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HomeMy WebLinkAboutCS 20-10 Carr Report To Executive Committee 1 ICKERIlyG Report Number: CS 20-10 Date: June 14, 2010 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2009 Pre-Audit Balances of Reserves and Reserve Funds Recommendation:.,. That Report CS 20-10 of the Director, Corporate Services & Treasurer be received for information. Executive Summary: Based on the preliminary 2009 results, we can now report on the pre-audit actual activities within the Reserves and Reserve Funds for 2009. A summary is presented in Appendix A. The purpose and 2009 financial transactions for each reserve and reserve fund are set out in Appendices B and C respectively. Financial Implications: Not applicable 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 reports filed over the years, this report provides specific information on each of the City's Reserves and Reserve Funds, including year-end balances. The 2009 pre-audit Reserves and Reserve Funds balance of $63,290,000 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 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, 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 Report CS 20-10 Date: June 14; 2010 59 Subject: 2009 Pre-Audit Balances of Reserves and Reserve Funds Page 2 still in the reserve fund's custody and is in compliance with Public Sector Accounting Board (PSAB) for obligatory reserve funds. The combined unspent budget commitments for all reserve funds are $5,838,760. 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 $34,872,751 (See Appendix A). The combined total of the budget commitments, other restricted balances and obligatory reserve funds of approximately $41 million reduced the "discretionary" balance to approximately $22 million as at December 31, 2009. Of the aforementioned balance of $22 million, almost $17 million is in the Rate Stabilization Reserve which is anticipated to be used over the next term of Council as the City progresses towards a sustainable level of budgets. The balance of $5 million is primarily reserved for capital works and capital replacements related to vehicles, equipment, telephone, and community facilities. The City established a new reserve and reserve fund this year: Economic Stabilization Reserve and Operations Centre Reserve Fund. Initial funding for the Economic Reserve came from a Veridian 2009 special dividend. This reserve will provide funds to assist the City's budget process during the next few years. The Operations Centre Reserve Fund was established to capture net proceeds from sale of land from City owned land especially in Duffin Heights. 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, 2009 is. approximately $2.3 million. These loans are undertaken from the Development Charges and Parkland Reserve Funds. The breakdown of the principal balance for both the reserve funds is $2.24 million and $55,619 respectively. 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 2007 internal borrowings. There was no internal loan in 2008. In 2009 there was an internal loan undertaken in the amount of $500,000, on which interest payments will commence in 2010. RegoS CS 20-10 Date: June 14, 2010 Subject: 2009 Pre-Audit Balances of Reserves and Reserve Funds Page 3 Attachments: 1. Appendix A Summary of Reserves and Reserve Funds 2. Appendix B Description of Reserves 3. Appendix C Description of Reserve Funds Prepared By: Approved / Endorsed By: Caryn Kong Gillis A. Paterson Senior Financial Analyst-Capital & Director, Corporate Services & Treasurer Debt Management GAP: ckk Copy: Chief Administrative Officer Recommended for the consideration of Pickering Cit Council Tony Pre a el, P. ng. Chief Administrative Officer ATTACHMENT#.,L.To REPORT#IL-2 o- I o 61 APPENDIX A CITY OF PICKERING SUMMARY OF RESERVES AND RESERVE FUNDS PRE-AUDIT ACTUALS DECEMBER 31, 2009 Pre Audit Audited Audited Audited Appendix B Summary Reserves 2009 2008 2007 2006 4610 Working Funds $400,000 $400,000 $400,000 $400,000 4611/4623 Replacement Capital 854,338 618,419 683,214 685,715 4612 Contingencies-OPG, Election, Other2 1,471,140 1,401,340 1,328,080 6,356,615 4613 Self-Insurance 2 962,707 951,391 951,391 951,391 4619 Rate Stabilization 16,565,777 17,374,935 15,491,176 6,910,981 4620 Develop. Ch a rges-City's Share 2 1,946,216 1,168,494 745,244 809,654 4621 Region Transit 2 - - 120,999 120,999 4622 Continuing Studies 2 390,315 750,534 713,821 474,484 4624 Vehicle Replacement 237,547 