Mayor's Report 2009

Annual Report of the Mayor on the 2009 Financial Situation, the General Orientations for 2010 and the Three-Year Capital Expenditures Program for 2010-2011-2012

November 9, 2009

PRESENTATION
In conformity with article 474.1 of the Cities and Towns Act, I am pleased to report on the 2009 financial situation of the City of Côte Saint-Luc (“City”), the three-year capital expenditure plan and the orientations for the upcoming 2010 budget.

FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2008

The financial statements for the year ended December 31, 2008, were audited by the external auditing firm of Raymond Chabot Grant Thornton. 

The City registered a net cumulative operating surplus of $1,064,816 and a cumulative pension plan surplus of $3,995,000, totalling $5,059,816 as at December 31, 2008. Although the pension plan surplus is shown on our balance sheet, it cannot be used by the City for operating or capital purposes.

The City has decided to use a portion of the cumulative operating surplus of $1,064,816 to:

• reduce the refinancing of the water infrastructure long-term debt paid to the City of Montreal in 2009 ($517,000);
• reserve funds to cover the estimated cost of holding the 2009 municipal election ($250,000). The City is now aware that it will spend substantially less than the $250,000 that has been reserved due to the Mayor and five Councillors being acclaimed.

During the 2008 fiscal year, the City resolved many outstanding issues with the City of Montreal, including one case dating back to 1982. The cases that were resolved are the following: the opening balance sheets transfer of assets and liabilities at January 1, 2006; the 2005 year-end deficit; the Mackle Collector law suit; the St. Pierre Collector law suit; and the Agglomeration allocations due for 2008. A settlement was reached which allowed the City to offset the substantial claims of the City of Montreal for alleged deficits resulting from harmonization of salaries and operating costs incurred during the years between 2002-2005, when the City ceased to exist due to the forced mergers and operated as one part of the Borough of Cote Saint-Luc/Hampstead/Montreal West within the City of Montreal.

Also in 2008, the Quebec Superior Court ruled on a case that had been outstanding since 1996 between a group of 26 municipalities on the island of Montreal who formed the Régie intermunicipale des déchets sur l’ile de Montréal (“Régie”) and the Société d’énergie Foster Wheeler Ltee. The court decided that the Régie was liable for an amount of $10 million plus interest, leading to a total condemnation of approximately $21.3 million (capital and interest to date). The City’s share of that amount was approximately $950,000. Prior to the reconstitution of the City in 2006, an amount of $200,000 had been accrued on the financial statements; therefore, an amount of $750,000 was applied to the 2008 fiscal year. Notwithstanding the objections of the City, the City of Montreal decided to appeal the judgment and estimates that the matter will come before the Quebec Court of Appeals in approximately two years.

During the last several years, the City Council has made a conscious effort to ensure that the City limits the amount of money that it borrows. In 2007, only 7.96 percent of the operating budget was used to pay interest and capital payments on long term debt – which is far less than the provincial average of 15.41percent. A lower debt-ratio means we have more money in our budget for programs and services.

In addition, during the 2007 and 2008 fiscal years, the City transferred $1 million from surplus into a working fund in order to finance capital projects without paying interest on long-term debt. Since 2008, the City has financed $564,000 of capital projects through the working fund instead of incurring long-term debt and interest charges.

THREE-YEAR CAPITAL EXPENDITURES PROGRAM FOR 2009-2010-2011

In addition to normal operating expenses, the City also prepares a budget for capital expenditures, which are funds used to pay for items that will be used by residents for a long period of time, such as playground equipment, water infrastructure and new roads. The 2009-2010-2011 three-year capital budget was adopted in December 2008 and the projects set out in that budget were the following:

Most projects included in the three-year capital expenditures program for the 2009 fiscal year have either been completed or are in the process of being completed. The Parks Improvements section, in 2009, includes $7.5 million for a possible Intergenerational/Aquatic Centre. The City submitted an application for funding to the Quebec government for this project in 2008 and unfortunately, the funding has not yet been approved. Therefore, this expenditure will be deferred into 2010 and the project will be reviewed when the Quebec government confirms that it will provide a grant to help build the Intergenerational/Aquatic Centre.

The City’s capital investment budget priorities for the current fiscal were major improvements in water and roads infrastructure, and facility upgrades in our parks. The City took advantage of the government funding Gas Tax program, allowing for major work on rehabilitation of the water distribution network underneath thirty-one (31) streets that were completed throughout the year. The grant from the governments of Canada and Quebec totaled $4.92 million over four years (2006-2009). The City’s contribution was $4.99 million over the same period. In total, $9.91 million worth of road and water infrastructure projects were completed during the last four years. 

In addition to the water infrastructure projects, in 2009 the City also invested in reconstruction and resurfacing of various roads including Cavendish Boulevard north of Mackle, Sir Walter Scott and Wentworth, upgrades and repairs at Donald Fletcher Park, major upgrades to the Westminster pump station, the installation of a portable classroom used by the library to offer computer courses, and other upgrades to equipment within the information technology department.

