EMT’S MESSAGE The City of Barrie is committed to providing a vast array of services to our growing community. Municipalities deliver key front line services such as police, fire, transit, recreation and cultural events, parks and operations, roads, snow removal, garbage collection, drinking water and wastewater, to name a few. The cost to provide these services and maintain our aging infrastructure is outpacing the rate of our revenues. This in turn puts pressure on the property tax base. Yet, only 10 cents of every tax dollar collected in Canada goes towards these important services. This year, the Executive Management Team (EMT) looked at what was needed to grow our city; effectively manage and improve our existing assets and to continue our efforts to achieve organization sustainability so we are prepared for growth and increased service delivery. EMT is recommending the following as key 2017 investment priorities: • Continuing to address our infrastructure deficit • Continuing to work towards financial sustainability • Protecting the public, our assets and our environment with a focus on environmental protection • Continuing to prepare for growth • Better serving our customers and ensuring we meet Legislated requirements for accessibility through AODA compliance • Supporting our staff and growing our talent so we can better deliver services • Continuing to work towards greater automation by building our technology infrastructure and business systems • Continue to focus on growing our economy Strengthened customer service, continuous improvement, strong financial management and accountability and, finding innovative ways to deliver services continues to be key priority areas for 2017. The organization is transforming to ensure we can best serve the community by improving our business systems, improved measuring and reporting and providing the proper technology tools to make things easier to do business with the City of Barrie. Investment in our workforce is essential- our staff is the engine behind all of the City’s work and without staff we could not deliver services. Staff are working hard every day to find efficiencies and improve the way we deliver services. With investments in these key areas in 2017, Barrie will be best positioned to advance Council’s priorities and achieve the Plan for a Better Barrie. Please don’t hesitate to contact any member of the Executive Management Team if you have questions. We look forward to Council’s deliberations on the 2017 Budget. Executive Management Team Carla Ladd, CAO Patti Elliott-Spencer, General Manager, Community and Corporate Services Richard Forward, General Manager, Infrastructure and Growth Management Rhonda Bunn, Executive Director, Innovate Barrie Zvi Lifshiz, Executive Director, Invest Barrie Rebecca James-Reid, Executive Director, Access Barrie Ingrid Peters, Director of Legal Services 1
Transcript
EMT’S MESSAGE The City of Barrie is committed to providing a vast array of services to our growing community. Municipalities deliver key front line services such as police, fire, transit, recreation and cultural events, parks and operations, roads, snow removal, garbage collection, drinking water and wastewater, to name a few. The cost to provide these services and maintain our aging infrastructure is outpacing the rate of our revenues. This in turn puts pressure on the property tax base. Yet, only 10 cents of every tax dollar collected in Canada goes towards these important services. This year, the Executive Management Team (EMT) looked at what was needed to grow our city; effectively manage and improve our existing assets and to continue our efforts to achieve organization sustainability so we are prepared for growth and increased service delivery. EMT is recommending the following as key 2017 investment priorities:
• Continuing to address our infrastructure deficit • Continuing to work towards financial sustainability • Protecting the public, our assets and our environment with a focus on
environmental protection • Continuing to prepare for growth • Better serving our customers and ensuring we meet Legislated
requirements for accessibility through AODA compliance • Supporting our staff and growing our talent so we can better deliver services • Continuing to work towards greater automation by building our technology
infrastructure and business systems • Continue to focus on growing our economy
Strengthened customer service, continuous improvement, strong financial management and accountability and, finding innovative ways to deliver services continues to be key priority areas for 2017. The organization is transforming to ensure we can best serve the community by improving our business systems, improved measuring and reporting and providing the proper technology tools to make things easier to do business with the City of Barrie. Investment in our workforce is essential- our staff is the engine behind all of the City’s work and
without staff we could not deliver services. Staff are working hard every day to find efficiencies and improve the way we deliver services.
With investments in these key areas in 2017, Barrie will be best positioned to advance Council’s priorities and achieve the Plan for a Better Barrie. Please don’t hesitate to contact any member of the Executive Management
Team if you have questions. We look forward to Council’s deliberations on the 2017 Budget.
Executive Management Team
Carla Ladd, CAO Patti Elliott-Spencer, General Manager, Community and Corporate Services Richard Forward, General Manager, Infrastructure and Growth Management Rhonda Bunn, Executive Director, Innovate Barrie Zvi Lifshiz, Executive Director, Invest Barrie Rebecca James-Reid, Executive Director, Access Barrie Ingrid Peters, Director of Legal Services
1
BUSINESS PLAN OVERVIEW
Introduction
The City of Barrie’s 2017 Business Plan and Budget sets out how the City
recommends to allocate resources in 2017 to deliver essential and key city services at the level of service expected by the Community. The City’s Business Plan and Budget is developed under a service-based approach that relates labour, materials and other costs to the services they are intended to support. Changes in budget requirements are driven by either the increased costs to maintain existing service levels or by increasing service levels through enhanced or new services. As in past years, it continues to emphasize the importance of improving the City’s financial condition and recognizes that in
order to address the City’s current financial challenges decisions will need to be
made that impact services and service levels today and in the future. The City is continuing to lay the foundation for a financially sustainable and responsible plan that addresses the needs of residents and business owners within the community.
The City’s budget includes three elements:
• A tax rate based operating budget – ongoing programs and services funded primarily from a combination of property taxes, user fees and reserves. These services are delivered either by the City of Barrie or by one of the City’s service partners.
• A user rate based operating budget – ongoing programs and services
funded primarily from user fees and reserve funds, based on user rates intended to make the programs and services self-sustaining. The City currently has three user rate based operating budgets: Water, Wastewater, and Parking.
• A capital budget – routine and non-routine projects designed to create,
enhance or restore the service potential of the City’s significant network of
assets. The capital budget is funded from a combination of property taxes, development charges, debt issuance, grants, rates and reserves.
The Business Plan and Budget reflect the Budget Directions approved by City Council on June 27, 2016 established to guide the process and ensure a fiscally responsible business plan and budget. The guidelines recognized that the City faces many pressures in developing its business plan and budget. Costs to deliver existing services at current service levels are increasing for items such as utilities, the cost of materials and supplies, and labour. The City is moving into a high growth period and needs to set the financial foundation to manage costs driven by the growth anticipated over the next number of years while continuing to maintain current service levels and existing infrastructure, and to ensure long term fiscal sustainability. The Business Plan balances these pressures. Like all municipalities, the City has limited funding options to address cost pressures. To mitigate increases in property taxes and user fees, the City looks for efficiencies and savings that can be achieved by improving processes, but once these are exhausted there are only two choices – increase taxes and user fees or reduce services. Included in this document are detailed performance plans for each department, which set out: services provided, major objectives and performance measures, as well as detailed cost information. This overview focuses on providing Council and the public an explanation of the major drivers contributing to the 2017 recommended Budget.
2
2017 Executive Management Goals
The 2017 Business Plan and Budget contains comprehensive plans to address key goals for the corporation. These have been organized under each of the four main headings General Management, Strategic Focus, Organizational Culture, and Service Delivery. Detailed key performance indicators for each of these goals are found in each of the lead division or strategic portfolio sections. General Management To direct and coordinate the general management and operations of the Corporation in accordance with by-laws, policies and plans adopted by City Council to ensure delivery of the highest quality services at the best value for the citizens and businesses of Barrie. • Reduce the risk of harm or loss of life by providing timely Fire and Emergency
services and Building Code review and enforcement. • Provide inclusive recreation facilities and programming that meets community
needs and ensures all residents have the opportunity to participate. • Inform and encourage individual compliance with and enforce community
standards through the administration and enforcement of municipal by-laws and licensing to enhance the safety and quality of life in the community.
• Deliver advice, policy support and administrative services to City Council and
the corporation for legislative, legal, real estate and financial services. • Develop and maintain financial policies and plans that support Council’s
strategic goals and protect the City’s creditworthiness and assets. • Deliver quality operating and maintenance of municipal infrastructure, meeting
service levels and ensuring regulatory compliance while striving for service improvements and operating efficiencies for all service functions.
• Provide for the balanced growth and development of the City through clear,
comprehensive and sound implementation of land use planning policies and principles, and servicing strategies, in a financially responsible manner.
• Maintain, protect and enhance neighbourhoods through the application of
zoning and land development standards.
• Provide total facility management for the City’s valuable portfolio of facility and property assets through comprehensive facility asset management and maintenance strategies that contain costs while preserving the City’s assets.
• Strategically manage the City’s corporate assets, to minimize replacement
costs over the long-term and to close the infrastructure deficit gap. • Execute the delivery of the Capital Plan to achieve best value for the
community. • Comply with all forms of legislation and meet or exceed regulatory compliance
with applicable Provincial/Federal legislation at all times. • Develop the Centre for Continuous Improvement to include optimal allocation
of resources, dashboard reporting and ensure alignment with Council’s strategic goals.
Strategic Focus To set the strategic focus of the organization that is aligned with Council’s strategies and priorities. • Develop a comprehensive Strategic Planning framework that aligns Council,
the Community and the Organization.
• Increase corporate accountability within the organization at all levels.
• Implement strategies that support economic diversification through growth and development of new industry clusters. Increase economic resiliency through innovation and entrepreneurship and enable the economy to create a range of high quality career opportunities.
• Position Barrie as a premiere destination for business investment in Ontario
• Develop and build strong relationships with the business community to maximize opportunities for collaboration and efficient service delivery.
• Develop innovative communication and advertising strategies to build effective relationships internally and externally, to address public relations and marketing needs and to identify and encourage opportunities for proactive and positive media coverage.
• Extend the life of the landfill through enhanced waste diversion programs.
3
Strategic Focus Cont’d • Enhance through comprehensive transportation planning, an inter-connected
community through access to and across the Highway 400. • Provide a public transportation system that is a viable alternative to the
automobile. Organization Culture
To build a positive and passionate organization culture that is customer focused. • Enhance Customer Service access options across multiple channels including
counter, phone, and online opportunities. Develop an energetic and inspiring leadership group along with attracting and retaining top talent.
• Support a culture of continuous improvement, innovation and cross-departmental communication through the use of standardized tools, templates and processes for change management and project management and build the capacity and capability in the organization through training and facilitation.
• Grow the Innovatology program where innovation is encouraged and
recognized.
• Foster organization-wide support of corporate communications to ensure proactive, consistent and meaningful communications with the community as well as within the corporation.
Service Delivery
To strengthen organizational capacity to more efficiently deliver service through the introduction of new tools (technology), process improvements and innovations in service delivery. • Enhance the City’s portfolio management framework to include optimal
allocation of resources and ensure alignment with Council’s strategic goals. • Provide leadership and support on process improvement initiatives while
building the capacity and capability in the organization through training.
• Continue to lead the organization through project and change management initiatives for the Enterprise Resource Planning (ERP) implementation and future sustainment, the building permit application implementation, and computerized maintenance management implementations focused on delivering transformational business capabilities.
• Enhance network, computing and mobility environments to meet existing and
new business requirements. Manage the corporation’s investment in technology to ensure the total cost of ownership is minimized.
• Provide policy support and communication services to Council, the Office of
the CAO and all other Divisions/Departments to assist them in their delivery of programs and services.
• Provide open and transparent communication to the public and staff on the
decision making process associated with Council and Committee meetings.
4
5
How the City is Organized to Deliver These Services:
The Executive Management Team is comprised of the Chief Administrative Officer, General Managers of Infrastructure and Growth Management; Community and Corporate Services; Executive Directors of Innovate Barrie, Invest Barrie and Access Barrie and the Director of Legal Services.
EMT’s mission is to build a customer focused organization responsive to the community where all staff understand and embrace their fundamental role as one of serving the community. Below is the organizational chart for the City of Barrie.
6
BUDGET AND FINANCIAL OVERVIEW
Tax Based Operating Budget
This following section is focused on the 2017 Tax Supported Budget. The user rate supported operating budgets and the capital budgets are discussed later in this document. The City faces many pressures in developing a fiscally responsible budget. To understand how these various pressures impact the recommended business plan and budget for Council’s consideration, City staff have used a “building
block” approach considering the costs of maintaining services, financing costs
driven by capital initiatives and the City’s financial policies, our Service Partners and new investments and service level recommendations. The following summarizes the components of the Business Plan and Budget recommended by staff for Council consideration. • The cost to maintain existing service levels, including the impact of prior
decisions • Implementing approved financial policies for debt and reserve management
related to financing of capital • 1% for Dedicated Infrastructure Renewal Fund • Service Partner Requests (Police, County of Simcoe, Library, Conservation
Authorities, etc.) • New Investment and Service Level Recommendations have been further
categorized by area of investment: Infrastructure; Financial Management; Environmental Protection; Growth Management; Customer Service; Workforce; Technology Infrastructure and Business Systems.
