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2023-11-22 Finance Committee Agenda Packet - Open Session�B City of Saint John Finance Committee - Open Session AGENDA Wednesday, November 22, 2023 4:30 pm Meeting Conducted by Electronic Participation 1. Call to Order 2. Approval of Minutes 2.1 Minutes of November 8, 2023 3. Approval of Agenda 4. Disclosures of Conflict of Interest 5. Consent Agenda 6. Business Matters 6.1 Enterprise Resource Management 6.2 2024 Draft General Operating Budget 6.3 2024 Draft Utility Fund Operating Budget 6.4 Internal Debenture Report 7. Adjournment Pages 1-3 4-12 13-42 43 - 60 61 - 80 Finance Committee Meeting Open Session November 8, 2023 MINUTES — OPEN SESSION FINANCE COMMITTEE MEETING NOVEMBER 8, 2023 AT 4:10 PM MEETING CONDUCTED THROUGH ELECTRONIC PARTICIPATION Present: Councillor G. Sullivan Mayor D. Noade Reardon Councillor P. Radwan Councillor G. Norton Councillor D. Hickey Also Present: Commissioner of Finance and Treasurer/ Acting CAO K. Fudge Commissioner Human Resources S. Hossack Commissioner Utilities & Infrastructure I. Fogan Acting Commissioner Growth and Community Development A. Poffenroth Commissioner Public Works and Transportation M. Hugenholtz Fire Chief K. Clifford Financial Controller C. Lavigne Director Financial Services J. Forgie Director Transit and Fleet I. MacKinnon Director Saint John Water M. Kendall Director Public Works T. O'Reilly Director Growth and Community Planning D. Dobbelsteyn Senior Manager Community Support Services C. Coes Manager Community Planning J. Kirchner Intermediate Accountant V. Parikh Deputy Clerk P. Anglin Administrative Assistant A. MacLean Meeting Called to Order Councillor Sullivan called the Finance Committee open session meeting to order. Mayor Noade Reardon joined the meeting. Approval of Minutes 2.1 Minutes of October 26. 2023 Moved by Councillor Hickey, seconded by Councillor Norton: RESOLVED that the minutes of October 26, 2023 be approved. MOTION CARRIED. Approval of Agenda Moved by Mayor Noade Reardon, seconded by Councillor Hickey: RESOLVED that the agenda of November 8, 2023 be approved. MOTION CARRIED. Disclosures of Conflict of Interest No disclosures. Finance Committee Meeting Open Session November 8, 2023 5. Consent Agenda 6. Business Matters 6.1 Draft 2024 Utilitv Fund Ooeratina Budaet Reviewing the submitted presentation 2024 Utility Fund Budget Timeline, Commissioner Fogan provided an overview of the 2024 budget. He highlighted that there will be no proposed increase for flat rate customers or metered customers, with the flat rate of $1,428 for the past 6 years. The rate stabilization was achieved by the ongoing focus on significant cost reductions and is allowing the Utility to mitigate the current economic pressures. Commissioner Fogan stated that due to increasing costs for goods, the Utility faces risk with continued cost cutting measures without impacting the level of service. Moved by Councillor Hickey, seconded by Mayor Noade Reardon: RESOLVED that 2024 Utility Fund Operating Budget presentation be received for information and any questions be directed to staff. MOTION CARRIED. 6.2 Reauest to Adiust 2023 Heritaae Grant Budaet Referring to the submitted report Request for Supplementary Heritage Grant Funding, Manager Kirchner stated that the inflationary pressures, increasing costs of products, and increasing developer/construction service prices make it challenging for the owners of heritage homes to maintain them. New applications are coming in and a waitlist has been created. Staff believe that the extra funding should be able to help cover the initial projects that have been submitted to keep benefitting citizens who may face the repair and maintenance challenges while owning a heritage home. Moved by Mayor Noade Reardon, seconded by Councillor Norton: RESOLVED that Finance Committee recommends Common Council approves the following: Amend the 2023 General Operating Budget to reallocate $30,000 from Unspecified Grants to Heritage Grants, with no overall change to the overall 2023 General Operating Budget. MOTION CARRIED. 6.3 2024 Draft General Fund Operating Budget Reviewing the submitted presentation 2024 Draft General Fund Operating Budget, Commissioner Fudge provided an overview of the 2024 budget which included service levels, enhancements, initiatives, affordable housing priorities, revenues highlights, Wage Escalation policy, General Fund Operating Budget for service areas, long term debt and fair taxation. He stated that staff will be seeking feedback from the Finance Committee on the 2024 budget, before the final recommendation will be brought before the Common Council for consideration. Moved by Councillor Radwan, seconded by Councillor Hickey: RESOLVED that the Finance Committee: 1. Reflect upon the proposed 2024 General Fund Operating Budget and direct questions to staff. 2. 2024 Draft General Fund Operating Budget presentation be received for information. MOTION CARRIED. Moved by Mayor Noade Reardon, seconded by Councillor Hickey: RESOLVED that the Finance Committee recommends Common Council send a letter to the provincial government and municipal associations regarding municipal tax reform. MOTION CARRIED. 7. Adjournment Moved by Mayor Noade Reardon, seconded by Councillor Radwan: RESOLVED that the Finance Committee meeting be adjourned. Finance Committee Meeting Open Session November 8, 2023 MOTION CARRIED. The Finance Committee open session meeting held on November 08, 2023 was adjourned at 5:51 pm. Respectfully submitted, Anna MacLean, Recording Secretary z QJ O QJ cc Qj •V) cz CL .� W WT O i C6 N >-o >.00 �O 0— � O� +•'� ca��p —Ca N U i � aN-+ a••' N C6 o a✓ V' �N cn N m (O V _0 N > C6 O O i 0 O U U a.=, Q � .> U � N E 0 U E O -o > � E N m 0 0 — N -Q L 0 U 0 v U V) (D U pa a 0 w Of CD L 0 L K N %e i cn O � N C6 � U : C6 .ate E O U N Q O E Q cn Q. 0 +-0 Ln d--a 0 .0 0 � a U o� _y x w L a E 0 4-1 V) 0 CL L - U Z ` 0 f6 U 0 U f6 O U � LL Q) U Z3 v Z N °; L N %` � c6 O Q f6 E U i }' N fL6 E L }, O Lu O L te) a -j L O Q U `— O LOru 41 L ' U 0 a--+ N � _ 41 U L (n U a) a--+ a--+ N 41 O N O U O N 2 41 O N O U co02S N T + a--+ D 41 O N O U O U +�.+ 0 V 41 O N O U cn L U 41 O N O U _ O 41 C7 i ' U ' O U Q) i m Ln ju O N a"'' O Q > O 0 DC O 41 = E 0 0 O LL � = U a Q LL O Q > > m a)O _ m c6 V Y V Q O ` Z O + +j •E N U U i i •U _O O > ~ +j cn cn c�i� � 0 v v O '� U cn i O ca O _0 }' O U •u ca O O O O s � 0 0 X O U_ N N •> a--+ E u co ate-+ N N i Q. ca O O _ 4J N C6 D (n O U Q U N 0 Ll_ = a) 06 �^ O 'gin +, +j O ca O O 6 m O �' N +j Q ca ^ O ^ • i U UcL O C1A — •� C6 •� i O Q `� O O CL Q c�i� cn VW) O Q V) C� O ULU U- •C6 cn U 0 C6 C6 U U � oC cn LLI z_ J W 2 F- F- V W —11 a W O m� Q1 c6 E a Q E _0 N N ateJ Q O N Q � L (6 U Q LL Q a N Q O 4- aA L� N O m N 0Ln N ,:4 41 E .N �. (6 (n L f6 S Q Q • 'J. dy s� o�1 �b 6� t��� 26� — �O — t> '2 90 '�J O �6 7� CIO 'mob 6 m O i Q A W U I -0 a..+ / A V N Co a)E _O U O > 0 DC co > E w E O = C: .(A N = " Q C: � � C UC: V) N U L N 0 0 r" .E O T a) E N to co co 0 co O Ln Hif Q a O a ate-+ Ln m Ln O N E Ln W) Ln O A U m N Lel u X V) E Ln 4- 0 Q 0 ate-+ L dA U L 0 ^E W H L O O � 0 N � -0 pN + E Q Q ate-+ GJ E oc E N fyi G! N cn N G CL bA O 0 . Z w FINANCE COMMITTEE REPORT Report Date November 16, 2023 Meeting Date November 22, 2023 Chairman Gary Sullivan and Members of Finance Committee SUBJECT. 2024 Proposed General Fund Operating Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head Chief Administration Officer Craig Lavigne Kevin Fudge J. Brent McGovern RECOMMENDATION It is recommended that the Finance Committee approve the proposed 2024 General Fund Operating Budget and forward it to the next meeting of Common Council for receive and file and endorse the following. RESOLVED: 1. That the sum of $187,800,682 be the total Operating Budget of the City of Saint John for 2024. 2. That the sum of $150,579,477 be the Warrant of the City of Saint John for 2023. 3. That the tax rate for the City of Saint John be set at $1.58. 