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HomeMy WebLinkAboutFIN 17-14 CHI r � = Report to Executive Committee PICKERING Report Number: FIN 17-14 Date: July 7, 2014 From: Paul Bigioni Director, Corporate Services & City Solicitor Subject: Repositioning of Reserves and Reserve Funds Recommendation: 1. That Report FIN 17-14 of the Director, Corporate Services & City Solicitor be received; 2. That Council approve the establishment of the following Reserve Funds and corresponding By-laws: a) Roads and Bridges b) Stormwater Management 3. That Council approve the following transfers from the Public Works Reserve Fund: a) the amount of$755,225.42 to the Roads and Bridges Reserve Fund b) the amount of$355,274.56 to the Stormwater Management Reserve Fund; 4. That the Public Works Reserve Fund By-law No. 494/76 be repealed; 5. That the Division Head, Finance & Treasurer be authorized to: a) Transfer the balance of$7,107.49 in the Doubles Squash Courts Reserve Fund to the Community Facilities Reserve Fund and that the Doubles Squash Courts Reserve Fund By-law No. 6190/03 be repealed; and, b) Transfer the balance of$2,723.22 in the Move Ontario Reserve to the Rate Stabilization Reserve and that the Move Ontario Reserve be closed; 6. That Council authorize a transfer of$700,000.00 from the Rate Stabilization Reserve to establish a Winter Control Reserve and that the Division Head, Finance &Treasurer be authorized to transfer funds from this reserve when: a) the actual winter control costs exceeds budgeted winter control costs; and b) there are.no other available surplus funds from other City operations; 7. That the draft by-laws attached hereto be enacted; and, 372 Report FIN 17-14 July 7, 2014 Subject: Repositioning of Reserves and Reserve Funds Page 2 8. That the appropriate City of Pickering officials be authorized to take necessary action to give effect thereto. Executive Summary: The Finance Division has completed a review of the City's reserves and reserve funds in preparation for the City's 2015 budget cycle. Finance staff reviewed the various reserves and reserve funds to maximize their use for the budget cycle either from a capital or current budget perspective. This higher level review has identified an opportunity to allocate the Public Works Reserve Fund to two new reserve funds to enhance the matching of financial resources to meet projected expenditure demand. The Move Ontario Reserve currently has a small balance of$2,723.22 and from an accounting staff resource allocation and efficiency perspective, it would be better if this • balance were transferred and the reserve closed. The Doubles Squash Courts Reserve Fund was established to assist in the,financing of the new doubles squash courts. This reserve fund should be closed and the balance transferred because of the current low contribution levels. • In 2013 and for the first half of 2014, the City experienced a higher level of winter control activity compared to 2011 and 2012. The establishment of the winter control reserve will provide the City the financial flexibility to meet higher than expected uncontrollable winter control cost pressures. • Financial Implications: The table below provides a breakdown of Reserves and Reserve Funds being addressed in this report: Name of Fund Account Fund Balance as at Recommendation December 31/13 Public Works 7702 $1,110,499.98 Transfer balance to Roads Reserve Fund and Bridges Reserve Fund and Stormwater Management Reserve Fund and repeal By- law No. 494/76 Doubles Squash 7704 7,107,.49 Transfer balance to Courts Reserve Fund Community Facilities Reserve Fund and repeal By-law No.6190/03 Move Ontario 7043 $2,723.22 Transfer balance to Rate Reserve Stabilization Reserve and close reserve 373 Report FIN 17-14 July 7, 2014 Subject: Repositioning of Reserves and Reserve Funds Page 3 Road and Bridges new To set up new reserve fund Reserve Fund and transfer $755,225.42 from Public Works Reserve Fund Stormwater new To set up a new Reserve Management Fund and transfer 355,274.56 Reserve Fund from Public Works Reserve Fund Winter Control new To set up a new reserve and Reserve transfer $700,000.00 from Rate Stabilization Reserve Discussion: Public Works Reserve Fund This reserve fund was established in 1976 for the Public Works portion of lot levy fees collected on severances. The purpose and role of the Public Works Reserve Fund has been replaced by the Development Charges Reserve Fund. Upon the enactment of the Development Charges Act, 1997, funds deposited