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TRANSCRIPT
June 4, 2020
Revised
METRO VANCOUVER BOARD BUDGET WORKSHOP
(Joint special meeting of the Metro Vancouver Regional District, Greater Vancouver Sewerage & Drainage District, Greater Vancouver Water District and Metro Vancouver Housing Corporation)
Friday, June 5, 2020
9:00 A.M. 28th Floor Boardroom, 4730 Kingsway, Burnaby, British Columbia
Purpose: Budget Workshop
Membership and Votes
R E V I S E D A G E N D A1 1. ADOPTION OF THE AGENDA
2. PRESENTATION AND DISCUSSION
2.1 Budget Workshop Designated Speakers: Jerry Dobrovolny, Chief Administrative Officer/Commissioner
3. ADJOURNMENT OR CONCLUSION
1 Note: Recommendation is shown under each item, where applicable. All Directors vote unless otherwise noted.
Meeting 1 of 1
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Board Budget Workshop2021 Financial Planning CycleFRIDAY, JUNE 5, 2020
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Section 2.1
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UNPRECEDENTED TIMES
Together We Make Our Region StrongMetro Vancouver Board Budget Workshop
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WORKSHOP OBJECTIVE
Seek direction for the preparation of the 2021-2025 Financial Plan
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OUTLINE
• Process• Principles and plans
o Feedback and Discussion• Our starting point - current Five Year Outlook• COVID-19 implications and opportunities
o Feedback and Discussion• Toolbox
o Feedback and Discussion• Board Direction to Staff• Next steps
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PROCESS
Board Budget Workshop
(Jun 5)
Committee Feedback
(Jul)
Budget Committee Reports
(Oct)
Board Budget Workshop (Oct 21)
Council of Councils(Oct 24)
Board Meeting (Oct 30)
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Principles and Plans
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METRO VANCOUVER PLANNING DRIVERS
Regional Growth
Environmental Sustainability
Financial Sustainability
System Stewardship
Regulatory & Legislative Environment
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PLANS
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PLANNING HORIZONS
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REGIONAL GROWTH
The region’s increasing population will require core utility services and regional services to expand and optimize to
respond to new growth
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ENVIRONMENTAL SUSTAINABILITY
Our region is dependent on healthy, functioning ecosystems and requires actions to reduce pollutants, including
greenhouse gases, to prevent waste and to conserve our natural ecosystems
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FINANCIAL SUSTAINABILITY
Financial sustainability requires that core utility and regional services are delivered with an adherence to sound fiscal
policies that balance the organization’s long-term financial health while maintaining affordability for regional ratepayers
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SYSTEM STEWARDSHIP
Critical regional infrastructure must be sufficiently maintained or replaced to meet current and future service needs and to be resilient to impacts from seismic events, wildfires, power
failures, and natural disasters
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REGULATORY AND LEGISLATIVE ENVIRONMENT
Core utility services and regional services will anticipate and meet regulatory requirements and respond to legislative
change
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PRINCIPLES AND PLANS
Your Input
To what extent do you agree with the following statements:• The drivers continue to reflect Metro Vancouver’s core priorities • Projects should address multiple drivers• Certain drivers need to be emphasized
What do you see as the level of importance for each of the drivers?
