Town of View Royal Council Report: Financial Plan Bylaw Amendment
A staff report proposing amendments to the 2023-2027 Financial Plan to account for unforeseen expenses and updated revenue projections.
TOWN OF VIEW ROYAL COUNCIL REPORT
TO: Council
FROM: D. Christenson, Director of Finance
DATE: June 26, 2023
MEETING DATE: July 4, 2023
Financial Plan Bylaw Amendment
RECOMMENDATION:
THAT the report dated June 26, 2023, from the Director of Finance titled “Financial Plan Bylaw Amendment” be received.
PURPOSE:
To inform Council of amendments to Financial Plan Bylaw No. 1113, 2023 required due to new information or circumstances.
TIME CRITICAL:
Council may amend the five-year financial plan bylaw at any time. Since this bylaw represents Council’s authorization to spend, delaying formal amendment of the financial plan bylaw may delay implementation of the projects or programs authorized by the amendment.
EXECUTIVE SUMMARY:
Financial Plan Bylaw No. 1113, 2023 was adopted by Council on May 9, 2023. Since that time, staff have identified several items that are required or optimal to be completed in 2023 that were not included in the 2023-2027 Financial Plan. These items, totalling $277,900, are included in Bylaw 1118 attached and will amend the 2023-2027 Financial Plan to authorize the expenditures. The recommended bylaw amendment does not impact 2023 taxation or user fees, as the sources of funding are Casino revenue ($180,000), reserves ($42,900) and increased anticipated building permit revenue ($55,000).
BACKGROUND:
The Community Charter (s. 173) limits a municipality’s expenditures to those authorized and included in its financial plan, except in emergency situations.
The 2023-2027 Financial Plan was developed through focused efforts in the latter part of 2022 and early 2023 and included funding for View Royal’s services, programs, and capital and non-core projects. While staff make every effort to anticipate future requirements, it is inevitable that during the year, new information or a change in circumstances indicates a need for additional funding for projects or operational items that were not included in the financial plan. The Community Charter (s. 165) allows the financial plan to be amended at any time to authorize those expenditures that were not included in the original bylaw.
DISCUSSION:
Bylaw 1118 attached to this report amends Financial Plan Bylaw No. 1113, 2023 to incorporate the following items, with the accompanying rationale and funding source:
Town Hall HVAC replacements
On June 20, 2023, Council approved (C-81-23) the replacement of five (5) condensing units at Town Hall at the cost of $110,000, funded by Casino revenue and CleanBC Commercial Express incentive program rebates (if available). This project will reduce GHG emissions and use of natural gas, as well as ensure air quality and comfort for personnel, visitors, and Council at Town Hall. Project Summary C-141 attached provides more information about this project.
Parks vehicle replacement plan
Late in 2022, a replacement vehicle for the 2006 Ford F350 (CC 1253) was ordered with a total cost of $62,000, including commissioning expenses; however, due to supply chain issues, the vehicle was not delivered until March 2023. The approved 2022 budget for this item was $85,000; however, due to supply chain uncertainties identified above, the budget was inadvertently not carried forward or included in the 2023-2027 Financial Plan.
Additionally, due to issues finding a satisfactory replacement for the 1996 Kubota (CC 1067), staff changed direction and were able to secure attachments for the John Deere tractor that meet service requirements. This solution was completed earlier this year for a total cost of $33,000, providing a $48,600 savings from the original $81,600 budget.
The recommended budget amendment reflects the reallocation of $48,600 to the replacement for the 2006 Ford F350 from the unused budget for the 1996 Kubota replacement. A revised Project Summary C-031 (attached) reflects this change of plans and indicates that the total 2023 budget will need to increase by $13,400 from $166,600 to $180,000 to complete the planned replacement of the 2007 Chev 1-ton in 2023. This increase will be funded from the Machinery and Equipment Reserve. An updated fleet replacement plan will be presented to Council as scheduled in the 2024-2028 Financial Planning Calendar.
Information technology infrastructure hardware replacements
During the development of the plan for information technology infrastructure replacements, the level of effort to complete the update of Windows Server 2012 R2 operating system to the latest version was underestimated. Currently, five servers are running on Windows Server 2012 R2 which is at end of life in October 2023, meaning that failure to complete the update presents an unacceptable risk to View Royal. While the licensing cost was anticipated, the total cost to update the servers, considering the impacts to the applications running on those servers, and performing a carefully planned migration, was unforeseen. This project will also upgrade a physical server to a Microsoft hypervisor environment, increasing future portability and resiliency. This critical work will be done by View Royal’s managed service provider for an estimated budget increase of $50,000, funded from Casino revenue. The revised Project Summary C-038 (attached) reflects this increase.
Helmcken Bay pump station upgrade
Construction on the Helmcken Bay pump station upgrade started in 2022 with an estimated total budget of $670,000. This project was completed in early 2023 for a total cost of $651,280, under budget by $18,720. However, due to a timing difference at year end between invoicing and calculating the 2023 budget early in the year, the approved budget amount for 2023 is $29,500 less than previously estimated for 2023. The recommended budget amendment corrects this timing miscalculation by increasing the 2023 budget amount from $272,000 to $301,500, funded by sewer capital reserves. The revised Project Summary C-088 (attached) reflects this change.