4. That the City of Saint John set the property tax rate for Heavy Industrial Class at 1.7 times the residential rate. 5. That the City of Saint John set the property tax rate for Non -Residential Class at 1.7 times the residential rate. 6. That Management Professional Group receive a wage increase of 3.5% for 2024. EXECUTIVE SUMMARY The proposed 2024 General Operating Budget was presented to the Finance Committee on November 8th, 2023. The purpose of this report is to provide the Finance Committee a summary of changes from the budget presented on November 8t" in the 2024 Operating Budget and recommend approval. There was only one minor adjustment made to the previous budget presented. There was an additional $50,000 that will be transferred from Community 13 -2- Reserves that will come in as a revenue and additional $50,000 to grants as recommended by the Growth Committee at its meeting on November 21. PREVIOUS RESOLUTION Finance Committee Meeting — November 8, 2023 "It is recommended that the Finance Committee reflect upon the proposed 2024 General Fund Operating Budget, make all inquiries to staff and receive and file the report." STRATEGIC ALIGNMENT The proposed 2024 draft General Fund Operating Budget is aligned with Councils' priorities, the 10-year Strategic Plan, the City's financial policies and plans, and strategic operational plans. REPORT The proposed 2024 General Operating Budget was presented to the Finance Committee on November 8th, 2023. The budget has been produced based on Council's strategic priorities, 10-year Strategic Plan as well as on the principles, policies and targets contained in the City's Long Term Financial Plan. The proposed 2024 General Operating Budget totals $187,800,682, up 5.93%year over year. The budget includes a property tax rate reduction of 4.0 cents, from $1.62 to $1.58 per $100 of assessed value. If approved by Council, the 2024 property tax rate would be reduced by a total of 20.5 cents or 11.5% reduction over the last three years. The budget also incorporates maintaining the tax differential for Commercial and Heavy Industry at 1.7 which aligns the City's strategy on tax reform. REVENUE Property tax assessment has increased based on a growth rate of 9.80% largely due residential tax base growth. The growth rate can be split between market adjustments at 9.08% and new construction of 0.72%. The proposed reduction of the tax rate to 1.58 and increased the property tax assessment results in an increase of annual property tax revenue of $8,474,067 or 5.96% over the previous year. The annual equalization and unconditional grant saw a reduction of $1,547,853 or -11.2%. This reduction will be partially offset by the increase in the Regional Service Grant of $463,010. Revenue also includes $1,200,000 from Saint John Energy in relation to the benefits derived from the Burchill Wind Farm project, along with $2,335,841 surplus from 2022. Also included is $1,300,000 from the operating and community service reserve to fund three temporary bylaw officers, $50,000 14 -3- additional grant, $250,000 to fund Industrial Parks with the additional allocation of funds to be determined. Own source revenues are budgeted at $17,572,146 which is an increase of 12.035% over last yar. This increase is partial due to increases in off-street parking, residential parking permits and various bylaw infractions along with increases in interest revenues. EXPENDITURES Overall expenditures are up year over year by $10,513,182 or 5.93%. Wages and benefits are within wage escalation with an increase of $4,611,182 or 4.95% over previous year. Goods and Services are increasing by $5,852,000 or 5.59% and the increase is due to several factors such as inflationary increases in fuel ($395K), roads ($1.06M), fleet parts ($352K) and insurance ($160K). There is an increase in assessment charge due to an overall increase in the tax assessment. Under the City's grants to Agencies, Boards and Commissions, the Transit Commission will receive an increase of $883K due to the increase in its operating grant and reduction in debt. Capital from operating increased by $1,150,000 and aligns with the Long -Term Financial Plan stretch targets. The transfer to Capital reserve allocations $3,000,000 to the future recreation facility. Council Priorities/Strategic Plan/Service Delivery The 2024 budget addresses multiple elements of the 10-year strategic plan, Council Priorities, and addresses service delivery. The following list are highlights from the various service areas which have one time funding and recurring expenditures. ➢ Street Cleanliness Initiative — additional resource and reallocation of resources to focus on increased curbside and sightline mowing, enhanced street sweeping program for Uptown and bike lanes, along with enhancing mowing crews to focus on more unsightly areas in dense neighborhoods and heavily traveled arterials. ➢ Parks — additional resource and reallocation of existing staff to focus on enhanced maintenance of Rockwood Park, Harbour Passage and other parks. ➢ Additional community funding to focus on East recreation needs. ➢ Funding for Mayor and Council - $1500 each for initiatives (TBD) ➢ Saint John Transit operating subsidy increase of $1.02M ➢ Completing phase two of recreation user fees - $60K ➢ Funding, supporting and implementation of the vision for Industrial Parks - $558K 15 -4- ➢ Additional funding to hire a project manager to support and manage capital projects, along with maintenance of capital assets and advance the 10-year capital plan. ➢ Implementation of the homelessness strategy in partnership with the Province ➢ Traffic Safety Enhancements - $75K to support the City's Traffic Engineer. ➢ Funding for additional staff member and two casuals in Human Resources to support the 10-year work force strategy, labour relations strategy and implementation of safety audit. ➢ Funding the community reserves to fund three bylaw enforcement offices as part of a pilot program ➢ Additional $500K into pay as you go capital for align with the City's long term financial plan stretch goal. ➢ Additional $500K transferred into Capital reserves to fund future roundabout in accordance with Move SJ. ➢ Funding to improve the City's website. ➢ $50K contribution to Sophia Recovery Center The investments being made maintain existing service levels but also support the priorities of council, follow various plans, and address social issues and meeting the targets and principles of the long-term financial plan. Aligning with Long Term Financial Plan The budget follows 4 key financial values set out in the long-term financial plan: Don't spend more money than you make — 2024 budget is a structurally balanced budget Borrow Wisely —the budget includes principal and interest charges of $15.42M The city continues to reduce debt and increase pay as you go and is on track with its Debt Management Plan. Save your money for a rainy day —The budget includes $3.7M in capital reserves to address several Council priorities, avoiding new debt and continuing a culture of "save first" versus "spend first". Take control of your expenses before they take control of you —the 2024 operating budget follows the City's wage escalation policy. CONCLUSION In conclusion, the proposed 2024 General Fund Operating Budget continues to advance and surpass the City's long term strategic financial objectives. This budget -5- advances the City's strategic financial objectives to increase flexibility, reduce vulnerability, and is sustainable. The budget also balances the financial objectives of the long-term plan while balancing the priorities of Council along with the 10-year strategic plan. SERVICEAND FINANCIAL OUTCOMES The proposed 2024 General Operating Budget aligns with Councils 5 priority areas of Move, Belong, Grow, Green and Perform. INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS Input has been received from all Service Areas, Member of Finance Committee and Common Council. ATTACHMENTS Appendix 1 — 2024 General Fund Operating Budget Appendix 2 — 2024 General Fund Budget Presentation 17 �11 N N U O —j a N O N _0 N C f6 N S O N U 3cfa) N � N 7 a••' o N E Q _0 w a+ U U W E +' E-0 O U N N E U E O U C � LL OC N O N W-0 4- Z c E 0o N E L N 0 U 0 aN+ U C � N � C 111 N C6 L 0 —0M Q _ Q C m Q LL W Q O (10 i--+ > Q > > L CL N Q Q a+ i` O N Q O O (7OQ D Q U U • • • 4� Q a� o a •, LL M N M � (j +' E O= Ln L O O 0 5 ii U • • � a o > 4, ao U =3 LL O fB • ++LL> LL N O N 4A —0 a"' cB — Q-0 —0 U U • • a� a,o N =3 L m > 4-J LL Q LQ +� > ao° �Q a. 