City of Surrey Financial Plan 2020-2024

CONTRIBUTION & EXPENDITURE OVERVIEW

The City uses several approaches to finance capital works: “pay as you go”, internal borrowing, and external debt. Surrey continues to use a “pay as you go” approach to finance a majority of its capital works projects. The “pay as you go” approach employed by Surrey has two significant benefits, namely it:  Preserves flexibility for the City by allowing it to avoid fixed debt costs and interest charges; and  Is particularly appropriate in a growing municipality where development can be funded through developer contributions and an increased tax base. The City undertook significant capital investments to meet the needs of our growing community. In order to fund the capital projects under this program, the City incurred both internal and external debt.

Budgeted MFABC cash principal/interest payments and actuarial earnings over the next five years (2020 - 2024) will be $23,412,000 and $10,317,000 respectively. Section 177 of the Community Charter allows municipalities to undertake short- term (up to five years) borrowing to pay for capital projects. Total short-term debt outstanding must not exceed $50 multiplied by the municipal population, as certified by the Minister of Municipal Affairs and Housing. The City’s short- term capital borrowing capacity for 2020 is $25.9 million. Section 177 of the Community Charter also allows municipalities to borrow money to meet current year expenditures. Revenue Anticipation borrowing is limited to 75% of all property taxes imposed in the prior year and is the first obligation repaid. Surrey’s Revenue Anticipation borrowing capacity for 2020 is approximately $598 million. The City’s authorized Revenue Anticipation borrowing limit for 2020 is $20 million.

CAPITAL EXPENDITURES The capital program includes statutory and asset maintenance as well as new projects.

Statutory and Asset Maintenance Statutory and asset maintenance constitute the largest part of the capital program. They are the ‘base’ expenditures required to preserve previous investments, replace old or worn-out assets, and service growth.

These expenditures are funded by ongoing capital sources such as:  Contributions from operating revenue;  DCCs; and  Sundry sources.

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