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2020-04-15 Finance Committee Minutes - Open SessionFinance Committee Meeting Open Session April 15, 2020 MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING APRIL 15, 2020 AT 4:30 PM MEETING CONDUCTED BY ELECTRONIC PARTICIPATION Present: Mayor D. Darling Councilor D. Merrithew Councilor S. Casey Councilor D. Reardon Councilor G. Sullivan Councilor G. Norton Also Present: City Manager J. Collin Commissioner of Finance and Treasurer K. Fudge Director of Strategic Affairs I. Fogan Comptroller Finance C. Graham City Solicitor J. Nugent Fire Chief K. Clifford Commissioner Saint John Water B. McGovern Commissioner Growth & Community Development J. Hamilton Commissioner Transportation & Environment Services M. Hugenholtz Senior Financial Manager D. Arbour Senior Financial Manager C. Lavigne Deputy Fire Chief R. Nichol Deputy Fire Chief M. Carr Common Clerk J. Taylor Administrative Assistant K. Tibbits 1. Meeting Called To Order Councilor Merrithew called the Finance Committee open session meeting to order. 2. Consent Agenda 2.1 Year End 2019 Forecast for General Fund and Utilitv Fund Moved by Councillor Norton, seconded by Councillor Reardon: RESOLVED that the Finance Committee receive and file the submitted report and submit a copy to Common Council to be received and filed at its next meeting. MOTION CARRIED. 3. 3.1 Business Matters Financial Risk Assessment COVID-19 Mr. Fudge reviewed the submitted presentation entitled, "Financial Impacts of COVID-19". The global and Canadian economic impact of this event is significant. The City is positioned to mitigate some of the financial vulnerabilities through polices such as the Restructuring Reserve, Winter Weather Reserve, Benefit Fluctuation Reserve, and City Hall Reserve. Finance Committee Meeting Open Session April 15, 2020 Mr. Fudge reviewed the forecast of the City's finances as a result of COVID-19 as well as the assumptions used in developing the forecast. The model addresses a best and worst case scenario based on the length of the pandemic from three to nine months. The impact to the General Fund revenue is between $4.2M to $8.9M depending on the length of the pandemic, or approximately $1.3M per month based on the worst case scenario. The impact to Saint John Water revenue is projected to be between $1.1M to $3.3M. The consolidated financial impact assessment ranges from $5.3M to $12.2M under a worst case scenario. The City's cost mitigation strategy is in addition to the on -going restructuring plan to address sustainability. The cost mitigation strategy addresses loss of revenue through workforce adjustments, hiring freezes, freezing overtime and discretionary spending, service reduction for Saint John Transit, reinstatement of transit fares and parking fees, closing of facilities such as ice rinks, sports fields, Aquatic Centre, TD Station, and Trade and Convention Centre, in an effort to mitigate costs and risk to the City. The City has moved to an essential services model and reduced service levels and cancelled events, programs and services. A 25% reduction in water consumption for Saint John Water is estimated. SJ Water has a high infrastructure deficit and a high debt load with no operating reserves in place. There is very little flexibility to reduce operating expenses as most expenses are associated with infrastructure and labour force. Mr. Fudge commented on possible service impacts under the cost mitigation strategy. The cost mitigation plan will address the expected shortfall over 2020 but there are longer term risks such as the potential reduction to the City's tax base. Mr. Collin stated that the City is operating under an essential services model and conforming to the mandatory order issued by the Province. These initial services were primarily based upon health and safety but if this becomes a longer -term event, the identification of critical services will change. The mandatory order does not permit the City to alter collective agreements currently in place. In response to a question, Mr. Collin stated that the City has terminated the employment of the casual workforce which has impacted the dilapidated building program. If COVID-19 becomes a prolonged event, it is possible that this service will be restored to address dangerous buildings in the City. The cost for the contracted services to deliver the program is recoverable through the province but staffing costs are not. Some development services such as permitting and building inspections are being done virtually. Virtual PAC and Public Hearings will soon be introduced. There is a team in place to address how the City can restore services as soon as the mandatory order is amended or lifted. In response to a question with respect to the interim funding from the province, Mr. Collin stated that those funds can only be used for specific purposes. The City has requested that any surplus be used towards the City's restructuring efforts and there has been a positive indication of this approach, although nothing has been received in writing. It is unlikely that the Province will permit the City to use surplus funds to mitigate against COVID-19 impacts. It is more likely that a provincial approach will be taken in terms of municipal relief. The City must deal with its deficit, currently projected at $10M, but due to COVID-19 could be more. The City is facing additional financial pressures beyond sustainability and COVID-19 as the City's costs remain higher than its growth. Transformational reforms must occur to address the financial pressures in the long term. In addition, the City will play a role in economic recovery which is an additional financial pressure. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee recommends that Common Council: Finance Committee Meeting Open Session April 15, 2020 Re -designate the $2 million Winter Weather Reserve more broadly as an Emergency Service Reserve; ➢ 80% of the Growth Reserve be dedicated to serve as a Recovery Fund to spur economic recovery in the City of Saint John post Covid-19; ➢ Saint John Transit reduce operating costs by at a minimum 25% no later than May 15tn unless Federal or Provincial funds become available; ➢ Finance Committee acknowledges that Cost Mitigation Strategy is dependent on the savings presented which include short-term service reductions and that any future Council directive to reinstate these services will compromise the plan. MOTION CARRIED. 3.2 Gas Detection Agreement — Fire Services Chief Clifford stated that gas detection has been part of the Fire Service since the mid 1980's at a cost of approximately $17K per year. The current inventory of equipment is beyond its useful life. Detection assets have been reduced from 11 to 6 units and the cost of the proposal is less than the amount forecasted for gas detection equipment in 2020 and future years. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that as recommended by the City Manager in the submitted report "Gas Detection Agreement— Fire Services" the Finance Committee recommends to Common Council that Council enter into an inept 72 Month Agreement (Exchange Program) with Industrial Scientific Canada, ULC, for the hardware, service, repairs and consumables required for its gas detection program at an annual cost of $16,490.52 plus HST and that the Mayor and Common Clerk be authorized to execute the necessary contract documents. ►T[��[�I�[ye ::1" 3.3 Reclassification of Capital Proizram Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that as recommended by the City Manager in the submitted report "General Fund and Utility Fund — 2020 Capital Adjustments" the Finance Committee endorse the adjustments to the General and Utility Fund 2020 Capital Budgets and to have the report approved at the next meeting of Common Council. MOTION CARRIED. Adjournment Moved by Councilor Reardon, 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 April 15, 2020 was adjourned at 6:00 p.m. 3