RED DEER COUNTY FINANCIALSTATEMENTS
DECEMBER 31, 2014 TABLEOF CONTENTS
FINANCIALSTATEMENTS
Management Report 1
Independent Auditor's Report 2
Statement of Financial Position 3
Statement of Operations 4
Statement of Change in Net Financial Assets (Debt) 5
Statement of Cash Flows 6
Schedule of Tangible Capital Assets 7
Schedule of Property and Other Taxes 8
Schedule of Government Transfers 9
Schedule of Expenses by Object 10
Schedule of Segmented Disclosure 11
Notes to Consolidated Financial Statements 12-26 MANAGEMENT REPORT
To the Members of Council of Red Deer County
Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for signi?cant accounting judgments and estimates in accordance with Canadian generally accepted accounting principles. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.
In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and ?nancial records are properly maintained to provide reliable information for the preparation of ?nancial statements.
The elected Council and the Audit Committee are composed entirely of neither management nor employees of the County. The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financialreporting process, auditing matters and ?nancial reporting issues. The Council is responsible for recommending the appointment of the County’s external auditors.
MNP LLP,an independent firm of Chartered Accountants, is appointed by the Council to audit the financialstatements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Audit Committee and management to discuss their audit ?ndings. The accompanying financialstatements and other informationcontained in this Financial Report are the responsibility of the management of Red Deer County. 477/? Curtis Herzberg, County Manager
April 7, 2015 INDEPENDENTAUD|TOR’S REPORT
To the Members of Council:
Report on the Financial Statements We have audited the accompanying ?nancial statements of Red Deer County, which comprise the statement of ?nandal position as at December 31, 2014, and the statements of operations, change in net ?nancial assets (debt), cash flows and Schedules 1 through 5 for the year then ended, and a summary of signi?cant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these ?nancial statements in accordance with Canadian public sector accounting standards, and for such internal control as management detennines is necessary to enable the preparation of ?nancial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility Our responsibility is to express an opinion on these ?nancial statements based on our audit.We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply withethical requirements and plan and perform meaudit to obtain reasonable assurance about whether the ?nancial statements are free from material misstatement.
An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the ?nancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the ?nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internalcontrolrelevant to the entity's preparation and fair presentation ofthe?nancial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the ?nancial statements.
We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the ?nancial statements present fairly, in all material respects, the ?nancial position of Red Deer County as at December 31, 2014, the results of its operations, change in its net ?nancial assets (debt) and its cash ?ows for the year then ended in accordance with Canadian public sector accounting standards.
Red Deer, Alberta MA/73LLP April7, 2015 Chartered Accountants
MNP Red Deer County Statement of Financial Position As at December 31, 2014
ASSETS 2014 2013
FINANCIALASSETS
Cash and temporary Investments (Note 2) $ 16,802,852 $ 9,689,625 Receivables Taxes and grants in place of taxes (Note 3) 1,334,585 1,902,288 Trade and other 1,242,246 1,872,972 Grant receivable 964,350 4,632,722 Investments (Note 4) 15,969,401 16,318,366 36,363,434 34,415,973
LIABILITIES Accounts payable and accrued liabilities 5,712,121 6,227,546 Reclamation liabilities (Note 6) 9,241,611 12,698,570 Employee bene?t obligation (Note 16) 587,958 557,521 Deposits and deferred revenue (Note 15) 3,913,463 3,500,512 Long-term debt (Note 7) 1,732,385 2,452,630 21,187,533 25,436,779
NET FINANCIALASSETS (DEBT) 15,115,896 8,979,194
NON-FINANCIALASSETS
Tangible capital assets (Schedule 1) 620,719,158 626,846,993 Inventories for consumption 8,362,602 8,613,201 Prepaid expenses 665,185 409,933 629,746,945 635,870,127
ACCUMULATEDSURPLUS (Note 11) 644,922,841 644,849,321
CONTINGENCIES,COMMITMENTSAND GUARANTEES- (Note 17, Note 19 8: Note 21)
The accompanying notes are an integral pan olthese ?nancial slatements Red Deer County Statement of Operations For the Year Ended December 31, 2014
