford Road, be adopted." 11. CRPS-09-066 -SPREITZER MEATS LTD. -128 BEDFORD ROAD The Committee considered Corporate Services Department report CRPS-09-066, dated May 5, 2009 concerning a request to refer the 2009 business licence for Spreitzers Meats Ltd. to a Licensing Hearing. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 84 - CITY OF KITCHENER 11. CRPS-09-066 - SPREITZER MEATS LTD. -128 BEDFORD ROAD (CONT'D) On motion by Councillor G. Lorentz - itwas resolved: "That the 2009 business licence for Spreitzers Meats Ltd., 128 Bedford Road be referred to a Licensing Hearing." 12. CAO-09-030 -MODIFICATIONS TO DOWNTOWN PATIO ENCROACHMENT AGREEMENTS The Committee considered Chief Administrator's Office report CAO-09-030, dated April 30, 2009 concerning modifications to the standard terms of the City's Patio Encroachment Agreement and amendments to Council Policy I-1205 (Outdoor Patios -Encroachment Agreement}. The Committee also considered a memorandum (C. Bluhm), dated May 7, 2009, requesting that the staff recommendation be amended by adding direction to staff to incorporate the proposed modifications to the patio encroachment agreements commencing with the 2009 season and to authorize the Mayor and Clerk to sign amending agreements to implement the changes to existing 2009 agreements. Ms. S. Wright advised that downtown businesses identified concerns related to the City's existing encroachment agreement for sidewalk patios and a number of revisions are proposed based on a system of performance, pertaining to: use of glass/china/metal dishware; signage; refuse containers; fencing alternatives; increased minimum liability insurance for patios serving alcohol; and extension of the season itself. Mr. C. Bluhm advised that a meeting was held with the Manager of the Downtown Kitchener Business Improvement Area (KBIA), who was in agreement with all proposed modifications, save and except the proposed increase from a minimum of $2M liability insurance requirement to $5M. He added that it was Legal staff's opinion the increased amount is appropriate given the increased risk of incidents where alcohol is being served. The Downtown KBIA has concerns that the increased rate may act as a deterrent to businesses wishing to operate a sidewalk patio and while not yet quantified, they estimate a 20-25% increase to insurance premiums. Councillor J. Gazzola questioned the need to require a sign stating "what do you think of my patio". Ms. J. Sheryer advised that this sign is used to direct patrons' comments to the City, a connection which might not otherwise be made. Councillor Gazzola requested clarification of the issue of refuse containers and Mr. Bluhm advised that this is an item that is being recommended to be based on performance. If the patio is kept clean without a container then it will not be required but ability to re-instate the requirement if needed would remain in the agreement. Councillor Gazzola inquired as to the feasibility of marking the pavement rather than requiring a physical barrier to delineate the patio. Ms. Sheryer advised that alternative delineation was discussed and Legal staff have some concerns that if barriers of a permanent nature are not used, migration from the designated area tends to occur. She added that the purpose of a permanent barrier is to ensure pedestrian access is not obstructed. Ms. Sheryer pointed out that patios serving alcohol are required to have a fence barrier under Provincial regulation but for other patios not serving alcohol, staff would be willing to look at alternatives. Councillor Gazzola asked why the proposed increase in liability insurance is so high. Ms. Sheryer advised that the figure was derived in consultation with the City's Risk Manager but would be a matter for Council to ultimately decide. Mayor C. Zehr agreed that options for delineation of patios should be looked at, citing an example of the use of heavy planters in each of the 4 corners instead of fencing. He also raised concerns with the proposed increase in liability insurance, questioning if there have been any incidents wherein the City was made party to a law suit as the result of a patio. Ms. Sheryer advised that there are none that she is aware of specifically. In reference to signage, refuse containers and fencing requirements, Mayor Zehr suggested that where standards are not being met, these should be dealt with by a specific member of staff rather than waiting for Council consideration and he would consider these issues of licensing. Ms. Sheryer suggested that the agreement could be modified to specify the Manager of Licensing. She also suggested that Clause 5 (a) of the staff recommendation be removed to reflect that FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 85 - CITY OF KITCHENER 12. CAO-09-030 -MODIFICATIONS TO DOWNTOWN PATIO ENCROACHMENT AGREEMENTS - (CONT'D) alternative fencing for patios not serving alcohol