AUDITORS’ REPORT
To the Chair and Members of Council
We have audited the
consolidated statement of financial position of the City of Ottawa as at
December 31, 2002 and the consolidated statements of financial activities and
the changes in financial position for the year then ended. These consolidated financial statements are
the responsibility of the City’s management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in
accordance with Canadian generally accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the consolidated
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these
consolidated financial statements present fairly, in all material respects, the
financial position of the City as at December 31, 2002 and the results of its
operations and its changes in financial position for the year then ended in
accordance with Canadian generally accepted accounting principles.
Ottawa,
Canada, 
May 30, 2003. Chartered Accountants
The
City of Ottawa
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
[dollars in thousands]
As
at December 31
2002 2001
[restated
– note 3]
FINANCIAL ASSETS
Cash and short-term
investments 368,576 338,770
Accounts receivable 128,013 129,339
Investments [note 4] 435,300 504,307
Investment in government business enterprise [note
5] 408,958 419,923
Other [notes 3 and
7] ¾ 20,260
Total financial assets 1,340,847 1,412,599
LIABILITIES
Accounts payable and
accrued liabilities 262,343 228,658
Deferred revenue [note
6] 216,814 178,950
Employee benefits [notes
7 and 12] 225,617 213,505
Accrued interest [note
12] 15,106 15,732
Landfill closure and
post-closure liability [notes 8 and 12] 9,784 10,649
Net long-term debt [notes 9 and 12] 676,871 674,388
Total liabilities 1,406,535 1,321,882
Net financial
assets (liabilities) (65,688) 90,717
Non-financial assets
Inventories 24,016 23,359
Prepaid
expenses [note 10] 10,662 11,498
Net assets (liabilities) (31,010) 125,574
Contingencies and Commitments [note 11]
MUNICIPAL POSITION
Operating fund 990 919
Capital fund 231,685 257,994
Reserves and reserve
funds 272,462 361,012
Equity in government
business enterprise [note 5] 408,958 419,923
Fund
balances 914,095 1,039,848
Amounts to be
recovered in future years [note 12] (945,105) (914,274)
Total municipal position (31,010) 125,574
See accompanying notes
The
City of Ottawa
CONSOLIDATED STATEMENT OF
FINANCIAL ACTIVITIES
[dollars
in thousands]
For the year ended December 31
2002 2001
[restated
– note 3]
REVENUES
Taxation and payments in lieu 956,480 913,696
Fees and user charges 452,055 425,531
Government grants 327,376 408,344
Development charges 45,543 32,945
Investment income 55,191 50,212
Other revenues 36,988 92,872
Total revenues 1,873,633 1,923,600
EXPENDITURES
People services 657,706 658,674
Transportation, utilities and public works 641,885 603,828
Corporate services 299,319 257,800
Emergency and protective services 284,644 268,762
Development
services 85,773 70,188
Human resources 25,918 41,512
Financial charges 14,490 12,432
Council and city
manager 9,338 8,171
Total expenditures 2,019,073 1,921,367
Net revenues
(expenses) for the year before the following (145,440) 2,233
Equity in
earnings of government business enterprise [note 5] (10,965) 4,527
Net revenues (expenses) for
the year (156,405) 6,760
Financing
New debt issued 60,815 96,620
Debt principal repayments (58,332) (53,718)
Accrued interest on long-term
liabilities (626) (4,051)
Employee benefits 12,112 11,431
OC Transpo pension 17,727 ¾
Landfill closure and
post-closure (865) 1,194
Increase
in amounts to be recovered 30,831 51,476
Increase (decrease) in
non-financial assets (179) (7)
Change in fund balances for
the year (125,753) 58,229
Fund balance at the beginning
of the year 1,039,848 981,619
Fund balance at the end of
the year 914,095 1,039,848
See accompanying notes
The City of Ottawa
CONSOLIDATED STATEMENT OF CHANGES IN
FINANCIAL POSITION
[dollars
in thousands]
For the year ended December 31
2002 2001
[restated
– note 3]
OPERATING ACTIVITIES
Net revenues
(expenses) for the year (156,405) 6,760
Deduct non-cash item:
Equity in earnings of government business
enterprise 10,965 (4,527)
Uses:
Decrease in interest payable (626) (4,051)
Decrease in landfill closure and
post-closure liability (865) ¾
Sources:
Decrease in accounts receivable 1,326 34,214
Decrease in other 20,260 2,599
