2021
Corporate Business Plan
How is the financial plan developed? Here is our approach to developing the business and financial plans.
1 • Community feedback • Council priorities • Department requests
Timeline Here are some of the key dates and activities in this year’s process.
3
Business and Financial Plans
2 • Senior Management • Council Notice of Motions
What are the parts of the Financial Plan? The Financial Plan is comprised of:
May - June 2020
General Fund and Utilities
July 2020
Each have operating and capital components
Capital Needs Identified Council Priorities Updated
July - September 2020
Department Business Plans and Budgets Developed
October 2020
Senior Management Review
November 4, 2020
Property tax is collected for the General Fund Utility Fees are collected for utilities
Corporate Business Plan & Financial Plan Released
November 9-22, 2020
Storm Water Utility
Public Engagement
November 24-26, 2020
Council Budget Deliberations
December 8, 2020
General Fund
2021-2025 Financial Plan Bylaw Sewer Utility
Financial Plan
Electric Utility
Water Utility
2021 Budget at-a-glance REVENUES & EXPENSES
REVENUES $118.8 million* Other Revenues $4.4 million Grants $1.9 million Fiscal Services $1.8 million Storm Water Utility $0.8 million
EXPENSES $99.5 million*
Development Cost Charges $1.2 million Donations $0.02 million
Sewer Utility $4.9
Water Utility $4.6
Water Utility $10.1 million Taxation $36.5 million Sewer Utility $8.5 million
Electrical Utility $37.1
General Operating $52.4
Electric Utility $42.2 million Sale of Services $11.5 million
Storm Water Utility $0.5
*Net of $22M in taxes collected on behalf of others
Highlights
• The difference of $21.7 million is used to fund capital for the utilities and includes transfers to reserves. • Revenues increased 1.45% from 2020 driven primarily by utility rate increases that will be transferred to reserves to pay for future capital projects. • Expenses increased 1.57% from 2020 driven primarily by non-discretionary increases such as collective labor agreements, contractual arrangements, labour expenses and the SOEC deficit. • The City has a four-point plan to address financial challenges created by COVID-19 while maintaining service levels and minimizing tax increases.
What does it mean to you? Residents
Average Residential Property will pay an extra $14 per month
Annual Changes Assumptions:
General Municipal Taxes
Storm Water
Electric Utility
Water Utility
Sewer Utility
Total $ Charge
$25
$11
$0
$39
$89
$164
914 kwh/mo
(3/4”) 840 cu ft/mo
500 cu ft/mo in winter
2020: $441,711 value 2021: $463,797 (+5%)
Businesses
Average Business Property will pay an extra $122 month
Annual Changes Assumptions:
General Municipal Taxes
Storm Water
Electric Utility
Water Utility
Sewer Utility
Total $ Charge
$420
$32
$0
$230
$781
$1,463
5,000 kwh/mo
(1 1/2”) 7,000 cu ft/mo
(1 1/2”) 7,000 cu ft/mo
2020: $1,223,459 value 2021: $1,162,286 (-5%)
2021 General Fund GENERAL REVENUES
Revenues $57.1 million* REVENUES $56.4 million* Development Cost Charges $0.40
Fiscal Services $1.8 Grants $1.9 Ot
Highlights
Donations $0.02
• Overall, revenue decreased by $600k over last year. • Drop in revenue caused by closure of Casino and reduced ability to generate revenue from recreation facilities. • Decreased revenue offset by moderate tax increase (2.25%) and increased funds from parking, new development and other fees and charges.
he
rR $4 eve .4 n
ue
s
Sale of Service $11.4
Taxation $36.5
*Net of $22M in taxes collected on behalf of others
Breaking down the Property Tax increase 0.25%
2.5
2.0
COVID-19 Impact Mitigation
1.5
2%
1.0
Increase 2.25%
Inflation
0.5
0.0
GENERAL EXPENSES
Expenses $52.4 million* Environmental Health Services $2.0 Public Safety $0.4
Environmental Development Services $2.4
Highlights
General Government $8.5 Other Protective Services $2.6
Recreation & Culture $10.9
RCMP $10.9 Transportation Services $7.9 Fire $6.7
• Expenses increased by $1.8M over 2020 • Despite savings from staff restructuring, increases are anticipated as a result of inflation and investments to support Council Priorities such as the addition of two RCMP, technology enhancements and improved garbage collection at City parks and beaches.