Budget 2014 2013 REVENUE Net taxes (Schedule 2) 5 42,353,021 S 42,523,592 3 40,598,750 sales and user charges 3,251,690 3,480,058 3,667,854 Government uanslers (Schedule 3) 2,503,238 2,052,487 1,045,813 Investment income 755,000 1,013,028 920,371 Penalties and casts of taxes 250,000 395,151 478,439 water and waste water 2,348,769 2,185,455 1 ,886,198 Llcerlses and permits 151,150 361,200 260,887 Fines 234,000 361,158 357,716 Gain on disposal cl tangible capital assets - 151,058 472,255 Other - 381,613 52,958 TOTALREVENUE 51,906,868 52,904,830 49,731,271 EXPENSES Fublic Wnrks: operating repairs and maintenance 18,068,381 14,307,445 15,593,488 Administration 7,157,552 5,791,259 5,281,706 Amortization 25,000,000 29,233,943 28,044,444 Fire and ambulance services 2,107,330 2,145,982 1,512,621 Subdivision and land development 2,036,189 1,669,135 1,348,824 Agricultural service hoard 1,431,585 1,152,284 1,281,953 Patrol services 905,530 798,593 818,962 Engineering services 948,144 702,170 977,936 water and waste water 2,347,981 2,495,952 2,885,971 waste management 2,714,973 2,653,135 2,654,783 Parks Rec and Community Services 3,679,895 3,404,995 3,542,528 Legislative 674,500 550,167 518,109 Disaster expenses 1,867,628 1,263,715 201,869 TOTAL EXPENSES 71,941,289 66,160,775 64,963,204
EXCESS (SHORTFALL)OF REVENUE OVER EXPENSES (20,034,421) (13,2B3,945) (Z3,865,117) BEFORE OTHER
OTHER Changes In estimated reclamation liabilities -1,500,000 1,984,591 —8,633,184 Contributed assms 1,000,000 1,134,037 996,823 Government transfers tor capital (Schedule 3) 9,902,210 9,783,593 11,123,103 Offsite levies - 435,244 923,501 9,402,210 13,337,465 4,410,243
EXCESS (SHORTFALL)OF REVENUEOVER EXPENSES (10,E32,111) 73,520 (10,821,590) ACCUMULATEDSURPLUS, BEGINNINGOF YEAR 644,849,321 544,849,321 $55,671,011 ACCUMULATED SURFLUS, END OF YEAR $634,217,110 S 644,922,841 3 644,549,321 ._j:
rne accompanying notes are an lnlegraipan olthexe ?nancial statements Red Deer County Statement of Change in Net Financial Assets (Debt) For the Year Ended December 31, 2014
Budget 201.1 2013
EXCESS (SMORTFALL) OF REVENUE OVER EXPENSES (10,532 211) 73,520 (1o.821,s9o)
Acquisition of tangible capital assets (27,a37,55a) (22,5B6,138) (zs,3s4,577) conmbuiezi assets (1,000,000) (1,134,037) (995,323) Proceeds on disposal anangibie capital assets . 755,135 1,632,836 Amoruzauon onangibie capital assets 214,000,000 20,233,943 28,044,404 Gain on disposal onanginie capital assets _ (151,055) (472,255)
(457,555) 6,127,836 1,873,325
Acqulsilion (use) avsuppiies invenmnes . 250,593 (75,747) Increase in prepaid assets . (255,252) (104,245)
. (4,654) (179,992)
INCREASE(DECREASE) IN NETFINANCIALASSETS (11.os9,7s4) 6,196.702 (9,125,357)
NET FINANCIAL ASSETS, BEGINNING or YEAR 3,979,194 3,579,154 15.107551
NET FINANCIAL ASSETS (DEBT). END or YEAR (2,090,570) 15,175,396 0,979,194
The accompanying notes are an Integlalpall or?iese ?nancial statements Red Deer County Statement of Cash Flows For the Year Ended December 31, 2014
2014 2013
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES:
OPERATING Excess (shortfall) of revenue over expenses 73,520 (10,821,690) Non-cash items included in excess (shortfall) of Revenue over expenses: Amortization 29,233,943 28,044,444 Gain on disposal of tangible capital assets (151,068) (472,255) Contributed assets (1,134,037) (996,823) Decrease (increase) in operations: Decrease (increase) taxes and grants in place of taxes 511,703 160,321 Decrease (increase) trade and other receivables 630,126 326,523 Decrease (increase) grants receivable 3,668,372 4,573,755 Decrease (increase) prepaid expenses (255,252) (104,245) Decrease (increase) inventories for consumption 250,599 (75,746) Increase (decrease) accounts payable and accrued liabilities (3,941,946) 8,677,915 Increase (decrease) deposits and deferred revenue 412,949 (2,533,357) Adjustment for payables and receivables related to capital 758,382 502,817
Cash provided by operating transactions 30,063,891 27,581,660
CAPITAL Acquisition of tangible capital assets (22,586,13S) (26,384,877) Sale of tangible capital assets 165,136 1,682,836 Adjustment for payables and receivables related to capital (153,332) (502,817)
Cash applied to capital transactions 122,579,384) (25,2o4,s53)
INVESTING Increase in investments 343,965 (736,588)
FINANCING Long-term debt repaid (720,245) (687,401)
CHANGE IN CASH AND EQUIVALENTS DURING THE YEAR 7,113,227 952,813
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,689,625 8,736,812
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2) 16,802,852 $ 9,689,625
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A.uw.E.mE.Sm mmo.>._wm EmE:._w>o0 » 35.30 a:uEao_v>mn_ .._!s¢w..wum5 .m.Em__.muno: @>_a0?uO._l _m._m:mmv _N«0._. 5 E0. ?0..UwK vbm=_E=N_l WOU..>._0W mmo_>..wm _mu:mE:o.:>cm :o_a3._onm=m.:. m..._=um;um 38 .3 .m..E3an uouzm._mm>up: an o._=mo_um_nuE:uEmuw3 m__.=um:um 3.500 Eon uwm Red Deer County Notes In Financial Statements For the Year Ended December 31, 2014 1. SIGNIFICANT ACCOUNTINGPOLICIES The ?nancial statements of Red Deer county ("The County") are the representations of management prepared in accordance with accounting standards established hy the Public sector Accounting Board or the chartered Professional Accountants canatla. signi?cant aspects ot the accounting policies adopted by Red Deer county are as follows: 3) Reporting Entity The financial statements reflect the assets, liabilities, revenue, expenditures, and changes in financial position of the reporting entity. This entity is comprised of the municipal operations plus all of the organizations that are owned or controlled by the county and are, therefore, accountable to the county council for the administration ortheir ?nancial affairs and resources. included with the municipality are the following: i) general municipal ii) water and sewer utility The schedule of taxes levied also includes operating requisitions tor education and senior housing organizations that are not part of the municipal reporting entity. 