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2019-09-18 Finance Committee Agenda Packet - Open Session MINUTES OPEN SESSION FINANCE COMMITTEE MEETING JULY 18, 2019 AT 5:15 PM th 8 FLOOR COMMON COUNCIL CHAMBER (LUDLOW ROOM), CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor G. Sullivan Councillor G. Norton Absent: Councillor S. Casey Councillor D. Reardon Also Present: City Manager J. Collin Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Commissioner Growth & Community Development J. Hamilton Comptroller Finance C. Graham City Solicitor J. Nugent Director Corporate Performance S. Rackley-Roach Assistant Comptroller Finance and Administrative Services C. Lavigne Deputy Commissioner Administrative Services I. Fogan Senior Financial Analyst J. Forgie Administrative Fire Officer J. Hennessy 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 May 29, 2019 Moved by Mayor Darling, seconded by Councillor Norton: RESOLVED that the minutes of May 29, 2019 be approved. MOTION CARRIED. 1.2 Public Consultation Budget Simulator Results Ms. Forgie reviewed the results from the public consultation budget simulator exercise, noting that participation from the public was very good with equal participation across all wards. Results were validated and a number of themes identified. These themes will be used in the creation of the long-term financial plan. Key themes included: Service Areas no area was untouched and all areas received a slight reduction, ranging from 1.5% to 19% depending on the service. Highest reductions were in economic development, transit services, recreation programming, sports facilities, One-Stop Shop Development/property compliance programs. Lowest reductions were in road maintenance, snow control and sidewalks. Revenue Generation common themes included non-resident user fees and taxes, tolls on City roads, charges to neighbouring communities for services and taxation of heavy industry. Community Facilities results common themes included alternative funding models, closure of facilities, higher contributions from users outside the City Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the Public Consultation Budget Simulator Results be received for information. MOTION CARRIED. 1.3 Proposed Phase 1 Municipal Tax Reform Mr. Jacobsen noted that the proposal on Municipal Tax Reform was one of many sustainability themes discussed within the mandate of the Government of New Brunswick / City of Saint John Municipal Sustainability Working Group. The province derives significant revenue annually from heavy industry located in the Saint John area through various taxes. The proposed municipal heavy industrial property tax reform recommends that 100% of the property tax collected from large industry in Saint John stays within the City of Saint John. This would be an interim step in the much broader review of property taxation issues committed to by the - Mr. Jacobsen and Mr. Fudge reviewed the submitted report. Key highlights of Phase 1 Municipal Tax Reform include: alleviates the province from making any future special funding requirements with respect to the $10.4M in 2020; provides an immediate sustainability solution as the City implements a series of sustainability action items; redistributes $9M in property tax revenue which is supported by the fair taxation report experts and would be transformational for the City, representing almost 6% of the budget versus 1 tenth of a percent for the province of NB; can be positioned as an important first step in municipal tax reform and a comprehensive review of municipal tax system by the province of NB; does not require new tax assessment capabilities or resources from the province. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the submitted presentation entitled Proposed Phase 1 Municipal Tax Reform MOTION CARRIED. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the submitted presentation entitled Proposed Phase 1 Municipal Tax Reform be received for information. MOTION CARRIED. 1.4 2020 and 2021 Proposed Draft General Fund Capital Budgets Mr. Fudge stated that the proposed capital budget represents over $50M in investment over the next two years. It leverages funding from other levels of government as much as possible. Of the $50M two year capital budget, $29M is proposed to come from the other levels of Mr. Lavigne reviewed the 2020 and 2021 proposed Draft General Fund Capital Budget and the proposed Draft Utility Fund Capital Budget. