HomeMy WebLinkAbout2011 - 2015 Financial Plan.pdfMAPLE RIDGE
Deep Roots
Greater Heights
TO:
FROM:
SU BJ ECT:
District of Maple Ridge
His Worship Mayor Ernie Daykin DATE: May 2, 2011
and Members of Council
Chief Administrative Officer ATTN: Council Workshop
2011-2015 Financial Plan Amending Bylaw No. 6819-2011
EXECUTIVE SUMMARY:
The 2011 property tax assessment roll has been received from BC Assessment and the property tax
rate bylaw has been prepared. Prior to establishing the tax rates, it is desirable to update our
financial plan to reflect information received since the plan's adoption last December. As in previous
years and as reported to Council in the year end update, projects that were budgeted for in the prior
year but were not completed have been reviewed. This financial plan has been amended
accordingly.
The Financial Plan Bylaw that is adopted prior to the Tax Rates Bylaw is the budget that is used in
our Annual Report. In order for this financial plan bylaw to be adopted on May 10, the meeting at
which the tax rates bylaw will be considered; three readings are required at Council Workshop on
May 2 or May 9.
RECOMMENDATION(S):
That Bylaw No. 6819-2011 be given first, second and third readings.
DISCUSSION:
a) Background Context:
Previous 2011-2015 Financial Plan
The 2011-2015 Business Plans and an overview of the financial plan were presented to
Council at public meetings held on November 29 and 30, 2010. Business Plans from all areas
including the Capital Works Program and the 2010-2014 Financial Plan Overview report were
provided. Financial Plan Bylaw 6781-2010 was adopted in December. Highlights of the plan
include:
property tax increase of 4% in 2011-2015, which includes 1% for infrastructure
sustainability and 3% for general purposes,
an increase to the fire department service improvement levy for 2011 and 2012 of
$600,000 plus growth since 2005, the year of the inception of the levy. The increase
is half that amount in 2013 and then will be similar to the balance of the operation
and part of the regular business planning process.
water user fee increase of 9% per year, sewer user fee increase of 5% per year, and
recycling rates increase of 3% per year.
CKCI
In last year's financial plan, Council adopted an aggressive capital program and this plan
builds on that direction.
We have approximately $1 billion invested in our infrastructure and it is essential that we
properly manage it. This financial plan sets aside dedicated money for sustaining our
infrastructure. We are a growing community and 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.
Given the level of uncertainty in reaching the target of 2.35% growth in taxation revenue
some funding was left unallocated to ensure that our existing commitments could be met
before taking on any incremental costs. The actual growth was 1.7% so the funds which
were left unallocated were needed to cover the shortfall.
b) Financial Plan Implications:
The 2011-2015 Financial Plan is being amended to carry forward funding for projects that
were approved in 2010 but were not completed as of yearend. The previously approved
funding sources remain unchanged.
The plan is further amended to incorporate recent information. These amendments include:
1. The actual real growth in tax revenue of 1.7% compared to a previously budgeted
2.35%. This represents a revenue reduction in 2011 of $328,000.
2. Other updates to operating budgets with a net increase in revenues of $9,000 in
2011 include: grant in lieu of taxes, employer costs of employee benefits, the
removal of the inflation contingency for 2011, hydro rate increases and updated
reserve interest earnings.
3. As recommended at the last Finance and Audit Committee meeting, an amount
has been budgeted for developer contributed assets. The amount has been
estimated at $12,250,000 annually.
4. The capital program has been adjusted to move the replacement of some of the
Self Contained Breathing Apparatus for the Fire Department from 2013 to 2011.
5. The transfer to accumulated surplus for 2011 has been reduced from $409,000
to $87,000 as a result of the above noted adjustments.
This transfer to accumulated surplus could be quickly eliminated through supplementary
adjustments to assessed values.
c) Desired Outcome:
A Financial Plan that accurately reflects the planned expenditures and methods of funding
and is consistent with corporate strategic plans, policies and Council direction.
d) Strategic Alignment:
All departments updated their Business Plans which were prepared using the Business
Planning Guidelines 13th Edition. These guidelines are reviewed and amended annually in
consultation with Council. The Financial Plan reflects Council's Strategic Financial
Sustainability Policies and Infrastructure Funding Strategy.
e) 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.
f) Statutory Requirements and Policy Implications:
The Financial Plan has been prepared in accordance with statutory requirements and
Municipal financial policies. As required by the Community Charter, the Financial Plan Bylaw
includes: 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.
