Special City Council Meeting Agenda · That the Council of the City of Guelph now hold a meeting that is closed to the public, pursuant to the Municipal Act, to consider: CS-2019-89

City of Guelph Council Agenda – October 30, 2019 Page 1 of 3

Special City Council Meeting Agenda Consolidated as of October 25, 2019

Wednesday, October 30, 2019 – 5:30 p.m. Council Chambers, Guelph City Hall, 1 Carden Street

Please turn off or place on non-audible all electronic devices during the meeting.

Please note that an electronic version of this agenda is available on guelph.ca/agendas.

Guelph City Council and Committee of the Whole meetings are streamed live on guelph.ca/live.

Changes to the original agenda have been highlighted.

Authority to move into closed meeting That the Council of the City of Guelph now hold a meeting that is closed to the public, pursuant to the Municipal Act, to consider:

CS-2019-89 Non-union Employee Compensation Increase Section 239 (2) (d) of the Municipal Act related to labour relations or employee negotiations.

Open Meeting – 6:00 p.m.

O Canada Silent Reflection First Nations Acknowledgement Disclosure of Pecuniary Interest and General Nature Thereof

Special Council – Presentation and Public Delegations for Non-tax Supported Operating Budget

CS-2019-80 2020 Non-tax Supported Operating Budget (presentation)

Presentation: Trevor Lee, Deputy Chief Administrative Officer, Corporate Services Kealy Dedman, Deputy Chief Administrative Officer, Infrastructure, Development and Enterprise Services Terry Gayman, Acting General Manager, Engineering and Transportation Services/City Engineer Wayne Galiher, Divisional Manager, Water Services Tim Robertson, Divisional Manager, Wastewater Services Jamie Zettle, Program Manager, Parking


Delegations: Susan Watson (presentation) Samantha Lawson, Chief Administrative Officer, Grand River Conservation Authority (presentation) Sonja Radoja, Manager of Corporates Services, Grand River Conservation Authority (presentation) Correspondence: Susan Watson Recommendation:

1. That the following recommendations from report CS-2019-80 titled 2020 Non-tax Supported Operating Budget dated October 30, 2019 be referred for approval to November 13, 2019:

i. Stormwater Services:

a) That the 2020 Stormwater Services operating budget in the gross amount of $7,903,600 inclusive of reserve and reserve fund transfers be approved.

b) That a stormwater base charge of $5.80 per month per equivalent residential unit (ERU) effective January 1, 2020 be approved.

c) That the 2020 Stormwater Fees and Services By-law be approved.

ii. Water and Wastewater Services: a) That the 2020 Water and Wastewater Services operating budgets in

the gross amounts of $32,445,849 and $33,949,117 respectively, inclusive of reserve and reserve fund transfers be approved.

b) That a wastewater volume charge of $1.92 per cubic meter, effective January 1, 2020 be approved.

c) That a water volume charge of $1.77 per cubic meter, effective January 1, 2020 be approved.

d) That the 2020 water and wastewater basic service charges be approved at the 2019 rate.

e) That the 2020 Water Services and Wastewater Services Fees and Services By-law be approved.

iii. Parking Services:

a) That the 2020 Parking Services operating budget in the gross amount of $6,337,502 inclusive of reserve and reserve fund transfers be approved.

b) That the 2020 monthly off-street parking permit fees for the Arthur Street and Norwich Street lot be increased by 30.20 per cent and 42.60 per cent respectively to $100.00 per month and that all remaining parking fees be approved at the 2019 rate.

c) That a Parking Services Operating Contingency Reserve (106) be created and that Appendix A to the General Reserve and Reserve Fund Policy be amended to reflect the policy language as identified in report CS-2019-80.

d) That the 2020 Parking Services By-law be approved.


iv. Building Services: a) That 2020 Ontario Building Code Administration operating budget in

the gross amount of $3,591,200 inclusive of reserve fund transfers be approved.

b) That the 2020 Ontario Building Code Administration fees be approved with an increase of 2.20 per cent.

c) That the 2020 Ontario Building Code Administration fees by-law be approved.

v. That the 2020 Court Services operating budget in the gross amount of $4,202,100 inclusive of reserve fund transfers be approved.

Adjournment

Non-tax supported operating strategy 2020 proposed operating budget

2

The Strategic Plan’s five priorities lead this budget, setting us on a sustainable path for our economy, environment and transportation while supporting an efficient workforce and united community.

Powering Sustaining Navigating Working together Buildingour future our future our future for our future our future

The Strategic Plan & 2020 Budget

Agenda

• Highlights and assumptions• Budget overview• 2019 accomplishments• Services

• Stormwater Services• Water Services• Wastewater Services• Parking Services

• Operating budget summary

3

Highlights and assumptions

• Budget supports Council-approved infrastructure planning studies, financial plans, and corporate guidelines.

• 2020 budget builds on previous years’ work and strategies including capital reserve sustainability, rate affordability and stability.

• With exception of Parking, non-tax budgets are self-funded from rates/fees (no property tax)

• Parking is included in non-tax budget presentation.• Property tax support of $1.4 million consistent with 2019

budget.• Rate and fee increases effective January 1, 2020.

4

Budget overview - operating

5

2019 2020 Change

Stormwater ServicesExpenditure $6,889,000 $7,903,600 $1,014,600

Water ServicesExpenditure $31,867,000 $32,445,849 $578,849

Wastewater ServicesExpenditure $33,448,838 $33,949,117 $500,279

Parking ServicesExpenditure

$2,008,540 $6,337,502 $4,328,962

Ontario Building Code AdministrationExpenditure $3,545,000 $3,591,200 $46,200

Court ServicesExpenditure $3,957,400 $4,202,100 $244,700

2019 accomplishments

6

7

Stormwater Services

8

Stormwater Video

https://www.youtube.com/watch?v=vo_oXda7B7U&feature=youtu.be

9

Credits and Rebates

10

2020 initiatives

• Protect people and property from flooding and protect our water quality through sustainable asset renewal of Guelph’s stormwater infrastructure network.

