7.     Capital Adjustments and Closing of Projects – tax supported

 

ADJUSTEMENTS DU BUDGET DES IMMOBILISATIONS ET CESSATION DE PROJETS FINANCÉS PAR RECETTES FISCALES

 

 

Committee Recommendations as amended

 

That Council:

 

1.      Approve the budget adjustments as detailed in Document 1;

 

2.      Authorize the closing of capital projects listed in Document 2, the funding of deficits as identified and the return of balance of funds to funding sources;

 

3.      Authorize the refinancing of capital projects due to the receipt of $27.185 million Provincial Transit Capital Grant, as shown in Document 3;

 

4.      Authorize the refinancing of capital projects due to the receipt of  $14.645 million Municipal Road and Bridge Infrastructure Investment Grant, as shown in Document 3;

 

5.      Approve a net decrease in debt authority of $23.842 million as a result of the recommendations above;

 

6.      Approve additional authority of $33.73 million for the Central Archives Relocation and Ottawa Library Technical Services Facility project to be funded with the $20 million in provincial revenue received under the Municipal Infrastructure Improvement Initiative (MIII) and the balance of $13.73 million with tax supported debt; and

 

7.      Receive the budget adjustments in Document 4 undertaken in accordance with the Delegation of Authority By-law 2005-503, as amended, as they pertain to capital works.

 

8.   That the recommended reduction in capital budget authority for 900991 Bridlewood Community Centre (Document 1 – Budget Adjustments Requiring Council Approval) be removed and funds be held until a location within Bridlewood can be fully explored and cost be determined.

 

 

RecommandationS modifiÉeS du Comité

 

Que Conseil :

 

1.      approuve les ajustements budgétaires décrits dans le document 1;

 

2.      autorise la cessation des projets d’immobilisation énumérés dans le document 2, le financement des déficits indiqués et la remise des fonds restants aux sources de financement;

 

3.      approuve le refinancement des projets d’immobilisations en raison de l’obtention de la subvention d’immobilisation provinciale de 27,185 millions de dollars destinée au transport en commun, tel qu’il est indiqué dans le document 3;

 

4.      autorise le refinancement des projets d’immobilisations en raison de l’obtention la subvention de 14,645 millions de dollars destinée à l’amélioration des routes municipales et des infrastructures de pont, tel qu’il est indiqué dans le document 3;

 

5.      approuve une diminution du pouvoir d’endettement de 23,842 millions de dollars, en conséquence des recommandations énoncées ci-dessus;

 

6.      accorde une autorisation supplémentaire de 33,73 millions de dollars pour le projet de déménagement des archives centrales et de l’installation des services techniques de la Bibliothèque publique d’Ottawa, dont le financement proviendra d’un paiement de 20 millions de dollars reçu de la Province en vertu de l’Initiative d’investissement dans l’infrastructure municipale (IIIM) et, pour le montant restant de 13,73 millions de dollars, d’une dette financée par les recettes fiscales; et

 

7.   prend connaissance des ajustements budgétaires décrits dans le document 4, apportés aux termes du Règlement municipal 2005-503 sur la délégation de pouvoirs, modifié, et ayant trait aux travaux d’immobilisation.

 

8.   Que l’autorisation recommandée de réduire le budget d’immobilisations pour le Centre communautaire de Bridlewood – 900991 (document 1 – ajustements budgétaires exigeant une approbation du Conseil) soit levée et que les fonds soient retenus jusqu’au choix définitif d’un emplacement à Bridlewood et à la détermination des coûts.

 

 

 

Documentation

 

1.   City Treasurer’s report dated 29 April 2008 (ACS2008-CMR-FIN-0019).

 

2.   Extract of Draft Minutes


Report to/Rapport au :

 

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

 

and Council / et au Conseil

 

April 29, 2008 / le 29 avril 2008

 

Submitted by/Soumis par : Marian Simulik,
City Treasurer, Trésoriere municipale

 

Contact Person/Personne ressource : Tom Fedec, A/Manager of Financial Planning

Financial Services/Services financiers

(613) 580-2424 x 21316, Tom.Fedec@ottawa.ca

 

City Wide/à l'échelle de la Ville

Ref N°: ACS2008-CMR-FIN-0019

 

 

SUBJECT:

Capital Adjustments and Closing of Projects - tax supported

 

 

OBJET :

