AGENDA - Finance Advisory Committee - 20230613Town of Aurora
Finance Advisory Committee
Meeting Agenda
Date:Tuesday, June 13, 2023
Time:5:45 p.m.
Location:Holland Room, Aurora Town Hall
Meetings are available to the public in person and via live stream on the Town’s YouTube channel.
To participate, please visit aurora.ca/participation.
Pages
1.Call to Order
2.Land Acknowledgement
3.Approval of the Agenda
4.Declarations of Pecuniary Interest and General Nature Thereof
5.Receipt of the Minutes
5.1 Finance Advisory Committee Meeting Minutes of May 9, 2023 1
That the Finance Advisory Committee Meeting Minutes of May 9,
2023 be received for information.
1.
6.Delegations
7.Matters for Consideration
7.1 Memorandum from Manager of Cultural Services; Re: Aurora Town
Square Budget Update
5
(Presentation to be provided by Phil Rose, Manager, Library Square, and
Robin McDougall, Director, Community Services)
That the memorandum regarding the Aurora Town Square
Budget Update be received; and
1.
That the Finance Advisory Committee comments regarding the
Aurora Town Square Budget Update be received and referred to
staff for consideration and further action as appropriate.
2.
7.2 Memorandum from Project Management Office; Re: Town's Major
Capital Projects Update
20
That the memorandum regarding Town’s Major Capital Projects
Update be received; and
1.
That the Finance Advisory Committee comments regarding the
Town’s Major Capital Projects Update be received and referred
to staff for consideration and further action as appropriate.
2.
7.3 Memorandum from Senior Financial Management Advisor; Re: Reserve
Management Policy
25
That the memorandum regarding Reserve Management Policy
be received; and
1.
That the Finance Advisory Committee comments regarding the
Reserve Management Policy be received and referred to staff for
consideration and further action as appropriate.
2.
8.New Business
9.Adjournment
Town of Aurora
Finance Advisory Committee
Meeting Minutes
Date:
Time:
Location:
Tuesday, May 9, 2023
5:45 p.m.
Holland Room
Committee Members: Mayor Tom Mrakas (Chair)
Councillor Michael Thompson (Vice Chair)
Councillor Ron Weese
Other Attendees: Councillor Rachel Gilliland (joined 5:51 p.m.)
Doug Nadorozny, Chief Administrative Officer
Rachel Wainwright-van Kessel, Director, Finance
Jason Gaertner, Manager, Financial Management
Tracy Evans, Advisor, Financial Management*
Palak Mehta, Council/Committee Coordinator
Attended electronically*
_____________________________________________________________________
1. Call to Order
Mayor Mrakas called the meeting to order at 5:46 p.m.
2. Land Acknowledgement
The Committee acknowledged that the meeting took place on Anishinaabe lands,
the traditional and treaty territory of the Chippewas of Georgina Island,
recognizing the many other Nations whose presence here continues to this day,
the special relationship the Chippewas have with the lands and waters of this
territory, and that Aurora has shared responsibility for the stewardship of these
lands and waters. It was noted that Aurora is part of the treaty lands of the
Mississaugas and Chippewas, recognized through Treaty #13 and the Williams
Treaties of 1923.
Page 1 of 36
Finance Advisory Committee Meeting Minutes
Tuesday, May 9, 2023 2
3. Approval of the Agenda
Moved by Ron Weese
Seconded by Councillor Thompson
That the agenda as circulated by Legislative Services be approved.
Carried
4. Declarations of Pecuniary Interest and General Nature Thereof
There were no declarations of pecuniary interest under the Municipal Conflict of
Interest Act, R.S.O. 1990, c. M.50.
5. Receipt of the Minutes
5.1 Finance Advisory Committee Meeting Minutes of April 11, 2023
Moved by Councillor Thompson
Seconded by Ron Weese
1. That the Finance Advisory Committee Meeting Minutes of April 11,
2023 be received for information.
Carried
6. Delegations
None.
7. Matters for Consideration
7.1 Memorandum from Financial Management Officer; Re: Compensation and
Support for Members of Council Policy Review and Update
Staff provided an overview of the Town's Compensation and Support for
Members of Council Policy ("Policy 57") and provided a review and update
of the existing policy as requested by Council, including proposed
changes.
The Committee inquired about the language or mechanism to determine
eligible expenditures and the fair share amount. Staff provided a response.
Page 2 of 36
Finance Advisory Committee Meeting Minutes
Tuesday, May 9, 2023 3
The Committee inquired about references to comparable municipalities
regarding ward budgets. Staff provided a response.
Moved by Councillor Thompson
Seconded by Ron Weese
1. That the memorandum regarding the Compensation and Support for
Members of Council Policy review and update be received; and
2. That the Finance Advisory Committee comments regarding the
Compensation and Support for Members of Council Policy be received
and referred to staff for consideration and further action as
appropriate.