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r W The City of Saint John 2024 General Fund Operating Budget—�" 2024 2023 Budget Budget Revenues Property Taxes 150,579,477 142,105,410 PILT Adjustment - 64,323 Equalization & Unconditional Grant 13,773,579 15,321,432 Regional Services Grant 1,009,640 546,630 Surplus 2nd Year Previous Year 2,335,841 1,753,145 Transfer from Operating Reserves 1,330,000 800,000 Growth & Community Services 4,505,063 4,327,812 Public Works & Transportation Services 6,378,970 5,599,798 Public Safety Services 1,992,113 1,976,432 Utilities & Infrastructure Services 316,000 317,000 Strategic Services 4,380,000 3,178,518 Corporate Services - 285,000 Saint John Energy Benefits 1,200,000 1,012,000 Total Revenues 187,800,682 177,287,500 Expenditures Growth & Community Services 19,407,491 18,580,739 Public Works & Transportation Services 45,457,077 41,715,344 Public Safety Services 62,044,481 59,633,669 Utilities & Infrastructure Services 7,357,463 6,994,893 Strategic Services 8,610,102 7,917,074 Corporate Services 8,295,166 7,443,379 Other Charges 36,628,901 35,002,402 Total Expenditures 187,800,682 177,287,500 Surplus (Deficit) - - 35 The City of Saint John 2024 General Fund Operating Budget 2024 2023 Budget Budget Revenues Property Taxes 150,579,477 142,105,410 PILT Adjustment - 64,323 Equalization & Unconditional Grant 13,773,579 15,321,432 Regional Services Grant 1,009,640 546,630 Surplus 2nd Year Previous Year 2,335,841 1,753,145 Transfer from Operating Reserves 1,330,000 800,000 Growth & Community Services 4,505,063 4,327,812 Public Works & Transportation Services 6,378,970 5,599,798 Public Safety Services 1,992,113 1,976,432 Utilities & Infrastructure Services 316,000 317,000 Strategic Services 4,380,000 3,178,518 Corporate Services - 285,000 Saint John Energy Benefits 1,200,000 1,012,000 Total Revenues 187,800,682 177,287,500 Expenditures Growth & Community Services Growth & Community Planning Services 1,826,081 1,791,586 Development Services 240,600 220,600 Development Engineering 369,657 350,328 Community Development 783,064 608,695 Animal Control 109,250 109,250 Dangerous and Vacant Building Program 468,954 374,428 Minimum Property Standards 492,521 375,506 Heritage Conservation Service 202,480 203,654 Cultural Affairs 139,453 129,827 Other By -Laws 297,303 356,103 Permitting & Inspection Services 1,412,306 1,181,614 Regional Economic Development Agency 3,087,500 3,093,000 Market Square 2,250,000 2,250,000 Saint John Trade & Convention Centre 317,066 390,186 Imperial Theatre 308,048 295,714 Saint John Aquatic Centre 421,418 521,281 Saint John Arts Centre 195,223 178,408 TD Station 491,949 478,246 Library 489,909 487,597 City Market 1,188,449 1,144,015 0V The City of Saint John 2024 General Fund Operating Budget 2024 Budget 2023 Budget Growth & Community Services (Continued) Arts & Culture Board 70,000 70,000 Public Art Maintenance & Repair 16,000 16,000 Remembrance Day 3,500 1,500 New Year/Canada Day Celebrations 50,000 40,000 PRO Kids 130,759 109,693 Succeed & Stay 165,118 92,785 Local Immigration Partnership 93,785 86,424 Carleton Community Center 190,700 190,700 Loch Lomond Community Center 45,000 45,000 North End Community Center 190,313 174,876 Recreation Programming 720,239 666,282 Neighbourhood Development 172,000 170,000 YMCA - Contracted Services 157,560 157,560 Boys and Girls Club - Contracted Services 145,887 145,887 Unspecified Grants 284,000 234,000 Affordable Housing Strategy 217,660 105,719 Lifeguards 199,410 195,500 Play SJ 45,000 45,000 Lord Beaverbrook Rink 167,764 167,392 Building Incentive Reserve 350,000 350,000 Regional Services Commission 343,299 176,383 Community Services Reserve 558,266 800,000 Total Growth & Community Development Services 19,407,491 18,580,739 Public Safety Services Fire Rescue and Suppression Service 24,274,689 23,591,356 Fire Training 10,437 1,319 Technical Rescue Response 52,119 46,925 Hazardous Materials 74,774 69,984 Fire Prevention 926,219 908,059 Fire Investigation 68,520 66,123 Emergency Management Services 356,233 360,216 Water Supply and Hydrants 2,500,000 2,500,000 Public Safety Communications Centre 3,184,017 2,894,857 Street Lighting 1,060,000 1,060,000 Saint John Police Commission 29,537,474 28,134,830 Total Public Safety Services 62,044,481 59,633,669 37 The City of Saint John 2024 General Fund Operating Budget 'fir 2024 2023 Budget Budget Public Works & Transportation Services Snow Control Streets 5,592,712 5,601,737 Street Cleaning 1,641,956 1,605,543 Utility Cuts 1,506,716 919,782 Street Services - Surface Maintenance 8,445,799 7,448,639 Snow Control Sidewalk 1,158,927 1,034,591 Sidewalk Maintenance 913,129 712,014 Pedestrian & Traffic Management Service 2,555,863 2,343,221 Solid Waste Management 4,082,708 3,830,567 Landscape - Parks & Open Spaces 2,182,304 2,095,731 Rockwood Park 527,829 405,699 Urban Forestry 414,439 336,497 Saint John Horticultural Association 60,000 50,000 Arena Operation & Maintenance 1,501,504 1,375,297 Sportsfield Operation & Maintenance 1,294,245 1,228,942 Other Facilities Operation & Maintenance 461,845 548,513 Transit Debt 1,609,000 1,746,105 Transit Subsidy 6,651,541 5,630,640 Fleet Stockroom 363,333 354,448 Stormwater Rural 1,799,192 1,844,465 Parking Administration 953,960 942,723 Peel Plaza Parking Garage 405,697 389,616 Market Square Parking Garage 154,283 115,881 Off Street Parking 1,180,095 1,154,693 Total Public Works & Transportation Services 45,457,077 41,715,344 W The City of Saint John 2024 General Fund Operating Budget Utilities & Infrastructure Services Engineering 1,388,105 1,252,328 Carpenter Shop 400,977 371,482 Facilities Management 1,633,135 1,579,996 City Hall Building 1,021,696 1,014,205 GIS 442,364 413,258 Stockroom 220,396 246,122 Stormwater Urban 2,250,789 2,117,502 Total Utilities & Infrastructure Services 7,357,463 6,994,893 Strategic Services Finance 1,413,726 1,250,757 Assessment 1,837,897 1,701,756 Supply Chain Management 446,624 449,075 Information Technology 3,782,930 3,511,071 Corporate Planning 337,961 316,055 Insurance 215,965 138,360 Liability Insurance 575,000 550,000 Total Strategic Services 8,610,102 7,917,074 Corporate Services City Manager's Office 701,584 779,271 Mayor's Office 161,579 225,837 Common Council 651,458 602,503 Common Clerk 742,413 642,779 Human Resources 2,379,426 1,942,089 Legal Department 1,150,316 1,136,916 Real Estate 186,004 177,086 Saint John Industrial Parks 558,501 170,763 Barge Terminal 25,000 25,000 Customer Service 993,065 999,115 Corporate Communications 527,882 516,634 External Relations 217,937 225,386 Total Corporate Services 8,295,166 7,443,379 Other Charges Fiscal Charges 15,420,429 15,685,605 Landfill Closure 300,000 300,000 Special Pension Contributions 10,225,000 9,460,000 PILT Adjustment 48,453 - Transfer to Capital Reserves 3,700,019 3,771,797 Transfer to Operating Reserves 135,000 135,000 Capital from Operating 6,800,000 5,650,000 Total Other Charges 36,628,901 35,002,402 Total Expenditures 187,800,682 177,287,500 Surplus (Deficit) - - 39 The City of Saint John 2024 Operating Fund Budget by Object 2024 2023 Proposed Budget Approved Budget Revenues Property Taxes 150,579,477 142,105,410 PILT Adjustment - 64,323 Equalization & Unconditional Grant 13,773,579 15,321,432 Regional Services Grant 1,009,640 546,630 Saint John Energy Benefits 1,200,000 1,012,000 Surplus 2nd Previous Year 2,335,841 1,753,145 Permits & Licenses 1,221,914 1,124,754 Rentals & Fees 1,567,998 1,582,979 Inter -fund Charges 1,900,000 1,900,000 Market Square Parking 1,503,000 1,350,000 Meter Violations & Summonses 445,000 290,000 Parking Meters 887,000 783,000 Traffic By -Law 492,800 362,300 Fines 25,000 25,000 Extra Duties 70,000 100,000 Training 70,000 70,000 Contributions from Others 1,002,866 889,244 Partnerships 241,255 195,000 Emergency Dispatch 1,246,300 1,240,432 Utility Cuts 955,391 860,713 Interest Income 2,000,000 750,000 Internal Services 182,000 252,000 Insurance Proceeds 20,000 20,000 Accommodation Levy 1,250,000 1,193,000 Other Miscellaneous Revenues 906,593 1,082,143 Saint John Industrial Parks - 260,000 Barge Terminal - 25,000 Peel Plaza Parking Garage 366,000 301,500 Off Street Parking 1,219,029 1,027,495 Transfer from Operating Reserve 1,330,000 800,000 Total Revenues 187,800,682 177,287,500 Expenditures Salaries & Benefits Salaries 66,573,743 63,701,132 Overtime/Other Personnel Costs 2,769,576 2,844,773 Fringe Benefits 18,153,230 17,104,461 Pension 10,225,000 9,460,000 Total Wages and Benefits 97,721,548 93,110,366 .N The City of Saint John 2023 Operating Fund Budget by Object Goods & Services General Services Insurance Professional Services Other Purchased Services Repairs & Maintenance Other Purchased Goods Roads Tipping Fees Property Taxes Assessment Charge Asset Purchases Contracted Services Postage Inter -Fund Charges Telephone Radio Building Incentive/Community Improvement Reserve Fuel Advertising Travel, Conferences & Training Commissionaires Engineering Cleaners & Janitors Solid Waste Collection Licenses & Software Rentals - Buildings, Vehicles & Equipment Asphalt Parts Apparel Fuel Oil & Gas Oil Salt & Sand Electricity Office Supplies Operating & Safety Supplies Water Meals 2024 2023 Draft Budget Approved Budget 952,499 522,594 1,385,749 1,225,768 2,574,542 2,151,320 2,536,741 2,393,527 2,306,666 1,935,225 1,533,792 1,295,930 5,263,200 4,199,850 1,070,173 1,113,050 1,428,556 1,391,324 1,837,897 1,701,756 1,091,598 1,017,048 1,673,370 1,657,951 104,065 97,640 3,547,000 3,553,508 539,797 679,989 464,402 401,080 908,266 1,150,000 3,728,454 3,332,974 206,575 174,575 1,014,178 856,543 586,830 489,018 366,000 321,000 208,740 243,820 190,435 127,700 460,215 497,210 5,492,656 