Special Council Meeting Draft 2019 Capital and Operating Budget

December 11, 2018

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Agenda

• Key Dates • Economic Outlook and Benchmarks • Draft Budget Highlights • Budget Process and Strategy • Public Consultation Feedback • Draft 2019 Operating Budget • Draft 2019 Capital Budget • Questions

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2019 Budget Key Dates

Key Dates

Civic Satisfaction Survey July

Budget Outlook - Council report July 24

Public engagement on the budget Oct 26-Nov 14

Draft 2019 Budget and Five-Year Financial Plan:

Report available to public - online Nov 27

Public info and Q&A session Dec 3

Council meeting –presentation and speakers Dec 11

Council meeting – Council vote Dec 18

Economic Outlook and Benchmarks

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Economic Outlook

Vancouver’s economy is forecast to be among the fastest-growing economies of metropolitan areas in the country

• Global economic growth is forecast to moderate from 3.8% in 2018 to 3.6% in 2019

• Canadian economic growth is forecast to moderate from 2.1% in 2018 to 1.8% in 2019

• Canadian export growth has been subdued as a result of limited capacity as well as restrained business investments

• Metro Vancouver’s economy is forecast to decrease from 2.9% in 2018 to 2.3% in 2019, with 2019-2022 GDP growth at 2.3%

Source: Conference Board of Canada Metropolitan Outlook, Spring 2018 (released June 2018)

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Historical Tax Increases Below Average Higher than Inflation across Metro Vancouver

Comparing 10-year average property tax increase, Vancouver at 2.8% is one of the lowest in the region

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Overall 2018 Utility Fees In Line with Metro average

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Affordable & Competitive Recreation User Fees

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Median Single-Family Home 2018 Combined Taxes & Utility Fees Below Average

Langley (City) Pitt Meadows Township of Langley Port Coquitlam Maple Ridge Delta Burnaby Vancouver North Vancouver (City) Coquitlam Average Richmond Surrey North Vancouver (District) Port Moody New Westminster White Rock West Vancouver

$3,035 $3,197 $3,232 $3,237

$3,315 $3,326

$3,570 $3,609

$3,709 $3,757 $3,814 $3,863 $3,885

$4,273 $4,299 $4,311

$4,427 $5,801

- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000

2018 COMBINED MUNICIPAL PROPERTY TAX AND UTILITY FEES FOR MEDIAN SINGLE-FAMILY HOME ($)

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Property Tax Explained

The City does not generate higher property tax revenue as a result of rising property values

Approximately half of the property tax paid by Vancouver taxpayers goes toward funding City services while the other half goes to provincial and regional taxing authorities to fund regional

services, schools, transit, and property assessment services

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Single Family Home City Taxes & Utility Fees above average including OTA Levies

Budget Highlights

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Highlights – Draft 2019 Budget in Brief • Vancouver faces the pressures and opportunities of a growing city

• Tax and utility fee increases needed to maintain core services and fund priority investments

– 4.9% proposed property tax increase, driven by the new Employer Health Tax, infrastructure renewal needs, cost increases and new investments

– 8.7% blended utility fees increase

– 6.3% blended property tax and utility fees increase

• 2019 Capital Budget includes $371 million of projects and programs being initiated from the 2019-2022 Capital Plan, of which $302 million is planned to be spent in 2019

• 2019 Annual Capital Expenditure budget of $568.1 million reflects the expenditures on these new capital projects ($302 million) and those projects previously approved and continuing in 2019 ($266 million)

Budget Process and Strategy

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Financial Sustainability Guiding Principles

These principles, combined with a long-term view of the City’s overall financial planning, will be the platform on which annual budgets are built Fiscal Prudence • Live within our means • Consider long-term implications in all decisions • Maintain a stable and predictable revenue stream • Keep debt at a manageable level • Build in flexibility and contingencies for emerging priorities

and opportunities Affordability and Cost Effectiveness • Deliver services that are relevant and result in desired public outcomes • Ensure value for money through productivity and innovation • Keep property tax and user fees affordable and competitive Asset Management • Maintain assets in a state of good repair • Optimize capital investments to meet public and economic needs while achieving value for

the investment

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Steps in the process

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Budget Recognition

• Sponsored by the Government Finance Officer’s Association (GFOA) to:

• Encourage and assist local governments to prepare budget documents of the very highest quality that reflect guidelines established by the GFOA's best practices on budgeting

• Recognize individual governments that succeed in achieving that goal.

