CITY OF QUESNEL

CITY OF QUESNEL

QUESNEL MUNICIPAL COUNCIL

Standing Committee - FINANCIAL SUSTAINABILITY & AUDIT

----------------------------------------

Amended AGENDA

January 11, 2017 at 1:30 p.m. Page

A. CALL TO ORDER - Mayor Simpson [CHAIR]

B. APPROVAL OF AGENDA:

C. ADOPTION OF REGULAR MINUTES: 2 - 4 1) Minutes of December 14, 2016

D. ACTIONS / OLD BUSINESS: 5 1) Action Summary

E. STAFF REPORT(S):

F. NEW BUSINESS: 1) Finance Department Update

2) Spending Issues (Overage)

6 - 41 3) Operating Budget

42 - 44 4) Branding Implementation Report - Economic Development Officer Reid to Report

45 - 49 5) Airport Options Report - Director Norburn to Report ~LATE ITEM

[Addenda]

G. CORRESPONDENCE:

H. NEXT MEETING

January 25, 2017

I. MOVE TO SPECIAL CLOSED

Pursuant to the Community Charter: s.90

(g); Litigation or potential litigation affecting the City; and

(k); Negotiations and related discussions respecting the proposed provision of a City service that are at their preliminary stages and that, in the view of the Council, could reasonably be expected to harm the interest of the city if they were held in public.

J. RELEASE ITEM(S) FROM SPECIAL CLOSED TO SPECIAL OPEN

K. ADJOURN SPECIAL CLOSED AND RESUME SPECIAL OPEN

L. ADJOURNMENT:

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MEETING NO. 20

A Municipal Council Standing Committee - FINANCIAL SUSTAINABILITY & AUDIT Meeting was held on the 14th day of December, 2016 commencing at 1:30 p.m. at Council Chambers, City Hall, 410 Kinchant Street..

Present:

Committee Members: Mayor Bob Simpson [CHAIR], Councillors John Brisco and Ed Coleman [via teleconference until 2:40 p.m.]

Staff: City Manager Byron Johnson, Deputy City Manager/Director Finance and Corporate Services Kari Bolton

Guests: Economic Development Officer Amy Reid, Director Capital Works & Infrastructure Ken Coombs, Director Public Works Operations Matt Thomas, Director Community Services Jeff Norburn, Director Development Services Tanya Turner, Councillor Laurey-Anne Roodenburg

A. CALL TO ORDER - CHAIR

Chair Simpson called the meeting to order at 1:34 p.m.

B. APPROVAL OF AGENDA: MOTION - 59 MOVED Councillor Brisco, Seconded Councillor Coleman and resolved:

THAT the Financial Sustainability & Audit Committee approve the December 14, 2016 Agenda with the following additions:

Late Item (s):

E(5) Gas Tax

F(1) North Cariboo Aboriginal Family Program Society - Request for Financial Assistance

CARRIED

C. ADOPTION OF REGULAR MINUTES:

C.1) AMENDED Minutes of November 16, 2016 C.2) Minutes of November 30, 2016

MOTION - 60 MOVED Councillor Brisco, Seconded Mayor Simpson and resolved:

THAT the Financial Sustainability & Audit Committee adopt the Amended Minutes of November 16, 2016 and the Minutes of November 30, 2016, as presented.

CARRIED

D. ACTIONS / OLD BUSINESS:

D.1) Action Summary - Reviewed

E. NEW BUSINESS:

E.1) Finance Department Update

Working on Updates to Business Licences. Invoices go out the first week of January.

E.2) Spending Issues (Overage)

No issues

E.3) 2017 Capital Budget - Director Bolton to Report

Reviewed updated version of Capital Budget. Updates to Reid Street project and change to use approximately $350,000 of Development Cost Charges for the Two Mile Flat Watermain project.

Minutes of December 14, 2016 Page 2 of 49

Meeting No. 20 Financial Sustainability & Audit Committee 14 December, 2016

Page 2 of 3

Discussion of creating a consultation calendar for various capital projects.

ACTION: Request for report on dog parks at January 17th, 2017 Council Meeting.

MOTION - 61 MOVED Councillor Brisco, Seconded Councillor Coleman and resolved:

THAT the Financial Sustainability & Audit Committee ("FSAC") recommend to Quesnel City Council the approval of the Five Year Capital Plan presented at the December 14, 2016 meeting, as amended.

CARRIED

MOTION - 62 MOVED Councillor Brisco, Seconded Mayor Simpson and resolved: THAT the Financial Sustainability & Audit Committee recommend to Quesnel City Council that the upgrades for the Museum parking lot be funded by the Capital Reinvestment Reserve even though there is no longer a grant involved in the project.

CARRIED

E.4) Operating Budget - Director Bolton to Report

[Deferred from Nov 30/16]

First review of the operating Budget. Requests for additional information to be brought forward to the next FSAC meeting including:

Airport options – improvement fees, differential airplane parking fees

West Quesnel Land Stability – breakdown of operating costs

Branding – overview of implementation plan

Information on Waste Reduction and Water Ambassador Initiatives

ACTION: Additional Information regarding the Operating Budget to be brought forward to the January 11, 2017 FSAC Meeting

Discussion of Supplemental Items

The Committee felt vest for bylaw should be undervests Canada Day and Skyfest should be added to the supplemental list for discussion – no dollar

amounts at this point.

The Northern Development Initiative Trust ("NDIT") grants for Theatre and RV/Campground were removed as the NDIT grants are oversubscribed for the year.

ACTION: Recommend that the Policy and Bylaw Committee review the Council Travel Policy again regarding budget amounts set for Councillors.

E.5) LATE ITEM – Gas Tax

Discussion of the use of gas tax funding by the City. Request for staff to create a report showing how the City uses its gas tax. The report is to also include the capital costs of various services that Regional District citizens enjoy but that no funding is received from the CRD for those services, such as trails and the airport.

F. CORRESPONDENCE:

F.1) LATE ITEM - North Cariboo Aboriginal Family Program Society - Request for Financial Assistance

Tabled for now

ACTION: Refer request to the joint School District #28 and North Cariboo Joint Planning Committee meeting.


Meeting No. 20 Financial Sustainability & Audit Committee 14 December, 2016

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G. NEXT MEETING

January 11, 2017

H. ADJOURNMENT:

With there being no further business to discuss, the Financial Sustainability & Audit Committee meeting ended at 4:05 p.m.

CERTIFIED CORRECT

Mayor Bob Simpson [CHAIR]


Financial Sustainability & Audit Committee Action Tracking Summary – 2016 [12 14 2016]

Date # Responsible Action Status/ Complete

2016

MAR 8 70 M.Thomas

[G.Albers]

Summary of playgrounds together with other park amenities[flower beds]

Update: Nov 2/16:

Committee requested a more detailed parks report to come back to FSAC including ◦Maps showing parks ◦Costs by parks ◦Playground details ◦Any available information on where the kids are

Jan 25/17

NOV 16 72 •Fleet review – Develop Terms of Reference for a fleet review to determine the best cycle period for our equipment and types of equipment

•Report on yearly investments

DEC 14 73

FUTURE AGENDAS

Action Summ

aryPage 5 of 49

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To: Financial Sustainability and Audit Committee

From: Director of Corporate and Financial Services

Subject: Draft Operating Budget

PURPOSE

The purpose of this report is to update the Committee on the status of the operating budget and to give the first draft of the operating budget report that will go to Council on February 7th.

SUMMARY

The draft operating budget shows an increase of 2.5% for the operating budget once supplementals have been included.

The City has received the first set of assessments from BC Assessment. This draft operating budget is based on the tax model approved by Council and includes an additional

$125,000 being added to the Capital Reinvestment Reserve. Taxation levels remain frozen for Major and Light Industry and increase by approximately $54 for the

average residence (valued at $177,448) or $30.48 per $100,000 of assessment and by $93 per $100,000 of commercial assessment for businesses.

BACKGROUND

Since the operating budget was present to FSAC at the last FSAC meeting a few changes have been made to the budget.

The monitoring for the Avery/Avison Gas investigation project has been increased to $23,600 for 2017

The monitoring for WQLS has been decreased by $14,000 for 2017 to a budget of $207,180

The Completed Roll has been received from BC Assessment. Below are the adjustments to taxes created by the non market adjustments to the roll. The Revised Roll comes in March which may have slight adjustments that will affect the final tax rates.

QUESNEL CITY OF

Administration Report

Report Date: Jan 5, 2016 Meeting Date: Jan 11, 2017

Operating Budget Page 6 of 49

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NEXT STEPS

Once approved by the Financial Sustainability and Audit Committee the Operating Budget Overview will be taken to Council for approval. This information will then be consolidated into the five year financial plan so the bylaw can be brought forward for approval. When the final assessment roll is received in March, the final tax rates will be calculated and the Tax Rate bylaw will be brought forward for approval.

ATTACHMENTS

1. Draft Operating Budget Overview 2. Draft Supplemental List 3. Additional Information on Operating Items

RECOMMENDATION

THAT the Financial Sustainability and Audit Committee give direction on any changes, updates that they want made to the operating budget.

