HomeMy WebLinkAbout2014 - 2018 Financial Plan Amending Bylaw 7106-2014.pdfCORPORATION OF THE DISTRICT OF MAPLE RIDGE
District of Maple Ridge TO: His Worship Mayor Ernie Daykin DATE: December 10, 2013 and Members of Council DATE: December 10, 2013 FROM: Chief Administrative Officer ATTN: Council SUBJECT:
2014-2018 Financial Plan Bylaw EXECUTIVE SUMMARY: The 2014-2018 Business and Financial Plans were presented to Council at a public meeting held on December 9. The Financial Plan overview
was presented followed by a public Question and Answer period which was streamed live over the internet. Council directed that a Financial Plan Bylaw be brought forward incorporating
the recommendations outlined in the 2014-2018 Financial Plan Overview report. The Financial Plan Bylaw is a consolidated plan that includes the general revenue fund, the sewer and water
utility funds and the capital program. It is in a format that follows the legislated requirements including revenue and tax policy disclosure: the objectives and policies regarding
the proportions of revenue proposed to come from various funding sources, the distribution of property taxes among property classes, and the use of permissive tax exemptions. RECOMMENDATION(S):
That Maple Ridge 2014-2018 Financial Plan Bylaw No. 7043 -2013 be given first, second and third readings. DISCUSSION: a) Background Context: The 2014–2018 Financial Plan was presented
to Council at public meetings held on December 9. Business Plans from all areas were also provided. The Financial Plan Bylaw incorporates the following direction from Council: property
tax increase for General Purposes of 2.2% per year for 2014, 2015 and 2016 and 2% per year for 2017 and 2018 property tax increase for Infrastructure Sustainability of 0.50% per year
for 2014, 2015 and 2016 and 0.70% for 2017 and 2018 property tax increase for Parks & Recreation Improvements of 0.25% each year property tax increase for Drainage Improvements
of 0.30% for each year Growth in property tax revenue from all property classes (from new construction) of 1.65% in 2014 and 2% per year from 2015 to 2018 Water Utility rate increase
of 5.5% per year Sewer Utility rate increase of 4.6% per year Recycling rate increase of 2.75% per year
Growth costs as detailed on Page 8 of the Financial Overview Report Incremental Adjustments as outlined on Page 9 of the Financial Overview Report Capital Works Program totaling
$18.2 million in 2014, $30.1 million in 2015, $27.2 million 2016, $20.7 million in 2017 and $21.3 million in 2018 Cost and revenue adjustments from Pages 21 and 22 of the Financial
Overview Report, which reconciles the 2013-2017 Financial Plan with the 2014-2018 Financial Plan In last year’s financial plan, Council adopted an aggressive capital program and this
plan builds on that direction. The 2014-2018 Financial Plan includes a capital program of about $118 million. We have about $1.4 billion invested in our infrastructure and it is important
that we protect this investment. This financial plan sets aside dedicated money for sustaining our infrastructure. As well, we are a growing community and along with that growth comes
pressure on our existing services. This financial plan provides funding to help meet growth related demands. The funding for growth and for infrastructure sustainability are in line
with Council’s Financial Sustainability Policies. The amount of incremental property tax revenue from new construction will not be known until property assessments are finalized. The
growth assumption built into the financial plan for 2014 is 1.65%. Future budget amendments will include the actual growth revenue as well as projects that were approved in 2013 and
are still in progress. The previously approved funding sources will also be included in the plan, placing no burden on 2014 property taxes. b) Desired Outcome: A financial plan that
accurately reflects the planned expenditures and methods of funding that is consistent with corporate strategic plans, policies and Council direction. c) Strategic Alignment: All departments
submitted Business Plans which were prepared using the Business Planning Guidelines 17th Edition. The Financial Plan reflects Council’s Strategic Financial Sustainability Policies and
Infrastructure Funding Strategy. 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. Property tax revenue and user fees are planned to increase as detailed in the above discussion. e) Statutory Requirements and Policy Implications: The
financial plan has been prepared in accordance with statutory requirements and Municipal financial policies. There are several requirements in the Community Charter for the Financial
Plan Bylaw, including: disclosure of the proportions of revenue proposed to come from various funding sources, the distribution of property taxes among property classes, and the use
of permissive tax exemptions. Explicit policies and objectives in each of these areas are also required. Maple Ridge’s approach to business planning, property taxation policies and
other financial policies have addressed all these reporting requirements. The attached bylaw includes this information.
