The Corporation of the City of Nelson

Transcription

1 The Corporation of the City of Nelson

2 Agenda 1. Introduction 2. Council Priorities & Strategic Direction Financial Plan Process 4. Proposed Financial Plan Presentation 5. City Assets/Reserves/Debt 6. Comments & Questions Presenter: Colin McClure, Chief Financial Officer

3 Council Priorities ) Waterfront Downtown MasterPlan Advisory committee formed Railtown improvements Baker & Hall Street improvements Waterfront Development 2) Community Energy Plan Ecosave Energy Retrofit Program District Energy business plan Alternative transportation Transit reviews 3) Infrastructure Renewal Program Water & Sewer Nelson Hydro Building Retrofits It Investment 4) Corporate GHG Plan PCP Milestone 5 5) Doing Business Differently Look for ways to generate non-tax revenues

4 Financial Planning Process, Environment & Direction Five Year Plan Overview and Quick Facts Operating Costs Funding Sources User Fees, Debt, Reserves & Taxation Utilities, City Assets & the Capital Budget

5 Financial Planning Process Departmental staff prepare budget Bylaw introduction and adoption Finance staff & senior management review Council review of input & potential subsequent changes Adjustments by staff Today Public consultation Staff presentations to council Council debate & propose tax rate

6 Financial Planning Environment Economic performance in BC will be mixed in 2012 Shifting of responsibilities Public demand for services Increasing demands on aging infrastructure and the need to address this issue Sustainability & GHG Reduction Plans Long term planning (e.g. implementation of Dev. Plan) Reduced new private development less new taxation Reduced interest earned on investments Impact of wage pressures

7 General Operating Budget Principles Council s Direction to Staff Support delivery of municipal services Maintain services delivered at 2011 levels Reduce costs of service delivery, where possible, while minimizing service impact levels Generate new revenue Minimize tax rate increase Long term planning as a focus Continue infrastructure program Implement sustainability principles

8 Five Year Financial Plan Areas: General Water Sewer Hydro Resource Recovery Costs include: Capital Operating General Water Sewer Hydro Waste Funding Sources Debt & Grants Taxation User Fees

9 Budget Overview Highlights: Recommend 3% average overall property tax increase A 1% increase in taxation produces about $65,000 to cover operational expenditures 6% or $25 annual increase in water rates 5% or $19 annual increase in sanitary sewer rates 5.8% increase in Hydro rates effective April 1, 2012 (4% annual increase) No change in Garbage and recycling fees All City Operations: $38M (includes general fund operating, water, sewer and hydro) General Fund Operations: $16M Capital: $13M including General, Water, Sewer & Hydro

10 Operating Fund - How did we get there? Operating Budget Shortfall $(571,000) New Revenues New Development - taxation 60,000 Development Services 40,000 Change in fees/collections 39,000 Nelson Hydro Dividend 50,000 Total New Revenues $189,000

11 Operating Fund - How did we get there? Expenditure Reductions Training/travel/admin/other $27,000 Sick leave management 50,000 Service reductions 50,000 Internal restructuring & efficiencies 60,000 Total Expenditure reductions $187,000 Shortfall after all adjustments (195,000) Proposed 3% Taxation revenue 195,000 -

12 Revenue Sources Operating Expenses Capital Plan

13 2012 Operating Budget Revenues GRANTS CONDITIONAL GRANTS 4% UNCONDITIONAL 3% INVESTMENT INCOME 0% OTHER REVENUE FROM OWN SOURCES 24% TAXES 47% SALE OF SERVICES 18% GRANT IN LIEU OF TAXES 4%

14 What is the bottom line? Assessment * Tax Rate = Property Taxes

15 Taxation - Assessment BC Assessment is a provincial Crown corporation that determines the market value of all real properties in BC. After determining correct classification, actual value and exemption status of every property, BC Assessment provides taxing authorities with an Assessment Roll which lists all properties, names of owners and taxable values of the land and any improvements (buildings)

16 Tax Revenues: Growth Where does it come from? New revenue only exists when there is new assessment Increase in inventory i.e. through subdivision or new construction General increases in market value do not generate more tax dollars Past couple of years has resulted in minimum new revenues from growth

17 Effect of Assessments in 2012 Current Assessment date: July 2011 Average market increases: Residential.83% (down from 2.1% last year) Commercial 6.71% ( up from 1.7% last year) Staff has recommended that the Business tax multiple be decreased to offset the larger increase in Commercial assessment values in the current year This will keep the tax burden consistent with prior year instead of shifting it to Business

18 Property Taxes and Assessments Property Class 2012 Assessed Values Assessed Value Percentages % of Property Taxes Levied Residential $1,256,798, % 72.40% Utility 2,995, % 1.28% Light Industry 1,154, % 0.12% Business/Other 192,181, % 26.11% Recreation/Non Profit 1,901, % 0.09% Total $1,455,031,440

