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2017-06-29 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Thursday, June 29, 2017 4:30 pm 8th Floor Boardroom, City Hall Call to Order Pages 1.1 Approval of Minutes - May 30, 2017 1 - 2 1.2 2016 City of Saint John Consolidated Financial Statements 3-93 1.3 Fleet Replacement Program 94-110 Po eta Sy: rIN. m MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING MAY 30, 2017 AT 4:30 PM Stn FLOOR BOARDROOM, CITY HALL Present: Mayor D. Darling Councillor D. Merrithew Councillor D. Reardon Councillor G. Sullivan Councillor S. Casey Councillor G. Norton Also Present: Commissioner of Finance and Treasurer K. Fudge Deputy Commissioner Finance and Administrative Services I. Fogan Comptroller C. Graham Senior Manager, Financial Planning H. Nguyen Commissioner Saint John Water B. McGovern Commissioner of Transportation & Environment Services M. Hugenholtz Assistant Comptroller Finance C. Lavigne Commissioner Growth & Development Services J. Hamilton Common Clerk J. Taylor Acting Director Corporate Planning/Chief Information Officer S. Rackley -Roach Fire Chief K. Clifford Administrative Officer Fire Dept. J. Hennessy City Solicitor J. Nugent 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 — April 11. 2017 Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the minutes of April 11, 2017, be approved. MOTION CARRIED. 1.2 March 2017 Year End Forecast Referring to the submitted report, Ms. Nguyen stated that the forecast is based on the best available information, noting that it is a continuous process and that unexpected events can impact the forecast. Mitigation efforts are in place to help offset some of these unexpected factors. At the end of March, there is a small overall variance of approximately $134,000 but essentially on budget. Department heads commented on their budget areas, the variances within the budgets, and responded Mr. Fudge noted that some service areas are at risk for unexpected fluctuations such as weather, noting that there is a $2M reserve that has been established to absorb and mitigate that risk. Commenting or fiscal charges associated with external agencies such as the Police Department, he noted that although operating expenses associated with managing outside facilities incurred by the City are billed back to those areas, fiscal charges are not currently segrated and tracked. Mayor Darling indicated an interest in knowing the total cost of operating the police station. Moved by Councillor Reardon, seconded by Councillor Casey: RESOLVED that item 1.2 March 2017 Year End Forecast, be received for information. MOTION CARRIED. (Mr. Hugenholtz withdrew from the meeting) 1.3 Continuous Improvement Update Ms. Rackley -Roach commented on the submitted presentation entitled, "Continuous Improvement Update" and provided an update on projects including the City Hall space optimization project. The City is currently on track to reach its cumulative cost savings target of $2M by 2018. Continuous improvement projects are designed to eliminate any waste in services delivered by the City. The current focus is on projects that will generate savings in the $25,000 plus range. The Continuous improvement team is also involved in revenue generating projects and have indentified at least two upcoming projects in 2017. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that item 1.3 Continuous Improvement Update, be received for information. ►I• •► T:: 1.4 Investment Management Policy Guidelines Mr. Fudge suggested that there may be an opportunity to earn more interest on cash holdings that are not immediately required to cover operating expenses. He noted that an investment policy based on best practices of other municipalities is being proposed to guide investment decisions and ensure alignment with Council's priorities. Referring to the submitted presentation entitled "Investment Policy", Mr. Lavigne noted that City funds, such as surplus cash and reserve funds not needed for day to day operations, would be invested at a higher rate of return in order to maximize return on investment. The return on these funds currently is less than one percent. The main principles of the investment policy is principle protection, liquidity to meet the demands of the City, and earning a higher investment return in the operating account. Moved by Councillor Norton, seconded by Councillor Sullivan: RESOLVED that the Finance Committee endorse the Investment Policy and bring it forward to the next meeting of Common Council for acceptance. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee open session meeting held on Tuesday, May 30th, 2017 be adjourned. MOTION CARRIED. The Finance Committee meeting held on Mav 30. 2017 was adiourned at 6:10 p.m FINANCE COMMITTEE REPORT M&C No. M&C 2017 - Report Date June 27, 2017 Meeting Date June 29, 2017 Service Area Finance and Administrative Services Members of the Finance Committee Finance Chair and Members of Council SUBJECT: 2016 Consolidated Financial Statements 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 Hilary Nguyen Kevin Fudge Jeff Trail RECOMMENDATION It is recommended that the Finance Committee approve this report and that the Chair of the Finance Committee submits a report to Common Council recommending approval of the 2016 Consolidated Financial Statements and the 2016 Trust Fund Statements. EXECUTIVE SUMMARY Deloitte has completed an audit of the Consolidated Financial Statements of the City of Saint John for the Year ending December 31, 2016 and has expressed a clean audit opinion that the statements present fairly, in all material respects, the consolidated financial position and results of operations of the City of Saint John. Under PSA standards, municipal reporting requirements include: • Consolidated Statement of Financial Position • Consolidated Statement of Operations and Accumulated Surplus • Consolidated Statement of Changes in Net Debt • Consolidated Statement of Cash Flows • Notes to the Consolidated Financial Statements There are 16 entities under the control of the City of Saint John (see note 2 to the Consolidated Financial Statements). Deloitte has also completed an audit of the 2016 Trust Fund Statements and have expressed a clean audit opinion. K3 -2 - PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT The report provides an update on the Economic Health of the City of Saint John. REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS The Commissioner of Municipal Affairs prescribes, pursuant to Section 8 of the Control of Municipalities Act, Chapter C-20 of the R.S.N.B. 1973, a revised Municipal Financial Reporting Manual to be applicable to municipalities in the Province of New Brunswick, according to which Financial statements should be prepared in accordance with Canadian Generally Accepted Accounting Principles for local governments as outlined in the Public Sector Accounting (PSA) Handbook starting January 1, 2012. Deloitte has completed an audit of the Consolidated Financial Statements of the City of Saint John for the Year ending December 31, 2016 and has expressed a clean audit opinion that the Consolidated Financial Statements present fairly, in all material respects, the consolidated financial position and results of operations of the City of Saint John. Under PSA standards, municipal reporting requirements include: 1. Consolidated Statement of Financial Position 2. Consolidated Statement of Operations and Accumulated Surplus 3. Consolidated Statement of Changes in Net Debt 4. Consolidated Statement of Cash Flows 5. Notes to the Consolidated Financial Statements There are 16 entities under the control of the City of Saint John (see note 2 to the Consolidated Financial Statements). 