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HomeMy WebLinkAboutCST 14-12 158 Call o~ Report To Executive Committee PICKERING Report Number: CST 14-12 Date: May 14, 2012 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2011 Pre-Audit Balances of Reserves and Reserve Funds Recommendation: That Report CST 14-12 of the Director, Corporate Services & Treasurer regarding the 2011 pre-audit balances of reserves and reserve funds be received for information. Executive Summary: Based on the preliminary 2011 results, staff are now in a position to report on the pre-audit actual activities within the Reserves and Reserve Funds for 2011. A summary is presented in Appendix A. The purpose for each reserve and reserve fund, as well as the 2011 financial transactions is set out in Appendices B and C respectively. Financial Implications: As at December 31, 2011, Reserves and Reserve Funds totalled $76.7 of which $43.1 million were obligatory. This category consists of Development Charges, Parkland, Federal Gas Tax and Third Party Contributions. A further $13.2 million is restricted as to use. The balance of $20.4 million is primarily made up of the Rate Stabilization Reserve ($16.3 million) with other smaller reserves and reserve funds. Discussion: As in previous years, this report provides specific information on each of the City's Reserves and Reserve Funds, including year-end balances. The 2011 pre- audit Reserves and Reserve Funds balance of $76,721,518 is one of the highest balances ever reported in Pickering. However, this balance is not fully available for use due *to the outstanding budget commitments of funds not yet spent, the obligations connected with the collection of funds or other specific purposes approved by Council or under provincial legislation. With regard to unspent budget commitments for capital projects, staff are continuing the practice of not transferring funding for commitments until the expenditures are incurred. This procedure allows the reserve funds to earn interest income as long as Report CST 14-12 May 14, 2012 159 Subject: 2011 Pre-Audit Balances of Reserves and Reserve Funds Page 2 funds are still in the reserve fund's custody and is in compliance with the Public Sector Accounting Board (PSAB) for obligatory reserve funds. The combined unspent budget commitments for all reserve funds are $9,106,800. The Development Charges, Parkland, Third Party/Developer Contributions, Federal Gas Tax and Building Permit Reserve Funds represent funds received for specific purposes, many of which are subject to legislative requirements, with others based on developer agreements or agreements with any third parties. These reserve funds, totalling $43,136,488, are obligatory in nature and should be treated as committed. These reserve funds together with restricted balances of $13.2 million, which includes budget commitments of $9.1 million, total $56.3 million reducing the balance available for other purposes to $20.4 million at December 31, 2011. Of the aforementioned balance of $20.4 million, approximately $16.3 million is in the Rate Stabilization Reserve which is anticipated to be used over the current term of Council as the City progresses towards a sustainable level of budgets. The balance of $4 million is primarily reserved for capital works and capital replacements related to vehicles, equipment, telephone, and community facilities. The City established three new reserves this year, namely: Land Purchase Reserve, Seaton Development Review Reserve and Financial Systems Reserve. The Land Purchase Reserve was established to set aside funds for minor land purchases to be used for various City projects. The Seaton Development Review Reserve was established to capture transactions related to the development of Seaton. The Financial Systems Reserve was established to accumulate funds for a new Financial Suite. The purposes of the reserves and reserve funds are discussed further in Appendices B and C. Internal borrowings from the reserve funds commenced in 2001 to assist in funding capital projects. The outstanding principal balance as at December 31, 2011 is $806,848 which was borrowed from the Development Charges Reserve Funds. This provided the reserve funds with an attractive rate of interest compared to current market investment rates while at the same time providing a cheaper cost of borrowing for the municipality. Interest earned on internal loans represents amounts earned on the 2001 to 2009 internal borrowings. There was no internal loan undertaken in both 2010 and 2011. Attachments: 1. Appendix A Summary of Reserves and Reserve Funds 2. Appendix B Description of Reserves 3. Appendix C Description of Reserve Funds Report CST 14-12 May 14, 2012 160 Subject: 2011 Pre-Audit Balances of Reserves and Reserve Funds Page 3 Prepared By: Approved / Endorsed By: Caryn Kong, CGA Gillis A. Paterson, CMA Senior Financial Analyst-Capital & Director, Corporate Services & Treasurer Debt Management Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council a 20 /2 Tony Prevedel, P.Eng. Chief Administrative Officer h ATTACHMENT#_J_,TO REPORT#2.ar 14(-12 APPENDIX A CITY OF PICKERING SUMMARY OF RESERVES AND RESERVE FUNDS PRE-AUDIT ACTUALS DECEMBER 31, 2011 Pre Audit Audited Audited Audited Appendix B Summary Reserves 2011 2010 2009 2008 7000 Working Funds $400,000 $400,000 $400,000 $400,000 7001,7031-36 Replacement Capital 852,792 1,090,999 854,338 618,419 7011-7014 Contingencies-OPG, Election, Otherz 1,447,278 