ADMINISTRATIVE REPORT

Date: June 15, 2002
Author/Local: Ken Bayne / 7223
CC File No. 1611

RTS No. 02801

Council Date: June 25, 2002

TO:	Vancouver City Council
FROM:	Corporate Management Team in consultation with the Capital Plan Staff Review Group
SUBJECT:	2003 - 2005 Capital Plan Draft Allocation

RECOMMENDATION

A. THAT Council receive the recommendations of the Corporate Management Team and Staff Review Group for the 2003 - 2005 Capital Plan, THAT the plan be circulated to the public for comment, and THAT the plan be brought back to Council for final adoption on October 1, 2002.

B. THAT Council approve in principle the creation of a "pool" of funding totalling $20 million in addition to the financial limit recommended for the Capital Plan to be available to projects that receive senior government cost sharing, and THAT the Director of Finance report back in September on implementation of this "pool" as part of the financing strategy for the 2003 -2005 Capital Plan.

C. THAT Council approve the public consultation program as outlined in this report, culminating in a public meeting on the Capital Plan draft allocation on September 17, 2002.

CITY MANAGER'S COMMENTS

The presentation of the draft 2003 - 2005 Capital Plan represents a major step in the development of the capital expenditure plan that will guide annual capital budgets over the term of the next City Council. The draft plan presents the recommendations of the Capital Plan Staff Review Group that considered the funding requests from departments against related Council and corporate policies, the priorities identified by departments and the financial capacity of the City forfurther capital expenditures. These recommendations are supported by the Corporate Management Team.

Council will note that the report identifies several significant projects to which the Staff Review Group were unable to allocate funding, either because other priorities prevented their inclusion within the financial limits used to develop the plan or because Council has not had the opportunity to indicate the priority that should be attached. These include initiatives that may be eligible for cost sharing from senior governments. The Staff Review Group and Corporate Management Team considered the approaches that Council could utilize to take advantage of these cost-sharing opportunities without jeopardizing important capital programs that can proceed without this funding. Recommendation B asks Council to utilize a strategy adopted in the 1987 - 1990 Capital Plan by creating a "pool" of funds that could be utilized for projects that receive cost sharing over the next few years.

It is normal practice that at this point in the planning process, the draft plan be referred to the public for comment and that Council consider those comments at a public meeting. Over the next two months, staff will circulate the draft plan using a variety of media, including a flyer delivered with community newspapers in the City and available through community centres, libraries and other civic facilities; through a short video outlining the planning process and draft plan contents to be shown on Shaw Cable; and, through information on the City website. In every case, opportunities for public input will be encouraged.

A public meeting has been scheduled for September 17, 2002 to hear input from the public and, if necessary, from departments and boards affected by the plan. Council will be asked to finalize the plan on October 1, 2002 to ensure that the necessary borrowing authority questions can appear on the ballot at the civic election in November.

On behalf of the Corporate Management Team and Staff Review Group, the City Manager RECOMMENDS approval of A, B and C.

COUNCIL POLICY

The City of Vancouver has a policy to plan for capital expenditures on a multi-year cycle. In recent years, capital plans have been developed in three year terms in order to match the term of Council and allowing for a borrowing plebiscite to be held in conjunction with civic election.

Capital Plans are normally funded from a combination of sources including, borrowingapproved by plebiscite, borrowing authority approved by Council for sewer and water purposes, the annual operating budget and from contributions from third parties.

The Vancouver Charter, Section 242 provides that Council may approve the borrowing of funds for water and sewer purposes without the assent of voters. Borrowing for other purposes requires voter approval through a borrowing plebiscite.

PURPOSE

The purpose of this report is to present the staff recommendations regarding 2003-2005 Capital Plan project priorities to Council for their consideration and to recommend that the draft plan be referred to the public for comment.

BACKGROUND

The City plans its capital expenditure program on a long term basis, often many years into the future. To make these plans manageable and to provide the opportunity for borrowing authorities to be sought from the public, these long range plans are formalized into three year Capital Plans. On January 22, 2002, Council received a presentation from the Corporate Management Team outlining the process for developing the next Capital Plan, covering the period from 2003 to 2005, as well as some of the issue that would arise during its development.

The process for developing the capital plan involves several components.

1. Capital Plan Staff Review Group

The Corporate Management Team takes overall responsibility for developing the Capital Plan and bringing it forward for Council approval. The detailed work of developing the plan is delegated to an interdepartmental staff group - the Capital Plan Staff Review Group (SRG).

