2017 Finance Annual Report

THE FUTURE

Investments City staff continues to administer our investment portfolio, generating a very significant revenue stream to support City services. The administration of the portfolio adheres to 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 2017 was $821.6 million ($747.2 million in 2016), which earned $17.5 million in interest in 2017 ($16.5 million in 2016); of which $0.8 million was earned specifically for deferred development cost charges ($1.2 million in 2016). The average rate of return during 2017 on the City’s investment portfolio was 1.95% (2.05% in 2016). Reserve Funds The City’s statutory reserve funds amount to $124.9 million at the end of 2017 compared to a balance of $116.9 million at the end of 2016. This increase is mainly due to increases to the Park Land Acquisition and Neighbourhood Concept Plans reserves. The deferred development cost charge balance at the end of 2017 was $254.3 million, which is a decrease over the balance of $267.0 million at the end of 2016. 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 (2018-2022) 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 2017, the City’s financial position decreased by $35.6 million resulting in a net financial asset position of $23.0 million mainly due to net capital acquisitions offset by the City’s annual consolidated surplus (revenues exceeding expenses) of $287.1 million. The City’s non-financial assets increased in 2017 by $322.8 million, bringing the total to $8.6 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 decrease in financial position and increase in non- financial assets was accumulated surplus increasing in 2017 to $8.7 billion (2016 - $8.4 billion). Overall, the City continues to maintain a strong financial position.

Our City continues its journey of growth and change, driven by our steady population increase, in particular young families that choose to make this great City their home. Our current and future residents will require significant investments on the part of the City in relation to infrastructure, civic facilities and services. The City, with support and direction from Mayor and Council, has already commenced several key capital investments that will support our residents’ demands. These projects include the Cloverdale Sport and Ice Complex, North Surrey Sport and Ice Complex, and the Clayton Hub, where residents will be offered social, recreational and library services from one location. Significant investments are also needed to our civic infrastructure, perhaps none more important to the future of the City than our Light Rail Transit (LRT) project that has already commenced with preliminary works in 2017. LRT will shape and impact our City like no other capital project before it, laying the foundation to our City’s transportation needs for years to come. With significant growth and the related demand for capital investments, coupled with increased demand for general City services including public safety and recreational programming, the City must continue to effectively manage its resources and exercise fiscal responsibility to ensure residents receive maximum value for their tax dollars. Working under the direction and guidance of City Council, the City has been, and continues to be, in a strong financial position to deliver a high quality of service and capital infrastructure to its residents and businesses for years to come.

Respectfully submitted,

Kam Grewal, CPA, CMA General Manager, Finance

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