POLICY REPORT
Date: November 1, 1995
TO: Vancouver City Council
FROM: Director of Finance
SUBJECT: The Next Capital Plan
RECOMMENDATION
A. THAT the next Capital Plan be for the period 1997-1999 with
the plebiscite for borrowing authority held at the same time
as the 1996 civic elections.
B. THAT the Capital Plan process as outlined in this report be
approved.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of A
and B.
COUNCIL POLICY
The City's present policy is to plan for capital expenditures on a
three-year cycle. Funding for capital expenditures comes from a mix of
borrowed funds, cost sharing from senior levels of government (e.g.,
conditional revenue sharing grants) and a contribution from the
operating budget (pay-as-you-go financing). The borrowing of funds
(except for borrowing for sewer and water purposes) requires approval of
the voters through a capital plebiscite. The plebiscite usually takes
place at the same time as the civic elections.
PURPOSE
The purpose of this report is to recommend the term of the next Capital
Plan and a process for preparing the component parts of that Plan.
DISCUSSION
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 and Council and, to a lesser
degree, input from the public. The process is concluded with Council's
adoption of the Plan, followed by a plebiscite to obtain voter approval
for borrowing authority on the portion of a the Plan financed through
the issuance of debentures, but excluding sewer and water borrowing,
which only requires Council approval.
The current 1994-1996 Capital Plan will wind up at the end of 1996. It
is, therefore, necessary to begin planning for the next Capital Plan and
to decide on a process for developing the component programs that will
comprise the City's capital spending priorities for the period covered
by the Plan.
1. Term of the Next Capital Plan
The City's capital programs are, for the most part, developed on a long-
term planning horizon. Waterworks, for instance, identifies a 100-year
plan for replacement of existing facilities, which gives recognition to
the long life of water pipes. The sewer replacement program is planned
on a similar basis. In other areas - such as park acquisition and
recreation facilities, childcare, fire protection, city buildings, and
libraries - the planning horizon is of a significantly shorter term and
gives recognition to the changing needs, preferences and priorities of
incumbent Councils and the community at large.
The current Capital Plan has a duration of three years as did the
previous plan. Previously, plans had a duration of four years. The
plebiscites for all of these plans were submitted at the same time as
the corresponding civic elections, but it is not unknown to have capital
plebiscites occurring at other times - for instance, the special
plebiscite that was held requesting voter approval of borrowing
authority for the Cambie Bridge in 1984.
The argument for holding a plebiscite at the time of the civic election
is two-fold. First, the cost of the plebiscite is in the order of
$375,000 (excluding publicity) if done separately, or minimal, if
conducted at the same time as an election. Second, it is arguable that
a capital plebiscite held alongside a civic election will attract more
voter attention and more opportunity for public comment, and this input
is clearly desirable.
We propose that the City's next Capital Plan continue with a three-year
term that corresponds with the election of City Council. This means
that the next Capital 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 of 1996.
The balance of this report discusses a process for achieving that
objective.2. Process for the Next Capital Plan
In suggesting a methodology for the development of the City's next
Capital Plan, we have examined our experience with the process that was
used to develop the current 1994-96 Capital Plan. For the most part,
that process worked fairly well from a staff perspective, although the
process for involving the public was not particularly effective.
In proposing a process for the next Capital Plan, we believe that the
following components should be incorporated into the development of the
next Plan, as set out in the schedule below.
- Council direction regarding financial constraints and limitations
on overall capital expenditures.
- Council direction and policy regarding specific capital programs
and other process-related considerations, including the
incorporation of the CityPlan perspective.
- Departmental/Board submissions on their capital expenditure
programs.
- Public opinion survey to gauge public concern around the City's
capital programs, taxation, and relative priorities among the
programs.
- Council direction on the creation of a staff review group with a
mandate to review and recommend on Department/Board submissions.
- Public input on content and priorities and Council's public review
of the Plan.
- Council adoption of components of the Capital Plan.
- Publicity program for communicating content of the Capital Plan to
voters.
- Plebiscite questions submitted to voters requesting approval of the
borrowing component of the Capital Plan.
a) Financial Limits
The coming decade will continue to see the recent growth in public
capital expenditures. These expenditures are driven by environmental
concerns, maintenance of existing infrastructure, upgrading for seismic
risks, accommodating population growth, and technology changes. In
addition, Council will want to begin to make new expenditures such as
the redevelopment of Hastings Park and to facilitate the new directions
flowing from the CityPlan. Some of these expenditure decisions will be
made by the GVRD and/or Provincial government, such as:
- secondary sewerage treatment and other measures to mitigate
effluent discharge into the receiving waters,
- upgrading water treatment and increasing distribution capabilities
for water supply,
- new hospital construction.