Increase in deferred revenue 37,864 38,623
Increase in accounts payable and accrued liabilities 33,685 17,527
Increase in employee benefit obligation 12,112 11,431
Increase in landfill closure and post-closure liability ¾ 1,194
Cash provided by (used in) operating activities (41,684) 103,770
INVESTING ACTIVITIES
Decrease (increase) in investments 69,007 (111,168)
Cash provided by (used in)
investing activities 69,007 (111,168)
FINANCING
ACTIVITIES
New debt issued 60,815 96,620
Debt principal
repayment (58,332) (53,718)
Cash provided by (used
in) financing activities 2,483 42,902
Net increase in cash
and short-term investments for the year 29,806 35,504
Cash and short-term
investments, beginning of the year 338,770 303,266
Cash and short-term
investments, end of the year 368,576 338,770
See accompanying notes
The City of Ottawa Schedule
1
ANALYSIS OF CONSOLIDATED
OPERATING FUND
[dollars in thousands]
For the year ended December 31, 2002
2002 2002 2001
Budget Actual Actual
$ $ $
[unaudited] [Restated –
note 3]
REVENUES
Taxation and user charges
Taxation and payments in lieu 954,599 956,480 913,696
Fees and user charges 443,636
452,055 425,531
Grants 292,296 311,666 321,238
Other
Investment income 31,008 43,808 33,620
Other revenue 26,653 16,534 13,207
Total revenues 1,748,192 1,780,543 1,707,292
EXPENDITURES
People services 627,020 627,847 624,661
Transportation, utilities and public works 455,797 473,453 434,279
Emergency and protective services 252,623 257,179 246,086
Corporate services 153,614 158,672 155,990
Development services 36,072 37,067 34,906
Human resources 17,024 16,809 18,513
Financial
charges 12,760 14,490 12,432
Council and city manager 10,225 9,338 8,171
Total expenditures 1,565,135 1,594,855 1,535,038
Net revenues for the year 183,057 185,688 172,254
Financing and transfers
Net transfers to reserves,
reserve funds and capital
fund (152,907) (155,454) (126,687)
Debt principal repayment (58,300) (58,332) (53,718)
Accrued interest on long-term
liabilities (600) (626) (4,051)
Employee benefits 12,100 12,112 11,431
OC Transpo pension 17,700 17,727 ¾
Landfill closure and post-closure (870) (865) 1,194
Total financing and transfers (182,877) (185,438) (171,831)
Increase (decrease) in
non-financial assets (180) (179) (7)
Change in operating fund
balance ¾ 71 416
Fund balance at the beginning
of the year ¾ 919 503
Fund balance at the end of
the year ¾ 990 919
See accompanying notes
The City of Ottawa Schedule
2
ANALYSIS OF
CONSOLIDATED
CAPITAL FUND
[dollars in thousands]
For the year ended December 31, 2002
2002 2001
[restated
– note 3]
REVENUES
Grants
Province of Ontario 13,700 86,351
Government of Canada 2,010 755
Other
Development charges 45,543 32,945
Other revenue 7,188 11,449
Total revenues 68,441 131,500
EXPENDITURES
Transportation,
utilities and public works 168,432 169,549
Corporate Services 140,647 101,810
Development services 48,706 35,282
People services 29,859 34,013
Emergency and
protective services 27,465 22,676
Human resources 9,109 22,999
Total expenditures 424,218 386,329
Net
expenditures for the year (355,777) (254,829)
Financing
and transfers
New debt issued 60,815 96,620
Contributions from
reserves, reserve funds and
operating fund 268,653 378,399
Total financing and
transfers 329,468 475,019
Change in capital
fund balance (26,309) 220,190
Fund
balance at the beginning of the year 257,994 37,804
Fund
balance at the end of the year 231,685 257,994
See accompanying notes
The City of Ottawa Schedule
3
ANALYSIS OF
CONSOLIDATED
RESERVES AND
RESERVE FUNDS
[dollars in thousands]
For the year ended December 31, 2002
2002 2001
[restated
– note 3]
REVENUES
Investment income 11,383 16,592
Other revenue 13,266 68,216
Total revenues 24,649 84,808
Financing and transfers
Net transfers from operating fund 155,447 127,473
Transfers to capital fund (268,646) (379,185)
Total financing and
transfers (113,199) (251,712)
Change in reserves
and reserve fund balance (88,550) (166,904)
Fund balance at the
beginning of the year 361,012 527,916
Fund balance at the end of
the year 272,462 361,012
As at December 31
2002 2001
Reserves 10,417 31,913
Reserve Funds
Capital
expenditures 222,104 281,370
Equipment
replacement 21,697 24,027
Employee
benefits 10,450 15,467
Other 7,794 8,235
Total reserve funds 262,045 329,099
Total reserves and reserve funds 272,462 361,012
See
accompanying notes
1.
