City of Surrey's Annual Financial Report 2021

REPORT FROMTHE GENERAL MANAGER, FINANCE CONTINUED

Investments City staff diligently continue to administer our investment portfolio, generating a very important 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 2021 was $994.0 million ($766.9 million in 2020). During 2021 the City earned $18.0 million from investment income ($19.4 million in 2020) of which $0.9 million was earned specifically for deferred development cost charges ($2.6 million in 2020). The average rate of return during 2021 on the City’s investment portfolio was 1.73% (2.30% in 2020). The lower overall return is a direct result of global investment yields being at historic lows, negatively impacting our interest income. Reserve Funds The City’s statutory and discretionary reserves, on a net basis, amounted to $149.0 million at the end of 2021 compared to a balance of $58.8 million at the end of 2020. The Deferred Development Cost Charges (“DCCs”) balance at the end of 2021 was $371.7 million, which is an increase over the balance of $314.5 million at the end of 2020. This increase is attributable to the resurgence in development activity within the City, a reversal of the pandemic related slowdown in 2020. These funds will be used to fund future capital projects that are listed in the City’s current Five-Year (2022-2026) Capital Financial Plan as well as future financial plans. Challenges continued in 2021 as the pandemic evolved and governments worked hard to balance public health measures with the population’s desire to reclaim some semblance of normalcy. Our City has successfully evolved and grown in-step with the changing landscape and responded effectively to the needs of citizens. Current and future residents and businesses will continue to look to the City to provide investments in infrastructure, civic facilities, and services while maintaining a sound and strong financial position. Building on the robust 2021-2025 Capital Financial Plan, the City, with support and direction from Mayor and Council, continued its momentum with further capital investments as part of the 2022-2026 Capital Financial Plan. With Surrey growing at an unprecedented rate, the City has prioritized new capital infrastructure projects that will ensure the recreational, cultural and transportation infrastructure needs of its citizens will keep pace with the City’s growth. The Surrey Invests program will add new and improved recreational facilities, arenas, sports fields, parks, and arts & culture amenities. THE FUTURE

Additional funding has been committed to the Newton Community Centre which will now include an Olympic sized swimming pool. Planning, design, and construction is proceeding briskly on this project along with other notable facilities such as the City Centre Sports Complex, Cloverdale Sport & Ice Complex, Bear Creek Athletics Centre, and the Nicomekl Riverfront Park, to name a few. In addition to producing tangible benefits that support a high quality of life for our citizens, investing in major capital projects spurs economic activity that can catalyze growth while supporting our vision of a thriving, green and inclusive community. This will ensure our City continues to advance as one of Canada’s most vibrant, livable cities. 2022 will be another important year in the transition to our police service. SPS continues to rapidly scale up operations to create a new independent municipal police service that reflects our diverse, urban community. The first group of experienced SPS officers has begun working in the community beside Surrey RCMP officers. In 2022, the first class of new recruits will be trained at the Justice Institute of BC. Another major milestone was recently achieved with the signing of the first collective agreement between the Surrey Police Board and the Surrey Police Union. The Surrey Police Transition Trilateral Committee (“SPTTC”) continues with its collaborative approach and detailed planning to ensure that public safety remains the top priority for all throughout the transition period. SPS will implement proven, community based approaches to building safety and well-being for our community. During the course of 2021, the City has grown stronger financially, and is very well positioned to continue to deliver a high quality of service to our residents and businesses in 2022 and years beyond, including delivering on one of the most aggressive capital plans in the City’s history that will provide world class civic facilities for our citizens.

Respectfully submitted,

Kam Grewal, BBA, CPA, CMA CFO/General Manager, Finance

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