5,444,620 1,034,130 1,257,622 1,765,751 1,412,850 245,011 214,692 339,836 306,685 1,039,546 1,023,073 710,004 685,863 151,488 151,175 626,014 506,942 155,750 167,950 237,757 166,305 41 The City of Saint John 2023 Operating Fund Budget by Object 2024 2023 Draft Budget Approved Budget Lumber, Paint, Chemicals & Cement 549,976 451,644 Tools & Hardware 98,334 102,362 Memberships 211,224 175,829 Receptions 126,800 115,268 48,764,015 44,713,280 Grants - Agencies, Boards & Commissions Grants 828,500 756,500 Transit Commission 8,260,541 7,376,745 Lord Beaverbrook Rink 167,764 167,392 Saint John Free Public Library 489,909 487,597 Regional Services Commission 343,299 176,383 Regional Facilities Commission 1,733,705 1,863,835 Regional Economic Development Agency 3,087,500 3,093,000 14, 911, 218 13,921,452 Fiscal Charges Interest 2,589,688 2,514,628 Principal Repayment 12,830,741 13,170,977 15,420,429 15, 685, 605 Other Charges Howes Lake Landfill 300,000 300,000 Capital from Operating 6,800,000 5,650,000 PILT Adjustment 48,453 - Transfer to Operating Reserves 135,000 135,000 Transfer to Capital Reserves 3,700,019 3,771,797 10,983,472 9,856,797 Total Expenditures 187,800,682 177,287,500 General Fund Surplus (Deficit) :A FINANCE COMMITTEE REPORT Report Date November 14, 2024 Meeting Date November 22, 2024 Chairman Councillor Sullivan and Members of Finance Committee SUBJECT. 2024 Utility Fund Operating Budget OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. Head Chief Administration Officer Craig Lavigne Ian Fagan J. Brent McGovern RECOMMENDATION It is recommended that the Finance Committee approve the proposed 2024 Utility Fund Operating Budget and forward to the next meeting of Common Council for approval of the first and second reading of Water and Sewerage Bylaw amendments. EXECUTIVE SUMMARY The 2024 Utility Fund Operating Budget will represent the sixth year in a row that will see no rate increase for ratepayers. These ratepayers include both flat rate customers which will see the annual cost remain the same at $1,428 per year and metered customers will see no change in the cost per cubic meter and meter charges. The budget also includes rates for the Industrial Raw Water customers. Rate stabilization has been achieved for rate payers for the past six years despite the Utility still experiencing stagnate revenues and increasing costs in several areas. PREVIOUS RESOLUTION Finance Committee — November 8, 2023 — "Finance Committee receive and file the Utility Fund Potable Operating Budget" STRATEGIC ALIGNMENT !i93 -2- The proposed 2024 Utility Fund Operating Budget is aligned with Council's priorities demonstrated though the commitment to address infrastructure risk associated with climate change, focusing on its leak detection program that helps eliminate water waste. The Utility continues to find operational efficiencies through continuous improvement, focusing on ensuring service objectives are being met and managing the finances of the Utility to achieve rate stabilization for rate payers. REPORT The 2024 Utility Fund Operating Budget will represent the sixth year in a row that will see no rate increase for ratepayers that use both water and sewer services. These ratepayers include both flat rate customers who will see the annual cost remain the same at $1,428 per year and metered customers will see no change in the cost per cubic metre and meter charges. Potable Revenue Overall potable revenue for 2024 is budgeted at $37,982,057 (2023- $37,550,00). The Utility has experienced a reduction in flat rate accounts over the past several years, however it anticipated the loss in customer accounts has leveled for 2024. Meter rate revenue is from metered customers and are largely commercial, manufacturing, malls, schools, restaurants, hotels, and apartment buildings. Meter revenues are anticipated to be $15,732,057 for 2024 which is an increase of 2.82% and is a result of a general increase in consumption and an industrial customer coming online for potable water. There is $750,000 budgeted in 2024 for the dredging of Lancaster Lagoon and is a carryover from 2023 due to delays in completing the work. This is a one-time cost that is not expected to reoccur for approximately a decade and therefore the one- time use of funds from the operating reserve is appropriate. The balance of revenues includes the fire protection levy, storm sewer levy, interest revenue, other revenue, and prior year surplus. Interest rate revenue is the large driver of the revenue increase due to rates anticipated to remain high for 2024. Potable Expenditures The Utility operating expenditures increased by $1,311,713 over 2023. Wages and benefits increased by $487,477 or 4.59% despite the general fund setting the wage escalation rate at 5.0%. The Utility has added funding for a new Safety Manager and will share 25% of the cost of the new project manager added by the General Fund. -3- Expenditures has $750,000 budgeted for the Lancaster Lagoon large scale dredging, an operational project that is necessary before capital improvements to the Lagoon are made as part of the Utility Capital Program. Capital from operating also increase by $672,956 over 2023. The Utility still has a large amount of expenses that cannot reduced further to provide water and sewer services. Costs such as annual payments for the water treatment plant capital and operating, cost of operating water and wastewater pump stations, sewer treatment plants, debt payments, electricity, property taxes, chemicals and insurance are just some examples of areas that need to be funded to provide services. These costs along with several are subject to the inflation pressures being felt due to the economic environment. There are several initiatives that will be undertaken in the 2024 budget. There will be continued leak detection done water distribution system which may identify leaks to be repaired to improve water efficiency and maintain a highly reliable water system. The fire hydrant and paint program will continue into 2024 with approximately 25% of the 2,100 hydrants repainted and inspection of 35% of the hydrants. The budget includes, as mentioned earlier, significant investment in Lancaster Lagoon. There is funding in trenchless technology, an efficient and cost-effective repair solution as well as security upgrades at the three large wastewater treatment facilities. The budget includes $5,540,756 million in pay as you go (capital from operating). This will allow the Utility to complete its 2024 capital program without any borrowing. There has been a lot of success in obtaining funding for Capital projects as can be seen in the proposed 2024 Capital Utility Budget. The funding will allow the Utilityto focus on climate change initiatives, sewer separation and the renewal of underground infrastructure in coordination with the General Fund. Industrial Raw Water The Utility budget also includes the expenditures and revenues for the four customers who receive raw untreated water. The bylaw rates include. ➢ Operational cost to provide the service, ➢ Contributions to asset replacement/asset management, ➢ Rate stabilization reserves, ➢ New debt associated with the industrial system delivering the service, ➢ Previous debt associated with being a member of the water distribution system. In summary, the City set the rates to cover all operating costs associated with providing raw water to each customer, recover past debt associated with each system and include a charge for future asset replacement. There is also a charge :111 -4- to some customers to cover the cost of assets currently being replaced, along with funding to a rate stabilization reserve for each customer. Rates for each of the four customers are seeing various degrees of increases. Some of the increases are a result of lower than consumption estimates or higher cost of service. Overall, the consumption rates will increase for each customer as note below. Customer 2024 Rate 2023 Rate East Industrial Irving Oil 0.2974 0.2834 Irving Paper 0.0947 0.0896 West Industrial Irving Pulp & Paper 0.0835 0.0816 NB Power Coleson Cove 0.9526 0.9199 Conclusion The sixth straight rate freeze for 2024 is a positive note for potable ratepayers particularly with the current economic environment and inflationary pressures. The Utility has continued to focus on cost reductions, continuous improvement, finding efficiencies, and process improvements in 2023, as well as debt management, leveraging of funds from other levels of Government and pay as you go (no borrowing) for all capital expenditures. The Utility will continue to focus on the various cost control initiatives. However, a major issue the Utility cannot control is its revenue base. As positive growth