could be delineated by something other than that which would act as a physical barrier. On motion by Councillor C. Weylie - itwas resolved: "That the standard terms of the City's Downtown Patio Encroachment Agreement be changed in accordance with Chief Administrator's Office report CAO-09-030, save and except that liability insurance requirements shall remain at a minimum of $2M for patios serving alcohol and the City's Manager of Licensing shall be specifically assigned the authority within such agreements to require the placement of signage, refuse containers and fencing in instances where standards are not being met; and, That Council Policy I-1205 (Outdoor Patios -Encroachment Agreement) be amended by deleting sections 2 and 3 in their entirety and replacing them with the following new sections: `2. That all applicants wishing to operate an outdoor patio on City property must submit, for approval by the City's Finance and Corporate Services Committee, a complete patio sketch plan outlining the type, style, colour and materials of fencing and patio furniture (on the understanding that fencing or barriers must be in accordance with the terms of the patio encroachment agreement}, as well as an outline of any proposed signage and landscaping, including flower beds and planters. That a condition be included in said agreement that if patron behaviour is a problem, the licensee is responsible for hiring the necessary security personnel; 4. That the patio encroachment agreement may require on any outdoor patio located in the downtown and encroaching on City property, the installation of a sign which reads "No shirt, no shoes, no service" where the patio has not previously been operated under the same owner or where the City's Manager of Licensing determines that past conduct of the operator creates a concern that the operator may not impose this dress code. 5. That alternatives to fencing may be considered by Council for patios not serving alcoholic beverages on a case by case basis provided: (a) the proposed alternative is fixed or difficult to move; (b) the proposed materials are approved by the City's Manager of Downtown and Community Development; and, (c) in the opinion of the City's Director of Operations and Director of Transportation Planning (or delegates thereof}, the proposed alternative does not create a hazard.'; and, That staff be directed to incorporate the suggested changes to downtown patio encroachment agreements as set out in report CAO-09-030, as amended, commencing with the 2009 patio season; and further, That the Mayor and Clerk be authorized to sign amending agreements as necessary to implement the changes set out in report CAO-09-030, as amended, to existing 2009 downtown patio encroachment agreements." 13. DTS-09-067 -LOCAL ENVIRONMENTAL ACTION FUND (LEAF) GRANTS: APRIL 2009 - CREW & OVER $50,000. APPLICATIONS The Committee previously considered Development & Technical Services Department report FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 86 - CITY OF KITCHENER 13. DTS-09-067 -LOCAL ENVIRONMENTAL ACTION FUND (LEAF) GRANTS: APRIL 2009 - CREW & OVER $50,000. APPLICATIONS (CONT'D) DTS-09-067 at its meeting held on April 20, 2009, at which time a decision was made in respect to Local Environmental Action Fund (LEAF) grant applications of less than $50,000., save and except the Community Renewable Energy Waterloo (CREU11) -Power $aving Network applicaton. The CREW application was deferred, together with grant applications of over $50,000., for consideration this date. The Committee was circulated this date with correspondence from Mr. Gordon Nicholls, on behalf of Friends of Hidden Valley (PORN), outlining concerns he had raised at the April 20th meeting related to: shading of the FOHV application on Table 2 of report DTS-09-067 to indicate the application is not being totally rejected; applying Objectives 6 and 7 which he maintains the application has met; provision of quantitative information prior to a decision of Council; and determination of an appropriate level of capital spending for natural land acquisition. Ms. B. Steiner advised that six applications have been recommended by the LEAF Steering Committee in the category of over $50,000., as outlined in Table 2 to report DTS-09-067. She noted that since the April 20th meeting, staff have had opportunity to work with the CREW applicants and while staff believe the initiative to be a good one, they would still like to see the project more fully defined to ensure it aligns with the objectives of the LEAF program. It was noted that the Committee received an email transmission (B. Steiner) this date, outlining a summary of discussions with CREW. Ms. Steiner further advised that in respect to the over $50,000. grant application by the City's Facilities Management Division with Vigor Clean Tech Inc., staff is asking that this application be deferred to the June 1, 2009 