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2019-05-29 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Wednesday, May 29, 2019 4:50 pm 8th Floor Common Council Chamber (Ludlow Room), City Hall Pages 1. Call to Order 2. Approval of Minutes 2.1 Minutes of March 13, 2019 1 - 3 3. Consent Agenda 3.1 2019 General Operating Fund Year End Projection 4 - 7 3.2 2019 Saint John Water Year End Projection 8-11 3.3 Safe Clean Drinking Water Project (SCDWP) Reserve Fund 12-13 4. Business Items 4.1 2018 Consolidated Financial Statements and Trust Funds Financial Statements 14-101 4.2 2018 State of the Infrastructure Report 102-206 4.3 2020-2021 General and Utility Capital Budgets 207-257 4.4 Greening our Fleet Policy 258-280 4.5 Canada Games Aquatic Centre - Reallocation of 2019 Capital Funding 281 -281 rIN. m MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING MARCH 13, 2019 AT 4:50 PM Stn FLOOR COMMON COUNCIL CHAMBER (LUDLOW ROOM), CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor S. Casey Councillor D. Reardon Councillor G. Norton Also Present: City Manager J. Collin Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Commissioner Growth & Community Development J. Hamilton Commissioner Saint John Water B. McGovern 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 Comptroller Finance C. Graham Deputy Commissioner Parks & Public Spaces T. O'Reilly Senior Financial Analyst J. Forgie Fire Chief K. Clifford Corporate Performance N. Moar Administrative Assistant K. Tibbits 1. Meeting Called To Order Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes—January 30, 2019 Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that the minutes of January 30, 2019, be approved. MOTION CARRIED. 1.2 Debt Management Policy Mr. Fudge reviewed the Debt Management Policy which will establish criteria for the issuance of debt to ensure acceptable levels of debt. The policy also communicates to the public that the City is committed to managing its long-term debt. It is a best practice for a municipality to have a Debt Management Policy. The policy excludes Saint John Water who will require a RESOLVED that the Finance Committee recommends that Common Council approve the Draft City of Saint John Debt Management Policy FAS -006. MOTION CARRIED. 1.3 Wage Escalation Policy Mr. Fudge reviewed the Wage Escalation Policy. Wages and benefits comprise the largest category of expense in terms of the percentage to the overall operating budget. Wages and benefits have increased from 55% to 58% of the overall operating budget since 2013. To address the structural deficit, it is necessary to address the escalation of wages and benefits. To be sustainable, expenditure growth must align with revenue growth. The Wage Escalation policy ensures that the ability to pay is considered when negotiating future wage arrangements. In response to a question regarding binding arbitration, Mr. Fudge noted that changes to provincial legislation are very important and if arbitrated settlements result in higher than can be afforded increases, it poses serious challenges to the municipality. The policy states that the City does not want wage increases to cause tax increases or service reductions. The policy, for collective bargaining purposes, provides a mandate to the City Manager and senior staff that the City is striving to bargain within an affordable wage package framework. Moved by Mayor Darling, seconded by Councillor Norton: RESOLVED that the Finance Committee: • approves the Draft Wage Escalation Policy • recommends that Common Council approve the Wage Escalation Policy FAS -007 • recommends that if approved by Common Council that a copy of the Wage Escalation Policy be sent to Agencies, Boards and Commissions where the City is the majority funder with a request that those ABCs adopt the same policy MOTION CARRIED. 1.4 Public Engagement Mr. Fudge commented on the development of the long-term financial plan. On March 25th as part of the best practice of long-term financial planning, the public will be asked to provide feedback through a budget simulator tool. This feedback will be one of many inputs used in the development of the financial plan. It is hoped that themes in the overall responses can be identified, to determine how citizens want the City to prioritize tax dollars and service levels. This is also an opportunity to educate the public on the challenges in balancing the City's operating budget. The structural deficit in 2021 is projected at $12M. Through a number of initiatives and austerity projects, the City is targeting $3M to address a portion of that gap. The public, through the budget simulator tool, is tasked at budgeting the City's 2021 budget shortfall of $9M. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that item 1.4 Public Engagement, be received for information. MOTION CARRIED. Adjournment The Finance Committee open session meeting held on March 13, 2019 was adjourned at 6:05 p.m. FINANCE COMMITTEE REPORT Report Date May 24, 2019 Meeting Date May 29, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: 2019 General Operating Fund Year End Projection OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Kevin Fudge John Collin RECOMMENDATION It is recommended that the Finance Committee receive and file this report. EXECUTIVE SUMMARY City staff have provided input into the preparation of a year end forecast for the General Operating Fund based on actual results as of April 30, 2019, estimated revenues to be earned and estimated expenditures to occur. The General Operating Fund is estimating a year end surplus of $775 thousand or 0.49% of budget. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The recommendation aligns with Council's priority of fiscal responsibility. REPORT Based on the April year to date results and projections provided by Department Heads, the General Operating Fund is presently projected to be in a surplus position at year-end by approximately $775 thousand or 0.49% of the total CI -2 - budget. Based on a General Operating Budget of approximately $161 million, a variance of 0.49% would be widely considered to be tracking on budget. It should be understood that the projection is compiled based on departmental best estimates as at April 30, 2019. While there are no significant events that have come to the attention of staff to require modification of these estimates at this time, actual year-end results may differ depending on weather conditions as well as other unexpected events. Appendix 1 (attached) represents year-end projections by service areas for the General Fund. Overall revenues are trending towards a positive variance of approximately $721 thousand, or 0.45% of budget, which includes: 1. Growth and Community Development — Positive variance of approximately $249 thousand due to withdraws from the Growth Reserve for which offsetting approved growth initiative expenses are recorded, as well as higher than expected activity in Building, Plumbing and Demolition Permits; 2. Finance & Administration — Positive variance of $627K due mostly to $425K in FCM funding to carry out building condition assessments as part of phase 2 of Asset Management and $125K in higher than expected interest revenue; 3. Corporate Services — Negative variance of ($102K) due to a reclassification issue — service level agreements for IT services budgeted as revenue but actual revenues recorded as recoveries in expenses. Overall not impact on the bottom line. Overall expenses are projected to be in a surplus position of approximately $55 thousand, or 0.04% of budget by the end of the year. The most significant variances are highlighted below: 1. Growth and Community Development — Negative variance of approximately ($254 thousand) mostly associated with growth initiatives that is offset by growth reserve revenue for approximately $213 thousand which includes increased Heritage Grants, investment in Dangerous Building Program and other growth initiatives; 2. Transportation and Environment Services — Positive variance of approximately $222 thousand due to a combination of projected staff vacancies as well as current positive tracking of fuel and maintenance on fleet; 61 -3- 3. Finance and Administrative Services — Negative variance of approximately ($447 thousand) due mostly to building condition assessments being conducted for Asset Management for which offsetting FCM funding is recorded as revenue; 4. Other Charges - Projected positive variance of approximately $429 thousand due to interest expense tracking lower than budget with better than expected debenture terms. The above budget projections are based on staff's best estimates as of April results. Staff will continue to monitor the results of operations for the balance of the year and report back to Council at a later date. SERVICE AND FINANCIAL OUTCOMES The forecast is a service based budget projection based on the cost of providing services to the community. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input has been received from all Service Areas ATTACHMENTS N/A C.1 The City of Saint John Budget to Projected Variance Report For the Year Ended December 31, 2019 City of Saint John 2019 Budget 2018 Approved Budget 2019 2019 Year-to-date Year-to-date Budget Actual 2019 Annual Budget 2019 Year-end Projection Variance REVENUES Property taxes 121,319,088 41,192,350 41,192,350 123,577,054 123,577,054 PI LT Adjustment - 3,826 3,826 3,826 3,826 11,670,560 Equalization & Unconditional Grant 16,603,206 5,784,448 5,784,448 17,353,344 17,353,344 57,039,749 Financial Assistance 4,717,196 - - 7,117,402 7,117,402 44,887,139 Surplus 2nd previous year 1,338,515 28,852 28,852 86,557 86,557 9,432,969 Growth & Community Development Services 2,503,571 741,123 803,969 2,507,734 2,756,436 248,702 Public Safety Services 1,887,022 457,516 789,118 1,695,896 1,698,569 2,673 Transportation & Environment Services 3,982,308 1,326,864 1,131,276 4,060,970 4,004,120 (56,850) Finance &Administrative Services 3,654,886 1,247,628 1,423,858 3,743,000 4,370,719 627,719 Corporate Services 85,000 37,332 1,695 112,000 10,500 (101,500) TOTAL REVENUES 156,090,792 50,819,939 51,159,392 160,257,783 160,978,527 720,744 EXPENDITURES Growth & Community Development Services 11,230;732 4,047,459 4,130,510 11,415,903 11,670,560 (254,657) Public Safety Services 55,385,779 18,512,193 17,853,378 57,061,724 57,039,749 21,975 Transportation & Environment Services 43,720,502 13,641,945 14,031,761 45,108,732 44,887,139 221,593 Finance & Administrative Services 9,503,272 2,964,266 2,597,336 8,985,886 9,432,969 (447,083) Corporate Services 7,928,039 2,723,721 2,539,878 8,318,049 8,233,754 84,295 Other Charges 28,322,468 5,507,033 4,485,206 29,367,489 28,938,600 428,889 TOTAL EXPENDITURES 156,090,792 47,396,617 45,638,069 160,257,783 160,202,771 55,012 General Fund Surplus (Deficit) - 3,423,322 5,521,323 - 775,756 775,756 1 M FINANCE COMMITTEE REPORT Report Date May 24, 2019 Meeting Date May 29, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: Saint John Water Year End Projection OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head+Jcci ty Manager Craig Lavigne Brent McGovern hnCollin RECOMMENDATION It is recommended that the Finance Committee receive and file this report. EXECUTIVE SUMMARY Saint John Water has prepared a year end forecast based on actual results as of April 30, 2019, estimated revenues to be earned and estimated expenditures to occur. Saint John Water is estimating a year end deficit of ($135,271) or 0.28% of budget. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The recommendation aligns with Council's priority of fiscal responsibility. REPORT Saint John Water has prepared a year-end projection based on actual results at April 30, 2019 and estimated revenue and expenditures for the remaining eight months. The Utility is currently estimating a year-end deficit of ($135,271) or 0.28%. There are still several risks that could significantly change this number, namely that there are eight months left in 2019, so there is a large amount of 8 -2 - assumptions. Revenue can be extremely difficult to predict, particularly on the meter revenue as consumption is tied into the Commercial and Industrial users and the Utility does not have insight to the customers' future consumption. Operationally, there is always the risk of watermain breaks, major equipment failure that can have an impact on estimated expenditures. Revenues - estimating a favorable variance of $1,347,835 largely due to meter revenue and interest revenue. Meter revenue is a large driver of the positive variance and is due to a particular Industrial customer continuing to use potable water when they were budgeted to use raw water. This will change as the Safe Clean Drining Water Project (SCDWP) moves toward substantial completion and final watermain connections are made. Interest revenue is the other major driver of the estimated surplus. The 2019 budget was passed with the expectation that the SCDWP would have been substantially completed in late 2018. However, substantial completion and payment is not due to occur until approximately June 2019, which has resulted in the Utililty having unexpected cash on hand in 2019 and earning unbudgeted interest revenue. Expenditures — estimated an unfavorable variance of ($1,483,106). The main area causing the majority of this variance is related to the SCDWP. There have been two major settlements made in 2019 relating to this project. The new settlement costs have been absorbed due to operating expenses budgeted for the treatment plant that will not materialize until substantial completion around June, 2019. Also the additional interest revenue being earned has been taken into consideration to offset these additional costs. Overall, the Utility will continue to aggressively manage its expenditures, controlling cost and finding savings. A year-end projection for the Finance Committee in early fall will be much more accurate and meaningful for the committee members due to reduced amount of assumptions. SERVICE AND FINANCIAL OUTCOMES The additional revenue being earned from interest and the delay in substantial completion of the SCDWP has given the ability to pay for additional costs and settlement associated with the project. These additional costs do not have to be borrowed for and therefore will have very little impact on rate payers. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS N/A ATTACHMENTS Water and Sewer Budget Analysis April 2019 Water and Sewer Budget to Projected Variance Report City of Saint John 2018 2019 2019 2019 2019 (1,394,674) Industrial Water Approved Year-to-date Year-to-date Annual Year-end 2019 Budget Budget Budget Actual Budget Projection Variance REVENUES 1,051,000 819,110 701,999 3,158,000 4,463 (4,463) Flat Rate 21,742,000 11,336,500 11,243,740 22,673,000 22,561,500 (111,500) Meter Revenue 15,518,000 2,624,002 2,558,101 15,744,000 15,585,500 (158,500) Industrial Meter Revenue 4,050,000 765,000 1,074,007 4,600,000 5,210,000 610,000 Surplus 2nd previous year 1,217,000 327,000 327,000 981,000 981,000 4,375 Fire Protection 2,300,000 866,664 866,664 2,600,000 2,600,000 4,722 Storm Sewer 1,000,000 313,332 311,664 940,000 940,000 (1,917) Other Revenues 1,977,000 205,660 943,393 748,000 1,755,835 1,007,835 TOTAL REVENUES 47,804,000 16,438,158 17,324,569 48,286,000 49,633,835 1,347,835 EXPENDITURES Drinking Water Watershed Management 211,000 - 79 - 2,084 (2,084) Water Treatment 3,122,000 3,627,452 1,559,115 10,035,000 11,242,109 (1,207,109) Water Pumping & Storage 1,166,000 388,057 368,370 1,222,000 1,353,825 (131,825) Transmission & Distribution 5,281,000 1,244,714 1,456,759 4,976,000 5,019,007 (43,007) Customer Metering 703,000 210,112 231,798 714,000 724,403 (10,403) East Watershed Management - 29,152 29,239 119,460 120,686 (1,226) West Wellfield Mgmt. 15,758 6,792 82,540 81,560 980 11,268,000 3,354,299 3,270,754 11,054,000 11,141,367 (87,367) Infrastructure Management Municipal Engineering 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1 iN 10,483,000 5,515,245 3,580,090 17,149,000 18,543,674 (1,394,674) Industrial Water Watershed Management 524,000 - 326 - 4,789 (4,789) Water Pumping & Transmission 1,051,000 819,110 701,999 3,158,000 4,463 (4,463) Customer Metering 121,000 1,523,224 1,496,325 4,810,000 4,464 (4,464) West Watershed Mgmt. - 86,148 54,729 523,530 485,914 37,616 West Water Transmission 249,593 141,538 1,147,833 1,129,762 18,071 West Customer Metering 18,190 12,167 66,556 62,181 4,375 East Customer Metering 13,398 11,410 66,444 61,722 4,722 East Watershed Mgmt. 22,325 21,112 91,470 93,387 (1,917) East Water Transmission 214,417 145,298 687,167 695,247 (8,080) 11,268,000 3,354,299 3,270,754 11,054,000 11,141,367 (87,367) Infrastructure Management Municipal Engineering 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1 iN (1,696,000) 604,071 (385,928) 2,583,000 2,541,929 41,071 Wastewater Wastewater Pumping 2,859,000 1,011,965 1,072,430 3,086,000 3,169,996 (83,996) Wastewater Collection 3,440,000 819,110 701,999 3,158,000 3,206,629 (48,629) WasteWater Treatment 4,969,000 1,523,224 1,496,325 4,810,000 4,764,742 45,258 11,268,000 3,354,299 3,270,754 11,054,000 11,141,367 (87,367) Infrastructure Management Municipal Engineering 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1,201,000 269,187 297,618 820,000 876,236 (56,236) 1 iN Water and Sewer Budget to Projected Variance Report City of Saint John 2018 2019 2019 2019 2019 Approved Year-to-date Year-to-date Annual Year-end 2019 Budget Budget Budget Actual Budget Projection Variance Other Charges Other Internal Charges 895,000 260,000 260,588 905,000 905,000 Debt Servicing 10,102,000 42,132 42,131 9,753,000 9,738,900 14,100 Capital from Operating 10,775,000 1,566,664 1,190,000 4,700,000 4,700,000 Post Employment Benefits 1,384,000 430,194 291,180 1,288,000 1,288,000 Other Miscellaneous Charges - 11,328 - 34,000 34,000 23,156,000 2,310,318 1,783,899 16,680,000 16,665,900 14,100 TOTAL EXPENDITURES 47,804,000 12,053,120 8,546,433 48,286,000 49,769,106 (1,483,106) SURPLUS I (DEFICIT) - 4,385,038 8,778,136 - (135,271) (135,271) 2 11 FINANCE COMMITTEE REPORT Report Date May 27, 2019 Meeting Date May 29, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: Safe Clean Drinking Water Project (SCDWP) Reserve Fund OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Cathy Graham Brent McGovern John Collin RECOMMENDATION It is recommended that the Finance Committee submit the following report to the June 3, 2019 meeting of Common Council with a recommendation to withdraw the Safe Clean Drinking Water Project (SCDWP) Reserve funding in preparation for the upcoming substantial completion payment to Port City Water Partners which is planned to occur in the approximately the next few weeks. EXECUTIVE SUMMARY Saint John Water has been budgeting for and transferring funds into a SCDWP Reserve Fund since 2015. This was a conscious decision to reduce borrowing which in turn would lower the operating costs over the next 30 years with lower principal and interest payments. In approximately the next few weeks a payment will be made for substantial completion of the SCDWP to Port City Water Partners. In preparation for this payment the time has come to withdraw the funds of just over $20.1 million from the SCDWP Reserve Fund that was set-up for this purpose. The withdrawing of these funds requires Council approval as per the policy on reserve funds. PREVIOUS RESOLUTION N/A 12 -2 - STRATEGIC ALIGNMENT The recommendation aligns with Council's priority of fiscal responsibility. REPORT Saint John Water has included in the operating budget, funds to be transferred to the SCDWP Reserve Fund. There have also been additional transfers of surplus funds in the last few years. These funds plus the interest earned now totals just over $20.1 million. These funds were set aside to reduce the borrowing required for the substantial completion payment of the SCDWP. Substantial completion is nearing and the final reviews are occurring by the Independent Certifier, Saint John Water and Port City Water Partners. Upon completion of these reviews and identification of the deficiency holback amount the substantial completion amount will be finalized. Payment will then follow in the coming weeks therefore it is time to withdraw the funds from the SCDWP Reserve Fund. SERVICE AND FINANCIAL OUTCOMES The capital reserve fund for the SCDWP will save rate payers approximately $10M and forgo the burden of additional debt payments. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Finance and Saint John Water collaborated and provided input for this report. ATTACHMENTS N/A 13 i u V) W E W L ^cr W L W LU a -_I 00 O N c O +-i cn O CL 4- 0 E C� un z O z Q LL 0 V H GD W H W z O O O O O O O Ln Ln Ln Ln M M N N T -I 00 r -I O N r -I O N w r -I O N In r -I O N ICT r -I O N °• # 3 # r • #; • 3 • • # • • • ( ,3 ( 00 • 3 Ln 0• fu • tLn# fu z O z Q LL 0 V H GD W H W z O O O O O O O Ln Ln Ln Ln M M N N T -I 00 r -I O N r -I O N w r -I O N In r -I O N ICT r -I O N C7 N $� Y tw Ln a w 00 rq Ul Ln Ln crU s `a 's 's C5 ,. C7 N 2 0 � M � N E ANNa w I:T dA O r -I O NJ _N � fC Q O m O Y O m m 0 ^ N E O E N � � � � Ln 4�oq O O E w Q oq O rI N m U M a° M NLA i E L O 2 U! D C Z r -I dA m r -I M � Ln w N M r -I N i m i G1 0 rn G1 N _N en Ln Q i UU m V M Q O O O O O O OO O O O O 0 I!) 0 Ln 0 Lr) m N N rl r -I 2 5 40. W z W W 00 rq 0 N W z W W QL r -I 0 N -. 0 ON 00 000 �.o o O O r -I r -I txo U_ G1 > O L- LL, N N 1 cn cn ^ �(1 I.do yoo cn W E W un .m V C� _0 _0 LL C� 0 v) C: 0 U 00 r-IO N I The City of Saint John The City of Saint John Consolidated Financial Statements December 31, 2018 Wel The City of Saint John December 31, 2018 CONTENTS Consolidated Financial Statements Independent Auditor's Report Consolidated Statement of Financial Position Consolidated Statement of Operations and Accumulated Surplus Consolidated Statement of Changes in Net Debt Consolidated Statement of Cash Flow Notes to the Consolidated Financial Statements 091 P_ ape 3-4 5 6 7 8 9-41 Independent Auditor's Report To His Worship the Mayor and Members of Common Council of The City of Saint John Report on the Audit of the Financial Statements Opinion We have audited the financial statements of The City of Saint John (the "City"), which comprise the statement of financial position as at December 31, 2018, and the statements of operations, and accumulated surplus, change in net debt and cash Flow for the year then ended, and notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements"). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the City as at December 31, 2018, and the results of its operations, its accumulated surplus, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards ("PSAs"). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the City in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with PSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Organization's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Organization or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Organization's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 31 As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the City's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the City to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the City to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants Saint John, NB XXXX, 2019 MA The City of Saint John Consolidated Statement of Financial Position As at December 31, 2018 2018 2017 Financial assets Cash and cash equivalents (Note 4) 54,488,474 28,972,730 Accounts receivable (Note 5), (Note 6) and (Note 7) 14,928,030 16,754,191 Investment in energy services (Note 8) 50,801,000 29,687,000 Other investments (Note 9) 98,227,006 101,975,857 Financial liabilities Accounts payable and accrued liabilities (Note 10) Deferred revenue 218,444, 510 177, 389, 778 153,921,931 30,134, 834 1,350,102 1,631, 334 Deferred government transfers (Note 11) 45,327,274 31,534,608 Post employment benefits and compensated absences (Note 13) 117,842,785 114,846,827 Long-term debt (Note 12) 230,759,530 241,041,285 549,201,622 419,188,888 Net debt (330,757,112) (241,799,110) Non-financial assets Inventory Prepaids 4,971,338 1,463, 962 588,601 643,058 Tangible capital assets (Note 20) 1,023,433,031 915,734,659 1,028,992,970 917,841,679 Accumulated surplus 698,235,858 676,042,569 Contingencies (Note 14) Commitments (Note 15) Approved by: Don Darling, Mayor David Merrithew, Chair of Finance Committee The accompanying notes are an integral part of these consolidated financial statements. M 091 The City of Saint John Consolidated Statement of Operations and Accumulated Surplus For the year ended December 31, 2018 The accompanying notes are an integral part of these consolidated financial statements. G 2018 Budget (Unaudited) 2018 2017 (Note 2) s s a Revenues Property taxes 121,319,088 123,443,042 122,979,450 Unconditional grant 16„603,206 15,659,510 19,328,372 Financial assistance 4,717,1196 4,556,010 - Other revenue from own sources (Note 25) 25,086,,270 23,679,812 24,679,313 Water and sewer revenue (Note 16) 44,504,000 44,590,627 42,667,479 Miscellaneous revenue 311,000 421,081 865„927 Contributions from others (Note 25) 1„371,876 12,239,375 21,193,684 Income from energy services - 21,114,000 - 213,912,636 245,703,457 231,714,225 Expenses General government services (Note 25) 42,310,658 48,894,496 35,844,645 Protective services (Note 25) 54„285,593 53,478,337 52,470,573 Transportation services (Note 25) 39,249,909 47,324,451 46,488,052 Water and sewer services (Note 25) 47,804,000 40,332,566 35,819,969 Environmental health services (Note 25) 3,764,178 3,429,828 3,281,736 Environmental development services (Note 25) 17,954,811 18,792,023 18,184,695 Recreational and cultural services (Note 25) 10,245,838 11,258,467 10,889,117 Loss from energy services - - 8,152,000 215,614,987 223,510,168 211,130,787 Annual surplus (deficit) (1,702,351) 22,193,289 20,583,438 Accumulated surplus, beginning of year - 676,042,569 655,459,131 Accumulated surplus, end of year - 698,235,858 676,042,569 The accompanying notes are an integral part of these consolidated financial statements. G The City of Saint John Consolidated Statement of Changes in Net Debt For the year ended December 31, 2018 2018 2017 Annual surplus 22,193,289 20,583,438 Acquisition of tangible capital assets (Note 20) (152,540,310) (49,799,937) Loss on disposal of tangible capital assets (Note 20) 1,148,028 980,829 Proceeds on sale of tangible capital assets 1,428,448 349,239 Amortization of tangible capital assets (Note 20) 38,825,114 36,358,075 (Increase) decrease in inventory (3,507,376) (15,447) (Increase) decrease in prepaids 54,457 (96,394) Tangible capital assets adjustment related to land held for resale Note 20 3,440,348 - Decrease in net assets (111,161,291) (12,223,635 Net debt, beginning of year (241,799,110) (250,158,913) Net debt, end of the year (330,757,112) (241,799,110) The accompanying notes are an integral part of these consolidated financial statements, N MI The City of Saint John Consolidated Statement of Cash Flow For the year ended December 31, 2018 2018 2017 S 5 Operating transactions Annual surplus 22,193,289 20,583,438 Items not involving cash Amortization of tangible capital assets (Note 20) 38,825,114 36,358,075 Loss on disposal of tangible capital assets 1,148,028 980,829 Tangible capital assets adjustment related to land held for resale 3,440,348 - Change in investment in Energy Services (21,114,000) 8,152,000 Change in non-cash assets and liabilities Accounts receivable 1,826,161 (5,007,861) Inventory (3,507,376) (15,447) Prepaids 54,457 (96,394) Accounts payable and accrued liabilities 123,787,097 5,910,785 Deferred revenue (281,232) (22,298) Deferred government transfers 13,792,666 17,798,585 Other Post employment liabilities 2,995,958 3,236,441 183,160,510 81,405,271 Capital transactions Acquisitions of tangible capital assets (Note 20) (152,540,310) (49,799,937) Proceeds on sale of tangible capital assets 1,428,448 349,239 (151,111,862) (49,450,698) Financing transactions Repayment of long-term debt (24,861,755) (18,743,985) Proceeds from long-term debt 14,580,000 53,000,000 Repayment of bank loan - (56,454) (10,281,755) 34,199,561 Investing transaction Investments Note 9 3,748,851 93,627,866 Net increase (decrease) in cash and cash equivalents 25,515,744 (27,473,732) Cash and cash equivalents, beginning of year 28,972,730 56,446,462 Cash and cash equivalents, end of year 54,488,474 28,972,730 The accompanying notes are an integral part of these consolidated financial statements. C MQ The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 1. Purpose of the organization The City of Saint John (the "City") was incorporated by royal charter in 1785. As a municipality, the City is exempt from income taxes under Section 149(1)(c) of the Canadian Income Tax Act. The City has the following vision statement, "We are energized, engaged people committed to working together to provide services that are responsive to Community needs and delivered in a sustainable, cost effective way." 2. Summary of significant accounting policies The consolidated financial statements of the City are the representations of the City's management prepared in accordance with Public Sector Accounting Standards ("PSAS") as recommended by the Chartered Professional Accountants of Canada Public Sector Accounting Board ("PSAB"). Significant aspects of the accounting policies adopted by the City are as follows: Reporting entity The consolidated financial statements reflect the assets, liabilities, revenues, expenditures, and changes in net debt and cash flows of the reporting entity. The reporting entity is comprised of all organizations and enterprises accountable for the administration of their affairs and resources to the City and which are owned or controlled by the City. Interdepartmental and organizational transactions and balances are eliminated. The focus of PSAB financial statements is on the financial position of the City and the changes thereto. The Consolidated Statement of Financial Position includes all of the assets and liabilities of the City. The entities included in the consolidated financial statements, having the same year end as the City, are as follows; 1. The City of Saint John General Operating Fund 2. The City of Saint John Capital and Loan Fund 3. The City of Saint John Water and Sewerage Utility Operating Fund 4. The City of Saint John Water and Sewerage Utility — Capital and Loan Fund 5. Saint John Parking Commission 6. Saint John Transit Commission 7. Develop Saint John 8. Harbour Station Commission 9. Saint John Aquatic Centre Commission 10. Saint John Trade and Convention Centre 11. Saint John Energy 12. Lord Beaverbrook Rink 13. Saint John Police Commission 14. Saint John Free Public Library 15. Saint John Jeux Canada Games Foundation, Inc. M Kul The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 2. Summary of significant accounting policies (Continued) Investment in Energy Services The City's investment in Saint John Energy is accounted for on a modified equity basis, consistent with generally accepted accounting principles as recommended by PSAS. Under the modified equity basis of accounting, the business enterprise's accounting principles are not adjusted to conform with those of the City and inter -organizational transactions and balances are not eliminated. The City recognizes its equity interest in the annual income or loss of Saint John Energy in its consolidated statement of operations with a corresponding increase or decrease in its investment asset account. Budget The budget figures contained in these financial statements were approved by Council on December 11, 2017 and the revised budget was approved by Council on March 26, 2018 and the Minister of Local Government on January 28, 2018. The budget is unaudited and does not include elimination of inter -organizational revenues and expenses with controlled entities. Revenue recognition Unrestricted revenue and other sources of revenue are recorded on an accrual basis and is recognized when collection is reasonably assured. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Other revenue is recorded when it is earned. Property taxes, which are authorized by Council, are recognized as revenues in the period for which the taxes are levied. Government transfers Government transfers are recognized in the consolidated financial statements as revenues in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, except to the extent that transfer stipulations give rise to an obligation that meets the definition of a liability and reasonable estimates of the amounts can be made. Transfers are recognized as deferred revenue when amounts have been received but not all eligibility criteria have been met. Expenses Expenses are recorded on an accrual basis. The cost of all goods consumed and services received during the year is expensed. Measurement uncertainty The preparation of the consolidated financial statements in accordance with Canadian PSAS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the year. Key components of the consolidated financial statements requiring management to make estimates include: the useful life of tangible capital assets, impairment of tangible capital assets, rates for amortization, allowance for doubtful accounts in respect of receivables and estimates for pension liabilities. 10 M-11 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 2. Summary of significant accounting policies (Continued) Measurement uncertainty (Continued) Estimates are based on the best information available at the time of preparation of the financial statements and are reviewed annually to reflect new information as it becomes available. Measurement uncertainty exists in these financial statements. Actual results could materially differ from those estimates. Cash and cash equivalents Cash and cash equivalents include cash on hand, balances with banks and short-term deposits with original maturities of three months or less. Tangible capital assets Tangible capital assets are non-financial assets having a physical substance that: - Are held for use by the City in the production or supply of goods and services, for rentals to others, for administrative purposes or for the development, construction, maintenance or repair of other tangible assets; - Have useful lives extending beyond one year and are intended to be used on a continual basis; - Have a minimum value of $5,000 for individual assets; or $25,000 for pooled assets; and - Are not intended for sale in the ordinary course of operations. I I The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 2. Summary of significant accounting policies (Continued) Tangible capital assets (Continued) Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. Assets that fall below the threshold amounts are expensed for accounting purposes. The cost of the tangible capital asset is amortized on a straight line over the estimated useful life as follows: Asset Type Equipment and light machinery Furniture and office equipment Information technology equipment and software Land Land improvements Leasehold improvements Municipal buildings Transportation Motor vehicles and mobile equipment Water and wastewater networks Years 3-25 5-15 1-15 NIA 5-100 Term of Lease 10-70 5-50 5-20 5-100 In the year of acquisition and the year of disposal, one half of the annual amortization expense is recognized. Assets under construction are not amortized until the asset is available for productive use. Tangible capital assets are written down when conditions indicate that there is impairment in the value of the assets and the reduction in the value can be objectively estimated and it is expected to be permanent. The net write-downs are accounted for as expenses in the statement of operations. Donated or contributed assets are recorded at fair market value at the date of construction or donation. In some circumstances, replacement cost may be used. Segmented information The City provides a wide range of services to its residents. For management reporting purposes, operations and activities are organized and reported by function. This presentation was created for the purpose of recording specific activities to attain certain objectives in accordance with special regulations, restrictions or limitations. Municipal services are provided by service areas as follows: General government services This segment is responsible for the overall governance and financial administration of the City. This includes Council functions, general and financial management, legal matters and compliance with legislation as well as civic relations. 12 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 2. Summary of significant accounting policies (Continued) Segmented information (Continued) Protective services This segment is responsible for the provision of policing services, fire protection, emergency measures, animal control and other protective measures. Transportation services This segment is responsible for common services, road and street maintenance, street lighting, traffic services, parking and other transportation related functions. Water and sewer services This segment is responsible for the provision of water and sewer services including the maintenance and operation of the underground networks, treatment plants, reservoirs and lagoons. Environmental health services This segment is responsible for the provision of waste collection and disposal. Environmental development services This segment is responsible for planning and zoning, community development, tourism and other municipal development and promotion services. Recreation and cultural services This segment is responsible for the maintenance and operation of recreational and cultural facilities, including the swimming pool, arenas, parks and playgrounds and other recreational and cultural facilities. Energy services This segment comprises a non -generating distribution utility that supplies electricity to municipal, residential, general service and industrial customers through 12 interconnection supply points and substations located in the City of Saint John. It also provides street lighting, area lighting and water heater rental services. Inventory Inventory consists mainly of parts and materials and is valued at the lower of cost and net replacement cost with cost being determined on the first in, first out basis. M HI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 2. Summary of significant accounting policies (Continued) Post employment benefits The City recognizes its obligations under post -employment benefit plans and the related costs, as disclosed in Note 13. Where appropriate, the City has undertaken actuarial valuations. 3. Bank loan payable The City has credit facilities with the Bank of Nova Scotia. According to the terms and conditions of the commitment letter signed between the City and the Bank of Nova Scotia, the City can borrow up to $6 million to fund general operations and $25 million to assist in financing capital expenditures pending fall -in of long-term financing. The interest rate for the credit facilities is the Bank's prime lending rate less 0.5% per annum with interest payable monthly. As at December 31, 2018, the balance of the bridge financing credit facility was zero (2017 - zero) and the balance of the operating line of credit was zero (2017 - zero). As prescribed in the Municipalities Act, borrowing to finance General Fund operations is limited to 4% of the City's operating budget. Borrowing to temporarily finance Utility Fund operations is limited to 50% of the operating budget for the year. In 2018, the City has complied with these limitations. 4. Cash and cash equivalents Cash and cash equivalents consists of the following: 14 Dec 31, 2018 a Dec 31, 2017 a Unrestricted cash 46,604,352 24,993,221 Restricted cash Airspace 2049 fund 27,205 16,733 Land sub -division fund 74,243 54,455 Saint John Non -Profit Housing future development fund 52,447 51,495 Deposits on contracts 1,197,214 1,116,478 Gas Tax 6,533,013 2,740,348 54,488,474 281972,730 14 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 5. Accounts receivable Accounts receivable consist of the following: Dec 31, Dec 31, 2018 2017 a E Water and sewer charges to ratepayers 7,644,637 7,460,420 Other 4,245,858 3,698,457 Due from the Province of New Brunswick (Note 7) 3,001,876 1,655,173 Due from the Federal Government and its agencies (Note 6) 1,751,208 5,441,570 Allowance for doubtful accounts (1,715,549) (1,501,429) 14,928,030 16,754,191 6. Due from the Federal Government and its agencies Amounts due from the Federal Government and its agencies consist of the following: Dec 31, Dec 31, 2018 2017 S E Clean Waste Water Funding 799,133 2,067,081 Canada Revenue Agency HST receivable 856,099 3,289,747 Other 95,976 84,742 1,751,208 5,441,570 7. Due from the Province of New Brunswick Amounts due from the Province of New Brunswick consists of the following: Dec 31, Dec 31, 2018 2017 E E Clean Waste Water Funding 395,216 1,029,341 Financial Assistance 1,566,473 - Department of Transportation 272,255 - Dep of Public Safety -Flood 2018 502,000 - Other 265,932 625,832 3,001,876 1,655,173 15 :1191 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 8. Investment in energy services Change in equity in Saint John Energy: Dec 31, Dec 31, 2018 2017 S S Investment at the beginning of year 29,687,000 37,839,000 Net earnings (loss) 21,114,000 (8,152,000) Investment at end of year _ . ..._ 60,801,000 29,687,000 9. Other investments Other investments consist of the following: Dec 31, Dec 31, 2018 2017 a a GIC 90,229,783 93,433,972 Canada Games Foundation investments 6,869,070 7,369,602 Other investments 1,128,153 1,172,283 Total other investments 98 227,006 101,975,857 Investments of the City of Saint John are held with the Bank of Nova Scotia and consist of 2 year term redeemable GICs issued by the Bank of Scotia which fall within the scope of the City's Investment Policy. It is the policy of the City to invest funds to provide the optimal blend of investment returns and principal protection while meeting the City's daily cash flow and liquidity demands. The investments of the Canada Games Foundation (the "Foundation") are held in the custody of Scotiatrust and CIBC Melon. The Foundation's investment strategy is to hold high quality corporate or government bonds and liquid equity investments which bear no unusual credit or interest rate risk. Fair values of investments in fixed income securities and equities are determined using year end quoted market prices. The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 10. Accounts payable and accrued liabilities Accounts payable and accrued liabilities consist of the following: 11. Deferred government transfers Deferred government transfers consist of the following: Dec 31, Dec 31, 2018 2017 3 5 Gas tax funding 6,533,014 2,740,348 Contribution from Regional Development Corporation 38,794,260 28,794,260 45,327,274 31,534,608 As per the Gas Tax Funding Agreement, funding received as part of the Gas Tax Funding program is recorded as revenue in the year during which related expenditures are incurred. Amounts that have not been spent are recorded as deferred government transfers on the Consolidated Statement of Financial Position. Contribution from Regional Development Corporation was related to the Safe Clean Drinking Water Project. The money will be used toward the substantial completion payments in the future. 17 Dec 31, 2018 S Dec 31, 2017 S Trade payables 143,148,215 20,084,554 Other 189,487 87,217 Payroll 7,242,808 6,680,326 Conferences and holdings 1,085,925 994,986 Deposits 1,318,585 1,297,889 Interest payable 685,928 714,280 Due to Pension Fund 258,983 222,865 Canada Revenue Agency - 52,717 .. 153,921,931 30,134, 834 11. Deferred government transfers Deferred government transfers consist of the following: Dec 31, Dec 31, 2018 2017 3 5 Gas tax funding 6,533,014 2,740,348 Contribution from Regional Development Corporation 38,794,260 28,794,260 45,327,274 31,534,608 As per the Gas Tax Funding Agreement, funding received as part of the Gas Tax Funding program is recorded as revenue in the year during which related expenditures are incurred. Amounts that have not been spent are recorded as deferred government transfers on the Consolidated Statement of Financial Position. Contribution from Regional Development Corporation was related to the Safe Clean Drinking Water Project. The money will be used toward the substantial completion payments in the future. 17 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 12. Long-term debt Debentures consist of the following: Year of Issue Interest Rate % Term (Years) 2018 Annual Payment $ 2018 $ Y097 $ New Brunswick Municipal Finance Corporation Debentures 2008 3.300 to 4.850 10 3,397,000 - 3,397,000 2008 3.300 to 4.850 10 1,375,000 - 1,375,000 2008 2.100 to 5.550 15 367,000 1,830,000 2,197,000 2008 2.100 to 5.550 15 175,000 1,750,000 1,925,000 2008 2.100 to 5.550 15 100,000 500,000 600,000 2009 0.950 to 5.000 10 933,000 5,603,000 6,536,000 2009 0.950 to 5.000 10 75,000 826,000 900,000 2009 0.950 to 5.000 10 100,000 600,000 700,000 2009 1.000 to 4.500 10 567,000 3,397,000 3,964,000 2009 1.000 to 4.500 10 250,000 2,750,000 3,000,000 2009 1.000 to 4.500 10 333,000 2,003,000 2,336,000 2010 1.500 to 4.550 10 1,000,000 7,000,000 8,000,000 2010 1.500 to 4.550 10 250,000 3,000,000 3,250,000 2011 1.650 to 4.250 10 1,667,000 15,331,000 16,998,000 2011 1.650 to 4.250 10 700,000 9,100,000 9,800,000 2011 1.350 to 3.450 10 300,000 2,400,000 2,700,000 2011 1.350 to 3.450 10 350,000 4,550,000 4,900,000 2011 2.060 15 200,000 2,600,000 2,800,000 2012 1.350 to 3.550 15 767,000 6,898,000 7,665,000 2012 1.350 to 3.800 20 425,000 5,950,000 6,375,000 2012 1.350 to 3.550 15 300,000 2,700,000 3,000,000 2013 1.350 to 3.700 15 687,000 6,865,000 7,552,000 2013 1.350 to 4.000 20 550,000 8,250,000 8,800,000 2013 1.350 to 4.000 20 360,000 7,200,000 7,560,000 2014 2.000 20 500,000 8,000,000 8,500,000 2014 1.150 to 3.900 15 707,000 7,772,000 8,479,000 2014 1.200 to 3.700 15 1,055,000 3,720,000 4,775,000 2014 1.200 to 3.700 20 668,000 6,008,000 6,676,000 2014 1.150 to 3.900 15 27,000 292,000 319,000 2014 1.200 to 2.150 5 56,000 56,000 112,000 2015 0.950 to 3.250 15 500,000 6,000,000 6,500,000 2015 1.050 to 3.650 15 607,000 2,649,000 3,156,000 2015 0.950 to 3.500 20 175,000 2,975,000 3,150,000 2015 1.050 to 3.150 20 175,000 1,225,000 1,400,000 2015 1.050 to 3.650 15 107,000 879,000 986,000 2016 1.200 to 3.550 15 1,034,000 6,102,000 7,136,000 2016 1.450 to 3,500 15 400,000 5,200,000 5,600,000 18 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 12. Long-term debt (Continued) OTHER DEBENTURES Canada Mortgage and Housing Debentures 2009 24,763,000 230,079,000 240,262,000 3.97 15 98,755 680,530 779.285 Total debentures 24,861,755 230,759,530 241,041,285 The aggregate amount of principal repayments required in each of the next five years and thereafter to meet provisions of long-term debt, assuming maturity debt is renewed at terms comparable to those currently in effect, is as follows: 2019 2018 Annual 2020 25,886,752 2021 Interest Rate Term Payment 2018 2017 Year of Issue % (Years) $ $ $ 2016 1.450 to 3.750 20 200,000 3,600,000 3,800,000 2016 1.200 to 2.950 10 400,000 3,200,000 3,600,000 2016 1.200 to 3.550 15 127,000 1,046,000 1,173,000 2017 1.200 to 3.300 15 333,000 4,667,000 5,000,000 2017 1.650 to 3.200 15 513,000 3,387,000 3,900,000 2017 1.650 to 3.400 30 1,500,000 43,500,000 45,000,000 2017 1.650 to 2.900 10 350,000 3,150,000 3,500,000 2017 1.650 to 3.200 15 101,000 1,069,000 1,170,000 2018 2.550 to 3.550 15 - 10,500,000 - 2018 2.100 to 3.000 5 - 2,830,000 - 2018 2.100 to 3.450 10 - 1,250,000 - OTHER DEBENTURES Canada Mortgage and Housing Debentures 2009 24,763,000 230,079,000 240,262,000 3.97 15 98,755 680,530 779.285 Total debentures 24,861,755 230,759,530 241,041,285 The aggregate amount of principal repayments required in each of the next five years and thereafter to meet provisions of long-term debt, assuming maturity debt is renewed at terms comparable to those currently in effect, is as follows: M 2019 33,864,675 2020 25,886,752 2021 38,956,990 2022 12,753,396 2023 13,161,000 Thereafter 106,136,717 Total 230,759,530 M The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences City of Saint John Shared Risk Plan The City of Saint John Pension Plan (Former CSJ Plan) was converted to the City of Saint John Shared Risk Plan ("CSJ SRP") effective January 1, 2013 (the conversion date). The purpose of the CSJ SRP is to provide secure benefits to members of the plan without an absolute guarantee but with a risk focused management approach delivering a high degree of certainty that base benefits can be met in the vast majority of potential future economic scenarios. These objectives are achieved through the development of a risk management framework that adheres to the legislated criteria, results in a low probability that base benefits will be reduced, and sets out the specific steps to be taken should the Plan's funded ratio fall below, or exceed, specified thresholds. These steps, when the Plan is underfunded, include the cessation of indexation of benefits, increasing contribution rates (to a predetermined maximum), reducing certain ancillary benefits, and ultimately reducing base benefits. When the Plan has excess funding, previous benefit reductions can be reversed, indexing is fully implemented, and various other potential increases can be implemented, including a decrease in contribution rates (to a predetermined maximum). Shared risk plans are legislated under the provincial Pension Benefits Act (PBA) which contains a number of requirements that must be met in order to qualify for registration by the Office of the Superintendent of Pensions. The Plan is also subject to the Income Tax Act. The Plan is administered by a Board of Trustees which includes 4 individuals nominated by the City and 4 individuals nominated by each of the four unions. The assets of the Plan are held by RBC Investor and Treasury Services which acts as custodian of the Plan. The assets of the Plan are managed by various investment managers who have discretionary investment authority within the investment mandates given to them by the Plan's Board of Trustees. The performance of the Plan relative to its benchmarks is measured on a regular basis. For service prior to the conversion date, the Plan provides for pensions at the rate of 2% per year of service times the average of the three consecutive years of service having the highest salary at the time of conversion. For service after the conversion date, the pension accrual for each year of service is 1.8% times the salary (excluding overtime pay) earned during the relevant year to a certain maximum salary that is indexed every year ($133,892 in 2018). Pension benefits accrued before the conversion date are payable without reduction when the member's age and service equal at least 85 (or at age 65, if earlier). Pension benefits accrued after the conversion date are payable without reduction at age 60 for employees in the International Association of Fire Fighters and Saint John Police Association and at age 65 for all other employees. Pension benefits can be paid as early as age 55 with a reduction. Shared risk plans extinguish all accrued rights to automatic future indexing. These automatic adjustments have been replaced by indexing as permitted by the Plan's funding policy, which is contingent on the SRP performance. 20 !l3 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences (Continued) City of Saint John Shared Risk Plan (Continued) The initial required employee contributions are equal to 12% of earnings for employees in the International Association of Fire Fighters and Saint John Police Association and employee contributions of 9% of earnings for other employees. Members in public safety occupations who accept a non-union position will have a one-time opportunity to elect to continue to contribute at the higher rate. The City makes initial required employer contributions of 15.2% and 11.4% of earnings (representing about 126.7% of employee contribution rates) for each of these groups. The initial contribution rates for both the employees and the City is subject to change as a result of the triggering mechanism and limitations imposed by the Plan's funding policy. Also, since April 1, 2013, the City is required to make contributions of 17% of earnings for a period of 15 years, or when the Plan achieves a minimum funded ratio of 150% (as calculated under the legislation) using a 15 -year open group method (no less than 10 years of payment must be made). The City has no other financial obligation other than to make contributions at the above rates, and within the limits found under the Plan's funding policy. In the event of a wind-up of the Plan in the five years following the conversion date, the Plan would be wound up under the provisions of the Former CSJ Plan. All assumptions relating to the CSJ SRP have been made on the basis of an on-going Plan and the City does not foresee a wind-up of the Plan. Actuarial valuations Actuarial valuations for the Plan are conducted annually by the Board of Trustees for regulatory purposes. In turn, the actuarial valuations for accounting purposes are based on these figures (with adjustments). The most recent actuarial valuation was prepared as at January 1, 2018. The actuarial valuations for accounting purposes are based on a number of assumptions about future events, such as inflation rates, interest rates, salary increases, employee turnover and mortality. The accrued benefit obligation as at December 31, 2017 and current period benefit cost for the following year are based on an actuarial valuation conducted as at December 31, 2017. The accrued benefit obligation as at December 31, 2018 and current period benefit cost for the following year are based on an actuarial valuation conducted as at December 31, 2017 and extrapolated to December 31, 2018, using assumptions effective for December 31, 2018. The assumptions used reflect management's best estimates. The following summarizes the major assumptions in the accounting valuations and extrapolations at the various effective dates: Dec 31, Dec 31, 2018 2017 Discount rate 6.05% 6.05% Inflation rate 2.25% 2.25% Salary increase 3% 3% Mortality: CPM -2014 mortality table with adjustments factors 0 0 The Expected Average Remaining Service Life (EARSL) is 12 years. During the year, the City made pension contributions of $20,562,689 (2017 - $18,853,033). 211 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences (Continued) City of Saint John Shared Risk Plan (Continued) The following table reflects the City's share of the accrued benefit liability, which equals to the full portion of the Accumulated Benefit Obligation ("ABO") related to the temporary contributions and 55.9% of the remaining portion of the ABO net of Plan assets because funding contributions are shared at 55.9% by the City and 44.1% by employees, before taking into account the additional temporary contribution of 17% of earnings. Dec 31, Dec 31, 2018 2017 s a City share of accrued benefit liability, beginning of year 89,300,000 114,600,000 City share of current period benefit cost 6,300,000 5,800,000 City share of past service cost 13,000,000 2,700,000 Interest cost Less City contributions Actuarial (gain)/loss 5,700,000 6,600,000 (20,600,000) (18,800,000) 20,400,000 (21,600,000) City share of accrued benefit liability, end of year 114,100,000 89,300,000 Unamortized actuarial gain/(loss) (15,700,000) 5,400,000 Pension liability, end of year 98,400,000 94,700,000 The following table reflects the City share of pension related expenses' Dec 31, Dec 31, 2018 2017 S S Current period benefit cost 6,300,000 5,800,000 Past service cost 13,000,000 2,700,000 Interest cost 5,700,000 6,600,000 Amortization of City share of actuarial (gain) loss (700,000) 1,200,000 Total expense related to Pension _ 24,300,000 16,300,000 22 6119] The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences (Continued) Other employee future benefits The City provides for the payment of retirement allowances to retiring employees in accordance with the terms of the various collective agreements and Municipal policy, The retirement allowance is based on the member's final annual salary and years of service at retirement. Employees upon retirement from the City are entitled to a retirement allowance equal to one month's pay, to a maximum of six months, for every five years of service. The program has been amended to provide certain employees with a payout option prior to retirement. Accepting the early payout option eliminates further accumulation of retirement allowance entitlement for those employees. The City also provides for employee sick leave. Unused sick leave accumulates to a maximum number of hours which varies by employment agreement_ Under this program„ employees are not entitled to a cash payment in lieu of sick leave when they leave the City's employment except as described below with respect to the retirement both outside workers (local 18) and firefighters (local 771). Upon retirement, members of Local 18 and 771 will be eligible to receive 10% of their regular rate of pay for accumulated sick leave credits in excess of 1,760 hours or 2„280 hours respectively. For employees of the City of Saint John Fire department, who are unable to work due to heart disease or permanent injury to the Bungs„ the City pays certain amounts to disabled firefighters or their survivor spouse as a result of the provisions of an Act of the Legislature, known as the Act respecting the Saint John Firefighters's Association. As at January 1, 2013, the City's pension plan was converted to a shared risk model. As part of the conversion, the City assumed the obligation for paying existing disability pensions, that had been granted under the old plan, until disabled members reach the age of 65. On a go forward basis, disability coverage is now provided for employees through a long term disability program administered by an insurance carrier. Finally there are specific agreements that obligate the City to pay top up pensions to certain individuals. During the year, the City made payments of $65,375 (2017 - $64,128) related thereto. Valuation techniques and assumptions Actuarial valuations of the above benefits are completed for accounting purposes using the projected benefit method prorated on services. The last actuarial valuation of the post -employment benefit plans was conducted as at December 31, 2018. Previous to that, an actuarial valuation was performed as at December 31, 2017. The above benefit plans are unfunded and as such, there are no applicable assets. Benefits are paid out of general revenue as they become due. W 51 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences (Continued) A reconciliation of the accrued benefit obligation for these plans, along with the main assumptions used for disclosure and expense calculations are as follows: Dec 31, Dec 31, 2018 2017 3 3 Accrued benefit obligation, beginning of year 26,522,427 26,436,668 Current period benefit cost 1,081,400 988,300 Benefit payments (3,042,243) (3,062,043) Interest cost 808,601 902,602 Actuarial loss 279,000 1,256, 900 Other employee future benefits, end of year 25,649,185 26,522,427 Dec 31, Dec 31, 2018 2017 S S Main assumptions used for these plans: Discount rate 3.46% 3.17% Salary increase 3% 3% EARSL Range from 8 to 23 Range from 10 to 22 91 61 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 13. Post employment benefits and compensated absences (Continued) These benefit plans require no contributions from employees. The benefit liability as at December 31, 2018 includes the following components: Accrued benefit obligation (carrying value) Retirement allowances Sick leave Dec 31, Dec 31, 2018 2017 S 3 4,517,400 4,048,400 8,330,000 8,407,000 Heart and lung pension 5,133,600 5,270,900 Disability benefits 5,637,600 6,634,800 Contractual top up agreements 1,076,185 1,138,827 Sick leave - Saint John Transit Commission 954,400 1,022,500 Unamortized actuarial losses 25,649,185 26,522,427 (6,206,400) (6,375,600) 19,442,785 20,146,827 The unamortized actuarial losses will be amortized over the expected average remaining service life ("EARSU) of the related employee groups starting in the next fiscal year. EARSL is determined separately for each benefit program. The total expense related to other employee benefits described above includes the following components: Dec 31, Dec 31, 2018 2017 S E Current period benefit cost 1,081,400 988,300 Amortization of actuarial loss 448,200 434,700 Other employee benefit interest expense 1,529,600 1,423, 000 808,601 902,602 Total expense related to other employee future benefits 2,338,201 2,325,602 6V The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 14. Contingencies In accordance with the Regional Service Delivery Act and the General Regulation thereunder, the City is also liable for a pro rata share of the debentures and other long-term debt issued on behalf of the Fundy Region Solid Waste Commission ("Commission"). The portion attributable to the City is determined on the basis of its percentage of total population within all participating municipalities and unincorporated areas. The total of such debt outstanding at December 31, 2018 amounted to $108,000 (2017 — $214,000). Based on 2003 population figures, the City is liable for approximately 55% of the Commission's debt. The City is, from time to time, subject to various investigations, claims, and legal proceedings covering matters that arise in the ordinary course of its business activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the consolidated financial position or operaUing results of the City. Legal proceedings filed in December 2013 remain outstanding against the city of Saint John with respect to the alleged activity of a former employee/police officer. The relief sought has not been quantified in the documents filed with the court and therefore the city is not in a position to estimate the amount of potential liability if any, in this matter. Legal proceedings were filed against the City of Saint John in early 2018 relating to the water supplied by the municipal water system to some of its customers. The relief sought has not been quantified in the documents filed with the court and therefore the City is not in a position to estimate the amount of the potential liability, if any, in this matter. 