13) Basis of Accounting The basis of accounting toilovved in the ?nancial statement presentation includes: Revenue is recognized in the period in which the transactions or events occurred that gave rise to the revenues. Expenses are recognized in the period the goods and services are acquired and a liability is incurred or transfers are due. with the exception of pension expenditures as disclosed in Note 1 (:1). Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose speci?ed. Government transfers. contributions and other amounts are received from third parties pursuant to legislation, regulation or agreement and may only be used for certain programs, in the completion of speci?c work, or for the purchase of tangible capital assets. In addition, certain user charges and fees are collected for which the related services have yet to be performed. Revenue is recognized in the period when the related expenses are incurred, services performed orthe tangible capital assets are acquired. Tax revenues are re nized when the tax has been authorized by bylaw and the taxable event has occured. Requi ons operate as a flow through and are excluded from municipal revenue. 12 Red Deer County Notes to Financial Statements For the Year Ended December 31. 2014 1. SIGNIFICANTACCOUNTINGPOLICIES (Continued) 0) Government Transfers Government transfers are the transfer of assets from senior levels of government that are not the result of an exchange transaction, are not expected to be repaid in the future. or the result of: direct financial return. Government transfers are recognized in the financial statements as revenues in the period that the events giving rise to the transfer occurred, providing tne transfers are authorized, and eligibility criteria have been met by the county, and reasonable estimates of the amount can be made. d) Pension Expenditure Red Deer county participates in a multi-employer defined bene?t pension plan. The plan is accounted for as a de?ned cantrihution plan. Taxes and Gran? in Place 01 Taxes Taxes and grants in place of taxes consist of current tax levies and arrears tax levies which remain outstanding at December 31, 1014. Investments Investments are carried at amortixed cost. When there is a loss in the value of an investment that is other than a temporary decline, the investment is written down to recognize the lass. 13 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 1, SIGNIFICANT ACCOUNTING POLICIES (Continued) g) Nml-Financial Assets Nun-?nancial assets are not available to discharge existing liabilities and are held for use in the provision ofservices. They have usetul lives extending beyond the current year and are not intended for sale in the normal course of operations. The change in non-financial assets during the year, together with the excess of revenue over expenses. provides the change in net ?nancial assets (debt) for the year. i. Tangible Capital Assets Tangible capital assets are recorded at cost which includes all amounk that are directly attributable to acquisition, construction. development or betterment of the asset. The cost of the tangible capital assets is amortized on a straight-line basis over the estimated useful life as follows: YEARS Land NIA Land Improvements 1U»20 Buildings 25-50 Engineered Structures Water system 4575 Wastewater system 45-75 Storm system 45-75 Other engineered structures 07-65 Machinery and Equipment 05-Z5 Vehicles 05-20 Amortization is charged on the month after the Invoice date; assets under construction are not amortized until the asset is available for productive use. Included in tangible capital assets is work in progress 07 59,4-79.577 (2013 - $7,803,027). For roads included in other engineered structures, amortization is estimated to commence in December of each year. ii. Contributions of Tangible Capital Assets Tangible capital assets received as contributions are recorded at fair value at the date of receipt and are also recorded as revenue‘ Inventories for Consumption Inventories ormaterials and supplies are valued at the lower orcost or replacement cost with cost delermined by the weighted average cost method. Land purchased for the purpose oracquiring reserves of gravel is recorded as inventory and a provision or $a.23s,2o2 (2013 - s:l.149,5a7) has been included in reclamation liabilities for tuture restoration casts. (Note 5) vi. Prepaid expenses Prepaid expenses include pre-payments on goods and services which will be utilized in the following tiscal year. Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 1. SIGNIFICANTACCOUNTINGPOLICIES (Continued) h) Equity in capital Assets Equity in capital assets represents Red Deer county's net investment in its total tangible capital assets, after deducting the portion tinanced by third parties through debenture, bond, mortgage debts, long term capital borrowing, capitalized leases, and other capital liabilities which will be repaid by the County. School Requis ons - Over-levies and Under-levies Over-levies and uridenlevies arise from the difference between the actual levy made to cover each requisition and the actual amount requisitiuned. If the actual levy exceeds the requisition, the over—ievy is accrued as a liability and property tax revenue is reduced. where the actual levy is less than the requisition amount, the undenlevy is accnied as a receivable and property tax revenue i hcreased. Requisition tax ramsin the subsequent year are adjusted for any over-levies ctr under-levies orthe prior year. J) Use of Estimates The preparation of ilnancial statements in conformity with Canadian Public Sector Accounting standards requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. and the reported amounts of revenue and expenditures during the period. Accounts receivable are stated after evaluation as to their ccilectibility and an appropriate allowance for doubtful accounts is provided where considered necessary. Provisions are made for obsolete inventory. Amortization is based on the estimated useful lives of tangible capital assets. Reclamation liabilities are estimated based on an independent engineering contractor. Where measurement uncertainty exisw, the financial statements have been prepared within reasonable limits of materiality. Actual results could differ from those estimates. k) cash and cash Equivalents Cash and cash equivalents consists of petty cash and cash in bank accounts. I) Recent Accounting Pronouncements i. Financial instruments In June 2011.the Public Sector Accounting Board ("PSAB") issued PS 3450 Financial Instruments PS 3450 is effective for fiscal years beginning on or after April 1, 2016. Earlier adoption is permitted. The county does not expect the adoption of the new section to have a material impact on its consolidated ?nancial statements. ii. Financial smtement presentation In June 2011, as a result at the Issuance of PS 3450 Financial Instruments, the Public Sector Accounting Board ("PSAB") issued new Section PS 1201 Financial Statement Presentation, which revises and replaces Section PS 1200 Financial Statement Presentation This section is effective in the same period PS 3450 is adopted. PS 1201 and PS 3450 are to be adopted together and are effective for fiscal years beginning on or after April 1. 2016. Early adaption 's permitted. The County does not expect the adoption of the new section to have a material impact on lb consolidated financial statements. iii. Portfolio investments In March 2012, as a result of the issuance of PS 3450 Financial Instruments, the Public Sector Accounting Board ("PSAB") 'ssued new PS 3041 Portfolio Investments, which revises and replaces PS 3030 Temporary Investments and PS 3040 Portfolio Investments. This Section is effective in the same period PS 1201 Financial Statement Presentation 15 Red Deer County Nates to Financial Statements For the Year Ended December 31, 2014 1. CASH AND TEMPORARYINVESTMENTS 2014 2013 Cash in bank, less outstanding items S 16,802,352 $ 9,689,625 S 16,002,852 $ 9,689,625 The above includes $2,559,730 (2013 - $2,253,115) of funds designated for Municipal Reserves (Note 5). 3. TAXES AND GRANTS IN PLACE OF TAXES RECEIVABLE 201 4 2013 Current taxes and grants in place of taxes $ 1,092,724 $ 1,360,767 Tax arrears 317,734 530,958 Tax payment deferred 123,035 95 17 Allowance for doubtful accounts 149.768 84 54) S 1,304,585 $ 1,902,283 4. INVESTMENTS 2014 2013 Portfolio investments, at cost 5 15,969,401 $ 16,318,366 5 15,969,401 $ 15,318,366 The market Value of tha portfolio investments for 2014 is $16,050,672 (2013 - 515,430,533). 2014 201 3 Portfolio investments are comprised of the following: Cash bearing interest at 15% to 1% 5 820.747 S 942,860 Short term investment funds hearing interest from 2% to 4.6% 2,044,953 767,113 Bonds bear‘ nterest from 0% to 10.22% maturing from February 13,103,651 14,608,393 201 510 December 2049 3 15,969,401 $ 16,318,366 Red Deer County has 2 15.1% interest (15.7% in 2013) in central Alberta Regional waste Management Commission with a cost ofsnii. Red Deer county also has a 50% stake (50% in 2013) in the Red Deer Regional Airport Authority by virtue of board appointment with a cost of snil and provides an annual operating Grant. Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 5. RELATED PARTY TRANSACTIONS included in the County‘: revenue was the tollowing arncune related to central Alberta Regional waste Management commission. 2014 201 3 CARWMC CARWMC Administration 916 1,092 915 included In the County's expenses tor 2014 were s1so.ooa(zma — 5112.330). related to the Regional Airport Authority. The above transactions are in the normal course of operations and are recorded at the exchange amount which is the amount of consideration as established and agreed to by the related parties. 