Note: The three (3) year capital investment budget is designed to be a planning document required by law with no obligation to carry out any of the projects. City Council must approve each project in this planning document on an individual basis before any funds are actually committed.

PRELIMINARY FORESCAST ON THE FINANCIAL SITUATION FOR THE YEAR 2009

This year, we are estimating a small budget surplus based on third-quarter results. We will continue to keep close control over our expenses until the end of the year while maintaining a high quality of service to City residents.

The actual operating revenues are within budget to the end of the third quarter. In 2009, the City introduced a one-time tariff for recycling bins. The revenues of approximately $200,000 were used to purchase and distribute more than 4,100 blue recycling bins to homes across the City. As well, the City received its share of a special fund created by the Quebec government to promote projects that reduce the amount of household waste sent to landfill (redevances pour l’élimination de matières résiduelles). The City uses part of this redistribution for the collection of organic waste. The balance of this redistribution will be used to help finance other innovative projects in the future in order to meet our waste reduction targets over the next few years.

The actual operating expenses are also well within budget to the end of third quarter. The City successfully negotiated and signed new collective agreements with its blue collar employees in February 2009 and its white collar employees in September 2009. The previous agreements were negotiated by the City of Montreal during the forced merger years. I am proud to say that these new collective agreements have been negotiated taking into account the real needs of the City and its employees. The City has experienced some cost increases in various areas such as waste management, however, due to better overall efficiency and cash-flow management, the City has also experienced some savings in various areas.

Once again this year, members of the City Council closely monitor the actual revenues and expenses of the City. On a monthly basis, the Audit Committee, chaired by Councillor Dida Berku, examines internal financial reports produced by the Finance Department and identifies corrective measures when required. 

GENERAL ORIENTATION FOR THE 2010 BUDGET

• The 2010 operating budget building guiding principles continue to be the following;
• The budget must ensure that there is a balance between revenues and expenditures;
• The budget must be established to ensure that the property tax increase will not exceed the rate of inflation;
• The budget must ensure long-term financial viability of the City;
• The budget must ensure that cost of debt service never exceeds 15 percent of the overall local operating budget;
• To meet the growing needs of residents, the budget building process must ensure efficiency, and the budget monitoring process must ensure a City-wide commitment for controlling costs in all departments;
• The City will not issue long-term debt unless justified through a business analysis on a case-by-case basis.

As in previous years, the established priorities for the 2010 budget will continue to focus on quality services for the residents of the City while maintaining any increase in municipal taxes to an amount below the cost of inflation. We will continue to run the City like a business focusing on waste management programs, improvements in our water infrastructure system, and providing innovative recreational and cultural programs that suit the needs of City residents.

The 2010 capital budget priorities will continue to be investments in our parks, aqueduct infrastructure and maintenance of roads/sidewalks. We will continue to take advantage of revenues from the new Gas Tax grant which will be finalized during the next few weeks; and research other grants available to municipalities.

In the upcoming weeks, the City Administration and City Council will finalize the 2010 operating and capital budgets. The City Council will adopt the 2010 operating budget and the 2010-2011-2012 capital expenditure program three (3) year plan at a special public Council meeting in December 2009.

It should be noted that while the Mayor and City Council continue to monitor the local budget, they have little input or control over the Agglomeration portion of the expenses. These Agglomeration expenses mainly used to pay for island-wide and regional services (including STM (public transit), Fire, Police, water treatment and distribution, Evaluation, downtown expenses and collective center city assets) have increased considerably over the past four   years. The City paid a total of $22.2 million to the Agglomeration in 2009. We expect this amount to increase significantly in 2010. The reliance on Montreal island cities alone to continue to pay for these central services will not be sufficient to cover these exploding costs in the future. We will seek a correction from the Quebec government to ensure that certain Agglomeration services are paid for by the entire Metropolitan region of the Montreal Metropolitan Community and to ensure that there is sustainable financing for these services going forward without having to continuously overtax Montreal island residents.

In early December 2009, the City Council will hold a public information meeting to review the 2010 budget and provide the opportunity to the public to give input into the budget building process. More information will be posted at www.CoteSaintLuc.org in the next few days.

LIST OF CONTRACTS EXCEEDING $25,000.00
In accordance with the law, I have deposited with the City Clerk the list of all contracts issued in 2008 that include an expenditure exceeding $25,000 and entered into since the last meeting of Council at which I presented this report. I have also deposited the list of all contracts involving an expenditure exceeding $2,000 entered into within that period with the same contracting party, if those contracts involved a total expenditure exceeding $25,000.

REMUNERATION OF MEMBERS OF COUNCIL
As members of the Council, we receive an annual remuneration and an annual allowance for expenses related to our function. The following table indicates the remuneration and allowances received by members of Council.

CONCLUSION
In conclusion, I would like to assure you that although fixed costs continue to rise, City Council and City Administration will work very hard to create a fair and efficient budget for the 2010 fiscal year. We will do everything possible to continue to increase the excellent level of services that residents have come to expect at the most reasonable cost possible.

Anthony Housefather
Mayor
November 9, 2009