NATURE OF BUSINESS
The City of
Ottawa (the City) was created through Provincial legislation on December 20,
1999 and commenced operations on January 1, 2001.
The City is
responsible for providing municipal services such as employment and financial
assistance, long term care, community services and libraries, emergency and
protective services including police, fire and ambulance, and transportation,
utilities and public works, including roads, sewers and wastewater, drinking
water, garbage and recycling.
As sole
shareholder of Hydro Ottawa and the Ottawa Community Housing Corporation, the
City also provides hydro and housing services to the residents of Ottawa.
2.
SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These consolidated financial statements are prepared by
management in accordance with accounting policies prescribed by the Public
Sector Accounting Board (“PSAB”) of the Canadian Institute of Chartered
Accountants (CICA). Since precise determination of many assets and liabilities
is dependent upon future events, the preparation of periodic financial
statements necessarily involves estimates, which have been made using careful
judgement.
The accounting policies have been applied on a consistent
basis with the exception of the retroactive effect of the consolidation of
Ottawa Community Housing Corporation (note 3).
Basis of consolidation
These consolidated financial
statements reflect the assets, liabilities, revenues and expenditures of the
operating fund, capital fund, reserves and reserve funds, and include the
activities of all committees of council, and the following boards:
The Police Services Board The
Carp Village Business Improvement Area
The City of
Ottawa Public Library Board The
Vanier Business Improvement Area
Pine View
Municipal Golf Course The
Manotick Business Improvement Area
The Ottawa
Community Housing Corporation
The
Ottawa-Nepean Campsite Authority
The Sparks
Street Mall Authority
The
Bank Street Business Improvement Area
The Westboro
Business Improvement Area
The Sparks
Street Business Improvement Area
The
Somerset Heights Business Improvement Area
The Preston
Street Business Improvement Area
The Byward
Market Business Improvement Area
The Somerset
Village Business Improvement Area
The Rideau
Business Improvement Area
All interfund assets and liabilities, revenues and
expenditures have been eliminated.
The City’s investment in Hydro
Ottawa is accounted for on a modified equity basis, consistent with the
generally accepted accounting treatment for such government business
enterprises [note 5]. Under the
modified equity basis, Ottawa Hydro’s accounting principles are not adjusted to
conform with those of the City, and inter-organizational transactions and
balances are not eliminated.
The City of Ottawa Sinking Fund
is not consolidated except for the City’s share of Sinking Fund interest income
used to finance the principal amount of debt.
The financial statements also exclude trust assets that are administered
for the benefit of external parties.
School boards
The taxation, other revenues,
expenditures, assets and liabilities with respect to the operations of the
school boards are not reflected in these consolidated financial statements.
Basis of accounting
Revenues and
expenditures are reported on the accrual basis of accounting. The accrual basis
of accounting recognizes revenues as they are earned and measurable;
expenditures are recognized as they are incurred and measurable as a result of
receipt of goods or services and the creation of a legal obligation to pay.
Measurement uncertainty
The preparation of financial statements in
conformity with Canadian generally accepted accounting principles requires
management to make estimates and assumptions on such areas as employee
benefits, assessment appeals and environmental provisions. These estimates and assumptions are based on
the City’s best information and judgment and may differ significantly based on actual
results.
Financial instruments
The City’s financial instruments consist of
cash and short-term investments, accounts receivable, investments, accounts
payable and accrued liabilities, deferred revenue, and net long-term debt. Unless otherwise noted, it is management’s
opinion that the City is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The carrying values of the City’s financial
instruments approximate their fair values unless otherwise noted.
Investments
Investments are
recorded at amortized cost less amounts written off to reflect a permanent
decline in value. Investments consist
of authorized investments pursuant to provisions of the Municipal Act and
comprise government and corporate bonds, debentures and short-term instruments
of various financial institutions.
