2017-07-19 Finance Committee Agenda Packet - Open SessionCity of Saint John
Finance Committee - Open Session
AGENDA
Wednesday, July 19, 2017
4:30 pm
8th Floor Boardroom, City Hall
1. Call to Order
Pages
1.1 Approval of Minutes - June 29, 2017 1 - 2
1.2 2018 Draft Capital Budgets General Fund/Utility Fund 3-33
1.3 2018 General Fund Capital Budget 34-45
1.4 2018 Utility Fund Capital Budget 46-53
1 Poeta Sy:1
MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING
JUNE 29, 2017 AT 4:30 PM
Stn FLOOR BOARDROOM, CITY HALL
Present: Councillor D. Merrithew
Councillor G. Sullivan
Councillor S. Casey
Councillor G. Norton
Regrets: Mayor D. Darling
Councillor D. Reardon
Also
Present: Commissioner of Finance and Treasurer K. Fudge
City Manager J. Trail
Deputy City Manager N. Jacobsen
Deputy Commissioner Finance and Administrative Services I. Fogan
Comptroller C. Graham
Assistant Comptroller C. Lavigne
Senior Manager, Financial Planning H. Nguyen
Commissioner Saint John Water B. McGovern
Commissioner of Transportation & Environment Services M. Hugenholtz
Fire Chief K. Clifford
Administrative Officer R. Evans
1. Meetiniz Called To Order
Councillor Merrithew called the Finance Committee open session meeting to order.
1.1 Approval of Minutes — May 30, 2017
Moved by Councillor Sullivan, seconded by Councillor Casey:
RESOLVED that the minutes of May 30, 2017, be approved.
MOTION CARRIED.
Jeff Cochran and Jeremy Mallais from Deloitte entered the meeting.
1.2 2016 City of Saint John Consolidated Financial Statements
Mr. Cochran and Mr. Mallais reviewed the submitted report to the Finance Committee on the 2016
audit.
Moved by Councillor Merrithew, seconded by Councillor Casey:
RESOLVED that the Finance Committee approve this report and that the Chair of the Finance Committee
The board had an in -camera session with no staff in the room to speak with the auditors.
Referring to the submitted presentation, K. Fudge gave an overview of the 2016 Consolidated Financial
Statements.
The City Manager commented that they are having discussions this week with the province in regards to
the unconditional grant and the affects of the tax assessment freeze.
(Mr. Cochrane and Mr. Mallais withdrew from the meeting)
1.3 Fleet Replacement Program
Referring to the submitted report, I. Fogan presented on the fleet replacement program highlighting the
following:
• The current state of fleet
• Pooled Vehicle Program
Moved by Councillor Sullivan, seconded by Councillor Casey:
RESOLVED that item 1.3 Fleet Replacement Program, be received for information.
MOTION CARRIED.
Moved by Councillor Norton, seconded by Councillor Sullivan:
RESOLVED that the 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.
Are •► WA::
Adjournment
Moved by Councillor Sullivan, seconded by Councillor Norton:
RESOLVED that the Finance Committee open session meeting held on Thursday, June 29th, 2017 be
adjourned.
AR •►
The Finance Committee meeting held on June 29, 2017 was adjourned at 6:10 p.m.
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FINANCE COMMITTEE REPORT
Report Date July 11, 2018
Meeting Date July 19, 2018
Chairman Councillor Merrithew and Members of Finance Committee
SUBJECT: 2018 General Fund Capital Budget
OPEN OR CLOSED SESSION
This matter is to be discussed in open session of the Finance Committee.
AUTHORIZATION
Primary Author
Commissioner/Dept. HeadL4
City Manager
Craig Lavigne
Kevin Fudge
m
I Jeff Trail
RECOMMENDATION
It is recommended that Finance Committee reflect upon the attached document
and make any and all inquiries and recommendations to staff; and receive and
file this report.
EXECUTIVE SUMMARY
The draft 2018 General Fund Capital Budget reflects the current fiscal challenges
that face the City of Saint John. The rate of reinvestment in the City's current
assets is not keeping up with the rate of depreciation of those assets. There is
additional pressure on the capital budget due to lack of reserve funding and the
"pay as you go" capital funding in the operating budget has been stripped to
virtually nothing.
This Council has made it a priority to develop an asset management plan. This
plan is critical for the City to determine the true state of its infrastructure, the
level of service that assets provide and the level of funding that will be needed to
sustain the level of service that assets provide. The asset management plan will
feed directly into and be a critical part of the long term financial plan of the City.
