ADMINISTRATIVE REPORT

Date: May 19, 1998

Author / Local: J. Beresford / 7789

CC File No. 1602

TO: City Services and Budgets Committee

FROM: Director of Finance

SUBJECT: 1998 Basic Capital Budget

RECOMMENDATIONS

A. THAT the 1997 - 1999 Capital Plan reduction of $700,000 be $350,000 in each of 1998 and 1999 respectively to be achieved through the elimination of the remaining 1997 - 1999 Capital Plan provision for Downtown South Park Acquisition ($968,400), and

THAT the balance of the funding remaining after elimination of this project ($268,400) be transferred to the 1998 Supplementary Capital Budget.

B. THAT the allocation of the 1998 Capital from Revenue funding of $10,650,000 to the 1998 Capital Budget be as follows:

Public Works $3,000,000

Parks & Recreation Facilities 2,400,000

Police Protection 420,000

Social and Cultural Facilities 1,822,000

Other 1,039,600

Supplementary Capital 1,968,400

Total $10,650,000

C. THAT the allocations to the Protection, Social & Cultural Facilities and Other components of the 1998 Basic Capital Budget as summarized in this report and detailed in Appendix 2 be approved.

GENERAL MANAGER COMMENT

The General Manager of Corporate Services RECOMMENDS approval of A, B and C.

COUNCIL POLICY

The 1997 - 1999 Capital Plan included 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.

On April 8, 1997, Council approved a reduction in the Capital from Revenue portion of the 1997-1999 Capital Plan totaling $1,531,600 to provide transition funding for new revenues in the 1997 Operating Budget. This reduction was allocated to the provision for Downtown South Park Acquisition.

On April 9, 1998, Council approved a reduction of $700,000 in the Capital from Revenue portion of the 1997-1999 Capital Plan to be achieved in equal installments in 1998 and 1999. This reduction will require elimination of projects/programs with this value from the Capital Plan.

PURPOSE

The purpose of this report is to summarize the 1998 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 1998 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 which 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 plebiscite and/or by Council and from Capital from Revenue approved as part of the annual Operating Budget.

On February 17, 1998 Council approved the 1998 Engineering Capital Budget of $59,274,000. The portion of the funding funding to be provided from the Operating Budget is included in Recommendation B of this report.

On February 19, 1998 Council approved the 1998 Park Board Capital Budget totalling $8,513,150. The portion of the funding to be provided from the Operating Budget is included in Recommendation B of this report.

On April 30, 1998 Council approved the final revenue and expenditure estimates of the 1998 Operating Budget. Reflecting Council approval to reduce the 1998 Capital from Revenue provision as part of the two-year budget management plan, the Operating Budget included a revised provision of $10,650,000 to support the City’s capital program.

DISCUSSION

1. Funding Adjustments in the 1997-1999 Capital Plan

The 1997-1999 Capital Plan initially included $32.2 million in funding to be provided from the Operating Budget over the three years of the plan. In 1997, Council approved a reduction in that provision of $1,531,600 in order to provide transition funding for new revenue initiatives in the Operating Budget. This funding was provided by reducing the provision for Downtown South Park Acquisition funding in the Capital Plan from $2.5 million to $968,400. This reduction was based on the following conclusions:

·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,

As part of the development of the 1998 Operating Budget, Council approved a further reduction in the 1997-1999 Capital Plan provision for Capital from Revenue of $700,000 to be achieved in the 1998 and 1999 Operating Budgets. In order to achieve this reduction, itis recommended that the Downtown South Park Acquisition provision be eliminated from the Capital Plan, freeing $968,400 of funding in 1998 and 1999. It is recommended that the balance of the funding available ($268,400), after providing for the budget reduction, be reallocated to the 1998 Supplementary Capital Budget to help with funding for several high priority items.

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.

2. Funding for the 1998 Basic Capital Budget.

The following table summarizes the total funding for the 1997 - 1999 Capital Plan (including unallocated borrowing authority from prior Capital Plans), on the assumption that Council approves Recommendation A. The table also shows the 1997 allocations, the portion to be allocated to the 1998 Capital Budget and the balance of funding to be available in 1999.

