City of Surrey's Annual Financial Report 2021

NOTESTOTHE CONSOLIDATED CITY OF SURREY FINANCIAL STATEMENTS

For the year ended December 31, 2021 [tabular amounts in thousands of dollars]

14. COMMITMENTS AND CONTINGENCIES (CONTINUED)

h) Biofuel processing facility The City entered a 25-year agreement in 2015 to design, build, finance, operate and maintain the Surrey Organics Biofuel Processing facility. Under the agreement, the City guaranteed to provide a minimum tonnage of City organic waste (as defined in the agreement) for processing. In return the City will receive 100% of the biomethane produced at the facility and will share in certain other revenues generated at the facility. In 2018, the City recorded the facility as a tangible capital asset in the amount of its cost of construction of $50.0 million. The City also recorded a loan payable liability for an equal amount representing the capital financing for the facility. The liability will be reduced over the term of the agreement as payments are made to the operator for the City organic waste processed by the facility (Note 10(ii)) .

15. CONTRACTUAL RIGHTS

Contractual rights are rights to economic resources arising from contracts or agreements that will result in revenues and assets in the future. The following table summarizes the contractual rights that existed at December 31, 2021 of the City for future assets:

2022 7,100 3,649

2023

2024

2025

Thereafter $ 23,704

Lease revenue (a)

$

$ 6,380

$

5,539

$

4,857

Government agreements (b)

3,596

1,421

140

599

Total

$ 10,749

$ 9,976

$ 6,960

$ 4,997

$ 24,303

a) Lease revenue The City has entered into a number of fixed term lease agreements for the use of City owned land and/or buildings that are anticipated to provide the City with future revenues. These agreements are for terms that vary from 1 to 18 years. b) Government agreements The City has entered into various government agreements with senior government and other agencies related to contractual rights expected to be realized as stipulations are met. c) Developer contributions The City has entered into a number of public works development agreements which require the developers to contribute various infrastructure assets to the City, including roads and underground utilities. The timing and extent of these future contributions vary depending on development activity and fair value of the assets received at the time of contribution, which cannot be determined with certainty at this time. d) Other contractual rights The City is entitled to receive revenue from certain other agreements. The revenue from these agreements cannot be quantified and has not been included in the amounts noted above.

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