Carried
7.2 Memorandum from Director, Finance; Re: Financial System Project Update
Staff provided an overview of the Financial System Project Update
regarding the procurement which was awarded to Vigilant in 2022 to
implement Oracle Fusion as the Town's new financial system replacing
other systems. An update was provided on the functionality of the system
to go live on May 31, 2023.
The Committee inquired about other municipalities that have worked with
Vigilant to successfully implement new financial systems. Staff provided a
response.
The Committee inquired about the project timeline, project roll-out,
functionality, testing, and any further expenditures for continued support
after going live.
Moved by Councillor Thompson
Seconded by Ron Weese
1. That the memorandum regarding Financial System Project Update be
received; and
2. That the Finance Advisory Committee comments regarding Financial
System Project Update be received and referred to staff for
consideration and further action as appropriate.
Carried
Page 3 of 36
Finance Advisory Committee Meeting Minutes
Tuesday, May 9, 2023 4
8. New Business
None.
9. Adjournment
Moved by Councillor Thompson
Seconded by Ron Weese
That the meeting be adjourned at 5:58 p.m.
Carried
Page 4 of 36
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Community Services
Re: Aurora Town Square Budget Update
To: Finance Advisory Committee
From: Phil Rose, Manager of Cultural Services
Date: June 13, 2023
Recommendation
1. That the memorandum regarding the Aurora Town Square Budget Update be
received; and
2. That the Finance Advisory Committee comments regarding the Aurora Town Square
Budget Update be received and referred to staff for consideration and further action
as appropriate.
Background
The original business plan and financial strategy for Town Square were approved in
March 2019. The financial strategy estimated that the net annual operating costs for
Town Square would be $720,000. The strategy proposed a phasing in of the operating
budget impact over three years (2019, 2020 and 2021) to ensure that the $720,000 was
fully funded prior to the opening of Town Square.
This amount has not been subject to an inflationary increase since its inclusion in the
operating budget. As a result, this amount has foregone approximately $75,500 in
inflationary increases from 2019 to 2023.
Incremental Net Operating Costs for Town Square
Fiscal Year Phased in Amount
2019 240,000 or 0.5% tax levy impact
2020 240,000/0.5%
2021 240,000/0.5%
Page 5 of 36
Aurora Town Square Budget Update
June 13, 2023 Page 2 of 4
Total 720,000
The business plan and financial strategy also assumed that Town Square would operate
under a Municipal Services Board (MSB) Model, whereby Council would delegate
authority to an independent board to operate Town Square. All existing Town funding
for the Aurora Cultural Centre (ACC), Aurora Museum & Archives (AMA), and Facility
Maintenance (for Library and 22 Church) was to be pooled, and it was assumed that the
independent board would receive revenue from rentals, program registration,
sponsorship, ticket sales, staff recoveries, and more.
Following an in-depth governance review, the MSB Model was eventually abandoned in
favour of the Not-for-Profit/Municipal Hybrid Model, which was approved in June 2020.
Under this model, the ACC would continue to provide cultural services to the community
under a Provision of Cultural Services Agreement and Lease Agreement with the Town,
while the AMA would continue to provide heritage and museum services, and the Library
would offer a range of programs focused on adult learning, literary arts, and more.
The following decisions have also been made as part of the implementation of the
Hybrid Model:
The Town will assume responsibility for facility maintenance, IT delivery,
bookings and rentals, box office administration, and some programming,
including community events.
The ACC will continue to provide base programming focused on performing arts,
visual/fine arts, crafts, camps and community events.
The ACC may expand their existing services to include Front of House and
Technical Production for all of Town Square.
In addition to transitioning to the Hybrid Model, key components were added to Town
Square following approval of the original business plan and financial strategy, including:
Bridge
Water feature
Skating loop
Library improvements:
o New façade and elevator
o Two program rooms
o Boardroom
Page 6 of 36
Aurora Town Square Budget Update
June 13, 2023 Page 3 of 4
o Reading garden
o Corridor
These additions enlarged Town Square by over 10,000 sq. ft. The adoption of the Hybrid
Model, as well as the expansion of Town Square’s physical footprint, compounded by
COVID-19 and inflation, have necessitated a reassessment of Town Square’s operating
budget.
Analysis
In 2024, expenses for salaries and benefits, marketing and communications,
programming, and facility maintenance will increase as the facility becomes
operational. Facility maintenance expenditures will also be higher due to the expanded
square footage as noted above. Staff have also refined and separated revenue
projections based on which organization (Town or ACC) will deliver the various services
to be offered at Town Square.
Between 2024 and 2026, there will be a gradual increase in the number of programs,
performances and rentals, so that by 2026 Town programming at Town Square will
have more or less reached peak programming and rental capacity.
