Loading...
2017-05-30 Finance Committee Agenda Packet - Open SessionCity of Saint John Finance Committee - Open Session AGENDA Tuesday, May 30, 2017 4:30 pm 8th Floor Boardroom, City Hall 1. Call to Order Pages 1.1 Approval of Minutes - April 11, 2017 1 - 3 1.2 March 2017 Year End Forecast 4-20 1.3 Continuous Improvement Update 21-45 1.4 Investment Management Policy Guidelines 46-72 1 Poeta Sy:1 rIN. m MINUTES - OPEN SESSION FINANCE COMMITTEE MEETING APRIL 11, 2017 AT 5:00 PM Stn FLOOR BOARDROOM, CITY HALL Present: Councillor D. Merrithew Councillor D. Reardon Councillor G. Sullivan Absent: Mayor D. Darling Councillor S. Casey Councillor G. Norton Also Present: Commissioner of Finance and Treasurer K. Fudge Deputy Commissioner Finance and Administrative Services I Comptroller C. Graham Commissioner Saint John Water B. McGovern Commissioner of Transportation & Environment Services M. Assistant Comptroller Finance C. Lavigne Continuous Improvement Officer S. Ranson Administrative Assistant K. Tibbits 1. Meeting Called To Order Fogan Hugenholtz Councillor Merrithew called the Finance Committee open session meeting to order. 1.1 Approval of Minutes 1.1.1 Minutes of January 30, 2017 1.1.2 Minutes of February 28, 2017 Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the minutes of January 30th, 2017 and February 28th, 2017, be received for information. MOTION CARRIED. 1.2 Asset Management Roadmap (Mr. Samir Yammine, Energy Manager, and Mr. Hans Arisz of RV Anderson entered the meeting) Mr. Yammine stated that the first phase of the project has been completed. The roadmap will provide comprehensive detail on service levels and the effective management of assets. It will allow for more effective decision making to provide an optimal level of service, offer the benefit of being able to quantitatively defend decisions, and provide for transparency. Referring to the submitted report, Mr. Arisz commented on the purpose and vision of the asset management plan. For successful implementation, support is required from Council, senior leadership Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the submitted presentation entitled, "Saint John Asset Management Road Map Project Update", be received for information. MOTION CARRIED. (Mr. Yammine and Mr. Arisz withdrew from the meeting) 1.3 Long -Term Financial Planning Framework Mr. Fudge stated that the development of a long-term financial plan is slated for 2018. It provides a tool for financial forecasting by identifying future financial challenges and opportunities and identifying strategies to secure financial stability. A long term financial plan will address the delivery of the appropriate level of services, cost containment strategies, infrastructure considerations and be aligned with the City's strategic vision. It will include strategies to mitigate financial shocks and protect the tax payer from unexpected tax increases or cuts to services. Components of a Long -Term Financial Plan: • Environmental analysis — general economic trends and local issues, analyze potential impacts to the financial position in terms of employment rates, tax rates, affordability of services, demographic shifts, changes to legislation. • Revenue/expenditure forecast based on the current position — provide long range projection (10 to 15 years) to reveal gaps and determine the level of services to be provided. • Debt analysis - describes current and anticipated debt levels, assesses the sustainability of the debt burden, and examines the capacity to take on additional debt with respect to infrastructure needs through the asset management plan. • Financial Balance analysis — identify gaps, estimate future financial position, uncover potential problems by incorporating strategies to describe how to address those imbalances. • Long term capital investment plan to align with the asset management plan. • Suite of polices that align with the long-term financial plan. (Mr. Fogan withdrew from the meeting) This plan will provide for a stable tax rate over the long term by identifying ways for the City to take mitigating actions in advance by being proactive rather than adjusting the tax rate annually or having to reduce services. It encourages mindful decisions and awareness of the long term impact of today's decisions. Sustainability does not necessarily infer current service levels but a strategy where a planned level of service can be maintained over the long term. Reserve funds are not meant to help with structural imbalances but are intended as risk mitigation reserves to absorb fluctuations that cannot be predicted. Service levels are set based on what the community and council wants and the degree it can be funded. Affordability is a key consideration in a long-term financial plan. Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the submitted presentation entitled, "Long Term Financial Planning Framework", be received for information. MOTION CARRIED. 