SUPPORTS ITEM NO. 4
CS&B COMMITTEE AGENDA
MAY 8, 1997
ADMINISTRATIVE REPORT
Date: May 1, 1997
TO: Standing Committee on City Services and Budgets
FROM: Director of Finance
SUBJECT: 1997 Basic Capital Budget
RECOMMENDATIONS
A. THAT the 1997-1999 Capital Plan provision for Downtown South
Park Acquisition be reduced by $1,531,600 to provide for new
revenue transition funding in the 1997 Operating Budget.
B. THAT the allocation of the 1996 Capital from Revenue funding
of $9,068,400 to the 1997 Capital Budget be as follows:
Public Works $ 3,000,000
Police Protection 700,000
Social and Cultural Facilities 2,036,400
Other 1,732,000
Supplementary Capital 1,600,000
Total $ 9,068,400
C. THAT the 1997 Park Board Basic Capital Budget totalling
$11,273,900, as summarized in this report and detailed in
(Appendix 2) be approved, with the funding to be provided from
borrowing authority as approved as part of the 1997-1999
Capital Plan.
D. THAT the allocations to the Protection, Social & Cultural
Facilities and Other components of the 1997 Basic Capital
Budget as summarized in this report and detailed in Appendix 3
be approved.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services notes that Recommendation
A is supported by the Corporate Management Team as the most
appropriate way to provide the necessary transition funding for the
1997 Operating Budget. The General Manager RECOMMENDS approval of
A, B, C and D.
COUNCIL POLICY
The 1997-1999 Capital Plan includes provision for $32.2 million in
capital expenditures to be funded from the Operating Budget (Capital
from Revenue) over the three years of the plan. The 1996 component of
this funding is $10.6 million.
On April 8, 1997, Council approved a reduction in the Capital from
Revenue portion of the 1997-1999 Capital Plan totalling $1,531,600 to
provide transition funding for new revenues in the Operating Budget.
PURPOSE
The purpose of this report is to summarize the 1997 Capital Budget and
to seek Council approval for the allocation of Capital from Revenue
funding and for debenture authority necessary to complete the funding of
the 1997 Capital Program.
BACKGROUND
The 1997-1999 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 that had not been
anticipated in the Capital Plan but which have become a priority
during the course of the Plan.
Funding for these capital budgets comes from debenture borrowing
approved by the plebiscite and/or by Council and from Capital from
Revenue approved as part of the annual Operating Budget.
On March 25, 1997, Council approved the 1997 Engineering Capital Budget
along with the debenture portion of the funding program. Funding to be
provided to the Engineering Capital Budget from the Operating Budget is
included in Recommendation B of this report.
On March 25, 1997, Council approved the Fire Protection Basic Capital
Budget, including funding to begin planning for the replacement of Fire
Hall #3 and for completion of Phase II of the Fire Training Site.
Funding for this work is from borrowing authority provided in the
1997-1999 Capital Plan.
On April 14, 1997, the Park Board approved the Park Board Basic Capital
Budget and forwarded it to Council for approval.
On April 8 and April 24, 1997, Council approved the final revenue and
expenditure estimates of the 1997 Operating Budget, including a
provision of $9,068,400 to support the City s capital program. This
allocation includes a reduction of $1,531,600 from the $10.6 million
Capital from Revenue provision included in the 1997-1999 Capital Plan,
in order to provide transition funding for new revenues approved a part
of the 1997 Operating Budget estimates.
DISCUSSION
Funding for the 1997 Basic Capital Budget
The following table summarizes the total funding for the 1997-1999
Capital Plan (including unallocated borrowing authority from prior
Capital Plans) and the portion to be allocated to the 1997 Capital
Budget.
Capital Plan 1997 Unallocated
Funding Budget Balance
($000) ($000) $(000)
Capital from Revenue(1):$30,668 $9,068 21,600
Debenture Authority:
Plebiscite (1994-1996) 1,082 0 1,082
Plebiscite (1997-1999) 83,383 33,190 51,275
Sewer 49,417 16,660 32,757
Water 74,100 23,100 51,000
Total Debentures $207,982 72,950 135,032
Total Funding $238,650 $82,388 $156,632
(1) the 1997 provision includes a reduction of $1,531,600 related to
transition funding in the 1997 Operating Budget which is
reflected in the table.
A summary of the projects/programs in the 1997-1999 Capital Budget and
the funding allocated in the Plan and in the 1997 Capital Budget is
included in Appendix 1. Appendix 2 provides additional detail about
projects in the Park Board Capital Budget and Appendix 3 provides
details about the projects/programs funded in the Protection, Social and
Cultural Facilities and Other sections of the 1997 Capital Budget.
As noted in the table, $72,950,000 of the funding for the 1997 Basic
Capital Budget comes from debenture authority, including $33,190,000
from plebiscite authority and $39,760,000 in sewer and water authority
approved by Council. Note 2 indicates the amount of this borrowing
authority approved in advance. Recommendations in this report will
provide authority for the balance of this funding.