• Administer a credit/rebate program that provides education and financial incentive for property owners who reduce the burden on Guelph’s infrastructure and environment.

• Grow staff’s expertise through participation in a national benchmarking program and the Canadian Municipal Water Consortium.

11

Rate setting objectives

• Consistent with Council-approved five-year Sustainable Funding Strategy.

• Work towards adequate lifecycle funding for system infrastructure needs.

• Predictable and affordable—eliminate rate spikes.

• Maintain cost competitiveness compared to other municipalities.

12

Rate change and forecast (Residential bill impacts)

Year four of the Council endorsed five-year funding strategy*Average impervious area of a residential property is one ERU (188 m2);

2019 2020 Change

Stormwater monthly charge * $5.20 $5.80 $0.60

Average residential annual bill $62.40 $69.60 $7.20

13

Residential rate comparison (2019 comparators vs 2020 Guelph proposed)

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Municipality

Benchmark Costs

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Budget highlights

• $1,014,000 increase in user fees based on Council endorsed rate of $5.80/ERU/month resulting in a total funding amount of $7.9M in 2020 for the Stormwater Service.

• $956,000 increase in the transfer to capital reserve bringing the total transfer to $5.7M.

• Sustainable funding target for the Stormwater Service is $11.1M annually and is forecasted to be achieved in 2024 at a rate of $8.20/ERU/month.

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Service level impacts

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Very Poor Poor Fair Good Excellent

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Long term financial strategy

Description Comments

Self-sustaining business model Capital and Operating Reserve Strategy

Capital Funding Sustainability 70% of sustainable capital funding target achieved

Rate Competitiveness

Long-term Rate Predictability

Water Services

17

2020 initiatives Update the 2014 Water Supply Master Plan, 2009 Water

and Wastewater Linear Servicing Master Plan.

Detailed engineering design and construction renewal of critical FM Woods Pumping Station infrastructure.

Condition assessment of the Arkell Aqueduct to inform future renewal planning.

Design and tender of the Clythe Well Water Treatment Plant.

New water supply exploration studies to support growth (Logan and Guelph South test wells).

Progressive training and certification of water professionals to support utility succession planning.

18

Water and Wastewater rate setting objectives

19

• Consistent with sustainability targets of Long-Range Financial Plan.

• Continued compliance with provincial regulations.

• Adequate lifecycle funding for system infrastructure renewal.

• Predictable and affordable—eliminate rate spikes.

• Managed contingency reserve levels—driving lower proposed 2020 rate increases.

• Maintain cost competitiveness.

• Encourage efficient use by customers who pay based on use.

20

Comparison of residential water/wastewater total volumetric and service charges (2018 rates)

$759.60

$859.70 $882.00

$1,017.00

$1,195.20

$‐

$200.00

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$600.00

$800.00

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$1,400.00

2019 Average Annual Household Water Billfor Ground Water Based Communities

(180 m3 annual consumption)

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$1,200.00

Comparison of Average Annual Household Water/Wastewater Bills by Municipality(2019 rates, 180 m3 annual consumption)

Groundwater source

What does the graph show?Guelph's 2019 average annual household water and wastewater costs are 19th highest of the 26 comparator municipalities which places Guelph five

spots above the group median.

22

Budget highlights• $1,080,600 in new rate revenues (growth).

• $123,800 increase in professional services to support new regulatory monitoring requirements of Clythe Well and Water St Wellfield PTTWs.

• $176,800 decrease in purchased goods mainly due to lower electricity costs realized through changes in operational peak well strategy and removal of one-time vehicle acquisition.

• $500,000 increase due to $250,000 increase to capital reserve funds and $250,000 decrease transfer from operating contingency

23

• *Based on the average annual volume of water consumed by a three‐person household in Guelph of 180 cubic metres.

• Rate includes $250k one‐time transfer from contingency reserve to mitigate rate increase

• 2020 rates will come into effect on January 1, 2020.

• 2020 leap year and includes additional day of utility costs within household impact.

Proposed preferred scenario:Water—Rate change and forecast (Residential Bill Impacts~)

23

2019 2020 Change

Water volume charge

$/cubic metre$1.72 $1.77 $0.05

Water basic charge

$/day$0.26 $0.26 $0.00

Average residential

annual bill*$404.50* $413.76*

$9.26 or

2.3%

Service Level impacts

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Statutory standard of care

“The Safe Drinking Water Act, 2002 includes a statutory standard of care for

individuals who have decision-making authority over municipal drinking water

systems or who oversee the operating authority of the system. This can extend to

municipal councilors. There are legal consequences for not acting as required

by the standard of care, including possible fines or imprisonment.

It is important that members of municipal council and municipal officials with

decision-making authority over the drinking water system and oversight

responsibilities over the accredited operating authority understand that they are

personally liable, even if the drinking water system is operated by a corporate entity

other than the municipality.”

Excerpted from

Taking Care of Your Drinking Water:

A Guide for Members of Municipal Councils Province of Ontario (2014)

25

Long term funding strategy

26


Self-sustaining business model Capital and Operating Reserve Strategy

Capital Funding Sustainability



Wastewater Services

27

2020 initiatives• Update the consolidated wastewater services master plan.

• Continue with energy efficiency strategies including phase 1 of the aeration blower upgrade program and a full site energy audit.

• Implement upgrades to all chemical metering and delivery systems used for the treatment process.

• Encourage and support staff to seek opportunities for interdepartmental collaboration.

• Support a continuous improvement environment through participation in the National Water Wastewater Benchmarking Initiative program.

• Enhance wastewater services outreach program.

28

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Budget highlights

• $839,259 in new rate revenues (growth).

• $375,000 decrease in transfer from Contingency Reserve reducing the transfer to $375,000 to continue rate stabilization strategy.

• $105,500 decrease in electricity as result of ongoing energy efficiency strategies.

• $625,000 increase due to $250,000 increase to capital reserve funds and $375,000 decrease transfer from operating contingency.

