Capital Budget and Long Range Capital Forecast January 17, 2019 ajax.ca
Agenda Capital Budget 1. Budget / Forecast Overview 2. Definition 3. Funding 4. Production 5. Presentation 6. Council Approval 7. Delivery of Capital Plan 8. Pressures 9. 2019 Budget Highlights 10. Public Budget Meeting 2
1 Budget and Forecast Overview 3
Master Plans, Studies & Strategies Operating Budget Prior Year’s Capital Forecast Budget & Long General Levy Range Capital Forecast Forecast Recommended New/Expanded Current Year Operating Budget Programs/Services Current Year Capital Budget &LRCF Recommended FT/PT Staff Requests In-year Service Delivery Operating Budget Management Capital Expenditure Control 4
2 Definition 5
Capital Budget and Long Range Capital Forecast Capital Budget/Long Range Capital Forecast is: Funding for the design, acquisition and maintenance of new and existing capital infrastructure and other projects including: • Buildings • Parks • Vehicles and equipment • Road network • Technology • Master plans, studies and strategies 6
Capital Budget and Long Range Capital Forecast Council approves: Current Year Capital Budget and; Four Year Long Range Capital Forecast (LRCF) • The LRCF is updated each year as part of the annual budget process The Capital Budget and LRCF is fully funded, from a variety of sources, based on funds currently available plus projected future revenues 7
3 Funding • F i n a n c i a l S u s t a i n a b i l i t y P l a n • D i s c r e t i o n a r y C a p i t a l R e s e r v e s • R e v e n u e S o u r c e s - C a p i t a l R e s e r v e s • D e b t • R e s e r v e F u n d s • O t h e r 8
Financial Sustainability Plan The Financial Sustainability Plan (FSP), implemented in 2014, has guided strategic financial planning ensuring short and long term financial strength and sustainability Relative to the Capital Plan, the FSP defines: • Capital reserves, including use and revenue sources • Long term debt management 9
Discretionary Capital Reserves The Discretionary Capital Reserves Policy #123 establishes the revenue sources and use of discretionary capital reserves There are a total of 11 capital reserves of which 7 actively fund the capital budget and LRCF 10
Discretionary Capital Reserves The 4 inactive reserves are as follows: Reserve Use Revenue Source Capital Contingency Town’s share of capital grant Operating Budget Surplus programs Unbudgeted Capital Expenditures CIP Development Capital projects within Downtown Disposal/sale of land Improvement CIP 20% of building permit fees for projects in Downtown CIP (0% from priority sites) Debt Repayment Offset the operating budget Development Charges impact of existing debt payment User fees Post Growth Capital Not an active/current funding Up to 15% of assessment source growth Annual surplus from Supplementary Tax Revenue 11
Discretionary Capital Reserves The 7 active reserves are as follows: Reserve Use Revenue Source Building Maintenance/repair/ rehabilitation of General Levy Budget Allocation Maintenance existing buildings and facilities (includes 10% of Slots Revenue surrounding campus) 20% of Veridian Revenue Renovations to existing buildings Portion of the tax room on retired long term debt Debt Reduction Reduce the amount of long term debt 25% of Slots Revenue (Slots) issued Offset the operating budget impact of existing debt payment Development Town’s share of DC projects General Levy Budget Allocation New infrastructure not eligible for DC 25% of Slots Revenue Funding 20% of Veridian Revenue Waterfront & Shoreline Improvements General Maintenance/repair/rehabilitation of all General Levy Budget Allocation Infrastructure other infrastructure not fundable by 10% of Slots Revenue Building Maintenance 15% of Veridian Revenue 12
Discretionary Capital Reserves The 7 active reserves are as follows (con’t): Reserve Use Revenue Source Roads Repair/maintenance/rehabilitation of General Levy Budget Allocation Maintenance roads and related infrastructure 10% of Slots Revenue 15% of Veridian Revenue Strategic Master plans, strategies, studies General Levy Budget Allocation Initiatives Traffic Calming 5% of Slots Revenue Community Action Plan capital 5% of Veridian Revenue projects New Software Art in public spaces Vehicle and Replacement of Vehicles and General Levy Budget Allocation Equipment equipment including information Sale of used and surplus Replacement technology, fire and recreation vehicles and equipment equipment 25% of Slots Revenue 20% of Veridian Revenue 13