Providing Transition Funding: Reducing Capital from Revenue
Capital from Revenue of $10.6 million was proposed in the 1997 Operating
Budget, however, on April 8, 1997 Council approved the following
recommendation:
B. THAT Council approve the provision of $1,837,600 in transition
funding to annualize new revenues within the 1997 estimates, source
of funding to be $1,531,600 through a reduction in the provision
for Capital from Revenue and $306,000 from the elimination of the
balance in the Demolition Fee Reserve.
This action leaves the Capital from Revenue provision for 1997 at
$9,068,400 and requires the deferral of $1,531,600 in projects/programs
from the 1997 Capital Budget. Council must now decide, among the
approved projects in the 1997-1999 Capital Plan funded from Capital from
Revenue, which will be reduced to provide the required savings. A
listing of the programs/projects that were recommended for funding from
revenue funds in the 1997-1999 Capital Plan are included in Appendix 1
of this report.
At the time the Capital Plan Review Group reported its recommendations
on the 1997-1999 Capital Plan to Council (July 23, 1996), the members
identified the following projects as being of lower priority and where
further reductions in the Plan might be achieved:
Capital Plan
Allocation
Vancouver Museum Rehabilitation $3,000,000
Downtown South Parks Acquisition 2,500,000
City-owned Social/cultural facilities 500,000
Orpheum washroom upgrade 350,000
Other 180,000
The recommendation of the Capital Plan Review Group was that, if
projects/programs needed to be eliminated from the Capital Plan, these
were the ones to which Council should look. Subsequently, Council has
approved funding for the Vancouver Museum totalling $1,340,000, leaving
$1,660,000 for the final phase of that rehabilitation project. In
addition, of the funding available for the Orpheum Washroom upgrade,
$80,000 has been utilized in an expanded asbestos removal project at the
Queen Elizabeth Theatre, leaving $270,000 available for the washroom
project.
On February 4, 1997, when considering the need for transition funding in
the 1997 Operating Budget, Council also identified the Library Outreach
Program reloaction project as a potential source of the necessary
transition funding. The Library Outreach program, which is further
discussed in Appendix 3, involves the relocation and expansion of this
program from the basement of the Kitsilano Branch Library into Library
Square. The space proposed to be occupied is currently owned by the
Property Endowment Fund. The project involves the following components:
Purchase of Library Square Property $ 854,000
Tenant Improvements 200,000
Furniture and Equipment 145,000
Total $1,200,000
Funding for this project is requested in the 1997 Capital Budget. The
Library Board will be present at Committee on May 8 to make a
presentation in support of this expenditure.
The issue of which project(s) should be reduced to provide transition
funding was reviewed by the Corporate Management Team on April 29, 1997.
The CMT supports the priorities established by the Capital Plan Review
Group. However, given Council s support for the Museum rehabilitation
project, they recommend that funding for Downtown South Parks
acquisition be reduced by $1,531,600 to provide the necessary transition
funding. This will leave $968,400 available for park land acquisition
in the 1997-1999 Capital Plan. This recommendation is based on the
conclusion that:
the allocation in the Capital Plan is a general allocation to support
park land purchase over a period stretching beyond the current
Capital Plan,
there are no specific parcels contemplated for purchase at this time,
there is currently DCL funding available, and in future years there
will be additional funding, for park land acquisition,
Recommendation A of this report confirms the proposed reduction and
Recommendation B presents an allocation of the balance of Capital from
Revenue that reflects this recommendation.
Funding for the 1997 Supplementary Capital Budget
The 1997-1999 Capital Plan includes $5.0 million for the Supplementary
Capital Budget. The 1997 allocation is $1,600,000. Council has
previously approved $423,000 of this funding to individual items,
leaving $1,177,000 to be allocated from among the funding requests. A
report recommending allocation of this funding will be before City
Services and Budgets Committee on May 15, 1997.
COMMENTS ON THE BASIC CAPITAL BUDGET REQUESTS
1. Engineering
As noted, the Engineering Basic Capital Budget, totalling $63,406,000
was approved by Council on March 25, 1997, subject to approval of
Capital from Revenue. Revenue funding is proposed to complete the
purchase of the CP Rail right of Way in False Creek that was approved by
Council in 1996.
Approval of Recommendation A of this report will allocate Capital from
Revenue to complete the funding of this budget.
2. Park Board
On April 14, 1997, the Park Board approved its 1997 Capital Budget and
is referred to Council for approval. Details of the Park Board Capital
Budget are provided in Appendix 2 of this report and the budget is
summarized in the following table:
1997-1999 1997
Capital PlanCapital Budget Balance
Land Acquisition $ 3,665,000 $ 1,683,000$ 1,980,000
Park Development 7,527,900 4,113,300 3,414,600
Facility Development 11,788,400 4,916,700 6,871,700
Overhead Costs 1,249,400 427,300 822,100
Debenture Costs 271,300 133,600 137,700
$24,500,000 $11,273,900 $13,226,100
The Capital Plan allocation indicated above excludes $2.0 million in
community centre funding to be provided from Capital from Revenue that
was approved by the electorate in an opinion question associated with
the 1996 municipal election. Subject to Council approval, that funding
will be provided to the Park Board in 1998 and 1999.
