HomeMy WebLinkAboutFIN 24-23Report to Council
Report Number: FIN 24-23
Date: December 11, 2023
From: Stan Karwowski
Director, Finance & Treasurer
Subject: Restructuring of Reserves and Reserve Funds
-File: F-4910-001
Recommendation:
1.That Report FIN 24-23 of the Director, Finance & Treasurer be received;
2.That the Director, Finance & Treasurer be authorized to:
a)Transfer the balance in the Community Facilities Reserve Fund as at December 31,
2023 to the Facilities Reserve and close the Community Facilities Reserve Fund;
b)Transfer the balances in the following reserves as at December 31, 2023 to the
Facilities Reserve and close the reserves:
•Contingency – True Sports Reserve
•Surcharge – Program Reserve
•Surcharge – Dunbarton Pool Reserve
•Surcharge – Don Beer Arena Reserve
•Surcharge – Rec Complex Core Reserve
•Surcharge – Rec Complex Pool Reserve
•Surcharge – Rec Complex Arena Reserve
•Accessibility Initiatives Reserve
•Minor Buildings Replacement Reserve
c)Transfer the balance in Contingency – Miscellaneous Reserve as at December 31,
2023 to the Rate Stabilization Reserve and close the Contingency – Miscellaneous
Reserve;
d)Transfer the balance in Accelerated Infrastructure Program Reserve as at December
31, 2023 to the Roads & Bridges Reserve Fund and close the Accelerated
Infrastructure Program Reserve;
e)Transfer the balance in the Capital Works Reserve Fund as at December 31, 2023
to the Parks Reserve and close the Capital Works Reserve Fund; and
f)Close the Seaton FIA Reserve.
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 2
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3. That the Replacement of Capital Equipment Reserve be renamed the Information
Technology Reserve;
4. That the Major Equipment Replacement Reserve be renamed the Equipment
Replacement Reserve;
5. That the Federal Gas Tax Reserve Fund be renamed the Canada Community Building
Reserve Fund and the draft By-law, included as Attachment 1 to Report FIN 24-23, to
rename the reserve fund and repeal the Federal Gas Tax Reserve Fund By-law Number
6609/05, be approved, and enacted to reflect this name change;
6. That the draft By-law, included as Attachment 2 to Report FIN 24-23, to repeal the
Community Facilities Development Reserve Fund By-law Number 357/76 be approved
and enacted;
7. That the draft By-law, included as Attachment 3 to Report FIN 24-23, to repeal the Capital
Works Reserve Fund By-law Number C9/1980, be approved and enacted; and
8. That the appropriate City of Pickering officials be authorized to take necessary action to
give effect thereto.
Executive Summary: The Finance department has completed a review of the City’s
reserves and reserve funds in preparation for the City’s 2024 budget cycle. Finance staff
reviewed the various reserves and reserve funds in order to optimize the available funds and
their use for the capital and current budget.
Many of these reserves and reserve funds were established before the city started its Asset
Management program. The city continues to mature its asset management program where it
is considered advantageous to align capital reserves with the asset groups they are intended
to support. Currently there are numerous reserves with small balances and very small or no
identified funding sources. By combining these reserves or transferring their dollars, results in
a more efficient utilization of these funds. It should be noted that through this financial
housekeeping exercise, the overall dollar balance will remain the same.
Staff have identified opportunities to consolidate several reserves and reserve funds to
minimize administrative time and improve the City’s ability to align financial resources with
projected expenditure requirements.
Staff also propose a number of housekeeping updates to reflect the current operating
environment.
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 3
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Financial Implications: There is no net financial impact from the recommendations
included in this report. All funds currently held in reserves or reserve will be maintained in the
new reserve & reserve fund structure. The table below summarizes the current balance and
recommendations related to each fund being addressed in this report:
Name of Reserve /
Reserve Fund
Account Projected
Fund Balance
as at Dec. 31,
2023*
Recommendation
Facility-related Reserves and Reserve Funds
Contingency –
True Sports Reserve
8004 $121 Close all reserves and reserve
funds and transfer all funds to
the Facilities Reserve (8026).