Finance and Corporate Services Committee meeting pending further investigation of legal issues that may have an impact on this application. Mr. Glen Woolner attended on behalf of CREW in support of the Power $aving Network grant application of less than $50,000. The project is geared toward educating and assisting citizens in doing self audits to identify their electricity use and document their reduction initiatives. Mr. Woolner advised that there is some confusion as to how division of the numbers by 80 homes will be achieved. He advised that only a part of the program kits are distributed in a controlled manner with the remaining distributed during outreach events. He stated that this project is ready to go now and no assurance has been given that delaying and re-submitting in the next round of applications will result in funding approval. Councillor J. Gazzola noted that an application by CREW is also listed in the over $50,000. category and requested clarification of the connection between the two. Mr. Woolner advised that there is no formal connection between the two projects. The over $50,000. application relates to a partnership arrangement with the City's Building Division and REEP (Residential Energy Efficiency Project) to encourage building green in the housing market. He noted that CREW has many differing interests and the applications represent two differing areas of interest. Councillor Gazzola raised concerns that two applications are being considered for one group, and who is also associated with REEP. Mr. Woolner acknowledged that CREW grew from a group of individuals originating from REEP and pointed out that CREW is an incorporated non-profit organization. Mayor C. Zehr referred to the May 11 email transmission, in which it is noted that CREW stated that the LEAF funding will be used for Kitchener residents only, and $1,000. from the City of Waterloo for assessments in Waterloo and $4,000. from the Region of Waterloo for assessments in other Regional municipalities. Mayor Zehr also noted that Kitchener approved $10,000. for the original pilot of 40 homes. Mr. Woolner concurred that this information was correct. Mayor Zehr requested clarification as to where the funds from the Region will be used and Mr. Woolner advised that these funds would be used wherever needed in the Region. Mayor Zehr raised concerns in respect to Kitchener providing funding twice, both through LEAF as well as it's share of the Region's contribution. He suggested that this should be kept in mind in respect to distribution of funding. Mr. Woolner stated that he would have no concerns with CREW placing its focus entirely in Kitchener this year. FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 87 - CITY OF KITCHENER 13. DTS-09-067 -LOCAL ENVIRONMENTAL ACTION FUND (LEAF) GRANTS: APRIL 2009 - CREW & OVER $50,000. APPLICATIONS (CONT'D) Ms. Jill Thompson attended on behalf of CREW in support of the Kitchener Green Housing Initiative grant application of over $50,000. ,which is a project in partnership with the City's Building Division and REEP. Councillor J. Gazzola raised concerns that he had not received detailed information concerning the over $50,000. applications and was advised that staff had previously notified Council by email transmission that detailed information was available in the Office of the Mayor and Council for review. Mr. M. Selling advised that the objective of this project is to encourage developers to go beyond the minimum standards prescribed by the Building Code and construct homes which meet Leadership in Energy and Environmental Design (LEED) standards. He noted that municipalities are not permitted to mandate standards above and beyond those provided for in the Building Code. Accordingly, this project will only encourage builders by providing them with incentives once a qualified third-party professional has inspected the home and certified it as being built to LEED standards. He added that the Building Division would incorporate this project into its permit process and would be responsible for its administration. Ms. J. Thompson advised that CREW's involvement would be primarily centered on promotion and education, noting that the group is not qualified to do LEED certifications. She stated that resultant to their reduced funding request this project would only be applied to approximately 400 homes. She confirmed that the Building Division would retain control of the budget for this project. Mr. J. Willmer advised that to move this project forward, the City would need to approve a Community Improvement Plan to prevent these incentives from being considered bonusing under the Municipal Act. In reference to the correspondence received from Mr. Gordon Nicholls, Friends of Hidden Valley (PORN}, Ms. B. Steiner agreed to apply a lighter shading to the FOHV application on the chart summarizing LEAF Applicants ($50,000. and Over). Concerning