The Capital Plan Staff Review Group for the 2003 - 2005 Capital Plan is comprised of:

Brent MacGregor, Deputy City Manager Estelle Lo, General Manager of Corporate Services Tom Timm, Deputy City Engineer, Engineering Piet Rutgers, Director of Planning & Operations, Park Board Eric Smith, Director of Corporate Services, Library Board Pat Wotherspoon, Assistant Director of City Plans, Community Services
Wayne Holland, Inspector/Commander Corporate Services, Police Ken Bayne Director of Financial Planning & Treasury, Corporate Services

The Staff Review Group began its work in the fall of 2001 with a request to departments and boards for expenditure proposals and supporting information. Prior to the review of individual project submissions, the group identified the process for allocating funding in the plan and considered other issues which would assist in developing a list of priority projects. These meetings focussed on the following:

· Council policy related to the maintenance, upgrading and replacement of City's basic public works infrastructure;
· service plans of departments and boards which set out long-range capital expenditure priorities, policies and service issues, departmental strategic plans and priorities and policy related to infrastructure replacement programs;
· the Facilities Strategic Plan which provides an inventory of civic buildings and long-range priorities for capital maintenance expenditures. The plan was also intended to identify potential joint use facilities;
· CityPlan and Transportation Plan objectives, guidelines, and policies.

The Staff Review Group was also guided by the priorities set for past capital plans. These included placing:

· the highest priority on those programs/projects that concentrated on maintaining the City's existing facilities (infrastructure and buildings) and addressing mandated health and safety issues;
· a second level priority on requests that dealt with maintaining existing service levels or remedying service deficiencies; and,
· the lowest priority on the provision of new facilities and service level expansions.

From February through May the SRG met with departments to discuss the expenditure proposals and how they fit with departmental and corporate priorities. The group then held a series of meetings from which emerged the draft allocation detailed in this report.

During development of the plan, the Staff Review Group encountered a number of projects for which no supporting Council policy or priority has been established. As a result the group felt it had no mandate to assign funding to them. These projects are considered further in later section of this report.

The draft plan was reviewed by the Corporate Management Team and endorsed forpresentation to Council as representing a balanced set of priorities for capital expenditures in the next three years.

2. Financial Limits for the Plan

In an accompanying report, the Director of Finance makes a recommendation for funding limits for the 2003 - 2005 Capital Plan. This financial limit includes two components:

· tax supported funding for the capital program,

including funding for the debenture program
and for capital-from-revenue $200,000,000

· waterworks capital supported by user fees $43,940,000
· funding to be allocated to projects eligible for

funding from the City-wide Development Cost Levy $12,000,000

These financial limits, totalling $243.9 million in tax and user fee support and $12.0 million in DCL funding have been utilized by the Staff Review Group in developing the draft plan outlined in this report.

Although the primary consideration in developing the Capital Plan is the amount of City funding that goes into the plan, the Capital Plan process acknowledges contributions to specific capital programs or projects that are received from:

· other levels of government and government agencies;
· third parties which leverage City funds, such as those provided by community centre associations or the non-profit sector;
· property owners through cost-sharing arrangements such as local improvements;

The availability of funding from these other sources provides additional opportunities to upgrade and develop new City facilities beyond the level that would be available within the Capital Plan funding limit. These contributions have been conservatively estimated at $55.8 million should the recommended draft Capital Plan proceed as outlined.

DISCUSSION

The draft Capital Plan addresses several issues related to the proposed capital expenditure program for the period 2003 - 2005:

· a list of programs/projects that are recommended for funding within the financial limit of $200 million in tax supported funding and $12 million inDCL funding;
· a recommendation for Park Board capital funding in the Capital Plan, developed within the overall context of capital expenditure needs of the City;
· a recommendation for Supplementary Capital funding, based on an assessment of the demand for funding for emergent issues;
· a recommendation for the capital allocation to waterworks;
· a number of projects that the Staff Review Group could not justify funding based on an assessment of priorities but which Council may wish to consider for inclusion in the Capital Plan;
· a number of projects for which the Staff Review Group had no policy or priority guidance and which are put forward for consideration by Council.

The Staff Review Group faced difficult choices in their deliberations. The cost of the requested projects exceeded the tax supported financial limit of the plan by $265 million. As a result, many worthwhile projects could not be accommodated within the draft plan. Those projects recommended by the Staff Review Group were identified as the highest priority for funding in the 2003-2005 Capital Plan.

The Draft Plan

The recommended draft plan has been consolidated under several categories which are summarized in Table 1 below. Details of the departmental submissions and the recommendations of the Staff Review Group are included in the attached document Submissions to the 2003-2005 Capital Plan (limited distribution) and a more detailed summary is attached to this report as Appendix 1.