Investments for Ottawa Community Housing Corporation are carried at cost
and only written down when there has been a permanent impairment to the
carrying value.
Environmental provisions
The City
provides for the cost of compliance with environmental legislation when
conditions are identified which indicate non-compliance with environmental
legislation and costs can be reasonably determined. The estimated amounts of future restoration costs are reviewed
regularly, based on available information and governing legislation.
Deferred
revenue
Certain amounts
are received pursuant to legislation, regulation or agreement and may only be
used in the conduct of certain programs or in the completion of specific
work. In addition, certain user charges
and fees are collected but for which the related services have yet to be
performed. These amounts are recognized
as revenue in the fiscal year the related expenditures are incurred or services
performed.
Government
transfers
Government
transfers relate to the social services and housing programs and are recognized
in the consolidated financial statements in the period in which events giving
rise to the transfer occur, providing the transfers are authorized, any
eligibility criteria have been met and reasonable estimates of the amounts can
be made.
Inventories
Inventories are
recorded at the lower of cost and replacement cost.
Capital assets
The historical
cost and accumulated depreciation of capital assets are not recorded for
municipal purposes. Capital assets are
reported as an expenditure on the Consolidated Statement of Financial
Activities in the year of acquisition.
Employee benefit plans
The City has adopted the
following policies with respect to employee benefit plans:
[a]
The costs of post-employment benefits are recognized over the
period earned; costs include projected future income payments, health care
continuation costs and fees paid to independent administrators of these plans,
calculated on a present value basis;
[b]
The costs of pensions and other retirement benefits are
actuarially determined using the projected benefits method prorated on service
and management’s best estimate of retirement ages of employees, salary
escalation, expected health care costs and plan investment performance;
[c]
The contributions to a multi-employer, defined benefit pension
plan are expensed when contributions are due;
[d]
For a defined benefit plan, the excess of the present value of
the pension plans’ assets over the accrued pension benefits, as well as
adjustments arising from past service benefits, experience gains and losses,
and valuation allowance are amortized to expenditure over the expected average
remaining service life of the employee group covered by the pension plan.
Solid waste landfill provision
The estimated costs to close and maintain solid waste
landfill sites are based on estimated future expenditures in current dollars,
adjusted for estimated inflation, and are accrued and amortized over the
estimated remaining capacity of each landfill site. The annual provision is reported as an operating fund expenditure
and the accumulated provision is reported as a liability on the Consolidated
Statement of Financial Position.
Reserves
and reserve funds
Reserves and reserve funds comprise funds set aside for
specific purposes by Council (Schedule 3).
3. CHANGE IN BASIS OF ACCOUNTING
Ottawa Community Housing Corporation
In 2002, assets of the former City of
Ottawa Non-Profit Housing Corporation were transferred to the former Ottawa
Housing Corporation forming an amalgamated corporation renamed as Ottawa
Community Housing Corporation. In
addition, subsidies previously flowed directly from the Province to the housing
corporations are now initially being flowed through to the City of Ottawa, who
in turn subsidizes the operations of Ottawa Community Housing Corporation.
As sole shareholder of both former
corporations, the amalgamated renamed corporation, and in light of the funding
changes discussed above, the City of Ottawa is now required to fully
consolidate its investment in Ottawa Community Housing Corporation consistent
with generally accepted accounting treatment for government business
enterprises. This change has been
applied on a retroactive basis.
As a result, the City’s investment in
the former City of Ottawa Non-Profit Housing Corporation ($49,140) and
investment in the former Ottawa Housing Corporation ($NIL) accounted for
previously on a modified equity basis, has been restated to full consolidation
as described in note 2.
4. INVESTMENTS
Investments are comprised of:
Cost Market Value
2002 2001 2002 2001
City of
Ottawa debentures 41,776 50,253 45,543 53,997
Federal
government 112,078 218,190 117,691 223,404
Provincial
government 114,310 85,865 119,665 89,582
Municipal
government 47,379 29,101 49,579 30,042
Banks 91,361 92,892 92,979 94,783
OCHS
securities* 28,396 28,006 27,377 29,276
435,300 504,307 452,834 521,084
* Corporate bonds, Common and Foreign stock held for Ottawa
Community Housing Corporation
The weighted average yield on
investments held as at December 31, 2002 is 5.21% [2001-5.03%]. Investments mature from April 7, 2003 to
March 8, 2029.
