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HomeMy WebLinkAboutAFC 2013-03-18 AgendaCorporation of the District of Maple Ridge Audit & Finance Committee March 18, 2013 8:00AM Blaney Room Chairperson:Councillor M. Morden Committee Members:Councillors:C.Bell; R. Masse; Mayor Daykin Staff:Chief Administrative Officer:J. Rule GM –Corporate & Financial Svc:P. Gill GM –Public Works & Development F. Quinn GM –Community Dev. Park & Rec K. Swift Manager of Accounting:C. Nolan Recording Secretary:Amanda Gaunt AGENDA 1.Approval of agenda 2.Approval of minutes of February 4, 2013 3.Preliminary General Revenue Fund Update 4.Next Meetings April 22nd Review Consolidated Financial Statements May 6th Post audit meeting with BDO ____________________________________________ Agenda submitted by:C. Nolan, CGA Manager of Accounting District of Maple Ridge Audit & Finance Committee Meeting Minutes February 4, 2013 The Minutes of the Audit and Finance Committee Meeting held in the Blaney Room of the Municipal Hall, 11995 Haney Place, Maple Ridge, BC on Monday ,February 4, 2013 at 8:00 a.m. PRESENT Committee Members Municipal Staff Councillor Morden, Chair J. Rule, Chief Administrative Officer Mayor Daykin P. Gill, General Manager, Corporate &Financial Services Councillor Bell K. Swift, General Manager of Community Development, Councillor Masse Parks and Recreation Services C. Nolan, Manager of Accounting Guests T. Thompson, Manager of Financial Planning Councillor Hogarth Councillor Ashlie B. Cox (BDO Canada, LLP) The meeting was called to order at 8:00 a.m. 1.Approval of agenda MOVED by Councillor Bell and SECONDED by Mayor Daykin that the agenda be approved as circulated. CARRIED 2.Approval of minutes of July 16, 2012 MOVED by Mayor Daykin and SECONDED by Councillor Bell that the minutes of July 16, 2012 be approved. CARRIED 3.Community Grants –Draft Policy The Manager of Accounting reviewed the report and the Community Grants Policy. She provided background on the work undertaken to develop the policy and spoke to the financial support process available to groups through the District. Audit & Finance Committee Meeting Minutes February 4, 2013 Page 2 The General Manager of Corporate and Financial Services advised on grant eligibility and advised that the work done on the policy ac knowledges that the grant process should not be about competing with private industry. MOVED by Mayor Daykin and SECONDED by Councillor Masse that the draft Community Grants Policy be brought forward to Council with the inclusion of feedback from the Audit and Finance Committee. CARRIED 4.2012 Audit Update –Overview of 2012 audit by external auditor Bill Cox, External Auditor, BDO Canada LLP reviewed the Auditor’s letter of January 18, 2013 and outlined anticipated issues. He highlighted the table pertaining to higher risk financial statement areas and provided an explanation of why items may be considered high risk. He reviewed the list and outlined procedures for each audit area. The au ditor reviewed the remaining sections of the letter. He foc used on materiality and the section on “Council’s Fraud Awareness” and upcoming changes in government accounting. There was discussion on best practices in terms of setting aside monies for infrastructure replacement. Adjournment –8:52 a.m. ____________________________________________ Councillor Morden, Chair 1 of 6 District of Maple Ridge TO:His Worship Mayor Ernie Daykin MEETING DATE:18-March-2013 and Members of Council FILE NO: FROM:Chief Administrative Officer MEETING:C.O.W SUBJECT:Preliminary 2012 Year-end Update (General Revenue Fund) EXECUTIVE SUMMARY: The 2012 Consolidated Financial Statements have been drafted and will be finalized following the completion of the audit. The purpose of this report is to provide a preliminary update of 2012 results in the General Revenue Fund, an update on gaming revenues as well as some information highlighting the differences between the financial plan and the financial statements. Overall, 2012 results were positive.We ended the year with a General Revenue annual surplus of $340,443,which is net of provisions for projects scheduled for 2012 that will progress in 2013, as well as a number of items that are discussed below. Key variances contributing to the overall positive results in the General Revenue fund include positive investment returns, higher than anticipated gaming revenues, savings from planned principal and interest payments on debt that was not accessed until October, as well as vacancy management. These favourable variances were partially offset by a shortfall in building permit revenues and snow removal costs in excess of budget. The