Table 1: Summary of the Capital Plan Draft Allocation

Tax Supported Funding	DCL Funding	Capital Plan Category
$ 170,090,000	$2,000,000	Public Works (Streets, Water, Sewers, Electrical, Traffic Signals, Yards)
$5,050,000		Library
$ 9,800,000		Public Safety (Fire and Police)
$ 25,950,000	$6,200,000	Parks and Recreation
$ 9,000,000	$3,800,000	Community Service (Affordable Housing, Social &Cultural Facilities, Downtown Eastside Initiatives, Public Art)
$ 19,025,000		Other (Information Technology, Facility Development, Major Building Maintenance)
$ 3,000,000		Supplementary Capital
$ 2,025,000		Debenture Costs
$ 243,940,000	$12,000,000	Total Capital Plan

#1 Kingsway Joint-Use Civic Facility

One of the more significant components of the proposed Capital Plan is a joint-use civic facility at #1 Kingsway. Council approved the purchase of this property on September 18, 2001. In the intervening months, staff from Parks and Recreation, the Vancouver Public Library, Community Services, Facilities Development and Real Estate have worked together to bring a development proposal for the site to the 2003 - 2005 Capital Plan. That proposal is documented in more detail in an accompanying report.

The #1 Kingsway proposal includes the following components:

Functional Component	Area (sq. ft)	Cost	Funding Source
Sustainable Building Pilot Project		175,000	2003 - 2005 Capital Plan
Mt Pleasant Community Centre	31,600	5,750,000 1,150,000 2,000,000	2000 - 2002 Capital Plan 2003 - 2005 Capital Plan SE False Creek CACs
Mt Pleasant Library	12,000	200,000 4,850,000	2000 - 2002 Capital Plan 2003 - 2005 Capital Plan
Childcare	6,800	1,050,000 1,300,000	2003 - 2005 Capital Plan City-wide DCLs
Market Rental Housing	55,000	10,230,000	Property Endowment Fund
Total		$27,280,000

As noted, the project involves a variety of funding sources including the 2000-2002 Capital Plan, the proposed 2003-2005 Capital Plan, City-wide DCL funds, CAC funds and an investment by the Property Endowment Fund in the market rental housing component. It should be noted that City-wide DCLs are allocated to the Kingsway day care facility to assist planning and project development. Consistent with Council policy on DCL spending in advance of approval of the recommendation arising from the Financing Growth Review, this allocation (as well as other allocations of City-wide DCL funding) will require Council approval as part of the approval of the Capital Plan financing strategy to be considered in September. Funding recommended from the 2003-3005 Capital Plan is reported with the funding proposal for each sponsoring department.

The balance of the draft allocation is summarized below:

a(i) Public Works (excluding waterworks): $128.1 million

Tax Supported Funding	DCL Funding	Programs / Projects
$ 14,170,000		Street infrastructure, including repairs to major bridges
$ 11,900,000		Pedestrian & bicycle improvements, including greenways and the bicycle network
$ 7,500,000		Transit and safety improvements
$ 13,165,000		Local area street improvements and traffic plans, including local improvements
$ 5,500,000		Traffic signal modification and replacement
$ 7,000,000	$2,000,000	Major Projects
$ 7,000,000		Street lighting and communications improvements
$ 58,000,000		Sewer replacement and pollution abatement initiatives
$ 1,915,000		Yards upgrading program

The Public Works section of the Capital Plan deals with the funding requirements to maintain and upgrade the City's streets, sewers, traffic signals, street lighting and communications infrastructure. In developing the Public Works component of the plan, the Staff Review Group was guided by Council policy related to the ongoing replacement of the City's basic public works infrastructure as well as those related to transportation priorities for pedestrians, bicycles and transit improvements.

There are five major categories of expenditure in the Streets section of the Plan which address:

· the need to rehabilitate or reconstruct the arterial and local street network and the City's major bridges. City funding in this area is augmented by funding from TransLink;
· pedestrian & bicycle improvements, including sidewalk and pedestrian projects and continued development of the bicycle network and neighbourhood greenways;
· local area street improvements and the development of neighbourhood traffic plans, including funding for the local improvement program; improvements to enhance transit service and initiatives to improve traffic safety;
· modification and expansion of the traffic signal system.

Overall the plan includes $59.2 million in City funding for Streets work which will be supplemented by approximately $35.2 million in funding from outside funders to support the maintenance and upgrading of the major road network and residential streets and provide safety improvements and amenities for pedestrians and bicycles.

One of the major "projects" in the recommended Capital Plan is the continued upgrading of the Burrard Street Bridge. The recommended funding will ensure completion of the proposed pedestrian and bicycle improvements to the bridge and will upgrade/replace the railings, stairs and light posts on the bridge. The total cost of this work is estimated at $14.5 million, including approximately $7.0 million from the 2000 - 2002 Capital Plan. The Staff Review Group were unable to provide additional funding to complete the seismic upgrading of the south approach to the bridge because of other funding priorities, but would support this project if additional funding were available in the Capital Plan.

The Street Lighting and Communications section of the plan provides funding to replace and provide limited upgrading of the City's street lighting and communications network. In the Street Lighting area, funding is provided to continue the renovation and upgrading of the street lighting system. The latter expenditure provides for maintenance and expansion of the City's voice and data transmission to meet the business needs of civic facilities as well ascontrol of vital systems.

