Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Corporate Services / Director of Finance

SUBJECT:

2003 - 2005 Capital Plan: Financial Plan and Plebiscite Questions

 

RECOMMENDATION

A. THAT the 2003 - 2005 Sewer and Waterworks Capital Plans be funded from debenture authority as provided for in the Section 236 and 242 of the Vancouver Charter:

B. THAT the 2003 - 2005 Capital Plan borrowing plebiscite contain three questions in the following categories:

CITY MANAGER COMMENTS

The City Manager RECOMMENDS approval of A and B.

COUNCIL POLICY

Council's policy for capital works is to fund sewer and water capital expenditures from debenture borrowing and to fund the balance of capital expenditures from a combination of debenture borrowing and contributions from the Operating Budget (Capital from Revenue).

Section 236 and 242 of the Vancouver Charter give Council the authority to approve borrowing authority for sewer and water capital expenditures without reference to the electors. Section 245 of the Charter requires that borrowing authority for other capital expenditures be approved by a majority of the electorate.

The limits to capital expenditure funding have been governed by three benchmarks established by Council. These benchmarks provide that:

· debt charges (principal and interest on outstanding debt) to 15% of the Operating Budget.
· debt charges and capital from revenue (the capital envelope) to a range of 17% to 20% of the Operating Budget.
· the capital envelope should be neutral with respect to its impact on property taxes during the capital planning period.

PURPOSE

The purpose of this report is to seek Council approval of the financial plan that will govern the funding of the 2003 - 2005 Capital Plan, including the allocation of capital expenditures from borrowing authority, capital from revenue and development cost levies. The report also provides information on the proposed wording of the borrowing questions that will appear on the ballot in November.

BACKGROUND

The process to develop the 2003 - 2005 Capital Plan began in the fall of 2001. On October 1, 2002, Council passed the following recommendations which finalized the allocation of funding in the plan:

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

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.

DISCUSSION

1. Total Funding in the 2003 - 2005 Capital Plan

Appendix A summarizes the City funding that has been approved for the 2003 - 2005 Capital Plan, including funding from the City's borrowing program, capital from revenue and the City-wide Development Cost Levy:

2003 - 2005 Capital Plan Funding

Borrowing Program

  
 

General

$96,790,000

 

Sewer

$58,750,000

 

Water

$46,000,000

Capital from Revenue

$45,900,000

Development Cost Levy

$13,000,000

 

Total Capital Plan

$260,440,000

In addition, Council approved the addition of a funding "pool" of $20 million to the Capital Plan, this funding to be the subject of a separate borrowing question on the November ballot. If approved by the voters, this funding would be available to projects that receive a majority of their funding through cost sharing from senior governments or other outside sources. This approval will bring the total City funds available for the Capital Plan to $280.4 million.

In addition to City funds designated within the Capital Plan, it is anticipated that up to $100 million will be provided by property owners (through the Local Improvement process), senior governments and other outside sources.

2. Allocation of Capital Plan Funding

The financial plan that supports the 2003 - 2005 Capital Plan specifies the source of funding for each component of the plan. As noted above, the sources of financing for the plan are borrowing authority, capital from revenue and DCL funding. The limits on these components within a Capital Plan are also reviewed above.

Appendix A summarizes the expenditures included in the Capital Plan approved by Council on October 1, 2002 (including minor final adjustments for debenture costs) and indicates which projects/programs are proposed to be funded by the three sources.

Sewer and Water expenditures are funded entirely from borrowing authority which Council may approve without reference to the electorate. Council has approved the following allocations of borrowing authority to these areas:

The balance of the Capital Plan totals $155,690,000. The guidelines outlined in the Council policy section govern the amount of funding allocated from borrowing authority and from the Operating Budget. Based on projections of the Operating Budget and application of these funding limits, it is recommended that the following allocations be made:

The funding in the Capital Plan is allocated to specific projects generally on the following basis:

· Capital from Revenue funding is favoured for expenditure areas that do not involve infrastructure investments or that involve transfer of funds to others (eg. grant programs).
· smaller individual projects are funded from capital from revenue in order to keep the borrowing authority plebiscite questions from becoming overly complex.
· Supplementary Capital is funded from Capital from Revenue.
· debenture funding is favoured for projects that involve infrastructure investments or expenditures on assets with a longer life.
· program/project expenditures that are not divisible (such as replacement of a community centre or construction of a branch library) are funded from just one source.
· projects that meet the requirements of the development cost levy provisions of the Vancouver Charter and the City-wide DCL bylaw and that have a component associated with meeting the demands of growth can be funded in part from development cost levies.
· the balance of the Operating Budget funds are allocated across the remaining components of the plan.

3. Plebiscite Questions

The Vancouver Charter gives Council the authority to approve borrowing authority for sewer and water capital expenditures without reference to the electorate. This assures that important health and safety issues are not subject to the vagaries of a public vote.

