ADMINISTRATIVE REPORT

Date: September 27, 2002
Author/Local: Ken Bayne 873-7223

RTS No. 02998

CC File No. 1611

Council Meeting: October 1, 2002

TO:	Vancouver City Council
FROM:	Capital Plan Staff Review Group in consultation with the Director of Finance
SUBJECT:	2003 - 2005 Capital Plan: Final Allocation

RECOMMENDATIONS

A. THAT Council confirm the capital envelope for the 2003 - 2005 Capital Plan as follows:

· $201.5 million from tax supported funding (the capital envelope)
· $10.0 million from City wide DCL funding
· $44.0 million from waterworks user fees

AND approve the allocation of funding for the 2003 - 2005 Capital Plan as detailed in the "2003 - 2005 Capital Plan Draft Allocation" report considered on June 25, 2002 (summarized in Appendix A).

B. THAT Council approve an increase in the Waterworks capital plan allocation of $2.0 million (to a total of $46 million) to provide partial funding for the rehabilitation of the Queen Elizabeth Park Reservoir roof.

C. THAT Council approve 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 not funded in the Capital Plan that receive the majority of their funding from cost sharing provided by senior governments or other outside sources, and THAT this allocation be submitted for electorate approval as a separate plebiscite question during the November civic election.
D. THAT Council approve the replacement of Sunset Community Centre in the 2003 - 2005 Capital Plan at an estimated cost of $7.0 million, contingent on the project receiving cost-sharing for the majority of its cost from senior governments or other outside sources with City funding to be included in the $20 million "pool" of funding outlined in Recommendation B above.

E. THAT Council approve the allocation of up to $3.0 million of additional City-wide DCL funding to the Park Board sport field expansion program, subject to a report back to Council on how these funds would be allocated and to the availability of DCL revenues during the 2003 - 2005 Capital Plan.

F. THAT Council approve the allocation of up to $2.0 million of park-designated CAC funding from the Bayshore redevelopment to the required major maintenance of the Stanley Park Seawall.

G. THAT the Director of Finance be instructed to report back on October 8, 2002 with a financial plan to support the 2003 - 2005 Capital Plan, including the breakdown of funding between borrowed funds, revenue funds and City-wide DCL funds, and on proposed wording for the borrowing questions that will be submitted to the electorate during the November civic election.

H. THAT prior to development of the 2006 - 2008 Capital Plan, staff report back on the options for alternative funding for major upgrading and replacement of civic facilities outside of the Capital Envelope.

CITY MANAGER COMMENTS

The City Manager notes that allocating limited capital funding to the range of needs identified by departments and boards is a difficult task. Faced with requests totalling $420 million, the Staff Review Group spent many hours reviewing the requests and rationalizing the list of progams and projects that it could recommended for funding within the $212 million envelope available during 2003 -2005. To the extent possible, the allocation attempts to balance the overall needs of the City to maintain its basic infrastructure and facilities, to meet Council policies on infrastructure renewal; to meet the operational needs of departments; to meet the demands of the public and to maintain an appropriate level of financial responsibility. The allocation recommended in this report has left several worthwhile projects with no funding, however, this is no different a situation than is faced in each capital planning exercise. Compromises are always necessary in developing a capital plan, and the 2003 - 2005 Capital Plan is no exception.

Over the last few weeks, staff have worked to identify options for meeting the most urgent needs of departments. A "pool" of funding to ensure that projects that receive cost sharing from senior governments or other outside sources can proceed has been recommended. In response to concerns raised at the public meeting on September 17, 2002, staff have looked for solutions to the concerns expressed by the public and Park Board. This report recommends solutions which are consistent with Council policy and which do not drive tax increases. The City Manager supports these solutions including the provision of funding for the City portion of the Sunset Community Centre, a $7 million project, from the $20 million pool of funding, and additional funding totalling $7.0 million from other sources for development of artificial turf sports fields, improvements to the top of the new Queen Elizabeth Park reservoir and Stanley Park Seawall improvements.