The Capital Plan Staff Review Group has recommended an increase in the funding for the Sewers section of the draft plan in order to maintain the 1% replacement policy for sewers infrastructure. This funding had been reduced in the 2000 - 2002 Capital Plan in order to accommodate funding for the Cambie Yard relocation. Other expenditures are planned for sewer system management and pollution abatement, including continuation of the sewer separation on private property program that is directed at eliminating sewer outflows into surrounding water. The City has applied for significant sewer cost sharing from the Canada-BC Infrastructure Program that would augment funding recommended in this plan.

The plan also includes funding to continue the upgrade of Engineering works yards that was begun in the 2000 - 2002 Capital Plan. Although only $1.9 million has been allocated in the plan for work at Manitoba Yards, other projects at 900 Kent Street, totalling $9.5 million, are funded outside the plan.

a(ii) Waterworks $43.9 million

Tax Supported Funding	DCL Funding	Program / Projects
$43,940,000		Waterworks

The second component of the Public Works capital allocation is for the waterworks. The allocation is governed by the policies established by Council for renewal and upgrading of the water system.

The recommended allocation at $43.9 million provides for infrastructure replacement ($28.2 million), system capacity and fire protection requirements ($7.6 million), completion of the dedicated fire protection system ($3.9 million) and monitoring, control and water quality initiatives ($3.7 million). Funding for the dedicated fire protection system (DFPS) will complete the first phase of this development that began in the 1991 - 1993 Capital Plan.

The proposed allocation is approximately 25% below the 2000 - 2002 Capital Plan because of the completion of the DFPS and a reassessment of the life cycle of some water infrastructure. This reduction will have a moderating effect on water rates over the next few years.

b) Library: $5.05 million

Tax Supported Funding	DCL Funding	Program / Projects
$ 4,850,000		Relocate Mount Pleasant Branch Library in #1 Kingsway Project
$ 200,000		Branch Library Major Maintenance

The Library submitted two proposals for changes to its branch network as well as a request to support major maintenance issues throughout its system. The Capital Plan Staff Review Group has recommended funding be provided for relocation and upgrading of the Mt. Pleasant Library Branch as part of the joint-use facility at #1 Kingsway. Funding of $5.05 million, including $200,000 remaining from the 2000 - 2002 Capital Plan and $4.85 million from the draft 2003-2005 is recommended.

The second request for funding for a new branch library in the Downtown Eastside /Strathcona could not be accommodated in the draft Capital Plan but is included on a list of significant projects that have not been funded but are put forward for Council consideration.

c) Community Services: $9.85 million

Tax Supported Funding	DCL Funding	Program / Projects
$ 2,500,000	$2,500,000	Affordable Housing Fund
$ 3,250,000	$1,300,000	Social, child care, and cultural facilities
$ 2,500,000		Initiatives associated with the revitalization of the Downtown Eastside
$750,000		Public Art Program

The proposed funding levels for Community Services projects takes a number of issues into consideration:

· City funding in areas such as Affordable Housing and the development of social and cultural facilities provides considerable "leveraged" funds from other levels of government and from the community;
· Some community services projects are eligible for funding from Development Cost Levy and Community Amenity Contribution programs, including the provision of public open space, childcare facilities and replacement housing projects;
· Council has identified the rehabilitation of the Downtown Eastside as apriority, including the provision of improvements to the public realm.

Funding for the Affordable Housing Fund will ensure that the City is able to follow through with the initiatives anticipated in the Provincial-Municipal Housing Partnership approved by Council as well as continue the program of City-initiated non-market housing initiatives. In addition to tax supported funding of $2.5 million, the Staff Review Group is recommending allocation of up to $2.5 million of City-wide DCL funding to deal with replacement housing issues.

Funding for the Social and Cultural Facilities component of the plan provides for maintenance and upgrading of City-owned and non City-owned social, cultural and daycare facilities, including:

· $1.05 million in tax supported funding and the allocation of $1.3 million of City-wide DCLs for the development of a childcare facility in the joint-use project at #1 Kingsway.
· $600,000 for other daycare initiatives
· $1.6 million for social and cultural facilities, including funding for city-owned facilities and for continuation of a capital grant program for facilities owned by others.
· $750,000 to continue the City's contribution to the provision of art in public places.

In May 2001, Council reduced the current capital plan by deferring $1.0 million in funding for the Little Mountain Neighbourhood House relocation for consideration in the 2003 - 2005 Capital Plan. Funding for this project has been included in the last two plans, however, a suitable site has only recently been identified. With the funding reduction, there remains sufficient funds in place to purchase a site for the relocation, but no funding to support construction. Even with site purchase, facility development will not likely occur during the next Capital Plan and the SRG was not prepared to allocate funding in the face of other demands. As a result, additional funding for Little Mountain Neighbourhood House has been added to the list of projects that are presented for Council consideration.