1,277,278 1,471,140 1,401,340 7020 Self-Insurance 2 962,707 962,707 962,707 951,391 7021 Rate Stabilization 16,310,644 16,579,632 16,565,777 17,374,935 7022 Develop. Charges-City's Share Z 4,370,874 3,695,928 1,946,216 1,168,494 7024 Continuing Studies 2 582,055 406,984 390,315 750,534 7040 Vehicle Replacement 93,722 149,158 237,547 172,547 7041 Easement Settlement 17,595 - 131,279 131,279 7042 Library Eastern Branch 2 155,000 130,000 105,000 80,000 7043 Move Ontario 97,483 14,533 267,033 8,243 7045 Economic Stabilization 830,000 830,000 1,235,000 - 7046 Capital Maint Mgmt System 240,000 165,000 90,000 75,000 7047 Land Purchase Nev2 194,403 - - - 7048 Seaton Development Review Newt 2,133,752 - - - 7049 Financial Systems Newt 175,000 - - - Total Reserves $28,863,305 $25,702,219 $24,656,352 $23,132,182 Pre Audit Audited Audited Audited Appendix C Summary of Reserve Funds 2011 2010 2009 2008 7501 Third Party/Dev. Contributions' $2,233,978 $2,185,223 $2,210,924 $2,043,667 7502 Parkland 182 1,818,119 1,757,582 1,914,793 1,984,486 7505 Federal Gas Tax Revenue' 4,977,097 3,526,410 3,032,702 3,084,862 7506 Building Permit Stabilization Fees 18,2 - - - 7600 Development Charges 112 34,107,294 29,593,894 27,714,332 26,413,355 7700 Community Facilities 148,547 145,483 215,350 192,845 7701 Capital Works 377,057 369,943 361,338 348,583 7702 Public Works 1,074,373 1,049,595 1,224,292 1,167,782 7704 Doubles Squash Courts 2 - 116 1,315 92,530 7705 Workers Safety Insurance Brd 2 2,374,028 2,021,105 1,658,462 1,339,907 7706 Animal Shelter2 196,370 173,850 162,553 152,896 7707 Pickering Mens' Slow Pitch 2 138,985 136,359 137,587 128,470 7708 Operations Centre 2 412,365 - - - Total Reserve Funds $47,858,213 $40,959,560 $38,633,648 $36,949,383 Total Reserves & Reserve Funds $76,721,518 $66,661,779 $63,290,000 $60,081,565 Notes (Includes 7600 & ' Obligatory Reserve Funds $43,136,488 7502 (Excludes 7600 2 Restricted Reserves & Reserve Funds 13,142,817 & 7502) Total Obligatory' & Restricted 2 -2011 = 56,279,305 Less Budget Committed Projects (9,118,403) Total Uncommitted Obligatory & Restricted R & RF $47,160,902 Total Reserves & Reserve Funds $76,721,518 Less Obligatory, Restricted Reserve & Reserve Funds (56,279,305) Net-Discretionary Reserves & Reserve Funds $20,442,213 ATTACHMENT #2TO REPOT /q-/Z Appendix B Reserve for Working Funds 7000 Actual Balance December 31, 2010 $ 400,000 Transfers into the Reserve - Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2011 $ 400,000 1. Purpose of this Reserve: The reserve for working funds is used to provide operating cash to assist in avoiding short term interest expenses incurred on operations, typically during the first few months of the year prior to tax billing and at other times when cash inflows and outflows do not match as occurs in any corporation. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: It is recommended as a "rule-of-thumb" that this reserve be 2% to 3% of total City revenues. Based on average annual revenue of $45 million, at 2%, the amount to maintain for this reserve should be $900,000. 153 Appendix B Reserve for Replacement of Capital Equipment - G/L 7001, 7031-7036 Actual Balance December 31, 2010 $ 1,090,999 Transfers into the Reserve: Revenue Fund Contribution 138,777 Sale of Land - Return to Source 14,300 Transers out of the Reserve: Transfers to Capital Fund (391,284) Pre-Audit Actual Balance December 31, 2011 $ 852,792 1. Purpose of this Reserve: The purpose of this reserve is to reduce the need to levy for the full cost of major equipment in the year of acquisition. This reserve acts as a stabilization factor and helps to avoid both tax rate fluctuations and the issuance of long-term debt or other means of financing. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: This reserve should be kept at a level that is equivalent to the replacement cost of the assets for which they were established. Over the last couple of years, the reserve balance has been kept at a minimum level. Contributions to this reserve are provided for annually in the Current Budget. In 2003, additional sub-categories were set up for accounting purposes to, better match the collection of funds to the application of these funds to particular facilities as shown on the following page. Appendix B 1 4 The balances pertaining to these sub-categories are as follows: Corp Use Prgrms Pool Arena Core Pool Arena Total Acct 7001 7031 7032 7033 7034 7035 7036 Dec 31/10 362,439 190,252 37,645 183,297 128,110 153,839 35,417 1,090,999 Transfers in 23,315 18,500 4,962 30,000 27,000 15,000 20,000 138,777 Sale of Land 0 - Returned to source 0 14,300 - 14,300 Transfers out (183,897) - - (65,990) (63,994) (77,403) - (391,284) Dec 31/11 201,857 208,752 42,607 161,607 91,116 91,436 55,417 852,792 165 - Appendix B Reserve for Contingencies - G/L 7011-7014 (OPG, Other Assessment Appeals, Election, Miscellaneous) Actual Balance December 31, 2010 $ 1,277,278 Transfers into the Reserve: Transfers from Revenue Fund 170,000 Transfers out of the Reserve: - Pre-Audit Actual Balance December 31, 2011 $ 1,447,278 1. Purpose of this Reserve: Like the Capital Equipment Replacement Reserve, this reserve acts in a tax stabilization capacity. It was established in anticipation of unknown, unusual or extraordinary expenditures, which occur from time to time. The interest income on this account forms part of the annual Current Budget General Government Revenue. I 2. Recommended Maintenance Levels of this Reserve: In 2003, the