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May 16 – 17, 2019
City of Vancouver Investor Presentation
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Disclaimer
• This presentation and subsequent discussion, contains certain forward-looking information, forecasts, projections, goals and strategies (the “forward-looking information”) with respect to revenues, funding, expenses, the financial condition, results of operation and business of the City of Vancouver (the “City”). This forward-looking information represents the City’s expectations or beliefs concerning future events and involves known and unknown risks and uncertainty that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance cannot be relied on as a guide to future performance. This material is for information purposes only.
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High quality credit ratings
Thriving and robust economy
Stable revenue sources and property tax base
Strong fiscal management
Commitment to regular issuance
Investment Proposition
Aaa (stable) AAA (stable)
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Maintaining Highest Quality Credit Rating
May 09, 2019 • “The affirmation of the Aaa ratings is based
on positive operating outcomes which are supported by reliable revenues and a large, diverse economic base.”
• “The ratings also reflect the city's high levels of liquidity.”
• “The stable outlook reflects Moody’s assumption of continued strong fiscal performance over the next 18-24 months from predictable sources of income, and continued excellent levels of liquidity and strong debt affordability.”
February 07, 2019 • “Continuity of sound management under new
government and steady, but milder, economic growth will support creditworthiness.…”
• “The stable outlook reflects our assumption that a solid economy and comprehensive fiscal planning will facilitate operating and after-capital fiscal surpluses over the next two year.”
• “We believe that Vancouver's detailed long-term financial planning, as well as its experienced financial management team, will provide a solid fiscal policy anchor as the city's new government looks to implement its policy agenda.”
Economy
Thriving and Robust Economy 3rd largest metropolitan in Canada • Metro Vancouver ~2.6 million residents (~53% of province) • City of Vancouver ~ 670,000 residents
Global Gateway & Regional Transport Hub • 3rd largest port in North America (#1 in Canada) • 2nd busiest airport in Canada
Diverse industry sectors • 3rd largest film production in North America • Growing hub for technology & digital industries • Tourism centre
Globally ranked one of the most livable cities • Economist: Liveability Ranking #3 • Mercer: Quality of Living Survey #5
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Metro Vancouver – Positive Economic Indicators
3.9% 4.2%
4.0%
4.4%
2.5% 2.5% 2.4% 2.3% 2.2% 2.4%
2.6%
0.9% 1.1%
3.0%
2.1% 1.9%
2.1%
1.7% 1.6% 1.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F
Metro Vancouver Canada Real GDP Growth (%)
5.9% 5.9%
5.4%
4.6% 4.3% 4.3%
4.5% 4.5% 4.5% 4.5%
6.9% 6.9% 7.0%
6.3%
5.8% 5.6% 5.5% 5.5% 5.5% 5.5%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F
Unemployment (%)
1.5%
1.0%
1.3%
1.1% 1.2% 1.2%
1.1%
1.3% 1.4%
1.5%
1.1%
0.9% 1.0%
1.2% 1.3%
1.1% 1.1% 1.1% 1.1% 1.1%
0.0%
0.5%
1.0%
1.5%
2.0%
2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F
Population Growth (%)
1.1% 1.2%
2.2% 2.2%
3.1%
2.4%
2.0% 2.0% 2.0% 2.0%
1.9%
1.1% 1.4%
1.6%
2.4% 2.3% 2.0% 2.0% 2.0% 2.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2014 2015 2016 2017 2018 2019F 2020F 2021F 2020F 2021F
CPI (%)
Source: The Conference Board of Canada Winter 2019; Statistics Canada; CMHC Housing Time Series Database
• Implementation of housing cooling measures by the provincial and federal governments, together with rising interest rates, has led to a slowdown in Vancouver’s housing market.
• Property Tax Revenue Stability - The City has flexibility to adjust mill rates in order to ensure fairly stable property tax revenues in a changing price environment.
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City of Vancouver Greenest City Action Plan
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Greenest City Action Plan
GREENEST CITY ACTION PLAN
3 HIGH-LEVEL OBJECTIVES
GOAL AREAS 10 TARGET
METRICS 17
“Vancouver will be the greenest city in the world by 2020”
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Greenest City Framework
ZERO CARBON
Green Buildings
Green Transportation
Zero Waste
Access to Nature
Clean Water
Local Food
Clean Air
ZERO WASTE
HEALTHY ECOSYSTEMS
3 high-level objectives goal areas 10
Neighbourhood Energy Strategy
Zero Emission Buildings Plan Transportation 2040
Vancouver Food Strategy
Healthy City Strategy Climate Change Adaptation Strategy Rain City Strategy
Electric Vehicle Ecosystem Strategy
A FAMILY OF STRATEGIES
GREENEST CITY ACTION PLAN 11
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2018 Greenest City Success
AWARDS
Source: City of Vancouver Greenest City 2020 Action Plan, which can be found at: vancouver.ca/GreenestCityActionPlan
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Task Force for Climate-Related Financial Disclosures (“TFCD”)
Starting this year, the City is including climate-related financial disclosures in its annual financial report. This disclosure will align or partially align with TCFD recommendations
TCFD Recommended Climate Related Disclosures City of Vancouver Disclosures
Governance • Governance on risks and opportunities
Strategy
• Impacts to business, strategy and financial planning where material
Risk Management
• Disclose how risk is identified, assessed and managed
Metrics & Targets
• Disclose metrics & targets to assess and manage risks and opportunities