There has also been an incremental approach to the onboarding of staff to limit salary
and benefit expenses during the start-up period. By 2025, the proposed Town Square
staffing complement will be as follows:
1 FT Manager – existing
1 FT Marketing & Communications Specialist – existing
2 FT Customer Services Representatives – 1 approved to date
1 FT Crew Leader – existing
2 FT Maintenance Staff – existing contracts
2 FT Facility Operators
1 FT Technical Production Specialist – approved; this position, as well as Front
of House staff, have been proposed as ACC staff
PT Customer Service Representatives
PT Maintenance Staff
In addition to the staff listed above, there are 2.5 FTEs already funded from the AMA
budget that will also be responsible for program and service delivery at Town Square.
Page 7 of 36
Aurora Town Square Budget Update
June 13, 2023 Page 4 of 4
The Aurora Public Library has also allocated 1 FTE to support the A/V and technical
production needs of Town Square user groups.
Seasonal staff, such as program instructors and camp assistants, will also be recruited
as needed.
Budget Strategy
In consideration of the above staffing and other anticipated operating costs and
revenues for the Aurora Town Square, its total annual incremental net operating
requirements are estimated to be $1,070,000 by 2026, excluding the Aurora Cultural
Centre (ACC’s) requirements. A summary of the ATS’ total estimated net operating
costs for 2026 is presented under Attachment 1. As can be seen from Attachment 1,
once the already earmarked amount of $720,000 within the approved operating budget
is considered, the remaining operating pressure becomes $350,000.
Staff recommend that this new pressure be addressed through a similar multiyear
funding strategy to what was used previously. It is recommended that the $350,000
pressure be phased into the operating budget over a three year period to commence in
2024. This pressure would be fully funded by the tax levy by 2026; in the interim any
funding shortfalls will be funded from past unused ATS funding that is being held within
the tax rate stabilization reserve.
Attachments
1. 2026 Town Square Operating Budget
Page 8 of 36
Attachment #1
Item Amount
Expenditures
Salaries & Benefits 1,306,900
Programming 192,200
Marketing & Communications 99,600
Materials & Supplies 6,850
Contractual Services 28,350
Facility Maintenance 349,100
Total 1,983,000
Revenues
Fees & Services (86,500)
User Fees (296,000)
Grants (39,500)
Total (422,000)
Net Operating Requirement 1,561,000
Less: Existing Approved AMA & Facility funding (491,000)
Short-fall before approved earmarked funds 1,070,000
Less: Approved earmarked funds (720,000)
Net incremental funding requirement 350,000
Note: Excludes all Aurora Cultural Centre Requirements.
2026 Town Square Operating Budget
Page 9 of 36
Finance Advisory CommitteeJune 13, 2023Page 10 of 36
Background•March 2019 – Original Business Plan and financial strategy approved.•Financial strategy included incremental tax levy increase of $240k from 2019 to 2021 until $720k reached in 2022.•Financial strategy based on Municipal Services Board (MSB) Model and before entire scope of project was finalized.Page 11 of 36
BackgroundMSB Model •Expenditures were calculated as an aggregate of existing Town funding for Cultural Centre, Museum, and (Library and 22 Church) Facility Maintenance.•Additional funding earmarked for facility maintenance + programming + staffing.•Under this model, the newly established MSB would be the recipient of all revenue (rentals, program registration, sponsorship, ticket sales and staff recoveries).Page 12 of 36
BackgroundNot-for-Profit/Municipal Hybrid Model•Approved June 2020.•Town responsible for facility maintenance, IT, bookings and rentals, box office administration, and some programming.•ACC to continue to provide base programming.•Opportunity for ACC to expand services to include Front of House and Technical Production Services.Page 13 of 36
BackgroundNot-for-Profit/Municipal Hybrid Model•Facility maintenance expenditures higher due to expanded square footage following approval of financial model and Business Plan.•Over 10,000 square feet added after business plan approval: bridge, water feature, skating loop, Library improvements, including façade and elevator, new program rooms, boardroom, and reading garden.•Compounding budget impacts: COVID and inflation•Revenue projections refined and separated (Town vs. ACC).Page 14 of 36
Budget SummaryIn 2024, expenses for salaries & benefits, marketing and communications, programming, and facility maintenance will increase as the facility becomes operational.Gradual increase in # of programs, performances and rentals, so that by 2026 Town programming will reach peak programming and rental capacity.This approach allows for incremental onboarding of staff to limit salary and benefit expenses during start up period.Page 15 of 36
Budget SummaryProposed Town Square Staffing Complement by 2025•1 FT Manager•1 FT Marketing & Communications Specialist•2 FT Customer Services Representatives •1 FT Crew Leader•2 FT Maintenance Staff•2 FT Facility Operators•1 FT Technical Production Specialist – this position, as well as Front of House staff, proposed as ACC staff•PT Customer Service Representatives and Maintenance Staff Additional Staff2.5 FTEs funded from the Museum that will also be responsible for program and service delivery at Town Square. Library has allocated 1 FTE to support the A/V and technical production needs of Town Square user groups.Page 16 of 36
Budget Strategy•Revised estimated net annual operating costs are $1,070,000.•Does not include Aurora Cultural Centre requirements. •Staff recommend a phasing in of the additional operating budget impact of $350,000 over three years so revised net operating costs will be fully funded by 2026. •Funding shortfalls funded from past unused ATS funding within the tax rate stabilization reserve. Page 17 of 36
Page 18 of 36
Page 19 of 36
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Corporate Services
_______________________________________________________________________________________
Re: Town’s Major Capital Projects Update
To: Finance Advisory Committee
From: Project Management Office, Corporate Services
Date: June 13, 2023
Recommendation
1. That the memorandum regarding Town’s Major Capital Projects Update be received;
and
2. That the Finance Advisory Committee comments regarding the Town’s Major Capital
Projects Update be received and referred to staff for consideration and further action
as appropriate.
