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HomeMy WebLinkAboutCST 27-11 Cif Report To Executive Committee PICKERING Report Number: CST 27-11 Date: June 13, 2011 170 From: Gillis A. Paterson Director, Corporate Services & Treasurer I i Subject: 2010 Pre-Audit Balances of Reserves and Reserve Funds Recommendation: That Report CST 27-11 of the Director, Corporate Services & Treasurer be received for information. Executive Summary: Based on the preliminary 2010 results, staff are now in a position to report on the pre-audit actual activities within the Reserves and Reserve Funds for 2010. A summary is presented in Appendix A. The purpose for each reserve and reserve fund, as well as the 2010 financial transactions is set out in Appendices B and C respectively. Financial Implications: At December 31, 2010, Reserves and Reserve Funds totalled $66.7 of which $37.1 million were obligatory. This category consists of Development Charges, Parkland, Federal Gas Tax and third party contributions. A further $8.8 million is restricted as to use. The balance of $20.8 million is primarily made up of the Rate Stabilization Reserve ($16.6 million) with other smaller reserves and reserve funds. Sustainability Implications: 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 years, this report provides specific information on each of the City's Reserves and Reserve Funds, including year-end balances. The 2010 pre- audit Reserves and Reserve Funds balance of $66,661,779 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 Report CST 27-11 June 13, 2011 Subject: 2010 Pre-Audit Balances of Reserves and Reserve Funds Page 2 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 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 $8,324,109. The Development Charges, Parkland, Third Party/Developer Contributions, 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 $37,063,109 (See Appendix A). The combined total of the budget commitments, other restricted balances and obligatory reserve funds of approximately $45.8 million reduced the "discretionary" balance to approximately $20.7 million as at December 31, 2010. Of the aforementioned balance of $20.7 million, almost $16.5 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 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, 2010 is approximately $1.1 million undertaken 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 in 2010. 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 27-11 June 13, 2011 Subject: 2010 Pre-Audit Balances of Reserves and Reserve Funds Page 3 172 Prepared By: Approved / Endorsed By: Caryn Kong, CGA Gillis A. Paterson, Senior Financial Analyst-Capital & Director., Corporate Services & Treasurer Debt Management Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council WaI4 -30, 2-011 Tony Prevedel, P.Eng. Chief Administrative Officer 7 3 ATTACHMENT #_.4,_T0 REPORT #.;-1S a-7 -11 APPENDIX A CITY OF PICKERING SUMMARY OF RESERVES AND RESERVE FUNDS PRE-AUDIT ACTUALS DECEMBER 31, 2010 Pre Audit Audited Audited Audited Appendix B Summary Reserves 2010 2009 2008 2007 4610 Working Funds $400,000 $400,000 $400,000 $400,000 4611/4623 Replacement Capital 1,090,999 854,338 618,419 683,214 4612 Contingencies-OPG, Election, Other2 1,277,278 1,471,140 1,401,340 1,328,080 4613 Self-Insurance 2 962,707 962,707 . 951,391 951,391 4619 Rate Stabilization 16,579,632 16,565,777 17,374,935 15,491,176 , 4620 Develop. Charges-City's Share 2 3,695,928 1,946,216 1,168,494 745,244 4621 Region Transit 2 - - - 120,999 4622 Continuing Studies 2 406,984 390,315 750,534 713,821 4624 Vehicle Replacement 149,158 237,547 172,547 122,547 4625 Easement Settlement - 131,279 131,279 - 4626 Library Eastern Branch z 130,000 105,000 80,000 55,000 4627 Move Ontario 14,533 267,033 8,243 308,243 4628 Capital Maint Mgmt System 165,000 90,000 75,000 - 4629 Economic Stabilization 830,000 1,235,000 - - Total Reserves $25,702,219 $24,656,352 $23,132,182 $20,919,715 ' I Pre Audit Audited Audited Audited Appendix 'C Summary of Reserve Funds 2010 2009 2008 2007 4225 Community Facilities $145,483 $215,350 $192,845 $180,880 4228 Capital Works 369,943 