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2017-09-07 Finance Committee Minutes - Open SessionFinance Committee Meeting Open Session September 7, 2017 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING SEPTEMBER 7, 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 Councillor G. Norton Also Present: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Senior Manager Financial Planning H. Nguyen Deputy Commissioner Finance and Administrative Services I. Fogan Comptroller C. Graham Commissioner Saint John Water B. McGovern Commissioner of Transportation & Environment Services M. Hugenholtz Assistant Comptroller Finance C. Lavigne Commissioner Growth and Community Development J. Hamilton Fire Chief K. Clifford Administrative Fire Officer J. Hennessey Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes — July 19. 2017 Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the minutes of July 19, 2017, be approved. MOTION CARRIED. 1.2 Asset Management — 2016 State of the Infrastructure (Mr. Samir Yammine, Energy Manager, and Mr. Hans Arisz of RV Anderson entered the meeting) Referring to the submitted report, Mr. Arisz commented on Phase II of the Asset Management Plan, the implementation of the project and the current state of the City's infrastructure. The data used in this analysis is of low confidence and must be more refined to increase accuracy. The methodology used is non -subjective — condition ratings and risk ratings have been assigned to assets and is used to generate the state of the infrastructure. Overall the City's infrastructure is in a fair state of repair. Decisions will have to be made to ensure the infrastructure does not fall into a state of disrepair over the next 10 to 20 years. Historical trends Finance Committee Meeting Open Session September 7, 2017 indicate that the City is underfunding infrastructure assets by less than half of the requirement. The recommendation is to build on this gradually and increase the budget by a certain percentage each year to meet infrastructure needs. There needs to be an increase to funding or a decrease in service levels with a focus on improving the efficiency on how the City does business. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that Item 1.2 Asset Management — State of the Infrastructure Report, be received for information. MOTION CARRIED. (Mr. Yammine and Mr. Arisz withdrew from the meeting) 1.3 2018 General Fund Capital Budget Referring to the submitted report, Ms. Graham commented on the changes from the original draft budget which included an increase of $100,000 to Parks & Public Spaces and an increase of $500,000 to the Neighbourhood Plan, with a corresponding reduction to Transportation & Environment Services. The capital budget envelope continues to be under the $12M threshold. The committee commented on a request from Uptown Saint John regarding an enhanced level of maintenance to sidewalks. Uptown SJ has offered the City a partnership arrangement for a sidewalk cleaning machine and has offered to contribute up to $75,000 towards a sidewalk cleaning machine, estimated at $155,000 plus HST. Uptown SJ is also willing to contribute to the operation of the machine or in another fashion for maintenance of the uptown area. Moved by Councillor Norton, seconded by Councillor Reardon: RESOLVED that the request from Uptown Saint John regarding the purchase of sidewalk cleaning machine be referred to the South End Neighbourhood Plan committee for consideration. MOTION CARRIED with Mayor Darling voting nay. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve the 2018 General Fund Capital Budget and submit to Common Council for the September 18th meeting for approval. MOTION CARRIED. 1.4 2018 Water and Sewerage Utility Fund Capital Budget Ms. Graham commented on changes to the 2018 Water and Sewerage Utility Fund Capital budget and noted that an additional item was added relating to the Ocean Drive Pumping Station. It is a large capital budget predominately the result of the Safe Clean Drinking Water project. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve the 2018 Water and Sewerage Utility Fund Capital Budget and submit to Common Council for receive and file at the September 18th meeting. MOTION CARRIED. 1.5 Safe Clean Drinking Water Proiect— Substantial Completion Pavment Mr. Lavigne commented on the submitted report. The capital budget for the utility is large, specifically around the Safe Clean Drinking Water project. Interest rates are rising which has forced the City to re- consider the timing of its borrowing. Mr. Fudge recommended to proceed with an earlier debenture due to increasing interest rates, adding that although there will be some cost not budgeted in 2017, it will decrease borrowing costs over the life of the project. The City will ask for a 30 year fixed rate. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve borrowing $45,000,000 for the Safe Clean Drinking Water Project as part of the Fall Debenture issue and approve amending Council Report M&C 2017— Finance Committee Meeting Open Session September 7, 2017 202, 2017 Fall Debenture — Notice of Motion to reflect borrowing $45,000,000 as part of the 2017 Fall Debenture issue. MOTION CARRIED. 1.6 June 2017 Year -End Forecast—General and Utilitv Operating Funds Ms. Nguyen commented on the revised year end projection for 2017 based on the June results. The revised forecast has a 0.49% positive variance, which is essentially considered to be on -budget. Each department commented on department results as of June 30tH Commenting of the projected deficit of the Police budget of an estimated $300,000 to $330,000, Mayor Darling noted that the Police Commission has the expectation of a balanced budget by year end. Moved by Councillor Norton, seconded by Mayor Darling: RESOLVED that a representative(s) from the Police Commission be asked to attend the next meeting of the Finance Committee to present on its budget. MOTION CARRIED. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that item 1.6 June 2017 Year -End Forecast — General and Utility Operating Funds, be received for information. MOTION CARRIED. 1.7 Revenue Generation ODDortunity— License Agreements— Eastlink & Bell Mobili Mr. McGovern reviewed the submitted report and commented on the alternative revenue sources regarding Bell Mobility and Eastlink. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommend to Common Council that: 1) the City enter into a 20 year License Agreement with Bell Mobility Inc. generally in the form as submitted, for the purpose of allowing Bell Mobility to place telecommunication antenna on a Saint John Water Tower for a yearly fee; and that the Mayor and Common Clerk be authorized to execute the said License Agreement; and 2) the City enter into a 20 year License Agreement with Bragg Communications Incorporated (Eastlink) generally in the form as submitted, for the purpose of allowing Bragg Communications to place telecommunication antenna on a Saint John Water Storage Reservoir for a yearly fee; and that the Mayor and Common Clerk be authorized to execute the License Agreement. MOTION CARRIED. 1.8 2018 Utility Fund Operating Budget Mr. McGovern reviewed the submitted report regarding the 2018 Utility Fund Operating budget. The Safe Clean Drinking Water project is the largest municipal infrastructure project in the history of New Brunswick. A wastewater rate study, universal metering evaluation, and industrial rates study will be completed, in addition to a long term financial plan. Continuous improvement and revenue generation will remain a focus. Overall, the proposed increase is $72 per year for flat rate customers which is consistent with the forecast to manage the debt associated to the safe clean drinking water program. Council is required to set rates that cover expenses and capital, with rates expecting to reach $1440 per year once the safe clean drinking water program is fully operational. Rates will stabilize after 2019 within CPI. There will continue to be competing pressures between debt reduction efforts and the asset infrastructure deficit. Finance Committee Meeting Open Session September 7, 2017 Mr. Fudge noted that the utility does not retain earnings and when there is a surplus, the surplus is carried forward and always goes back to the ratepayers. Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that the Finance Committee reflect upon the submitted document and make any and all inquiries and recommendations to staff, and that the report be received for information. MOTION CARRIED. 1.9 Fundy Regional Service Commission Budget Mr. Fudge commented on the submission from the Fundy Regional Service Commission regarding its 2018 budget. The Fundy Regional Service Commission has requested feedback and an increase in funding from $10,000 to $34,000. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that item 1.9 Fundy Regional Service Commission budget be received for information, with further discussion and feedback at the next Finance Committee meeting. MOTION CARRIED. Adjournment Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the Finance Committee open session meeting held on Thursday, September 7th, 2017 be adjourned. MOTION CARRIED. The Finance Committee meeting held on September 7, 2017 was adjourned at 8:05 p.m.