The City of Vancouver received the Distinguished Budget Presentation Award from the Government Finance Officer’s Association (GFOA) for the 2018 Budget and Five Year Plan

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Budget Recognition

C.D. Howe Institute’s 2017 municipal fiscal accountability report card: • Vancouver received one of the top rankings among Canadian

municipalities.

Highest credit rating of AAA/Aaa: • The City’s strong financial management practices have been

acknowledged by credit rating agencies, including Moody’s and Standard & Poor’s.

Public Consultation Summary

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2019 Budget Consultation – Two Phases

Multiple opportunities for public to engage in budget conversations Phase 1: July 2018 – Civic Service Satisfaction Survey Representative sample of residents of businesses assessing satisfaction and priorities

• Telephone survey – Ipsos Public Affairs

Phase 2: October/November 2018 – Variety of channels Test emerging directions for priorities, perceptions of financial management, strategies for managing service delivery

• Online survey – Talk Vancouver • 3-1-1 Telephone survey • Community outreach – infographic displays • Workshop • Webinar

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2019 Budget - Consultation Overview

Summary of public participation

Ipsos Opinion Research Telephone Survey

July 5-19 800 participants

Talk Vancouver Online Survey

Oct 26-Nov 9 3,096 participants

3-1-1 Telephone Survey Nov 2-9 813 participants Community Outreach – Infographic Displays

Nov 1-12 740 completed comment cards

Youth Workshop - NEW Nov 7 5 attendees Stakeholder Webinar - NEW

Nov 8 6 attendees

Stakeholder Survey Nov 8-14 15 participants Total touchpoints 5,475

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Top Vancouver Issues

Residents and businesses agree on the top three issues

Residents Businesses

Housing/accommodation (49%) Infrastructure/transportation (44%)

Infrastructure/transportation (44%) Housing/accommodation (38%)

Cost of living (16%) Cost of living (28%)

Social Issues (13%) Development (12%)

Environment/sustainability (10%) Addictions and overdoses (10%)

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Satisfaction with Services

• Majority of residents and businesses satisfied overall with City services • 83% of residents satisfied • 80% of businesses satisfied

• Majority believe quality of services have either stayed the same or

improved • 62% of residents say services have ‘stayed the same’, 14% say

‘improved’, • 62% of businesses say ‘stayed the same’, 9% say ‘improved’,

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Satisfaction with Services

Strongest satisfaction ratings • Library services, fire rescue and medical response (all) • Parks/green spaces (residents) • Online payment services and police services (businesses)

Areas identified for improvement

• Enabling affordable housing, homelessness services, and development and building permits (residents)

• Development and building permits, parking, and long-range planning (businesses)

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Preferred Investments in Services

Top services where both residents and businesses want the City to invest more

Residents Businesses

Enabling affordable housing (73%) Street infrastructure (53%)

Social policies and projects (71%) Development and building permits (52%)

Homelessness services (66%) Keeping our community clean (50%)

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Perceptions of Financial Management

Value for Tax Dollar • 79% of residents and 72 % of businesses say they are receiving good

value for their tax dollars • Overall, across all forms of engagement, positive ratings in the way the City

allocates and uses City funds

60%

73% 76%

71% 70%

13% 16% 16%

24% 17%

27%

11% 9% 6% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

311 Comment Cards Online SurveyResidents

Online SurveyBusinesses

Average

How would you rate the way the City allocates and uses City funds?