Repeal By-law 357/76 related
to the Community Facilities
Reserve Fund
Surcharge – Program
Reserve
8010 $430,755
Surcharge – Dunbarton
Pool Reserve
8011 $25,236
Surcharge – Don Beer
Arena Reserve
8012 $86,979
Surcharge – Rec
Complex Core Reserve
8013 $38,168
Surcharge - Rec
Complex Pool Reserve
8014 $48,161
Surcharge - Rec
Complex Arena Reserve
8015 $42,803
Accessibility Initiatives
Reserve
8022 $66,840
Minor Buildings
Replacement Reserve
8029 $2,010,000
Community Facilities
Reserve Fund
8700
$35,708
Other Reserves & Reserve Funds
Replacement of Capital
Equipment Reserve
8001 $90,294 Rename to “Information
Technology Reserve Fund” and
amend purpose to be for the
replacement or renewal of IT
assets
Contingency –
Miscellaneous Reserve
8005 $675,486 Close and transfer funds to the
Rate Stabilization Reserve
(8007)
Accelerated Infrastructure
Program Reserve
8027 $519,500 Close and transfer funds to the
Roads & Bridges Reserve Fund
(8706)
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 4
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Name of Reserve /
Reserve Fund
Account Projected
Fund Balance
as at Dec. 31,
2023*
Recommendation
Seaton FIA Reserve 8030 $0 Close reserve
Federal Gas Tax Reserve
Fund
8502 $2,237,365 Rename the Reserve Fund
“Canada Community-Building
Reserve Fund”
Repeal By-law 6609-05 related
to the Federal Gas Tax
Reserve Fund and pass a new
By-law to reflect this change
Capital Works Reserve
Fund
8701 $129,891 Close and transfer funds to the
Parks Reserve (8040)
Repeal By-law C9/1980 related
to Capital Works Reserve Fund
* Projected balances were estimated based on expected 2023 activity and assume that all
outstanding commitments against the reserves and reserve funds will be fully funded as of
December 31, 2023.
Discussion:
8001 – Replacement of Capital Equipment Reserve
Financial Statement Grouping: Replacement of Capital Equipment
(Annual Contribution: $nil, Projected Balance: $90,294)
This reserve was established with proceeds of a one-time sale in 2001 and was intended to be
used to fund the replacement of capital equipment, however the reserve has been dormant
since 2014.
The City does not currently have a funding source for the replacement of IT equipment, and all
such replacements are currently funded from property taxes or the Rate Stabilization Reserve.
It is recommended that this reserve be redirected toward the funding of IT equipment renewal
and renamed the Information Technology Reserve Fund.
Future Current Budget reports may include a recommendation to initiate an annual contribution
to this reserve so that it can also act in a stabilization capacity to smooth out the tax impacts of
irregular replacement costs.
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 5
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8004 - Contingency – True-Sports Reserve
Financial Statement Grouping: Contingencies
(Annual Contribution: $nil, Projected Balance: $121)
This reserve was originally part of a general Reserve for Contingencies and was used to fund
the City’s share of the True-Sport program. This reserve does not have any identified revenue
source and has not been used since 2012.
It is recommended that the small remaining balance be transferred to the Facilities Reserve
and the reserve be closed.
8005 – Contingency – Miscellaneous Reserve
Financial Statement Grouping: Contingencies
(Annual Contribution: $nil, Projected Balance: $675,486)
This reserve was also originally part of a general Reserve for Contingencies and was
subsequently separated into specific purpose reserves: Assessment Appeals, Elections and
Miscellaneous. It was intended to act in a tax stabilization capacity in anticipation of unknown,
unusual, or unforeseen events. It has not been used since it was segregated from the other
reserves in 2003.
Since this reserve serves the same financial stabilization function as the Rate Stabilization
reserve, it is recommended that its balance be transferred to the Rate Stabilization Reserve
and that this reserve be closed.
