CAPITAL AND RATE SUPPORTED OPERATING BUDGETS Special Committee of the Whole November 13, 2017 Presented by: Mike Mayes, Director, Financial Services 1

Background

Budget process overview On an annual basis, the Town of Newmarket prepares a budget to authorize its expenditures for the year. For 2018, this includes: $127 million in operating expenditures - $84 million in tax-supported operations - $43 million in rate-supported operations (water, stormwater, building) $26 million in capital expenditures When developing the budget, the Town prioritizes projects and services that are required to meet legislative requirements and community needs. Although the budgets are broken down into service areas, the budget is considered and recommended as a whole to enhance the Town’s decision-making process.

Potential impact on the average residential property Proposed increases for the average residential property using 200 cubic metres of water per year. 200 cubic metres represents the normal annual household use in Ontario. 2018 Budget Increase Monthly cost Water $ 1,157.41 $ 67.71 6.21% $ 96.45 Stormwater $ 33.97 $ 3.72 12.30% $ 2.83

Council Priorities The focus of the 2018 Budget is Sustainability: Financial Environmental Community Organizational Readiness Council’s strategic priorities: Developing corridors and community Manage assets, maintain service levels and cultivate talent Cultivate innovation and growth

Budget Schedule Date Activity October 16 Preliminary draft budgets to Cow October 23 Info report to Council with additional details and answers to questions November 13 Special CoW – capital & rate-supported operating budgets November 20 Special CoW – tax-supported operating budget November 27 Regular CoW – budget and fees & charges December 4 Council approval – budget and fees & charges

2018 Budget Process - Definitions Decision Package – budgetary requests for Enhancements, Growth Expenses, and Mandatory Items are submitted with all related costs, net of recoveries ARF or Asset Replacement Fund – monies set aside in a reserve fund to finance the replacement of existing Capital Assets such as roads, watermains and sewers

2018 Budget Process - Assumptions Assumptions used in the 2018 Budget: Inflation – the March 2017 Toronto CPI was used as a predictor of inflation – 2.1% Growth – the Town’s Growth Revenue Model projects a 1.24% increase for 2018 Preserve service levels for a growing population with any reductions based on prioritization Service level preservation takes precedence over service level enhancements

Water and Wastewater Budget

Operating Budget - Water 2017 2018 Change Rate revenue $ 15,384,000 $ 17,129,802 $ 1,745,802 Region $ 8,439,000 $ 9,011,485 $ 572,485 Operations 3,669,233 3,839,459 170,226 ARF 2,713,083 3,127,156 414,073 Overhead 1,029,485 1,142,000 112,515 Rate stabilization - 466,801 9,702 476,503

Operating Budget - Wastewater 2017 2018 Change Rate revenue $ 17,084,000 $ 19,684,137 $ 2,600,137 Region $ 11,098,000 $ 12,951,320 $ 1,853,320 Operations 1,009,467 1,212,938 203,471 ARF 3,674,219 3,940,703 266,484 Overhead 926,770 1,006,000 79,230 Rate stabilization 375,544 573,176 197,632

Water Rate Group Financial Performance 2018 Budget 6-year plan Difference Rate revenue $ 17,129,802 $ 16,909,802 $ 220,000 ARF increase $ 414,073 $ 0 Contribution to rate stabilization $ 9,702 - $180,750 $ 190,452

Wastewater Rate Group Financial Performance 2018 Budget 6-year plan Difference Rate revenue $ 19,684,137 $ 20,604,137 - $ 920,000 ARF increase $ 266,484 $ 0 Contribution to rate stabilization $ 573,176 $ 527,092 $ 46,084

Consolidated rate group Financial Performance 2018 Budget 6-year plan Difference Rate revenue $ 38,813,939 $ 39,513,939 -$ 700,000 ARF increase $ 680,557 $ 0 Contribution to rate stabilization $ 582,878 $ 346,742 $ 236,136 Consolidated performance exceeds the 6-year plan targets

Proposed Water/Wastewater Rates Annual Consumption 2017 Average Bill 2018 Average Bill Change 2" Residential and Non-Residential Customer 200 m3 $ 1,090 $ 1,157 6.2% 2" Industrial, Institutional, Commercial Customer 4,600 m3 $ 17,629 $ 19,290 9.4% 3" Industrial, Institutional, Commercial Customer 6,900 m3 $ 26,709 $ 29,514 10.5% 4" Industrial, Institutional, Commercial Customer 22,000 m3 $ 83,140 $ 89,699 7.9%

Comparative Rate Data - Water and Wastewater Newmarket has financially sustainable water and wastewater operations: Full cost recovery Healthy reserve fund levels Comparatively lower infrastructure gaps Tiered water rates have been introduced to address the fact that our residential rates are the 2nd highest in York Region while our non-residential rates are the lowest