1. Consolidated Statement of Financial Position: Financial Assets: Assets are economic resources controlled by the organization as a result of past transactions or events and from which future economic benefits are expected to be obtained. Economic resources can be financial in nature (for example, cash, accounts receivable, investment); or non-financial in nature (for example, inventory, prepaid items, tangible capital assets). The City ended the year with financial assets totaling $107.2 Mil. This represents an increase of 3.5 % compared to prior year: C! -3 - Cash and cash equivalents totaled $56.4 Mil, an increase of 95.4% from 2015. This was mainly due to an increase in cash flow from operating transactions. • Accounts receivable totaled $11.7 Mil at the end of 2016 (2015: $15.9 Mil). Details of the accounts receivable can be found in Notes 5, 6 and 7 to the Consolidated Financial Statements. • Investment in Energy services represents the City's equity in Saint John Energy, which totaled $30.7 at the end of 2016 (2015: $50.8 Mil). • Other investments consist mostly of Canada Games Foundation investments as well as other small investments (see Note 9 to the Consolidated Financial Statements). Non -Financial Assets: Tangible capital assets represent the net book value of all assets owned by the City of Saint John and its controlled entities. Asset historical costs totaled $1.49 billion, of which $588.78 Mil was amortized resulting in the asset net book value of $903.1 Mil at the end of 2016 (2015: $928.3 Mil). Of the $588.78 Mil accumulated amortization, $143.5 Mil was fully amortized which means these assets have passed their normal useful life expectancy. Note 20 to the Consolidated Financial Statements disclosed total assets by asset classes. The City's major asset categories are water and wastewater networks and transportation, which includes roads, sidewalks, storm sewer networks, traffic signals, etc. The City and its controlled entities own a significant number of buildings, which include the Market Square, Harbor Station, Aquatic Centre, Police headquarters, Transit building, etc. Financial Liabilities: Financial liabilities are present obligations of the organization to others arising from past transactions or events, the settlement of which is expected to result in the future sacrifice of economic benefits. At the end of 2016, financial liabilities totaled $364.5 Mil. This represents a decrease of 3.5% or $13 Mil compared to 2015: • Accounts payable and accrued liabilities totaled $24.2 Mil at the end of 2016 (2015: $29.5 Mil). Details of the accounts payable and accrued liabilities can be found in Note 10 to the Consolidated Financial Statements. • Post -employment benefits and compensated absences represent liabilities associated with the City's benefit programs including retirement allowances; sick leave; heart & lung pension; disability benefits; contractual top -up agreements; and the City of Saint John Shared Risk Plan ("CSJ SRP") based on actuarial valuations (see Note 13 to the Consolidated Financial Statements). 61 -4 - Long term debt includes debenture debt totaling $206.8 Mil at the end of 2016 (2015: $221.4 Mil) (see Note 12 to the Consolidated Financial Statements). 2. Consolidated Statement of Operations and Accumulated Surplus: This statement accounts for the operating revenues and expenditures of the City of Saint John and its controlled entities. The statement has been prepared in accordance with the Public Sector Accounting Standards; therefore it is different from the fund -based Statement in that the expenditures include amortization of tangible capital assets rather than principal repayment. Revenues for the year ended December 31, 2016 totaled $214.5 Mil, which is 3.2% less than prior year (2015: $221.5 Mil). Expenses for the year totaled $223.5 Mil, which is 12.4% more than prior year (2015: $198.9 Mil). The overall result of operations was a deficit of $8.97 Mil (2015: $22.7 Mil). A detailed listing of revenues and expenses can be found in Note 25 to the Consolidated Financial Statements. 3. Consolidated Statement of Changes in Net Debt: Net financial assets (net debt) position is a key indicator of the City's overall financial health and is calculated by deducting the City's financial assets from its financial liabilities. If the financial assets are greater than the liabilities then it is called net financial assets. If the financial assets are less than the liabilities then it is called net debt. A net debt balance represents a lien against future operations while a net financial assets balance means the City has resources available for future operations. Compared to 2015, net debt at December 31, 2016 has decreased from $274 Mil to $257.3 Mil, which is equivalent to 6.1% reduction. This represents an improvement in the net debt position of the City. 4. Consolidated Statement of Cash Flows: The Consolidated Statement of Cash Flow reports on the change in cash and cash equivalents during the year from operating, capital, financing and investing activities. The City generates cash to finance its operating activities, acquire tangible capital assets and meet its obligations by raising revenues, issuing debts or converting other financial assets into cash. The City's primary source of cash is from its operating activities. The Consolidated Statement of Cash Flow indicates that during the year, the City has generated sufficient cash to maintain its programs and services, finance its capital expenditures, meet its debt service requirements as well as make new investments. As at December 31, 2016, Cash and cash equivalents totaled $56.4 Mil (2015: $28.9 Mil). This represents an increase of 95.4% or $27.5 Mil over 2015. C.1 -5- 2016 TRUST FUND STATEMENTS The City's Trust Fund Financial Statements consist of funds held in trust by the City that are restricted for a particular purpose. Deloitte has completed an audit of the 2016 Trust Fund Statements and has expressed a clean audit opinion. SERVICE AND FINANCIAL OUTCOMES N/A INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input has been received from all Service Areas ATTACHMENTS: 1. City of Saint John Consolidated Financial Statements, December 31st 2016 2. City of Saint John Trust Funds, December 31st, 2016 0 12 .W .� V 4- 0 W v M 0 0 0 0 0 0 0 0 0 0 0 0 lD Ln M N -A 2 V) m v co V) m U V) v Z3 v V N E 4-1 V) N N 4-1 O a,o v v N � v - v +' > v v E N 4-1 V) v 0 0 0 0 0 0 0 0 0 0 0 0 lD Ln M N -A 2 V) m v co V) m U V) v Z3 v Ln c -I U v 0 r - M Ik 0) 0) C C C C O Ln O Ln O Ln N N T -I ri u n 0 N 111 0 M RT O RT 0 V-1 RT 0 RT M O M M 0 W M 0 Q1 N 0 00 V-1 O O N w � N N E t0 _N Ln 3 cr N t� '7 W 06 IA c v W 41 O Q O O 00 E S G a mo 0) L 5 c ca r O J J — m N O r - c o6O 41 i C +moi+ OJ OJ E Q U Q i Lu H 3: "1 06 i N 00 00 in OW 00 O 00 M canN N A N tt1 W C- 0 C- C- E 0 0 4-j C- C- .7 m 0 C- 0 4-j CY) u C- 4 -J W11 - r -i 0 C- C- 0 4-J 4-J u Ln C- C- 0 0 0 U > -Fo co .0 T --i L- C- 0 CU 4-J Ln C- 0 4- U Ln C - Ln Ln 0 Ln 4- < U LL *a 41 u 4-(a p (D o u . . L.L C- C- 4 -J 0 C- 0 C- 0 E 0 +-j C- C - CU Ln m u 4- CL 4-- 0 E *E > 0 tw tf 00 I E Ln w 0 0 m m w w Q Q 0 0 c c 0 0 m m 0 0 E E Q Q E E Q Q k k k k k k Ln 0 0 0 0 0 0 § S e k Q / � � a O a i O Q C 0641 10 10 10 10 10 10 a 0 0 0 0 0 0 0 0 N 0 0 0 M N 0 N 0 0 I� lC Lfl � a --I �M; IA m IA O CL E J N N L 0 E L� 4^-j, W/� �L // V L� 0 4-J i 0 L Ln M N■ O O G co +, �vg O Ln O Ln O Ln O Ln O Ln O Ln le le M M N N r -I r -I N W z W W 0: r -I O N N ® W z W W 0: 111 r -I 00 O V ® H W z W W W r -I O N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 � N O 00 iD � N c -I c -I c -I N N E v O 'i G1 N N E A O 3 � N _ O W 0 0 0 0 0 0 0 0 0 0 0 0 0 0 � N O 00 iD � N c -I c -I c -I N 3 O N N 3 O f� O N � G1 O N G1 3 G1 N N 3 � O � N G1 3 O O N O � 3 � i O O O N O O O a' � ca O i O v O D N X M Q O a E O O O O O O O O O O O O lD t11 M Co (o c L Ln O N + U N U U (n N = Co ro a N N N E Q N U c O > O O N > > cn (U LU C) to N N N E 4- V 0 75 N i O = c LU N N � U co cn - co N (U V) 0 ro N i U Q i cn N N Co N > N a N U .V 4- i O N d � ON N U � L � N N O N C7 E O bA N > N N � N O w c n J Co (o c L Ln O N + U N U U (n N = Co ro a N N N E Q N U c O > O O N > > cn (U LU C) to N N N E 4- V 0 75 N i O = c LU N N � U co cn - co N (U V) 0 ro N i U Q i cn N N Co N > N a N U .V 4- i O N d � ON N U � L � N N O N C7 0 0 0 0 0 0 0 L o L o L o Ln M M N N 14 a --I Lail O C0 G C6 O L _ LL 0 C O a -J c r_ .O Ln .� E c Q) Q) o Z Ln Q) z o Q) . 0 U 0 0 0 0 0 0 0 L o L o L o Ln M M N N 14 a --I Lail 9 AXI The City of Saint John Consolidated Financial Statements December 31, 2016 K-11 The City of Saint John December 31, 2016 CONTENTS We%7 Page Consolidated Financial Statements Independent Auditor's Report 1 -2 Consolidated Statement of Financial Position 3 Consolidated Statement of Operations and Accumulated Surplus 4 Consolidated Statement of Changes in Net Debt 5 Consolidated Statement of Cash Flow 6 Notes to the Consolidated Financial Statements 7-39 We%7 Auditors' Report THIS IS A PLACEHOLDER. REPLACE WITH REAL AUDITORS' REPORT. 091 Auditors' Report THIS IS A PLACEHOLDER. REPLACE WITH REAL AUDITORS' REPORT. 