The following is a brief overview of each of the components in the 2017 Business Plan and Budget.
Maintaining Existing Service Levels
The City’s cost to maintain service levels increases every year due to inflation,
similar to the costs residents face. Prices may increase for hydro, gas and diesel which are significant components of the budget. Other materials and supplies increase in price. The City’s labour costs are impacted by negotiated labour
agreements. Revenue changes also can impact the net cost to deliver existing services. To mitigate these net cost increases staff look for efficiencies and process improvements, as well as new revenue options. Also included are increased costs due to new investments and enhanced service levels approved in the previous year’s budget or throughout the year, where these services are
only provided for part of 2016. To maintain the new service level, additional costs or benefits for the full year of service must be included in the 2017 Business Plan and Budget. Debt and Reserve Management
The City has established financial policies for debt and reserve management that provide for the long-range financial sustainability of the City. The City’s debt
policy includes limiting annual debt servicing costs to 20 per cent of own source revenues, which is lower than the provincial limit of 25 per cent. Including existing debt, the proposed 2017 budget will bring the annual debt servicing costs to approximately 9% of the City’s own source revenues. Tax funded debt
servicing costs are budgeted to increase $1.4 million (0.56% tax rate increase) over 2016. This increase is inclusive of annualized and planned new debt. In order to reduce the City’s reliance on debt and build appropriate capital
reserves to support renewal needs, the City’s financial policy framework
identifies the need to increase the annual contribution to the tax capital reserve for new amortization costs. Amortization costs reflect the cost of infrastructure used up during a year, and how much funding that should be set aside on a yearly basis over the life of the asset to allow for eventual replacement of the asset. The proposed 2017 Business Plan and Budget includes increasing the contribution to tax for new amortization costs by $1 million or 0.4% on the average tax bill.
7
This amount was calculated by determining the 2017 amortization on new assets and deducting the portion related to debt funded assets (e.g. Transit Garage) and amortization on assets taken out of service. These adjustments were made in an effort to avoid double counting under the amortization method and brought the calculated contribution down to approximately $2 million. To reduce the 2017 tax rate impact, only 50% of this amount has been included in the base budget. Finally, the City contributes annually to various other reserves to provide funding for specific commitments and financial risks. The 2017 budget includes a net tax funded increase of $513 thousand (0.21% tax rate increase) for these contributions. The primary drivers of the increase include an additional $300 thousand contribution to the County of Simcoe Capital Reserve and a $200 thousand contribution to the Legal Contingencies Reserve, a newly proposed reserve for 2017. Combined, the year-over-year budget changes for debt and reserve management total $2.9 million or 1.17% to the average residential tax bill. Dedicated Infrastructure Renewal Fund
The City of Barrie owns $1.6 billion in infrastructure, based on historical costs. The current dollar value of this infrastructure is considerably higher, at approximately $3.3 billion in replacement cost. The City’s annual requirements
for repairing and rehabilitating aging infrastructure is considerably higher than current funding levels resulting in a significant backlog in infrastructure renewal. The condition of infrastructure has a direct impact on service levels as well as the reputation of the City. To address the significant backlog in infrastructure renewal, in 2015 City Council approved the implementation of a Dedicated Infrastructure Renewal Fund, which requires an incremental 1% increase in taxes annually. This fund will be used to increase infrastructure rehabilitation for tax-supported infrastructure – roads, sidewalks, storm sewers, parks, buildings, fleet and equipment. The 2017 Business Plan and Budget includes $2.5 million for the increase in the Dedicated Infrastructure Renewal Fund, which has a 1% impact on the property tax bill.
The following chart shows the estimated amortization expenses for tax-supported infrastructure in 2016 based on historical costs for the City of $29.8 million. The transfer to the capital reserve in 2016 was $25.9 million, leaving a gap of approximately $3.9 million. However, amortization expense is based on historical values. The FIA analysis undertaken by Watson & Associates Economists Ltd. identifies net tax supported non-growth capital expenditures (existing infrastructure) of approximately $1.37 billion over the next ten years, for an average annual amount of $74 million, resulting in an annual shortfall of close to $48 million.
Service Partners The City of Barrie has a number of Service Partners including the Barrie Police; County of Simcoe who provides long-term care, paramedic services, and social services; Conservation Authorities; and Library. These Boards, Municipalities, and Agencies have a legislated authority to establish Budgets and levy taxes through the City’s tax rate. The City has limited ability to revise their requests.
However, they comprise almost 31% of the property tax bill. An additional $1.1 million will be required from the tax levy to meet the funding requests of Service Partners in 2017. This will result in a 0.45% increase in the tax bill.
8
Impact of Proposed 2016 Budget The following table outlines the net tax budget changes for the cost to Maintain Current Programs at Current Service Levels, Debt and Reserve Management
activities, the City’s Service Partners, and Investment and Service Recommendations.
2017 Budget Tax Rate
Impact
(A) Prior Year - Net Operating Expenditures funded by property taxes 208,262,826$
Maintain current programs at current service levels:
Economic Adjustments - Labour 4,282,000$ 1.71%
Economic Adjustments - Contracts 1,864,000$ 0.75%
Approved Investment & Service Recommendations 429,000$ 0.17%
Efficiencies & Cost Savings (1,146,000)$ -0.46%
Revenue Changes (674,000)$ -0.27%
Interfund Charges (65,000)$ -0.03%
Utilities 256,000$ 0.10%
Other (37,600)$ -0.02%
(B) Subtotal - Maintaining current programs at current service levels 4,908,400$ 1.96%
Debt & Reserve Management:
Debt Management 1,402,000$ 0.56%
Reserves - Tax Capital Reserve (Amortization Method) 1,000,000$ 0.40%
(D) 1% Dedicated Infrastructure Renewal Fund 2,500,000$ 1.00%
(E) Subtotal - (B+C+D) 10,323,400$ 4.13%
(F) Service Partner Budget Requests 1,115,000$ 0.45%
(G) Subtotal - (E+F) 11,438,400$ 4.58%
(H) Realized Assessment Growth Benefit -1.00%
(I) Subtotal - (G+H) 11,438,400$ 3.58%
Investment & Service Recommendations:
Technology Infrastructure and Business Systems 117,399$ 0.05%
Customer Service 45,000$ 0.02%
Financial Management 89,332$ 0.04%
Environmental Protection 28,750$ 0.01%
Workforce 96,185$ 0.04%
Growth Management 96,715$ 0.04%
Subtotal - Investment & Service Recommendations 473,381$ 0.19%
(J) Current Year Net Expenditures funded by property taxes (A+I+J) 220,174,607$ 3.76%
9
Property Tax Bill
According to Statistics Canada, National Economic Accounts Division and the Association of Municipalities Ontario, Municipalities receive a very small portion of total taxes paid by an individual in Canada, when you consider sales tax, income tax and all other taxes paid to municipalities, Provincial and Federal Governments. For example, Ontario municipalities receive only 10 cents of every tax dollar raised in Ontario, while the Provincial and Federal governments receive 44 cents and 47 cents. In contrast to this, municipalities own 57% of the capital infrastructure, while the Provincial Government owns 41% of Infrastructure and the Federal Government only 2%.
Property Tax Bill Funds – City Programs, Service Partners
and Education
To help taxpayers understand what the City Business Plan and Budget will mean to their total property tax bill, impacts are presented as a change to the total tax bill. This also makes comparisons to other municipalities easier, as some municipalities are separated cities and single tier, others two tier – focusing on the total tax bill provides for apples to apples comparisons.
Allocation of Property Tax Bill
In 2017, the proposed average residential property tax bill of $3,992 will fund the following programs: City Services $2,220 (55.5%), Education $541 (13.5%), and Service Partners $1,231 (31%). The education portion is determined by the Province of Ontario and for 2017 it’s assumed there will be no change to the rate.
The average commercial property tax bill contributes 41% of their tax dollar to education compared to a 14% contribution from residential. Commercial properties contribute proportionately less of their total tax payment to support municipal services. An Industrial property tax bill has the same breakdown as a commercial property tax bill.
%
Commercial Property Tax Bill
City Services
38%
Education 41% Service
Partners 21%
Residential Property Tax Bill
City Services
55% Education
14%
Service Partners
31%
10
Value for Your Property Tax Dollar
Every day the residents and businesses of Barrie use City services and see their tax dollars at work. In a typical day most residents will use or witness most City services being provided - they will use clean water from their taps; use wastewater services by flushing or draining a shower; place garbage and recycling in containers for future pickup; walk on a sidewalk; drive on a road, in a car or a City of Barrie bus, which has stoplights, signage and street lighting. They may walk through a park, take a class at a community centre, or borrow a book from the Library. They will likely see a fire truck, or a police car or an ambulance pass by them, knowing if they need these services they are available 24 hours a day, 7 days a week. The City of Barrie delivers many of these valued and essential services. The County provides ambulance, homes for the aged, and social services. Barrie children attend elementary and high schools funded by the education portion of the property tax bill. The cost to an average home for all of these services is estimated at $3,992. When one considers the annual cost to the average household for natural gas, cable, hydro, this represents very good value.
The average house in Barrie has an assessed value of approximately $302,000. In 2017, this average home will pay $3,992 in property taxes based on the proposed budget. Major services received and the total annual amounts paid per home for each are described on the following pages.
11
Police Services - $789
• 24 hours a Day, 7 Days a Week availability, 365 Days a Year • Current staffing complement is 237 sworn police officers and 105 civilians
• 60,637 calls for service with a 62.5% clearance rate
• Barrie Census Metropolitan Area designated as second “Safest
Metropolitan Area” in Canada Fire & Emergency Services - $399
• 24 hours a Day, 7 Days a Week availability, 365 Days a Year • Responses to fires, motor vehicle accidents, ice rescues, tiered medicals,
hazardous materials incidents and a variety of other technical rescues. • Responded to 8,128 calls in 2016 with the first arriving truck on scene 93%
of the time in less than 6 minutes • Over 4,900 calls are medically related • Comprehensive public education/fire prevention programs and Fire Code
enforcement. Roads & Traffic Operations - $249
• Maintenance of and snow cleared from 1668 lane kilometres of roads and 603.6 kilometres of sidewalks
• Maintenance of 117.8 kilometres of ditches • Maintenance and operation of 398.76 kilometres of storm sewers • Maintenance of 106.4 kilometres of watercourses, 18 kilometres of
culverts, and 89 detention ponds • Maintenance of 530 kilometres of wastewater collection sewers • Maintenance and operation of 35 kilometres of Barrie
Collingwood Railway • Power supplied to 11,000 street lights and 246 traffic signals. • Actions over 4,500 service requests annually
Transit - $187
• 2.7 million annual conventional transit trips and 47,000 annual specialized transit trips
• 194,000 transit vehicle in-service hours with 30 minute frequencies during peak periods and extended service hours to increase go train connections
Libraries - $113
• 2 library locations
• 6,450 annual service hours
• 3.2 million annual library engagements, 955,000 electronic library engagements
• 365,000 annual library visits (32,700 active borrowers) • 20,300 annual program attendance
• No membership or user fees for all Barrie residents
• Access to computer workstations, wireless Internet, multilingual and special collections, community meeting spaces
• Services include online databases, courses, downloadable ebooks and multimedia, Information Barrie
Recreation - $116
• 4 Community Centres, 7 Sport and Recreation Centres, 3 Gyms • 43 Baseball Diamonds, 56 Soccer Pitches • 8 Arena Ice Pads, 19 Outdoor Ice Rinks • 37 Tennis Courts • More than 2.0 million participant visits to recreation facilities Environmental Operations - $100
• Over 53,000 households receive bi-weekly garbage collection, weekly organics collection, weekly blue and grey box collection and 34 weeks of yard waste collection curbside;
• Access to the City landfill 5 days per week; and • Hazardous household waste drop-off at no charge on Saturdays
12
Parks & Forestry - $84
• Care of 34,000 street trees, 6,800 trees in parks and over 2,100 acres of City owned forest
• 127 parks totaling 812 acres in area, 2,450 acres of natural areas, 49 Gores, and 40 acres of boulevards
• Inspection and maintenance of 88 kilometers of public trails (including bridges, boardwalks, hard and natural surfaces)
• Inspection and maintenance of equipment and play areas at 114 playgrounds
• Maintenance of 452 planting beds (shrubs, perennials and annuals) and 183 planters (concrete or reservoir)
• Hosted 21 startup, innovation and “collision” events with approximately
1,000 attendees • Delivered 3 business workshops for creative entrepreneurs with 92
attendees • Number of Attendees at City-run festivals (New Years, Celebrate Barrie,
Winterfest, Canada Day, Culture Days, Rhythmfest) – 87,000 • Number of patron tickets purchased for Mady Centre – 7,084 • Number of patron tickets purchased for the Georgian Theatre – 32, 701
Your tax bill also includes services provided by the
County of Simcoe: $279
Paramedic Services - $96 per average household, Long Term Care - $13, Social Housing - $78, Ontario Works - $78, Children & Community Services - $34 Barrie Taxes Are Comparable
The following table presents the total tax bill in 2015 on an average household basis. The total tax levy includes all levels of municipal government and education. Barrie’s taxes are in the lower end of other major Ontario municipalities. The information in this chart is from the BMA Management annual Municipal Study database, which allows for the comparison of various municipal property tax-related benchmarks.
