Loading...
2019-01-30 Finance Committee Agenda Packet - Open Session MINUTES OPEN SESSION FINANCE COMMITTEE MEETING DECEMBER 6, 2018 AT 5:15 PM th 8 FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor S. Casey Absent: Councillor D. Reardon Councillor G. Norton Also Present: Acting City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Commissioner Growth & Community Development J. Hamilton Comptroller Finance C. Graham Senior Manager Financial Planning H. Nguyen Director Corporate Performance S. Rackley-Roach Assistant Comptroller Finance and Administrative Services C. Lavigne Deputy Commissioner Administrative Services I. Fogan Commissioner Transportation & Environment M. Hugenholtz Web Specialist T. McGraw Senior Financial Analyst J. Forgie Fire Chief K. Clifford CEO Transit & Parking Commissions I. MacKinnon Corporate Performance N. Moar Deputy Commissioner Saint John Water K. Mason Director Strategic Real Estate Services S. Carson Energy Manager S. Yammine Planner J. Cyr Administrative Assistant K. Tibbits 1. Meeting Called To Order Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the Finance Committee resume in open session. MOTION CARRIED. Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes October 17, 2018 Moved by Councillor Sullivan, seconded by Councillor Casey: MOTION CARRIED. 1.2 Coast Guard Administration Building Referring to the submitted report Mr. Fogan reviewed the options as it relates to the building on the Coast Guard site. Options include: Reinvestment in the building and subsequent lease/sale of the site - Significant work would be required to bring the building to an appropriate standard, at an approximate cost of $2.9M. There is no business case to support this option. Maintain the building in its current condition and attempt to lease/sell the site - An investment would be required to keep the building in its current condition and prevent further deterioration, at a cost of approximately $150K every year to maintain it. Demolition of the Coast Guard building - Staff is recommending the demolition at an approximate cost of $1M although there may be opportunity to mitigate some of this expense. Once the site is clear and the seawall remediated, the expected value of the site is $3.5M. It is further recommended that the site be used as a temporary parking lot, estimated to generate $100,000 annually in parking revenue. This revenue used to replenish the reserves used for demolition. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee: Recommend to Council to approve the transfer of $500,000 of the projected 2018 General Operating Fund surplus to the General Operating Reserve Fund to partially fund demolition work in 2019; Recommend that Common Council allocate $500,000 approved in the 2018 Capital Budget for Growth to fund demolition work in 2019; Refer to the Growth Committee to approve the use of the 2018 Growth Capital Budget envelope for Growth to fund demolition in 2019; Direct staff to negotiate a Memo of Understanding with the Saint John Parking Commission for the management and operation of the parking lot at the former Coast Guard Site; Direct staff to proceed with application to PAC to obtain a temporary parking lot and comply with conditions set out by PAC; Direct City pro-rata portion of proceeds from parking revenue be used to replenish the General Operating Reserve Fund used to pay for demolition. MOTION CARRIED. (Mr. Carson, Mr. Yammine and Mr. Cyr withdrew from the meeting) 1.3 2018 Year End Forecast and Reserve Recommendation Ms. Nguyen reviewed the year-end forecast for 2018, noting that there is an estimated surplus of $1.2M at the end of October before reserve recommendations. If reserve recommendations are taken into account the surplus is reduced to approximately $164K. There is still an approximate $5.9M structural deficit. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommend to Common Council to approve the transfer of: $400,000 to an Operating Reserve to cover the potential increase in WorkSafeNB premiums; $400,000 to the General Capital Reserve to fund infrastructure deficit; $500,000 to an Operating Reserve to fund the demolition of the Coast Guard Administration Building in 2019; $100,000, which is the amount needed to complete the Market Slip Dredging to an Operating Reserve to be used in 2019; $1 Mil which is the projected surplus in the Utility Operating Fund to the SCDW project reserve fund; gains to an Operating Reserve annually in order to fund future losses; MOTION CARRIED. Mr. Mason reviewed projections for Saint John Water with an estimated year end surplus of approximately $1.1M. A large portion of the surplus is attributed to a higher volume of water sold to industry and increased interest earned on SCDW funds. Neither of these items are reoccurring revenues. There is still considerable risk to the SCDW project until it is substantially complete. In response to a question, Mr. Fudge stated that if the reserve is not needed for the SCDW project, it would be used to reduce the debt on the remainder of the project. Moved by Mayor Darling, seconded by Councillor Casey: RESOLVED that the Finance Committee recommend that Common Council transfer $1M to the Safe Clean Drinking Water Project Reserve for 2018. MOTION CARRIED. 