District of Sparwood2018-2022 FINANCIAL PLAN

Public Consultation MeetingFebruary 27, 2018

Presented by:Michèle Schalekamp, CPA, CMA - Director of Finance

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Introduction

Tax Base

Operating Budget

Project Funding

Capital Budget

Public Consultation Meeting

Agenda

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Improve the efficiency, transparency and public involvement in the budget process

Ensure the public understands and supports the direction of Council

Why are we here?

Community Charter – Section 166

“A Council must undertake a process of public consultation regarding the proposed financial plan before it is adopted”

We are here because Section 166 of British Columbia’s Community Charter states that we must have public consultation regarding the proposed financial plan for the year, this one formal meeting. This gives the public an opportunity to see what major projects are planned for the upcoming year and what their estimated costs will be. This also gives the public an opportunity to provide feedback whether it be positive or negative, as both can be useful.

The timing of this presentation is before the 2017 year end results are known. With the exception of 2018 capital items, future capital projects are proposed and estimates only. Because of the cash flow challenges we are faced with in 2018, projects will be prioritized and moving forward only as cash is available.

During the early part of the year before the current financial plan is adopted, we operate under the authority of the financial plan adopted in the previous year, which makes provision for operations in a 5 year period. This presentation will deal with operations in an overview only.

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Sustainability is defined as:

“Meeting the needs of the present

without compromising the ability

of future generations to meet their needs”

Paraphrased from the Brundtland Commission

In order that we remain aware of future needs we review the effects of the capital and the reserve plans out to 20 years.

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Official Community Plan (OCP)

Sparwood undertook to renew their Official Community Plan (OCP) starting in 2013 and the OCP bylaw was adopted in 2015.

This plan is the formal communication from the community on where they want to be in the future.

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Strategic Plan

With the adoption of the Official Community Plan, strategic planning is undertaken. During strategic planning we chart a course that is intended to lead to the goals set by the Official Community Plan.

As financial plan projects are brought forward for consideration, they will be assessed on how well they head in the direction set by the OCP. Some items will be more concerned with keeping the District operating effectively and will be neutral in relation to the OCP. However, some proposals may conflict with the OCP and should be reconsidered. This is especially true of capital items, which once built or purchased may serve to frustrate the goals set by the OCP for many years.

Local government operations gather a significant momentum and just like an ocean liner cannot stop or change direction very quickly. Our present course may already be heading in the general direction that the new OCP will identify, so a major change of direction might not be needed. It may take one or two budget cycles before a shift of direction is seen.

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Council’s 2014 - 2018 Corporate Strategic Goals

To support a strong local economy

To preserve a healthy natural environment

To encourage an active, involved and healthy community

To foster an effective and responsible local government

To cultivate an engaged community

To encourage, promote and celebrate local heritage, culture and arts

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2017 Tax Base

The following slides are to give you an idea of where all of the taxes that are collected get distributed and who is paying. Sparwood does not get to keep everything it collects!

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Allocation of Sparwood Property Taxes

$12.4M taxes collected

58% available for municipal use

It should be noted that not all of the taxes that are paid to the District of Sparwood belong to the District.

This chart shows that of the total 2017 taxes to be collected in Sparwood ($12.4M) only 58.2% ($7,230,000) is available for the District’s use.

2017 Allocation of Sparwood Taxes

EV Mine Pool - Fernie, Elkford & Area A $1,900,079

EV Mine Pool - Sparwood $3,055,271

District of Sparwood General $4,174,750

Regional Hospital District $184,498

RDEK - general $252,956

EValley Waste - closure & debt $126,879

School taxation $2,260,714

Police $337,196

BCAA & MFA $114,756

TOTAL $12,407,099

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Sparwood Tax Share by Class

Mine Pool – 46.7%

Residential – 22.14%

Business – 11.5%

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Keeping up with the neighbours – 2017(Selected 1200 square foot home)

Fernie Crowsnest Pass Elkford Sparwood

Assessed value $400,000 $294,410 $312,300 $294,700

Tax 3,120.71 2,786.65 2,667.92 2,103.27

Utilities 678.66 1,028.76 467.00 909.84

Total 3,799.37 3,815.41 3,134.92 3,013.11

To see how our taxes and utilities compare with surrounding communities we have been tracking four similar homes in these communities from year to year. Sparwood’s total taxes and fees continue to be reasonable in comparison to its neighbours. Please note that these are not always perfectly comparable numbers as each area’s taxes are used to fund different things. For example, the Crowsnest Pass taxes help fund their ambulance service. The results are affected by the assessed value. The sample home is located in lower Sparwood.

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2018 Operating Budget

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Solid waste removal contracted out

2018 Municipal election

Develop evacuation and response plans

Flood mitigation project

Update● Zoning bylaw ● Subdivision servicing bylaw● Cemetery master plan

Continuing to focus on● Wildlife mitigation strategies● Business retention● Trail development● Water leak repairs

2018 Major Operating Initiatives

These are some of the operational items that Staff and Council are working on to ensure that Sparwood moves forward.

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2018 Operating Revenue $13.2M

RDEK requisition moved to taxes No longer doing commercial pickup

Taxation is 57% (2017 54%) (change in RDEK requisition) of our revenue, while user fees are 18% (2017 23%). The remaining 25% is from various other sources, such as grants.

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2018 Operating Costs $13.2M

2018 - $13,231,805 2017 - $13,084,146

Administration includes Office and Lease building maintenance, community broadband, IT, Legal, finance, human resources, records management

Other Protection includes Bylaw Enforcement, Building Inspection, Animal Control & Emergency Planning

Other Community Development includes Miscellaneous studies, Tourist Information Centre, District Float, Fibre operation & Coal Miner Days

Parks and Recreation including Library, Heritage, etc.