PREVIOUS RESOLUTION
N/A
STRATEGIC ALIGNMENT
011
-2 -
The proposed 2018 General Fund Capital Budget is aligned with Councils'
priorities; Vibrant, Safe City, Value Service Delivery and Fiscally Responsible.
REPORT
The 2018 General Fund Capital Budget aligns with Council's priorities to support
investment in creating a Vibrant, Safe City, offering Valued Service Delivery and
being Fiscally Responsible. The budget also heavily invests in existing financial
assets to close the gap in the infrastructure deficit the City has on its assets.
Common Council approved the Asset Management Policy in 2017. This plan will
give Council the ability to make evidenced and strategic based decisions on
where best to invest the limited capital dollars to help achieve Council's
priorities. The asset management plan sets the foundation for long term debt
planning, long term financial planning and supports fiscally responsible spending
focused on service.
The Finance Department received over $26.7 million in capital budget requests
from service areas for 2018. The requests exceed the $10-$12 million that the
City has established as a financial measure to keep long term debt from growing
to an unsustainable level. Long term debt for the General Fund reached $117
million by the end of 2016.
The proposed 2018 General Fund Capital Budget totals $18,308,260 of which
$6,318,130 is to be funded from other sources (gas tax, reserves, etc.) and the
remainder $11,990,130 is to be funded by debt issue ($10,172,500 in 2017).
2018 CAPITAL BUDGET HIGHLIGHTS
The capital budget includes investments that support sustainable city services
and municipal infrastructure. Key re -investments include road improvements,
investments in municipal buildings, storm water, fleet and information
technology that will maintain service delivery and contribute to reducing the
infrastructure deficit.
Reinvestment in Existing Assets
Transportation —The 2018 General Fund Capital Budget includes $5.44 million of
investment in asphalt, curb and sidewalk and street reconstruction. This
represents a year over year increase of $95,000 compared to the 2017 General
Fund Capital Budget ($5.345 million). Total investment in roads in Capital and
Operating Budgets for 2018 equals $6.805 million ($6.71 million 2017). Overall
PCI is intended to remain at similar levels; however there is risk around the
unknown price of asphalt for 2018 and the amount spent on roads is not enough
to keep all roads from falling into the rebuild stage.
W
-3 -
Drainage — Continuing to invest in Westgate Park, funds have been included in
the amount of $495,000. There are also three projects included for storm sewer
separation that is being done in conjunction with Saint John Water for $370,000
which will continue to advance the reliability of the wastewater network through
separation of storm water and wastewater as well as additional work on Sandy
Point Road for $115,000.
Fleet — Funding of $2.5 million from the fleet reserve is included to ensure the
City has the equipment and fleet required to provide necessary public services
without having to increase borrowing. A new fleet model was developed and
approved by Common Council in 2017, which has seen a reduction of vehicles
due to initiatives such as pooling, that aligns strongly with a value service
delivery model and continuous improvement.
Information Technology - The City's information technology is key in supporting
Council and staff initiatives, as well as supporting effective and efficient delivery
of the services provided to residents. The proposed budget includes $280,000 in
replacement of firewall and network infrastructure with the funding all coming
from the computer reserve fund.
Parking — Nine pay and display machines are being replaced with more advanced
technology that will no longer require receipt paper. The cost allocated for these
nine machines is $78,300 and this investment will result in a reduction of
$35,000 yearly in the parking administration budget.
Facility and Equipment Renewal — This budget includes $877,000 for
reinvestment in buildings and machinery and equipment in those buildings.
Work includes replacement and repairs on the Visitor Information Center West,
Saint Patrick Pedway, Harbour Station Pedway and various arenas. Harbour
Station will receive $97,000 to replace vintage equipment needed for contractual
and safety reasons. Canada Games Aquatic Center will receive $610,000 to
replace vintage 1983 domestic hot water tanks, heat exchangers, pool deck as
well as other facility related items.
Transit — Twelve new buses have been ordered and are anticipated to be in
service by early 2018. Access to reliable cost-effective public transportation
plays an important part in creating great neighborhoods. The budget includes
$3.086 million that is split 50/50 between external funding and City Share and
brings the total cost of replacing twelve buses to $6.636 million.
Public Safety Services — An additional $2.8 million for the replacement of the
trunk radio system currently being used by the City's first responders has been
earmarked in this budget. This project is critical for the safety of the first
responders and as well as the Citizens who live and visit the City.
MQ
-4 -
Economic Development — The Trade & Convention Centre's $82,000 for
replacement of unreliable kitchen equipment and an ice machine could have
potential health and safety issues if not replaced.