5. RECLAMATION LIABILITIES 2014 201 3 Land Remediation Kevisville#1 satelite waste trst site Pan NW 21-35»3—5 » 1.560.983 Kevisvllle#2 satelite waste trsf site Pan NW 21-35e:l—5 1.422.396 - Kevisville east closed satelite waste trsf site Pan NW 2145-375 1,399,924 1,523,000 Grader parking & re-fueiing site sw 25~35~25-4 35.470 127,000 Luusarla salt storage NE 23-36-234 589.624 843.000 Old County maintenance shop (40ave) NE3&37—274 631,595 5.157.000 Pine Lake closed waste disposal site Part NE 07.315-244 1,874,400 338,000 Equity in post closure liability(note 11) 03,409 9 45 63 Post Closure Reciarnation (gravei pits - includes all 7 County owned pits) 3,238,202 3.149.587 9,241,611 12,698,570 The county is legally required to remediate ground contaminants and contamination orgroundwater when it exceeds environment standards. As or December 31, 2n14.the county has accrued sa.aoa,4us (2013 » $9,548,983) reflecting the liability for remediation of the contaminated sites. During the year, the county remediated one landfill site lKevisvillo#1) and a second site was identi?ed in the process. In addition, the county conducted Phase II environmental studies by an independant engineering company to obtain a truer picture of cost to remediate. In zlm. we recognized a signi?cant decrease in 4 of the sites. The signi?cant assumptions used to determine the best estimate of the liability include: - approximately 56,443 cubic meters ormaterial and soil will be required to be excavated, disposed of and replaced. “ Additiona| cuss include environmenml assessments. excavation and geutechnical engineering and testing. Post closure reclamation of gravel pits is assessed as reasonable and considers the accreted costs ot restoration per hectare. the age orthe pit and the estimated usetul life left at the pit. costs were estimated by an independent contractor and include the tollowing costs » mobilization and bonding; placinglscreening topsoil and overburden; and grass seeding and iertlllzer. Red Deer County Notes to Financial Statements For the Year Ended December 31. 2014 7. LONG-TERMDEBT 2014 1013 Alberta Capital Flnance Autho?ty Debentures Capital 1,732,335 2,452,630 Total Long-term Debt 1 731 385 5 2 452 E30 Principal and interest repayment over the next ?ve years are estimated as follows: Principal Interest Total 2015 754,679 75542 $20,321 2016 615.266 41,179 656,445 2017 352,440 10,009 372,449 $1 32 S5 Debenture debt is repayahle to me Alberta capitai Finance Authority in semi-annual payments and bears interest at rates ranging trom 3.17% to 5ro5:s%, hefure Provincial subsidy. and matures in the years 2015 through 2017. Red Deer county's totai cash payments tar interest in 2014 were $110,075 (2013-$142,919). 8. MUNICIPALTRUST FUNDS Red Deer county administers the following: Interest& 2013 Revenue Expenditures 2014 'rransportationAssisianceGrant 5 94,075 is 1,150 3 95.255 Maxspn scholars p 77,095 950 2,500 75,555 rotai'rrustLiabiii es $ 171,170 5 2.140 s 2500 5 170,310 in addition, two endowment tunes are being administered on behalf of Red Deer County; the county of Red Deer Educational Bursary Fund which provides bursaries in the amount of approximately 5350 per year, and the Arthur Teague Hub Memoriai Fund which provides bursaries nfapproximately $750 per year. 18 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 9. RESERVES Reserves cnnsist of the following: 2013 Increases Decreases 2014 Reserves General 25,772,971 13,314,954 5,155,230 30,901,595 Bridges and Drainage 5,405,155 550,000 2,330,934 4,555,232 Future Development 551,229 — . 591,229 Total Reserves 32,550,255 13,994,954 10,517,154 35 235,055 Restricted Reserves Municipal Reserve 2,253,115 331,515 75,000 2,559,730 community Services Reserve 4,391,124 253.534 59,137 4,595,521 Regional Utility Reserve 305,539 652,222 (345,533) Environmental (227,053) 1,505,393 305,539 972,591 Protective Services Reserve 2,275,091 302,932 1,975,099 Total Restricted Reserves 5,595,257 2,455,271 1,394,950 9,755,559 Total Reserves 41,555,533 15,351,225 11,912,144 45,994,514 Gasoline Alley ofisite Levies (1) (12,112,570) 335,599 2,301,774 (14,027,745) Transportation Orfsite (1) (15,323) (15,023) C 8. E Trail Offsite Levies 122,505 17,991 140,799 Springbrook Offsite Levies 232,451 113,754 395,235 Crossroads Offsite Levies 37,490 37,490 Central Park Offslte Levies 915,217 915,217 Benalto Offsite Levies (1) (1,594,132) (1,594,132) Galloway Road Dflsila Levies (1) (525,401) (525,401) Burnt Lake Offsite Levies (1) (1,014,152) (1,014,152) Tubal Offsites (14,004,222) 519,474 2,301,774 (15,797,522) Total Reserves 5 Offsiies 27,551,311 15,559,599 14,213,913 30,207,092 For presentation purposes the reserves balances and the Offsite levies have been reported separately. in 2014, an additional restricted reserve was added, Regional utility Reserve. The purpose orthis reserve is to iacilitate Red Deer County's eventual move to a seli-susiainin utility program. in 2013, the County paid out a debt to the city for water inrrastructure, it was funded by the environmental reserve. However it was determined in 2014 that it would reflect more appropriately in its own reserve. (1)The shclr?all in these Levy funds were created as a result of initial expenditures having been incurred as the programs were initiated or expanded. These short?lls will be covered by iuture developments paying into these orlsite Levy funds. 