Proceeds from Sale of Land – Policy Amendment

TOWN OF VIEW ROYAL COUNCIL REPORT

TO: Council
DATE: June 26, 2017
FROM: Dawn Christenson, Director of Finance
MEETING DATE: July 4, 2017

Proceeds from Sale of Land – Policy Amendment

RECOMMENDATION:

THAT the Reserve and Surplus Policy be amended as follows:

added to Section 1.3 (Capital Works and Land Acquisition Reserve):
“Net proceeds from the sale of real property will be contributed to this reserve as realized.”

added to Appendix A for Capital Works and Land Acquisition Reserve under the column labelled “Funding Source(s)”:
“Net proceeds from the sale of real property.”

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:

I concur with the recommendation.

PURPOSE OF REPORT:

To amend the Reserve and Surplus Policy to direct the use of proceeds from the sale of land.

BACKGROUND DISCUSSION:

In 2016, Council approved the Reserves and Surplus policy No. 1600-020 (Attachment “A”) that establishes guidelines for the structure and use of funds set aside for specific future purposes. Section 5 of the policy specifies that reserve contributions are approved by Council through the financial planning process. However, proceeds from sale of real property are often not included in the annual budget as amounts are not typically known in advance.

Because proceeds from the sale of land represent the liquidation of assets held by the Town and are one-time events that are largely unpredictable, best practice indicates that these funds be treated as “windfalls” and not be used to fund ongoing operational activities. Ideally, they would be used to replace the recently disposed asset with another asset of similar or higher community value.

The Community Charter restricts the use of proceeds from the sale of parkland to the acquisition of other parkland. Proceeds from the sale of other land, such as a road closure, are not restricted in legislation.

RECOMMENDATION:

THAT the Reserve and Surplus Policy be amended as follows:

added to Section 1.3 (Capital Works and Land Acquisition Reserve):
“Net proceeds from the sale of real property will be contributed to this reserve as realized.”

added to Appendix A for Capital Works and Land Acquisition Reserve under the column labelled “Funding Source(s)”:
“Net proceeds from the sale of real property”

SUBMITTED BY:
Dawn Christenson, BAccS, CPA, CGA, Director of Finance

REVIEWED BY:
K. Anema, Chief Administrative Officer