2021 Capital Spending $24.7 million Parks $0.4
Information Technology $0.7
Fire $0.1
Traffic Control $0.2
Key Projects Water Highlights Ellis 4 Dam upgrades $8.3M
Fleet $2.3
Engineering $6.4
Engineering Highlights Penticton Creek Reach 3 $2.9M Penticton Creek Reach 12 $413k Pavement Rehabilitation $1.0M Fleet Highlights
Water Utility $6.0
Pumper/Rescue Combination truck $990k SOEC Zero Emission Ice Resurfacer $175k
Facilities $2.5
Sewer Utility $1.9
Municipal Tractor with attachments $210k Facilities Highlights
Electric Utility $4.1
McLaren Refrigeration $538k Firehall #1 & #2 Roof replacement $195k City yards roof replacement $200k
Where is the money coming from for General Capital? RCMP Reserve $0.1
Storm Reserve $0.2
Capital Reserve $0.9
$ millions Highlights
Marina Reserve $0.2
Electrical Dividend $3.2 Grant Funding $2.6
Community Works Reserve $2.8
Equipment Replacement Reserve $2.7
• Debt will be required to help fund projects for the next five years. • Water, Electric, and Sewer are funded from user fees. • Fleet is funded from the equipment replacement reserve. • Roads & Creeks, Facilities, and other capital in the General Fund are predominantly funded by the electrical dividend, gas tax and transfers from reserves.
Property Taxes How do we compare? Resident Taxes Residential Tax Competitiveness
West Kelowna Summerland
2020 Total Residential Taxes & Charges Comparison
Kelowna Vernon Penticton
0
$1,000
$2,000
$3,000
$4,000
$5,000
Penticton continues to have one of the lowest total residential taxes and charges (comparable utilities) in the region.
Business Taxes
Business Tax Multiplier Comparisons (2020)
The business taxpayer pays more than the residential taxpayer recognizing their greater use of City assets and infrastructure. Penticton has increased the multiplier to calculate business taxes in recent years but continues to use a rate that is in line with the recommendation of the Canadian Federation of Independent Business (CFIB) and neighbouring municipalities. g. a p om
v A n riso
B I C F C
. g v al A
i c n i rov
P
Vernon West Kelowna Kelowna Summerland Osoyoos Penticton 2020 Penticton 2021
0.0
0.5
1.0
1.5
2.0 2.15
2.5 2.60
3.0
Guided by Council Priorities In late spring of 2020, shortly after the COVID-19 pandemic became prevalent, Council reviewed and reset their Priorities.
COUNCIL PRIORITIES 2020-2022
ASSET & AMENITY MANAGEMENT The City of Penticton will ensure the services we provide to our residents and visitors are reliable and cost effective by proactively investing into our natural and built assets.
Strategic Initiatives and Actions
VISION A vibrant, innovative, healthy waterfront city focused on sustainability, community and economic opportunity.
> Identify service levels and costs for all community owned assets and services. > Review our amenities and investigate ways to maximize their usage and value while exploring innovative service delivery options with regional and other partners. > > >
MISSION
Penticton will serve its residents, businesses and Review agreements and determine fee structures to reflect the fiscal realities and affordability visitors through good for users of services. governance, partnership Promote continuous improvement on our Asset Management processes. and the provision of effective and Modernize the DCC Bylaw to reflect current growth and appropriate distribution of infrastructure costs. community focused COMMUNITY SAFETY services. The City of Penticton will support a safe, secure and healthy community.
Strategic Initiatives and Actions > Engage Criminal Justice system through collaborative approaches to reduce the impact of prolific offenders on the community. > Continuing engagement with BC Housing and Interior Health to reduce or mitigate the effect of health issues in the community. > Enhance safety through partnerships with other service delivery agencies. > Improve resident and visitor confidence through engagement, protection, prevention and enforcement. > Invest in appropriate human assets and technology to keep our community safe and secure.
COMMUNITY VITALITY The City of Penticton, guided by the Official Community Plan, will promote the economic wellbeing and vitality of the community
Strategic Initiatives and Actions > Support the community in economic recovery from the impacts of the COVID-19 health crisis. > Attract and promote sustainable growth and development. > Expand and invest in safe multi-modal transportation options including the ‘Lake to Lake’ connection. > Utilize best management practices and strategies related to climate change adaptation and mitigation activities. > Encourage environmentally sustainable development including renewable energy initiatives. > Continue Downtown revitalization focused on cleanliness, safety, vibrancy and sustainable infrastructure.
Actions to support Council Priorities This table highlights the new initiatives planned in support of Council’s priorities and the estimated budget amount. Proposed Increase $122,300
Mission Building & Licensing
Sustainable Construction Position
$25,000
Building & Licensing
Online Building Services Enhancements
$45,000
IT/GIS
Continuous Improvements on Enterprise Applications
$40,000
IT/GIS
Emergency Operations Centre Technology Upgrades
$12,300
Asset & Amenity Management
$178,700
Infrastructure
Development Cost Charges Bylaw Update
Infrastructure
Penticton Bus Stop Inspection and Prioritized Action List
Community Safety Social Development
$150,000 $28,700 $327,000
Substance Use Addictions Community Action Plan
Economic & Social Development
$25,000 $10,000
Bylaw
Safer Streets Bylaw
$10,000
Bylaw
Safety & Security Improvement Program
$10,000
RCMP
Hire two RCMP Members
$172,000
IT/GIS
Disaster Recover as a Service, managed security (network & desktop), software audits
$100,000
Community Vitality Public Works
$88,500 Waste and Recycle Collection Parks and Beaches
SUBTOTAL Electric Department GRAND TOTAL
*Funded from Electric Utility.