31 The City of Saint John Consolidated Statement of Financial Position As at December 31, 2016 December 31, December 31, 2016 2015 Financial assets Cash and cash equivalents (Note 4) 56,446,462 28,879,337 Accounts receivable (Note 5), (Note 6) and (Note 7) 11,746,331 15,934,185 Investment in Energy Services (Note 8) 30,677,600 50,833,600 Other investments (Note 9) 8,347,991 7,913,047 107,218,384 103,560,169 Financial liabilities Accounts payable and accrued liabilities (Note 10) 24,224,050 29,484,048 Deferred revenue 1,653,632 1,801,578 Deferred government transfers (Note 11) 13,736,023 1,098,153 Post employment benefits and compensated absences (Note 13) 118,083,268 123,690,809 Bank loan payable (Note 3) 56,454 108,582 Long term debt (Note 12) 206,785,270 221,444,436 364,538,697 377,627,606 Net debt (257,320,313) (274,067,437) Non-financial assets Inventory Prepaids Tanaible capital assets 1,448,515 1,469,832 546,664 1,098,292 3,123,127 928,272,092 905,118,306 930,840,216 Accumulated surplus 647,797,993 656,772,779 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. 3 0 The City of Saint John Consolidated Statement of Operations and Accumulated Surplus For the year ended December 31, 2016 Revenues Property taxes Unconditional grant 2016 Budget (Unaudited) 2016 2015 (Note 2) 120,141,178 120,141,178 118,325,922 19,923,206 19,923,206 20,935,308 Other revenue from own sources (Note 25) 21,797,617 24,123,864 25,125,562 Water and sewer revenue (Note 16) 40,552,000 39,944,867 37,745,373 Miscellaneous revenue 896,844 1,298,956 1,571,153 Contributions from others (Note 25) 725,000 9,050,932 11,921,225 Income from energy services - - 5,916,736 206,306,466 223,457,789 198,856,480 Annual surplus (2,270,621) (8,974,786) 22,684,799 Accumulated surplus, beginning of year - 656,772,779 634,087,980 Accumulated surplus, end of year (2,270,621) 647,797,993 656,772,779 The accompanying notes are an integral part of these consolidated financial statements. 4 093 204,035,845 214,483,003 221,541,279 Expenses General Government Services (Note 25) 41,993,592 36,676,361 32,062,629 Protective services (Note 25) 50,686,402 49,623,256 48,947,307 Transportation services (Note 25) 37,787,264 46,935,155 49,906,075 Water and sewer services (Note 25) 43,947,000 34,986,997 34,612,882 Environmental health services (Note 25) 3,629,410 3,208,944 3,262,654 Environmental development services (Note 25) 18,303,935 21,479,934 20,030,186 Recreational and cultural services (Note 25) 9,958,863 10,391,142 10,034,747 Loss from enerav services - 20,156,000 - 206,306,466 223,457,789 198,856,480 Annual surplus (2,270,621) (8,974,786) 22,684,799 Accumulated surplus, beginning of year - 656,772,779 634,087,980 Accumulated surplus, end of year (2,270,621) 647,797,993 656,772,779 The accompanying notes are an integral part of these consolidated financial statements. 4 093 The City of Saint John Consolidated Statement of Changes in Net Debt For the year ended December 31, 2016 2016 2015 Annual surplus (8,974,786) 22,684,799 Acquisition of tangible capital assets (Note 20) (27,764,268) (39,412,548) Loss on disposal of tangible capital assets (Note 20) 2,314,456 2,646,875 Proceeds on sale of tangible capital assets 749,717 270,562 Amortization of tangible capital assets (Note 20) 36,097,310 37,054,444 Decrease (Increase) in inventory 21,317 (70,583) Decrease in prepaids 551,628 739,497 Tangible capital assets adjustments (Note 20) 13,751,750 - Increase in net assets 25,721,910 1,228,247 Net debt, beginning of year (274,067,437) (297,980,483) Net debt, end of the year (257,320,313) (274,067,437) The accompanying notes are an integral part of these consolidated financial statements. 5 The City of Saint John Consolidated Statement of Cash Flow For the year ended December 31, 2016 Change in non-cash assets and liabilities 2016 2015) Operating transactions 4,187,854 10,870,234 Annual surplus (8,974,786) 22,684,799 Items not involving cash 551,628 739,497 Amortization of tangible capital assets (Note 20) 36,097,310 37,054,444 Loss on disposal of tangible capital assets 2,314,456 2,646,875 Adjustments related to Non Profit Housing 1,125,094 - Adjustments related to Parking Commission tangible capital assets 239,846 - Change in investment in Energy Services 20,156,000 (5,916,736) Change in non-cash assets and liabilities Accounts receivable 4,187,854 10,870,234 Inventory 21,317 (70,583) Prepaids 551,628 739,497 Accounts payable and accrued liabilities (5,259,998) 237,248 Deferred revenue (147,946) (3,892) Deferred government transfers 12,637,870 (1,834,934) Other post employment liabilities (5,607,541) (7,684,091) 57.341.104 58.722.861 Capital transactions Acquisitions of tangible capital assets (Note 20) Proceeds on sale of tanaible capital assets (27,764,268) (39,412,548) 749,717 270,562 (27,014,551) (39,141,986) Financing transactions Repayment of long-term debt (17,772,356) (18,150,848) Proceeds from long-term debt 15,500,000 14,000,000 Repayment of bank loan (52,128) (48,133) (2,324,484) (4,198,981) Investing transactions Investments (Note 9) (434,944) 142,663 Net increase (decrease) in cash and cash equivalents 27,567,125 15,524,557 Cash and cash equivalents, beginning of year 28,879,337 13,354,780 Cash and cash equivalents, end of year 56,446,462 28,879,337 The accompanying notes are an integral part of these consolidated financial statements. 0 KSI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 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 Canadian generally accepted accounting principles for local governments, 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. Saint John Development Corporation 8. Saint John Industrial Parks Inc. 9. Harbour Station Commission 10. Saint John Aquatic Centre Commission 11. Saint John Trade and Convention Centre 12. Saint John Energy 13. Lord Beaverbrook Rink 14. Saint John Police Commission 15. Saint John Free Public Library 16. Saint John Jeux Canada Games Foundation, Inc. 7 01-1 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 2. Summary of significant accounting policies [Cont'd] 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 Public Sector Accounting Standards ("PSAS") for government business enterprises. 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 17, 2015 and the Minister of Local Government on February 1, 2016. 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. 0 Kul The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 2. Summary of significant accounting policies [Cont'd] Measurement uncertainty [Cont'd] 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. 0 011 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 2. Summary of significant accounting policies [Cont'd] Tangible capital assets [Cont'd] 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 Years Equipment and light machinery 3-25 Furniture and office equipment 5-15 Information technology equipment and software 1-15 Land N/A Land improvements 5-100 Leasehold improvements Term of lease Municipal buildings 10-70 Transportation 5-50 Motor vehicles and mobile equipment 5-20 Water and wastewater networks 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. 10 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 2. Summary of significant accounting policies [Cont'd] Segmented information [Cont'd] 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, roads and streets 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. 11 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 2. Summary of significant accounting policies [Cont'd] 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, 2016, the balance of the bridge financing credit facility was zero (2015 - zero) and the balance of the operating line of credit was zero (2015 - 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 finance Utility Fund operations is limited to 50% of the operating budget for the year. In 2016, the City has complied with these limitations. 