2017 Non Market Change - Completed Roll

Projected 2016 Adjusted for

NMC Tax Rate Change for tax Framework

Residential 3,457,101 4.63 16,002 16,002

Utilities (799,700) 40.00 (31,988) (31,988)

Major Industry 1,914,200 83.55 159,938 - $'s frozen till 2018

Light Industry 154,300 27.60 4,259 - $'s frozen till 2018

Business (131,932) 13.55 (1,787) (1,787)

Rec (7,700) 13.55 (104) (104)

(17,878)$


The City of Quesnel

Preliminary Budget

Overview DRAFT for REVIEW by

Financial Sustainability and Audit Committee

Initial Budget Estimates for 2017

Prepared by

Kari Bolton

Director of Corporate and Financial Services

With Recommendations from the Financial Sustainability and Audit

Committee

February 2017


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City of Quesnel Preliminary Budget Overview

February 7, 2017

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TABLE OF CONTENTS

1.0 INTRODUCTION .............................................................................................................................................. 4

2.0 BUDGET PROCESS ......................................................................................................................................... 4

3.0 BUDGET PRINCIPLES .................................................................................................................................... 4

4.0 REVIEW OF BUDGET 2016 ............................................................................................................................ 4

5.0 INTRO TO BUDGET 2017 ............................................................................................................................... 5

6.0 RECOMMENDED CHANGES PROPOSED BY THE FINANCIAL SUSTAINABILITY AND AUDIT

COMMITTEE ............................................................................................................................................................. 5

7.0 BUDGET OVERVIEW ..................................................................................................................................... 6

7.1 SUMMARY OF PRELIMINARY 2017 ASSESSMENTS ............................................................................................ 6 7.2 SUMMARY OF TAXES BY OPERATING FUNDS ................................................................................................... 7 7.3 PROPOSED TAX FRAMEWORK AND OPTIONS FOR TAX INCREASE IN 2017 ......................................................... 8

8.0 FINANCIAL RISKS / CHALLENGES ........................................................................................................... 9

9.0 TOTAL COMBINED BUDGET SUMMARY .............................................................................................. 11

10.0 GENERAL OPERATING BUDGET ........................................................................................................ 11

10.1 REVENUE ....................................................................................................................................................... 13 10.2 KEY REVENUE / EXPENDITURE ITEMS ............................................................................................................ 13

11.0 WATER OPERATING FUND ................................................................................................................... 14

11.1 REVENUE SOURCES ........................................................................................................................................ 14 11.2 EXPENDITURES............................................................................................................................................... 14

12.0 SEWER OPERATING FUND ................................................................................................................... 15

12.1 REVENUE SOURCES ........................................................................................................................................ 15 12.2 FUND EXPENDITURES ..................................................................................................................................... 15

13.0 SOLID WASTE OPERATING FUND ...................................................................................................... 16


14.0 TRANSIT OPERATING FUND ................................................................................................................ 18


15.0 AIRPORT OPERATING FUND ............................................................................................................... 20


16.0 DEPARTMENTAL BUDGETS – CORE CITY SERVICES .................................................................. 21

16.1 LEGISLATIVE SERVICES AND COMMUNITY SUPPORT ..................................................................................... 21 16.2 CITY MANAGER & CORPORATE SERVICES ..................................................................................................... 22 16.3 COMMUNITY SERVICES .................................................................................................................................. 23 16.4 PLANNING & DEVELOPMENT SERVICES ......................................................................................................... 24 16.5 EMERGENCY SERVICES .................................................................................................................................. 25 16.6 RCMP ............................................................................................................................................................ 26 16.7 PUBLIC WORKS & ENGINEERING ................................................................................................................... 27

17.0 RESERVES .................................................................................................................................................. 28


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18.0 DEBT FINANCING .................................................................................................................................... 28

18.1 CURRENT DEBT STATUS .................................................................................................................................. 29

19.0 CAPITAL EXPENDITURE PROGRAM ................................................................................................. 29

20.0 CONCLUSION ............................................................................................................................................ 30


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1.0 INTRODUCTION The purpose of this report is to provide Council with the preliminary estimates for the 2017 operating budgets. This operating budget combined with the capital budget, assessments from BC Assessment and direction from Council on distribution of property taxes will determine the City’s tax rates for 2017. The Financial Sustainability and Audit Committee is responsible for providing direction on the budget process. 2.0 BUDGET PROCESS The budget process allows the City of Quesnel to make resource allocation decisions, including choices about staffing, service levels, and which priorities will be addressed in the coming fiscal year. All of the budget meetings are open to the public, and there will be a public input session to enable the public to inform Council of their ideas and concerns. The budget process is as follows:

October / November - department heads complete their budget worksheets and assemble their preliminary budget estimates and capital budgets.

November 14, 2016 – Public Budget Meeting January 17th - the five year capital budget was presented to Council February 7th - the preliminary draft budget will be presented to Council March - the 2016 yearend is closed. April - the final revised assessment data is available, final tax rates will be set. Prior to May 15 – the budget bylaw and tax rates bylaw to be approved.

3.0 BUDGET PRINCIPLES Council has adopted a policy of Budget Principles that is used for preparation of the yearly budget with direction from the Financial Sustainability and Audit Committee. In addition to the budget principles, this year Council approved continuing the tax framework that includes freezing major and light industry taxes for three years (2016-2018) and contributing another $675,000 to the Capital Reinvestment Reserve.

4.0 REVIEW OF BUDGET 2016 To review 2016, the key financial impacts are as follows:

Council approved a budget that resulted in a total tax increase of 2.8%, there was no increase for operating costs, the entire increase was put into the Capital Reinvestment Fund for infrastructure replacement to address the City’s infrastructure deficit.

For 2016 the taxes from major and light industry were frozen at 2015 tax levels resulting in a higher increase to the residential and business classes.

This was the last year for the Revitalization Exemption of $600,000 per year to a West

Fraser sawmill.


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Total Taxes Collected

2016 - $14,403,128 2015 - $14,009,503 2014 - $13,624,422 2013 - $13,203,600 2012 - $12,800,353 2011 - $12,385,083 2010 - $12,257,713

Increase from Previous Year

2.8% 2.8% 2.5% 3.2% 3.4% 1.0% -0.5%

Note: This is the increase in total taxes collected

or revenue received by the City, not the tax increase to individual property owners.

5.0 INTRO TO BUDGET 2017 As an outcome of Council’s strategic planning discussions, Council committed to staying the course on the three-year budget framework it established in 2016. The essence of this framework is as follows:

Freeze industrial (light and heavy) taxation at 2015 levels. Tax for the City’s capital re-investment program (100% of the tax increases in 2015 and

2016 went to the capital re-investment program reserve). Increase general taxation to cover only inflationary pressures in 2017 and 2018. Continue to look for cost reductions in the City’s operating budget and to actively seek

alternative sources of funding to enhance the revenues generated from property taxes and to achieve Council’s strategic priorities (e.g. grants for initiatives and cost sharing programs for capital projects).

Adhere to the policy of committing the annual surplus to the capital re-investment program reserve.

In December, staff prepared a draft budget based on status quo programs and service levels with the cuts that Council had previously approved and interest rate savings due to the interest rate on the loan for the City Hall building resetting. This budget showed City’s operating costs increasing by $110,417 from the previous year. This year includes another increase of $125,000 to the Capital Reinvestment Reserve. The Financial Sustainability and Audit Committee have reviewed and recommended $206,300 in supplemental items to be added to the operating budget, bringing the budget to a 2.5% increase in total taxes required. 6.0 RECOMMENDED CHANGES PROPOSED BY THE FINANCIAL SUSTAINABILITY

AND AUDIT COMMITTEE The Financial Sustainability and Audit Committee recommended the following supplemental requests with $121,300 from general operating, $80,000 from Gas Tax Funds and $5,000 from 2016 Surplus. Bylaw Vests $ 4,500 Student Positions 15,000


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Branding Implementation 50,000 Council Initiatives 50,000 Emergency Detachment RCMP Rental 1,800

$121,300 – from General Taxation Fleet Review 30,000 Waste Reduction Activities 50,000 $80,000 – from Gas Tax Funds Physician Recruitment Celebration 5,000 – from 2016 Surplus 7.0 BUDGET OVERVIEW

7.1 Summary of Preliminary 2017 Assessments For the 2017 budget year, the assessment base increased as per the chart below.

NET TAXABLE ASSESSMENTS

2017 Completed Roll vs 2016 Revised Roll

Market Non Market

Class 2016 2017 Change % Change Change Change

RESIDENTIAL 634,355,602 660,174,053 25,818,451 4.1% 3.5% 0.5%

UTILITIES 6,726,961 5,984,976 741,985- -11.0% 0.9% -11.9%

MAJOR INDUSTRIAL 107,994,900 107,841,300 153,600- -0.1% -0.1% 0.0%

LIGHT INDUSTRIAL 8,735,400 8,734,900 500- 0.0% 0.0% 0.0%

BUSINESS 186,824,600 186,654,150 170,450- -0.1% 0.1% -0.1%

RECREATIONAL 106,800 106,300 500- -0.5% 6.7% -7.2%

FARM 165,976 165,976 - 0.0% 0.0% 0.0%

944,910,239 969,661,655 24,751,416 2.6%

* both 2016 and 2017 major industry assessment has been adjusted by the estimated change that could occur due to an outstanding appeal


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7.2 Summary of Taxes by Operating Funds

General: The total General Budget is approximately $16 million, with the rest of the funding coming from grants, sales of service fees, rental income, etc.