Mr. Nicholls assertion that the FOHV application meets Objectives 6 and 7 of the LEAF criteria, she clarified that Objective 6 refers to increasing the City's ownership of significant natural lands where other techniques for acquisition have not succeeded. She pointed out that while the FOHV proposal would increase ownership, all of the techniques available to the City to acquire those lands have yet to be explored. She added that Objective 7 outlines that an application would provide capital enhancements to City-owned and managed natural lands over and above what would occur as part of normal City procedures. She stated that this does not refer to increasing the City's overall inventory of natural lands; rather it involves enhancements to existing lands such as, the development of interpretive centres or trails. She further advised that a quantitative scale measuring how closely an application might meet the prescribed LEAF objectives was not employed during this year's evaluation process, as all applications had to meet objectives 1-3 and accomplish one or more of objectives 4-8. Given this definitive requirement, a project either met these objectives or it was not considered to be eligible. Ms. Steiner suggested that in future a quantitative scale could be established indicating how a grant application aligns with the additional evaluation criteria derived from the input obtained from City Council and the public. Mayor C. Zehr referred to Mr. Nicholls reference to his comments concerning a comparison of capital spending forecasts with the Region of Portland as not being a fair comparison. Mayor Zehr stated that while he did not disagree that the City has role to play in respect to the Hidden Valley lands, on the point of comparison of capital spending, Mr. Nicholls and he would have to agree to disagree. A motion by Mayor Zehr was brought forward for consideration to defer consideration of the CREW grant application for the Power Saving Network project for review in 2010 for the reasons outlined in the email transmission dated May 11; and to approve the over $50,000. grant applications recommended by the LEAF Steering Committee, subject to clarification of all legal issues that may have impact to any one of the six applications. He asked that such FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 88 - CITY OF KITCHENER 13. DTS-09-067 -LOCAL ENVIRONMENTAL ACTION FUND (LEAF) GRANTS: APRIL 2009 - CREW & OVER $50,000. APPLICATIONS (CONT'D) clarification be received prior to Council's consideration of the Committee's recommendation at the May 19, 2009 Council meeting. Mayor Zehr commented that one of the principle goals of LEAF was to fund initiatives that would be transformative and begin to change behaviours and he believed the projects recommended have the potential to make major change. Councillor J. Gazzola advised that having not realized more detailed information had been made available he was not prepared this date to support the motion and expressed disappointment that the application of FOHV is not among those recommended. Mayor Zehr commented that at the last meeting he had made clear a desire to preserve a portion of Hidden Valley and believed all of Council had interest in doing so. He maintained, however, that there is time to explore other opportunities to acquire the lands without impact to the tax base. On motion by Mayor C. Zehr - itwas resolved: "That the Local Environmental Action Fund (LEAF} grant application by the Community Renewable Energy Waterloo (CRE1M -Power Saving Network be deferred for review in 2010 for reasons as set out in an email transmission (B. Steiner), dated May 11, 2009; and further, That the LEAF grant applications of over $50,000. recommended for funding by the LEAF Steering Committee, as outlined in Development and Technical Services Department report DTS-09-067, be approved, subject to further clarification of any legal issues that may have impact to any one of the six projects listed." 14. CAO-09-028 -MUNICIPAL RESPONSE TO PROVINCE'S ONTARIANS WITH DISABILITIES PROPOSED EMPLOYMENT ACCESSIBILITY STANDARD The Committee considered Chief Administrator's Office report CAO-09-028, dated May 1, 2009 requesting endorsement of a summary response to the Government of Ontario's Proposed Accessible Employment Standards and direction to staff to prepare a formal written response to the Province. Ms. A. Kotlarchuk advised that this is the fourth of five proposed accessibility standards issued by the Province for review. Councillor Gazzola inquired as to when the standards previously reviewed would come into effect. Ms. T. Hare O'Connell advised that Ms. Kelly Steiss is co- ordinating response to previously reviewed standards but it was her understanding the legislation is intended to be enacted prior to the end of the fiscal year. At this time, it is not known what the final outcome of review and its impact to