19 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 10. EQUITYINCAPITAL ASSETS Equity in capital assets consists oi the tollawing: 2014 2013 capital assets (Schedule 1) s 1,090,450,301 s 1,058,283,315 Accumulated amortization (Schedule 1) (4ss,141,14:s) 041,435,323) Total capital assets 620,119,158 826,846,993 Less long tenn debt [Note 1) 1,732,305) (2,452,630) s 618,986,773 5 $24,394,363 11. ACCUMULATED SURPLUS Accumulated surplus consists of restricted and unrestricted amounts and equity in tangible capital assets as follow: 2014 2013 Unrestricted surplus 5 1,732,335 5 2,452,630 Reserves & offsites (Note 9) 30,207,051 27,551,311 Equity in post closure liability (Note 5) (6,003,409) (9,548,983) Equity in tangible capital asses (Note 10) 618,936,773 624,394,353 5 644, 841 3 $44,849,321 12. DEBT LIMITS Section 275(2) ot the Municipal Government Act requires that debt limits as deiiried by Alberta Regulation 255/00 tor Red Deer Cnunty be disclosed as follows: 2014 2013 Total debt limit 5 80,010,111 $ 75,932,158 Less long term debt (Note 7) 1,732,385 2,452,630 Amount of debt limit available 5 78,277,726 $ 73,529,525 Debt servicing limit 5 13,335,019 S 12,563,593 Less debt servicing 330,321 830,321 Amount of debt servicing limit available 5 12,504,598 5 11,833,372 The debt limit is calculated at 1.5 times revenue oi the municipality (as de?ned in Alberta Regulation 255/00) and the debt service II it is calculated at 0.25 times such revenue. lncurring debt beyond these limitations requires approval by the Minister at Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Atiairs tc identity municipalities that could be at financial risk iiturther debt is acquired. The calculation taken alone does not represent the financlal stability of the municipality. Rather, the ?nancial statements must be interpreted as a whole. 20 Red Deer County Notes to Financial Statements For the Year Ended December 31. 2014 13. SALARIES AND BENEFITS FOR ELECTED OFFICIALS AND COUNTY MANAGER Salaries, in accordance with Alberta Regulation 31312000.and benefits are as follows: 2014 2013 salary (1) aerieriis (2) Total Mayor 5 34.432 $ - 5 34.432 $ 34.376 Councillor-D 5 57.491 5 - 5 51,491 5 5s.e41 5 59.391 5 — x 59,381 3 11,323 3 59.351 3 - 5 55,331 5 60.225 5 59,801 5 - 5 59.801 $ 53,545 councilior—nivision5 5 53,951 s — 5 53.951 3 55,535 - Councillor Division 6 5 59,501 $ - 5 59.801 5 53.335 County Manager 5 228.311 5 33.064 S 261.875 5 252.538 ueslgnateooiticer :4 129.593 s 24,515 5 154,209 $ 145,145 Designated Officer 5 125.312 $ 23.597 5 148.909 $ 140.704 3 921.964 S 31.277 $ 1.004.241 $ 925.471 (1) Salary includes regular base pay. bonuses. overtime. lump sum payments, gross honoraria and any other direct cash remuneration. (2) Bene?ts include the employer's share orall employenpaid benefits including pension, health care. dental coverage. group llie insurance, accidental disability and dismemberment insurance, and long term disability plans. Reimbursement of expenses is not included. Bene?ts are not provided for the Mayor and councillors. 14. PENSION PLANS a) Employees or Red Deer county participate in the Local Authorities Pension Plan (LAPP). which is covered by the Alberta Public Senor Pension Plans Act. The Plan serves about 230.534people and about 413 empioyers. it is financed by empioyerand employee contributions and investment earning of the LAPP fund. Red Deer county is required to make current service contributions to the Plan of 11.39% nf pensionable earnings up to the canada Pension Plan Year's Maximum Pensionable Earnings and 15.94"/. for the excess. Employees 0! Red Deer county are required to make current service contributions or10.39“/. on the nrst $52,500 of pensionable salary and 14.94% thereafter. Total current and past service contributions by Red Deer county to the LAFP in 2014 were $838,806 (2013 - s774.113). Total current and past service contributions by the employees of Red Deer county to the LAPF in 2014 were $775,359 12013- $710,053). At December 31, 1013.the Plan disclclsed an actuarial shortfall of $4.86 billion (2012 - $4.98 billion). 21 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 14. PENSION PLANS (continued) b) The APEX supplementary pension plan, an Alberta Urban Municipality Association (AUMA) sponsored de?ned bene?t pension plan covered under the provisiuns of the Alberta Employment Pension Plans Act. commenced in 2003 and provides supplementary pension pian bene?ts. The plan supplements the Local Authorities Pension Plan. The Red Deer Cou nty is required to make current service contributions [D APEX of 3.0% of employment Income. The participating employee of the Red Deer county is require to make current service contributions of 2.5% of employment income. The current service contributions by the Red Deer county to APEX in 2014 were $4,155 (2013 - $4,044). Total current service contributions by the employee of the county orRed Deer