Vancouver City Council

ADMINISTRATIVE REPORT

Date: April 29, 2003
Author /Loc: Annette Klein/
604-873-7789
RTS #: 3346
File No. 1602
CS&B: May 15, 2003

TO: Standing Committee on City Services and Budgets

FROM: General Manager of Corporate Services / Director of Finance

SUBJECT: 2003 Basic Capital Budget

RECOMMENDATIONS

A. THAT the allocation of 2003 Capital from Revenue funding of $12.6 million to the 2003 Capital Budget be as follows:

Parks & Recreation Facilities $ 1,050,000
Community Service Initiatives $ 3,050,000
Civic Property Management $ 2,737,000
Other $ 4,763,000
Supplementary Capital $ 1,000,000
Total $12,600,000

B. THAT the project/program expenditures in the Community Service Initiatives, Civic Property Management and Other components of the 2003 Basic Capital Budget as summarized in this report and detailed in Appendix 2 be approved with the source of funding to be:

Capital from Development
Revenue Cost Levies

Community Services Initiatives $3,050,000 $1,000,000
Civic Property Management $2,737,000
Other $4,763,000

COUNCIL POLICY

It is Council policy to identify capital funding priorities in three year Capital Plans. These Plans and the associated Capital Financing Plan are developed such that the plan and necessary borrowing authority can be put to the voters at the time of triennial civic elections.

PURPOSE

This report is one of four which seek approval of the programs and projects in the 2003 Capital Budget and their funding sources:

1. This report provides an overall summary of the 2003 Capital Budget and the sources of funding for the program and seeks Council approval for the Community Service Initiatives, Civic Property Management and Other components;

2. The 2003 Engineering Basic Capital Budget report reviews the capital expenditure program for Streets, Sewers and Waterworks and seeks Council approval of necessary borrowing and other funding sources;

3. The 2003 Park Board Basic Capital Budget report reviews the capital expenditure program for the Park Board and seeks Council approval of necessary borrowing and other funding sources;

4. The 2003 Supplementary Capital Budget seeks Council approval of the allocation of Supplementary Capital funding to specific project expenditures.

BACKGROUND

The Capital Plan, totaling $282.4 million, guides the development of annual capital budgets in 2003, 2004 and 2005. Funding for the plan is derived from borrowing authority approved by plebiscite ($96.8 million) and by Council for sewer and water projects ($104.8 million). In addition, the 2003-2005 Capital Plan includes a provision of $45.9 million Capital from Revenues, $13.0 million from Development Cost Levies, $2 million from Community Amenity Contributions, and $20 million for potential cost sharing.

The Capital Plan forms the framework within which annual capital budgets are prepared. The two components of the annual capital budget are:

· Basic Capital, which includes project/program - specific items that were included in the Capital Plan, and

· Supplementary Capital, which includes items which had not been anticipated in the Capital Plan but which have become a priority during the course of the Plan.

On April 8, 2003, Council approved a deferral of $2.0 million in the 2003 provision for Capital from Revenue to assist with balancing the 2003 Operating Budget, leaving a balance of $12.6 million to be allocated in 2003.

Council has approved funding for the following programs in advance of the 2003 Capital Budget:

a) Award of Construction Tender for Vancouver Fire Training Office at $375,000;
b) Street and Sidewalk Rehabilitation Projects at $2.2 million;
c) Purchase of Stanley/New Fountain Hotel at $2.0 million
d) QET Cooling Tower Replacement at $150,000
e) Traffic Calming Speed Hump Program at Ash St. & @. 45^th at $228,000

Funding for these projects has been included in the recommendations in this report and in the accompanying Engineering and Park Board Capital Budget Reports.

DISCUSSION

1. Funding for the 2003 Basic Capital Budget.

The following table summarizes the total funding for the 2003 - 2005 Capital Plan detailed in the Background Section of this report and as proposed the funding recommendation of this report and the accompanying reports. The table also shows the portion to be allocated to the 2003 Capital Budget and the balance of funding to be available in 2004 and 2005.


($`000)	Capital Plan Summary	2003 Budget (1^st Year Allocation)	Unallocated Balance 2004 & 2005

Capital from Revenue:	$45,900	$12,600	$33,300
Capital from DCL & CAC Funding	$15,000	$2,400	$12,600

Debenture Authority:
Plebiscite 2003 - 2005
Capital Plan	$96,790	$31,722	$65,068
Cost Sharing Projects	$20,000	-	20,000
Sewer	$58,750	$18,030	$40,720
Water	$46,000	$18,902	$27,098
Total Debentures	$221,540	$68,654	$152,886

Total Funding ($'000)	$282,440	$83,654	$198,786

A summary of the projects/programs and funding in the 2003 - 2005 Capital Plan and in the 2003 Capital Budget is included in Appendix 1. Appendix 2 provides additional detail about the projects/programs funded in the Community Service Initiatives and Other categories of the 2003 Capital Budget. Details of the Engineering and Park Board capital budgets are included in accompanying reports.

As noted in the table, $68,654,000 of the funding for the 2003 Basic Capital Budget comes from debenture authority, including $31,722,000 from plebiscite authority, and $36,932,000 is from authority approved by Council for sewer and water programs.

New to the Capital Plan is the inclusion of City-Wide Development Cost Levies (DCLs) funding totaling $13 million and Community Amenity Contribution (CAC) funding of $2 million over 3 years. The 2003 Basic Capital Budget includes $2.40 million of DCL and CAC funding: $1 million for Affordable Housing and $1.4 million for the Park Board.