ADJUSTEMENTS DU BUDGET DES IMMOBILISATIONS ET CESSATION DE PROJETS FINANCÉS PAR RECETTES FISCALES

 

 

REPORT RECOMMENDATIONS

 

That the Corporate Services and Economic Development Committee recommend Council:

 

1.      Approve the budget adjustments as detailed in Document 1;

 

2.      Authorize the closing of capital projects listed in Document 2, the funding of deficits as identified and the return of balance of funds to funding sources;

 

3.      Authorize the refinancing of capital projects due to the receipt of $27.185 million Provincial Transit Capital Grant, as shown in Document 3;

 

4.      Authorize the refinancing of capital projects due to the receipt of  $14.645 million Municipal Road and Bridge Infrastructure Investment Grant, as shown in Document 3;

 

5.      Approve a net decrease in debt authority of $23.842 million as a result of the recommendations above;

 

6.      Approve additional authority of $33.73 million for the Central Archives Relocation and Ottawa Library Technical Services Facility project to be funded with the $20 million in provincial revenue received under the Municipal Infrastructure Improvement Initiative (MIII) and the balance of $13.73 million with tax supported debt; and

 

7.      Receive the budget adjustments in Document 4 undertaken in accordance with the Delegation of Authority By-law 2005-503, as amended, as they pertain to capital works.

 

 

RECOMMANDATIONS DU RAPPORT

 

Que le Comité des services organisationnels et du développement économique recommande au Conseil :

 

1.      d’approuver les ajustements budgétaires décrits dans le document 1;

 

2.      d’autoriser la cessation des projets d’immobilisation énumérés dans le document 2, le financement des déficits indiqués et la remise des fonds restants aux sources de financement;

 

3.      d’approuver le refinancement des projets d’immobilisations en raison de l’obtention de la subvention d’immobilisation provinciale de 27,185 millions de dollars destinée au transport en commun, tel qu’il est indiqué dans le document 3;

 

4.      d’autoriser le refinancement des projets d’immobilisations en raison de l’obtention la subvention de 14,645 millions de dollars destinée à l’amélioration des routes municipales et des infrastructures de pont, tel qu’il est indiqué dans le document 3;

 

5.      d’approuver une diminution du pouvoir d’endettement de 23,842 millions de dollars, en conséquence des recommandations énoncées ci-dessus;

 

6.      d’accorder une autorisation supplémentaire de 33,73 millions de dollars pour le projet de déménagement des archives centrales et de l’installation des services techniques de la Bibliothèque publique d’Ottawa, dont le financement proviendra d’un paiement de 20 millions de dollars reçu de la Province en vertu de l’Initiative d’investissement dans l’infrastructure municipale (IIIM) et, pour le montant restant de 13,73 millions de dollars, d’une dette financée par les recettes fiscales; et

 

7.      de prendre connaissance des ajustements budgétaires décrits dans le document 4, apportés aux termes du Règlement municipal 2005-503 sur la délégation de pouvoirs, modifié, et ayant trait aux travaux d’immobilisation.

 

 

BACKGROUND

 

Generally, budget adjustments to capital projects are required to:

 

·          Adjust for increases or decreases in project costs;

·          Consolidate similar accounts to facilitate issuing of contracts;

·          Create separate accounts to facilitate project tracking;

·          Account for the receipt of revenues not previously anticipated or for the over / underestimation of revenues; and

·          Adjust project financing.

 

In its Delegation of Authority By-law 2005-503, as amended, City Council included parameters in which budget adjustments may be made if authorized by the City Treasurer.  Those capital budget adjustment requests that do not meet the delegated authority limits of the City Treasurer require approval of City Council.  Generally, Council authority is required for those capital budget adjustments involving:

 

·          Transfers between programs or internal orders in excess of 10% or $100,000 whichever is the lesser;

·          Transfers of debt authority between programs with previously approved debt authority, regardless of amount;

·          Establishment of new projects outside the budget process; and

·          A reduction of or increase in funding authority.

 

As in the past, this report includes those capital adjustments that require specific Council approval (Document 1), as well as those that have been made as a result of the delegated authority provisions (Document 4).  The latter is provided for the information of Council, as these adjustments have already been processed, while the adjustments in the former document are being recommended for approval.

 

Capital project closures are also included in this report with details provided in Document 2.  In closing these projects, surplus funds are firstly applied to those projects being closed that are in deficits.  Secondly, and as directed during the 2008 budget process, one time operating requirements will be funded from the net surplus funds that will be returned to source.

