REQUEST FOR DECISION
DATE: March 15, 2017 Report No. FIN-17-005
TO: Laurie Hurst, Chief Administrative Officer
FROM: Ian Irvine, Director of Financial Services
SUBJECT:
Title
Infrastructure and Revitalization Reserve Fund Transferring Bylaw, 2017, No. 2892
End
RECOMMENDATION:
Recommendation
That Council gives Infrastructure and Revitalization Reserve Fund Transferring Bylaw, 2017, No. 2892, first, second and third reading.
Body
RELEVANT POLICY:
Community Charter S.189
STRATEGIC RELEVANCE:
Identify infrastructure repair and proactively plan for replacement needs
Identify long term financial requirements for infrastructure
BACKGROUND:
During its meeting on March 6, 2017, Council approved the expenditure of up to $2,813,000 for the Esquimalt Town Square Remediation project costs. Typically, these costs would be funded through the acquisition of long term debt to spread out the costs over a number of years. Due to the timing of the project initiation, the option of obtaining long term debt from the Municipal Finance Authority was not available. Another potential option for funding capital projects is the Capital Projects Reserve Fund however the current balance in the Reserve Fund is not sufficient to fully fund the project costs.
In 2014 the Township also established an Infrastructure and Revitalization Reserve Fund and as of December 31, 2016 it contains an available balance of $3,479,000 which is sufficient to fully fund the remediation project costs. However, the funding of these costs is not clearly permitted based on the wording in the bylaw which established the Fund.
The Community Charter permits transfers between reserve funds, through bylaw, if both the originating and receiving reserve funds have been set up for the purposes of funding capital projects. In instances where these transfers occur, the full amount including interest, are to be repaid to the initial reserve fund. The Charter indicates this repayment must be completed no later than when the funds are needed for the purposes of the initial fund.
ISSUES:
1. Rationale for Selected Option
By transferring the funds from the Infrastructure and Revitalization Reserve Fund to the Capital Projects Reserve Fund, the costs of the Esquimalt Town Square Remediation project can be fully funded without the need to incur additional debt or forego other approved capital projects within the Township.
2. Organizational Implications
There are no organizational implications of this decision.
3. Financial Implications
The cost of the remediation will be included in the 2017-2021 Financial Plan. This decision has implications on how the project is funded within the Financial Plan but has no impact on the total project cost.
The repayment to the Infrastructure and Revitalization Reserve Fund will occur over the next eight years commencing in the 2018 fiscal year. Annual repayments of $350,000 will be made in addition to the annual minimum contribution to the Reserve Fund as indicated within the bylaw under which it was established. These amounts will be included in the draft Financial Plan each year and will be factored when calculating the annual tax revenue requirements.
4. Sustainability & Environmental Implications
There are no sustainability or environmental implications of this decision.
5. Communication & Engagement
The adopted bylaw, as support for the initial transfer as well as the annual repayment amounts, would be included in the budget binders provided to Council and held at the counter for public viewing at the Municipal Hall.
ALTERNATIVES:
1. That Council gives Infrastructure and Revitalization Reserve Fund Transferring Bylaw, 2017, No. 2892, first, second and third reading.
2. That Council make amendments to the Bylaw and gives first, second and third reading to the amended bylaw.
3. That Council not give the Bylaw first, second and third reading to Bylaw 2892.