2018-2022 Financial Plan

APPENDIX C: INFRASTRUCTURE FUNDING STRATEGY

Lifecycle Reserve, in the financial statements referred to as “Recreation” Facility Maintenance, although buildings other than recreation are covered, such as those for fire, police and general government. This reserve receives $450,000 annually from general revenue. An increase of $50,000 occurred in 2003 to help with the addition of municipal buildings in the downtown core, but this is not adequate. Comprehensive lifecycle studies are being performed, which will deliver 30-year Financial Plans and performance measures. In 2005, the RCMP building, courthouse and leisure centre were reviewed. In 2006, the municipal hall, arts centre and works yard building are planned for review and studies on the fire halls are planned for 2007. The office tower study was done in 2004. According to appraisals done for insurance purposes, the following values are assigned to the buildings and equipment I believe were intended to be covered from this reserve:

Annual Sustainability Requirement

Replacement Value 53,000,737

General Government - Construction General Government - Equipment

1,766,691

555,500

27,775 59,675

General Government - Yard

1,193,503 42,789,383

Parks & Recreation - Construction Parks & Recreation - Equipment

1,426,313

22,370

1,119

Parks & Recreation - Yard

4,558,490 3,325,347

227,925 110,845 10,620 161,257

Fire - Construction

Fire - Yard

212,400

Police - Construction

4,837,701

110,495,431

3,792,219

We are currently allocating $450,000 to building and equipment renewal, out of sustainability provision requirement of $3.8 million, or 12%. Once again I state that the $3.8 million annual sustainability requirement is not needed each and every year, as many of the buildings are new, but there will come a time where a significant investment is required and more so if we are not allocating enough to the maintenance program. Equipment Replacement Reserve – This reserve is divided into three segments: operations equipment; Fire Department equipment; and technology. In addition to the specific funding allocated to these reserves, the fund balances also earn interest income. Operations: Equipment is charged against general revenue accounts at rates calculated to cover both maintenance and eventual replacement. This is a reasonable method to ensure replacement funding is available and to ensure the appropriate service areas pay their share of costs. In 1998, this amount was just under $500,000; for 2006 it is $665,000. Technology: General revenue contributed $135,000 in 1998 towards technology equipment replacement, increasing to $312,000 per year for the last several years. There was a history of incremental requests to increase funding levels as assets were added to the inventory, however, improved asset management and stabilized funding have improved the approach. In 2001, water and sewer utilities began to contribute for their usage of IT equipment, contributing $35,000 each initially, then $85,000 each in 2002 and since 2003, have remained at $100,000 each. The intention was to reach a number that represented adequate compensation for actual usage, as estimated in 2001. This should likely be evaluated once again to determine whether this amount is adequate. The IT replacement reserve currently includes workstation, network and some productivity software. It does not include replacement funding for enterprise wide software systems, such as the Ross financials, Amanda property system, GIS and Class recreation system. The strategy for these programs is when replacement comes due; a capital program funding request is raised and evaluated against other competing interests. Fire: The Fire Department Capital Acquisition Reserve is for acquiring growth-related equipment and buildings. The contribution to this reserve has historically been tied to taxation, with 2% 1 in 1998 netting $380,000 and in 2006, $720,000. For replacement of these assets, a separate reserve is used.

1 As a separate issue, the 2% allocation may not be enough given the demands of a growing community and the organizational change the Department has experienced. In recent years, the funding from this reserve was not enough to meet demand for growth-related infrastructure acquisitions and had to be augmented by other funding sources.

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