In 2009 we reported our assets and the related amortization expense to be in compliance
with accounting rules in PSAB 3150. The Financial Plan Bylaw now includes a figure for the
annual amortization expense and an offsetting entry to draw down the value of the Tangible
Capital Assets. These items are accounting entries and do not represent cash being spent.
The amortization figure does have some relevance for financial planning, even if it is based
on historic cost rather than a replacement costs. If we compare the annual amortization
expense to the amount to what we spend on replacement of our existing assets or transfer to
reserves to later fund the same one would see that the amortization expense is considerably
more. This highlights the fact that we currently have an infrastructure funding gap which
means that we are consuming more of our assets that we are replenishing. Fortunately, we
have relatively new infrastructure so we have some time to bridge this funding gap. The
District's financial sustainability policies calls for Council to dedicate a property tax increase
of 1% per year to fund a significant portion of this gap, over time.
Public consultation is an important and legislated component of preparing financial plans.
The Business Planning Guidelines are updated in spring with an opportunity for the public to
provide feedback. 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 or voicemail. A further opportunity existed for
public comment on the Financial Plan Bylaw prior to adoption.
For the amendment to the Financial Plan an advertisement will be placed in the local paper
once the bylaw receives first reading from Council. Public input into the financial plan and
departmental business plans is incorporated indirectly through regular feedback and
interaction with customers and the public as well as through the results of surveys.
g) 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 2011-2015 Financial Plan Bylaw No.6781-
2010. This would 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 Plan
provides a forecast of the financial resources that are available to fund operations, programs and
infrastructure for the five year period.
Prepared by: Trev6r`N6'm- pson, BBA, CGA
Manager of Financial Planning
11A 777�
Approved by: Paul Gilt, BBA, CGA
GM Coraorate & Financia ery
Concurrence: J.L. (JlrA) Rule r
Chief Administrative Officer
DISTRICT OF MAPLE RIDGE
BYLAW NO. 6819-2011
A bylaw to amend Maple Ridge 2011-2015 Financial Plan Bylaw No. 6781-2010
WHEREAS, through a public process in an open meeting the business plans and resulting financial
plan 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.
NOW THEREFORE, the Council for the District of Maple Ridge enacts as follows:
1. This Bylaw may be cited as "Maple Ridge 2011-2015 Financial Plan Amending Bylaw No.
6819-2011".
2. Statement 1, Statement 2 and Statement 3 attached to and forming part of Maple Ridge 2011-
2015 Financial Plan Bylaw 6781-2010 are deleted in their entirety and replaced by Statement
1, Statement 2 and Statement 3 attached and forming part of Maple Ridge 2011-2015 Financial
Plan Amending Bylaw No. 6819-2011.
READ a first time the day of 2011.
READ a second time the day of 12011.
READ a third time the day of 2011.
PUBLIC CONSULTATION completed on the day of
RECONSIDERED and adopted the day of
PRESIDING MEMBER
ATTACHMENT: Statement 1, Statement 2 and Statement 3
, 2011.
CORPORATE OFFICER
, 2011.
