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HomeMy WebLinkAboutFIN 02-16City oin PICKERING Report to Executive Committee Report Number: FIN 02 -16 Date: January 11, 2016 From: Paul Bigioni Director Corporate Services & City Solicitor Subject: 2016 Financial Policy and Housekeeping Items Recommendation: 1. That Council amend the Community Grant Policy to permit the issuance of grants to those organizations that previously received grants up to $1,000 to accommodate the grant requests that occur prior to Council budget approval; 2. That Council approve the Development Services fee changes listed on Attachment 1 and these fees be incorporated into the development of the 2016 Current Budget; 3. That Council amend the Purchasing Policy as follows: a) That the Chief Administrative Officer and Treasurer be authorized to approve consulting services between $30,000 to $50,000 initiated by the Director without going through the competitive process and any award above $50,000 is subject to the additional approval of Council; b) That subsection 6.12 (Purchasing Policy) be amended to authorize the Chief Administrative Officer and Treasurer to approve the purchase of goods and services that are within budget over $75,000 up to $250,000; c) Any contract or tender for the purchase of goods and services over $250,000 will require the approval of the Director, Division Head, Finance & Treasurer, Chief Administrative Officer and Council; d) That subsection 6.08 (Purchasing Policy) be amended to allow the Director to approve the purchase of goods or services over $1,000 and up to $5,000 not covered by a contract or blanket order where a minimum of one informal quote has been obtained and that the Director or designate is responsible to ensure that all of the Health & Safety and Insurance requirements have been met; 4. That the City's Investment Policy be amended to permit the City to invest in The One Investment Program - Universe Corporate Bond Portfolio to an upset dollar limit of $5.0 million and that the corresponding By -law be approved; 38 Report FIN 02 -16 January 11, 2016 Subject: 2016 Financial Policy and Housekeeping Items Page 2 5. That Pickering Council authorize staff to proceed with the initial investigation and preliminary marketing of City owned lands at 2510 Brock Road and the lands adjacent to the Pickering Soccer Centre located at 1975 Clements Road; 6. That the City's Fair Wage Policy be repealed; and 7. That the appropriate City of Pickering officials be authorized to take the necessary actions as indicated in this report. Executive Summary: The purpose of this report is to seek Council approval for financial related changes to various policies. The majority of the recommendations can be viewed as housekeeping and Council approval will assist the City in developing and meeting its 2016 financial plan. The grant policy change will provide staff the authority to provide grants to those agencies and /or organizations that have received grants in the past prior to Council approval of the annual budget. For 2016, this recommendation will allow staff to provide grants up to $1,000 for the months of January, February and March. The Purchasing policy changes mainly relates to dollar limits and corresponding management approvals. The dollar limits were previously approved in 2011 and staff are adjusting these dollar limits to reflect inflation and efficiency. The revised dollar limits are similar to other Durham municipalities. The recent economic news of a possible decrease in interest rates or "negative interest rates" may have an impact on the City's investment income. Staff are seeking Council approval to participate in the Corporate Bond Portfolio of "The One Investment Program" to increase City investment revenues. This program is operated by AMO through Local Authority Services or LAS and CHUMS Financing Corporation (a subsidiary of the Municipal Finance Officers' Association of Ontario). The One Investment Program welcomes investors from the broader Ontario public sector including conservation authorities, municipalities, hospitals, universities and school boards. The Council recommendation will "cap" the City's participation up to $5.0 million. Financial Implications: The adoption of the proposed Development Services user fees will be incorporated into the 2016 budget plan. It is anticipated that these user fees will generate a minimum of $20,000 in additional revenues. 