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Discussion
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2020-2024 Financial Plan
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5 YEAR OUTLOOK2020-2024 Operating Budget Overview (Approved November 1, 2019)
• Operations are in line with inflation and remains steady over the 5 years
• Increasing capital program drives contribution to capital and debt service escalation over the 5 years
-
500
1,000
1,500
2020 2021 2022 2023 2024
Mill
ions
Operating Budget
Operations Debt Service Contribution to Capital
$ Millions 2020 2021 2022 2023 2024Operations $498.0 $516.6 $529.2 $547.1 $547.8
Debt Service $135.0 $175.0 $237.7 $294.9 $357.7
Contribution to Capital $257.1 $275.9 $300.7 $329.3 $367.1
Total $890.1 $967.5 $1,067.6 $1,171.3 $1,272.6 % Increase 8.7% 10.3% 9.7% 8.6%
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Drivers for Capital Projects
Replace aging infrastructure
Reduce GHGs and improve resiliency to
climate change
Meet regulatory requirements
Create capacity to meet future
growth
Improve financial
sustainability Project Objectives
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5 YEAR OUTLOOK2020-2024 Capital Budget Overview (Approved November 1, 2019)
($ in millions) 2020 2021 2022 2023 2024
Water $397.5 $449.7 $496.5 $522.7 $540.8
Liquid Waste $883.4 $759.9 $529.5 $617.8 $634.1
Solid Waste $88.5 $81.6 $52.4 $18.8 $41.6
Housing* $25.3 $31.5 $19.1 $6.6 TBD
Regional Parks $19.9 $23.9 $29.4 $32.2 $37.3
Total Capital Expenditures $1,414.6 $1,346.6 $1,126.9 $1,198.2 $1,253.8
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5 YEAR OUTLOOKCapital Program
• 2020: $1.41 Billion capital spend 90% committed to projects underway
• 2021: $1.35 Billion capital spend (projected) 80% already committed to projects underway
• 2022: $1.13 Billion capital spend (projected) 78% already committed to projects underway
• 2023: $1.19 Billion capital spend (projected) 71% already committed to projects underway
• 2024: $1.25 Billion capital spend (projected) 66% already committed to projects underway
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5 YEAR OUTLOOKFinancials – Household Impact (Approved November 1, 2019)
2020 2021 2022 2023 2024
Water District $178 $186 $201 $218 $239
Liquid Waste $264 $290 $322 $352 $372Solid Waste $62 $65 $68 $70 $73Regional District $64 $69 $74 $79 $84Total Household Impact $568 $610 $665 $719 $768$ increase $42 $55 $54 $49% Change 7.7% 8.9% 8.2% 6.7%
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5 YEAR OUTLOOK
Benchmarking of Utility Rates ($ CAD)
Liquid Waste(Avg household rate)
2020
Metro Vancouver $264
MV Regional Average(MV + Municipal Sewer Service Charge)
$632
Capital Regional District + City of Victoria $539
Waterloo $621
Seattle $1082
San Francisco $1030 Metro Vancouver Board Budget Workshop
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5 YEAR OUTLOOK
Benchmarking of Utility Rates
Water(Wholesale water rate)
2020
Metro Vancouver $0.7386/m3
Capital Regional District $0.6968/m3
Waterloo $1.0953/m3
Seattle $0.975/m3
San Francisco $2.704/m3
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5 YEAR OUTLOOK
Benchmarking of Utility Rates ($ CAD)
Solid Waste(Cost per tonne)
2020
Metro Vancouver (average tipping fee) $121
Capital Regional District $110
Toronto $159
Seattle $230
San Francisco $280
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OVERALL IMPACT ON THE REGION
1.7% of annual GDP in the
region
Over 25,000 jobs supported
100k+ tonnes of GHG reductions
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Discussion
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COVID-19Implications and Opportunities
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COVID-19 IMPLICATIONS
Immediate Actions
• Held off on half of seasonal hiring, around 100 positions• Maintained critical parks and fire protection positions
• Deferral of all non-critical recruitment• Discussions with unions regarding workforce adjustment
agreements• Review of all projects in market procurement• Greater emphasis on continuous improvement to identify
efficiencies and savings
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COVID-19 IMPLICATIONS
TransLink Scenarios
Scenario 1:Quick Recovery
Scenario 2:Lasting Impacts
Scenario 3:Hibernation
Scenario 4: Paradigm Shift
Physical distancing
Ends on Canada Day
Ends on Canada Day
Ends in 12 months
Ends in 12 months
Economic Recovery
12-month recession
48-month depression
12-month recession
48-month depression
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Current Population Projections to 2050
• ~35,000 people per year (long standing historic trend)
• Projections are scenario based / no single number
• Inherent in the projections is a range of +/- 15%
