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2017-09-27 Finance Committee Agenda Packet - Open Session City of Saint John Finance Committee Meeting Wednesday, September 27, 2017 Committee of the Whole 1. Call to Order Si vous avez besoin des services en français pour une réunion de Conseil communal, veuillez contacter le bureau du greffier communal au 658-2862. Each of the following items, either in whole or in part, is able to be discussed in private pursuant to the provisions of subsection 10.(2)(4) of the Municipalities Act and Council / Committee will make a decision(s) in that respect in Open Session: th 5:30 p.m., 8 Floor Boardroom, City Hall 1.1 Approval of Minutes 10.2(4) 1.2 Approval of Minutes 10.2(4) 1.3 Financial Matter 10.2(4)(c) 1.4 Financial Matter 10.2(4)(c) Finance Committee Meeting Open Session September 7, 2017 MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING SEPTEMBER 7, 2017 AT 4:30 PM th 8 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: City Manager J. Trail Deputy City Manager N. Jacobsen Commissioner of Finance and Treasurer K. Fudge Senior Manager Financial Planning H. Nguyen Deputy Commissioner Finance and Administrative Services I. Fogan Comptroller C. Graham Commissioner Saint John Water B. McGovern Commissioner of Transportation & Environment Services M. Hugenholtz Assistant Comptroller Finance C. Lavigne Commissioner Growth and Community Development J. Hamilton Fire Chief K. Clifford Administrative Fire Officer J. Hennessey 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 July 19, 2017 Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the minutes of July 19, 2017, be approved. MOTION CARRIED. 1.2 Asset Management 2016 State of the Infrastructure Report (Mr. Samir Yammine, Energy Manager, and Mr. Hans Arisz of RV Anderson entered the meeting) Referring to the submitted report, Mr. Arisz commented on Phase II of the Asset Management Plan, the implementation The data used in this analysis is of low confidence and must be more refined to increase accuracy. The methodology used is non-subjective condition ratings and risk ratings have been assigned to assets and is used to generate the state of the infrastructure. Overall tpair. Decisions will have to be made to ensure the infrastructure does not fall into a state of disrepair over the next 10 to 20 years. Historical trends Finance Committee Meeting Open Session September 7, 2017 indicate that the City is underfunding infrastructure assets by less than half of the requirement. The recommendation is to build on this gradually and increase the budget by a certain percentage each year to meet infrastructure needs. There needs to be an increase to funding or a decrease in service levels with a focus on improving the efficiency on how the City does business. Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that Item 1.2 Asset Management State of the Infrastructure Report, be received for information. MOTION CARRIED. (Mr. Yammine and Mr. Arisz withdrew from the meeting) 1.3 2018 General Fund Capital Budget Referring to the submitted report, Ms. Graham commented on the changes from the original draft budget which included an increase of $100,000 to Parks & Public Spaces and an increase of $500,000 to the Neighbourhood Plan, with a corresponding reduction to Transportation & Environment Services. The capital budget envelope continues to be under the $12M threshold. The committee commented on a request from Uptown Saint John regarding an enhanced level of maintenance to sidewalks. Uptown SJ has offered the City a partnership arrangement for a sidewalk cleaning machine and has offered to contribute up to $75T towards a sidewalk cleaning machine, estimated at $155T plus HST. Uptown SJ is also willing to contribute to the operation of the machine or in another fashion for maintenance of the uptown area. Moved by Councillor Norton, seconded by Councillor Reardon: RESOLVED that the request from Uptown Saint John regarding the purchase of sidewalk cleaning machine be referred to the South End Neighbourhood Plan committee for consideration. MOTION CARRIED with Mayor Darling voting nay. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve the 2018 General Fund Capital Budget and submit to th Common Council for the September 18 meeting for approval. MOTION CARRIED. 1.4 2018 Water and Sewerage Utility Fund Capital Budget Ms. Graham commented on changes to the 2018 Water and Sewerage Utility Fund Capital budget and noted that an additional item was added relating to the Ocean Drive Pumping Station. It is a large capital budget predominately the result of the Safe Clean Drinking Water project. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve the 2018 Water and Sewerage Utility Fund Capital th Budget and submit to Common Council for receive and file at the September 18 meeting. MOTION CARRIED. 1.5 Safe Clean Drinking Water Project Substantial Completion Payment Mr. Lavigne commented on the submitted report. The capital budget for the utility is large, specifically around the Safe Clean Drinking Water project. Interest rates are rising which has forced the City to re- consider the timing of its borrowing. Mr. Fudge recommended to proceed with an earlier debenture due to increasing interest rates, adding that although there will be some cost not budgeted in 2017, it will decrease borrowing costs over the life of the project. The City will ask for a 30 year fixed rate. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee approve borrowing $45,000,000 for the Safe Clean Drinking Water Project as part of the Fall Debenture issue and approve amending Council Report M&C 2017 Finance Committee Meeting Open Session September 7, 2017 202, 2017 Fall Debenture Notice of Motion to reflect borrowing $45,000,000 as part of the 2017 Fall Debenture issue. MOTION CARRIED. 1.6 June 2017 Year-End Forecast General and Utility Operating Funds Ms. Nguyen commented on the revised year end projection for 2017 based on the June results. The revised forecast has a 0.49% positive variance, which is essentially considered to be on-budget. Each th department commented on department results as of June 30. Commenting of the projected deficit of the Police budget of an estimated $300,000 to $330,000, Mayor Darling noted that the Police Commission has the expectation of a balanced budget by yearend. Moved by Councillor Norton, seconded by Mayor Darling: RESOLVED that a representative(s) from the Police Commission be asked to attend the next meeting of the Finance Committee to present on its budget. MOTION CARRIED. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that item 1.6 June 2017 Year-End Forecast General and Utility Operating Funds, be received for information. MOTION CARRIED. 1.7 Revenue Generation Opportunity License Agreements Eastlink & Bell Mobility Mr. McGovern reviewed the submitted report and commented on the alternative revenue sources regarding Bell Mobility and Eastlink. Moved by Councillor Sullivan, seconded by Mayor Darling: RESOLVED that the Finance Committee recommend to Common Council that: 1) the City enter into a 20 year License Agreement with Bell Mobility Inc. generally in the form as submitted, for the purpose of allowing Bell Mobility to place telecommunication antenna on a Saint John Water Tower for a yearly fee; and that the Mayor and Common Clerk be authorized to execute the said License Agreement; and 2) the City enter into a 20 year License Agreement with Bragg Communications Incorporated (Eastlink) generally in the form as submitted, for the purpose of allowing Bragg Communications to place telecommunication antenna on a Saint John Water Storage Reservoir for a yearly fee; and that the Mayor and Common Clerk be authorized to execute the License Agreement. MOTION CARRIED. 1.8 2018 Utility Fund Operating Budget Mr. McGovern reviewed the submitted report regarding the 2018 Utility Fund Operating budget. The Safe Clean Drinking Water project is the largest municipal infrastructure project in the history of New Brunswick. A wastewater rate study, universal metering evaluation, and industrial rates study will be completed, in addition to a long term financial plan. Continuous improvement and revenue generation will remain a focus. Overall, the proposed increase is $72 per year for flat rate customers which is consistent with the forecast to manage the debt associated to the safe clean drinking water program. Council is required to set rates that cover expenses and capital, with rates expecting to reach $1440 per year once the safe clean drinking water program is fully operational. Rates will stabilize after 2019 within CPI. There will continue to be competing pressures between debt reduction efforts and the asset infrastructure deficit. Finance Committee Meeting Open Session September 7, 2017 Mr. Fudge noted that the utility does not retain earnings and when there is a surplus, the surplus is carried forward and always goes back to the ratepayers. Moved by Councillor Reardon, seconded by Councillor Norton: RESOLVED that the Finance Committee reflect upon the submitted document and make any and all inquiries and recommendations to staff, and that the report be received for information. MOTION CARRIED. 