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HomeMy WebLinkAboutCS 20-07 CiUI o~ REPORT TO EXECUTIVE COMMMITTEE ~.l 050 Report Number: CS 20-07 Date: June 11,2007 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: .2006 Pre-Audit Balances of Reserves and Reserve Funds Recommendation: That Report CS 20-07 of the Director, Corporate Services & Treasurer be received for information. Executive Summary: Based on the preliminary 2006 results, we can now report on the pre-audit actual activities within the Reserves and Reserve Funds for 2006. A summary is plresented in Appendix A. The purpose and 2006 financial transactions for each Reserve and Reserve Fund are set out in Appendices Band C respectively. Financial Implications: Not applicable Sustainabilit~v ImplicaUons: Funds available under the Reserves and Reserve Funds provide partial financial support towards the sustainability of Pickering in both capital and operating expenditures. Background: As in previous reports filed over the last four years, this report provides specific information on each of the City's Reserves and Reserve Funds, including year- end balances. The 2006 pre-audit Reserves and Reserve Funds balance of $50,771,080 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, thH obligations connected with the collection of funds or other specific purposes approved by Councilor under Provincial Legislation. With regard to unspent budget commitments for capital projects, we 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 funds are still in the reserve fund's custody and is in compliance with Public Sector Accounting Report CS 20-07 Date: June 11, 2007 Subject: 2006 Pre-Audit Balances of Reserves and Reserve Funds Page 2 051 Board (PSAB) for obligatory Reserve Funds. The combined unspent budget commitments for all Reserve Funds are $5,969,368. From 2001 to 2005, the City's share of collections from OPG related to properties under assessment appeal was $9,336,829 in the Reserve for Contingency - OPG Assessment pending final decision of this appeal. At this time, we are still unable to confirm the availability of these monies for corporate purposes. In the meantime, these funds are being used for the temporary financing of the Don Beer Arena expansion with the balance being invested. The Development Charges, Parkland, Third Party/Developer Contributions, Ontario Transit Renewal, Provincial Dedicated Gas, Federal Gas Tax and Building Permit Reserve Funds represent funds received for specific purposes subject to legislative requirements and based on developer agreements or agreements with any third parties. Funds available in these Reserve Funds are obligatory in nature and should be treated as committed. The balance in these obligatory Reserve Funds is $28,844,560.The combined total of the budget commitments, OPG assessment appeal, other restricted balances and obligatory Reserve Funds of approximately $42 million reduced the "discretionary" balance to approximately $8 million as at December 31,2006. The City established a new reserve and reserve fund this year, namely: Move Ontario Reserve and Building Permit Reserve Fund. The purposes of the reserves and reserve funds are discussed further in Appendices Band C. Internal borrowings from the Reserve Funds commenced in 2001 to assist in funding capital projects. Although the amount borrowed each year has declined, the outstanding principal balance at December 31, 2006 is approximately $4.8 million. These loans are undertaken from the Development Charges and Parkland 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 to the capital fund. Interest earned on internal loans represents amounts earned on the 2001 to 2005 internal borrowings. Repayment for 2006 internal borrowings will commence in 2007 and interest earned will be reflected accordingly. Attachments: 1. Appendix A Summary of Reserves and Reserve Funds 2. Appendix B Description of Reserves 3. Appendix C Description of Reserve Funds Report CS 20-07 Date: June 11, 2007 Subject: 2006 Pre-Audit Balances of Reserves and Reserve Funds Page 3 1,1, ...05? PrepareaBy: Approved I Endorsed By: ~~~~-=o. Caryn Kong Senior Financial Analyst --~~~ Gillis A. Paterson Director, Corporate Services & Treasurer GAP:ck Attachments Copy: Chief AdministrativH Officer Recommended for the consideration of Pickering City Council..