annual surplus noted above is after having provided for a number of key items that are discussed in the body of this report. A detailed review of the Consolidated Financial Statements will be provided in April once the statements are finalized. RECOMMENDATION(S): None required. For information only. DISCUSSION: Before discussing our 2012 financial results, it is important to understand the difference between the Financial Plan (Budget) and our Financial Statements. The Financial Plan is one of the most important documents a local government produces. It sets out all of the planned uses of funds in a year and the sources of those funds. Planned uses include expenditures for our day-to-day operating activities, transfers to reserves and investments in the tangible capital assets used in service provision. Planned sources include taxes, revenues from user fees, grants from other levels of government, investment income and transfers from reserves. The Community Charter stipulates that the total of proposed expenditures and transfers to reserves must 2 of 6 not exceed the total of proposed revenues and transfers from reserves. The result is a “balanced budget” where planned inflows of funding are equal to the planned outflows. The Financial Statements compare our actual financial performance against the activities set out in the Financial Plan.The Community Charter stipulates that our financial statements must be prepared in accordance with generally accepted accounting principles for local governments. In Canada, the Public Sector Accounting Board (PSAB) sets those accounting principles and prescribes the model used for our statements. The format required for the Financial Statements differs from the format required for the Financial Plan, and the differences between the two documents can easily result in confusio n. For example the Financial Plan treats transfers to and from reserves as transactions, while the Financial Statements at the consolidated level ignore transfers as they take place within the corporate entity. The objective of a Financial Plan is to demonstrate that a local government has identified how it will pay for all of the activities it plans to accomplish in a year, while the objective of the Financial Statements is to report the financial condition of a local government at a point in time. This is a fundamental difference and it is important to keep this in mind as we begin to review financial results for 2012. General Revenue Update Local government operations are extremely diverse; our business includes everything from the provision of water, to maintaining our infrastructure, to developing the plans and bylaws that will guide our community’s growth, to fire protection services to swimming lessons. All of these business streams have different resource demands and while some are supported by day-to-day operations, others require long-term planning to ensure we’re positioned to meet the demands of a growing community and have the fiscal capacity to sustain our infrastructure. Tools, such as our reserves, the General Revenue Fund and the Sewer and Water utilities help us manage both the short and long-term demands of our business. This report will focus on operations in the General Revenue Fund as this is the area where Council has the most discretion and it is the transactions in this fund that drive property tax rates. Overall, results for 2012 were positive, with an annual surplus of $340,443. This is net of provisions for projects scheduled for 2012 that will progress in 2013, as well the year-end provisions detailed below.Revenues for the year total $125.5 million with favorable variances realized from positive investment returns and higher than anticipated gaming revenues offset by shortfalls in building permit revenues.Expenses and transfers to reserves totaled $125.2 million with favorable variances coming from a combination of savings on planned principal and interest payments for debt that wasn’t accessed until October 2012, careful cost containment in all operating areas, offset by costs in excess of budget in some areas such as snow removal. Council has established various reserves to help manage annual fluctuations in certain key revenue and expense accounts.For example, in 2011 we experienced a shortfall in building permits revenues and drew on the Building Inspections reserve to offset the impact of that shortfall. In 2012, we did not need to do this as the shortfall in building permit revenues was compensated for by positive variances in other revenue streams.Savings of $243,308 from the RCMP contract (50% of savings) were transferred to the Police Services reserve to assist with various policing issues as they are identified. In the past, this practice allowed us to manage the cost i mpact of renovation work required as a result of changes to RCMP building standards, such as the cell renovations that were recently required.A detailed discussion on our Reserves is scheduled for the May 27,2013 Council Workshop. 