 

Council approval is also recommended to refinance capital projects with provincial funding.  This reduces the requirement to issue debt as well as making available city wide reserve funding for other Council directed purposes (Document 3).  The advancement of project authority in the Central Archives Relocation and Ottawa Library Technical Services Facility project is also recommended due to the receipt of Municipal Infrastructure Improvement Initiative (MIII) grant.

 

In previous Capital Adjustments and Closing of Projects reports, adjustments to both the tax supported and rate supported capital projects were presented in a joint report.  In keeping with Council’s direction to separately table and approve the tax and rate supported budget requirements, two separate reports have been prepared.  The rate supported report will be submitted to the Planning and Environment Committee on May 13.

 

 

DISCUSSION

 

Recommendation 1 – Budget Adjustments Requiring Council Approval

 

As indicated above, those capital budget adjustments that require Council approval because they are not within the delegated authority limits for the transfer of funds are detailed in Document 1.  An explanation for why each budget adjustment is required, as provided by the submitting department, is also included.

Document 1 includes those adjustments requested by project managers as well as administrative adjustments.  Unlike those requested by departments, administrative adjustments do not have an impact on the scope or nature of the work, nor do they involve transfers between projects or change total project authority.  Generally, they revise the financing of a project and require Council approval because they either involve debt or exceed the authority limits provided to the City Treasurer as identified in the delegation of authority by-law. 

Among these administrative adjustments is the refinancing of some solid waste projects because they qualify for funding from the solid waste reserve fund.  The refinancing of these projects results in a return to the city wide reserve fund of  $1.715 million.  Some child care and environmental projects were also funded from the city wide reserve fund because insufficient funding was available in the dedicated reserves at the time of Council approval.  These projects are also being refinanced resulting in $4.193 million and $0.266 million, respectively, being returned to the city wide reserve fund.

 

Recommendation 2 – Capital Projects Recommended for Closure

 

In March 2006, Executive Management Committee (EMC) approved a policy for the closure of capital projects.  Generally, capital projects that have been open longer than three years or have had no spending within the last year are considered candidates.  In the absence of a justification to EMC for keeping the projects open, the policy directs that these projects will be recommended to Council for closure.  Document 2 includes those project closures that are the result of the application of this policy as well as others that are deemed complete by project managers.

 

Document 2 also provides information related to the adjustments required that will return excess funds to source or fund deficits.  An explanation is provided for those projects recommended for closure with deficits that exceed $100,000.  The same project may be included in both document 1 and 2 with the understanding that the adjustment will occur prior to closure.  The financial information provided on the list of recommended closures is based on the assumption that the adjustment has been made.   

 

The integrated program is included in both the tax supported and rate supported Capital Adjustments and Closing of Projects reports.  This is because both tax and rate sources of funding are affected if there is a deficit or a surplus when these projects are closed.  Although this report seeks Council approval for the tax supported portion of these projects only, the impact on the rate side is also shown for information purposes.

 

One Time Operating Costs

 

During the 2008 budget process, City Council approved one time operating costs to be funded from surplus funds when capital projects are closed or project authority reduced through budget adjustments.  There is sufficient funding made available from the closures and reductions to fund the one time operating costs of $4.596 million.  The list of operating works to be funded is provided in Document 5. 

 

Recommendation 3 – Provincial Transit Capital Grant

 

On February 29, 2008, the Province announced that the City would receive $27.185 million as a one time grant for municipal transit capital purposes.  This report recommends that these funds be applied to bus additions and replacements with an offsetting reduction in the total debt authority required ($1.7 million in tax supported debt, $14.689 million in federal gas tax debt and $10.796 million in provincial gas tax debt).  The details of the refinancing are provided in Document 3.

 

Recommendation 4 – Municipal Road and Bridge Infrastructure Investment Grant

 

On March 27, 2008, the Province announced that the City would receive $14.645 million towards the funding of road and structure rehabilitation capital projects.  These funds can be used for any road or bridge project.  Document 3 provides the list of projects that are recommended for refinancing upon receipt of provincial funding. 

 

Recommendation 5 – Decrease in Debt Authority

 

All changes in debt authority require the specific approval of City Council.  The change in debt authority resulting from the budget adjustments in Document 1, project closures in Document 2 and refinancing with provincial revenue in Document 3 is a net decrease of $23.842 million.  As shown in the summary chart below, there is an increase in development charge debt and this is primarily the result of refinancing of the Riverside Drive (Hunt Club – Limebank) project due to revenue that will not be realized.  Most of the reduction in gas tax debt is refinancing due to the receipt of the provincial transit capital grant. 