large balances in this reserve were reviewed and grouped into sub- categories in the general ledger, for accounting purposes only, to better distinguish those amounts that are committed and those amounts available for general corporate use. The sub-categories are as follows: OPG Assessment Appeal, Elections, Other Assessment Appeals and Miscellaneous. As at the year ended December 31, 2009, there are no longer any funds in the Contingency-Ontario Power Generation (OPG) Assessment Reserve as the assessment appeals related to the taxation years 2003-2006 have been reached and this amount was transferred to the Rate Stabilization Reserve in 2007. The amounts pertaining to the other sub-categories are as follows: Election - $86,138 Other Assessment Appeals - $682,594, True Sport City Share- $3,060 and Miscellaneous - $675,486 165 Appendix B Reserve for Self Insurance - G/L 7020 Actual Balance December 31, 2010 $ 962,707 Transfers into the Reserve - Transfers out of the Reserve: Transfer to Capital Fund - Pre-Audit Actual Balance December 31, 2011 $ 962,707 1. Purpose of this Reserve: This reserve was established as a necessary form of asset protection and risk management. Specifically, it is to cover insurance claims resulting from the increase in deductible levels, costs of uninsured claims and other claim related costs. The higher deductible reduced insurance premiums. Significant savings can be realized through reduced premium costs and staff analyzes the costs/benefits of such actions on an annual basis. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: This reserve should be maintained at a level to ensure that the funding is adequate to meet future liabilities. This situation is analyzed by staff on a regular basis. 1 67 Appendix B Reserve for Rate Stabilization - G/L 7021 Actual Balance December 31, 2010 $ ,16,579,632 Transfers into the Reserve: 2011 Excess Surplus Contribution 281,822 Dividend from Veridian 2,484,600 2,766,422 19,346,054 Transfers out of the Reserve: 2011 Current Budget Provision (3,017,338) Transfer to Capital Fund (18,072) Pre-Audit Actual Balance December 31, 2011 $ 16,310,644 1. Purpose of this Reserve: The purpose of this reserve is to act as a tax rate stabilization factor for annual current budget funding. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: The fund balance should be maintained at a level of 3 to 5 per cent of tax revenues to provide tax rate stabilization for annual current budgeting purposes. The 2011 Current Budget provided for a transfer in the amount of $3,017,338 from this reserve to fund current expenditures. With the settlement of OPG assessment appeal in 2007, dividends from Veridian and surplus in 2011; there is sufficient built-up of funds to draw from this reserve for future budgeting years. 168 Appendix B Reserve for Development Charges - City Share G/L 7022 Actual Balance December 31, 2010 $ 3,695,928 Transfers into the Reserve 2011 Excess Surplus Contribution 657,582 2011 Budgeted Transfer 580,000 Returned to source 184,818 5,118,328 Transfers out of the Reserve Transfer to Capital Fund -External Subdivision Works (747,454) Pre-Audit Actual Balance December 31, 2011 $ 4,370,874 1. Purpose of this Reserve: This reserve has been established to set aside funds for projected growth in the City. From the 1999 and the 2004 Development Charges Studies it was approved that a reserve be established for the City's share (i.e. the non- development charge portion) of the costs of services included in the Development Charges Study and that contributions be included in the annual Current Budget for consideration by Council. For the City to meet its obligations for the various capital projects, an annual contribution of $2.4 million is required. The interest incomes on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: Funds continue to be budgeted in the Current Budget to build-up this reserve to fund future capital growth of the City. The draws in the current year were to finance External Subdivision Works. This reserve should be maintained at a level to ensure that the funding is adequate to meet future capital growth in the City. 159 Appendix B Reserve for Continuing Studies and Consulting - G/L 7024 Actual Balance December 31, 2010 $ 406,984 Transfers into the Reserve Continuing Consulting Work or Studies 386,180 Transfers out of the Reserve (211,109) Pre-Audit Actual Balance December 31, 2011 $ 582,055 1. Purpose of this Reserve: This reserve was established to capture any unspent annual Current Budget provisions related to consulting, continuing studies, professional and legal fees. 'Under Generally Accepted Accounting Principles, the approval to expend funds for these efforts ceases at year-end, however work may continue beyond that date. The establishment of this fund enables the transfer of unspent funds into future year and accommodates this frequent timing difference between the approval and the expenditure. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. Funds transferred to this reserve will be used to fund the balance of the expenditures still to be incurred for incomplete studies or consulting contracts. Expenditures incurred in 2011 in the amount of $211,109 pertained to consulting work that was transferred into the reserve in the prior year. An additional amount of $386,180 has been transferred-in for ongoing consulting work. 7 0 Appendix B Reserve for Vehicle Replacement - G/L 7040 Actual Balance December 31, 2010 $ 149,158 Transfers into the Reserve 50,000 Transfers out of the Reserve: Transfers to Capital Fund (105,436) Pre-Audit Actual Balance December 31, 2011 $ 93,722 1. Purpose of this Reserve: This reserve was newly established in 2004 to begin building up funds to finance the cost of replacing the City's aging fleet. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. Funds transferred to this reserve will be committed to fund the purchase of new vehicles. 171 Appendix B Reserve - Easement Settlement - G/L 7041 Actual Balance December 31, 2010 $ - Transfers into the Reserve: - Projects returned to source 257,595 Transfers out of the Reserve: Transfer to Capital Fund - (240,000) Pre-Audit Actual Balance December 31, 2011 $ 17,595 1. Purpose of this Reserve: This reserve was established in 2005 with funds received from easement settlement in February 2005. The amount collected was $2.5 million. These funds were used to finance both the capital and operating expenditures of the City. The interest income on these funds forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. 172 Appendix B Reserve - Provision for Eastern Branch Library - G/L 7042 Actual Balance December 31, 2010 $ 130,000 Transfers into the Reserve 25,000 Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2011 $ 155,000 1. Purpose of this Reserve: This reserve was established in 2005 to begin building up funds for a new library at the eastern part of Pickering. This provision may be used to fund the new facility, capital cost, resource materials and any other related costs. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. Started in 2002, the Library requested $10,000 under the Capital Budget for the "Provision for Eastern Branch". A similar request was made in both 2005 and 2006. It is the intention of the Library to annually request for this provision to continue building up funds for the proposed new facility. In 2007, the annual provision has been increased to $25,000. The same amount was provided annually from 2008 to 2011. 173 Appendix B Reserve - Move Ontario - G/L 7043 Actual Balance December 31, 2010 $ 14,533 Returned to source-completed projects 94,431 Transfers out of the Reserve: Capital Expenditures -Roads (11,481) Pre-Audit Actual Balance December 31, 2011 $ 97,483 1. Purpose of this Reserve: This reserve was established in 2006 to capture the one-time funding received on March 20, 2006 from the Ontario government, the Ministry of Transportation. The Ontario government is providing a one-time investment to help municipalities primarily outside the GTA, with specific emphasis on rural and northern municipalities and to invest in municipal roads and bridges. Municipalities will determine their own roads and bridges priorities. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. Appendix B 1 7 4 Reserve - Economic Stabilization - G/L 7045 Actual Balance December 31, 2010 $ 830,000 Transfers to Reserve - Transfers out of Reserve - Pre-Audit Actual Balance December 31, 2011 $ 830,000 1. Purpose of this Reserve: This reserve was established in 2009 in order to place a special dividend approved by Veridian. Report to Council CS15-09 provides background information on the establishment of this reserve. The special dividend will be used to assist the City's budget process during the next few years. For both 2009 and 2010 budgeting years, $405,000 has been drawn per year from this reserve to rroinimize proposed tax increase. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. Appendix B Reserve - Capital Maintenance Management System - G/L 7046 Actual Balance December 31, 2010 $ 165,000 Contribution from Revenue Fund 75,000 Transfers out of the Reserve Capital Expenditures - Pre-Audit Actual Balance December 31, 2011 $ 240,000 1. Purpose of this Reserve: This reserve was newly established in 2008 to accumulate funds for asset maintenance and management systems to assist in meeting mandatory Public Sector Accounting (PSAB) requirements and future capital asset management initiatives. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. In the last two years, funds were transferred-in from the Current Budgets to provide for replacement cost for the telephone system. 176 Appendix B Reserve - Land Purchase - G/L 7047 new in 2011 Actual Balance December 31, 2010 $ - Transfers into Reserve - Revenue Fund Contribution 200,000 Transfers out of Reserve - Transfer to Capital Fund (5,597) Pre-Audit Actual Balance December 31, 2011 $ 194,403 1. Purpose of this Reserve: This reserve was established in 2011 in order to provide funds to meet the expenses incurred related to minor land purchases. This includes purchase of small parcels of land to be used for various City projects such as sidewalks, walking trails and road improvements. Council approval is required before land can be purchased. Provision was made in the 2011 Current Budget to transfer $200,000 from General Government to this newly created. Actual capital expenses incurred in 2011 was $5,597. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. 177 Appendix B Reserve - Seaton. Development Review - G/L 7048 new in 2011 Actual Balance December 31, 2010 $ - Transer into Reserve - Revenue from Application Fees 2,133,752 Transfers out of Reserve Pre-Audit Actual Balance December 31, 2011 $ 2,133,752 1. Purpose of this Reserve: This reserve was established in 2011 to allow the matching of Seaton Development application fees received prior to 2010 to the costs incurred for this development. As the development process progresses transfers, earmarked through the budget process, will be made to fund staffing and consulting costs related to this development. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. X73 Appendix B Reserve - Financial Systems - G/L 7049 new in 2011 Actual Balance December 31, 2010 $ - Transfer into Reserve: Revenue Fund Contribution 175,000 Transfers out from Reserve Pre-Audit Actual Balance December 31, 2011 $ 175,000 1. Purpose of this Reserve: This reserve was established in 2011 in order to build-up funds for the purchase of a new Financial Suite. In 2011, there was a current budget provision in the amount of $175,000 for a New Financial Suite. Recommendation 11 d) under report to council CST 14-11, provides that any unspent funds in 2011 be transferred to the Financial System Reserve. Annual provision will be made to continue building-up sufficient funds to replace the current outdated Financial System. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There is no recommended maintenance level. 1 °7 o ATTACHMENT #;_TO REPORT # F S7" 1+ l 2 Appendix C Third Party/Developers Contributions Reserve Fund - G/L 7501 Actual Balance December 31, 2010 $ 2,185,223 Transfers into the Reserve Fund: Contributions from Developers/Third Parties $ 104,600 Interest Earned on External Investments 43,963 Reserve Fund Management Fee (2,187) 146,376 Transfers out of the Reserve Fund: - Capital Expenditures: Ext Subdivision Works-Regional Altona Road (80,567) Brockridge Park Batting Cage (17,054) (97,621) Pre-Audit Actual Balance December 31, 2011 $ 2,233,978 1. Purpose of this Reserve Fund: This reserve fund was established by Council pursuant to Section 417(1) of the Municipal Act, 2001. The purpose of this reserve fund is to capture contributions from developers or third parties per development agreements and any cost sharing arrangements for future capital projects. Due to the externally restricted contributions, this reserve fund is treated as obligatory. The collections are committed for specific purposes and not available for general use. Unless specified, the City is under no obligation to pay interest to any developers or third parties. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund No reserve fund limits are appropriate for this fund as the collection and commitment of funds are dependent upon development agreements or cost sharing arrangements. 1 80 Appendix C Reserve Fund for Parkland - G/L 7502 Actual Balance December 31, 2010 $ 1,757,582 Transfers into the Reserve Fund: Developers Contributions $ 461,814 Returned to source $ 2,445 Interest Earned on External Investments 34,105 Reserve Fund Management Fee (2,019) 496,345 Transfers out of the Reserve Fund: Transfer to Capital Fund-Parks: Kinsmen Fieldhouse Rehabilitation (75,693) Brockridge Park-Play area (97,528) Playground Resurfacing (5,796) Large Grass Mowers (53,542) Trim Crew Trailers (13,010) Nature Haven Park (31,959) Brockridge Park (43,942) Soccer Pitch-Diana Princess of Wales (85,955) Dunmoore Park (28,383) (435,808) Pre-Audit Actual Balance December 31, 2011 $ 1,818,119 1. Purpose of this Reserve Fund: This is an "obligatory" reserve fund and it was established pursuant to section 417(1)(2) of the Municipal Act, 2001 as required by subsections 42(1), (5), (6), (7), (8) and (9) of the Planning Act. This fund is governed by legislation, regulation or agreement and requires revenues received for the special purposes to be segregated from the general revenues of the municipality. Obligatory reserve funds must be created whenever a statute requires revenues for a special purpose to be segregated from the general revenues of the municipality and the revenue is to be used solely for the purpose prescribed by statute. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: Due to the obligatory nature of this fund, there are no limits on this fund. The unspent budget commitments for the year ended 2011 are $170,000. The pre-audit balance of $1,818,119 after taking into account the unspent budget commitments will provide an uncommitted balance available of $1,648,119 as at December 31, 2011. 1~1 Appendix C Federal Gas Tax Reserve Fund - G/L 7505 Actual Balance December 31, 2010 $ 3,526,410 Transfers into the Reserve Fund: Federal Contribution (through AMO) 2,694,431 Interest on External Investments 73,970 Reserve Fund Management Fee (3,521) 2,764,880 Transfers out of the Reserve Fund: - Current Expenditures Audit Fees (5,597) Capital Expenditures in the following cost centres/projects: Roads-Whitevale Bridge (94,008) Roads-Final Lift of Asphalt: Toy Av, William St, Luna Crt, Charlotte Circle (150,323) Roads-Glenanna Rd Resurfacing (8,089) Sidewalks-Kingston Road Phase 1 (139,432) Streetlights-Dixie Road (4,648) Fire-Purchase of a Command Vehicle (58,956) Civic Complex-Replacement Backup Boiler (91,380) Senior Centre-Roof Rehabilittaion Phase 3 (274,715) Don Beer Arena Rehabilitation (171,396) Community Centre-WSCC Lighting Improvements (8,637) Community Centre-Greenwood Rooftop AC Unit (45,747) Rec. Complex:Energy Audit & System, Air Handling Units (141,252) Rec Complex Arena: Dehumidification System (3,389) Parks: Western Gateway & Kinsmen Fieldhouse Rehabilitation (17,918) Central Library-Roof Replacment Central & Front Door (98,706) (1,314,193) Pre-Audit Actual Balance December 31, 2011 $ 4,977,097 182 1. Purpose of this Reserve Fund: This reserve fund was established in 2005 to capture the transfer of gas tax revenues from the