The City Manager RECOMMENDS approval A, B, C, D, E, F, G and H .

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, borrowing approved 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 seek Council approval of the final program/project allocation to the 2003 - 2005 Capital Plan.

BACKGROUND

On June 25, 2002, Council considered two reports from staff on the 2003 - 2005 Capital Plan: a report dealing with the financial limits to the upcoming capital expenditure program; and, a report dealing with the allocation of that funding to programs / projects in the Capital Plan.

The Director of Finance, with the support of the Corporate Management Team and Capital Plan Staff Review Group, put forward the following recommendations which were approved by Council:

A. THAT Council set the property tax-supported financial limit for the 2003-2005 Capital Plan at $200 million as outlined in this report, subject to final consideration by Council prior to adoption of the Capital Plan on October 1, 2002.

B. THAT Council set an upper limit of $12.0 million in City-wide Development Cost Levy (DCL) funding within the 2003-2005 Capital Plan based on interim allocations established for the City-wide DCL By-law and on the policies proposed in the Financing Growth Study.

C. THAT Council set the financial limit on the Waterworks Capital Plan at $43.9 million as outlined in this report.

On August 1, 2002, Council adopted a number of recommendations related to the Gastown Heritage Management Program. As part of this program, Council approved the implementation of an incentive grant program for Gastown and Chinatown requiring funding of $1.5 million during the course of the next Capital Plan. Funding for this program was to be provided by increasing the 2003 - 2005 Capital Plan financial limit to $201.5 million.

With respect to the allocation of the funding to specific expenditure areas within the financial limits, Council approved the following recommendations put forward by the Corporate Management Team and Capital Plan Staff Review Group:

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.

The recommended allocation is summarized in Appendix A to this report.

Since approval of these recommendations, staff have undertaken a program seeking input from the public and other interested parties related to the Capital Plan draft allocation. This included publication of an information flyer outlining the capital planning process, the constraints facing the City with respect to plan funding and the contents of the draft plan. Included in the flyer was a short questionnaire aimed at soliciting reaction from the public and others to the expenditure priorities reflected in the draft plan. This information was also available on the City's website, along with the ability to complete the questionnaire online. A summary of the responses to this questionnaire is attached as Appendix B for information. A number of letters and e-mails from the public were also received and circulated to Council for information. A short video outlining the capital planning process and how to be involved has also been shown during August and September on Shaw Cable.

Staff also made a presentation to the Park Board on the financial limits in the plan and the draft allocation and discussed options for funding several Park Board priority projects not specifically funded in the draft allocation.

On September 17, 2002, Council held a special meeting to hear input from the public. More than 20 speakers addressed their views on the recommended funding priorities. In addition, a number of letters were received from Park Board stakeholders. These presentations were primarily concerned with the funding levels recommended for the Park Board and included a request from the Park Board for increased funding to meet the Board's objectives for renovation, upgrading and expansion of parks and recreation facilities. The following summarizes the comments presented at the meeting:

· the Park Board has requested that Council increase the funding allocation to the Park Board from the current $35.5 million to the $51.4 million requested in its capital plan submission. The Board argued that this funding level is necessary to enable it to meet the current requirements for sport field upgrading and expansion and community centre renewal and to complete high priority projects that cannot be accommodated within the existing funding allocation. The Board is especially concerned that funding for replacement of Sunset Community Centre, for the completion of the Queen Elizabeth Park Reservoir renovation project and to continue the upgrading of sports fields in the City has not been provided in the draft plan.
· representatives of the Community Centre Associations indicated support for additional funding for community centre renewal, including funding for Sunset Community Centre and additional funding to undertake other upgrading work in the community centre system.
· representatives from sports associations discussed the need for additional funding to continue upgrades of the sports fields in the City.
· representatives of groups that use the area on top of the Queen Elizabeth Park Reservoir outlined the uses made of this space and requested that funding beprovided to complete the renovation and provide facilities for their use.