Solid Waste: The total Solid Waste Budget is approximately $1.6 million. Funding in addition to taxation comes from user fees at the landfill, garbage collection fees and contributions from the Cariboo Regional District.

Airport: The airport budget is just under $1 million, mostly funded by aircraft fees, fuel sales and rental income.

Transit: The transit budget is approximately $0.5 million with the rest of the funding coming from passenger fees, contract services and a contribution from the CRD.

2016 2017

General 10,883,117 10,961,001 0.7% 77,884

Solid Waste 380,311 403,882 6.2% 23,571

Taxation for CRP 1,757,500 1,882,500 7.1% 125,000

Taxation for Capital Reserves 297,065 348,546 17.3% 51,481

WQLS Operating 217,050 207,180 -4.5% 9,870-

WQLS Capital Project 257,000 257,000 0.0% -

Airport 237,835 201,230 -15.4% 36,605-

Transit 373,250 377,206 1.1% 3,956

Supplementals - 121,300 0.0% 121,300

-

TOTAL TAXES 14,403,128 $14,759,845 2.5% 356,717

TAX COLLECTED BY AREA

Variance to Prior Year


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7.3 Proposed Tax Framework and options for tax increase in 2017

As previously mentioned Council proposed a three year tax framework that includes freezing the tax levels for both major and light industry at 2015 levels and increasing the Capital Reinvestment Reserve by another $675,000 by the end of the three years. 2017 includes an increase of $125,000 to the Capital Reinvestment Reserve. The chart below shows the final taxation collected for 2016 and the mill rates and tax share to be able to compare to 2017.

PROPOSED 2017: The proposed 2017 budget has the Capital Reinvestment Reserve increase by $125,000 as per the original tax framework model proposed. Major Industry and Light Industry remain frozen at 2015 levels.

This option has total taxes collected of $14,759,843, an increase in total taxation revenue received by the City of 2.5%.

Class Total Transit/ Capital Total Tax Rate % Share

Assessment Municipal Airport Levy Municipal Taxes **

RESIDENTIAL 634,355,602 2,472,691 119,595 343,958 2,936,243 4.63 20.4%

UTILITIES 6,726,961 226,598 10,960 31,520 269,078 40.00 1.9%

MAJOR INDUSTRIAL ** 107,994,900 6,998,810 367,526 1,057,016 8,423,351 78.00 58.5%

LIGHT INDUSTRIAL 8,735,400 203,028 9,820 28,242 241,090 27.60 1.7%

BUSINESS 186,824,600 2,131,550 103,095 296,505 2,531,150 13.55 17.6%

RECREATIONAL 106,800 1,219 59 169 1,447 13.55 0.0%

FARM 165,976 647 31 90 768 4.63 0.0%

944,910,239 12,034,543 611,085 1,757,500 14,403,128$ 100.0%

** after $600,000 226 Exemption

Major Industry Mill Rate Adjusted for 226 Exemption 83.55

2016

CITY OF QUESNEL FINAL 2016 TAXATION

Class Total Transit/ Capital Total Tax Rate % Share

Assessment Municipal Airport Levy Municipal Taxes **

RESIDENTIAL 660,174,053 2,627,267 123,564 402,136 3,152,967 7.4% 4.78 21.4%

UTILITIES 5,984,976 199,484 9,382 30,533 239,399 -11.0% 40.00 1.6%

MAJOR INDUSTRIAL ** 107,841,300 7,018,910 330,110 1,074,331 8,423,351 0.0% 78.11 57.1%

LIGHT INDUSTRIAL 8,734,900 200,893 9,448 30,749 241,090 0.0% 27.60 1.6%

BUSINESS 186,654,150 2,250,412 105,840 344,453 2,700,705 6.7% 14.47 18.3%

RECREATIONAL 106,300 1,282 60 196 1,538 6.3% 14.47 0.0%

FARM 165,976 661 31 101 793 3.2% 4.78 0.0%

969,661,655 12,298,907 578,436 1,882,500 14,759,843$ 100%

2.20% -5.34% 7.11% 2.5%

2017 Completed Roll Proposed

CITY OF QUESNEL 2017 TOTAL MUNICIPAL TAXATION


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The increase to the average residence (valued at $177,448) is $54.09 or approximately $30.48 per $100,000 of assessment. The average residence assessment increased 3.5%. It is important to note that the revised assessment roll will be received in late March. Changes on this roll often result in the tax rate changing slightly. 8.0 FINANCIAL RISKS / CHALLENGES There are a several significant risk factors associated with our five year budgets which will impact the ability of the City to achieve its long term objectives. The key risks are as follows:

Risk to the general economic climate of Quesnel due to potential forestry and forestry related job losses.

Risks to the assessment base, related to the impact the Mountain Pine Beetle will have on Industrial operations in Quesnel. Over the next several years the quantity and quality of the fibre base may have an impact on the viability of certain industrial operations. If a mill closure happens, the City will have to address the resulting loss in property taxes.

The City is currently putting funds aside to replace the Public Works Building. The current building is aged and located in the flood plain. Council has approved including in the 2018 election a referendum on the debt required to build a new Public Works Building.

The Water Fund currently has a significant surplus of approximately $4 million but over the next five years the Five Year Capital Plan shows spending of $4 million on water capital projects. Grants have been submitted for three major water projects.

Taking Care of Infrastructure In 2007, Council instituted a special line item on the tax notice for funding the Capital Reinvestment Plan. The objective of this is to financially plan for the orderly replacement of existing City infrastructure. At this point only Road and Sidewalk Infrastructure replacement is included or if approved by Council, to be used to match grants funding for replacement of other infrastructure. For many years, the City has contributed to reserve funds to replace our mobile equipment, trucks, and fire equipment. In 2016, the following contributions were made to the Capital Reinvestment Reserve which included an increase of $395,000 to the amount collected through taxation:

Taxation

2015 Surplus Allocation

Small Communities Grant TOTAL

$1,757,500 12,536

417,835 $2,189,871


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In 2016, approximately $1.4 million of this reserve was spent on projects, leaving about $3.8 million in the reserve. In 2017, the proposed contributions to the Capital Reinvestment Reserve are:

Taxation

Proposed Increase Taxation

2016 Surplus Allocation - TBD

Small Communities Grant TOTAL

$1,757,500 125,000

0

424,000 $2,306,500

Council committed to an increase to the Capital Reinvestment Reserve of $675,000 over three years 2016-2018. 2018 will be the last increase of $155,000. In addition to the City’s general infrastructure, Council has committed to raising utility rates to a level that is sustainable long term. The Sewer Fund has reached a sustainable level for the foreseeable future and there was no increase to sewer rates in 2017. The Water Fund still requires more funding. Applications have been submitted for three large water projects that could have a significant positive effect on the sustainability of the water fund if approved.


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9.0 TOTAL COMBINED BUDGET SUMMARY This section summarizes the preliminary 2017 budget by groups of major funds. Fund accounting is central to local governmental budgeting, with each fund representing a self-balancing set of revenues, expenditures, and transfer accounts. This means that General fund expenditures must be funded through General fund revenue sources. The City’s total combined operating budget is $19,405,000 for 2017, a 0.3% increase over 2016 operating budgets. The capital budget includes a general capital program of $673,546, which will be funded from a transfer from current year revenues of $198,546 and a transfer from the Casino Capital reserve of $475,000. Any capital projects designated from special reserves such as the Equipment Replacement Reserve and the CRP Reserve are in addition to these numbers. The five operating funds listed in the table below comprise the majority of the day-to-day operating activities of the City. The remaining four capital funds account for the financial resources that are used for the acquisition or construction of major physical assets and equipment.

10.0 GENERAL OPERATING BUDGET The General Operating Budget pays for core City services such as public works, policing, fire protection, corporate and community services, planning, and development services which are utilized across the community. The revenues to pay for these services are comprised of property taxes, as well as fees for licenses and permits, conditional and unconditional grants, rental income, interest earnings on investments, and a variety of other revenues. The 2017 preliminary budget for the general operating fund is $14,336,000 overall a 0.4% decrease versus the 2016 general operating budget. This amount is before capital and transfers to the various reserves included below.

2016 2017

Approved Preliminary Budget Positive % Change

Expenditures Budget Budget (Negative)

General Operating 14,390 14,336 54 0.4%

Solid Waste Operating 1,486 1,550 (64) -4.3%

Water Operating 1,284 1,322 (37) -2.9%

Sewer Operating 767 787 (20) -2.6%

Airport Operating 792 807 (16) -2.0%

Transit Operating 638 603 35 5.4%

Combined Operating Budgets 19,357 19,405 (48) -0.2%

City of Quesnel - Total Combined Budget Overview (in $000's)

'17 Budget vs. '16 Budget


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Note: The 2016 final budget includes capital carryforwards and 2016 surplus allocations in the transfer to/from own funds lines. Later in the budget 2017 process, these adjustments will be made to these lines.