From the City's perspective, there are a number of initiatives underway,
including:
- water supply issues, including water storage and saltwater pumps
and piping for fire protection,
- maintenance of the existing infrastructure of capital works,
including water, sewers, streets and bridges, civic buildings,
park and recreation facilities, libraries and firehalls,
- replacement of the City's communications systems, to take advantage
of new technology and to facilitate inter-agency communications for
emergency situations,
- replacement of some of the City's computer legacy systems and
equipment to convert to new computer technology and improve
customer service,
- transportation improvements, to deal with trucking, HOV lanes,
shortcutting in residential areas, and generally to implement the
recommendations which will arise out of the current Transportation
Plan and Policy review,
- redevelopment of Hastings Park,
- redevelopment of industrial "let go" areas, including the City's
property on the Southeast shore of False Creek,
- development issues to accommodate growth and implement the CityPlan
visions.
In addressing these needs, the challenge will be to constrain the growth
of City's debt and the impact of these programs on the City's taxes.
This will require a continuation of the City's current practices for
innovative financing arrangements and overall constraints on the City's
borrowing program.
We, therefore, propose that a report be submitted in the near future,
identifying the cumulative financial impact of these initiatives,
combined with reductions being experienced in traditional senior
government cost-sharing programs, and seeking Council direction on an
overall financial limitation of capital expenditures for the next Plan.
This action will set the stage for subsequent phases of the Plan and
will allow the review process to have a definite focus on project and
program areas that are an immediate priority to Council. We also
propose that any financial limitation set by Council would be reviewed
during the course of developing the next Capital Plan to reflect other
considerations which may arise during the capital planning process
itself.
b) Council Review of Capital Programs
The anticipated capital program submissions will be a mix of items, some
being continuation of existing programs with existing Council mandates,
and others reflecting new directions and initiatives. During the next
six months, it is anticipated that some of these programs will be
reported on, to obtain Council directions on priorities.
There also needs to be an opportunity for Council to articulate its
overall sense of priorities for the next capital plan. It is proposed
that the various issues be compiled for Council's review, including the
establishment of criteria which would guide the Staff Review Group in
reviewing and developing an overall plan.
c) Submissions to Capital Plan
Departments and Boards will prepare their Capital Plan submissions,
taking into account the financial policy guidelines established earlier
in the process.
d) Staff Review Process
In previous capital plan processes, a staff review group was formed to
review the detail of program proposals and to develop a recommended plan
for Council, reflecting previous direction from Council, as well as
their own appreciation of the infrastructure issues affecting the City.
For the last capital plan, that review group was comprised of
individuals representing both the departments undertaking the majority
of capital works (Engineering, Parks, and Facility Development), and the
City Manager, Planning,
Social Planning and Finance departments. As previously agreed, the Park
representative was in an advisory capacity, and did not carry voting
power in the group decisions.
The proposed structure of the review group for the next plan will be
reported to Council in the Spring, and will attempt to maintain a
reasonably broad representation of City interests, as well as ensuring
the CityPlan perspective is well reflected in the deliberations of the
group.
e) Public Input to the Plan
It always remains a challenge to find opportunities and vehicles for the
public to learn about the City's capital expenditure plans and
priorities and to express their concerns and priorities. For instance,
in the last plan, a series of three public meetings were held to
publicize the plan, and often staff outnumbered the public. Council's
public meeting on the Plan also met with little interest, with a total
of five speakers. On the other hand, the Parks Board has greater success
in involving its constituency in public discussions of Park Boardplans.
One innovation in the last plan was to conduct a public opinion survey
which measured the public's interest, understanding and relative
priorities in the City's expenditure programs. This survey was done
alongside of another survey which measured public attitudes towards city
services and taxation levels. These two surveys, together, provided
Council with useful information in developing the plan. The fact that
the referendums were all successful was consistent with the results of
those surveys. The possibility of repeating this process will be
considered and reported back to Council.
The public participation in developing the CityPlan provides a major
piece of public input to the Capital Plan process, and this will be
further explored, for report back to Council in the Spring as well as
other initiatives to enable greater public consultation.
f) Council Consideration of the Plan
In order to allow sufficient time for Council to fully consider the
detailed components of the next Capital Plan, it is necessary to ensure
that the work of the staff review group is available to Council by the
end of June, 1996. This timetable would give Council the months of July
and August to consider the contents of the Plan and to receive
representations for both Departments/Boards and the public. Final
approval of the Plan will be required in early September to be ready for
a November plebiscite.
g) Publicity
The publicity phase of the Capital Plan process involves a number of
activities that are necessary to bring the Capital Plan process to
completion in time for the plebiscite. These activities include
appointing a consultant to handle the advertising and publicity aspects
of the Plan, developing and distributing an informational brochure on
all the elements of the Capital Plan (including the estimated costs of
each segment of the Plan on the average residential property) and
finalizing the actual wording of the ballot questions.
h) Plebiscite
The 1997-99 Capital Plan would be put to the voters in a plebiscite to
be held at the same time as the civic elections in November, 1996.
CONCLUSION
It is now time to start the development process for the City's next
Capital Plan. This report proposes that the next plan cover a three-
year period commencing in 1997 and that a phased development process be
used to construct the plan in accordance with the methodology set out in
this report.
A final version of the 1997-99 Capital Plan must be approved by next
September for submission to the voters at the same time as the 1996
civic elections. The recommendations of this report reflect that
process.
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