Borrowing for all other capital expenditure requires voter approval. The programs/projects to be funded from borrowing authority requiring voter approval have been grouped into two plebiscite question, one related to expenditures contemplated by Council, the other related to the expenditure priorities of the Park Board. These components of these questions and the associated borrowing authority are listed below:

Public Works, Public Safety and Civic Facilities
· Streets and Bridge Infrastructure $16,104,000
· Pedestrian and Bicycle Facilities 15,293,000
· Transit and Safety Improvements 11,587,000
· Local Area Improvements 12,376,000
· Street Lighting & Communications 6,275,000
· Public Safety 9,620,000
· Other Civic Facilities 6,845,000 $78,100,000

Parks and Recreation
· Park Development 3,770,000
· Facilities Development 14,920,000 $18,690,000

The third plebiscite questions seeks approval to borrow up to $20 million for projects that receive a majority of their funding from cost sharing with senior governments or other outside sources.

If Council is in agreement with this categorization of Capital Plan projects and the allocation of debenture authority, the wording of the proposed questions will generally be in accordance with the examples provided in Appendix B. As the Vancouver Charter is specific about the information that must be included in the borrowing questions, a final review by the Director of Legal Services will be necessary.

PUBLIC INFORMATION PROCESS

Once Council has dealt with the final funding allocations and the Director of Legal Services has concurred with the wording of the borrowing questions that will be put to the voters, the final phase of the public information process will begin. This will include:

·
updating the Capital Plan website to reflect the resolutions arising from this report
· production of a brochure detailing the contents of the plan and the questions to be put to the voters. This brochure will be mailed to all eligible voters as part of the election campaign and will be available at community centres, branch libraries and other civic facilities.
· placement of public information advertisements in the daily and community newspapers.

On November 16, 2002, the public will be asked to vote on the borrowing questions as part of the civic election process.

* * * * *

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Appendix B
2003 - 2005 Capital Plan

Draft Debenture Authority Questions

1. PUBLIC WORKS, PUBLIC SAFETY AND CIVIC FACILITIES

This question seeks authority to borrow funds to be used in carrying out the basic capital works program with respect to Public Works, Public Safety and Civic Facilities.

ARE YOU IN FAVOUR OF COUNCIL HAVING THE AUTHORITY, WITHOUT FURTHER APPROVAL OF THE ELECTORS, TO PASS BYLAWS BETWEEN JANUARY 1, 2003 AND DECEMBER 31, 2005 TO BORROW AN AGGREGATE SEVENTY EIGHT MILLION ONE HUNDRED THOUSAND DOLLARS ($78,100,000) FOR THE FOLLOWING PURPOSES?

A. Streets and Bridge Infrastructure

To reconstruct arterial and residential streets and lanes;

B. Pedestrian and Cycling Facilities

To provide sidewalks, bikeways, curb ramps, greenways,

C. Transit and Safety Improvements

To provide facilities that improve traffic safety and improve

D. Local Area Improvements

To provide for neighbourhood traffic initiatives that

E. Street Lighting and Communications

To provide for the replacement of street lighting components

communications systems. $6,265,000

F. Public Safety

To provide for replacement of facilities for the Vancouver

G. Civic Facilities

To provide for the replacement and rehabilitation of civic

If this question receives the assent of the electors, Council has the power, without further assent of the electors, to pass by-laws, as and when Council considers appropriate, to borrow money for the projects described up to Seventy Eight Million One Hundred Thousand Dollars ($78,100,000).

2. PARKS AND RECREATION FACILITIES

This question seeks authority to borrow funds to be used in carrying out the basic capital works program with respect to Parks and Recreation.

ARE YOU IN FAVOUR OF COUNCIL HAVING THE AUTHORITY, WITHOUT FURTHER APPROVAL OF THE ELECTORS, TO PASS BYLAWS BETWEEN JANUARY 1, 2003 AND DECEMBER 31, 2005 TO BORROW AN AGGREGATE EIGHTEEN MILLION SIX HUNDRED NINETY THOUSAND DOLLARS ($18,690,000) FOR THE FOLLOWING PURPOSES?

A. Recreation Facilities

To provide for major maintenance, upgrading, replacement

B. Park Development

To provide for the improvement or development of City-wide

If this question receives the assent of the electors, Council has the power, without further assent of the electors, to pass by-laws, as and when Council considers appropriate, to borrow money for the projects described up to Eighteen Million Six Hundred Ninety Thousand Dollars ($18,690,000).

3. COST SHARED INFRASTRUCTURE PROJECTS - CITY SHARE

This question seeks authority to borrow funds to be used in providing the City share of funding for basic capital works that receive a majority of their funding from senior governments or other outside sources.

ARE YOU IN FAVOUR OF COUNCIL HAVING THE AUTHORITY, WITHOUT FURTHER APPROVAL OF THE ELECTORS, TO PASS BYLAWS BETWEEN JANUARY 1, 2003 AND DECEMBER 31, 2005 TO BORROW UP TO AN AGGREGATE TWENTY MILLION DOLLARS ($20,000,000) TO FUND THE CITY SHARE OF PUBLIC WORKS, PARKS AND RECREATION OR OTHER CIVIC PROJECTS THAT RECEIVE A MAJORITY OF THEIR FUNDING FROM SENIOR GOVERNMENTS OR OTHER OUTSIDE SOURCES?

If this question receives the assent of the electors, Council has the power, without further assent of the electors, to pass by-laws, as and when Council considers appropriate, to borrow money for the projects described up to Twenty Million Dollars ($20,000,000).

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