* Source: 2015 BMA Municipal Study Overview of Tax Supported Operating Budget
Changes to Maintain Current Service Levels
The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $4.9 million or a Tax Rate Increase (TRI) of 1.96%. The following table sets out the main drivers in the cost to maintain existing service levels:
2017
Budget
Tax Rate
Impact
Maintain current programs at current service levels:
Economic Adjustments - Labour 4,282,000$ 1.71%
Economic Adjustments - Contracts 1,864,000$ 0.75%
Approved Investment & Service Recommendations 429,000$ 0.17%
Efficiencies & Cost Savings (1,146,000)$ -0.46%
Revenue Changes (674,000)$ -0.27%
Interfund Charges (65,000)$ -0.03%
Utilities 256,000$ 0.10%
Other (37,600)$ -0.02%
Subtotal - Maintaining current programs at current service levels 4,908,400$ 1.96%
13
Economic Adjustments – Labour
The City has a largely unionized employment force where the City is required to negotiate labour agreements. In 2015, negotiations took place for both the Firefighters and CUPE unions. The 2017 budget reflects the current labour agreements, with a 1.5% increase for CUPE and non-union employees. Fire Services receives a 2.5% increase, given in two semi-annual increases.
Benefit costs are expected to increase by approximately $1.4 million for 2017 with the most significant drivers being a 21.8% increase for health premiums and a 2.75% increase to cover anticipated escalation of costs for CPP, EI, life insurance, accidental death and disability, and OMERS.
The provision for salary gapping has been increased by $100 thousand to $900 thousand for 2017. Salary gapping is a staff management approach to achieving savings through position vacancies. Staff believes this provision reflects the salary gapping likely to be achieved in a stable organizational environment.
Finally, employee costs recovered from the capital fund have been decreased year-over-year by approximately $300 thousand to reflect anticipated project management requirements for 2017. The primary drivers of the reduction are the ERP project which is expected to go live in 2017 and recoveries for Right of Way Activity (ROWA) staff, which is actually covered by ROWA fees.
Economic Adjustments – Contracts
Many of the services provided by the City require multi-year contracts with external businesses for the provision of services or purchase of materials. These contracts often contain provisions for the cost of inflation (e.g. CPI). While an adjustment for inflation is common; there are other adjustments that can be equally or more costly. The following table highlights some of the more significant contract adjustments affecting the City in 2017:
The increased waste collection costs are spread across a number of services. The cost of Residential and Multi-Residential waste collection is expected to increase by approximately $584 thousand as a result of anticipated additional tonnage, the start of front end bin collection for multi-residential and the need for additional curbside audits (primarily multi-residential). The collection cost for solid waste is the cheapest per tonne while organics is the most expensive per tonne.
The cost of contracted services for winter control are expected to increase as result of contract indexing, growth in the road network, enhanced minimum maintenance standards for sidewalks, and a new sidewalk winter control contract.
The cost for the City's P3 transit agreement is expected to increase approximately $556 thousand for 2017. The majority of the increase, approximately $440 thousand, is the result of an inflationary increase linked to CPI.
Contracted services for Storm conveyance maintenance in the areas of watercourse maintenance, ditching, and catch basin repair are not keeping pace with the rate of failure and the need for adequate drainage in existing and newly developed areas. The year-over-year budget increase of $123 thousand is intended to address this service gap.
Contract Type 2017 Budget Increase
Waste Collection 584,000$
Winter Control 265,000$
Transit 556,000$
Storm Conveyance 123,000$
14
Approved Investment & Service Recommendations Decisions made in prior years to implement new or enhanced services can have impacts on future budgets. In 2017, increased costs for prior year decisions have a pressure of $429 thousand, with a tax rate impact of 0.17%. Prior year investment and service level decisions include:
• Director of Internal Audit • Strategy & Entrepreneurship Officer • Supervisor of Business Planning, Budgets, and Performance Reporting • Supervisor of Investment & Debt Management • Maintenance Management Sustainment Permanent Staffing • SAP Support Staff & Consultants • Manager of Energy • Supervisor of Transit Infrastructure & Compliance • Canada’s 150
th Anniversary • Customer Contact Centre Development & Customer Information
Advisor Efficiencies & Cost Savings Efficiencies and cost savings are expected to be realized in several areas for 2017. Budgeted fuel costs have been reduced year-over-year by $520 thousand as a result of lower fuel prices. Salt purchases for winter control have been reduced by $230 thousand resulting from the Salt Use Reduction Strategy and recent mild winters. In addition, budgeted costs for various supplies (e.g. caretaker supplies, stationary, field and other supplies) have been reduced by a cumulative total of $342 thousand. Overall, identified efficiencies and cost savings will offset the tax rate increase by 0.46% Revenue Changes
The City relies on a diverse set of non-tax revenue sources to support municipal services. These revenue sources are expected to generate more than $42 million in 2017. Like any business, these revenue streams have their own unique set of risks and uncertainties that affect the amount of revenue realized and despite Staff’s best efforts to accurately predict results more than a year in advance; adjustments are needed on occasion.
Some of the City’s revenue streams benefit from strong historical trends
permitting consistent and reliable budgeting while others are much more susceptible to variables such as market forces or weather. New fees or fees associated with services that have undergone significant changes are especially susceptible to uncertainty as historical trends may be disrupted or non-existent. The 2017 budget contains several year-over-year adjustments to non-tax revenue sources, these adjustments result in a net benefit of $674 thousand that offset the tax rate increase by 0.27%. Recreation revenue has been increased by approximately $277 thousand for 2017. The increased revenue is expected to be realized through a modest increase in user fees of approximately 2.5% to 3% and an increase in the volume of pass sales. Payments in lieu of taxes (PIL) have been increased by $251 thousand to reflect actual expected receipts. PIL are received from properties owned by other levels government, colleges, hospitals, etc. Similarly, revenue from interest and penalties has been increased by $125 thousand for 2017. Revenue from an active investment approach has been increased by $181 thousand for 2017. However, the increase is offset by a reduction of $208 thousand resulting from a decrease to the interest rate on the note receivable from Barrie Hydro Holdings Inc. (BHHI). Transit fare revenue has been adjusted down by approximately $160 thousand to more accurately reflect current ridership trends. Current trends are indicating that while ridership is growing, more riders are moving from cash fares to the discounted pass fares. Revenue from parking tickets and fines has been increased approximately $141 thousand for 2017 based on historical trends. However, revenue from pet licenses has been decreased by $72 thousand reflecting the decision to adopt a lifetime pet license.
15
Interfund Charges
Under the service based budget approach, costs are allocated to the services they support regardless of which department controls these costs. Costs related to administration and overhead are allocated to the rate supported services for water, wastewater and parking. In addition, certain costs billed to the City by Service Partners are covered by user rates where appropriate. Utilities
Electricity and natural gas rates are expected to increase 4.6% and 5% in 2017. While electricity costs are expected to increase by approximately $449 thousand, natural gas costs are expected to decrease by approximately $206 thousand on reduced consumption estimates. Staff continue to investigate and execute energy conservation measures to help offset future rate increases. Total cost avoidance due to conservation efforts are expected to be approximately $320 thousand in 2017. Debt Management
The City issued a $34.1 million debenture in February 2016. The incremental tax funded debt servicing cost associated with this debenture is approximately $674 thousand. A second debenture in the amount of $7.8 million is planned for the end of the 4th quarter 2016. The incremental tax funded debt servicing cost associated with this debenture is approximately $177 thousand.
Additional debentures planned for 2017 amount to $12.7 million. The 2017 tax funded debt servicing costs associated with these debentures are expected to be approximately $536 thousand. Projects included in planned 2017 debentures are listed in the Financial Condition section. Reserve Management
The Dedicated Infrastructure Renewal Fund portion of the annual reserve contribution was approved by Council starting in the 2015 budget year and prescribes an annual increase to the reserve contribution equivalent to a 1% property tax increase for the average residential tax payer. For the proposed 2017 budget, the 1% increase represents approximately an additional $2.5 million.
The City’s proposed Tax supported budget includes a $29.8 million transfer to
the Tax Capital reserve to support the Capital program. This transfer is based on the City’s Financial Policies Framework and represents a $3.45 million increase
over 2016. The increase over 2016 consists of a $2.5 million increase related to the Dedicated Infrastructure Renewal Fund, a $1 million increase related to amortization of capital assets, and a $50 thousand decrease related to the repayment of an internal loan through fundraising related to the Downtown Theatre.
The City’s operating budget includes transfers to other capital reserves such as
the County of Simcoe Capital Reserve and the Development Charges Discounts & Exemptions Reserve; the transfer to the Development Charges Discounts & Exemptions Reserve has been held at 2016 levels for 2017 while the contribution to the County of Simcoe Capital Reserve has been increased by $300 thousand to $1.4 million. Forecasted details of the County of Simcoe Capital Reserve are provided in the Reserve & Reserve Fund section of the executive summary.
At Council’s direction, a Police Services Board Capital Reserve has been
established for 2017. The contribution to this reserve is budgeted at $1.3 million. The contribution to this reserve does not necessarily result in a tax rate impact for 2017 because the Police Services capital program has historically been imbedded in the Board’s annual budget request.
The City’s operating budget also includes contributions to various non-capital reserves. The 2017 budget includes an additional $200 thousand contribution to a proposed Legal Contingency Reserve and increased contributions of $25 thousand and $37.7 thousand to the Elections Reserve and Landfill Site Maintenance Reserve respectively. The 2017 Budget proposes the creation of a legal reserve to provide a funding source for increasing legal costs.
16
Service Partners The 2017 service partner base budget requests require an increase of $1.1 million to the tax levy. The main drivers of the net increase include the Barrie Police Service ($1.56 million) offset by a reduction to the County of Simcoe’s
operating levy which has been decreased by $600 thousand for 2017.
The Police Budget increase is largely driven by salary and benefits costs. The 2017 increase also reflects the elimination of $88 thousand in Development Charge funding that will applied directly to the associated capital project where appropriate.
Costs associated with the County’s Capital Program have been moved to the
Capital Fund to provide enhanced transparency. As these costs are funded from the County of Simcoe Capital Reserve and Development Charges there is no direct impact to the 2017 tax levy. However, as noted above, the contribution to the County of Simcoe Capital Reserve has been increased for 2017 (see the Reserve & Reserve Fund section of the executive summary).
The County of Simcoe operating budget request includes increases for Land Ambulance of $163 thousand, Long Term Care of $79 thousand, Social Housing of $120 thousand, and Children and Community Services of $34 thousand. This is offset by a reduction of $1.3 million for the Ontario Works program as a result of continued increases in upload funding from the Province. The County’s social
housing budget includes $460 thousand to fund the City’s share of an
anticipated debt financed social housing project. These costs are funded by a combination of draws from the County of Simcoe Capital Reserve and Development Charges and therefore do not have a direct impact on the 2017 tax rate increase.
17
The following table shows the net impact to the tax levy and the year-over-year percentage change by service partner, including requested budget and other funding sources available.
