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2018-10-17 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Wednesday, October 17, 2018 5:15 pm 8th Floor Boardroom, City Hall 1. Call to Order Pages 1.1 Approval of Minutes - September 20, 2018 1 - 3 1.2 2019 Utility Fund Operating Budget 4 - 9 1.3 2019 General Operating Budget 10-14 1.4 2019 Service Based Budget - Growth & Community Development Services 15-25 1.5 2019 Service Based Budget - Fire Rescue & Suppression Services / SJEMO 26-37 Services 1.6 2019 Operating Budget - Saint John Police Force and Public Safety 38-52 Communication Centre (PSCC) 1.7 2019 Service Based Budget - Transportation & Environment Services 53-63 1.8 Transit and Parking Commission 64-67 1.9 2019 Service Based Budget - Finance & Administrative Services 68-80 1.10 2019 Service Based Budget - Corporate Services 81-96 1 Poeta Sy: (L rIN. m MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING SEPTEMBER 20, 2018 AT 4:30 PM Stn FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor S. Casey Councillor D. Reardon Councillor G. Norton Also Present: Acting City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Commissioner Saint John Water B. McGovern Comptroller Finance C. Graham Senior Manager Financial Planning H. Nguyen Deputy Commissioner Administrative Services I. Fogan Assistant Comptroller Finance and Administrative Services C. Lavigne Commissioner Growth and Community Development J. Hamilton Senior Financial Analyst J. Forgie Fire Chief K. Clifford Deputy Commissioner Parks and Public Spaces T. O'Reilly Administrative Assistant K. Tibbits 1. Meetiniz Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 ADDroval of Minutes — July 24. 2018 Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the minutes of July 24, 2018, be approved. LTA [0000114L1ilk]ilk] Iif91 1.2 Appointment of Auditor for Auditing Services Ms. Forgie reviewed the submitted report and advised that a combined Request for Proposals was prepared to provide auditing services for the City and several of its agencies, boards and commissions. Over a 6 year period, it equates to a savings of $102K, or $17K annually. (Councillor Norton entered the meeting) Council: That Deloitte LLP be appointed auditors for the City of Saint John, The Saint John Trust Funds, Saint John Parking Commission, Saint John Transit Commission, Develop Saint John, Saint John Free Public Library, Saint John Aquatic Centre Commission and Saint John Trade and Convention Centre for the next 4 years with a 2 year renewal option at the City's discretion. MOTION CARRIED. 1.3 July 2018 Year End Forecast Ms. Nguyen reviewed the year end forecast as of July 2018. An $825K surplus is projected for year end, however this includes one-time injections of money such as a carry forward amount of $1.3M, property tax amount of $1.2M and the deal with the province for $3.5M. The structural deficit is approximately $5.2M and is projected to increase in 2019. Department heads commented on their budget areas and variances within the budgets. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that Item 1.3 July 2018 Year End Forecast, be received for information. LTA [0000114L1:k]k]11191 1.3.1 July 2018 Saint John Water Year End Forecast Mr. McGovern reviewed the year end forecast for Saint John Water. A surplus of $1,015,000 is projected for the end of 2018. By year end, the accumulated reserves will have been used as part of the Safe Clean Drinking Water payment. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that Item 1.3.1 July 2018 Saint John Water Year End Forecast, be received for information. MOTION CARRIED. 1.4 2019 General Operating Budget Mr. Fudge presented the first draft of the 2019 General Operating Budget. It is 2.35% higher than the 2018 budget and essentially a status quo budget, consistent with 2018 service levels. This is the last single year budget and will implement long-term strategies going forward. The structural deficit for 2019 is approximately $9M. The 2018 structural deficit gap is approximately a 4% gap between reoccurring revenue and reoccurring expenses and will increase close to 6% in 2019. The 2019 operating budget has a heavy reliance on short term financial assistance from the province with an $8.9M funding commitment for 2019. The City continues to work with the province to find a sustainable funding solution. The agreement with the province commits that the City minimize impact to front-line services until a solution has been found. An increase in the tax rate is not part of the 2019 budget. Work will continue on the 10 year financial plan and the capital investment plan. Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that Item 1.4 2019 General Operating Budget, be received for information. Mr. McGovern reviewed the 2019 Water & Sewerage Utility Operating Budget. Industrial and potable rate studies as well as the universal metering analysis are all underway. Continuous improvement and revenue generation remain a priority to ensure that water and sewerage costs are allocated appropriately and as fairly as possible. A rate increase of $60 per year is proposed which is slightly less than the initial planned $72 rate increase. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that Item 1.5 2019 Water & Sewerage Utility Operating Budget, be received for information. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the open session meeting of the Finance Committee be adjourned. MOTION CARRIED. The Finance Committee open session meeting held on September 20, 2018 was adjourned at 6:30 p.m. FINANCE COMMITTEE REPORT Report Date October 11, 2018 Meeting Date October 17, 2018 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: 2019 Utility Fund Operating Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. HeadL4 City Manager Craig Lavigne Brent McGovern m I Neil Jacobson RECOMMENDATION It is recommended that the Finance Committee approve the 2019 Utility Fund Operating Budget and submit to Common Council for the October 22 meeting for receive and file. EXECUTIVE SUMMARY The 2019 Utility Fund Operating Budget was presented to the Finance Committee on September 20th. The budget reflects the completion of the largest municipal infrastructure project in the history of the Province of New Brunswick, the Safe Clean Drinking Water Project (SCDWP). The proposed 2019 budget holds a service level similar to the service level in the 2018 budget as detailed in the attached high level Service Based Budget Report. 2019 will represent the first full year for the Loch Lomond Drinking Water Treatment Facility (LLDWTF). The flat rate being recommended for 2019 is $1,428 which is an increase of 4.39% ($60 per year or $5 per month) over 2018. This rate is less than what has been predicted and forecasted over the last five years. The rate had been planned to increase to $1,440 per year (an additional $72 per year or 5.26%) by 2019. The ability to keep the rates lower is as a result of the numerous expenditure reductions that have been implemented as well as revenue CI -2 - PREVIOUS RESOLUTION It was recommended that Finance Committee at the September 20th meeting to reflect upon the attached document and make any and all inquiries and recommendations to staff; and receive and file this report. STRATEGIC ALIGNMENT The proposed 2019 Utility Fund Operating Budget is aligned with Council's priorities in taking a strategic approach to financial management of the Utility by continuing to contribute capital funding from operating, finding other revenue sources, improving the allocation of costs among ratepayers and continuing to find efficiencies and savings through continuous improvement initiatives. REPORT The proposed 2019 Utility Fund Operating Budget will be the last budget brought forward using the existing rate structure. Staff have been balancing the significantly increased workload associated with the SCDWP (and over the last several months in particular they have been focused on the successful commissioning of the new LLDWTF), managing a large capital program that is separate and apart from the SCDWP which has deadlines associated with funding from other levels of government, while at the same time working with consultants on east and west industrial rate analyses, potable water rate structure and a universal metering analysis. Considerable work has been completed on new potable and industrial rate structure reports as well as in undertaking an analysis and report on universal metering. The rate reports and universal metering