Excellent/Good/Fair Poor/Very Poor Don't Know

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Tax Tolerance

Online survey respondents asked about willingness to pay a tax increase • Majority of both residents and businesses willing to pay a 1% - 2% tax

increase

66%

47%

23%

15%

59%

44%

16%

7%

1% increase 2% increase 3% increase 4% increase

Budget 2019 Willing to Pay Tax Increase

Resident property owners

Business property owners

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Balancing the Budget

Measures supported to balance City budget*

• New user fees (53%)

• Increase user fees (47%)

• Reduce level of staff/personnel (without impacting service levels) (37%)

• 68% on average willing to pay more in user fees for services they or their business use* (higher than 65% in Budget 2018 Survey)

*Overall results, average of both residents and businesses

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2019 Budget Consultation Insights

In the 5,500 touchpoints with residents across all engagement channels in both phases, there are common themes in the feedback: • There is a high level of satisfaction with City services • Housing and cost of living are consistent priority issues for residents • Positive ratings for the way the City allocates and uses City funds,

and say they get good value for their tax dollars • Residents and stakeholders are both willing to pay more in fees,

especially for services they use, and prefer not to pay more in property taxes

• The budget is a complex topic and people want more information and context so that they can provide more meaningful feedback

Draft 2019 Operating Budget

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Draft 2019 Operating Revenues

55%

20%

6%

5% 4%

4% 3 1 1 1

2019 OPERATING REVENUES $1,516 MILLION

55% | Property taxes

20% | Utility fees

6% | Licence and development fees

5% | Parking

4% | Program fees

4% | Cost recoveries, grants and donations

3% | Rental, lease and other

1% | Bylaw fines

1% | Revenue sharing

1% | Investment income

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7.8% Year-Over-Year Increase in Revenue ($109 million)

2019 Revenue Increase Summary: $000s

Property tax levy increase at 4.9% 35,281

Property tax revenue from New Construction 5,000

Other property tax-related revenue 3,502

Increased Business Improvement Association levy 845

Total Property taxes 44,628

Water revenue 12,056

Sewer revenue 8,152

Solid Waste revenue 7,569

Neighbourhood Energy revenue 387

Total Utility fees 28,164

Licence & Development fees 14,980

Parking revenue 7,807

Other revenue 4,441

Program revenue 3,811

Cost recoveries, grants & donations 3,298

Investment income 1,759

Bylaw fine revenue 500

Provincial revenue sharing -

Total Fees and other revenue 36,595

Total 109,387

Note: Totals may not add due to rounding.

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Draft 2019 Budget – Tax and Fee Increases

Property tax Increase 4.9% Less: Employer Health Tax (1.7%) Infrastructure Renewal (1.0%) Remaining 2.2%

Utility fee increases: increased metro utility charges

(including site preparation for sewer secondary treatment)

the costs to renew critical City utility infrastructure as per the approved 2019-2022 Capital Plan

Phase two of permit fee review: Full cost recovery Additional staffing Associated costs

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Draft 2019 Budget – Tax and Fee Increases Impact

Tax and fee combined increase in 2019: • Residential median single-family home $227 • Median business property $308

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Draft 2019 Budget - Expenditures by Service Area

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Draft 2019 Budget - Expenditures by Service Area

Draft 2019 Budget - Expenditures by Type

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Draft 2019 Budget Expenditure Increase - $109.4 Million (7.8%)

2019 Budget

Expenditure Increase $109.4 M

Utilities and other

expenditures $31.8 M

New Investments

$27.8 M

Fixed Costs $49.8 M

Funding sources for 2019 Budget increase: • Property tax $44.6M • Utilities fees $28.2M • User fees, other revenue $36.6M

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Draft 2019 Operating Budget Priority Investments

2019 Operating Investments aligned with five priorities $27.8 million

Increase housing supply and affordability, and

improve availability and supports for renters and

vulnerable citizens $7.7M

Meet our commitments to provide safe and

healthy workplaces and public spaces

$3.2M

Maintain and improve operations and service levels

$7.7M

Continue to build vibrant communities

and public spaces that support arts, culture and the

environment $3.7M

These are funded from multiple sources such as property taxes, user fees and utility fees, and internal reprioritization of existing budgeted resources across the organization.