2016 2017 Budget Net Change

Budget Preliminary Positive/(Negative) %

Revenue

Property Taxes 13,792,043 14,060,109 268,066 1.9%

Grants-in-lieu / 1% Tax 1,063,241 1,058,909 (4,332) -0.4%

Sale of Services 462,008 492,690 30,682 6.6%

Government Grants 1,506,119 1,558,339 52,220 3.5%

Services Provided to Other Governments 545,644 570,301 24,657 4.5%

Investment Income 225,000 225,000 - 0.0%

Other Revenue 406,566 389,822 (16,744) -4.1%

Transfer from Reserves 133,748 20,000 (113,748) -85.0%

Total Revenue 18,134,370 18,375,170 240,801 1.3%

-

Expenditures

General Government 2,348,145 2,269,591 78,554 3.3%

Protective Services 5,479,082 5,436,038 43,044 0.8%

Transportation (Public Works) 3,534,905 3,788,358 (253,453) -7.2%

Development Services and Planning 1,219,165 976,077 243,088 19.9%

Recreation and Cultural Services 1,184,437 1,273,092 (88,655) -7.5%

Cemetery 168,285 172,080 (3,795) -2.3%

Debt Servicing 456,336 421,176 35,160 7.7%

Transfer to Own funds 3,363,706 3,634,878 (271,172) -8.1%

Transfer to Solid Waste 380,311 403,882 (23,571) -6.2%

Total Expenditures 18,134,370 18,375,171 (240,800) -1.3%

General Operating Budget Summary


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10.1 Revenue

Property Taxes The preliminary budget recommended by the Financial Audit and Sustainability Committee calls for an increase in total tax revenue of 2.5%. The proposed framework has major industry and light industry tax amounts frozen at 2015. Residents will receive an increase of approximately $30.48 per $100,000 of assessment and commercial businesses will receive an increase of approximately $93 per $100,000 of assessment. 10.2 Key Revenue / Expenditure Items Most of the expenditure items are dealt with later in this report under the departmental reviews. Some key items not discussed at the departmental level include the following: Cariboo Regional District (CRD) Contributions to Services:

The Memorandums of Understanding (MOU’s) with the CRD were all renewed in 2015.

The Parks and Recreation service agreement with the Subregional Recreation (SRR) function of the CRD is included in General Revenue for $164,997. In reality, the net positive impact is approximately $57,000 to City residents, since those residents fund approximately 65% of the SRR budget.

As per our CUPE agreements, wages are up 1.5% in June 2016 and 1.5% in June 2017.

Staff salary increases are included in the budget at the same rate as the bargaining unit employees.

CRD Contributions Operating Capital

Fire Protection 211,960 35,000

Landfill 172,094 75,983

Recycling 154,299

Cemeteries 54,379

Transit/Handydart 62,724

Emergency Services 3,000

Library Maintenance 10,312

Vistor Centre 10,000

Parks and Recreation 164,997

843,766$ 110,983$


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11.0 WATER OPERATING FUND The City’s water operations are treated as a distinct operating entity, and as such are accounted for in a separate fund. The City’s Utility Department is responsible for water distribution and production functions, while the Finance Department administers the utility collection activities. 11.1 Revenue Sources The City’s Water Operating Fund is supported primarily through the City’s water user charges and frontage taxes. Parcel taxes have been used to pay for extensions to new areas. Council approved raising water utility fees by 5% in 2017 to continue building the reserve for future required capital replacements. At this point no increase to frontage taxes have been included in the budget 11.2 Expenditures The Water Operating Fund supports the Supply and Distribution Services and the Water Administration budget. Total operating expenditures for the water fund total $2,063,891 of which $742,388 represents a transfer to the surplus/capital program.



Revenue

Customer Billings 1,351,349 1,357,993 6,644 0%

Less: Discounts (102,504) (107,629) (5,125) 5%

Connection Charges / Custom Work 7,200 7,200 - 0%

Bulk Water 65,000 65,000 - 0%

Frontage Taxes 379,503 379,503 - 0%

Parcel Taxes 361,824 361,824 - 0%

Surplus FROM Reserves -

Total Revenue 2,062,372 2,063,891 1,519 0.1%

Expenditures

Administration 252,200 265,858 (13,658) -5%

Distribution 479,837 490,402 (10,565) -2%

Leak Detection 21,330 21,770 (440) -2%

Pump Houses 285,630 296,250 (10,620) -4%

Hydrants 43,960 44,960 (1,000) -2%

Bulk Water 12,670 13,880 (1,210) -10%

Debt Servicing 188,383 188,383 - 0%

Transfer to Water Surplus/Capital 778,362 742,388 35,974 5%


Water Operating Budget Summary


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12.0 SEWER OPERATING FUND Like water operations, the City’s sewer operations are treated as a distinct operating entity, and as such are accounted for in a separate fund. The City’s Utility Division of the Public Works and Engineering Department is responsible for wastewater collection, while Cariboo Pulp is responsible for wastewater treatment through a contract arrangement with the City (and the CRD for the Red Bluff Sewerage). The arrangement with Cariboo Pulp is lower cost than if the City had to build and maintain its own secondary treatment plant. The Finance Department administers the sewer utility collection activities. The sewer fund has reached a level of sustainability for the near future. Council approved no increase to the sewer utility rates for 2017. No increase to frontage taxes have been included in the budget. 12.1 Revenue Sources The City’s sewer operating fund is supported primarily by the City’s sewer user fees and frontage taxes. 12.2 Fund Expenditures

Sewer operating costs for 2017 are $1,238,774 including $451,750 for surplus/capital projects.


Budget Prelim. Budget Positive/(Negative) %

Revenue

Customer Billings 1,077,177 1,081,556 4,379 0%

Less: Discounts (78,060) (74,432) 3,628 -5%

Connection Charges / Custom Work / Other 15,000 15,000 - 0%

Frontage Taxes 216,649 216,649 - 0%

Surplus FROM Reserves - - - 0%

Total Revenue 1,230,766 1,238,773 8,007 0.7%

Expenditures

Administration 197,530 202,324 (4,794) -2%

Collection System 227,687 232,716 (5,029) -2%

Line Cleaning 55,290 56,450 (1,160) -2%

Treatment & Disposal 286,797 295,534 (8,737) -3%

Debt Servicing - - -

Transfer to Sewer Capital 463,462 451,750 11,712 3%


Sewer Operating Budget Summary


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13.0 SOLID WASTE OPERATING FUND The Solid Waste Operating Fund is responsible for garbage collection, both residential and commercial, the landfill operations, recycling depots and zero waste initiatives. 13.1 Revenue Sources The City’s solid waste operating fund receives funding from a variety of sources. Collection costs are covered by utility charges. The landfill costs and recycling costs are covered by taxation with the Cariboo Regional District contributing to these services based on population. 13.2 Fund Expenditures Solid Waste Operating costs for 2017 are $1,648,226.


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14.0 TRANSIT OPERATING FUND The Transit Fund is set up to administer all transit operations within the City of Quesnel. The primary service is the city wide and Red Bluff area fixed route bus service, and also includes a handiDart Service, which provides door-to-door service for the elderly and for those with a disability. Transit is one of the success stories for the City, with ridership increasing by an average of 11% per year since its re-introduction to Quesnel in 2001. However, Transit ridership decreased by 12% in 2011. This significant decrease triggered a service review that was completed in 2012. On November 18, 2013 a new schedule came into effect. Changes included the addition of several express trips between downtown and south Quesnel shopping areas and minor route adjustments on Routes 1, 2 and 3. Transit also provides weekly service to Nazko and Wells through partnership agreements that are based on full cost recovery. A full review of the transit system will be completed in 2016. 14.1 Revenue Sources The Quesnel Transit system is provided to the community by a partnership between the provincial crown corporation, B.C. Transit, the City of Quesnel, and the operating company, Five Five Transport. The City’s gross share of overall operating expenses is 57.1%, while B.C. Transit’s share is 42.9%. The City receives all revenue derived from the Transit operation. In addition the CRD supports transit by contributing $5,900 to Transit and $57,465 to handiDart. On April 1, 2010, a three zone transit fare system was introduced for handiDart. The main source of revenue for the Transit system is property taxation. This is done on a separate line on the tax bill and all funds raised are dedicated to Transit. 14.2 Fund Expenditures The total projected cost to operate the City’s transit system in 2017 is $603,430 with a net cost to the taxpayers of $377,206. The vast majority of these expenditures, $567,480, cover the contractor’s operating costs, which includes the leases for the buses. B.C. Transit is responsible for providing the necessary fleet equipment.


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Revenue

Transit Fares 115,000 128,500 13,500 12%

Nazko Contract 14,560 6,500 (8,060) -55%

Wells Contract 21,335 28,000 6,665 100%

Advertising/Misc Revenue 500 500 - 0%

Transit Property Taxes 373,250 377,206 3,956 1%

CRD Contribution 63,365 62,724 (641) -1%

From Surplus 50,000 - (50,000) -100%

Total Revenue 638,010 603,430 (34,580) -5%

Expenditures

Contract - BC Transit 586,250 567,480 18,770 3%

Other Expenses 51,760 35,950 15,810 31%

Total Expenditures 638,010 603,430 34,580 5%

Transit Operating Budget Summary


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15.0 AIRPORT OPERATING FUND The Airport Fund, which administers the financial operations of the Quesnel Regional Airport, is also treated as a distinct operating entity, and as such is accounted for in a separate fund. For 2016, the total airport-operating budget is $819,190 including $15,000 for capital and $12,000 to the airport capital reserves. The Airport Division of the Community Service department is responsible for airport operations, while the Finance Department assists with administering the revenue collection activities. 15.1 Revenue Sources The City’s airport fund is supported through passenger fees, landing fees, rental income, parking fees, aviation fuel sales and a property tax levy. Since the City assumed responsibility for airport operations in 1997 from Transport Canada, the airport fund has been operating at a deficit. For the first several years this deficit was eliminated by applying funds from its Airport Reserve fund. When this reserve was depleted in 2003 it became necessary to introduce a dedicated tax levy to balance the budget. The Quesnel airport receives no funding from the Cariboo Regional District. 15.2 Fund Expenditures The City’s airport operations are broken into the following categories: Administration, Equipment & Machinery, and Buildings & Grounds.