4. Cash and cash equivalents Cash and cash equivalents consists of the following: Unrestricted cash Restricted cash Contribution from Regional Development Corporation for the Safe Clean Drinking Water Project Reserve for capital purchase Airspace 2049 fund Land sub -division fund Saint John Non -Profit Housing future development fund Deposits on contracts Gas Tax Saint John Non -Profit Housing replacement reserve Saint John Non -Profit Housing subsidy surplus reserve General Operating Reserve !II December 31, December 31, 2016 2015 34,499,652 21,191,635 12,237,041 - 5,716,293 2,830,000 17,833 20,766 41,259 58,961 50,926 50,457 384,476 532,370 1,498,982 1,098,152 - 3,045,345 - 51,651 2,000,000 - 56,446,462 28,879,337 12 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 5. Accounts receivable Accounts receivable consist of the following: December 31, December 31, 2016 2015 Water and sewer charges to ratepayers 6,851,225 7,913,606 Other 3,500,689 5,624,309 Due from the Province of New Brunswick (Note 7) 1,574,671 1,847,604 Due from the Federal Government and its agencies (Note 6) 1,474,546 2,376,281 Allowance for doubtful accounts (1,654,800) (1,827,615) 6. Due from the Federal Government and its agencies Amounts due from the Federal Government and its agencies consist of the following 11,746,331 15,934,185 December 31, December 31, 2016 2015 Atlantic Canada Opportunities Agency 784,054 665,939 Canada Revenue Agency HST receivable 657,740 1,545,373 Other 32,752 164,969 7. Due from the Province of New Brunswick Amounts due from the Province of New Brunswick consists of the following: 1,474,546 2,376,281 December 31, December 31, 2016 2015 Other 825,266 829,202 Regional Development Corporation - Barge terminal 513,840 884,901 Dept. of Public Safety 235,565 133,501 1,574,671 1,847,604 13 _:1P The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 8. Investment in energy services Change in equity in Saint John Energy: 2016 2015 Equity at beginning of year 50,833,600 44,916,864 Net (loss) earnings (20,156,000) 5,916,736 Equity at end of year 30,677,600 50,833,600 9. Other investments Other investments consist of the following: December 31, December 31, 2016 2015 Canada Games Foundation investments 7,312,494 6,943,151 Other investments 1,035,497 969,896 Total other investments 8,347,991 7,913,047 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. 14 !193 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 10. Accounts payable and accrued liabilities Accounts payable and accrued liabilities consist of the following: December 31, December 31, 11. Deferred government transfers Deferred government transfers consist of the following: December 31, December 31, 2016 2015 Gas tax funding 1,498,982 1,098,153 Contribution from Regional Development Corporation 12,237,041 - 13,736,023 1,098,153 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 Saint John West Milestone and substantial completion payments in the future. 15 2016 2015 Trade payables 15,133,301 21,717,142 Payroll 6,352,448 5,190,743 Conferences and holdings 786,900 610,973 Deposits 782,385 906,006 Interest payable 703,306 738,700 Due to Pension Fund 197,889 137,052 Other 195,729 158,522 Canada Revenue Agency 72,092 24,910 24,224,050 29,484,048 11. Deferred government transfers Deferred government transfers consist of the following: December 31, December 31, 2016 2015 Gas tax funding 1,498,982 1,098,153 Contribution from Regional Development Corporation 12,237,041 - 13,736,023 1,098,153 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 Saint John West Milestone and substantial completion payments in the future. 15 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 12. Longterm debt Debentures consist of the following Year of Issue Interest Rate % Term (Years) 2016 Annual Payment $ 2016 $ 2015 $ New Brunswick Municipal Finance Corporation Debentures 2006 4.150 to 4.450 10 733,000 - 4,403,000 2006 4.150 to 4.450 10 400,000 4,400,000 2006 4.300 to 4.450 10 60,000 360,000 2007 4.450 to 4.850 10 380,000 2,280,000 2,660,000 2007 4.450 to 4.850 10 350,000 3,850,000 4,200,000 2007 4.450 to 4.850 10 33,000 203,000 236,000 2008 3.300 to 4.850 10 567,000 3,964,000 4,531,000 2008 3.300 to 4.850 10 125,000 1,500,000 1,625,000 2008 2.100 to 5.550 15 367,000 2,564,000 2,931,000 2008 2.100 to 5.550 15 175,000 2,100,000 2,275,000 2008 2.100 to 5.550 15 100,000 700,000 800,000 2009 0.950 to 5.000 10 933,000 7,469,000 8,402,000 2009 1.000 to 4.500 10 75,000 975,000 1,050,000 2009 0.950 to 5.000 10 100,000 800,000 900,000 2009 1.000 to 4.500 10 567,000 4,531,000 5,098,000 2009 0.950 to 5.000 10 250,000 3,250,000 3,500,000 2009 1.000 to 4.500 10 333,000 2,669,000 3,002,000 2010 1.500 to 4.550 10 1,000,000 9,000,000 10,000,000 2010 1.500 to 4.550 10 250,000 3,500,000 3,750,000 2011 1.650 to 4.250 10 1,667,000 18,665,000 20,332,000 2011 1.650 to 4.250 10 700,000 10,500,000 11,200,000 2011 1.350 to 3.450 10 300,000 3,000,000 3,300,000 2011 1.350 to 3.450 10 350,000 5,250,000 5,600,000 2011 2.060 20 200,000 3,000,000 3,200,000 2012 1.350 to 3.550 15 767,000 8,432,000 9,199,000 2012 1.350 to 3.550 15 425,000 6,800,000 7,225,000 2012 1.350 to 3.550 15 300,000 3,300,000 3,600,000 2013 1.350 to 3.700 15 687,000 8,239,000 8,926,000 2013 1.350 to 4.000 20 550,000 9,350,000 9,900,000 2013 1.350 to 4.000 20 360,000 7,920,000 8,280,000 2014 2.000 20 500,000 9,000,000 9,500,000 2014 1.150 to 3.900 15 707,000 9,186,000 9,893,000 2014 1.200 to 3.700 15 1,055,000 5,830,000 6,885,000 2014 1.200 to 3.700 20 668,000 7,344,000 8,012,000 2014 1.150 to 3.900 15 27,000 346,000 373,000 2014 1.200 to 2.150 5 56,000 168,000 224,000 16 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 12. Long term debt [Cont'd] 17 2016 Annual Interest Rate Term Payment 2016 2015 Year of Issue % (Years) $ $ $ 2015 0.950 to 3.250 15 500,000 7,000,000 7,500,000 2015 1.050 to 3.650 15 607,000 3,763,000 4,370,000 2015 0.950 to 3.500 20 175,000 3,325,000 3,500,000 2015 1.050 to 3.150 20 175,000 1,575,000 1,750,000 2015 1.050 to 3.650 15 107,000 1,093,000 1,200,000 2016 1.200 to 3.550 15 8,170,000 - 2016 1.450 to 3.500 15 6,000,000 2016 1.450 to 3.750 20 4,000,000 2016 1.200 to 2.950 10 4,000,000 2016 1.200 to 3.550 15 1,300,000 17,681,000 205,911,000 208,092,000 OTHER DEBENTURES Canada Mortgage and Housing Debentures 2009 3.97 15 91,356 874,270 965,626 Total debentures 17,772,356 206,785,270 209,057,626 17 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 12. Long term debt [Cont'd] In total, long term debt consists of: December 31, December 31, 2016 2015 Debentures 206,785,270 209,057,626 Mortgages - 12,386,810 Total long term debt 206,785,270 221,444,436 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: 18 2017 24,313,984 2018 22,064,755 2019 30,216,675 2020 21,698,752 2021 34,768,990 Thereafter 73,722,114 18 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 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 ($128,383 in 2016). 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. 19 !E:3 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 13. Post employment benefits and compensated absences [Cont'd] City of Saint John Shared Risk Plan [Cont'd] 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, 2016. 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, 2015 and current period benefit cost for the following year are based on an actuarial valuation conducted as at December 31, 2015. The accrued benefit obligation as at December 31, 2016 and current period benefit cost for the following year are based on an actuarial valuation conducted as at December 31, 2015 and extrapolated to December 31, 2016, using assumptions effective for December 31, 2016. 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: Discount Rate Inflation rate Salary increase Mortality: CPM -2014 mortality table with adjustments factors The Expected Average Remaining Service Life (EARSL) is 13 years contributions of $18,570,307 (2015 - $18,349,337). !Loll December 31, December 31, 2015 2016 5.95 6.10 2.25 2.25 3.00 3.00 During the year, the City made pension 20 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 13. Post employment benefits and compensated absences [Cont'd] City of Saint John Shared Risk Plan [Cont'd] 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. 2016 2015 City share of accrued benefit liability, beginning of year 114,100,000 103,900,000 City share of current period benefit cost 5,400,000 5,000,000 Interest cost 6,600,000 6,100,000 Less City contributions (18,600,000) (18,300,000) Actuarial loss/(gain) 7,100,000 17,400,000 City share of accrued benefit liability, end of year 114,600,000 114,100,000 Unamortized actuarial (loss)/gain (17,400,000) (11,000,000) Pension liability, end of year 97,200,000 103,100,000 The following table reflects the City share of pension related expenses: Current period benefit cost 5,400,000 5,000,000 Interest cost 6,600,000 6,100,000 Amortization of City share of actuarial loss/(gain) 700,000 (600,000) Total expense related to Pension 12,700,000 10,500,000 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). 21 6119] The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 13. Post employment benefits and compensated absences [Cont'd] Other employee future benefits [Cont'd] 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 lungs, 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 $62,833 (2015 - $61,670) 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, 2016. Previous to that, an actuarial valuation was performed as at December 31, 2015. 