Various Surcharge Reserves
Financial Statement Grouping: Replacement of Capital Equipment
• 8010 – Surcharge – Programs Reserve
(Annual Contribution: $18,500, Projected Balance: $430,752)
• 8011 – Surcharge – Dunbarton Pool Reserve
(Annual Contribution: $5,000, Projected Balance: $25,236)
• 8012 – Surcharge – Don Beer Arena Reserve
(Annual Contribution: $30,000, Projected Balance: $86,979)
• 8013 – Surcharge – Rec Complex Core Reserve
(Annual Contribution: $27,000, Projected Balance: $38,168)
• 8014 – Surcharge – Rec Complex Pool Reserve
(Annual Contribution: $15,000, Projected Balance: $48,161)
• 8015 – Surcharge – Rec Complex Arena Reserve
(Annual Contribution: $20,000, Projected Balance: $42,803)
These reserves historically formed part of the Replacement of Capital Equipment Reserve, but
were subsequently separated into individual reserves related to specific facilities.
Contributions to these reserves are provided for annually in the Current Budget. They were
designed to act in a stabilization capacity and help to avoid tax rate fluctuations and/or
issuance of long-term debt or other financing costs. However the surcharge reserve
contributions have not been adjusted to reflect inflationary impacts or current needs due to a
lack of funds. The result is that funds have been spread into a number of small reserves that
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 6
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are not sufficient to fund any large projects and the intended purpose of these reserves is no
longer being achieved.
It is recommended that the reserve balances be transferred to the Facilities Reserve where
collectively the funds can be more effectively leveraged for priority facility-related capital
projects. The related annual reserve transfers in the current budget should also be
consolidated into the annual reserve transfer to the Facilities Reserve.
8022 – Accessibility Initiatives Reserve
Financial Statement Grouping: Accessibility Initiatives
(Annual Contribution: $nil, Projected Balance: $66,840)
This reserve was established in 2012 to accelerate the City’s accessibility-related capital
program. Originally, any unspent funds from the prior year’s accessibility projects would be
transferred to this reserve, for use in future accessibility projects. The City no longer
segregates accessibility related costs from general project costs for accounting purposes and
this practice is no longer viable.
It is recommended that the funds be transferred to the Facilities Reserve for use in future
capital projects and then the reserve be closed. The City can continue to identify accessibility-
related initiatives in the capital budget as required.
8027 – Accelerated Infrastructure Program Reserve
Financial Statement Grouping: Accelerated Infrastructure Program
(Annual Contribution: $nil, Projected Balance: $519,500)
The Accelerated Infrastructure Program (AIP) Reserve was established in 2016 to receive a
special capital levy and to provide a source of capital or debt financing that would allow certain
priority capital projects to be accelerated. The special levy was discontinued after the 2016
budget and the reserve fund no longer has an identified revenue source.
This reserve is recommended to be closed. The balance will be transferred to the City’s
Roads and Bridges Reserve Fund where the funds will remain available for priority capital
projects related to the City’s road network.
8029 - Minor Buildings Reserve
Financial Statement Grouping: Minor Buildings Replacement
(Annual Contribution: $400,000, Projected Balance: $2,010,000)
This reserve was established in 2017 to provide a source of funds for the replacement of old
and/or small municipal facilities. As this reserve performs a similar function to the Facilities
Reserve, it would be more effective to consolidate these funds together and expand the range
of potential uses of the consolidated reserve to include all facilities in the City.
It is recommended that the reserve balance be transferred to the Facilities Reserve where the
funds can be more effectively used for the highest priority facility-related capital projects. The
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 7
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related annual reserve transfer of $400,000.in the Current Budget should also be consolidated
with the annual reserve transfer to the Facilities Reserve.