 

 

Debt not required /(Debt required)

$000

Tax supported debt

4,947

Federal / provincial gas tax debt

25,520

Development charges debt

(6,625)

Total

23,842

 

 

Recommendation 6 – Central Archives Relocation and Ottawa Library Technical Services Facility Project

 

During the 2008 budget deliberations, City Council approved $3.8 million towards the Central Archives Relocation and Ottawa Library Technical Services Facility Project.  The budget authority identified in 2009 was $33.73 million and as an “identifiable legacy project that benefits multiple generations”, the full amount of $37.53 million was to be financed with debt.

 

Earlier this year, the City applied and was successful in securing $20 million under the provincial Municipal Infrastructure Investment Initiative (MIII) program.  The recommendation in this report is for approval to advance the project authority of $33.73 million by one year and, after the application of the provincial grant of $20 million, to fund the balance of $13.73 million with tax supported debt.

 

Recommendation 7 – Capital Budget Adjustments Processed Under Delegated Authority

 

Those capital budget adjustments processed under the authority delegated to the City Treasurer for the period May 1, 2007 to December 31, 2007 are detailed in Document 4.  This document is provided for the information of Council as these adjustments have been processed.

 

Capital Budget Status

 

The capital budget status report showing capital projects that were open as of March 31, 2008 is posted on the City’s website.  Excluded from this status report are the adjustments related to the recommendations in this report with the exception of those made under the authority delegated to the City Treasurer. 

 

 

CONSULTATION

 

The purpose of this report is administrative in nature and therefore no public consultation is required.  All departments have been involved in its preparation.

 

 

FINANCIAL IMPLICATIONS

 

Recommendations 1, 2, 3, 4 and 5

 

The impact of the budget adjustments on total authority recommended in Document 1, the closing of capital projects recommended in Document 2 and the refinancing of projects due to the receipt of provincial funding in Document 3 are summarized in the chart below.

 

 

Budget Adjustments

(Documents 1 & 3)

$000

 

Project Closures

(Document 2)

$000

 

 

 

Total

$000

 

Tax supported reserve funds

·          City wide (1)

·          Transit

·          Corporate fleet

·          Environmental resource areas acquisition

·          Child care

 
Subtotal

 

 

 

21,516

(558)

-

 

(266)

(4,193)

 

16,499

 

 

670

279

(7)

 

(9)

85

 

1,018

 

 

 

22,186

(279)

(7)

 

(275)

(4,108)

 

17,517

 

Other Non Tax Reserves

·          Cash in lieu of parkland

·          Solid waste

Subtotal

 

 

 

(200)

(1,715)

(1,915)

 

 

 

(94)

152

58

 

 

(294)

(1,563)

(1,857)

 

 

Federal / provincial gas tax

 

 

-

 

257

 

257

 

Development charges

 

 

7,287

 

 

1,436

 

 

8,723

 

Debt

·          Tax supported

·          Federal / provincial gas tax

·          Development charges

Subtotal

 

 

 

3,596

25,485

(6,625)

22,456

 

 

1,351

35

-

1,386

 

 

4,947

25,520

(6,625)

23,842

 

 

Revenue (2)

 

 

(35,219)

 

-

 

(35,219)

Total

9,108

4,155

13,263

(1) Council directed that funding of $4.645 million be contributed to the Tax Rate Stabilization Reserve and $10 million to the Winter Maintenance Reserve.

(2) This is a net increase in revenue primarily due to the receipt of the Provincial Transit Capital and Municipal Road and Bridge Infrastructure Investment grants.

 

During the 2008 budget deliberation process, City Council directed that one time operating costs be funded from project closures and reductions.  There is sufficient funding being returned to the city wide reserve to cover the one time operating expenditures of $4.596 million. 

 

In approving these recommendations, the reserve fund balance for all tax supported reserve funds remains below the City’s policy limit of $50 million.  An update to the City’s reserve fund position will be provided in the first Quarter Status report.

 

Recommendation 6

 

Approval of this recommendation advances the authority of $33.73 million identified in 2009.  It will be funded from the Provincial Municipal Infrastructure Investment Initiative (MIII) grant ($20 million) and tax supported debt ($13.73 million).