Revenue

Property Tax 237,835 201,230 (36,605) -15%

Rentals 66,025 69,250 3,225 5%

Concessions/Other 17,140 18,700 1,560 9%

Fuel Sales 280,250 320,000 39,750 14%

National Fees 202,250 210,000 7,750 4%

Transfer from Surplus/Reserves - - - 0%

Total Revenue 803,500 819,180 15,680 2.0%

Expenditures

Administration 122,525 117,935 4,590 4%

Aviation Fuel System 213,795 239,400 (25,605) -12%

Buildings & Grounds & Equipment 422,180 434,845 (12,665) -3%

Transfer to Airport Reserve 12,000 12,000 - 0%

Airport Capital 33,000 15,000 18,000 0%

Total Expenditures 803,500 819,180 (15,680) -2.0%

Airport Operating Budget Summary


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16.0 DEPARTMENTAL BUDGETS – Core City Services In developing the preliminary draft budget for 2017, city staff reviewed the 2016 budgeted and actual expenditures and estimated the revenues and expenditures anticipated for the coming year. 16.1 Legislative Services and Community Support The Legislative Services budget is a sub-component of the General Government Services budget. The majority of the costs in the Legislative Service’s budget are dedicated toward supporting the activities of the Mayor and Council. The functions of the department are to provide good government to the citizens of Quesnel through the development of policies, consideration of bylaws, budget approval, and appointment of statutory officials and the regional district representative. In addition to the above functions, the Mayor performs other duties which include, among other things: providing leadership for Council, performing various statutory duties, representing the City at local functions, and providing access to City government for the taxpayer.

Community Support The Community Support budget covers activities that are Council Initiatives and discretionary in nature. The rationale behind this is to help Council exercise closer oversight and scrutiny by grouping these items.


Operating Expenditures Budget Preliminary Positive/(Negative) %

INDEMNITIES 134,828 137,525 (2,697) -2%

EXECUTIVE ASSISTANT 38,050 38,983 (933) -2%

MEMBERSHIPS & SUBSCRIPTIONS 13,000 13,000 - 0%

TELEPHONE 1,500 1,500 - 0%

ADVERTISING 4,000 4,000 - 0%

PUBLIC RELATIONS / HOSTING 5,000 3,500 1,500 30%

KIDS CHRISTMAS PARTY - 1,500 (1,500) 0%

COUNCIL SUPPLIES 2,500 2,500 - 0%

COUNCIL TRAVEL & TRAINING 30,000 30,000 - 0%

COUNCIL COMMITTEES 10,000 10,000 - 0%

Total Expenditures 238,878 242,508 (3,630) -2%

FTE Allocation 0.5 0.5 -

Legislative Services - Budget Overview


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Please note that the above budget includes a carryforward from the 2016 budget. $10,000 was approved by Council for a First Nations Recognition Project in 2016 that will happen in 2017.

16.2 City Manager & Corporate Services The City Manager’s and Corporate Services budget represents the resources needed to provide administrative services to the organization and the community. The City Manager’s Office and the Corporate Services function is a department that provides services to City Council, the community, businesses, other agencies, and City staff. The following areas are represented within the City Manager and Corporate Services’ budget: General Administration, Finance, Human Resources, Technology, Communications and other Government Services, which includes such items as: legal, auditing, and other consulting fees.



INSURANCE 500 750 (250) -50%

TOURISM & MARKETING COMMITTEE - 5,000 (5,000) 0%

SENIOR CITIZENS PICNIC/CANADA DAY 2,500 2,500 - 0%

CITIZEN OF THE YEAR 2,500 2,500 - 0%

TWIN CITY PROJECTS 4,460 2,000 2,460 55%

PROMOTIONAL SUPPLIES 2,500 2,500 - 0%

SECONDARY SCHOOL BURSARY 1,600 1,600 - 0%

FIRST NATIONS COMMITTEE 5,000 15,000 (10,000) -200%

QUESNEL FOUNDATION CONTRACT 5,000 5,000 - 0%

COMM. SUPPORT - PROFESSIONAL RECRUITMENT - 5,000 (5,000) 0%

NORTH CARIBOO HIGHWAY RESCUE 12,250 12,250 - 0%

PUBLIC EVENTS AIRPORT - - - 0%

MISS QUESNEL SELF DEVELOPMENT 4,000 4,000 - 0%

QUESNEL SEARCH & RESCUE SOCIETY 12,250 12,250 - 0%

BAKER CREEK ENHANCEMENT SOCIETY 10,000 10,000 - 0%

ACCESSIBILITY BROCHURES & POSTERS - 500 (500) 0%

COUNCIL INITIATIVES -


Community Support - Budget Overview



DOWNTOWN BIA 63,000 64,000 (1,000) -2%

WEST QUESNEL B I A 40,000 40,000 - 0%

SOUTH QUESNEL B I A 80,000 80,000 - 0%


Note: These grants are funded by local service area taxes on commercial properties in the respective areas.

Business Improvement Area - Grants


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16.3 Community Services The Community Services Department contains such functions as recreation and leisure services, facility maintenance, museum and archives, and overseeing visitor information activities.



ADMINISTRATIVE 568,375 436,223 132,152 23%

CORPORATE COMMUNICATIONS 90,575 91,308 (732) -1%

WEBSITE - 6,732 (6,732) 0%

FINANCE 636,600 651,652 (15,052) -2%

NDIT INTERN 52,333 93,000 (40,667) -78%

INFORMATION REQUESTS 6,250 6,250 - 0%

PURCHASING DEPT 215,495 196,020 19,475 9%

HUMAN RESOURCES 191,200 191,300 (100) 0%

TECHNOLOGY 268,689 260,236 8,453 3%

DISASTER RECOVERY 4,900 4,900 - 0%

VIDEO SURVELLIANCE 8,500 6,000 2,500 0%

OTHER GOVERNMENT SERVICES 208,066 207,807 259 0%

ELECTIONS & REFERENDUMS - - - 0%

ADMIN FEES RECOVERY (564,404) (565,335) 931 0%

Total Expenditures 1,686,580 1,586,093 100,486 6%

FTE Allocation 14.00 14.00 -

Corporate Services - Budget Overview



CITY BUILDINGS 595,401 603,822 (8,421) -1%

COMMUNITY SERVICES 68,990 69,674 (684) -1%

TOURIST BUREAU 87,975 85,750 2,225 3%

DOWNTOWN WASHROOMS - 52,239 (52,239) 0%

MUSEUM 173,600 189,000 (15,400) -9%

Total Expenditures 925,966 1,000,485 (74,520) -8%

AIRPORT OPERATING 791,500 807,180 (15,680) -2%

TRANSIT OPERATING 638,010 603,430 34,580 5%

Total Community Services Operating - All Divisions 2,355,476 2,411,096 (71,020) -3.0%

FTE Allocation (not incl. bldg mtce) 5.92 5.92 (0.0)

Community Services - Budget Overview


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16.4 Planning & Development Services The Planning and Development Services contains such functions as building permits and inspections, code enforcement, bylaw enforcement, GIS mapping applications, community planning, and the review of development applications. The economic development department is now also included in this area.

Note the 2016 Budget included $150,000 for the Official Community Plan Process. This process will continue into 2017 and the remaining budget will be added as a carryforward to the 2017 budget once year end is closed.



GIS / MAPPING 32,300 33,344 (1,044) -3%

BUILDING INSPECTION 156,707 168,902 (12,195) -8%

BYLAW / ANIMAL CTRL 210,521 198,134 12,387 6%

PLANNING 414,837 224,641 190,196 46%

FAÇADE GRANT 40,000 20,000 20,000 50%

ECONOMIC DEVELOPMENT 143,303 140,642 2,661 2%

ECONOMIC DEVELOPMENT PROJECTS 317,750 287,700 30,050 9%

Total Expenditures 1,315,417 1,073,363 242,055 18%

FTE Allocation 6.00 6.00 - 0%

Planning & Development Services - Budget Overview


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16.5 Emergency Services The Quesnel Volunteer Fire Department is a composite department (a combination of career and volunteer fire fighters). Currently there are 5 career fire fighters and 31 volunteer fire fighters. The City has two firehalls, and one contract firehall which is located outside the municipality in the Red Bluff area. Fire Department services include fire suppression, special industrial rescue, fire prevention, training, public education, and disaster preparedness activities. The department’s service area is the City of Quesnel, as well as a portion of Electoral Area “A” within the Cariboo Regional District.