continues in the City, the Utility often bears a large cost for infrastructure related to growth, but will see very little revenue in comparison to the tax assessment the City receives. In accordance with the Chief Administration Officer's Work Plan and updates to the Finance Committee, work has commenced on preparing for 10-year long-term financial plan and work on it will be completed in 2024. The document will provide the financial road map for the Utility. SERVICEAND FINANCIAL OUTCOMES See enclosed 2024 Utility Fund Operating Budget INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS The budget was established in collaboration with the City's Finance team. ATTACHMENTS • Appendix A— 2024 Saint John Water Operating Budget • Appendix B — 2024 Utility Fund Operating Budget Presentation The City of Saint Johnn"wdf@ 2024 Utility Fund Operating Budget �► 2024 2023 Budget Budget Expenditures Drinking Water Service Watershed Management 676,221 794,953 Water Treatment 9,122,364 8,768,620 Water Pumping & Storage 1,244,612 1,230,957 Transmission & Distribution 4,491,783 4,396,550 Customer Metering 712,794 720,634 Internal Charges 465,000 510,050 Other Charges 562,486 574,093 Debt Servicing 3,676,774 3,752,315 Capital from Operating 1,715,622 2,135,500 Total Drinking Water Service 22,667,655 22,883,671 Wastewater Service Wastewater Pumping 3,314,762 3,131,775 Wastewater Collection 3,110,344 3,039,799 Wastewater Treatment 6,225,206 6,054,322 Internal Charges 465,000 510,050 Other Charges 562,486 574,093 Debt Servicing 2,959,598 3,020,324 Capital from Operating 3,825,134 2,732,300 Total Wastewater Service 20,462,530 19,062,663 Industrial Water Service Watershed Management 695,930 668,245 Water Pumping and Transmission 2,869,275 2,157,068 Customer Metering 269,460 176,652 Debt Servicing 1,796,522 1,846,586 Transfer to Operating Reserves 1,118,631 895,516 Transfer to Capital Reserves 836,677 836,677 Capital from Operating 635,210 767,708 Total Industrial Water Service 8,221,705 7,348,452 Infrastructure Management Engineering Services 837,530 709,668 Total Expenditures 52,189,421 50,004,453 47 1 The City of Saint John �jn dr�. 2024 Utility Fund Operating Budget 2024 Budget Revenues Flat Rate Accounts 22,250,000 Meter Rate Accounts 15,732,057 Industrial Raw Water Accounts 7,819,412 Fire Protection Levy 2,500,000 Storm Sewer Levy 945,000 Other Revenues 1,455,581 Transfer from Reserves 750,000 Previous Year's Surplus 737,371 2023 Budget 22,250,000 15, 300, 000 6,983,657 2,500,000 925,000 943,508 421,492 680,796 Total Revenues 52,189,421 50,004,453 Annual Flat Rate - Water and Sewerage $1,428 $1,428 Meter Rates:/Cu.m. Block 1 - First 100 $1.9940 $1.9940 Block 2 - Excess of 100 $1.2700 $1.2700 Consumption based on Bi-monthly billings NOTE: Sewer Surcharge 80.35% of Water Charge Industrial Raw Water Rate:/Cu. M East Industrial Irving Oil $0.0297 $0.2834 Irving Paper $0.0896 $0.0896 West Industrial Irving Pulp and Paper $0.0835 $0.0816 NB Power (Coleson Cove) $0.9526 $0.9199 Industrial Raw Water Rate - Bi-monthly fixed charge East Industrial Irving Oil $36,488 $27,057 Irving Paper $9,346 $7,874 West Industrial Irving Pulp and Paper $67,023 $53,094 NB Power (Coleson Cove) $1,687 $1,322 48 2 Z x 0 C� L CL AlU LL N O N q* N O N N N i E O z U m .C: I i--1 _r_ >- O O a- E N Ln C: O dl a1 +, O o O LO = k.0 1 Q =3 0) aJ � O U 0-hA N M 00 O +, = O M � c6 U N dJ _ �--+ U M C •— Ln o M � a m oc aA o o O `) cc Q M U Z u ON > m -o w •� 'L 4-) V) (1) T aJ E > O O00 m _0 � C6 L +� N a p o N •— a--j 0 a --a . _0 M } , > 4J O C o }, a--+ (B o (00 V +, (A dJ � •� _0Q (1) M dJ > N L u V • N p U 4--j U p O p p o -0O •U CU fB Qai OJU O 4-J V GJ +-) 4J — E (B W O > L a1 U =3 O ° to = ca O o o L •� U N > •L Q U O QJ > Q • • w • V) � 0 0 0 LO ,,Zt44FAlk, 0 z x 0 cV) W 4-J NO NO ^L W 4--a ro J .Co L co c6 w N O N W ate-+ a--+ E E O U M O N N N I r —0 C: C: .O c6 +� _C E ca O O V 4-+ V a--+ • 0 O 0 C6 m LO c s O OMMI N 4-0 W O tU0 L CO u J N O E E O U 4--+ w N L C6 V) w a--+ V O U J r4 4-1 ca w N r M 4 I : — `- • U (1) C- C- ::3 O U aA 4J O — . u 4-+ E � ? E ° — •� 4J U �_ •� 4-' 4- U � O > 0 E ca � 0) E 4O E L E i N O 4-1 cn a1 � V E O (6 a--+ ate-+ O • un f a--j U a--� 4-j 4J ate--+ • > SZ-J 4J C6 a--j L (1) S 4J Ca • L a--j O ca a --' ca •u V) = Q a-j can O O a� p — _ = C6 Ln a--j U cn c6 O =3 N Ej +1 — ca ' L cn QJ O O 4- 4 4-1 a1 U a--J — =3 O _0 •� (7) U m rl N M ::j- Lri Im, z. 1 M GJ C tW N m O .,� m txo i i Q o O 11 •— 3 (A6L O �= � V s o H N 0 I ul N o0 to O N ul lO lO o0 U1 lO rl U1 I- I- lO o0 O r- N m I- U1 to ul 01 r N LA o0 �O r- Ln p r- to T U1 rn to m r- kO 00 q* m 00 ;:1- k.O 00 4* lO rl rl 00 00 00 I- M 01 m M N rl I� lO I� O m I n I- O to N N rl m I- I- O 7-1 LA O N 7-1 m Ol LA 0 m N T I n to to N^ ;:I- N I n m Ol lO Ol lO lO m 00 rl lO m I n m r-I N Ol rl N O r-I N lO 00 N r- rl 00 lO N 00 � N 00 I- 00 ti LO O N (A > N N V V) D G1 O H N tL0 N 4J U Q 4-0 L D m w O Q u a N d oC c� v y L 4-1�' C N + V) D O C a7 U 0 H H U OC C c > W QL i WON i M E M N O L i M E o, 0 0 ca L 0 L Q ca a off 73 a L 0 �7 m L C: O S-- =3 U— E (6 O U . O 4-' hA 4- O N .� O N -0 dJ L O n O O u Q 4 O }' 4-1 �! > cn ca Co 4 j Co +-i 4-j O m E Q U =3 co bA to O O U ca s 1 i FINANCE COMMITTEE REPORT Report Date November 20, 2023 Meeting Date November 22, 2023 Chairman Sullivan and Members of Finance Committee SUBJECT. 2023 Fall Debenture Issue OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Authors Commissioner/Dept. Head Chief Administrative Officer Craig Lavigne Kevin Fudge J. Brent McGovern RECOMMENDATION It is recommended that members of the Finance Committee endorse the following recommendations and forward a copy of this report to Common Council for approval. RESOLVED that occasion having arisen in the public interest for the following Public Civic Works and needed Civic Improvements that the City of Saint John proposes issue of the following debentures to be dated on or after December 12, 2023: GENERAL FUND — 10 years Transportation $750,000 Recreation and Culture $5,250,000 TOTAL $ 6,000,000 UTILITY FUND — 5 years Refinance Debenture AZ-12 2008 $875,000 AI -2- EXECUTIVE SUMMARY The purpose of this report is to seek Finance Committee and Council approval to issue internal debentures to borrow funds for General Capital projects approved by Council and for the Utility fund that has an existing debenture that matured and requires refinancing. Staff are seeking to issue these debentures internally by using the City's own reserve funds, rather than the traditional route of borrowing through the New Brunswick Municipal Finance Corporation. The City will be able to redirect the interest paid on debentures directly back to itself. The estimated savings for both Utility and General Fund will amount to approximately $1.672M over the term of the debentures, along with additional savings for the General Fund, by borrowing over 10 years rather than the traditional 15-year term. PREVIOUS RESOLUTIONS N/A STRATEGIC ALIGNMENT This report aligns with Council's priority of PERFORM by ensuring the City is accountable for results in delivering public service by adhering to its plans, policies, procedures, and best practices. The recommendation also aligns with the City's Operating and Capital Reserves Policy Section 8 and the City's Debt Management Policy Section 6. REPORT The purpose of this report is to seek Finance Committee and Council approval to borrow funds for Capital projects approved by Council and for the Utility fund that has an existing debenture that requires refinancing. Staff are seeking to borrow these funds by issuing debentures to itself using reserve funds, rather than the traditional route of borrowing through the New Brunswick Municipal Finance Corporation. The City will be able to redirect the interest paid on debentures directly back to itself. The estimated savings for both Utility and General Fund will amount to approximately $1.672M over the term of the debentures, along with savings for the General Fund, by borrowing over 10 years rather than the traditional 15-year term. The interest is based on the actual rates used on the most recent debentures issued by the Province this fall. Additional savings the City will receive is on the debenture discount that occurs when debentures are received which can be approximately 1% of the value of the debenture. I' -3- The following is the summary of borrowing. GENERAL FUND — 10 years Transportation $750,000 Recreation and Culture $5,250,000 TOTAL $ 6,000,000 UTILITY FUND — 5 years Refinance Debenture AZ-12 2008 $875,000 The estimated balances in General Fund Capital Reserves are approximately $24.85M and $10.89M in the Utility Fund Capital Reserves. fnnrhicinn In conclusion, the recommendation of issuing internal debentures to fund Capital borrowing will save taxpayers/rate payers approximately $1.672M in interest paid. The financial policies that have been put in place have allowed the City to build reserves funds that have mitigated risk for the City but have now enabled the City to use these funds to pay for Capital through internal debentures. Staff are confident that the amount being borrowed from reserves can be achieved without any risk to future use of Capital reserves. SERVICEAND FINANCIAL OUTCOMES This report meets the City's financial policies and will provide significant saving in interest paid over the next 10 years. Subsection 6.1 of the Debt Management Policy states, "the City may use reserves as a source of funds for the internal financing of capital projects approved by Council. Any borrowing from reserve funds shall comply with Policy FAS-003 Reserves Policy". Subsection 8 of the Operating and Capital Reserve Policy entitled Temporary Borrowing from Reserves, states: "Temporary borrowing from reserves for short term cash flow management and internal financing is permitted, however the following conditions must be met: 8.1.1 Borrowing must not adversely affect the intended purpose of the reserve. 