New Assets/Service Enhancements
Saint John Fieldhouse — Official announcement has been made securing funding
from all levels of government. The City has committed $4.2M over three years
and 2018 is the first year of that commitment for $1.4M.
Intersection Improvements - The budget earmarks $150,000 for enhancements
to various intersections throughout the City. An additional $600,000 is being
recommended to start the initial design work around the intersections at
Ashburn Lake Road/Rothesay Avenue/Retail Drive.
Council Priorities
Fiscal Responsibility
The 2018 capital budget aligns with Council Priority of fiscal responsibility. The
capital budget set forth is based on $11,990,130 of new borrowing. Staff
continues to recommend that Council limit new debt to $11-$12 million per year
in order to reduce the debt over time to ensure fiscal sustainability.
The second stage of the asset management plan is well underway and is
anticipated to be completed by the end of 2018. This will set the foundation for
current and future Councils, staff and all stakeholders enabling better sound
financial decisions, setting levels of service and feeding the long term financial
plan. This will be a living document to help guide financial decision making.
Vibrant, Safe City
The purchase of the twelve new buses for Transit will align directly with this
priority. These additions will provide accessible and cost-effective
transportation. The continued reinvestment in the trunk radio system for first
responders will replace a legacy system with a system that is safe, reliable and
allow delivery of an efficient public safety service.
Value Service Delivery
The 2018 General Capital Budget focuses a continued renewal to the roadway
system. The monies allocated to the roadways focuses on maintaining the level
of PCI and avoid roads falling into the rebuild stage, which is five times the cost
of repaving.
Kul
-5 -
CONCLUSION
Planned capital expenditures total $18,308,260, with $6,318,130 is to be funded
from other sources (gas tax, reserves, etc.) and the remainder $11,990,130
funded through debt. The annual funding from the gas tax program as well as
funding from other government programs, has helped reduce projected
borrowing costs and has allowed the City to undertake needed infrastructure
improvements. This level of capital expenditures is within the City's borrowing
capacity.
The 2018 capital budget is investing 88.27% ($16.16M) in existing assets. This
amount falls short compared to the amount of asset being amortized on a yearly
basis. The asset management plan becomes an extremely important living
document to address the infrastructure deficit and will feed into the long term
financial plan that is starting to be developed in 2018.
SERVICE AND FINANCIAL OUTCOMES
The 2018 General Fund Capital budget will become a fixed charge for the next 15
years for the General Operating Budget. The projects chosen for the capital
program that require borrowing have a useful life of 15 years or more.
INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS
Input has been received from the all the Service Areas, the ABCs and the Senior
Leadership Team.
ATTACHMENTS
Exhibit 1 - 2018 General Capital Budget Recommended
Exhibit 2 - 2018 General Capital Budget Deferred
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VA
MAI
FINANCE COMMITTEE REPORT
Report Date July 11, 2018
Meeting Date July 19, 2018
Chairman Councillor Merrithew and Members of Finance Committee
SUBJECT: 2018 Utility Fund Capital Budget
OPEN OR CLOSED SESSION
This matter is to be discussed in open session of Finance Committee.
AUTHORIZATION
Primary Author
Commissioner/Dept. HeadL4
City Manager
Craig Lavigne
Brent McGovern
m
I Jeff Trail
RECOMMENDATION
It is recommended that Finance Committee reflect upon the attached document
and make any and all inquiries and recommendations to staff; and receive and
file this report.
EXECUTIVE SUMMARY
The draft 2018 Utility Fund Capital Budget reflects the completion of the largest
municipal infrastructure project in the history of the Province of New Brunswick,
the Safe Clean Drinking Water Project (SCDWP). The 2018 capital budget reflects
the largest financial portion of this project.
The renewal of assets in 2018 is much less than previous years due to the
pressure and cost associated with the SCDWP and the efforts being made to limit
spending on infrastructure renewal to essentially just those projects that are
necessary to ensure service continuity. The completion of the asset management
plan will play a critical role in determining the state of the utilities assets, the risk
of failure, service that the asset provides for and how to close the gap on the
overall infrastructure deficit as is being done in the General Fund. The asset
management plan will be a critical piece in the development of the long term
financial plan of Saint John Water.
PREVIOUS RESOLUTION
N/A
-2 -
STRATEGIC ALIGNMENT
The proposed 2018 Utility Fund Capital Budget is aligned with Councils'
priorities; Vibrant, Safe City, Value Service Delivery and Fiscally Responsible.
REPORT
The proposed 2018 Draft Utility Capital Budget is a total of $146,789,519.