ADMINISTRATION 343,000 228,981 114,019 33%

VOLUNTEER SERVICES 60,700 62,950 (2,250) -4%

SUPPRESSION 63,250 64,750 (1,500) -2%

PREVENTION 81,730 83,685 (1,955) -2%

COMMUNICATION 8,000 8,250 (250) -3%

TRAINING 142,100 131,231 10,869 8%

FIRE TRAINING FACIILITY 7,550 7,550 - 0%

FIRE HALL MAINTENANCE 52,250 53,850 (1,600) -3%

VEHICLES 173,100 177,981 (4,881) -3%

SPECIAL RESCUE 9,000 9,000 - 0%

EMERGENCY MEASURES 18,300 18,300 - 0%

Total Expenditures 958,980 846,528 112,452 12%

FTE Allocation (not incl. Volunteers) 5.00 4.00 (1.0) -20%

Emergency Fire Services - Budget Overview


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16.6 RCMP This section of the budget represents the costs of contracting for police services with the Royal Canadian Mounted Police (RCMP). It also covers the costs for Community Policing and Victims Assistance. The Municipality picks up 70% of the fully loaded cost of the police officers. We are maintaining the authorized complement of 21 RCMP officers.

NOTE: The building maintenance for the RCMP and CPAC building are shown above to indicate the full cost of providing policing services. In reality, they are managed by our facilities manager and remain his budget responsibility along with other city buildings.



RCMP OPERATIONS 3,673,583 3,748,732 (75,149) -2%

COMMUNITY POLICING 56,295 54,366 1,929 3%

VICTIMS ASSISTANCE 102,682 105,543 (2,861) -3%

BUILDING MAINTENANCE - DETACHMENT 224,674 232,532 (7,858) -3%

BUILDING MAINTENANCE - CPAC 10,600 11,150 (550) -5%

Total Expenditures 4,067,834 4,152,323 (84,489) -2%

Staffing Allocation - Muncipal FTE's 14.80 14.80 - 0%

Staffing Allocation - Community Policing 0.50 0.50 - 0%

Staffing Allocation - Police Officers, Municipal 21.00 21.00 - 0%

RCMP Quesnel Detachment - Budget Overview


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16.7 Public Works & Engineering



FLOOD CONTROL 5,570 5,570 - 0%

PROTECTION TO PERSONS 79,470 64,580 14,890 19%

ADMINISTRATION 436,807 449,264 (12,457) -3%

GENERAL EQUIPMENT 120,770 188,570 (67,800) -56%

SHOP & YARD 233,733 231,749 1,984 1%

OTHER SHOPS & OFFICES 21,965 22,725 (760) -3%

STREET MAINTENANCE 469,780 481,000 (11,220) -2%

ASPHALT PATCHING 207,004 211,290 (4,286) -2%

DITCHING 11,670 11,910 (240) -2%

DUST SUPPRESSENT 36,235 36,960 (725) -2%

WINTER SHIFT WORK 150,648 182,415 (31,767) -21%

STREET CLEANING 200,469 204,826 (4,357) -2%

SNOW REMOVAL 447,528 543,559 (96,031) -21%

DRIVEWAY ENTRANCE CLEARING 40,145 48,840 (8,696) -22%

SANDING 185,755 225,186 (39,432) -21%

SIDEWALKS 71,289 72,920 (1,631) -2%

LEGION MEMORIAL CENOTAPH 1,935 500 1,435 74%

STORM SEWERS 63,458 64,845 (1,387) -2%

DRAGON LAKE 15,410 15,750 (340) -2%

BRIDGE MAINTENANCE 52,800 54,185 (1,385) -3%

STREET LIGHTING 335,470 342,200 (6,730) -2%

TRAFFIC CONTROL 120,765 123,355 (2,590) -2%

PRE-PROJECT PLANNING 34,302 35,131 (828) -2%

ENVIRONMENTAL COMMITTEE 26,520 - 26,520 100%

CEMETERIES 121,960 124,730 (2,770) -2%

CEMETERY - BURIALS 46,325 47,350 (1,025) -2%

PARKS AND PLAYGROUND 380,770 388,955 (8,185) -2%

PIONEER & COMMEMORATIVE TREES 5,055 5,165 (110) -2%

INVASIVE PLANT CONTROL 33,396 33,997 (601) -2%

WF TIMBER PARK 70,770 72,330 (1,560) -2%

LEBOURDAIS PARK 122,526 125,300 (2,774) -2%

CARIBOO FIELDS 39,383 40,270 (887) -2%

PUBLIC SERVICE 68,540 69,615 (1,075) -2%

CITY BEAUTIFICATION 169,310 173,115 (3,805) -2%

SPRAY PARK 8,040 8,234 (194) -2%

RIVERFRONT TRAIL 38,398 39,265 (867) -2%

BALL PARKS 39,055 39,930 (875) -2%

Total Operating - General Public Works 4,513,027 4,785,587 (272,560) -6.0%

WQ LAND STABILITY (operations only) 217,050 207,180 9,870 5%

WATER OPERATING 1,284,010 1,321,503 (37,493) -3%

SEWER OPERATING 767,304 787,024 (19,720) -3%

Total Public Works Operating - All Divisions 6,781,391 7,101,294 (319,903) -4.7%

Staffing Allocation - Muncipal FTE's 53.90 54.90 1.0 2%

Note: Included in the costs above are an allocation of $312,120 for our equipment reserve

Public Works & Engineering - Budget Overview


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17.0 RESERVES The City maintains several reserves for its operations, and these funds form an essential part of sound financial management. The funds are set aside for both planned and unplanned future expenses, primarily future capital works. The City has a number of reserves for various functions. Some reserves are statutory including: Development Cost Charges, City property sales, Tax Sale, General Capital and the Capital Reinvestment funds. Other reserves are to take care of recognized future needs on a proactive basis, such as the Landfill Closure reserve account, and Capital Equipment Replacement reserves. The chart below highlights these reserve allocations.

17.1 Surplus Surplus funds are important and required for a variety of reasons.

Surplus funds fund expenditures until major revenue collection occurs (property taxes/utilities).

Surplus funds form a contingency account for unbudgeted emergencies or unusual expenses.

Currently our general surplus (including allocated surpluses) is approximately 15% of our general operating budget. 18.0 DEBT FINANCING No new debentures were entered into in 2016.


Transfers Budget Preliminary Positive/(Negative) %

P/W YARD RELOCATION 50,000 85,000 (35,000) -70%

GENERAL CAPITAL - from taxation 164,064 213,546 (49,482) -30%

GENERAL CAPITAL - contributions/carryforwards - - -

INTEREST TO RESERVES 175,000 200,000 (25,000) -14%

FIRE CAP. RESERVE 85,000 85,000 - 0%

FIRE TRAINING FACILITY 5,000 5,000 - 0%

CARBON OFFSET FUND - - -

TAX STABILIZATION RESERVE - - -

TAX LEVY TO CRP RESERVE 1,757,500 1,882,500 (125,000) -7%

SCPG TO CRP RESERVE 387,500 424,190 (36,690) -9%

NEW DEAL - COMMUNITY WORKS 474,642 474,642 - 0%

CEMETERY CAPITAL - CRD/CITY - - -

TRANSFER TO EQUIPMENT FUND 306,000 312,120 (6,120) -2%

MUSEUM RESERVE 8,000 8,000 - 0%

WEST QUESNEL LAND STABILITY RESERVE 257,000 257,000 - 0%

Total Transfers to Reserves 3,669,706 3,946,998 (277,292) -8%

CAP TRANS FROM CASINO FUND 575,000 475,000 100,000 17%

Continuing Transfers to Capital Funds - Budget Overview


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The following table summarizes the debt payments from the general, water, and sewer operating funds. The debt payment totals include principal and interest payments.

18.1 Current Debt Status As of December 31, 2016 the City of Quesnel has the following outstanding debenture balances, all through the Municipal Finance Authority:

General Fund Debt $5,023,000 Water Fund Debt $1,015,000 Sewer Fund Debt $ 0

Total Debenture Debt $6,038,000

At the beginning of 2015 our total debenture debt was $6,625,000. Principal payments and actuarial adjustments during the year totaled $587,000. 19.0 CAPITAL EXPENDITURE PROGRAM Capital expenditures are made to purchase, develop, and renovate assets that support City services and whose lives extend beyond one year. What the City spends on these activities forms the City’s capital funding requirement. On January 17th staff reviewed the 5 year capital plan with Council. Capital projects related to the City’s water system are funded through the water fund. Projects related to the City’s sewer system are funded through the sewer fund. The City’s water and sewer utilities charge user fees, and these fees are intended to cover the full cost of these respective functions. All other capital expenditures are funded through the general operating budget fund, including the annual top-up from the Casino reserve, from special reserves which have been created in the past, and from the Capital Replacement reserve. Other revenue, such as government grants and Development Cost Charges reduce the City’s funding requirements from general revenue.



GENERAL DEBT

Fire Truck Due Date: 2029 45,048 45,048 - 0%

City Hall Due Date: 2030 268,766 268,766 - 0%

Johnston Bridge Due Date: 2019 133,023 97,863 35,160 26%

TOTAL DEBT SERVICING 446,836 411,676 35,160

BANK & INTEREST CHARGES 9,500 9,500 - 0%

WATER DEBT Due Date: 2020 188,385 188,385 - 0%

SEWER DEBT - - - 0%

Total Debt Servicing Costs 644,721 609,561 35,160 5%

Percentage of Total Operating Costs 3% 3%

Debt Servicing Summary - Budget Overview


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20.0 CONCLUSION The preliminary budget reflects a concerted effort on the part of staff to maintain existing levels of service within the constraints of our revenue resources, except where specifically noted for Council’s attention. The Financial Sustainability and Audit Committee has reviewed and recommends this budget to Council.