the proposed legislation will be. Ms. Kotlarchuk advised that staff have met with representatives of the Region of Waterloo and the City of Waterloo, as well as with internal staff and external stakeholders (ie. Association of Municipal Managers, Clerks and Treasurers of Ontario [AMCTO]; Ontario Municipal Human Resources Association [OMHRA]; and Association of Municipalities of Ontario [AMO]}. The employment standard considers all aspects of the employment life cycle, including: recruitment; selection; training and orientation; retention; accommodation at each stage; redeployment; and termination. Implementation will require development of an accessible employment policy, procedures and processes; employee awareness training; outreach to agencies that provide services to persons with disabilities; provision of communications in accessible formats; and performance measurement indicators. Issues that have been raised for consideration relate to the relationship between the employment standard and other legislation, such as the Human Rights Code; clarification of documentation requirements; overlap with other accessibility standards; compliance deadlines; availability of tools/materials; financial implications; Employer Class `F' (inclusion of all public sector organizations regardless of size); expectations of accommodation (staff recommend adding "reasonable" to FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 89 - CITY OF KITCHENER 14. CAO-09-028 -MUNICIPAL RESPONSE TO PROVINCE'S ONTARIANS WITH DISABILITIES PROPOSED EMPLOYMENT ACCESSIBILITY STANDARD - (CONT'D) the wording of the legislation); obligations in advertising positions; references to standards not yet finalized; and clarification of performance indicators. Councillor Gazzola requested clarification of what is meant by accommodation. Ms. Kotlarchuk provided examples wherein during the pre-employment stage the City would be required to reach out to external agencies providing services to those with disabilities, meeting with them and/or posting information in their facilities; provision of differing formats during the interview process; and provision of work accommodations for those hired. Mayor C. Zehr commented that reasonableness is an important consideration given the potential costs involved. He asked for an indication as to how far off the City is in respect to the proposed standards now. Ms. Kotlarchuk advised that the City does already have substantial accommodation programs but noted that the proposed outreach to service agencies is new. She added that costs will rise if there is an increase in response to outreach programs. Mayor Zehr referred to the Province's estimate of costs to comply, raising concerns that costs related to provision of information 1 communications in accessible formats and methods; individual accommodation requirements; and "upon request" elements, had been excluded and which would represent new costs to a municipality. Ms. Kotlarchuk stated that the Province's estimate of .002% of total revenue is very conservative and based on an assumption that the Province will provide tools /materials and employers will utilize /redirect staff to comply. She added that there is no accounting of technical aspects related to accommodation and it is difficult to assess the extent of materials that will be required in multiple formats. Mayor Zehr noted that AMO is already working on a response to the Province and questioned if the City is working with the Association toward a unified response. Ms. Kotlarchuk advised that the City is not working specifically with AMO but staff have reviewed their submission, the content of which has been taken into account in the City's response together with issues specific to the City. Ms. J. Sheryer noted that accessible formats will be prescribed through the Communications Standard, which is not yet finalized but is inter-related and will have influence on associated costs. She added that a predominate factor in AMCTO's response is the need to review all proposed standards together to be in a better position to comment. Ms. Kotlarchuk added that the City's response also asks that implementation of the Employment Standard be delayed and that all standards be made public at one time so they can be assessed in totality, and time be given to develop a plan for implementation. On motion by Councillor K. Galloway - itwas resolved: "That the summary of response to the Government of Ontario's Proposed Accessible Employment Standard, as attached to Chief Administrator's Office report CAO-09-028, be endorsed; and further, That staff be directed to submit a formal written response to the province by its deadline of May 22, 2009." 