• Many assumptions built in; (e.g. immigration rates, # of non-permanent residents, policy framework)
Assumptions
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
3.63M
3.38M
3.07M
2.67M
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Population Components –
-20,000
-10,000
0
10,000
20,000
30,000
40,000Immigration
Inter-Provincial
Natural Increase
2002 2004 2006 2008 2010 2012 2014 2016
Births
Deaths
Intra-Provincial
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POTENTIAL IMPACTS ON POPULATION GROWTH: SCENARIO 1
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SCENARIO 2: POTENTIAL IMPACTS ON POPULATION IMPACTS
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COVID-19 IMPLICATIONS
Scenarios – Survey of Guesses
Recovery DurationBank of Canada 12 to 36 months
TransLink 12 to 48 months
GDP
Conference Board of Canada
2020 MV GDP Growth = (3.0%)2021 MV GDP Growth = 6.5%2022 MV GDP Growth = 2.5%
Central 1 Credit Union
2020 BC GDP growth = (7.3%)2021 BC GDP growth = 5.1%2022 BC GDP growth = 2.8%
Parliamentary Budget Office
2020 Canada Real GDP growth = (12.0%)Metro Vancouver Board Budget Workshop
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COVID-19 IMPLICATIONS
Impacts to Metro Vancouver
• Ability to pay: Residents Businesses Members
• Capital project delays • Potential cost escalations due to associated claims• Length of recovery for the regional economy
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COVID-19 IMPLICATIONS
Challenges and Opportunities
Challenges:• Aging assets• Growing region• Scale of capital plan• Difficulty attracting foreign
investment• Economic stress • Climate change• Tremendous global uncertainty
Opportunities:• Strong financial position• Providing local employment• Restarting with carbon neutral
projects• Integrated response• Stimulus funding• Leading in economic recovery• Meeting multiple objectives
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COVID-19 IMPLICATIONS
Your Input
• What do you see as the main challenges for Metro Vancouver as an organization?
• What do you see as the main opportunities for Metro Vancouver as an organization?
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Discussion
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Toolbox
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TOOLBOX
Reduce Pay-as-you-go
Increase Debt Amortization
TermUse of
ReservesAdditional External Funding
Increase Contract Risk
ToleranceCapital Plan
Deferrals Demand Side Management
Continuous Improvement
Impacts the financial strength of the organization
Being actively pursuedIncreases the risk of the organization
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TOOLBOX
Demand Side Management
Increase Contract Risk
Tolerance
Capital Plan Deferrals
Use of Reserves
Increase Debt
Amortization Term
Reduce Pay-as-you-go
Most immediate impact to Household ratesMetro Vancouver Board Budget Workshop
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TOOLBOX
Your Input
• Rate your support for the use of each of the tools on a scale of 1 to 5, with 1 being lowest and 5 being highest
Reduce Pay-as-you-go
Increase Debt Amortization
TermUse of Reserves
Increase Contract Risk Tolerance
Capital Plan Deferrals
Demand Side Management
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Discussion
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COVID-19 Opportunities and Challenges
Recovery Scenarios
Tools
Direction to staff for preparation of the
2021-2025 Financial Plan
Current 5 Year Financial Plan
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BOARD DIRECTION TO STAFF
Proposed Approach
Short-term Relief for Households• Leverage supported tools to create a short-term action plan
(1-3 years)Maintain current goals and objectives
• Continue work on strategic and long-range plansRealize New Opportunities
• Partner on projects to increase affordable housing and reduce GHGs
• Help drive economic recovery• Other?
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BOARD DIRECTION TO STAFF
Limits for Short-term Financial Planning
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UNPRECEDENTED TIMES
I hope in the years to come we will be able to look back and take pride in how we responded to this challenge
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UNPRECEDENTED TIMES
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BOARD DIRECTION TO STAFF
Feedback on Proposed Approach
Short-term Relief for Households• Leverage supported tools to create a short-term action plan
(1-3 years)Maintain current goals and objectives
• Continue work on strategic and long-range plansRealize New Opportunities
• Partner on projects to increase affordable housing and reduce GHGs
• Help drive economic recovery• Other?
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Thank You
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