DISCUSSION

Following the recent public meeting, the Capital Plan Staff Review Group convened to consider the input from the public and Park Board and whether changes in the draft allocation would be recommended to Council. The conclusion of the Staff Review Group, reached in consultation with the Director of Finance, was that, based on its review of the capital plan priorities and allocation, it was not prepared to recommend an increase in the Capital Plan financial limit to provide additional funding to Park Board nor a change in the proposed allocation. However, recognizing that the tax supported allocation to the Park Board was below that in the current plan and responding to the Board's view that it would have difficulty meeting several capital expenditure needs, the Group sought other ways of providing funding to the Park Board without impacting on the capital envelope. This report summarizes the view of the Staff Review Group on the issues raised by the public and the recommendations presented above.

Financial Limits in the Capital Plan

Council has long standing policy related to the limits on the capital expenditure program which were documented in the financial limits report considered on June 25, 2002. These policies are intended to ensure a level of capital expenditures that reflects the City's capacity to service debt and to fund capital expenditures from current taxes (capital from revenue) without significant long term impacts on property taxation.

Recognizing that the City had the capacity to carry additional debt service costs and capital from revenue based on this policy and that there were considerable demands on the available funding, staff recommended a financial limit that was 15% above the current plan, even though in the longer run there was likely to be an impact on property taxes. The basis for this strategy was that:

· capital funding in the operating budget was below levels provided for in Council policy;
· there was significant demand for capital from worthwhile projects; and,
· failing to provide sufficient capital funding could lead to a situation where important maintenance and upgrading of City facilities would be deferred.

While the limit recommended by staff was projected to have an impact on property taxes in the future, it is equally as important to provide sufficient capital funding to ensure appropriate levels of infrastructure and facility maintenance and replacement to maintain theCity's credit rating. The recommended limit is intended to begin the process of moving the overall capital envelope closer to policy levels, recognizing that this cannot be accomplished in a single capital plan because of the impact that reaching policy levels would have on property taxes.

In addition to the tax supported financial limits recommended by the Director of Finance, Council approved the allocation of up to $12 million from the interim City-wide Development Cost Levy (DCL). This is funding provided to the Capital Plan for the first time which is targetted at assisting the City to deal with the costs that population growth has on the demands for services from the City. While the application of this funding is limited to growth-related costs for park site acquisition and development, daycare, replacement housing and some public works, it does provide a source of funding that the City has not included in its capital expenditure plans in the past and supplements available tax-supported funding. With inclusion of DCL revenues, the funding available to the 2003 - 2005 Capital Plan increases to $213.5 million from $175.0 million available in the current plan, a 22% increase.

Although the initial Council approval is for the allocation of up to $12 million in City-wide DCL funding, a review of that allocation has identified $2.0 million allocated to Streets that will not be necessary in the capital plan because of the availability of area specific DCL (False Creek Flats) to meet the requirements. The Staff Review Group notes that if this funding is not allocated to Streets, Council would have two options:

· as the Capital Plan does not allocate all of the anticipated revenues from the City wide DCL, these "excess" funds could be excluded from the allocation. While they would not be dedicated to specific projects, they would be available, along with other unallocated funding that might arise, for allocation to growth-related projects during the plan.
· Council could allocate this funding to specific program areas or projects in the Capital Plan. Later in this report, a proposal is put forward as part of the discussion for additional funding for the Park Board.

Finally, the Staff Review Group recognized that there were a number of projects for which funding was requested in the Capital Plan that could not be given a funding allocation. Some of these projects have the potential of attracting cost sharing from senior governments or other funders. In order to ensure that joint funding opportunities could be taken advantage of, especially for higher priority projects, the Staff Review Group recommended to Council that a "pool" of funding totalling $20 million be approved. This "pool" could be accessed by projects that receive a majority of their funding on a cost-shared basis from senior governments or other outside sources during the Capital Plan. The draft allocation report identified a number of potential projects that might access this funding, although thatlist is not exclusive. It is proposed that this funding pool be the subject of a separate borrowing question on the ballot during the November election. Assuming voter approval of this additional borrowing authority, Council could allocate funding to any projects that receive cost sharing.

