GENERAL COMMITTEE MINUTES EIGHTEENTH MEETING REGULAR MONDAY, JUNE 9, 2008 Present: Mayor Brian McMullan Councillor Jeff Burch Councillor Dawn Dodge Councillor Mark Elliott Councillor Andrew Gill Councillor Heather Foss Councillor Joseph Kushner Councilllor Bill Phillips Councillor Peter Secord Arrived at 7:40p.m. Councillor Len Stack Councillor Jennifer Stevens Councillor Greg Washuta Councillor Bruce Williamson Officials Chief Administrative Officer, Mr. Colin Briggs Present: Deputy City Clerk, Mr. James Powell Director of Financial Management Services, Ms. Shelley Chemnitz Acting Director of Recreation and Community Services, Mr. James Benson Director of Transportation and Environmental Services, Mr. Paul Mustard Director of Economic Development and Tourism Services, Mr. David Oakes Director of Fire and Emergency Services, Mr. Mark Mehlenbacher Assistant City Solicitor, Mr. Denis Squires Manager, Planning Services, Ms. Judy Pihach Council/Committee Co-ordinator, Ms. Susan Harrison Mayor Brian McMullan took the chair and called the meeting to order in Council Chambers, City Hall, at seven thirty-five o'clock p.m. ITEMNO. 309 Report from the Financial Management Services Department Dated: May 14, 2008 Re: 2008 Capital Budget and Four Year Forecasts File(s): 10.57.10 COUNCILLOR GILL DECLARED A CONFLICT OF INTEREST (Pecuniary) to matters relating to Fire Services ofltem Number 309 ofthe General Committee Minutes, June 9, 2008. The 2008 Capital Budget (See Appendix "A") is the plan of capital expenditures to be committed during 2008. The four year forecast is a plan of capital expenditures to be incurred each year over a period of four years to meet capital needs arising from approved capital programs and anticipated capital works. The Capital Budget allows the City to finance its projects over a number of years. The Capital Budget also provides a control mechanism for future debt levels. -2- General June 9, 2008 MUNICIPAL ACT DEBT GUIDELINE The Municipal Act requires that a Municipality has a five-year capital financing forecast. Ontario Regulation 403/02limits annual debt charges to not more than 25% ofthe City's net revenue fund revenues. Using this guideline, the City could increase its debt by approximately a further $84.1 million based on an interest rate of 7%, which is the rate which the Ministry of Municipal Affairs uses for illustrative purposes. Using the City's current estimated borrowing rate of 5%, this additional debt capacity would be $94.6 million. Although there has never been a suggestion that this limit be approached, Council does have significant capacity available should circumstance warrant. The City Treasurer has up-dated the "Debt Repayment Limit" for the City and the debenture amount proposed in the 2008 Capital Budget will not cause the City to exceed its limit. CITY'S CAPITAL BUDGET POLICIES (I) Limitation of Debt Service Costs In order to keep debt service costs from becoming an increasing burden and a larger portion of the City's budget, Council adopted a policy aimed at containing debt charges at approximately 10% of the City's own total expenditures. Each year the Ministry of Municipal Affairs produces a financial indicator review for each Ontario Muncipality. According to the 2007 Financial Indicator Review for the City of St. Catharines, debt costs represent 6.06% of the City's own total expenditures. The Ministry of Municipal Affairs' benchmark financial indicators are: Debt per Household % of Operating Expenditures Low Under $400 Under 5% Moderate $400 - $1,000 5- 10% High Over $1,000 Over 10% Therefore the City's debt burden would be considered a moderate risk. (ii) Capital Allocation From Current Funds Council has approved a policy of making a 10% capital allocation from current funds.(rounded to the nearest $'000) This "down payment" has the effect of reducing the amount to be borrowed, while at the same time, bringing the approximate costs of one year's debt service to the year of decision. This means that the Council which makes the decision will raise through taxes an amount which will be equivalent of future annual debt charges for each particular project. For the 2008 Capital Budget, staff is recommending an amendment to this policy with regards to the Aquatic Centre project. The details are contained in the following section. Aquatic Centre Cost Estimates for the Aquatic Centre At their February 11, 2008 meeting, City Council approved a preferred model for a new municipal aquatic centre. This model includes: a six lane, 25 metre pool; an irregular warm water leisure/therapeutic pool with spray features; accessibility components; male, female and family change rooms; two community rooms; lifeguard area; and maintenance and administrative space. The estimated cost for a facility with these amenities and features ranges between $12 and $15 million. Further, at their May 26,2008 meeting, City Council approved that a minimum of LEED Silver certification be sought for the aquatic centre. The cost of certification was