reports are expected to be finalized in early 2019 once the analyses are completed. These reports will be presented to the Finance Committee and Council once they are completed which is expected to occur in the next six months. This will give Councillors the ability to make informed decisions and give staff proper time to allow the creation of communications plans to inform rate payers of the changes that will come out of these reports and the new rate structures. The outcomes from these reports will lay the foundation for the Utilities long term financial plan. The 2019 Utility budget is a total of $48,286,000 and represents an increase of $482,000 (1.01%) over 2018 budget ($47,804,000). Saint John Water is continuing to focus on reducing expenditures, paying down debt, while bringing forward prudent, strategic capital budgets that seek to renew infrastructure, lower operating cost while striving to leverage funding from other levels of government for every capital dollar invested. 61 -3 - Expenditures There are budgeted increases in expenditures for 2019 that the Utility has little control over, items such as; wage increases tied to collective agreements, workers compensation rates, electricity increases, the commissioning of 3 new wastewater lift stations, the commissioning of 2 new wastewater treatment facilities (Mora Heights and Greenwood) to meet regulatory obligations, the ongoing maintenance of approximately 75 combined sewer overflows that were constructed as part of regulatory obligations, asphalt costs associated with utility cuts and debt associated with the SCDW project. However, there have been significant cost reductions and savings that have contributed to a lower than expected rate increase. The early borrowing of the $45M substantial completion payment will save rate payers approximately $3.5M. The capital reserve fund for the SCDW project will save rate payers approximately $9.75M and forgo the burden of additional debt payments. Staffing positions have been eliminated in 2018 resulting in savings of approximately $183,000 in 2019. As well as ongoing savings of $46,000 due to changes in the way public notices are communicated and ongoing savings of $50,000 in electricity reductions due to a continuous improvement project. Overall expenditures are increasing by 1.01% with the largest change in water treatment. This service area is budgeted to be $10.035M and the increase is due to the annual service and operating payments associated with the treatment plant and west side well fields. Capital from operating has the largest decrease due to a very lean capital budget and funds no longer being set aside for the SCDW reserve. Revenue Flat rate and meter rates will increase by approximately 4.39% with the flat rate being $1,428 per year. Saint John Water continues to look for other sources of revenue to help offset rate increases. Finance Committee recommended and Council adopted; new lease agreements (Bell and Eastlink) resulting in $35,875 per year in new revenue which is for a 20 year period and indexed. Changes to water and sewerage bylaw will allow the Utility to recover approximately $86,500 more by ensuring all properties that have access to water and sewerage service pay for that access even if the building is unoccupied and by amending cost associated with meter testing. Other services such as live water main tapping for other municipalities or on private water systems which was recently approved will result in recurring annual revenues of approximately $10,000. C.1 -4 - The most significant changes in 2019 revenue is the decrease in other revenue which is from less interest being earned due to less cash on hand. It is anticipated a substantial payment will be made late 2018 or early 2019 for the SCDWP. As well, the previous year's surplus is down over last year and if the Utility continues to have small or no surpluses, the loss of this non rate revenue will need to be made up through rates. Conclusion The increase in rate being proposed and forecasted for 2019 is less than the rates forecasted over the past 5 years. The budget being proposed does have risk involved. The LLDWTF has just come online. There is a large variable cost associated with operation and it is difficult to predict