Background
The Town currently has multiple major capital projects underway in varying stages of
completion. These major projects include the following:
Aurora Town Square
Fire Hall 4-5
Joint Operations Centre Additional Work
Financial System
Analysis
Aurora Town Square
Activities March- April 2023
Exterior envelope works for the New Museum and Cultural Centre (NMCC)
continued with installation of insulation, metal paneling, and z-girt supports.
Interior fit-up of the NMCC also progressed as drywall boarding, taping, and
painting progressed in several throughout the building.
Page 20 of 36
Town’s Major Capital Projects Update
June 13, 2023
Metal decking for the Treasure Hill Bridge was installed, and radiant in-floor
heating lines were roughed in, and floor slab pour. Work continues on the install
the roof and framing elements.
Exterior site works in The Square ramped up with the warmer weather, sand
blasting of the rink has been completed and installation of the precast concrete
exterior seating has begun.
One hundred forty-eight (148) Request for Change Orders (RFCOs) issued by
Chandos.
Forty-one (41) CCNs / RFCOs have been rejected totaling an estimated value of
~$359k
Two-hundred and fifteen (215) Change Orders (COs) have been approved to-date
totaling a value of ~$2.27M
Notable Change Orders that were approved during the month of February 2023
include:
o NCC Elevator Transformers - $12,148.94
o Frost Slab at east exit door of NCC - $4,521.00
o Relocating exhaust and intake ducts in boiler room - $8,021.20
o Electrical coordination with Library Door Hardware - $9,261.37
o Theatre Remote Lighting Controls Revision -($3,932.15)
o CO-214 – Custom Flagpole Covers - $5,280.00
Project Schedule:
In late March 2023, Chandos provided an updated schedule for the School House and
the New Cultural Centre (NCC).
Milestone Expected Completion Actual/Forecast
Substantial Completion Fall 2022 Summer 2023
Total Completion Summer 2023 Fall 2023
Budget Status:
Colliers has revised the Budget status as “Green” in this reporting period following the
$1.2M budget increase approved by Council in February 2023, Colliers Project Leaders
have rebaselined the project budget at $53,139,700 (including HST).
Page 21 of 36
Town’s Major Capital Projects Update
June 13, 2023
It is inevitable that the project will be pushed beyond the approved funding envelope
when considering the forthcoming post-project claims Chandos will eventually be
submitting due to the schedule extension.
There is approximately 19% of the project scope remaining with approximately $2.43M
in unallocated funds remaining within the project budget. Approved and pending /
forecast Change Orders continue to accumulate. Approx. $2.5M of the $3.5M
construction contingency fund has been approved in COs. Another $0.96M is being
forecasted in upcoming changes indicating a moderate risk to the project outcome.
This is based on the approved and pending / forecasted Change Orders accumulating at
a quicker pace than base construction works. The combined percentage of approved +
forecasted changes for this reporting period (76.2% of the Contingency). Colliers
anticipates that the progression of changes should slow as the construction works
progress and the project moves out of renovation and underground site works, however,
current market conditions continue to create volatile material and labour pricing and
believe this is being reflected in Chandos’ quotes.
Chandos’ contract price excluding Cash Allowances is $39,394,615. The Cash
Allowance amount of $1,615,250 will be tracked separately as the various areas of
scope are implemented throughout the Construction process.
Fire Hall 4-5
Project Schedule
Total Completion: June 15, 2022
Project is now within warranty period and staff are working with contractor to
complete deficiencies and warranty works.
Project will be closed at end of warranty period.
Joint Operations Centre Additional Work
The outstanding capital works of the JOC have been completed with the exception of
the cold storage building. While the need still exists to protect fleet assets and
operational materials staff need to conduct an internal space needs study to map
placement and the potential for repurposing existing structures on site.
The project is to be closed in 2023 and the remaining funding returned to reserves
accordingly. For Council consideration, a placeholder will be included in the 10 Year
Capital for an exterior cold storage building.
