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2016-08-16 Finance Committee Minutes Open SessionFinance Committee Meeting Open Session August 16, 2016 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING AUGUST 16, 2016 AT 5:15 PM 11t" FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor S. Casey Councillor G. Norton Regrets: Councillor G. Sullivan Also Present: City Manager Jeff Trail Commissioner of Finance and Treasurer K. Fudge Commissioner Saint John Water B. McGovern Comptroller C. Graham Senior Manager, Financial Planning H. Nguyen Commissioner of Transportation & Environment Services M. Hugenholtz Commissioner of Growth & Development Services J. Hamilton City Solicitor J. Nugent Fire Chief K. Clifford Common Clerk J. Taylor Deloitte Auditor J. Cochrane Deloitte Auditor J. Malais Administrative Assistant K. Tibbits 1. Meeting Called To Order Mayor Darling called the Finance Committee open session meeting to order. 1.1 Appointment of Chair and Vice -Chair Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that Councillor Merrithew be appointed Chair of the Finance Committee. MOTION CARRIED. Moved by Mayor Darling, seconded by Councillor Merrithew: RESOLVED that Councilor Norton be appointed Vice -Chair of the Finance Committee. LTA 10411000114Y1:k]k]11191 1.2 Approval of Agenda Finance Committee Meeting Open Session August 16, 2016 Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that the agenda of August 16, 2016, be approved. MOTION CARRIED. 1.3 Approval of Minutes — March 15, 2016 Moved by Councillor Norton, seconded by Councillor Reardon: RESOLVED that the minutes of the Finance Committee meeting of March 15, 2016, be approved. MOTION CARRIED. 1.4 Review and Approval of Terms of Reference for the Finance Committee The committee discussed the proposed Terms of Reference for the Finance Committee. Mayor Darling expressed concern with not having a vote within the committee structure, acknowledging the concern on the matter of dealing with tie votes. Mr. Trail commented that it is up to the committee to make a recommendation to Common Council on the terms of reference. A mature committee structure will have up to five or six committees. The design was to allow members of Council to participate as Chair and Vice Chair and have the Mayor participate in the discussion in a non-voting capacity. Mr. Trail suggested that if the terms of reference are modified for the Finance Committee, then a similar change be made to other committee's terms of reference. It is intended that the terms of reference for both committees will be brought to Common Council together for adoption. Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that the Mayor have voting capacity on the Finance Committee. MOTION CARRIED. Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that the Finance Committee recommends to Common Council approval of the Terms of Reference as submitted, subject to the Mayor sitting as an ex -officio member and being permitted to vote on the Finance Committee. MOTION CARRIED. 1.5 2016 Year End Forecast Reports for General and Utility Operating Budgets Mr. Fudge stated that based on the results at June 30, 2016, both funds are in a surplus position. The surpluses for both funds are under 1% of the overall budget. Ms. Nguyen commented on the 2016 year end projections of the general fund, highlighting positive changes, including a series of mitigation measures put in place to offset the pending deficit in 2015. The budget is being monitored by departments on a monthly basis in order to identify possible risks to the budget and put mitigation measures in place if necessary. As of today, there is a $1,400,000 surplus. Ms. Nguyen cautioned that there are risks to consider, such as exposure to severe weather events and possible year end accounting adjustments. Even a small change in the discount rate can have a large impact on the final numbers, which the City has no control over. The City has been hit with additional cost over the past several years due to the discount rate. Ms. Graham highlighted the 2016 year end projections with respect to the Water & Sewerage Utility operating fund. Revenues are under budget predominately due to flat rate customers. Finance Committee Meeting Open Session August 16, 2016 There is a decrease to the number of flat rate accounts due to such things as demolitions; requests by some building owners to have their water shut off (after 6 months the City stops charging); a number of conversions to in -family adjustments; accounts that have been shut off for lack of payment; and conversion of some flat rate customers to meter accounts, all of which contribute to the overall decrease in the number of billings and the reason revenues are down. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that item 1.5 2016 Year End Projections with respect to the General and Water & Sewerage Utility Operating Funds, be received for information. MOTION CARRIED. 