30

• *Based on the average annual volume of water consumed by a three‐person household in Guelph of 180 cubic metres.

• Rate includes $375k one‐time transfer from contingency reserve to mitigate rate impact

• 2020 rates will come into effect on January 1, 2020.

• 2020 leap year and includes additional day of utility costs within household impact.

Proposed preferred scenario:Rate change and forecast (Residential bill impacts~)

30

2019 2020 Change

Wastewater volume charge

$/cubic metre$1.88 $1.92 $0.04

Wastewater basic charge

$/day$0.32 $0.32 $0.00

Average residential

annual bill*$455.20* $462.72*

$7.52 or

1.7%

31


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Long term financial strategy

32


Self-sustaining business model

Capital and Operating Reserve Strategy

Capital Funding Sustainability 60% of sustainable capital funding target achieved



Average residential bill impacts of rate change

*Average impervious area of a residential property is 188 m2. **Based on the average annual volume of water consumed by a three-person household in Guelph of 180 cubic metres.2020 rates will come into effect on January 1, 2020

33

2019 2020 Change

Water $404.50 $413.76 $0.05

Wastewater $455.20 $462.72 $0.04

Stormwater* $62.40 $69.60 $0.60

Total** $922.10 $946.08 $23.98 or 2.6%

Parking Services

34

• Insert a picture here

2020 initiatives

• Continue roll out of technology and equipment to improve customer service and tighten revenue control.

• Launch of customer self-service portal for account administration.

• Conduct public engagement to design and implement a comprehensive periphery parking permit system in the downtown secondary area.

• Begin formal update to the Downtown Parking Master Plan.

35

Rate setting objectives

• Consistent with Council-approved Downtown Parking Master Plan.

• Work towards adequate lifecycle funding for infrastructure replacement needs.

• Predictable and affordable—eliminate price spikes.

• Maintain competitiveness compared to other municipalities.

36

Rate change and forecast

• No change to rates in 2020 other than Arthur Street lot and Norwich Street lot (completion of 2-year phase-in of 2019 rate increase).

37

Budget highlights• $483,000 increase in parking revenues primarily

attributed to Market Parkade coming online.

• $395,600 increase in property taxes in lieu attributed to Market Parkade.

• $117,780 increase in purchased goods and services for maintenance and software.

• $519,100 increase for transfer to operating contingency reserve and program support services received from tax supported departments.

• $2.0 million transfer to capital reserve to address long term sustainable capital funding.

38


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Condition Rating by Percentage of Inventory

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Long term funding strategy

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Self-sustaining business model Parking receives $1.4 million funding from property taxes

Capital and Operating Reserve Strategy

Capital Funding Sustainability



Budget overview—operating

41

2019 2020 Change

Stormwater ServicesExpenditure $6,889,000 $7,903,600 $1,014,600

Water ServicesExpenditure $31,867,000 $32,445,849 $578,849

Wastewater ServicesExpenditure $33,448,838 $33,949,117 $500,279

Parking ServicesExpenditure

$2,008,540 $6,337,502 $4,328,962

Ontario Building Code AdministrationExpenditure $3,545,000 $3,591,200 $46,200

Court ServicesExpenditure $3,957,400 $4,202,100 $244,700

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Making a Difference

2020 Draft BudgetCity of GuelphOctober 30, 2019

Photo: GRCA /C. Snider

About the Grand River Watershed

300 km

Length

6,800 km2

larger than Prince Edward Island

Area

Lake Erie at Port Maitland

Flows into

11,000 km

Length of rivers and streams


4 major tributaries

Close to one million

Population

Boundaries

Speed, Eramosa, Nith and Conestogo

39 municipalities and two First Nations80% of people live in five cities: Kitchener, Waterloo, Guelph, Cambridge, Brantford


70% of watershed is agricultural land

Farming

73% wells24 % river3 % lake

Drinking water

30 sewage treatment plants

Wastewater


• Need for water supplies, sewage treatment, groundwater recharge

Population Growth

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,000

1980 2000 2020 2040 2060


• impact on water quality and quantity

• erosion needs to be addressed to protect farmland and water quality

Extensive Agriculture


• the issue of our time –presents new challenges including increased frequency of extreme events (floods, droughts, ice storms, etc.)

Climate Change

GRCA Strategic Plan 2019 - 2021

Our VisionA healthy watershed where we live, work, play and prosper in balance with the natural environment.


Our MissionWe will work with local communities to reduce flood damage, provide access to outdoor spaces, share information about the natural environment, and make the watershed more resilient to climate change.


Strategic Priorities:1. Protecting life and

minimizing property damage from flooding and erosion.

2. Improving the health of the Grand River watershed.


Strategic Priorities:3. Connecting

people to the environment through outdoor experiences.

4. Managing land holdings in a responsible and sustainable way.

• Seven dams and reservoirs are actively managed to reduce flood damages and maintain flows

• Flood peaks reduced 50 per cent or more

Protect life and minimize property damage

Regulated Rivers andFlow Augmentation

Strategic Priorities 2019 - 2021

• Working with senior levels of government to find innovative ways to improve floodplain mapping

• Ability to regulate hazard areas



• Deliver value and innovation

• Improved flood forecasting and warning

• Improved monitoring and preparedness

• Adapting to climate change



Protect life/property & Improve watershed health


Planning and Development• Through Memorandums of Agreement

with municipalities, the GRCA provides technical advice on Planning Act applications

Source Water Protection Program• Complete development of water

quantity policies for Guelph and Guelph/Eramosa area

• Continuing updates to Source Protection Plans in Lake Erie Region to reflect infrastructure changes (e.g.: new wells) and where new information becomes available

Improve watershed health


• Province has funded 100% of Source Protection Program

• Continuing support to municipalities for plan implementation



Rural Water Quality Program (RWQP) Watershed-wide success since 1998:• More than 6,300 projects

completed

• More than $19.4 million in grants

• More than $53 million invested




• The Water Management Plan builds resiliency to address challenges related to climate change, population growth and land use intensification.

