Loading...
2018-03-18 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Tuesday, March 13, 2018 5:00 pm 8th Floor Boardroom, City Hall 1. Call to Order Pages 1.1 Approval of Minutes - December 6, 2017 1 - 2 1.2 Long Term Financial Planning 3-49 1.3 2018 Revised General Operating Budget 50-58 1.4 Water and Sewerage By -Law Amendment 59-85 1 Poeta Sy:1 City of Saint John Finance Committee Meeting Tuesday, March 13, 2018 Finance Committee Closed Session 1. Call to Order Si vous avez besoin des services en fran�ais pour une r6union de Conseil communal, veuillez contacter le bureau du greffier communal au 658-2862. Each of the following items, either in whole or in part, is able to be discussed in private pursuant to the provisions of subsection 10.(2)(4) of the Municipalities Act and Council / Committee will make a decision(s) in that respect in Open Session: 4"30 p.m., 8th Floor Boardroom, City Hall 1.1 Approval of Minutes 68(1) 1.2 Financial Matter 68(1)(c) K rIN. m MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING DECEMBER 6, 2017 AT 5:00 PM Stn FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor G. Norton Councillor S. Casey Absent: Councillor D. Reardon 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 of Transportation & Environment Services M. Hugenholtz Assistant Comptroller Finance C. Lavigne Commissioner Growth and Community Development J. Hamilton Fire Chief K. Clifford Deputy Fire Chief J. Armstrong Police Chief J. Bates CEO Saint John Parking & Transit Commissions I. MacKinnon Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1.1 Approval of Minutes— November 29, 2017 Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the minutes of November 29, 2017, be approved. MOTION CARRIED. 1.2 2018 Recommended General Operating Budget Mr. Fudge reviewed the submitted report entitled, "2018 Recommended General Operating Budget". Various strategies have been discussed in terms of fiscal responsibility such as budgeting past a single budget cycle, asset management and determining the City's -- Policy, Investment Policy and Reserve Policy. A three year plan is being introduced to reduce expenditures by $15M through organizational restructure. A $6.1M structural deficit has resulted from an imbalance in reoccurring revenues and reoccurring expenditures. It is recommended that any short term government funding not be used to fund on-going operations to avoid the risk of future increases to the structural deficit. Short term funds are better used to reduce debt, reduce infrastructure deficit, or fund one-time expenditures. It is proposed that any financial assistance received from the province be allocated to a general operating reserve to provide some flexibility to implement work force reductions through an attrition program. This will allow time to plan for service changes, mitigate operational risk and retain employees with less seniority. Mr. Trail stated an attrition plan and an establishment plan will be presented to Council early in 2018 and does not recommend buy out packages or incentive packages to encourage accelerated retirements or reductions in the establishment. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the Finance Committee approve the 2018 General Operating Budget as submitted and send the budget to Common Council for approval. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the open session meeting of the Finance Committee meeting be adjourned. LTA [0000114L1:k]k]11191 The Finance Committee open session meeting held on December 6, 2017 was adjourned at 6:15 p.m. TA SII V iz TA 0 w r4 N fyi 4 Lfi CO Lo, ,-&'I I �7t 11 m El El �V 2 0 • m i 2 > > — N i }' U VN N V > O N U ca C2A N ca U U N O 4- c Q ca a� O — cn N U i `1 C6 N = U NLn = �Ln bn O >. Q N i f6 N} (_� N- X i L.L E Ln a_+ O i 'V 0 N > bn Ln = � Q f6 O f6 U ' ^ N +' — U f6 }, cn N N f6 N p Ln > N f6 N- a c6 -0 N 4-1 Q — +-+ -0 `~ ca CU CU U -0 CU = ca ca U N N Q a-' a'' 0 CO — O Ln 0 CU N +-+ N N a_+ chi) -0i f6 m c -0 Uf6 m N U— +-j N Q bn U N i , N Q)i Q � } C6 i ate-+ > N N +, Q E c � O a N Q N O N NE O rl +-+ } Q Q N Q i ® ;ate--+ O O N Ul U 0 bn N — QJ Q Q Q O j _O _O _O v O ® a-+ a_+ i ate-+ O Q Q1 Q1 cu i N bn 'n E 2 u J Q Q C6 U ClA Q LL 4-j W a.., L CL N N O N cc N E O Q Oo > m U > N ® W 4-j Q O ® N V f6aJ >. U N U U a � m a Li- U �U H O UO UO Q) L. - oz O L. - r) _0 _0 _0 qt U) (10 n N N N 0 0 0 0 0 Q Q Q Q Q Q m Q Q Q 0 H m a� - � N CL O O U o r -I N m qt U) (10 n 0 0 0 0 0 0 0 nUO W �U O 0- M N — U +-+ . � • � bD cn N +-+ C: 0 a"' a) L cn � � � O O � ate-+ bD bD O C N ® ca .v O U 0 O U O Q X O 4-•� O cn N 4-J cii Q1. N Q N ateJ U Q • ; N l�A }' �. cn _0 O •u •0- N O U •N •— N N O N O -0 Q 4- ate+ — � ateJ }+ cn U U —_ •?> O •L N . , b.0 N U o O •-q cn N a __ •� 0 >-0 EN Ln� o N" C: a••' N U IM - � N (31 . a LL c ® U E - a_ V ®cu }' c O a ca N E a a a✓ (1) bD 0 3 m bD � U N •— O �-+ N .� -0N � N W O ate -J N :3 C: bA •� 07 0 Ln C O U •N N ate-+ O •U O U te-J a — O 4-J _0 ca � O -0 U ) �J ateJ _0 aJ O a -J bD • N > U N +.+ O N (1 ro � — � LL L ca N -0 a..i N > U U C: •— :3 N C: >O L L p a -JO = � O NO > CLL N •N 4-J 4-J 4 -0 =3}' i N m }' N O — ca U _� C6 cn L U z N W _ •O ca a✓ (1) bD 0 3 m bD � U N •— V) O 0 u cinC) 4-j cu bn U U H u c m cu 0 4-a ca cu bn CD CL m cu 0 CL u 0 0 E -0 CU CU 0 4--a bn 0 " 0 w a_ 4- u cu m U C 0 u 4- aE 0 cu m Ln CU cr cu 4- u M E c iz > ao_ u '— 0 a- 0 CU E E m m cu u Ln c CL CL 0 cu cu =3 cr CU w 4-1 cu bn 4- bn m c E l..j cu 'n C CU E 4-J Ln cu > cu cu cu u CL bn a) bn FF U bn cu 4- u =3 L- tin � ca c p cn a) U Q C2A U +j tiA ca N +, U ate-+ ` 4-j U }' N f6 }' p O ca N � U +j ca _ a U U }, N a) 4-1 O X 4-j U O U i Na..i iCL N C C6 O Q O �' O O p f6 v 4 _ `� C2n >- . v p a — f6 b 0 cu — O —0 (DN N U U cn +-' +-+ j }' 4-j O — !E+-, ate-, a E cc i �O `1 U anam n.c N an O _ N — N N 4-j N O a--+ C6 i G L L a..+ ate-+ t -0 N ca U }' U p cn +, N O cY) SIIQu clo00LZ C Vcccciz cY) (/') (/') U O N O N O ca E -u 0 w L- W W Io I U C� OUD Q0 0 W, Ln Q) m Il fa ry ._ J i r =r i IIIIIIP bn¢" co C toI @III ��lnl IOIIIIIIU,1III0111011101 ERVVIIIIIIIIIIIIIII011111111111111111111 bn � MJ ��IOIIIIIO Ml�, IIIIIIP bn¢" co C toI Q) n E m X Q) C- Q) (D I Q) L.- :3 u 4-j :3 L.- 4 -j V) 5.0 o V) co U Ln 0) LL Ln Ln CL CL = V) .2 >u 0) L. L.L Ln 0) > E 0) u 0 14- LU > E = U 0 u iz 4-j tip -E Ln 4-1 w Ln 0 0 CL :t E E 0 U CLi 0)CL > 0) M 0 0 V) coE as 4-j .— E s- 0) a- C: 0 umu 0) CL (n E co . E 0) U CO �5 C) m > Ln as 00 E E 0 U (n V) u co Ln Ln C: :3 E E 0 u UO CDL Q) 4--d 4--J X Q) z rl 2 rl M R'm red 1•1 ri7 . ......... I . ............. . 0 Q) CU . ......... 0 ru . ............. . �uuuuu -Ei CU Q) mxm uuum rum x V) v) CU o mn ......... - "I L) t10 ru ) Ll'uui TW mumu imi mi mn Q) . ......... M V) CU (35 ru . ......... . ............. .uumm t10 . ......... ru ru ru E ll�m�uu Ll') 0 ap % I . ............. . Q) 0 . ......... 0 -Ei 0 > . ......... >- . ......... >% 0mn 0 . ......... V) . ......... .. . ....... mnmouou L.- t10 mn CU E 0 4—j QD QD > QD QD QD iiiiiiiiiiiin 0 miIiiiiiiiiiiiiiiiiiiiiiiii aDmillillillilin QV QD IDMIIIIIIIIIIIIIII miIiiiiiiiiiiiiiiiiiiiiiiii > IDMIIIIIIIIIIIIIII +11a .0 Q) QD iiiiiiiiiiiin miIiiiiiiiiiiiiiiiiiiiiiiii ru aDmillillillilin Liiiiiiiiiiiii, E aDmillillillilin cc .0 (v aDmillillillilin xW IIIIIU VIII miIiiiiiiiiiiiiiiiiiiiiiii� IIIIII miIiiiiiiiiiiiiiiiiiiiiiiiii M.1� IIIIIIIIIIIIIIIIIIIIIIIIII > M, N qA U Le i to c .... EN ........... U N N N N c6 a) N O Q c6 � c6 � a) c6 N a) N � � /) L: U N O N U � U � U N U � U N U � U N U N uO L- 4- 0 O T LZ O O OO n0 O O 0 n OO\0\ 00 U un 0n m (1O Ln Ln c -I r - r, o6 m tib mn mim o � Q m N � � N >- cB O JCL " (1) iCL O T J L Q> U c Q C z m v L oc \ Q O o :3- 0 X w Q �, �, w z u D O m� v = 0 X pC > d N Q N m Q+ M cCL H U U ce } Q O L O /INn V N fB a+ L (� fB L — fB L .0 N Vi U m 0 cD (D 2 0 .... 