2017 03 07 Business Plan Follow Up Information
Report to Committee DATE:
March 1, 2017
TO:
Budget and Infrastructure Committee
FROM:
Farouk Zaba Manager of Financial Planning and Systems
SUBJECT:
2017-2018 BUSINESS PLAN FOLLOW-UP INFORMATION
EXECUTIVE SUMMARY: 2017-2018 Departmental Business Plans and operating budgets were presented to Committee on December 5th and 6th, 2016 followed by Decision Package deliberations on December 13 th, 2016. A number of requests for additional information and for changes to workplans and the budget binder were made by Committee during the presentations and deliberations. Following additional information provided on February 28th, the following decisions are requested: reallocation of election reserve contributions for 2017 and 2018 ($20,000 per year); the reallocation of net income from the City’s property leased to the Salvation Army (2275 Elgin Avenue) from facility revenue to the land sale reserve ($45,000); and, consideration of producing additional copies of the Port Coquitlam history book (now out of print). Following a review of the latter request, an option to support the development of a children’s history book was identified. Council will be formally asked to consider approval of a $5000 grant for this book in April and a resolution indicating support of this initiative is recommended. RECOMMENDATIONS: That the 2017 and 2018 Election Reserve contributions ($20,000 per year) be reallocated to the General Capital Reserve; and That the net income ($45,000) from the property at 2275 Elgin Avenue be transferred to the land sale reserve; and That the initiative of the Port Coquitlam Heritage and Cultural Society to produce a children’s history book be supported. BACKGROUND AND DISCUSSION 2017-2018 Departmental Business Plans and operating budgets were presented to Committee on December 5th and 6th, 2016 followed by Decision Package deliberations on December 13 th, 2016. A number of requests for additional information and for changes to workplans and the budget binder
March 1, 2017 2017-2018 Business Plan Follow-up Information
were made by Committee during the presentations and deliberations. At the February 28th, 2017 meeting, this information was provided and resulted in a request that the following matters to be considered by Committee on March 7th: 1. Reduction of Election Reserve contributions for 2017 and 2018 2. Reallocation of building lease income to the land sale reserve from facility revenue 3. Consideration of reproducing the Port Coquitlam history book 1. Reduction of Election Reserve contribution for 2017 and 2018 The February 28th report presented information on the Arts and Culture Reserve and other reserves that are funded in a similar manner. At the meeting there were many questions around the balances of these operating reserves, as well as the concern that some of them were being overfunded. The following reserves, as per the financial management policy, are funded by unspent funds to be used for future activities/requirements in those areas: Self-insurance; Snow and Ice Removal; Canada/May Day; Arts, Heritage and Culture; Election; Public Safety Initiative; RCMP; and, Rate Stabilization. Committee requested a review of the financial management policy, as well as the possibility of repurposing some of the current balances in the reserves. Legislatively, these reserve accounts fall under Operating Reserve Bylaw 3497 which is very flexible in that it only restricts the use of funds to expenditures “for or in relation to any purpose that is not of a capital nature”. Although Council has established these reserve accounts for specific operating purposes, if the funds are no longer required for that specific purpose they can choose to reallocate the funds for other operational needs. The Election Reserve account is the only operating reserve account that is funded by an annual tax allocation ($20,000). The funding is intended to fund the election every four years as well as be a contingency for two by-elections, as a result of a previous experience where there was a by-election held each year for five years. The balance in the reserve required for an election and two by-elections, at a cost of $100,000 each, is $300,000. In recent years, since no by-elections have been required, a $100,000 balance is considered adequate for by-elections, in addition to ensuring there is funding for an election every four years. As the current balance in the reserve is $252,000, further contributions are not required until at least following the 2018 election. These planned contributions could be repurposed to the General Capital Reserve (recommended) or alternatively another reserve. It is not recommended to be a reduction in taxation, since the election reserve will have to be refunded on an ongoing basis following the 2018 election. The allocation amount will be reviewed at that time. The rate stabilization reserves are funded by water and sewer rates which have already been billed for 2017, therefore these contributions and balances will be reviewed during the 2018 rate discussions. 2. Reallocation of building lease income to the land sale reserve from facility revenue Historically, the City has used rental income to offset the cost of operating and maintaining its rental facilities. Typically, operating costs exceed rental income. However, in the case of the recently acquired commercial property that is leased to the Salvation Army, rental income (approximately $56,000) exceeds budgeted maintenance costs (approximately $11,000). The excess revenue of $45,000 currently offsets general taxation. Transferring this excess revenue to the land sale reserve instead of using it to offset taxation would result in a tax increase of $1.37 per average home or 0.06%