• The Wastewater Optimization Program builds upon the successful optimization work in municipalities like Guelph.


Outdoor Education

• More than 40,000 students participate in GRCA outdoor education programs annually

• More than 1,500 day campers in the summer of 2019

• Programming provided for more than 10,000 children and families through various community programs

Connect people with the

environment


GRCA Conservation Areas

• Balancing revenue and visitor needs with conserving natural resources

• Weather dependent

• Revenue forecasts are prone to significant fluctuations

Connect people with the environment


Natural Areas

• Increasing management and cost pressures due to population growth and changing demographics

Connect people with the environment & Responsible land management


GRCA Landholdings• More than 48,000 acres of

recreational and natural land

• Current initiatives include restoration of Niska property, wind-down of residential tenancy program and hazard tree management

Responsible & sustainable land management


• To prepare a budget prior to release of provincial regulations regarding core vs non-core program mandates for conservation authorities

• To avoid downloading to municipalities the $420,000 Section 39 provincial funding cutback announced during 2019

2020 Budget Challenges

1. Core vs Non-Core Programs2020 Budget Challenges

Budget Assumption• GRCA will continue to

deliver programs that are currently in place and fund programs with general municipal levy as in the past

New regulations are anticipated in 2020.

2. To offset the $420K Section 39 provincial funding cutback the following savings/ strategies have been identified:

2020 Budget Challenges

1. Use Reserves

2. Realize additional revenue

3. Decrease compensation expenses

4. Decrease discretionary administrative and operating expenses

Base Programs (Operating)

81%

Base Programs (Capital)

12%

Special Projects

7%

Expenditures by Category2020 Budget: $32.7 million(2019: $35.3 million)

2020 Draft Budget

2020 Draft Budget

RevenueGeneral Municipal Levy:• Increasing by 2.5% to $11,927,000 in 2020

• Operating Levy increasing 3.8% or $391,000

• Capital Levy decreased $100,000 to $950,000

Special Projects:• Expenses are offset 100% by special funding sources

• Do not use general municipal levy to fund these projects

2020 Draft Budget

ExpendituresOperating Budget($26.6 Million)

• Watershed Management (dams, flood forecasting, planning, lands management)

• Conservation Areas

• Environmental Education

• Corporate Services and Communication

2020 Draft Budget

ExpendituresCapital Budget($3.7 Million)

• Water Control Structures

• Conservation Areas

• Motor Pool and Information Technology

ExpendituresSpecial Projects($2.4 Million)• Source Protection

Program

• Rural Water Quality Grants

• Emerald Ash Borer

• Mill Creek Rangers

• Children’s Water Festival

2020 Draft Budget

Revenue by Category2020 Budget: $32.7 million(2019: $35.3 million)

2020 Draft Budget

2020 Draft BudgetGrand River Conservation Authority

Summary of Municipal Levy - 2020 BudgetDraft October 25, 2019

% CVA in 2019 CVA CVA-Based 2018 Budget 2020 Budget 2020 Budget 2020 Budget ActualWatershed (Modified) CVA in Watershed Apportionment Matching

Admin & Maintenance

Levy

Non Matching Admin &

Maintenance Levy

Capital Maintenance*

Levy

Total Levy 2019 Levy % Change

Brant County 82.9% 6,445,704,057 5,343,488,664 2.80% 12,575 294,381 26,565 333,521 320,200 4.2%

Brantford City 100.0% 14,094,801,844 14,094,801,844 7.38% 33,169 776,505 70,073 879,747 859,526 2.4%

Amaranth Twp 82.0% 741,173,956 607,762,644 0.32% 1,430 33,483 3,022 37,935 36,818 3.0%

East Garafraxa Twp 80.0% 567,538,838 454,031,070 0.24% 1,068 25,013 2,257 28,338 27,694 2.3%

Town of Grand Valley 100.0% 508,048,182 508,048,182 0.27% 1,196 27,989 2,526 31,711 27,840 13.9%

Melancthon Twp 56.0% 548,535,978 307,180,148 0.16% 723 16,923 1,527 19,173 18,422 4.1%

Southgate Twp 6.0% 940,585,890 56,435,153 0.03% 133 3,109 281 3,523 3,437 2.5%

Haldimand County 41.0% 6,660,920,536 2,730,977,420 1.43% 6,427 150,454 13,577 170,458 166,879 2.1%

Norfolk County 5.0% 9,136,313,363 456,815,668 0.24% 1,075 25,167 2,271 28,513 27,947 2.0%

Halton Region 10.4% 43,072,861,004 4,486,635,761 2.35% 10,558 247,176 22,306 280,040 267,286 4.8%

Hamilton City 26.8% 88,141,299,524 23,577,797,623 12.34% 55,486 1,298,938 117,218 1,471,642 1,425,840 3.2%

Oxford County 37.5% 4,100,166,131 1,537,219,499 0.80% 3,618 84,688 7,642 95,948 92,876 3.3%

North Perth Twp 2.0% 2,050,788,963 41,015,779 0.02% 97 2,260 204 2,561 2,480 3.3%

Perth East Twp 40.0% 1,903,923,454 761,569,382 0.40% 1,792 41,956 3,786 47,534 45,247 5.1%

Waterloo Region 100.0% 97,165,516,725 97,165,516,725 50.85% 228,659 5,353,001 483,059 6,064,723 5,947,653 2.0%

Centre Wellington Twp 100.0% 4,825,004,290 4,825,004,290 2.53% 11,355 265,817 23,988 301,160 291,250 3.4%

Erin Twp 49.0% 2,434,448,511 1,192,879,770 0.62% 2,807 65,718 5,930 74,455 73,721 1.0%

Guelph City 100.0% 25,990,473,570 25,990,473,570 13.60% 61,164 1,431,856 129,213 1,622,233 1,576,986 2.9%Guelph Eramosa Twp 100.0% 2,677,794,567 2,677,794,567 1.40% 6,302 147,524 13,313 167,139 163,892 2.0%

Mapleton Twp 95.0% 1,648,728,333 1,566,291,917 0.82% 3,686 86,289 7,787 97,762 94,062 3.9%

Wellington North Twp 51.0% 1,616,042,908 824,181,883 0.43% 1,940 45,405 4,097 51,442 50,151 2.6%

Puslinch Twp 75.0% 2,508,795,384 1,881,596,538 0.98% 4,428 103,660 9,354 117,442 115,793 1.4%

Total 317,779,466,008 191,087,518,099 100.00% 449,688 10,527,312 950,000 11,927,000 11,636,000 2.5%

*Capital Maintenance Levy represents levy allocated to maintenance of capital infrastructure, studies, and/or equipment.