0 1= x M, N qA U Le i Q ro C6 (0 U U w ro 4 -J W U m (3) 1� L Q� W � ^� LL n� bD W V 4-J 3 O m m L L Q /W V r m 3 4., LL H 4J L H CC C7 O 111111 IN O O0 � u U a O N 7 U a O N o�ou0000ioii o�oi � IIIIII�� � mllllo uo��6V�u� no'`Mma �vummummupuuommoommuuuama'� N w > � }, — N O +-+ O O N w' (T U c6 O N N O N N N N U 4-J U N a--+ N L •. cn O cn cn p U N cn ca U .� III .................. m m L L Q /W V r m 3 4., LL H 4J L H CC C7 O 111111 IN O O0 � u U a O N 7 U a O N o�ou0000ioii o�oi � IIIIII�� � mllllo uo��6V�u� no'`Mma �vummummupuuommoommuuuama'� �0 V N L 0 N Q X N U N 0 a -J C6 4-J 4-J ()►�D�. 0 =3 4-J hW a -J C6 ^L W Q O 4-J 4- O N 4-J U ^L W E _0ClA O — N4-1 'N .� bD N .� W-0 -Q Q 0 0 0 0 0 0 0 O O O O O O O l0 Ul M N r-1 0 v ao CIO 00 O N u U N O LL r-1 O N 7 U a O N 7 U a O N r)C N N H CL (1) W Ai dA W vi ++ Q 0 AL' � W GJ LL i 4l 4l 0 0 0 0 0 0 0 0 0 0 O 0 O 0 O 0 O 0 O 0 Ln �* R* M M N N r-1 r-1 O o�ou0000ioii o�oi 0 ¶� U���n„�a�� Ipplllllll ��mummummupuuommoommuuuama'� o a") o O N N N N N ca ca > N ca Co O N L III U cn U N a- � 0 � � O N .............. _ �' A Ilh A Ilh 0 0 0 0 0 0 0 0 0 0 O 0 O 0 O 0 O 0 O 0 Ln �* R* M M N N r-1 r-1 O o�ou0000ioii o�oi 0 ¶� U���n„�a�� Ipplllllll ��mummummupuuommoommuuuama'� ca ca U L N LU L ca (� 4-J •� U U m N Q p ^ LL N N bD 1L 0 ca N � -3 Q O �^ V m m V L a A� W 3 LL L W r_ W '4 O 17 O 00 Q O l0 O i..f) � O M O N O i --I O O m"'o poi °�0°Vippp U r—I 4-J oom"° 1119ll1Uh,� N A N Q (j N N 00 ca p > Ln LIII ,� `� v Q tin p Li- -0 v m m V L a A� W 3 LL L W r_ W '4 O 17 O 00 O IA O l0 O i..f) O � O M O N O i --I O O m"'o poi °�0°Vippp r—I oom"° 1119ll1Uh,� A V�mummummupuuommoommuuuama'V N L C6 N N N 0 a--� _0 (3) L Q E EQ O Ln U Ln a--+ W ,L 11 E Ln L 1 N ) Ln N M W X C6 X' 2 tin W o Ln C A IUDWssasse ui a2uegD IUDDJad 0 O Ln O Ln O Ln 0 In c -I c -I N N M 0 0 0 0 0 0 0 0 00 r� l0 In �t M N -i (suol11!A) Juawssassy 00 O N c -I O N c -I O N Ln c -I O N c -I O N M c -I O N N U a--+ C6 � � � N a--+ O E .cn E cNn � � � � QO N C6 N N N tin— 0 N IUDWssasse ui a2uegD IUDDJad 0 O Ln O Ln O Ln 0 In c -I c -I N N M 0 0 0 0 0 0 0 0 00 r� l0 In �t M N -i (suol11!A) Juawssassy 00 O N c -I O N c -I O N Ln c -I O N c -I O N M c -I O N W w U a") r1 LTJ E N � tin o O DC v v 00w O N O O O w v i N +-+ O c/) N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N O 06 l0 N O r-1 r-1 v CIO 00 r -q O N en u U N L 0 LL r-1 O N 7 u U a O N 7 U a Ln O N N _0 O cn N N (3)O =300 +J N .� Ov � O •N N U C Q L _0 N Ln = N U N 00 O 00 N > vi > DC N L N 4— •N O (3) C: O .� •� O C6 iii A U •o � ?� - O O E ai 0- O E > O wo _0 N N O > Q, •> O UO U^ L CL W W ^•> 0--c L - ^> 0 N li 4-7 O N U (1) N •� O a-�+ U•U ca � N ) O J O •� �o 0-01 O cn N N (3)O =300 +J N .� Ov � O •N N U C Q L _0 N Ln = N U N 00 O 00 > DC 2 •N O .� •� A iii A iii � tit) NOR c Lri c l6 A N U N }, � � bA O O C)- (3) N N 4--+ N N C: U U • O Co U oc O U C ++ (D O � d z Q N O O 00 r -I O N O = N m rr-I M O -0 N = Co 0�O N m +) v O N m � M O N m �v M O N Co a) O N Co I � � bA O cn N • .. • O Co U (D cn u N -0 f6 N '> ClA O U z 0 .� O O 00 r -I O N O = N m rr-I M O -0 N = Co 0�O N m +) v O N m � M O N m �v M O N Co a) O N Co • .. • �uuuuuuuuum� mm �uuuuuuuuuuuuuuu uuuuuuuuuuuCD w uuuuumi muuumi uuuuu uuuuuuuuuuu uuuuuuu uuuuuumu X Ca }' a -J W O L � U O N " Co U CO N 0 ClA N U tin 0 Q z •N v ao m m r -q O N N h0 7 m n r -I O N U a O N 7 U a O N O O O O O O O cl cl n n r -I r -I tf�- tf� IA- i/)- IA- IA- IA- (0,11-1- Title: Operating Budget Subject: Operating Budget Category: Finance and Administrative Services Policy No.: FAS-004 M&C Report No.: Effective Date: TBD Next Review Date: TBD Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-002 Investment Policy FAS-003 Reserves Policy FAS-005 Capital Budget Policy FAS-006 Debt Management Policy Document Pages: This document consists of 5 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: I certify that this Policy was adopted by Common Council as indicated above. Common Clerk Date Date Created: Common Council Approval Date: Contact: TBD Finance and Administrative Services 0 TABLE OF CONTENTS 1. POLICY STATEMENT...................................................................................................... 2 2. DEFINITIONS...................................................................................................................2 3. PRINCIPLES AND STRATEGIES........................................................................................ 2 4. AUTHORITY.....................................................................................................................3 5. USE OF NON-RECURRING REVENUES.....................................................................................3 6. GRANTS.......................................................................................................................................4 7. VARIANCE REPORTING..............................................................................................................4 8. ROLES AND RESPONSIBILITIES....................................................................................... 4 091 City of Saint John Operating Budget 1. POLICY STATEMENT 1.1 The purpose of this policy is to outline the financial principles governing the funding of the City operating budget; 1.2 Operating budget planning shall comply with all relevant provisions of the Local Governance Act and all other applicable legislation; 1.3 The City's objectives with respect to the Operating Budget Policy are as follows: 1.3.1 Strengthen Financial Sustainability by budgeting recurring expenditures with recurring revenues and allocating one time revenues to one time expenditures or reserves. 1.3.2 Reduce Financial Vulnerability by gradually decreasing reliance on sources of revenue outside its controls such as operating grants from other government sources. 2. DEFINITIONS Operating Budget — a Council approved plan containing the revenue and expenditure allocations required to provide City programs and services for the current fiscal year which must be aligned with a Council Approved Long Term Financial Plan; Structurally Balanced Budget — a budget for which recurring operating revenues are sufficient to fund recurring operating expenses; Non Recurring Revenues are revenues that the City cannot reasonably expect to receive on an ongoing basis. The source is most likely one-time if any of the followings applies: • Has a set ending date ranging between 12-36 months with the exception of intergovernmental funding agreements designed to improve long term sustainability; • Revenue spikes due to higher than normal transactional activity; • One time transactions, such as the sale of assets. 3. PRINCIPLES AND STRATEGIES 3.1 The City will utilize the following principles and strategies in making decisions related to the operating budget: 3.1.1 Alignment with Strategy — the City's budgeted operations shall be in line with agreed upon Council priorities and the Long Term Financial Plan; 34 2 City of Saint John Operating Budget I'! 