15. Commitments Greater Saint John Regional Facilities Commission During 1998, the Greater Saint John Regional Facilities Commission ("Regional Facilities Commission") was created by an Act of the Legislative Assembly of New Brunswick. Under the provisions of the Act, the Regional Facilities Commission has the authority to determine the annual amount of total municipal contribution to be made towards the operation of five regional facilities: the Saint John Aquatic Centre Commission, Harbour Station Commission, the Saint John Trade and Convention Centre, the Imperial Theatre and the Saint John Arts Centre. Under the provisions of the Act, the City's contribution is its pro rata share of the Regional Facilities Commission's operating budget based on the tax bases of the participating municipalities of the Town of Quispamsis, the Town of Rothesay, the Town of Grand Bay -Westfield and the City of Saint John. The City's contribution is 67.151 % in 2018 (2017 - 67.39%). go 6'511 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 16. Water and Sewer fund surplus/deficit The Municipalities Act requires Water and Sewer Fund surplus/deficit amounts to be absorbed into one or more of four Operating Budgets commencing with the second ensuing year; the balance of the surplus/deficit at the end of the year consists of: Dec 31, Dec 31, 1,592,852 3,116,037 17. Water cost transfer The City's water cost transfer for fire protection is within the maximum allowable by Regulation 81-195 under the Municipalities Act, based upon the applicable percentage of water system expenditures for the population. 18. Funds held in trust Funds administered by the City for the benefit of external parties are not included in the consolidated financial statements. The amount administered as at December 31, 2018 was $484,113 (2017 - $476,690). ii 6191 2018 2017 2018 surplus 51,791 - 2017 surplus 532,037 532,037 2016 surplus 179,141 716,564 2015 surplus 322,225 483,337 2014 surplus 507,658 1,015,317 2013 surplus - 368,782 1,592,852 3,116,037 17. Water cost transfer The City's water cost transfer for fire protection is within the maximum allowable by Regulation 81-195 under the Municipalities Act, based upon the applicable percentage of water system expenditures for the population. 18. Funds held in trust Funds administered by the City for the benefit of external parties are not included in the consolidated financial statements. The amount administered as at December 31, 2018 was $484,113 (2017 - $476,690). ii 6191 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 19. Funds and reserves Water & General General Transit Sewer Capital operating Capital Capital 2018 2017 Reserve Reserve Reserve Reserve Total Total S 5 S S S S Assets Cash 21,672,723 4,646,089 5,381,167 354,399 32,054,378 17,327,914 Accumulated surplus 21,672,723 4,646,089.. 5,381,167 354,399 32,054,378 17,327,914 Revenue Transfers from Water and Sewerage Utility Operating Fund 7,796,255 - - - 7,796,255 6,850,000 Transfers from General Operating Fund - 1,350,000 3,620,702 - 4,970,702 2,383,000 Transfers from Transit Operating Budget - - - 100,000 100,000 250,000 Interest 300,688 57,732 20,330 4,399 383,149 128,621 8,096,943 1 407 732 3,641,032 104 399 13,260,106 9,611,621 Exeendltures 68,420 1,777,342 1,845,762 Annual surplus 8,096,943 1 339 312 1,863,690 104 399 11,404,344 9,611,621 Balance, beginning of Year 13,575,780 3,306,777 3,517,477 250,000 20,650,034 7,716,293 Balance, end of Year 21,672,723 4,646,089 5,381,167 354,399 32,054,378 17,327,914 The City received funding from the Canada -- New Brunswick Municipal Rural Infrastructure Program between 2001 and 2006 to assist with the cost of construction of water and sewerage assets. The agreements require the City to maintain replacement reserve funds, which can only be used to pay for the cost of replacement of specified capital items, unless otherwise approved by the Minister of Environment and Local Government. 28 67� OI O M OD W O V n n r r O V V (O to r (D M M a! n M O M M n to M O r W OOy N co M Law M M Ci tq O N C%lO 00 N y yO y poi � OO W (O V M O N~ M b r M tnp n M N O- r r m C N V W co t r (p V co 7 H Cc i N 1D (O (p Ld Q V L W 7 1( c N N N rn n n rn on c v in H t0 O N , 7 chi M (O n N ((a N N Z � M h N' N 0 N co 7 W R R c2i � 03 C'4O 00 aa en rn Cl) Cl) Cn r 7 1n co LP n IW+ 0)r a! 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M Cb (fl 0 N N 7 (A (D N 0 C_ a �_ N N 0 01 rfl m 00i G N rE N (A ICI W O � .j CL N O tPi Na r N N 9 (C0 N 0 (0 J ` O N n CL 0 (7 M 4M N �- C) W M N r n so (0 N 0 V J N t17 w 0 C to C •� s em a� c F D N N wa m 0 m Q O OI N w O O 0 �0 W Pt A la N CD A Ip M O V 0 N 07f A M .1 Y A W W 0 o 0 goN A A A16 co 00 r r r eq (G m V 0 000 M In N N N N Cl) 01 T 00 m Go C co m Go W Go O 0 co 0 m 0 n m r V O Ctp{7 (O coN � Cl) M m 001 V) Im r W M ' 4 ('7 to M ap 4m O co N tory IOn O 1:1 (O V r 01 0) 0 O Q Lo v It r n (O C r (P T r 7 8 N CI C7 N T N N N r r W cm 04 00 O O N ONi 00i r n V- v r M +- Oi V °.° n uvi (° `D o 0 N cc Ci (p N O O ON Co. 01 N N 0 e 0 N C7 N to N N N m r 0 1(1 N r r 01 N N Cl) O 0 Y 0 h 117 T 117 m 0) h r IA eOe}� N N O O rp In 1(j w 0-- idco O O ' NCol T N m O 7 h n LO N V h h N O Ui Ij'1 V NT It 00 LO ItT 0 T v n T 3 rz N n to EO n In n n N lC1 N to to t0 0 co ^ T IA T N N N N N m n h h 47 LO 1n to In LO n n h N lA T N 117 N { a N � v Z O � (Q LU r o0 i7 _ 4 N oa z 0 OLL 0 a _ 4`0 g QO M0 ui �m6 3 w C 'r- 0 .F O 0 co :: rn aF M m Ea m O w m lu R v rN� z m am Eo ¢ ¢ m V(7 58 0 6'1%] O N M f` Q1 V to 1- fe m d � d 7 M M Of Vi to N N O Qui ado O n a O) a0 Ol in n M w a0 f-- O m N 0 0 401- f+ d N co N to (D a0 (O (O C) f+ (O O LO h 11) M f- M N V I[f N 0 - ' N 7 ' O ~ N N Cl) W) m U T N T N O r O r N r r w N N O O M [r ti N N O In to It r" N n W 47C O O 10 O M V r N r r eUY m C O M 3 2 is (O 47 117 Cf A r N 'd O m V r 4> P7 Cl) O m N O N to N r Le)40 r N 10 U U2 r N h r m I r- p 1'l KJ M r N N ILI r gN V O O S O O m 7 7 p w T T m N N C W C L° T(Nn V ti N p mgo (+M1 40, to C11 � co pO , 1 1 00 I 1 I tD � N I I 1G1.,Yy m C M T r M to r ee A - V 00 a0 d CO d a E„ Ci M N QNi, tt 7dA m rn co C w C.2 , 1 1 r A 1- a0 N d , I b (D 00 (� 9 WLn c I 0 O c n w U2 r Q g T N � � W = w N N I N _ P a0 O r T we w °; r a0 ( I t= o c 3�M � 1, v T T M m 0 d M d ap N N aO N fl - : U -)N OI (O O M cq L a w (V It O `(' O Go N o 0 v m m (D n n M ID a c n r I a N T F C C3 Nr m co Eact E o ado (i w +�+ w rn a M co a v CD , n , I � , I , C6 � ' N Nr d d IA 0) O N_ Cl n MN d N O O N M ado Nt 0 'Cm w m Cs'�] Oi (D N N M n O l/ O W N� m C ID m Cm V ' � N I w () N N IPl V N n M LL v (.7 r '0 � M _ E O 0 v In u) Q N w C O w O u c Y} O yy O NH N p W N SIS O H C = -I-# >%N O N G1 N (� H d 4) a v _ `� d m 0 w N +� i° a o Q% r U) CL C C` N 't�+ ; it i O G m o � c£� m v o M o :: y m H Z k N w Q 7 ii O 2 S U lel U) C7 5 a 6'1%] f V fp � LL R N 7 C. 7 h C C 0 Y .0 0 V Ix N N act m fq o 'rte' o n o 0 0 n N N p aD p N p ti ID 10 N N N Cf f? n M f0 O w N 0 ti r p tp N Op N O '�" Iff U) 40 N O `� r f9 N O T r v7 O � M r- m m CO qlr � r 4s ID 0 O f7 O n co m 4 V N U O N CO O O M N co ui ui CO 0 h R V N N 4 Lo O ap O O O N Nf Ir1 4 cc 4 Lq O n N M m v N m M � m 4 U �n � H N C w 2 C y ?L a 2 v i c a C fp ffl o c Q m C E N C E ° G y fi 5; E amici m n G E C o L O N n 4 a X m c O 1 N € E m C c o a eo d E d wC m 9 g Q W CD 0 W Q1 0 Y W O d N d EoE Q dr o� J J Ais] M AI LO LQ LO m 0 co le cD N N N N O O f0 V tl Cp C O awO. m O1 a'no O t�fi 4�7 m V V! In Or GO ��mp O N ~ '0 00 0) 0) O V) Cl N E M T CMO N m = N N 100 a <O N O M ++ (�1 M QC p c N Cl) CI T h co y. Ir r I°'n U) Q O O) N 47 O C CO m fC 10 O at 011 fA tRb r d � N d N N qa0o r Ci 1 l7 V Q O O V Of - Ili OI aD w O E N C N N ' M N O coo0 U C to O r V CA aO LO N m f0 cli N C7 O) N 13i N C rco 407 (O M LO ++ oil N N 1Ln Q 00 N O M N O7 0= N 61 O� O ' OD a0 m m O 0 Q O V CO [O (Q 47 a M m " mm O N a0 N OD C O7 O co N G G LL E f` O L N Cl V Ill ( N N C CD w M r4 Lo C4 CO Y i11 " E (? C9 O Cl N C CV f�1 L J N _ O 117 V7 a Q N r V c N 0 � Na Lo v F- v go CC,) vaO n n C "v' ani v { I: C G ao o OIL h 1� O^ N O a 407 O n e 47 G0 N N R of 1f1 co W O W 'n d N � r N V R E 1D It a0 N J m R E R N V m a o 0 o 0 0 Goco C W c 47 o 4] N R US N O N O f0 .w C o rn co 1n n cl r/ = r a d m m c w M 1Ln OD vCV �v 41 a+ CO � O LL N W c La C m .0 EG. d O G 0x �+ C _ a o r m n •� r Co O .EL W m m c X O O ++ `N 41 C H a m 3 v' y m e O N M 7 IA 3 9 a1 16 [ O Ta m [ O Q r ` 1�4 R o U YO R L R R l3i W {0 H Z 1i NF- o o c c a v o o� AI LO LQ LO m 0 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 24. Reconciliation of funding deficit upon adoption of PSAS Special Top - up Heart and Retirement Agreements Lung Allowances Liabilities at December 31, 2016 as calculated on adoption of PSAS 1,078,100 5„270,900 4„048,400 Amount of December 31, 2016 liabilities funded in current year (42.„600) (137,300) 469,000 Balance to be funded in future years 1,035,500 5,133,600 4,517,400 I' The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details REVENUE Other revenues from own sources General Government Services Protective services Transportation services Environmental development services Recreational and cultural services 2018 Budget 2018 2017 (Unaudited) (Note 2) 3 S 5 4,282,401 1,272,095 1,690,010 2,709,222 2,906,894 4,066,614 12,794,186 12,142,519 11,624,053 3,987,403 5,497,334 5,913,346 1,313,058 1,860,970 1,385,290 35 W 25,086,270 23,679,812 24,679,313 21,193,684 EXPENDITURES Contributions from others General government services General Government Services - 1,372,310 139,618 Protective services - 480,000 - Transportation services 250,000 4,890,146 3,999,029 Water and sewer services - 3,124,120 15,700,347 Environmental development services 1,121,876 743,278 706,064 Recreational and cultural services - 1,629,521 648,626 35 W 1,371 876 12,239,375 21,193,684 EXPENDITURES General government services Legislative Mayor's Office 176,000 180,243 174,056 Common Council 473,203 429,253 442,482 649,203 609,496 616,538 35 W The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) 36 AE,I 2018 Budget 2018 2017 (Unaudited) (Note 2) S 5 E City Manager City Manager 692,386 596,969 651,790 Corporate Planning 592„568 449,352 514„749 Corporate Communications 438,613 386,035 418,512 1,723,567 1,432,356 1,585,051_ Common services City Hall Building 1,892,991 1,858,526 2,028,156 Property Assessment 1,318,538 1,341,622 1„336,557 Public Liability Insurance 304„000 310,253 299,,930 3,515,529 3 510 401 3,664 643 Other Common Clerk 569,921 555,626 709,056 Human Resources 1,463,712 1,449,039 1,506,203 Finance 1,746,323 2,177,676 2,266,598 City Solicitor 746,406 694,459 674,167 Materials Management 1,115,837 1,117,304 1,112,053 Information Systems and Support 2,273,965 2,032,289 2,436,050 Insurance 149,458 174,396 296,076 Debt Charges 16,710,383 3,794,763 4,202,502 Amortization - 7,939,482 7,836,803 Post Employment Expenses 10,610,300 13,132,306 6,816,700 Trust Funds - - 20,000 Other 1,001,785 10,240,634 2,077,978 Regional Services Commission 34,269 34,269 24,227 36,422,359 43,342,243 29,978,413 Total general government 42,310 658 48,894,496 35,844,645 Protective services Police protection Police Operations 15,288,108 15,348,119 15,201,194 Support Services 1,783,689 1,493,241 1,360,438 Administration 1,949,785 2,060,276 2,118,552 36 AE,I The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) 3" ARI 2018 25,087,368 24,815,542 Fire protection Budget 2018 2017 Fire Operations (Unaudited) 22,334,577 21,947„,568 Fire Investigation (Note 2) 57,809 57,163 Fire Prevention s a s Stations and Buildings 1,047,368 931,292 943,298 Criminal investigation 4,465„843 4,437,358 4,311„463 Detention Services 174„000 168,006 279„648 Automotive 980,500 649,076 600«949 3" ARI 25,689,293 25,087,368 24,815,542 Fire protection Fire Operations 22,727,286 22,334,577 21,947„,568 Fire Investigation 73„091 57,809 57,163 Fire Prevention 912,700 841,637 920 483 Fire Training 5„601 - 2„,605 23,718,678 23,234,023 22,927,819 Other protective services Inspection Services 941,642 856,249 995,049 Enforcement Services 359,531 369,143 239,350 Minimum Standards 261,690 244,084 257,993 Dangerous Buildings 489,955 656,210 520,663 Animal Control 89,996 88,047 87,652 Emergency Measures 307,729 511,845 278,482 Emergency Dispatch Centre 2,427,079 2,431,368 2,348,023 4,877,622 5156 946 4,727,212 Total protective services 54,285,593 53,478,337 52,470,573 3" ARI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) External controlled entities Saint John Transit Commission Saint John Parking Commission 583,943 495,664 522,218 12,069,000 12,935,820 12,101,539 4,371,724 2,922,084 2,786,857 16, 440,724 15,857,904 14,888,396 Total transportation services 39,249,909 47,324,451 46,488,052 C�� 2018 Budget 2018 2017 (Unaudited) (Note 2) s s a Transportation services Public works Roads and Sidewalks 15,089„111 12,033,043 12,;787,474 Other Drainage Services 2,785,485 2,566,748 2,,105„971 Street Lighting 943„000 953,702 969„891 Municipal Operations 525,393 473,443 432„816 Amortization -Transportation - 12,227,648 12,205,433 Flood 2018 - 480,000 - _ 19,342,989 28,734,584 28,501,585 General engineering Transportation 533,278 313,527 319,,382 Traffic Engineering and Systems 2,348,975 1,922,772 2,256,471 2,882,253 2,236,299 2575 853 Parking administration Parking Administration 583,943 495,664 522,218 External controlled entities Saint John Transit Commission Saint John Parking Commission 583,943 495,664 522,218 12,069,000 12,935,820 12,101,539 4,371,724 2,922,084 2,786,857 16, 440,724 15,857,904 14,888,396 Total transportation services 39,249,909 47,324,451 46,488,052 C�� The City of Saint John Notes to the Consolidated Financia! Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) 99 Cil 2018 Budget 2018 2017 (Unaudited) (Note 2) S 5 S Water and sewer services Saint John water & wastewater Drinking Water 10,483,000 9,732,616 8„347„521 Industrial Water 1,696,000 1,090,946 1„108,621 Wastewater 11,268,000 9,357,067 8,,893,315 Infrastructure Management 1,201,000 421,584 444„985 Internal Charges 895„000 265,541 150„619 Fiscal Charges 22,261,000 4,794,339 4„177„956 Amortization - 14,670,473 12„696,952 Total water and sewer services 47,804,000 40,332,566 35,819,969 Environmental health services Sanitary Service 3,764,178 3,429,828 3.„281,736 Total environmental health services 3,764,178 3,429,828 3,281,736 Environmental development services Research and planning Community Planning 1,610„540 1,645,290 1,648,155 Plan SJ 120,000 23,369 265,425 1,730,540 1,668,659 1,913,580_ Administration and geographic information systems (GIS) GIS 466,996 429,544 330,799 Carpenter Shop 351,431 313,536 267,888 818,427 743,080 598,687 99 Cil The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) 5,047,227 3,395,886 3,564,569 Real estate management Property Management 1,323,653 1,436,430 1,095,437 Property Management -Police HO - - - Real Estate 216„717 662,966 361,730 2018 2,099,396 1,457,167 Budget 2018 2017 Other environmental development services (Unaudited) City Market (Note 2) 1,075,525 1,061,321 Tourism a a a Economic development 181,551 214,449 195,511 Growth Reserve 350,000 2,607 170,984 Economic Development Agencies - - - Market Square Common Area 2,195„207 2,125,694 2200„552 Regional Economic Development 475,000 475,000 475,000 Regional Facilities 2,027,020 792,585 718,033 Saint John Industrial Parks - - - 5,047,227 3,395,886 3,564,569 Real estate management Property Management 1,323,653 1,436,430 1,095,437 Property Management -Police HO - - - Real Estate 216„717 662,966 361,730 6,518,877 8,561,533 8,371,855 Total environmental development services 17,954,811 18,792,023 18,184,695 MCI 1,540,370 2,099,396 1,457,167 Other environmental development services City Market 1,084,324 1,075,525 1,061,321 Tourism 1,033,495 1,033,495 1,022,005 Community Development 181,551 214,449 195,511 2,299,370 2,323,469 2,278,837 External controlled entities Saint John Development Corporation - - 609,308 Harbour Station Commission 3,351,927 3,575,975 3,760,021 Aquatic Centre Commission - 2,832,142 2,516,216 Trade and Convention Centre 920,072 895,266 864,678 Saint John Industrial Parks - - 621,632 Develop Saint John 2,246,878 1,258,150 - 6,518,877 8,561,533 8,371,855 Total environmental development services 17,954,811 18,792,023 18,184,695 MCI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2018 25. Other revenue and expense details (Continued) 41 C:1'] 2018 Budget 2018 2017 (Unaudited) (Note 2) S S S Recreational and cultural services Cultural grants Other Cultural Grants 2,168,310 1,256,224 1,;328,880 2,168,310 1,256,224 1,328,880 Parks Rockwood Park 598,292 461,565 459,239 Parks General Services 2,182,515 2,049,605 2„059„970 2,780,807 2,511,170 2519209 Community services Parks and playgrounds 306,691 199,000 205,688 Recreation and parks 331,008 249,944 298,213 Pro Kids 121,183 104,437 99,482 758,882 553,381 603,383 Other recreational and culture services Sports and Recreation 3,320,858 3,491,475 3„285,374 Community Centres 674,401 689,194 843,929 Cultural Affairs 117,030 55,259 111,517 Amortization - Recreation - 1,228,251 10,202,075 4,112,289 5,464,1179 5,442,895 External controlled entities Lord Beaverbrook 425,550 432,771 378,653 Saint John Free Public Library - 582,071 616,097 Canada Games Foundation - 458,671 - 425,550 1,473,513 994,750 Total recreational and cultural services 10,245 838 11,258,467 10,889,117 Saint John Energy - - 8,152,000 Total energy services - - 8,152,000 TOTAL EXPENDITURES 215,614,987 223 510,168 211,130,787 41 C:1'] Financial Statements The City of Saint John Trust Funds December 31, 201 S rill Independent Auditor's Report To His Worship the Mayor and Members of Common Council of The City of Saint John Report on the Audit of the Financial Statements Opinion We have audited the financial statements of The City of Saint John Trust Funds ("City"), which comprise the statement of financial position as at December 31, 2018 the statements of changes in net assets and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements"), In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the City as at December 31, 2018, and the results of its operations, its accumulated surplus, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards ("PSAs"). Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the City in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with PSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Organization's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Organization or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Organization's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the 71 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Organization's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Organization to cease to continue as a going concern, • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Chartered Professional Accountants Saint John, NB XXXX, 2019 roil co I W �Inl of 1v.l �i n I rig] A PC Im N .r C fry •: -� 40 V as ao� � qTI le � I,le aaw II II v w 0 wi i - V] kn in co I W �Inl of 1v.l �i n I rig] A PC Im W w Ch .• N r 69 U H N ,n u r N In V V M � 11 F N r ee PO U d� PC GAY W r~ n r O b colla C/�% � r•i r �� C Cro v n Ch .• M Q � o CCh 00 ON N ry rL! 10 all N � V M � 11 00 ON N ry rL! 10 all 00 ON N ry rL! 10 STATEMENT OF CASH FLOW The accompanying notes are an integral part of these financial statements In lu 01 2018 2017 $ S Operating activities Excess of investment income over expenditure 8,795 5,536 Changes in noncash working capital: Term Deposits (13) (14) Accrued Receivable 1,318 (1,318) Accounts Payable 125 61 Investment activities Contributions to other entities (1,716 . Net increase (decrease) in cash and cash equivalents 1KIII""",,, I"...""""�m....,..�, 8,509 (1,774) Cash, binninofear ....... ...... ........ 473,833 475,607 Cash, end of year 482,342 473,833 The accompanying notes are an integral part of these financial statements In lu 01 The City of Saint John - Reserve and Trust Funds Notes to the financial statements For the year ended December 31, 201$ 1. SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City are the representations of the City's Management prepared in accordance with Canadian generally accepted accounting principles for local governments, as recommended by the Chartered Professional Accountants of Canada Public Sector Accounting Board. Revenue Investment income is recognized on an accrual basis as earned. Expenses Expenses are recorded on an accrual basis. Cash and cash equivalents Cash and cash equivalents include cash on hand, balances with banks and short term deposits with original maturities. Financial Instruments The Trust Fund's financial instruments consist of cash, term deposits, and accounts payable. Financial instruments are recorded at fair value when acquired. Financial assets with actively traded markets are reported at fair value, with any unrealized gains or losses reported in excess (deficiency) of revenue over expenditure. Financial instruments are tested for impairment at each reporting date. The Reserve and Trust Funds are exposed to interest rate risk in that the value of the marketable securities can be adversely affected by a change in interest rates. 2. TRUST FUNDS Tucker Fund By an Act of the Legislature enacted on April 20, 1927, securities with a par value of $10,000 were vested with the City of Saint John. This Act provided that the income and a portion of the principal from this Trust, with the approval of Common Council, should be used for the maintenance and improvement of Tucker Park. E WQ The City of Saint John - Reserve and Trust Funds Notes to the financial statements For the year ended December 31, 2018 2. TRUST FUNDS (continued) Stockford Memorial Fund This fund was established on December 28, 1939 as a result of a bequest of $3,000 from Fannie M. Stockford of Boston, Massachusetts. This amount was to be invested and the annual income was to be used towards the upkeep and maintenance of King Square. O'Connell Fund This fund was established on March 22, 1939 with a contribution of $2,000 from J.D. O'Connell. The contribution was to be invested and the income distributed among the orphanages of the City on the prorata basis of the children cared for by each, to be given by way of a Christmas gift to each child. In October 2004, this agreement was amended to allow the Trustees to disburse the income arising from the trust investments yearly to the Empty Stocking Fund. L.R. Ross Fund This fund was established in 1921 through the gift of $1,250 and the "Ross Memorial Cup". The Cup was to be competed for annually by amateur single scullers, aged twenty-one years or under who are residents of the Maritime Provinces. The income from this Trust was to be used to provide a duplicate cup for the winner of each race held. Changes to the Trust in 1986 now allow for the funds to be used to promote the sport of rowing within the City of Saint John and its suburban communities, provided that an amount of $4,000 remains in the fund to enable the "Ross Memorial Cup" to be duplicated when necessary. A. Carle Smith Fund Established in September 1976, funds were received from the estate of A. Carle Smith. These funds are to be used for the maintenance of a wildlife sanctuary in the South Bay area. Bi -Centennial Funds These funds are to be used for ceremonies marking the 2001h anniversary of Canada in the year 2067. 0 WA • M- The 1- M1 t City of Saint John Report to the Finance Committee on the 2018 audit Presented to Finance Committee on May 29, 2019 N-11 May 24, 2019 To the Finance Committee of the City of Saint John Report on audited annual financial statements Dear the Finance Committee Members: We are pleased to submit this report on the status of our audit of the City of Saint John ("the City") for the 2018 fiscal year. This report summarizes the scope of our audit, our findings and reviews certain other matters that we believe to be of interest to you. As agreed in our master service agreement dated February 22_,,,,,201- have 2, 01 -have performed an audit of the financial statements of The pity Sjit John as of and for the year ended December 31, 2018, in accordance with Canadian generally accepted auditing standards ("Canadian d expect to issue our audit report once all work is finalized%end the ° statements are approved. This report is intended solely for the inforrr�tiorY ani tie of the Finance Committee, management and others within e b& d is Piot intended to be, and should not be, used by anyone othe,tlf ifese specified parties. We look forward to discussing this repo&PurnMarizing the outcome of our audit with you and answering any questior�you may have. Yours truly, i DeloitteLP Charterec-`rQ,0///ssional Accountants Wel Deloitte LLP Brunswick House P.O. Box 6549 44 Chipman Hill, 7th Floor Saint John NB E21- 4R9 Canada Tel: 506-632-1080 Fax: 506-632-1210 www.deloitte.oa A% The City of Saint John I Table of contents Table of contents Our audit explained Significant audit risks Other reportable matters Appendix 1 - Communication requirements Appendix 2 - Draft version of our auditor's r 4 report Appendix 3 - Deloitte resources a click/awa/ `` Oi E:ii] � e J --i CC UI � 00 Q V 0 Ln -0 a)� C _0 a a) E U1 � V a) Lwn N N I Ln ELn �� u Ln u Croo-60 01V-0 C Z)U) OL C N .. �j m o L in L in O L _ if O a) >` O n� �O > O wJ W L N� > L 0 /�i� +� CLO 0 O C a) E � 0 c 0) Ln E ''ai L coo � w -0 .� E � °; n �� — V> W w a)� o 0 Z) OV 0) (� U' ) i E (L6 +4]-+ O E C C L (6 C UI C C — 7/ 0 01 — — y, (6 ^ C USI m 0 U7 -0 i p 0-0 L c o E ro Q �' a� ro E E//�' ro 3 'CO: Q o E °� t ;!;" 5 / , �o �) U -0 cn +� ro a) U U E a� c� o w ro _ 0 o w > 01 c` L 0 L C a) L U C a) QJi X : 1 0 C O N -r- t C f a /i U L (6 L N C Illlfll 6 0� _0 (�6 4.P,U C-0 0 -0� C�� w 7 C � C"0 UI ax/-,, E� E r E Q�o� o o mN� y e 0� E u0a) c ; ■ � &,k Q) C V L O '0 L >. � � ��nr ��llJ ' , e6 0 L C (�' � � [i U) 1O Ln 6 L c: c: o i Q L -0 a) N ._ L- ro U) �' 0 0---o 0 L E ami 3 °�� °� fl -0 Ln 2o o a�Ei > -0 E a E> '0 O 0 r6 �' O _0 C '.�, Q (6 a) (a a) E a) L uu > cn +� LLn cZ)EQ) Q)F+� raro >+�ro+�+� 0- 'R °� L O Q +� cl 0 O _0 a) (a 0 a) E a) L 0 Q) C 0 a "0 V a) �' - m a) UI a--. 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O (6 Q _0 O (ay' C C O U Ln 01 O i o Z) Q O N Ln V N C y' C y' 01 Ln C V O +� Q E .Ln 7 E > E O� V +' V C p) O C El (n p O L V 0 N L w D U C c 0) > C LL V Q � L � 0) N C > UI N w O N U.S --0 O L C fl O Ln E Qz)) o 1 Ln N m Ln 0 o It/K// LL OL U 0 LO m \� \\\ SJ E \\\ �\ . [� E y� �mE.AUDI/, a>0 � � \�§a ^-E a a »41E - J §��7 <s 2-E�ƒ- &3/ E§E |%« %K\»� � e e ( _ 0-0 E 41= { 0 �w )b � 004 o \\\\\\ \ � @ �- \\ \\/\ § E 3{| 3=2/ e LO m S "t a "t e rn e ri ��t o ��f iiiiii III' eIIII n ooi The City of Sai ii II iiri s e s Convention Mependent AudAmrs Repoiirt Stahrrn ^rpt of and a^xp e Notes to the Sandal sAtement =tm Independent Auditor's Report To the Mayor and Common Council of The City of Saint John: Opinion We have audited the accompanying statement of revenue and expen Saint John Trade and Convention Centre (the "Centre"), for h� ar other explanatory information (the "financial statement") �� fi�� management in accordance with the provisions of the m ge Jr Saint John (the "City") and Hilton Canada Co. dated June 4 wii September 4, 2014. Deloitte LLP 816 Main Street Moncton NB E1C 1E6 Canada Tel: 506-389-8073 Fax: 506-632-1210 www. Belo itte. ca of The City of Saint John led December 31, 2018 and statement was prepared by !ement between The City of meAdment dated In our opinion, the financial statement presents fair°° mat(w� espects, the statement of revenue and expenses of the City of Saint John TranI wC vententre for the year ended December 31, 2018, in accordance with the pro ons �� nagement agreement between the City and Hilton Canada Co. dated June 1, 19it pamen �ht dated September 4, 2014. Basis for Opinions We conducted our audit in accor ce wit �,�adian generally accepted auditing standards ("Canadian GAAS"). Ourres �/� gnde !!!