Contribution to County Capital Reserve $1,100,000 $1,100,000 $1,100,000 $1,400,000 $300,000 27.27%Children and Community Services $2,030,400 $2,099,832 $2,100,000 $2,134,000 $34,168 1.63%Simcoe County Museum and Archives $100,280 $105,996 $104,000 $106,000 $4 0.00%Total - Tax Funded $19,305,272 $19,889,478 $19,870,000 $19,290,000 ($599,478) -3.01%
Simcoe Muskoka District Health Unit $1,613,925 $1,701,243 $1,701,243 $1,734,542 $33,299 1.96%Province of Ontario $0 $26,000 $26,000 $26,000 $0 0.00%
Total - Tax Funded $1,613,925 $1,675,243 $1,675,243 $1,708,542 $33,299 1.99%
Grand Total - Tax Funded $76,423,334 $78,801,045 $78,874,311 $79,916,372 $1,115,327 1.42%
Base Budget Change Report
SERVICE PARTNERS & GRANTS
Simcoe Muskoka
District Health
Unit
Other Service
Partners &
Grants
Change in 2017 Requested Budget
to 2016 Approved Budget
Conservation
Authorities
County of
Simcoe
Local Boards
Lake Simcoe
Regional Airport
18
New Investments and Service Recommendations
This component of the Business Plans includes a number of proposed new investments and service recommendations the Executive Management Team recommend for implementation. These new investments are required to ensure the City is able to deliver on Council’s strategic plans and to meet the demands of growth. EMT has identified these new investments by the service objective, or theme, they support. These are Infrastructure; Financial Management; Public Safety and Asset Security; Environmental Protection; Growth Management; Customer Service; Workforce, and Technology Infrastructure. A listing of the new investments is provided by theme at the end of this section. The need for investment in each area is discussed below, with a total tax-supported cost of $473 thousand (0.19%) for 2017.
Infrastructure
Infrastructure is critical to support services that our residents require on a daily basis. The City has $3.3 billion in assets with an additional investment on the horizon of $3.1 billion in new assets and asset replacement over the next 20 years. The level of investment is huge, but essential, not only to support growth but to maintain and replace existing infrastructure.
Taking care of existing infrastructure reduces the risk of asset failure which costs more than proactive maintenance and renewal. The City has the benefit of learning from the past growth boom that it is necessary to get infrastructure investments right from the start to avoid costly rehabilitation projects in the future.
Financial Management
In keeping with Council’s priority for Responsible Spending, the City needs
strong financial management.
The long term financial plan and supporting policies need to be updated, to ensure growth does pay for growth, existing assets are maintained and the City has the ability to make strategic investments to make residents high quality of life even better.
The City is in the process of improving financial systems and processes through automation which will help enhance reporting, provide more accurate data and forecasting and track progress through consistent measurement systems.
The City must continue to put a focus on innovation to reduce costs and become more efficient.
It is important that the City not only continue its current efforts and momentum but ramp them up to take maximum advantage of the opportunities that are being provided through automation and increased municipal revenues. The recommended investments in 2017 total $89 thousand for a junior internal audit position, with a tax impact of 0.04%.
Environmental Protection
The City of Barrie and its community is environmentally minded. Great strides have been made in taking proactive measures to improve waste diversion in the community to extend the life of the landfill. These efforts must continue to achieve significant cost avoidance for as long as possible.
Programs to protect drinking water sources for the safety of the public need to continue. Laws passed by the Province of Ontario, make this the City’s
responsibility. Recommended investments in 2017 total $66 thousand with a tax impact of 0.01%.
Growth Management
Growth Management has been on the forefront of the City’s agenda for the last
several years. As growth occurs it will put considerable pressure on the City to provide the same services, at the same level, that current residents receive.
To manage this more proactively than in the past, the City needs systems, processes and people to do it. Recommended investments in 2017 total $221 thousand, with a tax impact of 0.04%.
19
Customer Service
As part of our efforts to improve customer service on Barrie Transit and to ensure compliance with the provincial Accessibility for Ontarians with Disabilities legislation, the recommended investment of $45,000 in 2017 will ensure hour parity for Specialized Transit service with the hours of conventional bus service. This will provide our specialized transit customers with improved service times. Recommended investments in 2017 total $45 thousand, with a tax impact of 0.02%.
Workforce
Investment in the City’s workforce is essential – City staff are the engine behind all of the city’s work and without them the City could not deliver services. The City needs to invest in its staff through training, recognition, and planning for the future to address the upcoming retirement bubble to ensure the City has staff with the right skills and talent to enhance business systems and deliver services. Unfortunately investments in staff are often seen as being much less important than all the others but at the end of the day, a strong workforce is required to deliver services, undertake projects, solve problems and improve the organization through innovation. Recommended investments in 2017 total $109 thousand. Technology Infrastructure and Business Systems
Finally, the City needs to continue investing in technology as a key tool to improve efficiency in delivering services to our residents. Council has supported a significant investment in technology and business systems so the City can achieve a much greater level of automation.
These investments however need to be secured by ensuring appropriate resources to sustain and grow them. This investment is no different than ensuring there are resources to sustain infrastructure – just as new kilometres of road require additional snowplows and drivers to clear them, as more automation is added, and networks expand, systems experts are required to maintain and further increase automation by maximizing the capacity of systems. Recommended investments in 2017 total $213 thousand, with a tax impact of 0.05%.
20
New Investment and Service Recommendations
The new investments and service level recommendations provide for new programs and therefore identify new staff resources. The City provides services, and services are largely provided by people and therefore as we increase services, it is necessary in some cases to have staff resources to deliver them. The new investments and service recommendations for 2017 require 12.7 new permanent positions. Many of these positions are funded from sources other than property taxes, and therefore do not impact the tax rate. Of the 12.7 positions, only 5.98 require tax funding. Details on each of these staffing requests are provided in the New Investment and Service Recommendation appendix.
Technology Infrastructure and Business Systems Total
Growth Management Total
Funding Sources
Tax Levy / Tax Capital Reserve
Water
Wastewater / Wastewater Capital Reserve
Parking
Recovery from Capital Projects
Infrastructure Total
Financial Management
Legislated2017 Budget
Environmental Protection Total
FTE
ImpactDescription
Form
#Themes
Environmental Protection
Financial Management Total
21
Note 1: Annual staffing numbers reflective of 2016 corporate reorganization Note 2: Non-tax funding sources include capital project recoveries and the conversion of casual positions with no tax impact.
Division/Department
FT PPT Total Tax Non-Tax2 Water Wastewater Parking FT PPT Total
Office of the Mayor & CAO
Office of the Mayor & CAO 5 5 1 - 1 1 6 - 6 Legal Services 19 19 - - - 19 - 19
The 2017 requested Tax Operating budget represents an $8.9 million (3.0%) increase in gross expenditures and consists of the following breakdown of expenses.
The 2017 requested Tax Operating Budget represents an $8.9 million (3.0%) increase in planned revenues and consists of the following sources of operating revenue.
Total City Staff (Tax Bass) 733 781 11.0 0.7 11.7 4.98 4 0.83 0.79 0.10 764.0 28.7 792.7
Note 1: Annual staffing numbers reflective of 2016 corporate reorganizationNote 2: Non-tax funding sources includes capital project recoveries and the conversion of casual positions with no tax impact.
Infrastructure & Growth
Management
2015 Total
Approved
Complement1
2016 Total
Approved
Complement1
Recommended
Themes Impact
Recommended Themes Complement
Funding Source
Recommended
Complement
23
The table below shows gross expenditures by service area and the net cost to the tax supported operating budget after inclusion of all other revenues and non-tax funding sources, as well as recommended new investments and services.
Net
Change
Net
Change
Gross Net Gross Net Gross Net % Gross Net Gross Net Gross Net %
Requested Budget Change2016 - Budget 2017 - Base Budget Base Budget Change 2017 New Investments &
Service Recommendations
2017 Requested Budget
24
Property Tax Revenue
The annual property tax levy is shared across various classes of property. The levy for a particular property is calculated by multiplying the assessed value for the property, as established by the MPAC, by the appropriate tax rate for that property’s class. The tax rates are calculated using the tax ratios established by Council each year. Tax ratios represent the relative tax burden across the property taxes in relation to the residential tax class. For example, a commercial tax ratio of 1.43 means that for every dollar of assessment, a commercial property will pay 1.43 times more than a residential property.
The chart below illustrates the breakdown of the proposed 2017 tax levy supporting municipal services and service partners by major property class.
History of Tax Rate Changes
Since 2001 and including the recommended 2017 plan, the average annual residential property tax increase for a typical home in Barrie has been 3.49%.
Forecasted Tax Rate Increases - Three Year Forecast
In 2016, the City implemented a new budgeting system which provides the ability to produce multi-year operating forecasts. Over the coming year, City departments and service partners will continue to better understand the impacts of planned growth, including the operating impact of capital projects. Staff have made best efforts to provide a three year operating forecast for the 2017 Business Plan and will continue to refine the forecasting process to improve accuracy in future business plans.
Staff have attempted to capture expenditure and non-tax revenue trends for the next 3 years. Inflationary factors on key labour and operating contracts will continue to be drivers; as will tax funded reserve contributions needed to sustain capital renewal and replacement activities related to the City’s aging infrastructure. Where possible, non-tax revenue sources (e.g. User fees) have been forecasted taking in to account anticipated sales volumes and pricing.
Commercial 22%
Industrial 3%
Residential 72%
Multi-Residential
3%
Other 0%
2017 Tax Levy
Commercial Industrial Residential Multi-Residential Other
012345678
% In
cre
ase
Tax Rate Change
Annual Tax Rate Average Tax Rate
25
Estimated tax rate increases over the next three years are as follows:
Growth driven increases to expenditures and revenue will also become a more significant factor in the coming years. As new homes and businesses are developed; related infrastructure such as roads, sidewalks, and parks will be constructed. Additional staff and equipment dedicated to services such as Waste Collection, Winter Control, Road Surface and Roadside Maintenance will be needed to maintain minimum maintenance standards and current service levels. For example, Fire Station #6 is expected to go into service in 2019. This will require an additional 20 firefighters as well as the cost to operate and maintain a new building and equipment. Other significant projects include: The First Responders Campus (2020), Highway 400 Overpass – Harvie/Big Bay (2019).
In addition, as rural lands become urbanized, additional stormwater resources to accommodate storm system expansion and maintenance will be required. These assets will need to be operated and maintained to meet Environmental Compliance Approvals issued by the Ministry of the Environment and Climate Change.
Realized growth in property tax revenue resulting from real growth (e.g. new homes and businesses) will provide some relief to the tax rate. However the revenue often lags behind the expenditures.
2017 User Rate Supported Operating Budget
User-rate supported budgets include water, wastewater and parking services.
The 2017 Business Plan and Budget reflect the water and wastewater financial plans that have been developed to provide existing and growth related service requirements. The plan for water complies with Financial Plans Regulation (O.Reg. 453/07) under the Safe Drinking Water Act for a full cost recovery operation. Although the legislation does not require a financial plan for wastewater services, it is encouraged so the City does prepare a similar plan to support long range financial planning. While the financial plans for water and wastewater were built with an annual rate increase of 2% and 3% respectively,
staff are recommending 2016 rate increases of 2.5% for water and 5% for wastewater. The Financial Plan presents a 10 year horizon and relies on aggressive assumptions for Development Charge revenue. These increases are calculated based on the financial impact for an average residential rate payer for the calendar year with proposed rates effective May 1st, 2017.
2017 Water Operating Budget
The annual Water Operating Budget reflects the cost associated with delivering safe drinking water to the community using a combination of ground and surface water supply, and a distribution network associated with reservoirs and pumping stations.
The proposed 2017 Water Operations Budget reflects an additional $748.2 thousand in rate revenue to maintain current service levels and a rate increase of 2.5% ($7.95) for a typical household.
The 2017 plan will focus the continuation of a number of maintenance, repairs and upgrades that will assist with increasing process efficiencies and the useful life of critical assets. Examples include the resurfacing of the Bayfield elevated water tower, remediation of additional water services prone to freezing, achieving compliance with the Backflow Prevention Program across the ICI sector, data management for water network modeling and performance assessment, and the movement toward LED lighting within the Surface Water Treatment Plant and other Water Operations facilities. Additionally, Water Operations staff will be continuing a research partnership with the University of Toronto exploring potential efficiencies within the operation of membrane treatment systems.
