CSD 17-2021 March 10, 2021 NIAGARA REGION Appendix 4 2020 Q4 FINANCIAL UPDATE DECEMBER Q4 Financial Update – December 2020 Table of Contents Introduction 2 Consolidated Operating Funding Surplus/(Deficit Review): Levy 3 Water and Wastewater 4 Waste Management 5 Summary of Consolidated Operating Funding Surplus/(Deficit) 6 Departmental Statement of Operations: Blank Consolidated Levy 7 Governance 10 General Government 12 Corporate Administration 15 Corporate Services 19 Community Services 24 Public Health & Emergency Services 29 Public Works Transportation 33 Planning and Development 37 Courts Services 40 Niagara Regional Housing 43 Niagara Regional Police Service Niagara 47 Peninsula Conservation Authority 49 Water and Wastewater 51 Waste Management 54 Operating Budget Amendments & Adjustment Summary 57 Reserves Summary 58 Deferred Revenue Summary 60 Operating Reserve Transfer Reconciliation 63 Capital Reserve Transfer Reconciliation 65 Encumbrance Summary and Detail 67 Capital Project Reports: Capital Highlights 70 Capital Summary 71 Capital Budget Adjustments 72 Capital Project Closures 75 Capital Project Closed by Adjustment 77 Capital Project Closed by Transfer 78 Capital Project Summary 79 Capital Project Forecast 80 Capital Variance Project Summary 95 Investment Report and Detail 96 Debt Report 98 Accounts Receivable Aging Report 101 Consolidated Statement of Financial Position 102 Explanation of Statement of Operations 104 1 | Page Introduction On behalf of Niagara Region, we are pleased to provide you with the 2020 Q4 financial update. Niagara is a culturally rich and historically significant region that offers its residents a mix of urban and rural living within 12 area municipalities. The Region boasts a diverse economy that includes manufacturing, tourism, agriculture and emerging sectors such as new media, green technology and bioscience. Regional government operations are overseen by Niagara Regional Council which is composed of 32 elected representatives from 12 area municipalities and the Regional Chair. The current Regional Council was elected in November 2018 and the 32 members will serve a four year term to November 14, 2022. At December 31, 2020 Niagara Region has a surplus of $37,306 thousand related to the levy programs, a $2,729 thousand surplus related to Water and Wastewater programs, and a $1,493 thousand surplus related to the Waste Management Program. The Niagara Region has responded to the COVID-19 pandemic by strategically redeploying staff resources to areas impacted significantly by COVID-19, as well as re- prioritizing planned work. A recovery plan has been put in place and continues to be refined and actioned to guide the Niagara Region through the COVID-19 pandemic. Affordability and sustainability are two key elements of Niagara Region’s budget strategy. Achieving a balance between providing the programs and services residents have come to rely upon, ensuring they can afford to pay for them and ensuring that we have money to fund future infrastructure and program needs is critical. We would appreciate your feedback at www.niagararegion.ca. We hope you will find the information provided in this report of interest and welcome any suggestions for its improvement going forward. Helen Chamberlain, Director of Financial Management & Planning, Deputy Treasurer The following is an unaudited report which has been prepared and reviewed by the Financial Management & Planning team in Corporate Services. 2 | Page Return to Table of Contents Consolidated Operating Funding Surplus/(Deficit) Review Levy (In thousands of dollars) Niagara Region’s levy programs excluding agencies, boards and LEVY DEPARTMENT and Programs Financial Results of agencies, Financial Statement commissions have an operating surplus of $37,410, which is (Including Agencies, boards and commissions) Highlights largely driven by additional Provincial funding of $47,911 following boards and commissions extensive mitigation efforts to manage the increased costs related % Niagara to required investments in Community Services and Public Health +4.52 $ to support the COVID-19 emergency, including the redeployment Regional − 26,866 of staff resources and re-prioritizing planned work. These mitigation police service % Variance in unanticipated Gross Budgeted efforts were put in place for the continuation of essential services − 0.2 costs related to the COVID-19 Expenditures of prior to announcements of additional funding to address these pandemic, including additional * increased costs. In addition, the recovery process has been slower $ staffing, cleaning and PPE than anticipated, resulting in further work delays and corresponding 188,172 costs in Seniors Services Deficit of $368 cost deferrals. The Region will continue to monitor