1.9 Fundy Regional Service Commission Budget Mr. Fudge commented on the submission from the Fundy Regional Service Commission regarding its 2018 budget. The Fundy Regional Service Commission has requested feedback and an increase in funding from $10,000 to $34,000. Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that item 1.9 Fundy Regional Service Commission budget be received for information, with further discussion and feedback at the next Finance Committee meeting. MOTION CARRIED. Adjournment Moved by Mayor Darling, seconded by Councillor Reardon: RESOLVED that the Finance Committee open session meeting held on Thursday, September 7th, 2017 be adjourned. MOTION CARRIED. The Finance Committee meeting held on September 7, 2017 was adjourned at 8:05 p.m. FINANCECOMMITTEEREPORT Report DateSeptember 21, 2017 Meeting DateSeptember 27, 2017 Chairman CouncillorMerrithewandMembers of Finance Committee SUBJECT: 2018UtilityFund OperatingBudget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary AuthorCommissioner/Dept. HeadCity Manager Craig LavigneBrent McGovernJeff Trail RECOMMENDATION It isrecommended that Finance Committeeapprove the 2018 Utility Fund Operating Budget and submit to Common Council for receive and file. EXECUTIVE SUMMARY The2018UtilityFund OperatingBudget reflectsthe completion of the largest municipal infrastructure project in the history of the Province of New Brunswick, the Safe Clean Drinking Water Project(SCDWP). The project is anticipated to be substantially completed by November/December 2018. The proposed 2018 budget for the most part holds a service level similar to the service level in the 2017 budget however the West side water users as of September 14, 2017 have begun receivingsafe, clean drinking water and 2018 will represent the first full year in service for the new West side potable begin receiving safe, clean drinking water in 2018. Severalkey initiativesare anticipated to be completed in 2018 along with the SCDWP. These include the continuation and finalization ofboththe Water and Wastewater Rate Study(which includes evaluation of universal metering) and completion and finalization ofthe Industrial Rate Studies. Also included in 2018 initiatives are maintenance and repair of much of Saint Johninventory of gravel roads, dredging of the Lancaster Lagoon, Lancaster Water Storage Tank coating maintenance, improved watershed signage and allocation of funds for sewer lining and pipe patching. Giventhe sewer video programis soon to get - 2 - underway; funds are also being allocated to deal with sewer issues that are discovered to allow for the deferral of Capital in some instances or for the prompt infrastructure repair in other instances. In addition, Continuous Improvement projects and revenue generation opportunities will remain a focus in 2018. The flat rate being recommended for 2018 is $1,368. This rate is consistent with the transitional forecasted rate over the past 5 years and it represents an annual increase of $72 in 2018 or $6.00 per month per residential flat rate user. PREVIOUS RESOLUTION Finance Committee reflect upon the attached document and make any and all inquiries and recommendations to staff; and receive and file this report STRATEGIC ALIGNMENT The proposed 2018 Utility Fund Operating Budget is aligned with Council priorities in taking a strategic approach to financial management of the Utility by continuing to contribute Capital funding from Operating and by contributing to the SCDWP reserve fund. REPORT The proposed 2018 Utility Fund Operating Budget is a total of $47,804,000 and represents an increase of $2,554,000 (5.64%) over 2017 budget ($45,250,000). There are budgeted increases in expenditures for 2018 that the Utility has little control over and include items such as; wage increases tied to collective agreements, workers compensation rates, electricity increases and asphalt costs associated with utility cuts. Since the last presentation of the draft budget to the Finance Committee on th September 7 there have been three changes to the budget. The changes consist of; a reduction in the amount budgeted for utility cuts by $165k due to a utility cut review, the elimination of a design engineer position through attrition totaling $110k (includes all benefits) and the increase in revenue of $500k due to the early borrowing and the