AGENDA - General Committee - 20150207SPECIAL GENERAL COMMITTEE
2015 BUDGET REVIEW
MEETING AGENDA
SATURDAY,FEBRUARY 7,2015
9 A.M.
COUNCIL CHAMBERS
AURORA TOWN HALL
PUBLIC RELEASE
February 4,2015
TOWN OF AURORA
SPECIAL GENERAL COMMITTEE
2015 BUDGET REVIEW
MEETING AGENDA
Saturday,February 7,2015
9 a.m.
Council Chambers
1.DECLARATION OF PECUNIARY INTEREST AND GENERAL NATURE THEREOF
2.APPROVAL OF THE AGENDA
RECOMMENDED:
THAT the agenda as circulated by the Legal and Legislative Services be
approved.
3.PUBLIC CONSULTATION –OPEN SESSION –OPPORTUNITY FOR MEMBERS
OF THE PUBLIC TO PROVIDE INPUT REGARDING THE 2015 BUDGET
4.DELEGATIONS
RECOMMENDED:
THAT the requirements of section 3.8(c)of the Procedural By-law be waived to
permit the delegation of Dan Elliott,Director,Corporate &Financial Services,to
speak for more than five (5)minutes.
(a)Dan Elliott,Director,Corporate &Financial Services -Treasurer
Re:Asset Management Plan,Ten Year Capital Investment Plan,and
Capital Budgets
5.CONSIDERATION OF ITEMS
6.ADJOURNMENT
Special General Committee –2015 Budget Review Meeting Agenda
Saturday,February 7,2015 Page 2 of 2
AGENDA ITEMS
(Binder distributed Jan.26,2015)
1.Review of Town’s Asset Management Plan (AMP)(Binder Tab 1)
RECOMMENDED:
THAT the Town’s Asset Management Plan (AMP)be received for information.
2.Review of 2014 Ten Year Capital Investment Plan (Binder Tab 2)
RECOMMENDED:
THAT the 2014 Ten Year Capital Investment Plan be received for information.
3.Review of 2015 Draft Repair &Replacement Capital Projects (Binder Tab 3)
RECOMMENDED:
THAT the 2015 Draft Repair &Replacement Capital Projects be received;and
THAT the 2015 Draft Repair &Replacement Capital Projects be approved as
presented.
4.Review of 2015 Draft Growth &New Capital Projects (Binder Tab 4)
RECOMMENDED:
THAT the 2015 Draft Growth &New Capital Projects be received;and
THAT the 2015 Draft Growth &New Capital Projects be approved as presented.
5.Review of 2015 Draft Studies &Other Capital Projects (Binder Tab 5)
RECOMMENDED:
THAT the 2015 Draft Studies &Other Capital Projects be received;and
THAT the 2015 Draft Studies &Other Capital Projects be approved as presented.
TOWN OF AURORA
ADDITIONAL ITEM
FOR SPECIAL GENERAL COMMITTEE
2015 BUDGET REVIEW MEETING
Saturday, February 7, 2015
9 a.m.
Council Chambers
Delegation (b) Bill Hughes, Commissioner, Finance and Treasurer, Regional
Municipality of York
Re: Financial Sustainability, Asset Management, and York Region Long-Term
Financing Overview
RECOMMENDED:
THAT the requirements of section 3.8(c) of the Procedural By-law be waived to
permit the delegation of Bill Hughes, Commissioner, Finance and Treasurer,
Regional Municipality of York, to speak for more than five (5) minutes.
1
Good Government
Financial Sustainability for York Region
Aurora Town Council
Bill Hughes, Commissioner of Finance &
Regional Treasurer, York Region
February 7, 2015
Outline
Financial Sustainability
Asset Management
Proposed Regional Budget
2
Financial Sustainability
Roman aqueducts still in use today
4
Credit agencies’ view of York Region
From Moody’s:
“The Regional Municipality of York’s Aaa debt rating is supported
by…prudent and far-sighted fiscal management”
“…given York’s track record, we are confident that medium-term
pressures will be addressed successfully through the budgetary
process.”