15. FIN-09-042 -DECEMBER INTERIM STATEMENTS The Committee considered Financial Services Department report FIN-09-042, dated May 5, 2009 which provides an update on City spending and revenues compared to the 2008 budget and explains significant variances. Mr. R. LeBrun advised that the City ended 2008 with an operating deficit of $2.4 M which has been funded through a transfer from the City's Tax Stabilization Fund and is attributed to: lower than anticipated net supplementary taxes resulting from higher than anticipated write- offs; higher winter maintenance costs due to a greater number of winter events; higher than average rainfall resulting in delay in opening Golf Courses and decreased revenue from lower than average residential water consumption; higher wage expenses; and expenses incurred under the Regional Maintenance Agreement (RMA). He advised that the RMA relates to FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 90 - CITY OF KITCHENER 15. FIN-09-042 -DECEMBER INTERIM STATEMENTS (CONT'D) services provided by the City for summer 1 winter maintenance of Regional roads and has been in effect since 2006. He pointed out that staff has reached agreement with the Region to begin to pay actual costs in 2009. Mr. LeBrun advised that the variances are as outlined in Schedule 1 to report FIN-09-042 and have been somewhat off-set by investment income and cost containment initiatives in the first quarter of 2008. Building Enterprises (Schedule 2) experienced lower than anticipated revenues due to a descrease in building permit issuance resulting from an economic downturn; off-set by delay in hiring additional staff and a transfer of $421,546. from the Building Reserve Fund. Golf Courses (Schedules 3 & 4) had a consolidated deficit of approximately $75,000. due to poor weather conditions and equipment repair costs, off-set by staff initiatives to minimize costs during slow periods. Water Utility (Schedule 5) ended with a deficit of $511,000 due to higher than average rainfall resulting in lower residential water consumption revenues. Sanitary Sewer Utility (Schedule 6) exceeded budget by approximately $1.972 M, attributed to the water consumption forecast not being met, which reduced surcharge revenue into the Sanitary Sewer Utility; and increased inflow /infiltration due to higher than average rainfall leading to higher sewage processing costs paid to the Region of Waterloo. Gas Utility (Schedule 7} ended with a positive variance of approximately $1.2M; and the Supply Program with a negative variance of approximately $1.5M due to increases in commodity costs over and above forecast estimates. Delivery and supply expenses were revised twice on a retroactive basis to correct accounting for fuel gas and the year-end accrual for unbilled gas deliveries. This resulted in a decline in the transfer from the Gas Capital Investment Reserve Fund in 2008 for gas delivery, and for gas supply the adjustment will be recovered through future supply rates. Mayor C. Zehr requested clarification of the shortfall related to the RMA and Mr. LeBrun confirmed that the $515,000. shortfall is a net deficit over the 3 year period of the agreement and reiterated that the Region has agreed to full cost recovery in 2009. Mayor Zehr referred to Gas Works (Schedule 7} to clarify that of the $15M transferred in 2007 to the Gas Capital Investment Fund, approximately $8-9M of that was attributed to the Joseph/Gaukel Street remediation. Mr. LeBrun concurred. Mayor Zehr also requested clarification that despite the Golf Course loss there is no effect to the tax base having been off-set by a transfer to capital fund for administration. Mr. LeBrun concurred. Mayor Zehr referred to the Canteen Operations of the Golf Courses, requesting clarification of differences in the gross profit margins. Mr. C. Miller advised that an approximate 8.5% increase in the cost of goods was experienced in 2008 that had been unforeseen and both facilities experienced a drop in catering sales, with greater impact to Doon. Mayor Zehr suggested that these are variable costs, wherein, a decrease in catering should result in decreased staffing and food supplies. Mr. Miller advised that labour is fixed over the year as the facility still has to remain open and operated. Mr. G. Hastings added that the deficit was also due in part to unexpected equipment repair costs. Mayor C. Zehr commented that a deficit is obviously not a good news story but acknowledged that staff have implemented a number of actions for cost control in 2009. He emphasized the need for the cost control policies, recognizing that there are certain uncontrollable aspects such as investment and assessment income that make it necessary to closely scrutinize expenditure lines. He added that there will be need to give stringent guidelines in 2010 and going forward, noting that the impact on the Tax Stabilization Reserve Fund as a result of the 2008 deficit speaks to the need to reduce reliance on transfers from the fund to off set tax increases. Councillor J. Gazzola questioned if Council had been given indication of the $2M deficit during the 2009 budget