short-term investment of SCDWP funds. The combination of additional revenue and expense reduction increases the contribution to the SCDW Reserve by approximately $575k. The revised numbers are reflected in the updated table below along with the more significant year over year changes in service areas. - 3 - 2018 2017 ProposedApprovedVariance BudgetBudget Operating Expenditures Drinking Water10,483,0009,512,000971,000 Industrial Water 1,696,0001,519,000177,000 Wastewater 11,268,00010,564,000704,000 Infrastructure Management 1,201,0001,330,000-129,000 Internal Charges/Post Employment2,279,0002,142,000137,000 Benefits Fiscal Charges Debt servicing10,102,0007,458,0002,644,000 Capital from Operating10,775,00012,725,000-1,950,000 Total Expenditures 47,804,00045,250,0002,554,000 Almost 44% of the budget is associated with Debt Servicing & Capital from Operating as a result of the recent and significant infrastructure investments in Harbour Clean-up and the SCDWP. Drinking Water The amount proposed for Drinking Water for 2018 is $10,483,000 and represents an increase of $971,000 over 2017. The largest driver of this variance is the increase in water treatment of $667,000 which is directly linked to the anticipated start up and operating of the new east water treatment plant in November/December 2018. There are also budget increases being allocated to the new west well system The other major increase is in water transmission and distribution which is increasing $304,000 over 2017. This increase is also directly linked to the SCDWP. It is anticipated based upon best industry advice that with the new West System and East System expected to go online, the Utility could see an increase in infrastructure leaks due to the change in water chemistry. This increase has the potential in the short-term to drive up expenditures such as the utility cuts, overtime and parts to repair leaks, etc. Finally, there have also been increases in maintenance of assets. Industrial Water The present supply of some East water to West for industrial purposes is coming to an end, as part of the SCDWP; therefore, the demand on Musquash will increase. The increase of $177,000 over 2017 is due to the additional pumping costs at the Musquash pumping station and royalties paid to the Province for the water supply at Musquash. - 4 - Wastewater Wastewater will see an increase of $704,000 over the 2017 budget. The dredging and removal of biosolids that will be done on the Lancaster Lagoon resulted in a $100K increase in the budget. There are also increases in electricity usage, for example, as a result of new or expanded infrastructure that contributes to the new treatment processes at Morna and Greenwood along with the three new sewage lift stations under construction resulting in $220K more in budgeted expenditures. Mechanical parts is budgeted to be an additional $150K over 2017 for ongoing maintenance at pump stations. Internal Charges/Post-Employment Benefits The increase of $137,000 over last year is directly related to collections. Overall increases for collections include increases in wages, postage, and other services. There is also a provision for bad debt. Although rare, some accounts will be deemed uncollectable, for example, property tax sale. Fiscal Charges The increase in debt servicing of $2,644,000 relates to the increase in debt the Utility is taking on as part of the SCDWP. Principle and interest payments on $45,000,000 will be made in 2018. The Capital from Operating includes $6,275,000 for the SCDWP reserve and $4,500,000 for Capital projects. Aside from the SCDWP, Saint John Water has strategically compiled a very small Capital program for 2018 due to completion of the large project and resources needed, therefore resulting in a decrease in expenditures of $1,950,000 over 2017. Revenue Council is required to set the water rates that recover the Operating and Capital cost of the Utility and the budget is $47,804,000 for 2018. A couple of highlights for revenue for 2018 is that the flat rate charge being recommended for 2018 is $1368 which represents an annual increase of $72 in 2018 or $6.00 per month per residential flat rate user. There is also cumulative previous years surplus of $1,217,000 that is brought in as the first revenue item. Also, an additional amount of $1,300,000 has been budgeted for interest revenue associated with the $45,000,000 that is planned to be invested for a year until required for the substantial completion payment for the SCDWP. Conclusion The increase in rates for 2018 being proposed and forecasted for 2019 are consistent with the transitional forecasted rates over the past 5 years. 