5 3.1.2 Affordability — the City must be able to bear the budgeted costs of providing services without incurring financial difficulty or risking other undesirable consequences; 3.1.3 Innovation —implementation of operational efficiencies, continuous improvement initiatives, and new revenue generation strategies will be considered when planning the operating budget; 3.1.4 Sustainability — the operating budget will be produced with a long-term focus of achieving a structurally balanced budget; giving taxpayers a better representation of the link between financial resources and services that can be delivered over the long term. 3.1.5 Diversification — the City will seek to improve its mix of operating budget revenues to the extent feasible within the confines of the Local Governance Act, and other applicable legislation. AUTHORITY 4.1 The operating budget establishes the spending authority for all Service Area activities and initiatives. 4.2 Operating budgets, at the Service Area level, cannot be reallocated to compensate for existing over/under-expenditures without Council approval. 4.3 Service Area Commissioners are responsible for managing within their existing budget. USE OF NON-RECURRING REVENUES 5.1 Non-recurring revenues shall be directed to onetime uses and away from funding ongoing services. Examples of non-recurring revenues would include one-time sale of assets. Examples of acceptable uses would include funding capital expenditures that would otherwise be funded by debt, to fund the infrastructure deficit, or to build up reserves; 5.2 Short term revenue spikes should be treated in a similar way to non-recurring revenue. 35 3 City of Saint John Operating Budget 7 GRANTS 6.1 Inter -Governmental funding opportunities will be pursued for initiatives that are in line with Council priorities, the approved budget, and the Long Term Financial Plan; 6.2 Any opportunities falling outside the criteria in 6.1 will require Council approved adjustment to the budget and the Long Term Financial Plan and be supported by a business case. VARIANCE REPORTING 7.1 The Finance Committee shall be informed on a timely basis on all significant unfavourable financial matters and will receive, as a minimum, quarterly financial budget variance reports; 7.2 Service Area Commissioners are responsible to present a quarterly report analyzing material variances and causes of such variances to the Finance Committee. ROLES AND RESPONSIBILITIES 8.1 Council shall: 8.1.1 Approve the operating budget as recommended by the Finance Committee; 8.1.2 Establish priorities through the Long Term Financial Plan. 8.2 The Finance Committee shall: 8.2.1 Review the operating budget and make recommendations for Council approval; 8.2.2 Ensure the operating budget is aligned with the Long Term Financial Plan. 8.3 The City Manager shall: 8.3.1 Direct, in co-operation with the Finance Commissioner and Senior Leadership Team, the preparation and presentation of the operating budget 8.3.2 Exercise financial control over all corporate operations in conjunction with the Finance Commissioner to ensure compliance with the operating budget approved by Council. 36 4 City of Saint John Operating Budget SAINT' JOHN 8.4 The Finance Commissioner and Finance Team shall: 8.4.1 Prepare long range revenue and expenditure forecasts; 8.4.2 Review departmental budgets with individual departments; 8.4.3 Analyze and make recommendations on budget requests; 8.4.4 Review the consistency and alignment between budget requests and overall budget goals; 8.4.5 Consolidate all budget requests and their impact into a package that clearly communicates the City's budget objectives, pressures, and linkage to the City's Long Term Financial Plan. 37 5 (0,11-1- Title: Capital Budget Subject: Capital Budget Category: Finance and Administrative Services Policy No;: FAS-005 M&C Report No Effective Date: TBD Next Review Date: TBD Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-003 Reserves Policy FAS-005 Operating Budget Policy Document Pages: This document consists of 4 pages Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: I certify that this Policy was adopted by Common Council as indicated above: Common Clerk Date Date Created: Common Council Approval Date: Contact: TBD Finance and Administrative Services M-11 TABLE OF CONTENTS 1. POLICY STATEMENT........................................................................................................ 2 2. DEFINITIONS.................................................................................................................... 2 3. PRINCIPLES AND STRATEGIES......................................................................................... 2 4. CAPITAL PRIORITIZATION..........................................................................................................3 5. AUTHORITY...................................................................................................................... 3 6. ROLES AND RESPONSIBILITIES........................................................................................ 4 Wel City of Saint John Capital Budget 1. lka 3. POLICY STATEMENT 1.1 This Policy applies to budgeting by the Municipality for capital funds; 1.2 The purpose of this policy is to outline the financial principles governing capital funding decisions, while providing some flexibility to respond to evolving circumstances; 1.3 Capital budget shall be aligned with the Council approved Long Term Financial Plan; 1.4 Capital budget planning shall comply with all relevant provisions of the Local Governance Act and all other applicable legislation; DEFINITIONS Capital Budget — A plan of proposed capital expenditures to be incurred in the current year and over a period of subsequent future years (long-term) identifying each capital project and the method of financing; Lifecycle Cost - The total cost of an asset over its life cycle, including the initial purchase or construction cost, maintenance and operating costs, financing costs, and refurbishment costs; Affordability - Ability to pay for the debt servicing and life cycle costs of capital assets; The overall measure of affordability is the burden of debt servicing and life cycle costs compared to the City's revenues; Asset Management — Process of developing, operating, maintaining, upgrading, and disposing of assets cost-effectively; Infrastructure deficit - Gap between the funding that is required and the funding that is available for maintaining, updating, or replacing existing and aging infrastructure before serious problems occur; PRINCIPLES AND STRATEGIES 3.1 The City will utilize the following principles and strategies in making decisions related to capital budget planning: 3.1.1 Alignment with Long Term Financial Plan — Capital planning shall reflect the level of infrastructure investment required to achieve agreed service objectives; 40 2 City of Saint John Capital Budget ( HINT' JOHN 3.1.2 Asset Management — The Capital Budget will consider the full life -cycle cost approach to costing capital initiatives based on asset management best practices; 3.1.3 Sustainability - The Capital Budget will reflect the City's goal to address the infrastructure deficit by gradually increasing capital reserves and Pay -As - You -Go funding; 4. CAPITAL PRIORTIZATION 4.1 Proposed Capital Budget Projects will be prioritized based on the following criteria: 4.1.1 Legally Mandated — must be completed due to legal or regulatory requirements; 4.1.2 Organizational Risk— required for health and safety requirements, mitigate liability, or to mitigate sudden asset failure; 4.1.3 Priority of Council — As stipulated in the Long Term Financial Plan in accordance with Asset Management best practices and supported by Asset Management recommendations; 4.1.4 Positive Financial Impact — Capital request supported by a business case that demonstrates a positive financial impact for taxpayers as a result of tax base growth or reduction in operating expenses. Requires amendment to the Long