GRCA Per Capita Levy 2010 to 2020

2020 Draft Budget

$9.75

$10.04

$10.19 $10.29

$10.39 $10.49

$10.60 $10.72

$10.84 $10.97

$8.00

$8.50

$9.00

$9.50

$10.00

$10.50

$11.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Year

Questions?

Mayor Guthrie and Members of Council: I understand that the information in the email I received from City Treasurer, Tara Baker, on Wednesday was also forwarded to all of you in a separate email. I am including Ms. Baker's email in my Council correspondence, both to bring forward this information for the non-tax supported budget discussion and to put it in the public domain as part of the consolidated agenda so that both the media and the public can clearly understand the breakdown of the figures and where they come from. Much of this information comes from the extensive work done jointly with staff and Watson & Associates as part of the Development Charge update study. I was a citizen representative on the stakeholder committee. The relevant figure for the non-tax supported budget is $21.5 million. This is the non-tax cost of growth to citizens over the next 10 years which has been embedded in water, wastewater and other fees. Just to put that in context, that's the price tag of the Wilson Street parkade that is officially opening tomorrow. Despite the excellent work done by Ms. Baker and her staff, I'm concerned that the true cost of growth continues to fly under the radar. Media coverage of the operating budget meeting focused on a number of major projects that were contributing to a tax levy, however the fact that a 0.50% levy is being proposed to cover the tax shortfall over and above what we are already paying for growth was not reported, even though it is clearly set out in 1. (g) of the staff recommendations. https://guelph.ca/wp-content/uploads/council_consolidated-agenda_102319.pdf Together with property taxes, the fees paid by citizens for water and wastewater are a substantial portion of household budgets. Water and wastewater fees hover around $1,000 per year, depending on the family water consumption. I don't think the average citizen realizes that we are paying $2.15 million per year to subsidize growth through the water, wastewater and other fees we pay. Essentially, we are paying a growth tax hidden in these fees.

The City news release says that the fees we pay cover the services we get: https://guelph.ca/2019/10/lets-talk-2020-non-tax-supported-operating-budget/ That is not the whole picture. $2.15 million of fees collected every year will be transferred directly into the capital budget to pay for infrastructure related to growth - a subsidy for the shortfall between development charges collected and the actual cost of that infrastructure. Current citizens are not just paying for the costs related to the water coming out of their taps, they are paying to lay pipe to new subdivisions and for plant capacity expansion or efficiencies to accommodate that growth. That $2.15 million for growth has nothing to do with annual operating costs, or capital investments to upgrade or repair existing infrastructure. While progress is being made in quantifying the costs of growth, this information still needs to be broken out more clearly in budget documents. At capital budget there was much discussion by Council of the back-end impact of capital expenditures on future operating costs. While the City's overall budget is broken into three different sections to make the discussion manageable, the reality is that the different budgets are all inextricably intertwined and impact each other. In the same way that the library and the operations hub are being scrutinized for future operating costs, Council needs to look closely at the future operating costs of growth that is being approved and the net tax impact of servicing that growth. The carrot that is always dangled in front of you is that new growth will generate development charges and property tax revenue. But the DCs come with a price tag - a 20% matching requirement of public dollars - and the promise of future tax revenues is also a mirage. That is why we have a $300 million infrastructure deficit in Guelph, and a $60 billion infrastructure deficit Province-wide. Attached to this email, you will find a slide deck from a presentation given to Guelph City Council by Gary Scandlan in 2006. The objective of the presentation was to look at the implications of growth from a municipal finance perspective. The key slide, in my view, is #36, which shows you the annual operating surplus or deficit for different kinds of residential development in a study conducted for the town of Milton.

The numbers are stark and startling. With the exception of estate lots, all low-density development draws more in servicing costs than it remits in property tax, resulting in a net drain on the finances of the municipality. By contrast, the net financial benefits of high-density housing are astounding. In this study, the net surplus is $668.77 per apartment annually. Almost a $1,000 annual differential from the ($308.94) deficit generated by a semi-detached unit. I have no doubt that this data was the reason behind tax increment-based grants given to the first Tricar towers in the downtown. The long-term tax benefits were made clear to the Council of the day. Likewise, planning for the Baker District which began more than a decade ago, was based on the understanding that we wouldn't just be activating an under-performing asset, but that we would be building a golden goose which would lay an annual property tax egg of around $1 million annually. And because the servicing costs of high-density development are lower, there would be a net benefit to City finances. The current Council also needs to get a grip, not just on the subsidies current citizens are making upfront to the costs of growth, but also the true operating costs of different kinds of growth at the back end. I would suggest that it would be beneficial to the City to engage Watson & Associates and Mr. Scandlan to give a Council/public workshop specifically on the operating cost implications of different kinds of growth with current 2019/2020 data. Council needs to be making evidence-based decisions based on accurate, concrete data. Moreover, recent conversations between Council and staff have highlighted that at some point we may reach the environmental limits of local growth in terms of the capacity of the Speed river to absorb wastewater effluent. If we are going to dig ourselves out of a financial hole as a City, the 2006 data from Watson & Associates would indicate that for the next decade, we should be focussing solely on medium and high-density development. This will be the only way to accommodate future population growth without bankrupting citizens. On slide 47, Watson & Associates identifies that Milton would be looking at the amount, type, location and phasing of their growth in order to get a handle on costs.