the actual operating cost due to there being numerous variables. The capital budget which is funded from the operating is very lean and it does not address enough of the infrastructure deficit and does not put any funds away for operating and capital reserves. However, the rate studies and universal metering reports that will be brought forward over the next five months will set the rate structure, capital investment plan and long term financial plan for the Utility. SERVICE AND FINANCIAL OUTCOMES See enclosed 2019 Utility Fund Operating Budget INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS N/A ATTACHMENTS Appendix — A — 2019 Saint John Water Expenditure and Revenue Budget r� a a , 2019 SAINT JOHN WATER EXPENDITURE BUDGET 2019 Proposed Budget Operating Expenditures Drinking Water Watershed Management 211,000 202,000 Water Treatment 3,122,000 10,035,000 Water Pumping & Storage 1,166,000 1,222,000 Transmission & Distribution 5,281,000 4,976,000 Customer Metering 703,000 714,000 Industrial Water Watershed Management 524,000 615,000 Water Pumping & Transmission 1,051,000 1,835,000 Customer Metering 121,000 133,000 Wastewater Wastewater Pumping 2,859,000 3,086,000 Wastewater Collection 3,440,000 3,158,000 WasteWater Treatment 4,969,000 4,810,000 Infrastructure Management Municipal Engineering 1,201,000 820,000 Other Internal Charges 895,000 905,000 Additional Post Employment Benefits 1,384,000 1,322,000 26,927,000 33,833,000 Fiscal Charges Debt servicing 10,102,000 9,753,000 Capital from Operating 10,775,000 4,700,000 Total Fiscal Charges 20,877,000 14,453,000 Total Expenditures 47,804,000 48,286,000 E:3 a a , . 2019 SAINT JOHN WATER REVENUE BUDGET Revenues Flat rate Accounts 21,742,000 Metered Accounts 19,568,000 Fire Protection Levy 2,300,000 Storm Sewer Levy 1,000,000 Other revenues 1,977,000 Previous Year's Surplus 1,217,000 Total Revenues 47,804,000 Flat Rate - Water & Sewerage Meter Rates: Block 1 Block 2 Block 3 NOTE: Sewer Surcharge 122% of Water Charge 1,368 5.55% 1.5445 0.9835 0.3471 2019 Proposed Budget 22,673,000 20,344,000 2,600,000 940,000 748,000 981,000 48,286,000 1,428 4.40% 1.6123 1.0267 0.3623 The City of Saint John 2019 GENERAL OPERATING BUDGET City of Saint John 2019 Budget 2018 Approved Budget 2019 Proposed Budget REVENUES 4,580,298 4,656,373 Property taxes 121,319,088 121,925,686 Financial Assistance 4,717,196 8,912,315 Equalization & Unconditional Grant 16,603,206 16,603,206 Surplus 2nd previous year 1,338,515 86,557 Growth & Community Development Services 2,503,571 2,507,734 Public Safety Services 1,887,022 1,695,896 Transportation & Environment Services 3,982,308 4,060,970 Finance & Administrative Services 3,654,886 3,743,000 Corporate Services 85,000 112,000 TOTAL REVENUES 156,090,792 159,647,364 EXPENDITURES Growth & Community Development Services 4,580,298 4,656,373 Growth & Community Planning Services Growth & Community Planning Services 1,730,540 1,783,598 One Stop Development Shop Services 350,000 350,000 Heritage Conservation 181,551 190,562 Permitting & Inpection Service & By -Law Compliance 2,142,814 2,142,898 Infrastructure Development 525,393 539,315 i1K 4,580,298 4,656,373 Economic Development Service Economic development agencies Growth Reserve Fund 350,000 350,000 Regional Economic Development (Enterprise) 475,000 475,000 Develop Saint John 821,002 821,002 Destination Marketing Organization 1,033,495 1,033,495 2,679,497 2,679,497 Saint John Trade and Convention Centre 638,899 625,570 Harbour Station 483,513 588,525 3,801,909 3,893,592 Urban Development Service Market Square - Common Area 2,195,207 2,195,207 Arts & Culture Cultural Affairs 117,030 108,030 Imperial Theatre 355,850 360,205 i1K The City of Saint John 2019 GENERAL OPERATING BUDGET City of Saint John 2019 Budget 2018 Approved Budget 2019 Proposed Budget Saint John Arts Centre 83,938 84,125 Arts & Culture Board 70,000 70,000 Public Art - Maintenance and Repair 10,000 10,000 Acadian Games - 19,750 Remembrance Day Ceremonies 1,500 1,500 New Year/Canada Day Celebrations 15,000 15,000 Total Growth & Community Development Services 653,318 11,230,732 668,610 11,413,782 Public Safety Services 2,348,975 2,287,375 Fire Rescue and Suppression Service 23,718,678 24,516,722 Water Supply and Hydrants 2,300,000 2,600,000 