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)
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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.
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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.
•
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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)
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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
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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.
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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,
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(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,
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(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 -
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