I would also draw your attention to slide #41. Milton "Assessed the need to receive additional contributions from developers or slow growth." On Thursday, October 24th, MPP Mike Schreiner was the guest at the Breezy Breakfast hosted by Councillors James Gordon and Phil Allt. The cost of growth was one of the topics of conversation. At a recent AMO conference, Mr. Schreiner heard that a number of municipalities are "planning for growth", as required by the Province, but are refusing to approve growth because they consider it to be fiscally irresponsible under the current Provincial regime and with the lack of information about the CBCs and Bill 108. Burlington was one example that Mr. Schreiner was able to provide. His office is going to furnish a list of other municipalities. In Mr. Schreiner's view, the current subsidies required for growth structured into Development Charge formula shortfalls constitute financial incentives for sprawl. It's clear that citizens across the Province are being landed with the tab for growth, not just for the up-front costs of infrastructure, but for the annual operating deficits required to service low-density growth. Sincerely, Susan Watson From: Tara Baker Date: Wed, 23 Oct 2019 at 09:46 Subject: RE: Inclusion of your email in Council budget correspondence To: Susan Watson

Hi Susan

Upon further review of your figures and questions, I think there is a misunderstanding in the cost of growth figures that staff provided.

We communicated that $121.95 million of the costs identified through the DC study are no recoverable by DCs.

Of this $50M is the estimated tax cost related to the 10% mandatory deduction, ineligible services, and DC exemptions.

Next we indicated that $43.5 million is related to costs “in excess of the DC service standard”. These costs are not recoverable by DCs because the project exceeds what would be considered “growth”. Therefore it is not fair to consider these a true

cost of growth as many of these costs would be classified as “enhancements” to service levels and paid for through City Building funding. All tax supported though – no non-tax included here. An examples here is the main library.

The remaining amount of $28.45 is a combination of non-tax and other ineligible tax supported services.

Staff would say that of the $121.95 here is the real tax/non tax breakdown over 10 years is:

Growth Tax: $57 million

City Building Tax: $43.5 million

Growth Non-tax: $21.5 million

Let me know if you have any other questions,

Thanks

Tara

Tara Baker, CPA, CA, Treasurer, GM Finance

Finance City of Guelph 519-822-1260 extension 2084 [email protected]

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City of Guelph

Development Priorities PlanWorkshop

July 6, 2006

C. N. Watson and Associates Ltd. 4304 Village Centre Court

Mississauga, L4Z 1S2905-272-3600

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Workshop Purpose

• To overview the implications of growth from a municipal finance perspective

• To provide a basis for future strategies to assist in long term decision making by Council

• To assist Council in developing policies to guide the preparation of operating and capital plans… understanding what choices are available and the implications of those choices

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Development Priority Plan

• The DPP is annual plan prepared by Planning and Development Services

• The DPP Team includes representation from various Service areas (Planning, Engineering, Parks Planning and Finance)

• It provides a multi-year forecast of development activity to assist in “managing growth in a balanced sustainable manner”

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Development Priority Plan

Objectives of the Plan:• Outline City’s intentions for processing development

from new plans of subdivision• Integrate financial planning of capital costs with land

use planning• Assist in forecasting DC expenditures and revenues• Ensure mix of housing• To monitor new lot development• Assist other agencies in planning (e.g. School Boards)

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New Initiatives

• Presently, financial planning is undertaken for shorter term - i.e. 1 year Operating Budget and 5 year Capital Budget

• Need to develop a longer term vision regarding servicing needs, levels of service, etc. to effectively plan financially for the City

• This longer term vision will allow Council to understand fully the various decisions that are made in the future

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Overview of Financial Impact of Growth

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Assessing the Financial Impact of Growth

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DC’s and Growth Related Capital Expenditures

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DC History

• Pre-1989 – lot levies (Planning Act)• 1989 – 1997 – Development Charges Act,

1989• 1997 to today – Development Charges Act,

1997

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DCA 1989

• The first DCA• Replaced the former lot levy regime which

evolved through OMB hearings• The Act standardized the practice and provided a

time limited basis for appeal• The Act provided for measuring service standards,

relating growth to capital costs, required a public process, allowed for all services to be considered, etc.

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DCA 1997

• A major overhaul was undertaken in 1997• Resulted in limitations being place on what

services could be included, restrictions on recoveries and additional rules and regulations surrounding approach and implementation

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Cost Recovery Limitations on Funding Growth Related

Expenditures• Service Limitations• Service Standard Restrictions• Mandatory Reductions• Mandatory Exemptions• May also require early replacement of

existing assets

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Limitations on Services

• Some forms of capital and some services may not be included in the DCA. For example:– Solid Waste Service (includes landfill & recycling

facilities as well as associated vehicles & equipment)– Arts & Culture Facilities– Museums– Vehicle & Equipment with avg. life of <6 yrs.– Computer Equipment

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Service Standards

• Service Standard measure provides a ceiling on the level of the charge which can be imposed

• Previously (DCA, 1989), provided that the DC be “no higher than” the highest level attained over the previous 10 year period.

• DCA, 1997 provides that the “average of the past 10 years” be the basis for the upper limit of the charge and must measure both quantity and quality

• Impacts – generally lowers collection levels and may provide for spiral downwards if municipality does not keep up with construction of services

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Service Standard Example

• A municipality of 10,000 in 1994 is growing at 1,000 persons per year

• They have 1 arena ($5 million value) and have a council approved standard of one arena per 10,000 persons – they will construct the new arena in 2004 when they reach a population of 20,000

• Following slide shows recovery under current DCA vs. 1989 DCA

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Service Standard Example

-

100

200

300

400

500

600

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

DCA 1989

DCA 1997

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Arena Value 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 population 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000

Service Standard 500 455 417 385 357 333 313 294 278 263

10 Yr. Avg. 359.39

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Impact of Service Standard on Capital Recovery

• In this example, the “no higher than” service standard (1989 DCA) would have provided a $1,500 per unit DC whereas the “average 10 year” service standard (1997 DCA) would be $1,078 DC (based on 3 ppu’s)