March 1, 2017 2017-2018 Business Plan Follow-up Information
to fund the difference. This transfer is recommended because the revenue may not be ongoing (e.g., if the tenant relocates or the property is redeveloped and sold). 3. Consideration of producing a Port Coquitlam history book Chuck Davis, who wrote Port Coquitlam’s most recent history book in 2000, has passed away. The publisher, Harbour Publishing, the printer, Friesens, and the designer, Patty Osborne, of Vancouver Desktop Publishing do not have digital files or archives of the book. There are three options: Option 1: Re-print Port Coquitlam, Where Rails Meet Rivers by Chuck Davis Reprinting Port Coquitlam, Where Rails Meet Rivers requires scanning a book and recreating files for printing. Friesens Corporation (the only printing company that Harbour Publishing knew of that could do this work), has the technology and equipment to provide high quality scanning, camera-ready file set-up and digital printing. The book will look similar to the original but will have a lower quality because the duotone images cannot be scanned so a four colour process will need to be used. A sample of similar work is not available and although a sample of the book could be provided, it would be at a cost and would not be ready prior to budget deliberations. The publisher, Howard White, agrees to allow the City to have the book scanned as camera-ready art in order to reprint. Harbour Publishing grants the City permission to use the page layout and typeset at no cost, but copyright page must remain in place for future printings. Permission from Chuck Davis’ estate or family is not required if we choose to remove his Acknowledgements. Friesens does not recommend adding content because it is extremely difficult or impossible to match the print. It is possible to delete content; although permission from Harbour Publishing and the family of Chuck Davis is required. The following quotes were provided by Friesens: Order size 200 books 250 books 300 books 400 books 500 books 1000 books
Total cost $14,262 $14,866 $15,285 $16,038 $17,118 $21,162
This option is not recommended due to the lower quality of the scanned book. Option 2: Produce a new history book. 2017 (phase one): research and development: $35,000 2018 (phase two): publishing, printing and distributing: $100,000
March 1, 2017 2017-2018 Business Plan Follow-up Information
This budget is based on the cost of producing Chuck Davis book, Port Coquitlam, Where Rails Meet Rivers in 2000. This option is not recommended because the PoCo Heritage Society was a key partner in the development of the last history book and has advised that it does not have resources this year to allocate towards this project. The development of the book also involved significant staff time. The Society’s business plan includes hosting the Touring Exhibit, Terry Fox – Running to the Heart of Canada, providing heritage programming including the Canada 150 projects and supporting the development of the new children’s illustrated history book. Option 3: Support the PoCo Heritage and Cultural Society’s new children’s history book (recommended) The PoCo Heritage and Cultural Society is partnering with Art Focus to create an illustrated history book for children. Short stories are currently being written by six local writers and nine visual artists, all inspired by Port Coquitlam’s history and landmarks. 2017: fundraising, research and development 2018: printing and distribution This project is eligible for a Community Cultural Development (CCD) funding grant from the City. The group has secured seed money and will be applying to Council for approval of a grant in April, 2017; the grant is within the budget set for the Cultural Division. Cost of purchasing copies of this book is to be determined. This option to provide for a heritage book is recommended because it has a low cost, supports the local community groups, is a new initiative and caters to a new audience. CONCLUSION Council’s decisions on the election reserve contributions, reallocation of net income for the property on Elgin, and history book are required in order to move forward with the draft budget for public consultation. Respectfully Submitted by,
______________________________ Farouk Zaba, Manager of Financial Planning and Systems
Attachment 1: Reserve History