1.4 2018 Budget Timeline Mr. Fudge commented on the advantages of early completion of the capital budget. Construction companies are getting ready to bid on a number of projects and there are economies of scale through that process by getting tenders out early, prior to March 1St Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the report entitled, "2018 Proposed Budget Schedule", be received for information. Ms. Graham reviewed the submitted report entitled, "Water and Sewerage Account Receivable Update March 2017." Moved by Councillor Reardon, seconded by Councillor Sullivan: RESOLVED that the presentation entitled, "Water and Sewerage Account Receivable Update March 2017", be received for information. MOTION CARRIED. Adjournment Moved by Councillor Sullivan, seconded by Councillor Reardon: RESOLVED that the Finance Committee open session meeting held on Tuesday, April 11, 2017 be adjourned. The Finance Committee meeting held on April 11, 2017 was adjourned at 6:55 p.m. u CIER 0 LO _0 E CU E 0 0 1 LL LU m o :E 4-J o LU >- r14 U) (D cf) 111- 1- a) Q E co m o) LD CN M C) ILI') (D Qui> 2 -t (.6 -'l, cy) Lo CN c) %T Lu D r) C) C7) o 0 -0 < w 0 cf) 0 . T) -0 ui 0 't 06 0) E co 0 0 CL 0 .4- c 0 L- 0 CN (n c c Im 0 2- 2 -05 0 L4 o Q a U) 4 LO to 0 m II Nf I ap In c:> Lrl) 00 1- (D cri '4' M CD N to C -,I- Lf.) C\j C) CC) co Cj III LO a) C14 q* Lf) rl w 0 0) C) COcr) C r- It M CO 0 ell w CFj 00 - IN 0) no > Q LO LO 3 U) (D cf) a) Q E co 0 E U) Qui> 2 Lu E (D 06 E c E L Lf o 0 -0 < w 0 cf) 0 . T) -0 ui 0 't 06 0) E co 0 0 CL 0 .4- c 0 L- 0 (n c c Im 0 2- 2 -05 0 L4 o Q LO 1.0 0 A ai 0 0I+ 0)U) 0 LD LO CC cc 0 00 a) (Na r <0 LO N 0 "T 04 � W SV C:) ( M), co- T-- M- ("Q- 0 M LO LD > (3) (f) Q > W U) 0 > LLJ (3) 7C3 P u od (1) S_ 06 C,6 CL > CD c)tft p) x U) c ui co -C (D (L cl� -Fz 7E) (1) -C M CL 0 U) LL < (1) X 0 F- LLJ LO 1.0 0 A ai 0 0I+ 0)U) 0 U') �r C) 0 0 ONJ 911 C/ a (N 0 0 LO LO co SV C:) m rl— (6, kr,;, c\1 GA M LO LD > (3) (f) Q > W U) 0 > LLJ (3) 7C3 P u od (1) S_ 06 C,6 CL > CD c)tft p) x U) ui co -C (L cl� -Fz 7E) (1) -C M =s U) 0 U) LL < (1) 0 F- LO 1.0 0 A ai 0 0)U) 0 U') �r C) 0 0 ONJ 911 C/ C;� (N 0 0 LO LO co SV C:) m rl— (6, kr,;, c\1 ce) M LO LD (Y) CIO (f) Q > W U) 0 > (3) P u Cll (1) 06 C,6 -j > CD c)tft p) co -C (L cl� CLF -'0 LO 1.0 0 A ai 0)U) U) r- 0 E E U) M (D 06 > W U) 0 (3) LL m Cll (1) 06 C,6 -j > CD c)tft p) co -C (L cl� CLF -'0 LO 1.0 0 A ai O O O O O O O M00 0 0 O � W �' L. T 00 't l0 O V Z a oc l0 O O O O N O W H O C C C C 0w0 O 031 U Ln O O O 00 110 M W m M O M 0w0 N c -I 0^0 ot O cI M LL W N 110 O O O O N O N O O Ln O 00 Ln �y l0 c -I L c -I O 00 c -I 00 01 M I- O It Ln QQ1 M O -:t F, N CG r -I N N W N Z cO N cG W G = D ~ N O c 06 c cn O O =W W W wW Z D L g t :5 " 2 z tA W 06 O m =)=)W W J > z U U m oC OC Z w H w � w Q J Z = LLI LU cW ot = c d D O O O O O W 0 W Ln Ln 0 W Ln N W Z N co 0= N D W 2 00 0 0 co Fc Z 0 N LL O F- 0 Q W V W 0 _ H cc 0 J F- 0 O O^ LL O O W O M__ g rl 00 Ion 0 0 u N O LL H O r ^ O v 0 loom Y W Z oC LU Or CW O d c m Ln M rl cj O 0 0 06 (/f N ui vnW m W ZZ Z 0 Lu cO0 O c O c M N l0 N OW 0 LU LL 06 Lneq J l0 H Z 00 m LU O O O O O O O O O O O O O O O O O O N O 00 z �* N r -I r -I 0 Ln N ci N o 1� o m H q QF,rnN0100Hm CA V O O m m m O O N W � N l0 m o0 01 N u1 m o o o 00 m 0 m 0 � ri ri ri � 0o MM" LL W } rl O N rl 10 O� N m H O H 0w0 00 O 0100 N m n LU 1� � M H N O O Ill rri a1 O oo Ln 1N0 R* ci c Co H H P% rl O N In F - LL LU V) N LU LU N W m Q z z 06 z d W a N w J N w N W WJ= w z in Q X Q Z) In Q CC 00 0 LU cn w Q cn 0 C7 Q H m 0 OI:t O O N O O 1® H 00 O 1� � N O H N u m 06, 06, Di R* Q oc Q N ci N o 1� o m H q QF,rnN0100Hm CA V O O m m m O O N W � N l0 m o0 01 N u1 m o o o 00 m 0 m 0 � ri ri ri � 0o MM" LL W } rl O N rl 10 O� N m H O H 0w0 00 O 0100 N m n LU 1� � M H N O O Ill rri a1 O oo Ln 1N0 R* ci c Co H H P% rl O N In F - LL LU V) N LU LU N W m Q z z 06 z d W a N w J N w N W WJ= w z in Q X Q Z) In Q CC 00 0 LU cn w Q cn 0 C7 Q H m 0 r*_ 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 car o oN 0 000 � � o 0 � � � i � O O � 00 0 0 Lr) i 1. o 0 00 � O O � I m O O u1 (a O O 00 A W U z a_ a H O O O H O N O Um cr) 110 LLI N cI 0 LL W n r -I N N C O O O O N0 D N W z W � W O ry N -i Q Z W W CG N W D 0 O N W O o zH N LA W D W z W Z W W N W D 0 O W O o zH g NJ N a w z U W Ln N > W C7 LLI :)z w OC z W z w a a W o w a 0 H LA W D Z W W O O o N D 0 W z J W V o O v � W F- 0 0 Q V W cc 0 O LL N LU rl a O W z N IIIIIIIIIII o a N a ci �o W m r -I O N O O 0 M N (7 z z ZZ 0 O H n M N O O O O O O O O O O 0 0 0 0 0 N N rl r -I 0 0w 0 0 0 0 0 N H O O l0 N N I:t I:t N O 0 � O M rl m m O m I� m N rl 00 00 O I� m O N I� 1 C6 Ize O L6 N Ll1 CT) H 0000 H CT) N 01 a N H o N N A N O 0 r" al O � Om0 oo O N LLn � r^i l0 1 C6 Ize o L6 L6 00 00 � H 0000 H � N 01 0. N y`'LLI H '� N Ln LU J CL a cooa Ln Z) LU V) Ln LL N w w w w= LL w u N N z �N Ln LU LU N 00 CC Q 2 Z z J w LU w a w C[ CC CC Q OC J a w w z N= QZ)wO_aLnFO C7 0 r -i � LLIa a o LLI LLI 0. y`'LLI '� cooa C7 0 r -i �t O O O O M m M O O I- M Rzj O O � M O) U CF) O Ln O m I- ri 00 m N Z a oc a H N 0 0 W Ln 0 O 0 O 0 M r� N O m 0 O Ln N n 0 c�-I 00 Ln On Ln M Ol W Ol W M N c -I Ln n O N to O O O O (C r -I Ln O O O O M Ln O O O W � M O to O � Q 00 00 M N Rt W = 00 cI M n ri O N Ln W D z W w D LU O (D cn w w = W W LLA z NQ u O Q W Lu U O = =-jLL = U a w Z Ln coZ z w W N> Lei N Q z Lu LU w w D = w w H H H N H 0 Z Z Z Z O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 00 LD ll N O M 1-0 1* N N r -I r -I r -I r -I r -I O LA W W W :5Z = W O J> W W U � U 0 LU g W lull O Z a W 2 O U Z_ F- LU W F- a 0 Zu LL L Q W = Z U