• Hence a 28% loss in DC revenue under this example

• Impacts will vary based on rate of growth and timing of acquiring additional services

• For Guelph, a 1.5% annual growth rate would provide a $100 or 6.5% loss under this example

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Other Refinements

• Cannot include past expenditures which benefit growth unless Council expressed its intention to recover it from growth

• Mandatory 10% capital deduction for “soft” services

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Mandatory Exemptions

Exemptions:• Mandatory exemptions

→ for industrial building expansions (may expand by 50% with no DC)

– May add up to 2 apartments for a single as long as size of home doesn’t double

– Add one additional unit in medium & high density buildings

– Upper/Lower Tier Governments and School Boards

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Example of Reductions of Full Costs Recovery

• Example based on actual municipality (lower tier)

• Growth from 2001 – 2021will see the municipality grow by over 300% (already experienced 50% over past 3 years)

• Costs included based on numerous service studies undertaken to manage service quality to residents

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Example of Reductions Limiting Cost Recovery

Growth Ineligible Post Existing Net Service Std. Mandatory DCService Related Service Period Benefit Growth-Related Reduction 10% Eligible

Capital Exp. Costs Benefit Deduction Capital Exp. (over Max.) Deduction (net of 10%)

Corporate Services 31,635,248 (30,874,076) - (94,554) 666,617 - (66,662) 599,955 Transportation 155,871,250 - (28,648,437) (46,677,054) 80,545,760 - 80,545,760 Transit 14,379,379 - - (450,000) 13,929,379 - (1,392,938) 12,536,442 Public Works 2,425,500 - - - 2,425,500 - - 2,425,500 Fire 14,379,379 - - (450,000) 13,929,379 - (1,392,938) 12,536,442 Recreation/Culture 62,576,029 (13,689,288) (13,151,900) (110,464) 35,624,377 - (3,562,438) 32,061,939 Parks 45,994,961 - - - 45,994,961 - (4,599,496) 41,395,465 Library 20,812,994 (112,500) - (5,979,819) 14,720,675 (2,684,095) (1,472,068) 10,564,513 Planning & Development 2,845,125 - - (11,250) 2,833,875 - (283,388) 2,550,488

TOTAL 350,919,866 (44,675,864) (41,800,337) (53,773,142) 210,670,523 (2,684,095) (12,769,926) 195,216,502

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Possible Impacts of Provincial Policy

• “Places to Grow” requires 40% of growth to occur within the built- up area which may also have considerable impacts – for example:– Redevelopment Credits will limit revenue– Water and Sewer Service probably not sized to take that

level of development – Brownfield servicing is 4 times more expensive than Greenfield – also existing benefit costs to be paid for by City

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Commentary on Present DCA Regime

• As can be seen, from a capital perspective , growth does not fully pay for the recovery of the capital costs due to:– Exempted services– Mandatory reductions– Service standard restrictions– Mandatory exemptions– Further changes in Provincial Legislation

• Over time, the net funding needs for growth related capital places upward pressures on the taxes/rates

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Timing of Capital Expenditures

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Timing of Capital Spending

• Capital spending to service development will occur at various times

• Some expenditures made well in advance of development, some during development and some after building occupancy

• Following chart provides for timing by service

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Timing of Capital ExpendituresOPA/ Secondary Plan

Service Capital ItemWater: Treatment

DistributionLocal

Wastewater Treatment CollectionLocal

Stormwater Management FacilitiesRoads and Related Roads

Rolling StockLibrary Facilities

Collection MaterialsTransit Facilities

VehiclesParking Parking SpacesPolice Facilities

VehiclesPolice Communication EquipmentPolice Officer Equipment

Health Unit FacilitiesAmbulance Facilities

VehiclesChild Care FacilitiesProvincial Offences Act FacilitiesParks Parkland DevelopmentRecreation FacilitiesFire Facilities

VehiclesFirefighter Equipment

Administrative Growth Studies

Development Timing

Draft Approval Subdivision Approval Post OccupancyBuilding Permit

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DC Services and Timing of Need for a Subdivision

Services DC % of Total(SDU)

Expenditures Prior to Subdivision ApprovalWater 1,014 Sanitary Sewer 1,697 Subtotal 2,711 26%

Expenditures at approx. Subdivision Approval Storm 113 Roads and Related 3,103 Subtotal 3,216 31%

Expenditures After Building OccupancyFire 154 Library 306 Transit 419 Parking 266 Police 225 Health Unit - Ambulance 8 Child Care - Provincial Offences Act - Parks 1,470 Recreation 1,489 Administrative 39 Subtotal 4,376 43%

TOTAL 10,303 100%

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DC Services and Timing of Need for a Subdivision

0%

20%

40%

60%

80%

100%

120%

1 2 3 4 5 6 7 8 9 1

Approval Process Site Development

Building and Occupancy

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Expenditures to Service Development Within Secondary Plan Area

0%

20%

40%

60%

80%

100%

120%

1 2 3 4 5 6 7 8 9 1011121314151617Subdivison #1 Subdivison #2 Subdivison #3 Subdivison #4Subdivison #5 Subdivison #6 Subdivison #7 Subdivison #8

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Comments

• In the early stages of development of an area, expenditures related to hard services to allow development to proceed

• With occupancy will come the growing need to provide softer services which benefit the people and employees

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Operating Expenditure Impact

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Sample Impacts from Other Municipalities

• The following provides for a perspective of individual the net financial impact of various types of impacts while the other provides growth impacts in a rapidly expanding municipality

• Note that the impacts of development will vary by community based on the type and mix of development, services provided, level of service provided, tax rates, etc.