The following table summarizes the funding that would be available to the 2003 - 2005 Capital Plan, assuming that appropriate voter approval for the debenture portion of this funding is received in November. Comparable funding levels for the current capital plan are also included:

There are a number of issues to weigh in considering an increase in the capital expenditure limits detailed in the table above:

· the proposed financial limit represents a significant overall increase in funding from the current plan. With the proposed funding "pool", the 2003 - 2005 Capital Plan is 20% larger than the current plan.
· based on Council policy, the operating budget has the capacity to accommodate additional capital expenditures funded from borrowing or current revenues. The proposed $20 million "pool" of funding, when added to the existing financial limit will leave the City below its maximum limit for debt charges as a share of operating revenues.
· any increase in the financial limit will impact on taxes. Assuming that any increase in the financial limit is financed using debt, each $10 million increase will result in an increase of approximately $1.5 million in annual debt charges over the term of the borrowing, equivalent to a tax increase of 0.4%.
· the City's AAA credit rating depends in part on maintaining an appropriate level of capital expenditures. It is worth noting that our credit rating agencies indicate concern that the growth in capital spending, at both the municipal and regional levels, does not place an undue burden on the property taxes paid by the City's tax base in the future. The rating agencies will continue to look at overall trends in capital requirements, capital expenditure levels and funding sources in assessing the City's creditworthiness. In the medium term, decisions to significantly increase capital expenditure levels could affect those considerations.

Based on existing Council policy, the concerns about the impact of the existing limit on property taxes and a review of available funding opportunities, the Director of Finance does not support an increase the Capital Plan financial limit. Although an increase would move the capital envelope closer to the policy limits more quickly, any increase would have a direct impact on property taxes and on the possibility of having to trade off operating expenditures for capital expenditures in bringing the budget into balance in the future.

Issues Related to the Capital Plan Draft Allocation

There are a number of issues related to the draft allocation that have surfaced since Council considered the draft plan in June. While these are ultimately related to the funding available in the plan, these can be considered as specific funding requests. The Staff Review Group considered whether a change could be supported in how these program/project requests were treated in the draft allocation.

In each case, these issues arise because funding that is considered a priority by departments or their stakeholders has not been provided in the draft allocation. In considering whether these programs or projects should receive funding within the Capital Plan, Council should consider that there are a number of projects that might be considered priorities beyond those identified during the public process. For example, while the Park Board and parks stakeholders made arguments for additional funding, these are not the only areas where additional funding might be added to the plan:

· In an accompanying report, development and funding requirements for the proposed Downtown Eastside/Strathcona Branch Library (up to $7.0 million) are identified.
· Replacement of a 90 year old firehall that no longer meets operational requirements ($3.5 million) was not funded in the draft allocation. If additional funding were available, the Staff Review Group would give some priority to this project to continue the replacement program begun several plans ago.
· In September 2001, Council requested a report back on pedestrian /bicycle improvements to the Granville Bridge (up to $11.0 million). Design and cost issues associated with this project are documented in an accompanying report to Council. While the City Engineer has determined that Burrard Street Bridge improvements should be the priority in this Capital Plan, Council may see this work as a priority.
· The Staff Review Group was unable to provide funding for the seismic upgrading of the south approach to the Burrard Bridge ($4.25 million) although it was recognized that continuing with the City's seismic program is important.

The Capital Plan Staff Review Group considered each of these projects, along with several others, for funding in the 2003 - 2005 Capital Plan and was unable to allocate funding within the approved financial limit. Moreover, upon subsequent review, the Staff Review Group was unable to identify rationale for changing the proposed allocation. The following sections discuss these areas:

1. Park Board Request for Additional Funding

The Park Board has requested that Council increase its capital plan allocation from $35.5 million to the $51.5 million requested in order to provide additional funding for its community centre renewal plan, including the replacement of Sunset Community Centre, and to ensure funding for upgrading of sports fields, replacement of Killarney Pool, redevelopment of Van Dusen Gardens, major maintenance on the Stanley Park Seawall, and other parks related expenditures.