Attachment to Maple Ridge 2011-2015 Financial Plan Amending Bylaw 6819-2011
Statement 1
Consolidated Financial Plan 2011-2015
(in thousands)
EXPENDITURES
2011
2012
2013
2014
2015
REVENUES
$3,316
($143)
($986)
($2,207)
($5,388)
External Revenues
$87,579
$87,958
$92,348
$97,399
$102,095
Development Fees
$3,137
$3,111
$3,200
$3,426
$3,329
Developer Contributed Assets
$12,250
$12,250
$12.250
$12,250
$12,250
Developer Cost Charges
$25,375
$12„727
$8,970
$7,902
$9,514
Parkland Acquisition
$674
$200
$200
$200
$200
Contributions from Others
$4,460
$3,795
$6,227
$3,560
$3,534
Development Fees Total
$42,759
$28,972
$27,647
$23,912
$25,498
Property Taxes
$58,223
$62,586
$67,070
$71,681
$76,594
Parcel Charges
$2,626
$2,761
$2,903
$3,053
$3,210
Fees & Charges
$33,269
$35,101
$37,087
$39,264
$41,593
Interest
$2,012
$2,022
$2,032
$2,032
$2,032
Grants (other Govts)
$27,682
$5,132
$11,297
$3,379
$2,917
Total External Revenues
$166,571
$136,574
$148,036
$143,321
$151,844
EXPENDITURES
$13,210
($876)
($1,347)
($1,9971
($2,571)
Operating Expenditures
$3,316
($143)
($986)
($2,207)
($5,388)
Other Expenditures
$87,579
$87,958
$92,348
$97,399
$102,095
Less: Interest Payments on Debt
$3,137
$3,111
$3,200
$3,426
$3,329
Amortization Expense
$17,370
$18,015
$18,688
$19,391
$20,124
Total External Expenditures
$108,086
$109,084
$114,236
$120,216
$125,548
ANNUAL SURPLUS
$58,485
$27,490
$33,800
$23,105
$26,296
Add Back: Amortization Expense (Surplus)
$17,370
$18,015
$18,688
$19,391
$20,124
Less: Capital Expenditures
$100,337
$27,756
$35,253
$15,235
$15,711
Less: Developer Contributed Capital
$12,250
$12,250
$12,250
$12,250
$12,250
CHANGE IN FINANCIAL POSITION
($36,732)
$5,499
$4,985
$15,011
$18,459
OTHER REVENUES
Add: Borrowing Proceeds
$22.738
$2,502
$4,776
$0
$0
OTHER EXPENDITURES
Less: Principal Payments on Debt
$4.741
$6,489
$7,034
$8,380
$8,449
TOTAL REVENUES LESS EXPENDITURES
($18,735)
$1,512
$2,727
$6.631
$10,010
INTERNAL TRANSFERS
Transfer from Reserve Funds
Capital Works Reserve
$2,449
$1,093
$853
$866
$853
Equipment Replacement Reserve
$1,917
$2,203
$1,802
$1,065
$1,524
Fire Department Capital Reserve
$1,840
$0
$950
$350
$250
Transfer from Reserve Fund Total
$6,458
$3,296
$3,605
$2,281
$2,627
Less :Transfer to Reserve Funds
Capital Works Reserve
$948
$959
$961
$1,456
$1,199
Equipment Replacement Reserve
$2,160
$2,262
$2.352
$2,444
$2,544
Fire Dept. Capital Aquisition
$1,089
$516
$634
$756
$883
Land Reserve
$7
$7
$7
$7
$7
Sanitary Sewer Reserve
$45
$45
$45
$45
$45
Total Transfer to Reserve Funds
$4.249
$3,789
$3,999
$4,708
$4,678
Transfer from (to) Own Reserves*
$13,210
($876)
($1,347)
($1,9971
($2,571)
Transfer from (to) Surplus
$3,316
($143)
($986)
($2,207)
($5,388)
Transfer from (to) Surplus
$16,526
($1,019)
($2,333)
($4,204)
($7,959)
TOTAL INTERNAL TRANSFERS
$18,735
($x1.512)
($12,727)
($6,631)
($10.010)
Attachment to Maple Ridge 2011-2015 Financial Plan Amending Bylaw 6819-2011
Statement 2
Revenue and Property Tax Policy Disclosure
REVENUE DISCLOSURE
Revenue Proportions
2011
2012
2013
2014
2015
Development Fees Total
('000s)
%
$ ('o00s)
%
$ (.000s)
%
$ ('000s)
%
$ %'000s)
%
Revenues
2,012
1%
2.022
1%
2,032
1%
2,032
1%
2,032
1%
Property Taxes
58,223
31%
62.586
45%
67.070
44.6
71,681
509t
76,594
50%
Parcel Charges
2.626
1%
2.761
2%
2.903
2%
3,053
2%
3,210
2%
Fees & Charges
33.267
18%
35.098
25%
37,084
24%
39,261
27%
41,590
27%
Borrowing Proceeds
22.738
12°x6
2,502
2%
4.776
3%
-
0%
-
0%
Other Sources
72,453
38%
36,126
26%
40,976
27%
29,323
20%
30,447
2096
Total Revenues
189,307
100%
139,073
100%
152.809
100%
143,318
100%
151,841
100%
Other Sources include:
Development Fees Total
42,759
23%
28,972
21%
27,647
18%
23,912
17%
25,498
17%
Interest
2,012
1%
2.022
1%
2,032
1%
2,032
1%
2,032
1%
Grants (Other Govts'i
27.682
15%
5,132
4%
11,297
7%
3,379
2%
2,917
2%
72,453
38%
36,126
26%
40,976
27%
29,323
20%
30,447
20%
Oblectives & Policies
Proi)erty 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.