March 1, 2017
TO:
Budget and Infrastructure Committee
FROM:
Farouk Zaba Manager of Financial Planning and Systems
SUBJECT:
2017-2018 BUSINESS PLAN FOLLOW-UP INFORMATION
EXECUTIVE SUMMARY: 2017-2018 Departmental Business Plans and operating budgets were presented to Committee on December 5th and 6th, 2016 followed by Decision Package deliberations on December 13 th, 2016. A number of requests for additional information and for changes to workplans and the budget binder were made by Committee during the presentations and deliberations. Following additional information provided on February 28th, the following decisions are requested: reallocation of election reserve contributions for 2017 and 2018 ($20,000 per year); the reallocation of net income from the City’s property leased to the Salvation Army (2275 Elgin Avenue) from facility revenue to the land sale reserve ($45,000); and, consideration of producing additional copies of the Port Coquitlam history book (now out of print). Following a review of the latter request, an option to support the development of a children’s history book was identified. Council will be formally asked to consider approval of a $5000 grant for this book in April and a resolution indicating support of this initiative is recommended. RECOMMENDATIONS: That the 2017 and 2018 Election Reserve contributions ($20,000 per year) be reallocated to the General Capital Reserve; and That the net income ($45,000) from the property at 2275 Elgin Avenue be transferred to the land sale reserve; and That the initiative of the Port Coquitlam Heritage and Cultural Society to produce a children’s history book be supported. BACKGROUND AND DISCUSSION 2017-2018 Departmental Business Plans and operating budgets were presented to Committee on December 5th and 6th, 2016 followed by Decision Package deliberations on December 13 th, 2016. A number of requests for additional information and for changes to workplans and the budget binder
March 1, 2017 2017-2018 Business Plan Follow-up Information
were made by Committee during the presentations and deliberations. At the February 28th, 2017 meeting, this information was provided and resulted in a request that the following matters to be considered by Committee on March 7th: 1. Reduction of Election Reserve contributions for 2017 and 2018 2. Reallocation of building lease income to the land sale reserve from facility revenue 3. Consideration of reproducing the Port Coquitlam history book 1. Reduction of Election Reserve contribution for 2017 and 2018 The February 28th report presented information on the Arts and Culture Reserve and other reserves that are funded in a similar manner. At the meeting there were many questions around the balances of these operating reserves, as well as the concern that some of them were being overfunded. The following reserves, as per the financial management policy, are funded by unspent funds to be used for future activities/requirements in those areas: Self-insurance; Snow and Ice Removal; Canada/May Day; Arts, Heritage and Culture; Election; Public Safety Initiative; RCMP; and, Rate Stabilization. Committee requested a review of the financial management policy, as well as the possibility of repurposing some of the current balances in the reserves. Legislatively, these reserve accounts fall under Operating Reserve Bylaw 3497 which is very flexible in that it only restricts the use of funds to expenditures “for or in relation to any purpose that is not of a capital nature”. Although Council has established these reserve accounts for specific operating purposes, if the funds are no longer required for that specific purpose they can choose to reallocate the funds for other operational needs. The Election Reserve account is the only operating reserve account that is funded by an annual tax allocation ($20,000). The funding is intended to fund the election every four years as well as be a contingency for two by-elections, as a result of a previous experience where there was a by-election held each year for five years. The balance in the reserve required for an election and two by-elections, at a cost of $100,000 each, is $300,000. In recent years, since no by-elections have been required, a $100,000 balance is considered adequate for by-elections, in addition to ensuring there is funding for an election every four years. As the current balance in the reserve is $252,000, further contributions are not required until at least following the 2018 election. These planned contributions could be repurposed to the General Capital Reserve (recommended) or alternatively another reserve. It is not recommended to be a reduction in taxation, since the election reserve will have to be refunded on an ongoing basis following the 2018 election. The allocation amount will be reviewed at that time. The rate stabilization reserves are funded by water and sewer rates which have already been billed for 2017, therefore these contributions and balances will be reviewed during the 2018 rate discussions. 2. Reallocation of building lease income to the land sale reserve from facility revenue Historically, the City has used rental income to offset the cost of operating and maintaining its rental facilities. Typically, operating costs exceed rental income. However, in the case of the recently acquired commercial property that is leased to the Salvation Army, rental income (approximately $56,000) exceeds budgeted maintenance costs (approximately $11,000). The excess revenue of $45,000 currently offsets general taxation. Transferring this excess revenue to the land sale reserve instead of using it to offset taxation would result in a tax increase of $1.37 per average home or 0.06%