· Sunset Community Centre
While recognizing the priorities related to community centre replacement and upgrading, the Staff Review Group supported the Park Board position that replacement of Mt Pleasant Community Centre was the highest priority in this plan. With no additional funding available for the Sunset replacement, the the project did not make the draft allocation. However, because there is potential cost sharing for Sunset (as well as a number of other projects in the plan) it was recommended that a $20 million "pool" of funds be created to provide the City share of projects that might receive significant outside funding.

The cost to replace Sunset Centre is estimated at $7.0 million. The Board had requested $5.0 million be provided in the Capital Plan with the community association providing the balance. In an accompanying report, the Board indicates that up to $4.0 million may be available from senior governments for this project, potentially reducing the City cost of the Sunset replacement to $3.0 million. However, there is no certainty that this cost sharing will materialize.

The Staff Review Group believes that the most appropriate way to provide funding for the Sunset Community Centre replacement is as proposed in the original allocation report - through access to the proposed funding pool. This will ensure that funding within the capital envelope will be designated for projects that have some certainty of proceeding and will provide the public with the opportunity to support the project through a separate vote on the associated borrowing authority. Assuming this authority is approved, Council can designate funding within this pool as available to Sunset, thereby providing certainty to the project. Recommendation D offers Council the opportunity to confirm that the Sunset Community Centre replacement is a priority, if cost sharing is approved.

· Queen Elizabeth Park Reservoir Roof Rehabilitation
The Park Board had requested $5.0 million be included in the Capital Plan for the refurbishment of the roof of the Queen Elizabeth Park Reservoir currently being reconstructed by the Regional District. Following completion of the draft allocation, Parks advised the Staff Review Group that this work could be completed for $3.5 million by reducing the design elements and seeking outside funding for a major component of the redevelopment.

There are arguments that favour undertaking at least a portion of this work in concert with the reservoir renovation. A major component of this project will provide additional storage capacity for the City water system, eliminating the need for a more significant expenditure by the City Engineer. Had this work been undertaken by the City, Waterworks would have been expected to pay the costs of restoring the affected site, be it a street right-of-way or a park. Approval of Recommendation B would increase the Capital Plan allocation to Waterworks by $2.0 million with these funds allocated to the rehabilitation of the reservoir roof. This will ensure that some of the major objectives of the rehabilitation will be undertaken, including completion of the proposed bus and vehicle parking area, some planting and structural work. The impact of this increase would be a very minor increase in water user fees in the future, although this increase would be significantly less than if the City had provided this additional capacity at another location.

· Sport Field Upgrading
The Park Board's initial request included $10.75 million (capital and DCL funding) for neighbourhood park funding, including $1.2 million for grass fields and $2.5 million for the development of artificial turf fields at the Trillium Parksite on the False Creek Flats. The Trillium Parksite development was also dependent on the availability of $1.0 million in outside funding. The Staff Review Grouprecommended funding of $4.5 million for neighbourhood park development, including sport fields, well below the Board's request.

Council heard representations from the Park Board and the public about the need for funding to upgrade and expand sports field capacity in the City. It was also noted that by utilizing all weather surfaces, the capacity of an individual field could be increased several times from the traditional natural turf fields currently in place. Should Council wish to allocate additional funding to the Park Board for sport field upgrading, one option would be to utilize City-wide DCL funding to augment the allocation the Park Board will make to this work. Increasing the capacity of fields in Vancouver in response to growth in demand is an appropriate use of City-wide DCL funds. Utilizing additional funds to develop artificial turf fields that offer the benefit of much higher utilization will maximize the benefit from further investment.

In allocating DCL's for this Capital Plan, the Staff Review Group followed the policies developed by for the Financing Growth Study. These will be considered by Council early next year. The draft policy states that DCLs should be allocated only when the revenue has been received and, then, projects should receive their proportionate share of DCL revenue in each Capital Plan period. This ensures that projects are not advanced before DCL revenues are available and that all projects are treated equally and can proceed in response to growth-related demands.