Fire turnout gear
Due to a delay in supplier invoicing, a shipment of fire turnout gear that was ordered in September 2022 and received in November 2022 was not billed until April 2023. Since the 2022 fiscal year was closed at that point, we were unable to process the invoice against last year's budget. The recommended budget amendment increases the amount for fire turnout gear (account 1-2-02110-550) by $10,000 to accommodate this purchase without reducing planned purchases for 2023, funded from Casino revenue.
CleanBC heat pump rebate top-up
The 2023-2027 Financial Plan includes an additional $10,000 for CleanBC heat pump rebate top-ups. With the original allocation of $10,000 expected to be fully subscribed in June, it was decided in late April to proceed with an additional contribution of $10,000 to the program which is expected to take this climate emergency response initiative to much later in 2023. The recommended budget amendment, adding another $10,000 to the Administration budget (1-2-01400-310), is to be funded from Casino revenue.
Protective inspections contracted services
Just before the 2023-2027 Financial Plan was finalized, Council approved the addition of $40,000 in 2023 for contracted building inspection services to supplement in-house building inspection expertise for inspections that require a Level III Building Inspector. At this time, staff believe the need for supplementary building inspection services will exceed the approved $40,000 in 2023. The recommended budget amendment adds another $55,000 to this line item (account 1-2-02410-310) to ensure uninterrupted service delivery for 2023 to be funded from building permit revenue. Future need for contracted building inspection services will be included in the proposed 2024-2028 Financial Plan to be considered by Council in February 2024.
SUSTAINABILITY/CLIMATE CHANGE IMPACTS:
The changes to the 2023-2027 Financial Plan recommended in this report have no significant direct impact to View Royal’s sustainability or climate change.
FINANCIAL IMPLICATIONS:
The budget amendments recommended in this report are incorporated into the Bylaw 1118 Financial Plan Amendment bylaw and summarized in the following table:
| Financial Plan Schedule ‘A’ line description | Bylaw 1113 Amount (2023) | Item reference | Description | Amendment Amount | Bylaw 1118 Amount (2023) |
|---|---|---|---|---|---|
| General government services | $2,933,254 | n/a | CleanBC heat pump rebate top up | $10,000 | $2,943,254 |
| Protective services | $5,488,701 | n/a | Fire turnout gear | $10,000 | $5,553,701 |
| n/a | Protective inspections contracted services | $55,000 | |||
| Capital expenditures | $6,460,370 | C-141 | Town Hall HVAC replacements | $110,000 | $6,663,270 |
| C-031 | Parks vehicle replacement plan | $13,400 | |||
| C-038 | Information technology infrastructure hardware replacements | $50,000 | |||
| C-088 | Helmcken Bay pump station upgrade | $29,500 | |||
| Sales of services | $863,800 | n/a | Funding for protective inspections contracted services | $55,000 | $918,800 |
| Transfer from reserves for capital | ($1,472,320) | C-031 | Funding for parks vehicle replacement plan | ($13,400) | ($1,515,220) |
| C-088 | Helmcken Bay pump station upgrade | ($29,500) | |||
| Transfers from surplus for operating | ($1,749,011) | n/a | Funding for CleanBC heat pump rebate top up | ($10,000) | ($1,769,011) |
| n/a | Funding for fire turn out gear | ($10,000) | |||
| Transfers from surplus for capital | ($4,039,695) | C-141 | Funding for Town Hall HVAC replacements | ($110,000) | ($4,199,695) |
| C-038 | Funding for information technology infrastructure hardware replacement | ($50,000) |
ALTERNATIVES:
To the extent that doing so does not increase the risk of interruption to service delivery, Council may choose to reduce or deny the requested budget amendments. Staff may be able to describe some of the impacts of various alternative courses of action or investigate further and report back to Council.
CONCLUSION:
Financial plan amendments are required to authorise expenditures that were not originally foreseen and included in the approved plan. The Community Charter permits Council to amend the financial plan by bylaw at any time.
The amendments proposed in Bylaw 1118 attached to this report can be summarized as follows:
- Increase operational expenditures by $75,000
- Increase projected building inspection revenue by $55,000
- Increase capital expenditures by $202,900
- Increase funding from Casino revenue by $180,000
- Increase funding from Sewer Capital reserve by $29,500
- Increase funding from Machinery and Equipment reserve by $13,400
None of the proposed amendments affect 2023 taxation or user fees and do not significantly affect the feasibility of or timing of projects planned for future years.
| CONCURRENCE: | Initials | Comments |
|---|---|---|
| Chief Administrative Officer | KA | Recommend Approval |
| REVIEWED BY: | Initials |
|---|---|
| Director of Corporate Administration | SJ |
| Director of Finance | DLC |
| Director of Development Services | LT |
| Director of Engineering and Parks | IL |
| Director of Protective Services |
ATTACHMENTS:
Schedules A, B and C from Financial Plan Bylaw No. 1113, 2023, Amendment Bylaw No. 1118, 2023 (changes in red text)
Revised Project Summaries (changes in red text):
- C-031 Parks vehicle replacement plan
- C-038 Information technology infrastructure hardware replacements
- C-088 Helmcken Bay pump station upgrade
- C-141 Town Hall HVAC replacements
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