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. A reconciliation of the accrued benefit obligation for these plans, along with the main assumptions used for disclosure and expense calculations are as follows: 2016 2015 Accrued benefit obligation, beginning of year 26,580,309 23,675,400 Current period benefit cost 992,100 748,900 Past service improvement costs, plan amendments 1,244,000 1,720,509 Benefit payments (3,178,843) (3,346,400) Interest cost 892,302 776,500 Actuarial loss (93,200) 3,005,400 Other employee future benefits, end of year 26,436,668 26,580,309 22 51 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 13. Post employment benefits and compensated absences [Cont'd] Main assumptions used for these plans: Discount rate Salary increase EARSL 2016 2015 3.56% 3.00% Range from 10 to 23 3.51% 3.00% Range from 10 to 24 These benefit plans require no contributions from employees. The benefit liability as at December 31, 2016 includes the following components: December 31, December 31, 2016 2015 Accrued benefit obligation (carrying value) Retirement allowances 3,744,300 3,916,200 Sick leave 7,732,200 7,832,000 Heart and lung pension 5,036,900 4,763,700 Disability benefits 7,863,300 7,997,200 Contractual top up agreements 1,121,668 1,152,009 Sick leave - Saint John Transit Commission 938,300 919,200 26,436,668 26,580,309 Unamortized actuarial losses (5,553,400) (5,989,500) 20,883,268 20,590,809 The unamortized actuarial losses will be amortized over the expected average remaining service life ("EARSL") of the related employee groups starting in the next fiscal year. EARSL is determined separately for each benefit program. 23 61 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 13. Post employment benefits and compensated absences [Cont'd] The total expense related to other employee benefits described above includes the following components: 2016 2015 Current period benefit cost 992,100 748,900 Amortization of actuarial loss 342,900 216,400 1,335,000 965,300 Other employee benefit interest expense 892,302 776,500 Total expense related to other employee future benefits 2,227,302 1,741,800 14. Contingencies In accordance with the Clean Environment Act, the City is also liable for a pro rata share of the debentures and other long term debt issued on behalf of the Fundy 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, 2016 amounted to $712,000 (2015 — $1,200,000). 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 operating results of the City. Legal proceedings were filed against the City of Saint John, the Saint John Police Commission and the Saint John Police Department in December 2013 related 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. 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 67.30% in 2016 (2015: 67.81 %). 24 6V The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 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: 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 intrust 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, 2016 was $477,329 (2015 - $476,797). 25 6'511 2016 2015 2016 surplus 716,564 - 2015 surplus 644,449 644,449 2014 surplus 1,522,975 2,030,633 2013 surplus 737,565 1,106,347 2012 surplus 126,276 252,552 2011 surplus - 10,792 3,747,829 4,044,773 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 intrust 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, 2016 was $477,329 (2015 - $476,797). 25 6'511 The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 19. Funds and reserves Assets Cash Water & Sewer Capital Reserve General Operating 2016 2015 Reserve Total Total 5,716,293 2,000,000 7,716,293 2,830,000 Accumulated surplus 5,716,293 2,000,000 7,716,293 2,830,000 Revenue Transfers from Water and Sewerage Utility Operating Fund Transfers from General Operating Fund Interest 2,855,000 - 2,855,000 21,448 - 2,000,000 2,000,000 25,052 31,293 - 31,293 - Annual surplus 2,886,293 2,000,000 4,886,293 46,500 Balance, beginning of Year 2,830,000 - 2,830,000 2,783,500 Balance, end of Year 5,716,293 2,000,000 7,716,293 2,830,000 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. On November 24, 2014, Common Council passed a resolution to authorize the establishment of a capital reserve fund for the Water and Sewerage Utility. In 2016, the Water and Sewerage Utility Operating Fund contributed $ 2,855,000 to the reserve fund (2015: $ Nil). On December 12, 2016, Common Council passed a resolution to authorize the establilshment of a General Operating reserve fund. In 2016, the General Operating Fund contributed $2,000,000 to the reserve fund. 26 6191 r - CN Ln I.- W r N N M O 00 N M n n O n c c 0- M W) M W N r cD M T CD N W I - M M I O N Cl) r N r h 00 M N N r �� f0 ip � w m w W) M O n N O N M n M - M M - T h Cl) N - le - W M N O N F M n n le D) O O w n n - co le - L CO N r. 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N E U .y - O (N V 00 O 0') 00 O O O 7 N LO CM9 000 M O N V (D � � � L C� +�+ R O r N r N r M M M cu = N j J p MM CO 00 00 M ' 00 O N O N N M M ' Ln Cfl Ln (D Ln ' (D Ln c U N :E M M C N N N O M M M M CO O N V Cfl N r L N 'a 00 G V I- r M N N W N NN cu Q c iv J Oro CC) CC) CC) N ' N .(, LN LC) � lC) Cn CO CO �, i N J N N N LL N Co r CO CO � Q N mU N N ul LU E O 0 yN c 0 N c m> O ~ 0 u, O c o o z CU 0 LL U O .� 'Zj O O N O L 0 c N CO "O c c rn w ul d R Q rn rn a LU L z O � O Z w J U) a) CO C= c c c 3 �'0) N E Q a g = , o O a Y m 0 O� Ll 0 O CC a) C a3 a) N a) a3 7 a) N ~ 0 Lu y Q CO N i U O_ " Ul 0 t� U C: t� m y O .. t 0 0 0 co as 0 m o o R R U U m o E � v o ca R LU Q O a) Z LL N U m Q D Q m Q m Q Q Q m z U (7 >O r - CN Ln co N rl- LO Cl) Cl) Q v (co E (co Q v M M W O T OA O r CA Lo R cn N le N N le n OA N O r N F Cl) M r — N Cl) n O n O ,a^ M It U- O T n M Cl) OA i O le M O N Q N U 00 M C Cl) � 0 � .O N r d (c O r L d T W) M H Z LL N co N rl- LO Cl) Cl) (co v (co v (co rn v M M W O T OA O r CA Lo R le N le N N le n OA N O r N F Cl) M — I — N Cl) n O n M O OA N M It n N O T n M Cl) OA N O le n OA N 00 N M 00 M Cl) Go 04 le r M r T W) M y a N M M In 00 -a O 00 O r r 00 00 i) V (C (C V y r N N O O 0 r N N r CO Q 00 0 N M r O CO V r V W O N Ln C09 O M V M V R a o 00 0 00 0 P- D) D) (D ri ri � LO V rn V P- (D m m R R d Z r 00 r N D) 00 00 M M N N M M O 0) V M r O O 00 M V V 'R 00 N 00 N V M D) D) 0 0 V M Or M V LO O CMD CMD Q r r M M O Ln 00 00 ' H 00 O - V M V Oro c N R F V V N N 06 O (14 0') M (`) (`) 0') r Cc) Cc) >`v O NO M W N V r rr G. EA V V V M N M N O M LO r r R Ln N D) 00 (C 00 D) V M M W r r V V H v W O V V N r N G V V u - M O N N N CMD 000 N N O V O r O r N N CO V N 0) LO M N (D N N V V N N N N M V ONO V r CMD M N N H O r r Ln Ln r V V c N MrN V N V O D) N 00 NOOL M LO D) O D) O m 00 N O N Ln 00 O N N N N N O N 'a C) r (N D) r V V V CD OD O M CD M CD D) 00 00 In O (Q N N O 0) O 00 O N O ty6 0 J = r r r H 00 OD 0) r 0) O 0) (D LO O 00 r N O r O O V r D) V O LO V r r > O N N N O N 00 V M V 0) N N LO r r - J p 000 LM() r r Q M M M N N M LO r 0')N N N r D) N V V V M J W M M M M Ln LO Ln LO Ln LO Ln J H a ul Q m U z U) O w J U) 00 ul QO Nz C O Q N N N O ~ m T U)O 0) '- N LL O O w R y N O N �O CC w m N N D N w J U) O w 3 m O v Q > m N a) g�0- a oCO �,�� N C O m V 0) N 7 V O W Co CO U m Q R U m O :3R U C C O m O N R U m E U R W Q O 0) m U m Q 0 M Q m Q Q m z U (7 co N rl- LO N -0 y N N O a0 N CO a0 M I� CO M 0 N 0) r 0 I- V V N M O 0 0 R O O Ln V M I� N N 0 0 O N U) 'a Ln M Ln N Ln CO 00 M V Ln Ln N y V3 N M M O I1- V V I� O N O LO Ln O m Ln 0 M 00 O C V 0N 00 Ln N r M Ln - LO N Ln 0) r ( M 00 -0 W w -4 w h N Cl) -4 w O w w O y R h r O N w 00 w T w 00 Cl) T O O N co h co - Cl) - w CO W) O O t0 'a M M 00 .9i O M O CD h T h CD 04 y V3 r N T N r T N -4 T W) O 00 I W W O T T O w N w r 004 O - T - N r T Cl) T le - O n W) CO M h O N N y O 'jv O M H � � Of O y N c W c L W V O M N R y C09 y a) v rn r- 00 rn ` c) wcy LV V V � R .., 0) O OD M O O I— OD r w O r OM LO N N V y M v E O � M � O LO M 0> y3 V V 00 O) V 000 W r y C U 00 a ` CT oc� 0 N 0 R W t y O V O V -0 v R O CO - 00 CO O) O V w N LO r N v V VLn Ln V N O0 CO M w y M C09 M V 0 v y 0 OMD O Ln M CO � LO 00 LO O N O Ln r r V Ln r v O M N N 0) W 0 V Q 0 0 y R O M V O V y ~ i� E > CN9 r M G N t) v ON N V (D N O +�+ w > N M r 0) ay v OD 0 V LO 00 OD N OD M •�% yy r ON N V OMD G [- M N C R E v M LV 00 00 M V O O iv r c E> V N O) I- V V O 0) LO 00 Ln O O V I- M M C y y LL C7 � r M Q L •Q U) O V i V y y a) .