/, se standards are further described in the Auditor's Responsibilities for the A f the Fi' "al Stents section of our report. We are independent of the Company in accord with the etrequDoients that are relevant to our audit of the financial statements in Canada, a have fulfil our other ethical responsibilities in accordance with these requirements. We believe the audit clence we have obtained is sufficient and appropriate to provide a basis for our opini Responsibilities of Manager"" and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements in accordance with the provisions of the management agreement between the City and Hilton Canada Co. dated June 1, 1984 with an amendment dated September 4, 2014, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Centre's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Centre or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Organization's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Centre's internal control. • Evaluate the appropriateness of accounting policies u �a � Ar asonableness of accounting estimates and related disclosures made by manage / , • Conclude on the appropriateness of management's u �� e goi �/ nbasis of accounting u and, based on the audit evidence obtained, whether ,, �rial rice II00exists related to events or conditions that may cast significant doubt on th!rtre's ability to continue as a going 11 Il � ii oii , concern. If we conclude that a material uncert �� ts, w11 required to draw attention in our auditor's report to the related disclosure th cial ments or, if such disclosures ai are inadequate, to modify our opinion. Our 'ncl ns c ased on the audit evidence obtained %�R up to the date of our auditor's report. ver, ure e � s or conditions may cause the Centre to cease to continue as a going conc We communicate with those charged with''', el nance regarding, among other matters, the planned scope and timing of the audi icanit findings, including any significant deficiencies in internal control that we id I ri r aud' lllllii,,, //r lllllllii Chartered Professional [Date] 061 The City of Saint John Saint John Trade and Convention Centre Gt t irneint of revellLie aindxlll un Year ended December 3t, 201 8 Revenue Commissions on food and beverage sales and sundry revenue Room rental Direct expenses Wages and benefits Laundry Supplies Operating equipment and uniforms Overhead expenses Salaries and benefits Outside services Advertising and promotion Cleaning and maintenance Miscellaneous expense Telecommunication Garbage removal Legal and audit Equipment rental Travel and training Postage, printing and stationery Entertainment Water heating charges Gas Licenses Dues and subscription: Operating deficit for the Operating expenses ni Management fee HVAC utility/maintenai Real estate tax Electricity 2018 2018 2017 Budget Actual Actual varp. $ $ $ (Unaudited) 262,444 205,156 201,361 163,000 150,820 175,499 425,444 355,976 376,860 202,922 215,194 203,984 17,018 24,064 20,148 28,000 20,751 25,927 2,000 1,171 1,013 249,940 261,180 251,072 175,504 94,796 125.788 Ali, 1111, 06 504,822 502,217 16 38,958 2 16,693 37,911 23,125 15, 15,129 fi/ji"�1,49 16,418 11 12,129 �� 4,296 111 11,062 11,756 12,107 5,320 5,078 4,175 1,500 4,111 1,311 5,400 3,719 5,636 / 4,606 3,157 3,662 kl� Total expenses Total deficit for the year The accompanying notes are an integral part of the financial statements. 2,180 1,471 1,530 208 677 323 670,131 648,028 643,386 (494,627) (553,232) (517,598) 19 2, 000 1 51 58 9,488 8,509 6,739 10,350 8,840 4,935 103,916 6,000 5,590 6,550 5,320 5,078 4,175 1,500 4,111 1,311 5,400 3,719 5,636 / 4,606 3,157 3,662 kl� Total expenses Total deficit for the year The accompanying notes are an integral part of the financial statements. 2,180 1,471 1,530 208 677 323 670,131 648,028 643,386 (494,627) (553,232) (517,598) 19 2, 000 191,891 187,492 119,900 103,916 116,362 85,100 82,594 82,954 42,300 32,001 41,073 439,300 410,402 427,881 1,359,371 1,319,610 1,322,339 (933,927) (963,634) (945,479) Page 3 The City of Saint John Saint John Trade and Convention Centre °Notes °f fllll °fikiiaiii6iaIIII stateiineiiit 31 v 201.8 1. iFM 3. Revenue Under the terms of the management agreement dated June 1, 1984, with amendment dated September 4, 2014, Hilton Canada Co. pays to the Saint John Trade and Convention Centre ("Centre") a percentage of gross revenue for food and beverage with cost of sales, including product and labour costs, being the responsibility of Hilton Canada Co. The Centre is responsible for all other operating costs. Management agreement — Saint John Trade and Convention Centre This financial statement has been prepared in accordance with the provisions of the management agreement between the City of Saint John (the "City") and Hilton Canada Co. The Centre is owned by the City and managed by Hilton management agreement dated September 4, 2014./ J� had a 20 year term with options to renew for thre m renewal period remains. According to the terms of the operating loss of the Centre. In addition to the � incurs common area costs and management fees w 9 Y s. un o the City's consolidated ate financial statement, r a f Eo. under an amended agreement dated June 1, 1984 0 year periods. One 10 year ��th;P/Ihe y is responsible for ng los'%%� is agreement, the City P reflect general operating With the establishment of the Greater Saint h,,,,"F��f�lies Commission in 1998, operating deficits, management fees and p� ert ncluc�"'in common area costs are shared with the municipalities making t , G ier John Regional Facilities Commission. These costs are allocated in proportio 'the base the municipalities. Recording of rise bili The City's investor n the str a anted equipment, furnishings and fixtures is reported on the �tal and Loan ��d balaice sheet of the City. 4. Greater Saint Joh ilities Commission Act Under the regional Greater°""'rf)0"John Regional Facilities Commission Act, pursuant to 87(2)(a) of the Municipalities Act, councils of the participating communities of Grand Bay Westfield, Quispamsis, Rothesay and Saint John are required to pay contributions towards the operation of regional facilities, which include the Centre. The amount of contribution is calculated on the net operating cost for each facility covered under the Municipalities Act, in proportion to the tax base of the contributing municipality. S. Budget figures The 2018 budget figures that are presented on the Statement of revenue and expenses for comparison with the actual figures were provided by the Centre's management and have not been audited. `O Page 4 The City of Saint Johl 2018 State of the Infrastructure Report WIN April 29, 2019 City of Saint John 2018 State of the Infrastructure Report Card 'VALUATION DElFKUr LETTER GRADE TREINID $129.6 M $48.0 M C- VALLAT�01N DEFICIT LETTER GRADE TREIND $69.1 M $13.6 M C+ % VALUATION DEFICFT LETTER GRADE TREIND $1073.3 M $52.7 M B % VALUATION DEFICIrT LIE77ER GRAIDE TREINID $1443.5 M $313.6 M C+ % VALUATION DEF PCIT LETTER RAIDE TREND $15.4 M $7.1 M C - CITY OFSAINh TJOHIN SAMI I011IN 10ALUATON DENIM LET7EFIGRADE TREr10 $2730.9 M $435.0 M C+ % i NQ City of Saint John 2018 State of the Infrastructure Putting Things into Perspective How much infrastructure do I own? What is my deficit? $60,000 $50,000 W V) $38,081 :D $40,000 $30,000 M $20,000 IIIIIIIIIIIIIIIIIIIIIIIIII $10,000 IIIIIIIIIIIIIIIIIIIIIIIIII 9�� $14,513 9074 $1,468 $782 $636 $17,495 INFRASTRUCTURE L DEFICIT How much does it cost to renew my infrastructure? CURRENTLY -,** FUNDED Water & Wastewater elm General Daily Coffee Cellphone Cable TV & Internet Electricity $0 $40 $80 MontMy Househdd Cost M91,11 $1.20 (2� Z, Z, le How much does it cost to renew my infrastructure? CURRENTLY -,** FUNDED Water & Wastewater elm General Daily Coffee Cellphone Cable TV & Internet Electricity $0 $40 $80 MontMy Househdd Cost M91,11 $1.20 2018 State of the Infrastructure Report 4 of 67 April 29, 2019 CITY OF SAINT JOHN 2018 State of the Infrastructure Report Table of Contents 1. INTRODUCTION..........................................................................................................................8 1.1. Background................................................................................................................................... 8 1.2. Purpose.........................................................................................................................................8 2. APPROACH.................................................................................................................................9 2.1. Asset Hierarchy.............................................................................................................................9 2.2. Replacement Costs......................................................................................................................11 2.3. Condition.....................................................................................................................................11 2.4. Risk..............................................................................................................................................12 2.5. Letter Grade................................................................................................................................15 2.6. Long -Term Financial Forecast.....................................................................................................17 2.7. Trend Arrow................................................................................................................................18 2.8. Confidence Band.........................................................................................................................19 3. RESULTS...................................................................................................................................21 Cityof Saint John.............................................................................................................................22 Overview................................................................................................................................................. 22 Condition................................................................................................................................................. 22 Risk.......................................................................................................................................................... 23 Long -Term Financial Forecast.................................................................................................................24 ConfidenceBand.....................................................................................................................................25 SaintJohn (General Fund)................................................................................................................26 Overview................................................................................................................................................. 26 Condition................................................................................................................................................. 26 Risk.......................................................................................................................................................... 27 Long -Term Financial Forecast.................................................................................................................28 ConfidenceBand.....................................................................................................................................29 SaintJohn Water..............................................................................................................................30 Overview................................................................................................................................................. 30 Condition................................................................................................................................................. 31 Risk.......................................................................................................................................................... 31 Long -Term Financial Forecast.................................................................................................................33 ConfidenceBand.....................................................................................................................................33 Growth and Community Development.............................................................................................35 Overview................................................................................................................................................. 35 Condition................................................................................................................................................. 36 `Wei 2018 State of the Infrastructure Report 5 of 67 April 29, 2019 Risk.......................................................................................................................................................... 36 Long -Term Financial Forecast.................................................................................................................38 ConfidenceBand.....................................................................................................................................38 PublicSafety....................................................................................................................................40 Overview................................................................................................................................................. 40 Condition................................................................................................................................................. 41 Risk.......................................................................................................................................................... 41 Long -Term Financial Forecast.................................................................................................................42 ConfidenceBand.....................................................................................................................................43 Transportationand Environment......................................................................................................44 Overview................................................................................................................................................. 44 Condition................................................................................................................................................. 45 Risk.......................................................................................................................................................... 45 Long -Term Financial Forecast.................................................................................................................47 ConfidenceBand.....................................................................................................................................47 Corporate, Finance and Administrative.............................................................................................49 Overview................................................................................................................................................. 49 Condition................................................................................................................................................. 50 Risk.......................................................................................................................................................... 50 Long -Term Financial Forecast.................................................................................................................51 ConfidenceBand.....................................................................................................................................52 4. Conclusions..............................................................................................................................53 4.1. Summary of Results....................................................................................................................53 4.2. Comparing the 2016 and 2018 SOTI Reports..............................................................................54 APPENDICES Appendix A - Asset Hierarchy Appendix B - Asset Assumptions (Replacement Cost, Useful Life, Consequence of Failure) `191.1 2018 State of the Infrastructure Report April 29, 2019 LIST OF FIGURES 6 of 67 Figure 1 - Service -Based Asset Hierarchy....................................................................................................10 Figure 2 - Generalized Asset Deterioration Curve......................................................................................12 Figure 3 - Risk Heatmap Example Plot........................................................................................................15 Figure 4 - Letter Grade Scoring...................................................................................................................16 Figure 5 - Long -Term Financial Forecast Example......................................................................................18 Figure 6 - Example Confidence Band..........................................................................................................19 Figure 7 - City of Saint John Condition Distribution.................................................................................... 23 Figure 8 - Distribution of City of Saint John Asset Risks.............................................................................. 23 Figure 9 - City of Saint John Risk Heatmap................................................................................................. 24 Figure 10 - City of Saint John Long -Term Financial Forecast...................................................................... 25 Figure 11 - City of Saint John Confidence Band.......................................................................................... 25 Figure 12—General Fund Condition Distribution.......................................................................................27 Figure 13 - Distribution of General Fund Asset Risks..................................................................................27 Figure 14 — General Fund Risk Heatmap..................................................................................................... 28 Figure 15 —General Fund Long -Term Financial Forecast............................................................................ 29 Figure 16 — General Fund Confidence Band............................................................................................... 29 Figure 17 — Saint John Water Condition Distribution.................................................................................31 Figure 18 - Distribution of Saint John Water Asset Risks............................................................................32 Figure 19 — Saint John Water Risk Heatmap...............................................................................................32 Figure 20 — Saint John Water Long -Term Financial Forecast......................................................................33 Figure 21— Saint John Water Confidence Band..........................................................................................34 Figure 22 - Growth and Community Development Condition Distribution................................................36 Figure 23 - Distribution of Growth and Community Development Asset Risks..........................................37 Figure 24 - Growth and Community Development Risk Heatmap.............................................................37 Figure 25 - Growth and Community Development Long -Term Financial Forecast....................................38 Figure 26 — Growth and Community Development Confidence Band.......................................................39 Figure 27 — Public Safety Condition Distribution........................................................................................41 Figure 28 - Distribution of Public Safety Asset Risks...................................................................................41 Figure 29 — Public Safety Risk Heatmap......................................................................................................42 Figure 30 — Public Safety Long -Term Financial Forecast.............................................................................43 Figure 31— Public Safety Confidence Band.................................................................................................43 Figure 32 —Transportation and Environment Condition Distribution........................................................45 Figure 33 - Distribution of Transportation and Environment Asset Risks...................................................46 Figure 34 -Transportation and Environment Risk Heatmap......................................................................46 Figure 35 —Transportation and Environment Long -Term Financial Forecast............................................47 Figure 36 -Transportation and Environment Confidence Band.................................................................48 Figure 37 - Corporate, Finance & Administrative Condition Distribution..................................................50 Figure 38 - Distribution of Corporate, Finance and Administrative Asset Risks.........................................50 Figure 39 - Corporate, Finance and Administrative Risk Heatmap.............................................................51 Figure 40 - Corporate, Finance and Administrative Long -Term Financial Forecast....................................52 Figure 41 - Corporate, Finance and Administrative Confidence Band........................................................52 `[otl 2018 State of the Infrastructure Report April 29, 2019 LIST OF TABLES 7 of 67 Table 1 - Condition Rating Descriptions......................................................................................................11 Table 2 - Probability and Consequence Descriptions.................................................................................13 Table3 - Risk Rating Framework.................................................................................................................13 Table 4 - Consequence Rating Guide..........................................................................................................14 Table 5 - Letter Grade State of Repair and Definitions...............................................................................16 Table 6 - Trend Arrow Descriptions............................................................................................................19 Table 7 - Data Accuracy Descriptions.......................................................................................................... 20 Table 8 - Data Completeness Descriptions................................................................................................. 20 Table 9 - City of Saint John Asset Valuations.............................................................................................. 22 Table 10 — General Fund Asset Valuations................................................................................................. 26 Table 11— Saint John Water Asset Quantities and Valuations...................................................................30 Table 12 - Growth and Community Development Asset Valuations.......................................................... 35 Table 13 — Public Safety Asset Quantities and Valuations..........................................................................40 Table 14—Transportation and Environment Asset Quantities and Valuations.........................................44 Table 15 - Corporate, Finance and Administrative Asset Quantities and Valuations.................................49 Table 16 - 2016 to 2018 SOTI Report Changes...........................................................................................54 `M-,] 2018 State of the Infrastructure Report April 29, 2019 1.1. Background 8 of 67 In 2016, the City of Saint John began developing and implementing an asset management (AM) program for all municipal assets to ensure the sustainable delivery of municipal services. Phase 1 of this program saw the development of an AM road map, AM Policy, and AM Strategy. Following these developments, the City published its inaugural State of the Infrastructure (SOTI) report to communicate the current state of infrastructure repair. This document is the second iteration of the SOTI report and contains significant improvements in the quality and reliability of information presented. In addition to publishing a SOTI report, the City has been actively improving its asset management program by completing several key initiatives: • Updating asset inventory data • Establishing a condition rating framework • Establishing a risk rating framework • Reviewing asset management workflows and processes • Reviewing organizational structures • Reviewing data sharing processes • Reviewing data management systems • Establishing a Levels of Service and Key Performance Indicators program 1.2. Purpose The purpose of the State of the Infrastructure (SOTI) Report is to communicate the state of repair of the City of Saint John's infrastructure assets essential to the delivery of public services. The report contains several indicators that will allow the comparison of the state of infrastructure repair across different service areas, within service sub -areas, and over time (when the SOTI report is produced in the future). The report also presents the sustainable funding requirement (the future investments needed to replace existing infrastructure at the end of its service life), a comparison of the sustainable funding requirement to the projected capital funding, a distribution of asset conditions, a risk "heat map" of the assets requiring replacement in the next 20 years, and an estimate of the funding required to replace these assets (and eliminate the current infrastructure deficit). In general, the SOTI Report is intended to provide information to answer the six key asset management questions. 1. What do you have? 2. What is it worth? 3. What condition is it in? 4. What do you need to do to it? 5. When do you need to do it? 6. How much money do you need? `[ok7 2018 State of the Infrastructure Report 9 of 67 April 29, 2019 As the second iteration of the SOTI Report, this document provides a new benchmark which can be compared to the 2016 report. The 2018 SOTI Report represents a significant improvement in the accuracy and completeness of the underlying data, often causing dramatic changes in the results obtained. The 2016 SOTI Report relied solely on the City's Tangible Capital Asset Registry, an inventory maintained by the Finance and Accounting group. The 2018 Report goes beyond this single source of information, and compiles data and information from a variety of systems and stakeholders. As a result, the confidence in the results presented in the 2018 Report is much greater than the 2016 Report. It is expected the City will produce SOTI Reports on an on-going basis at pre -defined intervals. As future iterations are produced, City residents will understand and see the impacts of infrastructure renewal programs, funding commitments, and advanced asset management practices. In the interpretation of this report, it should be noted the results presented are based on current, readily available asset data and information. As this asset data is likely still incomplete and not fully accurate (even with the improvements), the results are expected to be subject to change when the data quality is further refined and improved. 2.1. Asset Hierarchy The City's assets are organized in a hierarchal format which arranges assets into various service areas (e.g. a water distribution main > water distribution network > drinking water > Saint John Water). The purpose of the hierarchy is to ensure asset data is collected and organized in a framework that will facilitate data access, information extraction and reporting, and decision making. Asset hierarchies can be arranged to reflect organizational structure (e.g. public works, fleet maintenance, facilities management) or services provided (e.g. potable water, transportation, recreation). To ensure consistency with the existing service -based budgeting at the City and to streamline asset management decisions with the supporting budgeting process, a service -based asset hierarchy has been adopted. The asset hierarchy is broken down into various "levels". Each level of the hierarchy demonstrates a different degree of asset complexity/detail for a service area. Most assets included in the asset inventory require 3 levels of complexity, while others, such as the Saint John Water assets, require an additional 2 levels, for a total of 5. Additional levels of detail can be added to the hierarchy to improve asset management decision making or incorporate operational requirements. The Service Areas and level 2 categories of the service -based asset hierarchy are shown in Figure 1 below, while the complete asset hierarchy is presented in Appendix A. Note, the asset categories used in the 2018 SOTI Report have been slightly re -organized from the 2016 SOTI Report. These changes were made to accommodate an improved asset inventory with additional data resolution. iisK 06 xi o oU. v = 13 ani w a-+ (L U- C U i.+ 0 ea tw w F fp/i av N Ol CV00 C. p 2 Q Ln a w ac cz C CL 06 CL CL CL c v Fp U i a-+ (L C i.+ �= o F fp/i N Ol CV00 C. p 2 Q 2018 State of the Infrastructure Report April 29, 2019 2.2. Replacement Costs 11 of 67 In the 2016 SOTI Report, all asset replacement costs were estimated by inflating the asset's original acquisition cost using the Canadian Consumer Price Index (CPI). For the 2018 Report, current replacement costs are estimated for all assets using one of three methods: 1. Historical contracts or tenders (inflated to current year dollars). 2. Engineering estimates. 3. Inflating original acquisition costs using relevant price indices. All costs included in the SOTI Report are expressed in current year Canadian dollars. A complete summary of unit replacement costs used for each asset are listed in Appendix B. 2.3. Condition The condition of each asset represents the current state of physical repair and is often used as an indicator for the relative time until corrective action (rehabilitation, or replacement) is required. A five -point rating scale is used to align the City of Saint John with the 2016 Canadian Infrastructure Report Card and provincial reporting recommendations. This simplified condition rating scale allows for comparative benchmarking between asset groups and is sufficiently detailed for high-level decision making. Descriptions of each condition rating (from 1 to 5) are shown in Table 1 below. In addition to the five - point rating scale, an additional condition rating category of "Unknown" has been added to account for assets with insufficient information available to properly estimate condition. Table a. - Condition Rating Descriptions The condition of assets in the City are determined using one of three methods: 1. Theoretical Condition —using asset age and estimated useful life as a proxy 2. Operator Experience —relying on operator experience and knowledge of the asset 3. Documented Observations —systematic and documented observations of the asset `N Excellent working condition. 