2018 Annual Financial Report

Reserve Funds The City’s statutory reserve funds, net of internal borrowings to fund capital programs, amount to $86.2 million at the end of 2018 compared to a balance of $103.5 million at the end of 2017. This decrease is mainly due to increases to the use of internal borrowings to fund capital programs during 2018. The deferred development cost charge balance at the end of 2018 was $277.7 million, which is an increase over the balance of $254.3 million at the end of 2017. 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 (2019-2023) Financial Plan. THE FUTURE 2018 was another year of significant growth and development throughout the City, with more residents than ever making our City their home. As we look to future years, we can expect the trend of strong growth to continue, and with this growth will come further demand for services and infrastructure. Two significant initiatives that have been made strategic priorities by Mayor and Council, the creation of our own City Police force and Skytrain, will serve to enhance public safety and transportation respectively for our residents for years to come. The Skytrain extension is part of Translink’s South of Fraser Area Transit Plan that will help shape and impact our City like no other capital project before it, laying the foundation for Surrey’s transportation needs for years to come. In addition to these, the City, with support and direction from Mayor and Council, has continued several key capital investments that will support our residents’ needs. These projects include the completion of a new recreation and cultural facility in Clayton, a partnership with the YMCA to deliver recreation services in the City Centre, a third field hockey turf field and covered bleachers at Tamanawis Park, a new Kabaddi Facility, a new stadium at Bear Creek Park, and various park additions and expansions. Working under the direction and guidance of our new City Council, the City of Surrey 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.

The City’s non-financial assets increased in 2018 by $346.4 million, bringing the total to just under $9.0 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 these increases in financial position and non-financial assets was accumulated surplus increasing in 2018 to $9.1 billion (2017 - $8.7 billion). Overall, the City continues to maintain a strong financial position.

CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31 (amounts in $ millions)

2017 Actual

2018 Actual

Change

Revenues Expenses

$ 1,024.3 $ 134.9

$ 1,159.2

(737.2)

(35.8)

(773.0)

Annual Surplus

$ 287.1 $

99.1

$ 386.2

The City’s revenues in 2018 totaled $1,159.2 million, which is an increase in comparison to revenues of $1,024.3 million collected in 2017. The increase was primarily attributable to additional property taxes, utility fees, licenses, permits, development cost charges and developer contributions. The additional revenue generated from increased property related fees and taxes was required to support a $10.4 million budgeted increase in public safety along with a $16.5 million budgeted increase in support for necessary labour and inflationary cost increases and other various corporate funding requirements. The City’s expenses totaled $773.0 million in 2018, which was an increase in comparison to expenses of $737.2 million in 2017. This year-over-year change was primarily attributable to increases noted in Police and Fire services, Parks, Recreation and Culture programming, Engineering services, Planning and Development, and in the cost of Water, Sewer, Drainage and Solid Waste. Investments City staff continue 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. The policy outlines how City funds are to be invested in a manner which will allow for reasonable returns and security while meeting the City’s cash flow requirements. The average portfolio balance related to the City’s investments during 2018 was $816.8 million ($821.6 million in 2017), which earned $22.0 million in interest in 2018 ($17.5 million in 2017). The average rate of return during 2018 on the City’s investment portfolio was 2.34% (1.95% in 2017).

Respectfully submitted,

Kam Grewal, CPA, CMA General Manager, Finance

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