� O N v 3 o c U O > U) ° 0 E ami > w �' U) rn 2 o U) x c a) c U) o N amio c y o c ami E a� E U iIl N N 7 >' :p a3 a3 w N y O N O Q O Q O t N N U CL 0N Z O LL N �' d D O > co) X m W U) O (7 E Q a) O 0 N N w E_ E o E o F p Go N n� w o 0 0 0 w w I-- o _ o n & m LO ƒ § ® C� C� cc cc 9 C � & ® / Cl) / s 2 �00 ■ f64/ 0 L , , , , , , , , , 0 ® \ \ \ 7%LL $ 4 / G / / 0 0 = o o r \ N \\ 7 / �mr� 0 2 § \ \ r - LL g 8 / \/ ® v \ / / / / / \ / / o \ / \ ƒ \ 0 § $ \ § _ / / R * R w L Z, CL2 0 c @ E f @ � § 2 m t . 7 § � � c R § L ) 2 7 Q / k / mr-k G § / k \ 2 o g; ] ) E k e 2 c 0 c 2§ 7 2 m g> \ \ 2 § k C C\ ® % m \ L m 2 + w § E m\ § o E / y E § t ] / 2 t 0 0 ) q .q 2 \ 2 [ .q E ° ~ ! S m � E k N$ 2 2 k \ / \ E ) d ± / G \ \ / ] 2 o LL w 04 04« u< z m 7= a.< 0 & m LO L O N r- O N i— Y co — N O o E Q L Ei3 a d Q N O pU i O O O N rte+ i 'N f:? E mac co U O O 0 = •N 'E 64 ~ O N U I- N 00 r 00 O N N o o v 0- M O M M O 0o M r M N co m O m O oc N N N 0) LO IT CO I� N 00 O I� V (V LO co V IT - LO 00 LO O LO M M V � co N O LO 00 N N M 00 v M o N V LO OD N co VO LQ N N 00 M 00 IT M O V co v N W) 'a O O N y r_ O U N CD64 O O N y r_ O U i N O r- U 0 O LL � v O ++ a E4 CO LL Y O O .a L L O 64 J > a� m A N N 64 O N LU co O (� O L as as i Fs? 'a > N O U LO LO LO O r Ln 00 r V N W 00 N r M N cD M N r O O N I- 00 O M M O 0 M �m LO M Ln M N N LO N m 00 � M L 00 N O M N N M co N h co M h 00 co Go Go M O LO m 00 r V LO LO 0 O LO 0 N M 00 N ON M r LO 00 V O r M c a) E a) co co �U C co C a) co O c 0 a� c a� U .S a) co C O O co M O O Q E Q cv cn cv o N N M O L C �_ E N O i p O i U � � v 0 vi H Z LL N I- N 00 r 00 O N N o o v 0- M O M M O 0o M r M N co m O m O oc N N N 0) LO IT CO I� N 00 O I� V (V LO co V IT - LO 00 LO O LO M M V � co N O LO 00 N N M 00 v M o N V LO OD N co VO LQ N N 00 M 00 IT M O V co v N W) 'a O O N y r_ O U N CD64 O O N y r_ O U i N O r- U 0 O LL � v O ++ a E4 CO LL Y O O .a L L O 64 J > a� m A N N 64 O N LU co O (� O L as as i Fs? 'a > N O U LO LO LO O r Ln 00 r V N W 00 N r M N cD M N r O O N I- 00 O M M O 0 M �m LO M Ln M N N LO N m 00 � M L 00 N O M N N M co N h co M h 00 co Go Go M O LO m 00 r V LO LO 0 O LO 0 N M 00 N ON M r LO 00 V O r M c a) E a) co co �U C co C a) co O c 0 a� c a� U .S a) co C O O co M O O The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 24. Reconciliation of funding deficit upon adoption of PSAS Special Top - up Heart and Retirement Agreements Lung Allowances Liabilities at December 31, 2015 as calculated on adoption of PSAS 1,051,800 4,763,700 3,916,200 Amount of December 31, 2015 liabilities funded in current year (10,700) 273,200 (171,900) Balance to be funded in future years 1,041,100 5,036,900 3,744,300 32 AI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support 33 I' 2016 523,652 556,776 Budget 2016 2015 City Manager (Unaudited) City Manager (Note 2) 595,268 508,043 Corporate Planning 368,849 357,046 344,381 REVENUE 456,889 418,434 474,608 Other revenues from own sources General Government Services 2,503,033 1,472,244 1,725,470 Protective services 2,985,768 3,220,969 3,009,669 Transportation services 9,908,895 10,707,783 9,872,260 Water and sewer services - 100 950 Environmental development services 5,151,994 7,406,069 9,161,114 Recreational and cultural services 1,247,927 1,316,699 1,356,099 21,797,617 24,123,864 25,125,562 Contributions from others General Government Services - 598,838 145,914 Protective services - 141,734 - Transportation services 230,000 3,514,251 5,354,085 Water and sewer services - 1,695,965 2,120,301 Environmental development services 495,000 2,435,308 4,255,124 Recreational and cultural services - 664,836 45,801 725,000 9,050,932 11,921,225 EXPENDITURES General government services Legislative Mayor's Office 167,583 162,577 151,239 Common Council 382,350 361,075 405,537 33 I' 549,933 523,652 556,776 City Manager City Manager 665,994 595,268 508,043 Corporate Planning 368,849 357,046 344,381 Corporate Communications 456,889 418,434 474,608 33 I' The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] 34 W 2016 Budget 2016 2015 (Unaudited) (Note 2) 1,491,732 1,370,748 1,327,032 Common services City Hall Building 1,878,337 1,758,192 1,644,784 Property Assessment 1,305,736 1,305,736 1,286,007 Public Liability Insurance 295,000 299,766 650,678 3,479,073 3,363,694 3,581,469 Other Common Clerk 642,938 618,921 653,864 Human Resources 1,517,345 1,378,081 1,328,698 Finance 1,695,452 2,293,238 2,384,112 City Solicitor 739,942 648,991 614,262 Materials Management 1,048,413 1,137,391 1,074,103 Information Systems and Support 2,201,626 2,460,000 2,399,676 Insurance 269,215 275,413 260,345 Debt Charges 16,031,173 4,330,234 4,517,470 Amortization - 7,740,108 6,760,846 Post Employment Expenses 10,455,415 4,463,273 735,286 Other 1,842,954 6,044,236 5,827,605 Regional Services Commission 28,381 28,381 41,085 36,472,854 31,418,267 26,597,352 Total general government 41,993,592 36,676,361 32,062,629 Protective services Police protection Police Operations 13,877,241 14,264,880 13,520,928 Support Services 1,973,614 1,604,170 1,811,955 Administration 1,930,568 2,096,097 1,991,525 Stations and Buildings 922,500 980,584 1,019,278 Criminal Investigation 4,422,436 4,531,840 4,604,536 Detention Services 323,000 296,332 332,341 34 W The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] 4,745,241 4,362,228 4,382,348 Total protective services 50,686,402 49,623,256 48,947,307 35 AE,I 2016 21,112,111 20,857,473 Budget 2016 2015 Other protective services (Unaudited) Inspection Services (Note 2) 991,493 942,421 Enforcement Services 192,001 200,328 191,638 Automotive 770,400 375,014 426,923 Dangerous Buildings 24,219,759 24,148,917 23,707,486 Fire protection 85,342 85,698 83,260 Fire Operations 20,645,762 20,109,287 19,867,945 Fire Investigation 75,776 62,928 61,459 Fire Prevention 992,364 939,896 927,635 Fire Training 7,500 - 434 4,745,241 4,362,228 4,382,348 Total protective services 50,686,402 49,623,256 48,947,307 35 AE,I 21,721,402 21,112,111 20,857,473 Other protective services Inspection Services 998,077 991,493 942,421 Enforcement Services 192,001 200,328 191,638 Minimum Standards 246,683 226,547 261,724 Dangerous Buildings 426,499 268,701 335,936 Animal Control 85,342 85,698 83,260 Emergency Measures 316,239 270,869 267,860 Emergency Dispatch Centre 2,480,400 2,318,592 2,299,509 4,745,241 4,362,228 4,382,348 Total protective services 50,686,402 49,623,256 48,947,307 35 AE,I The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] 1,583,263 1,476,259 1,737,483 General engineering Transportation 501,353 274,397 214,740 Traffic Engineering and Systems 2,090,525 1,842,550 1,916,187 2,591,878 2,116,947 2,130,927 Parking administration Parking Administration 602,655 544,415 460,815 602,655 544,415 460,815 External controlled entities Saint John Transit Commission 11,767,197 12,674,913 12,292,944 Saint John Parking Commission 3,231,173 2,520,269 2,892,810 14,998,370 15,195,182 15,185,754 Total transportation services 37,787,264 46,935,155 49,906,075 KE ARI 2016 Budget 2016 2015 (Unaudited) (Note 2) Transportation services Public works Roads and Sidewalks 13,783,699 11,600,133 14,598,373 Other Drainage Services 2,765,440 2,411,079 2,075,798 Street Lighting 937,300 875,820 984,480 Municipal Operations 524,659 468,525 387,036 Amortization -Transportation - 12,246,795 12,345,409 18,011,098 27,602,352 30,391,096 Fleet Maintenance and Repair 1,583,263 684,167 1,365,609 Fleet Administration - 792,092 371,874 1,583,263 1,476,259 1,737,483 General engineering Transportation 501,353 274,397 214,740 Traffic Engineering and Systems 2,090,525 1,842,550 1,916,187 2,591,878 2,116,947 2,130,927 Parking administration Parking Administration 602,655 544,415 460,815 602,655 544,415 460,815 External controlled entities Saint John Transit Commission 11,767,197 12,674,913 12,292,944 Saint John Parking Commission 3,231,173 2,520,269 2,892,810 14,998,370 15,195,182 15,185,754 Total transportation services 37,787,264 46,935,155 49,906,075 KE ARI The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] Total environmental health services 3,629,410 3,208,944 3,262,654 Environmental development services Research and planning Community Planning 1,253,108 1,128,910 1,149,514 Plan SJ 282,742 297,090 314,532 2016 1,426,000 1,464,046 Administration and geographic information systems (GIS) Budget 2016 2015 GIS (Unaudited) 379,882 273,120 Carpenter Shop (Note 2) 264,601 378,034 753,848 644,483 651,154 Water and sewer services Saint John water & wastewater 2,333,116 2,202,210 2,148,960 Drinking Water 9,690,000 7,662,509 7,750,061 