8030 - Seaton FIA Reserve
Financial Statement Grouping: N/A (balance is zero)
(Annual Contribution: $nil, Projected Balance: $nil)
This reserve was originally established to receive development payments related to the Seaton
Fiscal Impact Agreement (FIA). However, since the funds are received through contractual
agreements, they should be managed through a reserve fund. This was immediately corrected
by the establishment of the Seaton FIA Reserve Fund (By-law 7608-18) and this reserve has
not been used.
It is recommended that the reserve be closed.
8032 – Major Equipment Reserve
Financial Statement Grouping: Major Equipment
(Annual Contribution: $1,100,000, Projected Balance: $237,700)
This reserve was established in 2019 to fund the purchase of major equipment or major
repairs. To better utilize the available funds to support necessary asset renewal and mitigate
the fluctuating impact of these irregular purchases on the annual tax levy, staff recommend
broadening the scope of allowable uses to include all equipment replacement, as well as major
repairs.
8502 – Federal Gas Tax / Canada Community-Building Reserve Fund
Financial Statement Grouping: Deferred Revenue
(Annual Contribution: Federal grant amount, Projected Balance: $2,237,365)
This reserve fund was established in 2005 to track the gas tax revenues received from the
Government of Canada under the New Deal for Cities and Communities. On June 29, 2021,
the Federal Government renamed the Gas Tax Fund the Canada Community-Building Fund
(CCBF) to better reflect the program’s evolution over time. This did not change the program in
any way.
It is therefore recommended that By-law 6609-05 be repealed, and a new By-law be enacted
to reflect this housekeeping change. The related accounts in the City’s financial system would
also be updated to reflect the new program name.
8700 – Community Facilities Reserve Fund (By-law 357-76)
Financial Statement Grouping: Recreation Programs & Facilities
(Annual Contribution: $nil, Projected Balance: $35,708)
This reserve fund was originally established in 1976 by Council to set aside monies received
from levies taken in lieu of industrial/commercial development to be used for capital
expenditures for community facilities. As there are no longer any levies collected for this
purpose, this reserve fund no longer has a revenue source.
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 8
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It is therefore recommended that any outstanding commitments against his reserve fund be
fully funded at year-end and the remaining balance be transferred to the Facilities Reserve
where the funds will be used for capital expenditures related to City Facilities in accordance
with the purpose for which they were collected. It is further recommended that the Reserve
Fund then be closed, and By-law 357-76 be repealed.
8701 – Capital Works Reserve Fund
Financial Statement Grouping: Acquisition of Tangible Capital Assets
(Annual Contribution: $nil, Projected Balance: $129,891)
This reserve fund was established by Council in 1980 for the financing of the Capital Works
Program. Originally this reserve fund received lot levies collected from developers, however lot
levies were replaced with the Development Charge regime and accordingly lot levies are no
longer collected by the City of Pickering. As a result, this reserve fund is no longer required.
It is therefore recommended that any outstanding commitments against this reserve fund be
fully funded at year-end and that the balance be transferred to the Parks Reserve where the
funds will be used for capital projects related to parks and playgrounds in accordance with the
purpose for which they were collected. It is further recommended that the Reserve Fund then
be closed, and By-law C9/1980 be repealed.
Attachments:
1. Draft By-law to provide for the establishment of a Reserve Fund to be known as the
Canada Community Building Reserve Fund
2. Draft By-law to Repeal By-law 357/76
3. Draft By-law to Repeal By-law C9/1980
Prepared By: Approved/Endorsed By:
Original Signed By: Original Signed By:
Jason Bekramchand, CPA Stan Karwowski, CPA, CMA, MBA
Senior Financial Analyst – Capital & Director, Finance & Treasurer
Debt Management
Original Signed By:
Danna Munns, CPA, CA
Senior Financial Analyst –
Budgets
Report FIN 24-23 December 4, 2023
Subject: Restructuring of Reserves and Reserve Funds Page 9
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Recommended for the consideration
of Pickering City Council
Original Signed By:
Marisa Carpino, M.A.