Advancing extra DCL's in this plan for the Park Board means that future park DCL allocations may have to be reduced. This is all the more significant because the proposed Financing Growth policies include a recommendation to reduce the park percentage to better reflect the relative growth costs of all the eligible projects. In short, while additional DCL revenues allocated in this plan would assist in dealing with a funding shortfall, it is unlikely that this level of DCL funding can be sustained in future plans. However, meeting the bylaw limits is a longer term requirement and the expenditure levels at any time can exceed these guidelines.

It should also be noted that the Park Board share of tax-supported funding in the 2003 -2005 Capital Plan is approximately $5.0 million lower than in the previous plan. Along with the other proposals in this report, utilizing additional DCL funding provides an opportunity to increase the investment in sport field expansion. Recommendation E seeks Council support for an additional allocation of $3.0 million to the sport field program for artificial turf sports fields. This support would be contingent on the Park Board reporting back after the capital plan has been approved by the voters on how it would apply the additional DCL revenues to improve sport field capacity in the City. Allocation of DCL revenues to specific projects would be approved when DCL revenues have been collected.

· Stanley Park Seawall Maintenance
The Park Board had requested $2.0 million in the Capital Plan for major maintenance of the Stanley Park Seawall as part of a $3.0 million request for work in the park. At the public meeting, the Board expressed concern about its ability to maintain funding for this project given the other demands on its overall allocation.

The seawall is an integral part of the park system in the western part of the downtown peninsula and ensuring it will withstand winter storms and be available to a wide variety of users is important objective of the Park Board. One of the options for providing funding for this project without increasing the Capital Plan financial limit would be to utilize park-designated funding received from the redevelopment of the Bayshore property. It is anticipated that up to $5.0 million will be available by the time this project is completed. There is currently $2.6 million in unallocated funds available.

Recommendation F offers the opportunity to allocate $2.0 million of Bayshore funding to the seawall maintenance project.

Should Council approve the proposed amendments to the Capital Plan allocation, the funding available to for park related capital expenditure during the 2003 - 2005 Capital Plan will increase by $10 million to $45.5 million in addition to the senior government funding anticipated for Sunset Community Centre. This is less than requested but will allow most of the specific projects identified by the Park Board to be funded, including the Sunset Community Centre replacement; partial rehabilitation of the Queen Elizabeth Reservoir roof; an expanded sport field program and required maintenance on the Stanley Park Seawall. Overall, spending on Park Board Capital will increase by more than 40% over the current capital plan.

2. Downtown Eastside/Strathcona Branch Library

The Downtown Eastside/Strathcona Branch Library has been part of the Library Board strategic plan for several years. Funding was requested in the 2000 - 2002 Capital Plan, however, the project was considered premature and no funding was allocated. The Staff Review Group was unable to provide funding in the 2003 - 2005 Capital Plan based on relative priorities and because Council had not had the opportunity to complete a review of the proposed facility.

In September 2001, Council approved the purchase of property at 475 East Hastings primarily for housing purposes. Staff were instructed to review the possibility of a joint housing - library project on the site. The housing component of this project is ready to proceed and in a report before Council this day, the options related to inclusion of thebranch library are identified for Council. A decision is requested on whether the proposed branch library should proceed or be deferred to a future Capital Plan. There are essentially three options:

· The project could proceed without the branch library and an alternative site would be sought in the area for a future development. While the report notes this option may ultimately cost more than proceeding in this Capital Plan, other location and development options have not been pursued in any detail.
· The project could proceed with development of a "shell" for the proposed library. In this case, funding estimated at $3.4 million would have to provided in the Capital Plan to complete construction with fit-out funding being provided in a later capital plan. The difficulty with this option is that the completed shell would not be attractive for commercial leases, especially in the short term, resulting in an empty storefront on Hastings Street until funding to complete the library is available.
· The project could proceed with full development of the branch library. In this case, an additional $7.0 million would have to provided in the 2003 -2005Capital Plan and an estimated $675,000 in additional operating costs would have to be added to the Operating Budget once the facility was completed in 2005.