Term Financial Plan; 4.1.5 Discretionary — New assets which aim to increase or enhance service levels to the residents and taxpayers as approved in the Long Term Capital Investment Plan and supported by a business case; S. AUTHORITY 5.1 The capital budget approved by Council establishes the scope, funding and spending authority for each capital project listed in the capital budget document; 5.2 Council approval will be required for any adjustment to the Capital Budget or to the Long Term Financial Plan; 5.3 Service Area Commissioners may authorize additional gross expenditures through change orders in accordance with approval levels in the City's procurement policy provided that: 41 3 City of Saint John Capital Budget (� HINT' JOHN 5.3.1 This policy is otherwise complied with; 5.3.2 Funding is available to fund the over -expenditure, either from under - expenditures in other capital projects within the same Service Area or by deferral of other capital projects within the same Service Area; 6. ROLES AND RESPONSIBILITIES 6.1 Council shall: 6.2.1 Approve the capital budget as recommended by the Finance Committee; 6.2.2 Establish priorities through the Long Term Financial Plan; 6.3 The Finance Committee shall: 6.3.1 Review the capital budget and make recommendations for Council approval; 6.3.2 Ensure the capital budget is aligned with Council priorities and the Long Term Financial Plan; 6.4 The City Manager shall: 6.4.1 Direct, in co-operation with the Finance Commissioner and Senior Leadership Team, the preparation and presentation of the capital budget; 6.4.2 Exercise financial control over all corporate operations in conjunction with the Finance Commissioner to ensure compliance with the capital budget approved by Council; 6.5 The Finance Commissioner and Finance Team shall: 6.5.1 Analyze and make recommendations on capital budget requests; 6.5.2 Consolidate all capital budget requests and their impact into a package that clearly communicates the City's budget objectives, pressures, and linkage to the City's Long Term Financial Plan; 42 4 Q-)- SAINTJOHN Title: Debt Management Subject: Debt Management Category: Finance and Administrative Services Policy No.: FAS-006 M&C Report No.: Effective Date: TBD Next Review Date: TBD Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-003 Reserves Policy FAS-004 Operating Budget Policy FAS-005 Capital Budget Policy Document Pages: This document consists of 6 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: _ I certify that this Policy was adopted by Common Council as indicated above. Common Clerk Date Date Created: Common Council Approval Date: Contact: TBD TBD Finance and Administrative Services City of Saint John Debt Management TABLE OF CONTENTS 1. POLICY STATEMENT...................................................................................................... 3 2. DEFINITIONS...................................................................................................................3 3. ACCEPTABLE PURPOSES FOR DEBT ............................................................................... 4 4. DEBT LIMITS................................................................................................................... 4 5. DEBT ISSUANCE.............................................................................................................. 5 6. INTERNAL BORROWING................................................................................................. 5 7. PAY AS YOU GO.............................................................................................................. 5 8. REPORTING.....................................................................................................................6 9. RESPONSIBILITIES.......................................................................................................... 6 44 z City of Saint John Debt Management SAINT' JOHN 1. POLICY STATEMENT 1.1. The Debt Management Policy for the City of Saint John is established to ensure that all debt is issued both prudently and cost effectively. The City will use debt to meet infrastructure requirements while ensuring that future financial sustainability remains relatively unconstrained. 1.2. All City debt issuance and management procedures will comply with the following legislation where applicable: • Province of New Brunswick Local Governance Act • Province of New Brunswick Municipal Capital Borrowing Act • Province of New Brunswick Municipal Debentures Act • Province of New Brunswick Control of Municipalities Act • Province of New Brunswick Financial Corporation Act 2. DEFINITIONS Sustainability - means meeting the needs of the present without compromising the ability of future generations to meet their own needs; Affordability - means the City's ability to pay for debt servicing in relation to the City's revenues; Long Term Debt - means debentures, lease -purchase contracts, loans and loan guarantees; Debt Servicing Cost - means the annual amount required for debt repayment, including principal, interest, and associated debt fees; Inter -Generational Equity - means distributing the costs associated with capital investments across the generations which will be enjoying the benefits of the capital assets built today; Internal Borrowing - means financing for capital purchases from reserve funds as permitted in FAS -003 Reserves Policy; Pay -As -You Go Financing - means the use of operating funds for capital purchases as opposed to using debt; 45 3 City of Saint John Debt Management SAINT' JOHN 3. ACCEPTABLE PURPOSES FOR DEBT 3.1. The City will issue long-term debt solely for the purpose of financing the projects approved in the Capital Budget; 3.2. Long term debt shall not be used to fund operating or maintenance costs or leveraged to balance operating budgets; 3.3. The borrowing term shall not exceed the life of the asset; 3.4. The asset must have a life expectancy of at least 10 years; 3.5. The City shall promote a balanced approach between debt affordability, maintaining infrastructure and accommodating growth by: 3.5.1. Utilizing this Policy in conjunction with the Asset Management Plan, FAS - 005 Capital Budget Policy, and FAS -003 Reserves Policy; 3.5.2. Integrating debt issuance with the Capital Budgeting process to determine the necessity, priority, and viability of the capital project; 3.5.3. Considering the Long Term Financial Plan, and analyzing the tolerance or capacity to absorb and manage new debt given future priorities; 3.6. Debt will be structured to fairly distribute the costs over time, taking into consideration inter -generational equity (matching the cost of debt to those who benefit from the use of the capital) 4. DEBT LIMITS 4.1. The New Brunswick Local Governance Act stipulates that: 4.1.1. A local government shall not, in any one year, borrow for its current operations any money in excess of the sum represented by 4% of the budget of that local government for that year or $15K, whichever is greater; 4.1.2. A local government shall not, in any one year, borrow for capital expenditures any money in excess of the sum represented by 2% of the assessed value of real property in that local government; 46 4 City of Saint John Debt Management 4.1.3. The total amount of money borrowed by a local government for capital expenditures shall not exceed 6% of the assessed value of real property in the local government. S. DEBT ISSUANCE 5.1. A resolution of Council is required for all new debt issues; 5.2. The debt issuance process generally follows the steps below: 5.2.1. Notice of motion: Council gives notice of intent to borrow after 30 days from the day of Council resolution; 5.2.2. After expiration of 30 days, Council authorizes staff to issue and sell to the New Brunswick Municipal Finance Corporation debentures at such terms and conditions recommended by the Corporation; 5.2.3. Application form filled out and submitted to the New Brunswick Municipal Finance Corporation; 5.2.4. New Brunswick Municipal Finance Corporation advises the City of the actual bond issue; and 5.2.5. Staff reports back to Council regarding terms of the issue, coupon rate, price, average yield and settlement date. 6. INTERNAL BORROWING 6.1. The City may use reserves as a source of funds for the internal financing of capital projects as approved by Council. Any borrowing from reserve funds shall comply with Policy FAS -003 Reserves Policy. 