The Park Board Capital Budget proposes several projects that will expand
the services provided by the Park Board and which will require
additional operating costs to be added to the global budget in future
years. A review of the details attached as Appendix 2 indicate
identifiable operating costs exceeding $400,000 annually. These
include: $79,000 in increased staffing and maintenance to support the
Park Board Information System; $80,000 for the refurbished Stanley Park
Service Yard; $24,500 for mainentance of realigned Stanley Park seawall;
$77,400 for refurbished/rebuilt community centres and $13,700 for
maintenance of the Engine 374 Display Pavillion at the Roundhouse
Community Centre.
All of the funding for the 1997 Park Board Capital Budget will be
provided from debenture borrowing and Recommendation B of this report
provides for that funding.
3. Fire Protection
As noted, the Fire Protection 1997 Capital Budget was approved by
Council on March 25, 1997. It included funding for the following
projects, all funded from debenture authority:
Fire Hall #3 Replacement - Design Phase $ 500,000
Fire Training Site - Phase II 770,000
Total $1,270,000
4. Social and Cultural Facilities
The 1997-1999 Capital Plan includes funding of $8,450,000 for projects
related to social and cultural facilities owned by the City and by
others. These include upgrading or relocation for social service,
daycare and cultural facilities, relocation of the Library Outreach
program, rehabilitation of the Vancouver Museum and continuation of the Public Art program. All of these projects are funded from Capital from
Revenue.
The 1997 Capital Budget includes funding be allocated to the following
projects/programs:
relocation and expansion of the Library Outreach Program ($346,000).
This funding will allow the Library to undertake improvement of the
space at Library Square. The balance of the funding, to purchase the
space from the PEF, will be provided in the 1998 Capital Budget.
In addition, general allocations are requested to the following
programs, with specific expenditures to be reported back to Council for
approval:
capital requirements related to City-owned social, cultural and
daycare facilities ($100,000)
the capital grant program, that supports the capital needs of social
and cultural facilities not owned by the City ($100,000)
continuation of the Public Art program ($150,000).
Details of these requests are included in Appendix 3.
5. Other
The Other category of the Capital Plan includes allocations for
maintenance and upgrading of the City Hall Precinct (City Hall, East
Wing and VanCity Buildings and City Square offices) and the Civic
Theatres, and a contribution to the Affordable Housing Fund. All of
these projects are funded from Capital from Revenue.
The 1997 recommended allocations include:
maintenance / upgrading of City Hall Precinct ($780,000)
contribution to the Affordable Housing Fund ($372,000)
asbestos removal at the Civic Theatres ($580,000, previously
approved).
Details of the new requests are included in Appendix 3.
CONCLUSION
The 1997 Capital Budget represents the first annual budget arising from
the 1997-1999 Capital Plan and provides for the allocation of funding
included in that Plan to individual projects and programs.
* * * *
Appendix 1
Summary of the 1997 Basic Capital Budget
1997-1999 1997 1997 Funding
Capital Budget Borrowi Revenue
Engineering
Streets (1) 47,710 17,986 14,986 3,000
Communications (2) 960 465 465 0
Street Lighting 4,373 1,540 1,540 0
Traffic Signal 7,970 3,655 3,655 0
Sewers 49,417 16,660 16,660 0
Waterworks 74,100 23,100 23,100 0
184,530 63,406 60,406 3,000
Parks
Parkland Acquisition 3,663 1,683 1,683 0
Park Development 7,528 4,113 4,113 0
Recreation Facilities 11,788 4,917 4,917 0
Overhead & Debenture 1,521 561 561 0
24,500 11,274 11,274 0
Protection
Fire Department 6,670 1,270 1,270 0
Police Department 1,800 700 0 700
Social & Cultural
City-owned Facilities 2,500 100 0 100
Capital Grants 500 100 0 100
Crabtree Corner 500 0 0 0
Public Art 750 150 0 150
Museum/Planetarium 3,000 1,340 0 1,340
Library Outreach 1,200 346 0 346
Other
City Hall Precinct 2,300 780 0 780
Downtown South Parks 968 0 0 0
Affordable Housing 2,500 372 0 372
Civic Theatres 850 580 0 580
Supplementary Capital 5,000 1,600 0 1,600
Total Capital Budget 237,568 83,750 72,950 9,068
(1) In an opinion question associated with the
1997-99 Capital Plan borrowing questions, the
electors approved additional funding of $2.0 million from the
Operating Budget for
Community Centres. This funding will be considered as part of the
1998 and 1999 Capital Budgets and has been excluded from this
allocation.