-- / /' lr / /1 APPENDIX A 053 CITY OF PICKERING SUMMARY OF RESERVE AND RESERVE FUND PRE-AUDIT ACTUALS DECEMBER 31, 2006 Pre Audit Audited Audited Audited Appendix B Summary Reserves 2006 2005 2004 2003 4610 Working Funds $400,000 $400,000 $400,000 $400,000 4611/4623 Replacement Capital 685,715 722,844 758,175 730,713 4612 Contingencies-OPG, Election, Other 2 10,594,909 10,774,909 9,053,320 7,813,558 4613 Self-Insurance 2 951,391 915,514 940,514 940,514 4619 Rate Stabilization 4,450,981 3,388,965 2,619,565 2,177,209 4620 Develop.Charges-City's Share 2 809,654 484,204 1,921,332 2,685,297 4621 Region Transit 2 120,999 237,106 1,025,741 1,106,634 4622 Continuing Studies 2 474,484 342,533 233,159 141,884 4624 Vehicle Replacement 72,547 75,000 25,000 4625 Easement Settlement 1,095,129 4626 Library Eastern Branch 2 30,000 20,000 4627 Move Ontario _ New 833,243 Total Reserves $19,423,923 $18,456,204 $16,976,806 $15,995,809 Pre Audit Audited Audited Audited Appendix C Summary of Reserve Funds 2006 2005 2004 2003 4225 Community Facilities $194,176 $265,492 $380,604 $386,726 4228 Capital Works 321,618 309,872 302,610 535,849 4229 Development Charges 1 & 2 22,736,472 21,135,306 19,496,777 15,804,668 4230 Parkland 1 & 2 1,993,928 2,103,061 2,166,696 1,959,087 4232 Public Works 1,072,893 1,038,206 1,152,444 1,465,425 4234 Workers Safety Insurance Brd 2 834,922 589,575 378,731 181,023 4235 Third PartylDev. Contributions 1 1,868,148 1,819,264 1,601,076 1,024,691 4236 Ontario Transit Renewal 1 19,166 19,166 14,035 14,957 4237 Squash Courts 2 78,989 66,087 33,713 7,450 4238 Provo Dedicated Gas Tax 1 771,076 722,039 161,515 4239 Federal Gas Tax Revenue 1 1,455,769 850,684 4240 Building Permit Stabilization Fees 1&2 New Total Reserve Funds $31,347,157 $28,918,752 $25,688,201 $21,379,876 Total Reserves & Reserve Funds $50,771,080 $47,374,956 $42,665,007 $37,375,685 Notes 1 Obligatory 28,844,560 (Includes 4229 & 4230) 2 Restricted 13,895.348 (Excludes 4229 & 4230) Total Obligatory 1 & Restricted ~ -2006 = $ 42,739,908 APPENDIX B !.: 054 RE:SERVE FOR WORKING FUNDS 4610 Actual Balance DI9cember 31, 2005 Transfe~rs into the Reserve $ 400,000 Transfe!rs out of th,e Reserve $ 400,000 Pre-Audit Actuall:lalance December 31, 2006 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 these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance levels of the Reserve: It is recommended as a "rule-of-thumb" that this reserve be 2% to 3% of total City revenW3S. Based on an average annual revenue of $45 million, at 2%, the amount to maintain for this reserve should be $900,000. , ~, 055 APPENDIX B RESERVE FOR REPLACEMENT OF CAPITAL EQUIPMENT - G/l 4611/4623 Actual Balance December 31, 2005 Transfers into the Reserve Revenue Fund Contribution $ 722,844 115,462 Transers out of the Reserve Transfer to Capital Fund (152,591 ) Pre-Audit Actual Balance December 31, 2006 $ 685,715 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. The 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 these funds form 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. ~~ ~ 056 APPENDIX B The balances pertaining to these sub-categories are as follows: Genl9ral Recreation Dunbarton Don Beer Rec Comp Rec Comp Rec Comp Corp Use Prgrms Pool Arena Core Pool Arena Total $ $ $ $ $ $ $ $ Dec 31/05 53,,860 148,260 34,734 92,500 89,893 151,312 152,285 722,844 Transfer in 0 18,500 4,962 30,000 27,000 15,000 20,000 115,462 Transfer out (50,.508) (7,080) (17,822) (35,120) (42,061 ) (152,591 ) Dec 31/06 53,,860 116,252 32,616 104,678 81,773 166,312 130,224 685,715 t..t 057 APPENDIX B RESERVE FOR CONTINGENCIES- G1L 4612 (OPG, Other Assessment Appeals, Election, Miscellaneous) Actual Balance December 31, 2005 Transfers into the Reserve Revenue re OPG Assmt. Appeal Properties Transfer from Revenue Fund $ 10,774,909 Transfers out of the Reserve: Elections Pre-Audit Actual Balance December 31, 2006 (180,000) $ 10,594,909 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 these funds form part of the annual Current Budget General Government Revenue. 