361,338 348,583 335,486 4229 Development Charges '82 29,593,895 27,714,332 26,413,355 23,528,009 4230 Parkland 182 1,757,582 1,914,793 1,984,486 1,557,607 4232 Public Works 1,049,595 .1,224,292 1,167,782 1,122,707 4234 Workers Safety Insurance Brd 2 2,021,105 1,658,462 1,339,907 1,103,109 4235 Third Party/Dev. Contributions' 2,185,222 2,210,924 2,043,667 2,129,221 4237 Doubles Squash Courts 2 116 1,315 92,530 119,057 4238 Prov. Dedicated Gas Tax' - - - 523,014 4239 Federal Gas Tax Revenue' 3,526,410 3,032,702 3,084,862 2,144,076 4240 Building Permit Stabilization Fees 182 - - - 4241 Animal Shelter2 173,850 162,553 152,896 146,195 4242 Pickering Mens' Slow Pitch 2 136,359 137,587 128,470 - 4243 Operations Centre - - - - Total Reserve Funds $40,959,560 $38,633,648 $36,949,383 $32,889,361 Total Reserves & Reserve Funds $66,661,779 $63,290,000 $60,081,565 $53,809,076 Notes (Includes 4229 & ' Obligatory Reserve Funds $37,063,109 4230) (Excludes 4229 2 Restricted Reserves & Reserve Funds 8,804,327 & 4230) Total Obligatory' & Restricted 2 -2010 = 45,867,436 Less Budget Committed Projects (8,324,109) Total Uncommitted Obligatory & Restricted R & RF $37,543,327- Total Reserves & Reserve Funds $66,661,778 Less Obligatory, Restricted Reserve & Reserve Funds (45,867,436) Net-Discretionary Reserves & Reserve Funds $20,794,342 I ATTACHMENT #..'2-TO REPORT # LUJ,7 - /I Appendix B 174 Reserve for Working Funds 4610 Actual Balance December 31, 2009 $ 400,000 Transfers into the Reserve - Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2010 $ 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. Appendix B Reserve for Replacement of Capital Equipment - G/L 4611/4623 Actual Balance December 31, 2009 $ 854,338 Transfers into the Reserve Revenue Fund Contribution 115,462 Sale of Land 95,589 Return to Source 157,006 Transers out of the Reserve Transfers to Capital Fund (131,396) Pre-Audit Actual Balance December 31, 2010 $ 1,090,999 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. •I 176 Appendix B The balances pertaining to these sub-categories are as follows: Corp Use Prgrms Pool Arena Core Pool Arena Total Dec 31 /09 253,050 171,752 47,502 10,091 101,110 153,678 117,155 854,338 Transfers in 0 18,500 4,962 30,000 27,000 15,000 20,000 115,462 Sale of Land 95,589 95,589 Returned to source 13,800 143,206 - 157,006 Transfers out - - (14,819) - - (14,839) (101,738) (131,396) Dec 31/10 362,439 190,252 37,645 183,297 128,110 153,839 35,417 11-090,999 i I 177 Appendix B Reserve for Contingencies - G/L 4612 (OPG, Other Assessment Appeals, Election, Miscellaneous) Actual Balance December 31, 2009 $ 1,471,140 Transfers into the Reserve Transfers from Revenue Fund 70,000 Transfers out of the Reserve: (263,862) Pre-Audit Actual Balance December 31, 2010 $ 1,277,278 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 - $16,138 Other Assessment Appeals - $682,594, True Sport City Share- $3,060 and Miscellaneous - $575,486. 178 Appendix B Reserve for Self Insurance - G/L 4613 Actual Balance December 31, 2009 $ 962,707 Transfers into the Reserve - Transfers out of the Reserve: Transfer to Capital - - Pre-Audit Actual Balance December 31, 2010 $ 962,707 1. Purpose of this Reserve: This reserve was established as a necessary form of asset protection. Specifically, it is to cover insurance claims resulting from the increase in j 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. 179 Appendix B Reserve for Rate Stabilization - G/L 4619 ~I Actual Balance December 31, 2009 $ 16,565,777 Transfers into the Reserve 2010 Excess Surplus Contribution 785,811 Dividend from Veridian 2,140,382 2,926,193 19,491,970 Transfers out of the Reserve 2010 Current Budget Provision (2,9121338) Pre-Audit Actual Balance December 31, 2010 $ 16,579,632 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 2010 Current Budget provided for a transfer in the amount of $2,912,338 from this reserve to fund current expenditures. With the settlement of OPG assessment appeal in 2007, dividends from Veridian and surplus in 2010; there is sufficient built-up of funds to draw from this reserve for future budgeting years. In 2010, there is a budgeted draw of $2.8 million and further draws anticipated in 2011 and after. I I 130 Appendix B Reserve for Development Charges - City Share G/L 4620 Actual Balance December 31, 2009 $ 1,946,216 Transfers into the Reserve 2010 Excess Surplus Contribution 1,833,559 2010 Budgeted Transfer 480,000 Returned to source 5,100 4,264,875 Transfers out of the Reserve Transfer to Capital Fund -External Subdivision Works (568,947) Pre-Audit Actual Balance December 31, 2010 $ 3,695,928 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. 