not included in the original cost estimates. Preliminary Staff research found that achievement of Silver certification is typically in the range of 2% to 6%. The successful architect team will be asked to investigate LEED certification in detail and, should project conditions result in cost for Silver certification that are higher than these estimates, staff will -3- General June 9, 2008 report to Council with further information. For this reason, the 2008 Capital Budget provision is for $15,000,000. In addition, at the April 7, 2008, City Council directed Staff to investigate the inclusion of the Grantham Branch of the St. Catharines Public Library as part of the facility. The Aquatic Centre Project Team is currently in discussions with library administrators and will report to Council in the near future regarding potential inclusion of the Grantham Branch. The Capital Budget does not contain any provision for these costs. Funding Considerations for Aguatic Centre Grant Funding A Provincial Grant under the Municipal Infrastructure Investment Initiative (Mill) in the amount of $4,500,000 was received March 31, 2008 to aid in the funding of the project. Capital Allocation from Current Funds As is noted above, Council has approved a policy of making 10% capital allocation from current funds. For the Aquatic Centre this allocation would amount to $1,050,000 (calculated using the project cost of $15,000,000 less the $4,500,000 Provincial Grant). The 2008 Operating Budget does not contain a provision for this allocation. Previously, for the Seymour Hannah project, this requirement was waived. However, for this project, staff is recommending that this allocation be made from the interest portion ofthe Civic Project Fund over two years, 2008 and 2009. Appendix "B" contains a projection ofthe Civic Project for 2008 and 2009 with this transfer. Taking into account both the grant funding and the Civic Project Fund reserve funding, $9,450,000 remains to be funded. As directed by Council, the Aquatic Centre Project Team will investigate and recommend fundraising options following the approval of an architect team. As this analysis has not yet been undertaken, the 2008 Capital Budget is preparyd on the basis that this remaining amount will be debentured. Staff will be reporting to Council regarding the overall funding of the Aquatic Centre (both the project and future operations ofthe Centre). At that time, the specific financing of the Aquatics Centre will be recommended for Council approval. Financing options could include debentures (either at a 10 year or 20 year term), using the Civic Project fund, and fundraising. Future Capital Forecasts The Forecast for Years 2009 to 2012 is preliminary in light of the uncertain impact of provincial/ municipal reform. A number of studies are underway, or recently completed, which could impact on this forecast, i.e. Parks Master Plan, Fire Master Plan, Recreation Master Plan, Pollution Control Plan, Municipal Space Study etc. Capital Borrowing Funds and Future Operating Budget Impact The impact of increased borrowing is delayed. It usually takes a year to two years to complete the borrowing cycle. • project approval • project design • tendering • construction • debenture issuance • debenture cost inclusion in an Operating Budget. In the next five years the impacts of increased capital borrowing activities are estimated to be: -4- General June 9, 2008 Outstanding Debt $ 59.7m $ 91.7m Debt Per Household $ 1,023.25 $1,570.39 Debt Charges $ 9.5 m $ 16.4m Per Cent of Operating Budget 6.52% 11.23% The tax rate impact is estimated at approximately 1.5 to 2.0% per year. RECOMMENDATION: That the 2008 Capital Budget and Four Year Forecasts be approved; and that the City Solicitor be directed to prepare the necessary borrowing by-laws. MOVED BY COUNCILLOR GILL: That the 2008 Capital Budget and Four Year Forecasts be approved; and that the renovations for the Haig Bowl Arena be pulled and held in abeyance until next week; and that the City Solicitor be directed to prepare the necessary borrowing by-laws. CARRIED. ITEMNO. 310 Report from the Planning Services Department Dated: June 5, 2008 Re: Proposed Seniors' Retirement Residence, 582 Ontario Street, St. Catharines Facility Inc. File(s): 60.51.532, Vol. 3 COUNCILLOR GILL DECLARED A CONFLICT OF INTEREST (Pecuniary) of Item Number 310 ofthe General Committee Minutes, June 9, 2008. The Owner ofthe above-noted property is proposing to construct a 6-storey 118-unit seniors' retirement residence at 582 Ontario Street (see Appendix 'C'). Site Plan approval is an authority delegated to staff except under circumstances where Council has specifically directed that residents be involved in the site plan process. As part of the approval of a zoning by-law amendment for this development; Council directed that the neighbourhood residents be consulted during the site plan approval process. An open house was held September 4, 2007 for the neighbourhood residents to review and comment on the proposal.