$88,500 $716,500
Hire Electric Engineer in Training
$100,000* $816,500
2021 Budget - A Balanced Approach Financial challenges caused by COVID-19 have resulted in the City taking major steps to maintain services for the community while preserving the financial health of the City. These steps influenced the budget for 2021 and the 2021-2025 Financial Plan. The following is a summary of these initiatives.
Four-point Plan Increase other revenue sources - $0.9M • Pay Parking Fee Increase • Expanded Metered Parking Areas • Increased Parking Fine Amounts • Increased Planning Fees
Moderate Tax Increase - $0.8M Proposed 2.25% tax increase will go towards: • Covering general inflation and non-discretionary increases • Reducing draw from general surplus due to COVID-19 Moderate
Parking and Fees
Tax Increase
Identify cost savings - $0.9M • 10.5 Positions Affected • 5 Repurposed • 5.5 Eliminated • Savings of $537,000
Cost Savings
Staffing Discretionary
Other Revenue Sources
Use of Reserves Reduced Contribution Draws
Temporary use of reserves • Transfer to Asset Sustainability Reserve reduced • Opportunity to use $4.7M grant to replenish reserves and balance budget
More about staffing The City has a diverse workforce with unique challenges. While we work hard to maintain our existing staffing levels, increasing workload, impending retirements and greater legislative and regulatory requirements have required increases in a number of departments. The full-time equivalent* staffing levels and increases from 2020 to 2021 are reflected below. As a result of the COVID-19 financial challenges, the City undertook a thorough review of its existing workforce for what was needed moving forward. The end result was that 10.5 FTEs were directly impacted. Of these, 10.5 FTEs, 5.5 were eliminated while the remaining five were repurposed to areas to address changing needs at the City. FTE FTE Opening 2020 FTE Opening 2020 FTE Repurposed positions Revised number of FTE as of December 31, 2020 Revised number of FTE as of December 31, 2020 Proposed New Additions** 2021 Proposed New Additions ** Total number of FTE per 2021 Business Plan Total number of FTE per 2021 Business Plan
302 302 (10.5) -5.5 5 296.5 296.5 5 5 301.5 301.5
Planning to Borrow The City owns over $1.25 billion in assets and generally spends between $16-18 million in capital annually. The City has identified a potential $96 million in major projects of which $34 million is projected to be funded over the next five years. In addition to the City’s annual average capital spending, these projects will be funded partially through grants, DCCs, internal borrowing. The City is proposing to fund the remaining $18 million with debt financing in 2022.
Proposed borrowing by fund
Highlights • The 2021-2025 Financial Plan recommends that the City borrow up to $18.4 million to help fund the approximately $34 million in capital projects that are expected in the next five years.
20.00 18.00 16.00
Millions
14.00 12.00 10.00 8.00 6.00 4.00 2.00 -
2022
2023
2024
2025
Total
-
1.52
-
-
1.52
Sewer
2.72
-
2.59
-
5.31
Water
11.55
-
-
-
11.55
General
Should we borrow? Debt financing is used strategically to
maintain the city’s financial strength and stability. With careful management, the City has reduced debt levels to 14.33% in 2019 and is in a strong position to borrow. When paired with low interest rates, debt financing over the upcoming years is advantageous. Debt financing will only be undertaken in compliance with relevant sections of the Community Charter and related regulations.
Unfunded Projects The following is a list of projects that are currently unfunded. The total investment needed for these projects is $62.4M. The City will be evaluating these projects and determining how to proceed as part of the Asset and Amenity Management initiative. Parks (in millions) Future Projects Arena Upgrade/replacement
$2.35M
Unfunded Amount 25.00
Bike Network (Lake-to-Lake Bike Route)
6.87
Campbell Drainage
2.22
Carmi Drainage
2.45
City Hall - Mechanical & Envelope
4.40
Compost Site Improvements
8.50
Downtown Revitalization
1.60
Ellis Creek Revitalization
5.85
Fire Hall upgrade/replacement Reservoir Road Reconstruction Skaha Park East SOEC - Jumbotron Total
Not Determined 2.36 2.35 0.75 62.34
Sewer $8.50M
Facilities $30.15M Engineering $21.34M