3 of 6 Gaming Revenues In 2011, Council adopted a policy guiding the use of gaming revenues, with an emphasis on using the revenue to fund one-time items, such as capital, rather than committing it to on-going operating expenses. Any annual revenues received above $500,000 are automatically set aside for future capital projects and any portion of the base amount of $500,000 that is not expended in a year is also set aside for future capital projects.This revenue stream is relatively new and our intent was to accumulate a pool of funding to allow us to undertake more significant projects. At the end of 2012 we have accumulated $1,043,811, of which $120,255 is committed to projects already in progress. Other projects recommended to be funded from this accumulation are described on page 5. Year-end Provisions As part of our year-end processes,we try to advance certain Council approved capital projects that were postponed due to lack of General Revenue funding. We also try to assess the adequacy of Council approved initiatives and recommend appropriate adjustments. The General Revenue contribution to capital has remained fairly static for the past number of years and as a result the scheduled start year of some projects has been pushed back in order to respect the available funding envelope. In past years, we’ve tried to make some provision at year -end to advance priority projects when possible. For example, a couple of years ago, we were able to set aside $1 million for paving, allowing Operations to address some scheduled ro ad maintenance that had been deferred.During the 2013-2017 business planning sessions it became apparent there was a need to advance the start date of a number of capital projects that had been pushed back in the capital program.In order to address that,$945,000 was set aside to advance some priority projects as follows: Lougheed Highway Upgrades –Over past few years,significant improvements have been made on 224th Street as well as on Lougheed Highway between 224th Street and 222nd Street. There have also been several private sector developments adjacent to Lougheed Highway between 227th and 224th Streets; the new Gaming Centre and the new Target store being two such projects. It has always been the intent to extend improvements on Lougheed Highway west of 224th Street when funding became available.Property and business owners in the area have also expressed an interest to see the streetscape extended from 224th Street to 227th Street.As part of the development requirements for the new Gaming Centre, the developer will be making some road and sidewalk improvements on the south side of Lougheed near 227th Street. Further, Lougheed Highway is part of the Major Road Network and funding from Translink will also be available. In light of this, detailed design work is being done to see what works would make sense to do and in what order on Lougheed Highway between the new Gaming Centre and 224th Street. An interim budget provision of $700,000 has been established. This should allow us to do work west of the Gaming Centre to the intersection at 226th Street. $300,000 of this funding is expected to come from Translink.Half of our share will be funded from the 2012 Surplus, with the remainder to be funded from Gaming Revenues.A further report and recommendation will be provided to Council once the detailed design information is available. Council also recognized the need for capital improvements outside of the town centre area. The following projects build on existing community-wide investments. 4 of 6 Complete 122 Avenue to 224 Street -In 2012, we made significant road and sidewalk improvements around Maple Ridge Secondary School. In 2013, we will complete 122 Avenue to 224 Street. The total budget for this project is $400,000. We propose to fund $315,000 from Surplus and the remaining $85,000 from Gaming Revenues. Hammond Stadium Retrofit -This project has a total budget of $762,000. This includes $325,000 set aside in previous budgets for a complete field retrofit, new batting cages, a new backstop, concessions, equipment storage and seating. A senior government grant of $187,000 is also included in the project budget. The remainder of $250,000 is being provided from the 2012 Surplus to allow for the installation of field lighting