8.1.2 Borrowing must not be for purposes contrary to the Long -Term Financial Plan 8.1.3 A plan to repay the reserve within a reasonable timeframe is required and must be documented, and 8.1.4 Borrowing must be approved by Resolution of Council" W -4- INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS N/A ATTACHMENTS Appendix 1 — IFD 1 -2023 General Fund Debenture Appendix 2 — IFD 2 -2023 Utility Fund Debenture Appendix 3 — FAS 003 Capital and Operating Reserve Policy Appendix 4 — FAS 006 Debt Management Policy AE,I DEBENTURE NO. IFD 1 -2023 THE LOCAL GOVERNMENT OF THE CITY OF SAINT JOHN for value received, hereby acknowledges itself indebted and promises to pay to the registered holder, being the local government of the City of Saint John, General Fund Capital Reserves the principal sum of SIX MILLION DOLLARS $6,000,000.00 and to pay interest thereon at the following rates, such payments of principal and interest to be made from the 12 th day of December 2023 , in accordance with the following schedule at the office of the City Treasurer of the city of Saint John: YEAR INTEREST RATE % PRINCIPAL BEFORE REPAYMENT ANNUAL PRINCIPAL SEMI-ANNUAL INTEREST DUE SEMI-ANNUAL INTERESTDUE TOTAL ANNUAL CHARGE December 12 June 12 December 12 2023 $0.00 2024 5.245% $6,000,000.00 $600,000.00 $141,864.00 $141,864.00 $883,728.00 2025 4.858% $5,400,000.00 $600,000.00 $126,129.00 $126,129.00 $852,258.00 2026 4.616% $4,800,000.00 $600,000.00 $111,555.00 $111,555.00 $823,110.00 2027 4.512% $4,200,000.00 $600,000.00 $97,707.00 $97,707.00 $795,414.00 2028 4.511 % $3,600,000.00 $600,000.00 $84,171.00 $84,171.00 $768,342.00 2029 4.566% $3,000,000.00 $600,000.00 $70,638.00 $70,638.00 $741,276.00 2030 4.647% $2,400,000.00 $600,000.00 $56,940.00 $56,940.00 $713,880.00 2031 4.716% $1,800,000.00 $600,000.00 $42,999.00 $42,999.00 $685,998.00 2032 4.782% $1,200,000.00 $600,000.00 $28,851.00 $28,851.00 $657,702.00 2033 4.835% $600,000.00 $600,000.00 $14,505.00 $14,505.00 $629,010.00 *Bond interest rates are based on NBMFC Bond series issue CE Fall 2023 TOTAL $6,000,000.00 $775,359.00 $775,359.00 $7,550,718.00 This debenture is issued under the authority of Chapter M-20 (1973) of the Acts of the Legislature of the Province of New Brunswick and the following Ministerial Orders or Orders In Council and Resolutions: AMOUNT PURPOSE O.I.C./M.O. NUMBER O.I.C./M.O. DATE RESOLUTION DATE $750,000 Transportation ACTS OF ASSEMBLY, 52, VICTORIA, CHAPTER 27, SECTION 29, AND AMENDMENTS THERETO $5,250,000 Parks and Recreation In testimony whereof, the Local Government has caused this debenture to be signed by its Mayor and countersigned by its Clerk and its corporate seal to be hereto affixed on the day of 2023 SEAL MAYOR CLERK REGISTRAR'S CERTIFICATE This debenture is entered in the Debenture Registration Book of the above Local Government as of December 12 th 2023 REGISTRAR COMPTROLLER'S CERTIFICATE This debenture is authorized by Chapter M-20(1973) of the Acts of the Legislature of the province of New Brunswick and this certificate is endorsed hereon under the Municipal Debentures Act. Dated at Fredericton, NB this 12 th Day of December 2023 COMPTROLLER, PROVINCE OF NEW BRUNSWICK 65 DEBENTURE NO. IFD 2 - 2023 THE LOCAL GOVERNMENT OF THE CITY OF SAINT JOHN for value received, hereby acknowledges itself indebted and promises to pay to the registered holder, being the local government of the City of Saint John, Utility Fund Capital Reserves the principal sum of EIGHT HUNDRED AND SEVENTY FIVE THOUSAND DOLLARS $875,000.00 and to pay interest thereon at the following rates, such payments of principal and interest to be made from the 12 th day of December 2023 , in accordance with the following schedule at the office of the City Treasurer of the city of Saint John: YEAR INTEREST RATE % PRINCIPAL BEFORE REPAYMENT ANNUAL PRINCIPAL SEMI-ANNUAL INTEREST DUE SEMI-ANNUAL INTERESTDUE TOTAL ANNUAL CHARGE December 12 June 12 December 12 2023 $0.00 2024 5.245% $875,000.00 $175,000.00 $20,775.00 $20,775.00 $216,550.00 2025 4.858% $700,000.00 $175,000.00 $16,185.00 $16,185.00 $207,370.00 2026 4.616% $525,000.00 $175,000.00 $11,934.00 $11,934.00 $198,868.00 2027 4.512% $350,000.00 $175,000.00 $7,895.00 $7,895.00 $190,790.00 2028 4.511 % $175,000.00 $175,000.00 $3,947.00 $3,947.00 $182,894.00 *Bond interest rates are based on NBMFC Bond series issue CE Fall 2023 TOTAL $875,000.00 $60,736.00 $60,736.00 $996,472.00 This debenture is issued under the authority of Chapter M-20 (1973) of the Acts of the Legislature of the Province of New Brunswick and the following Ministerial Orders or Orders In Council and Resolutions: AMOUNT PURPOSE O.I.C./M.O. NUMBER O.I.C./M.O. DATE RESOLUTION DATE $875,000 Environmental Health Services ACTS OF ASSEMBLY, 52, VICTORIA, CHAPTER 27, SECTION 29, AND AMENDMENTS THERETO In testimony whereof, the Local Government has caused this debenture to be signed by its Mayor and countersigned by its Clerk and its corporate seal to be hereto affixed on the day of 2023 MAYOR SEAL CLERK REGISTRAR'S CERTIFICATE This debenture is entered in the Debenture Registration Book of the above Local Government as of December 12 th 2023 REGISTRAR COMPTROLLER'S CERTIFICATE This debenture is authorized by Chapter M-20(1973) of the Acts of the Legislature of the province of New Brunswick and this certificate is endorsed hereon under the Municipal Debentures Act. Dated at Fredericton, NB this 12 th Day of December 2023 COMPTROLLER, PROVINCE OF NEW BRUNSWICK (P SA NT 1014'N Title: Operating and Capital Reserves Subject: Operating and Capital Reserves Policy Category: Policy Policy No.: FAS-003 M&C Report No.: 2017-311 Effective Date: 2018-01-01 Next Review Date: 2019-01-01 Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-002 Investment Policy Document Pages: This document consists of 7 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: 2017-12-11 I certify that this Policy was adopted by Common Council as indicated above. Common Clerk Date Date Created: Common Council Approval Date: Contact: 2017-12-05 2017-12-11 Finance and Administrative Services AYA TABLE OF CONTENTS 1. POLICY STATEMENT...................................................................................................... 2 2. DEFINITION OF RESERVES.............................................................................................3 3. PERMITTED USE OF RESERVES.......................................................................................3 4. AUTHORITY....................................................................................................................4 5. ADEQUACY OF RESERVES...............................................................................................4 6. FUNDING RESERVES.......................................................................................................4 7. INVESTMENT OF RESERVE FUNDS.................................................................................5 8. TEMPORARY BORROWING FROM RESERVES.................................................................5 9. ANNUAL REPORTING.....................................................................................................5 10. RESPONSIBILTIES................................................................................................................... 