Supplemental items for Budget 2017

STAFF

PRIORITY Cost Other Funding Tax Required Ongoing/One Time

Already Approved and built into budget

Gymnastics/Soccer Building Design (Gymanstics reserve) 178,000 178,000 Less $'s spent in 2016

Destination BC Coop Marketing 5,000 5,000 One Time

183,000 178,000 5,000

NEW

Vests - Bylaw - undervests 4,500 4,500 One Time till Replacements needed

Waste Reduction Initiatives 50,000 50,000 One Time

Student Positions - Water Ambassadors/Fire Assistant15,000 15,000 Trial - if Successful continue

Branding Implementation 50,000 50,000 One Time

Council Initiatives 50,000 50,000 Ongoing

Fleet Review (Gas Tax) 30,000 30,000 - One Time

Canada Day

SkyFest

Emergency Detachment RCMP 1,800 1,800 $200/month - Ongoing

Physician Recruitment 5,000 5,000 Carryforward 2016 funds for Celebration

Total Supplemental 206,300 85,000 121,300

Operating Budget

Page 38 of 49

OPERATING BUDGET 2017 – Additional Information

New Supplemental Request – Student Positions – 3 requested - $15,000

These positions would be dependent on potential Funding from the Canada Summer Jobs Grant

Program. The funding request from the City would be for the City’s portion of wages (the grant covers

50% of minimum wage) and for materials for the water ambassadors.

This is a way to support youth in our community by creating job experience opportunities throughout

the City. The intent for 2017 would be to be a trial year, if successful, would look for future

opportunities each year for students.

Water Ambassadors – May to August 2017

The intent behind this initiative is to hire 2 students (preferably university age) to act as Water

Ambassadors for the City of Quesnel. The primary duties behind these positions are as follows:

• To visit residential properties in Quesnel (primarily focused on the WQLS area) to ensure

residents are following sprinkling rules that currently exist

• To ensure that surface drainage on these properties is directed into the appropriate storm

sewer system

• To research and distribute information about xeriscaping concepts to residents

• To develop an understanding of our storm drainage systems in West Quesnel to be able to

provide information to residents

• If time permits, to do this same work in other locations within the City.

Requirements:

• We would prefer to have two students, from a safety perspective it’s preferable to have people

who work away from our regular forces to be paired up.

• They will require the use of one vehicle between the two of them.

• Computer skills will be required to research and distribute information about xeriscaping.

Fire Hall Assistant – July/August 2017

The vision for this position is that we would target those high school students entering into grade 12

that are currently involved in the Junior Fire Fighter program and that have an interest in a Fire Service

career or on a volunteer level.

Supplemental Item – Zero Waste Reduction Activities

At this point staff suggests budgeting for $50,000 from gas tax funds again for potential zero waste

reduction activities. Discussion needs to occur, including the regional district, on how best to move

forward with these types of initiatives, perhaps hire a consultant to come review our system and give

suggestions.


Supplemental Item – Fleet Review

The intent of the review would be to review the following areas:

• Procurement Process and policy (including vehicle specifications)

• Replacement Policy review – including vehicle and equipment replacement schedules

• Lifecycle costing

• Greener fleet options

• Fleet downtime

• Fleet utilization (including in activity)

• Fuel Management

• Operating costs – repairs, parts management, warranty programs

• Records and documentation

• Maintenance management

• Preventative Maintenance Programs (PVI)

• Operators feedback

• Staff training

• Insurance Costs


West Quesnel Land Stability (“WQLS”) Operating Budget for 2017…………………..……….$207,180

Financial Break-down:

Personnel $6,880

Contract $190,000

Equipment $1,645

Electricity $8,655

This budget was established to provide funds for routine operating and maintenance of the dewatering

systems, data collection/analysis/reporting and support services associated with the WQLS Project.

2016 was not a routine year as Public Works staff provided project support throughout the year (In-

house expenses cannot be claimed through the New Build Canada grant). As Phase 2 of this Project will

continue into 2017 Public Works staff will provide continued project support as required, which is

charged to this account.

In 2018 the budget for this task can be adjusted to meet the actual required scope of the work to

operate, maintain and monitor the systems in place. In 2015 the 17 pumping wells produced over 19

million litres of water and the 14 horizontal drain sites produced 98 million litres of water. The total

cumulative flows since installation from all wells and drains to the end of 2015 was 529,628,263 litres of

water. The total cumulative horizontal movement from 1998 to 2015 is 684 millimetres.


Page 1 of 3

To: Finance and Sustainability Audit Committee

From: Economic Development Officer

Subject: City of Quesnel Brand Implementation Plan

PURPOSE

The purpose of this report is to provide the Financial Sustainability Audit Committee an overview of brand implementation and associated costs related to the supplemental budget item for Brand Implementation.

SUMMARY

There are two approaches to brand implementation:

o Revolution: All brand identifiers change overnight (high cost)

o Evolution: Brand identifiers change over time, with a few significant immediate changes (more cost friendly). This report assumes this approach.

Branded signage, materials, and documents have been inventoried.

Signage

Some signage should be replaced or removed immediately, including in Council Chambers, the entrance of City Hall, outdoor signage at City Hall, and various City of Quesnel information signs along the highway corridor.

Some signage may be removed completely, including the BC Hydro sign at Hwy 97 and Hwy 20

Some signage may remain for now, and be changed at end of life, or at the time of an anticipated upcoming project. Eg. Riverfront Trail signage, signage at Heritage Corner

Other Branded Materials

Immediate: City vehicle decals, Council and Staff Name Plates in Council Chambers, Council Name Tags, City Pins, City Flags, City of Quesnel pull-up banners, City of Quesnel sandwich boards (eg. Notice of Filming)

Printed Materials

Immediate: Letterhead (digital design), envelopes, Q-City News (February) In 2017: Travel Guide, Museum Brochure, City of Quesnel brochure, Relocation Guide, Community

Profile, Q-City Insider At time of reprint: Tourism flat sheets, Pioneer Cemetery brochure, Chinese Memorial Cairn guide,

Event Guide, other tourism brochures Discontinued: City of Quesnel pin card

QUESNELCITY OF


Report Date: January 5, 2017Meeting Date: January 11, 2017

FSAC

Branding Implementation Report - Economic Development Office... Page 42 of 49

Page 2 of 3

Other documents

Immediate: Council Report templates, Council Clippings, Business Licenses, forms, Development Services checklists, Building Permits, etc.

Electronic and Online

Immediate: Change of colour and logo on City website, City of Quesnel and Tourism Facebook pages, twitter accounts, VADIM

In 2017: Full City website redesign, update logo on partner websites, iCity, QCity Map, Quesnel Civic Info page

Symbolic Actions

The Brand Communications Plan recommends taking some symbolic actions in line with the Brand Strategy. These may be immediate, or at some time in 2017.

Some actions already planned or underway may be considered symbolic actions, such as new playgrounds, and accessibility initiatives, Skateboard Park planning with youth involvement, and creating video with brand messaging to promote the community.

Additional actions suggested in the Communications Plan for consideration include: A Dragon’s Den initiative for young entrepreneurs, install new gateway signage, repaint the Gold Pan.

The Communications plan will be referred to the Executive Committee for further consideration regarding which symbolic actions to implement immediately, or in future years.

STRATEGIC OBJECTIVE

Reposition the community image through a marketing and rebranding initiative.

FINANCIAL IMPLICATIONS

Some costs of implementation will be covered by grants already received, or in the application process (website, video, brochures), other costs will be covered through other City budgets as they are due for regularly scheduled replacement/purchase (City pins, stationery, flags).

A detailed list of signs, branded materials, printed materials, other documents, and electronic platforms is attached. A summary of additional required budget is below:

Signage $3,000

Branded materials $13,000

Printed materials $6,000

Other documents $0

Electronic platforms $0

Symbolic actions $28,000

Total $50,000

ATTACHMENTS

Brand Inventory Detail


Page 3 of 3

OPTIONS

1. Approve the Supplementary Budget item for Brand Implementation based on the information received in this report.

2. Direct staff to further prioritize items for Brand Implementation to decrease the Supplementary budget request.

3. Direct staff to include other symbolic actions for Brand Implementation to increase the Supplementary budget request.

RECOMMENDATION

THAT the Financial Sustainability and Audit Committee recommend to Council a supplementary budget allocation of $50,000 for Brand Implementation.


Page 1 of 5

To: City Manager

From: Director of Community Services

Subject: Airport Revenue Options

PURPOSE

The purpose of this report is to provide information to the Financial Sustainability and Audit Committee regarding fees and charges at the airport and other potential sources of revenue to make the airport more financially sustainable.

REVENUE SOURCES

The airport presently generates revenue primarily from the following areas:

o Aviation fees in the form of Landing Fees, Terminal Fees, and Passenger Fees make up approximately 55% of non-tax revenue ($210,000)

o Leases of land and buildings, including agriculture leases, aircraft parking, building leases/rentals, and lease of land for private hangers make up approximately 22% of non-tax revenue ($81,750)

o Fuel sale profits make up approximately 21% of non-tax revenue ($80,600).

