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2017-07-29 Finance Committee Minutes - Open SessionFinance Committee Meeting Open Session July 19, 2017 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING JULY 19, 2017 AT 4:30 PM 8t" FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor G. Sullivan Councillor S. Casey Absent: Councillor G. Norton Also Present: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Deputy Commissioner Finance and Administrative Services I. Fogan Comptroller C. Graham Senior Manager, Financial Planning H. Nguyen Commissioner Saint John Water B. McGovern Commissioner of Transportation & Environment Services M. Hugenholtz Assistant Comptroller Finance C. Lavigne Acting Director Corporate Planning/Chief Information Officer S. Rackley -Roach Fire Chief K. Clifford Senior Financial & Economic Analyst B. Zirobwa Administrative Assistant K. Tibbits 1. Meetiniz Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes—June 29, 2017 Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the minutes of June 29, 2017, be approved. MOTION CARRIED. 1.2 2018 Draft Capital Budgets General Fund/Utility Fund 1.3 2018 General Fund Capital Budget 1.4 2018 Utility Fund Capital Budget Mr. Fudge stated that there are benefits in approving the capital budget early in the year as it allows the City to advertise for tenders earlier and thereby receive better pricing from contractors. The draft general fund represents a total investment of $18.3M with approximately $12M funded through debt issue. Debt has been capped at $12M to avoid the risk of a tax rate increase through an increase in fiscal charges. Because infrastructure is primarily funded through debt, assets are depreciating at a Finance Committee Meeting Open Session July 19, 2017 higher pace than the City's ability to renew investment in those assets. As such, there is a risk of sudden large capital expenditures at higher than normal operating costs which could potentially affect service levels. Ms. Graham reviewed the submitted report with respect to the draft capital general fund and commented on the recommended capital projects for 2018. The committee discussed the capital budget and offered comment. Members were asked to direct comments/considerations to the Finance Department. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the 2018 Draft General Fund Capital Budget presentation and report be received for information. MOTION CARRIED. Ms. Graham reviewed the submitted report with respect to the draft capital utility fund. The substantial completion payment for the P3 water project will be made in 2018. The draft capital budget for the utility is $146M predominantly related to the safe clean drinking water project, with the City borrowing portion at $47M over a 30 year period. Since 2014, the water utility has been setting aside some capital funding to help offset the borrowing cost through yearly increases in water rates. This has allowed the buildup of the reserve which means less borrowing and a cushion against rate shock when the project is operational. There is approximately $17M in the reserve to put towards the safe clean drinking water project. In 2018, the capital envelope will increase to over $100M for the utility. The intention is to not borrow additional capital for the water utility and gradually bring the capital back down to the $60M level by 2025. Ms. Graham commented on other capital expenditures planned for 2018 and responded to questions. The committee was encouraged to direct comment/considerations to staff. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the 2018 Draft Utility Fund Capital Budget presentation and report be received for information. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee open session meeting held on Wednesday, July 19th, 2017 be adjourned. MOTION CARRIED. The Finance Committee meeting held on July 19, 2017 was adjourned at 5:50 p.m.