 

SUPPORTING DOCUMENTATION

Document 1 –      Budget Adjustments Requiring Council Approval

 

Document 2 –      Capital Projects Recommended for Closure

 

Document 3 -      Provincial Transit Capital Grant and Municipal Road and Bridge Infrastructure Investment Grant

 

Document 4 –      Budget Adjustments Processed Under Delegated Authority

 

Document 5 –      Summary of 2008 One Time Items to be Funded from Capital Project Closures and Reductions

 

 

DISPOSITION

 

Upon approval of this report, Financial Services will process the necessary adjustments.

 

 


            Capital Adjustments and Closing of Projects - tax supported

ADJUSTEMENTS DU BUDGET DES IMMOBILISATIONS ET CESSATION DE PROJETS FINANCÉS PAR RECETTES FISCALES

ACS2008-CMR-FIN-0019                                city-wide / À l’Échelle de la ville

 

Responding to a question from Councillor Wilkinson, Ms. M. Simulik, City Treasurer, began by explaining the purpose of the report.  She advised that at the beginning of each year, departments reviewed their works in progress to identify projects that were finished and could be closed, projects where there was additional authority required and projects where there was additional authority no longer required.  She indicated this was done in order to ensure the City was making the best possible use of the available capitals funds.  With respect to the closing of the Sand Hill Park project, she explained that staff had realized it was a duplicate project in that it appear as a stand-alone as well as being included in a larger capital project called “Growth Parks”.  As a result, staff was recommending closing the Sand Hill Park project because the work would be funded from the larger works in progress, which would remain open.

 

Councillor Wilkinson moved the following motion on behalf of Councillor Feltmate.

 

Moved by Councillor M. Wilkinson

 

Whereas capital funding was provided in 2002 for the construction of a new community center in Bridlewood, the Eva James Centre and surrounding Deevy Pines Park development;

 

AND WHEREAS the centre is complete and only a storage unit remains to be installed in the park this spring;

 

AND WHEREAS the Bridlewood community continues to grown, and at 20,000 does not have an outdoor aquatic opportunity for its residents;

 

THEREFORE BE IT RESOLVED that the recommended reduction in capital budget authority for 900991 Bridlewood Community Centre (Document 1 – Budget Adjustments Requiring Council Approval) be removed and funds be held until a location within Bridlewood can be fully explored and cost be determined.

 

                                                                                                CARRIED

 

In response to questions from Councillor El-Chantiry, Ms. Simulik confirmed that as a result of recommendation 6 of the report and $20M of funding received from the Province, the City would need to issue less debt in order to finance the Central Archives relocation project.  She also confirmed that, under the terms of an agreement signed with the Province, the provincial gas tax had to be used for transit.

She advised that part of it was used for the transit operating budget and the rest would be used for transit capital works. 

 

Councillor Desroches referenced recommendation 4 of the report and asked for confirmation that this related to a list of projects to be approved by the Province.  Ms. Simulik confirmed the Province had indicated that, before receiving the funding, the City was to send a list of projects to them. 

 

Following these exchanges, Committee voted on the item as amended.

 

That the Corporate Services and Economic Development Committee recommend Council:

 

1.      Approve the budget adjustments as detailed in Document 1;

 

2.      Authorize the closing of capital projects listed in Document 2, the funding of deficits as identified and the return of balance of funds to funding sources;

 

3.      Authorize the refinancing of capital projects due to the receipt of $27.185 million Provincial Transit Capital Grant, as shown in Document 3;

 

4.      Authorize the refinancing of capital projects due to the receipt of  $14.645 million Municipal Road and Bridge Infrastructure Investment Grant, as shown in Document 3;

 

5.      Approve a net decrease in debt authority of $23.842 million as a result of the recommendations above;

 

6.      Approve additional authority of $33.73 million for the Central Archives Relocation and Ottawa Library Technical Services Facility project to be funded with the $20 million in provincial revenue received under the Municipal Infrastructure Improvement Initiative (MIII) and the balance of $13.73 million with tax supported debt; and

 

7.      Receive the budget adjustments in Document 4 undertaken in accordance with the Delegation of Authority By-law 2005-503, as amended, as they pertain to capital works.

 

8.   That the recommended reduction in capital budget authority for 900991 Bridlewood Community Centre (Document 1 – Budget Adjustments Requiring Council Approval) be removed and funds be held until a location within Bridlewood can be fully explored and cost be determined.

 

                                                                                                            CARRIED as amended