The Staff Review Group does not favour proceeding with this project in the 2003 - 2005 Capital Plan for several reasons. First, if additional funding is available in the plan, there are higher priorities related to the City's basic infrastructure that should be considered for funding before an expansion of the library system is considered. Second, the draft Capital Plan already includes the replacement and expansion of Mt Pleasant Branch Library at a cost of $5.0 million. Finally, the Staff Review Group is concerned about the impact of additional operating costs on the operating budget.

3. Granville Street Bridge Pedestrian/Bicycle Improvements

The City Engineer has prepared a report back on a number of options for providing pedestrian and bicycle access to the Granville Bridge. The Staff Review Group has reviewed this report but is unable to support additional funding in the Capital Plan for this project. The Group shares the view of the City Engineer that funding for pedestrian and bicycle improvements to/from the downtown peninsula should be focused on the Burrard Bridge during the upcoming plan. Moreover, if additional funding were available in the plan, the Group believes there are higher priorities than this project, including completion of the Burrard Bridge seismic program ($4.25 million) or replacement of Firehall #15 ($3.5 million).

4. Police Officer Training Centre

Over the last year, the Police department has reviewed its deployment model and space needs into the future. When this work is completed in the new year, the department will bring a proposal forward to Council for review. That proposal will likely be the development of a centralized Police "campus" facility to house the department's operations. Centralizing departmental activities is expected to provide significant operational savings.

A component of the "campus" concept is the development of a centralized Officer Training Centre that would bring a variety of training requirements to a single facility. Land acquisition and construction costs of the centre and relocation of the Dog Squad are included in the proposed $9.0 million allocation in the draft Capital Plan.

There are a number of reasons why it is important to maintain this funding in the 2003 -2005 Capital Plan. First, the department currently utilizes a number of facilities located throughout the region for its training requirements. The decentralization of training facilities imposes significant costs on the department that could be avoided with a central facility. For example, firearms training and certification is currently provided at a private facility in Coquitlam, involving considerable travel time and cost to the department. Moreover, access to this facility is provided on a month-to-month basis under permits issued by the Provincial Firearms Branch. The department's review indicates that moving its firearms training to a central facility (perhaps in the False Creek Flats) would not only secure access to required training in a City facility but could save the department up to $27 million over the next 25 years. These savings are the equivalent of 10 to 15 officers that would be available for deployment to police activities rather than being tied up travelling back and forth to Coquitlam.

The Staff Review Group determined that the benefits of developing a central training facility to replace the scattered and uncertain facilities now in use should make this request a priority in the Capital Plan. Providing this funding is important despite the fact that a specific site and project configuration have not been identified and that discussions with possible partners are ongoing. Assuming that the voters approve the capital plan financing and the discussions on a possible partnership have been concluded, a specific project will be reported back to Council for approval.

Other Capital Planning Considerations

The most significant challenges in developing a capital expenditure plan are ranking priorities across a broad spectrum of need and finding new ways of funding projects. The Staff Review Group is charged with the responsibility of advising Council on fundingpriorities. The group relies on Council policy and the priorities set by departments and boards as reflected in their funding submissions and is assisted by the Facilities Strategic Planning Group which reviews and comments on expenditure priorities during Capital Plan development. The Staff Review Group believes that working through this priority setting process provides greater coordination between the individual priorities of departments and boards.

The Staff Review Group also notes that there is a need to explore alternative means of providing financing for community recreation facilities, especially given that there are significant demands for limited capital funding. There are a number of options outside the capital envelope that are potentially available to assist with the upgrading and replacement of these facilities, including more active pursuit of joint use facilities, consideration of new partnerships with community associations and groups or even a mechanism for neighbourhood participation in the funding package. Finding innovative ways to fund these improvements may allow the City to achieve more civic building renewal objectives without jeopardizing its long standing financial policies. Prior to the next Capital Plan, staff from the City and boards will review these opportunities and bring forward recommendations for consideration.

