ADMINISTRATIVE REPORT

Date: September 30, 1999
Author/Local: Ken Bayne / 7223
RTS No: 0981

CC File No. 1611

Council: October 5, 1999

TO:	Vancouver City Council
FROM:	General Manager of Corporate Services / Director of Finance
SUBJECT:	2000 - 2002 Capital Plan: Financial Plan and Plebiscite Questions

RECOMMENDATION

A. THAT the 2000 - 2002 Sewer and Waterworks Capital Plans be funded from debenture authority as provided for in the Section 236 and 242 of the Vancouver Charter:

Sewer $51,045,000
Water $58,950,000

AND THAT the balance of the 2000 - 2002 Capital Plan be approved in total at $123,955,000, including an additional $2.0 million for Parks and Recreation, with funding as follows:

Debenture Borrowing $ 85,955,000
Capital from Revenue $ 38,000,000
Total $123,955,000

AND THAT the allocation of debenture authority and capital from revenue be as detailed in Appendix A.

B. THAT the 2000 - 2002 Capital Plan borrowing plebiscite contain two questions in the following categories:

Public Works and Fire Facilities $59,495,000
Parks and Recreation $26,460,000

AND THAT the wording of the questions be generally as set out in Appendix B, subject to any modifications required by Corporation Counsel to ensure consistency with the requirements of the Vancouver Charter.

COUNCIL POLICY

Council’s policy for capital works is to fund sewer and water capital expenditures from debenture borrowing and to fund the balance of capital expenditures from a combination of debenture borrowing and contributions from the Operating Budget (Capital from Revenue).

Section 236 and 242 of the Vancouver Charter give Council the authority to approve borrowing authority for sewer and water capital expenditures without reference to the electors. Section 245 of the Charter requires that borrowing authority for other capital expenditures be approved by a majority of the electorate.

The limits to capital expenditure funding have been governed by three benchmarks established by Council. These benchmarks provide that:

· debt charges (principal and interest on outstanding debt) to 15% of the Operating Budget.
· debt charges and capital from revenue (the capital envelope) to a range of 17% to 20% of the Operating Budget.
· the capital envelope should be neutral with respect to its impact on property taxes during the capital planning period.

PURPOSE

The purpose of this report is to seek Council approval of the financial plan that will govern the funding of the 2000 - 2002 Capital Plan, including the allocation of capital expenditures from borrowing authority and capital from revenue. The report also provides information on the proposed wording of the borrowing questions that will appear on the ballot in November.

BACKGROUND

The process to develop the 2000 - 2002 Capital Plan began in the fall of 1998. On September 21, 1999, Council passed the following recommendations related to the plan.

A. THAT the funding limit for the 2000-2002 Capital Plan be set at $175 million, which includes an increase of $2 million for the Park Board component, and that the Director of Finance and Park Board staff report back on the implications of this adjustment.

B. THAT the Director of Finance be instructed to report back on October 5,1999 with a financial plan to support the Capital Plan, including the breakdown of funding between borrowed funds and revenue funds, and on proposed wording for the borrowing questions to be put to the voters during the civic election.

C. THAT Council approve the components of the 2000-2002 Capital Plan, as set out in Appendix 1 of the Administrative Report dated June 30, 1999, except that the Park Board funding be increased to reflect motion #(1) .

Council also approved the following resolution related to the 2000 - 2002 Waterworks Capital Plan:

THAT Council approve the 2000-2002 Waterworks Capital Plan at a total cost of $58.95 million, with funding to be provided from borrowing authority approved by Council on an annual basis.

DISCUSSION

1. Total Funding in the 2000 - 2002 Capital Plan

The funding limit for the 2000 - 2002 Capital Plan was initially set at $173 million (excluding waterworks), reflecting an inflationary increase above the levels of the 1997 -1999 Capital Plan. However, on September 21, 1999, Council approved an increase in the funding limit by $2.0 million to provide additional funding within the Parks and Recreation component of the plan. In addition, Council has approved waterworks expenditures totalling $58.95 million, bringing the total plan to $233.95 million (dollars of the day).

Although the additional $2.0 million of capital plan funding approved for Park Board increases the funding limit of the plan beyond the original $173 million limit, it is unlikely to have a significant impact on the overall limits for the capital program established by Council policy. Based on a review of the projections for the operating budget, the Director of Finance is proposing to include this allocation in the borrowing component of the financing plan.

2. Allocation of Capital Plan Funding
The financial plan that supports the 2000 - 2002 Capital Plan specifies the source of financing for each component of the plan. As noted above, the two sources of financing for the plan are borrowing authority and capital from revenue. The limits on these components within a Capital Plan are also reviewed above.

Appendix A summarizes the expenditures included in the Capital Plan approved by Council on September 21, 1999 and indicates which projects/programs are proposed to be funded by borrowing authority and which are to be funded from capital from revenue.

Sewer and Water expenditures are funded entirely from borrowing authority which Council may approve without reference to the electorate. Council has approved the following allocations of borrowing authority to these areas:

Sewer $51,045,000 Council Authority
Water $58,950,000 Council Authority

The balance of the Capital Plan totals $123,955,000. The guidelines outlined in the Council policy section govern the amount of funding allocated from borrowing authority and from the Operating Budget. Based on projections of the Operating Budget and application of these funding limits, it is recommended that the following allocations be made:

Debenture Borrowing $ 85,955,000 Plebiscite Authority
Capital from Revenue $ 38,000,000 Operating Budget
Total $123,955,000

The $38.0 million of the plan funded from capital from revenue is allocated to specific projects generally on following basis:

· debenture funding is favoured for projects that involve infrastructure investments or expenditures on assets with a longer life.
· program/project expenditures that are not divisible (such as replacement of a fire hall or the relocation of Cambie Yards) are funded from just one source. In the case of both of these projects, funding is from borrowing authority.
· smaller individual projects are funded from the Operating Budget in order to keep the borrowing authority plebiscite questions from becoming overly complex.
· Supplementary Capital is funded from the Operating Budget.
· the balance of the Operating Budget funds are allocated across the remaining components of the plan.