Public consultation is an important and legislated component of preparing financial plans. Public input was invited when Council set the 2014-2018 business planning guidelines in spring
of 2013. Regular feedback and interaction with the public is also taken into account in developing the business plans. The business planning presentations were open to the public; there
was also a live question and answer period where comments and questions were accepted in person as well as over the phone, email and social media like Facebook and Twitter. f) Alternatives:
In the event that this bylaw is not adopted, the District is not authorized to make any expenditure other than those identified in the 2013-2017 Financial Plan Bylaw. This will require
departments to curtail or delay expenditures and only proceed with capital projects that were identified in the previous financial plan. CONCLUSIONS: The Financial Plan is a multi-year
planning, reviewing and reporting tool that represents Council’s vision and commitment to providing quality services to the residents of Maple Ridge. The Financial Plan provides a forecast
of the financial resources that are available to fund operations, programs and infrastructure for the five year period. The Financial Plan Bylaw is routinely amended in late April or
early May to include the projects that were approved but not completed in the prior year. The change also includes an update to reflect the actual amount of property tax revenue due
to the amount of real growth. “Original signed by Trevor Thompson”________________ Prepared by: Trevor Thompson, BBA, CGA Manager of Financial Planning “Original signed by Paul Gill”
_____________________ Approved by: Paul Gill, BBA, CGA GM Corporate & Financial Services “Original signed by J.L. (Jim) Rule ____________________ Concurrence: J.L. (Jim) Rule Chief
Administrative Officer
DISTRICT OF MAPLE RIDGE BYLAW NO. 7043-2013 Maple Ridge 2014-2018 Financial Plan Bylaw No. 7043-2013 ____________________________________________________________________________________
WHEREAS, through a public process in an open meeting input was sought from the public with respect to the financial plan and budget guidelines; AND 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 a process of public consolation under section 166 of the Community Charter. The Council for the District of Maple Ridge in open meeting assembled
ENACTS AS FOLLOWS: 1. This Bylaw may be cited as Maple Ridge 2014-2018 Financial Plan Bylaw No. 7043-2013. 2. Statement 1 attached to and forming part of this bylaw is hereby declared
to be the Consolidated Financial Plan of the District of Maple Ridge for the years 2014 through 2018. 3. Statement 2 attached to and forming part of the bylaw is hereby declared to
be the Revenue and Property Tax Policy Disclosure for the District of Maple Ridge. 4. Statement 3 attached to and forming part of the bylaw is hereby declared to be the Capital Expenditure
Disclosure for the District of Maple Ridge. READ a first time the day of , 201 . READ a second time the day of , 201 . READ a third time the day of , 201 . PUBLIC CONSULTATION completed
on the day of , 201 . RECONSIDERED and adopted the day of , 201 . ________________________________ PRESIDING MEMBER ________________________________ CORPORATE OFFICER ATTACHMENT: Statement
1, Statement 2 and Statement 3
Attachment to Maple Ridge 2014-2018 Financial Plan Bylaw 7043-2013 Statement 1 Consolidated Financial Plan 2014-2018 (in $ thousands) 2014 2015 2016 2017 2018 REVENUES Revenues Development
Fees Developer Contributed Assets 16,500 16,500 16,500 16,500 16,500 Developer Cost Charges (6,897) 9,606 11,418 7,158 5,954 Developer Specified Projects -----Parkland Acquisition 200
200 200 200 200 Contributions from Others 1,245 1,256 1,275 1,249 1,238 Development Fees Total 11,048 27,562 29,393 25,107 23,892 Property Taxes 68,346 71,722 75,352 79,483 83,575 Parcel
Charges 2,857 2,957 3,058 3,163 3,243 Fees & Charges 36,461 37,961 39,955 41,614 42,896 Interest 1,853 1,853 1,853 1,853 1,853 Grants (Other Govts) 4,035 4,983 3,920 4,308 3,420 Property
Sales -4,250 ---Total Revenues 124,600 151,288 153,531 155,528 158,879 EXPENDITURES Operating Expenditures Interest Payments on Debt 2,240 2,435 2,300 2,161 2,077 Amortization Expense
19,391 20,124 20,929 21,766 22,637 Other Expenditures 97,743 98,238 101,755 106,453 110,395 Total Expenditures 119,374 120,797 124,984 130,380 135,109 ANNUAL SURPLUS 5,226 30,491 28,547
25,148 23,770 Add Back: Amortization Expense (Surplus) 19,391 20,124 20,929 21,766 22,637 Less: Capital Expenditures 18,483 30,179 27,330 20,811 21,414 Less: Developer Contributed Capital
16,500 16,500 16,500 16,500 16,500 CHANGE IN FINANCIAL POSITION (10,366) 3,936 5,646 9,603 8,493 OTHER REVENUES Add: Borrowing Proceeds 11,400 ----OTHER EXPENDITURES Less: Principal
Payments on Debt 2,661 3,955 4,047 4,144 4,183 TOTAL REVENUES LESS EXPENSES (1,627) (19) 1,599 5,459 4,310 INTERNAL TRANSFERS Transfer from Reserve Funds Capital Works Reserve 2,149