W LU LL 06 J H Z oc u LPI to to O O I- N �o LU O to w N O c-1 I�% LU r- r- O� M ri D U m � Z Q Z � LU Q a > X LU 00 N O O O�t O Co N N O LPI c -I M Ol to Ol O M LPI ri H O M O to Ol -:F 00 N r- to to O to O Rt vIRrn M � r -I r -I � w r- Ln to -i of O w LU O N m r- �o O O r- m M O c -I O LPI M N ci to O O M O m c -I N Ol 00 Ol M I� I- to to r I C1i LU (7 0 D m r - r -I O N w J d d D LU yN LL LU w N w Q N z v N V) o n LU = Z oz Z co cavil a � Q a V) X Z = N LN Q w W LZ Qw w = J Q X Q w Q a 0 0 w cn o O a O H H W V Z Q OC W H Z W CL X W O O O O O O O O O O O O O O O O O O O O O OOOOOOOOOO �* M N r -I ri r4 m d" L9i LD N r -I H O O O UO O O W a G cc rl O LL W } n rl O N H O O O 0 Ln Ln o N rm D m n rl O N 4-J U Ur O N CLLLI ai D m LU W W Z a) W N a LLI (D w a, p OC H Z H W V Z r -I l¢° m rn O rn N r -I N m C � � NQ 1.1. NQ 1.1. NO am m N O m O O o 't lb 0o rl N 0 � 0 LL N �D I11 r -I N N m ch i l0 Ln � M 00 W } N QM 00 r -I rl N N } (fl lD m O IZI, m N H 00 m N O O lD oo N m rl IN CT) tz 00 m N rri (Z Ln ZY N Ln mI11 O N 00 N N rl O w m In O r -I in N N Z N v m LU Z LU CO w Q l0 z oC r -I N w N Z a W J Q p m } Q c -I C7 Q H oL N } n rl O N v N W ~ LL c/I w v (j aj U u C OC Z (L w p � w CO °6 (A w g cQn U �s w N coai V) O O C7 (n Z Q oc C7 v u >LU N v u m Q a bbD � (A Z a W J 0 n3 > bA 4-J aj a W Z 07� l � m O O w ICT Ln 1 Ln N 1.01 0000 � NQ 1.1. NO am m N O m O O o 't lb 0o rl N 0 � 0 LL N �D I11 r -I N N m ch i l0 Ln � M 00 W } N rl N (fl lD m O IZI, m H 00 m N O O lD oo N m LU IN CT) tz 00 m N rri (Z Ln ZY N Ln mI11 N 00 N rl O N N Z N v O WLL I OC a Z LLJQ OC LU LU Z LU CO w Q w Uf° > or- N 06 O 0 z oC —_ 11 --- Ln u > cn N m N w N Z a W J Q p a� U C (0 > aj bo C c aj } cn C7 C7 Q H oL m r -I � O O O O � N U ru O N O V O .� CN O O O i 0 U r v 4-1 O v v O 4 -14 -Jr lz LLJO v v O v O a a v •v 4--1a O ai cn 0 p v ?Z) O O N Oj . N 4-1 4-1 s O O � � v C3) N i O 4-31 bD — O O Rt O ru a O "i = ai O iz N N '0 ru .i., Ln 4-1 � U 0 j N 0 O iO a ru ::z7- L C3 Ln a N v �p v v ru -L- 4-1 L O Ia N a v a 0 O 0 O iii v O O a i O O Q ru � •p O ru kn a.j O O U O M 0 41 � 0� w� O �N 0� O O i i O Q O N a'' 0 j a4-1 =Ln O O 4-1 >. 4Za C3)L� v 4-1 OJ L N� O� W pj q)v �. •� O N S v v��� i ti Q a ov0 O Imo- O Rt � O O O O H H 0 0 0 0 o LU r%,O O O O O O V H L Am 1` OM H � Z Ln m � Ln N Ln I YI H H 0 0 0 0 f� V) � O O O O O N H L Am 1` OM H � W m 5 N L O N H V) 0 ri IL LL 0 0 0 �o W U L O } u 41 GJ 41 L m N V) �aU3} a0i � 7 rl � � a N 41 0) o ++ 0 V) 3 L Ln N Ln I YI 0 W 0 w 0 0 0 0 0 O 0 0 0 0 0 0 0 0 f� � a N H L Am 1` v l"I 5 N L O V) ri IL Ln N Ln I YI 3 � a M L v 5 L O V) ri 0 0 0 �o � U L O GJ u 41 GJ 41 L m N V) �aU3} a0i � 7 � � a W 41 0) o ++ 0 V) 3 L � a W 2 ai a E '0 6 }I L W i 0 i fC O o 4j CC� m w w LL L is V) a O Ln N Ln I W Ln r—I Ln rl O �o v 5 O o O ri �o O O L m N a0i � 7 � � a o �Q L � a N V � 0 W oC O o w 3 m w 0 Li O E WL } 0 0 n m rl N c C IIIIIIIIIII o M y N 0 W 0 a (19 VQ O L O 0 LL O M N m O 41 rn N o0, �� Q O o � o w Ch41i lC L 41 � C rl co rn y m a+ ON ++ y N lco0 LL � 0 N 0 0 0 0 0 0 0 0 0 0 Lni o Ln o Ln N N rl I W Ln r—I U N 0 0 0 m 0 0 Z m c c m c �o ao1Do�°rnu�iM m H N i Q ' rl i11 O O I O m mo0000 °°I W o W 00 00 Ql N 1 00 m rl rl I O N 0 O N H H ui LL rl N H qT W } �i O N H O 0) O O H O O W 0 H O O N O O (� Q1 m O O H O O 0 0 0 i11 00 i11 G M M N M M N m rl O Ln N O qT O N ul V) Ul LUZ LL w w W UUl _ LU Ul W w> m 0 0� Z w p Q W �°6 0�=0w X Lu Q U U L7 D W OC J OC OC J Z W Q W W Q W a Q z w u=_ X Q w= 0 p W W 0 0 H W H Z W a W 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 In 0 Ln 0 Ln Ln 0 Ln 0 Ln 0 N N rl r -I i --I rl N N �m Y'� I r*_ r -I N a I m -JL Mir 1 lo /l/AA/ 06 w ,�N Ali TA a m 0 0 0 0 0 0 0 0 0 0 0 0 Ln 0 0 0 Ln 2 0 2 +-j u cn 4J 2 u 0 a) b.0 0 0 0 N U r14 -JL Mir 1 lo /l/AA/ 06 w ,�N Ali TA a m a ul Mo 0 0 0 00 > ro 0 T 0 ul Mo Lr) u 0 0 ul ro O' r)(V 111111 ::, . ..... C-. CL 0 ul 00 .............. 0 % CL ro 0 0 Lr) Q0 ul T 0 1.0 ro ul ul u E 52.1 0 % m Ul cu CL al ............. E % 0 ul .......... ul 0 0 0 0 0 0 0 0 0 0U 0 - 0 " CL (spuesnoq .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. SOU.IlAeS P@I:)@[OAd JO PZ.111le@d a m N a O 06 O +1 O (1) of 41 c� (6 L C (� O O QL V, o > a C C m .� LU Q V L 4- M M LrLr C: c t c O c ,C CF) _ N ro t/? N r - m O VI O > ++ O C rl N O �y W +' N U c I C Ln O 0 N p (D O U > " L� LL - r - m -n LL -n UO 4--J U Q) 0 L. - r) -0 li LU -n 0 oc LU U < CD 5; LU j= i= NLu < (A Q) ca r r -I O N Q 75 LL 41 m 4-J -x M *,,R =49 ............ 41 m 4-J ............ 41 m _N 0 .E 701 10 N a -j Q Q) U O Q) � m cn � Q • _N 0 .E 701 10 III I III MrM co co .............. I E ,J . u ..... 2!" 40 .......... 3: 0 W U C� E O Q) n 7, c U � VS Owlu 7 I ........... a M. Ln a M1VI u Gu tz m q4-1 l u i n roc a jE Z� a, Q) (O U UO UO Q) .UO D m 04 X ateJ N O O cn N . Q U a -J > ' cn 0 U 0 cerin Co .20- 4-J O O Co CL a - b.0> w N > >- O a '— L •" U O — U b.0W U U O Q U cn L •— Co -0 O m l�A •O=3ca N t1A .N QO > -0 U O N O O L U . U Q) (O U UO UO Q) .UO D m 04 N N a -J 4- N N .E 0 U F w O 0 0 L m L N O L O lu O �1 O O U — Z 4 U 0 C .i 4-J+-jU N U M U O N i cn O Ln 0 -0_ l�A w N b.0'� �J O '� U O Q W Q > a--' U U Q U N = U .— U .S .S :3 F Number of FTEs 0 O O0 O O O O O O O O O O O 0 0 0 0 0 0 N O 00 W N r -I r -I 01) eaay ION L M U M O 'C d n t IZ O U cz rU v .