Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO: Vancouver City Council

FROM: General Manager of Corporate Services

SUBJECT: Planning for the Next Capital Plan

RECOMMENDATIONS

CITY MANAGER'S COMMENTS

COUNCIL POLICY

The City's long standing policy has been to plan for capital expenditure on a multi-year cycle.

Funding for capital expenditures comes from a mix of borrowed funds, cost sharing from senior levels of government and a contribution from the operating budget (referred to as Capital from Revenue) that represents a pay-as-you-go financing.

The Vancouver Charter, Section 242 provides that Council may approve the borrowing of funds for sewer and water purposes without assent of the voters. Borrowing for other purposes requires voter approval through a borrowing plebiscite. The plebiscite normally takes place in conjunction with the triennial civic election.
PURPOSE

The purpose of this report is mark the beginning of the process to develop the next Capital Plan and to recommend to Council the term of the Plan and a process and timetable for preparing the component parts of the Plan.

BACKGROUND

In the past, the City has organized its capital expenditures into multi-year programs called Capital Plans. These Capital Plans have been developed through a process involving staff, Council and the public. Because of the complexity involved in establishing priorities among a variety of competing program/project proposals, the process normally begins about 12 months before final approval of the Plan is given by Council. This timing is also dictated by the need to seek voter approval for the borrowing authority necessary to finance the general portion of the Plan which is most efficiently and economically done at the same time as the triennial civic election.

The 1997 - 1999 Capital Plan, will be completed at the end of 1999. It is, therefore, necessary to begin planning for the next Capital Plan and to decide on a process for developing the component programs and projects that will make up the City's capital spending priorities for the next three-year period.

DISCUSSION

TERM OF THE NEXT CAPITAL PLAN

The City's capital programs are, for the most part, developed on a long-term planning horizon. Waterworks and sewer infrastructure are managed on a 100-year replacement cycle, which gives recognition to the long life of the system components. In other areas, such as park acquisition and development of recreation facilities, childcare, fire protection, City buildings and libraries, the planning horizon tends to be somewhat shorter, reflecting a combination of factors such as the life of the particular assets, the changing needs of the community, preferences and priorities of the incumbent Council and of the community at large.

In order to bring the long range needs of our capital assets for renewal into a more manageable and practical financial planning horizon, the City has generally developed medium term plans for its capital expenditures.. Prior to 1991, the planning horizon was generally four years, spanning two Council terms. However, since 1991, our capital planshave been of a three year duration, matching the term of Council and allowing for borrowing plebiscites to be held in conjunction with civic elections. This is not a necessary requirement, however, it is effective for two reasons. First, the cost of conducting a plebiscite is about $400,000 (excluding publicity) if done separately, however, the cost of conducting the plebiscite at the same time as a civic election is minimal. Second, it is arguable that a capital plebiscite held at the same time as a civic elections will attract more voter attention and more opportunity for public input and comment on the plan.

The Corporate Management Team believes that it is appropriate to develop the next capital plan on the same three-year term that has been used for the last three plans and that the term should continue to coincide with the term of Council. This means that the next plan and all of its component parts will need to be finalized by September of next year in order to submit the borrowing portion of the plan to the voters in November, 1999.

PROCESS FOR DEVELOPING THE NEXT CAPITAL PLAN

Developing a capital expenditure plan for the City is a process that must balance a wide variety of needs that are not always comparable. It involves a variety of stakeholders with unique perspectives on what are our capital expenditure priorities. Moreover, there are limits on the availability of financial and other resources that dictates that not everything we need or would like to do can be accommodated. In suggesting a methodology for development of the next Capital Plan we have attempted to define a process that provides a forum for dealing with these competing interests, a process that is inclusive and strategic but that deals with the realities the City will face in the next few years.

City Council will have overall control over development of the 2000-2002 Capital Plan. In this report, Council approval of the term of the Capital Plan and the overall planning process is sought. In subsequent reports to be submitted this fall and in the spring of 1999, Council will be asked to review capital expenditure priorities and to endorse a financial plan that addresses the limits on the expenditures in the plan as well as a financing strategy. In June 1999, Council will consider a draft plan prepared by staff and, in September, decide on the final components of the plan and the borrowing questions that will be put to the voters.