5. INVESTMENT IN GOVERNMENT BUSINESS ENTERPRISE
The following table provides condensed supplementary
financial information of Hydro Ottawa for the year ended December 31:
2002 2001
Financial position
Current assets 179,579 168,238
Capital assets 354,641 349,354
Other assets 2,267 1,727
Total assets 536,487 519,319
Current liabilities 112,770 88,634
Total liabilities 127,529 99,396
Net assets 408,958 419,923
2002 2001
Promissory notes payable to the City of Ottawa 237,825 237,825
Share capital 190,628 190,628
Deficit (19,495) (8,530)
Net
assets 408,958 419,923
Promissory
notes bear interest at an annual rate of 6.9% upon market opening on May 1,
2002. Interest income of $11,015 was
earned by the City of Ottawa in 2002 and $4,136 of this amount is recorded as
an account receivable on the Consolidated Statement of Financial Position.
2002 2001
Results of
operations
Revenues:
Sale of electricity 582,863 540,937
Other 13,228 18,014
Total
revenue 596,091 558,951
Expenses:
Cost of electricity 495,133 487,168
Other 111,923 67,256
Total expenses 607,056 554,424
Net income (loss) (10,965) 4,527
6. DEFERRED REVENUE
Deferred revenue set-aside
for specific purposes by legislation, regulation or agreement as at December 31
is comprised of:
2002 2001
Development charges 193,167 157,344
Other deferred revenue 15,430 15,330
Cash in lieu of parkland 5,465 3,674
Cash in lieu of parking 2,120 1,896
Local improvements 632 706
Total deferred revenue 216,814 178,950
7. EMPLOYEE BENEFITS AND PENSION AGREEMENTS
The City
provides certain benefits including retirement and other employment benefits to
most of its employees.
[a] Employee
benefits
Employee benefit liabilities of
the City as at December 31 are as follows:
2002 2001
Post-retirement
benefits 108,169 101,133
Post-employment
benefits 53,607 50,042
Worker’s Safety and
Insurance Board Obligations 46,260 43,951
Vacation leave 17,581 18,379
The defined benefit plans relating to post-retirement and post-employment
provide a variety of benefits to retirees, active and long-term disabled
employees, including income, medical, dental, life insurance, workers’
compensation and sick leave gratuity benefits.
The City is a schedule 2 employer under the Workplace Safety and
Insurance Act and as such, assumes full responsibility for financing its
workplace safety insurance costs. The
accrued obligation represents the present value of future benefits on existing
claims.
The
continuity for post-retirement and post-employment benefits for 2002 is as
follows:
Post-retirement Post-employment Total
Balance at the beginning of the year 101,133 50,042 151,175
Current service costs/cost of new claims 3,880 5,307 9,187
Interest cost 7,078 3,505 10,583
Benefits paid (3,922) (5,247) (9,169)
Balance at
the end of the year 108,169 53,607 161,776
Due to the complexities in valuating the plans, actuarial valuations are
conducted on a periodic basis. The
liabilities reported in these consolidated financial statements are based on a
valuation as of December 31, 2001. Many
of the estimates and assumptions used in 2001 may change significantly with the
next detailed evaluation. The
significant actuarial assumptions adopted in measuring the City’s accrued
benefit obligations for post-retirement and post-employment benefits for 2002
are as follows:
Discount
rate 7%
Inflation
rate 3%
Health
care inflation rate 0
to 8%
[b] Pension
agreements
(i) Ontario
Municipal Employees Retirement Fund
The
City makes contributions to the Ontario Municipal Employees Retirement System
(“OMERS”), which is a multi-employer pension plan, on behalf of most of its
employees. The plan is a defined
benefit plan which specifies the amount of the retirement benefit to be
received by the employees based on length of service and rates of pay. Due to significant surpluses, OMERS declared
a temporary contribution holiday for all active employees and participating
employees, effective August 1, 1998 through to December 31, 2002. As a result of this contribution holiday, no
contributions were required on account of current service in 2002 or 2001. Contributions to the OMERS plan commence in
January 2003.
The
amount contributed for past service to OMERS for the year ended
December 31, 2002 was $ 884 [2001 - $ 854] and is included as an
expenditure on the Consolidated Statement of Financial Activities.