Funding to support Council's initiatives on the Downtown Eastside is also recommended at $2.5 million in the draft plan. During the next phase of the program, including the implementation of the Vancouver Agreement, the City will likely be called on to participate with senior governments in projects which might include:

· lease subsidies and other supports to attract new businesses to the area;
· new community space to provide educational and cultural programming and increase public safety;
· purchase/renovation of key buildings in public-private partnerships to stimulate new businesses;
· physical improvements to Pigeon Park and Victory Square;
· street improvements to provide better pedestrian connections between Hastings Street, Gastown, Chinatown and Victory Square.

There were two requests in this area of the Plan that the Staff Review Group had difficulty dealing with both because of the size of the request (totalling $12 million) and because they have no Council policy or priority attached to them. The Gastown Heritage Management Program and the Gastown / Chinatown Building Facade Program are considered further in a later section of this report. The programs will be the subject of a separate report to Council in July, 2002. Should Council wish to proceed with funding from the Capital Plan, provision will have to made either by reallocating funding within the existing financial limit or by adding funding to the plan.

d) Parks & Recreation: $35.35 million

(Including $2.0 million in CAC funding for Mt Pleasant Community Centre and $1.3 million in other funding for the redevelopment of Hastings Park.)

Tax Supported Funding	DCL Funding / Other Funding	Capital Plan Category
$16,250,000	$2,000,000	Recreation Facilities, including Community Centres, Rinks, Pools and Concessions
	$2,200,000	Land Acquisition
$1,000,000		Street Trees Program
$5,700,000		Park Development, including neighbourhood parks, playgrounds and playfields
$3,000,000	$5,300,000	Major Parks, including Stanley Park, Queen Elizabeth Park and Hastings Park

The Parks & Recreation component of the Capital Plan addresses funding requirements in three areas: Facilities Development, including the community centre and community recreation facility system; Park Development, including the maintenance and development of major and neighbourhood parks; and Land Acquisition, including funding to increase the park inventory in park deficient neighbourhoods. The Parks & Recreation component also includes funding to continue the restoration of Hastings Park.

The allocation to the Park Board reflected both the many priorities for funding in the Capital Plan and the priorities determined by the Board. The Staff Review Group have recommended funding:

· to complete the relocation and upgrading of Mt. Pleasant Community Centre ($1.15 million). This funding is in addition to approximately $5.7 million currently in place and an estimated $2.0 million in contributions from developers in the Southeast False Creek area;
· to replace Killarney Pool ($9.0 million) and provide an additional $4.0 million for allocation to other recreation facilities projects;
· maintain the Street Tree Program at $1.0 million;
· provide $7.0 million in tax supported funding, $6.2 million in City-wide DCL funding and $1.3 million in other funding for park site acquisition and park development.

There are two projects that were priorities for the Park Board that the Staff Review Group was unable to fund within the financial limit.

· the Board had requested $5.0 million to upgrade Sunset Community Centre;
· In 2003, the regional district will reconstruct the Queen Elizabeth Reservoir. The GVRD has committed to include $1.5 million in their project to strengthen the roof of the reservoir in order to permit bus parking and a greater variety of landscape treatments than is currently the case. The Park Board requested $5.0 million to redevelop the roof into a combined parking lot and public space.

Given the major projects included in the Park Board Plan, including the Mt Pleasant Community Centre replacement and the replacement of Killarney Pool, and the competing priorities elsewhere in the plan, the Staff Review Group was not prepared to recommend funding for these projects.

Final allocation of the recommended funding is the responsibility of the Park Board. At the present time, the Board is collecting public input on the allocation of the funding in the draft plan. The final allocation will be reported to Council prior to final approval of the Capital Plan.

e) Other Civic Facilities: $19.025 million

Tax Supported Funding	DCL Funding	Programs / Projects
$300,000		Replace Firehall #15 (design)
$9,000,000		Police Officer Training Centre, Police Precinct Study, relocate Dog Squad
$6,000,000		Major maintenance of civic buildings, including the roof replacement program
$600,000		City Hall Precinct Upgrades
$100,000		Facilities Structural Upgrade Program
$375,000		Back-Up City Hall
$175,000		Sustainable Building Pilot Project: #1 Kingsway

This section of the draft Capital Plan deals primarily with the balance of the civic infrastructure, most notably the 280 buildings from which the City delivers its core services.

An integral part of the process for developing the Capital Plan was an update of the Facilities Strategic Plan that was formalized during the planning for the 2000 - 2002 Capital Plan. This plan has three main purposes:

· to inventory all City buildings and facilities, including an evaluation of their condition and
· to develop a funding request to deal with the highest major maintenance priorities;
· to review requests for replacement of civic facilities;
· to review the potential for joint-use facility projects to take advantage of synergies in providing services.

The report of the Facilities Strategic Planning Group was utilized as a resource document in developing the facilities-related funding in the draft plan and the Manager of Facilities Development & Maintenance provided advice to the group.