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1. Example Impacts of Different Development Types

• Objective was to estimate the way that net operating expenditures, revenues and the tax levy can be expected to be impacted by various types of development

• This involves considering operating expenditures per individual service in light of various factors

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1. Approach Used Therein

• Approach was to assess the related municipal spending and revenues received for individual development types

• Considered the Town’s financial spending and revenues over past 4 years – also undertook discussions with staff and considered capital spending in draft DC

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1. Development Types Considered

1. Residential Dwellings1.1 Single Detached 30-39 ft. Frontage1.2 Single Detached 40 - 50 ft. Frontage1.3 Single Detached 50+ ft. Frontage1.4 Semi-Detached Unit1.5 Townhouse Dwelling1.6 Condo Apartment Dwelling

2. Industrial/Commercial/Institutional2.1 Neighbourhood Plaza2.2 Medical Clinic Building2.3 Large Industrial Building2.4 Light Industrial Units

Development Type

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1. Residential Development ImpactFinancial Component

Single Detached 30-39 ft. Frontage

Single Detached 40 - 50 ft. Frontage

Single Detached

50+ ft. Frontage

Semi-Detached

Unit

Townhouse Dwelling

Condominium Apartment Dwelling

Operating Expenditures

Occupancy 3.28 3.28 3.28 3.28 2.57 1.74

X 275.30$ /capita

Sub-Total 902.73$ 902.73$ 902.73$ 902.73$ 707.14$ 479.00$

Capital Spending from Current Budget

35% of other operating expenditures 315.96$ 315.96$ 315.96$ 315.96$ 247.50$ 167.65$

Total Annual Expenditure Increases 1,218.69$ 1,218.69$ 1,218.69$ 1,218.69$ 954.64$ 646.65$

2004 Assessment 146,325$ 210,878$ 273,355$ 136,542$ 166,140$ 143,000$

2004 Tax Rate (Town only) 0.402000% 0.402000% 0.402000% 0.402000% 0.402000% 0.786200%

Property Tax Revenue Increase 588$ 848$ 1,099$ 549$ 668$ 1,124$

Non-Tax Revenue Occupancy 3.28 3.28 3.28 3.28 2.57 1.74

X 110.02$ /capita 360.75$ 360.75$ 360.75$ 360.75$ 282.59$ 191.42$

TOTAL ANNUAL REVENUE INCREASES 948.75$ 1,208.75$ 1,459.75$ 909.75$ 950.59$ 1,315.42$

Annual Operating Surplus (Deficit) (269.94)$ (9.94)$ 241.06$ (308.94)$ (4.05)$ 668.77$

Note: Does not include the Development Charge funding gap should Council discount the development charge or exempt certain types of development.

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1. Commercial/Industrial Development Impact

(based on 10,000 sq. ft. Building)

Financial ComponentNeighbourhood

PlazaMedical Clinic

BuildingLarge Industrial

BuildingLight Industrial

UnitsOperating Expenditures

Occupancy 25 25 11 11

X 212.01$ /employee

Sub-Total 5,300.29$ 5,300.29$ 2,332.13$ 2,332.13$

Capital Spending from Current Budget

35% of other operating expenditures 1,855.10$ 1,855.10$ 816.24$ 816.24$

Total Annual Expenditures 7,155.39$ 7,155.39$ 3,148.37$ 3,148.37$

Property Tax Revenue Increase 2,750.00$ 4,001.82$ 9,264.24$ 6,368.36$

Non-Tax Revenue Occupancy 25 25 11 11

employees X 90.93$ /employee 2,273$ 2,273$ 1,000$ 1,000$

TOTAL ANNUAL REVENUES 5,023.00$ 6,274.82$ 10,264.24$ 7,368.36$

Annual Operating Surplus (Deficit) (2,132.39)$ (880.57)$ 7,115.87$ 4,219.99$ Note: Does not include the Development Charge funding gap should Council discount the development charge.

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2. Milton Fiscal Impact

• Milton looked at the long term development of their official plan

• The development phases will see Milton grow from 32,000 to over 150,000

• As part of their preparation for this growth, they undertook a number of studies and developed a long term approach to their capital and operating budgets

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2. Studies Used In Fiscal Impact Assessment

New Studies Include:• Parks and Recreation Needs Assessment • Trails Master plan• Fire Master plan• Transit Study (North Halton Transportation Study)• Traffic Master plan• Sub-watershed plans• Facility Plan• Phase 2 Secondary Plan• Updated Growth Projections (Region)

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2. Proposed Development Charges

• The then Current DC for Single detached was at $6,279

• Increasing for this five year bylaw to $7,941• Will continue to increase in the future to

$9,000+ range

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2. Debt Capacity

• Assessed the need to receive additional contributions from developers or slow growth

Debt Capacity Comparison - Combined Main St.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Annu

al D

ebt C

apac

ity P

erce

ntag

e

No FE or Cap Prov With DC FE and No Cap Prov With DC & PPB FE and No Cap Prov With DC & PPB FE and Cap Prov

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2. Tax Rate Increases

• Without capital provision or developer front-ending, avg. annual increase is 5%•With capital provision or developer front-ending, avg. annual increase is 4.5%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Without Capital Provision With Capital Provision Inflationary Increase

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2. Fiscal Impact Update

• Fiscal impact model is updated as development changes are made or as major changes to servicing are made

• Also undertaken for OP, Secondary Plan updates and detailed development phasing negotiations

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Discussion on Long Term Financial Strategy

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Long Term Planning

• Staff envisage evolving the current process to address longer term strategies by combining long term planning, infrastructure planning and financial planning into a cohesive process

• This long term vision should allow for better service provision in a timely manner on a cost effective basis

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Present Financial Review ProcessGrowth Management

Strategy (2008)

Financial PlanModel (2008/2009)

5 Year Capital Budget1 Year Operating Budget

DPP (3 Years)

47

Future Financial Review ProcessGrowth Management Strategy (2008)- amount, type, location, phases, etc.- infrastructure, standards, timing, etc.

Financial Plan Model (2008/2009)-30 year Captial and Operating Budget, financial strategy,

options assessment, etc.

10 Year Capital Budget3 Year Operating Budget

DPP (3 Years)

Documents

Special City Council Meeting Agenda · That the Council of the City of Guelph now hold a meeting that is closed to the public, pursuant to the Municipal Act, to consider: CS-2019-89