6 C:�:3 City of Saint John Operating and Capital Reserves SA I NT I01-11 1. POLICY STATEMENT 1.1 This policy sets out consistent standards and guidelines for the establishment, management, and accounting of reserve and reserve funds in accordance with agreed upon policy guidelines and applicable regulations under the New Brunswick Municipalities Act. 1.2 The City of Saint John (City) establishes this policy to address longer term funding strategies and to ensure good financial and cash management for the ongoing financial stability of the City. In conjunction with the Asset Management, Investment and Debt Management Policies, this policy will inform decisions relating to long term operating and capital expenditures in order to minimize debt servicing costs, address the infrastructure deficit, and mitigate the effect of unanticipated events. 1.3 The City must comply with the New Brunswick Local Governance Act Reserve Fund Regulation in relation to the establishment and use of Reserves. Under the Act, reserves are permitted to be established for Operating and Capital purposes. 1.4 All reserves will be managed in accordance with the New Brunswick Local Governance Reserve Fund Regulation as follows: 'General Operating Reserve Fund ■ A municipality may, by resolution, establish, manage and contribute to a general operating reserve fund for the payment of operating expenses. ■ The amount held in a general operating reserve shall not exceed five percent of the total expenditure that was budgeted for the municipality for the previous fiscal year. ■ Money held in a general operating reserve fund shall be used for no purpose other than the payment of operating expenses. ■ Every resolution respecting a contribution made to or a withdrawal from a general operating reserve fund in respect of a calendar year shall be made by December 31 of that calendar year and shall specify the dollar amount contributed to the general operating reserve fund. ' Reserve Fund Regulation NBReg 97-145 Section 3.1 to 3.4— New Brunswick Municipalities Act (O.C. 97-1036) 69 2 City of Saint John Operating and Capital Reserves SA I NT I01-11 2General Capital Reserve Fund ■ A municipality may by resolution establish, manage, and contribute to a general capital reserve fund for the payment of capital expenses. ■ Money held in a general capital reserve fund shall be used for no purpose other than the payment of capital expenses. ■ Every resolution respecting a contribution made to or withdrawal from a general capital reserve in respect of a calendar year shall be made by December 31 of that calendar year and shall specify the dollar amount contributed to the general capital reserve fund. 2. DEFINITION OF RESERVES 2.1 "Reserves" are created when funds are set aside (designated) for a future purpose. 2.2 "Operating Reserve" means a general operating reserve; a service; or utility operating reserve. 2.3 "Capital Reserve" means a general capital reserve; a service or utility capital reserve. 3. PERMITTED USE OF RESERVES 3.1 The City of Saint John will set aside and maintain adequate reserves to provide for: 3.1.1 Major unanticipated/unforeseen events; 3.1.2 Major Capital renewal; 3.1.3 Future Liabilities; 3.1.4 One time operating expenses which are greater than $100,000 and are not part of the recurring operating budget; 3.1.5 Infrastructure deficit; and 3.1.6 Investment in growth opportunities. z Reserve Fund Regulation NBReg 97-145 Section 4.1 to 4.3— New Brunswick Municipalities Act (O.C. 97-1036) 70 3 City of Saint John Operating and Capital Reserves SA INT IO1.11 4. AUTHORITY 4.1 A resolution of Council will be required to establish a reserve. 4.2 3No transfer of money from an operating reserve fund or a capital reserve fund shall be made except: 4.2.1 By resolution of Council; and 4.2.2 Within the fiscal year to which the expenditure relates. 4.3 4A resolution of Council will be required to close a reserve. S. ADEQUACY OF RESERVES 5.1 The adequacy of individual reserves shall be determined, on a case by case basis, and aligned with the Long Term Financial Plan, Asset Management Plan, and the Debt Management Plan. 6. FUNDING RESERVES 6.1 Reserve funds will generally come from: 6.1.1 The excess of revenues over expenditures and one time revenues; and 6.1.2 Planned/budgeted amounts for reserves. 3 Reserve Fund Regulation NBReg 97-145 Section 7.1 to 7.2— New Brunswick Municipalities Act (O.C. 97-1036) 4 Reserve Fund Regulation NBReg 97-145 Section 10 — New Brunswick Municipalities Act (O.C. 97-1036) 71 4 City of Saint John Operating and Capital Reserves SA INT IO1.11 7. INVESTMENT OF RESERVE FUNDS 7.1 5Any money, including interest, within an operating reserve fund or a capital reserve fund shall be invested in accordance with the Trustees Act. 7.2 Any investment of reserve funds shall comply with the Trustees Act and the City's Investment Policy. 8. TEMPORARY BORROWING FROM RESERVES 8.1 Temporary borrowing from reserves for short term cash flow management and internal financing is permitted, however the following conditions must be met: 8.1.1 Borrowing must not adversely affect the intended purpose of the reserve; 8.1.2 Borrowing must not be for purposes contrary to the Long Term Financial Plan; 8.1.3 A plan to repay the reserve within a reasonable timeframe is required and must be documented; and 8.1.4 Borrowing must be approved by Resolution of Council. 9. ANNUAL REPORTING 9.1 The annual reporting of the Operating and Capital Reserve Funds shall be in accordance with the Local Governance Reserve Fund Regulation. 5 Reserve Fund Regulation NBReg 97-145 Section 8 — New Brunswick Municipalities Act (O.C. 97-1036) 72 5 City of Saint John Operating and Capital Reserves 10. RESPONSIBILITIES 10.1 Council shall: 10.1.1 Approve the Reserve Policy; and 10.1.2 Approve transactions to and from reserves by specific resolution. 10.2 The City Manager Shall: 10.2.1 Ensure compliance with the principles and mandatory requirements contained in this policy. 10.3 The Finance Commissioner Shall: 10.3.1 Develop and update this policy as necessary and present changes to Council; 10.3.2 Ensure that the principles and requirements contained in this policy are applied consistently across all Service Areas; 10.3.3 Perform the transfers to and from reserves and reserve funds as authorized by Council; 10.3.4 Recommend strategies for the adequacy of reserve levels; and 10.3.5 Report to Council, the reserve balances and forecast as part of the annual budget approval process. 73 6 (P- Title: Debt Management Subject: General Fund Debt Management Policy Category: Finance and Administrative Services Policy No.: FAS-006 M&C Report No.: 2019-167 Effective Date: 2019-07-08 Next Review Date: Area(s) this policy applies to: Cross Corporate Office Responsible for review of this Policy: Finance and Administrative Services Related Instruments: Policy Sponsors: FAS-001 Asset Management Policy Commissioner of Finance and Administrative Services FAS-002 Investment Management Policy FAS-003 Reserves Policy FAS-004 Operating Budget Policy FAS-005 Capital Budget Policy Document Pages: This document consists of 7 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: July 8, 2019 1 certify that this Policy was adopted by Common Council as indicated above. July 10, 2019 Common Clerk Date Date Created: Common Council Approval Date: Contact: July 8, 2019 July 8, 2019 Finance and Administrative Services W11 City of Saint John Debt Management Ir_l01we] a tQ01111►1161 1. POLICY STATEMENT................................................................................................... 3 2. DEFINITIONS...............................................................................................................3 3. ACCEPTABLE PURPOSES FOR DEBT ............................................................................ 4 4. DEBT LIMITS............................................................................................................... 5 5. DEBT ISSUANCE.......................................................................................................... 6 6. INTERNAL BORROWING............................................................................................. 6 7. PAY AS YOU GO.......................................................................................................... 6 8. REPORTING................................................................................................................ 7 9. RESPONSIBILITIES......................................................................................................7 0 75 z City of Saint John Debt Management INT K)H 1. POLICY STATEMENT 1.1. The Debt Management Policy does not apply to Saint John Water; 1.2. The Debt Management Policy is established to ensure that all debt is issued prudently and cost effectively in accordance with the Long Term Financial Plan; 1.3. The Debt Management policy objectives are as follows: • The City obtains debt financing only when necessary; • The City manages debt such that future financial flexibility is maintained; • The City strategically issues debt based on sound financial planning. 