Government of Canada through the Association of Municipalities of Ontario under the New Deal for Cities and Communities (Canada-Ontario-AMO-Toronto Agreement). The Council had approved under Report to Council CS 92-05, the establishment of this reserve fund under By-law 6609/05 and Resolution 219/05. This program is not application based and does not require matching funding. Municipalities are allowed to invest in environmental sustainable infrastructure in programs such as public transit, storm water system, local roads and bridges. It comes with the expectation that the investments will see Ontarians enjoying cleaner air, cleaner water and reduced greenhouse gas emissions. The original 2005 Canada-Ontario-AMO-Toronto Agreement was amended on September 3, 2008 in order to extend the municipalities Gas Tax Fund allocations to 2014. Report to Council CS 06-10 provides detailed background information on the Amending Agreement and By-Law 7030/10 authorized the execution of an Amending Municipal Funding Agreement for the Transfer of Federal Gas Tax Revenues. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(1). 2. Recommended Maintenance Levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. The following table represents the schedule of payments under the 2005 Municipal Funding Agreement: Year Jul November 2005 $ 849,577.58 2006 $424,788.79 424,788.79 2007 566, 321.81 566, 321.82 2008 707,854.83 707,854.84 2009 1,415,709.67 1,415,709.67 Total $7,078,927.80 18~ The following table represents the schedule of payments over the life of the Amending Agreement: Year Jul November 2010 $1,347,215.33 $1,347,215.33 2011 $1,347,215.33 $1,347,215.33 2012 $1,347,215.33 $1,347,215.33 2013 $1,347,215.33 $1,347,215.33 Total $10,777,722.64 I As at December 31, 2011, this Reserve Fund has an unspent budget commitment of $1,659,289. Taking into consideration this budget commitment, the pre-audit balance as at December 31, 2011 of $4,977,097 will be reduced to $3,317,808. 184 Appendix C Building Permit Stabilization Reserve Fund - GL 7506 Annual Report - Building Permit Fees for the year ended December 31, 2011 Building Permit Revenue $ 1,494,487 Costs Direct Costs (1,292,168) Indirect Costs (228,234) (1,520,402) Excess/(Deficit) Revenue over Costs $ (25,915) Building Permit Stabilization Reserve Fund - GL 7506 Opening Balance, Jan. 1, 2011 $ - 2011 Contribution 1. Purpose of this Reserve Fund: This reserve fund was officially established in 2006 based on By-Law 6651/06 and Report to Executive Committee PD 41-05. The need for the establishment of this reserve fund arises as a result of the significant changes to the building regulatory system in Ontario with the introduction of the Building Code Statute Law Amendment Act, 2002 (known as Bill 124) and associated amendments to'the Ontario Building Code. The purpose of this fund is to secure funding to provide for service delivery stabilization during an economic downturn. The source of funds will be the annual portion of building code permit fees after related direct and indirect costs are netted. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 18 ID 2. Recommended Maintenance Levels of this Reserve Fund: Given the rationale for creating a fee stabilization reserve fund, the targeted reserve fund balance should reflect the reduction in permits witnessed during the last recession when compared to the long-run development average - acknowledging the City's responsibility to manage a portion of the costs associated with an economic downturn. Based on the modeled activity based direct costs conducted by CN Watson; the appropriate balance to maintain is proposed at $1.16 million, expected to be achievable within a target of seven accumulated years. As at the year ended 2011, this reserve fund remains at a zero balance. This is due to expenses exceeding building permit fee revenues; therefore, there was no transfer to the Building Permit Stabilization Reserve Fund. The Building Code Act, section 7(4) requires an annual reporting of this reserve fund, on which Report to Executive Committee CST 12-12 provided detailed information on the 2011 reporting year. 1 86 Appendix C Reserve Fund for Development Charges - G/L 7600 Actual Balance December 31, 2010 $ 29,593,894 Transfers into the Reserve Fund: Net Developer Contributions $ 4,293,482 Interest Earned on External Investments 633,408 Interest Earned on Internal Loans 48,657 Reserve Fund Management Fee (30,880) 4,944,667 Transfers out of the Reserve Fund: Transfer to Current Fund-Studies (58,078) Transfer to Capital Fund: (373,189) (431,267) Pre-Audit Actual Balance December 31, 2011 $ 34,107,294 1. Purpose of this Reserve Fund: This is an "obligatory" reserve fund and as such is governed by Municipal Act 2001, Development Charges Act, 1997, Ontario Regulation 82198, City By-law or agreement and requires revenue received for the special purposes to be segregated from the general revenues of the municipality. Obligatory reserve funds must be created whenever a statute requires revenue received for a special purpose to be segregated from the general revenues of the municipality and the revenue is to be used solely for the purpose prescribed by statute, i.e. in this case the monies charged to developers must be held and used to fund capital services and related background studies required for new growth. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: In accordance with development charge legislation, all development charge revenues must be held within separate Reserve Funds and can only be used for the financing of growth-related projects. 