There are a number of significant projects recommended in the draft plan:

Fire: The plan recommends the allocation of $300,000 to the replacement of Firehall #15, the oldest of the existing fire buildings. While the Staff Review Group were supportive of continuing the firehall replacement program in this plan,other priorities and the ability to keep the existing building operational for three or four years resulted in a recommendation to defer this project until the next Capital Plan. The $300,000 allocation will allow design work for the replacement to begin before the end of the next Capital Plan so that construction can begin in 2006.

Police: The Police department brought forward two significant proposals to the Capital Plan process. The first was a plan to replace the two existing operational facilities with a new, centrally located headquarters building at a cost estimated at $80 million. The Staff Review Group considered this proposal to be in the formative stages of development and agreed that it was premature to consider this a priority expenditure. It is recommended that the department continue its functional review and conceptual design and seek Council support prior to submitting a more complete proposal to the 2006 - 2008 Capital Plan process.

The second proposal is for funding for an new Officer Training Facility that would consolidate training in all types of force options, including firearms training at one facility. Currently, the department conducts fire arms training at a leased facility in Coquitlam and all other force options training at 312 Main Street. The Coquitlam range is in contravention of Provincial Firearms Regulations and will require upgrade or relocation shortly. The proposed facility would have a 24-position, 50 metre range, classrooms and administrative support space and could be coordinated as a joint facility with the RCMP, Ministry of the Solicitor-General and other potential partners. A number of potential sites in the False Creek Flats area have been identified, however, decisions on the location, participants and scale of the facility are to be determined. The draft plan includes an allocation of $9.0 million for this facility.

Major Building Maintenance/ Roof Replacement: The recommended allocation maintains funding at current levels for major building maintenance projects to ensure City facilities continue to be functional and meet mandated safety standards for the delivery of civic services.

There are also a number of smaller facilities related projects recommended in the plan:

· $275,000 to improve building security at the Civic Theatres;
· $600,000 to continue the City Hall precinct upgrading program;
· $375,000 to upgrade the new Fire Department training centre on Chess Street to act as a back-up City Hall facility.
· $175,000 to fund sustainable building components as part of the #1 Kingswaydevelopment.
· $100,000 to develop a comprehensive facilities-related emergency response strategy to identify priorities for upgrading civic / other buildings to respond to post-disaster situations.

f) Information Technology

Tax Supported Funding	DCL Funding	Programs / Projects
$5,000,000		IT Infrastructure
$4,000,000		SAP Expansion Phase I & II
$2,500,000		Revenue Billing Systems

The City's information technology (IT) infrastructure includes shared corporate systems and telecommunications infrastructure, voice systems, local area networks and desktop services like office applications and e-mail. If this infrastructure is to meet the City's increasing reliance on information systems and its use of electronic communications to interact with its stakeholders - public, staff, business partners and other levels of government, obsolete equipment must be replaced, system capacities must be increased; processes, tools and standards must be put in place to manage increasing complexity and cost; and robustness built in so that information integrity and system availability are maintained in the face of potential threats.

Council has already provided ongoing funding to support these goals, however, the current allocation of approximately $5.0 million annually needs to be supplemented if the City is to keep up. The Staff Review Group is recommending that an additional $5.0 million (approximately $1.7 million annually) be directed to meet these requirements. This funding will permit the City to:

· Replace many of its local data storage (LAN) systems, which are both technologically and physically obsolete, with current technology which fits better with evolving desktop and messaging architectures. Where improved data connectivity between City facilities permits, these currently-distributed systems will be replaced with a more enterprise-oriented shared storage system. Benefits include greater protection against business interruptions caused by system failures, better integration and reduced maintenance workload.

· Take the first steps towards integrating its data and voice systems. The key benefit from the convergence of these technologies is the elimination of what are currently parallel voice and data networks. Other benefits include improved phone mobility and better customer service through computer-telephony integration.
· Increase the robustness of its information systems so that they can continue to provide core services to the public even in the event of a major disaster. This will include deployment of redundant telecommunications connections, deployment of mirrored application and data servers, and potentially out-of-province data replication.

· Upgrade other core systems, like e-mail, both public and private web servers, and security infrastructure to take advantage of advances in technology which can streamline internal processes and support improved service delivery.

In addition to maintaining current infrastructure, there are several corporate business systems that require upgrading. The Staff Review Group have allocated funding to two specific projects:

· Replacement of the City's major revenue billing systems for Property Tax, Utility Billing and Bylaw Fines and an upgrade to the cashiering system. These systems are responsible for the billing and handling of approximately $820 million annually and are a major point of contact between the City and its citizens. This project has a cost estimated at $4.9 million which would be funded through a combination of operating savings (estimated at $1.7 million over 5 years) and a contribution from the Capital Plan of $2.5 million.
· the City's SAP system went into production in 1999 and has now become an integral part of the City's corporate information management infrastructure. To date, the City has implemented a number of financial, materials management and human resource/payroll modules. However, as an "enterprise" system, SAP works best when the majority of an organization's business functions take advantage of the integration it offers. While the City owns all of the SAP software, there is functionality that has not been implemented that will enhance management of the City's assets. The Staff Review Group is recommending the allocation of $4.0 million over the next capital plan to continue implementation of these modules, including Plant Maintenance, Asset Management, enhancement of Human Resources functionality and introduction of tailored management desktop reporting.