19 2012 Proposed Budget Effect on $332,337 Home (Nelson 2011 average) 2011 Actual 2012 Proposed Net Annual Change Net Monthly Change Property Tax (municipal only) 1,307 1,346 $ 39 $ 3.25 Water Rates (after discount) Sewer Rates (after discount) Resource Recovery Overall 2,236 2,319 $ 83 $ 6.91 New Home Owner Grant $200 $200 _

20 Business Tax Class Multiples North Saanich Revelstoke Kimberley Castlegar Invermere Cranbrook Fernie Nelson Kelowna Nakusp Trail Creston Rossland

21 Where your tax dollar goes:

22 Expenses What has changed from 2011? The status quo budget 3.0% tax increase Drivers: Contractual labour increases - $366k or 4.0% Savings over prior year on positions not replaced from retirement ($140K) Other cost increases (CPI, materials, etc.) Review and change in Transit operations (1 less bus) Looking for ways to change how we do business same, or better, service level at reduced costs Accomplish through: Reducing administration costs Staff efficiencies Increasing revenues

23 2012 General Budget Expenditures DEBT REPAYMENT 5% CONTRIBUTION TO RESERVES 9% INTEREST AND OTHER DEBT CHARGES 4% GENERAL GOVERNMENT SERVICES 17% RECREATION & CULTURAL 12% POLICE PROTECTION 20% PUBLIC HEALTH AND WELFARE SERVICES 1% TRANSPORTATION SERVICES 18% FIRE SERVICES 9% ENVIRONMENTAL HEALTH SERVICES 2% OTHER PROTECTIVE SERVICES 3%

24 Transit 2011 Budget 2012 Budget Transit operating costs 1,202,000 1,064,000 Debt service costs 222, ,000 Total costs 1,424,000 1,237,000 Fares 300, ,000 RDCK/BCT Contribution 715, ,000 City Contribution 409, ,000 Total Funding 1,424,000 1,237,000 Transit Open House April 26 th & 27 th, 2012

25 Overall Capital Plan 2012 Highlights: $13M including General, Water, Sewer & Hydro Mountain Station UV project Complete downtown conversion, Rosemont substation and G4 Rewind $3.7M Operating Capital IT Fibre connection Police station, RDCK, PW building and Youth Centre General paving, Park improvements Vehicle purchases

26 2012 Proposed General Capital Plan - $3.7M

27 Why are Assets important? Assets exist to provide services Changes in services and service levels drive capital costs Assets depreciate over time Each asset requires ongoing maintenance to maintain the infrastructure Many of the City s assets are long lasting and very old, such as: Hydro generating station Water pipes Roads

28 Overview Total City Assets Replacement Historical $ Millions Water Utility Sewer Utility Hydro Utility PW Assets City Assets

29 Surplus and Reserves Debt

30 Funding - What is a Surplus A surplus is the amount by which revenue exceeds expenditures in a year. We do not budget for a surplus. May be caused by: Unexpected revenue Revenue exceeding budget (i.e. investments, fees - difficult to budget) Budgeting may be conservative because we cannot have a deficit Vacant positions

31 How Should We Spend General Surplus or Reserves? Good tool for non-recurring items (e.g. capital or onetime projects) Recurring items (e.g. policing costs or parks maintenance) should generally not be funded through reserves, as the benefits can be short lived.

32 Statutory Reserves Statutory Reserves are set up by bylaw. The bylaw describes the specific purpose of the reserve, how it is funded and what expenditures the funds can be used for. Examples are: Equipment replacement reserve Capital projects reserve Water licence reserve Land sales reserve Parks acquisition reserve Non-Utility statutory Reserves at the end of 2011 is expected to be $2.4 M

33 Other Appropriated Surplus Past Councils have directed allocation of surpluses to be reserved from a variety of one-time and ongoing activities including: Selkirk College Campus Services Recycling, Economic Development Administrative Costs Insurance, Legal Development and Infrastructure Land Sale, Bridges, Airport, Storm Sewer Fortis Pay Down Appropriated Surplus at the end of 2011 is expected to be $2.4 M

34 Debt and Debt Servicing Major capital projects typically funded by using combination of existing reserves and by borrowing funds Strategic decision when to borrow vs using reserves or taxation Of $14.6M total outstanding debt (Dec 31, 2011), only $500K is supported through general taxation. Plan to borrow in 2012 and 2013 to fund Operating Capital projects that would result in no change to the present debt taxation

35 2012 $3.7M General Capital - Funding Sources

36 Water Licence Reserve Opening bal. $606,841 $858,387 $828,327 $227,177 $1,279,527 Water licence rev. 650, , , , ,000 Borrowing 1,000, ,000 Grants/Donations 1,700,00 Debt Servicing 85, , , , ,000 Capital program (1,498,754) (1,334,360) (1,404,250) (1,426,750) (1,790,000) Interest 15,300 34,300 33,100 9,100 51,200 Closing Balance $858,387 $828,327 $227,177 $1,279,527 $310,727