� 0'3c 0 c m o O c Q 0 3 v LL L N in 00 N 15 a AA, v (3) u -0 u (3) (3) 0 (3) Un _0 Ln T 0 E L- > un u C L un =3 Ln — u tn (3) (3) fU E (3) (3) Ln (3) (3) (3) > > > u LL -2 U ur) Ln (3) UJ LL 0 U a AA, v (O O Q) 0 .UO O U u r w •N 0 N .N_ � N ca O � U N U }' � iJ C6 •E p N Q cn O }' M U 4-1 C6 O Ln N = O i Q" +-+ L U v M 2 O 0 C •— O L N N M a--+ � O � L U O •v � 'L ai 16 +� �- > O > U O c -0 ._ C:U U 3 c N O NO L = L Vi ca ca G L 4-J U M M u Ol Ol Ol Ln r - Ln N U C6 i N O CD I N au c O N W a u N EO O O ��0 I.d=h N I.J� W -j Lj W N O U }' \ E i E O O E DC \ O m = — C6 +� U O ca — O E u E O _O S U U Ol Ol Ol Ln r - Ln N U C6 i N O CD I N au c O N W a u O N C6 N N � O O N Q O N N _0 U N Ln � aA Q.� O ca N N C N 4-J +�-+ LL oc CL— O oc oc U LL 00 r -I O N O 4--j Q) E Q) a u FINANCE COMMITTEE REPORT Report Date May 23, 2017 Meeting Date May 30, 2017 Chairman Councillor Merrithew and Members of Finance Committee SUBJECT: Investment Management Policy Guidelines OPEN OR CLOSED SESSION This matter is to be discussed in open session of Finance Committee. AUTHORIZATION Primary Author Commissioner/Dept. HeadCity Manager Craig Lavigne Kevin Fudge Jeff Trail RECOMMENDATION It is recommended that the Finance Committee endorse the Investment Policy for approval and bring it forward at the next meeting of Common Council for acceptance. EXECUTIVE SUMMARY The purpose of this report is to provide the Finance Committee a detailed overview of the proposed Investment Policy and attached guidelines. PREVIOUS RESOLUTION N/A STRATEGIC ALIGNMENT This report aligns with Council's priorities of being fiscally responsible. This policy will allow potential opportunities to generate additional revenue. REPORT Finance and Administrative services currently manages cash relating to the General Operating Fund, Utility Operating Fund, General and Utility Capital Budgets, various Operating and Capital Reserve Funds, Gas Tax funds, and other cash held for future payment of long term liabilities. -2 - The purpose of the report is to present to the Finance Committee an Investment Management Policy Guideline that would guide future decisions around the potential of investing public funds in a manner that will provide an optimal blend of principle protection and investment returns, while meeting the daily cash flow and liquidity demands of the City of Saint John, and complying with statutory requirements of the Municipalities Act, the Control of Municipalities Act, and the Trustees Act of the Province of New Brunswick. These guidelines were established using best practices as set out by the Government Finance Officers Association (GFOA), as well as reviewing policies established by the City of Fredericton and Halifax Regional Municipality. They speak to the objectives of management of public funds. Safety of principal, liquidity and return on investment are the main objectives when investing funds. The primary objective is protection of principle. Liquidity or access to funds followed by return of investment are the other objectives but neither will be given more weight than protection of principle. The policy provides a detailed listing of responsibilities when it comes to investing City's funds. This will provide insurance that City staff is reviewing the policy as needed, reviewing and validating the performance of the investment and reporting to the Finance Committee on a yearly basis. The types of investments that are permitted, risk tolerance, and reporting requirements are in the guidelines to ensure that objectives of the investment are being followed which are; safety of principal, liquidity and return on investment. The City has receive payments from Regional Development Corporation in relation to the Province's commitment to the Safe Clean Drinking Water Project, as well as Council's prudent fiscal response in setting up various reserves for the Safe Clean Drinking Water project and various operating reserves, there is now an opportunity for the City to earn additional interest revenue on funds not needed for the day to day operations. As the City continues to look for ways to find additional revenue, Staff will continue to look at how things are done today and find ways to stretch every dollar. The Investment Policy will allow City Staff to stretch the taxpayer's dollar a little further when the opportunity provides itself and in a way that protects the taxpayer funds. SERVICE AND FINANCIAL OUTCOMES The City of Saint John currently earns 0.95% per annum on funds held in it operating accounts and there is opportunity to earn additional interest on funds used for the day to day operations of the City. -3 - INPUT FROM OTHER SERVICE AREAS AND STAKEHOLDERS N/A ATTACHMENTS Investment Policy Investment Management Policy Guidelines !E:3 (0,11-1- Title: Investment Policy Subject: Investment Policy Category: Policy No.: M&C Report No.: Effective Date: Next Review Date: Area(s) this policy applies to: Investments Office Responsible for review of this Policy: Finance Related Instruments: Policy Sponsors: Commissioner of Finance and Administrative Services Document Pages: This document consists of 11 pages. Revision History: Common Clerk's Annotation for Official Record Date of Passage of Current Framework: I certify that this Policy was adopted by Common Council as indicated above. Common Clerk Date Date Created: Common Council Approval Date: Contact: 05, 23, 2017 Finance and Administrative Services TABLE OF CONTENTS 1. POLICY........................................................................................................................... 