Should Council support this allocation, it is proposed that the $5.0 million in ongoing funding and the $6.5 million in one time project funding be removed from the draft Capital Plan and treated in a similar fashion to the existing funding for the Information Technology Long Term Financing Plan.

g) Supplementary Capital

Supplementary Capital is intended to deal with emergent issues that arise during 2003 - 2005Capital Plan. There are a variety of program and project proposals for which departments requested funding that were either of a smaller scale than could be considered in the plan, where the immediacy for undertaking the work was not established, or where the issues or request were not well defined. These items were not included in the plan and the potential for submitting them to future Supplementary Capital Budgets was identified. The draft plan recommends funding to deal with these projects on an annual basis be set at $3.0 million. This level represents a reduction of 40% from the 2000 - 2002 Capital Plan provision of $5.0 million, resulting in some loss of flexibility to deal with issues that arise during the plan.

OTHER FUNDING REQUESTS NOT INCLUDED IN THE DRAFT CAPITAL PLAN

As noted throughout this report, there are a number of significant programs / projects that were not funded by the Staff Review Group. There are two primary reasons the SRG note for not providing the requested funding:

h) the SRG was forced to make trade-offs on where funding should be allocated because of the financial limits they faced. In allocating funding, some projects were seen as a lower priority for this capital plan.
i) some of these projects are unlikely to require funding during the next capital plan. The SRG believed it was more appropriate to fund projects that had a likelihood of proceeding during the 2003 - 2005 period. This was especially relevant since the projects that were not funded tended to be relatively expensive and there is a reluctance to tie up funding that could be put to work now.
j) the SRG was confronted with funding requests for which there is no current policy or priority from Council or where the cost of the project was significantly beyond previous allocations. In these cases, the SRG did not have the mandate to allocate funding.

A brief description of these projects follows:

Downtown Eastside Branch Library $7.5 million

This branch library has been proposed as part of the program to rehabilitate the Downtown Eastside. A potential site on East Hastings has been purchased (joint-use with a proposed non-market housing sponsor). However, in consultation with the Library, the SRG determined that there remain a number of issues related to development of this library and it is unlikely that funding will be required in during the 2003 - 2005 Capital Plan.

Granville Street Bridge Safety Improvements $10.0 million

Staff brought forward the False Creek Crossing study to Council on March 26,2002, recommending further work be done on Burrard Bridge. At this same meeting Council directed staff to further develop the Granville Bridge Pedestrian/Cyclist walkway option for consideration for the 2003-2005 Capital Plan process. The work is being done and will be presented to Council on the July 29th workshop along with the Burrard Bridge developmental work.

Inner City Streetcar System $10 - $65 million

On May 28, Council considered a report from the General Manager of Engineering Services related to the development of an inner city streetcar system, potentially involving a private sponsor. As the timing and financial arrangement related to this project remain uncertain, the SRG did not believe it was appropriate to allocate funding.

Little Mountain Neighbourhood House $1.0 million

The redevelopment of this neighbourhood house has been included in the last two capital plans. Delays in finding an appropriate site and in the development of a funding plan has resulted in this City funding being reallocated. The association has now identified a site and, once soils issues and a functional plan are completed, a report recommending purchase of the site will come forward to Council. However, even with purchase of the site, redevelopment of the facility will not likely occur during the next Capital Plan and the SRG was not prepared to allocate funding in the face of other demands.

Coal Harbour Arts Centre $10.0 million

The Coal Harbour Arts Complex has been a priority for the cultural community for many years. The development of the complex is proposed for the waterfront adjacent to the convention centre expansion. An amenity contribution from the Coal Harbour developer has been secured and is expected to fund approximately 20% of the $60 million construction costs. At this time, no additional funding has been identified. However, senior governments and potential private sector donors would anticipate a lead commitment from the city. As the proposed City capital contribution, $10 million is beyond the scope of the City's recent capital investment in cultural facilities, the SRG present this project for Council's consideration.

Gastown Heritage Building Upgrade Program $10.5 million
Gastown/Chinatown Building Facade Program $1.5 million

These programs would provide a combination of property tax relief (or offsetting grants) or capital grants to property owners in Gastown and/or Chinatown to assist with the cost of building upgrades. These two program have not beenreported to Council and the SRG did not believe it had a mandate to allocated Capital Plan funding in advance of Council approval. Moreover, it is not clear that the costs of this program - $12 million but potentially much more - are appropriately funded from the capital program at all.