Reserve Contributions by Source 2019 Budget - $15,789,500 $5,631,900 General Levy $7,687,500 Veridian Slots $2,470,100 14 14
General Levy – Allocations to Reserves 2019 Budget - $5,631,900 Veh./Equip. Replacement $69,000 Roads Maintenance $60,000 $200,000 General Infrastructure Mtce. $387,000 Building Maintenance $1,657,900 $781,600 Strategic Initiatives Development $908,600 $1,567,800 Post Growth Election Increase of $92,000 from 2018 budget, from Assessment Growth Increase allocated to 4 reserves – Building Maintenance, Roads, General Infrastructure and Post Growth 15 15
Veridian – Allocations to Reserves 2019 Budget - $2,470,100 Veh./Equip. Replacement $123,500 Building Maintenance $370,500 $617,600 Development $370,500 Roads Maintenance $494,000 $494,000 General Infrastructure Mtce. Strategic Initiatives 100% of Veridian revenues are allocated to capital reserves No change from the 2018 budget 16 16
Slots – Allocations to Reserves 2019 Budget - $7,687,500 Development $369,400 Debt Reduction $298,900 Veh./Equip. Replacement $738,900 Roads Maintenance $1,847,200 $738,900 General Infrastructure Mtce. Building Maintenance $738,900 $1,847,000 $1,108,300 Strategic Initiatives Operating Budget 96% of the Slots revenue is allocated to capital reserves No change to 2018 budget 17 17
Revenue Allocations to Reserves Millions $4.0 $3.5 $3.0 $2.5 Slots $2.0 $1.5 Veridian $1.0 General $0.5 Levy $0.0 18 18
Capital Funding – Debt The Long Term Debt Management Policy #124 includes guidelines for: • Purposes • Term • Maximum Amount • Type • Use of tax room from retired debt 19
Capital Funding – Debt Purposes: • Construction of new buildings • Expansion or major repurposing of existing buildings Term: • Goal is 15 year term • Recommendation of different terms may occur depending on interest rates, amount of debt and future requirements and retirements Maximum Amount: • Internal debt only - maximum of $3.0M • Internal & External – shall not exceed 30% of the cost of construction (excludes design fees and land acquisition) 20
Capital Funding – Debt Type: • External – a debenture issued by the Region of Durham • Internal – borrowing from the Town’s discretionary reserves; requires approval by the Region of Durham Use of tax room from retired debt: • Tax room created from retired debt shall be converted to General Levy Reserve Allocations to the: o Debt Repayment Reserve o Building Maintenance Reserve 21
Capital Funding - Reserve Funds Reserve Funds (Statutory/Obligatory): • Development Charges • Federal Gas Tax • Parkland (Cash in Lieu) All reserve funds have restrictions on use through legislation and/or agreements 22
Reserve Funds – Development Charges In accordance with the legislation, Development Charge Act, 1997, every 5 years, the Town updates the Development Charge Background Study and By-law The background study, outlines the estimated amount, type and location of development within a municipality, and the related calculations of how the new development will affect municipal services. The completion of the background study typically takes about 1 year and includes stakeholder consultations as well as a mandatory public meeting and notices. 23
Reserve Funds – Development Charges Development charges are collected to support the following service categories: • Transportation Services • Fire Services • Parks and Recreation Services • Library Services • Administration Services 24
Reserve Funds – Development Charges The most recent DC By-law came into effect as of July 16, 2018 with the following charges: Residential Type Town of Ajax DC Single Detached $24,978 Semi-detached $24,978 Apartment, two bedrooms or more $12,015 Apartment, less than 2 bedrooms $7,552 Other (townhouse, link) $19,724 Non Residential Town of Ajax DC Commercial, Industrial, Institutional $6.43 per square foot 25
Reserve Funds – Development Charges Collection of Development Charges: • Development charges are collected at the time of building permit issuance • Every year, forecasts for the collection of Development Charges are done based on existing and anticipated planning applications with input from developers 26
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