What a difference a year makes

It is hard to believe that it’s now a year since I took office. It has been a generally satisfying year with significant positive changes at town hall.

 

Staffing

In the first Quarter of 2013, Mr. Allen’s resignation facilitated the promotion of Jon Wilsgard to the position of Chief Administration Officer. Jon assumed both jobs as CAO and Corporate Officer thus eliminating one position. I believe Jon is capable of becoming a first rate CAO.

Mr. Love and Mr. Smith also moved on to other communities affording Mr Wilsgard the opportunity to restructure the management team. Mr Love’s position, the manager of strategic initiatives, became redundant and he will not be replaced. The Manager of Planning position remains vacant.

The much improved staff moral under this new management team is palpable.

 

Economic development

The tripartite funding agreement for Golden Area Initiatives (GAI) comes to an end today. The disfunctionality of the GAI was recognized by both the town and the regional district and a new model of economic development needs to be established.

Bruce Fairley has stepped up to the plate and formed a committee with a project-based focus to economic development. I support this initiative and hope that in the New Year they can garner the support of the other stakeholders.

 

Financial Reporting

Many improvements have been achieved by the Chief Financial Officer in the timing and level of detail in the financial information that is now available to council to make informed decisions, and to the public in the 5-year financial plan that was given first reading on December 17^th, months ahead of last year. There is still more work to be done to improve the transparency of the information and the readability of the reports, but I am confident that this will be achieved.

 

Planning Department

With the departure of Mr. Smith and in the absence of Mr. Mirehouse the planning department is now staffed by 2 young and keen individuals whom I am hoping will present a friendly and enthusiastic face to both new and existing businesses.

With the New Year comes new challenges and opportunities

 

New Building Canada Plan

Expected to be introduced in 2014, the New Building Canada Plan is a 10-year federal grant program to help communities repair and rebuild infrastructure. How this plan is managed and how the town finances its matching contribution will be critical to its impact on the town. Chris Cochrane has identified the infrastructure in most need of attention and the NCBP will allow us to address a large portion of the town’s infrastructure deficit.

 

Borrowing Bylaw

Loan Authorization Bylaw 1326 2013 for $5 million to cover the town’s portion of the New Building Canada Fund (NBCF) grant application was given first, second and third reading at the council meeting on Dec. 3^rd 2013. The town is awaiting provincial approval, expected to be received in January 2014, before proceeding.

I am of the opinion that the town could and should fund its portion of the NBCP by reallocation of future budgeted general capital expenditure, an allocation of reserve funds, and/or reallocation of tax revenues. Town staff will be evaluating these and other alternatives in the New Year.

The borrowing bylaw will require approval from the electorate, but council has not yet decided if it will use the alternative approval process or go to referendum. I am totally against borrowing given the current state of the town’s finances and will continue to challenge the borrowing bylaw in 2014.

 

Zoning Bylaw

Reviewing sections of the zoning bylaw has been identified as a priority for the planning department in 2014. I’m hopeful that the significant barriers to development can be addressed and a made-in-Golden solution to the parking issues can be achieved. Resolving these thorny issues will be a test for the young planner in 2014.

Reserve Funds

The Finance department will undertake, as a strategic priority in 2014, a review and rationalization of the Reserve Funds. It’s not just about saving money for a rainy day, but about making the most out of the money we have.

 

Municipal Election

2014 is Municipal Election year.

I hope everyone has a happy and prosperous New Year.

Keith W Hern

The opinions expressed in this Blog are my personal opinions and may not represent the opinions of other councillors nor the opinions of council.

Borrowing Bylaw 1326 2013 Loan Authorization

At the council meeting on Tuesday, Dec 3^rd 2013, Council will consider reading bylaw 1326 2013 Loan authorization for $5 million to cover the town’s portion of the New Building Canada Fund (NBCF) grant application. I would like council to consider delaying the reading of the bylaw until after the staff has been given the opportunity to investigate alternative sources of funds to satisfy the town’s contribution under the NBCF grant. Only then will council have the data to make informed decisions on the amount and  timing of any short-term borrowing that may or may not be required.

Step 1: Reallocation from the 5-year plan capital budget

Staff should identify all of the water, sewer and road projects from the list of capital projects in the 5-year plan and determine if those projects would qualify under the NBCF. These projects could then be added to the list of NBCF projects and the capital re-allocated to satisfy the town’s contribution for the NBCF. 

Step 2: Reserve Allocation

If insufficient funds are identified in step 1, then the staff should determine if the addition of funds from the water, sewer and road reserves would be enough to satisfy the town’s contribution to the NBCF. 

