ADMINISTRATIVE REPORT

Date: November 21, 2000
Author/Local: Ken Bayne / 7223

RTS No. 01728

CC File No. 1501

Council: December 5, 2000

TO:	Vancouver City Council
FROM:	General Manager of Corporate Services / Director of Finance
SUBJECT:	Annual Financial Authorities - 2001

RECOMMENDATION

A. THAT the Director of Finance be authorized for the period of January 1 to December 31, 2001, in accordance with Section 215 and 216 of the Vancouver Charter, to draw warrants for payment and to report same in writing to the City Clerk for the information of Council within 15 days after the end of each month in which the warrant is drawn.

B. THAT the Director of Finance be authorized to temporarily use, during the period January 1, to July 15, 2001 such capital funds as are available, for other expenditures of the City, pending collections of taxes, as provided by Section 259 (b) of the Vancouver Charter.

C. THAT the Director of Finance be authorized, for the year 2001, to invest the funds of the following accounts as same become available, and to vary the investments from time to time as may be expedient, in accordance with Section 201, 259 and 260 of the Charter.

i) For Sinking Fund Account, Property Endowment Fund, Cemetery Perpetual Maintenance Fund, Captain Vancouver's Grave Maintenance Trust Fund, and Capital Financing Fund:

- Securities of or guaranteed by the Government of Canada;
- Securities of or guaranteed by a Province of Canada;
- Securities of the City of Vancouver;
- Securities of the Greater Vancouver Water District;

- Securities of the Greater Vancouver Sewerage and Drainage District;
- Securities of the Greater Vancouver Regional District;

- Securities of the Municipal Finance Authority;

- Securities of or guaranteed by any chartered bank in Canada;
- Securities or deposits in, or share or other evidence of indebtedness of, a Credit Union incorporated under the Credit Unions Act.

ii) For General and Capital Accounts

- Securities of or guaranteed by the Government of Canada;
- Securities of or guaranteed by a Province of Canada;
- Securities of or guaranteed by any chartered bank in Canada;
- Securities of the GVRD, GVWD, MFA, or City of Vancouver which mature within one year from the date of acquisition;
- Securities or deposits in, or shares or other evidences of indebtedness of, a Credit Union incorporated under the Credit Unions Act.

D. THAT the Director of Legal Services be instructed to bring forward a bylaw authorizing the Director of Finance to establish a line of credit with a financial institution to provide for short term overdraft in the City's accounts.

POLICY

Council has the policy to delegate to the Director of Finance the authorities of Council under the Vancouver Charter to:

· approve the issuance of warrants (Section 215). Details of all warrants drawn are filed with the City Clerk on a monthly basis for the information of Council.
· utilize capital funds on a temporary basis pending collection of taxes (Section 259 (b)).
· to invest the City's cash balances. Details of all investments are filed with the City Clerk monthly for the information of Council.
· to provide for short term overdraft protection by pledging a portion of the property tax levy. (Section 263)

DISCUSSION

The Vancouver Charter provides Council with a variety of financial authorities related to the City's operation. In order to allow for day-to-day administration of the City, Council delegates the following authorities to the Director of Finance.

1) The Authority to Issue Warrants

Sections 213 to 215 of the Charter specify the manner in which payments are to made by the City. Section 215 specifies that all payments must be approved by Council, except for small amounts necessary in case of an emergency. In every circumstance, payments by the City follow directly from Council approvals made as part of the budget process. The Director of Finance is requesting confirmation of her authority to make payments in circumstances where Council has approved them. This authority is administrative in nature and in no way infringes on Council's policy-making powers.

2) The Authority to Utilize Capital Funds

Section 259 of the Charter authorizes Council to temporarily utilize the proceeds of debenture issues to cover other expenditures of the city pending the collection of current taxes each year; provided that the use of such funds is limited to the period from of January 1 to July 15 in the year, and that such funds are returned to the Capital Fund that latter date. This authority is integral to the management of the City's financial affairs and the Director of Finance is seeking confirmation of this authority for 2001.

3) The Authority to Invest the City's Cash Balances

The Vancouver Charter provides Council with the authority to invest the City's cash balances (Section 201) including the proceeds of debenture sales (Section 259) and cash in the Sinking Fund (Section 260). This authority is delegated annually to staff to ensure that these funds are managed to the best advantage of the City. Details of the investments purchased and sold are filed with the City Clerk each month for information.

In an upcoming session of the Provincial Legislature, it is anticipated that the Vancouver Charter will be amended to broaden the powers of Council related to investment of the City's cash balances If the amendments proceed as expected, the City will have access to a variety of financial instruments that provide the opportunity to diversify our portfolio and earn additional income. The recommendations of this report do not contemplate these additional powers and the Director of Finance will report back on the changes and their impact on the City's investment policy and strategy once the legislative amendments are approved.

4) Overdraft Protection

Section 263 of the Vancouver Charter empowers Council to borrow funds on a short term basis to cover any overdrafts in the City's accounts. A portion of the property tax levy is utilized as the collateral for this overdraft protection. Authority is sought annually for the Director of Finance to negotiate a line of credit for the City, normally through the City's primary financial institution. Although in recent years, overdrafts in the City's accounts have been limited to overnight shortages, the maximum amount of such borrowing at any onetime has been set at $60 million to ensure an adequate level of protection. This authority is granted by the passage of a bylaw to be brought forward by the Director of Legal Services.

CONCLUSION

The Vancouver Charter provides Council with the authority to manage the financial affairs of the City, including the authority to issue warrants, to utilize surplus debenture cash to support the operations on a temporary basis and to invest surplus funds. In order for these matters to be dealt with effectively on a day-to-day basis, these authorities are delegated to the Director of Finance on an annual basis.

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(c) 1998 City of Vancouver