Annual Financial Report Fiscal Year Ended December 31, 2019 Annual Financial Report Fiscal Year Ended December 31 2019 Deposited at the City Clerk’s office of Ville de Montréal on April 15, 2020 Table of contents INTRODUCTION Word from the Mayor and the Chairman of the executive committee ..................................................................... III Message from the Treasurer ................................................................................................................................... VI Map of the Montréal Region .................................................................................................................................... IX Municipal Organization ........................................................................................................................................... XI Summary of Powers ............................................................................................................................................... XII CONSOLIDATED FINANCIAL INFORMATION Management responsibility for financial reporting .................................................................................................... 1 Independent Auditors’ Report .................................................................................................................................. 2 Consolidated Financial Statements Consolidated Statement of Financial Position ................................................................................................. 5 Consolidated Statement of Operations ............................................................................................................ 6 Consolidated Statement of the Change in Net Debt ........................................................................................ 7 Consolidated Statement of Cash Flows ........................................................................................................... 8 Segment Disclosures Schedule 1 – Consolidated Financial Position by Organization .............................................................. 9 Schedule 2 – Consolidated Itemized Operations by Organization ........................................................ 10 Schedule 3 – Consolidated Operating Surplus (Deficit) for Tax Purposes by Organization .................. 11 Schedule 4 – Consolidated (Deficit) Surplus of Capital Asset Activities for Tax Purposes by Organization ........................................................................................ 12 Schedule 5 – Consolidated Expenditures by Item and by Organization ................................................ 13 Table of contents (continued) Notes and Tables to the Consolidated Financial Statements ........................................................................... 15 Table 1 – Consolidated Operating Surplus (Deficit) for Tax Purposes by Responsibility ..................... 46 Table 2 – Consolidated (Deficit) Surplus of Capital Asset Activities for Tax Purposes by Responsibility .................................................................................................................. 48 Table 3 – Consolidated Accumulated Surplus ..................................................................................... 50 Table 4 – Consolidated Net Total Long-Term Debt .............................................................................. 52 Table 5 – Reconciliation of Budgets Tabled and Consolidated Budget Presented in the Consolidated Statement of Operations................................................................................. 53 FINANCIAL INFORMATION OF THE MUNICIPAL ADMINISTRATION Breakdown by Responsibility Table 6 – Non-Consolidated Operating Surplus for Tax Purposes by Responsibility ..................... 56 Table 7 – Non-Consolidated Deficit of Capital Asset Activities for Tax Purposes by Responsibility ............................................................................................................. 59 Table 8 – Non-Consolidated Accumulated Surplus by Responsibility ............................................ 60 Table 9 – Non-Consolidated By-item Amounts for Tax Purposes by Responsibility ....................... 62 Water Management Table 10 – Non-Consolidated Operating (Deficit) Surplus for Tax Purposes Related to Water Management by Responsibility ...................................................................................... 66 Table 11 – Non-Consolidated (Deficit) Surplus of Capital Asset Activities for Tax Purposes Related to Water Management by Responsibility ....................................................................... 69 Breakdown of Mixed Expenditures Independent Auditors’ Report .......................................................................................................... 72 Table of Breakdown of Mixed Expenditures by Responsibility ........................................................ 74 Supplementary Notes ...................................................................................................................... 76 Table of contents (continued) UNAUDITED CLIMATE-RELATED FINANCIAL DISCLOSURE FINANCIAL IMPLICATIONS AND COMMITMENTS ..................................................................................... 79 TCFD FRAMEWORK .................................................................................................................................... 80 TCFD RECOMMENDATIONS ......................................................................................................... 81 GOVERNANCE AND STRATEGIES ............................................................................................................. 83 Financial planning related to climate ............................................................................................... 84 Strategies and action plan related to climate ................................................................................... 84 CLIMATE RISK .............................................................................................................................................. 85 Climate risk assessment .................................................................................................................. 85 RISK MANAGEMENT ................................................................................................................................... 88 Flood management.......................................................................................................................... 88 METRICS AND TARGETS ............................................................................................................................ 89 Montréal’s citywide .......................................................................................................................... 89 Montréal agglomeration’s corporate ................................................................................................ 91 OUTLOOK AND NEXT STEPS ..................................................................................................................... 93 BIBLIOGRAPHY ............................................................................................................................................ 94 Introduction 2019 WORD FROM THE MAYOR AND THE CHAIRMAN OF THE EXECUTIVE COMMITTEE Moreover, in spite of the health crisis, the climate Dear Montrealers, emergency continues unabated. We have thus set ambitious objectives for all the city’s departments with the intention of speeding up the ecological transition. The current global health crisis and the resulting economic impacts, which will be felt for months if not This report therefore features a section dedicated years, will present major budgetary challenges. solely to financial information on climate change, which marks a first for a Québec-based city! Fortunately, while this is a critical period in our history, we are poised to come out of it in a good economic As always, our administration has chosen to support position. Our positive results are due to the sound Montrealers, regardless of the outcome, and to management of operations being carried out in redouble its efforts to meet the needs of residents, boroughs and to optimization efforts by our various particularly in these difficult times. central departments to ensure that each dollar is properly spent. We are increasing our investments aimed at shoring up This positive outlook is of the utmost importance under the city ageing infrastructures, notably by tackling the the current circumstances. At this time of great maintenance deficit in the water service and road economic uncertainty, we are proud to have managed networks. the city’s finances in a responsible manner over the last year. Additionally, we are stepping up our efforts to support diverse, adequate and affordable residential housing, In its Annual Financial Report and its Financial and we’re developing projects that promote Accountability Report for the 2019 financial year, the sustainable mobility. city posted an overall budgetary surplus of $250.9 million, an increase of $38.2 million compared We are supporting and working with Montréal to the year 2018. companies and businesses in order to ensure the city’s prosperity and position it favourably on the world stage in high-potential sectors. III As well, we are investing in social development, culture and sports, but we’re also working to ensure that the city offers public services that live