Public Health includes Mosquito control and Cemeteries

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2018 Community Support

* Programs are grant funded and managed through the District.

$646K

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How are Capital Projects Funded?

Debt funding

Grants

Reserves for capital projects

Replenished by:

Formal repayment with interest

Yearly transfers from operations

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When spendingCareful consideration

If reserves are diminishedMust borrow to fund new capital

Debt repaymentsNot as flexible

Resource community Reliant on industry

Must replenish reserves regularlyMay lose flexibility to respond to economic downturns

Reserve Funds - Guidelines

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Infrastructure and equipment

Upgrades & replacement

• Reasonable maintenance costs

New spending

Keep up with regulated standards

• Water protection, sewer & waste

Economic development

Grow & diversify the community

• Maintain low taxes

Reserve Funds - Guidelines

As with your house or vehicles, there comes a point where they must be replaced because they are either costing you too much money to repair or they need to be updated to keep up with current regulations. There are always new rules and regulations being set by various levels of government that the District must adhere to.

We must also consider the future and develop infrastructure strategically.

Often there are Government Grants available to help fund projects, but in the current economic downturn they are often coming up on short time lines and need proof that they have Council authorization and that the District’s share of funds are available. An example of this was the Stimulus Funding for the CPR Overpass and Link Trail.

Capital budgets in any one year may contain many more projects than actually move forward just so that we are able to take advantage of potential funding opportunities.

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Borrowing Funds! - When & Why?

Proposed sewer plant relocation & expansion

• Several years down road

• Too costly for reserves

• Borrowing evenly spreads out costs between current & future taxpayers

Local Service Areas (LSA)

• Infrastructure upgrades for limited area

• Taxpayers in LSA repay debt

*Conserves reserve funds for projects that benefit ALL taxpayers

It is the future residents of the community that benefit from these larger, long term projects. Therefore, they are typically the ones that pay for them over time by paying back the borrowed funds.

The District does have a Local Improvement reserve that can be used for very small projects and avoid the significant amount of administration that the borrowing process requires.

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Proposed Capital Projects

2018 Highlights

Some projects will be reduced, some will be handled through operations, some will be deferred until funding is available. Other requests will be rethought – there may be other ways of accomplishing what we need without a capital outlay.

The following capital items are still subject to change, and some may only proceed if grant funding is approved, e.g. the skate park.

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2018 Capital Budget

Equipment Replacement

Public Works Pickups (2) $ 80,000 Recreation Tractor $ 60,000 Hook Truck $ 175,000 4 Ton Dump Box Sander $ 275,000 Sweeper $ 280,000 Drum Roller $ 60,000 IT $ 55,000 Smaller Equipment $ 177,123

TOTAL $ 1,162,123

These figures are preliminary estimates and will be fine tuned before the financial plan is final.

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2018 Capital Budget

Building Upgrades

Fire Live-Fire Training Structure $ 86,000

Outbuilding Energy Retrofit $ 60,000

Main Office Exterior $60,500

Public Works (shop roof, salt shed, drainage) $515,000

Pool (Master Control Centre) $44,000

Refrigeration Plant (Master Control Centre) $55,000

TOTAL $ 826,500

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2018 Capital Budget

Parks and Recreation

Skate Park $ 635,000

Sparwood Height Multi Purpose Pad $ 200,000

Dog Park $52,553

TOTAL $ 887,553

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2018 Capital BudgetEngineering Structures

Hwy 3/43 Middletown* $ 7,334,000 Whiskey Jack - Roads, Water** $ 3,591,850 Fiber Optic Network and Expansion $ 132,780 Storm Water Infrastructure $ 214,000 Transfer Station Intersection $ 800,000 Sidewalk Repairs $ 300,000 Irrigation Central Control System $ 100,000 Gravel Road Resurfacing $ 150,000 Gravel Pit Development $ 214,000 Street Repaving $ 770,000

TOTAL $ 13,606,630* Funded through Provincial/Federal grant of $5,117,446.** Represents the District’s share of infrastructure required and planned for future development in Sparwood Heights and

Whiskey Jack. Whiskey Jack contributes their share.

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2018 Capital Budget

Water System

Pump House Upgrades $ 50,000

Water SCADA (Supervisory control and data acquisition) $ 185,000

Well#4 and Transmission Line $4,595,000

TOTAL $ 4,830,000

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2017 Capital Budget

Sanitary Sewer System

Infiltration Contingency $ 215,000

Infrastructure Upgrades $ 200,000

Sewer SCADA (Supervisory control and data acquisition) $ 200,000

Treatment Plant Headworks Upgrade $ 150,000

TOTAL $ 765,000

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2018 Capital Budget

Funding Sources for Capital Projects

TOTAL CAPITAL PROJECTS $ 23,287,805

FUNDING OF CAPITAL PROJECTS

Reserves $ 10,611,242

Borrowing $ 0

Grants and Other Sources $ 12,676,563

TOTAL $ 23,287,805

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Where can I ask questions or provide my suggestions?

In Person 136 Spruce Avenue

Mail PO Box 520, Sparwood BC, V0B 2G0

Phone 250.425.6271

Fax 250.425.7277

Email finance@sparwood.ca

Accommodating additional Capital Projects or Operational Changes needs sufficient lead time for Staff and Council to consider and plan.

Thank you for your time.

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