which will allow the stadium to be used year round as a game and training facility. Albion Park Playfield Retrofit -$120,000.This funding will supplement an already approved project and will provide 2 additional junior fields that can also be used in the winter. Westview Bleachers -$60,000. When the synthetic field was originally constructed in 2005,the scope of the project included bleachers, however, the scope had to be scaled back to address unexpected site conditions. This project will allow us to install the bleachers that were originally planned. The above projects will require funding from Surplus of $945,000 and $285,000 from accumulated Gaming revenues.Funding has also been set aside for two other Council priorities. Council established the Town Centre Investment Incentive Program to encourage accelerated private sector investment in the downtown.The program is delivering positive results,with 35 projects either completed or in progress at the present time.The program is comprised of a number of incentives such as fee reductions, partnering agreements an d revitalization tax exemptions.While an initial budget was established to support this program, the adequacy of the envelope needs to be assessed and properly funded.In the past, we would have relied on growth in the tax base to support initiatives such as this. Growth over the past few years has been constrained and this is likely to continue for the next few years .After analyzing the projects currently in progress, we recommend that $1,250,000 be set aside to bridge the impact of this temporary shortfall. The Town Centre Investment Incentive Program is scheduled to end this year and projects that do not have a building permit issued by Monday December 30, 2013 will not be eligible for the program. As a result of the success of the incentive program Council has expressed an interest in exploring whether a similar program,perhaps targeted at employment attraction, would be feasible. Should such a program be developed, it will need some funds dedicated to it and $550,000 has been set aside for that purpose. If Council decides not to proceed with another incentive program the funds will flow to the bottom line. 5 of 6 The following summarizes the above discussion and will be included in the next Financial Plan amendment. Prior Year Surplus Gaming Outside Total Capital Lghd (East of 224th)$-$ 200,000 $ 200,000 $ 300,000 $700,000 122 Ave -315,000 85,000 -400,000 Hammond 325,000 250,000 -187,000 762,000 Albion 350,000 120,000 --470,000 Westview -60,000 --60,000 Sub-total 675,000 945,000 285,000 487,000 2,392,000 Other TCIIP -1,250,000 --1,250,000 Employment Incentive -550,000 --550,000 Sub-total -1,800,000 --1,800,000 Totals $ 675,000 $ 2,745,000 $ 285,000 $ 487,000 $4,192,000 CONCLUSIONS: Final year-end results for 2012 will be available following the completion of the audit. In the i nterim, this report provides an overview of General Revenue performance for year, with an increase to General Revenue accumulated surplus of $340,443 after providing for a number of initiatives noted by Council. “original signed by Catherine Nolan” _______________________________________________ Prepared by:Catherine Nolan, CGA Manager of Accounting “original signed by Paul Gill” _______________________________________________ Approved by:Paul Gill, CGA GM, Corporate and Financial Services ”original signed by J.L. (Jim) Rule” _______________________________________________ Concurrence:J.L. (Jim) Rule Chief Administrative Officer 6 of 6 Appendix 1 Actual Revenues Taxes and grants in lieu 64,034,582- Fees & Other Charges 14,670,838- Investment income 2,821,077- Proceeds and Gains 5,674- Government Transfers 2,105,054- Gaming revenues 819,341- Equipment 2,843,436- DCC & Other Contributed Revenue 379,727- Collections for others 37,811,188- Total Revenue 125,490,917- Expenses (excluding amortization) General Government 11,924,477 Protective Services 29,530,753 Transportation 9,119,514 Planning; Public Health & Other 4,238,809 Recreation 17,779,154 Principal Payments 1,938,761 Collections for Others 37,811,188 Total Expenses 112,342,657 Transfers Transfers from reserve accounts 11,497,049- Transfers to own reserves 18,028,650 Transfers to reserve funds 3,890,638 Transfers to GCF (fund inventory change)94,840- Transfers to Capital (Capital Program)2,330,180 Interest transferred to reserve accounts 150,237 Net Transfers 12,807,817 General Revenue Annual Surplus 340,443- General Revenue Accumulated Surplus - beginning of year 5,750,719- General Revenue Accumulated Surplus - end of year 6,091,162- General Revenue Fund Analysis For the year ended December 31, 2012