181 Appendix B Reserve for Continuing Studies and Consulting - G/L 4622 Actual Balance December 31, 2009 $ 390,315 Transfers into the Reserve Continuing Consulting Work or Studies 263,858 Transfers out of the Reserve (247,189) Pre-Audit Actual Balance December 31, 2010 $ 406,984 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. I Expenditures incurred in 2010 in the amount of $247,189 pertained to consulting work that was transferred into the reserve in the prior year. An additional amount of $263,858 has been transferred-in for ongoing consulting work. i Appendix B, 1 8 2 Reserve for Vehicle Replacement - G/L 4624 Actual Balance December 31, 2009 $ 237,547 Transfers into the Reserve - Returned to source - Transfers out of the Reserve to Capital Fund (88,389) Pre-Audit Actual Balance December 31, 2010 $ 149,158 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. .183 Appendix B Reserve - Easement Settlement - G/L 4625 Actual Balance December 31, 2009 $ 131,279 Transfers into the Reserve: - Projects returned to source - Transfers out of the Reserve: Gablehurst Crescent-Resurfacing (45,000) Liverpool Rd/Annland -Overheard Hydro Conversic (86,279) (131,279) Pre-Audit Actual Balance December 31, 2010 $ - 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. The fund balance has been completely depleted as at the year ended December 31, 2010. 184 Appendix B Reserve - Provision for Easter Branch Library - G/L 4626 Actual Balance December 31, 2009 $ 105,000 Transfers into the Reserve 25,000 Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2010 $ 130,000 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. 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 2010. I I 185 Appendix B Reserve - Move Ontario - G/L 4627 Actual Balance December 31, 2009 267,033 Returned to source-completed projects - Transfers out of the Reserve Capital Expenditures -Roads (252,500) Pre-Audit Actual Balance December 31, 2010 $ 14,533 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. i i 186 Appendix B Reserve - Capital Maintenance Management System - G/L 4628 Actual Balance December 31, 2009 $ 90,000 Contribution from Revenue Fund 75,000 Transfers out of the Reserve Capital Expenditures - Pre-Audit Actual Balance December 31, 2010 $ 165,000 1. Purpose of this Reserve: This reserve was newly established in 2008 to start building-up funds for capital maintenance and management systems. Amount build-up will provide funds 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 in 2011. 187 Appendix B Reserve - Economic Stabilization - G/L 4629 Actual Balance December 31, 2009 $ 1,235,000 Dividend from Veridian - Transfers to Revenue Fund (405,000) Pre-Audit Actual Balance December 31, 2010 $ 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 minimize proposed tax increase. The interest income on this account forms part of the annual Current Budget General Government Revenue. II 2. Recommended Maintenance Levels of this Reserve. There is no recommended maintenance level. ATTACHMENT #_TO REPORT #.0SZ,.2 1/ Appendix C 188 Reserve Fund for Community Facilities - G/L 4225 Actual Balance December 31, 2009 $ 215,350 Transfers into the Reserve Fund Interest Earned on External Investments 4,742 Reserve Fund Management Fee (216) 4,526 Transfers out of the Reserve Fund Transfer to Capital Fund (74,393) (74,393) Pre-Audit Actual Balance December 31, 2010 $ 145,483 I ` 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. The pre- . audit balance of $145,483 after taking into account the unspent budget commitments of $29,107will provide an uncommitted balance available of $116,376 as at December 31, 2010. Additional amounts must be provided to this fund. 1 89 Appendix C Reserve Fund for Capital Works - G/L 4228 Actual Balance December 31, 2009 $ 361,338 Transfers into the Reserve Fund: Interest Earned on External Investments . 