1.4 Transit Building Fund Reserve Mr. MacKinnon stated a year-end surplus of approximately $130K, largely linked to an increase in ridership revenue and charter service, is predicted. It is recommended that $100K of the surplus be transferred to the Building Reserve fund. There are no pending projects, but given the age of the building maintenance will be required in the future. Moved by Mayor Darling, seconded by Councillor Casey: RESOLVED that the Finance Committee recommend to Common Council to authorize the transfer of $100,000 into the Transit Building Reserve Fund as a result of the estimated 2018 year end operating surplus. MOTION CARRIED. 1.5 2019 General Operating Budget Mr. Fudge stated that tax base and unconditional grant information has been received from the province. Tax base growth is 1.86%, an increase from the original draft budget projection of 0.5% growth. This represents approximately $1.6M in additional tax revenue. Although the 1.86% growth is encouraging, it lags considerably from other peer communities. Unconditional grant revenue is $17.3M, approximately $750K more than assumed in the first draft. A combination of the two revenues is $2.3M. There is an agreement with the province respecting the assumptions used in the structural deficit was a 1% tax baseincrease. Because tax base growth was 1.86% unconditional grant would remain the same. Overall $1.8M will be given back to the province. Adjustments to the budget are approximately $600K. The tax rate remains the same. Moved by Mayor Darling, seconded by Councillor Casey: RESOLVED that the Finance Committee recommend to Common Council that: 1. That the sum of $160,257,783 be the total Operating Budget of the City of Saint John for 2019; 2. That the sum of $123,577,054 be the Warrant of the City of Saint John for 2019; 3. That the tax rate for the City of Saint John be $1.785; 4. That Common Council orders and directs the levying by the Minister of Environment and Local Government of said amount on real property liable to taxation under the Assessment Act within the Municipality of Saint John; 5. That Common Council authorizes the Commissioner of Finance and Administrative Services to disburse, at a time acceptable to him, to the named Commissions, Agencies and Committees, the approved funds as contained in the 2019 budget; 6. That Common Council approves the 2019 Establishment of Permanent Positions at 627; 7. That Common Council approves $350,000 to the Growth Reserve Fund to support the 8. That Common Council approve $500,000 to the Capital Reserve Fund to fund infrastructure deficit; and, 9. That Common Council approve $300,000 to the Operating Reserve Fund to support a Restructuring Plan. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Casey: RESOLVED that the open session meeting of the Finance Committee be adjourned. MOTION CARRIED. The Finance Committee open session meeting held on October 17, 2018 was adjourned at 6:45 p.m. FINANCE COMMITTEE REPORT Report Date January 11, 2019 Meeting Date January 30, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: Disaster Mitigation and Adaptation Funding OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Jodie Forgie Kevin Fudge John Collin RECOMMENDATION It is recommended that this report be received and filed. EXECUTIVE SUMMARY The purpose of this report is to provide the Finance Committee a brief overview of a Capital Funding application the City in coordination with Saint John Energy has submitted to Infrastructure Canada to the Disaster Mitigation & Adaptation Fund (DMAF). PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT This report aligns with being fiscally responsible and providing valued service delivery by identifying within the asset management plan municipal infrastructure requirements that can leverage funding available and working collaboratively with Saint John Energy to optimize funding opportunities. REPORT The Government of Canada announced a 10 year, $2 billion national program designed to help communities strengthen their resilience against disasters - 2 - triggered by natural hazards and extreme weather events. DMAF will support large-scale infrastructure projects with a minimum cost requirement of $20 million and will provide 40% funding of costs for municipalities. The application process consisted of two intakes, the Expression of Interest and Full Application. In 2018 the City experienced a flooding event which resulted in a historic 5.8m flood level (nearly 1.6m above flood levels). This flood event caused significant damage to the municipal infrastructure such as sanitary sewer system back-up, electrical utility infrastructure and coastal structure SeaWall. The DMAF program is the opportunity to obtain assistance with mitigation efforts for future flooding events and sea level rise. On July 31, 2018, the City submitted an Expression of Interest with Saint John Energy, applying for funding which comprise of 3 components that make up the project. The opportunity to work together was invaluable as on our own neither organization was able to meet the minimum cost requirements. On October 12, 2018 the City was notified that the eligibility requirements were met and the City was invited to submit a full application. On January 11, 2019 the full application was submitted and awarding of funding will be announced in the spring. The project submitted is intended to mitigate the risk and increase the resiliency of the critical infrastructure. The 3 components listed in this project have been determined based on vulnerability risk assessment of where the biggest risk is associated with the effects of climate change due to flooding. Below is a brief description along with cost allocation for each project. 1. Refurbishment of SeaWall (former coast guard site): The SeaWall is a critical infrastructure for any existing and future development in the waterfront area. It has experienced erosion and structural damages due to higher coastal water level. The intent is to reinforce the structure to address the flooding level to a 1-in-100-year event. 2. Pumping Stations: Raise or replace critical municipal infrastructure (nine wastewater pumping stations and one water pumping station) above flood levels to avoid future damages from flooding and to provide continued critical services during flood. 3. Relocation of Critical Waterfront Electrical Utility Infrastructure (Saint John Energy): The existing substations are vulnerable to sea level rise, with the risk of future storm events causing flooding, wave action and salt sprays with the potential to disrupt essential electrical services. Currently, this infrastructure serves more than 7,500 residents and 1,150 businesses, employing more than 25% of the regional workforce. The relocation of this vulnerable electrical infrastructure will also mitigate the risk of future storm events resulting in hydro-carbon and heavy metal - 3 - contamination of Long Wharf slip, harming ocean ecosystems, and The total costs submitted for the 3 components of the project is $29.8 million made of Federal share of costs $11.9 million ($4.5 million for Saint John Energy and $7.4 million for the City), Saint John Energy share of costs $6.8 million and the City share of costs $11.1 million. The costs and associated cash flow impacts for the City are detailed below: Federal share of City's share of cost for the City cost Total Costs D.3 (Cash Flow) based on when reimbursement not when incurred 2018-2019 (April 1-March 31)$0$0$0 2019-2020 (April 1-March 31)$1,220,000$1,830,000$3,050,000 2020-2021 (April 1-March 31)$2,177,301$3,265,951$5,443,252 2021-2022 (April 1-March 31)$1,157,301$1,735,951$2,893,252 2022-2023 (April 1-March 31)$1,882,602$2,823,902$4,706,504 2023-2024 (April 1-March 31)$340,000$510,000$850,000 2024-2025 (April 1-March 31)$352,000$528,000$880,000 2025-2026 (April 1-March 31)$224,000$336,000$560,000 Total$7,353,203$11,029,805$18,383,008 In addition to the funding applied for within this application, we are currently working on obtaining additional funding for the SeaWall through the Bilateral agreement with the province. This has not been included within the calculations above as we cannot reasonably conclude at this time that we will receive further funding from the province. SERVICE AND FINANCIAL OUTCOMES The City estimated cost for these projects would be $11,029,085 which would be split between General Fund ($4,903,805) and Utility Fund ($6,126,000). If the City is successful at securing funding, staff will notify Council and recommend they be included in future capital budgets. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input was received from all service areas within the City, Develop SJ and Saint John Energy ATTACHMENTS Appendix 1 Full Application City of Saint John Disaster Mitigation Adaptation Fund n s n h e a l o l J p P t i n l i c a a n i S i c f r o n P y a t i d n C i n F a s m t January 2019 r e e g T r a g T n o L $ MILLIONS