Emergency Management Service 307,729 332,918 Police Services 25,689,293 25,934,896 Public Safety Communications 2,427,079 2,488,542 Street Lighting 943,000 971,000 Total Public Safety Service 55,385,779 56,844,078 Transportation & Environment Service Roadway Maintenance Service Snow Control Streets 5,720,664 5,771,964 Street Cleaning 1,333,980 1,666,615 Utility Cuts 748,350 738,162 Street Services - Surface Maintenance 5,276,171 6,111,427 13,079,165 14,288,168 Sidewalk Maintenance Service Snow Control Sidewalk 1,218,951 1,100,482 Sidewalk Maintenance 790,995 703,316 11 2,009,946 1,803,798 Pedestrian & Traffic Management Service 2,348,975 2,287,375 Stormwater Management 3,785,485 3,566,967 Solid Waste Management 3,764,178 3,717,973 Engineering 533,278 551,949 Parks & City Landscape Parks Maintenance 2,780,807 2,762,749 Lifeguards 170,000 173,400 Urban Forestry 306,691 308,207 2 11 The City of Saint John 2019 GENERAL OPERATING BUDGET City of Saint John 2019 Budget 2018 Approved Budget 2019 Proposed Budget Mispec 5,000 5,000 Saint John Horticultural Association 40,000 40,000 3,302,498 3,289,356 Sports & Recreation Facilities Service 1,100,933 583,943 Arena Operation and Maintenance 1,567,165 1,658,448 Sportsfield Operation and Maintenance 1,319,091 1,426,408 Other Facility Operation and Maintenance 434,602 436,383 Minor Hockey Subsidy 173,000 173,000 Lord Beaverbrook Rink 159,382 159,382 Aquatic Centre 464,820 541,837 4,118,060 4,395,458 Neighbourhood Improvement 1,100,933 583,943 Community Development 518,408 452,152 Neighbourhood Development 152,000 152,000 Loch Lomond Community Centre 45,000 45,000 PRO Kids 121,183 121,908 836,591 771,060 Community Development Service Grants Community Grant Program 179,721 179,721 Library 488,150 497,000 667,871 676,721 Recreation, Parks and Cultural Programming 1,100,933 583,943 Recreation Programming 674,401 651,852 Contracted Service - Boys and Girls Club 133,838 135,844 Contracted Service - YMCA-FGCC/MCC 162,751 133,623 Contracted Service - North End Community Centre 160,568 164,614 PlaySJ Recreation Programming Grant 15,000 15,000 Parking Service (Administration Support) Transit Service 1,146,558 1,100,933 583,943 617,188 7,543,954 7,977,405 Total Transportation & Environment Service 43,720,502 45,044,351 Finance and Administrative Services Financial Management Service Finance 12 1,746,323 1,731,950 3 The City of Saint John 2019 GENERAL OPERATING BUDGET City of Saint John 2019 Budget 2018 Approved Budget 2019 Proposed Budget Assessment 1,318,538 1,325,150 3,064,861 3,057,100 Asset Management 649,203 676,163 Purchasing & Materials Management 1,115,837 1,109,526 Insurance Service 149,458 201,264 Liability Insurance 304,000 304,000 Facilities Management 1,323,653 1,433,564 City Market 1,084,324 989,928 Carpenter Shop 351,431 354,813 City Hall Building 1,892,991 1,225,384 Real Estate 216,717 267,688 6.438.411 5.886.167 Total Finance and Administrative Services 9,503,272 8,943,267 Corporate Services 649,203 676,163 City Manager 692,386 678,792 Legal Department 746,406 801,057 Common Clerk 569,921 581,685 Human Resources 1,463,712 1,516,207 Strategy, Continuous Improvement & Performance Reporting 592,568 606,164 Corporate Communications 438,613 444,504 Information Technology 2,273,965 2,507,097 Geographic Information Systems 466,996 379,701 Regional Services Commission 34,269 37,474 Mayor & Council Mayor's Office 176,000 194,911 Council 473,203 481,252 4 13 649,203 676,163 Total Corporate Services 7,928,039 8,228,844 Other Charges Fiscal Charges 16,709,579 16,917,646 Long Term Disability 1,022,300 845,692 Pension 9,588,000 9,574,000 PILT Adjustment 804 - Capital from Operating 467,687 535,704 Infrastructure Deficit - 500,000 4 13 The City of Saint John 2019 GENERAL OPERATING BUDGET City of Saint John 2018 Approved 2019 Budget Budget Landfill Closure Restructuring Plan 2019 Proposed Budget Others 534,098 200,000 Total Other Charges 28,322,468 29,173,042 TOTAL EXPENDITURES 156,090,792 159,647,364 5 14 I Le, C— tf 0 4— 0 0'r QL 4� 0 QL olow, 0 C/) cn (D E 4% a 0 CU c- 0 Z.- W E-1 E E E CDL C— mom) 0 0, CU UC- 10 (D cr, a) > CY CU a) wo 4J (D -1-a cn co ijto, , -1-a a) 4- 0, 0 cn ita E 019m, cu 4J v E E cp ME o III; 2 L- ca. 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