City of Vancouver Investor Presentation September 10, 2019 - PowerPoint PPT Presentation

City of Vancouver Investor Presentation September 10, 2019

Disclaimer • This presentation and subsequent discussion, contains certain forward-looking information, forecasts, projections, goals and strategies (the “forward-looking information”) with respect to revenues, funding, expenses, the financial condition, results of operation and business of the City of Vancouver (the “City”). This forward- looking information represents the City’s expectations or beliefs concerning future events and involves known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance cannot be relied on as a guide to future performance. This material is for information purposes only. 2

Investment Proposition High quality credit ratings Thriving and robust economy Stable revenue sources and property tax base Strong fiscal management Commitment to regular issuance 3

Maintaining Highest Quality Credit Rating Aaa (stable) AAA (stable) May 09, 2019 February 07, 2019 • “The affirmation of the Aaa ratings is based • “Continuity of sound management under new government and steady, but milder, economic on positive operating outcomes which are growth will support creditworthiness.…” supported by reliable revenues and a large, diverse economic base .” • “The stable outlook reflects our assumption that a solid economy and comprehensive fiscal • “The ratings also reflect the city's high planning will facilitate operating and after- levels of liquidity .” capital fiscal surpluses over the next two year.” • “The stable outlook reflects Moody’s assumption of continued strong fiscal • “We believe that Vancouver's detailed long- performance over the next 18-24 months from predictable sources of income, and term financial planning , as well as its continued excellent levels of liquidity and experienced financial management team, will strong debt affordability .” provide a solid fiscal policy anchor as the city's new government looks to implement its policy agenda.” 4

Economy

Metro Vancouver – Positive Economic Indicators Metro Vancouver Real GDP Growth (%) Canada Unemployment (%) 5.0% 4.4% 8.0% 4.2% 4.0% 3.9% 7.0% 6.9% 6.9% 4.0% 7.0% 6.3% 5.9% 5.9% 3.0% 5.8% 2.5% 2.5% 2.4% 2.4% 6.0% 5.6% 2.3% 5.5% 5.5% 5.5% 5.5% 2.2% 3.0% 5.4% 2.6% 2.0% 5.0% 4.6% 2.1% 2.1% 4.5% 4.5% 4.5% 4.5% 1.9% 4.3% 4.3% 1.7% 1.7% 1.6% 1.0% 4.0% 1.1% 0.9% 0.0% 3.0% 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F 2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F Population Growth (%) CPI (%) 3.5% 2.0% 3.1% 3.0% 1.5% 1.5% 1.4% 2.4% 1.5% 1.3% 1.3% 2.5% 2.2% 2.2% 1.2% 1.2% 1.1% 1.1% 2.0% 2.0% 2.0% 2.0% 1.0% 2.0% 2.4% 1.3% 2.3% 1.0% 1.2% 2.0% 2.0% 2.0% 2.0% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.5% 1.9% 1.2% 1.0% 1.1% 0.9% 1.6% 0.5% 1.0% 1.4% 1.1% 0.5% 0.0% 0.0% 2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F 2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F Source: The Conference Board of Canada Winter 2019; Statistics Canada; CMHC Housing Time Series Database Metro Vancouver continues to be a thriving and robust economy. 6

Electric Vehicle Zero Emission Buildings Plan Transportation 2040 Ecosystem Strategy A FAMILY OF Neighbourhood Energy Vancouver Food Strategy STRATEGIES Strategy Climate Change Healthy City Strategy Greenest City Action Plan Adaptation Strategy GREENEST CITY ACTION PLAN 7

2019 Greenest City-Wide Success Source: City of Vancouver Greenest City 2020 Action Plan , which can be found at vancouver.ca/GreenestCityActionPlan 8

Task Force for Climate-Related Financial Disclosures (“TFCD”) TCFD Recommended Climate Related Disclosures City of Vancouver Disclosures • Vancouver’s Climate Strategies and Governance (page • Governance on risks and opportunities 32 & 33, 2018 CoV Annual Report) Governance • Climate Risk and Adaptation in Vancouver ( page 34 & 35 • Impacts to business, strategy and financial 2018 CoV Annual Report) planning where material • 2019-2022 Capital Plan Strategy • Climate Risk and Adaptation in Vancouver ( page 34 & 35 • Disclose how risk is identified, assessed and 2018 CoV Annual Report) managed Risk • 2019-2022 Capital Plan Management • Disclose metrics & targets to assess and • Climate Metrics and Targets in Vancouver ( page 37 2018 Metrics & manage risks and opportunities CoV Annual Report) Targets In 2018 the annual financial report, the City was the first municipality to include climate-related financial disclosures that align or partially align with TCFD recommendations 9