Business Planning Guidelines and the Financial Plan includes a 3% general tax increase, a 1%
increase to fund replacement of existing infrastructure and an increase of $600,000 plus growth
since 2005, to fund the Fire Department Master Plan implementation. More information can be
found in the Business Planning Guidelines 14th Edition, Financial Sustainability Plan and the 2011-
2015 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 collected through setting rate noted below 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 2011-2015 Amending Financial Plan Bylaw 6819-2011
Statement 2 (continued)
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 every 5 years, was completed
in 2008. Minor DCC amendments are done more frequently. Some fees are 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 or proposed for 2011-
2015 can be found in the 2011-2015 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
Proberty Tax Revenue Distribution
Property Class
Taxation Revenue
i"090s;
Assessed Value
(`OOOs)
Tax Rate
($/1000)
Multiple
(Rate/Res. Rate)
1 Residential
43,677
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
2,397
42%
198,725
1.6%
12-1045
3.1
6 Business, Other
9"160
162%
756,034
62%
12.1045
3.1
8 Rec., Non -Profit
54
0.1%
4,745
0a0%
11.3283
2"9
9 Farm
134
02%
5,338
0.0%
25.1767
6.5
Total
56,500
100.0%1
12.199,780
100.0%
Attachment to Maple Ridge 2011-2015 Amending Financial Plan Bylaw 6819-2011
Statement 2 (continued)
Revenue and Property Tax Policy Disclosure
PROPERTY TAX DISCLOSURE
Objectives & Policies
Property taxes are the District's largest source of revenue and are only contained by efficient
business practices. Annual business planning practices have been the mechanism for resource
allocation decisions.
The District's Financial Sustainability Policy section 6 discusses the necessity of diversifying the tax
base. As development of employment related properties is one method of diversification, key
performance measurement in Economic Development 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 keep within the set tax increases.
Proaerty 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 negatively correlated to market changes). 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 as the types of businesses in each class of
property are quite similar. This 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 reduction of 5% in 2009 and 2010 to the taxes collected 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 on comparing other geographical
areas must be considered in a comparison of tax rates or multiples.
Attachment to Maple Ridge 2011-2015 Amending Financial Plan Bylaw 6819-2011
Statement 2 (continued)
Revenue and Property Tax Policy Disclosure
Permissive Tax Exernotions
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
The District of Maple Ridge has made significant investments in the Town Centre over the last
several years, in keeping with Council's vision to create a vibrant and dynamic Town Centre. The
Town Centre Investment Incentives Program has been established to encourage accelerated private
sector investment in residential and commercial projects to help achieve Council's vision. Specific
objectives of the program are to:
a. Encourage residential investment to diversify housing options, to increase density in
the Town Centre, and to provide a larger base of residents to support Commercial
activities;
b. Encourage Commercial investment to create a strong local economy and expand
employment opportunities for citizens;
C. Increase pedestrian traffic with added residential and Commercial activity, both to
support local business, and to enhance safety;
d. Encourage and support the use of environmentally sustainable building construction
methods and materials, and encourage energy efficiency and alternative
technologies.
Revitalization Tax Exemption Bylaw 6789-2011 is one element of that incentive program. The three-
year program expires at the end of 2013.
Attachment to Maple Ridge 2011-2015 Amending Financial Plan Bylaw 010
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 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 2026 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 2016 through 2030.
Projects in these years typically exceed likely funding available.
Capital Works Program for 2016 - 2030
(in thousands)
Capital Works Program 325,879
Source of Funding
Development Fees
Development Cost Charges 119,092
Parkland Acquisition Reserve -
Contribution From Others 4,333
Development Fees Total 1231.425
Borrowing Proceeds 19,297
Grants 29,305
Transfer from Reserve Funds
Capital Works Reserve 11,377
Cemetery Reserve 115
Equipment Replacement Reserve 1,861.
Fire Department Capital Reserve 1,750
Infrastructure Sustainability Reserve 270
Transfer from Reserve Funds Total 15,373
Revenue Funds 138,479
Source of Funding Total 325,879