to APEX for 2014 were $3,462 (2013 - $3,370). The cost clf post retirement bene?ts earned by employees is actuarially determined using the projected bene?t method prorated on service and administrations best estimate of salary and benefit escalation and retirement ages of empioyees. The costs of post retirement bene?ts are iully funded. c) In 2003, the Red Deer county joined the MuniSERP (farnlely APEX plus} supplemental employee retirement plan, a plan sponsored by AUMA. MuniSERF and LAPF are voluntary. nomcontributory plans that provide bene?ts to employees. The actuarial valuation of the plan for service accrued to December 31, 2014 is estimated to be $139,431 (2013 — $140,393). A projected accrued bene?t cost with prorating on service method is used to determine the accrued bene?t obligation. Key actuarial assumptions used in the valuation were based on actuarial estimates. Those assumptions involve forecasts of expected future in?ation rates, discount rates, wage and salary increases, maximum pension limit under the Income Tax Act and employee turnover and mortality. Key assumptions are as follows: expected discount rate of 5.00% (2013 - 5.00%). expected . salary escalations 4.00% (2013 4.00"/.1peryear and intlation rate of 2.50% (2013 - 2.50"/.). 22 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 15. DEPOSITS AND DEFERREDREVENUE 2013 Increases Decreases 2014 Deposits 2,863,679 569,583 (453,140) 2,980,122 Deferred Annexatian 130,575 (180,576) - Deferred FCSS 45,178 54,000 (45,175) 54,000 Deferred Land lease 33,545 49,359 (33,546) 49,853 Deferred Prepaid taxlevy 95,117 123,535 (95,117; 123,335 Deffered ACA 3,700 (3.700) - Deflered Transpanation -Capital 3,755 (8,758) . Deflered ESRD -Capital 481,808 481,808 Deffered ESRD -Operation 73,840 73,340 Deffered MSI -Capital 269,959 l50,000 (269,959) 150.000 5 3.500512 S 1,502,925 (1,089,974) 3,913.45; Deposits: Various amounts retained on deposit lrom customers, Deferred revenue: Revenue received for various grant programs that have not yet been utilized and have been deferred until future periods. 16. EMPLOVEE BENEFIT OBLIGATION 2014 201 3 Vacation 5 587,958 $ 555,328 Posbemployment henelits - 1,193 S 537,953 3 557.521 Vacation: The vacation liability is comprised of the vacation that employees have earned and are deferring to the future. Employees are entitled to these benefits wltnlrl the next budgetary year. F'Dst~employment benefits: The County Council sponsored an early retirement program that includes an allowance and also covers a portion of health and dental care coverage for the retiree on behalf of the retiree up to the end of the month in which helshe attains age 65. County Council rescinded the early retirement policy effective nec31/2oos.1wa employees retired in 2003 and will bene?t from the program until the year in which they turn 65. 23 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 17. CONTINGENCIES Red Deer county is a member or the Jubilee insurance Reciprocal Exchange (Genesis). under the terms of the membership, Red Deer county could become liable for its proportionate share of any claim losses in excess orthe lunds held by the exchange. Ally liability incurred would be accounted for as a current transaction in the year the losses are determined. Red Deer county has a 15.7-/.. membership In the cen at Alberta Regional waste Management Commission (CARWMC)(with 61.2% cost sharing responsi ty). The Commission was established to provide solid waste management services to its members. The Commission operates one land?ll (which is currently closed). CARWMC has the authority to requisition Red Deer County far normal operating activ ies. There is a potential liability associated with landfills from future litigation. however, any liability is not determinable at this time. Any amount of future costs associated with the landfill would be accounted for as a current transaction in the year that it occurs, Red Deer county enters into long term contracts tor the iuture purchase of gravel to ensure an adequate supply is secured fur use during road construction and maintenance. certain payments under the gravel contracts are made up front while other payments under the terms of the contract will be made only upon removal oi the gravel over time. The iuture potential liability of gravel under these contracts is approximately $500,000 in current dollars. Red Deer County owns 100% of the Big Bend airport. An airport reserve has not yet been established. The full impact oi any tuture revenue or expenditures has not yet been determined, nor has an identi?cation of any potential luture lianility. 