549 549 549 701 Equipment Replacement Reserve 3,097 2,272 3,092 1,074 3,474 Fire Department Capital Reserve 583 250 1,750 --Land Reserve -4,250 ---Local Improvement Reserve -----Sanitary
Sewer Reserve -----Transfer from Reserve Fund Total 5,829 7,321 5,391 1,623 4,175 Less :Transfer to Reserve Funds Capital Works Reserve 916 819 1,361 790 1,345 Equipment Replacement
Reserve 2,271 2,359 2,450 2,602 2,729 Fire Dept. Capital Acquisition 1,342 738 822 952 1,082 Land Reserve 5 4,255 5 5 5 Local Improvement Reserve -----Sanitary Sewer Reserve 30 30 30
30 30 Total Transfer to Reserve Funds 4,564 8,201 4,668 4,379 5,191 Transfer from (to) Own Reserves 568 (920) (4) (1,825) (2,213) Transfer from (to) Surplus (206) 1,819 (2,318) (878)
(1,081) Transfer from (to) Surplus & own Reserves 362 899 (2,322) (2,703) (3,294) TOTAL INTERNAL TRANSFERS 1,627 19 (1,599) (5,459) (4,310) BALANCED BUDGET -----
Attachment to Maple Ridge 2014-2018 Financial Plan Bylaw 7043-2013 Statement 2 Revenue and Property Tax Policy Disclosure Revenue Disclosure Revenue Proportions 2014 2015 2016 2017 2018
$ ('000s) % $ ('000s) % $ ('000s) % $ ('000s) % $ ('000s) % Revenues Property Taxes 68,346 51% 71,722 49% 75,352 49% 79,483 51% 83,575 52% Parcel Charges 2,857 2% 2,957 2% 3,058 2%
3,163 2% 3,243 2% Fees & Charges 36,461 27% 37,961 26% 39,955 26% 41,614 27% 42,896 27% Borrowing Proceeds 11,400 8% -0% -0% -0% -0% Other Sources 16,936 12% 34,398 23% 36,166 23% 31,268
20% 29,165 18% Total Revenues 136,000 100% 147,038 100% 154,531 100% 155,528 100% 159,879 99% Other Sources include: Development Fees Total 11,048 8% 27,562 19% 29,393 19% 25,107 16%
23,892 15% Interest 1,853 1% 1,853 1% 1,853 1% 1,853 1% 1,853 1% Grants (Other Govts) 4,035 3% 4,983 3% 3,920 3% 4,308 3% 3,420 2% Property Sales -0% 4,250 3% -0% -0% -0% 16,936 12%
34,398 26% 36,166 23% 31,268 20% 29,165 18% Objectives & Policies Property Tax Revenue is the District’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 3.25% 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 1.65% in 2014 and 2% annually for 2015 through 2018. Additional information on the tax increases
and the cost drivers can be found in the 2014-2018 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 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 2014-2018 Financial Plan Bylaw 7043-2013 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 2014-2018 Financial Plan Overview report. 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 District funds
PROPERTY TAX DISCLOSURE The 2014 property tax revenue and updated rates will be included in a Financial Plan Amending Bylaw that proceeds the Property Tax Rate Bylaw, as the 2014 property
assessed values are not yet finalized. For information purposes the 2013 distribution is included. Property Tax Revenue Distribution Property Class Taxation Revenue Assessed Value Tax
Rate Multiple ('000s) ('000s) ($/1000) (Rate/Res.Rate) 1 Residential 48,981 77.6% 11,435,396 91.3% 4.2833 1.0 2 Utility 506 0.8% 12,642 0.1% 40.0000 9.3 4 Major Industry 669 1.1% 17,972
0.1% 37.2342 8.7 5 Light Industry 2,623 4.2% 214,481 1.7% 12.2307 2.9 6 Business/Other 10,163 16.1% 830,954 6.6% 12.2307 2.9 8 Rec./Non-Profit 36 0.1% 2,976 0.0% 12.0983 2.8 9 Farm
147 0.2% 5,287 0.0% 27.8646 6.5 Total 63,126 100% 12,519,706 100%
Attachment to Maple Ridge 2014-2018 Financial Plan Bylaw 7043-2013 Statement 2 (cont.) Revenue and Property Tax Policy Disclosure PROPERTY TAX DISCLOSURE Objectives & Policies Property
taxes are the District’s largest source of revenue and are contained by efficient business practices. Annual business planning practices are the mechanism for resource allocation decisions.
The District’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. 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 the 2014 – 2018 Financial plan, property taxes charged to major industrial class properties have been reduced; it starts at $70,000 in 2014, increasing
by $70,000 in each year of the plan. 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. They are Council Policies 5.19 though 5.24. The 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 2014-2018 Financial Plan Bylaw 7043-2013 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. 937(2); 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 2019 through 2035. Projects in these years typically exceed likely funding available. Capital Works Program for 2019 – 2035
(in $ thousands) Capital Works Program 327,177 Source of Funding Development Fees Development Cost Charges 127,540 Parkland Acquisition Reserve -Contribution from Others 6,756 134,296
Borrowing Proceeds 6,319 Grants 41,987 Transfer from Reserve Funds Capital Works Reserve 8,935 Cemetery Reserve 115 Equipment Replacement Reserve 2,303 Fire Department Capital Reserve
-Infrastructure Sustainability Reserve 310 Transfer from Reserve Funds 11,663 Revenue Funds 132,911 Source of Funding 327,177