deliberations. Mr. LeBrun advised that the full extent of the deficit was not known until the year-end accounting process was completed. Mr. D. Chapman added that indication of the deficit resulting from winter control maintenance was given at time of budget deliberations but the accounting process was not closed out at that time. The exact figure was unknown but staff was comfortable the Tax Stabilization Reserve Fund would cover the deficit and that in 2009 cost control measures would be needed. Councillor Gazzola inquired if there was indication of the net supplementary taxes and write-offs. Mr. Chapman advised that staff FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11.2009 - 91 - CITY OF KITCHENER 15. FIN-09-042 -DECEMBER INTERIM STATEMENTS (CONT'D had a fairly good grasp; however, posting in some cases occurred after year-end and the extent of the new deficit figure had not been contemplated. Councillor Gazzola referred to the substantial variance in Community Services Food and Beverage line item, asking what this is related to. Ms. K. Kugler advised that this relates to operation of the City Hall cafeteria, wherein an adjustment had to be made for staff benefits, which in 2009 is being re-negotiated; and is also in part related to a downturn in in-house catering sales. Councillor Gazzola requested clarification of the variance for Operations -Administration. Mr. J. Witmer advised that this relates to the City's Commercial Vehicle Operator Registration (CVOR) requirements which has resulted in substantial increase in staff training. Councillor Gazzola inquired if there is any recourse in respect to the RMA. Mr. Witmer advised that the 3 area municipalities have written the Regional Commissioner asking for review of the agreement given the amount of costs municipalities are absorbing is not what was contemplated at signing of the agreement. Councillor Gazzola requested clarification of the variance for fringe benefits. Mr. LeBrun advised that primarily this relates to a transfer to the vacation liability account due to an increase in hourly rates and in the number of staff resulting in higher liability than in the previous year. Councillor Gazzola referred to the Golf Course Canteen Operations, suggesting that the gross profit margins should remain stable and pricing be increased to off-set increases in supplies. Mr. C. Miller advised that pricing is at maximum market rates and if raised too high could result in a decrease in customers. Ms. P. Houston pointed out that two components impact gross profit margins being golf course revenues and catering revenues; and where both experience a decrease, the percentage of gross profit margin is also impacted negatively. Mr. G. Hastings added that operating costs are not directly related to sales, noting that the need for labour is constant as the facility has to remain open and is the highest cost factor. Councillor Gazzola raised concerns with the impact of inflow /infiltration into sanitary sewers resulting in higher sewage processing costs, questioning if the City is addressing this issue. Mr. G. Murphy advised that this is being addressed in part through the City's reconstruction program, wherein staff use Close Circuit TV to investigate and identify defective areas that are subsequently sealed. In addition, application has been made under the Federal Stimulus Package for funding that will enhance the City's trenchless rehabilitation program and is a much larger scale project. Mr. Murphy added that the past summer season was one of the wettest on record and was a challenge to address. Councillor Gazzola requested clarification of the variance in the Gas Works transfer to the Gas Capital Investment Fund and Mr. D. Chapman provided explanation as to the policy used to calculate the balance at year-end and advised that had the retroactive adjustments not been required in respect to fuel gas, the 2008 projected transfer would have been met. He added that this issue has been addressed for 2009 and going forward. Councillor Gazzola raised concerns with the number of cost centres with a differential of approximately 10%, whether positive or not. Mr. D. Chapman advised that staff is actively monitoring budget lines, noting that some expenditures are uncontrollable and if not for the overage in winter control maintenance, budget targets would have remained on plan. On motion by Councillor K. Galloway - itwas resolved: "That the Internal Financial Statements as at December 31, 2008 (Financial Services Department report FIN-09-042) be received for information; and further, That staff be directed to implement the budget control measures outlined in Financial Services Department report FIN-09-042 effective immediately." FINANCE & CORPORATE SERVICES COMMITTEE MINUTES MAY 11, 2009 - 92 - CITY OF KITCHENER 16. ADJOURNMENT On motion, the meeting adjourned at 4:05 p.m. J. Billett Committee Administrator