15. FINANCIALINSTRUMENTS The County's ?nancial instruments consist of cash and temporary investments, receivables, investments, accounts payable and accrued liabilities, deposits and Il.)ng»term debt. It is Council's opinion that the County is not exposed to signi?cant interest, currency or credit arising from these ?nancial instruments. Unless otherwise noted, the fair value of these ?nancial instruments appraximates their carrying values. The county is subject to credit risk with respect to trade and other receivables. credit risk arises irom the possibility that taxpayers and entities to which the county provides services may experience ?nancial difficulty and be unable to fulfill their obligations. The large number and diversity of taxpayers and customers rnirlimiles the credit risk. At December 31, 2014 the county had a line or credit with a limit of s2ll.ooo,ooo, (2013 - $10,0DU.0?D) bearing interest at bank prime rate minus 0.50"/.. The ettective rate at year end 2014 was 3.00% (2013 - 3.00%). The line or credit is secured lay the county Burrowing Bylaw No. 2014/03. The balance at December 31. 2014 was shit (2013 . snil). Red Deer County Borrowing Bylaw No. 2008127 provides authclrization to secure debt in the form of Credit Card transactions in order to conduct daily business activities to the limit of $75,000 (2013 ~ $75,000) in total at any time. The balance at December 31, 2014 was $35,120 (2013 - $23,168). 24 Red Deer County Notes to Financial Statements For the Year Ended December 31, 2014 19. COMMITMENTS The county entered into contracts with Ledcor Alberta Ltd. (Expiring - May 3151 ms) (road maintenance), Epcor water Services Inc. (Expiring ~ 2024) (water and sewer maintenance and management) and Tagish Engineering (Expiring - 2015) (engineering services). as part or the Alternative Services Delivery Program. 20. BUDGET AMOUNTS The initial 2014 budget ior Red Deer County was approved by council on December 17, 21113and has been amended and approved throughout the year by Council. 21. GUARANTEES The county has provided a limited guarantee to Central Alberta Regional waste Management commission. As at December 31, 2014. the loans outstanding that are covered by the guarantee amounted to $139,291 l2o1a-5139.291). no liability has been recorded in these ?nancial statements as no payments are expected to be made on these guarantees. 22. APPROVAL OF FINANCIALSTATEMENTS Management and council have approved these ?nancial statements. 23. COMPARATIVE FIGURES certain comparative figures have been restated to conform with current year presentation. 24. CHANGES INACCOUNTINGPOLICIES Liability {or contaminated Sites Effective January 1, 2013.Red Deer County adapted the Public Sector Accounting Board‘: (FSAB) new recommendations for the recclgnition, measurement and disclosure ofa liability associated with the remediation of contaminated sites under PS 3260 Liability for Contaminated Sites. The new standard de?nes activitie Included in a liability for remediation, establishes when to recognize and how to measure a Ila ty for remediation, and provides the related tinancial statement presentation and disclosure requirements. Previously, Red Deer county recognized liabilities for contaminated sites in accordance with P8 3200 Liabilities, which requires recognition when there is an apprclpriate basis of measurement and a reasonable estimate of the amount can be made. under the new recommendations, a liability for remediation oi a contamined site is recognized when certain criteria are met and at the best estimate of the amount required to remediate the site, as described in Note 5. 25 Red Deer county Notes to Financial Statements For the Year Ended December 31, 2014 24‘ CHANGES INACCOUNTINGPOLICIES(continued) Tax Revenue Effective January 1. 2013.Red Deer county prospectively adopted the Public Sector Accounting board's (PSAB) new recommendations for the recognition. measurement, presentation and disclosure of tax revenue under PS 3510 Tax Revenue. Prior periods have not been restated. Previously, tax revenue was recognized as it was earned and measurable, and reasonable collection was assured. Under PS 3510, Red neercounty recognizes tax revenue and the related receivable when they meet the deiinition of an asset, they are authorized, and the taxable event occurs. Tax revenue and the related receivable are initially recorded at managements‘ best estimate ortheir realizable value at the acquisition date. The related receivable is subsequently evaluated lor collectability. There was no material impact on the iinancial statements from the prospective applicatinn of the new accounting recommendations. Government Transfers Erreotive January 1, zuizl, Red Deer county adopted the Public sector Accounting Board's (PSABl new recommendations tor the recognition, presentation and disclosure oi government transiers under newly issued l=s 3410 Gnvemment Transfers. Pursuant to these recommendations, the change was applied prospectively and prior periods have not been restated. Previously, a government transfer was recognized in the period in which the events giving rise to the transfer occurred, provided the transfer was authorized. any eligibility criteria had been met, and a reasonable estimate of the amount could be made. Newly issued PS 3410 requires recognition of government translers as revenue when the transfer is authorized and all eligibility criteria, if any, have been met, unless the existence Di stipulations on the transfer creates a liability. ‘rhere was no material impact on the ?nancial statements «mm the prospective application of the new accounting recommendations. 25