8,967 Reserve Fund Management Fee (362) Transfers out of the Reserve Fund - Pre-Audit Actual Balance December 31, 2010 $ 369,943 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 has declined to $515,000. Starting from 2004 on to the current year, the funds balance for this reserve funds 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. 9 Appendix C 10 Reserve Fund for Development Charges - GIL 4229 Actual Balance December 31, 2009* $ 27,718,727 Transfers into the Reserve Fund: Net Developer Contributions $ 1,653,063 Interest Earned on External Investments 661,342 Interest Earned on Internal Loans 81,147 Reserve Fund Management Fee (26,297) 2,369,255 Transfers out of the Reserve Fund: Transfer to Current Fund-Studies (122,644) Transfer to Capital Fund: Operations Centre-Environmental Assessment (822) Parks (2,567) Ext. Subdiv- Roads & Related (368,054) (371,443) Pre-Audit Actual Balance December 31, 2010 $ 29,593,895 ' Included adjustment for interest income allocation 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 $5,748,608. The pre- audit actual balance of $29,593,895 would be reduced by this amount to reflect an uncommitted balance of funds available for future expenditures of $23,845,287. 191 Appendix C Reserve Fund for Parkland - G/L 4230 Actual Balance December 31, 2009 $ 1,914,793 Transfers into the Reserve Fund: Developers Contributions $ 266,138 Interest Earned on External Investments 47,669 Interest Earned on Internal Loans 3,121 Reserve Fund Management Fee (1,974) 314,954 Transfers out of the Reserve Fund: Transfer to Capital Fund-Parks: Duffin Trails (17,968) Tennis Court-Bramalea Fencing (15,293) Mowers & Groomer (92,167) Shadybrook Park-Play Area (132,726) Brockridge Park-Play Area (10,071) Beachfront Park-Sunshade (13,600) Kinsmen Fieldhouse Rehabilitation (123,677) Playgrounds Resurfacing and Replacement (36,357) Parks- Trees (30,306) (472,165) Pre-Audit Actual Balance December 31, 2010 $ 1,757,582 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 2010 are $264,825. The pre- audit balance of $1,757,582 after taking into account the unspent budget commitments will provide an uncommitted balance available of $1,492,757 as at December 31, 2010. 192 Appendix C Reserve Fund for Public Works - GIL 4232 Actual Balance December 31, 2009 $ 1,224,292 Transfers into the Reserve Fund Third Party Contributions $ 1,430 Interest Earned on External Investments 29,876 Reserve Fund Management Fee (1,227) 30,079 Transfers out of the Reserve Fund: Glenanna Road Resurfacing (204,776) (204,776) Pre-Audit Actual Balance December 31, 2010 $ 1,049,595 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 $1,049,595 after taking into account the unspent budget commitment of $13,885 will provide an uncommitted balance available of $1,035,710 as at December 31, 2010. r I i 1 9 3 Appendix C Reserve Fund for Workers Safety Insurance Board - GIL 4234 Actual Balance December 31, 2009 $ 1,658,462 Transfers into the Reserve Fund Contribution from Current Fund $ 505,000 Interest Earned on External Investments $ 48,122 Reserve Fund Management Fee (1,868) 551,254 Transfers out of the Reserve Fund Claims and Other Related Costs $ (63,664) Funding Insurance Costs (97,751) Contribution to Health & Safety Training (27,196) (188,611) Pre-Audit Actual Balance December 31, 2010 $ 2,021,105 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 2010, 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 $252,000 from 2003 to 2010 has resulted to the 2010 year-end balance of $2,021,105. I 194 Appendix C Third Party/Developers Contributions Reserve Fund - G/L 4235 Actual Balance December 31, 2009 $ 2,210,924 Transfers into the Reserve Fund Contributions from Developers/Third Parties $ 54,280 Interest Earned on External Investments $ 54,557 Reserve Fund Management Fee (2,226) 106,611 Transfers out of the Reserve Fund - Capital Expenditures: Ext Subdivision Works-Regional Altona Road (44,556) Ext Subdivision Works-Sideline 4 (7,091) Brockridge Park Batting Cage (80,666) (132,313) Pre-Audit Actual Balance December 31, 2010 $ 2,185,222 1 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. 