2 DEFINITIONS........................................................................................................ 2 SCOPE................................................................................................................... 3 OBJECTIVES.......................................................................................................... 3 STANDARD OF CARE............................................................................................ 4 ETHICS AND CONFLICT ON INTEREST.................................................................. 4 2. INDIVIDUAL RESPONSIBILTIES........................................................................................ 5 DELEGATION OF AUTHORITY............................................................................... 5 AUTHORIZED INVESTMENT DEALERS AND FINANCIAL INSTITUTIONS ................ 6 3. INVESTMENT OPPORTUNITIES........................................................................................ 6 4. RATINGS AND CONSTRAINTS.......................................................................................... 7 RISK TOLERANCE.................................................................................................. 7 PORTFOLIO CONTRAINTS.................................................................................... 7 OTHER CONTRAINTS............................................................................................ 8 5. REPORTING...................................................................................................................... 8 REPORTING.......................................................................................................... 8 DEPARTMENT INVESTMENT POLICY GUIDELINE ADOPTION .............................. 8 6. APPENDICES.................................................................................................................. 9 6119] City of Saint John Investment Management Policy Guidelines SAINT' JOHN SECTION I: POLICY 1. POLICY STATEMENT The City of Saint John invests funds not required for operating cash flow, to ensure maximized return on its investment for the desired risk level. 2. RESPONSIBILITY It is the responsibility of the Commissioner of Finance and Administrative Services to ensure that this Policy is followed. PURPOSE OF THE POLICY GUIDELINES The purpose of this policy guideline is to document a framework for the prudent management of the City of Saint John's investment portfolio "Funds" within an acceptable investment risk tolerance level. It is the policy of the City of Saint John to invest public funds in a manner which will provide the optimal blend of investment returns and principal protection while meeting the daily cash flow and liquidity demands of the City of Saint John, and complying with statutory requirements of the Municipalities Act, the Control of Municipalities Act, and the Trustees Act of the Province of New Brunswick. 1. DEFINITIONS Funds: For investment purposes, funds are defined as cash which is not required for day to day operations. Benchmarks: For the purpose of measuring the performance of the portfolios, the following comparators will be used. • Short-term investments — Government of Canada 3 month Treasury Bill average • Medium-term investments— Government of Canada 3 year Benchmark Bond average • Long-term investments — Government of Canada long-term Benchmark Bond average Investments: • Short-term investment portfolio consists of cash or liquid securities with a maturity date of one year or less. • Medium-term investment portfolio consists of securities with an original maturity date from one to five years. 51 2 City of Saint John Investment Management Policy Guidelines SAINT' JOHN • Long-term investment portfolio consists of securities with an original maturity date that exceeds five years. Liquidity: defined to the City of Saint John as the ability to access funds within a maximum of 30 days after requesting redemption of investments funds. 2. SCOPE This Policy Guideline applies to the investment of all cash assets held for short-term, medium, and long-term uses in the City's various funds. Investment Portfolio of Funds • General, and Water and Sewer Operating Funds • Operating and Capital Reserve Funds • Land Sales, Subdivision, Parking Land, and other separate funds • Retirement allowance account, development obligations, and other deposits held for future payment of long-term liabilities The City's funds will be invested according to the liquidity needs for operating cash flow, return on investment requirements of long-term obligations, and the protection of principal for medium term uses. 3. OBJECTIVES Principal Protection Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the safety of principal, and the preservation of the purchasing power of principal in the overall Fund in the short, medium, and long-term. The goal is to manage credit risk, interest rate risk, and inflation risk. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. Return on Investment The Fund shall be constructed with the objective of attaining, at minimum, a benchmark rate of return throughout varying budgetary and economic cycles, taking into account investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the preservation of capital and liquidity objectives. 52 3 City of Saint John Investment Management Policy Guidelines SAINT' JOHN 4. STANDARD OF CARE Prudence Investments shall be made exercising the care, diligence and skill that a person of ordinary prudence would exercise in dealing with the property of another person, considering the probable safety of principal as well as the probable income to be derived, and having regard to the circumstances of the funds, including: (a) its assets, (b) its beneficiaries or purposes, (c) its probable duration, and (d) a reasonable balance between risk and return. The carrying out of investment activities in accordance with this policy guideline, and with the judgment, diligence, and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, shall relieve the investment officers of personal liability, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Internal Controls Management shall establish a system of internal controls, which shall be documented in writing. The internal controls shall be reviewed by the independent auditor. The controls shall be designed to prevent the loss of public funds arising from fraud, employee error, and misrepresentation by third parties. S. ETHICS & CONFLICT OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity with the same individual(s) with whom business is conducted on behalf of the City. Individuals involved with the investment process shall refrain from personal business activity that could conflict with proper execution and management of the investment program or impair their ability to make impartial investment decisions. Individuals involved with the investment process shall not knowingly permit a situation to arise in which: (a) the individual's personal interest conflicts with the exercise of the powers or performance of this policy, or where (b) the individual may derive any personal benefit or a benefit for any other person. 53 4 City of Saint John Investment Management Policy Guidelines SAINT' JOHN SECTION II: INDIVIDUAL RESPONSIBILITIES 1. DELEGATION OF AUTHORITY Authority to manage the City of Saint John's investment program is derived from the Investment Management Policy Statement. The City delegates the management of the Funds to various agents including certain Officers of the City. The agents and Officers of the City include: • the Commissioner of Finance and Administrative Services, • the Comptroller, and • the Senior Manager of Financial Planning, Reporting & Analysis and • the Assistant Comptroller Management of the investment portfolio Funds and responsibilities have been allocated as follows: Council • State the goals of the Corporate Program and articulate the desired results for the community. • Receive and adopt an Investment Policy to achieve those results. Officers' Responsibilities • Review the Policy and if appropriate make recommendations to Common Council for changes. • Ensure that the Cash-flow and Investment Management Service provided by the City meets the goals of the Corporate Program and achieves desired community results and policy objectives. • Select investment dealers and institutions (the "Brokers") to assist the Commissioner in meeting performance objectives for the Fund. • Review the Fund's performance on a regular basis and provide a report to the Finance Committee annually. • To be responsible for the delegation of any responsibility not specifically mentioned in the policy or policy guideline. • Validate and report the rates of return on the Funds, based on book and market value. • Select specific investments for the Funds, recognizing the quality and diversification requirements established in this policy guideline, and subject to approved signing authority. • Seek to maximize and preserve the investment return on the Funds, after ensuring that the foregoing liquidity, quality and diversification requirements have been satisfied. • Manage the securities held by the Funds in accordance with the Policy, policy guidelines, and applicable legislation. • Work to meet the benchmarks and targets. 54 5 City of Saint John Investment Management Policy Guidelines The designated Officers of City of Saint John may from time to time engage consultants or other advisors to assist them in fulfilling their responsibilities. 