HomeMy WebLinkAbout2016 - 2020 Financial Plan Amending Bylaw 7241-2016.pdfBrRish Columbia
mapleridge.ca City of Maple Ridge
TO: Her Worship Mayor Nicole Read MEETING DATE: April 18, 2016
and Members of Council
FROM: Chief Administrative Officer MEETING: C. of W.
SUBJECT: 2016-2020 Financial Plan Amending Bylaw
EXECUTIVE SUMMARY:
Prior to setting the 2016 property tax rates, it is desirable to update our financial plan to reflect
information received since the plan's adoption in January. The 2016 property assessment roll has
been received from BC Assessment, which means that the 2016 property taxes can now be set.
The Property Tax Rates Bylaw must be adopted each year prior to May 15. The Financial Plan
Amending Bylaw and 2016 Property Taxes Bylaw will require three readings on the Council Meeting
on April 26 and final consideration at the Council Meeting on May 10.
The majority of the updates to the Financial Plan are the inclusion of funding and budgets for the
projects that were included in the prior year's adopted budget but were not completed by year end.
Council has approved a few additions to the budget through Council Resolutions, which are itemized
later in this report.
Each year Council receives numerous reports on different aspects of property taxation. In the past,
we reduced the major industrial property taxes due to these rates being high compared to other
communities. Each year Council receives a report concerning our commercial property tax rates and
multiples. The competitiveness of our commercial property tax rates is something that we continue
to monitor.
Council has raised some concerns about the property tax burden on our business/commercial class
properties. A reduction in the magnitude of the 2016 property tax increase for Business and Light
Industrial class properties has been incorporated in this Financial Plan Amendment. These property
classes will have an increase of 1.85% compared to the 3.15% increase in other property classes.
This will result in the business class multiple, the number of times larger the business class property
tax rate is compared to the residential class rate, being reduced from 2.75 to 2.71.
RECOMMENDATION(S):
That Bylaw No. 7241-2016 be given first, second and third readings.
1137
DISCUSSION:
a) Background Context:
The 2016-2020 Business Plans and an overview of the financial plan were presented to Council
at public meetings in December of 2015. Business Plans from all areas including the Capital
Program and the 2016-2020 Financial Overview Report were provided and a Financial Plan
Bylaw was adopted in January. The business plans, reports, presentations and Financial Plan
Bylaw are available on our website.
b) Business Plan/Financial Implications:
The financial plan is amended as follows:
1. The real growth in 2016 property tax revenue, largely due to new construction, was 1.78%.
The actual growth was 2.15%; however, some of this growth will be exempt for a few years as
it was under an incentive program. An estimate of 2% for real growth was included in the
previous financial plan. Funding has been set aside to assist with temporary growth revenue
shortfalls due to property tax exemptions for the incentive programs.
2. As in past years and as reported to Council in the year end update, funding has been
provided for projects that were budgeted for in the prior year but were not completed.
3. Council approved funding from the Police Services Reserve for two separate items: to
support a strategy to address systematic vehicle speeding and additional security coverage
in the downtown core in 2016 of $60,000.
4. Other cost updates for existing items resulted in some cost savings, these include employee
benefits, library contract and removal of the inflation contingency for 2016.
5. These favourable adjustments provided some latitude to reduce the property tax increase for
business and light industrial class properties from 3.15% to 1.85%.
6. The transfer to General Revenue Accumulated Surplus for 2016 is $98,400 and for the
following three years ranges from $36,500 to $56,500.
c) Desired Outcome:
A financial plan that accurately reflects the planned expenditures and methods of funding and is
consistent with Council's direction.
d) Citizen/Customer Implications:
The business plans have far-reaching citizen and customer implications. The Financial Plan
reflects the financial impact of the business plans.
Public consultation is an important component of preparing the financial plan. Public input
during business planning this December was invited through advertisements in the local paper
and through online methods. Input was accepted through many different mediums including: in
person, email, voicemail, Facebook, Twitter and regular mail. Regular feedback and interactions
with the public and people who we serve is also taken into account in developing the business
plans.
For this amendment to the Financial Plan, as there is very little new information and few
decisions being made, public consultation will consist of an advertisement placed in the local
paper.
CONCLUSIONS:
The Financial Plan is a multi-year planning, reviewing and reporting tool that represents Council's
commitment to providing quality services to the people of Maple Ridge. The plan provides a forecast
of the financial resources that are available to fund operations, programs and infrastructure for the
five year period.