Funding from other sources, (Gas tax, P3 Canada, RDC, Reserves) is $95,560,619
and Saint John Water's share is $51,228,900.
Saint John Water is expected to borrow $47,000,000 for its portion of the
substantial completion payment on this project. The majority of the project is
anticipated to be completed the end of 2018, with the water treatment plant
being fully operational by that date.
The operation of the new treatment plant along with the increase in debt which
is expected to peak at approx. $104,600,000 in 2018 will put significant pressure
on rate payers and the continued asset renewal for Saint John Water.
The reinvestment in assets in 2018 is $6.23M with $1.96M coming from others,
leaving the Utility share at $4.275M. Amortization in 2016 was $12.4M. This gap
will not be sustainable, however the asset management plan will help identify
how to close the gap and support the creation of Saint John Water's long term
financial plan.
Infrastructure Renewal —Water
The total amount including funding from other sources for water infrastructure
renewal is $3,559,019 for 2018. The two largest projects in this budget is phase
14 of the ongoing watermain cleaning and lining project and phase 2 of a 2 year
project at the Musquash pumping station. Also noteworthy is that there is
approximately 700 m of watermain in total to be renewed as well as strategic
work to be done on Leinster Street to coincide with the construction of Irving
Oil's new parking garage.
Infrastructure Renewal — Sanitary
The amount of renewal in sanitary for 2018 is $2,675,000. Reinvestments call for
renewing vintage 1891 and 1925 sewer lines, replacing components of and
upgrading the SCADA system and replacement of pumps at Carpenter place
pumping station. Also work will be done to replace sanitary services on Leinster
Street in coordination with the watermain renewal.
-3 -
Safe Clean Drinking Water Project
Funding from P3 Canada, Regional Development Corporation and internal
reserves will be $93,601,600 and Saint John Water portion which will be funded
through debt is $46,953,900.
SERVICE AND FINANCIAL OUTCOMES
The infrastructure renewal portion of the 2018 Utility Fund Capital budget will be
funded from the operations, so there will be no borrowing. The borrowing for
the Safe Clean Drinking Water Project will become a fixed cost for the next 30
yea rs.
INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS
N/A
ATTACHMENTS
Exhibit 1 - 2018 Draft Utility Capital Budget
!E:3
Prc� �s� rc�r Sal Iry Fc�r ®1
Category
No. of
Other
Utility
Total
Projects
Share
Share
Infrastructure Renewal - Sanitary
12
$600,000
$2,075,000
$2,675,000
Infrastructure Renewal - Water
8
$1,359,019
$2,200,000
$3,559,019
Safe, Clean Drinking Water
1
$93,601,600
$46,953,900
$140,555,500
TOTALS: 21 $95,560,619 $51,228,900 $146,789,519
Infrastructure Renewal -
Sanitary
4.1%
Infrastructure Renewal -
ite r
3%
Safe, Clean Drinking
Wate r
91.7%
MDH: MUNICIPAL DESIGNATED HIGHWAYS
PDH: PROVINCIALLY DESIGNATED HIGHWAYS
RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects.
w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council.
C-**: PROJECTS CARRIED OVER FOR COMPLETION THE FOLLOWING YEAR Priority assignments are subject to change at any time.
*: PROJECTS DEPENDANT ON FUNDING FROM OTHERS
Infrastructure Renewal - SanitAl_y
Project Location Description Other Utility
Share Share
Currie Avenue
Pugsley Avenue to Balfour
Line approx. 175 in of 300 mm Concrete
0 130,000
sanitary sewer, including design and
construction management services.
Energy Efficiency
Various Locations
Technical analysis regarding energy
0 75,000
conservation opportunities on various Saint
John Water facilities.
Glen Road
Glenview Drive to Morgan Road
Renew 215m of existing 200mm Concrete
0 210,000
sanitary sewer, including construction
management services.
Jack's Field
Gooderich Street to Wright
Line approx. 150 in of 375 mm, 50 in of 300
0 190,000
Street
mm and 10 in of 450 mm T.C. Sanitary sewer,
including design and construction management
services.
Leinster Street
Sydney Street to Carmarthen
Renew approx. 130m of 300mm T.C. with new
0 145,000
Street
200mm sanitary sewer, including construction
management services.
Mill Street
At railroad track crossing
Line approx. 28m of 750 mm sanitary sewer
0 110,000
under tracks, including design and construction
management services.
Paddock Street
Paddock Street to Cliff Street
Line approx. 80 in of 375 mm T.C. sanitary
0 75,000
sewer, including design and construction
management services.