Chief Administrative Officer
Attachment #1 to Report FIN 24-23
The Corporation of the City of Pickering
By-law No. xxxx/23
Being a By-law to provide for the establishment of a Reserve Fund
to be known as the Canada Community Building 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 the Council of the City of Pickering approved Council Report CS 92-05 authorizing
the City to execute the Municipal Funding Agreement for the Transfer of Federal Gas Tax
Revenues under the New Deal for Cities and Communities.
Whereas the execution of the Municipal Funding Agreement as per By-law 6609/05 and the
subsequent Amending Municipal Funding Agreement as per By-law 7060/10 provides the City
of Pickering with funds to be used for eligible projects as outlined in the agreement(s).
Whereas the Council of the City of Pickering passed By-law 6609/05 being a By-law to
establish and maintain a Federal Gas Tax Reserve Fund.
Whereas on June 29, 2021, the Federal Government of Canada renamed the Federal Gas Tax
Fund the Canada Community Building Fund.
Whereas the name change was undertaken by the Federal Government to better reflect the
program evaluation over time and did not alter or modify the objectives or requirements of the
program in any way.
Whereas renaming the City of Pickering’s Federal Gas Reserve Fund the Canada Community
Building Reserve Fund will align the fund with the new program name.
Now therefore the Council of the Corporation of the City of Pickering hereby enacts as follows:
1. The establishment of a reserve fund know as the Canada Community Building Reserve
Fund is hereby authorized.
2. The Canada Community-Building Reserve Fund shall consist of such moneys paid by the
Federal Government or through the Association of Municipalities of Ontario for the purpose
of meeting the requirements of the program as described in the Municipal Funding
Agreement for the Transfer of Federal Gas Tax Revenues under the New Deal for Cities
and Communities (as amended) together with investments made and earnings derived
there from.
3. That By-law 6609/05 be repealed in its entirety.
By-law No. XXX-23 Page 2
4. That this By-law shall come into effect upon the date of the final passing thereof.
By-law passed this 11th day of December, 2023
________________________________
Kevin Ashe, Mayor
________________________________
Susan Cassel, City Clerk
Attachment #2 to Report FIN 24-23
The Corporation of the City of Pickering
By-law No. xxxx/23
Being a By-law to repeal By-law 357/76 being a By-law to establish
a Reserve Fund (known as the Reserve Fund for Community
Facilities Development).
Whereas the Community Facilities Reserve Fund was established to set aside monies
received from levies taken in lieu of industrial/commercial development.
Whereas such levies are no longer collected by the City of Pickering.
Whereas the Council of the City of Pickering approved Council Report FIN XX-23 authorizing
the City to close the Community Facilities Reserve Fund.
Now therefore the Council of the Corporation of the City of Pickering hereby enacts as follows:
1. That By-law 357/76 be repealed in its entirety.
2. That this By-law shall come into effect upon the date of the final passing thereof.
By-law passed this 11th day of December, 2023
________________________________
Kevin Ashe, Mayor
________________________________
Susan Cassel, City Clerk
Attachment #3 to Report FIN 24-23
The Corporation of the City of Pickering
By-law No. xxxx/23
Being a By-law to repeal By-law C9/1980 being a By-law to
amend the Town of Pickering Municipal Code to establish a
reserve fund for the Financing of a Capital Works Program.
Whereas the Capital Works Reserve Fund was established to set aside monies
received for Lot Development Fees Collected.
Whereas the legislative framework that gave rise to Lot Development Fees has been
replaced by the Development Charges Act 1997 (as amended) such that the City no
longer receives Lot Development Fees.
Whereas the Council of the City of Pickering approved Council Report FIN XX-23
authorizing the City to close the Capital Works Reserve Fund.
Now therefore the Council of the Corporation of the City of Pickering hereby enacts as
follows:
1. That By-law C9/1980 be repealed in its entirety.
2. That this By-law shall come into effect upon the date of the final passing thereof.
By-law passed this 11th day of December, 2023
________________________________
Kevin Ashe, Mayor
________________________________
Susan Cassel, City Clerk