"Original signed by C.K. Lee"
Prepared by: CK Lee, CPA, CGA
Financial Analyst
"Original signed by Trevor Thompson"
Prepared by: Trevor Thompson, BBA, CPA, CGA
Manager of Financial Planning
"Original signed by Trevor Thompson" for
Approved by: Paul Gill, BBA, CPA, CGA
General Manger, Corporate & Financial Services
"Original signed by E.C. Swabey"
Concurrence: E.C. Swabey
Chief Administrative Officer
CITY OF MAPLE RIDGE
BYLAW NO. 7241-2016
A bylaw to amend Maple Ridge 2016-2020 Financial Plan Bylaw No. 7194-2015
WHEREAS, through a public process in an open meeting the business and financial plans were
presented;
AND WHEREAS, the public will have the opportunity to provide comments or suggestions with respect
to the financial plan;
AND WHEREAS, Council deems this to be a process of public consultation under Section 166 of the
Community Charter;
The Council for the City of Maple Ridge ENACTS AS FOLLOWS:
1. This Bylaw may be cited as Maple Ridge 2016-2020 Financial Plan Amending Bylaw
No. 7241-2016.
2. Statement 1, Statement 2 and Statement 3 attached to and forming part of Maple Ridge 2016-
2020 Financial Plan Bylaw 7194-2015 are deleted in their entirety and replaced by Statement 1,
Statement 2 and Statement 3 attached and forming part of Maple Ridge 2016-2020 Financial
Plan Amending Bylaw No. 7241-2016.
READ a first time the day of 2016.
READ a second time the day of 2016.
READ a third time the day of 2016.
PUBLIC CONSULTATION completed on the day of 2016.
ADOPTED the _ day of
PRESIDING MEMBER
2016.
ATTACHMENT: Statement 1, Statement 2 and Statement 3
CORPORATE OFFICER
Attachment to Maple Ridge 2016-2020 Financial Plan Amending Bylaw 7241-2016
Statement 1
Consolidated Financial Plan 2016-2020 (in $ thousands)
REVENUES
Revenues
Development Fees
Developer Contributed Assets
Developer Cost Charges
Developer Specified Projects
Parkland Acquisition
Contribution from Others
Development Fees Total
Property Taxes
Parcel Charges
Fees Charges
Interest
Grants (Other Govts)
Property Sales
Total Revenues
EXPENDITURES
Operating Expenditures
Interest Payments on Debt
Amortization
Other Expenditures
Total Expenditures
ANNUALSURPLUS
Add Back: Amortization Expense (Surplus)
Less: Capital Expenditures
Less: Developer Contributed Capital
CHANGE IN FINANCIAL POSITION
2016 2017 2018 2019 2020
16,500
16,500
16,500
16,500
16,500
36,178
1,961
2,151
13,335
9,926
1,403
200
200
200
200
1,979
1,248
1,282
1,244
1,287
56,060
19,909
20,133
31,279
27,913
74,471
78,559
82,634
86,861
91,288
2,906
2,997
3,091
3,188
3,288
41,197
42,539
44,140
45,841
47,494
1,883
1,898
1,913
1,928
1,943
7,042
4,829
3,691
4,855
4,531
1,500
1,500
1,500
1,500
1,000
185,059
152,231
157,102
175,452
177,457
1,970
2,006
1,941
1,818
1,699
19,780
19,780
19,780
19,780
19,780
109,461
103,588
107,083
110,646
114,342
131,211
125,374
128,804
132,244
135,821
53,848
26,856
28,296
43,209
41,636
19,780
19,780
19,780
19,780
19,780
92,248
27,617
23,800
29,615
26,402
16,500
16,500
16,500
16,500
16,500
(35,120)
2,519
7,776
16,874
18,514
OTHER REVENUES
Add: Borrowing Proceeds 7,046 6,000 7,000
OTHER EXPENDITURES
Less: Principal Payments on Debt
3,476
3,705
3,721
3,800
3,882
TOTAL REVENUES LESS EXPENSES
(31,550)
4,814
11,055
13,074
14,632
INTERNALTRANSFERS
Transfer from Reserve Funds
Capital Works Reserve
10,050
3,549
-
-
-
Equipment Replacement Reserve
5,414
1,813
3,245
2,311
1,857
Fire Department Capital Reserve
2,273
-
-
-
250
Land Reserve
-
-
Local Improvement Reserve
Sanitary Sewer Reserve
-
-
-
-
-
Transfer from Reserve Fund Total
17,737
5,362
3,245
2,311
2,107
Less :Transfer to Reserve Funds
Capital Works Reserve
3,820
2,842
4,314
4,117
3,218
Equipment Replacement Reserve
2,573
2,728
2,860
2,996
3,165
Fire Department Capital Reserve
709
783
861
991
1,127
Land Reserve
5
5
5
5
5
Local Improvement Reserve
-
-
-
-
-
Sanitary Sewer Reserve
30
30
30
30
30
Total Transfer to Reserve Funds
7,137
6,388
8,070
8,139
7,545
Transfer from (to) Own Reserves
24,072
(606)
(574)
(758)
(1,438)
Transfer from (to) Surplus
(3,122)
(3,182)
(5,656)
(6,488)
(7,756)
Transfer from (to) Surplus & own Reserves