172,547 122,547 72,547 4625 Easement Settlement 131,279 131,279 - - 4626 Library Eastern Branch2 105,000 80,000 55,•000 30,000 4627 Move Ontario 267,033 8,243 308,243 833,243 4628 Capital Maint Mgmt System 90,000 75,000 4629 Economic Stabilization New 1,235,000 Total Reserves $24,656,352 $23,132,182 $20,919,715 $17,645,629 Pre Audit Audited Audited Audited Appendix C Summary of Reserve Funds 2009 2008 2007 2006 4225 Community Facilities $215,350 $192,845 $180,880 $194,175 4228 Capital Works 361,338 348,583 335,486 321,618 4229 Development Charges 112 27,714,332 26,413,355 23,528,009 22,341,331 4230 Parkland 182 1,914,793 1,984,486 1,557,607 1,993,928 4232 Public Works 1,224,292 1,167,782 1,122,707 1,072,893 4234 Workers Safety Insurance Brd2 1,658,462 1,339,907 1,103,109 834,922 4235 Third Party/Dev. Contributions' 2,210,924 2,043,667 2,129,221 1,868,148 4236 Ontario Transit Renewal' - - - 19,166 4237 Doubles Squash Courts 2 1,315 92,530 119,057 78,989 4238 Prov. Dedicated Gas Tax' - - 523,014 771,076 4239 Federal Gas Tax Revenue' 3,032,702 3,084,862 2,144,076 1,455,769 4240 Building Permit Stabilization Fees 182 - - 4241 Animal Shelter2 162,553 152,896 146,195 4242 Pickering Mens' Slow Pitch 2 137,587 128,470 - - 4243 Operations Centre New - - _ Total Reserve Funds $38,633,648 $36,949,383 $32,889,361 $30,952,015 Total Reserves & Reserve Funds $63,290,000 $60,081,565 $53,809,076 $48,597,644 Notes (Includes 4229 & ' Obligatory Reserve Funds $34,872,751 4236) (Excludes 4229 2 Restricted Reserves & Reserve Funds 5,872,588 & 4230) Total Obligatory' & Restricted 2 -2008 = 40,745,339 Less Budget Committed Projects (5,838,759) Total Uncommitted Obligatory & Restricted R & RF $34,906,580 Total Reserves & Reserve Funds $63,290,000 Less Obligatory, Restricted Reserve & Reserve Funds (40,745,339) Net-Discretionary Reserves & Reserve Funds $22,544,661 ATTACHMENT#.,~_TO REPORT# d .d6 62 APPENDIX B RESERVE FOR WORKING FUNDS 4610 Actual Balance December 3.1, 2008 $ 400,000 Transfers into the Reserve - Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2009 $ 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. 63 APPENDIX B RESERVE FOR REPLACEMENT OF CAPITAL EQUIPMENT - G/L 4611/4623 Actual Balance December 31, 2008 $ 618,419 Transfers into the Reserve Revenue Fund Contribution 173,462 Sale of Land 177,000 Return to Source 15,957 Transers out of the Reserve Transfers to Capital Fund (130,500) Pre-Audit Actual Balance December 31, 2009 $ 854,338 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. 64 APPENDIX B The balances pertaining to these sub-categories are as follows: Corp Use Prgrms Pool Arena Core. Pool Arena Total Dec 31/08 2,483 153,252 42,540 98,091 74,110 151,178 96,765 618,419 Transfers in 235,000 18,500 4,962 30,000 27,000 15,000 20,000 350,462 Returned to source 15,567 390 15,957 Transfers out - - - (118,000) - (12,500) - (130,500) Dec 31/09 253,050 171,752 47,502 10,091 101,110 153,678 117,155 854,338 i 65 APPENDIX B RESERVE FOR CONTINGENCIES- G/L 4612 (OPG, Other Assessment Appeals, Election, Miscellaneous) Actual Balance December 31, 2008 $ 1,401,340 Transfers into the Reserve Transfers from Revenue Fund 70,000 Transfers out of the Reserve: 200 Pre-Audit Actual Balance'December 31, 2009 $ 1,471,140 • 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. 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, 2008, there are no longer any funds in the Contin9encY-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 - $210,000, Other Assessment Appeals - $682,594, True Sport City Share- $3,060 and Miscellaneous - $575,486. 66 APPENDIX B RESERVE FOR SELF INSURANCE - G/L 4613 Actual Balance December 31, 2008 $ 951,391 Transfers into the Reserve 11,316 Transfers out of the Reserve: Transfer to Capital - Pre-Audit Actual Balance December31, 2009 $ 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 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. 67 APPENDIX B RESERVE FOR RATE STABILIZATION - G/L 4619 Actual Balance December 31, 2008 $ 17,374,935 Transfers into the Reserve 2009 Excess Surplus Contribution 381,180 - Dividend from Veridian 1,722,000 2,103,180 19,478,115 Transfers out of the Reserve 2009 Current Budget Provision (2,912,338) Pre-Audit Actual Balance December 31, 2009 $ 16,565,777 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 2009 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 2009; there is sufficient built-up of funds to draw from this reserve for future budgeting years. In 2010, there is a budgeted draw of $2.9 million and further draws anticipated in 2011 and after. 