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. The majority of the funds (88%) are related to Contingency-Ontario Power Generation (OPG) Assessment. Fund balance as at December 31, 2006 is $9,336,829. These funds were collected from 2001 to 2005. The availability of these funds is undeterminable as the appeal is still outstanding and is considered committed in the event repayment must be made. The amounts pertaining to the other sub-categories are as follows: Election - $0, Other Assessment Appeals - $682,594 and Miscellaneous - $575,486. -""'-'---''''''''''''.~'~~,",",,,~...,"-,""''~^<~,, .... ''''''''"''~'''''''''~-.d'',~,~~,."",,,,C''~_,,_ t. i 058 APPENDIX B RESERVE FOR SELF INSURANCE - G/L 4613 Actual Balance December 31, 2005 Transfers into the Reserve $ 915,514 49,620 Transfers out of the Reserve: Transfer to Capital -Fire vehicle (13,743) Pre-Audit Actual Balance December 31, 2006 $ 951,391 1. Purpose of this Reserve: This re!serve was established as a necessary form of asset protection. 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 these funds form part of the annual Current Budget Generall 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. The $13,743 draw in the current year was necessary to partially pay for the replacement vehicle for the Fire division resulted from accident. ~.I 059 APPENDIX B RESERVE FOR RATE STABILIZATION - G/L 4619 Actual Balance December 31,2005 $ 3,388,965 Transfers into the Reserve Excess Surplus Contribution 2,382,016 Transfers out of the Reserve 2006 Current Budget Provision (1,320,000) Pre-Audit Actual Balance December 31, 2006 $ 4,450,981 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 these funds form 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 2006 Current Budget provided for a transfer in the amount of $1,320,000 from this Reserve to fund current expenditures. \.1 060 APPENDIX B RESIERVE FOR DEVELOPMENT CHARGES - CITY SHARE G/l 4620 Actuall~alance December 31, 2005 $ 484,204 Transfers into the Reserve 2006 Current Budget Provision 590,000 Transfers out of the Reserve Transfer to Capital Fund -External Subdivision Works (264,550) Pre-Audit Actual Balance December 31, 2006 $ 809,654 1. Purpos.e of this Reserve: This reserve has been established to set aside funds for projected growth in the City. IFrom the 1999 and the 2004 Development Charges Studies it was approvE~d that a Reserve be established for the City's share (Le. 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 income on these funds form 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. I,; 061 APPENDIX B REGION TRANSIT RESERVE - G/L 4621 Actual Balance December 31, 2005 $ 237,106 Transfers into the Reserve GO Transit Funding from Region Transfers out of the Reserve APT A Expenditures-Buses (116,107) Pre-Audit Actual Balance December 31, 2006 $ 120,999 1. Purpose of this Reserve: This reserve fund was established in 2002 to capture funds raised by the Region for transit purposes and not immediately required. The interest income on these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: The Ajax Pickering Transit Authority (APT A) has been officially transferred to the Regional Municipality of Durham (Region) effective January 1,2006, thus there is no longer any revenue from the Region for this Reserve. The balance of this Reserve is expected to be used for any unpaid commitments or obligations related to APTA. The current year's expenditures of $116,108 are related to a prior commitment for the acquisition of buses for the amalgamated Durham Region Transit. This Reserve will eventually be closed-out upon settling all our commitments and obligations. 062. APPENDIX B RESERVE FOR CONTINUING STUDIES & CONSULTING - G/L 4622 Actuall Balance December 31, 2005 $ 342,533 Transfers into the Reserve Continuing Consulting Work or Studies 201,450 Transfers out of the Reserve (69,499) Pre-Audit Actual Balance December 31, 2006 $ 474,484 1. Purposie 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 intHrest incomB on these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There would be no recommended maintenance levels. 