the emergency and Public Health and make changes to service delivery to meet the needs of Gross Budgeted or 0.2% Niagara residents. Expenditures of NIAGARA $ * $ Niagara Region’s agencies, boards and commissions have a net 825,127 REGIONAL + 16,261 deficit of $104, which is driven primarily from lost revenue in Niagara HOUSING Regional Police Service from reduced OLG payments through the % Variance in strategic Gross Budgeted City of Niagara Falls due to the closure of Casino operations and + 1.0 mitigations, including transit Expenditures of in Courts Services from lost revenues for fines collected. These expansion deferrals, corporate * unfavourable variances are offset by savings in labour-related costs $ hold on recruitment, and 66,209 undersubscribed incentives and due to the COVID-19 pandemic and the 2020 Niagara Region Police Surplus of $655 development charge grants Association wage settlement. or 1.0% The Niagara Regional Housing Board has recommended that their Surplus of $37,306 Gross Budgeted surplus be allocated to the Taxpayer Relief Reserve in accordance or 4.52 % Expenditures COURT $ with the Operating Surplus/Deficit Policy C-F-022. Deficits in Niagara Services + 47,911 Regional Police Service and Court Services would be offset by Gross Budgeted overall levy surpluses before transferring the remaining levy surplus % Variance in confirmed Expenditures of to the Hospital Contribution and Taxpayer Relief reserves. These − 4.8 COVID-19 related funding, * recommendations are included in Corporate Services Committee $ including $18,928 in Safe 17-2021, with the intent of using these funds to support COVID-19 8,125 Restart and $28,838 in Deficit of $391 related pressures as approved in future operating budgets. program-specific funding *Includes transfer, intercompany charges and indirect allocations or 4.8% 3 | Page Return to Table of Contents Consolidated Operating Funding Surplus/(Deficit) Review WATER & WASTEWATER (In thousands of dollars) Water and Wastewater Services has a net operating surplus of $2,729 at year-end, Water & Wastewater OPERATING SURPLUS Financial Statement Highlights which consists of a surplus of $1,863 surplus in the Wastewater division and $866 in the Water division. + 2.05 % The surplus is primarily attributable to favourable variances of $2,127 for $ preventative maintenance and repair work, $666 resulting from staffing vacancies, + 2,127 $1,068 in allocation of business support costs, and net utility savings of $538. These favourable variances are offset by unfavourable variance in water sales of Variance in preventative $1,020 due to decreased water usage as a result of the COVID-19 pandemic combined with a wet spring, and unfavourable variances of $137 and $435 due to maintenance and repair work increased pricing in sludge management and chemical costs, respectively. due to delays driven by the COVID-19 pandemic It is recommended that the year-end surplus of $1,863 in the Wastewater division Gross Budgeted be transferred to the Wastewater Stabilization reserve. For the surplus of $866 in the Water division, it is recommended that $500 be transferred to the Water Capital Expenditures of reserve and the remaining $366 be transferred to the Water Stabilization reserve. $132,811 * After the recommended year-end transfer of the surplus in the Wastewater division, the Wastewater Stabilization Reserve will be at a balance of $3,254, which is $ below the minimum stabilization target for the reserve. The funding targets of 10% − 1,020 to 15% of annual budgeted expenditures (excluding reserve transfers and debt allocations) are $6,476 to $9,715. Given that the Wastewater Stabilization reserve is below the minimum funding target, this may impact Niagara Region’s ability to Variance in water sales due to manage future operational costs. reduced water usage during the pandemic As a result of the year-end transfer of the surplus within the Water division, the Surplus of $2,729 Gross Budgeted Water Stabilization Reserve will be at a balance of $3,431, which is within the or 2.05% Expenditures funding targets for the stabilization reserve. The funding targets of 10% to 15% of annual budgeted operating expenditures are $2,387 to $3,581. * Includes transfer, intercompany charges and indirect allocations 4 | Page Return to Table of Contents Consolidated Operating Funding Surplus/(Deficit) Review WASTE MANAGEMENT (In thousands of dollars) Waste Management Services has an operating surplus of $1,493 at year-end. Waste Management OPERATING SURPLUS Financial Statement Highlights The surplus is primarily a result of favourable variances of $647 from collection % contract adjustments, $526 from lower than anticipated landfill operation and + 2.68 monitoring costs, $321 in labour-related cost