2018 2019 2020
Estimated Tax Rate Increase 4.62% 5.07% 5.69%
26
1. "Rate Impact %" reflects the total impact on the water bill for an average rate payer.
2. "Change Due To Consumption Estimates" reflects rate change that is required to maintain revenue levels as consumption levels change.
3. Investment & Service Recommendations to be funded by reduction in reserve contribution rather than an increase to rates.
Water Rate Impacts Directly Controlled By City of Barrie
Description 2017 Budget Rate Impact % 1
Prior Year Water Rate Revenue 24,871,229$
Change Due To Consumption Estimates 2
Maintain current programs at current service levels:
Economic Adjustments - Labour 120,324$ 0.40%
Economic Adjustments - Contracts 153,600$ 0.51%
Approved Service Level Changes 112,613$ 0.38%
Revenue Changes (91,100)$ -0.30%
Interfund Charges (69,297)$ -0.23%
Utilities 57,395$ 0.19%
Other 333,828$ 1.12%
Subtotal - Maintain current programs at current service levels 617,363$ 2.06%
Subtotal - Increase to water rate revenue before Investment & Service Recommendations 748,237$ 2.50%
Total Water Rate Revenue 25,619,466$ 2.50%
Investment & Service Recommendations:
Technology Infrastructure and Business Systems 42,691$ 0.14%
Environmental Protection 18,817$ 0.06%
Workforce 8,744$ 0.03%
(B) Subtotal - Investment & Service Recommendations 3
70,252$ 0.23%
Adjusted Contribution to Reserves (A - B) 59,780$
27
Changes to Maintain Current Service Levels The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $617 thousand or an impact to the water rate of 2.06%. This does not include the impact of financing policy decisions for debt and reserve management established in prior years. Economic Adjustments – Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates.
Economic Adjustments – Contracts The 2017 budget includes a $72.5 thousand increase in the Advanced Metering Infrastructure system maintenance fees following the upgrade of the regional network interface in 2016. The budget includes $80 thousand to upgrade ten generators and fuel systems at the ground water wells and booster stations to meet current Technical Standards & Safety Act regulated standards.
Approved Service Level Changes
Annualization of partial water rate funding for permanent tax rate positions approved in the 2016 budget totaling $113 thousand.
Revenue Changes The water operations branch has a number of non-rate revenue sources. These revenue sources are expected to generate $651 thousand in 2017. The key driver of the proposed increase in 2017 is $107 thousand in backflow prevention program revenues. The program is expected to be fully staffed for 2017 and revenue increases are expected from additional compliance with the ICI sector and an increase in the number of new backflow prevention testable devices and new facilities added to the backflow prevention program.
Interfund Charges
The 2017 budget includes a reduction of $69 thousand in interfund charges for tax rate services that are provided for the Water Operations Branch. The reduction is a result of less facility staff time allocated to maintenance at the Surface Water Treatment Plant. Corporate Facilities management annually reviews where staff time was required and utilized during the previous year and updates the budget allocation for the upcoming year. The bulk of the reduction in the water budget was transferred to the wastewater and environmental facilities.
Utilities A modest overall utility budget increase of $57 thousand is driven by a significant reduction in the gas consumption budget ($70 thousand) due to conservation activities, but offset by electricity cost increases due to rate impacts of $122 thousand.
Other
The minor capital budget for operations at the Surface Water Treatment Plant was increased from $30 thousand to $310 thousand. A portion of the increase is to start to allow for necessary preventative replacement, modifications or upgrades to the equipment or processes. The majority of the increase is allotted to start a pre-payment program for the membrane replacement so when it’s
actually due for replacement a bulk of the expense is already paid for.
The budget for the purchase of water meters and SmartPoint reading devices was increased $52 thousand to more accurately reflect the annual cost to purchase the materials associated with meter installations. The cost of the meters and devices are to be recovered through funds collected via permit fees associated with new water service installations and water service renewals
Debt & Reserve Management The transfer to the water capital reserve is $130 thousand more than the amount budgeted in 2016 with an impact to the water rate of 0.43%. The increase in the transfer amount to the water reserve is needed to maintain the objective of a full cost service by building a reserve to a level that would accommodate replacement and renewal of water infrastructure.
28
Investment and Service Recommendations
There are no new investments directly recommended by water operations in 2017. However, there is a financial impact of $70 thousand, or 0.23% on the water rate as a result of three recommended new investments proposed in other service areas. These include investments in technology, workforce and environmental protection. Water is selected as a funding source when there is a direct benefit of the service or investment for the water business and or protection of water sources. If these new investments are approved, they will be financed by reducing transfers to the water capital reserve.
Water Rate Revenues
The target for total water revenue is driven by the cost of providing the service. Factors impacting the rate increase for a typical household include: Total water revenue requirement and changes to assumptions for consumption, service connections, and growth.
For a typical household that consumes 180 cubic metres annually, the annualized cost of water services in 2017 are estimated to be $326 ($318 in 2016). This represents a 2.5% increase over 2015.
Bi-monthly Consumption 2016 Rates 2017 Rates
0 - 30 cubic metres $0.9616 per m3 $0.9891 per m330 – 60 cubic metres $1.9233 per m3 $1.9783 per m360 – 90 cubic metres $2.8848 per m3 $2.9673 per m3> 90 cubic metres $3.8464 per m3 $3.9564 per m3
16 to 19 mm 24.38 25.12
Monthly Consumption 2016 Rates 2017 Rates
0 - 15 cubic metres $0.9616 per m3 $0.9891 per m3> 15 cubic metres $1.4425 per m3 $1.4837 per m3
13 to 19 mm 12.19 12.5625 to 32 mm 30.47 31.4038 mm 60.95 62.8050 mm 97.51 100.4875 mm 213.31 219.80100 mm 365.70 376.81150 mm 761.85 785.02200 mm 975.17 1,004.81250 mm 1,401.82 1,444.43300 mm 1,401.82 1,444.43
General Service Water Rates
Fixed Charge by Service Size
Fixed Charge by Service Size
Residential Water Rates
29
Staff Complement
Currently, 68 staff members are required to directly support Water Operations. There are no new positions recommended in the 2017 operating budget.
The annual Wastewater Operating Budget reflects the costs associated with receiving, treating and discharging sanitary sewage complying with all applicable governing legislation.
The proposed 2017 Wastewater Operations Budget reflects an additional $1.38 million in rate revenue to maintain current service levels and a rate increase of 5% ($22.06) for a typical household.
Lower phosphorus discharge limits imposed by the Lake Simcoe Protection Act became effective on June 2nd, 2015. The stringent effluent quality discharge limits require the Wastewater Operations Branch staff to operate the existing Wastewater Treatment Facility beyond design specifications to achieve an effluent quality that is compliant with Provincial approvals. Optimization efforts will continue through 2016 to assist with meeting performance objectives and additional staff time is anticipated to support related capital projects. Operational impacts are also anticipated due to Branch resource requirements associated with the Advanced Nutrient Removal Project.
30
Wastewater Rate Impacts Directly Controlled By City of Barrie
Description 2017 Budget Rate Impact % 1
Prior Year Wastewater Rate Revenue $ 32,633,316
Change Due To Consumption Estimates 2
Maintain current programs at current service levels:
Economic Adjustments - Labour $ 82,817 0.30%
Economic Adjustments - Contracts $ 3,690 0.01%
Approved Service Level Changes $ 43,957 0.16%
Revenue Changes $ 153,000 0.55%
Interfund Charges $ (286,163) -1.04%
Utilities $ 120,470 0.44%
Other $ (71,997) -0.26%
Subtotal - Maintain current programs at current service levels $ 45,775 0.17%
Adjusted Contribution to Reserves (A - B) $ 1,291,459
1. "Rate Impact %" reflects the total impact on the wastewater bill for an average rate payer.
2. "Change Due To Consumption Estimates" reflects rate change that is required to maintain revenue levels as consumption levels change.
3. Investment & Service Recommendations to be funded by reduction in reserve contribution rather than an increase to rates.
31
Changes to Maintain Current Service Levels
The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $45.8 thousand or an impact to the wastewater rate of 0.17%. This does not include the impact of financing policy decisions for debt and reserve management established in prior years.
Economic Adjustments – Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates.
Approved Service Level Changes
Annualization of partial wastewater rate funding for permanent tax rate positions approved in the 2016 budget.
Revenue Changes Revenue from non-rate revenue sources has been reduced from $189 thousand in 2016 to $36 thousand in the 2017 budget. The sewer surcharge revenue has been reduced by $83k to reflect the closure of the Vitality (Nestle) plant in 2016. No additional sewer surcharge agreements are anticipated in 2017.
Leachate revenue has been reduced from $100 thousand to $30 thousand as the County of Simcoe leachate will be treated at the Collingwood Wastewater Treatment Facility commencing in Q3 2016 and will use the Barrie Wastewater Treatment Facility as back up.
Interfund Charges
The 2017 budget includes a reduction of $286 thousand in interfund charges for tax rate services and staff resources that are provided for the Wastewater Operations Branch. Funding from non-tax rates is reviewed annually and in 2017 the funding model used for Environmental Compliance and Infrastructure Planning was updated resulting in a reduction in the funding from wastewater operations and an increase in the funding from water operations.
Utilities
Overall utility budget variance is driven by an electrical rate increase ($122 thousand), but slightly offset by water conservation activities allowing for a year-to-year reduction in the water/wastewater budget line.
Other
The development of a wastewater QMS/EMS framework and related elements was initiated in Q4 2016 and updated costing confirmed that a $75 thousand reduction in consultants for related optimization works was possible in the 2017 Business Plan.
Debt & Reserve Management
The transfer to the wastewater capital reserve is $1.36 million more than the amount budgeted in 2016 with an impact to the wastewater rate of 4.92% due to the overall increase in wastewater revenues. The increase in the transfer amount will allow the reserve to accommodate its intended purpose of a funding source for infrastructure renewal and replacement.
Investment and Service Recommendations
Wastewater Operations has submitted a request for the addition of a Maintenance Operator II position in the 2017 budget funded from a corresponding reduction in the wastewater contracted service budget.
There is a financial impact of $66 thousand, or 0.24% if put on the wastewater rate as a result of three of the recommended new investments proposed in other service areas that have an operating impact on wastewater. These include investments in technology, workforce and environmental protection. Wastewater is selected as a funding source when there is a direct benefit of the service or investment for the wastewater business. If these new investments are approved, they will be financed by reducing transfers to the reserve.
32
Wastewater Rate Revenues
The target for total wastewater revenue is driven by the cost of providing the service. Factors impacting the rate increase for a typical household include: Total wastewater revenue requirement and changes to assumptions for; consumption, service connections, and growth. For a typical household that consumes 180 cubic metres annually, the annualized cost of wastewater services in 2017 are estimated to be $463 ($441 in 2016). This represents a 5% increase over 2016.
0 - 30 cubic metres $1.3827 per m3 $1.4636 per m330 – 60 cubic metres $2.3507 per m3 $2.4883 per m360 – 90 cubic metres $2.3507 per m3 $2.4883 per m3> 90 cubic metres N/A N/A
16 to 19 mm 32.82 34.57
Monthly Consumption 2016 Rates 2017 Rates
0 - 15 cubic metres $1.3827 per m3 $1.3939 per m3> 15 cubic metres $2.0743 per m3 $2.0911 per m3
13 to 19 mm 16.41 17.2825 to 32 mm 41.03 43.2238 mm 82.06 86.4350 mm 131.31 138.3175 mm 287.21 302.52100 mm 492.48 518.73150 mm 1,025.76 1,080.43200 mm 1,312.97 1,382.95250 mm 1,887.39 1,987.99300 mm 1,887.39 1,978.99
Residential Wastewater Rates
Fixed Charge by Service Size
General Service Wastewater Rates
Fixed Charge by Service Size
33
2017 Parking Operating Budget
The 2017 Parking Operating Budget reflects the costs associated with the operations and maintenance of parking lots, parking structure and assets.
The parking service is intended to be self-sustaining through user pay revenue. However, the current operating model for the service has proven unable to generate sufficient revenue to meet the cost of annual operations on an ongoing basis.
Changes to Maintain Current Service Levels The cost to maintain existing services levels for service operations in 2017, including the annualized cost of implementing decisions from prior years, is $6.3 thousand. This does not include the impact of financing policy decisions for debt and reserve management established in prior years.