to this reserve fund were mainly cash-in-lieu for storm sewer connections and other generic public works related items. The total cash-in-lieu collected from 1998 to 2013 is approximately $250,000. This reserve fund is no longer required and it is recommended that the related by-law be repealed and the balance allocated as follows: Stormwater Management Fund $355,275 Roads and Bridges Reserve Fund- $755,225 374 Report FIN 17-14 July 7, 2014 Subject: Repositioning of Reserves and Reserve Funds Page 4 Doubles Squash Courts Reserve Fund This reserve fund was established in 2003 in order to receive proceeds from fundraising initiatives of the Pickering Squash Club, and the surcharge added for squash memberships to help contribute toward the construction of new doubles squash courts in the Pickering Recreation Complex. This reserve fund contributed $200,000 towards the total construction cost of$3.7 million for the Pickering Recreation Complex expansion, which included two doubles squash courts. This reserve fund has served its purpose, and it is recommended that the by-law creating it be repealed. Recommendation 5a) seeks Council approval to transfer the unspent amount of$7,107.49 as at December 31, 2013, and any squash surcharges collected in 2014 to the present to the Community Facilities Reserve Fund. Culture and Recreation staff have commented that many of the current members are obtaining the seniors' discount which makes them exempt from the squash surcharge, and that the surcharge is viewed as a negative factor when promoting and marketing for new members. Move Ontario Reserve This reserve was set-up in 2006 through the annual budget process for funds received from the Ministry of Transportation in the approximate amount of$1.8 million. This was a one-time funding grant from the Province to help municipalities outside of the GTA to invest in municipal roads and bridges. Funds have been directed to fund various municipal roads and bridges projects since 2006. This reserve has served its original purpose. Other than a small unspent amount, the original grant has been fully depleted. This reserve should be closed-out and the unspent amount of$2,723.22 should be transferred to the Rate Stabilization Reserve. Roads and Bridges Reserve Fund Last December, Council adopted report ENG 21-13 that established the City's Asset Management Plan (AMP) for roads and bridges. The AMP identified the need to invest $100 million for roads and bridges over the next ten years. The establishment of the Roads and Bridges Reserve Fund is the first step in implementing the AMP. This reserve fund will provide a dedicated source of funds for roads and bridges as it relates to asset replacement activity. The transfer of$755,225.42 to this reserve fund may be used in the 2015 budget to fund capital roads or bridges projects. Stormwater Management Reserve Fund The City maintains 306 kilometers of urban drainage systems and 312 kilometers of. rural drainage systems, as well as a number of stormwater management facilities (such as wet and dry ponds). The transfer of$355,274.56 to the Stormwater Management Reserve Fund will be used for major repairs and investments in the systems and these funds may be used in the 2015 budget. By maintaining the City's storm drainage systems, the City is better able to manage stormwater, mitigate flooding and protect the 375 Report FIN 17-14 July 7, 2014 Subject: Repositioning of Reserves and Reserve Funds Page 5 environment. Some of the City's storm drainage system is reaching the end of its life- cycle and requires attention in order to ensure an acceptable level of service and functionality as well as conformity to Environment Compliance Approvals (formerly known as Certificates of Approval) and laws (Ontario Water Resources Act and Environmental Protection Act) are maintained. Winter Control Reserve The City currently budgets approximately $1.2 million per year for winter control costs. Recommendation 6, establishes a Winter Control Reserve to be used whenever the actual annual winter control costs exceed the budget. The use of a winter control reserve should be seen as a financial safety net and the employment of this strategy is becoming more popular with municipalities. The transfer of$700,000 from the Rate Stabilization Reserve to the Winter Control Reserve will provide adequate financial protection to offset higher than anticipated winter control costs. Recommendation 6 provides the Treasurer the authority to draw from this reserve when there