'As such, no reserve fund limits are appropriate for the Development Charge Reserve Funds because they are tied to growth-related capital requirements. This reserve fund has an unspent budget commitment of $7,277,511. The pre- audit actual balance of $34,107,294 would be reduced by this amount to reflect an uncommitted balance of funds available for future expenditures of $26,829,783. 1 87 Appendix C Reserve Fund for Community Facilities - G/L 7700 Actual Balance December 31, 2010 $ 145,483 Transfers into the Reserve Fund: Returned to source 4,932 Interest Earned on External Investments 2,347 Reserve Fund Management Fee (145) 7,134 Transfers out of the Reserve Fund: Transfer to Capital Fund (4,070) (4,070) Pre-Audit Actual Balance December 31, 2011 $ 148,547 1. Purpose of this Reserve Fund: This is a "discretionary" reserve fund established by Council to attempt to avoid both tax rate fluctuations and the need for issuing long term debt for major expenditures required for community facilities. The interest income on this reserve fund forms part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: The balances in this fund have fluctuated from the high in 1998 of $773,483 to the low in 2001 of $69,102. Other than interest income earned, there has been no transfer to this reserve fund in the last ten years. Expenditures are transferred out of reserve funds only when incurred. As at the year-end ended 2011, there is no budget commitment against this Reserve Fund. 1 83 Appendix C Reserve Fund for Capital Works - G/L 7701 Actual Balance December 31, 2010 $ 369,943 Transfers into the Reserve Fund: Interest Earned on External Investments 7,484 Reserve Fund Management Fee (370) Transfers out of the Reserve Fund. - Pre-Audit Actual Balance December 31, 2011 $ 377,057 1. Purpose of this Reserve Fund: This Fund is a "discretionary" one and was established pursuant to section 417(1) (2) of the Municipal Act, 2001 for specified purposes by Council related to the acquisition of assets. The interest income on this reserve fund forms part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: Between the years of 1998 to 2000, the balances have been maintained at $600,000 to $800,000. The average balance from 2001 to. 2003 declined to $515,000 and since it has further declined to an average of $350,000 per year. This is largely due to no major contribution to this reserve fund in the past ten years. There is no unspent budget commitment for this reserve fund. Major additional contributions will be required in future years. Appendix C Reserve Fund for Public Works - G/L 7702 Actual Balance December 31, 2010 $ 1,049,595 Transfers into the Reserve Fund: Third Party Contributions $ 9,415 Interest Earned on External Investments 18,696 Reserve Fund Management Fee (1,051) 27,060 Transfers out of the Reserve Fund: Glenanna Road Resurfacing (2,282) (2,282) Pre-Audit Actual Balance December 31, 2011 $ 1,074,373 1. Purpose of this Reserve Fund: This fund was established by Council pursuant to section 417(1) (2) of the Municipal Act, 2001. The purpose of the reserve fund is to acquire fixed assets, to fund capital works related to public property, without the need to fund on a long-term nature through the issue of debentures. The main purpose at this time is to fund the City's share of the cost of subdivision works committed to under various subdivision agreements. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: The "average" annual balance of this fund over the last four years has been approximately $1 million. This reserve fund should be kept at least at this level in the future. Staff will periodically review the need for this level with the requirements contained in the capital budget and four year program and report any different findings to Council. The pre-audit balance of $1,074,373 after taking into account the unspent budget commitment of $11,603 will provide an uncommitted balance available of $1,062,770 as at December 31, 2011. Appendix C E ` Squash Funds Reserve Fund - G/L 7704 'I Actual Balance December 31, 2010 $ 116 Transfers into the Reserve Fund Surcharge on Memberships 7,370 Contribution from Pickering Squash Club - Interest on External Investments 8 Reserve Fund Management Fee (3) 7,375 Transfers out of the Reserve Fund - Recreation Centre Expansion & Squash Courts (7,491) Pre-Audit Actual Balance December 31, 2011 $ - 1. Purpose of this Reserve Fund: This reserve fund was established to capture funds from Pickering Squash Club memberships' surcharges, corporate sponsorships, third party contribution and any such funds as the Council may approve. This reserve fund shall be used for the purpose of paying expenses related to the provision of double squash courts. This reserve fund was newly created in 2003 further to the recommendation passed in Council Resolution #79/03, Item 5 per Report to Council CS 40-03. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. There was a commitment of $200,000 from this reserve fund towards the construction of the double squash courts at the Pickering Recreation Complex. The construction of the double squash courts was completed in September 2009. The majority of the funds received from the inception of this Reserve Fund to 2011, plus interest income earned have been used to fund part of this project. The total amount funded was $196,841. The portion remains unf.inanced from this reserve fund is $3,159 and will be funded pending future revenues from surcharge on memberships. 