Industrial Water 1,634,000 1,431,177 890,143 Wastewater 10,132,000 9,054,542 8,451,057 Infrastructure Management 1,278,000 420,872 613,615 Internal Charges 650,000 54,636 244,969 Fiscal Charges 20,563,000 3,936,511 4,203,961 Amortization - 12,426,750 12,459,076 Total water and sewer services 43,947,000 34,986,997 34,612,882 Environmental health services Sanitary Service 3,629,410 3,208,944 3,262,654 Total environmental health services 3,629,410 3,208,944 3,262,654 Environmental development services Research and planning Community Planning 1,253,108 1,128,910 1,149,514 Plan SJ 282,742 297,090 314,532 37 C�� 1,535,850 1,426,000 1,464,046 Administration and geographic information systems (GIS) GIS 364,834 379,882 273,120 Carpenter Shop 389,014 264,601 378,034 753,848 644,483 651,154 Economic development Market Square Common Area 2,333,116 2,202,210 2,148,960 Regional Economic Development 475,000 475,000 475,000 Regional Facilities 2,161,629 754,144 714,951 Saint John Industrial Parks 270,000 - - 37 C�� The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] 2,054,260 1,292,284 1,240,841 AYA KE 2016 Budget 2016 2015 (Unaudited) (Note 2) 5,239,745 3,431,354 3,338,911 Real estate management Property Management 1,136,755 1,098,390 949,820 Property Management -Police HO - 1,304 - Real Estate 319,604 258,254 268,245 1,456,359 1,357,948 1,218,065 Other environmental development services City Market 1,034,283 940,682 1,013,744 Tourism 965,600 1,020,234 993,324 Community Development 231,905 190,397 186,819 2,231,788 2,151,313 2,193,887 External controlled entities Saint John Development Corporation 770,615 459,304 1,848,651 Harbour Station Commission 3,207,098 3,555,462 3,215,423 Aquatic Centre Commission 2,671,427 2,496,244 2,571,782 Trade and Convention Centre - 875,208 773,552 Non Profit Housing - 4,834,554 2,478,577 Saint John Industrial Parks 437,205 248,064 276,138 7,086,345 12,468,836 11,164,123 Total environmental development services 18,303,935 21,479,934 20,030,186 Recreational and cultural services Cultural grants Cherry Brook Zoo 50,000 50,000 - Other Cultural Grants 2,004,260 1,242,284 1,240,841 2,054,260 1,292,284 1,240,841 AYA KE The City of Saint John Notes to the Consolidated Financial Statements For the year ended December 31, 2016 25. Revenue and expense support [Cont'd] Total energy services - 20,156,000 - TOTAL EXPENDITURES 206,306,466 223,457,789 198,856,480 2016 Budget 2016 2015 (Unaudited) (Note 2) Parks Rockwood Park 556,204 500,824 482,964 Parks General Services 2,083,221 1,837,986 1,658,772 2,639,425 2,338,810 2,141,736 Community services Parks and playgrounds 286,965 231,354 196,737 Recreation and parks 326,824 295,774 314,819 Pro Kids 100,489 104,015 94,927 714,278 631,143 606,483 Other recreational and culture services Sports and Recreation 3,115,330 3,018,743 3,054,002 Community Centres 906,052 754,765 844,554 Cultural Affairs 119,688 107,264 103,390 Amortization - Recreation - 1,214,383 1,090,781 4,141,070 5,095,155 5,092,727 External controlled entities Lord Beaverbrook 409,830 377,974 390,845 Saint John Free Public Library - 655,776 562,115 409,830 1,033,750 952,960 Total recreational and cultural services 9,958,863 10,391,142 10,034,747 Energy services Energy services - 20,156,000 - Total energy services - 20,156,000 - TOTAL EXPENDITURES 206,306,466 223,457,789 198,856,480 Financial Statements The City of Saint John Trust Funds December 31, 2016 C:1'] G O rl- Lr) k� C, - - - 2Q @ E\ en en - - - : en en en - U § A A A n Qn - � � E$ U ;To 2 2 2 � D � CJ k k k �ƒ @� @ �@ M M M _ § o q � M � 2 � � cl H t G O rl- � O � O O w M � C M � 00 00 w Z z � � � � w wy t M M N � r� V N 00 N � � w w rl O N w M i. w A O � H � H W Fzi � O � O O M � C M � 00 00 M � � I t t M M N � N 00 N � � � O � O O 's y 'z M M � � M N � N � � 's y 'z M STATEMENT OF CASH FLOW 2016 2015 Operating activities Excess of investment income over expenditure 4,402 4,744 Changes in non-cash working capital: Term Deposits - (12) Accounts Payable - - Investment activities Contributions to other entities (3,863) (977) Net cash increase in cash and cash equivalents 539 3,755 Cash, beginning of year 475,068 471,313 Cash, end of year 475,607 475,068 The accompanying notes are an integral part of these financial statements il roil The City of Saint John - Reserve and Trust Funds Notes to the financial statements For the year ended December 31, 2016 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. 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. k, 01 The City of Saint John - Reserve and Trust Funds Notes to the financial statements For the year ended December 31, 2016 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 2001' anniversary of Canada in the year 2067. D W11 The City of Saint John Report to the Finance Committee on the 2016 audit Presented to Finance Committee on June 29, 2017 01 June 23, 2017 To the Finance Committee of the City of Saint John Our audit has been conducted in accordanCd,/v"ftP,, the audit plan that was presented to the Finance CommittellOkkll j/t/toe'"eting on November 17, 2016. This report is intended solely for the Wf6rmation and use of the Finance Committee, management and*/hers within the City and is not intended to be, and should not ed by anyone other than these specified parties. We look forward t si g this report summarizing the outcome of our audit with you a �ing any questions you may have. Your ill Ir i, /r/ Deloitte LLP Chartered Professional Accountants 01-1 AtReport on audited annual financial statements II pos", / ij°Goy /oa000000i��/ ill f0s, rap" aoioo/% iiiai Dear the Finance Committee Members: 1/ We are pleased to submit this report on the status of our audit of the City of Saint John ("the City") for the 2016 fiscal year. This report summarizes i/iii% the scope of our audit, our findings and reviews certain othe�m rs iy�at �� iii%° we believe to be of interest to you. ��aoioo�% i°ooii As agreed in our master service agreement dated NoveMbefi7 2016, we have performed an audit of the financial statements of The WW%f Saint John as of and for the year ended December 31,in accordance with Canadian generally accepted auditing standards (; �a° ian GAAS") and expect to issue our audit report thereon date�ij!L017. Our audit has been conducted in accordanCd,/v"ftP,, the audit plan that was presented to the Finance CommittellOkkll j/t/toe'"eting on November 17, 2016. This report is intended solely for the Wf6rmation and use of the Finance Committee, management and*/hers within the City and is not intended to be, and should not ed by anyone other than these specified parties. We look forward t si g this report summarizing the outcome of our audit with you a �ing any questions you may have. Your ill Ir i, /r/ Deloitte LLP Chartered Professional Accountants 01-1 The City of Saint John I Table of contents Table of contents Our audit explained 1 Significant audit risks 4' Other reportable matters % Appendix 1 - Communication requirements 10j Appendix 2 - Draft version of our audi �rflp report as,%„ fl 2 /,% Appendix 3 - Deloitte resources a Ac ay 14 � i 77 © Deloitte LLP and affiliated entities = ru I-- Ln 4/001/* t Ln Ln 0 0 T'111�11�1 -�e Ln JOI/ �J� 'A 7L' a) -E -0 % 0 C: Z) eommma (a 0 0) U _0 C: Z) (1) 0 0 � Z, E U DI L 0 _0 E a) > 3: o _0 0 o U _0 E E 0 'Fa u E (i) (1) U > (a LL = (1) Ln 0 -0 0 4 - Ln Ln 4 co C)- > 0 0 o U Ln 0 _0 a) 0 15 4E� 3: Z) 0 -0 (1) 0 0 _0 0 >, > Ln t �F E 0 C 0 ol (n a) -0 -0 a) Ln 0) a) E ra u a) E E -0 Q) c: Q) — C: C: Ln -0 U > 0) Q) U (a Q) t" o 0 Z) 0 Z) Ln -0-- U C: lu E (a E L= 0) rl) 0 Ln z, z, z; ra 0) Z, a) C: (n (a a) (a o 0-0 C: -0 -0 E o o — (a Y 'Fj N (a E c: E B (a E ra 0 i/sk '10 0 -F, (1) u -0 u — . -L cm: uu uu' f ri E E rr//Mal, U: o Q) Q) U') E 0 0 a) > M u U 0) '11/d/00 ol m (a 4d (1) 1,-o C: E: Z) (1) 0 -0 -L' 0) E >, C: U U) C: _0 (a 0) Z) (o e Q) 0 o C: Q) U U c: �� Q) W E a) C: C: (a _0 (a (a U (a Q) -0 C: C"I"? 