39 Report FIN 02 -16 January 11, 2016 Subject: 2016 Financial Policy and Housekeeping Items Page 3 Discussion: The proposed financial policy changes will assist the City in finalizing the development of its 2016 budget. Recommendation 2 is asking Council to approve changes to the Development Services user fees with an effective date of February 1st in order to avoid potential revenue losses. Staff are recommending these changes to offset the increased staff time associated with fill permit administration. The increase in the dollar per cubic metre of imported fill is be in line with other local municipalities, who have recently increased their fees to this amount (ie. Town of Whitby, Township of Scugog and the Town of Whitchurch - Stouffville). A new Penalty and Investigation fee is being implemented, which will account for the staff time required to bring sites into compliance, for either starting work with no permit or completing work not according to the approved plans. This will result in generating some additional revenue from sites which are being used to import fill. Recommendation Three is asking Council to approve changes to the purchasing policy as it pertains to the management approvals within certain dollar limits. These limits haven't been changed since 2011 and the proposed approval changes reflect what other Durham Lakeshore municipalities have implemented and are using. Currently, Directors can approve consulting projects up to $30,000 without going through the competitive process. Durham Region and the City of Oshawa currently have their directors being able to approve consulting projects up to $50,000. Recommendation 3 a), is increasing the dollar limit to $50,000, however, an additional oversight layer is being added by having the CAO and Treasurer approve these expenditures. Currently, the CAO and Treasurer can approve the purchase of goods and services from $75,000 to $125,000 that are within budget and not debt financed. Recommendation 3 b), is changing the current dollar approvals from $125,000 to $250,000. The increase in the dollar limit approval closely follows Ajax and Clarington. Oshawa's limit is set at $500,000. If the project is over budget, then Council approval will be required. Recommendation 3 d), is changing the dollar limit for informal quote to $5,000 from $3,000. At this dollar level, only one informal quote is required. This change reflects the request from the user departments that the current $3,000 limit creates an efficiency barrier when you consider the fact that facility cost repairs are usually over $3,000 and would require three quotes. In the majority of facility repair expenditures, site visits are required and it is difficult to have all three vendors attend at the same time requiring additional staff time to attend each separate vender visit. Recommendation 4 is seeking Council's approval to participate in the AMO/LAS/MFOA `The One Investment - Universe Bond portfolio." The City's participation level would be capped at $5.0 million. Currently, there is $163.2 million invested in this fund and the five year average retum is 4.81 %. The City's average retum over the last few years is approximately 1.75% and therefore, the "Universe Bond Portfolio" provides the City with an opportunity to increase its investment income offset by higher risk and longer term investment horizon. The investment horizon for this product is at least four years. This fund invests in high quality corporate bonds such as major 40 Report FIN 02 -16 January 11, 2016 Subject: 2016 Financial Policy and Housekeeping Items Page 4 Canadian banks, Hydro One, Transcanada, 407 International, Manulife and Toyota Credit Canada. In 1995, LAS and CHUMS combined their efforts to create a single professionally - managed investment program known as ONE - The Public Sector Group of Funds (commonly referred to as the "One Funds "). One historically offered a Money Market Portfolio and a Bond Portfolio, but an Equity Portfolio was added. in 2007 and a Corporate Bond Portfolio in 2008. The addition of the Corporate Bond and Equity portfolios were launched as a result of 2005 amendments to the Municipal Act Eligible Investment Regulation (0. Reg. 438/97) allowing municipalities to invest in Canadian equities and longer term Canadian corporate bonds. The regulation however offered access to these investment types only through The One Investment Program. Throughout 2006, One worked with a diverse committee of municipal investment practitioners to develop investment policies and operating guidelines for both the Equity and Corporate Bond Portfolios, and to select professional managers for the two new portfolios. In February 2010 the Program was renamed "The One Investment Program ". The program has continued to grow in recent years and now also welcomes investment from organizations within the broader Ontario public sector. Investors from the broader public sector include conservation authorities and municipal services boards, but the program is also available to hospitals and other segments of the MUSH sector. Local government investment pools are not a new idea, with many having been established in jurisdictions across