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 2006 in the amount of $69,499 pertained to consulting work that was transferred into the Reserve in the prior year. An additional amount of $201 ,4EiO has been transferred-in for future work. APPENDIX B 063 RESERVE FOR VEHICLE REPLACEMENT - G/L 4624 Actual Balance December 31, 2005 Transfers into the Reserve $ 75,000 50,000 Transfers out of the Reserve to Capital Fund (52,453) Pre-Audit Actual Balance December 31, 2006 $ 72,547 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 these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There would be no recommended maintenance levels. Funds transferred to this reserve will be committed to fund the purchase of new vehicles. ~ 064 APPENDIX B EASEMENT SETTLEMENT RESERVE - G/l 4625 Actual Balance December 31,2005 Capital Fund Contribution-CS16-06 $ 1,095,129 185,000 Transfers out of the Reserve 2006 Current Budget Expenditures (1,280,129) Pre..Audit Actual Balance December 31, 2006' $ 1. Purpose of this Reserve: This re!serve was newly established in 2005 due to funds received from easemE!nt settlement in February 2005. The amount collected was $2.5 million. These funds will be used to finance both the capital and operating expenditures of the City. The intE~rest income on these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance levels of this Reserve: There would be no recommended maintenance levels. Whenever funds are received due to easement settlement, this reserve will be credited accordingly. Budgeted draws to fund City's expenditures will be dependent on the revenues collected. Due to the budgeted draws in both 2005 and 2006, the funds originally received in 2005 have been completely depleted as at the year ended December 31,2006. Breakdown of the cumulative expt3nditures are as follows: 2005 Current Exoenditures $ 435,337 2005 Capital Expenditures 784,534 2006 Current Expenditures 1,280,113 Total $2,499,984 !,.i . 065 APPENDIX B RESERVE - PROVISION FOR EASTERN BRANCH LIBRARY - G/l 4626 Actual Balance December 31, 2005 Transfers into the Reserve $ 20,000 10,000 Transfers out of the Reserve $ 30,000 Pre-Audit Actual Balance December 31, 2006 1. Purpose of this Reserve: This reserve was newly 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 these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance levels of this Reserve: There would be no recommended maintenance levels. In 2002, the Board of 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. The combined total of the three years provision is reflected in the year-end balance. It is the intention of the Board of the Library to annually request for this provision to continue building up funds for the proposed new facility. To reflect this intention, effective 2006 Budget year, the provision will be done by a "Transfer to Reserve for the Provision for Eastern Branch". (-*" Oub APPENDIX B RESERVE - MOVE ONTARIO - G/L 4627 Actual Balance December 31, 2005 Contribution from Province of Ontario $ 1,851,578 Transfers out of the Reserve Capital Expenditures -Roads (1,018,335) 833,243 Pre..Audit Actual Balance December 31, 2006 $ 1. Purpose of this Reserve: This reserve was newly 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 GT A, 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 these funds form part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There would be no recommended maintenance levels. APPENDIX C 067 RESERVE FUND FOR COMMUNITY FACILITIES - G/L 4225 Actual Balance December 31, 2005 $ 265,492 Transfers into the Reserve Fund Capital Fund - Returned to Source $ Interest Earned on External Investments 9,389 9,389 Transfers out of the Reserve Fund Transfer to Capital Fund - Parks (14,351 ) Transfer to Capital Fund - Community Centre (66,354 ) (80,705) Pre-Audit Actual Balance December 31, 2006 $ 194,176 1. Purpose of this Reserve: 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 these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance Levels of this Reserve: The balances in this fund have fluctuated from the 2001 year low of $69,102 to the high in 1998 of $773,483. Other than interest income earned, there was no transfer to this reserve fund in 2006. Expenditures are transferred out of Reserve Funds only when incurred. The value of the unspent budget commitments as at December 31, 2006 is $70,649. Taking these commitments into consideration, the uncommitted balance of funds available is $123,527. Additional amounts must be provided to this fund. l.,l . 