1.6 Deloitte Presentation of Year End Consolidated Audit Results Mr. Cochrane, Deloitte, presented the audit report on the 2015 consolidated financial statements and the audit report on the 2015 Trust Fund financial statements. Deloitte is prepared to render a clean audit opinion. There has been a change in this year's statements to reflect changes in accounting procedures for the shared risk pension plan. Statements for 2013 and 2014 were qualified due to the accounting policy that the City had followed with respect to the pension plan. The accounting policy was reviewed and changed. (Chief Clifford entered the meeting) Mr. Cochrane highlighted the report and responded to questions. No restrictions were placed on the auditors to give a clean audit opinion. The team is following all policies and processes. (Mr. Trail, Mr. Fudge, Ms. Graham, Ms. Nguyen, Mr. McGovern, Mr. Hugenholtz, Mr. Nugent, Ms. Hamilton, and Chief Clifford withdrew from the meeting) Discussion ensued in a closed session meeting to allow members to address the auditors. (Mr. Trail, Mr. Fudge, Ms. Graham, Ms. Nguyen, Mr. McGovern, Mr. Hugenholtz, Mr. Nugent, Ms. Hamilton, and Chief Clifford re-entered the meeting) The open session meeting resumed. Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that item 1.6 Deloitte Report to the Finance Committee regarding the audited 2015 consolidated and trust funds financial statements, be received for information. MOTION CARRIED. 1.7 Approval of the 2015 Consolidated Audited Financial Statements Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that the Finance Committee approve the submitted report and that the Chair of the Finance Committee submit a report to Common Council recommending approval of the 2015 Consolidated Financial Statements and the 2015 Trust Fund Statements. LTA IQ1[47►[4L1:k]k]1if91 Mr. Fudge provided highlights of the submitted report. The City received a clean audit report this year which is the first clean opinion the City has received since December 31, 2011. A clean audit opinion essentially means that the auditors expressed no reservations or concerns and that the financial statements present fairly in all material respects. The 2012 to 2014 financial Finance Committee Meeting Open Session August 16, 2016 statements were qualified due to the accounting procedures used for the shared risk pension plan. Moved by Councillor Reardon, seconded by Mayor Darling: RESOLVED that the submitted report and the 2015 Consolidated Financial Statements and the 2015 Trust Fund Statements, be received for information. MOTION CARRIED. 1.8 Review and Approval of the July Accounts Receivables Referring to the submitted report, Ms. Graham commented on the overall receivables for the Water and Sewerage accounts as of July 2016. Water and sewerage collection efforts are on- going and the City continues to work with customers by establishing payment plans and pre - authorized payments. Referring to the overall amount in receivables, approximately $1,200,000 is considered difficult to retrieve debt, while the remainder is expected in a timely fashion. Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that item 1.8 Water and Sewerage Accounts Receivable — July 2016, be received for information. MOTION CARRIED. 1.9 Community Grants Evaluation Committee Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the letter from the Nominating Committee regarding the Community Grants Evaluation Committee be added to the agenda. MOTION CARRIED. Mayor Darling explained that the Nominating Committee did not reappoint anyone to the Community Grants Evaluation committee and recommended that it be referred to the Finance Committee for feedback. There are some requests that need to be dealt with. Mr. Trail noted that a small amount of money remains that can be disbursed. The Community Grants Evaluation committee was designed to deal with small requests and a small amount of money was set aside for this purpose. The process allows for stakeholders to have input and make recommendations on behalf of Council. There is a decision to be made as to the future of the Community Grants Evaluation committee and the size of the envelope that might be available in the next budget. Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that the Finance Committee recommends that the letter regarding the Community Grants Evaluation Committee be referred to Committee of the Whole for discussion with all members of Common Council. TLA royffel► Adjournment Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that the Finance Committee open session meeting held on Wednesday, August 16, 2016 be adjourned. MOTION CARRIED. Finance Committee Meeting Open Session August 16, 2016 The Finance Committee meeting held on August 16, 2016 was adjourned at 7:45 p.m.