The process of developing the capital plan will be the responsibility of the Corporate Management Team (CMT). Terms of Reference detailing this responsibility have been established and are attached as Appendix 1.

Three staff groups will be responsible for development of the various components of the Capital Plan:

1. The Staff Review Group

The development of previous Capital Plans has involved an interdepartmental staff review group comprised of individuals who have a broad knowledge of City operations and a good understanding of the capital resource needs of their departments. In developing the 2000-2002 plan, CMT propose to appoint a staff review group of middle and senior managers who satisfy these requirements to undertake the detailed planning process. This group is co-chaired by the Deputy City Manager and General Manager of Corporate Services and includes representatives from Engineering, Parks, Library and Community Services.

In developing a proposed plan for presentation first to CMT and then to Council, the Staff Review Group will have the following major responsibilities in the process:

· coordinate the development and presentation of Municipal Service Policy Review Reports to CMT and Council.
· review of departmental submissions for Capital Plan funding considered in the context of direction from Council and their own appreciation of the infrastructure issues affecting the City.
· work with the Facilities Strategic Plan Group to review proposed expenditures on City facilities, including review of opportunities for development of joint-use facilities.
· work with the Finance Plan Group to ensure that the proposed Capital Plan is consistent with the financial policies and limitations set by Council and that opportunities for alternative funding sources have been explored.
· develop and manage a public input process that will ensure adequate community involvement in priority setting for the plan.

2. The Facilities Strategic Plan Group

Management of the City's inventory of facilities is as important a task as management of our sewer, water and streets inventory. However, unlike these public works assets which are under the control of the City Engineer, City facilities are in the care of a number of departments making the development of major maintenance, upgrading and expansion plans more difficult to coordinate. As a result, the maintenance needs of this infrastructure often receive little priority in the capital planning process. This weakness in the City's capitalplanning process was identified during the development of the 1997-1999 Capital Plan and the City Manager advised Council that a more coordinated approach to facilities planning would be a central part of the development of the 2000-2002 Capital Plan.

Appointment of a Facilities Strategic Plan Group to function as part of the Capital Plan process is intended to address Council's concern about facilities planning by bringing the varying interests together to ensure that the appropriate capital expenditures priorities are established. The Facilities Strategic Plan Group will serve two major objectives of the planning process:

· develop a comprehensive inventory of City buildings and other facilities including information about their use and physical condition. From this inventory, the group will determine the priorities for capital maintenance expenditures in the next three capital plans and develop a submission for consideration by the Staff Review Group outlining a capital maintenance plan for those buildings and building systems that require attention during the 2000-2002 Capital Plan.
· review of submissions by departments for major upgrades or expansion of City facilities and provide advice to the Staff Review Group on the opportunities for joint-use facilities.

3. The Finance Planning Group

There is always more to do than the City can afford so one of the most important components of the capital planning process is the development of a financing plan that addresses the ability of the City to support capital expenditures and the appropriate sources of funding for those expenditures.

The Finance Planning Group will be responsible for developing and reporting to Council, the financial context within which the plan will be defined. That will include:

· define the capacity of the City to support capital expenditures while maintaining its fiscal position and Council's policy of limiting general-purpose tax increases.
· develop an appropriate financing strategy, including the mix of debenture and operating funding, Development Cost Levy and Community Amenity Contributions and sponsorship funds.
· review and comment on proposals for joint-use facilities, including interdepartmental, inter-governmental or public-private developments.

TIMING AND OUTPUTS OF THE PROCESS

The objective of the planning process is to develop a capital plan that satisfies municipal service standards, corporate priorities and financial limitations. In order to complete the plan in time to put the necessary borrowing questions to voters in November,1999, the following general schedule is proposed:

Planning Process Report to Council September 1998
Municipal Service Policy Review Reports to Council November 1998-January 1999
Public Process Report to Council November 1998
Financial Plan Report to Council January 1999
Consideration of Draft Plan - Council June 1999
Public Input to Draft Plan July - September 1999
Adoption of Final Plan - Council September 1999

Following approval of the final plan by Council, a Public Information Program will take place during October - November 1999 in advance of the necessary borrowing questions being presented to electors at the time of the November 1999 municipal election.