7. PAY-AS-YOU-GO 7.1. The City will seek to gradually increase pay-as-you-go as an option for financing capital overtime. Factors which favor pay-as-you-go financing include: 7.1.1. Assets with a useful life that is less than 10 years — for example, IT equipment and road maintenance; 7.1.2. Projects that can be completed in an acceptable time frame given the available resources; 7.1.3. Situations where additional debt could adversely impact the City's financial health or as a component of a Debt Management Plan; 47 5 City of Saint John Debt Management 7.1.4. Situations where market conditions favour the use of cash rather than debt (for example, escalating interest rates) 8. REPORTING 8.1. The total debt outstanding, and total annual debt service payments will be reported in the annual consolidated financial Statements; 8.2. Long-term projections for outstanding debt will be provided through the annual budget process; 8.3. Long-term debt will be forecasted over the long term in a Debt Management Plan based on the Capital Investment Plan as part of the City's Long -Term Financial Plan. 9. ROLES AND RESPONSIBILTIES 9.1 Council shall: 9.1.1 Approve the Debt Management Policy; 9.1.2 Approve new debt issues; and 9.1.3 Approve budgets sufficient to provide for the timely payment of principal and interest on all debt. 9.2 Finance Committee shall: 9.2.1 Review borrowing requirements for alignment with the Long Term Financial Plan; and 9.2.2 Recommend to Council the approval of new debt issues. 9.3 The Finance Commissioner shall: 9.3.1 Assume primary responsibility for the debt management process; 9.3.2 Determine the City's available debt capacity and alignment with Long Term Financial Plan; 9.3.3 Provide for the issuance of debt at appropriate intervals and in reasonable amounts as required to fund approved capital expenditures; 9.3.4 Submit to Finance Committee and Council, all recommendations to issue debt; and 9.3.5 Ensure compliance with the principles and mandatory requirements contained in this policy. 48 6 16 Financing the Future v The City of Long Beach, {California (population 49.,564), was facing an extremely difficult sit- uation., The city had been operating with a structural deficit for more than fifteen years, but had been able to cover those deficits by using discretionary reserves and one-time funding sources. However, as a result of a voter -mandated tax reduction, rising pension costs :due to stock market losses, enhanced (negotiated) benefits, steadily increasing em- ployee health insurance costs, and other fac- tors, the situation had worsened to the point where these solutions were no longer adequate to cover the projected structural deficit of $43' million in the next fiscal year, potentially grow- ing as large as $182 million two years after that. The first step in addressing this problem was recognition. As the city had operated for some time in a deficit environment, something was needed to demonstrate that the old solutions Would no longer suff=ice. Therefore, the city cre- ated long-range revenue and expenditure pro- jections to demonstrate the size of the deficit. This action, combined with an analysis of the fiscal environment, showed that the deficit would only grew to,even more unmanageable proportions if no.action were taken, as the city was destined to face persistent resource short- ages and rising expenditures. Once decision makers were convinced of the gravity (if the: situation, solutions needed to be developed. The city began,to survey the corn- munity'to identify the lowest and highest 'prior- ity services and also to work with staff from across the"organization to identify cost- reduc-tion and re'enue-generating opportunities. Us- i;ng information on, -citizen's service -level, preferences and staff ideas, staff was able to work with the city council to identify cuts and service ;adjustments such that city projections showed that the structural deficit would be re- duced to less than $1 million after three years. This allowed. the city to use,its accumulated re- serves to make a "soft larnding" – all staff re !Loll ductions were accomplished through. attrition, without layoffs. The city felt that fair treatment. of employees was critical to maintaining the or- ganization's effectiveness beyond the current crisis. The elements of revenue and expenditure pro- jection, fiscal environment analysis, financial analysis, financial strategy development, and cooperation and communication between a wide range of stakeholder groups -including elected officials, staff, and citizens—are all hallmarks of successful long-term financial planning. Long Beach's story demonstrates the critical role that long-term financial planning can play in securing the financial position of a government. Lang -term financial planning is not just a one-time event in response to crisis, as Lung Beach's experience also illustrates. The city has built on its success by providing regular re- ports of its progress under the plan to the city council and the community, and by updating the plan annually. The city also tools steps to consolidate the hard-earned gains resulting from its planning' process. By the end�of the first year, the city had adopted new financial policies to safeguard against the Binds of deci- sions that`,led to the structural deficit. Second, the city began to change the way it delivered services, with a focus on optimized service de- livery and efficiency. Finally, Long Beach launched a perfor- mance-based program budgeting system to provide the analytic gnd management` tools necessary to make the most appropriate in- vestments With its limited resources, and to communicate the.outcomes that theso invest meets are; expected to produce,: Through more transparent policy controls, streamlined work' processes;; organizational focus on shared community, goals, and long -terse financial plan, ming, the City of Ong -Beach is determined to be'a much more effective steward of the pub fit's trust and resources. • • LA 67 • MW WE 4--J X Q) M W1 00 CD f— r fI- M N O N LO B O O 00 O 00 00 N � f,- f,- (7) L M LO O N f— O t LO N LO ti LO LO CD O M N L N Cfl N O O 00 O ti �+ Q O M O O 00 O C) M M [,- a) M CD O O 00 LO ti O M N It 1 Cfl N O O Cfl N (fl CD 1-: 1-: M N W) 00 M W) m W N W w 00 T" N 6"} 6"} 6"} �{} �} �} �} �} 6{} 6{} �} �} �} �{} `N N N U > � N N}, cn (D =! to =;c "� N 0= c Q co Xcn � N m X M 'i (n cn i� Eu0� �% m > O Co •U a)/ •C_ ♦ vJ a) _ Co U- N �/ �� D u > > Q�a)oUo� �aaO w�0 LL cn z 0 E z � N V L O LL T" N O N N n� V CD I- 0 O LL O N O N N n� V CD I- 0 O LL d7 r O N O I— CL Q ti r O N co LO N N 1- O O O 0) O N LO LO LO � N LO 'q N 0 N a) Re j 14 LO C) O 00 00 00 LO LO ti 'L L (n L to N N 0) � co 04 �5 Q 04 0) (D N ONO 000 CY7 CY7 ti M LO U 0 .