• Vancouver’s Climate Strategies and Governance (page 32 & 33, 2018 CoV Annual Report)
• Climate Risk and Adaptation in Vancouver (page 34 & 35 2018 CoV Annual Report)
• 2019-2022 Capital Plan
• Climate Metrics and Targets in Vancouver (page 37 2018 CoV Annual Report)
• Climate Risk and Adaptation in Vancouver (page 34 & 35 2018 CoV Annual Report)
• 2019-2022 Capital Plan
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Strong Fiscal Management
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Long-term Capital Planning
The 2019-2022 Capital Plan was approved in Dec 2018
Strategic choices about investments
Every 4 years
Identifies objectives to be achieved
(may include specific projects)
Assigns order-of-magnitude funding
10-Year Capital Strategic
Outlook
Shorter-term priorities
Every 4 years
Identifies program priorities and specific
projects to be completed
Assigns specific funding level
4-Year
Capital Plan
Project approval
Every year
Provides detailed information and
plans about projects to be completed
Assigns fixed funding level
1-Year Capital Budget
(updated quarterly) + 4-year forecast
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Strong Liquidity Position
Consolidated Reserves Balance as of 31 December 2018: $1,177.4 million
“strong liquidity profile”
“exceptional liquidity”
339 400 424 437 471 509
637 676 761
825 844
995
1,177
0
200
400
600
800
1000
1200Consolidated Reserves
12 year cumulative growth of $838M (+240%)
$ millions
- Excludes Sinking Fund
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“The City’s budget supports a livable, sustainable and equitable city”…..Sadhu Johnson, City Manager
2019 OPERATING REVENUES $1,516 MILLION
2019 OPERATING EXPENSES $1,516 MILLION Statutory requirement to balance budget
• Align property tax and fee increases with inflation while maintaining service standard
• Property tax increase • 2019 – 4.50% • 2018 – 3.90% • 2017 – 3.40% • 2016 – 2.02% • 2015 – 2.46%
• New investments to support a growing city: • Equity, safety and livability • Housing affordability • Arts & culture • Mental health and addiction issues
• Transit and social services are federal
and provincial responsibilities
• Major owner of land & other assets • Land – Over $12B (assessed value) • Other capital assets – over $20B
(replacement value)
Source: 2019 Budget
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2019 – 2022 Capital Plan - $2.8 billion
Source: 2019-2022 Capital Plan, City of Vancouver
Under this Capital Plan, the City can issue new debentures of up to $495M over the next 4 years.
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Financing and Debt Profile
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Legislative Framework
Vancouver Charter • Debt financing only for capital infrastructure
• City Council establishes limits for public utilities
• Electorate approves other borrowing limits
Debt servicing charges (principal & interest) for general capital program
• 100% funded from Operating Budget, refinancing not allowed
• Annual sinking fund contributions based on:
• Assumed rate of return • Prudent investment policy
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Keeping Debt at a Manageable Level
The City takes a careful approach to its use of debt • Used to renew and enhance public amenities and infrastructure
• While ensuring a balances budget
As part of the City’s long-term debt strategy: • Water and sewer transitioning from debt to Pay-As-You-Go model
• Helps lower overall debt and save interest costs in the long run
Source: City of Vancouver 2018 Budget and 5-Year Financial Plan
Net Debt at a manageable level
Excludes Olympic Village debt fully repaid in 2014
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Consistent and Established Debt Program
125 125 140 110 105 90 90 85 85
120
020406080
100120140160
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 GreenBond
2052
Debenture Maturity Profile
Funded by City of Vancouver’s ability to levy taxes & fees to repay debt.
Issuance Year Face Amount Coupon (pa) Maturity
2009 $125M 4.90% 2 Dec 2019
2010 $125M 4.50% 1 Jun 2020
2011 $140M 3.45% 2 Dec 2021
2012 $120M 3.70% 18 Oct 2052
2013 $110M 3.75% 24 Oct 2023
2014 $105M 3.05% 16 Oct 2024
2015 $90M 2.90% 20 Nov 2025
2016 $90M 2.70% 15 Dec 2026
2017 $85M 2.85% 3 Nov 2027
2018 $85M 3.10% 21 Sep 2028
$1,075M - Total Issued Debentures (to date)
$ millions
Outstanding Debentures Cumulative Net Debt
346 411
477 543 582 611 622 617 616 598 589
138 87
118 77
121 178
246 326
418 395 494
0
200
400
600
800
1000
1200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
$ millions
Sinking Fund
Net Debt
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Contacts & Additional Information Name Title Telephone Email
Patrice Impey Director of Finance and General Manager 604-873-7610 [email protected]
Grace Cheng Director, Long-Term Financial Strategy and Planning / Deputy City Treasurer
604-871-6654 [email protected]
Tim Leung City Treasurer 604-873-7250 [email protected]
Anthony Tia Senior Analyst 604-873-7443 [email protected]
Websites
General http://vancouver.ca/
Greenest City Action Plan http://vancouver.ca/green-vancouver/greenest-city-action-plan.aspx
Investors Relations ((including Green Bond Framework and Second Party Opinion) https://vancouver.ca/your-government/investor-relations.aspx
Budgets and Finances http://vancouver.ca/your-government/budgets.aspx
Capital Plan for 2019-2022 https://vancouver.ca/your-government/capital-plan-2019-2022.aspx
2019 Budget and Five-Year Plan https://vancouver.ca/files/cov/2019-budget-book.pdf
Vancouver Economic Commission http://www.vancouvereconomic.com/
Vancouver Charter http://www.bclaws.ca/civix/document/id/complete/statreg/vanch_00
