City of Surrey 2016 Annual Report

THE FUTURE

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 2016 was $747.2 million ($643.7 million in 2015), which earned $16.5 million in interest in 2016; plus an additional $1.2 million was earned specifically for deferred development cost charges. The average rate of return during 2016 on the City’s investment portfolio was 2.05%. Reserve Funds The City’s statutory reserve funds amount to $116.9 million at the end of 2016 compared to a balance of $111.0 million at the end of 2015. This increase is mainly due to the sale of lands in Campbell Heights. The deferred development cost charge balance at the end of 2016 was $267.0 million, which is an increase over the balance of $239.6 million at the end of 2015. 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 (2017-2021) 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 2016, the City’s the financial position improved by $25.5 million resulting in a Net Financial Asset position of $58.7 million mainly due to the City’s annual consolidated surplus (revenues exceeding expenses) of $215.9 million offset by net capital acquisitions. The City’s non-financial assets increased in 2016 by $190.4 million, bringing the total to $8.3 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 2016 to $8.4 billion (2015 - $8.2 billion). Overall, the City continues to maintain a strong financial position.

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. 2016 marked the official opening of New Grandview Heights Pool and the City’s New Works Yard facility. An additional gas boiler plant and distribution system to support the City’s District Energy System was completed in 2016 and construction continued on the public/private partnership of one of the largest Organics Biofuel Facilities in Canada, allowing for the introduction of cost and environmentally effective energy to more residential 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; Assets, Contingent Assets, and Contractual Rights. These new standards will be required to be adopted by January 1, 2018. Effective January 1, 2019 and January 1, 2020 respectively, staff will also be required to adopt new standards related to Restructuring and Financial Instruments. Other areas of potential change include possible changes to asset retirement obligations, revenue recognition, public private partnerships, employee future benefit obligations and the conceptual framework for financial performance. 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.

Respectfully submitted,

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

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