(ii) City of Ottawa
Superannuation Fund
The City also sponsors the City
of Ottawa Superannuation Fund, a defined benefit plan which provides retirement
benefits to employees based on length of service and rates of pay. With the introduction of OMERS, the COSF
became a closed group in 1965. As at
December 31, 2002, there were 12 active members and 1,038 pension recipients.
As at December 31, 2001, there were 19 active members and 1,070 pension
recipients. No employee or matching employer contributions to the COSF for
current service or for past service was required in 2002 or 2001.
An
actuarial valuation was made as at December 31, 2001, and was then extrapolated
to December 31, 2002. The net pension
asset (liability) is as follows:
2002 2001
Pension
fund assets – end of the year 271,881 305,305
Accrued
benefit obligation – end of the year 282,792 290,537
Net pension asset (liability) (10,911) 14,768
(iii) Ottawa-Carleton
Regional Transit Commission Employees’ Pension Plan
Staff
of the former Ottawa-Carleton Regional Transit Commission (OC Transpo)
joined OMERS as of January 1, 1999.
OC
Transpo maintains a contributory defined benefit pension plan which covers all
of its employees and provides a pension based on length of service and rates of
pay. The last actuarial evaluation was
conducted as at January 1, 2002 and no experience deficiency existed in the
plan at that time.
The continuity for OC Transpo’s accrued
pension amounts is as follows:
2002 2001
Accrued
benefit obligation
Balance - beginning
of the year 320,613 307,692
Interest cost 20,492 20,513
Benefits paid (10,703) (7,592)
Actuarial losses 666 ¾
Balance - end of the year 331,068 320,613
Plan assets
Fair value -
beginning of the year 383,667 366,759
Actual return on
plan assets (14,396) 24,500
Benefits paid (10,703) (7,592)
Fair value - end of the year 358,568 383,667
Accrued benefit asset
Funded status -
plan surplus 27,500 63,054
Unrecognized
transitional asset (202) (231)
Unrecognized net
loss (gain) 11,006 (28,647)
Valuation allowance
(38,304) (13,916)
Accrued benefit asset – end of the year ¾ 20,260
Effective for 2002, any
surplus related to OC Transpo’s Pension Plan can no longer be carried as a financial asset on the Consolidated
Statement of Financial Position as the City’sright to theaccrued benefit is
uncertain.
As a result, $20,260 previously
recorded as a financial asset on the Consolidated Statement of Financial
Position has been expensed in the Statement of Financial Activities. Of this amount, $17,727 will be funded
through future revenue requirements.
The significant actuarial
assumptions adopted in measuring OC Transpo’s accrued benefit obligation and
the expense recognized in the Statement of Financial Activities include:
Discount rate, accrued benefit obligation –
end of the year 6.50%
Discount rate, expense recognized 6.75%
Expected long-term rate of return on plan
assets 6.50%
Rate of compensation increase 3.0%
until 2004, then 2.5%
8.
LANDFILL CLOSURE AND POST-CLOSURE LIABILITIES
The
Ontario Environmental Protection Act sets out the regulatory requirements for
the closure and maintenance of landfill sites.
Under this Act, the City is required to provide for closure and
post-closure care of solid waste landfill sites. The costs related to these obligations are provided over the
estimated remaining life of active landfill sites based on usage.
The
City has two active landfill sites - Trail Road Landfill and Springhill as well
as 1 inactive site for which the City has responsibilities for all costs
relating to closure and post-closure care.
As at December 31, 2002, the remaining capacity of the Trail Road site
is approximately 1,405,032 [2001 – 1,833,890] cubic meters, all of which is
expected to be used by December 31, 2009. The remaining capacity at the
Springhill site is approximately 1,091,041 cubic meters which is expected to be
used by the year 2034. Currently, a Site Optimization/Expansion Environmental
Assessment is near completion/implementation which will extend the life of the
landfill to the year 2040.
Closure
for the Trail Road Landfill and Springhill will involve covering the site,
implementing drainage control and installing ground water monitoring
wells. Post-closure care activities for
these sites and other inactive sites are expected to occur for approximately 25
years.
The
estimated liability for the care of landfill sites is the present value of
future cash flows associated with closure and post-closure costs discounted
using the City’s cost of capital of 7%.