2018 will - 5 - bring an end to the Safe, Clean Drinking Water Project - the largest municipal infrastructure project in the history of New Brunswick. Rates are anticipated to stabilize after 2019 for ratepayers; however, it must be noted that the SCDWP is only 55% complete at this point. There remains the potential for significant financial risk on the project, a lot of operational costs are forecasted at this time, a water and sewer rate study is scheduled for completion in the first half of 2018 and a universal metering assessment will need to be considered in 2018 for the creation of future budgets. The asset management plan and the long term financial plan will both be key in determining how to close the gap on sustainable funding of the infrastructure deficit. The Rate Studies will be key on how rates will be set for each user class and the impact of those rates on the overall Utility. SERVICE AND FINANCIAL OUTCOMES See enclosed 2018 Utility Fund Operating Budget INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Finance has been involved in the creation of the budget, Transportation and Environment have been consulted on the Utility cuts program and Growth and Community Development have been consulted on growth related opportunities. ATTACHMENTS Appendix 1 2018 Utility Fund Operating Budget 2018 SAINT JOHN WATER SERVICE BASED BUDGET 201720182019 Forecast BudgetBudget Operating Expenditures Drinking Water Watershed Management229,000211,000213,000 Water Treatment2,455,0003,122,0009,285,000 Water Pumping & Storage1,086,0001,166,0001,178,000 Transportation & Distribution4,992,0005,281,0005,334,000 Customer Metering750,000703,000710,000 Industrial Water Watershed Management467,000524,000529,000 Water Pumping & Transport942,0001,051,0001,061,000 Customer Metering110,000121,000123,000 Wastewater Wastewater Pumping3,005,0002,859,0002,887,000 Wastewater Collection3,192,0003,440,0003,475,000 WasteWater Treatment4,367,0004,969,0005,019,000 Infrastructure Management Municipal Engineering1,330,0001,201,0001,211,000 Other Internal Charges750,000895,000930,000 Additional Post Employment Benefits1,392,0001,384,0001,394,000 25,067,00026,927,00033,349,000 Fiscal Charges Debt servicing7,458,00010,102,00010,054,000 Capital from Operating12,725,00010,775,0004,529,000 Total Fiscal Charges20,183,00020,877,00014,583,000 Total Expenditures 45,250,00047,804,00047,932,000 Revenues Flat rate Accounts20,687,00021,742,00022,899,000 Metered Accounts19,463,00019,568,00020,092,000 Fire Protection Levy2,300,0002,300,0002,400,000 Storm Sewer Levy965,0001,000,0001,000,000 Other revenues671,0001,977,000693,000 Previous Year's Surplus1,164,0001,217,000848,000 Total Revenues45,250,00047,804,00047,932,000 201720182019 Forecast BudgetBudget Flat Rate - Water & Sewerage1,2961,3681,440 5.85%5.55%5.28% Meter Rates: Block 11.46331.54451.6260 Block 20.93180.98351.0354 Block 30.32880.34710.3654 ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ {ğźƓƷ WƚŷƓ ‘ğƷĻƩ September 27, 2017 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ tƩƚƦƚƭĻķ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Budget Highlights 2018 Completion of the largest municipal infrastructure project in the history of New Brunswick Safe Clean Drinking Water Project Water and Wastewater Rate Study to be Completed Universal Metering Evaluation to be Completed Industrial Rate Studies to be Completed Continuous improvement & revenue generation to remain a focus Proposed increase of $72 per year on flat rate. 2 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ 2018 Proposed Operating Budget -$47,804,000 2018 2017 ProposedApprovedVariance BudgetBudget Operating Expenditures Drinking Water10,483,0009,512,000971,000 Industrial Water 1,696,0001,519,000177,000 Wastewater 11,268,00010,564,000704,000 Infrastructure Management 1,201,0001,330,000-129,000 Internal Charges/Post Employment2,279,0002,142,000137,000 Benefits Fiscal Charges Debt servicing10,102,0007,458,0002,644,000 Capital from Operating10,775,00012,725,000-1,950,000 Total Expenditures 47,804,00045,250,0002,554,000 5.64 % increase over 2017 3 ЋЉЊА ‘ğƷĻƩ wğƷĻƭ /ƚƒƦğƩźƭƚƓ 4 LƓŅƩğƭƷƩǒĭƷǒƩĻ /ƚƒƦğƩźƭƚƓ Ʒƚ bĻźŭŷĬƚǒƩźƓŭ/źƷźĻƭ Moncton, Dieppe & Saint JohnFrederictonRiverview (Wastewater Moncton only only) Dams 1402 WT Facilities (Large Production)221 Watermains (km)500km440km508km Water Storage Tanks 10*124 (but 1 inactive) Sewermain(km)746km380km700km381km Wastewater Pumping Stations 71*322211 Wastewater Treatment Facilities (high Volume)311 Wastewater Treatment Facilities (Low Volume)211 *3 under construction 5 How is the Utility going to pay for its Infrastructure Deficit? A need to transition to sustainable funding of assets 6 {ğźƓƷWƚŷƓ‘ğƷĻƩ5ĻĬƷtƩƚƆĻĭƷźƚƓƭ Debt Owing and Future Debt 120,000,000 107,451,000 100,000,000 SCDWP Borrowing 80,000,000 56,875,000 60,000,000 40,000,000 20,000,000 0 20152016201720182019202020212022202320242025 *Note this is premised upon future capital work being funded through operating and that there is no new borrowing. 