068 APPENDIX C RESERVE FUND FOR CAPITAL WORKS - G/L 4228 ActuallBalance December 31, 2005 Transfers into the Reserve Fund Interest Earned on External Investments $ 309,872 11,746 Transfers out of the Reserve Fund Pre-Audit Actual Balance December 31, 2006 $ 321,618 1. Purpose of this Reserve: 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 these funds form part of the Reserve Fund as per the Municipal Act, 2001. 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. There has been no major contribution to this Reserve Fund in the past six years. The value of the unspent budget commitments at the end of 2006 is $13,822. Taking these unspent budget commitments into account, the uncommitted balance available as at December 31, 2006 will be $307,7H6. Major additional contributions will be required in future years. APPENDIX C ; 1 069 RESERVE FUND FOR DEVELOPMENT CHARGES - GlL 4229 Actual Balance December 31, 2005 Transfers into the Reserve Fund: Net Developer Contributions Returned to source Interest Earned on External Investments Interest Earned on Internal Loans $ 21,135,306 $ 1,782,148 2,411 670,332 197,215 2,652,106 Transfers out of the Reserve Fund: Transfer to Capital Fund: Fire-Addition & Renovations to Station 5 Ext. Subdiv- Roads & Related Ext. Subdiv- Storm Water Management Sidewalk401 Pedestrian Bridge to GO Station Pre-Audit Actual Balance December 31, 2006 $ (122,734) (654,554) (264,502) (9,150) (1,050,940) $ 22,736,472 1. Purpose of this Reserve: This is an "obligatory" reserve fund and as such is governed by Municipal Act 2001, Development Charges Act, 1997, Ontario Regulation 82/98, 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 required for new growth. The interest income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance Levels of this Reserve: In accordance with development charge legislation, all development charge revenue 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 Development Charge Reserve Funds because they are tied to growth-related capital requirements. This reserve fund has unspent budget commitments of $3,676,130. The pre- audit actual balance of $22,736,472 would be reduced by this amount to reflect an uncommitted balance of funds available for future expenditures of $19,060,342. 070 APPENDIX C RESERVE FUND FOR PARKLAND - Gll 4230 Actual Bialance December 31, 2005 Transfers into the Reserve Fund: Developers Contributions $ Returned to source Interest Eamed on Extemallnvestments Interest Eamed on Intemal Loans Transfers out of the Reserve Fund: Transfer to Capital Fund-Parks: Greenwood & Village E- Tennis Crts Resurfacin~J Amberlea Park-Asphalt Replacement Centennial Park-Washroom facility Amberlea & Rosebank-Tennis Crts Resurfacing Playground Equipment David Farr Park Pre-Audit Actual Balance December 31, 2006 1. Purpos.e of this. Res.erve Fund: $ 2,103,061 301,550 24,681 73,983 19,394 419,608 $ (79,290) (8,611 ) (200,000) (29,838) (191,775) (19,227) $ (528,741) 1,993,928 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 Reservl3 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance levels of this Reserve Fund: Due to the obligatory nature of this fund, there are no limits on this fund. The value of the unspent budget commitments as at the year ended 2006 is $592,4!50. The pre-audit balance of $1,993,928, after taking into account the unspent budget commitments, will provide an uncommitted balance available of $1,401,,178 as at December 31,2006. APPENDIX C 071 RESERVE FUND FOR PUBLIC WORKS - G/L 4232 Actual Balance December 31, 2005 Transfers into the Reserve Fund Developer Contributions Interest Earned on External Investments $ 1 ,038,206 $ 16,270 38,982 55,252 Transfers out of the Reserve Fund Transfer to Capital Fund - Property Maintenance-Masonary Walls Pre-Audit Actual Balance December 31, 2006 (20,565) $ 1 ,072,893 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance Levels of this Reserve Fund: The "average" annual balance of this fund over the last four years has been approximately $1.18 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 value of unspent budget commitments for 2006 is $25,000. The pre-audit balance of $1,072,893 after taking into account the unspent commitments will provide an uncommitted balance of funds available of $1,047,893 as at December 31,2006. .072 