Economic Adjustments – Labour Employee compensation costs provide for modest cost of living provisions, merit increases for full time CUPE and non-union employees, and anticipated increases for benefit rates. The reduction in labour costs for 2017 is a result of a position that was previously split between Traffic and Parking Operations now being allocated 100% to Traffic Operations in 2017 and a reduction in the overtime budget to that was previously needed when parking staff supported transit operations.
Economic Adjustments – Contracts
The 2017 budget includes an increase of $37.5 thousand for contracted snow removal in from parking lots.
Approved Service Level Changes
Annualization of partial parking rate funding for permanent tax rate positions approved in the 2016 budget. Interfund Charges
The fleet internal charge to the non-tax rate businesses is based on the maintenance and labour cost for the previous year’s actual expenses. The three
parking vehicles had considerable repairs in 2015 which is the basis for the 2017 budget. The repairs were costly jobs like body work and a transmission but the vehicles have low mileage and it was less costly to repair them then replace them at this time. The internal fleet charge should be reduced in 2018 to reflect more typical maintenance costs for the parking vehicles.
Utilities
A significant budget reduction of $33 thousand is driven by lighting efficiency improvements completed at the Parkade, reducing electricity consumption by nearly half.
Parking Rate Impacts Directly Controlled By City of BarrieDescription 2017 Budget
Prior Year Parking Revenue 1,655,650$
Maintain current programs at current service levels:
Economic Adjustments - Labour (59,513)$
Economic Adjustments - Contracts 37,499$
Approved Service Level Changes (2,224)$
Interfund Charges 33,384$
Utilities (33,891)$
Other 31,062$
Subtotal - Maintain Current Service Levels - Operations 6,317$
Debt & Reserve Management
Debt Management 27,401$
Contributions from Reserves 114,032$ Subtotal - Debt & Reserve Management 141,433$ Increase to required Parking Revenue before Investment & Service
Recommendations 147,750$
Total Parking Rate Revenue 1,803,400$
Investment & Service Recommendations:
Technology Infrastructure and Business Systems 10,673$
Subtotal - Investment & Service Recommendations 10,673$
Recommended Contribution from Reserves 124,705$
34
Investment and Service Recommendations
There are no recommended new investments for Parking Operations in 2017. The financial impact of $11 thousand is a result of the parking rate proposed as a funding source on one of the recommended new investments proposed in other service areas that have an operating impact on Parking. This includes an investment in technology. Parking rate is selected as a funding source when there is a direct benefit of the service or investment for the parking business.
Revenues
In 2017 the municipal parking system is anticipating base budget annual revenues of $1.53 million in operating revenue consisting of $1.1 million parking meters and $416 thousand from parking permits. This is an increase in parking operations revenue of $150 thousand from parking permit and special event revenue based on how this revenue is trending.
Staff Complement
Currently, 3 staff are required to directly support Parking Operations. There are no new positions recommended in the 2016 operating budget.
Reserve Management As shown in the following table, the balance of the City’s reserves and reserve funds at December 31, 2017 is projected to be $85.7 million. Of this amount $54 million is allocated for specific purposes or externally restricted (i.e. development charges, user rate capital and self-insurance funds). Overall the City’s reserves and reserve funds are projected to increase (net) by $503 thousand or 0.59% by the end of 2017
Of the $152.5 million in contributions to Reserves, 22% ($33.6 million) is from the operating budget, 14% ($21.3 million) is from user rates, 57% ($87 million) is from developers, and 7% ($10.6 million) is from other levels of government.
35
The City’s main capital reserves are described along with a five year forecast in the next section under Capital Reserves for costs.
Program Specific Reserves are to be used to support the programs for which they were collected. They are expected to carry a December 31, 2017 year-end balance of $9.4 million and consist of primarily of: Landfill Development and Closure Reserves, Industrial Land Reserves, Marina Reserve, Building Code Reserve, and the Façade Improvement Reserve.
Corporate Reserves are expected to carry a Dec 31, 2017 year-end balance of $11.6 million and consist of provisions for future employee payouts such as WSIB, Vacation, and Sick Leave.
Finally, the financial policy framework identifies that the Rate Stabilization Reserves (Tax, Water, Wastewater) are to be utilized to provide rate stability by smoothing the effect of variable or unanticipated expenditures or revenues and to provide funding for one time or short term requirements. Best practices recommend that tax stabilization reserve balances should be equivalent to 5%-10% of operating expenses. The City’s reserve is 2% of operating expenses.
Reserve and Reserve Fund Continuity Schedule and Forecast
2015-2017
36
Capital Reserve Forecasts
The following section presents five year forecasts for the City’s main capital
reserves and reserve funds. These include Tax Capital Reserve, Development Charge Reserve Funds (DC’s), Water and Wastewater Capital Reserve Funds,
Federal Gas Tax Reserves, as well as the County of Simcoe Capital reserve.
The continuity reserve tables below show the projected year-end balances of each reserve. The draws from reserves are captured from forecasts proposed in the 2017 Capital and Operating budgets developed with the City’s new integrated budgeting tool Questica.
The contributions to reserves are based on projected forecasts utilizing current trends, as well as financial policies, growth studies such as the Financial Impact Assessment Study (FIA), and the 2014 Development Charge background study.
Development Charge Reserve Funds
Development Charges are used to pay for new growth related infrastructure and any associated debt servicing costs. The City’s proposed 2017 Capital Budget
reflects the needed investment in new and existing infrastructure to support the City’s planned growth.
The required draw from DC reserves for 2017 is projected to be $47.8 M, an increase of $26.5 million over 2016. These draws assume that DC eligible expenditures will be funded with cash, directly from the DC Reserve Funds.
For the 5 year forecast starting in 2017, it is projected the City will be drawing $295 million from the DC reserves to directly cash flow capital projects. Major projects planned during this period include the Mapleview Drive East new transmission watermain and road expansion, Mapleview Drive West sanitary forcemain twinning and Pumping Station 5 upgrades, McKay Road interchange at Highway 400, and the Harvie Road right of way expansion.
Existing annual debt payments associated primarily with the Water Plant, Wastewater plant expansion, and the Bio-solids facility, will be drawing $89.4 million from DC reserves for the forecasted period. In addition, the proposed 5 year forecast will require borrowing up to $58 million of new DC funded debt.
The new debt servicing costs are estimated to total $12.2 million from 2018 to 2021.
Forecast Facts:
• 5 year average annual total draws from DC reserves $98 million • 5 year average annual DC revenues $100 million • 5 year average ending DC reserve balance $15.4 million • 5 year forecasted new DC debt of $58 million
Based on current development activity and projections from within the developer community, DC revenues for 2017 are projected to reach $95.7 million, an increase of $78 million over 2016 levels. DC revenues are identified in the table above as Contributions to Reserves and the 5 year total is $500 million
In 2014, the City signed a Memorandum of Understanding (MOU) with the developer community related to development within the annexed lands. Included in the MOU are funding options which include entering into Development Charge Credit Agreements. Under such agreements, the developers would build and finance some of the needed growth infrastructure. Developers would receive development credits for the value of the work completed. In the table above, such credits are identified as Credits earned for Developer Build Projects and total $92.8 million for the 5 year period.
The MOU also includes additional contributions of revenue based on the type of unit being built. It is expected the City will begin collecting these revenues in 2018 and by 2021 will have totaled $32.9 million. These additional revenues will be used to fund growth related projects.
Tax Capital Reserve
The Tax Capital Reserve is the main funding source for all tax-supported, non-growth related capital work. This includes, but is not limited to, all renewal work on roads, storm sewers/ponds, parks, facilities, landfill projects, and fleet, as well as most corporate need projects. This reserve also funds strategic projects the City implements. The tax capital reserve is also used to fund the non-DC eligible portion of growth projects, often referred to as benefit to existing. The required total draw from the Tax Capital reserves for 2017 is projected at $47.3 million, out of which $28.5 million is for new requested funding.
Forecast Facts:
• 5 year average annual total draws $39 million • 5 year average annual Contributions $34 million • 5 year average ending reserve balance $7 million • 5 year forecasted new Tax supported debt of $60 million
Including previous commitments, the proposed 2017 capital plan 5 year forecast draws a total of $193 million from the Tax Capital Reserve. Some of the larger projects included in the plan are the renovation of the Operating Centre Building ($7.5 million); the new building development of First Responders Campus ($7.2 million); Harvie Rd. ROW Expansion – Essa to Bryne ($5.4 million); Foster, Merrett, Garson, MacLaren and Yeates New Sanitary, Watermain and ROW Replacement ($5.3 million). Also over the next 5 year, a total of $104 million will be supporting the benefit to existing portion of growth related projects.
The 2017 contribution to the Tax Capital Reserve is driven by the Reserve and Reserve Fund Management Policy which was updated in 2015 to include an annual contribution equivalent to a 1% increase on the average residential property tax bill; this contribution is referred to as the Dedicated Infrastructure Renewal Fund (DIRF).
The tax based contribution for the proposed 2017 budget, has increased by $3.45 million for a total contribution of $29.8 million. Over the next 5 years starting in 2017, the total contribution to the tax capital reserve is forecasted at $172 million.
Over the next 5 years, the average ending balance or uncommitted balance for the Tax Capital Reserve is $7.2 million. As result of this low average balance, in order to fund the proposed 2017 capital five year forecast, it is projected an additional $60 million of new tax supported debt will be needed. The next section of the executive summary discusses debt management and projected debt levels.
The Tax Capital Reserve continuity does not reflect any additional incremental increases for the amortization method in forecast year 2018 and beyond. The balance in the reserve could be higher over time if the additional contributions are not used to reduce debt financing or perform additional works beyond what is currently reflected in the plan.
Draws - previous Commitments 18,817,688Draws from Reserves - Capital 28,553,569 22,522,395 38,715,554 40,694,622 43,664,716Contributions to Reserves 29,800,000 31,300,000 33,800,000 36,300,000 41,700,000Ending Balance $6,250,613 $15,028,217 $10,112,663 $5,718,041 $3,753,325
38
Water Capital Reserve Fund
The Water Capital Reserve is used to fund water rate supported, non-growth related capital works (e.g. replacement of water pipes). The water rate reserve fund is projected to be an uncommitted balance of $12.5 million at the end of 2017. As with the wastewater capital reserve, this reserve has benefitted as a result of development charges being used to fund the debt servicing costs related to water treatment facilities (approximately $7.9 million annually).
Forecast Facts
• 5 year average annual draws from reserve $7.0 million • 5 year average annual contribution to reserve $6.3 million • 5 year average ending reserve balance $13.0 million
Over the period 2017 to 2021, including previous commitments, the total draws from the water capital reserve are forecasted to be $34.8 million. Over the same 5 year period, total contributions are forecasted at $31.9 million.
Wastewater Capital Reserve Fund
The Wastewater Capital Reserve is used to fund wastewater rate supported, non-growth related capital work (e.g. replacement of sewer pipes). The wastewater rate reserve fund is projected to have an uncommitted balance of $12.5 million at the end of 2017. The wastewater rate reserve has benefited as a result of development charges being used to fund the debt servicing costs related to wastewater treatment facilities (approximately $8 million annually).
Forecast Facts
• 5 year average annual draws from reserve $12.1 million • 5 year average annual contribution to reserve $15.7 million • 5 year average ending reserve balance $18.4 million
Over the 5 year forecast period, including previous commitments, the total draws from the wastewater capital reserve are forecasted to be $60.2 million. Over the same 5 year period, total contributions are forecasted at $78.6 million.
Draws - previous Commitments 5,631,349Draws from Reserves - Capital 3,221,434 11,910,254 13,261,240 15,466,385 10,762,727Contributions to Reserves 14,800,000 15,488,739 16,043,305 16,164,172 16,164,172Ending Balance $12,536,391 $16,114,876 $18,896,941 $19,594,728 $24,996,174
39
Federal Gas Tax Reserve
The Federal Gas Tax has been committed as a permanent transfer to municipalities. In addition to the amount allocated in the capital budget, Federal Gas Tax funds are being utilized in the operating budget. The City works towards an optimal balance between capital and operating when allocating the funding, which can be used up to 5 years after transfer to the municipality.