Canada and the United States. They have proven to be highly successful and popular investment and cash management tools for municipalities. Participation in such pools is, in fact, recognized as a recommended practice for achieving portfolio diversification and liquidity by the Government Finance Officers Association of the United States and Canada. Since 1995, The One Investment Program has successfully met the needs of Ontario municipalities by providing safe and high - quality investment opportunities. Asset levels in One have ranged between $300M and $600M since inception, with recent investment balances (2009 and 2010) in the $525 -$550M range. The Program provides professional investment services to almost 100 organizations, and throughout history performance has been competitive with the permitted alternative investments for Ontario municipalities. All One Portfolios are governed by formal investment guidelines requiring that monies be invested only in instruments allowed under the Municipal Act, with additional restrictions being established by the guidelines. One currently utilizes the professional investment services of MFS Investment Services for our Money Market, Bond, and Corporate Bond Portfolios, and Guardian Capital LP for our Equity Portfolio. Both organizations have billions in assets under management and have a long track record of managing large multi - customer investment pools. The investment guidelines and manager activities for each investment portfolio are monitored by One staff, an independent third -party investment consultant, as well as the One Advisory Committee, 41 Report FIN 02 -16 January 11, 2016 Subject: 2016 Financial Policy and Housekeeping Items Page 5 which is comprised primarily of senior public sector officials appointed by LAS and CHUMS. In addition, the program also receives periodic oversight from the MFOA/CHUMS and LAS Board of Directors, comprised of municipal finance professionals and municipal administrators and elected officials, respectively. There is no requirement for municipalities to invest for a specified period of time in "The One Investment Program "; money can be invested, withdrawn or transferred at any time, although each of the Portfolios has been established with a certain investment duration in mind. If investment/redemption instructions are provided by 4:00 p.m. on any banking day, the funds are deposited or withdrawn, as the case may be on, the next banking day. The minimum transaction amount is $5,000 for any Portfolio. There are no penalties or fees for deposit or withdrawal at any time. Investment fees for all invested monies are calculated on a daily basis based on the total balance held in the account, and all performance figures provided by One are always posted net of fees. The current fee for Universe Corporate Bond is 45 basis points. For the fees paid, each investor receives numerous benefits, including but not limited to: • Professional money management • Reduced risk through diversification and regular investment oversight • Flexibility & liquidity of investments • Accounting & performance reporting • Legal costs for program related issues • Regulatory compliance guarantee • Lower brokerage costs Preliminary Investigation and marketing of City Owned Land adjacent to 1975 Clements Road and 2510 Brock Road Recommendation 5 is seeking Council's approval to start the preliminary investigation and marketing of City owned land as referenced above. These steps would include developing a marketing plan, obtaining third party appraisals and engaging the market in informal conversations regarding the availability of the property. The. City still owns three parcels of land in Duffin Heights. The property at 2510 Brock Road is located south of Dersan and north of Concession 3 on the west side of Brock Road and approximately 8 acres. The land adjacent to the Pickering Soccer Centre (approximately 20 acres) would be available for future commercial and industrial use. If any of these properties are sold, Pickering would start to receive taxation revenue and there is a high probability that the buyer would construct some type of buildings (residential or commercial) translating into additional property tax revenue to the City. Fair Wage Policy Council adopted the Fair Wage Policy (FWP) in June 2011 by Resolution #123/11. Around this time, Durham Region Council elected not to adopt the FWP for reasons outlined below. During the last four and half years, this policy applied to one project - 42 Report FIN 02 -16 January 11,2016 Subject: 2016 Financial Policy and Housekeeping Items Page 6 Integrated Energy — Pickering Recreation Complex. This policy can create additional administrative processes as it relates to the construction of capital infrastructure and staff resources for monitoring policy