1.4. The Capital Investment Plan (CIP) is essential to intelligent planning of debt issuance by prioritizing potential capital investment and potential sources of financing. 1.5. All City debt issuance and management procedures will comply with the following legislation where applicable: • Province of New Brunswick Local Governance Act • Province of New Brunswick Municipal Capital Borrowing Act • Province of New Brunswick Municipal Debentures Act • Province of New Brunswick Control of Municipalities Act • Province of New Brunswick Financial Corporation Act 2. DEFINITIONS Sustainability — means meeting the needs of the present without compromising the ability of future generations to meet their own needs. Long Term Debt — means financing with a term over 10-30 years with municipal bonds through the Municipal Finance Corporation or capital leasing as defined by the Public Sector Accounting Standards. Inter -Generational Equity — means distributing the costs associated with capital investments across the generations which will be enjoying the benefits of the capital assets built today. Debt Term — the period of time during which debt payments are made. At the end of the debt term, the loan is paid in full. Internal Financing — means financing for capital purchases from reserve funds as permitted in FAS-003 Reserves Policy. 76 3 City of Saint John Debt Management 0 Pay -As -You Go Financing — means the use of operating funds for capital purchases as opposed to using debt or reserves. 3. ACCEPTABLE CONDITIONS FOR USE OF DEBT 3.1. The City will issue long-term debt solely for the purpose of financing the projects approved in the Capital Budget and the Capital Investment Plan (CIP); 3.2. Long term debt shall not be used to fund operating or maintenance costs or used as a tool to balance the operating budget; 3.3. The Long Term Debt amortization period shall not exceed the life of the asset it is financing; 3.4. The City shall promote a balanced approach between maintaining an affordable debt level, maintaining infrastructure and accommodating growth by: • Utilizing this Policy in conjunction with the Asset Management Plan, FAS- 005 Capital Budget Policy, FAS-004 Operating Budget Policy and FAS-003 Reserves Policy. • Integrating debt issuance with the Capital Budgeting process to determine the necessity, priority, and viability of the capital project. • Considering the Long Term Financial Plan, and analyzing the tolerance or capacity to absorb and manage new debt given future priorities. 3.5. Debt will be structured to fairly distribute the costs over time, taking into consideration inter -generational equity. 3.6. The City may also issue debt on behalf of an Agency, Board or Commissions (ABC) under its control pursuant to Generally Accepted Accounting Principles to further the public purposes of the City. The City shall take appropriate steps to confirm the financial feasibility of the project, the financial solvency of the ABC, and that the issuance of such debt is consistent with the policies set forth herein; 3.7. This Policy does not apply for the use of Short Term debt instruments. 77 4 City of Saint John Debt Management INT O)H 4. DEBT LIMITS AND DEBT CAPACITY 4.1. The New Brunswick Local Governance Act stipulates that: • A local government shall not, in any one year, borrow for its current operations any money in excess of the sum represented by 4% of the budget of that local government for that year or $15K, whichever is greater. • A local government shall not, in any one year, borrow for capital expenditures any money in excess of the sum represented by 2% of the assessed value of real property in that local government. • The total amount of money borrowed by a local government for capital expenditures shall not exceed 6% of the assessed value of real property in the local government. 4.2. The City's capacity to issue debt is directly related to Taxpayer's ability to service the payments required on the debt. Three key performance indicators will be benchmarked and measured and the following debt limits shall be applicable: • Debt per Capita: This measurement can provide elected officials with a trend of overall debt outstanding by measuring how much debt the City has per citizen. General Fund Debt per Capita shall not exceed $1600; • Debt Service Ratio: This measurement allows elected officials to be aware of the amount of the current year's annual operating budget which is devoted to servicing debt. The General Fund Debt Service Ratio shall not exceed 12%; • Total Debt Outstanding as a Percentage of Operating Budget: This measurement identifies the percentage of annual operating revenues that would be required to extinguish the City's outstanding debt. The General Fund Total Debt Outstanding as a Percentage of Operating Budget shall not exceed 70%; 4.3. Additional debt is only permissible when existing debt is within these limits, the limits will be reviewed and updated on an annual basis; 4.4. The City's General Fund target Debt Per Capita is $1175 by 2030, the City's Debt Service Ratio Target is 9% by the year 2030 and the City's General Fund Target Debt Outstanding as a Percentage of Operating Budget is 50% by 2030. 4.5. Long Term Debt Term shall be in accordance with the Debt Management Plan. 78 5 City of Saint John Debt Management INT O)H S. DEBT ISSUANCE 5.1. A resolution of Council is required for all new debt issues. 5.2. The debt issuance process generally follows the steps below: • Notice of motion: Council gives notice of intent to borrow after 30 days from the day of Council resolution; • After expiration of 30 days, Council authorizes staff to issue and sell to the New Brunswick Municipal Finance Corporation debentures at such terms and conditions recommended by the Corporation; • Application form filled out and submitted to the New Brunswick Municipal Finance Corporation; • New Brunswick Municipal Finance Corporation advises the City of the actual bond issue; and • Staff reports back to Council regarding terms of the issue, coupon rate, price, average yield and settlement date. 5.3. Debt is structured to fairly distribute the costs over time, taking into consideration intergenerational equity; 6. INTERNAL FINANCING 6.1. The City may use reserves as a source of funds for the internal financing of capital projects as approved by Council. Any borrowing from reserve funds shall comply with Policy FAS-003 Reserves Policy. 7. PAY-AS-YOU-GO FINANCING 7.1. The City will seek to gradually increase pay-as-you-go as an option for financing capital overtime. Factors which favor pay -go financing include: • Asset Renewal Projects; • Assets with a useful life that is less than 10 years — for example, IT equipment and road maintenance; • Situations where additional debt could adversely impact the City's financial health; • Situations where market conditions favour the use of cash rather than debt (for example, escalating interest rates) 79 6 City of Saint John Debt Management INT 0)H 8. REPORTING 8.1. The total debt outstanding, and total annual debt service payments will be reported in the annual consolidated financial Statements; 8.2. Key performance indicators for debt will be measured and tracked in the City's Annual Financial Health Report Card; 8.3. Long-term debt will be forecasted over the long term in a Debt Management Plan based on the Capital Investment Plan as part of the City's Long -Term Financial Plan. 9. ROLES AND RESPONSIBILTIES 9.1 Council shall: 9.1.1 Approve the Debt Management Policy; 9.1.2 Approve new debt issues; and 9.1.3 Approve budgets sufficient to provide for the timely payment of principal and interest on all debt. 9.2 Finance Committee shall: 9.2.1 Review borrowing requirements for alignment with the Long Term Financial Plan; and 9.2.2 Recommend to Council the approval of new debt issues. 9.3 The Finance Commissioner shall: 9.3.1 Review the policy annually in consideration to meeting the City's debt management goals and submit required changes to the Finance Committee for recommendation to Common Council consideration and approval. 9.3.2 Assume primary responsibility for the debt management process; 9.3.3 Determine the City's available debt capacity and alignment with Long Term Financial Plan; 9.3.4 Provide for the issuance of debt at appropriate intervals and in reasonable amounts as required to fund approved capital expenditures; 9.3.5 Submit to Finance Committee and Council, all recommendations to issue debt; and 9.3.6 Ensure compliance with the principles and mandatory requirements contained in this policy. 80