7keew. of deterioration. Minor signs of deterioration. Approaching or at mid -stage of life. Some elements exhibiting major 3 —Fair Beyond mid -stage of life. deficiencies. deterioration with localized Needs to be replaced/repaired in the 4 - PoorSignificant areas of failure. short-term. Asset is beyond repair and, generally, Needs to be replaced/repaired almost has completed failed. immediately. 0 — Unknown Insufficient information available to estimate condition. The condition of assets in the City are determined using one of three methods: 1. Theoretical Condition —using asset age and estimated useful life as a proxy 2. Operator Experience —relying on operator experience and knowledge of the asset 3. Documented Observations —systematic and documented observations of the asset `N 2018 State of the Infrastructure Report 12 of 67 April 29, 2019 The condition of most assets included in the 2018 SOTI Report are based on theoretical condition. Theoretical condition was calculated for these assets using a generalized asset deterioration curve, shown in Figure 2. This curve is intended to mimic the accelerated rate of deterioration an asset experiences towards the end of its useful life. Very Good Good Fair Poor Very Poor 100% 80% 60% 40% 20% 0% % of Life Remaining Some assets' condition ratings were determined using documented observations. These condition ratings are much more reliable than those based on theoretical condition. Documented observations have been made for the following assets: • Road Surfaces • Retaining Walls • Culverts • Sanitary/Storm Sewers (approx. 15% included) The total value of assets which have undergone actual documented observations represents approximately 10% of the City's total asset inventory. Additional information on the methodologies and frameworks used to determine the condition of municipal assets is found in the City's "Condition Rating Manual". 2.4. Risk 2.4.1. Risk Rating Risk ratings were used to determine which assets pose a significant threat to the delivery of services and are a priority for repair or renewal. Assets which are likely to fail and have a serious consequence of failure will score a higher risk rating than assets which are not likely to fail and/or have a minor consequence of `11193 2018 State of the Infrastructure Report 13 of 67 April 29, 2019 failure. A simple risk evaluation technique is used for all assets in the SOTI Report. This method uses both the probability and consequence of failure of an asset, and calculates the risk rating with the following equation: Risk Rating = (Probability of Failure) x (Consequence of Failure) Like condition, probability and consequence of failure are scored on a 1-5 rating scale. These ratings, and their associated descriptions, are shown in Table 2 below. Multiplying the values for probability and consequence of failure together yields a risk matrix, shown in Table 3. This risk framework is consistent with the "AM Risk Management Framework" adopted by the City. Table 3 - Risk Rating Framework Risk Category Insignificant Consequence of Failure Low 3 Moderate 4 High Insignificant Minor Moderate Major Catastrophic 1 2 3 4 5 Improbable 1 � j Unlikely 2 j 8 10 Possible 3 � j 9 12 15 M o Likely 4 8 12 a Highly Probable 5 10 1S Risk Category As an example, an asset could have a high probability of failure of 5 but only have a small consequence of failure of 2. As a result, the asset would only score a risk rating of 10 and fall in the moderate risk category despite its high probability of failure (a section of sidewalk would fit this risk profile). This asset can be compared to a second asset with a lower probability of failure of 3, but a much higher consequence of failure of 5. This asset would score a higher risk rating of 15, fall in the substantial risk category, and would SAINT J0fIN TIL'! Insignificant Low 3 Moderate 4 High 11 Extreme As an example, an asset could have a high probability of failure of 5 but only have a small consequence of failure of 2. As a result, the asset would only score a risk rating of 10 and fall in the moderate risk category despite its high probability of failure (a section of sidewalk would fit this risk profile). This asset can be compared to a second asset with a lower probability of failure of 3, but a much higher consequence of failure of 5. This asset would score a higher risk rating of 15, fall in the substantial risk category, and would SAINT J0fIN TIL'! 2018 State of the Infrastructure Report 14 of 67 April 29, 2019 be recognized as a more critical asset (a piece of disinfection equipment at the water treatment plant would fit this risk profile). For the SOTI Report, the only risk event included is the risk of asset failure due to deterioration. To evaluate this risk, it is assumed the condition of an asset directly relates to its probability of failure. Additionally, the consequence of failure of all assets has been pre -determined by subjective input from City staff (see Appendix B for details) using the consequence of failure guide shown in Table 4. For future iterations of the SOTI Report, additional risk events such as extreme weather events influenced by climate change will be included. Table 4 - Consequence Rating Guide Additional details of the methodologies and frameworks used to determine the condition of municipal assets is found in the City's "Risk Rating Manual". 2.4.2. Risk Heatmap The risk heatmap figure illustrates the magnitude and severity of expected infrastructure investments. The heatmap is intended to provide an 'at -a -glance' perspective of the infrastructure priorities. The heatmap is a bubble chart with the asset risk rating (1-25) plotted against the current replacement year of an asset. Additionally, the size of each bubble indicates the total replacement cost of all assets in the respective risk rating and replacement year. An example heatmap is shown in Figure 3 below. `R Small number of Negligible or no 1 Insignificant < $2,000 Negligible or no customers environmental injury. experiencing minor impact. disruption. Small number of $2,000 - Minor personal customers Impact reversible 2 Minor $20,000 injury. experiencing within 3 months. significant disruption. $20,000 - Serious injury Significant localized Impact reversible 3 Severe $100,000 with service loss over an within 1 year. hospitalization. extended period. $100,000 - Major localized Impact reversible 4 Major $1M Loss of life. disruption over an p within 5 years. extended period. Multiple loss of Major long-term Impact not fully 5 Catastrophic > $1M life or city-wide city-wide reversible. epidemic. disruption. Additional details of the methodologies and frameworks used to determine the condition of municipal assets is found in the City's "Risk Rating Manual". 2.4.2. Risk Heatmap The risk heatmap figure illustrates the magnitude and severity of expected infrastructure investments. The heatmap is intended to provide an 'at -a -glance' perspective of the infrastructure priorities. The heatmap is a bubble chart with the asset risk rating (1-25) plotted against the current replacement year of an asset. Additionally, the size of each bubble indicates the total replacement cost of all assets in the respective risk rating and replacement year. An example heatmap is shown in Figure 3 below. `R 2018 State of the Infrastructure Report April 29, 2019 1118111111111111 a� .<:::.o M cr: 1.2.5 Y Figure 3 - Risk Heatnmap Example Plot High Risk Short -Term Failure, re, High Risk Long -((Term Failure fj� u 2028 Relpllaceirneint Year 2.5. Letter Grade 2038 15 of 67 0 $25 million O$12.5 million O $2.5 million O $0.5 million Each asset category and service area is assigned a letter grade to communicate the current state of infrastructure repair. These letter grades combine both condition and risk to yield a letter grade as defined in Table 5. Additionally, consideration is given for assets which score close to the threshold of another grade (see Figure 4). In this scenario, assets are given a + or — symbol to indicate if an asset is close to a better or worse grade. 2018 State of the Infrastructure Report April 29, 2019 Table S - Letter Grade State of Repair and Definitions 16 of 67 The letter grades of each service area are calculated using weighted condition rating and risk category values for each asset in the service area. Each asset is assigned a condition rating using a scale of 1— 5 (as shown in Table 1), and a risk category value of 1-5 by normalizing the risk ratings of 1 — 25 (as shown in Table 3). The condition ratings and risk category values are used to calculate letter scores ranging from 1 to 5 using the following approach: • a weighting of 75% condition and 25% risk was used to reflect the relative importance of risk in determining asset replacement priorities, and • the condition ratings and risk category values for individual assets were weighted using replacement value to reflect the relative importance of more expensive assets on the delivery of services. The letter score thresholds and associated letter grades are shown in Figure 4 below. Figure 4 - Letter Grade Scoring Letter Score 1 1.5 2 2.5 3 3.5 4 4.5 5 A+ I Al A- I B+ I B I B- I C+ I C I C- I D+ I D I D- I F Letter Grade IIIII111 il'ilill I MINIM I MINIM I MINIM I III I MINIM I MINIM I i I MINIM i i I Ii 1111 !!1A Very Good Fit for the future. Great condition, new or recently rehabilitated, little to no concern of risk. .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. B Good Adequate for now. Acceptable, generally approaching mid -stage .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. of expected service life, low concern of risk. Requires attention. Signs of deterioration, some elements exhibit deficiencies and moderate concern of risk which should be C Fair addressed in the short-term. Asset category is approaching the "cliff" and requires corrective action. .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Increasing potential of affecting service. Approaching end of service life, condition below standard, large portion of system D Poor exhibits significant deterioration and high concern of risk — could .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. be catastrophic. Unfit for sustained service delivery. Near or beyond expected service life, widespread signs of advanced deterioration, some F Very Poor assets may be unusable and very high concern of risk — asset should be attended to as soon as possible. The letter grades of each service area are calculated using weighted condition rating and risk category values for each asset in the service area. Each asset is assigned a condition rating using a scale of 1— 5 (as shown in Table 1), and a risk category value of 1-5 by normalizing the risk ratings of 1 — 25 (as shown in Table 3). The condition ratings and risk category values are used to calculate letter scores ranging from 1 to 5 using the following approach: • a weighting of 75% condition and 25% risk was used to reflect the relative importance of risk in determining asset replacement priorities, and • the condition ratings and risk category values for individual assets were weighted using replacement value to reflect the relative importance of more expensive assets on the delivery of services. The letter score thresholds and associated letter grades are shown in Figure 4 below. Figure 4 - Letter Grade Scoring Letter Score 1 1.5 2 2.5 3 3.5 4 4.5 5 A+ I Al A- I B+ I B I B- I C+ I C I C- I D+ I D I D- I F Letter Grade 2018 State of the Infrastructure Report 17 of 67 April 29, 2019 In the interpretation of the letter grades presented in this SOTI Report it should be noted the Canadian Infrastructure Report Card and similar reports prepared for other municipalities do not include risk in the calculation/assignment of letter grades. Although the increasing importance of external (i.e. non -age or deterioration driven) asset risks, such as the effects of climate change, in our opinion justifies the inclusion of risk in the calculation of letter grades, it does not allow the direct comparison of the City of Saint John's letter grades to letter grades of external sources. 2.6. Long -Term Financial Forecast In addition to demonstrating the current state of infrastructure repair, the SOTI Report provides the reader with a high-level understanding of the long-term financial requirements to replace assets at the end of their useful lives. All forecasted cash flows presented in the long-term financial forecast are expressed in current year (2018) dollars and inflation is not accounted for in future cash flows. The forecasts have been generated to demonstrate the annual investment requirements over a 100 -year period and compare this value to current funding levels. A 100 -year evaluation period was selected to ensure the replacement cycle of the longest lasting assets are captured. From there, the average annual investment requirement is determined. This average is recognized as the "Sustainable Funding Requirement" and is the annual average investment requirement to replace all assets at the end of their useful lives and eliminate the current infrastructure deficit over a 100 -year period. This metric is compared to planned funding levels, with the difference between the two recognized as the "Investment Gap (or Surplus)". This measures what increase (or decrease) in average annual funding is required to sustainably replace assets at the end of their useful lives. Additionally, the long-term financial forecast highlights the current infrastructure deficit — the total value of assets which are at or beyond their useful life. The infrastructure deficit is presented throughout the report as a high-level proxy for the "catch-up" requirements of each asset type. However, it is important to recognize an asset is only in a deficit position if it has exceeded its estimated useful life. Some assets, such as road surfaces, will never reach the end of their useful life if properly maintained. For these assets, timely preventative maintenance and rehabilitation practices will minimize the total life cycle -cost and will ensure the asset never reaches a deficit position. For this reason, we caution the reader not to interpret the infrastructure deficit as an indication of the overall condition of an asset type nor as an investment requirement to restore the entire asset type to like -new condition. An example long-term financial forecast is shown in Figure 5. `MF:3 2018 State of the Infrastructure Report April 29, 2019 Figure 5 - Long -Terre Financial Forecast Example Infrastructure Deficit = $121 million Sustainable Funding level = $34.6 million per year —�_1—1—�—��—��— Period Current Funding Level = $18.5 million per year -1— � — � � — � � — 18 of 67 Note, the long-term financial forecasts presented assume an asset is replaced at the end of its useful life with a similar asset (size and quality). However, it is likely that some assets will not undergo full replacement, but instead will be rehabilitated and/or repaired to extend their useful life, likely reducing the average annual investment required. Additionally, some assets may be replaced with an asset which is not identical in order to meet current service objectives. A full list of assumptions used for asset useful lives and replacement costs are found in Appendix B. 2.7. Trend Arrow The long-term financial forecasts are then used to produce a simplified "Trend Arrow". This arrow indicates the expected trend in infrastructure state of repair given planned funding commitments and is determined using the current investment gap (or surplus). Combining these two criteria produces the funding ratio, defined below. Funding Ratio = Planned Funding Level Sustainable Funding Requirement This ratio will determine the slope of the trend arrow, as described in Table 6. Please note the slope of the trend arrow is continuously variable (using a linear scale) between a slope of +60° and -60° from horizontal. iM&61 $1.40 .a..., $1.20 > E $1.00 5...; ... IS 4'.10 cu �' $60 4!1 $40 $20 $0 Figure 5 - Long -Terre Financial Forecast Example Infrastructure Deficit = $121 million Sustainable Funding level = $34.6 million per year —�_1—1—�—��—��— Period Current Funding Level = $18.5 million per year -1— � — � � — � � — 18 of 67 Note, the long-term financial forecasts presented assume an asset is replaced at the end of its useful life with a similar asset (size and quality). However, it is likely that some assets will not undergo full replacement, but instead will be rehabilitated and/or repaired to extend their useful life, likely reducing the average annual investment required. Additionally, some assets may be replaced with an asset which is not identical in order to meet current service objectives. A full list of assumptions used for asset useful lives and replacement costs are found in Appendix B. 2.7. Trend Arrow The long-term financial forecasts are then used to produce a simplified "Trend Arrow". This arrow indicates the expected trend in infrastructure state of repair given planned funding commitments and is determined using the current investment gap (or surplus). Combining these two criteria produces the funding ratio, defined below. Funding Ratio = Planned Funding Level Sustainable Funding Requirement This ratio will determine the slope of the trend arrow, as described in Table 6. Please note the slope of the trend arrow is continuously variable (using a linear scale) between a slope of +60° and -60° from horizontal. iM&61 2018 State of the Infrastructure Report April 29, 2019 Table 6-Trernd Arrow Descriptions 19 of 67 The slope of the trend arrow indicates the degree to which historical funding is above/below the sustainable funding requirement, up to the limits defined above. As an example, if the funding ratio is determined as 125% the slope of the arrow will be +30°. 2.8. Confidence Band The information presented in the SOTI Report is based on the best readily available data and information for individual assets. As the summary information presented in the SOTI Report is sensitive to the accuracy and completeness of the asset data, confidence bands have been produced for all service areas in the SOTI Report. The confidence bands illustrate two things. Firstly, as more data is included and more sophisticated methods are used to determine the infrastructure's state of repair, the results obtained are expected to change. This change will not be due to an increased deterioration or betterment of infrastructure, it will simply be due to an increase in data accuracy and completeness. The confidence bands provide context for these sudden increases or decreases in infrastructure state of repair and results. Secondly, the confidence bands identify areas for data improvement. The City can use confidence bands to identify which asset groups require improvements in data quality to produce more certain results. An example confidence band is shown in Figure 6 below. To assist in the interpretation of confidence bands, Table 7 and Table 8 have been developed. SAINT IMIN Figure 6 - Example Confidence Band Accuracy Ccr LowHigh Degree of Completeness it `Tel Asset state of repair rapidly improving. Historical and 411-601> 150% current funding is well above the sustainable funding requirement. No change expected in asset state of repair. Historical 01 100% and expected funding meets the sustainable funding requirement. Asset state of repair rapidly deteriorating. Historical and -K < 50% current funding is well below the sustainable funding requirement. The slope of the trend arrow indicates the degree to which historical funding is above/below the sustainable funding requirement, up to the limits defined above. As an example, if the funding ratio is determined as 125% the slope of the arrow will be +30°. 2.8. Confidence Band The information presented in the SOTI Report is based on the best readily available data and information for individual assets. As the summary information presented in the SOTI Report is sensitive to the accuracy and completeness of the asset data, confidence bands have been produced for all service areas in the SOTI Report. The confidence bands illustrate two things. Firstly, as more data is included and more sophisticated methods are used to determine the infrastructure's state of repair, the results obtained are expected to change. This change will not be due to an increased deterioration or betterment of infrastructure, it will simply be due to an increase in data accuracy and completeness. The confidence bands provide context for these sudden increases or decreases in infrastructure state of repair and results. Secondly, the confidence bands identify areas for data improvement. The City can use confidence bands to identify which asset groups require improvements in data quality to produce more certain results. An example confidence band is shown in Figure 6 below. To assist in the interpretation of confidence bands, Table 7 and Table 8 have been developed. SAINT IMIN Figure 6 - Example Confidence Band Accuracy Ccr LowHigh Degree of Completeness it `Tel LowHigh Degree of Completeness it `Tel 2018 State of the Infrastructure Report 20 of 67 April 29, 2019 Table 7 -Data Accuracy Descriptions Assets have limited data available. Replacement cost and useful life are Very Low based off generalized unit costs. There are no in-service years available to estimate condition. Asset data is available for some assets. Where possible, replacement cost Low and useful life are estimated based on asset properties. Condition is only determined by using age as a proxy Asset data is available for most assets. Where possible, replacement cost Moderate and useful life are estimated based on asset properties. Condition is estimated using a combination of age as a proxy and documented observations. Asset data is available for all assets. Replacement cost and useful life are High estimated based on asset properties. Most asset condition ratings are estimated using documented observations. Asset data is available for all assets. Replacement cost and useful life are Very High estimated based on asset properties. All asset condition ratings are based on documented observations. Table 8 -Data Completeness Descriptions Very Low 1, e 0 - 20% of assets are included Low 1 1 20 — 40% of assets are included Moderate 40 — 60% of assets are included HighJ/1060 — 80% of assets are included Very High 1 80 —100% of assets are included SAINT IMIN 121 2018 State of the Infrastructure Report April 29, 2019 State of the Infrastructure reports have been generated for the following areas: 1. City of Saint John (overall) 2. Saint John Water 3. General Fund a. Growth & Community Development b. Public Safety c. Transportation & Environment d. Corporate, Finance & Administrative 21 of 67 Each area report contains key information such as total replacement value, infrastructure deficit, letter grade, long-term financial forecast, risk heatmap, trend arrow and confidence band. This information will communicate the current state of infrastructure repair and the necessary funding to maintain or improve it. `A 2018 State of the Infrastructure Report 22 of 67 April 29, 2019 City of Saint John Replacement Value Infrastructure Deficit Letter Grade Trend $2730.9 M $435.0 M C+ % Overview As Canada's oldest incorporated city and New Brunswick's largest municipality, the City of Saint John has been providing municipal services to local citizens for more than two centuries. Key service areas for the City include Growth & Community Development, Public Safety, Transportation & Environment, Saint John Water, and Corporate, Finance & Administrative. The City of Saint John relies on a variety of facility, water, wastewater, roadway, structures, stormwater, parks, recreation, and fleet assets to support the delivery of municipal services. Valuation results of the five (5) major service areas in the City of Saint John are shown in Table 9. Table 9 - City of Saint John Asset Valuations Growth & Community Development $129,646,291 $47,962,628 C - Public Safety $69,077,926 $13,641,277 C+ Transportation and Environment $1,073,263,922 $52,650,571 B Saint John Water $1,443,539,753 $313,581,339 C+ Corporate, Finance & Administrative $15,357,854 $7,137,891 C - Total $2,730,885,747 $434,973,706 C+ Condition Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for the City of Saint is 2.22 out of 5.00 with assets generally being recognized as being in Good to Fair condition. However, 19% of the City's assets are in a Poor or worse condition and there is insufficient information to estimate the condition of 7% of the City's assets, as shown in Figure 7. WIN 2018 State of the Infrastructure Report April 29, 2019 Very F 169 Poor 3% Fair 7% Risk Figure 7 - City of Saint John Condition Distribution Unknown 7% Good 27% Very Good 40% 23 of 67 Results of the initial risk assessment suggest the City of Saint John assets exhibit a "Medium" risk profile. There are a large amount of assets (4% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of water transmission mains. A distribution of the total value of assets in each of the risk categories is shown in Figure 8. $1,000 rn- 0 $800 �a $600 0 $400 CC,Y $200 $0 Figure 8 - Distribution of City of Saint John Asset Risks Vnsignificanl: I...ow (Medium VIigh I:::xi:reme Unknown Riislk Category A risk heatmap has been generated for the City of Saint John to demonstrate the relative timing and investment requirement for the City's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, the City has a significant amount of both higher and lower risk assets requiring investments in the immediate future. Future investments are relatively consistent, with no major grouping or "waves" of investments anticipated. Most investment requirements are in the short-term, and there are assets in an Extreme risk category which should be investigated immediately. 2018 State of the Infrastructure Report April 29, 2019 M Figure 9 - City of Saint John Risk Heatnnap 201.8 2028 2038 Relpllaceirneint Year Long -Term Financial Forecast 0 $125 million O$62.5 million 0 $12.5 million O $2.5 million 24 of 67 Results of the City of Saint John's long-term financial forecast are shown in Figure 10. The City has a current infrastructure deficit of $435.0 million and a sustainable funding requirement of $59.9 million per year. Projected capital funding levels (2020 — 2023) for the City are $26.0 million per year. In total, this represents a funding gap of $33.9 million per year. Projected funding levels would need to be increased by 130% to achieve the sustainable funding requirement. `P491 $209,168,716 $18,098,820 1 /I $369,781,239 $315,744,417 i- OEM o r/ U VV 0 201.8 2028 2038 Relpllaceirneint Year Long -Term Financial Forecast 0 $125 million O$62.5 million 0 $12.5 million O $2.5 million 24 of 67 Results of the City of Saint John's long-term financial forecast are shown in Figure 10. The City has a current infrastructure deficit of $435.0 million and a sustainable funding requirement of $59.9 million per year. Projected capital funding levels (2020 — 2023) for the City are $26.0 million per year. In total, this represents a funding gap of $33.9 million per year. Projected funding levels would need to be increased by 130% to achieve the sustainable funding requirement. `P491 2018 State of the Infrastructure Report April 29, 2019 $500 $450 $400 $350 .p....1 $300 r. 0 $250 E $200 $150 $:wo $50 Figure 10 - City of Saint John Long -Terns Financial Forecast Infrastructure Deficit $435.0 M Sustainable Funding Projected Funding $59.9 million per year $26.0 million per year 25 of 67 -0�c yc� Peir od Infrastructure Deficit Risk Category: MLJnknown MVnsignificani: E31 ow ❑Moderate ❑high MExl:reme Confidence Band The confidence of results presented for the City of Saint John assets are recognized to be complete and moderately accurate. This represents a significant improvement from the 2016 Report, where both the completeness and accuracy of results were recognized as low. In summary, 80 - 100% of the assets are estimated to be included and asset parameter data is available for most assets. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using a combination of age as a proxy and documented observations. Improvements in the accuracy and completeness of asset data and information resulted in an increase in the total asset valuation from the 2016 SOTI Report for the City of Saint John. This increase is primarily attributed to improved completeness of water and sewer main data and improved accuracy of unit replacement costs. The data used to generate the 2016 SOTI Report is only sourced from the City's Financial Tangible Capital Asset (TCA) Registry, whereas the 2018 Report relies on a combination of higher quality data sourced from the various information management systems used to manage the City's assets (e.g. GIS, MicroPaver, ...). W-1 2018 State of the Infrastructure Report April 29, 2019 t Replacement Value Infrastructure Deficit Letter Grade Trend $1287.3 M $121.4 M B % Overview 26 of 67 The City of Saint John General Fund includes all services except those provided by Saint John Water. Service areas include Transportation and Environment, Growth & Community Development, Public Safety, and Corporate, Finance & Administrative. The City of Saint John relies on a variety of facility, roadway, structures, stormwater, parks, recreation, and fleet assets to support the delivery of municipal services. Valuation results of the major service areas in the City of Saint John General Fund are shown in Table 10. Table 1.0 General Fund Asset Valuations Growth & Community Development $129,646,291 $47,962,628 C- Public Safety Transportation and Environment Corporate, Finance & Administrative $69,077,926 $13,641,277 C+ $1,073,263,922 $52,650,571 B $15,357,854 $7,137,891 C_ Total $1,287,345,993 $121,392,368 B Condition Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for the General Fund is 2.00 out of 5.00 with assets generally being recognized as being in a Good condition. However, 13% of the City's General Fund assets are in a Poor or worse condition and there is insufficient information to estimate the condition of 10% of the assets, as shown in Figure 12. WIN 2018 State of the Infrastructure Report April 29, 2019 Very 9`, Poor 4% Fair 6% Risk Figure 12 General Fund Condition Distribution Unknown 10% Good 30% Very Good 41% 27 of 67 Results of the initial risk assessment suggest the General Fund assets exhibit a "Low" risk profile. There are a small amount of assets (1% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of recreational facilities. A distribution of the total value of assets in each of the risk categories is shown in Figure 13. $450 $400 $300 $250 0 $200 CC,Y 1.50 $50 $0 Figure 13 - Distribution of General Fund Asset Risks VnsignificanL I...ow (Medium VIigh I:::xi:'enie Unknown Riislk Category A risk heatmap has been generated for the General Fund to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, the General Fund has a significant amount of both medium and lower risk assets requiring investments in the immediate future. Future investments are not uniform, with a significant quantity of investments anticipated from 2026 - 2032. However, most investment requirements are in the short-term, and there are some assets in an Extreme risk category which should be investigated immediately. iM-13 2018 State of the Infrastructure Report April 29, 2019 11MIIIIIIIIIII Figure 14 General Fund Risk Heatnmap 2028 Relpllaceirneint Year Long -Term Financial Forecast 2038 28 of 67 0 $25 million O$12.5 million Q $2.5 million O $0.5 million Results of the General Fund's long-term financial forecast are shown in Figure 15. The General Fund has a current infrastructure deficit of $121.4 million and a sustainable funding requirement of $34.6 million per year. Projected capital funding levels (2020 — 2023) for the General Fund average $18.5 million per year. In total, this represents a funding gap of $16.1 million per year. Projected funding levels would need to be increased by 87% to achieve the sustainable funding requirement. `N4%7 $59,009,075% $12,783,332 \ D 41 F $155,905,236/s `� ' ,' $177,548,124 FYI f i > w+��00' 2028 Relpllaceirneint Year Long -Term Financial Forecast 2038 28 of 67 0 $25 million O$12.5 million Q $2.5 million O $0.5 million Results of the General Fund's long-term financial forecast are shown in Figure 15. The General Fund has a current infrastructure deficit of $121.4 million and a sustainable funding requirement of $34.6 million per year. Projected capital funding levels (2020 — 2023) for the General Fund average $18.5 million per year. In total, this represents a funding gap of $16.1 million per year. Projected funding levels would need to be increased by 87% to achieve the sustainable funding requirement. `N4%7 2018 State of the Infrastructure Report 29 of 67 April 29, 2019 Figure 15 General Fund Long -Terns Financial Forecast Confidence Band The confidence of the results presented for the General Fund assets are recognized to be complete and moderately accurate. In summary, 80 —100% of assets are estimated to be included and up to date asset parameter data is available for most assets. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using a combination of age as a proxy and documented observations. Improvements in the accuracy and completeness of asset data resulted in an increase in total valuation (increase in roadway, sidewalk, and storm line unit replacement costs), a decrease in total valuation for Growth and Community Services (Market Square component completeness), an improvement in the overall condition (use of Pavement Condition Index rating to determine the condition of roadways), and a reduction in the sustainable funding requirement (extension of useful life of roadway bases and storm lines from 40 to 80 years). `Kil!) $140 ................................... cz Infrastructure Deficit $:9.20 t $121.4 M ------------------------------------------------- $:9.00 4..1AAAAe r. a $80 Sustainable Funding .. .. .. .. ...m... Projected Funding E$18.5 $60 $34.6 million per year J million per year ----,,,,---e.,,- / 1 $40 $20 t r $ f) ry�fT"J rye"n."J ryp"J ��'IM1 ry ry V V ry ry ry 4 V V V ry 4,�'v,� V �y Perod Infrastructure Deficit Risk Category: E Unknown ® Vnsignificani: E31 ow ❑ IModeraLe Offigh ®I.Exh,eme Confidence Band The confidence of the results presented for the General Fund assets are recognized to be complete and moderately accurate. In summary, 80 —100% of assets are estimated to be included and up to date asset parameter data is available for most assets. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using a combination of age as a proxy and documented observations. Improvements in the accuracy and completeness of asset data resulted in an increase in total valuation (increase in roadway, sidewalk, and storm line unit replacement costs), a decrease in total valuation for Growth and Community Services (Market Square component completeness), an improvement in the overall condition (use of Pavement Condition Index rating to determine the condition of roadways), and a reduction in the sustainable funding requirement (extension of useful life of roadway bases and storm lines from 40 to 80 years). `Kil!) 2018 State of the Infrastructure Report April 29, 2019 W Replacement Value Infrastructure Deficit Letter Grade Trend $1443.5 M $313.6 M C+ $5,285,331 Overview 30 of 67 Saint John Water supports the community in achieving its long-term vision and goal for safe, clean drinking water. Services are delivered to enhance the quality of drinking water and protect the natural environment with the treatment of wastewater. Major asset types include watermains, sanitary and combined sewer mains, water and wastewater treatment facilities, sanitary lift stations, storage reservoirs and water pumping stations. Total asset quantities and valuation for major asset types are highlighted in Table 11. Table 1.1...... Saint John Water Asset Quantities and valuations Industrial Water $10,110,454 $6,286,339 D Industrial Water Pumping Stations 1 $5,285,331 $4,629,076 D - Industrial Water Dam & Spillways 2 $3,167,860 $0 B+ Industrial Water Treatment Facilities 2 $1,657,263 $1,657,263 F Drinking Water $836,311,060 $171,933,917 C+ Drinking Watermains 517.5 km $766,892,743 $162,477,585 C Drinking Water Pumping Stations 13 $21,152,664 $3,186,196 13 - Drinking Water Storage Reservoirs 8 $22,490,736 $4,314,491 C - Other Drinking Water Assets $25,774,916 $1,955,646 NA Wastewater $591,339,323 $133,227,697 13 - Sanitary Sewer Lines 315.6 km $310,899,794 $17,928,937 B+ Combined Sewer Lines 78.7 km $95,582,766 $95,582,766 F Sanitary Forcemains 49.9 km $48,291,747 $0 A Wastewater Treatment Facilities 6 $75,938,930 $9,669,434 B Sanitary Lift Stations 68 $60,029,961 $9,820,429 13 - Other Wastewater Assets $596,125 $226,131 NA Shared Assets $5,778,916 $2,133,386 C - Fleet $4,195,782 $1,459,302 C - Machinery and Equipment $833,152 $514,441 D+ SCADA $749,983 $159,643 13 - Total $1,443,539,753 $313,581,339 C+ 131 2018 State of the Infrastructure Report 31 of 67 April 29, 2019 Note: The Saint John Water asset inventory does not include the newly constructed water treatment facility as part of the Safe, Clean Drinking Water program. The City is not responsible the replacement and/or repair of the assets located on this site until the facility is handed back over to the City at the end of the contract term. However, the associated linear infrastructure renewal projects completed in parallel with the construction of the water treatment facility have been included and the asset inventory is mostly complete. Condition Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for Saint John Water is 2.41 out of 5.00 with assets generally being recognized as being in Good to Fair condition. However, 25% of Saint John Water assets are in a Poor or worse condition and there is insufficient information to estimate the condition of 5% of the assets, as shown in Figure 17. Very P 22% Poor 3% Risk I Figure 17 Saint John water Condition Distribution Unknown 5% Good 23% Very Good 39% Results of the initial risk assessment suggest Saint John Water assets exhibit a "Medium to High" risk profile. There are a large amount of assets (5% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of watermains. A distribution of the total value of assets in each of the risk categories is shown in Figure 18. `19% 2018 State of the Infrastructure Report April 29, 2019 $500 $450 $400 $350 $300 $250 $200 150 $:wo $50 0 Figure 18 - Distribution of Saint John water Asset Risks VnsignificanL I...Ow (Medium VIigh I:::xLreme Unknown 32 of 67 A risk heatmap has been generated for Saint John Water to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, the General Fund has a significant amount of both high and medium risk assets requiring investments in the immediate future. Future investments are relatively minor but not uniform, with a significant quantity of investments anticipated in 2030 - 2035. However, most investment requirements are in the short-term, and there are some assets in an Extreme risk category which should be investigated immediately. M Figure 19 Saint John water Risk Heatnmap �., timnm U $150,159,641 rolls, $5,315,488 I SII 411 mm i�llr mo �� $213,876,003 Q 1�� " 44ro NVro II��V ro1�lh �IIIII� }W'�I�IIIIIIIII I111 $138,196,293 W Iro ��ri m, b tti»l��n ��uiiio� qqo �� X11 �iiillllii�n �uuu�l �1�� Flu IP I mlllllo cp��1� mffiUn 2028 Relpllaceirneint Year `CK 2038 0 $125 million O$62.5 million O $12.5 million O $2.5 million 2018 State of the Infrastructure Report 33 of 67 April 29, 2019 Long -Term Financial Forecast Results of Saint John Water's long-term financial forecast are shown in Figure 20. Saint John Water has a current infrastructure deficit of $313.6 million and a sustainable funding requirement of $25.3 million per year. Projected capital funding levels (2020— 2023) for Saint John Water are $7.5 million per year. In total, this represents a funding gap of $17.8 million per year. Projected funding levels would need to be increased by 237% to achieve the sustainable funding requirement. $350 J Infrastructure Deficit �....� $313.6 M $300 n> $250 $200 a 0 $:➢.50 Sustainable Funding $1.00 $25.3 million per year $50 $0 tll/ V IP IP I/ yV IP Period Projected Funding $7.5 million per year emmme em,®,. Infrastructure Deficit Risk Category: ■ V..Jnknown ■ insignificant ❑ 1 o ❑ lModerate Oiligh ■ I:::zctreme Confidence Band The confidence of the results presented for Saint John Water assets are recognized to be complete with low accuracy. In summary, 80 — 100% of assets are estimated to be included, and up to date asset parameter data is available for most assets. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using a combination of age as a proxy and documented observations. Most data for the water and wastewater facilities is likely outdated and inaccurate, and there are some outstanding watermain capital projects which have not been updated in the asset inventory. It is anticipated the overall condition of the Saint John Water assets will improve as the asset inventory data is updated. Improvements in the accuracy and completeness of asset data resulted in a significant increase in the total valuation of Saint John Water assets when compared to the 2016 SOTI Report. The primary driver for this change is an increase in the completeness of water and sewer mains and improved accuracy in the unit replacement costs of pipe. While the infrastructure deficit is still significant, it is anticipated this will decrease as additional improvements in the accuracy of watermains and sewermains in-service year are made. R011! 2018 State of the Infrastructure Report April 29, 2019 Figure 21 Saint John Water Confidence Band SAINT IMIN 135 34 of 67 2018 State of the Infrastructure Report April 29, 2019 Growth and Community Development Replacement Value Infrastructure Deficit Letter Grade Trend $129.6 M $48.0- Overview 35 of 67 The Growth and Community Development program supports the long-term vision and goal of a diverse, vibrant, resilient, environmentally sound economy. The service provides guidance, direction and support for development that enhances quality of life for residents by working to create places where people want to live, work and invest. Significant assets include Market Square, Harbour Station, Harbour Passage and the City Market. Results for the major assets are shown in Table 12. Note, a significant portion of the current infrastructure deficit is attributed to Market Square. Results are expected to change dramatically as additional improvements in the quality and reliability of this facility's information is made. Additionally, the total replacement cost of both Market Square and Harbour Station is undervalued. It is anticipated the total replacement cost of these facilities will increase as data quality improvements are made. Table 1.2 - Growth and Community Development Asset Valuations Market Square $83,406,016 $36,937,012 D+ Harbour Station $24,957,544 $5,232,917 C_ Harbour Passage $9,016,568 $400,220 B City Market $7,966,408 $3,705,469 D+ Arts & Culture Facilities $2,539,761 $1,030,382 D+ Visitor Information Centers $794,064 $456,770 D Tourism Facilities $553,800 $163,940 C+ Industrial Parks $412,130 $35,919 B Total $129,646,291 $47,962,628 C- 136 2018 State of the Infrastructure Report April 29, 2019 Condition 36 of 67 Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for Growth and Community Development is 3.15 out of 5.00 with assets generally being recognized as being in a Fair condition. However, 39% of the City's Growth and Community Development assets are in a Poor or worse condition as shown in Figure 22. Figure 22 - Growth and Community Development Condition Distribution Very Pooi 37% 01 Very Good 8% Fair 8% Good 45% Results of the initial risk assessment suggest the Growth and Community Development assets exhibit a "Medium" risk profile. There are a large amount of assets (6% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of Market Square and Harbour Station facility components. A distribution of the total value of assets in each of the risk categories is shown in Figure 23. The Growth and Community Development risk profile is atypical and is primarily attributed to a significant portion of assets with a moderate consequence of failure are at the end of their useful lives. SAINT 10][I i `19YA 2018 State of the Infrastructure Report April 29, 2019 $60 rn- $50 $40 $30 s $20 CC,Y $10 $0 Figure 23 - Distribution of Growth and Community Development Asset Risks Vnsignificani: I...OW (Medium VIigh I:::xi:reme Unknown Riislk Category 37 of 67 A risk heatmap has been generated for Growth and Community Development to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, Growth and Community Development has a significant amount of both high and medium risk assets requiring investments in the immediate future. There are very few investments required in the next 10 years, with a substantial wave of investments anticipated from 2028 — 2030. However, most investment requirements are in the short-term, and there are some assets in an Extreme risk category which should be investigated immediately. 25 Figure 24 - Growth and Community Development Risk Heatnmap 0 $23,035,596 $1,429,044 TO $28,629,952 $23,821,361 IMPIPu �O/firVIEW 2028 Relpllaceirneint Year `191:3 2038 0 $25 million O$12.5 million Q $2.5 million O $0.5 million 2018 State of the Infrastructure Report 38 of 67 April 29, 2019 Long -Term Financial Forecast Results of Growth and Community Development's long-term financial forecast are shown in Figure 25. Growth and Community Development has a current infrastructure deficit of $48.0 million and a sustainable funding requirement of $4.5 million per year. Projected capital funding levels (2020 — 2023) are $3 million per year. In total, this represents a funding gap of $1.4 million per year. Projected funding levels would need to be increased by 47% to achieve the sustainable funding requirement. $60 $.50 Infrastructure Deficit $48.0 M $40 0 $30 Sustainable Funding $20 $4.5 million per year -------------------------------- $1. 0 ,-,-,-,-,-,-,-,-,-,-,-,-,-,-,-,$1.0 $0 Projected Funding $3.0 million per year IN V IP I/ V V IP Period Infrastructure Deficit Risk Cate or � V..Jnknown ® insignificant ❑ I...ow ❑ Moderate iligh M E.:)ctreme g y: Confidence Band The confidence of the results presented for the Growth and Community Development assets are recognized as complete but with poor accuracy. In summary, 80 — 100% of assets are estimated to be included, but up to date asset parameter data is limited. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using age as a proxy. Improvements in the accuracy and completeness of asset resulted in a decrease in the total valuation and a slight improvement in the overall condition. These changes are primarily attributed to the improved accuracy and completeness of the Market Square and City Market facility components' age, replacement cost and useful life. However, much of the data is still based on the Financial Tangible Capital Asset (TCA) Registry and significant changes are anticipated as the City improves its confidence in facility asset data. `EI:10.1 2018 State of the Infrastructure Report April 29, 2019 Figure 26 Growth and Community Development Confidence Band `1191 39 of 67 2018 State of the Infrastructure Report April 29, 2019 l Replacement Value Infrastructure Deficit Letter Grade Trend D+ Fire Facilities + $9,858,833 Overview 40 of 67 The Public Safety service supports the Community in achieving its long-term vision of being a safe, livable community. The program helps to improve the quality of life with a focus on creating safe neighborhoods that provide opportunities for individuals to develop and grow together through recreation, cultural and leisure activities and community involvement. Significant asset types include fire and police fleet, fire and police equipment, fire and police facilities, public safety communications center (PSCC) and street lighting. Total asset quantities and valuations for assets are shown in Table 13. Table 1.3 Public Safety Asset Quantities and Valuations Fire & Rescue $21,486,420 $8,634,371 D+ Fire Facilities 9 $9,858,833 $5,139,871 D Fire Fleet 34 $8,164,966 $1,623,258 C - Fire Machinery & Equipment 230 $3,462,621 $1,871,241 D Police $39,819,783 $3,149,728 A - Police Facilities 1 $35,457,985 $0 A+ Police Fleet 68 $2,429,269 $1,575,762 D Police Machinery & Equipment 79 $1,932,529 $1,573,967 D - PSCC $692,293 $320,593 D+ Street Lighting 1,041 $7,079,430 $1,536,585 C - Total $69,077,926 $13,641,277 C+ `E111 2018 State of the Infrastructure Report April 29, 2019 Condition 41 of 67 Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for Public Safety is 2.33 out of 5.00 with assets generally being recognized as being in Good condition. However, 26% of the City's Public Safety assets are in a Poor or worse condition, as shown in Figure 27. Fair 8% 01 Figure 27 Public Safety Condition Distribution 1=7 Good 20% Very Good 46% Results of the initial risk assessment suggest the Public Safety assets exhibit a "Medium -High" risk profile. There are a small amount of assets (2% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately, and a larger amount of assets (16% of the total asset valuation) in the "High" risk category. These high-risk assets are primarily composed of fire facility components and fire fleet. A distribution of the total value of assets in each of the risk categories is shown in Figure 28. $30 rn- $25 $20 0. $1.5 s CC,Y $5 $0 Figure 28 - Distribution of Public Safety Asset Risks Vnsignificanl: I...ouv (Medium VIigh I:::xi:rc nie Unknown Riislk Category SAINT IMIN 142 2018 State of the Infrastructure Report 42 of 67 April 29, 2019 A risk heatmap has been generated for Public Safety to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short- term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, Public Safety has a uniform investment requirement over the next 20 years. Most investments are medium to low risk, with some higher risk assets interspersed. However, there are still substantial investments required in the short-term and there are some assets in an Extreme risk category which should be investigated immediately. Figure 29 Public Safety Risk Heatnnap Long -Term Financial Forecast mfl 2028 Relpllaceirneint Year $837,367 $13,182,610 Wm ®� 0 $5 million O$2.5 million Q $0.5 million O $0.1 million 2038 Results of Public Safety's long-term financial forecast are shown in Figure 30. Public Safety has a current infrastructure deficit of $13.6 million and a sustainable funding requirement of $3.9 million per year. Projected capital funding levels (2020 — 2023) are $1.7 million per year. In total, this represents a funding gap of $2.2 million per year. Projected funding levels would need to be increased by 125% to achieve the sustainable funding requirement. `['1193 z010State vfthe Infrastructure Report April 29, 2019 Figure 30 Public Safety Long -Term Financial Forecast 43 of 67 IN� Peidnd Infrastructure Deficit Risk Category: 0u^x^ow^ Mmsig^ffica^L E31 ow oModemLe 0sh M I xLreme Confidence Band The confidence of the results presented for the Public Safety assets are recognized to mostly complete with limited accuracy. In summary, 60'80Y6 of assets are estimated to be included and up to date asset parameter data is limited. Replacement costs are only based on an escalation of original acquisition costs and estimated useful life isassumed equal tothe accounting amortization period. There are no major data quality differences between the ZU1Oand 20163OT| Report results. This is because both reports results are based onthe City's Financial Tangible Capital Asset (TCA) Registry, without any review of historical records, only the additions and disposals of known assets. Figure 31 - Public Safety Confidence Band Accuracy �� Completeness A A` 2018 State of the Infrastructure Report 44 of 67 April 29, 2019 ISM Replacement Value Infrastructure Deficit Letter Grade Trend $1073.3 M $52.7 194 $6,906,278 Overview The Transportation and Environment program supports the community in achieving its long-term vision and goal of creating a green, attractive city where people can get around safely and easily. Services provide convenient and efficient modes of transportation and protect the environment through the maintenance of parks and public spaces. Significant asset types include roadways, sidewalks, storm water, solid waste, parks & public spaces, sports & recreation, transit and parking. Total asset quantities and valuation for major asset types are highlighted in Table 14. Table 1.4 Transportation and Environment Asset Quantities and valuations Road Network 1,392 lane -km $490,562,239 $2,453,649 B+ Retaining Walls 194 $6,906,278 $598,624 C+ Sidewalk Surfaces 372.6 km $50,081,586 $2,396,392 A - Culverts 1,113 $7,272,166 $21,865 B Storm Lines 318.8 km $299,427,100 $5,045,296 B+ Solid Waste 7 $1,210,413 $0 B Parks & Public Spaces 39 $39,952,085 $3,851,853 B Arenas 5 $26,438,521 $9,244,452 D+ Community Centers 4 $6,703,505 $2,308,046 C Outdoor Sports Fields & Facilities 29 $8,838,490 $2,275,343 C+ Playgrounds 37 $6,111,650 $1,844,731 C+ Pool & Swimming Facilities 1 $9,494,607 $2,274,216 C Transit Facilities 1 $27,092,809 $0 B+ Transit Fleet 53 $19,603,446 $1,963,774 C+ Parking Facilities 2 $22,323,360 $808,144 NA Parking Lots & Spaces 28 $2,262,850 $2,056,335 D Other Transportation and Environment $48,982,816 $15,507,852 NA Total $1,073,263,922 $52,650,571 B 2018 State of the Infrastructure Report April 29, 2019 Condition 45 of 67 Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for Transportation and Environment is 1.79 out of 5.00 with assets generally being recognized as being in Good condition. However, 8% of the City's Transportation and Environment assets are in a Poor or worse condition and there is insufficient information to estimate the condition of 11% of the assets, as shown in Figure 32. !C3 Fair 6% Risk Figure 32 Transportation and Environment Condition Distribution Unknown 12% 29% Very Good 45% Results of the initial risk assessment suggest the Transportation and Environment assets exhibit a "Low" risk profile. There is a small amount of assets (1% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of recreational facilities (e.g. arenas, parks, pools). A distribution of the total value of assets in each of the risk categories is shown in Figure 33. 2018 State of the Infrastructure Report April 29, 2019 $400 $350 $300 $250 0 $200 $150 CC,Y $50 $0 Figure 33 - Distribution of Transportation and Environment Asset Risks Vnsignificani: I...OW (Medium VIigh I:::xi:reme Unknown Riislk Category 46 of 67 A risk heatmap has been generated for the Transportation and Environment to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, Transportation and Environment has a uniform investment requirement over the next 20 years, with a concentration of investments required in the short-term and in the years 2025 - 2032. Most investments are medium to low risk, with some higher risk assets interspersed. However, there are still substantial investments required in the short-term and there are some assets in an Extreme risk category which should be investigated immediately. 25 Figure 34 -Transportation and Environment Risk Heatnmap 2028 Relpllaceirneint Year [N/ 2038 0 $25 million O$12.5 million Q $2.5 million O $0.5 million $26,963,071 $10,493,595 MN. r,�� r iii .110 93 061 718 140,011,283 `F�� 2028 Relpllaceirneint Year [N/ 2038 0 $25 million O$12.5 million Q $2.5 million O $0.5 million 2018 State of the Infrastructure Report 47 of 67 April 29, 2019 Long -Term Financial Forecast Results of Transportation and Environment's long-term financial forecast are shown in Figure 35. Transportation and Environment has a current infrastructure deficit of $52.7 million and a sustainable funding requirement of $24.6 million per year. Projected capital funding levels (2020 — 2023) are $12.5 million per year. In total, this represents a funding gap of $12.1 million per year. Projected funding levels would need to be increased by 97% to achieve the sustainable funding requirement. Figure 35 Transportation and Environment Long -Terre Financial Forecast $1.0 F I - T T -I F T T - F I - T T -I F T T F I T $6 05 CP P Perbd Infrastructure Deficit Risk Cate or y: � V..Jnknown ® Vnsig;nificant ❑ I...ow ❑Moderate Iiig;h ®I:::zcLrerne g Confidence Band The confidence of the results presented for the Transportation and Environment assets are recognized to be complete and moderately accurate. In summary, 80-100% of assets are estimated to be included and asset parameter data is available for most assets. Replacement cost and useful life are estimated based on asset parameters (where available) and condition is estimated using a combination of age as a proxy and documented observations. Improvements in the accuracy and completeness of asset data (compared to the 2016 SOTI Report) resulted in an overall increase in the total valuation of assets. This increase in valuation is primarily attributed to an increase in roadway, sidewalk, and storm line unit replacement costs. Secondly, there is an improvement in the overall condition. This is primarily attributed to the use of Pavement Condition Index ratings to determine the condition of road surfaces, and an extension of useful life of roadway bases and storm lines from 40 to 80 years. Lastly, the sustainable funding requirement has reduced, again attributed to an increase in the useful life of roadway bases and storm lines. `[E:3 2018 State of the Infrastructure Report April 29, 2019 Figure 36 - Transportation and Environment Confidence Band Accuracy Completeness 48 of 67 2018 State of the Infrastructure Report 49 of 67 April 29, 2019 Corporate, Finance and Administrative Replacement Value Infrastructure Deficit Letter Grade Trend $15.4 M $7.1 M C- �► Overview The Corporate, Finance & Administrative service area combines both Corporate and Finance & Administrative services hard assets into a single service area. Corporate services provide administrative support and policy and procedural advice to the elected Common Council. The service maintains, protects and responds to staff and public inquiries regarding the official and permanent records of the City. The Finance and Administrative Service focuses on responsible financial management and sustainable life- cycle management of the City's physical assets, including fleet, real estate, purchasing and materials management. Significant assets include IT & Equipment, Corporate Fleet, Corporate Facilities, General Machinery & Equipment and General Furniture & Fixtures. Results for each asset type is shown in Table 15. Table 1.5 - Corporate, Finance and Administrative Asset Quantities and Valuations Corporate Facilities 7 $9,256,273 $4,457,507 D+ Corporate Fleet 34 $1,330,078 $574,787 C- IT & Equipment 296 $4,029,910 $1,689,683 C - General Furniture & Fixtures 4 $465,086 $298,450 D+ General Machinery & Equipment 20 $276,508 $117,463 C Total $15,357,854 $7,137,891 C - W1191 2018 State of the Infrastructure Report April 29, 2019 Condition 50 of 67 Condition ratings represent the current state of physical repair and are often used as an indicator for the relative time until corrective action is required. Condition ratings for the City of Saint John's assets are rate on a 1 — 5 scale with 1 indicating an asset in Very Good condition, and 5 indicating an asset in Very Poor condition. The replacement value -weighted average condition for Corporate, Finance and Administrative is 3.46 out of 5.00 with assets generally being recognized as being in Fair to Poor condition. 53% of the City's Corporate, Finance and Administrative assets are in a Poor or worse condition, as shown in Figure 37. Figure 37 - Corporate, Finance & Administrative Condition Distribution Very Poor 47% 01 Very Good 13% Poor Fair 5% 7% Good 28% Results of the initial risk assessment suggest the Corporate, Finance and Administrative assets exhibit a "Low -Medium" risk profile. There are a small amount of assets (2% of the total asset valuation) in the "Extreme" risk category which should be investigated immediately. These high-risk assets are primarily composed of corporate facility components. A distribution of the total value of assets in each of the risk categories is shown in Figure 38. $8 $7 $6 �a $5 0 $4 Q $ s vy3 CC,Y $2 1.. 