	Capital	Prior	1998	Unallocated
($‘000)	Funding	Allocations	Budget	Balance
Capital from Revenue: (1)	$31,968	$9,068	$10,650	$12,250
Debenture Authority:
Plebicites (prior years)	2,121	0	0	2,121
Plebiscite (1997 - 1999):	83,383	$33,190	$22,372	$27,821
Sewer	49,417	$16,660	$16,165	$16,592
Water	74,100	$23,100	$23,850	$27,150
Total Debentures	209,021	$72,950	$62,387	$73,684
Total Funding ($’000)	$240,989	$82,018	$73,037	$85,934

(1) Capital from revenue funding reflected in the table, includes a 1997 reduction of $1,531,600 related to transition funding in the 1997 Operating Budget and a further reduction of $700,000 approved as part of the 1998 Operating Budget.

(2) Includes funding approved in advance for Engineering and Parks projects, as follows:

- Plebiscite Authority - Engineering $16,259,000

- Plebiscite Authority - Park Board 6,113,150

- Sewer & Water Authority 40,015,000

A summary of the projects/programs in the 1997-1999 Capital Budget and the funding allocated in the Plan, and in the 1998 Capital Budget, is included in Appendix 1. Appendix

2 provides additional detail about the projects/programs funded in the Protection, Social and Cultural Facilities and Other categories of the 1998 Capital Budget.

As noted in the table, $62,387,150 of the funding for the 1998 Basic Capital Budget comes from debenture authority, including $22,372,150 from plebiscite authority and $40,015,000 in sewer and water authority approved by Council. Note 2 indicates that all of this funding was approved in advance as part of the Engineering and Park Board Capital Budgets.

3. Funding for the 1998 Supplementary Capital Budget

The 1997 - 1999 Capital Plan includes $5.0 million for the Supplementary Capital Budget, and Recommendation A provides for an increase of $268,400. In 1997, $1.6 million of this funding was allocated to Supplementary Capital. With the adjustments proposed above, the 1998 allocation to Supplementary Capital will increase from $1,700,000 million to $1,968,400. The allocation of these funds to specific projects is dealt with in an accompanying report.

COMMENTS ON THE BASIC CAPITAL BUDGET REQUESTS

1. Social and Cultural Facilities

The 1997 - 1999 Capital Plan includes funding of $8.45 million 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; 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 1998 Capital Budget includes funding of $1.822 million allocated to the following projects/programs:

·Upgrading city-owned social & cultural facilities $478,000

·Capital Grants to privately owned social & cultural facilities 200,000

·Public Art Program 290,000

Specific allocation of these items will be the subject of future reports to Council.

·Relocation of the Library Outreach Program 854,000

This allocation will complete the funding required to purchase additional commercial space at Library Square from the Property Endowment Fund.

2. Other

The Other Category of the Capital Plan includes allocations for maintenance and upgrading of the City Hall Precinct (City Hall, East Wing and West Annex buildings) and the Civic Theatres, and a contribution to the Affordable Housing Fund. All of these projects are funded from Capital from Revenue.

The 1998 recommended allocation of $1,039,600 includes:

·Upgrading of City Hall Precinct $820,000

·Major Building Maintenance 219,600

Of this funding, $786,000 was approved in advance to complete the move of Information Technology to the West Annex and to complete expansion of Legal Service offices. The balance of the funding will complete shower/washroom improvements in City Hall ($14,000) and provide a general provision ($20,000) for small renovation work necessary as a result of service improvements or minor reorganizations. In addition, $219,600 will be spent to replace transformers and begin work on a major replacement of chiller equipment at City Hall, the Public Safety Building, the Orpheum Theatre and the BC Space Centre.

Details of the new requests are included in Appendix 2.

CONCLUSION

The 1998 Capital Budget represents the second 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.

Note:Attachments to this Report that do not have electronic copy are available on file in the City Clerk's Office.

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(c) 1998 City of Vancouver