68 APPENDIX B RESERVE FOR DEVELOPMENT CHARGES - CITY SHARE G/L 4620 Actual Balance December 31, 2008 $ 1,168,494 Transfers into the Reserve 2009 Excess Surplus Contribution 1,369,420 Returned to source 122,667 2,660,581 Transfers out of the Reserve Transfer to Capital Fund -External Subdivision Works (714,365) Pre-Audit Actual Balance December 31, 2009 $ 1,946,216 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. 69 APPENDIX B I RESERVE FOR CONTINUING STUDIES & CONSULTING - G/L 4622 i Actual Balance December 31, 2008 $ _ 75_ 0,5 Transfers into the Reserve Continuing Consulting Work or Studies 131,130 Transfers out of the Reserve (491,349 Pre-Audit Actual Balance December 31, 2009 f $ 390,315 1 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 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 2009 in the amount of $491,349 pertained to consulting work that was transferred into the reserve in the prior year. An additional amount of $131,130 has been transferred-in for future work. I 70 APPENDIX B F - RESERVE FOR VEHICLE REPLACEMENT - G/L 4624 - Actual Balance December 31, 2008 I $ 172,547 Transfers into the Reserve 50,000 =Returned to source 15,000 Transfers out of the Reserve to Capital Fund 6 Pre-Audit Actual Balance December 31, 2009 $ 237,547 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 this account forms 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. I 71 APPENDIX B ( RESERVE - EASEMENT SETTLEMENT - G/L 4625 r Actual Balance December 31, 2008 $ 131,279 Transfers into the Reserve: Projects returned to source - Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2009 i $ 131,279 1. Purpose of this Reserve: This reserve was established in 2005 due to funds received from easement 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 interest income on these funds forms 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. The funds available as at the year ended December 31, 2009 are the results of under-ages from 2005 and 2006 completed projects. i 72 APPENDIX B RESERVE - PROVISION FOR EASTERN BRANCH LIBRARY - G/L 4626 Actual Balance December 31, 2008 $ 80,000 Transfers into the Reserve 25,000 Transfers out of the Reserve - Pre-Audit Actual Balance December 31, 2009 $ 105,000 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 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. 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 has been done by a "Transfer to Reserve for the Provision for Eastern Branch". In 2007, the annual provision has been increased to $25,000. The same amount was provided for in both 2008 and 2009. 73 APPENDIX B RESERVE - MOVE ONTARIO - G/L 4627 Actual Balance December 31, 2008 $ 8,243 Returned to source-completed projects 495,085 Transfers out of the Reserve Capital Expenditures -Roads (236,295) Pre-Audit Actual Balance December 31, 2009 $ 267,033 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 would be no recommended maintenance levels. 74 APPENDIX B RESERVE - CAPITAL MAINTENANCE MGMT SYSTEM - G/L 4628 Actual Balance December 31, 2008 $ 75,000 Contribution from Revenue Fund 75,000 Transfers out of the Reserve Capital Expenditures (60,000) Pre-Audit Actual Balance December 31, 2009 $ 90,000 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 would be no recommended maintenance levels. In 2008 there was a budgeted transfer of $75,000 from the Current Budget. In 2009, there was a provision of $75,000 for a new telephone system. 75 APPENDIX B RESERVE - ECONOMIC STABILIZATION - G/L 4629 (New) Actual Balance December 31, 2008 $ - 640,000 I Dividend from Veridian 1, I f 4 " Transfers to Revenue Fund (405,000 I Pre-Audit Actual Balance December 31, 2009 $ 1,235,000 1. Purpose of this Reserve: This reserve was newly established in 2009 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 the 2009 budget, $405,000 has been drawn from this reserve to reach the proposed tax increase of 3.53%. The current fiscal strategy is, to draw $405,000 for the next four years (2009- 2012) to partially offset loss of income related to the recession. The interest income on this account forms part of the annual Current Budget General Government Revenue. 2. Recommended Maintenance Levels of this Reserve: There would be no recommended maintenance levels. 