Forecast Facts
• 5 year average annual reserve draws $9.1 million • 5 year average annual contributions $8.7 million • 5 year average ending reserve balance $1.3 million
While the table above projects over commitment of funds in 2017 and 2019, the 5-year average has an uncommitted balance of $1.3 million. In funding the City’s
Capital and operating budgets, city staff have maximized the full amount of expected Federal Gas Funds over the next 5 years.
Including previous commitments, the total draw from this reserve between 2017 and 2021, is project to be $45.5 million. Over the same period, expected contributions are forecasted at $43.9 million. Some of the proposed 2017 projects identified to be funded from the Federal Gas Tax include the Partial Depth Road Resurfacing Program to restore and preserve road pavement condition at various locations selected each year ($2.5 million); the Glen Echo Drive and College Crescent Pavement Replacement - from Lonsdale to Nelson ($1.2 million); as well as the Centennial Park Expansion from the Marina at Toronto Street southerly to Hotchkiss Creek that includes renewed pathways, electrical, water fountain servicing, and irrigation ($620 thousand).
County of Simcoe Capital Reserve
The City of Barrie is party to an agreement with the County of Simcoe for the delivery of services for Long-Term Care and Senior Services, Paramedic Services, Social Housing and Community Services. As part of this agreement, the City contributes funding to the County’s Capital plan on a prescribed basis.
The County of Simoce Capital Reserve is maintained to fund the non-growth portion of County Captial Projects. Any growth related funding for the County projects, are funded from the City’s DC reserves and the impact is reflected in the DC tables previously identified.
Over the period 2017 to 2021, based on the County’s capital forecast, the City
will be drawing $14.4 million from the County’s Capital Reserve.
Forecast Facts:
• 2016 contribution to this reserve $1.1 million • 5 year average draw from this reserve $2.6 million • 10 year average draw from this reserve $2.2 million
Staff are recommending gradually increasing the annual contribution over the next three years from the current $1.1 million to $2.1 million. As a result, the 2017 operating budget includes a contribution increase of $300 thousand to the County of Simcoe reserve.
The County will be issuing debt for the Collingwood Social Housing redevelopment, and the City will pay its proportionate share of the debt servicing costs.
For 2017, the capital projects approved in the County of Simcoe Capital include the development of various paramedic stations, vehicle and equipment replacements, the Collingwood Social Housing redevelopment project and the acquisition and/or rehabilitation of other building components.
Draws from Reserves - Capital 1,634,918 3,361,105 2,682,976 3,054,488 2,071,927Contributions to Reserves 1,400,000 1,700,000 2,100,000 2,100,000 2,100,000Ending Balance $299,447 ($1,361,658) ($1,844,634) ($2,599,122) ($1,847,512)
40
Debt Management
Debenture issuance represents a key financing source for the City’s capital plan. The projections shown in this section are based on the forecasted debenture needs identified in the 5-year capital plan.
A significant portion of the City’s debt has been incurred to finance growth-related capital expenditures. The debt servicing costs associated with these expenditures are DC eligible and a significant amount of City’s debt servicing
costs will be funded from development charges. It is anticipated that $17.9 million of debenture principal and interest payments will be recovered through development charges in 2017 with this trend continuing in future years.
Other sources that may be used for debt repayment include water, wastewater and parking user rates, provincial/federal gas tax revenues, property taxation and local improvements
The City is planning a debenture issuance in June 2017 in the amount of $12.7 million for the projects in the table below.
Projects Debenture Amount
WPCC Expansion Phase II $ 3,000,000 City Hall Parking Garage Rehabilitation $ 5,240,000 Cundles Road Project $ 1,209,864 Duckworth Street Project $ 2,782,699 Essa Road Project $ 459,576
Certain projects in this list will require a second debenture when final project costs are known to avoid over-debenturing the project. The annual principal and interest payment is estimated to be $1.3 million ($565 thousand in 2016 due to the timing of the planned debenture).
Continued diligence in managing debt levels and maintaining adequate reserves will be required to ensure Barrie’s financial condition meets creditor requirements
for timely settlement of the City’s obligations.
Standard and Poor’s (S&P), a financial services company that offers services
including credit ratings, data analysis and equity research to both the private and public sectors worldwide, recently affirmed the City’s AA rating with a stable
outlook
The City’s debt policy includes a total annual debt repayment limit of 20 per cent
of own source revenues (e.g. property taxes).
The first chart below shows the percentage of the City’s own source revenue
allocated to debt servicing costs relative to the maximum (20%) permitted by the City’s financial policies (Provincial regulations permit 25%). The City is
anticipating significant growth and development until 2031, and debt financing is one of the key tools used to ensure the infrastructure is in place to support growth. However, as shown in the chart, the City will remain within its total annual debt repayment limit each year. While the chart shows all debt servicing costs, compared to own source revenues, a large portion of the debt servicing costs are financed from Development Charges. Tax funded debt-servicing costs as a percentage of own source revenues is expected to be only 3% in 2017.
The chart below provides the forecasted annual debt requirements for each of the next 5 years, separated into Tax, Water, Wastewater and Parking rate supported debt.
41
The chart below shows forecasted debt repayments of principal and interest in total over the next 5 years displayed by funding source.
Sustainability
Sustainability is the degree to which the City can maintain existing programs and meet existing creditor requirements without increasing its debt or tax burden. The rate of population growth since 2001 has placed more demands on services and capital expenditures. These growth-related capital demands are not funded by the City’s own-source revenues, which has led to an increased reliance on debt.
The change in each of the measures identified below reflects the City’s plan to
issue new debt in 2017. These measures indicate sustainability is declining, but at a slower rate than past years as it has levelled off.
The “Total Debt per Household” measure is not reflective of the amount
residential taxpayers will be required to contribute toward repayment of debt principal. This measure is simply a way of describing the City’s debt relative to the size of the community.
With the anticipated increases in debt, these measures will become less favourable in future years. This will create additional pressure on the tax levy given that it is the City’s primary source of revenue. Continuing to rely heavily on the tax levy to meet future commitments may lead to future affordability challenges. In order to mitigate this pressure, the City has established an objective of increasing reliance on non-tax revenues.
Flexibility Flexibility is the degree to which the City can increase its financial resources to respond to rising commitments by either expanding its revenues or increasing its debt burden. As the data in the following table shows, the municipal taxes as a percentage of household income is still within the City’s affordability target of 4%.
Vulnerability is the degree to which a government becomes dependent on (and therefore vulnerable to) sources of funding outside its control. The City has increased its reliance on funding from both the provincial and federal levels of government over time, which includes federal and provincial gas tax revenues. The operating programs that these revenues support are primarily transit, road and storm drainage renewal activities, lifecycle activities, capacity building, and landfill re-engineering. The risk of increased reliance on funding from other levels of government is that the City does not directly control or influence the amount or timing of such revenues.
The Federal Gas Tax (FGT) has been declared a permanent program with committed funding levels until the end of the Federal 2015/16 fiscal year. Staff have not received any information indicating these programs will be discontinued. Therefore, staff have assumed these funding levels will continue beyond 2016 for planning purposes.
As depicted in the table below, Infrastructure Stimulus Funding (ISF) impacted the City’s vulnerability measures in 2010 and 2011. MTO funding in relation to
the Duckworth-Cundles interchange has also impacted the 2014 to 2016 measures as well as contributed to the significant drop anticipated in the 2017 Budget figure.
Government Transfers to Total Revenue 12.2% 11.4% 5.0% 6.1% 5.9% 6.4% 6.4% 4.9%
43
CAPITAL PLAN
Introduction
The City acquires, operates, maintains and renews assets to support the delivery of services to residents, businesses, partner agencies and visitors. Roads, bridges and sidewalks provide transportation networks to move goods and people, while water mains and treatment infrastructure ensure safe drinking water is available. Recreation centres and playgrounds are community gathering places where people learn, play, stay healthy and interact with one another. Fire trucks and snow ploughs are required to support emergency services and keep our city safe and accessible all year long. In total, the assets owned by the City amount to an estimated replacement value in excess of $3.3 Billion.
The City uses a risk-based approach to capital planning that prioritizes and balances the City’s needs in a sustainable manner. The need to build and acquire new infrastructure to service development is ongoing, all the while the City must simultaneously maintain, renew, rehabilitate and replace existing aging assets, particularly roads, facilities, sanitary/storm water drainage systems, fleet, and water supply and treatment systems.
To ensure that the City manages its existing and future assets responsibly and is able to financially support future development, the application of leading asset management practices was a foundational element in the preparation of the 2017-2021 Capital Plan.
In 2009 the City developed a Corporate Asset Management Strategy focused on evidence-based decision making, risk management, and optimizing investment of limited financial resources to support service levels. Decisions about where to allocate capital and operating funds leverage data from computerized maintenance management systems like Cityworks, CFA and Archibus. Supplemented with increased asset condition assessments, this data is further used as input to risk calculations that consider both the probability and consequence of asset failure to prioritize investment decisions.
Council’s Direction
In June 2016, Council’s direction for the capital budget was as follows:
That staff prepare the 2017 Capital Budget with appropriate consideration of:
• Council’s strategic goals; • A risk based approach to project selection driven by the rehabilitation and
replacement of existing assets, considering full lifecycle costs and the City’s
most critical needs; • Master plans and infrastructure implementation plans, considering full
lifecycle costs; and • Availability of financial and staff resources to do the work.
The objective was to deliver:
• 1 year approved Capital Budget (2017) with multi-year approvals in accordance with the capital control policy
• 4 year Capital Forecast (2018 – 2021) • 5 year Capital Outlook (2022 – 2026)
44
Capital Needs Prioritization
A key element of a sustainable, coordinated capital program is the ability to compare competing needs and priorities across the corporation. Within the City’s
capital planning framework projects are analyzed and assigned scores depending on driving factors. In general, for projects that are addressing existing asset renewal and replacement needs, a Business Risk Exposure calculation is undertaken and used as one of many factors to prioritize the project when comparing it to other community needs. If the project is being driven by the need to expand existing services and assets or the provision of new services and assets, an Importance and Urgency calculation is undertaken and used to prioritize the project against all other needs. Scoring for each type of project is mapped on a four quadrant matrix.
Projects for which funds are being requested in the 2017-2021 Capital Plan have been identified to begin addressing the highest priority and most critical needs that the City of Barrie is facing over the next 5 years. In addition to the Business Risk Exposure and Importance/Urgency scoring, the following additional criteria and filters were considered:
• Resourcing: Each department reviewed their total work plan to ensure that the City has the resources to deliver the projects proposed to be committed for 2017
• Readiness: The status of each project was reviewed to ensure that projects would be ready to proceed to the phase proposed to be committed for 2017, with a focus on delivering the plan as recommended
• Affordability: Funding for each of the five years was reviewed to ensure that the draws from tax capital and other reserves are affordable, with a focus on minimizing debt by relying on reserves, and maximizing use of the Dedicated Infrastructure Renewal Fund and the Federal Gas Tax Fund
• Growth principles: In 2009/10 Council endorsed “10 Principles for Growth
and Planning for the Annexed Lands.” The most applicable principle to capital planning is “that municipal services…be built at the same time or in
advance of the issuance of occupancy”. To this end, infrastructure projects
are included as per the Infrastructure Implementation Plan, and facility projects to service the annexed lands are included to align with anticipated occupancy. The expectation is that the affordability of the growth projects will be monitored on an ongoing basis.
2017 – 2021 Capital Plan
The total recommended capital budget for 2017 is approximately $111 million, including $80 million in new funding and $31 million that was approved previously, in a prior year’s capital plan or through an in-year request in 2016. Capital costs associated with recommended service level change forms for 2017 account for $58,410.
The City’s Capital Project Financial Control Policy provides for multi-year approvals for capital projects where a single phase will be implemented over multiple years. Some of the projects being proposed for 2017 will be in the initial year of a multi-year phase. For these projects, City Council is approving the
related future year budgets as well. The table below details the amounts recommended for approval for 2017, as well as the amounts that will be committed for 2018 - 2021 as a result of approving the 2017 Capital Budget. The total funding to be approved through the 2017 process, including future year commitments is $116 million. A significant portion of these future commitments in 2018 represent design and property projects associated with the annexed lands such as trunk sanitary sewers, transmission water mains and the McKay Road/Hwy 400 interchange. Approximately one quarter of the funds to be committed for 2018 are for construction of sanitary servicing infrastructure on Mapleview Drive West to service the Salem area.
