City of Surrey's 2021 - 2025 Financial Plan
CONTRIBUTION & EXPENDITURE OVERVIEW
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 2021 is $25.9 million. The approved 2021 - 2025 Financial Plan does not contemplate utilizing this potential source of funding. Section 177 of the Community Charter also allows municipalities to borrow money to meet current year expenditures, if required. This is known as Revenue Anticipation borrowing and is limited to 75% of all property taxes imposed in the prior year. This also is the first obligation a municipality must repaid. Surrey’s Revenue Anticipation borrowing capacity for 2021 is approximately $586 million, although the City’s authorized Revenue Anticipation bylaw sets this borrowing limit for 2021 is $50 million. There is no provision in the current Financial Plan
for the anticipated usage of this potential borrowing. Overall, the City uses several approaches to finance capital works: “pay as you go”, internal borrowing, and external borrowing. 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.
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.
City of Surrey | 2021—2025 Financial Plan | Capital Program
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