are no available surplus funds from other City operations that can be used to offset winter control cost pressures. With the transfer, the projected balance at December 31, 2014 for the Rate Stabilization Reserve will be $11.53 million. Attachments: 1. Being a by-law to provide for the establishment of a Reserve Fund to be known as the Roads and Bridges Reserve Fund 2. Being a by-law to provide for the establishment of a Reserve Fund to be known as the Stormwater Management Reserve Fund Prepared By: Approved / Endorsed By: Caryn Kong Stan Karwowski Senior Financial Analyst-Capital & Division Head, Finance &Treasurer Debt Management Paul Bi•'o Directo Co so :te Services & City Solicitor 376 Report FIN 17-14 July 7, 2014 Subject: Repositioning of Reserves and Reserve Funds Page 6 Recommended for the consideration of Pickering City Council / ,/0(1 / 23, 2_0/4 Tony Prevedel, P.Eng. Chief Administrative Officer • 377 ATTACHMENT# 6 TO REPORT#f'►ni .f� ' t The Corporation of the City of Pickering By-law No. • Being a by-law to provide for the establishment of a Reserve Fund to be known as the Roads and Bridges Reserve Fund Whereas under the Municipal Act, S.O., 2001 as amended, Section 417(1), the Council of the City of Pickering may establish and maintain a reserve fund for any purpose for which it has authority to expend funds. Whereas it is desirable for the City of Pickering to establish such a reserve fund for the purpose of investing in its roads and bridges infrastructure. Now therefore the Council of the Corporation of the City of Pickering hereby'enacts as follows: 1. The establishment of a reserve fund known as the Roads and Bridges Reserve Fund is hereby authorized. 2. The purpose of this fund is to provide funds for major repairs, rehabilitation, reconstruction or replacement of the City's roads and bridges, including culverts. 3. The initial source of funds will be a transfer from the Public Works Reserve Fund in the amount of $755,225.42. Future sources of funds will be as identified by the Treasurer or as approved by Council including but not limited to the annual budget or any other source; 4. The Treasurer may draw funds from this reserve fund for major repairs, rehabilitation, reconstruction or replacement of roads and bridges, including culverts. 1 5. The Treasurer has the discretion to draw from this fund when project expenditures exceeds the budget. 6. Interest earned on the investment of fund balances shall form part of this reserve fund. • 7. That By-law 494/76 be repealed. 8. This By-law shall come into force on the date of its enactment. By-law passed this 14th day of July, 2014. David Ryan, Mayor Debbie Shields, City Clerk 378 • ATTACHMENT# . ,TO REPORT# i rti (]-1L/ The Corporation of the City of Pickering By-law No. Being a by-law to provide for the establishment of a Reserve Fund to be known as the Stormwater Management Reserve Fund Whereas under the Municipal Act, S.O., 2001 as amended, Section 417(1), the Council of the City of Pickering may establish and maintain a reserve fund for any purpose for which it has authority to expend funds. Whereas it is desirable for the City of Pickering to establish such a reserve fund for the purpose of maintaining the City's stormwater management infrastructure. Now therefore the Council of the Corporation of the City of Pickering hereby enacts as follows: 1. The establishment of a reserve fund known as the Stormwater Management Reserve Fund is hereby authorized. 2. The purpose of this fund is to provide funds for major repairs. Rehabilitation, reconstruction or replacement of the City's stormwater management system. 3. The initial source of funds will be a transfer from the Public Works Reserve Fund in the amount of$355,274.56. Future sources of funds will be cash-in-lieu for storm sewer connections, stormwater management fees, or as identified by the Treasurer or as approved by Council including but not limited to the annual budget, or any other source. 4. The Treasurer may draw funds from this reserve fund for major repairs, rehabilitation, reconstruction or replacement of the City's stormwater management system. 5. The Treasurer has the discretion to draw from this fund when project expenditures exceeds the budget. 6. Interest earned on the investment of fund balances shall form part of this reserve fund. 7. That By-law 494/76 be repealed. 8. This By-law shall come into force on the date of its enactment. By-law passed this 14th day of July, 2014. David Ryan, Mayor Debbie Shields, City Clerk 379