2. AUTHORIZED INVESTMENT DEALERS AND FINANCIAL INSTITUTIONS All investment dealers and financial institutions used for investment transactions will be members in good standing of the Investment Industry Regulatory Organization of Canada ("IIROC"), Mutual Fund Dealers Association ("MFDA") or the New Brunswick Securities Commission. Preference will be given to investment dealers and financial institutions who are members of the Responsible Investment Association ("RIA"). SECTION III: INVESTMENT OPPORTUNITIES The following are the investments permitted in the Fund. • Eligible Securities as defined in the policy guideline. • Investments in internally financed City of Saint John's projects. All investments must be denominated in Canadian dollars. Investments in derivatives, swaps, options, forward contracts, or futures are prohibited, unless they are an interest rate or exchange rate hedging strategy related to a specific transaction, or group of transactions, and authorized by the Commissioner of Finance and Administrative Services. Investments in shares, warrants, convertible debt securities, or other equities, are prohibited unless they are equity securities of a Canadian Schedule "I" Chartered Bank. Funds may be invested or reinvested in one or more of the following: a) securities of the New Brunswick Municipal Finance Corp; b) securities that are obligations of, or are guaranteed by Canada or a province; c) investments guaranteed by a Canadian chartered bank; d) deposits in a savings institution, or non -equity shares of a credit union whose deposits are 100% guaranteed by a Provincial Government or the Federal Government; e) commercial paper or bonds issued by a company incorporated under the laws of Canada or a province, the securities of which are rated in the highest rating category by at least 2 recognized security rating institutions; All investment categories that are not explicitly permitted are prohibited. 55 6 City of Saint John Investment Management Policy Guidelines SAINT' JOHN SECTION IV: RATINGS AND CONSTRAINTS 1. RISK TOLERANCE Investments shall be made with the degree of judgement and care that persons of prudence, discretion and intelligence would exercise in the management of their own affairs, not for speculation, but with priority given firstly to safety of capital, secondly liquidity and thirdly to investment yield. The standard of prudence to be executed by City staff making investment decisions shall be the "prudent person" standard. Staff who act in accordance with the City's investment policy and exercise due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes provided that deviations from expectations are promptly reported in a timely manner and appropriate action is taken to limit losses in the event of adverse developments. Investments held in the Fund must be rated by at least one rating agency, namely Moody's, Standard & Poor's (S&P) or Dominion Bond Rating Service (DBRS). All investments must be Investment Grade (at least A by S&P, or equivalent by DBRS or Moody's.), as classified in Appendix A. In the case where a security is rated by more than one agency listed, the higher ratings will apply. The total Fund will be limited to the following credit rating thresholds on a weighted average basis (as defined by S&P or equivalent): Rating Up to AAA 100% AA 90% A 70% The maximum exposure to a single investment security is defined in Appendix II. Due to market fluctuations, maximum percentages may be exceeded at a point in time. Securities need not be liquidated to rebalance the portfolio; however, consideration should be given to this matter when future purchases are made to ensure that appropriate diversification is maintained. 2. PORTFOLIO CONSTRAINTS The primary constraints relate to safety of invested capital and maintaining the liquidity of the portfolio. • All securities held in the portfolio shall have a maturity as defined by short-term, medium term and long-term investments. • Cash & Marketable Securities: The deemed rating for cash, including the current account, High Interest Savings Accounts, redeemable GICs, Bankers' Acceptance (BA's), Bank Deposit 56 7 City of Saint John Investment Management Policy Guidelines Note (BDA's) and marketable securities will be equal to the rating of the institution it is being held in. • Credit Union Deposits: The deemed rating for securities issued by a Credit Union will be equal to the rating of the province that the credit union resides in and is guaranteed by. • Bank Deposits: The deemed rating for securities issued by a bank will be equal to the credit rating of that bank. • Securities issued by a Government entity: The deemed rating for securities issued by a Government entity will be equal to the credit rating of that province, country, or equivalent. 3. OTHER CONSTRAINTS • The Fund shall not borrow funds to acquire securities or otherwise deal in margin trading. • All investments are to follow the above listed constraints laid out per this policy guideline. An exception can be made when the Officers for City of Saint John listed under delegation of authority are in agreement that there is an investment opportunity that lies outside the constraints governing this policy guideline. Any such investment must comply as an eligible investment defined in this policy guideline. A maximum investment allocation not exceeding 15% of the City of Saint John's total portfolio will be permitted. SECTION V: REPORTING 1. REPORTING The designated officers will provide an annual report to the Finance Committee on the performance of the portfolio the following year. 2. DEPARTMENT INVESTMENT POLICY GUIDELINE ADOPTION The City of Saint John's investment policy guidelines shall be implemented by the Commissioner of Finance and Administrative Services. The policy guidelines shall be reviewed periodically as required due to changes in the economy or City's requirements and any modifications made thereto must be approved by the City Manager. 