191 i Appendix C Reserve Fund for Workers Safety Insurance Board - GIL 7705 Actual Balance December 31, 2010 $ 2,021,105 Transfers into the Reserve Fund: Contribution from Current Fund $ 505,000 Interest Earned on External Investments 43,472 Reserve Fund Management Fee (2,069) 546,403 Transfers out of the Reserve Fund: Claims and Other Related Costs $ (68,288) Funding Insurance Costs (104,883) Contribution to Health & Safety Training (20,309) (193,480) Pre-Audit Actual Balance December 31, 2011 $ 2,374,028 1. Purpose of this Reserve Fund: This reserve fund has been established to provide for the annual costs of insurance coverage, contributions towards the health and safety program, and the payment of claims and other related costs now that the City is a Schedule 2 employer. This reserve fund was created in 2001 further to the recommendation passed in Council Resolution#127/01 and in compliance with Workplace Safety & Insurance Act. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: Starting from 2004 and continuing to 2011, the contributions were more than double the claims experienced for the year, resulting to a built-up in the balance of the reserve fund to assist in offsetting future claims. As Schedule 2 operates on the self-insured principle, any anticipated savings between contributions and claims experience will be transferred to this reserve fund to build-up the fund balance in the event of any catastrophic claim-related costs, which may occur. The average annual built-up of approximately $263,000 from 2003 to 2011 has resulted in the 2011 year-end balance of approximately $2.3 million. i 192 Appendix C Animal Shelter Reserve Fund - G/L 7706 Actual Balance December 31, 2010 $ 173,850 Transfers into the Reserve Fund: Revenue Fund Contribution 10,000 Donations 8,874 Interest on External Investments 3,823 Reserve Fund Management Fee (177) 22,520 Transfers out of the Reserve Fund 0 - Pre-Audit Actual Balance December 31, 2011 $ 196,370 1. Purpose of this Reserve Fund: This reserve fund was established in 2007 based on By-law 6749/07, Report to Council CS 16-07, Recommendation 9. This reserve fund was established to record the City's share of the proceeds resulting from the dissolution and disposition of the assets of Pickering, Ajax, Whitby Animal Services (PAW). With the establishment of this reserve fund, financial resources received and provided can be used to construct a permanent animal shelter. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. The main contribution to this reserve fund was the proceeds of $144,433 from PAW in 2007. The balance of funds is from revenue funds contribution, donations and interest income earned. 193 Appendix C Pickering Men's Slow Pitch Reserve Fund - G/L 7707 Actual Balance December 31, 2010 $ 136,359 Transfers into the Reserve Fund: Contribution from Men's Slow Pitch League - interest Income 2,762 Reserve Fund Management Fee (136) 2,626 Transfers out of the Reserve Fund - Pre-Audit Actual Balance December 31, 2011 $ 138,985 1. Purpose of this Reserve Fund: This reserve fund was established at the end of 2007 based on By-Law 6822/07, Report to Council CS 58-07. This reserve fund was established to receive donations from the Pickering Men's Slow Pitch League, for safekeeping of donated funds and further application of funds towards a major softball facility. Report to Council OES 43-07 provides detailed information on the memorandum of understanding between the City and the Pickering Men's Slow Pitch League. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. In 2008, the City received the financial contribution of $125,000 from the Pickering Men's Slow Pitch League. The built-up of funds available as at December 31, 2011 in the amount of $138,985 is largely from interest income earned from the original financial contribution. 194 Appendix C Operations Centre Reserve Fund - G/L 7708 Actual Balance December 31, 2010 $ - Transfers into the Reserve Fund: Sale of Land 483,571 Interest on External Investments 5,542 489,113 Transfers out of the Reserve Fund: - Consulting & Legal Fees (76,748) Pre-Audit Actual Balance December 31, 2011 $ 412,365 1. Purpose of this Reserve Fund: This reserve fund was established to deposit net proceeds from the sale of land in the area known as Duffin Heights and other funds as may be approved by Council. The net proceeds will be used to finance costs associated with the establishment of the new Operations Centre. These include costs for disposal and acquisition of land, legal fees, surveys, soil testing, engineering design, construction costs, debt charges and, if available any equipment and furniture required for the facility. This reserve fund was established in 2009 under Report to Council CS 15- 09 Recommendation 9 a) and as approved by By-Law No. 6954/09. The interest incomes on these funds form part of the reserve fund as per the Municipal Act, 2001 section 417(3). 2. Recommended Maintenance Levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. A parcel of land was sold in 2011. Related consulting and legal fees incurred were funded from the proceeds of this sale. The balance of the funds available as at December 31, 2011 have been committed as follows: Duffin Heights roads cost sharing agreement ($317,000), and consulting and legal fees ($95,000). There are thus no more discretionary funds available from this Reserve Fund.