6 ATTACHMENT #-3-TO REPORT#-LLa 0 / J APPENDIX C RESERVE FUND FOR COMMUNITY FACILITIES - G/L 4225 Actual Balance December 31, 2008 $ 192,845 Transfers into the Reserve Fund Returned to source 15,447 Interest Earned on External Investments 7,058 22,505 Transfers out of the Reserve Fund Transfer to Capital Fund - - Pre-Audit Actual Balance December 31, 2009 $ 215,350 1. Purpose of this Reserve Fund: I 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 six years. Expenditures are transferred out of reserve funds only when incurred. The value of the unspent budget commitments as at December 31, 2009 is $164,148. Taking these commitments into consideration, the uncommitted balance of funds available is $51,202. Additional amounts must be provided to this fund. 77, APPENDIX C RESERVE FUND FOR CAPITAL WORKS - G/L 4228 Actual Balance December 31, 2008 $ 348,583 Transfers into the Reserve Fund Interest Earned on External Investments 12,755 Transfers out of the Reserve Fund - Pre-Audit Actual Balance December 31, 2009 $ 361,338 1. Purpose of this Reserve Fund: i 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. There has been no major contribution to this reserve fund in the past eight years. There is no unspent budget commitment for this reserve fund. Major add itional.contributions will be required in future years. I 78 APPENDIX C RESERVE FUND FOR DEVELOPMENT CHARGES - GIL 4229 Actual Balance December 31, 2008 $ 26,413,355 Transfers into the Reserve Fund: Net Developer Contributions $ 1,104,861 Returned to source 13,385 Interest Earned on External Investments 880,416 Interest Earned on Internal Loans 100,929 2,099,591 Transfers out of the Reserve Fund: Transfer to Current Fund-Studies (82,327) Transfer to Capital Fund: Parks (12,841) Ext. Subdiv- Roads & Related (703,446) (716,287) Pre-Audit Actual Balance December 31, 2009 $ 27,714,332 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 $3,442,897. The pre- audit actual balance of $27,714,332 would be reduced by this amount to reflect an uncommitted balance of funds available for future expenditures of $24,271,435. 79 APPENDIX C RESERVE FUND FOR PARKLAND - G/L 4230 Actual Balance December 31, 2008 $ 1,984,486 Transfers into the Reserve Fund: Developers Contributions $ 39,473 Interest Earned on External Investments 66,434 Interest Earned on Internal Loans 6,132 112,039 Transfers out of the Reserve Fund: Transfer to Capital Fund-Parks: Duffin Trails (54,456) Waterfront Trail-Park Crescent (9,750) Playground Equipment & Construction (63,487) Parks Signage (24,039) Parks- Trees (30,000) (181,732) Pre-Audit Actual Balance December 31, 2009 $ 1,914,793 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 2009 are $71,254. The pre- audit balance of $1,914,793 after taking into account the unspent budget commitments will provide an uncommitted balance available of $1,843,539 as at December 31, 2009. 80 APPENDIX C RESERVE FUND FOR PUBLIC WORKS - G/L 4232 i Actual Balance December 31, 2008 $ 1,167,782 Transfers into the Reserve Fund Third Party Contributions $ 11,289 Returned to source - Interest Earned on External Investments 45,221 56,510 Transfers out of the Reserve Fund Pre-Audit Actual Balance December 31, 2009 $ 1,224,292 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. There is no unspent budget commitment for this reserve fund. The uncommitted balance of funds available as at December 31, 2009 is $1,224,292. 81 APPENDIX C RESERVE FUND FOR WORKERS SAFETY INSURANCE BOARD - GIL 4234 Actual Balance December 31, 2008 $ 1,339,907 Transfers into the Reserve Fund Contribution from Current Fund $ 505,000 Interest Earned on External Investments 55,768 560,768 Transfers out of the Reserve Fund Claims and Other Related Costs $ (77,016) Funding Insurance Costs (143,197) Contribution to Health & Safety Training (22,000) (242,213) Pre-Audit Actual Balance December 31, 2009 $ 1,658,462 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 2009, the contributions were more than double the claims experience for the year, 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 $236,923 from 2003 to 2009 has resulted to the 2009 year-end balance of $1,658,462. 