57 8 City of Saint John Investment Management Policy Guidelines SECTION VI: APPENDICES Appendix I City of Saint John Short Term Investments - Credit Risk Criteria Investment Credit DBRS Moody's S&P Term Government of Canada (Minimum 10% per portfolio; max. of portfolio per issuer 100%; max. % of portfolio per category 100%) Bonds AAA Aaa AAA 1 year or less AA Aa AA 1 year or less Treasury Bills R1 -High P-1 A-1 1 year or less 1 year or less R1 -Middle P-1 A-1 1 year or less Guarantees and Crown Treasury Bills. Promissory Notes, R1 -High P-1 A-1 Corporations R1 -High P-1 A-1 1 year or less 1 year or less R1 -Middle P-1 A-1 1 year or less Provincial Governments and Guarantees (Max. 50% of portfolio; max. of portfolio per issuer 100% ) Bonds AAA Aaa AAA 1 year or less AA Aa AA 1 year or less A A A 1 year or less Treasury Bills. Promissory Notes, R1 -High P-1 A-1 1 year or less Guarantees R1 -Middle P-1 A-1 1 year or less R1- Low P -1/P-2 A -1/A-2 1 year or less 58 9 City of Saint John Investment Management Policy Guidelines SAINT' J014N City of Saint John Short Term Investments - Credit Risk Criteria Investment Credit DBRS Moody's S&P Term Major Canadian Bank "Schedule I" (Maximum 50% of portfolio; max. of portfolio per issuer $50M) R1 -High P-1 A-1 1 year or less R1 -Middle P-1 A-1 6 months or less 111- Low P -1/P-2 A -1/A-2 3 months or less Commercial Paper (Maximum 25% of portfolio; max. of portfolio per issuer 25%) Asset -Backed Commercial Paper AAA (111 High) Aaa (P-1) AAA (A-1) 1 year or less (Secured by a Schedule 1 Bank Guarantee) City of Saint John Medium and Long- Term Investments - Credit Risk Criteria Government of Canada (Minimum 25% of portfolio; max. of portfolio per issuer 20%) AAA Aaa AAA Unlimited AA Aa AA Unlimited Provincial Governments and Guarantees (Maximum 50% of portfolio; max. of portfolio per issuer 50%) AAA Aaa AAA Unlimited AA Aa AA 30 years or less 59 10 City of Saint John Investment Management Policy Guidelines Appendix II Eligible List of Counterparties (Investment Entities) Investments by or on behalf of the City of Saint John shall be made in accordance with the Investment Policy. The City of Saint John may invest in the following entities: The Government of Canada and its Guarantees Federal Government Business Development Bank Canada Mortgage and Housing Corporation Canadian Wheat Board Export Development Canada Farm Credit Corporation Provincial Governments and their Guarantees Province of Alberta and its Guarantees Province of Ontario and its Guarantees Province of British Columbia and its Guarantees Province of Quebec and its Guarantees Province of Manitoba and its Guarantees Province of Saskatchewan and its Guarantees Province of New Brunswick and its Guarantees Province of Nova Scotia and its Guarantees Financial Institutions and their Guarantees Bank of Montreal and its Guarantees Royal Bank of Canada and its Guarantees Bank of Nova Scotia and its Guarantees Toronto Dominion Bank and its Guarantees CDP Financial Inc. National Bank of Canada Desjardins Group Caisse Central Desjardins Canadian Imperial Bank of Commerce and its Guarantees Credit Unions whose deposits are 100% guaranteed by a Provincial or the Federal Government 60 11 INVESTMENT POLICY CITY OF SAINT JOHN POLICY STATEMENT POLICY SECTION: FINANCE AND ADMINISTRATIVE SERVICE 1. POLICY STATEMENT The City of Saint John invests funds, not required for operating cash flow, to ensure maximized return on its investment for the desired risk level. The City of Saint John shall invest funds, not required in operating cash flow, in a manner which will provide a best optimal mix of investments returns and principal protection while ensuring the daily cash flow and liquidity demands of the municipality are met. The City of Saint John shall comply with all applicable provincial legislation including but not limited to the Municipalities Act, the Municipal Capital Borrowing Act, New Brunswick Municipal Finance Corporation Act, Municipal Debentures Act and the Trustees Act. The Commissioner of Finance shall manage the investments of the municipality in a prudent manner in accordance with this Investment Management Policy and related documentation. Specific objectives of the Investment Management Policy are to: Principal Protection Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the safety of principal, and the preservation of the purchasing power of principal in the overall Fund in the short, medium, and long-term. The goal is to manage credit risk, interest rate risk, and inflation risk. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. Return on Investment The Fund shall be constructed with the objective of attaining, at minimum, a benchmark rate of return throughout varying budgetary and economic cycles, taking into account investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the preservation of capital and liquidity objectives. AI I 0 I V O V O V O V O r V O r V O r V O r V O r CL o o O m O O O m O r_ Ln N O LPf Ln I� Q W � LM wLn 0 0 0 0 0 0 Ln Ln Ln Ln Ln O O O O O O i i V � rl rl rl rl rl rl r_ cc E ~ E E E E E E N 00 N 00 N 00 rp-I rp-I rp-I rp-I rp-I rp-I 0 ++ O O O O O S O^ O^ O^ O^ O^ O^ O QO^ O^ N^ N^ M^ M^ V O r