Financial System
Overall Project Status:
On May 31st the Town of Aurora implemented the first phase of the new Oracle financial
system. This phase included: procurement, accounts payable, employee expenses,
Page 22 of 36
Town’s Major Capital Projects Update
June 13, 2023
project management, fixed assets and budgets. The balance of the system includes
accounts receivable, cashiering, property tax and water billing. This phase is expected
to be implemented in mid-July.
Project Schedule
Milestone Baselined Completion Expected Completion
Phase I - Financial System
Requirements Development End of Q3, 2021 End of Q3, 2021
Phase II – Procurement End of Q3, 2022 July 2022
Phase III (a) – Implement most
system modules Q4 2023 May 31, 2023
Phase III (b) – Implement
remaining modules Q4 2023 July 2023
Phase IV – Post-implementation
reconciling and documentation Q4 2023 Q4 2023
Phase V –Management of legacy
system data Q2 2024 Q2 2024
Budget Status:
The project is expected to complete within budget. This will also include the contract
staff costs for assisting with the post-implementation reconciling, documentation and
the management of the legacy system data.
Budget Status Cost Note
Approved Budget $2,486,000
Committed $2,445,000
,000
98% project budget
Expected spend at
completion $2,450,000 99% project budget
Page 23 of 36
Town’s Major Capital Projects Update
June 13, 2023
Attachments
None.
Page 24 of 36
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: Reserve Management Policy
To: Finance Advisory Committee
From: Sandeep Dhillon, Senior Financial Management Advisor
Date: June 13, 2023
Recommendation
1. That the memorandum regarding Reserve Management Policy be received; and
2. That the Finance Advisory Committee comments regarding the Reserve Management
Policy be received and referred to staff for consideration and further action as
appropriate
Background
Reserves are one of the most important tools available to municipalities for achieving
financial sustainability and flexibility. Reserves not only assist municipalities in
managing risks, but they also play a role in the financing of capital costs and the
provision of affordable and stable services to constituents. As outlined in the fiscal
strategy approved in 2021, a reserve management policy for the Town should be
developed to ensure stronger longer term financial management. This memo provides
an overview of the newly developed reserve management policy and its alignment to the
fiscal strategy.
Analysis
Reserve Management Policy outlines the guidelines and controls for the creation and
management of reserves
The purpose of the reserve management policy is to establish financial guidelines and
appropriate controls for the administration and management of reserves for the Town
of Aurora. This policy provides regulations and guidelines on the objectives, standards
of care, reporting requirements and responsibilities for the creation and management of
reserves.
Page 25 of 36
Reserve Management Policy
June 13, 2023 Page 2 of 3
The objectives of the reserves management policy are stated below:
Classification of Town’s reserves;
Guidelines associated with the creation of reserves;
Recommended guidelines for the management of reserves such as:
o Investment of reserve funds and allocation of investment income to
reserves;
o Contributions to/withdrawal from reserves;
o Temporary interfund lending between reserves;
o Closing of reserves
o Avoiding negative balance of reserves;
o Maintenance of 10-year reserve forecast
Roles and responsibilities of Town staff and Council members
Reporting and adherence to the guidelines of the reserve policy
Reserves are used to fund capital projects and deficit reserve balance should be avoided
Capital projects in the 10-Year Capital Plan are funded from reserves. There are a
number of reserves that are used to fund capital projects and the funds are applied to
the project based on the purpose for which each reserve can be used. The table above
shows the balance of these reserves over the next 10 years.
The tax-funded reserves maintain a healthy balance in 2023 after the elimination of
$19.9-million worth of roads projects from the 10-Year Capital Plan. While development
charge funded reserves do go into a negative balance, the overall capital reserves
balance stays positive in all years.
10-year capital reserves balances grouped by funding source
($40M)
($20M)
-
$20M
$40M
$60M
$80M
$100M
$120M
$140M
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Reserve Total
Rate Reserves
Hydro Reserve*
Cash-In-Lieu Park
Land
Development
Charge Reserve
Tax Levy
Reserves
Page 26 of 36
Reserve Management Policy
June 13, 2023 Page 3 of 3
The second-generation asset management plan highlighted the need for higher reserve
contributions
The second-generation asset management plan identified the need to further increase
reserve contributions on an annual basis for the next 20 years to address a long-term
infrastructure asset management funding gap. The funding gap was based on each
asset’s accounting estimated useful life. The next phases of the asset management
plan will base asset replacement needs on approved service levels which need to be
established by July 1, 2025. This additional work will refine just how big the funding gap
is, and while it could reduce this gap, it will not eliminate it. The following shows annual
tax and rate change recommended in the asset management plan to eliminate the
infrastructure deficit for core assets based on a 20-year plan for tax funded assets, 10-
year plan for water and wastewater assets and a 15-year plan for storm water assets.