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommend that the 2020 and 2021 Proposed Draft Utility Fund Capital Budget be presented to Common Council with a recommendation to receive and file; and that the Finance Committee recommend that the 2020 and 2021 Proposed Draft General Fund Capital Budget be presented to Common Council with a recommendation to receive and file. MOTION CARRIED. 1.5 Bi-Lateral Funding Application Mr. Lavigne explained that in 2017 the Government of Canada announced a $33B ten year funding agreement with the provinces/territories under four different funding streams, including public transit, green infrastructure, community cultural and recreation infrastructure and infrastructure needs for rural and northern communities. Projects will be cost shared between the federal (40%), provincial (33%) and municipal (27%) levels of government. The City of Saint John submitted Expression of Interests for the following projects: Fundy Quay project, total value $38M Green Infrastructure, total value $40M Mr. Fudge noted that there is no commitment by the City to proceed. This is only an application phase. The application was highly concentrated on projects that the City will have to do regardless with respect to the capital investment plan. Mr. Collin noted that there were constraints and strict guidelines within the various funding envelopes. Moved by Councillor Norton, seconded by Mayor Darling: RESOLVED that the submitted presentation on the Bi-Lateral Funding Application be received for information. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the open session meeting of the Finance Committee be adjourned. MOTION CARRIED. The Finance Committee open session meeting held on July 18, 2019 was adjourned at 6:40 p.m. FINANCE COMMITTEE REPORT Report Date September 04, 2019 Meeting Date September 18, 2019 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: 2019-2023 Gas Tax Fund Capital Investment Plan OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head City Manager Craig Lavigne/Brian Kevin Fudge John Collin Keenan RECOMMENDATION It is recommended that Finance Committee approve the 2019-2023 Capital Investment Plan for the Gas Tax Fund Administrative Agreement and submit to Common Council for approval. EXECUTIVE SUMMARY The purpose of this report is to recommend that Finance Committee approve the attached 2019-2023 Gas Tax Fund Capital Investment Plan. PREVIOUS RESOLUTION August 19, 2019: 2020 & 2021 Water & Sewerage Utility Fund Capital Program approved August 19, 2019: 2020 & 2021 General Fund Capital Program approved STRATEGIC ALIGNMENT This report aligns with 2020 & 2021 General Fund and Utility Fund Capital programs approved as well as, specifically as it relates to investing in sustainable City services and municipal infrastructure. - 2 - REPORT New Brunswick municipalities have been provided with a template from the Province along with a request to submit a Gas Tax Fund (GTF) Capital Investment Plan for 2019-2023. Council approved the 2020 & 2021 Water & Sewerage Utility Fund Capital Program and the General Fund Capital Program on August 19, 2019. Included in the approved Capital Program submissions were a number of projects proposed to be funded under the 2019-2023 Gas Tax Fund. At the request of staff, the Province has reviewed a draft of the 2019-2023 Capital Investment Plan on the Provincial templates and is in agreement that the proposed projects are eligible under the GTF Administrative Agreement. The next step is to request Council approval of the attached Capital Investment Plan and following that, an agreement will ensue with the Province. ANALYSIS A requirement of the application under the Gas Tax Fund is the submission of a Five-Year Capital Investment Plan. The Capital Investment Plan must outline in detail, projects to be funded under the Gas Tax Fund Agreement that are considered as priorities by the Municipality. The Capital Investment Plan that staff is recommending for submission, includes provision for four projects that otherwise would not have been possible in the years 2019-2023 without the Gas Tax Fund Agreement. The four projects proposed to be funded under the Gas Tax Program total $29,349,468 and are part of the Water & Sewerage Utility Fund Capital Program and General Fund Capital Program. While a Five-Year plan is a requirement, the Agreement also recognizes that plans do change. Provision has been made in the Agreement to allow