� U N LO V O N M 1` 1` C7 1` Cfl 04 N N N � LO 0 C) � � CD mE- � H? H? V- H? H? H? E!? r Z U EL Z (Al 60- C14 N Cfl 'q N O 0 1` LO 0 ON r 0 � cN 0 0 Cl) Iq 00 I` C7 Iq LO I` C7 C7 Iq 00 C7 LO O O N N 00 LO 00 le 04 N I` (D — LO Iq � 00 Iq a) Re� C7 Cfl N N L ti N ti N 6O N LO 0 CO Cfl T- V" T" (Al (Al 60- 0 (fl LO O (D L C) LO LO LO O 1` O O G) (fl C) C) 1` O T- 60- AN C14 N 00 N Iq � � 00 Cfl C) N C) C) a) N I` CO 00 � 04 N C) O O M 00 Iq O � T - LO O N Cfl 00 LO 0 N (fl N T -r c7 Cfl N 1` ce 00 N LO 0 C) � � Cfl ta H? HA, 60 00 (fl I` T" I` C) N 0 N LO 11- 0 O 00 O 00 00 N � 1` 1` d7 � Cl) LO 60- AO 0 N 1` O 'q LO N LO ti LO LO O 0 C7 N W N O N 0 0 L6 00 0 [,- r-- O M 0 0 00 O a) LO C) C) [I- `co co (fl T- O 0 00 LO 1` O 0 C) C14 'q Cfl N O 0 O N (D CD CD C7 N LO CO CO LC) (Al (Al (Al T- T" T"® (Al 60- 'q N 0 LO 00 00 LO O ti 04 N ' CO CD r - O � � COi O O C) le Re C) LO LO le C7 0 CO 0 r CD Cfl LO N N O 'q 0 C14 'q N T- 00 N LO Cfl CO 'q C14 'q O Re Iq O O N M 00 Cfl N Cfl N N N — LO CO CO LO � Ir - ea H? 40 co LO N N N U) (D cv7 N Q j N X c0 (6 L U H m X 0 W N 0 L 'L L (n L to N N 0) � co �5 Q 7 C >, N .0 0 0� C N � � LL U (D U 0 .� U N O0 E- CL Q O N q? x >>� m mE- a a 0 LU > O Q LL cn Z U EL Z co LO GC Q GJ _N �> 0) 0) CIA GC -0 00 3 r -I Co O N GJ 4' r-4 OCu0 O i -0 N Q 3 Q m Q Ln M O Ln 0 00 O Ict 0 0 00 I- N m 00 r -I N O O O O Zt Ln l0 00 O ,Ztl0 00 00Ol r- N M O Ln N l0 Ln O N . I- . 00 M 00 I- . I- n n . M . r -I . Ol . I- l0 I- r -I I L n Ln r -I Zt N 00 00 O 01 Zt r -I M m M -zt r -I I� L n r -I I� l0 . O r -I . N . L n r -I r -I . Ol . 00 r -I . r -I r -I N N Ict 00 O m M m O N N I- m I- N r -I I- O N m I� O O � Ln I� 00 O ,Ztl0 }' f6 Q o O 4-v — O r- N O O Ln N M Ln l0 N . I- . 00 . O . r- . Ol . I- . M . O . M . r -I . Ol . I- . Ln I- r -I O O 00 N Zt N O 00 O l0 Zt L nI- M M l0 � Ol I� L n L n I� r -I . O . M . N . L n . N . M . Ol . 00 . l0 . r -I r -I N N Zt r -I r -I m Ln OIct M m O 00 N I- m I- r- M N l0 O N m I- O Ln I- m I- 00 M r -I LliI� O W N O O 00 N N L n l0 L n 00 . . . . . . . . . . . . . . 00 O O O N I- M Ln M Ln Ol I- Ol Ol r -I 0 0 0 0 CV Zt CV 0 l0 O l0 M O r -I l0 M M Ln t m O Ln t � N O . . . . . . . . . . . O N N Zt N N Ol 00 l0 r -I r -I r -I N N lzt r -I r -I N N LnO U U Ln N cn � m i Ln t 0 U }' f6 Q o O 4-v — Ln N U O 4-j N U O L Q ate-+ N U LL U = 0 N V) N U_ a--+ C:> E _O N p E U o6U O (rJ N U i O Ln Ln v Q 0 v v if Ln 4-1 f6 -0 2 cn a + f6 N U N a--+ N E v � c C:o W N U N u O a- c N O m U E O +' U Q_ 4-1 w ateJ V) > V) C: O > w O O � N N U (n N > J 4-j_0 N Q 06v1 U f6 LL N 01 n O 01 O W Ln r -I M M r -I M r -I tG N Ln r -I N LnO U Ln N cn � m i Ln t 0 U }' f6 Q o O 4-v — Ln N U O 4-j N U O U Q ate-+ N U LL U = 0 N 01 n O 01 O W Ln r -I M M r -I M r -I tG N Ln r -I Ln 4--j Q) E 4--j (n 4--j hQ) rn W N a-1 C w E s m a-1 y W 00 ri O N a-1 C w E s m a-1 y W ri O N O O T O Q E W +T+ 00 N O r�-I N r -I r -I lD M r -I r-4 r -i r -I r -I Ln r -i OLn Ln •y y to C 76 o c O E4-1 U w V d c �N a o a E a� COU CO4-1 i Y O cn o 4J v O Q N O N N N O a N s= p i O � N M C1A (D O cn i z o E r -I r -I Ln r -i O N r -I N C O .N y .E E O u a, U O a C s O ++ C .m N m a-1 H OLn •y y to C C o o —' •� N O a- u ' f4 o O E4-1 U w V d c �N a o a E a� COU CO4-1 i Y O cn o 4J v O Q N O N r -I N C O .N y .E E O u a, U O a C s O ++ C .m N m a-1 H 0 0 C 0 m ( Q A 0 u 0 4' Nis A ,M 4' O el 4' 4 El i The City of Saint John GENERAL OPERATING FUND City of Saint John 2018 Budget 2018 2018 Approved Proposed Budget Budget REVENUES Property taxes 121,319,088 121,319,088 Equalization & Unconditional Grant 16,603,206 16,603,206 Financial Assistance 1,239,537 4,717,196 Surplus 2nd previous year 1,338,515 1,338,515 Growth & Community Development Services 2,503,571 2,503,571 Public Safety Services 1,887,022 1,887,022 Transportation & Environment Services 3,982,308 3,982,308 Finance & Administrative Services 3,654,886 3,654,886 Corporate Services 85,000 85,000 TOTAL REVENUES PY 152,613,133 156,090,792 EXPENDITURES Growth &Community Development Services 10,118,529 10,577,414 Public Safety Services 50,805,207 55,385,779 Transportation & Environment Services 42,025,858 43,720,502 Finance & Administrative Services 9,503,272 9,503,272 Corporate Services 8,465,297 8,581,357 Other Charges 31,694,970 28,322,468 TOTAL EXPENDITURES 152,613,133 156,090,792 General Fund Surplus (Deficit) 6'1:1 1 ►c .E E O U v c� c c o N 0 U a) _O • (_� E ^ •> C N 0 O C Lr) Q U (3) CID -0 C: 4- L L � M E > � E .O E in � to 0 a--+ .N O > •C: O U V Q N 4— (1) V O 6wo V 0 Lu DC Lu u N u 0 0 0 M 0 Kol 11 / n 1 ro � � s �O� L- 4-J Ln 0-0 Ln Q �4- L4n •� ro a� .1 U E� 0" M CLO O V U c6 � E U o � L � =3 O O Q) •- 4-J a M =3 V � � a--� V 4-JateJ c6 L c6 0 L L � � � � O V c6 s ' � U 11 0 / n 1 r � � Q �O� 4-J Ln Ln Q �4- L4n •� E s •c6 U O 0" i CLO — c6 � E a--+ o L =3 •_ =3 o Ln =3 c6 • x Ln L 0 O � � Q �O� Q �4- L4n s •c6 U 0 i CLO — E a--+ i E =3 •_ =3 ,f V Ul c �0, D r) • � U Lr) a -J O a; 4-, a--jU V O (1) to 4 (� U ate -+ (1) O + O -0 V O m N U O a--+ 2 C:� O U (A +, 4-j E o +, N O U ) O a-' 0 c �0, D r) CID V) (1) i V) i V) L- 0 CID i a--+ CID V) 4 ,f ca O Ln m c6 �' U y� Ln c6 � cn U CSA Ln O c6 S �C: O :3 ■ c6 LU L Ca Ln 00 I I x O L. CL CL Ca i i CSA i i V i ca O H sv�l 00 0 lu v . - E E 0 U ca a� El M 0 4--j n� W E n..,L W E 0 L 0 0 a� nW W . - E E 0 V a --j 4— Or! X11 i� V) C: A. (1) 4-J Co E • E 0 U 0 4-; V) m CD u < _0 —C U E -0 00 u 4-; V) u LU m U %%—woo V) 0) E _0 E m _0 0) V) 0 0- 0 0 L ^L W Q c� � � V Q V V C: a --j caQ 4-j Ln _0 c EQ 4-j Q C� 4-j Q � � Q O i ate-+ d O N cn 4'' O cn(31 O v N � -tJ1- � r' ou cn O r,, E �X � a-�+ �U E i_0 E C— ate-+ c�i� E O_0 •- O a- O O O E U z O i ate-+ d L Ln N N -tn- � .0 i dJ a� a _0 E c6 -1--+ dJ O = 4-J 4-J () > +- 'a) O O 0 4-j +� 4.j a) OU > E — E 2- a) a) U a 0 0 0 k O U 0 0 a -J O +, O -0 -0 m � ca E _00- a) C* r --i OO c: O U U � � N l0 4-J E i ca ' - I..L O U a--� a--� > +-j O -0 • — U - 4-J lO .- c E Iz O E E U -0 O O a� c c u o a) a) E E U a --j E C� - C� O i U �-j CO FINANCE COMMITTEE REPORT Report Date March 6, 2018 Meeting Date March 13, 2018 Chairman Councillor Merrithew and Members of the Finance Committee. SUBJECT. PROPOSED WATER & SEWER BY-LAW AMENDMENT OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. HeadCity Manager J. Brent McGovern and Melanie Tompkins J. Brent McGovern Jeff Trail RECOMMENDATION That the Finance Committee recommend that Common Council give First and Second reading to the amendment to the Water and Sewerage By-law, By-law No. M-16, attached to this report dated March 6, 2018. EXECUTIVE SUMMARY The proposed amendment to the Water and Sewerage By-law encompasses, amongst other things, housekeeping items, such as changes to the definition of Commissioner to reflect the current corporate governance, the repeal of a provision that was creating inequity and was not within the city's authority and the creation of new provisions aimed at improving the allocation of water costs among ratepayers — a Council Priority. The Amendment is also intended to improve By-law enforcement, through the creation of a new offence and the increase of the fine for violations of the by-law. The purpose of this report is to submit for the Committee's consideration the above described amendment to the Water and Sewerage By-law, and to request that the Committee recommend to Council that it give First and Second reading to the said amendment. PREVIOUS RESOLUTION N/A rrA -2 - STRATEGIC ALIGNMENT This report aligns with Council's Priority for Fiscal Responsibility, specifically as it relates to "investigating options to allocate water costs among ratepayers". REPORT BACKGROUND (CURRENT AND PAST