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TO: |
Mayor and Members of Council |
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FROM: |
Barb Cribbett, Treasurer |
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PREPARED BY: |
Lorri
Whetham, Senior Financial Analyst |
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DATE OF MEETING: |
2004-Nov-08 |
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SUBJECT: |
Status
of Capital Projects as of August 31, 2004 |
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RECOMMENDATION:
THAT the report entitled “Status of Capital
Projects as of
AND THAT projects listed in Exhibit B entitled
“Summary of Open Capital Projects 100% (or Greater) Encumbered at August 31,
2004” be closed upon payment of final invoices and any outstanding amount
returned to/from the original source(s) of funding;
AND THAT $1,120,105.53 from closed capital
projects be transferred to the sources of funding as listed on Exhibit C
entitled “Summary of Closed Capital Projects by Account at
AND THAT the Sections 3.0 & 4.3 of Capital
Budget Control Policy be amended, as attached in Exhibit E, so that remaining
funding in completed tax funded projects be transferred to a corporate-wide contingency
capital project to a maximum of $250,000, the use of which will be governed by
the Expenditure Control Policy.
PURPOSE:
To inform
Council on the status of Capital Projects as of
EXECUTIVE SUMMARY:
As
at the end of August, the Town of
STATUS OF OPEN CAPITAL PROJECTS
Exhibit
A identifies the “% Encumbered” which represents the percentage of the capital
budget expended or committed through purchase orders (P.O.’s). The total capital budget for open projects
under 100% encumbered at
The 60.0%
of open projects for which the Town has expended/committed funds represents a
slight decrease as compared to the 63.0% expended/committed amount in
2003. The decrease in the percentage
is primarily due to the 2004 capital budget being approved in May of 2004 and
this status report represents approximately 3 months of expenditures and
commitments (May to August) for the 2004 projects.
There are 56 open capital projects ($39.48M budget) that are completely encumbered shown on Exhibit B. Upon payment of final invoices, these projects will be closed and any remaining funding will be transferred to/from the original source(s) of funding.
CAPITAL PROJECTS TO BE CLOSED
There are 125 capital projects ($14.25M budget) being submitted for closure for a total of $1.12M (Exhibit D) available to be returned to the original source(s) of funding. As summarized on Exhibit C, $1.04M will be returned to various Reserves, Reserve Funds and the Development Charges Reserve. The balance of the $1.12, $0.08 ($1.12 - $1.04), is the tax funded portion of capital projects to be closed. This amount will be transferred to a corporate-wide capital contingency project as described in the next section.
CREATION
OF A CORPORATE-WIDE CAPITAL CONTINGENCY PROJECT
It is recommended that the Capital Budget
Control Policy be amended to allow the establishment of a corporate-wide
contingency capital project to be funded from tax funded closed capital
projects. The purpose of the contingency
project is to ensure completed capital projects are closed in a timely manner and
to provide for an alternate source of funding for unbudgeted capital projects
or for future potential unforeseen events related to capital that would cause other
projects to run over budget. This corporate-wide
contingency project will be funded to a maximum of $250,000, from closed
capital projects, and its use will be governed by the Capital Budget Control
Policy and the Expenditure Control Policy.
The contingency capital account will be topped up to $250,000 as tax
funded capital projects are closed. Once
the corporate-wide contingency account is at the maximum $250,000, further
closures of tax funded capital projects will be returned to the Major Capital
Repairs and Replacement Reserve.
BACKGROUND:
Status of Capital Less Than 100% Encumbered:
Exhibit A, “Summary of Open Capital
Projects Under 100% Encumbered at
Open Capital $164.00M
Total Encumbered $ 98.45M 60.0%
Unencumbered/Uncommitted $ 65.55M 40.0%
This indicates that 60.0% of the total approved open capital project budget is encumbered. The expectation is that this percentage will increase as the year progresses.
Projects listed in Exhibit A that do not
have a budget amount still require funding, either from outside funding
sources, such as a developer, or from internal sources pending a staff report
and Council approval. As the source of
funding is approved/received, the budget will be adjusted. Similarly, the projects on Exhibit A which
are over 100% encumbered have outside funding pending. The outside funding will increase the budget
for these projects and lower the encumbered percentage.
Total Encumbered:
The
total encumbered of $98.45M includes commitments of $24.43M and expenditures of
$74.02M. In accordance with the Capital
Budget Control Policy, Finance will monitor open projects and recommend closing
the projects, upon completion, in future status of capital reports.
Commitments refer
to purchase orders (
Unencumbered/Uncommitted:
Table 1 below summarizes the various funding sources for the uncommitted capital ($65.55M). The table also provides a comparison of the uncommitted amount of 2004 only projects (approved May, 2004) and the percentage of the 2004 projects contributing to the total $65.55M of uncommitted capital.
TABLE 1 Total Uncommitted 2004 Portion
$ %
DC Funded Projects:
Bur
Oak Fire Station $ 2.35M
Other DCA Funded Projects $22.64M $37.44M $19.12M 51.1%
Other Funding Sources $ 6.05M $ 3.02M 49.9%
As shown on Table 1 (above), the 2004 uncommitted projects represent over
50% of the total uncommitted capital.
This is due mainly to the fact that the 2004 capital budget was approved
in May of 2004 and this status report represents about 3 full months of
expenditures and commitments (May to August).