Asset management plan recommended reserve increases by funding source
Attachments
Attachment 1 – Reserve Management Policy
Page 27 of 36
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora Attachment 1
Reserve Management
Policy
Finance
Contact: Senior Financial Management Advisor
Approval Authority: Council
Effective: September 21, 2023
______________________________________________________________________________________
Purpose
The purpose of the consolidated Reserve Management Policy is to establish financial
guidelines and appropriate controls for the administration of reserves for the Town of
Aurora.
This policy provides regulations and guidelines on the objectives, standards of care,
reporting requirements and responsibilities for the creation and management of
reserves.
Scope
This policy applies to all aspects of the reserves of the Town of Aurora.
Definitions
Annual Surplus: The excess of revenues over expenses in a given year.
Community Benefit Charge (CBC): Fee allowed under Section 37 of the Planning Act,
which allows a municipality to impose community benefits charges against land to pay
for growth driven capital costs of facilities, services and matters required because of
development or redevelopment. Collected CBCs are consolidated within an
Obligatory/Statutory reserve to be applied to future eligible growth requirements.
Cash in Lieu (CIL) Parkland: In some instances, the Town will elect that required growth
driven parkland be provided as cash-in-lieu of land. Collected CIL Parkland is
consolidated within an Obligatory/Statutory reserve to be applied to future eligible
growth requirements.
Delegation By-law: The Town’s By-law Number 6212-19, as amended, or any successor
by-law thereto.
Development Charges (DC): Fees against land to pay in full or in part on the increased
capital cost required because of increased needs for municipal services arising from
development of area in which the land is located.
Page 28 of 36
2
Deferred Revenue: Deferred revenue is money received in advance for products or
services that are going to be performed in the future. For example, development
charges are collected in advance before the capital infrastructure is built.
Discretionary Reserves: Established by Council to earmark revenues to finance a future
expenditure for which it has the authority to spend money, and physically set aside a
certain portion of any year’s revenues so that the funds are available as required.
Reserve: A reserve is money set aside by municipalities for a specific purpose or use.
While Ontario legislation requires municipalities to establish certain reserve in certain
circumstances, municipal councils have the discretion to establish reserves for any
purpose for which they have the authority to spend money. Such reserves are intended
to smooth levy requirements for large and/or one-time purchases, mitigate credit
market risk by saving for future capital needs and reducing dependency on debt, as well
as provide self-insurance for uncertainties such as extreme events, events of
magnitude, cyber-crime, etc.
Reserve Funds: Funds that have been set aside for a future event either pursuant to a
by-law of the municipality, a contractual obligation, or a requirement of provincial
legislation. Reserve funds are either “discretionary” being those set aside by Council of
its own volition or “statutory” or “obligatory” being those required to be set aside by
Council by virtue of a requirement of provincial or federal statute. Municipal councils
may set up reserve funds for any purpose for which they have the authority to spend
money.
Tax Levy: The portion of funds that are collected through property taxes on taxable and
payment-in-lieu assessment of the residential, farm, commercial, industrial, and other
categories of property.
Treasurer/Director of Finance: The Treasurer/Director of Finance of the Town or
his/her/their designate.
Obligatory/Statutory Reserve: A reserve created when required by statute that the
revenue received for special purposes be segregated from the general revenues of the
municipality.
Page 29 of 36
3
Policy
Reserves play a vital role in long-term fiscal planning and financial sustainability to
support the Town’s financial health. By taking a long-term view of reserves, the Town
can plan for future increases in asset management capital plan needs and more
effectively fund them over time while minimizing the annual impact to tax and
ratepayers, to ensure the funds are available when needed to support the plan. Reserves
allow for the collection and deferral of development revenues for application toward
eligible future growth requirements. Reserves also plays a key role to manage the
unexpected economic impacts to Town’s operating budget when required. The policy
outlines the following guidelines and appropriate controls for the administration of
reserves such as:
Types of Reserves
Statutory/Obligatory Reserves:
Obligatory reserves are funds that are segregated for specific purposes in accordance
with Provincial statues or other legal agreements. There are strict rules and restrictions
around the collection and use of these reserves such as deferred revenue reserves (DC
/ CBC / CIL Parkland funded reserves)
Discretionary Reserves:
Discretionary reserves are designated for various purposes supported by Council.
Segregation is not required. These funds provide the Town with financial flexibility to
ensure that funds are available to finance a future expenditure or liability, manage
cyclical expenditures and plan for contingencies.
Discretionary reserves are subdivided into following categories:
1. Tax levy funded reserves – reserves funded by the tax levy and are established
by Council for the repairs and rehabilitation of existing Town assets or to pay for
the portion of new assets that are not funded from growth revenues such as DC’s
or to funds the Town’s masterplan and study development
2. User Rate funded reserves – The user rate funded reserves are funded from the
water, wastewater, and stormwater rates
3. Operating /special purpose reserves - Reserves funded by levy or other revenue
sources are used to mitigate or stabilize the impact on service levels, tax rates
and user fees of revenues shortfalls, higher-than-expected expenses and large
periodic or one-time expenses
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Objectives of Reserves
Reserves provide stability and flexibility in the management and planning of the Town’s
financial resources and contribute to the long-term sustainability of the Town’s services
and infrastructure required to deliver the services.