PRACTICE) Presently, subsection 47(3) of the Water and Sewerage By-law states: "47(3) Whenever the water has been turned off from any premises for six consecutive months, and the building is vacant and unused for domestic or commercial purposes, no further bills for water and sewerage services shall be rendered to the owner for the building for any monthly or bi- monthly period after the expiration of this six-month period for as long as the building remains vacant and unused or until the water is turned on again, except for the base charge for metered service, if any." The practice has been to halt any charges to customers after the water has been turned off for a period of six months, provided the building has been vacant and unused for domestic or commercial purposes. REASONS TO AMEND THE BY-LAW After researching the reasoning behind Section 47(3) of the By-law, it was identified that it was intended to serve as a disincentive for "snow birds", those customers who travel south in the winter months, who may wish to terminate their water and sewerage services for the period during which they are away from their home. However, the practice of charging the full flat rate amount for water and sewerage services to a customer for a period of six months after the service has been disconnected, does not align with the user -charge principle of utility rates under the Local Governance Act. Legal advice was received in the past that there is no authority to support such an approach and that the practice should be brought to an end. Similarly the practice of not charging any water and sewerage rates to a customer after a six consecutive month period of disconnection, as long as the building remains vacant and unused, also lacks fairness and equity as it does not fully allocate water costs among ratepayers. In other words, there is a cost to having the service to a building, which is not being recovered once the rates stop being collected. N-11 -3 - The Province recognized the need for a utility, if it is to produce an annually balanced budget, to recover the cost of having services available to buildings on lands by which a service runs. In this respect, the province enacted a provision in the Local Governance Act (and previously in the Municipalities Act) which gives authority to a municipal utility to make a charge to the owner of a building standing on lands by which a service runs, if that owner refuses to connect to the service. Under this authority, the City introduced Subsection 5(2) to the Water and Sewerage By -Law some time ago, which aims to allocate water costs among ratepayers. In the simplest of terms, section 5(2) states that for homes that are not connected to the water system or sewer system, the owner is to pay a rate equal to what the water or sewer service charge (or both) would be if the owner had connected to the service. To bring about fairness and equity and to more appropriately allocate water and sewer costs among ratepayers, the attached amendment repeals subsection 47(3) and introduces a new section 48 which ensures that all water and sewer customers whose water and/or sewer services have been disconnected, or owners whose buildings are vacant and unused or made uninhabitable because of fire, a basic water/sewer service charge, which represents the cost of having the service available, but does not include the water consumption portion of the rate. OTHER Years ago, Council established an Appeals Committee under section 48 of the By - Law, whose mandate was, pursuant to subsection 48(4) of the by-law, to "relieve the owner of any property either in whole or in part, from the payment of any water or sewer service rate imposed under" the by-law if it was established that such owner was "in indigent circumstances". The creation of this Committee and its mandate were legally reviewed, and the City Solicitor concluded that there was no authority in the then Municipalities Act to create such a Committee and give it the stated mandate. This was so because the very existence of the Committee and its mandate went against the user -charge principle clearly articulated in the act. Following this legal advice, the Committee was disbanded, but section 48 of the By -Law was never actually repealed. The attached amendment repeals section 48, and replaces it with a new section 48, which addresses the equity amongst rate payers described earlier in this report. The attached amendment also creates a new offense for turning a valve back on when Saint John Water has turned it off. The amendment also increases the fine for violating the by-law and provides for a voluntary fine payment scheme, whereby if an owner charged under the by-law makes a payment of a smaller amount ($1,500), he/she is not liable to prosecution. If the owner does not -4 - make use of the voluntary fine payment opportunity, and if he/she is found guilty of an offence under the by-law, the fine amount is $600 higher ($2,100). The attached amendment also increases the cost stipulated in the by-law for testing water meters, to reflect the actual cost to the utility to provide this service, and to ensure that the utility is able to produce an annually balanced budget, as mandated in the Local Governance Act. Finally, the amendment changes the definition of "Commissioner" to reflect the current corporate governance structure, such that the Commissioner is no longer the Chief City Engineer, but rather the "Commissioner of Saint John Water". COMMUNICATION Letters will be sent to the owners of properties that have been vacant and unused for domestic or commercial purposes to advise them of the by-law change in advance of issuing invoices. There are approximately 177 properties that would be impacted by this change. SERVICE AND FINANCIAL OUTCOMES In the 2018 Budget $85k was included as additional revenue due to anticipated By-law change. The $85k additional revenue was forecasted as a result of an inventory of approximately 177 properties that would be impacted by the By-law changes. Assuming that the 177 properties generate an approximate revenue of $480.30/property results in an additional $85,013.10 in revenue. However, it should be noted that there could be a higher than typical delinquency rate, particularly if the buildings are slated for demolition. While the delinquency rate could be higher than typical, the Utility should continue to still collect on the outstanding balance with the exception of cases where a property is auctioned for property tax sale. The number of water meters tested annually is approximately 7 and therefore the total increase in revenue associated with the increased water meter testing fee is approximately $1,400 per year. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Both the Finance and Legal Departments were involved in the development of the by-law amendment and the amendment itself was drafted by legal. Growth and Community Development were also consulted as well as communications. E:ii] -5 - ATTACHMENTS BY-LAW NO. M-16 A LAW TO AMEND A BY-LAW RESPECTING WATER AND SEWERAGE E -11I BY-LAW NO. M-16 A LAW TO AMEND A BY-LAW RESPECTING WATER AND SEWERAGE ARRETE NO M-16 ARRETE MODIFIANT L'ARRETE CONCERNANT LE RESEAU WEAU ET D'EGOUTS Be it enacted by the Common Council of Lors d'une r6union du conseil municipal, The City of Saint John as follows: The City of Saint John a d&cr&t& cc qui suit: A By-law of The City of Saint John entitled "A By-law Respecting Water and Sewerage", enacted on the 7t' day of June, A.D. 2004, is hereby amended as follows: 1. Section 1 is amended by repealing the definition of "Commissioner" and replacing it with the following: "Commissioner means the Commissioner of Saint John Water or any person authorized by him/her to act on his/her behalf. (commissaire)" Par les pr6sentes, 1'arret6 de The City of Saint John intitul& « Arr6t& concernant les r6seaux d'eau et d'6gouts », d6cr6t6 le 7 juin 2004, est modifi6 comme suit: 1. L'article 1 est modifi6 par 1'abrogation de la definition de "commissaire" et son remplacement par cc qui suit: "Commissaire" Commissaire de Saint John Water ou toute personae autoris&e par celui/celle-ci a agir en son nom. (Commissioner)" 2. Subsection 34(1) is amended by deleting 2. Le paragraphe 34(1) est modifie par la "$25.00" and replacing it with "$225.00". suppression de "25,00$" et son remplacement par "225,00$". 