This estimate amounts to $9,784 as at December 31, 2002 [2001 - $10,649]
and is included as a liability on the Consolidated Statement of Financial
Position.
Estimated
total expenditures over the 25 year period are approximately $48,000.
9. NET LONG TERM
DEBT
[a] Net long
term debt reported on the Consolidated Statement of Financial Position comprise
the following:
2002 2001
Installment and sinking fund debenture debt
issued at various rates of interest ranging from 3.4% to 10.75%. 598,469 590,229
The total value of sinking fund
deposits, which have accumulated to the end of the year to retire
Sinking Fund debentures included in the above amount. (175,575) (174,507)
Mortgages payable on housing properties at
various interest rates ranging from 4.5% to 11.15% guaranteed by the Canada
Mortgage and Housing Corp. 253,302 258,504
Forgivable loans related to Residential
Rehabilitation Assistance Program.675 162
Public
housing debentures issued by Canada Mortgage and Housing Corporation in the
amount of $103,769 [2001 - $106,878] included in the Ottawa Community Housing
Corporation have not been included in these consolidated financial statements
as they are the responsibility of the Province.
[b] Principal
payments including contributions to the Sinking Fund in future years are:
Principal
2003 48,786
2004 47,820
2005 50,450
2006 45,595
2007 37,551
2008 and
thereafter 390,193
These amounts will be paid from tax and rate supported operations. It is estimated that interest to be earned
by the Sinking Fund will amount to approximately $56,476, which together with
the $620,395 shown above, will be used to retire the outstanding debt of
$676,871.
10. PREPAID EXPENSES
The balance of prepaids reported on the
Consolidated Statement of Financial Position is comprised of:
2002 2001
Prepaid welfare entitlements 7,900 9,800
Other prepaids 2,762 1,698
Prepaid welfare
entitlements represent the advance payment of January benefit entitlements in
the month of December. Of this amount,
80% will be funded by the Province of Ontario.
11. CONTINGENCIES
AND COMMITMENTS
[a] The City
is subject to various legal claims arising in the normal course of its
operations. The ultimate disposition of
these claims may differ from amounts which have been recorded in the accounts.
[b] A class
action suit claiming $500,000 in restitutionary payments plus interest was
served on the former Toronto Hydro-Electric Commission as the representative of
the Defendant Class consisting of all municipal electric utilities in Ontario
which have charged late payment charges on overdue utility bills at any time
after April 1, 1981.
The
claim is that late payment penalties result in electric utilities receiving
interest at effective rates in excess of what is allowed under Section
347(1)(b) of the Criminal Code. The
Municipal Electrical Association, in cooperation with Toronto Hydro
Corporation, is undertaking the defence of this class action. At this time it is not possible to quantify
the effect, if any, on the financial statements of the City of Ottawa.
[c] The City
has commitments on Capital projects at December 31, 2002 in the amount of
$129,340 [2001 - $37,946].
[d] The City
is committed to the following payments over the next five years under lease
agreements:
2003 17,645
2004 14,266
2005 10,866
12. AMOUNTS TO BE RECOVERED IN FUTURE YEARS
The amounts to be recovered in future years
reported on the Consolidated Statement of Financial Position are comprised of:
2002 2001
Net long-term debt 676,871 674,388
Employee benefits 225,617 213,505
OC Transpo pension 17,727 ¾
Accrued interest on debt 15,106 15,732
Landfill closure and post-closure 9,784 10,649
13. EXPENDITURES BY OBJECT
2002 2001
Salaries, wages and employee benefits 772,788 726,636
Interest on debt 65,654 72,371
Materials, goods, supplies and utilities 509,864 408,889
Capital expenditures 424,218 386,329
Other 246,549 327,142
14. PUBLIC LIABILITY INSURANCE
The City
self-insures for public liability claims up to a specific amount and outside
coverage is in place for claims in excess of these limits.
The City has a
reserve fund for self-insurance, which at December 31, 2002 amounted to $7,795
[$8,235 in 2001]. The City contributed
$703 [$703 in 2001] to this reserve fund from operations.
15. BUDGET
AMOUNTS
Budgets
established for capital, reserves and reserve funds cover multiple fiscal years
and, therefore, have not been shown on the consolidated financial statements.
16. FINANCIAL
STATEMENT PRESENTATION
Certain
comparative amounts for 2001 have been reclassified to conform with the
presentation adopted in 2002.