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AUTHORIZATION Primary Author Commissioner/Dept. HeadCity Manager Chris Roberts Tom Cusack Ian Fagan Kevin Fudge Jeff Trail RECOMMENDATION It is recommended that Finance Committee recommend to Common Council to award the tenders and proposals as follows: 1) Six (6) half -ton four-wheel-drive extended cab pickup trucks at a total cost of $201,644.00 plus HST to Dobson Chrysler Dodge Jeep; 2) Four (4) one -ton four-wheel-drive crew cab pickup trucks at a total cost of $272,552.00 plus HST to Downey Ford Sales Ltd.; 3) Two (2) tandem dump trucks at a total cost of $321,784.00 plus HST to East Coast International Trucks Inc.; 4) One (1) compact loader at a total cost of $91,126.00 plus HST to Atlantic Tractors and Equipment Ltd.; and 5) One (1) vacuum sweeper at a total cost of $209,737.50 plus HST to MacFarlands Limited. EXECUTIVE SUMMARY The City manages a fleet of over 350 vehicles and equipment and each year, the City's Fleet Management Division works with various City departments to identify and replace vehicles which have reached the end of their useful service lives. The purpose of this report is to make recommendations to award the latest tendered vehicles which require Common Council approval. The City currently has over 100 vehicles past their optimal replacement point and this year, 35 vehicles (some of which are the least reliable and most expensive to maintain) will be replaced through the City's procurement processes. Also 10 sedans are being eliminated as a result of the implementation of the Continuous Improvement project relating to the City's 0L! -2 - new pooled vehicles initiative. Over $140,000 has been removed from the operating budgets as a result of these initiatives. PREVIOUS RESOLUTION Not applicable STRATEGIC ALIGNMENT Along with supporting Council's priority of Sustainable Infrastructure, the specifications for these purchases were completed in consultation with the cities of Moncton and Fredericton and will be used as we move towards a common specification for fleet between the three cities. Along with alignment of the vehicle specifications, the cities will move to a common purchase date to help decrease costs and increase efficiency. REPORT These purchases are planned replacement of existing fleet equipment, approved in the 2017 capital budget. The funds specifically are provided for in the fleet reserve, funded from the operating budget. The specifications allow for vendors to submit proposals of new and/or used equipment to be evaluated using common criteria. In this report, the compact loader is an example of one such piece of used equipment that also scored the highest in the evaluations of the submissions. Light Duty Pickup Trucks Transportation and Environment Services, Saint John Water, Leisure Services and Fleet Services currently operate multiple light-duty pickup trucks (half -ton, three -quarter -ton and one -ton models) which serve many purposes in their respective areas including, but not limited to, light plowing and sanding, equipment/tools and personnel transporting, towing, etc. Ten (10) existing light- duty pickup trucks are being replaced with this award recommendation. Tandem Dump Trucks (66,000 GVWR) The 66,000 GVWR dump trucks are used by Saint John Water to haul aggregate and other materials. Two (2) existing 66,000 GVWR dump trucks are being replaced with this award recommendation. Compact Loader The current piece of equipment is used by Transportation and Environment Services for general landscaping duties, plowing, ice removal from arenas and the loading of materials onto trucks. In accordance with the new Fleet Policy and its focus on the right -sizing of equipment, the new compact loader is replacing a tractor not meeting current needs and two other 1 -Ton trucks are OR -3 - being eliminated. The compact loader will complete the plowing duties of one of the 1 -Ton trucks and the service will be supplemented with a 1 -Ton seasonal rental as needed. Vacuum Sweeper Mechanical and vacuum sweepers are used by Transportation and Environment Services for the removal of debris from City streets during the spring months. The City currently operates two (2) sweepers. As detailed in this document, an RFP was issued to establish a source of supply of two (2) additional sweepers on a rental basis for the 2017 street sweeping season. The RFP contained a provision which allows for the purchase of one or both of the rental units following the 3 -month rental term. Given that one (1) city owned sweeper has reached the end of its useful life and was scheduled to be replaced this year, one (1) existing vacuum sweeper is being replaced with this award recommendation as the purchase option represents an excellent value to the City. SERVICE AND FINANCIAL OUTCOMES The equipment is necessary in the delivery of quality services to the general public. The cost of maintaining fleet equipment rises as the vehicles age and not replacing vehicles when at the end of their useful life drives up maintenance cost. The equipment replacement will help free up more resources towards delivery of service and away from maintenance cost. The decision to not replace vehicles when due has elevated maintenance cost higher than necessary. This has resulted in significant downtime and less efficient delivery of services. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Materials Management facilitated four (4) separate publically advertised calls as follows: 1) Tender no. 2017-232001T for the supply of six (6) half -ton four-wheel- drive extended cab pickup trucks was issued on April 27, 2017 and closed on May 16, 2017 with the following submissions (excluding HST): COMPANY NAI1IfE TENUERE[ PRICE* Dobson Chrysler Dodge Jeep $201,644.00 Downey Ford Sales Ltd. $211,536.00 *Lot price, includes vehicles and required options -4- 2) Tender no. 2017-232002T for the supply of four (4) one -ton four-wheel- drive crew cab pickup trucks was issued on April 27, 2017 and closed on May 16, 2017 with the following submissions (excluding HST): C©MPANY'NAME TENDERED PRICE Downey Ford Sales Ltd. $68,138.00 Dobson Chrysler Dodge Jeep $69,348.00 3) Tender no. 2017-232004T for the supply of two (2) tandem dump trucks was issued on May 1, 2017 and closed on May 16, 2017 with the following submissions (excluding HST): C©MPANY'NAME TENDERED PRICE East Coast International Trucks Inc. $160,892.00 Universal Truck & Trailer $172,375.00 4) Request for Proposal (RFP) No. 2017-230501P for the supply of one (1) compact loader was issued on May 29, 2017 and closed on June 15, 2017 with the following submissions: C©MPANY'NAME Brandt Tractors Ltd. Atlantic Tractors and Equipment Ltd. Fort Equipment Maritime Case Ltd. MacFarland's Limited A review committee, consisting of staff from Materials Management, Fleet Management and Transportation and Environment Services reviewed the submissions for completeness and compliance with the RFP requirements and selection criteria consisting of the following: 1. Presentation and Quality of Proposal 2. Compliance with Specifications 3. Delivery Timeframe 4. Service Response Time 5. Cost Also in accordance with the City's standard procedures, the committee members evaluated and ranked each proposal based on the proposals' technical merits. Following this, the financial bids were opened and once a factor was established, these were added to the individual rankings. Atlantic Tractors and Equipment Ltd.'s proposal was selected as the best proposal based on an overall rating of the evaluation criteria offering a strong Otl -5 - overall solution for the City at the lowest cost. 5) Request for Proposal (RFP) No. 2017-086401P for the rental of two (2) sweepers (with purchase options) was issued on February 8, 2017 and closed on March 2, 2017 with the following submission: C©MPANY'NAME MacFarlands Limited A review committee, consisting of staff from Materials Management, Fleet Management and Transportation and Environment Services reviewed the submission for completeness and compliance with the RFP requirements and selection criteria consisting of the following: 1. Presentation and Quality of Proposal 2. Compliance with Specifications 3. Delivery Timeframe 4. Service Response Time 5. Warranty 6. Cost Also in accordance with the City's standard procedures, the committee members evaluated and ranked the proposal based on the proposals' technical merits. Following this, the financial bid was opened and once a factor was established, these were added to the technical ranking. The proposal submitted by MacFarlands Limited met all the requirements set forth in the RFP at a cost acceptable to staff. Staff of Materials Management have reviewed all of the tenders and proposals and have found them to be complete and formal in every regard. Staff believes that in each case the recommended bidders have the necessary resources and expertise to supply the equipment, and recommend acceptance of their tenders and proposals. The above processes are in accordance with the City's Procurement Policy and Materials Management support the recommendations being put forth. 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