20,950
(3,788)
(6,230)
(7,246)
(9,194)
TOTAL INTERNAL TRANSFERS 31,550 (4,814) (11,055) (13,074) (14,632)
BALANCED BUDGET -
Attachment to Maple Ridge 2016-2020 Financial Plan Amending Bylaw 7241-2016
Statement 2
Revenue and Property Tax Policy Disclosure
Revenue Disclosure
Revenue Proportions
2016
$ ('OOOS)
%
2017
$ ('OOOs)
%
2018
$ ('OOOS)
%
2019
$ ('OOOS)
%
2020
$ ('OOOS)
%
Revenues
Property Taxes
74,471
38.8
78,559
49.6
82,634
50.4
86,861
49.5
91,288
51.4
Parcel Charges
2,906
1.5
2,997
1.9
3,091
1.9
3,188
1.8
3,288
1.9
Fees & Charges
41,197
21.4
42,539
26.9
44,140
26.9
45,841
26.1
47,494
26.8
Borrowing Proceeds
7,046
3.7
6,000
3.8
7,000
4.3
-
-
-
-
Other Sources
66,485
34.6
28,136
17.8
27,237
16.5
39,562
22.6
35,387
19.9
Total Revenues
192,105
100
158,231
100
164,102
100
175,452
100
177,457
100
Other Sources include:
Development Fees Total
56,060
29.2
19,909
12.6
20,133
12.3
31,279
17.8
27,913
15.7
Interest
1,883
0.9
1,898
1.2
1,913
1.1
1,928
1.1
1,943
1.0
Grants (Other Gov)
7,042
3.7
4,829
3.1
3,691
2.2
4,855
2.8
4,531
2.6
Property Sales
1,500
0.8
1,500
0.9
1,500
0.9
1,500
0.9
1,000
0.6
66,485
34.6
28,136
17.8
27,237
16.5
39,562
22.6
35,387
19.9
Obiectives & Policies
Property Tax Revenue
Property Tax Revenue is the City's primary revenue source, and one which is heavily reliant on the
residential class. Diversification of the tax base and generation of non -tax revenue are ongoing
objectives, outlined in Financial Sustainability Policy 5.52 section 6.
The Financial Plan includes property tax increases totaling 3.15% annually for:
• General Purposes
• Infrastructure Sustainability
• Parks and Recreation Master Plan implementation
• Drainage Improvements
Additional property tax revenue due to new construction is also included in the Financial Plan at
1.78% in 2016 and 2% annually for 2017 through 2020. Additional information on the tax increases
and the cost drivers can be found in the 2016-2020 Financial Plan Overview Report.
Specific policies discussing the tax increases are included in the Financial Sustainability Plan and
related policies which were adopted in 2004.
Property tax revenue includes property taxes as well as grants in lieu of property taxes.
Parcel Charges
Parcel charges are largely comprised of a recycling charge, a sewer charge and, on certain
properties, a local area service or improvement charge. Parcel charges are a useful tool to charge all
or a subset of properties for a fixed or variable amount to support services. Unlike property taxation
the variable amount does not need to be related to property assessment value, but can be
something that more accurately reflects the cost of the service.
Attachment to Maple Ridge 2016-2020 Financial Plan Amending Bylaw 7241-2016
Statement 2 (cont.)
Revenue and Property Tax Policy Disclosure
Fees & Charges
The Business Planning Guidelines call for an increase of 5% in fees as a guideline. Actual fee
increases vary depending on the individual circumstances, the type of fee and how it is calculated.
Fees should be reviewed annually and updated if needed. Recent fee amendments include
recreation fees, development application fees, business license fees and cemetery fees. A major
amendment to the Development Costs Charges (DCC), recommended no more frequently than every
five years, was completed in 2008. Minor DCC amendments are done more frequently. Some fees
are used to offset the costs of providing specific services. The utility fees are reviewed annually with
a view towards using rate stabilization practices to smooth out large fluctuations in rates, as set out
in the Business Planning Guidelines.
Borrowing Proceeds
Debt is used where it makes sense. Caution is used when considering debt as it commits future
cash flows to debt payments restricting the ability to use these funds to provide other services. The
source of the debt payments needs to be considered as does the justification for advancing the
project. More information on borrowing previously approved can be found in the 2016-2020
Financial Plan Overview report.