7 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Annual Surplus/Deficit 2017 Forecasts of a surplus is only a forecast and is subject to change. Early SCDWP borrowing will result in $450k in 2017 costs not included in last 2017 budget analysis presented. Current year surplus cannot offset rates in following years budget. Surplus/Deficits are brought into budget second following year after it is realized and spread out over 4 years to stabilize rates (note this is a legislated requirement). Past surpluses have enabled more funds to be set aside for SCDW reserve. 8 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Funding of HarbourClean-up & SCDW Project Proposed 2013 Utility Fund introduced the gradual increase of $72/year. Proposed due to large cost of HarbourCleanup that was finishing and larger cost associated with Safe Clean Drinking Water. Needed to build up reserves since City was only receiving funding of 50% towards SCDWP. Building reserves reduced borrowing, saving future costs for rate payers and mitigating rate increases. Upon completion of SCDWP project, two large recurring annual expenses commence:New Water Treatment Plant Operation and Principle & Interest (P&I) on Additional Debt. Without transitional year over year increases there would be rate shock. 9 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Benefits of Reserves SCDWP reserves establish by Council will allow the Utility to make a down payment of $17,000,000 on its portion of the Substantial Completion Payment, reducing future annual P&I payments and mitigating rate increases. Interest saved over 20 years based on 3.0% interest rate will be approximately $7,000,000 by making the $17M down payment. 10 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Lower 2018 Rate Increase Scenarios (instead of $72) 2018 Rate increase of $12 $1.62M reduction in SCDW Reserve Reduction in reserve will cost rate payers $665K in interest over 20yrs Average additional annual expense for P&I $88K over 20yrs. Increase in annual flat rate in 2019 would have to be $132 2018 Rate increase of $36 $850K reduction in SCDW Reserve Reduction in reserve will cost rate payers $348K in interest over 20yrs Average additional annual expense for P&I $46K over 20yrs. Increase in annual flat rate in 2019 would have to be $108 11 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Conclusions In 2018 & 2019 there remains risks and new expenses for Utility East Industrial Rate Study Implications unknown Residential and Commercial Rate Study Implications unknown First full year for cost of running new Treatment Plant is unknown and only estimated at this time at $6.685M Interest rate on borrowing $45M is unknown Debt will reach over $107M for Utility Infrastructure deficit is over $200M withlimited funding in place With added cost of treatment plant and cost of borrowing $45M, rates will need to be approximately $1,440 in 2019 to fund infrastructure and related cost obligations. 12 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Recommendation Recommend the Finance Committee approve the 2018 Utility Fund Operating Budget as presented and send to Council for receive and file. 13 {ğźƓƷ WƚŷƓ ‘ğƷĻƩ ЋЉЊБ hƦĻƩğƷźƓŭ .ǒķŭĻƷ Questions? 14 /ƚǒƓĭźƌ ƒĻĻƷźƓŭ {ĻƦƷĻƒĬĻƩ ЎͲ ЋЉЊА 11.2 Operations Savings Discussion (Deputy Mayor McAlary) Deputy Mayor McAlary moved the following motion that was seconded by Councillor Casey: That Council arrange a workshop to be held in Closed or Open Committee in the very near future where all Council Members and Senior Staff could discuss ideas and/or suggestions together for how savings can be acquired from our entire city operations as we do them presently. A referral Moved by Councillor Sullivan, seconded by Councillor Merrithew: RESOLVED that item 11.2 Operations Savings Discussion (Deputy Mayor McAlary) be referred to the Finance Committee. MOTION CARRIED with Councillor Casey voting nay.