0 Figure 38 - Distribution of Corporate, Finance and Administrative Asset Risks Vnsignificani: I...ouv (Medium VIigh fExi:'enie Unknown Riislk Category SAINT IMIN 151 2018 State of the Infrastructure Report 51 of 67 April 29, 2019 A risk heatmap has been generated for Corporate, Finance and Administrative to demonstrate the relative timing and investment requirement for the category's assets. Assets on the left side of the x-axis are to be replaced in the short-term, while assets in the upper half of the y-axis are relatively higher risk assets. In summary, most investment requirements for Corporate, Finance and Administration are in the short- term, with relatively minor investments anticipated over the next 20 years. Most investments are low risk, with some higher risk assets interspersed. However, there are some assets in an Extreme risk category which should be investigated immediately. I 0 Figure 39 - Corporate, Finance and Administrative Risk Heatnnap $1,100,651 $23,324 „> en, tw r/ $101543,507 0, $532,870 201.8 2028 2038 Relpllaceirneint Year Long -Term Financial Forecast 0 $5 million O$2.5 million O $0.5 million O $0.1 million Results of Corporate, Finance and Administrative long-term financial forecast are shown in Figure 40. Corporate, Finance and Administrative has a current infrastructure deficit of $7.1 million and a sustainable funding requirement of $1.6 million per year. Projected capital funding levels (2020 — 2023) are $1.2 million per year. In total, this represents a funding gap of $0.4 million per year. Current funding levels would need to be increased by 33% to achieve sustainable funding. `W 2018 State of the Infrastructure Report 52 of 67 April 29, 2019 Figure 40 - Corporate, Finance and Administrative Long -Terns Financial Forecast Cc C1"bo1gc5 y?y XCa Ca Ca n4 Ca' C RC1 �G RC1 �G RC1' �GJ HCl may. 7y �4 Pear od Infrastructure Deficit Risk Category: ■LJnlcnown MVnsignificani: E31 ow ❑IModeraLe ❑high ■I.xircnle Confidence Band The confidence of the results presented for the Corporate, Finance and Administrative assets are recognized to mostly complete with limited accuracy. In summary, 60-80% of assets are estimated to be included and up to date asset parameter data is limited. Replacement costs are only based on an escalation of original acquisition costs and estimated useful life is assumed equal to the accounting amortization period. There are no major data quality differences between the 2018 and 2016 SOTI Report results. This is because both reports results are based on the City's Financial Tangible Capital Asset (TCA) Registry, without any review of historical records, only the additions and disposals of known assets. Figure 41 - Corporate, Finance and Administrative Confidence Band Accuracy Completeness `M 2018 State of the Infrastructure Report April 29, 2019 4. Conclusions 4.1. Summary of Results 53 of 67 The 2018 State of Infrastructure (SOTI) Report provides City staff, Council, and residents with a better understanding of the current state of infrastructure repair essential to the delivery of public services, as well a high-level understanding of the financial requirements to sustainably replace assets at the end of their useful lives. The 2018 version is the second iteration of the SOTI Report, building on the foundation established in the 2016 version. The following general conclusions are drawn from the results presented above: 1. The current replacement value of all City assets is $2.73 billion, while the infrastructure deficit (assets at or beyond its useful life) is $435 million (approximately 16% of the total asset valuation). 2. The City's assets are generally in a Good to Fair condition. However, roughly 19% (replacement - value weighted) of the City's assets are in a Poor or worse condition. 3. Overall, the City's assets are recognized as having a Medium degree of risk. However, there are over $97.3 million of assets (by replacement value) in the Extreme risk category. This total is primarily composed of water transmission mains. 4. The City is currently underfunding its infrastructure renewal requirements. Projected capital funding for 2020 — 2023 indicates an average annual funding of $26.0 million per year, while the sustainable funding requirement (funding needed to replace assets as they reach the end of their useful life and eliminate the current infrastructure deficit over a 100 -year period) is $59.9 million per year. This represents a funding gap of $33.9 million per year and the City would need to increase its annual funding contribution by 130% to achieve the sustainable funding level. 5. The City has earned a "C+" grade for the current state of infrastructure (considering both condition and risk). This letter grade indicates the City's infrastructure is in a Good to Fair state of repair. In general, most assets are expected to show signs of deterioration, with some elements exhibiting deficiencies which need to be addressed in the short term. Some assets are beyond repair and need to be replaced immediately. In summary, the City's assets are generally in a Good to Fair condition, while a significant number of the assets are in a Poor or Very Poor condition. The City is currently under -funding in its infrastructure renewal requirements and its ability to sustainably provide municipal services is expected to diminish as assets continue to further deteriorate. In the interpretation of the SOTI Report results, it is important to note the presented information is based on current, readily available data of the City's assets. The 2018 Report shows significant improvements in the confidence of information presented from the 2016 Report. However, many data gaps still exist, and it is expected results will continue to change as additional improvements in the completeness and accuracy of asset data are made. Generally, the City's asset data and information is relatively complete but many improvements in the accuracy of asset data can be made. Although the accuracy of information can still be improved, the general conclusions are suitable to provide guidance for strategic decision making related to the management of the City's assets. W151! 2018 State of the Infrastructure Report April 29, 2019 4.2. Comparing the 2016 and 2018 SOTI Reports 54 of 67 Results from the 2016 and 2018 SOTI Reports do vary significantly due to an improved asset inventory. A summary of differences from the 2016 and 2018 reports for Saint John Water and the General Fund are presented in Table 16. Table 1.6 - 201.6 to 201.8 SOTI Report Changes Total Replacement Val"7511',088 General Fund million $1,287 million7+5355 77 millionSaint John Water million $1,444 million million ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Infrastructure Deficit General Fund $219 million $121 million -$98 million Saint John Water $214 million $314 million +$99 million ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Extreme Risk Assets General Fund $51 million $22 million -$29 million Saint John Water $106 million $76 million -$30 million ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Letter Grade General Fund C B Improved Saint John Water ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. C- C+ Improved Sustainable Funding Requirement General Fund $42 million/yr $35 million/yr -$8 million/yr Saint John Water $27 million/yr $25 million/yr -$1 million/yr ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Projected Funding General Fund $19.1 million/yr $18.5 million/yr -$0.6 million/yr Saint John Water ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. $12.5 million/yr $7.5 million/yr -$5.0 million/yr Investment Gap General Fund $23.0 million/yr $16.1 million/yr -$6.9 million/yr Saint John Water $14.1 million/yr $17.8 million/yr +$3.6 million/yr ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Data Completeness General Fund Moderate Very High Improved Saint John Water ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. Low Very High Improved Data Accuracy General Fund Low Moderate Improved Saint John Water Low Moderate Improved As previously mentioned, the 2018 SOTI Report has made significant improvements in the quality and reliability of results presented. A summary of significant changes is presented below: • The 2016 SOTI Report relied solely on the data and information contained in the City's financial Tangible Capital Asset (TCA) Registry. The 2018 Report relies on a variety of information management systems found throughout the City (e.g. GIS, MicroPaver, ...). The data and information from these sources more accurately reflects the asset inventory. 2018 State of the Infrastructure Report April 29, 2019 55 of 67 • Replacement costs for the 2016 SOTI Report were estimated for each asset solely by escalating the original acquisition cost of an asset using the Canadian Consumer Price Index (CPI) to account for inflation. Assets in the 2018 SOTI Report rely on a combination of engineering experience, historical tenders and contracts, as well as escalating original acquisition costs. This combination of methods to estimate cost is much more accurate. • Estimated useful lives for the 2016 SOTI Report were assumed equal to an asset's amortization period. These often conservation (shortened) amortization -based estimated useful live estimates are to ensure an asset is fully amortized upon disposal. 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N N N I U LL • I (Y) Ln N E Ln I I I I Ln I Ln fu fu I fu I (Y) Ln N I I W I I 11 _ 2 _ A 11 q cy- q E -0 / r-� • _ E a_+ �J U N � 0 U u N � L LU N U � L (n }' Q N Z ■ r-� • a_+ U N � aA Q u v _0 O i N +j +j c}'n N • — z u r-� •, • AN N 2 FINANCE COMMITTEE REPORT Report Date May 24, 2019 Meeting Date May 29, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT. 4 Finance Committee Report 2020-2021 General Capital Budget. docx OPEN OR CLOSED SESSION This matter is to be discussed in open session of the Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Craig Lavigne Kevin Fudge/Cathy Graham John Collin RECOMMENDATION It is recommended that Finance Committee reflect upon the attached document and make any and all inquiries and recommendations to staff; and receive and file this report. EXECUTIVE SUMMARY The 2020 and 2021 proposed draft General Fund Capital Budgets will be the first multi-year capital budget being proposed to the Finance Committee for review. This multi-year budget is laying the foundation for the 10 year Capital Budget Plan that staff will bring to Finance Committee in Q4 of 2019. This draft budgets continue to focus on multiple priorities; such as the City's infrastructure deficit, environmental factors, safety and growth opportunities. The proposed list of individual projects concentrates on addressing multiple priorities. These budgets keep the emphasis on affordability and borrowing to a maximum of $12 million per year. The last five capital budgets have been passed with a City share of no more than $12 million and the long term debt for the general fund has seen a reduction due to this strategy. General fund debt was $119.3 end of 2014 and is down to $106.6 end of 2018. PREVIOUS RESOLUTION N/A Ki0IN -2 - STRATEGIC ALIGNMENT The proposed 2020 and 2021 proposed draft General Fund Capital Budgets are aligned with Councils' priorities, Capital Budget Policy, Asset Management Plan, Central Peninsula Neighborhood Plan, Play SJ, Move SJ, Plan SJ with a focus on growth. REPORT The 2020 and 2021 proposed draft General Fund Capital Budgets align with Council's priorities to support investment in creating a Vibrant, Safe City, offering Valued Service Delivery, Growth and Prosperity and being Fiscally Responsible. The budgets align with the Capital Budget Policy and the Asset Management Policy. The 2020 and 2021 proposed draft General Fund Capital Budgets total $41,996,400 over the 2 years with $20,009,250 to be funded from other sources and the remainder $21,987,150 to be funded by debt issue, City reserves and capital from operating. The budget has funding from federal gas tax fund, federal disaster mitigation adaptation fund and proposed bi-lateral (federal and provincial) funding. Almost half of the overall budget is coming from other sources. Bi -lateral funding expressions of interest are currently being received by the Province and the first round deadline for submission is June 28, 2019. If the City is not successful in obtaining, staff will come back to Finance Committee with a recommendation to reallocate City funds. 2020 and 2021 PROPOSED CAPITAL BUDGET HIGHLIGHTS The capital budget decision making was guided by the Capital Budget Policy, along with the Asset Management Plan. These documents assist in addressing the infrastructure deficit, while factoring in the needs replace existing assets with the need for new assets. It is aligned with Council Priorities and various City of Saint John plans, with Plan SJ being the overarching plan. Other factors in the decision making revolved around environmental consideration such as mitigation and reduction of greenhouse gas and focusing on growth areas. Capital Budget Policy guided staff in prioritizing the capital budgets based on the following criteria: 1. Mandatory 2. Risk 3. Priority of Council 4. Positive Financial Impact PIN:] -3- 5. Discretionary The capital budget is investing heavily in asset renewal in order to address the large infrastructure deficit identified in the State of the Infrastructure Report as part of the Asset Management Plan. State of the Infrastructure (SOTI) Report The General Fund infrastructure deficit was $121.4 million with an estimated replacement cost of $1.29 billion for those assets. The largest portion of the deficit identified relates to Transportation and Environment. The majority of projects being recommended as part of the capital budget have an "F" letter grade, as measured in the SOTI report, meaning the asset is at high risk of failure and near or beyond its useful life. Focus on Tax Base Growth Fundy Quay — The City was awarded a significant amount of funding from the Federal government through the Disaster Mitigation Adaption Fund (DMAF). This funding will split the almost $8.175 million dollar seawall refurbishment between the City ($4.905 million) and Federal Government ($3.27 million) over two years. This project is considered one the largest transformational projects the City is pursuing. The goal is to transform the City's waterfront, encourage development and create significant tax base growth opportunities for the City. The seawall project also involves raising the height of the wall. This will be key to future development. It will ensure development can happen on the site and deal with climate change events. Other strategic investments involve a storm project in Millidgeville for $1.0 million that will allow more storm water capacity which will enable more growth in that area of the City. Another area of focus will be a number of major street reconstruction and beautification projects along the St. James Street corridor. This area is a key part of the Central Peninsula Neighborhood Plan to encourage growth and these projects will invest $1.925 million in the St. James Street area. Balancing Infrastructure Replacement with Climate Change The proposed budget includes over $8.9 million in sewer separation projects. Much of this infrastructure due for replacement is from the 1800's and will involve complete street reconstruction. Sewer separation is a key component in dealing with climate change and the extreme weather events that occur with climate change. Wel -4 - The budget also includes $850K for replacement of infrastructure that is beyond its useful life with assets that will reduce our carbon footprint. These assets being replaced involve various energy efficiency projects, new exterior windows at the Canada Games Aquatic Centre, heat pump replacements at Harbour station, and HVAC upgrades at City Market pedway. Infrastructure Deficit The multi-year budget focuses on some assets that are past their useful life, assets at high risk of failure and assets that are considered extreme risk of failure. This would include new roofs at three of the City's fire stations at a cost of $200K, exterior and foundation work at Carleton Community Centre for $325K, replacing the roof at St. Patrick Street Pedway for $30K and replacing part of the roof at City Market for $700K. The annual street rehabilitation program that includes curbs and sidewalks will see a two year investment of $7.9 million dollars. This program has been a focus of Council for several years. The SOTI report and excellent grade mark shows that the reinvestment in roads has been a successful asset renewal program. There are limited resources being put into arenas until a comprehensive arena strategy is completed. However, there is a need to replace chillers at the Charles Gorman and Peter Murray Arena for a total cost of $200K. As well, the LBR requires replacement of its main electrical service for $100K and ice plant compressor for $75K. The Trade and Convention Centre requires several pieces of equipment replaced that are beyond its useful life and could have safety issues and impact business if the assets fail. Over 2020 and 2021, $261K will be allocated to replace flooring, banquet equipment, refrigeration, kitchen equipment, point of sale system and LED lighting upgrades. Harbour Station will be replacing a Zamboni for $115K to ensure two reliable Zamboni's are on sight as required by the Quebec Major Junior Hockey League. Canada Games Aquatic Centre will require $150K in addition to replacing the exterior windows. The facility needs to replace a fire panel, install new shut off valves, install controls for domestic hot water usage, replace gym equipment that is well past useful life as well as interior work such as tile replacement in various areas. The City's Information Technology department will replace $1.67 million of equipment over two years as part of its annual equipment replacement program and this money is all funded from internal reserves. The department will be leading the project to replace its 20 year old enterprise reporting system for $3.0 million over two years. This will be a transformational project for all service P49191 -5 - areas in the City and will require a significant amount of planning, testing and resource requirements to make it successful. This will be a major first step to enable the City to offer more technology based solutions for citizens. Parking commission is continuing to move forward with replacing its aging parking machines with more up to date pay by plate machines and will invest $226K over the next two years. Saint John Transit is focused on replacing several bus shelters that are deemed to be safety concerns for a total of $50K. Fleet will budget $4.13 million over two years to replace vehicles and equipment that are past useful lives and with high operating cost. These funds will come from the vehicle reserve. Council will receive a detailed list of vehicles and equipment to approve as the replacement list is compiled. New Capital Investments/Service Enhancements The proposed 2020 and 2021 has a total of $1.014 million for new capital. The last payment towards the Exhibition Field House will be made for $564K in 2020. Also, Harbour Station must upgrade its dasher board and glass system at a cost of $450K to meet requirements of the Quebec Major Junior Hockey League. CONCLUSION Planned capital expenditures total $41,996,400, with $20,009,250 is to be funded from other sources over two years (gas tax, reserves, government funding etc.) and the remainder $21,987,150 funded through debt and capital from operating over two years. The annual funding from other government programs, along with Council's fiscal restraint, has helped reduce projected borrowing costs while still investing in needed infrastructure improvements. This multi-year budget is the first step in the long term capital plan which will guide decision making to ensure strategic reinvestments are being made, at the right time, that infrastructure deficit in being addressed, fiscal responsibility is being maintained, while ensuring the City continues to invest in assets to encourage growth. SERVICE AND FINANCIAL OUTCOMES The City's share of the 2020 and 2021 Proposed Draft General Fund Capital budget will be funded from capital from operating with the balanced being borrowed. The projects chosen for the capital program borrowing have a useful life of approximately 15 years or more. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input has been received from all Service Areas, the ABCs, and Senior Leadership Team. 231 -6 - ATTACHMENTS Exhibit 1— 2020 and 2021 Proposed Draft General Fund Capital Budget M— m W N a ~ 0 0Ln 0 0 o Oo U Ln O LLI O lD lD lD to �Ln Ln Ln Ln W Q N N N N � � = M r -I N D m in• tn• tn• tn• tn• -Ln- OC O O O O O O O O W O O O O O O O O 2 C Ln O M ro M O n O OO W On O O lD lD to O O W Z O O M C7 N D m in• tn• �/} tn• tn• tn• tn• tn• c N tlA to a nA L O N np 71 Ln O Q1 +� +� N N ro N N c 3 U +� t6 +O O � N N U O N O �i N m cn 1 U LL pro cn ro +' LL N co N O p m E •� x ro ro =+, E U Y O cn N+, N N u uN - a ro ro a 4- -- ro v o — a co � +, m - O p 00 N � j + O C7 v O O v Z Ln co o LL v c +,ro bz o+ v v �i O c N O CX6 ro U E N U O +, O M Q U N t6 X > t6 _ ro N LJJ LO M — N Q N N ro (U Ln cL.L ro Ln Lnro ro ro CL p C7 oC �� (n N 06 � � � i Q � +- N � N W cn c N N N O � LL ?� cn � O 06 N LL O � � 06 +' N to co + N cn O 0 ro LO O 00ro N f6 ro Q +1 Q � � � ro N > L Co a N N N L 4- U +-j N N +' (n N N N Ln Q +'' N a v C 0 a N" +-' a LO N N U _ U O LO N � N N N Q d N t1A ro O N p0 N N E O N N — O ro In N a--� N N J ro S Ln L Ln Ln L zc> c> c> c> c> c> c> c> c W O N O N O N O N O N O N O N O N O N +, Ln +, to +, LO +, LO +, LO +, LO +, LO +, LO +, cn ro ro ro ro ro ro ro +-j ro +-j ro +-j Q QQQQ E E E E Q E Q E Q E Q E Q E a N c c c c C C C C C: W CO O O O O O O O O ro ro ro ro ro ro ro ro fro i r r r r r r r r LU w w w w w w w w N N U Co N W O O O O O O O O Qc% c% c% c% c% c% c% c% °6 v Y co a M— m W N a N (� aj N a 0 0 0 0 0 0 0 U O Ln W O O lD N 01 OC r1 O O 00 lD 00 00 to W Ln O N Ln � � rN-I Q N N m v% to to to to -Lr)- -Lr)- -Ln- O O O O O O O O W O O O O O O O O Ln Om ro n O 0O W C r -I M r -I lD O OLn ro r14 ON W= r I n Ln r1 r1 M r I C7 N D m in 'v%• t/� tn tn tn tn tn a- c fro a-•� O c�i� f6 O �O N � f6 N +- O 1 co nA U� +� N u i +, N 0 4- +� 3 i ci N c O to N N—j m N W N CO 4- } 00 O O LO LOW N 0 f6 + LO Lo N O N qA N 06 x p � +� a ro C 0 � � � + (U u N N O O � v — g ° v ro Y v Z tlA ro Q U fNo (J nA U +� CiA +' c+i� O v N X � j to O U v o Cr6Ln co > LO c v +' > O O c w O c O W nA N ro a cn N W c0 L c0 ro +� = U a v N W W a U .� LO L C7 co LO ro co ro N W Ln N N OC > cn N W c co N N � v O � N W N � N O W 06 U O 06 � + � 06 O � v cn v N > (U1 m m N m N a O N 3: C6 a N O a' a' N N N L N i1 +� +� +� +' N N N N L a O O N OOC N a� LO N N +' N O N > } Ln Ln (n � a-� N Ln v a' a i W O a i E 'ro N O +� N cn C Q fo O Ln O O ( N JO N CO a N L v +, N V N L v v U co cn +� LO (� o ( C7 > � ULn Ln 06 .Y 06 .Y 06 .Y 06 .Y 06 .Y 06 .Y 06 .Y 06 .Y 06 .Y z O N O N O N O N O N O N O N O N OW N -Z- LO Ln LO LO LO LO LO LO cn fo+� fo +� fo +� fo +� fo +� fo +-jfo +-jfo +-jfo +-jH i +, +, +,+, +, C: C: +-j C i C Q Q E QQQ E E E Q E Q E Q E Q E Q E a N c c c c C C C C C: W CO O O O O O O O O fo fo fo fo fo fo fo fo fro i r r r r r r r r W W W W W W W W W O O O O O O O O O l9 L O O O O O O O O W H N Q Q Q Q Q Q Q Q U cro cro cro cro cro cro cro cro N (� aj N a UO yLI 0 Ln N 0 O 0 O Lr 0 O O 0 O O 0 O O 0 O O 0 O O 0 O O 0 O O 0 O O 0 O O 0 O O ' OC _ L Q c N 00 N r -I O O M N Ln N O O O to O 00 Ln I- Ln r" O O Ln N Ln ri O lD O Ln N D m t/)- t/)- t/)- t/)- -L� t/)- t/) - 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N c .V c .V N N ~ a-•' a-•' a-•' N U i i a- ro LL -0 u LL T-4 LL fo LL fo fo Q (U O O C14 O to O Q a c O c O c O -0 v c LO ro O Q E C:Ln� Q E N c O N W •t1A •tlA •tlA f6 fo O f6 O m •t1A o�c o�c o�c v c O °C co W W F L.L O O O O +, fr6 O i O i O iU O+1 N H C�6 ~ C6 N ui U W O U O O O QU U co co co ro N -0 N -0 (U -0to E co to = tro fro fro 0 Ln N O Ln 00 00 O rl Vj- za 4-+ 0) M� W Q m u C 3 LL m L O c rl N O N m O F N a FINANCE COMMITTEE REPORT Report Date May 24, 2019 Meeting Date May 29, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: 2020 -2021 Proposed Draft Utility Fund Capital Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head+Jcci ty Manager Craig Lavigne Brent McGovern hnCollin RECOMMENDATION It is recommended that Finance Committee reflect upon the attached document and make any and all inquiries and recommendations to staff; and receive and file this report. EXECUTIVE SUMMARY The Utility is proposing a very limited multi-year capital budget for 2020 - 2021 that focuses on leveraging monies from other levels of government for investments being made by the Utility. Debt associated with the Safe, Clean Drinking Water Project (SCDWP) and Harbour Clean-up, limited growth, a large infrastructure deficit and rates that have increased are challenges facing the Utility for both the medium and long term. A new rate structure to be completed in 2019, along with the Long Term Financial plan to be completed in 2019 will provide the road map for the Utility to deal with these challenges. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The proposed 2020 - 2021 Utility Fund Capital Budget is aligned with Councils' priorities, Asset Management Plan, Capital Budget Policy the Central Peninsula Neighbourhood Plan and in addition the budget prepares the Utility for challenges associated with climate change. Q, Iya -2 - REPORT The proposed 2020 - 2021 (2 year) Draft Utility Capital Budget is a total of $26,215,000. Funding from other sources, (Gas tax and other government funding) is $15,931,500 over two years and Saint John Water's share is $10,283,450 over two years and will be funded from pay as you go (no borrowing). The completion of the Safe, Clean Drinking Water Project and Harbour Clean-up has caused the Utility's long term debt to peak at just over $107 million at the end of 2017 (2018 - $101 million). The Utility will continue to focus on debt reduction and in order to achieve this the Utility will not borrow any money for its 2020 or 2021 capital program, focusing instead on stretching every ratepayer dollar invested by seeking funding support from others for essentially all projects. This significant debt coupled with escalated rates and stagnant growth will be challenging for the Utility as it tackles the infrastructure deficit. The deficit as reported to Council as part of the State of the Infrastructure report is approximately $313.6M which represents over 75% of the City's infrastructure deficit. The Utility received funding recently as part of the Federal Government's Disaster Mitigation Adaptation Fund (DMAF) and National Disaster Mitigation Program (NDMP). The Utility will spend approximately $10.2 million over the next 5-6 years raising and rebuilding critical infrastructure that was prone to flooding. The cost will now be spilt $4.084M Federal Share and $6.126M utility share. The completion of the rate study in 2019, along with the Asset Management Plan and Long Term Financial plan will guide the Utility's decision making around asset replacement and how to fund the infrastructure deficit to ensure services are reliably provided to rate payers while balancing the ability to fund more investments in infrastructure renewal. Infrastructure Renewal — Water and Sanitary The proposed budget focuses on assets that are well past their useful life, subject to risk of failure and in some cases extreme risk of failure with severe consequences such as the One Mile Life Station. There are several proposed street rebuild projects that are included in the budget and most of these projects involve the general fund. These projects have assets underground and are at a high risk of failure due to their age and material type. Numerous streets within the draft program have terra cotta sanitary -3 - sewers, much of which were installed between 1876 and 1895 and cast iron watermain installed in the early 1900s. The total capital for the Utility on street rebuilds is approximately $7.8 million over two years and some of these street sections include; Wentworth Street, Germain Street, Lower Cove Loop, Waterloo Street, Celebration Street, Princess Street, Peters Street, Brittain Street, Pitt Street, Rodney Street and St. James Street. These street reconstructions are located in the primary development area (PDA). St. James Street, Germain Street and Charlotte Street are prime examples of leveraging assets that need to be replaced and aligning with the City's priority of growth. St. James Street for example was listed on the Central Peninsula Neighborhood Plan as key corridor and this transformational project will be coordinated between; Transportation, Water, Growth and Community Development and Develop SJ. Additional projects that benefit both the Utility and supports the growth and development of Saint John are the Lakewood Heights and Millidgeville Sanitary Systems projects. These projects are geared towards asset imrpovements to allow for more growth and development while maximizing the use of existing infrastructure and lowering costs for all. These projects create capacity on the system for growth initiatives without having to build new infrastructure — a best use of assets. The budget also includes phase seventeen and eighteen of watermain cleaning and lining that will continue to extend the life of these assets and improve water quality for citizens serviced by them while minimizing the need for investment by lining as opposed to replacing. There is also structural lining of sewers in both years and this will also extend the life of these assets. There is a major investment being made at the One Mile Lift Station in 2020. The existing lift station is at the end of its life and needs to ensure there is reliability around the collection of wastewater. There are two other wastewater lift stations at Greenhead Road and Beach Crescent that not only need to be rebuilt, these stations will also be raised to ensure they can withstand future flood events and these projects have received funding under the DMAF program. The other major project under the DMAF program in this multi-year budget is the complete upgrade and reconstruction of the Musquash Water Pump Station. This asset will also be rebuilt to ensure flood proofing. The budget also includes a fleet replacement program for any vehicles and equipment past its useful life or with extraordinary operating costs. In previous -4 - years the Utility funded its fleet reserve directly to the General fund fleet reserve and all vehicles and equipment were funded from that reserve. These reserves have now been separated to ensure each entity is properly segregating its reserves. The budget only includes one new asset which is a wastewater pumping station at Prospect Street West and this is to ensure all residential wastewater is properly being directed for treatment at the Lancaster Lagoon treatment plant. Conclusion The 2020-2021 budgets are focused on leveraging as much additional funding the Utility can secure with its smaller capital from operating program. Projects identified are long past their useful life and have a high risk of failure. There are several projects that are asset renewal that are being done to replace or extend the life of the asset but also have a positive impact on growth. The 2020 - 2021 Draft Utility Capital budget will continue to focus on ensuring assets can provide reliable services to all customers, meet environmental regulations and mitigate against future climate change events. SERVICE AND FINANCIAL OUTCOMES The 2020 - 2021 Utility Fund Capital budget will be funded from the operations (pay as you go) and from other sources of funding with no new borrowing proposed. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input and coordination was received from Engineering, Senior Leadership Team, Growth and Community Development, Finance, Transportation and Environment and Develop SJ. ATTACHMENTS Exhibit 1 - 2020 - 2021 Proposed Draft Utility Capital Budget Prc� �s� rc�r Sal Iry Fc�r Category No. of Other Utility Total Projects Share Share Industrial Water Renewal - West 1 $1,020,000 $1,700,000 $2,720,000 Infrastructure Renewal - Sanitary 13 $6,938,450 $1,546,550 $8,485,000 Infrastructure Renewal - Water 13 $2,551,200 $1,873,800 $4,425,000 TOTALS: 27 $10,509,650 $5,120,350 $15,630,000 Infrastructure Renewal - Wate r 36.6% Infrastructure Renewal - Sanitary 30.2% lustrial Water Renewal - West 33.2% MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share * Musquash Water Pump Musquash Upgrade/reconstruction - appropriate pump 1,020,000 1,700,000 Station sizing, electrical upgrades, flood proofing, etc. Including design and construction management services. Phase A. Project to be partially funded under DMAF. TOTAL: $1.020.000 $1.700.000 MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council. G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share G&D * Germain Street St. James Street to Lower Cove Renew 100 m of 375 mm T.0 sanitary sewer 105,850 39,150 Loop (with an in service year of 1884), including design and construction management services. Subject to successful funding under Bilateral Funding. G&D * Lower Cove Loop Charlotte Street to Germain Install 150 m of 525 mm sanitary sewer, 248,200 91,800 Street including design and construction management services. Subject to successful funding under Bilateral Funding. * One Mile Lift Station Rothesay Avenue at Russell New pumping station, new screening channel 5,000,000 0 Street structure and associated building to replace the existing pumping station that is at the end of asset life to provide for relible collection of wastewater, including design and construction management services. Project to be funded under the G.T.F. Structural lining Various Locations Structurally line and point repairs to sanitary 0 225,000 sewers, including design and construction management services. * WWPS Lift Station C 515 Green Head Road Reconstruct lift station above flood level to 200,000 300,000 provide for reliable collection of wastewater, including design and construction management services Project to be partially funded under DMAF. * Douglas Avenue Civic 399 to 425 Install approx. 150m of 200mm and 27m of 300,000 25,000 150mm sanitary sewer, including land, design, and construction management services. Project to be partially funded under G.T.F. Wastewater Pumping Prospect Street West at Walnut Pumping station, land acquisition, and required 0 520,000 Street piping to direct flows to sewer on Main Street West for treatment at the Lancaster Lagoon, including construction management services. * Wentworth Street Elliott Row through King Street Renew 90 m of 300 mm T. C. sanitary sewer 83,950 31,050 East Intersection (Condition Grade of 4 with a year in service of 1867), including construction management services. Subject to successful funding under Bilateral Funding. * Waterloo Street Haymarket Square to Castle Renew approx. 330m of 300mm and 375mm 299,300 110,700 Street T.C.sanitary sewer ( Condition Grade of 5 with a in service year of 1869), including design and construction management services. Subject to successful funding under Bilateral Funding. MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project * St. James Street * Celebration Street Location Description Other Share Prince William Street to Renew 111 m of 250mm and 375 mm T.C. 94,900 Germain Street sanitary sewer (Condition Grade of 3.5 with an in service year of 1876), including design and construction management services. Subject to successful funding under Bilateral funding. Stanley Street to end Renew 100 m of 375mm and 450mm T.C. 150,000 sanitary sewer, including design and construction management services. Project to be funded under the G.T.F. Utility Share 35,100 * Broadview Avenue Charlotte Street to Carmarthen Renew 275 m of 375 mm T.C. sanitary sewer 237,250 87,750 Street (Condition Grade of 4 ), including design and construction management services. Subject to successful funding under Bilateral Funding. * Princess Street Wentworth Street to Crown Renew approx. 250m of 225mm and 300mm 219,000 81,000 Street T.C. sanitary sewer (Condition Grade of 5 with an in service year of 1893), with new 200mm and 300mm sanitary sewer, including design and construction management services. Subject to successful funding under Bilateral Funding. TOTAL: $6.938.450 $1.546.550 MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council. G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Infrastructure Rl - Water Project Location Description Other Utility Share Share * Fleet Replacement Various locations Fleet Replacement for Saint John Water. 485,000 0 Project to be funded under Fleet Reserve. G&D * Germain Street St. James Street to Lower Cove Renew 100 m of 200 mm C.I. watermain 87,600 32,400 Loop (1955), including design and construction management services. Subject to successful funding under Bilateral Funding. G&D * Lower Cove Loop Charlotte Street to Germain Install 150 m of 200 mm watermain, including 131,400 48,600 Street design and construction management services. Subject to successful funding under Bilateral Funding. Removal of cross- Ocean Westwest / Route 7 Removal of two cross- connections on Potable 0 150,000 connections on Potable Overpass Water and Raw Water Transmission mains, Water and Raw Water including construction management services. Transmission mains Engineering Various locations Funding for engineering investigations and 0 250,000 Investigations and Design design for various projects under the Water and Sanitary categories. * Wentworth Street Elliott Row through King Street Renew 90 m of 300 mm C.I. watermain (1931), 124,100 45,900 East Intersection including construction management services. Subject to successful funding under Bilateral Funding. * Waterloo Street Haymarket Square to Castle Renew approx. 330m of 300mm C.I. watermain 434,350 160,650 Street (1856), including design and construction management services. Subject to successful funding under Bilateral Funding. * St. James Street Prince William Street to Renew 110 m of 250 mm C.I. watermain 120,450 44,550 Germain Street (1876), including design and construction management services. Subject to successful funding under Bilateral funding. Hayes Avenue Area Civic #289 Gault Road to Civic Install approx. 530m of 200mm watermain on 0 950,000 #484 Gault Road Gault Road as well as a PRV to connect the Hayes Avenue system, including construction management services. * Celebration Street Stanley Street to end Renew 100 m of 3 00m C.I. watermain, 150,000 including design and construction management services. Project to be funded under the G.T.F. * Broadview Avenue Charlotte Street to Carmarthen Renew 275 m of 150 mm C.I. watermain 219,000 81,000 Street (1917), including design and construction management services. Subject to successful funding under Bilateral Funding. MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share * Princess Street Wentworth Street to Crown Renew approx. 275m of 250mm C.I. (1924) 299,300 110,700 Street watermain, including design and construction management services. Subject to successful funding under Bilateral Funding. * Watermain Cleaning and Various locations Cleaning and lining of existing unlined C.I. 500,000 0 Lining Phase 17 watermains to improve pressure, water quality, and fire flows. Project to be funded under G.T.F. TOTAL: $2.551.200 $1.873.800 Pr1 Category No. of Other Utility Total Projects Share Share Industrial Water Renewal - West 1 $1,020,000 $1,700,000 $2,720,000 Infrastructure Renewal - Sanitary 13 $2,347,450 $2,422,550 $4,770,000 Infrastructure Renewal - Water 11 $2,054,450 $1,040,550 $3,095,000 TOTALS: 25 $5,421,900 $5,163,100 $10,585,000 Infrastructure Renewal - Wate r 20.2% Industrial Water Renewal - West 32.9% Infrastructure Renewal - Sanitary 46.9% MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share * Musquash Water Pump Musquash Upgrade/reconstruction - appropriate pump 1,020,000 1,700,000 Station sizing, electrical upgrades, flood proofing, etc. Including design and construction management services. Phase B. Project to be partially funded under DMAF. TOTAL: $1.020.000 $1.700.000 MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share G&D * Charlotte Street St. James Street to Lower Cove Renew 155 in of 525 mm Concrete sanitary 171,550 63,450 Loop sewer (With an in service year of 1965), including design and construction management services. Subject to successful funding under Bilateral Funding. * Garden Street Coburg Street to City Road Renew approx. 101m of 300mm, and 86m of 156,950 58,050 375mm T.C. sanitary sewers (Condition Grade of 3), including design and construction management services. Subject to successful funding under Bilateral Funding. G&D Lakewood Heights East of Hickey Road Pumping Line concrete sewers to eliminate 0 720,000 Sanitary System Station Inflow/Infiltration in the Sanitary sewer system, including construction management services. Rodney Street Market Place to Watson Street Renewal of approx.290m of T.C., Brick, and 0 410,000 Concrete saintary sewer (Condition Grade of 3), including design and construction management services. Structural lining Various Locations Structurally line and point repairs to sanitary 0 225,000 sewers, including design and construction management services. * WWPS Beach Crescent 11 Beach Crescent Reconstruct lift station above flood level to 340,000 510,000 provide for reliable collection of wastewater, including design and construction management services, Phase A. Project to be partially funded under DMAF. * Pitt Street St. James Street to Broad Street Renew 155m of 370mm T.C. sanitary sewer 127,750 47,250 (Condition Grade of 4), including design and construction management services. Subject to successful funding under Bilateral Funding. * Mecklenburg Street Wentworth Street to Crown Renew approx. 265m of 600mm concrete with 248,200 91,800 Street new 600mm sanitary sewer (Condition Grade of 2.5), including design and construction management services. Subject to successful funding under Bilateral Funding. * Combined Sewer South / Central A strategy prioritizing the separation of 365,000 135,000 Separation Reduction combined sanitary and storm sewers for the Strategy - South / Central Southend and giving an estimate for budget purposes. One of the deliverables would be maps showing all existing sewers (storm, sanitary and combined) with proposed new sewers for separation. Subject to successful funding under Bilateral Funding MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share * St. James Street Germain Street to Sydney Street Renew 195 m of 300mm and 375 mm T.C. 164,250 60,750 sanitary sewer (Condition Grade of 4 with an in service year of 1878), including design and construction management services. Subject to successful funding under Bilateral funding. G&D * Retail Drive Area Rockwood Avenue to Gull Street Renew 275 m of 450mm sanitary sewer, 500,000 including design and construction management services. Project to be funded under the G.T.F. * Britain Street Pitt Street to Wentworth Street Renew 145 m of 300 mm T.0 sanitary sewer 116,800 43,200 (Condition Grade of 4 with a year in service of 1875), including design and construction management services. Subject to successful funding under Bilateral Funding. * Peters Street Waterloo Street to Coburg Street Renew approx. 190m of 300mm, and 375mm 156,950 58,050 T.C. sanitary sewers (Condition Grade of 2.5 with an in service year of 1889), including design and construction management services. Subject to successful funding under Bilateral Funding. TOTAL: $2.347.450 $2.422.550 MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council. G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Infrastructure Rl - Water Project Location Description Other Utility Share Share G&D * Charlotte Street St. James Street to Lower Cove Renew 75 m of 200 mm C.I. watermain (1965), 69,350 25,650 Loop including design and construction management services. Subject to successful funding under Bilateral Funding. * Fleet Replacement Various locations Fleet Replacement for Saint John Water. 485,000 0 Project to be funded under Fleet Reserve. * Garden Street Coburg Street to City Road Renew approx. 258m of 200mm C.I. 208,050 76,950 watermain, including design and construction management services. Subject to successful funding under Bilateral Funding. Rodney Street Market Place to Watson Street Renew approx. 295m of 300mm C.I. 0 345,000 watermain, including design and construction management services. Engineering Various locations Funding for engineering investigations and 0 300,000 Investigations and Design design for various projects under the Water and Sanitary categories. * Pitt Street St. James Street to Broad Street Renew 155m of 200 mm C.I. watermain with 124,100 45,900 200 mm watermain, including design and construction management services. Subject to successful funding under Bilateral Funding. * Mecklenburg Street Wentworth Street to Crown Renew approx. 265m of 200mm C.I. 211,700 78,300 Street watermain, including design and construction management services. Subject to successful funding under Bilateral Funding. * St. James Street Germain Street to Sydney Street Renew 230 m of 200 mm C.I. watermain 182,500 67,500 (1878), including design and construction management services. Subject to successful funding under Bilateral funding. * Britain Street Pitt Street to Wentworth Street Renew 145 m of 200 mm C.I. watermain 116,800 43,200 (1934), including design and construction management services. Subject to successful funding under Bilateral Funding. * Peters Street Waterloo Street to Coburg Street Renew approx. 190m of 200mm watermain, 156,950 58,050 including design and construction management services. Subject to successful funding under Bilateral Funding. * Watermain Cleaning and Various locations Cleaning and lining of existing unlined C.I. 500,000 0 Lining Phase 18 watermains to improve pressure, water quality, and fire flows. Project to be funded under G.T.F. MDH: MUNICIPAL DESIGNATED HIGHWAYS PDH: PROVINCIALLY DESIGNATED HIGHWAYS RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects. w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council, G&D: PROJECT IS FOR GROWTH AND DEVELOPMENT Priority assignments are subject to change at any time. *: PROJECTS DEPENDANT ON FUNDING FROM OTHERS Project Location Description Other Utility Share Share TOTAL: $2.054.450 $1.040.550 COUNCIL REPORT M&C No. 2019-129 Report Date May 24, 2019 Meeting Date June 03, 2019 Service Area Finance and Administrative Services His Worship Mayor Don Darling and Members of Common Council SUBJECT: Greening Our Fleet Policy FAS -010 OPEN OR CLOSED SESSION This matter is to be discussed in open session of Common Council. AUTHORIZATION Primary Author(s) Commissioner/Dept. Head Acting City Manager Kevin Loughery Kevin Fudge/ Ian Fogan John Collin RECOMMENDATION Be it resolved that: Finance Committee recommends that Common Council approve the attached City of Saint John Greening Our Fleet Policy Statement FAS -010; EXECUTIVE SUMMARY It is recommended that Common Council approve the Green Our Fleet Policy Statement for the City of Saint John. "Whereas, the City of Saint John recognizes that unnecessary vehicle and motorized equipment idling and longhauling wastes fuel and generates needless harmful emissions, and Whereas, the City of Saint John recognizes its responsibility to the public to implement fuel efficient practices, conserve natural resources, prevent air pollution, and improve environmental performance and be environmentally conscious; The aim of this Policy is to reduce greenhouse gas emissions (GHGs), other air pollutants and fuel consumption resulting from the operation of fleet vehicles and motorized equipment, implement and promote energy conservation and awareness, improve environmental performance, and reduce maintenance requirements and fuel costs." PREVIOUS RESOLUTION P491:3 -2 - Not applicable. STRATEGIC ALIGNMENT This report aligns with Council's Priority for Valued Service Delivery, specifically as it relates to investing in sustainable City services and municipal infrastructure. SERVICE AND FINANCIAL OUTCOMES The adoption of the Green Our Fleet Policy will reduce greenhouse gas emissions (GHGs), other air pollutants and fuel consumption resulting from the operation of fleet vehicles and motorized equipment, implement and promote energy conservation and awareness, improve environmental performance, and reduce maintenance requirements and fuel costs. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Staff from Corporate Services, Finance and Administrative Services, Protective Services (Fire) and Saint John Water have reviewed this report and support the recommendations being put forth. ATTACHMENTS Greening Our Fleet Policy FAS -010 Greening Our Fleet Presentation 18401 GREENING OUR FLEET CITY OF SAINT JOHN POLICY STATEMENT POLICY SECTION: FINANCE AND ADMINISTRATIVE SERVICES POLICY STATEMENT Whereas, the City of Saint John recognizes that unnecessary vehicle and motorized equipment idling and longhauling wastes fuel and generates needless harmful emissions, and Whereas, the City of Saint John recognizes its responsibility to the public to implement fuel efficient practices, conserve natural resources, prevent air pollution, and improve environmental performance and be environmentally conscious; The aim of this Policy is to reduce greenhouse gas emissions (GHGs), other air pollutants and fuel consumption resulting from the operation of fleet vehicles and motorized equipment, implement and promote energy conservation and awareness, improve environmental performance, and reduce maintenance requirements and fuel costs. K091 Subject: Fleet Management Policy No.: FAS -010 Effective Date: 2019-06-04 Area(s) this policy applies to: Fleet Management and Operations Related Instruments: Fleet Policv — FAS -009 Revision History: Contact: Telephone: Email: Title: Greening Our Fleet Policy Category: Policy M&C Report No.: 2019-129 Next Review Date: (3 years) 2022-06-03 Office Responsible for review of this Policy: Administrative Services / Fleet Division Policy Sponsor: Commissioner Finance and Administrative Services Document Pages: This document consists of 4 pages. Common Clerk's Annotation for Official Record I certify that the —Insert Title -Policy Statement was adopted by resolution of Common Council on Month -Day -Year. I certify that the —Insert Title -Policy was approved by the City Manager on Month -day -Year Common Clerk Date K -q TABLE OF CONTENTS 1. POLICY STATEMENT.....................................................................................................................2 2. SCOPE...........................................................................................................................................2 3. LEGISLATION AND STANDARDS...................................................................................................2 4. ROLES AND RESPONSIBILITIES.....................................................................................................2 5. MONITOR AND REVIEW...............................................................................................................3 6. IMPLEMENTATION.......................................................................................................................3 7. AUTHORIZATION.......................................................................................................................... 3 8. RESOURCES.................................................................................................................................. 3 9. PROCEDURES................................................................................................................................3 10. GLOSSARY...................................................................................................................................4 11. INQUIRIES...................................................................................................................................4 12. APPENDICIES..............................................................................................................................4 1 KIM 1. Policy Statement: Whereas, the City of Saint John recognizes that unnecessary vehicle and motorized equipment idling and longhauling wastes fuel and generates needless harmful emissions, and Whereas, the City of Saint John recognizes its responsibility to the public to implement fuel efficient practices, conserve natural resources, prevent air pollution, and improve environmental performance and be environmentally conscious; The aim of this Policy is to reduce greenhouse gas emissions (GHGs), other air pollutants and fuel consumption resulting from the operation of fleet vehicles and motorized equipment, implement and promote energy conservation and awareness, improve environmental performance, and reduce maintenance requirements and fuel costs. 2. Scope: This Policy applies to the entire fleet of vehicles and motorized equipment in use by The City, whether owned, rented or leased for use by employees of The City in the performance of their duties and the delivery of services. 3. Legislation and Standards: The following City of Saint John Policy and / or Standard Operating Procedures are related to this Policy: City of Saint John Fleet Policy City of Saint John Safety Policy City of Saint John Corporate GHG & Energy Action Plan City of Saint John Asset Management Policy 4. Roles and Responsibilities: 1. Fleet Services Administration of the "Greening Our Fleet" Policy shall be the direct responsibility of the Operations Manager of the Fleet Services Division of Finance and Administrative Services. 2. Service Areas The day to day administration of this Policy shall rest with the supervisory and management staffs of all departments which operate vehicles and motorized equipment in the course of delivering services to the public or in support of other front line service areas. 3. Employees Q-91 K Serve as asset stewards and shall adhere to applicable laws and regulations, as well as to Fleet Management and Safety Policies of The City, including the requirements of this "Greening our Fleet" Policy Document. 5. Monitor and Review: This policy will be reviewed every 3 years, and as determined by the City Manager. 6. Implementation: Fleet Services will work directly with Human Resources to: Integrate the "Greening Our Fleet" Policy into the orientation of all new permanent or temporary employees, and to; Communicate the "Greening Our Fleet" Policy to employees in general through the 5*22 Safety Management System, as well as through On Job Training (OJT) and Career Field Training Programs, and through established corporate networks, including SharePoint and InfoCenter. 7. Authorization: This Policy shall be authorized by the City Manager pursuant to a resolution of Common Council approving the associated "Greening Our Fleet" Policy Statement. 8. Resources: This Policy was developed with the advice and assistance of Corporate Services, Finance and Administrative Services, Protective Services (Fire), Saint John Water and consulted general fleet policies and best practices utilized by other municipalities across Canada, including but not limited to Vancouver, Calgary, Guelph, Halifax, Charlottetown, Fredericton and Moncton. 9. Procedures: To ensure a consistent approach to the "Greening Our Fleet" Policy, all employees operating a City vehicle or motorized equipment must adhere to the following limitations: 1. Vehicles and motorized equipment shall never be left idling when unattended. 2. Engine warm-up periods will not exceed three (3) minutes (provided required airbrake pressure and/or other critical settings have been reached). 3. Vehicles and motorized equipment will be shut off whenever idling time is expected to exceed three (3) minutes. 4. Employees are to take the most direct safe route to their destination. Vehicles are not to be utilized for longhauling. As with all Policies there will be some situations or conditions which are not conducive to the implementation of the above limitations. The following exceptions to this Policy have been identified and exist only under the following circumstances: 3 1. For vehicle and motorized equipment maintenance and diagnostic purposes; 2. During periods of extreme temperatures (below -10 and above 27 Celsius) or any other time when the health and safety of employees or others may be jeopardized; 3. If the vehicle or motorized equipment is not expected to be able to restart due to mechanical problem (this situation must be reported to Fleet Services immediately.); 4. Emergency response vehicles and motorized equipment while on the scene of an emergency or during training sessions; 5. Support vehicles and motorized equipment while on the scene of an emergency and while actively involved in a support function; 6. When the operation of vehicles and motorized equipment is required to power auxiliary equipment (e.g. hoist, lift platform, hydraulic tools, power inverters, electronic equipment, etc.). Periodic audits, as often as required, of vehicle and motorized equipment use will be performed by both Fleet Services and/or Service Area supervisory and management staff to ensure adherence to the "Greening Our Fleet" Policy. Employees may be subject to coaching and/or discipline for violations of this Policy Document. The Greening our Fleet Policy provides essential support for forward-looking leadership strategy and responsible, community -centered Fleet Management practices in the 21st Century. 10. Glossary: Fuel: any energy source, usually gasoline, diesel, propane or natural gas, consumed via the operation of a vehicle or motorized equipment. Idling: the act of running an engine while a vehicle is stationary or motorized equipment while it is not performing work. Motorized Equipment: any self-powered/person operated equipment used in support of municipal operations and services (i.e. lawn mowers, boat engines, bush cutters, etc.). Longhauling (Excessive Travel): the act of taking a long or unnecessary detour en route to one's destination. Needless or preventable travel between two direct points. Vehicle: any on -road or off-road, self-propelled vehicle that is required to be registered and have a license plate by the Department of Motor Vehicles, Province of New Brunswick. 11. Inquiries: Inquiries regarding this Policy can be addressed to the City of Saint John's Fleet Services Division, Finance and Administrative Services. 12. Appendices: None NOR 4 i Q) (O O C N Ln Ell r - r14 O � Ln d 0 d � H N J fB cr LU M (n D LL N 00 O O 0 0 0 0 0 0 0 V N SRI LL cr LU 00 O O 0 0 0 0 0 0 0 V N SRI Q) (O O C r L- O 4--j Q) E Q) 4--j m 4--j un 4--j Q) Q) Q) Q) rn ull, � UO O 4--j E I 4--j Q) Q) ull, I UO O 4--J C Q) U X W a --J Q) Q) LL t�A Q) Q) L. - (n a UO (O O 4--J Q) Q) Q) Q) rn I&W (O O C (O Q) ryoo (O Q) 0 ryoo 4--J Q) Q) Q) Q) rn O N N Q 4--j Q) Q) Q) Q) rn ol uuuu A A CL S, > C:E 0 E S CL CLO C, m 0 E ull, O ca O U N Canada Games '1111Centre Aquatique Aquatic Centre """ w Jeux du Canada May 21, 2019 Councillor David Merrithew, Chair Finance Committee City of Saint John P.O. Box 1971 Saint John, New Brunswick E2L 41_1 Sent electronically to david.merrithew@saintjohn.ca Dear Councillor Merrithew: Reallocation of 2019 Capital Funding In the City's 2019 capital budget, $40,000 was allocated for the replacement of our accessibility lift. This represents the full cost of the replacement. As a result of applications initiated by our Commission, we have secured grants from the federal government's Enabling Accessibility Fund ($22,000) and the Greater Saint John Community Foundation ($6,000) for this project. This reduces the amount required from the City of Saint John by an equivalent amount ($28,000). We request that the City of Saint John reallocate the $28,000 that has been freed -up as a result of the outside funding that we have obtained to be used for the following: $10,000 Motion detection & timer light switches that will reduce energy consumption $18,000 Flow monitors to better manage water consumption and determine the appropriate UV lighting J Cryptosporidium parvum filters that we require (the installation of these units is already in the 2019 capital budget but we need the monitors to ensure that the filters we install are for the proper capacity) and the repair or installation of isolation valves to segregate areas of our plumbing so that we can restrict water flow to specific infrastructure (e.g. pumps) for maintenance or replacement without having to broadly shut down water flow in the facility. This will allow us to minimise the impact on our operations providing improved service to our users. $28,000 We would be happy to provide any further details that you may require. Thank you for your consideration. c.c.: Kevin Fudge Cathy Graham Craig Lavigne Samir Yammine Shalene Losier Lloyd Foote Mark Curran Saint John Aquatic Center Commission 50 rue Union Street, Saint John, NB E2L IA1 181:51