NEXT STEPS

With approval of the final Capital Plan allocation, Council will have moved the 2003 - 2005 Capital Plan one step closer to reality. Subsequent steps are:

· On October 8, 2002, Council will be asked to approve the overall financial plan associated with the Capital Plan. This plan will detail the allocation of debenture, capital from revenue and DCL funding to program areas and/or projects. At the same time, Council will be asked to approve the plebiscite questions that will appear on the ballot during the November election seeking authority to borrow the necessary funds to complete the capital plan.
· Preceding the election, information about the Capital Plan and borrowing questions will be provided to all registered voters.
· With voter approval of the borrowing questions, the 2003 - 2005 Capital Plan will be approved and individual program and project expenditure approval will be sought in annual capital budgets during the course of the plan.

CONCLUSION

The Capital Plan outlines the capital expenditure plans for the City for the next three yearperiod. The plan is designed to address the ongoing need for maintenance and upgrading of civic facilities and infrastructure and of support for the community. As with all capital plans, the 2003 - 2005 Capital Plan reflected needs in excess of the funding levels that can be made available within a financially sustainable envelope and difficult decisions were required about priorities. The Capital Plan Staff Review Group have recommended that Council approve the draft allocation presented on June 25 with some adjustments to reflect the needs expressed by the public and the Park Board during the review process.

* * * * *

APPENDIX B
Responses to the Capital Plan Questionnaire

Approximately 150,000 Capital Plan flyers were distributed in 2 community newspapers (Courier and Ming Pao), and through community centres and libraries. The flyer was also available on the City of Vancouver website. We have received 236 completed questionnaires.

It is important to note that this sample is self selecting and not statistically significant.

The respondents are generally satisfied with the services and facilities the City provides and feel these services represent value for the tax dollars spent. There is also general agreement for the balance of the use of funds between maintenance of existing infrastructure and new and increased facilities.

Who Responded

The geographic distribution of the respondents is within 10% of the actual distribution of the population with 45% of the respondents living south of 16th Avenue (compared to 56% of the population) and 50% living north of 16th Avenue (compared to 44% of the population).

The respondents tend to be older (43% aged 34 to 54 years and 39% aged 55 or older), and have lived in Vancouver longer (80% longer than 10 years) than the general population.

96% of respondents say they plan to vote in the November 16th election.

There has been no weighting of the responses to reflect the democratic make-up of the City.

Satisfaction with City Services

81% of the respondents said they were either very satisfied (23%) or somewhat satisfied (58%) with the services and facilities the City of Vancouver provides. The same level of satisfaction (81%) was found in the MarkTrend Study.

How Well Services Represent Value for Property Taxes

A higher percentage of respondents to the 2003-2005 Capital Plan Questionnaire feel the services they receive represent value for property taxes, compared to the MarkTrend Study respondents.

72% of respondents said they thought the services they receive represent value for tax dollars spent either very well (16%) or fairly well (56%). In the MarkTrend Study, 58% responded very well or fairly well to the same question.

Support for the Balance of Use of Funds

The majority (72%) of the respondents support the proposed balance of the use of funds.

31% said they strongly support and 41% said they moderately support the balance of the use of funds between maintenance of existing infrastructure and new and increased facilities.

Of the 27% who were in favour of a different mix of the use of funds, 49% wanted more emphasis on maintenance of the existing infrastructure.

Priorities for Spending

Respondents were asked to rank the priority of several projects on a scale of 1 to 10.

The highest ranked priorities are:

· Maintenance of major public works
· Maintenance of City owned facilities
· Provision of affordable housing
· Downtown Eastside revitalization initiatives
· New library branches in areas currently under serviced
· Upgrading community centres and recreation facilities
· Traffic flow improvements


The lowest ranked priorities are:

· Maintenance/improvement of non City owned buildings
· Construction of additional bike routes
· Acquiring new park sites for neighbourhoods that lack parks
· Upgrading and building new social service facilities and daycares
· Construction of greenways

(c) 1998 City of Vancouver