Rockland Road
Parks Street to Cranston Avenue
Renew 210 in of 225 mm and 300 mm T.C.
0 235,000
sanitary sewers (1891), including design and
construction management services.
SCADA System
Various Locations
Design, purchase and install the equipment for
600,000 350,000
a PLC -5 Migration, Fournier SLC / Panel View
Migration, Polymer SLC / Local DTAM HMI
Migration at the Millidgeville Wastewater
Treatment Facility. Design, purchase and install
radio equipment and Twido PLC's at various
locations. Project proposed to be partially
funded under the Small Communities Fund
(SCF).
Spar Cove Road
Across from civic # 60 Spar
Replace 22m of 250mm sewer with larger
0 45,000
Cove Road
450mm sewer and install a weir in the benching
to direct more flow to the Spar Cove Lift
Station, including design and construction
management services.
MDH: MUNICIPAL DESIGNATED HIGHWAYS
PDH: PROVINCIALLY DESIGNATED HIGHWAYS
RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects.
w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council,
C-**: PROJECTS CARRIED OVER FOR COMPLETION THE FOLLOWING YEAR Priority assignments are subject to change at any time.
*: PROJECTS DEPENDANT ON FUNDING FROM OTHERS
Project
Visart Street
Wastewater Pumping
Location Description Other Utility
Share Share
Adelaide Street to Natalie Street Renew approx. 110m of 225 mm T.C. (1925) 0 110,000
with new 200 mm sanitary sewer, including
construction management services.
Carpenter Place Wastewater Replacement of two pumps with new chopper 0 400,000
Pumping Station style pumps, including design and construction
management services.
TOTAL: $600,000 $2.075.000
MDH: MUNICIPAL DESIGNATED HIGHWAYS
PDH: PROVINCIALLY DESIGNATED HIGHWAYS
RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects.
w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council.
C-**: PROJECTS CARRIED OVER FOR COMPLETION THE FOLLOWING YEAR Priority assignments are subject to change at any time.
*: PROJECTS DEPENDANT ON FUNDING FROM OTHERS
Infrastructure Rl - Water
Project Location Description Other Utility
Share Share
Glen Road Glenview Drive to Morgan Road
Leinster Street Sydney Street to Carmarthen
Street
Loch Lomond Watershed McBrien and Taylor Lakes
Renew approx. 210m of existing 200mm 0 240,000
watermain, including design and construction
management services.
Renew approx. 130m of 200mm C.I. 0 150,000
watermain, including design and construction
management services.
Investigate and design the requirements to do 0 90,000
some civil works at Taylor Lake to invest in
further securing the separation of this lake from
the watershed and Investigate and design the
requirements to fix the damaged control
structure at McBrien Lake.
Musquash Industrial Musquash Industrial Water Chamber Upgrades and Electromagnetic 0 50,000
Water Supply Supply Pipeline Inspection — Preliminary Assessment and
Engineering Design
Musquash Pumping Musquash Pumping Station Relocate substation across the road under the 0 1,275,000
Station 69KV Transmission Line, including design and
construction management services. Phase B
Rockland Road Parks Street to Cranston Avenue Renew 210 m of 200 mm C.I. watermain, 0 230,000
including design and construction management
services.
Visart Street Adelaide Street to Natalie Street Renew approx. 150m of 200 mm C.I. (1957) 0 165,000
watermain, including design and construction
management services.
* Watermain Cleaning and Various locations Cleaning and lining of existing unlined C.I. 1,359,019 0
Lining Phase 14 watermains to improve pressure, water quality,
and fire flows. Project to be funded under
G.T.F.
TOTAL: $1.359.019 $2.200.000
MDH: MUNICIPAL DESIGNATED HIGHWAYS
PDH: PROVINCIALLY DESIGNATED HIGHWAYS
RDH: REGIONALLY DESIGNATED HIGHWAYS This is a tentative program listing of proposed capital projects.
w&s: WATER AND SEWER RELATED PROJECTS This list has not been approved by Common Council.
C-**: PROJECTS CARRIED OVER FOR COMPLETION THE FOLLOWING YEAR Priority assignments are subject to change at any time.
*: PROJECTS DEPENDANT ON FUNDING FROM OTHERS
I'll, 11 11#_ #� IJ111 1 #_
Project Location
Safe, Clean Drinking TBD
Water Program
Description
Safe, Clean Drinking Water Program envelope
for 2018.
TOTAL:
Other
Utility
Share
Share
93,601,600
46,953,900
$93.601.600
$46.953.900