APPENDIX C RESERVE FUND FOR WORKERS SAFETY INSURANCE BOARD - G/L 4234 Actual Balance December 31, 2005 $ 589,575 Transfers into the Reserve Fund Contribution from Current Fund $ 387,025 InterE~st Earned on External Investments 31 ,462 418,487 Transfers out of the Reserve Fund Claims and Other Related Costs $ (54,073) Insurance Costs (105,432) Contribution to Health & Safety Training (13,635) (173,140) Pre-Audit Actual Balance December 31, 2006 $ 834,922 1. Purpose of this Reserve Fund: This Rl3serve 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance Levels of this Reserve Fund: Starting from 2004 and continuing to 2006, the contributions were more than double the claims experience for the year, thus resulting to a built-up in the balanCE~ of the Reserve Fund. 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 $208,000 from 2003 to 2006 has resulted to the 2006 year-end balance of $834,922. APPENDIX C 0.73 THIRD PARTY/DEVELOPERS CONTRIBUTIONS RESERVE FUND - G/l 4235 Actual Balance December 31, 2005 Transfers into the Reserve Fund Contributions from DeveloperslThird Parties Interest Eamed on Extemallnvestments $ 1,819,264 $ 133,243 72,481 205,724 Transfers out of the Reserve Fund Capital Expenditures-Ext. Subdivision Works Pre-Audit Actual Balance December 31, 2006 (156,840) $ 1,868,148 1. Purpose of this Reserve Fund: This reserve fund was established by Council pursuant to Section 417(1) of the Municipa/ 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance levels of this Reserve No reserve fund limits are appropriate for this fund as collection and commitment of funds are dependent upon development agreements or cost sharing arrangements. APPENDIX C ". 074 OtffARIO lRANSIT RENEWAL RESERVE FUND - GtL 4236 Actual Balance December 31, 2005 $ 19,166 Transfers into the Reserve Fund Contribution from Ministry of Transportation $ Interest on Extemallnvestments-reversal Transfers out of the Reserve Fund APTA Capital Expenditures Pre-Audit Actual Balance December 31, 2006 $ 19,166 1. Purposie of this Reserve Fund: This is an "obligatory" Reserve Fund established to capture funding received from Ministry of Transportation for the sole purpose of funding acquisition of APTA vehicles or for any major vehicle refurbishment. The interest income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance Levels of this Reserve Fund: No resl3rve fund limits are appropriate for this fund as availability of funds is dependent on the amount of grant received" Funds are provided from the Ontario Transit Renewal Program as expenditures are incurred. With the transfer of APT A to the Regional Municipality of Durham effective January 1 , 2006, this reserve fund will eventually be closed-out upon resolving all outstanding matters. Fund balance for the year ended 2006 remains the same as 2005 in the amount $19,166. 0.75 APPENDIX C SQUASH COURTS RESERVE FUND - G'L 4237 Actual Balance December 31, 2005 $ 66,087 Transfers into the Reserve Fund Surcharge on I\Aemberships 10,225 Interest on Extemallnvestments 2,677 12,902 Transfers out of the Reserve Fund Pre-Audit Actual Balance December 31, 2006 $ 78,989 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. ,. 0.76. APPENDIX C PROVINCIAL DEDICATED GAS TAX RESERVE FUND - G/L 4238 Actual Balance December 31, 2005 Transfers into the Reserve Fund Provo of Ontario InterHst on External Investments $ 722,039 21,630 27,407 49,037 Transfers out of the Reserve Fund (Pending Provincial Government Approval) $ 771,076 Pre-Audit Actual Balance December 31, 2006 1. Purpose of this Reserve Fund: This Reserve Fund was established to capture funds from the Province of Ontario for the new provincial gas tax revenue program. This Reserve Fund shall be used for the purpose of paying eligible public transportation expenditures, to offset Pickering's share of the costs for funding the Ajax Pickering Transit Authority (APT A). This Reserve Fund was newly created in 2004 further to the recommendation passed in Council Resolution #167/04, Item 3 at the Council Meeting of December 20,2004 per Report to Council CS 56-04. The interest income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Rec:ommended Maintenance levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. Under this program, the provincial