3. Section 46 is amended by adding the following "46(3) A customer whose water service has been discontinued pursuant to subsection 46(1), section 42, subsection 44(4) or for any other reason, shall not operate city valves or take any other action in relation to the City's water system to reinstate the water service." 4. Subsection 47(3) is repealed. 3. L'article 46 est modifi6 par 1'adjonction de cc qui suit: "46(3) Un abonn& dont le service d'eau a W interrompu en vertu du paragraphe 46(1), de Particle 42, du paragraphe 44(4) ou pour toute autre raison, n'op6rera pas les valves d'eau de la ville ni ne fera tout autre chose envers le syst&me d'eau de la ville afin de r6tablir le service d'eau. 4. Le paragraphe 47(3) est abrog&. 5. Section 48 is repealed and replaced with the 5. L'article 48 est abrog6 et remplac6 par cc qui following: suit: "48(1) Where, in the case of metered customers, (a) the water service has been discontinued pursuant to section 42, subsection 44(4) or subsection 46(1) for a period of at least 72 hours, or (b) the water has been turned off at the request of the owner for a period of at least 72 "48(1) Lorsque, en cc qui a trait aux usagers mums d'un compteur, E:3► (a) le service d'eau a &6 interrompu en vertu de Particle 42, du paragraph 44(4) ou du paragraphe 46(1) pour une p6riode minimale de 72 hours, ou (b) 1'alimentation en eau a &6 interrompue a la hours, or (c) a serviced building is vacant and unused for domestic, commercial or industrial purposes; or (d) fire has made a serviced building uninhabitable, the owner shall, upon the expiry of the 72 hour period described in paragraphs (a) or (b) or upon the building becoming vacant or uninhabitable, pay a monthly water rate equal to the water service charge based on the size of the appropriate meter, as set out in Schedule `B". 48(2) Where, in the case of flat rate customers, (a) the water service has been discontinued pursuant to section 42, subsection 44(4) or subsection 46(1) for a period of at least 72 hours, or (b) the water has been turned off at the request of the owner for a period of at least 72 hours, or (c) a serviced building is vacant and unused for domestic, commercial or industrial purposes; or (d) fire has made a serviced building uninhabitable, the owner shall, upon the expiry of the 72 hour period described in paragraphs (a) or (b) or upon the building becoming vacant or uninhabitable, pay a monthly water rate equal to what the water service charge would be if the flat rate customer was metered, based on the size of the appropriate meter, as set out in Schedule `B". 48(3) Where, (a) the sewer service has been discontinued demande de l'usager pour une periode minimale de 72 heures, ou (c) le batiment recevant 1'alimentation en eau est demeure vacant et non -utilise a des fins domestiques, commerciales ou industrielles, ou (d) le batiment est inhabitable en raison d'un feu, le proprietaire doit, des 1'expiration de la periode de 72 heures decrite aux alineas (a) ou (b) ou des que le batiment est vacant ou inhabitable, payer des frais mensuels equivalant au tarif des services d'eau base sur la dimension du compteur approprie, tel qu'enonce a 1'annexe `B". 48(2) Lorsque, en cc qui a trait aux usagers a tarif forfetaire, (a) le service d'eau a ete interrompu en vertu de Particle 42, du paragraphe 44(4) ou du paragraphe 46(1) pour une periode minimale de 72 heures, ou (b) 1'alimentation en eau a ete interrompue a la demande de l'usager pour une periode minimale de 72 heures, ou (c) le batiment recevant 1'alimentation en eau est demeure vacant et non -utilise a des fins domestiques, commerciales our industrielles, ou (d) le batiment est inhabitable en raison d'un feu, le proprietaire doit, des 1'expiration de la periode de 72 heures decrite aux alineas (a) ou (b) ou des que le batiment est vacant ou inhabitable, payer des frais mensuels equivalant au tarif des services d'eau base sur la dimension du compteur approprie que l'usager paierait s'il etait muni d'un compteur, tel qu'enonce a 1'annexe `B". 48(3) Lorsque, E:191 (a) le service d'egouts a ete interrompu en pursuant to section 42 or section 46(1) for a period of at least 72 hours, or (b) a serviced building is vacant and unused for domestic, commercial or industrial purposes; or (c) fire has made a serviced building uninhabitable, the owner shall, upon the expiry of the 72 hour period described at paragraph (a) or upon the building becoming vacant or uninhabitable, pay a monthly sewer rate equal to the applicable water service charge in paragraph (1) or (2), multiplied by the percentage set out in Schedule C""; vertu de Particle 42 ou du paragraphe 46(1) pour une p&riode minimale de 72 heures, ou (b) le batiment recevant le service d'6gouts est demeur& vacant et non -utilise a des fins domestiques, commerciales ou industrielles, ou (c) le batiment est inhabitable en raison d'un feu, le propri&taire doit, des 1'expiration de la p&riode de 72 heures d6crite a 1'alin6a (a) ou des que le batiment est vacant ou inhabitable, payer des frais d'6gouts mensuels &quivalant au tarif des services d'eau &nonce au paragraphes (1) ou (2), multipli& par le pourcentage identifi& a 1'annexe "C"". 7. Section 50 is repealed and replaced with the 7. L'article 50 est abrog& et remplac& par cc qui following: suit : "50(1) A person who violates any provision of this by-law is liable upon conviction to a fine of $2,100.00. 50(2) A person who violates any provision of this by-law may make a voluntary payment of a fine of $1,500.00 at the Payment Center, City Hall, 15 Market Square, Saint John, NB, Monday to Friday between the hours of 8:30 am and 4:30 pm. 50(3) A person who violates a provision of this by- law and makes a voluntary payment pursuant to paragraph (2) is not liable to be prosecuted for said violation. " 50(1) Quiconque contrevient a une disposition du pr&sent arret& commet une infraction et est passible, sur d&claration de culpabilit6, d'une amende de 2100,008. 50(2) Quiconque contrevient a une disposition du pr&sent arret& pent acquitter volontairement une amende de 1500,00$ au bureau de perception a 1'H6tel de ville, au 15 Market Square, Saint John, N. -B., du lundi au vendre di, de 8h30 a 16h30. 50(3) Quiconque contrevient a une disposition du pr6sent arret6 et acquitte volontairement 1'amende tel que pr&vu au paragraphe (2) n'est passible d'aucune poursuite a cet 6gard. » E:1! IN WITNESS WHEREOF The City of Saint John has caused the Corporate Common Seal of the said City to be affixed to this by-law the day of , A.D. 2018 signed by: EN FOI DE QUOI, The City of Saint John a fait apposer son sceau municipal sur le present arrete le 2018, avec les signatures suivantes : Mayor /Maire Common Clerk/greffier communal First Reading - Premiere lecture - Second Reading - Deuxieme lecture - Third Reading - Troisieme lecture - E-111