Notes to Consolidated Financial Statements Year ended December 31, 2021 (Notes 15-21)
Extract of the notes to the financial statements covering commitments, contingencies, contaminated sites, and segmented service information.
Town of View Royal
Notes to Consolidated Financial Statements
Year ended December 31, 2021
15. Commitments and contingencies (continued)
d) Under borrowing arrangements with the MFA, the Town is required to lodge security by means of demand notes and interest bearing cash deposits based on the amount of the borrowing. As a condition of these borrowings, a portion of the debenture proceeds is withheld by the MFA as a debt reserve fund. These deposits are held by the MFA as security against the possibility of debt repayment default. If the debt is repaid without default, the deposits are refunded to the Town. At December 31, 2021 there were contingent demand notes of $204,201 (2020 - $204,201) and a contingent deposit of $97,506 (2020 - $95,876).
e) The Town entered into a long term contract with the Federal Government and the Royal Canadian Mounted Police for the provision of police services. Under the terms of this contract, the Town is responsible for 70% of policing costs, which in 2022 are estimated to be $1,968,158 (2021 actual $1,879,014). In addition, the Government of Canada signed the first collective agreement with the National Police Federation in 2021. The result of this agreement is a retroactive pay increase for RCMP members and reservists, payable in 2022. The Town's estimated share of the retroactive pay increase is $299,000.
f) The Town has purchase orders in the amount of $77,411 open as at December 31, 2021 which have not been recorded. These amounts have been taken into account in the budget and will be recorded in the period the goods and services to which they relate are received.
16. Contaminated site
The Town owns one property not in productive use with levels of contamination exceeding current environmental standards. Testing of the contamination in 2003 found no known threats to human health or safety. The property is surrounded by the ocean and undeveloped crown-owned land with no current development applications. The property and surrounding crown-owned land were historically occupied by a plywood mill. Due to uncertainty regarding the future development of the surrounding property, the Town is unable to reasonably estimate what, if any, loss of future economic benefits will occur. As such no liability has been recorded in the consolidated financial statements for the year ending December 31, 2021.
17. Financial plan
The financial plan amounts presented throughout these consolidated financial statements are audited and represent the five year financial plan bylaw (Bylaw No. 1071) approved by Council on May 4, 2021 consolidated with the proportional share of the budgeted operating revenue and expense of West Shore Parks and Recreation Society. The summary below reconciles the 2021 consolidated financial plan to the Consolidated Statement of Operations.
| Description | Amount |
|---|---|
| Consolidated financial plan, 2021 surplus (deficit) | $ - |
| Add: | |
| Capital expenditures | 2,711,476 |
| Transfers to reserves | 386,161 |
| Transfers to surplus | 515,956 |
| Principal payments on debt | 306,470 |
| Less: | |
| Transfers from equity in capital assets | (3,087,648) |
| Transfers from reserves for operating | (199,700) |
| Transfers from reserves for capital | (749,969) |
| Transfers from surplus for operating | (1,951,109) |
| Transfers from surplus for capital | (772,460) |
| Financial plan annual surplus (deficit) | $ (2,840,823) |
18. West Shore Parks and Recreation Society
a) Capital asset transfer
The lands and facilities comprising the Juan de Fuca Recreation Centre are owned by the member municipalities (the “Municipalities”) in their proportionate share, as specified in the Co-Owners’ Agreement. The Town became party to the agreement effective January 1, 2007. Future improvements are allocated among the partners as per the cost sharing formula in effect each year for each service or facility, as outlined in a Members’ Agreement. For 2021, the Town’s share of improvements purchased by the Society on its behalf is $796,901 (2020 - $225,906).
Because the cost sharing formula in the Members’ Agreement produces different cost shares for the members from year to year, there is a gain or loss on the opening fund balances. In 2021, the Town recorded a loss of ($160,591) (2020 - gain of $79,875).
The participating Municipalities have each become members in the Society, which was incorporated to provide parks, recreation and community services to the Municipalities under contract. Under terms of an Operating, Maintenance and Management Agreement, the Society is responsible to equip, maintain, manage and operate the facilities located at the recreation centre.
b) Consolidation
Financial results and budget for the Society are consolidated into the Town’s financial statements proportionately, based on the cost sharing formula outlined in the Members’ Agreement. In 2021, the Town’s proportion for consolidation purposes was 14.502% (2020 - 14.866%). Condensed financial information for the Society is as follows:
| 2021 | 2020 | |
|---|---|---|
| Financial assets | $ 4,128,433 | $ 4,767,787 |
| Financial liabilities | 2,755,185 | 4,211,496 |
| Net financial assets | 1,373,248 | 556,291 |
| Non-financial assets | 1,112,757 | 1,042,698 |
| Accumulated surplus | $ 2,486,005 | $ 1,598,989 |
| Revenues | $ 10,098,436 | $ 4,439,706 |
| Requisition for members | 6,331,273 | 5,071,039 |
| 16,429,709 | 9,510,745 | |
| Expenses | 15,542,693 | 10,337,446 |
| Annual surplus (deficit) | $ 887,016 | $ (826,701) |
19. Segmented information
The Town is a diversified municipal organization that provides a wide range of services to its citizens. Town services are provided by departments and their activities reported separately. Certain functions that have been separately disclosed in the segmented information, along with the services they provide, are as follows:
a) General Government The general government operations provide the functions of corporate administration, finance, human resources and legislative services and any other functions categorized as non-departmental.
b) Protective Services Protective Services includes the View Royal Fire Rescue which is a composite fire department responsible to provide fire suppression service, fire inspections of public buildings, and training and education of volunteer firemen as well as the citizens of View Royal. In addition, it also includes policing provided by the RCMP, emergency planning, animal control and the maintenance and enforcement of building and construction bylaws as well as all other municipal bylaws. Fire protection services are provided to the Songhees and Esquimalt First Nation communities under contract.
c) Transportation Transportation services comprises a wide variety of services such as the annual maintenance of all municipally owned roads and bridges, sidewalks, street signage, boulevards, bus shelters, street lighting and traffic signals. Transportation also includes the design, inspection, and maintenance of the storm drain collection systems.
d) Environmental health services Environmental health services includes solid waste collection and disposal as well as collection and disposal of liquid waste through the sanitary sewer service.
e) Planning and development services Environmental development services include all land use, planning and zoning issues in the Town.
f) Recreation and cultural services Recreation and culture includes maintenance and development of all parks and green spaces within the Town as well as the Town's financial contribution to the services provided by the Greater Victoria Public Library and the Town’s portion of West Shore Parks and Recreation Society.
g) Consolidated schedules of segmented disclosure by service Schedules 1 and 2 provide additional financial information for the foregoing functions. Certain allocation methodologies have been employed in the preparation of the segmented information. Taxation is apportioned based on budgeted taxation revenue as presented in the consolidated financial plan.
20. Comparative figures
Certain comparative figures have been restated to conform with the current year's presentation.
21. Significant event
In early 2020, there was a global outbreak of COVID-19 (coronavirus), which has had a significant impact on organizations through the restrictions put in place by the Canadian, provincial, and municipal governments regarding travel, municipality operations and isolation/quarantine orders. At this time, the extent of the COVID-19 outbreak on the Town is unknown, as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, office closures or disruptions, and isolation/quarantine measures that are currently, or may be put, in place by Canada and other countries to fight the virus. In 2021, the Town experienced supply chain issues and project delays as a result of the pandemic, and implemented COVID-19 protocols to ensure the health and safety of Town Hall visitors and staff.