Adequately funded reserves allow the Town to:
• provide for future expenditures and/or liabilities;
• ensure funding is set aside to meet legislated and contractual obligations;
• provide for major capital expenditures;
• smooth expenditures which would otherwise cause fluctuations in the operating
budget and tax levy;
• take advantage of financial opportunities that may arise;
• mitigate the impacts of economic downturns, disasters, pandemics, and other
negative events;
• provide liquidity; and
• provide for emergencies
Establishing Reserves
A new reserve should only be established if it cannot be accommodated within an
existing reserve and/or all other possible alternatives have already been considered.
The Treasurer/ Director of Finance has the delegated authority to create new reserves
as required as per the delegation by-law. However, Council should be informed of any
reserve creation via report to Council or as part of the annual budget development. The
budget document, report or resolution must clearly identify the name of the reserve
being created and the purpose for the new reserve and include a financial plan which
identifies the target funding level (if applicable), funding sources and projected
disbursements (when practicable) to meet planned future obligations, and other
relevant information where applicable. In consideration of the administrative workload
the Town will strive to minimize the number of reserves.
Managing Reserves
To assist the Town in managing reserves, where appropriate, guidance related to
recommended reserve level targets and funding sources are provided on the Town’s
web reserve schedule (schedule of reserve funds)
Discretionary reserve balances will be determined by the Town’s Fiscal Strategy
financial obligations, future reserve requirements and available resources. As per the
delegated authority by Council the Treasurer/Director of Finance can redirect funding
between discretionary reserves. The Town should apply the following guidelines for the
management of reserves:
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Investment of Reserves
Reserves are to be invested and earn interest income for a term that coincides with the
Town’s fiscal year. Applicable funds must be invested in accordance with the Town’s
Investment Policy.
Contributions to/withdrawals from Reserves
All contributions to and/or withdrawals from reserves shall be approved by Council,
normally as a part of the annual budget process or specifically by resolution with the
following exceptions:
• direct contributions to reserves such as development charge contributions;
• transfers of funds between Discretionary Reserves based upon reserve adequacy
analysis, at the discretion Treasurer/ Director of Finance;
• transfers of funds between Discretionary Reserves for reserve restructuring
which, in the opinion of the Treasurer/ Director of Finance, have not changed the
purpose for which the funds were intended;
• transfers to reserves as per the Town’s surplus/deficit management bylaw;
• contributions to and/or withdrawals from revolving reserves such as Winter
Management, Employer Benefits and Tax Rate Stabilization can be made at any
time at the discretion of the Treasurer/ Director of Finance for the purpose
approved by Council;
• The Treasurer/ Director of Finance can authorize the use of undesignated
reserve(s) to fund costs related to an unforeseen event or occurrence deemed an
immediate threat to public safety, the maintenance of essential Town services, or
the welfare and protection of persons, property, or the environment. Repayment
of funds withdrawn is determined by the Treasurer/ Director of Finance based on
needs and adequacy of balances;
• all contributions to and/or withdrawals from reserves will be clearly identified
and segregated within the Town’s accounting system. Budgeted contributions to
reserves will be transferred upon Council approval of the budget and
contributions based on surplus variances will be transferred as required.
• staff to give funding priority to other revenue sources first such as grants if
applicable before accessing reserve funds to fund capital projects;
• growth projects should be funded by development charge revenue as outlined in
the DC study and only the benefit to existing (non-development charge eligible
costs) should be funded through the tax-levy reserves;
• reserve contributions and funding sources vary according to the specific reserve.
Specific direction regarding these contributions and funding sources is provided
on the Town’s web reserve schedule (schedule of reserve funds)
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Reserve balance deficit should be avoided as a best practice
A reserve balance before commitments should not be in a deficit position. Only under
very limited circumstances can a withdrawal /transfer place a reserve in a negative
balance, excluding commitments and will requires Council approval. As a best practice,
negative reserve balances should be minimized as this represents inter-fund lending
which takes away the flexibility of the lending reserves.
Council may, where it is deemed to be in the best interest of its taxpayers, approve the
issuance of debt for the Town’s municipal business. Issuing debt provides the flexibility
to proceed with planned capital projects sooner rather than waiting to collect the
funding source for the project in a reserve. Debt issuance should be viewed in
combination with long-term capital planning and reserve management as outlined in the
Town’s fiscal strategy.
If a reserve is in a negative financial position, restoring the reserve to zero or positive
position takes priority over funding projects, costs, or other initiatives the reserve is
intended to fund.