As part of the 2003 Operating Budget process, Council deferred $2 million of Capital from Revenue. The deferral was managed by allocating the deferral mainly to debt-related capital for Engineering and Park Board Capital Budgets, thereby reducing the reliance on 2003 Capital from Revenue for these categories.

2. Funding for the 2003 Supplementary Capital Budget

The 2003 - 2005 Capital Plan includes provision for $3.0 million in Supplementary Capital expenditures to be funded from the Operating Budget (Capital from Revenue) over the three years of the plan. The 2003 Supplementary Budget includes funding of $1,000,000, therefore leaving unallocated funds of $2,000,000 for 2004 and 2005.

The allocation of these funds to specific projects has been submitted as an accompanying report.

COMMENTS ON THE BASIC CAPITAL BUDGET REQUESTS

1. Engineering Basic Capital Budget

The 2003 - 2005 Capital Plan includes provision of $173.7 million for Engineering Public and Water Works projects. The 2003 Engineering Basic Capital Budget, totaling $61.0 million, is submitted in an accompanying report which includes the recommendations necessary to provide funding for identified projects.

The City Engineer has requested funding totaling $61,024,000 which fits within the 2003 - 2005 Capital Plan allocation. This funding is provided from 2003 - 2005 borrowing authority approved by plebiscite ($24,092,000) and by Council for sewer and water ($36,932,000).

Included in the 2003 Engineering Basic Capital Budget is an allocation of $2 million for the Park Board Project to rehabilitate the Little Mountain Reservoir Deck at Queen Elizabeth Park.

2. Park Board Capital Budget

The 2003 - 2005 Capital Plan includes provision of $37.4 million for the Park Board., The Park Board has brought forward a request for its 2003 Capital Budget at $9,480,000 including the Q.E. Park project mentioned above. Funding from Basic Capital budget is provided from plebiscite authority ($7,030,000 - of which $2,168,500 has been pre-approved), from capital from revenue ($1,050,000), and DCL and CAC funding ($650,000 and $750,000 respectively). The report also requests approval of funding ($600,000) from partner organizations of the Park Board, bringing their gross capital budget to $10,080,000 ($9,480,000 Capital Budget plus $600,000 partnering funds).

Operating costs associated with the 2003 Park Board Capital Budget will begin to impact the Operating Budget in 2004. The annual operating costs for these projects are estimated at $245,000 as follows:

Recreational Facilities $ 70,000
Park Development $175,000
Total Operating Costs $245,000

Details of the Park Board Capital Budget were approved by the Park Board on February 10, 2003 and are included in the accompanying report from the General Manager of Parks and Recreation

3. Community Services Initiatives

The 2003 - 2005 Capital Plan includes funding of $14,300,000, for projects related to social and cultural facilities owned by the City and by others. These include: upgrading or relocation of social service, daycare and cultural facilities; a contribution to the Affordable Housing Fund; funding for the Downtown Eastside revitalization program; and continuation of the Public Art program. These projects are funded from Capital from Revenue and Development Cost Levies.

The 2003 Capital Budget includes funding of $4,050,000 allocated to the following projects/programs

Affordable Housing - New Neighbourhoods $2,000,000
Childcare Facilities - General $ 50,000
Social Service and Cultural Facilities $ 50,000
Capital Grants $ 200,000
Civic Public Art Program $ 250,000
Emerging Neighbourhoods - DTES Revitalization Program $1,000,000
Gastown/Chinatown Building Façade Upgrade Program $ 500,000

Funding for the 2003 Capital program is provided from Capital from Revenue ($3,050,000) and Development Cost Levies ($1,000,000)

Approval of expenditures under some of the allocations will be the subject of future reports.

9. Other

The Other Category of the Capital Plan includes allocations for maintenance of the City Hall Precinct (City Hall, East Wing and West Annex buildings), maintenance for other civic facilities, Information Technology maintenance and expansion, and for renovation of Library Branch facilities. The Capital Plan provides $24,135,000 over three years, of which, $7,500,000 is being requested for 2003 to be funded from Capital from Revenue.
The 2003 Capital Budget includes:

City Hall & Civic Buildings Major Maintenance Program $2,737,000
Library Facilities - Renovate and Upgrade Various Branches $ 140,000
Information Technology Maintenance and Expansion $4,623,000

The $4,623,000 Information Technology of this capital category is made up of:

Information Technology Infrastructure $1,500,000

- To replace obsolete IT infrastructure (corporate networks, information servers and voice systems). The program for 2003 will be reported to Council later in the year.

Revenue System Replacement $2,500,000

- To replace the City's obsolete revenue system with new software for property tax, utilities, and bylaw fines billing and collection. The project and its associated business case will be reported to Council later in the year.

SAP Projects $623,000

- $414,400¹ to complete the second phase of the SAP's Asset Accounting and Plant Maintenance module
- $148,600 to expand SAP Human Resource Module to provide personnel development functionality
- $60,000 to pilot SAP Manager's Desktop in order to provided enhanced reporting.

¹Note: In October 2002, Council approved a $67,000 increase to the SAP AM/PM implementation project. Further Review of this project indicates that this additional funding, other than $7,000, will not be required.

CONCLUSION

The 2003 Capital Budget represents the first annual budget arising from the 2003- 2005 Capital Plan and provides for the allocation of funding included in that Plan to individual projects and programs.

* * * * *

Link to Appendix 1

Link to Appendix 2