Funding associated with future phases will be identified as a forecasted amount only, and will not be recommended for approval until that phase begins. Forecast amounts and timing will be revisited each year through the annual capital planning process, and are subject to change as new, better information is available. The grand total 2017 – 2021 Capital Plan line represents the anticipated budget totals for all five years of the capital plan, including forecast amounts, previously approved funds and current budget requests.
45
What’s in the Plan? In previous capital plans project type has been used to differentiate between renewal investment, growth in the annexed lands, and additional capacity and capability (ACC) where ACC included new or expansion of existing assets within the former City boundary. Recognizing that most expansion or new assets are related to growth, the project types have been changed for the 2017 business plan. The investment in the capital plan has been classified into the following project types:
Growth – Pre-2010 Boundary: Capital investment that has a growth related component identified in the City’s Development Charge (DC) Background Study
and/or service area-specific Master Plans and is located within the pre-2010 City boundary.
Growth – Annexed Lands: Capital investment that has a growth related component identified in the City’s Development Charge (DC) Background Study
and/or service area-specific Master Plans and is located within the lands that were annexed on January 1, 2010.
Renewal – Pre-2010 Boundary: Major activity required to upgrade or rehabilitate an existing asset or replace an asset which has reached the end of its useful life, will be funded through rates, and is located within the pre-2010 City boundary.
Renewal – Annexed Lands: Major activity required to upgrade or rehabilitate an existing asset or replace an asset which has reached the end of its useful life, will be funded through rates, and is located within the lands that were annexed on January 1, 2010.
Note that this new approach to classification requires that projects may be split between project types, as most growth projects include a “benefit to existing” or
renewal of an existing asset. For example the current project to reconstruct Mapleview Drive East between Huronia and Country Lane will result in a widened road, and new sanitary trunk sewer, but will also see the renewal of a road which was in poor condition and required replacement.
Additional capital investment is proposed in the following areas, which are difficult to classify into growth or renewal:
Legislated: These projects are those that address capital requirements resulting from new legislation introduced by senior levels of government, or by non-compliance with existing legislation.
2017 - 2021 Capital Plan
2017 - 2021 Capital Plan 2017 2018 2019 2020 2021 Grand Total
Grand Total 2017-2021 Capital Plan $112,349,810 $177,527,930 $175,085,449 $209,612,511 $170,251,324 $844,827,024
46
Partnerships, Studies and Technology: In previous years, studies have been funded through the operating budget, however for the 2017 Business Plan, one time studies requiring significant investment are being included in the capital plan. Partnerships include contributions to the County, College and hospital. Technology projects are those that that address capital requirements to renew existing technology assets and solutions, or implement new technology assets and solutions, to support services provided to the community.
The pie chart below shows a breakdown of the total recommended budget by project type and investment area. Each of the pie charts included in this section represent the new budget requests through the 2017 capital plan, and the funds committed for 2017 in prior years.
Renewal spending in the annexed lands amounts to very little, as most of the investment required is for expansion, and there are few existing assets in the annexed lands at this time. The growth spending in the pre-2010 boundary is attributed to some road widening projects such as Mapleview Drive (Huronia to Country Lane), Essa Road (Anne to Gowan), Harvie Road/Hwy 400 crossing (and associated projects on Big Bay Point and Bayview), Tiffin Street/Hwy 400 bridge replacement, as well as other projects such as the Centennial Park Expansion.
The investment in renewal in the former boundary and growth in the annexed lands is very similar. Renewal investment within the former boundary is spread across a large number of projects in a variety of asset or service areas. Some of the largest investments are a $2.5 million road resurfacing program, Royal Oak Drive area servicing and reconstruction, the main library HVAC system; City Hall’s parking garage, and the Operations Centre. Other significant renewal investment is associated with projects which are also receiving DC funding, such as the Mapleview Drive East and Essa Road projects noted above. In the annexed lands, projects to prepare for development are advancing, including design work and property acquisition for arterial road widening and water and sanitary servicing. Construction of infrastructure to provide sanitary servicing to the Salem area is a significant investment, as is work associated with the future McKay Road/Hwy 400 interchange.
When comparing the 2017 budget requests with the 2017-2021 Capital Plan, the relative investment in growth and renewal components are nearly identical. The biggest change in terms of percentage investment in one project type or investment area is with respect to legislated projects. The project known as “WwTF Advanced Nutrient Removal” is a $60 million legislated investment in the
City’s wastewater treatment facility (WwTF) to reduce phosphorus from entering
Lake Simcoe. This project will be moving into the construction phase in 2018 – 2021.
47
The pie chart below shows the total capital funding that is being recommended for approval in 2017, divided by asset class or major investment area. Partnerships represent contributions to the County of Simcoe, Georgian College and RVH. For the 2017 Business Plan, one time studies or projects of significant value are being captured in the capital plan rather than departmental operating budgets; these have been aggregated in the Corporate Studies & Projects portion of the chart.
Infrastructure accounts for the majority of the City’s $3.3 Billion in assets, so it
isn’t surprising that almost three quarters of the City’s capital investment
recommended in this capital budget is related to infrastructure. Many of the larger individual infrastructure projects are noted above relative to the investment by project type. Here the total investment in infrastructure has been separated into transportation, water, sanitary and storm infrastructure.
48
Several City buildings require significant renewal investment to protect the City’s
investment and support service levels. The 2017 budget request includes $2.2 million to rehabilitate the City Hall parking garage, $1.8 million for the main library HVAC system, and $1.5 million to initiate renovations at the Operations Centre. The fleet investment includes $1.2 million for an aerial platform truck approved in a prior year, $2.1 million for transit buses (to be offset by a PTIF grant), and $800k for an earth scraper to support the new landfill operations. The remainder of the fleet investment is replacement of smaller vehicles to support operations in various service areas throughout the City. Over half of the roughly $5.5 million in parks investment is attributed to the Centennial Park project currently underway. Other large park investments are Military Heritage Park, North Shore Trail Access Points, Loyalist Park, and playground and tennis court rehabilitation. The largest investments in the Technology area include $1 million for ERP sustainment and $1.9 million for servers and desktop software. Both of these technology investments are requested to be approved in 2017, but spending will be spread over 3 years.
Beyond 2017, investment in the Buildings asset class increases significantly, from just 7% of the 2017 budget request to 18% of the 5-year plan. This increase is due to the construction of several new facilities to service the annexed lands, the most significant of which includes over $70 million for the First Responders Campus and $30 million for the first year of construction of Hewitt’s Creek Community Centre. Additional facilities projects include a major renovation to the existing Operations Centre to address aging, deteriorated components as well as other renewal needs throughout the Buildings portfolio. The increase in investment in machinery and equipment is expected to increase from 2% of the 2017 budget request to 10% of the 5-year plan, and this is primarily due to the $60 million in improvements at the wastewater treatment facility (WwTF) to reduce phosphorus in Lake Simcoe. Investment in other areas will remain relatively the same in terms of percentage of the total plan, with infrastructure continuing to make up the majority of the capital spending.
49
How is the Plan Funded?
The capital plan is funded from a variety of sources: the Tax Capital Reserve, user rates (water and wastewater), development charges, debentures, developer contributions, and provincial and federal government funding. The figure below depicts funding sources for the total budget request being recommended through this business planning process, and the proportions of each.
50
The gross investment in the 2017-2021 Capital Plan increases throughout the five years, peaking in 2019 and 2020. This is primarily due to the mix of projects changing to include more construction work, which builds on the EA and design work that is included at the beginning of the five years. In 2020, much of the construction in the annexed lands is expected to be underway, including both infrastructure and facilities projects. As the mix of projects in the plan changes, and an increased percentage is to fund growth related projects, the DC draws increase. As the gross cost increases, but reserve draws remain relatively the same or increase but at a slower rate, the City must rely more heavily on debentures.
51
Key Impacts of the Capital Plan in 2017
Annexed Lands - Infrastructure Projects Phase in 2017 Planned Construction
Mapleview Drive West Sanitary Forcemain Twinning and Pumping Station 5 Upgrades Construction 2017-2019
Sandringham Drive New Transmission Watermain - Big Bay Point to Mapleview Construction 2017-2018
Ashford Drive and Madelaine Drive New Transmission Watermain - Big Bay Point to Mapleview Construction 2017-2018
Hewitt's Creek New Trunk Sanitary Sewer – Sun King to Mapleview (Developer led project) Construction 2018
Hewitt's Creek New Trunk Sanitary Sewer – Mapleview to Lockhart (Developer led project) Construction 2018
Hewitt's Creek New Trunk Sanitary Sewer - Sun King to Mapleview Construction 2017
Mapleview Drive E New Transmission Watermain - Yonge to Prince William Design 2018
Veterans Drive New Trunk Watermain and Road Expansion - Salem to City Limits Design 2020-2021
Mapleview Dr. E New Sanitary Sewer & Road Expansion - Prince William to Phase 1 Boundary
Design 2020
Essa Road New Transmission Watermain and Road Expansion - Athabaska to TCP EA & Design 2020-2021
Salem Road New Transmission Watermain and Road Expansion - County Road 27 to Veterans
Design 2020
Highway 400 Projects Phase in 2017 Planned Construction
Lockhart Road New Hwy 400 Crossing and Watermain, Reservoir and ROW Expansion – Veterans to Bayview Property 2023-2025
Hwy 400 Underpass Replacement at Tiffin Street Construction (by MTO) 2016-2017
McKay Road New Bridge Construction (by MTO) 2016-2017
McKay Road New Interchange and Transmission Watermain Design 2022-2023
52
Harvie/Big Bay Point Road Related Projects Phase in 2017 Planned Construction
Harvie/Big Bay Point Road (New Crossing) Property 2019-2020
Big Bay Point Road ROW Expansion – Bayview to Huronia Design 2021-2022
Harvie Road ROW Expansion – Essa to Bryne Design & Property 2019-2022
Bayview Drive ROW Expansion – Little to Big Bay Point Design 2022-2023
Bryne Drive – Harvie Road to North of Caplan Ave (South Section) Design (2017-2018) Property (2017) 2021-2022
Bryne Drive – Harvie Road to South of Essa Road (North Section) Design (2017-2018) 2021-2022
Waterfront Phase in 2017 Planned Construction
Military Heritage Park New Development Design & construction 2017
Centennial Park Expansion Construction 2016-2017
Neighbourhood Renewal Phase in 2017 Planned Construction
HNS Queens Park A1 Neighbourhood Renewal Pre-Design 2020-2021
HNS Allandale A Neighbourhood Renewal Pre-Design 2022-2024
HNS Allandale B Neighbourhood Renewal Pre-Design 2021-2022
SAP Deployment & Maintenance Implementation ongoing
54
2022 – 2026 Capital Outlook
Over the past several years, the City of Barrie has expended significant efforts to ensure that there is a sustainable plan for the future of the City. This work has been undertaken in two primary areas. Land use and infrastructure growth management plans have been produced to guide the City’s expansion over the
next two decades. Simultaneously, asset management plans for all City-owned assets have been prepared to guide decision making regarding capital investments required to sustain services and service levels to existing residents and businesses. All of this information together has formed the foundation for the ten year Capital Plan being presented to City Council. The outer five years of that plan has been prepared as an outlook to provide Council and the community a high-level view of anticipated works required to expand the City as outlined in the growth management plans as well as to sustain existing services as detailed in the City’s asset management plans. The 2022 – 2026 Capital Outlook is not intended to capture every capital investment required but rather to focus on investment requirements across various asset classes and service areas. As future capital plans are developed the previous year’s outlook will be used as
a starting point for planning purposes, and is likely to change.
The table below represents aggregated totals for various asset classes and investment areas. This includes specific projects proposed for consideration in the outer five years, which may be continuations of work begun in the first five years of the Capital Plan or new works recommended to begin between 2022 and 2026. Aggregated totals also incorporate forecasted needs based on average annual expenditures by asset class, projected through 2022-2026. This is to capture the ongoing need for investment in key asset classes while acknowledging the challenges associated with identifying specific critical priorities this far in advance. The amounts represent growth needs for the annexed lands and the former Barrie boundary, in addition to asset replacement requirements. The gross expenditures over the 2022-2026 year Capital Outlook window are anticipated to be approximately $807 million. When combined with the $844 million 2017-2021 Capital Plan, gross spending for the 10 years is approximately $1.65 billion.
2022-2026 Capital Outlook ($000)
Asset Class or Investment Area 2022 2023 2024 2025 2026 Grand Total 2022-2026