Annual Surplus/Deficit
As outlined in the Town’s surplus/deficit management bylaw and within this policy, the
following steps for the allocation of tax-funded operating surplus and deficit
management using reserves should be followed in this order:
1. The supplementary tax revenue growth in excess of the net budgeted amount be
allocated to the Growth and New reserve
2. Any net operating budget surplus in Winter Control operations be allocated to the
Winter Control reserve. This contribution is not to exceed the Town’s total tax-
funded surplus
3. Any remaining net operating surplus be allocated 50 percent to the tax rate
stabilization reserve and 50 percent to be allocated to tax-funded capital
reserves based on the future asset management plan requirements
4. Any Aurora Public Library surplus will be allocated to the facilities asset
management reserve
Alternatively, should a net tax-funded operating deficit occur, it would be funded from
the tax rate stabilization reserve. For the Town’s user rate funded operating budgets,
any arising surplus or deficit for building services, water, wastewater, and storm water
operating budgets are to be managed through their own reserves.
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Inter-fund lending
Temporary intra-fund lending between reserves is permitted to temporarily finance
capital expenditures or operating cash flow deficiencies to avoid external temporary
borrowing costs. However, the following conditions must be met:
• borrowing will not adversely affect the intended purpose of the reserve;
• a plan to repay the reserve within a reasonable timeframe as determined by the
Manager Financial Management, based on the nature of the loan and ability to
repay is required;
• if applicable, interest based upon the Town’s investment rate of return will be
applied to any outstanding borrowed amounts;
• all earned interest income must be allocated to lending reserve(s); and
• where applicable, legislative requirements may apply
Closing Reserves
If the purpose or purposes for which a reserve was created has been accomplished and
the reserve is determined to be no longer necessary, the Treasurer/Director of Finance
has the authority to close the reserve as per the delegated authority by Council. Council
should be informed via report or through the annual budget process with the following
information and/or recommendations (if necessary) pertaining to each deleted reserve:
• the closure of the reserve
• the disposition of any remaining funds
• the necessary amendment to the Reserve by-law
For any of the Town’s legacy reserves, the by-law under which they were initially created
may need to be amended to reflect the reserve’s closure. Otherwise, the Treasurer is
able to close the reserve as per the delegated authority.
10-year reserves forecast
A 10-year reserve forecast should be maintained by the Finance team to ensure the
proper planning and analysis of reserve health. The reserve forecast should include the
planned draws from the reserves which align with 10-year capital plan. The reserve
forecast should also include applicable planned contributions to reserves from various
sources such as tax-levy, DC’s, investment income, grant revenue or any user rate fee
revenues.
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Responsibilities
Council
Council shall:
• in accordance with the S.224 of the Municipal Act 2001, develop and evaluate
policies, ensure that administrative policies, practices and procedures and
controllership policies, practices and procedures are in place to maintain the
financial integrity of the municipality
• approve transactions to and from reserves through the budget process or by
specific resolution and by-laws
Treasurer/Director of Finance
• Overall responsibility for the management of reserves;
• Authority to rebalance discretionary reserves within the same funding sources as
they deem necessary;
• To create new and close reserves; and
Manager Financial Management
• ensures a review and report to Council on the adequacy and continuing need for
reserves is undertaken when deemed necessary
• arranges for the preparation and presentation of required reports and/or by-laws
for the creation or termination of any new or obsolete reserve
• develops appropriate strategies, procedures, and processes for the investment of
reserves
• a plan to repay the temporary lending of funds between reserve within a
reasonable timeframe along with the interest payments
Senior Financial Management Advisor
• determines the need for reserves for operating and capital through the
development of the long-range fiscal planning strategy
• Ensures that the appropriate allowances, contributions and/or appropriations are
accounted for in the Town’s annual budget relating to the financial requirements
of the reserves
• Monitors and reconciles all receipts to and disbursements from reserve accounts
to ensure compliance with provincial regulations
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Executive Leadership Team, Corporate Management Team
• provide Financial Management with most current capital asset requirements that
remain in alignment with the approved asset management plan to be used in the
assessment of the adequacy of capital lifecycle reserves
• inform Financial Management when reserve transfers are required; and Consult
with the Director of Finance when reserves transfers are required in support of
unbudgeted transactions
Monitoring and Compliance
The implementation of the reserve management policy should be monitored through:
• Annual Budget: Contributions to and from reserves should be approved by
Council as a part of the annual budget approval. The annual budget binder will
include an updated 10- year reserve forecast and details regarding reserve health
• Annual Audited Financial Statements: Shall include a statement of financial
position, financial activities, and changes in fund balances for all reserves.
• Report on reserve addition or deletion: An update on the addition or deletion of
reserves will be provided to Council via report
• Periodic adequacy review: A comprehensive review of the reserves will be
undertaken as required to determine if the existing balances are adequate based
on analysis of requirements, that the need for the reserves still exists and/or
identify the need for any new reserves
References
• Fiscal Strategy
• Debt Policy
Review Timeline
This policy will be reviewed 2 years after the initial approval date.
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