37 W/L Building Reserve Planned Five Year Expenditures 2,000,000 1,500,000 1,000, ,000 Buildings Parks Streets Info. Tech. Other

38 Capital Reserve (Roads) Opening bal. $522,160 $520,160 $351,660 $259,660 $163,960 Parking meter rev. 650, , , , ,000 Road maint. prgm. (672,000) (832,000) (752,000) (752,000) (752,000) Interest Income 20,000 13,500 10,000 6,300 2,500 Closing Balance $520,160 $351,660 $259,660 $163,960 $64,460

39 Assets Versus Reserves $180 $176 $160 $140 $123 $ Millions $120 $100 $80 $90 $100 $78 Annual Contribution Reserve Balance '11 Historical Cost Replacement Cost $ $ $ $0 Water Sewer Hydro General * Roads & Storm

40 Debt Payments Trend Line 5 years $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Sewer Utility Water Utility Hydro Utility General (NET) General (GROSS)

41 Statutory Reserves Trend Line $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 Water Licence Capital (Roads) Equipment Water Utility Hydro Utility Sewer Utility $500,000 $

42 Water Sewer Resource Recovery Nelson Hydro

43 Overview Water Utility Strategic Direction: Long term planning critical to maintain safe and accessible water and fire flow protection UV disinfection, water conservation analysis, and other secondary water sources (i.e. Kootenay Lake) Review water rate structure Rates: Council approved 6% or $25 annual increase in rates for 2012 Rates expected to increase 6% in 2013 and increase 5% per year from GOOD News - Prior year budget had expected 9% rate increase 2012 to 2015

44 Projected Water Rates $1,200 $1,000 $800 $600 $400 $200 $ Water Rates - Single Family

45 Overview Water Utility 2012 Operating Highlights Revenue: User fees $2.8M Other $155k Operating costs: Increase to $1.1M Debt Service: $106k/yr No new debt planned until 2018 Capital Highlights 2012 Budget $2.5M: $1.1M planned for UV Disinfection Grant funding $737k Other costs related to infrastructure expansion and replacement: Supply $80k Water Distribution $1.3M Capital funded through User Fees and Grants no borrowing

46 Overview Sewer Utility Strategic Direction: Sewer Masterplan asset repair & maintenance Develop replacement program in conjunction with water utility and road network upgrades Improved technology insituform has cut cost of relining sewer pipes Rates: Council approved 5% or $19 annual increase in 2012 sewer rates Rates expected to increase 5% per year until 2014 and increase 4% per year in 2015 & 2016.

47 Projected Sewer Rates $700 $600 $500 $400 $300 $200 $100 $ Sewer Rates - Single Family

48 Overview Sewer Utility Operating Revenue: User fees $2.5M Other $97k Operating costs: Increase 2.5% to $1.5M Debt Service: $113k in 2012 Capital 2012 Budget $1.12M infrastructure expansion and replacement: STP Upgrades $150k Lift Stations $125k Insituform $600k Sewer Main $300k Catch Basin $50k Capital funded through User Fees and Grants ($400k)

49 Overview Resource Recovery Utility The waste function is based on a fee for service model The yearly charge per household pays for the collection 2012: No increases projected 2013: Potential increase in transportation costs to truck garbage to new RDCK transfer station

50 Overview Hydro Utility Strategic Direction: Provide for efficient generation, distribution and sale of electrical energy Strategic Priorities: Infrastructure upgrades (Distribution System) Substations (Rosemont) Power Plan upgrades (G4 rewind & Vibration monitoring) District Energy Business Plan Corporate GHG Reduction Plan Energy Retrofit Program

51 Overview Hydro Utility 2012 Budget Challenges: Increased power purchase costs Large capital program focusing on improving reliability Nelson Hydro contributes: $2,275,000 to City of Nelson operations $475,000 Water Licence Reserve $90,000 to Community Complex pays a share of admin costs

52 Overview Hydro Utility Nelson Hydro rates are among the lowest in BC Nelson Hydro BC Hydro FortisBC Grand Forks Residential Rate Dec 31, 2011 ( /kwh) / % of Nelson Hydro Rate 84% / 121% 114% 113% 2012 Rate Increase Est. 4.0% 5.6% 4.0% 4.0% Residential Rate Dec 31, 2012 Fcst. ( /kwh) / % of Nelson Hydro Rate 84% / 121% 112% 112%

53 Overview Hydro Utility Operating Revenue: User fees $14.3M Other $382k Operating costs: Increase to $4.2M Power Purchase: Increase 11% to $6.1M Debt Service: $413k/yr, new debt in 2012 of $6M Est. debt pymts of $625k Capital 2012 Budget $3.2M Infrastructure expansion and replacement: Downtown conversion $500k Rosemont Substation $2.5M G4 Rewind $1.5M Other infrastructure $1.3M Capital funded through User Fees and Borrowing ($6M)

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