HomeMy WebLinkAbout2013 - 2017 Financial Plan Report and Bylaw.pdfFinancial Plan Bylaw 2013-2017
District of Maple Ridge TO: His Worship Mayor Ernie Daykin DATE: December 11, 2012 and Members of Council FROM: Chief Administrative Officer ATTN: Council SUBJECT: 2013-2017 Financial
Plan Bylaw EXECUTIVE SUMMARY: The 2013-2017 Business and Financial Plans were presented to Council at public meetings held on December 10 and 11. The Financial Plan overview was presented
followed by a public Question and Answer period which was streamed live over the intranet. Council directed that a Financial Plan Bylaw be brought forward incorporating the recommendations
outlined in the 2013-2017 Financial Plan Overview report dated December 10, 2012. The Financial Plan Bylaw 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 2013-2017 Financial Plan Bylaw No. 6959 -2012 be given first, second and third readings. DISCUSSION:
a) Background Context: The 2013–2017 Financial Plan was presented to Council at public meetings held on December 10 and 11. Business Plans from all areas were also provided. The Financial
Plan Bylaw incorporates the following direction from Council: property tax increases for general purposes, 2.25% annually in 2013 and 2014 and 2.75% annually for 2015 through 2017
property tax increases for infrastructure sustainability, 0.5% in 2013 and 1.0% annually for 2014 through 2017 property tax increase for drainage improvements, 0.3% annually property
tax increase for Park & Recreation Master Plan, 0.125% in 2013 and 0.5% annually for 2014 through 2017 property tax increase for 2013 for the fire department service improvement levy
of $300,000 plus growth since 2005, the year of the inception of the levy; Beyond 2013 any increases will be included in the general purposes property tax increase water user fee
annual increase of 5.5% sewer user fee annual increase of 4.6% recycling rates annual increases of 3%
In last year’s financial plan, Council adopted an aggressive capital program and this plan builds on that direction. The 2013-2017 Financial Plan includes a capital program of about
$99 million. We have about $1.5 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 spring when property assessments are finalized. The growth assumption built into the financial plan for 2013 has been reduced to 1.35%
and the budgeted costs of new growth have been reduced as well. The only areas that have some increased funding is maintenance of additional infrastructure and park inventory. Future
budget amendments will include the actual growth revenue as well as projects that were approved in 2012 but not yet complete. The previously approved funding sources will also be included
in the plan, placing no burden on 2013 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
16th 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 during business planning this December was invited through advertisements in the
local paper and on the corporate website. Input was accepted through many different mediums including: in person at the business planning presentations which were open to the public
or through email, voicemail, Facebook, Twitter and regular mail. Regular feedback and interaction with the public is also taken into account in developing the business plans. 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 2012-2016 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. _______________________________________________ Prepared by: Trevor Thompson, BBA, CGA Manager of Financial Planning _______________________________________________
Approved by: Paul Gill, BBA, CGA GM Corporate & Financial Services _______________________________________________ Concurrence: J.L. (Jim) Rule Chief Administrative Officer
DISTRICT OF MAPLE RIDGE BYLAW NO. 6959-2012 Maple Ridge 2013-2017 Financial Plan Bylaw No. 6959-2012 ____________________________________________________________________________________
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 2013-2017 Financial Plan Bylaw No. 6959-2012. 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 2013 through 2017. 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 2013-2017 Financial Plan Bylaw 6959-2012 Statement 1 Consolidated Financial Plan 2013-2017 (in $ thousands)
`Attachment to Maple Ridge 2013-2017 Financial Plan Bylaw 6959-2012 Statement 2 Revenue and Property Tax Policy Disclosure Revenue Disclosure 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 3.5% in 2013, 4.05% in 2014 and 4.55% annually for 2015 through
2017. The annual tax increase includes increases for: general purposes, infrastructure sustainability, drainage, Parks and Recreation Master Plan implementation and Fire Department
Master Plan implementation in 2013. Additional property tax revenue due to new construction is also included in the Financial Plan at 1.35% in 2013, 1.65% in 2014 and 2% annually for
2015 through 2016. Additional information on the tax increases and the cost drivers can be found in the 2013-2017 Financial Plan Overview Report dated December 10, 2012. 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 2013-2017 Financial Plan Bylaw 6959-2012 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 2013-2017 Financial Plan Overview report. Other Sources, will vary greatly year to year as it includes: -Development fees, which
is the funding for capital projects from the DCC Reserve, -Contribution from others in relation to capital, -Interest earned on funds invested in accordance with the Investment Policy
-Grants, which are sought from various agencies, and may be leveraged with District funds. PROPERTY TAX DISCLOSURE The 2013 property tax revenue and updated rates will be included in
a Financial Plan Amending Bylaw that proceeds the Property Tax Rate Bylaw, as the 2013 property assessed values are not yet finalized. For information purposes the 2012 distribution
is included. Property Tax Revenue Distribution Tax Rate Multiple ($/1000) (Rate/Res.Rate) 1 Residential 43,678 77.3% 11,205,437 91.8% 3.8979 1.0 2 Utility 467 0.8% 11,671 0.1% 40.0000
10.3 4 Major Industry 611 1.1% 17,829 0.1% 34.2734 8.8 5 Light Industry 2,405 4.3% 198,725 1.6% 12.1045 3.1 6 Business/Other 9,151 16.2% 756,034 6.2% 12.1045 3.1 8 Rec./Non-Profit 54
0.1% 4,745 0.0% 11.3283 2.9 9 Farm 134 0.2% 5,338 0.0% 25.1767 6.5 Total 56,501 100% 12,199,779 100% Taxation Revenue ('000s) Assessed Value ('000s) Property Class
`Attachment to Maple Ridge 2013-2017 Financial Plan Bylaw 6959-2012 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. This is done because the types of businesses in each class of property are quite similar. This alignment was
achieved over a long period of time with small incremental adjustments. 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 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.
`Attachment to Maple Ridge 2013-2017 Financial Plan Bylaw 6959-2012 Statement 2 (cont.) Revenue and Property Tax Policy Disclosure 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 Bylaw 6789-2011.
`Attachment to Maple Ridge 2013-2017 Financial Plan Bylaw 6959-2012 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 2030 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 2017 through 2030. Projects in these years typically exceed likely funding available. Capital Works Program for 2018 – 2030
(in $ thousands) Capital Works Program 274,732 Source of Funding Development Fees Development Cost Charges 104,590 Parkland Acquisition Reserve 0 Contribution from Others 6,355 110,946
Borrowing Proceeds 9,169 Grants 24,204 Transfer from Reserve Funds Capital Works Reserve 11,067 Cemetery Reserve 115 Equipment Replacement Reserve 1,543 Fire Department Capital Reserve
0 Infrastructure Sustainability Reserve 400 Transfer from Reserve Funds 13,125 Revenue Funds 117,288 Source of Funding 274,732