government will provide one cent a litre of the provincial gas tax funding in 2004. This rate has been increased to 1.5 cents in 2005 and incneased to two cents in 2006. As the purpose for providing this Fund is for the public transportation services, with the transfer of APT A to the Region effective January 1, 2006, the balance of this Fund will be transferred to the Region once all matters are resolved. APPENDIX C 0.77 FEDERAL DEDICATED GAS TAX RESERVE FUND - G'L 4239 Actual Balance DeceniJer 31, 2005 Transfers into the Reserve Fund Prov. of O1tario Interest on Extemallnvestments $ 850,684 849,578 47,191 896,769 Transfers out of the Reserve Fund Sidevvalk-401 Pedestrian Bridge-Design rosts Asphalt Resurfadng & Repairs-Oion,BeIinda,Bonita Sidewalk installation-ad Brock Rd Ovic OrpIx-Upgrade to Ughting System Green\l\OOCf Corrm Qr-Replaced wndO\tVS (73,783) (118,356) (55,836) (20,786) (22,923) (291,684) Pre-Audit Actual Balance DeceniJer 31, 2006 $ 1,455,769 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. The Council had approved under Report to Council CS 92-05, the establishment of this new Reserve Fund under By-law 6609/05 and Resolution 219/05. This new 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. The interest income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. 2. Recommended Maintenance levels of this Reserve Fund: No reserve fund limits are appropriate for this fund. Under the Municipal Fu d' A t th h d Iff d' t . as follows: n Ing \greemen, e sc e u e 0 un Ing paymen s IS Year July 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 ('. 078 APPENDIX C ANNUAL. REPORT - BUILDING PERIVIT FEES for the year ended DecerrtJer 31, 2006 Building Permt Revenue $ 599,324 Costs Drect Costs Indirect Costs Exo9SSl(Defidt) Revenue over Costs (1,003,102) (182,235) (1,185,337) $ (586,013) BUILDING PERIVIT STABlUZAllON RESERVE FUND -Gl. 4240 QJening Balance, Jan. 1, 2006 $ 2003 Contribution $ Oosing Balance, D3c. 31, 2006 1. Purpose of this Reserve Fund: This Reserve Fund was officially established in 2006 based on By-Law 665'1/06 and Report to Executive Committee PD 41-05. The By-law was made effective January 1, 2006. This Reserve Fund has a zero balance in 20015 due to the fact this is the first year of operation and funds have not been built-up. 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 income on these funds form part of the Reserve Fund as per the Municipal Act, 2001. k' 0 .7 9 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. REPORT TO EXECUTIVE COMMITTEE Report Number: CS 21-07 Date: June 11, 2007 l> From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Development Charges - Annual Indexing Recommendation: 1. That Report CS 21-07 of the Director, Corporate Services & Treasurer be received; 2. That effective July 1, 2007 as provided for in Section 16 of By-law 6349/04, the Development Charges referred to in Sections 6 and 11 of that By-law be increased by 6.9 percent being the annual increase in the Construction Price Statistics for the Non-Residential Building Construction Price Index as reported by Statistics Canada for the year ended March 31,2007; and, 3. That thl~ appropriate officials of the City of Pickering be given authority to give effect thereto. Executive Summary: Adoption of the Recommendations of this report will put into effect for the period July 1, 2007 to June 30, 2008 increases that are provided for in the Development Charges Act 1997 and Ontario Regulation 82/98 and By-law 6349/04 and are needed to finance construction costs under the City's Development Charge Background Study adopted by Council in July 2004. This is an annual adjustment needed to keep revenues current with costs. Financial Implications: Increasing the Development Charges by 6.9 percent will assist in keeping the revenues generated thereunder in line with current costs. The residential development charges for single and semi detached units will increase by approximately $635, other residential charges will increase similarly and the commerciallindustrial charge will increase by approximately $0.17 per square foot or $1.85 per square metre. Sustainability Implications: This annual increase is necessary to ensure that the financing of the costs of construction is sustainable.