Step 3: Leasing and short term borrowing

After steps 1 and 2 have been exhausted then the staff should determine how much capital could be preserved and reallocated to the NBCF by the use of leasing and short-term financing for larger capital items such as trucks, graders and plows in the 5-year budget.

Step 4: Long term borrowing

After steps 1,2 and 3 have determined how much of the town’s contribution can be funded by reallocation of funds from existing capital, council will the be able to make an informed decision as to the amount and timing of any long term borrowing to satisfy the town’s contribution under the NBCF grant application.

The opinions expressed in this Blog are my personal opinions and may not represent the opinions of other councillors nor the opinions of council.

NCBF alternatives to borrowing

The end game is to secure $10 million in NCBP funding to address the ongoing and accumulated water, sewer and road infrastructure deficit. We should strive to achieve this end with the minimum impact to the town’s balance sheet while maintaining maximum financial flexibility. Council should also consider a process that achieves this end with the highest probability of success.

Borrowing will have a negative impact on the town’s balance sheet and severely limit the town’s future financial flexibility. Borrowing will also require a referendum which introduces significant risk of failure. For these reasons, I would like council to reconsider its decision to proceed with a borrowing bylaw for $5 million and investigate other alternative sources to fund the town’s portion of the NBCP.

Alternative sources of funds

The NCBF has a 10-year grant life, which according to Focus Engineering, would require annual funding from the town of under $500k per year for 10 years. To secure the NCBP grant, the town must demonstrate, to the satisfaction of the grantors, that the town can and will dedicate $500k per annum to the NCBF. Can this be shown?

The 2012 Town of Golden annual report (page 39) shows the revenue and expenses for water and sewer services on schedule 3. The combined amortization for water and sewer in 2012 was reported at $580,859. This is the amount of money that should be either expended on water and sewer capital projects or, if not spent, transferred into the water and sewer reserve funds. Dedication of this amount to the NBCF will more than satisfy the grantor’s requirement of demonstrating the town’s ability and resolve to provide the matching funds.

The 5-year plan for water and sewer presented to the Mayor’s Finance Committee on November 22, 2013 shows a projected surplus before amortization of $754,183; ($312,780 for water; $441,403 for sewer). This is more than enough to cover the annual amortization ($590,859 in 2012) meaning that the water and sewer can now be considered to be self financing. The 5% increase in water and sewer rates anticipated for 2014 will put the water and sewer in a healthy surplus even after allowance for amortization.

Over the 5-year period 2014-2018, the projected surplus before amortization is $3,665,602 or an average of $733,120 per year. This is again more than enough to cover the anticipated maintenance and the town’s portion of the NCBP.

Effect on Existing Capital Program

Staff have developed an inventory of 19 suggested projects that should qualify for the NBCP over and above the existing budgeted capital in the 5-year plan. Would dedicating $500k to the NBCP affect the town’s ability to complete the existing budgeted capital?

At the Finance Committee meeting on November 22, 2013 I asked if the major expenses in the water and sewer capital budget would qualify for the NCBF. The staff responded that, subject to receiving and checking with the NCBP, the majority of the large capital expenses would qualify for the NCBP. When the NBCP granting application is made these projects would have to be included.

Hence there would be no impact on the town’s ability to complete projects in the existing 5-year capital budget. Combining the major projects from the existing 5-year capital budget with the 19 suggested projects would result in a NBCP grant application of more than $10 million. If the town wanted to stay at the $10 million level for the grant then some of the 19 suggested projects would have to be delayed or included in another grant application.

Leasing and short-term debt

Under the heading of General Capital, the big ticket items are the loader and plow truck. Normally buying these items outright is the cheapest way to proceed. Should it be required,  leasing or short-term borrowing facilitates the preservation of capital allowing the town to take full advantage of the NBCP without resorting to long-term borrowing.

Conclusion

Quite clearly, it can be demonstrated that the town generates sufficient funds from the water and sewer utilities to more than cover the town’s portion of the NCBP.

If the major water and sewer projects from the existing 5-year capital budget are included in the NBCP grant application, the town will be able to complete these projects in a timely manner.

The town has the financial flexibility to use leasing and/or short term borrowing to address general capital requirements should that be required to preserve capital for the NBCP.

Obtaining the NBCP grant without borrowing will maintain maximum financial flexibility should the town need to borrow funds in the future. This process also carries an almost 100% probability of success as it will not require the approval of the electorate.

Recommendation

I recommend that the town not proceed with the borrowing bylaw at this time.  Instead I propose that council request that the town staff determine if the dedication of $500k per year for the next 10 years from the water and sewer utility revenues, to fund the town’s portion of the NBCP, is feasible.

The opinions expressed in this Blog are my personal opinions and may not represent the opinions of other councillors nor the opinions of council.