195 Appendix C Squash Funds Reserve Fund - G/L 4237 Actual Balance December 31, 2009 $ 1,315 Transfers into the Reserve Fund Surcharge on Memberships 9,098 Contribution from Pickering Squash Club - Interest on External Investments (806) Reserve Fund Management Fee (4) 8,288 Transfers out of the Reserve Fund - Recreation Centre Expansion & Squash Courts (9,487) Pre-Audit Actual Balance December 31, 2010 $ 116 - i 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 as at the year ended 2010 have been used to fund part of this project. The total amount funded was $189,350. The portion remains unfinanced from this reserve fund is $10;650 and will be funded pending future revenues from surcharge on memberships. 196 Appendix C Federal Gas Tax Reserve Fund - GIL 4239 Actual Balance December 31, 2009 $ 3,032,702 Transfers into the Reserve Fund Federal Contribution (through AMO) 2,694,431 Interest on External Investments 91,471 Reserve Fund Management Fee (4,377) 2,781,525 Transfers out of the Reserve Fund - Current Expenditures Audit Fees (5,500) Roads-Wheatsheaf & Shadybrrok (29,477) Capital Expenditures in the following cost centres/projects: Roads-Whitevale Bridge (80,370) Roads-Toy Avenue (62,580) Roads-Hampton Court (62,783) Roads-6th Concession Rd Resurfacing (160,062) Roads-Westney Rd Limestone Resurfacing (33,296) Roads-Glenanna Rd Resurfacing (716,778) Sidewalks-Bayly St & Liverpool Rd (25,813) MPE & Parks: 2 Hybrid Vehicles (77,346) Fire Div-Fire Hall # 2 Roof Replacement (52,900) Civic Complex-Axial Fan Motors, Air Volume Box (68,672) Senior Centre-Roof Rehabilittaion (146,800) Don Beer Arena Rehabilitation (321,996) Community Centre-WSCC Window Repalcement (25,709) Rec. Complex:Energy Audit & System, Air Handling Unit, Boilers, Blinds (132,356) Rec Complex Arena: Dehumidification System & 0' Brien Rink Overhead Door (16,520) Parks: Western Gateway & Kinsmen Fieldhouse Rehabilitation (40,671) Library-Roof Replacment Central & Front Door (228,188) (2,287,817) Pre-Audit Actual Balance December 31, 2010 $ 3,526,410 197 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 $7,078,927.80 198 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 The pre-audit balance of $3,526,410, after taking into account the unspent budget commitments of $2,267,684, will provide an uncommitted balance available of $1,258,726 as at December 31, 2010. 199 Appendix C Annual Report - Building Permit Fees for the year ended December 31, 2010 Building Permit Revenue $ 1,074,592 Costs Direct Costs (1,162;411) Indirect Costs (232,105) (1,394,516) Excess/(Deficit) Revenue over Costs $ (319,924) Building Permit Stabilization Reserve Fund - GL 4240 Opening Balance, Jan. 1, 2010 $ - 2010 Contribution Closing Balance, Dec. 31, 2010 $ - 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). l 200 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 2010, 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 21-11 provided detailed information on the 2010 reporting year. 201 Appendix C Animal Shelter Reserve Fund - G/L 4241 Actual Balance December 31, 2009 $ 162,553 Transfers into the Reserve Fund Donations 7,069 Interest on External Investments 4,396 Reserve Fund Management Fee (168) 11,297 Transfers out of the Reserve Fund 0 - Pre-Audit Actual Balance December 31, 2010 $ 173,850 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 donations and interest income earned. 202 Appendix C Operations Centre Reserve Fund - G/L 4243 Actual Balance December 31, 2009 $ - Transfers into the Reserve Fund Interest on External Investments - Transfers out of the Reserve Fund Pre-Audit Actual Balance December 31, 2010 $ - 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 j 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. Since its inception in 2009, there has been no transactions, this reserve fund balance remains at zero.