As noted above, Council will be involved at several key points in the planning process. Later this fall, Council will consider a series of reports from departments outlining the levels of service they provide and the priorities they have for future capital expenditures. It is intended that these reports will assist Council in establishing the overall corporate priorities for the Capital Plan. Council will also be asked to approve the financial plan that will provide limits on the programs/projects that can be included in the plan. In June 1999, Council will be asked to provide input to the proposed capital plan in draft prior to it being finalized for approval in September 1999.

PUBLIC INVOLVEMENT IN THE PLANNING PROCESS

It always remains a challenge to find opportunities and means for the public to learn about the City's capital expenditure plans and to provide input into the planning process. As the bulk of capital expenditures are related to maintenance and upgrading of basic civic infrastructure like sewer, water and street systems, providing the right context for public input is often difficult. In the past, in developing capital plans, the City has found that public meetings are rarely successful as a means of soliciting public input, with staff and Council members often outnumbering members of the public. What we have found to be successful are tools such as public opinion surveys, wide-distribution public information flyers and the Rogers Cablevision-produced television segment utilized in developing the 1997-1999 Capital Plan. The City Plan process, and more recently thecommunity visioning process undertaken in the Dunbar and Kensington-Cedar Cottage neighbourhoods, are other vehicles available to gauge the opinion of the public for capital expenditures.

One of the early responsibilities of the Staff Review Group will be to recommend to CMT and subsequently to Council, how the public can become involved in the capital plan process. The objective is to develop a process that involves public input into developing the plan priorities as well as a measure of public opinion around the draft plan and a public information program leading up to the municipal election.

CONCLUSION

It is time to begin the process of developing the City's next Capital Plan. This report proposes that the planning horizon for this plan be a three-year period beginning in the year 2000 and that the phased planning process outlined in this report be utilized. The final version of the 2000-2002 Capital Plan must be approved by Council by September 1999 so that the necessary borrowing questions can be put to the voters during the November municipal election.

* * * * *

Appendix A

2000 - 2002 Capital Plan
Committee Membership and Terms of Reference

The City will undertake an extensive planning program to develop the 2000 - 2002 Capital Plan. The Capital Plan will provide the framework within which annual Capital Budgets in 2000, 2001 and 2002 will be developed, including identification of the specific programs and/or projects to be included and the financing mechanism for those initiatives. The objective of the planning process will be development of a Capital Plan that satisfies municipal service standards, corporate priorities and financial limitations.

The planning process is scheduled to begin in July 1998 and be completed with presentation of the Plan to the electorate in conjunction with the November 1999 Municipal Election. Milestones in this process are generally as follows:

The planning process will be sponsored by the General Managers of Corporate Services and Engineering Services, reporting to the CMT on progress and major issues. The Sponsors will oversee the work of the three committees and will work closely with the Director of Finance, Comptroller of Budgets, and the Chairs of the three committees. The initial review will be delegated to the three committees - the Staff Review Group, the Facilities Strategic Plan Group, and the Finance Planning Group. The Chairs are to schedule committee work to meet the major milestones. The following summarizes the roles and responsibilities of these groups.

Corporate Management Team

The CMT will have overall responsibility for the development of the 2000 - 2002 Capital Plan.

The CMT will establish the overall context within which the Plan
will be developed, including identification of the strategic priorities October 1998
and financial limitations. Where necessary, CMT will ensure that January 1999
Council input to development of this context is sought.

CMT will appoint the members of the Staff Review Group (SRG),
the Facilities Strategic Planning Group (FSPG) and the Finance
Planning Group (FPG), and approve their terms of reference. June 1998

CMT will be responsible for reviewing the output of the Municipal
Service Policy Review process to be undertaken by the SRG and
ensuring presentation of these reviews to Council. Ongoing

CMT will be responsible for reviewing the Capital Plan Financing
Strategy and ensuring its report to Council. January 1999

CMT will have responsibility for approving a process for involving
the public in the development of the Capital Plan. November 1998

CMT will be responsible for final approval of the Capital Plan developed
by the SRG prior to its submission to Council and will be the final staff
level of appeal for departments not satisfied with the recommendations
of the Staff Review Group. June 1999

Capital Plan Staff Review Group

The SRG will be responsible for recommending the composition of the 2000 - 2002 Capital Plan to CMT.

