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2020-05-14 Finance Committee Minutes - Open SessionFinance Committee Meeting Open Session May 14, 2020 MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING MAY 14, 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 Fire Chief K. Clifford General Manager Saint John Transit M. Dionne Energy Manager S. Yammine Director Corporate Performance S. Rackley-Roach Administrative Assistant K. Tibbits 1. Meetiniz Called To Order Councilor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes 1.1.1 Minutes of January 22, 2020 Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the minutes of January 22, 2020 be approved. MOTION CARRIED. 1.1.2 Minutes of April 15, 2020 Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the minutes of April 15, 2020 be approved. MOTION CARRIED. Finance Committee Meeting Open Session May 14, 2020 1.2 Introduction to the Importance of 10 Year Corporate Strategic Plan Mr. Fogan reviewed the submitted presentation regarding the 10-year Corporate Strategic Plan. The strategic plan will guide decisions and policy development for the City of Saint John and support other plans currently in place. Public consultation and stakeholder engagements will be part of the development of the Corporate Strategic plan. Mr. Collin noted that the strategic plan is a living document and will require support from the current council and subsequent councils. This is a long-term vision and strategy document and will require both human and financial resources to be successful. Moved by Mayor Darling, seconded by Councillor Sullivan: RESOLVED that the presentation entitled "Strategic Planning" be received for information. MOTION CARRIED. 1.3 City Market Tower Interior Renovations Second Floor and Fit -Up Mr. Yammine, Energy Manager, explained that original plans for the City Market renovation did not include renovations to the second floor due to capital budget limitations. In March 2020, the City received confirmation of grant funding from NB Power resulting from the implementation of energy measures. The City is now interested in completing the interior renovation and fit -up of the second floor at the City Market Tower. Upon completion, the entire building will be fully utilized. The proposed scope of work consists of interior renovations, supply and Installation of a high efficiency heating and cooling system, and supply and installation of new lighting. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the Finance Committee recommend to Common Council that the change order submitted by Eclipse Construction Services Ltd., for the City Market Tower Interior Renovations Second Floor and Fit -Up, in the amount of $324,843.49 plus HST be accepted. Further to the base quote amount, it is recommended that a contingency allowance be carried for this project in the amount of $10,000 plus HST, for a total project cost of $334,843.49 plus HST. MOTION CARRIED. 1.4 Budget Monitoring Policy Mr. Fudge noted that a Budget Monitoring Policy is a best practice financial policy to help the city remain on a sustainable path going forward. The policy will reinforce accountability in budget management practices, guide cost control measures, and increase the accuracy of the budget process. It is a tool to increase reserve funding and accelerate debt reduction, changing how budgets are managed. Wages and benefits and goods and services will be managed as separate budget envelopes. It will provide more transparency to the budget process and increase the performance of the operating budget. Service areas will not have the authority to fund unplanned initiatives from surpluses in their budget. Unplanned initiatives will require authorization from Council through a reserve fund process to allow the organization to consider all service needs and long-term objectives. Fundamental to this policy is the recognition that wage and benefit surpluses were never intended to subsidize the goods and services budget. The Budget Monitoring Policy will take effect January 1, 2021. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the Finance Committee approves the draft Operating Budget Allocation Policy and recommends that Common Council approve the Operating Budget Allocation Policy as presented by staff. MOTION CARRIED. Finance Committee Meeting Open Session May 14, 2020 1.5 Capital Budget and Long Term Debt Update Mr. Lavigne reviewed the submitted presentation entitled 2019 Capital Budget Report General Fund/Utility Fund and commented on the City's progress related to debt reduction. Both funds have a positive variance. The positive variances as well as additional pay as you go will reduce the amount to be borrowed. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the 2019 Capital Budget Analysis report be received for information. MOTION CARRIED. 1.6 COVID-19 Update Ms. Arbour provided an update on the financial impact to the General Fund as a result of COVID- 19. There has been significant negative impact to the economy which will cause further financial pressure on the City in terms of a potential reduction in the tax assessment base and an increased structural deficit. The loss in revenue to the General Fund in 2020 is estimated to be $5M; this does not take into account drastic steps back in the recovery process. To compensate for the anticipated loss of revenue, the City has put a mitigation plan in place. Mr. Fudge noted that communities have been hit very hard economically due to COVID-19 and to date the federal government has not announced stimulus funds for municipalities. The City is very vulnerable to tax base growth and the unconditional grant, as 90% of the City's revenue comes from these two sources. A 1.5% tax base growth has been used as an assumption in the City's forecasting for structural deficit purposes; if that number erodes to zero it would equate to an approximate $1.8M loss. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the General Fund COVID-19 Financial Impact Update be received for information. MOTION CARRIED. 1.7 Saint John Transit Reauest for Fundi Mr. Dionne noted that COVID-19 has had a significant financial impact on transit including a suspension of fares (since reinstated), as well as a nine passenger limit on buses. The operating budget has been reduced by 25% through staff layoffs, service reductions and reduced fuel consumption. Plexiglas shields have been installed on buses to provide greater safety to drivers and to enable the resumption of fares. Mr. Fudge noted that municipalities across the country are facing financial pressures on their transit services and a loss of revenue. At the end of April, Saint John transit was in a deficit position of $378K. With the current mandatory restrictions of nine riders per bus, transit is bringing in about 25% of their normal monthly revenue and is expected to run out of cash in July under the current conditions. Given the uncertainty, staff is recommending that Council provide the Saint John Transit Commission its July operating subsidy in early June in order to have sufficient cash to continue its operations. Mr. Collin stated that the City has requested that the Province allow municipalities to increase the number of people permitted to ride the bus. Even then, there is no guarantee that ridership will return to normal forecasted levels. Mr. Collin discussed the importance of the transit service to remain on a reduced service level to reduce cost by a minimum of 25%. In response to a question, Mr. Dionne noted that the Transit Commission has not discussed raising rates, noting that the Commission is undergoing a review and rates could form part of 3 Finance Committee Meeting Open Session May 14, 2020 those recommendations. In terms of service reductions, an evaluation of routes has been conducted which includes a reduction of service hours from 97K to 71K. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the Finance Committee make the following recommendation to Common Council: • Direct the Commissioner of Finance to advance the Saint John Transit Commission the budgeted July operating subsidy of $491,323 early in June to ensure there is sufficient cash flow to operate; • That the Council Resolution (20 April 2020) to reduce transit costs by 25% remain in effect for the remainder of 2020 and be subject to review as the situation develops in the coming months; • The City and the Commission continue to advocate to the provincial and federal governments for funding relief for public transit; • Request that an updated presentation be brought forward to the Finance Committee in early July with updated year-end projections and any additional mitigation recommendations that may need to be made to Council. MOTION CARRIED. Adjournment The Finance Committee open session meeting held on May 14, 2020 was adjourned at 6:30 p.m. 4