March 1, 2017 2017-2018 Business Plan Follow-up Information
to fund the difference. This transfer is recommended because the revenue may not be ongoing (e.g., if the tenant relocates or the property is redeveloped and sold). 3. Consideration of producing a Port Coquitlam history book Chuck Davis, who wrote Port Coquitlam’s most recent history book in 2000, has passed away. The publisher, Harbour Publishing, the printer, Friesens, and the designer, Patty Osborne, of Vancouver Desktop Publishing do not have digital files or archives of the book. There are three options: Option 1: Re-print Port Coquitlam, Where Rails Meet Rivers by Chuck Davis Reprinting Port Coquitlam, Where Rails Meet Rivers requires scanning a book and recreating files for printing. Friesens Corporation (the only printing company that Harbour Publishing knew of that could do this work), has the technology and equipment to provide high quality scanning, camera-ready file set-up and digital printing. The book will look similar to the original but will have a lower quality because the duotone images cannot be scanned so a four colour process will need to be used. A sample of similar work is not available and although a sample of the book could be provided, it would be at a cost and would not be ready prior to budget deliberations. The publisher, Howard White, agrees to allow the City to have the book scanned as camera-ready art in order to reprint. Harbour Publishing grants the City permission to use the page layout and typeset at no cost, but copyright page must remain in place for future printings. Permission from Chuck Davis’ estate or family is not required if we choose to remove his Acknowledgements. Friesens does not recommend adding content because it is extremely difficult or impossible to match the print. It is possible to delete content; although permission from Harbour Publishing and the family of Chuck Davis is required. The following quotes were provided by Friesens: Order size 200 books 250 books 300 books 400 books 500 books 1000 books
Total cost $14,262 $14,866 $15,285 $16,038 $17,118 $21,162
This option is not recommended due to the lower quality of the scanned book. Option 2: Produce a new history book. 2017 (phase one): research and development: $35,000 2018 (phase two): publishing, printing and distributing: $100,000
March 1, 2017 2017-2018 Business Plan Follow-up Information
This budget is based on the cost of producing Chuck Davis book, Port Coquitlam, Where Rails Meet Rivers in 2000. This option is not recommended because the PoCo Heritage Society was a key partner in the development of the last history book and has advised that it does not have resources this year to allocate towards this project. The development of the book also involved significant staff time. The Society’s business plan includes hosting the Touring Exhibit, Terry Fox – Running to the Heart of Canada, providing heritage programming including the Canada 150 projects and supporting the development of the new children’s illustrated history book. Option 3: Support the PoCo Heritage and Cultural Society’s new children’s history book (recommended) The PoCo Heritage and Cultural Society is partnering with Art Focus to create an illustrated history book for children. Short stories are currently being written by six local writers and nine visual artists, all inspired by Port Coquitlam’s history and landmarks. 2017: fundraising, research and development 2018: printing and distribution This project is eligible for a Community Cultural Development (CCD) funding grant from the City. The group has secured seed money and will be applying to Council for approval of a grant in April, 2017; the grant is within the budget set for the Cultural Division. Cost of purchasing copies of this book is to be determined. This option to provide for a heritage book is recommended because it has a low cost, supports the local community groups, is a new initiative and caters to a new audience. CONCLUSION Council’s decisions on the election reserve contributions, reallocation of net income for the property on Elgin, and history book are required in order to move forward with the draft budget for public consultation. Respectfully Submitted by,
______________________________ Farouk Zaba, Manager of Financial Planning and Systems
Attachment 1: Reserve History