Membership:

· Co-chaired by Deputy City Manager and General Manager of Corporate Services
· 7 senior/middle managers who have a broad knowledge of City operations and goodunderstanding of the needs of their departments. Choice of membership should be based on the quality of participants, with sound corporate perspective, rather than on membership that is inclusive.
· The group should be in a position to call on experts from within the City

Terms of Reference:

The SRG will coordinate the development and presentation of
Municipal Service Policy Review reports by departments to CMT
and Council, including identification of priorities for capital
funding to guide the development of the Capital Plan. November 1998
Using the context statement provided by CMT and/or Council,
the SRG will undertake the first level review of departmental submissions.
That review will include the opportunity for submitting departments to
make presentations to the SRG. January 1999

Following the review, the group will provide guidance to departments
with respect to the completeness of first round submissions and their
likely chance of proceeding to the second round review. January 1999

The SRG will work with the Facilities Strategic Plan Group and Finance
Planning Group to review facility renovation, upgrading or replacement
and to seek opportunities to achieve joint-use-facility objectives for
initiatives submitted to the planning process. February 1999
The SRG will review the revised submissions of departments as part of a
second round review. The process for this review will be determined by
the SRG and may include further representations from departments. April 1999

The SRG will work with the Finance Planning Group to ensure that the
recommended Capital Plan is consistent with the financial policies and
limitations set by Council and CMT and that opportunities for alternative
funding sources are fully explored. May 1999

The SRG will report to CMT following the second round review with a
recommended Capital Plan. June 1999

Recommend to CMT an appropriate public consultation program related
to the Capital Plan, including opportunities for early input to the plan
priorities and a pre-election public information program. October 1998
Facilities Strategic Plan Group

· Clyde Hosein (Chair), and to include representatives from Real Estate, Building Management, Parks, Library, Fire, Engineering, Community Services and Financial Services.

Develop an inventory of City buildings and other facilities, to include
age, economic life, and other relevant physical information, current
and potential uses and development proposals for the next 9 years
(3 Capital Plans). September 1998

Conduct a "triage" analysis of the building inventory to identify: those
buildings that should be abandoned during the planning period because
their condition does not justify further expenditure; those that can justify
major upgrading, expansion; and those that justify continued maintenance
but have little potential or need for upgrading. This review should include
consideration of the seismic upgrading needs of City facilities and possible
changes of use. October 1998

Develop a priority listing of those facilities requiring major maintenance,
refurbishing or seismic upgrading expenditures over the course of the
planning period, including cost estimates. November 1998

For those buildings not scheduled for major maintenance, develop a
submission to the 2000-2002 Capital Planning process related
to maintenance and/or upgrading of major building systems, including roofs,
HVAC, heating systems and elevators. November 1998

Provide advice to the SRG on priorities for facility upgrading and
redevelopment based on age and condition or other criteria determined
by the CMT or Council. Ongoing

Provide advice to the SRG on facility replacement proposals submitted
by departments, including the potential for joint-use developments. Ongoing

Finance Planning Group

· Hugh Creighton, Director of Finance (Chair), and representatives from Engineering, Park Board, Library and Planning.

As part of the Municipal Service Policy Review process to be
undertaken by the SRG, provide advice to the CMT and Council
on the financial policies and limitations that should govern development
of the 2000 - 2002 Capital Plan with a view to maintaining the City's
fiscal position and Council's policy of general purpose tax increases. January 1999

Develop the appropriate funding strategy for the Capital Plan, including
the mix of debenture and operating funding, DCL/CAC funds and
sponsorship funds February 1999

Review and comment to the SRG on proposals for inter-departmental,
inter-governmental, or public-private financing for joint-use facilities. Ongoing

ag980929.htm

Comments or questions? You can send us email.
[City Homepage] [Get In Touch]

(c) 1998 City of Vancouver