compliance and conducting complaint- driven investigations. Critics of this policy state that a FWP can limit smaller —to- medium suppliers ability to bid on government contracts. The Canadian Federation of Independent Business has long argued against FWPs and claims that government should not be involved in setting wages for private sector workers bidding on public sector contracts. The City's open and competitive procurement process allows for qualified contractors to bid on construction contracts. This supports the continued emphasis by public sector entities to emphasize equal access and non - discriminatory best practices for goods and services. Critics continue to state that FWP can reduce competition, increase labour and procurement costs resulting in higher costs to the taxpayer. During the remainder of this term and next term of Council, Pickering could be constructing at least one major capital project every two years. It is important that the City maximize its scarce resources for the benefit of the taxpayer. Attachments: 1. Development Services User Fees 2. By -law to Authorize the City of Pickering to enter into the Agency Agreement Prepared By: Stan Karwowski Division Head, Finance & Treasurer ved /Endorsed By: Pa Bi Dir-ctor, Co •orate Services & City Solicitor Recommended for the consideration of Pickering City Council Tony Prevedel, P.Eng. Chief Administrative Officer . z /, 2a /.S 43 ATTACHMENT# E TO REPORT # c - Development Services User Fee or Charge 2015 . Current Fee (Excluding HST) 2016 Proposed Fee (Excluding HST) HST Ap)ble Proposed Fee Effective Date Fill/Topsoil Permit One Year Permit $1,000.00 + $1,000.00 /hectare to a max of $5,000 or $1.00 /m3 whichever is greater $1,000.00 + $1,000.00 /hectare to a max of $5,000 + $2.00/m3 of imported fill N Feb. 1, 2016 One Year Extension $500.00 $1,000.00 N Feb. 1, 2016 Penalty & Investigation Fee New $5,000.00 N Feb. 1, 2016 Erosion & Sediment Control Security New 100% of estimated cost of Erosion & Sediment Control Measures N Feb. 1, 2016 - Road Damage Security Rural Paved Road $5,000.00 /km $5,000.00/km N No Increase Rural Surface Treat/Gravel Road $10,000.00 /km $10,000.00 /km N No Increase 44 ATTACH t`tE IT 3-tt TO REPORT FiN ()DA The Corporation of the City of Pickering By -law No. A by -law to authorize The Corporation of the City of Pickering to enter into the Agency Agreement, as defined herein, between CHUMS Financing Corporation and Local Authority Services Limited, as Agent, and Eligible Investors with respect to "The One Investment Program" and to authorize the Treasurer to execute the necessary documents from time to time for that Purpose. Whereas the Municipal Act provides that the power of a municipality to invest money includes the power to enter into an agreement with any other municipality, school board, college, university, hospital or such other person or classes of them as may be prescribed by regulation for the joint investment of money by those parties or their agents; And whereas the Corporation proposes to enter into a restated Agency Agreement dated as of March 1, 2010 (the "Agency Agreement ") between CHUMS Financing Corporation, a duly incorporated wholly -owned subsidiary of the Municipal Finance Officers' Association of Ontario, and Local Authority Services Limited, a duly incorporated wholly - owned subsidiary of the Association of Municipalities of Ontario, as Agent, and Eligible Investors, and defined therein, to permit the Corporation to be an investor through "The One Investment Program" for joint investments as set out in the various schedules to the Agency Agreement (the "Portfolios "); And whereas the Council of the Corporation deems it to be in the interest of the Corporation to enter into the Agency Agreement and to enroll in one or more of the One Investment Program Portfolios; And whereas the Treasurer has stated, pursuant to the statement appended hereto, that the investment guidelines of the Agent comply with the Corporation's investment policies and goals; Now, therefore, the Council of the City of Pickering hereby enacts as follows: The Treasurer is hereby authorized and directed to enter into and execute the Agency Agreement and any other necessary documents, including without limitation, enrolment documents and documents in connection with payment services for the Portfolios, and to do anything necessary or desirable, initially and on an ongoing basis, on behalf of the Corporation, to give effect to the purpose, and the Treasurer is hereby authorized to affix the corporate seal of the Corporation to the Agency Agreement and any other documents which are necessary or desirable to give effect to the Agency Agreement or to the purpose. 45 By -law No. Page 2 By-law passed this 18th day of January, 2016. 46 David Ryan, Mayor Debbie Shields, Clerk