Other Sources
Other sources will vary greatly year to year as it includes:
• Development fees which fund capital projects from the DCC Reserve
• Contribution from others in relation to capital
• Grants which are sought from various agencies and may be leveraged with City funds
PROPERTY TAX DISCLOSURE
Property Tax Revenue Distribution
Property Class Taxation Revenue
Assessed Value
Tax Rate
Multiple
('OOOs)
('OOOs)
($/1000)
(Rate/Res.Rate)
1 Residential
56,532
78.3%
12,918
91.2%
4.3761
1.00
2 Utility
541
0.8%
14
0.1%
40.0000
9.14
4 Major Industry
591
0.8%
17
0.1%
34.1952
7.81
5 Light Industry
2,760
3.8%
232
1.7%
11.8801
2.71
6 Business/Other
11,565
16.0%
974
6.9%
11.8801
2.71
8 Rec./ Non -Profit
39
0.1%
3
0.0%
15.2783
3.49
9 Farm
164
0.2%
5
0.0%
33.7082
7.70
Total
72,192
100%
14,162
100%
Attachment to Maple Ridge 2016-2020 Financial Plan Amending Bylaw 7241-2016
Statement 2 (cont.)
Revenue and Property Tax Policy Disclosure
PROPERTY TAX DISCLOSURE
Objectives & Policies
Property taxes are the City's largest source of revenue and are contained by efficient business
practices. Annual business planning practices are the mechanism for resource allocation decisions.
The City's Financial Sustainability Policy section 6 discusses the necessity of diversifying the tax
base. Development of employment related properties is one method of diversification; therefore a
key performance measurement in Strategic Economic Initiatives tracks the increased investment
and development of non-residential properties.
A policy in the Financial Sustainability Plan that calls for stable tax increases and the adoption of the
annual increase early in the prior year in the Business Planning Guidelines provides citizens with a
more stable and predictable set of cost increases. In some cases costs are phased in over multiple
years to stay within the set tax increases.
Property Tax Rates
It is policy to adjust property tax rates annually to negate the impact of fluctuations in the market
values of properties. Tax rates are reduced to negate the market increases. Property tax increases
are then applied at the same relative increase for all classes, unless legislation restricts the rates, as
with Class 2, Utility.
The Business Class and Light Industry Class properties have the same tax rate and are treated as a
composite class when setting the tax rates, as the types of businesses in each class are similar. For
2016 the increase was reduced from 3.15% to 1.85% to reduce the relative property tax burden for
these properties.
A review was done on the Major Industry Class rates and the recommendation from the Audit and
Finance Committee and Council was a 5% property tax reduction in both 2009 and 2010 to support
additional investments in the subject property and to keep rates competitive. In 2014 and 2015,
property taxes charged to major industrial class properties were reduced by $70,000 in each year.
In reviewing the tax rates to ensure competitiveness, absolute rates, tax multiples and overall tax
burden are considered. The impact that assessed values have when comparing other geographical
areas must be considered in a comparison of tax rates.
Permissive Tax Exemptions
Council has set policies around the use of permissive tax exemptions. These are Council Policies
5.19 through 5.24. These policies discuss Churches, Community Halls, Heritage Sites, Homes for
the Care of Children and the Relief of the Aged, the Poor, the Disabled and the Infirm, Municipal
Recreational Services, Private Hospitals and Daycares, Private School and Youth Recreation Groups.
Revitalization Tax Exemption
A revitalization tax exemption is available within a defined downtown area and provides a financial
incentive to encourage development in the town centre. Further financial incentives are available for
buildings that qualify; additional information on the town centre incentives can be found on our
website. For more information on the tax exemption, please refer to both Bylaw 6789-2011 and
7010-2013.
Attachment to Maple Ridge 2016-2020 Financial Plan Amending Bylaw 7241-2016
Statement 3
Capital Expenditure Disclosure
The sole purpose of this statement is to meet legislative requirements, highlighting the value of the
DCC program; no other conclusions should be drawn from the figures as the information could be
misleading. This disclosure is required under the Local Government Act s. 560; Capital costs
attributable to projects to be partially funded by Development Cost Charges (DCC) must be included
in the financial plan. The DCC program includes projects as far out as 2035 so the capital
expenditures must be extended to match. Certain types of projects are not planned past the five
year time horizon of the financial plan. Much less scrutiny is given to projects that are planned in
years 2021 through 2035. Projects in these years typically exceed likely funding available.
Capital Works Program for 2021 - 2035
(in $ thousands)
Capital Works Program 304,199
Source of Funding
Development Fees
Development Cost Charges 120,537
Parkland Acquisition Reserve -
Contribution from Others 6,622
127,160
Borrowing Proceeds 2,091
Grants 41,229
Transfer from Reserve Funds
Capital Works Reserve 13,163
Cemetery Reserve 115
Equipment Replacement Reserve -
Fire Department Capital Reserve 2,486
Recycling Reserve -
Transfer from Reserve Funds 15,764
Revenue Funds 117,328
Source of Funding 303,572