Invest in public safety $5.4M

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How Does the City’s Draft Budget Benefit Me?

Draft 2019 Capital Budget

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Capital Plan Objectives

• On July 25, 2018, the 2019-2022 Capital Plan was approved

– Includes $2.8 billion worth of capital investments over the four years of the plan

• $2.2 billion worth of City-led capital programs and $0.6 billion worth of in-kind contributions achieved through development.

• Key strategic objectives are to: – Address the growing need to renew the City’s critical

infrastructure and amenities and maintain them in a state of good repair.

– Optimize the City’s network of infrastructure and amenities to support economic development and growth.

– Advance Council, Board (Park, Library and Police) and community priorities in a sustainable and resilient manner.

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Draft 2019 Capital Expenditure Budget by Service Category

2019 Annual Capital Expenditure budget of $568.1 million includes: • $266 million for previously approved multi-year capital projects with budgeted

expenditures in 2019 • $302 million for 2019 expenditures on new multi-year capital projects

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Draft 2019 New Multi-Year Capital Projects Budget $371 million

For 2019, $371 million of projects and programs being initiated from the 2019-2022 Capital Plan, of which $302 million is planned to be spent in 2019

Housing

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Funding Housing across the City in the Budget

$145 million total capital expenditures: $30 million in new funding and $115 million in continuing projects

Empty Homes Tax program to encourage more rentals to improve the vacancy rate with revenue directed to affordable housing initiatives

Approximately $17 million in Planning, Urban Design & Sustainability and $24 million for Development, Buildings and Licensing related to housing

$8.2 million for Housing staff and operations within Arts, Culture and Community Services

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Affordable Housing – Capital Budget

• $145 million total capital investments in the Capital Budget:

– $30 million for new projects – $115 million for continuing projects

• Examples of major Housing

Capital projects/investments: – Acquisition of land for social and

affordable housing – Redevelopment of Roddan Lodge

and Evelyne Saller Centre – Acquisition of Downtown Eastside

properties for social housing

Infrastructure/ Transportation

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Infrastructure/Transportation Renewal – Major Capital Investments

• $281 million total capital investments for infrastructure/transportation renewal:

– Sewer and Water Infrastructure ($86 M) • Sewer Main Replacement • Water Distribution Main Replacement • Water Transmission Main Replacement • Pump Station Replacement/Upgrade (Glen & 7th)

– Facilities Infrastructure ($136 M) • Redevelopment of Roddan Lodge and Evelyne Saller Centre • Renewal of Fire Hall 17 • Planning for renewal for Marpole-Oakridge facilities (Community Center,

Childcare, Library) – Transportation ($59 M)

• Upgrades to Granville Bridge • Rehabilitation of Major Roads (City and MRN) • Replacement of Street Lighting Poles • Rehabilitation of Pedestrian and Bicycle Signals

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Infrastructure/Transportation New– Major Capital Investments • $172 million total capital investments for new

infrastructure/transportation: – Sewer and Water ($21 M)

• EFL shoreline protection • Green Infrastructure Planning/Implementation

– Facilities Infrastructure ($95 M) • Childcare projects (Nelson, Fleming, Tennyson, Eric Hamber, Gastown

Parkades, Kensington) • New Washroom and Fieldhouses • Qmunity Facility • Replacement of Fire Hall 5

– Transportation ($56 M) • 800 Robson • Active Transportation Corridor • Arbutus Corridor Detailed Design (carryforward) • Robson & Alberni

Questions

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