Strong Fiscal Management 10

Long-term Capital Planning 10-Year 1-Year 4-Year Capital Strategic Capital Budget Capital Plan Outlook (updated quarterly) + 4-year forecast Project approval Strategic choices Shorter-term about investments priorities Every year Every 4 years Every 4 years Identifies objectives Provides detailed Identifies program information and to be achieved priorities and specific plans about projects projects to be (may include to be completed completed specific projects) Assigns specific Assigns order-of- Assigns fixed funding level magnitude funding funding level  The 2019-2022 Capital Plan was approved in Dec 2018 11

Strong Liquidity Position Consolidated Reserves $ millions 1200 “strong liquidity profile” 1000 12 year cumulative growth of $838M (+240%) 800 600 1,177 “exceptional 995 liquidity” 400 844 825 761 676 637 509 471 200 437 424 400 339 0 - Excludes Sinking Fund  Consolidated Reserves Balance as of 31 December 2018: $1,177.4 million 12

“The City’s budget supports a livable, sustainable and equitable city”…..Sadhu Johnson, City Manager 2019 OPERATING REVENUES 2019 OPERATING EXPENSES Statutory requirement to balance budget $1,513 MILLION $1,513 MILLION • The 2019 property tax increase reflects the cumulative items: inflation; the property tax impact of the provincial government’s new Employer Health Tax; and the additional investments in infrastructure renewal approved in the 2019-2022 Capital Plan. • Property tax increase • 2019 – 4.50% • 2018 – 3.90% • 2017 – 3.40% • 2016 – 2.02% • 2015 – 2.46% • Key priorities for the 2019 Budget and Five-Year Financial Plan are: • Increase housing supply and affordability, and improve availability and supports for renters and vulnerable citizens. • Maintain and improve operations and service levels. • Invest in public safety. • Continue to build vibrant communities and public spaces that support arts, culture and the environment. • Meet our commitments to provide safe and healthy workplaces and public spaces Source: 2019 Budget 13

2019 – 2022 Capital Plan - $2.8 billion Under this Capital Plan, the Council approves in principle a borrowing limit totaling $495M. 14 Source: 2019-2022 Capital Plan, City of Vancouver

Financing and Debt Profile 15

Legislative Framework Vancouver Charter • Debt financing only for capital infrastructure • City Council establishes limits for public utilities • Electorate approves other borrowing limits Debt servicing charges (principal & interest) for general capital program • 100% funded from Operating Budget, refinancing not allowed • Repayment of the City’s debentures are funded by the City of Vancouver’s ability to levy taxes & fees. 16

Keeping Debt at a Manageable Level Net Debt at a manageable level Excludes Olympic Village debt fully repaid in 2014 Source: City of Vancouver 2018 Budget and 5-Year Financial Plan  The City takes a careful approach to its use of debt • Used to renew and enhance public amenities and infrastructure • While ensuring a balanced budget  As part of the City’s long-term debt strategy: • Water and sewer transitioning from debt to Pay-As-You-Go model • Helps lower overall debt and save interest costs in the long run 17

Consistent and Established Sinking Fund Debenture Program $ millions Debenture Maturity Profile 160 140 120 100 80 140 125 125 60 120 110 105 90 90 85 85 40 20 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Green 2052 Bond Outstanding Debentures Cumulative Net Debt $ millions Issuance Year Face Amount Coupon (pa) Maturity 1200 Sinking Fund 2009 $125M 4.90% 2 Dec 2019 1000 Net Debt 2010 $125M 4.50% 1 Jun 2020 2011 $140M 3.45% 2 Dec 2021 494 418 800 395 326 246 2012 $120M 3.70% 18 Oct 2052 178 121 2013 $110M 3.75% 24 Oct 2023 600 77 118 2014 $105M 3.05% 16 Oct 2024 87 400 138 2015 $90M 2.90% 20 Nov 2025 622 617 616 611 598 589 582 543 2016 $90M 2.70% 15 Dec 2026 477 200 411 346 2017 $85M 2.85% 3 Nov 2027 2018 $85M 3.10% 21 Sep 2028 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F $1,075M - Total Issued Debentures (to date) For 2019, Council has approved a regular debenture issuance of up to $100M. Announcement will be made later this fall. 18