From Standard & Poor’s:
“York’s financial management is strong…Management has a track
record of meeting its goals, and revising them as
necessary…Revenue and expenditure management is very strong”
“We expect that York’s liquidity will remain exceptional”
5
Financial sustainability is about the
stewardship of the long-term
Financial sustainability requires long-term planning; it does
not just happen
The key to financial sustainability is taking the necessary
steps in the near-term to manage long-term risks
The most important risks to the Region’s long-term financial
sustainability are:
The future cost of infrastructure investments (asset
management)
Over-reliance on debt financing of growth-related capital
The Region is well-positioned to manage future risks now
because it is growing
6
Building blocks of financial sustainability
7
Long-Term
Perspective
Strategic Use
of Debt
Growing
Reserves
Sound
Capital
Budgeting
Sophisticated
Asset
Management
Active
Investment
Management
Full Cost
Recovery
Superior
Credit Rating
Appropriate
Levels of
Service
Budget achieves complex, interwoven goals
related to long-term financial sustainability
Reduced reliance on debt
Accumulation and wise use of reserves
High credit rating
Capital investments to keep pace with growth
Moderate tax increases
Investment in Strategic Plan priorities
Compliance with the Province’s Annual Repayment Limit
8
Asset Management
Much more is at stake now for
municipalities
The municipal share of asset ownership in Ontario has
significantly increased since the 1960s
Original source: StatsCan, From Roads to Rinks, Table A.1, Feb. 2008
There has been a dramatic shift in government
responsibility for infrastructure
10
Share (%) 1961 2005
Federal 31% 10%
Provincial 31% 22%
Local 38% 67%
An asset management framework
Asset management is simply managing an asset so that it provides the
desired level of service over its life span at the lowest possible cost
11
Source: Based on York Region’s Asset Management Framework
Level of Service
•Current/Future Demand
•Performance Expectations
•Risk Tolerance
Lifecycle Management
•Asset Portfolio
•Lifecycle Investment Analysis
Financial Management
•Funding and Financing Source
Analysis
•Saving and Investment Timing
Asset Management Plans
Effective asset management lowers
costs over time
Timely investments in repairs can provide higher service levels
and lower the total cost of managing an asset
12
Source: Based on a chart in the Ontario Ministry of Infrastructure’s Guide for Municipal Asset Management Plans
Poor Asset
Management
Smart Asset
Management
$50m Condition
Year
$50m
The Region already has a valuable
asset base
13
Current Replacement Value – $9.4 Billion
As of December 31, 2013
*includes land, land improvements, buildings, equipment and vehicles associated with the services
The asset base continues to grow
rapidly
14
2015 Ten-Year Capital Plan by Asset Classification (2015-2024)
Total $5.8 Billion
*Including Housing York Inc.
Budgeting for asset management
The National Research Council recommends that about 2% of the value of
assets should be spent on repairs and normal rehabilitation and 2%
contributed to reserves each year
15
Pay-as-you -go Capital Reserves
Repairs and
normal
rehabilitation
Portfolio-based
life-cycle
investments
Major life-cycle
rehabilitation
Asset
replacement
Asset
betterment
The Region is providing for its asset
management needs
Council has a policy of incrementing the contribution to general
capital asset replacement reserves by 1 percent of the prior year’s
tax levy each year
Starting in 2013, Council directed that the increment be further
increased by 0.2 percent annually until it reaches 2 percent in 2017
16
($Millions) 2015 2016 2017 2018
Pay-as-you-go capital 81 98 104 83
Contributions to corporate asset
replacement reserves 75 92 112 117
Contributions to water/wastewater
replacement reserves 40 41 53 104
Other specialized contributions to
replacement reserves 47 50 51 52
Total contributions to capital
reserves 243 281 319 356
*Numbers may not add due to rounding
Rising contributions to corporate capital
asset replacement reserves
Contributions to corporate capital asset replacement reserves continue to grow
17
15
23
30
38
49
61
75
92
112 117
-
20
40
60
80
100
120
140
2009 2010 2011 2012 2013 2014 2015
Proposed
2016
Outlook
2017
Outlook
2018
Outlook
$ Millions
Strong growth in capital asset
replacement reserve balances
18
539 617
722
842
943
1,092
1,231
1,379
1,541
1,723
1,937
-
500
1,000
1,500
2,000
2,500
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
$ Millions
Proposed Regional Budget
History of tax levy increases
20
Recommended tax levy increases
1.69%
1.07%
0.09%
0.84%
3.79%
3.34%
2.94%
2.35%
0%
1%
2%
3%
4%
5%
2015 2016 2017 2018
Fiscal Strategy
Regional Programs Excluding
Fiscal Strategy
York Region Municipal Price Index
Bank Forecast of Inflation
21
Short-term Fiscal Sustainability Index
22
Fiscal Sustainability Index below one
23
0.86
1.69 1.57
1.41
2.24
0.92 0.85 1.02 0.97 0.85
0.00
0.50
1.00
1.50
2.00
2.50
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FSI York Region's FSI (2009 to 2018)
York Region's FSI
Target FSI = 1