the Municipality to update or modify their Capital Investment Plan at any time during the term of the Agreement subject to approval by the Province of New Brunswick Department of Environment and Local Government. The attached Capital Investment Plan includes the following content: Project Name, Category, Description, Expected Outcomes and Proposed Indicator(s) for each project related to the Utility Fund and General Fund Five-Year Capital Budgets Five-Year Capital Fund Budget Summary Following approval of the Capital Investment Plan by Council, staff will submit the Plan to the Department of Environment and Local Government for their final - 3 - review and approval. After approval of the Plan by the Province, they will forward a formal Gas Tax Agreement for review and signature by the City. SERVICE AND FINANCIAL OUTCOMES The Province has announced the 2019-2023 Federal Gas Tax Fund allocations to the municipalities. The five-year GTF allocation for Saint John amounts to $24,129,638 plus the one-time 2018 top up amount of $5,219,830 for a total of $29,349,468. The Capital Investment Plan recommended for submission includes projects that otherwise would not have been possible in the years 2019-2023 without the Gas Tax Funding. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input and coordination was received from Engineering, Saint John Water, Transportation and Environment Services and Finance ATTACHMENTS City of Saint John Five-Year Capital Investment Plan for the GTF Administrative Agreement (2019-2023) 2019-2023 Summary of Projects CITY OF SAINT JOHN Five-Year Capital Investment Plan for the GTF Administrative Agreement 2019 2023 Department of Environment and Local Government Capital Investment Plan for the GTF Administrative Agreement INTRODUCTION The City of Saint John has prepared a five-year Capital Investment Plan for the years 2019 2023 respecting the Gas Tax Fund (GTF) administrative agreement. Included are descriptions, cost estimates and financing for each selected project. Each project will contribute towards achieving the following program benefits: a) Beneficial impacts on communities of completed eligible projects; b) Enhanced impact of GTF as a predictable source of funding including incrementality; and, c) Progress made on improving Local Government planning and asset management. CAPITAL INVESTMENT PLAN CONTENT The capital investment plan for the GTF administrative agreement includes the following: 1. Certified copy of the resolution from Council adopting the five-year Capital Investment Plan for the GTF Agreement of the municipality 2. Project name, category, description, expected outcomes, proposed indicators for each tangible capital asset project. Also indicate if an Environmental Impact Assessment (EIA) and a tender are required for each project. 3. Five-Year Capital Budget Summary (Excel spreadsheet) Page 2 / 7 Capital Investment Plan for the GTF Administrative Agreement CITY OF SAINT JOHN FIVE-YEAR CAPITAL INVESTMENT PLAN FOR THE GTF ADMINISTRATIVE AGREEMENT 2019- 2023 RESOLUTION 201X-XXX Moved by Councilor ________ and seconded by Councilor ________ City of Saint John Five-Year Capital Investment Plan for the GTF Administrative Agreement 2019-2023 Motion Carried I certify that the above resolution of the council of __________________was adopted while in regular/special session XXXXXX, 201X. (SEAL) _______________________ COMMON CLERK CITY OF SAINT JOHN Page 3 / 7 Capital Investment Plan for the GTF Administrative Agreement PROJECTS 1) Curb/Sidewalk Renewal & Asphalt Resurfacing Various Locations Project Category (select one): Drinking water Recreational Infrastructure Wastewater Cultural Infrastructure Local roads and bridges Tourism Infrastructure Community energy systems Solid waste Capacity building Brownfield Redevelopment Disaster mitigation Public transit Sport Infrastructure Regional and local airports Project Description: Installation of new curb/sidewalk including asphalt resurfacing at various locations in the City. EIA Required Tender Required Expected Outcome: A number of roadways are in poor condition and there is a need to replace the curb/sidewalk and resurface the roads to bring roads up to municipal standards. Proposed indicator(s): We will report on the number of kilometers of roadway upgraded to municipal standards including sidewalk length. Year GTF Contribution Total Cost 2019 2020 1,500,000 1,500,000 2021 1,500,000 1,500,000 2022 1,500,000 1,500,000 2023 