As noted, the balance of the Capital Plan is proposed to be funded from borrowing authority that will require the approval of the voters.

3. Plebiscite Questions

The programs to be funded from borrowing authority requiring voter approval have been grouped into two categories, one related to expenditures contemplated by Council, the other related to the expenditure priorities of the Park Board. These components of these questions and the associated borrowing authority are listed below:

Public Works and Fire Facilities
· Streets and Bridge Infrastructure $9,000,000
· Pedestrian and Bicycle Facilities 6,750,000
· Transit and Safety Improvements 11,700,000
· Local Area Improvements 9,580,000
· Street Lighting 3,487,000
· Public Works and Fire 18,987,000 $59,495,000

Parks and Recreation
· Park Land Acquisition 3,500,000
· Park Development 13,160,000
· Facilities Development 9,800,000 26,460,000

Total Debenture Authority $85,955,000

If Council is in agreement with this categorization of Capital Plan projects and the allocation of debenture authority, the wording of the proposed questions will generally be in accordance with the examples provided in Appendix B. As the Vancouver Charter is specific about the information that must be included in the borrowing questions, a final review by the Director of Legal Services will be necessary.

PUBLIC INFORMATION PROCESS

Once Council has dealt with the final funding allocations and the Director of Legal Services has concurred with the wording of the borrowing questions that will be put to the voters, the final phase of the public information process will begin. This will include:

·
updating the Capital Plan website to reflect the resolutions arising from this report
· production of a brochure detailing the contents of the plan and the questions to be put to the voters. This brochure will be mailed to all eligible voters as part of the electioncampaign and will be available at community centres, branch libraries and other civic facilities.
· placement of public information advertisements in the daily and community newspapers.

On November, 20, the public will be asked to vote on the borrowing questions as part of the civic election process.

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Appendix B

2000 - 2002 Capital Plan
Draft Debenture Authority Questions

1. PUBLIC WORKS AND FIRE FACILITIES

This question seeks authority to borrow funds to be used in carrying out the basic capital works program with respect to Public Works and Fire.

ARE YOU IN FAVOUR OF COUNCIL HAVING THE AUTHORITY, WITHOUT FURTHER APPROVAL OF THE ELECTORS, TO PASS BYLAWS BETWEEN JANUARY 1, 2000 AND DECEMBER 31, 2002 TO BORROW AN AGGREGATE FIFTY NINE MILLION, FOUR HUNDRED NINETY FIVE THOUSAND DOLLARS ($59,495,000) FOR THE FOLLOWING PURPOSES?

A. Streets and Bridge Infrastructure

To reconstruct arterial and residential streets and lanes
and undertake major maintenance on the City’s bridges. $9,000,000

B. Pedestrian and Cycling Facilities

To provide sidewalks, bikeways, curb ramps, linear
parks, walkways and other facilities in public corridors
and open spaces to develop a City-wide network that
emphasizes pedestrian and bicycle movements. $6,750,000

C. Transit and Safety Improvements

To provide facilities that improve traffic safety and improve
transit services, including improvements to arterial streets
and construction of left turn bays, major maintenance and
modifications to existing traffic signals and the construction
of new traffic and pedestrian signals $11,700,000

D. Local Area Improvements

To provide for neighbourhood traffic initiatives that
reduce through traffic in neighbourhoods; to provide
the City’s share of local improvement projects on streets
and lanes; including construction of new curbs and
gutters, installation of new street and lane lighting,
and to provide other beautification features. $9,580,000

E. Street Lighting

To provide for the replacement of street lighting components
that are worn out and to improve street and lane lighting to
maintain public safety. $3,487,000

F. Public Works and Fire Facilities

To provide for the replacement and rehabilitation of Public
Works and Fire facilities which are beyond economical
repair and no longer meet operational needs, including
Firehall #13 and the Cambie Public Works Yard $18,978,000

Total $59,495,000

2. PARKS AND RECREATION FACILITIES

This question seeks authority to borrow funds to be used in carrying out the basic capital works program with respect to Parks and Recreation.

ARE YOU IN FAVOUR OF COUNCIL HAVING THE AUTHORITY, WITHOUT FURTHER APPROVAL OF THE ELECTORS, TO PASS BYLAWS BETWEEN JANUARY 1, 2000 AND DECEMBER 31, 2002 TO BORROW AN AGGREGATE TWENTY SIX MILLION, FOUR HUNDRED SIXTY THOUSAND DOLLARS ($26,460,000) FOR THE FOLLOWING PURPOSES?

A. Recreation Facilities

To provide for major maintenance, upgrading, expansion
or replacement of community centre facilities, ice rinks,
fieldhouses, indoor and outdoor pools and other parks
and recreation facilities $9,800,000

B. Park Development

To provide for the improvement or development of City-wide
and neighbourhood parks, shorelines, playing fields and
playgrounds; to continue the planting of street trees in City
neighbourhoods; to provide for maintenance and upgrading
of major parks including Stanley Park and Queen Elizabeth
Park; to provide for continued restoration of Hastings Park $13,160,000

C. Park Land Acquisition

To provide funds for the acquisition of parkland throughout
the City. $3,500,000

Total $26,460,000

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(c) 1998 City of Vancouver