To increase revenue from current sources the City would either need to increase fees and charges without a corresponding decrease in use, and/or increase usage.

Additional fees and charges or new revenue sources could also increase airport revenues provided it did not result in a corresponding decrease in activity at the airport.

AVIATION FEES

Presently the airport has three forms of aviation fees that it applies to aircraft and commercial airlines using the airport.

o Landing Fees apply to all turbine powered aircraft except Central Mountain Air Flights and Medivac flights that land at the airport. The fees are established in the City’s Fees and Charges bylaw and are comparable to other similar sized airports. ($11,000)

o Terminal Fees apply to larger aircraft, such as charters, excluding Central Mountain Air, who land at the airport. Terminal fees are in addition to landing fees. The fees are established in the City’s Fees and Charges bylaw and are comparable to other similar sized airports. ($1,000)

o Passenger Fees apply to Central Mountain Air flights and are contained in the 5 year agreement with CMA for their use of the Quesnel Airport. ($198,000)

QUESNEL CITY OF


Report Date: January 6, 2017 Meeting Date: January 11, 2017 (FSAC)

FSAC- January 11, 2017

Airport Options Report - Director Norburn to Report ~LATE IT... Page 45 of 49

Page 2 of 5

Landing Fees and Terminal Fees can be increased by amending the Fees and Charges Bylaw at any time at the discretion of Council.

Passenger Fees can be renegotiated with CMA when the current agreement expires October 31, 2019.

The current fees charged are consistent with fees charged at other airports and while they could be increased modestly, substantially increasing fees could result in the Quesnel Airport no longer being competitive with other similar sized airports which could negatively impact air traffic and revenues.

A modest increase in Landing and Terminal Fees would have minimal impact on airport revenues. For example, an increase of these fees by 10% would generate only $1,200 in additional revenues.

Fees could be negotiated with Central Mountain Air when their contract expires in 2019 however in the current economic climate it is reasonable to assume that a significant increase in fees may impact the viability of the carrier to provide service to Quesnel.

An increase in air traffic would result in increased revenue without an increase in fees. It should be noted that air traffic at the airport is impacted by a wide range of factors including the state of the local economy, our proximity to other airports and geographic location in the Province, the viability and sustainability of the commercial aviation industry as a whole, and numerous other factors, most of which are outside the control of the airport and the City.

Currently the City does not charge an Airport Improvement Fee. Implementing this fee is an option that could generate additional revenue for capital projects.

AIRPORT IMPROVEMENT FEE

An Airport Improvement Fee (AIF) is a per passenger fee that is collected by a commercial airline on behalf of the airport for capital improvements to the airport.

AIF’s are administered under a Memorandum of Agreement between the Air Transport Association of Canada (ATAC) and participating airports and air carriers.

In order to implement an AIF at the Quesnel Airport the City would need to become party to the Agreement or, in the alternative, collect the fee from passengers without the assistance of the airline.

To become party to the Agreement, the City would need to apply to the ATAC and adhere to the terms of the Agreement.

Under the terms of the Agreement the City would need to provide a rationale for the implementation of the fee with a program proposal and business plan that includes costs, scope of work and construction period for each project contained within the program and would need to consult with the airline carrier(s) and obtain their support to implement the program. Ongoing consultation with the airline carrier(s) with regard to how the funds are spent is also required.

The Airline would be entitled to retain a portion of the fees collected (8%), as provided for in the Agreement, to administer the Program.

Airport Improvement Fees are common at large National Airports that have multiple carriers and international flights. Some regional airports have Airport Improvement Fees, such as Smithers, Terrace, and Fort St. John but these airports all have multiple carriers and considerably more air traffic than Quesnel.

The majority of Regional Airports, including Williams Lake, Dawson Creek, Prince Rupert, Fort Nelson, and Trail do not have AIFs.

Airport Improvement Fees must be at least $5 per departing passenger. Fees range from $5 in Vancouver to $30 in Calgary and Edmonton.


Page 3 of 5

An AIF in Quesnel of $10 per departing passenger could be expected to generate approximately $80,000 per year, less administration fees charged by the airline of approximately $6,400, for a net revenue of approximately $73,600/year.

The funds collected would need to be applied to the capital projects identified in the Program.

LEASES AND SALE OF AIRPORT LANDS

Presently the City has a number of different types of leases or rental agreements at the airport.

o Agriculture Leases – These agreements are competitively bid for terms of five years. They provide the successful proponent with the rights to collect hay from fields on the airport property.

o Land Leases – The City has multi-year lease agreements with tenants who have constructed, or plan to construct buildings, primarily for airside hangers on airport property.

o Building Leases – The City leases space within buildings as well as leasing out entire auxiliary buildings on the site. These agreements are multi-year and the rates charged are based on fair and reasonable market value.

o Airport Parking Fees – The City charges fees to pilots who park their planes on airport property. These fees are established in the Master Fees Bylaw. The fees charged at the Quesnel Airport are comparable to other similar sized regional airports.

Agriculture leases are already competitively bid. The most recent lease received two bids, both of which were lower than the previous agreement.

Lease rates at the airport are commercially competitive and have inflationary increases built into them. Most current agreements are long term and have renewal clauses stipulating the same terms and conditions so there is little opportunity to generate additional revenue from existing leases.

Aircraft parking fees could be increased by amending the Bylaw at the discretion of Council however it isn’t likely to generate significant additional income. Increasing fees by 25% would generate an additional $3,125, assuming it didn’t result in a decrease in the number of planes parking at the airport.

Charging a differential fee for City/Non City residents/businesses for aircraft parking could be implemented at the airport although it wouldn’t result in a significant increase in revenue and would require increased staff time to administer.

If fees are increased substantially for aircraft parking it is possible that some pilots will make alternate parking arrangements for their aircraft which could result in reduced revenues.

In the past, the City has been reluctant to sell lands at the airport, opting instead for long term leases. While long term leases provide an ongoing source of revenue to the City, there have not been many new leases in recent years and none that have resulted in commercial development on airport property.

The City may wish to consider the option of making some land available for sale at the airport, particularly in situations where the development has the potential to increase activity at the airport.

FUEL SALES

The City expects to generate approximately $80,600 in profit from fuel sales at the airport in 2017.

Fuel pricing at the airport is competitive with other airports in the area.

Increasing fuel prices above competitive levels will likely result in decreased fuel sales.


Page 4 of 5

Staff have been very aggressive in securing competitive pricing for fuel purchases which has allowed us to maintain competitive pricing with favourable profit margins.

Fuel sale profits are contingent on the amount of air traffic at the airport, our fuel prices in relation to other airports in the region, and our bulk cost for fuel.

OTHER REVENUE SOURCES

Presently the Quesnel airport does not benefit from revenue generated by secondary services provided to travellers, such as restaurants, car rentals, and retail operations.

In order to make these services economically viable, air traffic will need to increase significantly at the airport.

Paid parking can be a significant source of revenue for many airports. The financial investment to implement the infrastructure would take a year or more to recover before paid parking would be profitable for the City. Paid parking can be expected to result in some public backlash and may negatively impact the use of the airport.

Staff recognize that increased activity at the airport will result in increased revenue and to that end have aggressively followed up with leads to attract flight schools, rental car companies, and new airline carriers and have worked with various parties who have expressed interest in developing land at the airport. Unfortunately, most of the factors that affect the business decisions of these third parties are beyond the influence of the airport and the City.

EXTERNAL IMPACTS

When considering options related to increasing rates or implementing new fees and charges, it is important to consider the difficult balance the Quesnel Airport faces in trying to be more financially sustainable without negatively impacting existing services.

In 2016, Hawk Air, a regional airline owned by the parent company that owns Central Mountain Air, declared bankruptcy and ceased operations.

There is presently a shortage in the airline industry for pilots and crew members. CMA cancelled a number of flights in December due to staffing issues.

Quesnel is located between two other airports to the north and south, including the Prince George Airport that has international flights and major carriers like Air Canada and Westjet.

SUMMARY

Air traffic at the Quesnel Airport is primarily driven by external factors that are largely beyond the control of the Airport and the City.

Increases in aviation fees and lease rates may generate additional revenue however there is some risk that any increase in fees may result in a corresponding decrease in airport use. Increases in fees should be carefully considered before implementation with regard to their potential impact on airport use.

Implementing a differential fee for City/Non City residents for aircraft parking at the Airport is possible. While unlikely to generate significant additional revenue, it may be seen as an important step in addressing a tax equity issue.

An Airport Improvement Fee is possible but will require consultation with the airline carrier and the ATAC before being implemented.

The best way to increase fuel sale revenue, aside from increasing traffic at the Airport, is to continue to aggressively pursue competitive pricing for bulk fuel purchases, enabling the City to increase profit margins on sales while continuing to maintain competitive fuel pricing.


Page 5 of 5

The City may wish to consider the option of selling airport lands at market value to stimulate development at the airport under certain circumstances.

Staff will continue to follow up with leads to attract aviation and secondary businesses and developments to the Airport in an effort to increase activity at the Airport.


Documents

CITY OF QUESNEL