82 APPENDIX C THIRD PARTY/DEVELOPERS CONTRIBUTIONS RESERVE FUND - G/L 4235 Actual Balance December 31, 2008 $ 2,043,667 Transfers into the Reserve Fund Contributions from Developers/Third Parties $ 261,893 Interest Earned on External Investments 77,430 339,323 Transfers out of the Reserve Fund - Current Expenditures-Consulting fees - Capital Expenditures: Parks, Trees Sunbird Trail (1,635) Ext Subdivision Works-Sideline 4 (135,099) Development Control-St Martin/Bayly (32,000) Development Control-Chieftan Development (3,332) (172,066) Pre-Audit Actual Balance December 31, 2009 $ 2,210,924 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 collection and commitment of funds are dependent upon development agreements or cost sharing arrangements. i 83 APPENDIX C SQUASH COURTS RESERVE FUND - G/L 4237 Actual Balance December 31, 2008 $ 92,530 Transfers into the Reserve Fund Surcharge on Memberships 10,459 Contribution from Pickering Squash Club 32,046 Interest on External Investments 3,924 46,429 Transfers out of the Reserve Fund - Recreation Centre Expansion & Squash Courts (137,644) Pre-Audit Actual Balance December 31, 2009 $ 1,315 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. The majority of the funds received as at the year ended 2009 have been used to fund the construction of the doubles squash courts at the Pickering Recreation Complex. The construction of the double squash courts were completed in September 2009. i 84 APPENDIX C FEDERAL DEDICATED GAS TAX RESERVE FUND - G/L 4239 Actual Balance December 31, 2008 $ 3,084,862 Transfers into the Reserve Fund Returned to source - Federal Contribution (through AMO) 2,840,502 Interest on External Investments 152,494 2,992,996 Transfers out of the Reserve Fund - Capital Expenditures in the following cost centres/projects: Civic Complex-Humidification Sys. & Computer Rm (167,401) Dunbarton Indoor Pool (1,033,328) Don Beer Arena-Rehabilitation (18,359) Recreation Complex-Air Handling Unit & Backup Boiler (94,753) Recreation Complex Expansion (1,031,087) Parks-Western Gateway (328,605) Roads-Toy Avenue (152,318) Storm Water Mgmt-Claremont Wellington St (95,539) Streetlights-LED Traffic Signals (34,918) Library-Roof Replacment Central Library (88,848) (3,045,156) Pre-Audit Actual Balance December 31, 2009 $ 3,032,702 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. 85 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 The following table represents the schedule of payments over the life of the Amending Agreement: Year July 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 J 86 APPENDIX C I ANNUAL REPORT - BUILDING PERMIT FEES for the year ended December 31, 2009 Building Permit Revenue $ 668,764 Costs Direct Costs (1,146,126) Indirect Costs (221,252) (1,367,378) Excess/(Deficit) Revenue over Costs $ (698,614) BUILDING PERMIT STABILIZATION RESERVE FUND -GL 4240 Opening Balance, Jan. 1, 2009 $ - 2009 Contribution Closing Balance, Dec. 31, 2009 $ - 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). 87 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 2009, 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 CS 16-10 provided detailed information on the 2009 reporting year. i 88 APPENDIX C ANIMAL SHELTER RESERVE FUND - G/L 4241 Actual Balance December 31, 2008 $ 152,896 Transfers into the Reserve Fund Donations 4,512 Interest on External Investments 5,145 9,657 Transfers out of the Reserve Fund - Pre-Audit Actual Balance, December 31, 2009 $ 162,553 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. 89, APPENDIX C PICKERING MEN'S SLOW PITCH RESERVE FUND - G/L 4242 Actual Balance December 31, 2008. $ 128,470 Transfers into the Reserve Fund . Contribution from Men's Slow Pitch League - Interest Income 9,117 9,117 Transfers out of the Reserve Fund - Pre-Audit Actual Balance December 31, 2009 $ 137,587 1. Purpose of this Reserve Fund: This reserve fund was established at the end of 2007 based on By-Law 6822/07, Report to Council CS 58-07. This reserve fund was established to receive donations from the Pickering Men's Slow Pitch League, for safekeeping of donated funds and further application of funds towards a major softball facility. Report to Council OES 43-07 provides detailed information on the memorandum of understanding between the City and the Pickering Men's Slow Pitch League. 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. In 2008, the City received the financial contribution of $125,000 from the Pickering Men's Slow Pitch League. 1 90 APPENDIX C OPERATIONS CENTRE RESERVE FUND-G/L 4243 (New) Actual Balance December 31, 2008 $ - Transfers into the Reserve Fund Interest on External Investments - Transfers out of the Reserve Fund - Pre-Audit Actual Balance December 31, 2009 $ - 1. 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 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. For the year-ended 2009, there was no transactions, this reserve fund balance remains at zero.