Sunset Community Centre $5.0 million

The Park Board had requested funding to complete the replacement of Mt Pleasant Community Centre as well as funding to replace the Sunset Community Centre. This project may be eligible for cost sharing with senior levels of government. Given the priority associated with the #1 Kingsway joint-use project, the SRG could not support additional funding for this project in this Capital Plan.

QE Park Reservoir Restoration $5.0 million

As noted above, the regional district will reconstruct the Queen Elizabeth Reservoir beginning in 2003. This upgrade will include $1.5 million of GVWD funding to strengthen the roof of the reservoir in order to permit bus parking and a greater variety of landscape treatments than is currently the case. The Park Board requested $5.0 million to redevelop the roof into a combined parking lot and public space. With the other funding demands among the capital plan requests, the SRG was unable to allocate funding to this project and suggested that the Park Board reallocate other funding from within their plan allocation should it be a priority.

While the Staff Review Group was not able to allocate funding to these projects, it is noted that some may be eligible for cost sharing from outside sources. Should this funding be forthcoming during the next three years, the lack of City funding could prove to be problematic. On the other hand, given the cost of these projects and the demand for capital expenditures in this plan, it is difficult to justify allocations to projects that may not be undertaken. Moreover, it is uncertain how much City funding might be necessary over the next three years.

There are a number of options that Council could utilize should there be a need to match senior government or other funding during the 2003 - 2005 Capital Plan:

· wait and reallocate funding from the adopted plan when outside funding is confirmed. This option would require difficult decisions to be made during the course of the Capital Plan and could lead to uncertainty about which projects departments and board can proceed with.
· allocate funding from within the proposed capital envelope to fund the city share of these projects now. This would require reduced funding to some projects recommended in the draft plan and could delay desirable or necessary work thatcan proceed now without outside funding. Should Council prefer this option, the SRG should be instructed to report back with a list of projects that might be eliminated from the draft plan.
· provide a "pool" of funding in addition to the capital envelope that could be accessed only if outside funding does materialize for any of these projects over the next three years. This was the option chosen in the 1987 - 1990 Capital Plan when during early discussions of federal/provincial support for infrastructure improvements.

In considering these options, the Staff Review Group and Corporate Management Team believe that the third option is preferable because it maintains allocations for important capital works included in the draft plan and ensures that, should cost-sharing be available, the City would have the option of proceeding with additional work. A "pool" of funds of approximately $20 million would be appropriate should Council prefer this option. Consideration of this strategy could be part of the public process to review the 2003 - 2005 plan.

The Director of Finance notes that this strategy effectively adds $20 million to the capital envelope and, if accessed, could result in property tax impacts in the future, those impacts being dependent on how much of the "pool" is utilized and when. However, the advantage of this strategy is that it gives Council the flexibility to react to cost sharing opportunities for important capital needs that may arise during the plan.

NEXT STEPS: PUBLIC CONSULTATION TO FINAL APPROVAL

This report provides the recommendations of the Capital Plan Staff Review Group and the Corporate Management Team as to the funding priorities for the 2003 - 2005 Capital Plan. Throughout its deliberations, the Staff Review Group attempted to take into consideration the priorities of Council and the public, however, it is acknowledged that the draft plan is really staff's view. In addition to providing the opportunity for Council to consider the components of the draft plan, it is appropriate that the public should also be given the opportunity to provide its input.

Park Board is currently in the midst of its consultation with the public on the Capital Plan and will be reporting its results to Council prior to the plan being finalized in September. In addition, the Staff Review Group has developed a process to publicize the contents of the draft Capital Plan and to encourage public feedback, culminating in a public meeting on September 17, 2002. The components of the public process include:

· an information video to be shown on Shaw Cable outlining the capital plan process andinviting the public to become informed about the plan and to provide input;
· a newspaper flyer summarizing the draft Capital Plan priorities to be delivered in a July issue of community newspapers and distributed through community centres, branch libraries and other civic facilities. This will be modelled after the What do you think? documents produced for the past two Capital Plans;
· the same information in the flyer will be available on the 2003-2005 Capital Plan webpage which can be accessed from the City homepage;
· a follow-up to the video outlining the Capital Planning process that will outline the major components of the draft plan. The video will be aired on Shaw Cable during Council breaks and on the greater.vancouver program;

Feedback from the public will be encouraged by means of the Capital Plan Questionnaire (Your Opinion), which will be available in the flyer and on-line on the Capital Plan webpage.
The public meeting will provide Council to opportunity to hear reaction to the draft Capital Plan from departments, boards and the public.

Following the public meeting, Council will be asked to make final decisions on the contents of the plan on October 1, 2002. This approval will be followed by a report recommending a financial plan outlining the sources of funding to support the Capital Plan. The components of the plan requiring borrowing authority will be submitted to the electorate in a series of plebiscite questions during the civic election on November 16, 2002.

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