Contributing to the 2004 uncommitted amount for DCA funded projects
($19.12M) are the following projects:
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Urban Design projects - Parks construction |
$5.11 |
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$4.42 |
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$1.80 |
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$1.20 |
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Engineering Projects |
$3.03 |
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Other DCA Projects |
$3.56 |
The 2004 uncommitted tax funded amount of $8.80M (Table 1) is comprised
of various projects including as follows:
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$1.10 |
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2004 Corporate Fleet Replacement Program |
$0.91 |
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$0.74 |
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Urban Design Projects – Non DCA portion |
$0.55 |
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ITS Infrastructure Project. |
$0.48 |
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Engineering Projects |
$0.67 |
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Other Projects |
$4.35 |
Reserve/Reserve Fund Projects include projects funded from various
reserves including Waterworks, General Capital and Pre DCA. The following projects are included in the
2004 uncommitted amount of $4.80M:
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Waterworks Projects |
$1.28 |
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$0.81 |
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East Community Centre and |
$0.49 |
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3 Stream Waste Implementation
- Phase 1 |
$0.39 |
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Other Projects |
$1.83 |
Other Funding Sources include carry forward projects, building permit
revenues and outside sources. The
following projects are included in 2004 uncommitted amount of $3.02M for Other
Funding Sources:
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ITS Projects |
$1.80 |
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Museum Reception Centre |
$0.40 |
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Other Projects |
$0.82 |
In accordance
with the Capital Budget Control Policy, departments provided Finance with a
status of all capital projects that have been inactive for a period of twenty
four months. Some of these projects are
included in the list of projects being recommended for closure in Exhibit
C.
Status of Capital which is 100% (or
Greater) Encumbered:
Exhibit B, “Summary of Open Capital Projects 100% (or Greater) Encumbered at August 31, 2004” lists open capital projects (by Commission/Department) with a total budget of $39.48M.
This is a new exhibit to identify projects which are fully expended or committed. The purpose of Exhibit B is to obtain approval at this time to close the projects listed on the exhibit, upon payment of final invoices. Obtaining pre-approval, at this time, to close fully expended/ committed projects will allow for more timely and frequent closing of capital projects in the future.
Corporate-wide
Contingency Capital Project:
During the annual Capital budget process,
departments make every attempt to ensure that the budget request is sufficient
to complete the defined scope of each project. Unanticipated
costs may arise however, requiring additional funding. In accordance with the Capital Budget Control Policy and the Expenditure Control Policy, these requests
must be forwarded to the Treasurer and include an appropriate alternate funding
source. In general, departments use
other open capital projects as their alternative source of funding. This may impact the scope of the other open
capital projects.
The creation of the corporate-wide contingency
capital project will assist in the timely closure of current projects as it
removes the incentive for keeping existing capital projects (less than 24
months old) open to fund potential cost overruns in other capital projects. New and unbudgeted capital projects that arise
during the year may also use the corporate-wide contingency capital project as
a source of funding, as outlined in Section 4.3 of the Capital Budget Control
Policy (Exhibit E).
The new corporate-wide contingency capital
project will be funded from closed tax funded capital projects to a maximum of
$250,000. Based on tax funded capital
projects recommended for closure in this report, the contingency capital
project will start with a balance of $79,948.52 (Exhibit C) upon approval of
this report. The use of funds in the
contingency capital project will be governed by the Capital Budget Control
Policy and Expenditure Control Policy.
The contingency capital account will be topped up to $250,000 as tax
funded capital projects are closed. Once
the corporate-wide contingency account is at the maximum $250,000, further
closures of tax funded capital projects will be returned to the Major Capital
Repairs and Replacement Reserve.
Projects where the appropriate source of
funding is non tax will not be eligible to use this funding and will continue
to be governed by the Capital Budget Control Policy.
Closed Capital Projects:
Exhibits C and D provide details of
the projects being recommended for closure.
Exhibit C “Summary of Closed Projects by Account” summarizes where the
balance from the closed projects (detailed in Exhibit D) will be
transferred. The net amount to be transferred back to
the original source(s) of funding is as follows:
*($3,545 rounded)
The amount to be transferred to the corporate-wide
contingency capital project from the closure of tax funded capital, listed on
Exhibit C, is $0.08M.
Exhibit D, “Summary of Closed
Capital Projects - Detail”, reflects the completed projects, which are
recommended for closure. The total of
these projects is $1.12M, of which $1.04M is to be returned to
original sources of funding and $0.08M will be used to establish the
corporate-wide contingency capital project (outlined above). This amount is net
of projects that were approved, in accordance with the Expenditure Control
Policy, and to be funded from closed capital (Exhibit D)
The majority of the projects listed
in Exhibit D are projects that were completed within budget. Projects that were under spent will have the balance
transferred back to the original source(s) of funding. Projects that have over expenditures fall
within the guidelines established in the Expenditure Control Procedures and
will have the necessary funds allocated from other identified closed projects.
FINANCIAL CONSIDERATIONS:
It is recommended that $1,120,105.53 from closed capital projects be transferred to the sources of funding as per Exhibit C and that the tax funding portion of this amount $79,948.52 be transferred to the corporate-wide contingency capital project.
ATTACHMENTS:
Exhibit A - Summary of Open Capital Projects
Under 100% Encumbered at
Exhibit B - Summary of Open Capital Projects
100% (or Greater) Encumbered at
Exhibit C - Summary of Closed Capital Projects
by Account
Exhibit D – Summary of Closed Capital Projects
- Detail
Exhibit E – Capital Budget Control Policy
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Barb Cribbett, Treasurer |
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Andy Taylor, Commissioner, Corporate Services |
Q:\Finance and
Administration\Finance\SHARED\2004FinAdminCtteeReports\0468 Update on Status of
Capital August 31.doc
