2015 City of Surrey Annual Report

THE FUTURE The City’s future financial, social and environmental health holds promise and opportunity. The significant growth and transformation we have experienced in the last several years continues as over 1,000 new residents per month make Surrey their home. With this level of growth expected to sustain for the next two decades, the City needs to continue to expand its infrastructure and service levels to ensure that both current and future residents and business needs are adequately met. 2015 marked the official opening of the New Guildford Indoor Pool, the near completion of the Grandview Heights Indoor Pool and the City’s New Worksyard facility. The City also began construction on the public/private partnership of one of the largest Organics Biofuel Facilities in Canada and an expansion on the City’s District Energy System, allowing for the introduction of cost and environmentally effective energy to more residential and commercial customers. Planning has also started on some significant community projects to support our growing population, these include the relocation of the North Surrey Arenas, the addition of a Multi-use facility in Clayton and expansion of the Surrey Museum and additional ice surfaces in Cloverdale. In light of the fiscal and operational pressures that come with such significant expansion and growth, City staff will endeavor to ensure that property owners continue to have competitive property tax rates relative to other cities of a similar size both in the local region and across Canada. The continued effective use of City resources will play a critical role in ensuring fiscal prudency, and effective and efficient utilization of resources will certainly be driven by the use of technology and the implementation of innovative solutions. The City continues to introduce technology that improves customer service as well as enhancing and expanding our online service delivery. Staff is staying abreast with financial statement changes that are being considered by the Public Sector Accounting Board (PSAB) with a view to ensuring that the City implements changes in a timely and efficient manner. Staff are currently studying the potential impact and developing policies to implement the upcoming guidelines related to Inter-Equity Transactions; Related Party Disclosures; Asset Disclosure Contingent Assets, and Contractual Rights. These new standards will be required to be adopted by January 1, 2018. Other areas of potential change include possible changes to revenue recognition and asset retirement obligation. Staff will monitor potential impacts of these areas as they evolve. Under the direction and guidance of City Council, the City of Surrey is well positioned to continue to deliver a high quality of services for its current and future residents and businesses in support of a continued high quality of life. The City’s tag line, “The Future Lives Here”, aptly characterizes the growing, exciting, youthful city that Surrey has become.

Investments The City’s investment policy, which complies with Community Charter requirements, outlines how City funds are to be invested to achieve reasonable returns and with investment security while meeting the City’s cash flow requirements. The average portfolio balance related to the City’s investments during 2015 was $643.7 million ($620.6 million in 2014), which earned $16.4 million in interest in 2015; of which $1.6 million was allocated to deferred development cost charges. The average rate of return during 2015 on the City’s investment portfolio was 2.38%. Reserve Funds The City’s statutory reserve funds amount to $111.0 million at the end of 2015 compared to a balance of $95.7 million at the end of 2014. This increase is mainly due to the sale of lands in Campbell Heights. The deferred development cost charge balance at the end of 2015 was $239.6 million, which is an increase over the balance of $229.6 million at the end of 2014. This is a reflection of the City’s steady development activity. These funds will be used to fund capital projects that are listed in the City’s Five-Year (2016-2020) Financial Plan. Financial Position The financial position is calculated as Financial Assets less Liabilities and results in either a Net Financial Asset or a Net Financial Debt. A Net Financial Asset position is an indicator of the funds available for future expenditures and a Net Financial Debt position is an indicator of funds required to pay for past expenditures. In 2015, the City’s financial position improved by $43.0 million resulting in a Net Financial Asset position of $33.1 million mainly due to the City’s annual consolidated surplus (revenues exceeding expenses) of $183 million offset by net capital acquisitions. The City’s non-financial assets increased in 2015 by $140.3 million, bringing the total to $8.1 billion. The increase is the net result of capital additions of physical assets in the year offset by disposals and amortization expense. The result of the increase in financial position and non- financial assets was accumulated surplus increasing in 2015 to $8.2 billion (2014 - $8.0 billion). Overall, the City continues to maintain a strong financial position.

Respectfully submitted,

Vivienne Wilke, CPA, CGA General Manager, Finance & Technology

49