3,000,000 3,000,000 Page 4 / 7 Capital Investment Plan for the GTF Administrative Agreement 2) Watermain Cleaning and Lining Various Locations Project Category (Select one): Drinking water Recreational Infrastructure Wastewater Cultural Infrastructure Local roads and bridges Tourism Infrastructure Community energy systems Solid waste Capacity building Brownfield Redevelopment Disaster mitigation Public transit Sport Infrastructure Regional and local airports Project Description: Cleaning and lining of existing unlined cast iron watermains to improve pressure, water quality and fire flows. EIA Required Tender Required Expected Outcome: Unlined cast iron watermains that were installed in the late 1800s and early 1900s (up until about 1960) are subject to a phenomenon called tuberculation - a buildup of material on the inside wall of the pipe. This buildup reduces the internal diameter of the pipe which in turn leads to a decrease in water pressure and available fire flow. In addition, tuberculation is a major contributor to water quality problems such as color, increased iron content and reduced chlorine residual. Following completion of the project, the cast iron watermains will have improved flow capacity, improved water quality and the service life of the candidate water mains will be appreciably extended. Proposed indicator(s): We will report on the length of cast iron watermains cleaned and lined following completion of the project. Year GTF Contribution Total Cost 2019 2020 500,000 500,000 2021 500,000 500,000 2022 500,000 500,000 2023 949,468 949,468 Page 5 / 7 Capital Investment Plan for the GTF Administrative Agreement 3) Street Reconstruction Various Locations Project Category (Select one): Drinking water Recreational Infrastructure Wastewater Cultural Infrastructure Local roads and bridges Tourism Infrastructure Community energy systems Solid waste Capacity building Brownfield Redevelopment Disaster mitigation Public transit Sport Infrastructure Regional and local airports Project Description: Installation of new watermain and/or sanitary sewermain and/or storm sewermain and reconstruction of street surface. EIA Required Tender Required Expected Outcome: The underground piping and roadway is in poor condition and there is a need to reconstruct the infrastructure to current municipal standards. Proposed indicator(s): We will report on the length, diameter and type of pipe as well as the length of roadway reconstructed to municipal standards. Year GTF Contribution Total Cost 2019 2020 1,900,000 1,900,000 2021 500,000 500,000 2022 4,000,000 4,000,000 2023 8,000,000 8,000,000 Page 6 / 7 Capital Investment Plan for the GTF Administrative Agreement 4) One Mile Sanitary Lift Station Replacement Project Category (Select one): Drinking water Recreational Infrastructure Wastewater Cultural Infrastructure Local roads and bridges Tourism Infrastructure Community energy systems Solid waste Capacity building Brownfield Redevelopment Disaster mitigation Public transit Sport Infrastructure Regional and local airports Project Description: Installation of new sanitary lift station to replace existing facility that is at the end of asset life to ensure reliable collection of wastewater. EIA Required Tender Required Expected Outcome: Under current conditions, the existing sanitary lift station bypasses wastewater frequently due to equipment failure. Following completion of the project, the operation of the facility will be more reliable. Proposed indicator(s): We will report on the number of lift station facilities replaced. Year GTF Contribution Total Cost 2019 2020 5,000,000 5,000,000 2021 2022 2023 Page 7 / 7 CITY OF SAINT JOHN FIVE-YEAR CAPITAL BUDGET SUMMARY PROJECT NAMES20192020202120222023Total Locations$1,500,000$1,500,000$1,500,000$3,000,000$7,500,000 $500,000$500,000$500,000$949,468$2,449,468 $1,900,000$500,000$4,000,000$8,000,000$14,400,000 One Mile Sanitary Lift Station Replacement $5,000,000$5,000,000 Total Capital Expenditures$8,900,000$2,500,000$6,000,000$11,949,468$29,349,468 SOURCE OF FUNDS GTF Agreement 2019-2023 (Plus 2018 top up)$9,876,427$4,656,597$4,868,260$4,868,260$5,079,924$29,349,468 Capital Reserve Fund Operating Fund Long Term Borrowing Other (Bridge Financing)$5,633,024$2,368,260$1,131,740$6,869,544$0 Total Sources of Funds$8,900,000$2,500,000$6,000,000$11,949,468$29,349,468 9Ɠķ CƚƩĻĭğƭƷ Ώ /źƷǤ ƚŅ {ğźƓƷ WƚŷƓ WǒƌǤ ЋЉЊВ —ĻğƩ City of Saint John September 2019 2020 General Operating Budget