Stormwater Budget

Operating Budget - Stormwater 2017 2018 Change Revenue $ 1,672,855 $ 1,852,084 $ 179,229 Operations $ 350,476 $ 1,160,623 $ 810,147 ARF 983,000 340,512 -642,488 Overhead 339,379 340,000 621 Rate stabilization 10,949

Stormwater Rate Group Financial Performance 2018 Budget 6-year plan Difference Rate revenue $ 1,852,084 $ 0 ARF increase -$ 642,488 $ 43,000 - $ 685,488 Contribution to rate stabilization $ 10,949 $ 4,084 $ 6,885 Additional expenses have been offset by lowering ARF contributions

Proposed Stormwater Rates Customer Type Median Property square meters 2017 2018 Increase (%) ($) Low Level Runoff 478 $ 6.36 $7.14 12.3% $ 0.78 Med Level Runoff 465 $ 30.24 $ 33.97 $ 3.73 High Level Runoff 561 $ 72.98 $ 81.99 $ 9.01

Comparative Rate Data - Stormwater 12 Ontario municipalities reported that they had Stormwater charges in the draft 2017 BMA Study Most are based on flat rates, while Newmarket’s rates are based on an automated program that performs detailed analysis to balance fairness and cost effectiveness Newmarket has the lowest residential rate

Building Department Budget

Operating Budget - Building 2017 2018 Change Revenue $ 1,680,191 $ 0 Operations $ 2,068,439 $ 2,070,238 $ 1,799 Overhead 466,976 466,463 - 513 $ 2,535,415 $ 2,536,701 $ 1,286 Building reserve - 855,224 - 856,510 - 1,286

Rate Supported Decision Packages

Decision Packages Recommended DP Form # Initiative Category Total Amount Storm Water 1 Stormwater Management Facility Maintenance Program Mandatory 400,000 2 Catch Basin Cleaning 200,000 18 Sr. Climate Change Coordinator -Contract to Full-Time Growth 107,356 Total $ 707,356 Water & Wastewater  3 Convert Water Quality Analyst From Contract to Full-time 8,267 22 GIS Technician- Cost Allocation to Water &WW 84,949 $ 93,216

Capital Budget

Capital Request Summary ARF Development charges Other General Total $ millions Replacement 10.9 3.6 14.5 Growth 8.7 0.6 9.3 0.9 0.7 0.5 2.1 11.8 4.9 25.9

Replacement Capital Replacements are determined by condition assessments such as the Roads Need Study $14,488,100 in replacements are funded: ARF $ 10,943,100 76% Federal Gas Tax 2,100,000 15% Grants 795,000 5% Reserves 650,000 4%

Replacement Capital Major Projects include: Municipal Infrastructure projects - $4,235,000 Vehicles and Equipment Replacement - $1,254,000 Sports Field Lighting Replacement - $1,016,000 Magna Centre roof repair - $950,000 All other facility maintenance needs - $934,500 Capital Projects – Engineering Staff Time - $900,000 Engineering/Design for Future Projects - $850,000 Fernbank Farmhouse Maintenance - $600,000

Growth Capital Growth needs are determined by growth plans such as the Development Charges (DC) Background Study $9,313,020 in to maintain service levels in the face of growth are funded from: Development Charges (DC’s) $ 8,660,775 93% Reserves 374,300 4% Other Sources 277,945 3%

Growth Capital Major Projects include: Haskett Park Trail & Davis Drive Breathing Space Construction - $1,700,000 ** Davis & Bathurst Intersection Improvements (Sidewalk & Streetlighting) - $1,550,000 * Water/Wastewater Master Servicing Study Implementation - $1,281,500 * Recreation Playbook Implementation - $1,013,000 ** Satellite Building – Glenway - $500,000 * Yonge Street North of Davis to Green Lane Consulting - $500,000 * * Funded 100% from DC’s **Funded 90% from DC’s

Other Capital Projects These are projects and studies to address legislated and health & safety requirements, and to meet Council direction. $2,132,000 is funded from: ARF $ 914,000 43% General Revenues 495,000 23% Grants 481,427 Reserves 241,573 11%

Other Capital Projects Major Projects include: Stormwater Management Pond Clean Outs - $714,000 * Low Impact Development (LID) & New Stormwater Facilities - $200,000 * Community Energy Plan Implementation - $310,000 Trail Lighting – TTT Tannery to CN Crossing - $160,000 Lighting of Pathways - $180,000 * Funded from Stormwater ARF

How to give feedback Residents are encouraged to Get Involved in the 2018 budget process

Next Steps Date Activity October 16 Preliminary draft budgets to Cow Info report to Council with additional details and answers to questions November 13 Special CoW – capital & rate-supported operating budgets November 20 Special CoW – tax-supported operating budget November 27 Regular CoW – budget and fees & charges December 4 Council approval – budget and fees & charges