Town council adopts 2012 financial statements; debt at $38.5 million

 

By Ron Giofu

 

Town council has passed its 2012 financial statements, a move their director of corporate services calls a “major step forward” as the town seeks to secure funding for projects.

Passage of the 2012 audited financial statements took place Monday night with town council also authorizing administration to immediately proceed to secure financing for up to $9 million to cover unfinanced capital projects. There are currently $8.5 million in completed projects to be financed by debt, noted Val Sequeira, with $5.6 million to be covered by the tax levy, $1 million to be covered by wastewater charges and $1.9 million to be covered in water rates.

By council passing the 2012 financial statements, Sequeira stated he will notify Infrastructure Ontario about the town’s grant applications and invite them to start the process of flowing money.

That $8.5 million will likely cause the municipal debt to rise, though the 2012 financial statements did show a $2.5 million decrease from 2011 to $38.5 million.

“We have been cash flowing them right now and it is time to put them on the books as debt and clean up what has been going on for a while,” said Sequeira of how projects have been paid for.

“I think management is expecting the debt to increase when capital projects are completed this year,” noted Lindsay Rounding, engagement partner with the accounting firm Graham, Setterington, McIntosh, Driedger and Hicks LLP.

An additional $9 million has to be financed for “work-in-progress” projects, with that scheduled to be taken care of when the projects are completed.

The director of corporate services acknowledged the town’s debt is above normal for a town this size.

“It is high for a town like Amherstburg,” said Sequeira of the debt.

Sequeira added that Amherstburg does have “significant assets”, such as a new pollution control plant under construction, that other municipalities do not have.

“I think we’ve been making excellent progress in the last few months,” he stated.

His department’s work has entailed “a lot of work cleaning up and getting everything up to speed,” he added.

Amherstburg had $15.7 million in total financial assets in 2012 as opposed to $14.1 million in 2011 while liabilities were $79.7 million in 2012 compared to $73.9 million in 2011. Roughly $30.4 million in revenue came in with $28.9 million budgeted but expenses sat at about $34 million with $29.5 million having been budgeted for. That gave the town a net deficit of $3.6 million for 2012 with $515,752 having been budgeted.

The town’s accumulated surplus was $185.3 million with a budgeted total being $186.4 million.

Reserves and cash flow weren’t where Sequeira said he wanted them to be. Figures show reserves at over $56 million, but Sequeira said the town only has $6-7 million at its disposal.

“A lot of reserve dollars are committed to capital projects we have spent money on,” he said.

Rounding noted much of the focus will be on addressing unfinanced capital, cleaning up the prior year’s accounting and analyzing the budget to the actual figures. Other focuses in 2013 will be on water and wastewater operations, funding and long-term stability.

Councillor Diane Pouget, who earlier questioned Rounding over not hearing back from her firm over concerns she had raised, wondered if water and wastewater rates may have to be adjusted further.

“Have we raised enough to cover our debt or do we have to raise more?” she asked.

Sequeira said that is being investigated and recommendations will come back to council once administration has reviewed that.

Also on administration’s plate is developing a long-term financial strategy that identifies how the town pays for long-term financing, reviews adequacy of reserves and reserve funds, establishes parameters for future financial commitments, rationalizes fees and service charges, waivers and revenue deferrals and addresses long-term trends and impacts on future year budgets.

In a separate report, council adopted a moratorium on waiver of fees and charges pending a review of the existing practice with administration reporting back in three months with recommendations regarding a policy for such matters, future level of fees and charges with “due regard” to the cost of service delivery and an action plan to implement these recommendations for the 2014 budget.

Councillor John Sutton said he wanted a breakdown of the debt and its sources to clear up rumors about it. He added it was “upsetting to all of us” why the town’s financial straits were not in front of council when the original decision to redevelop Texas Road came before the town.

CAO Mike Phipps said he wants to see an open house the week of Aug. 26 on Texas Road so the public can see various options for repairing the road and have public comment play into a decision of town council in September. Deputy Mayor Ron Sutherland “wholeheartedly supported” that method.

“Doing it that way will suffice,” said Sutherland.

Councillor Carolyn Davies said that as difficult as the financial situation has been, she believed other communities are “envious” of Amherstburg for the assets it has.

“As much as it has been a struggle, we are way ahead as far as upgrading our infrastructure and attracting investment to our community,” said Davies.

The Town of Amherstburg has revealed a schedule of reports that will go before council to deal with the financial situation.

In a press release issued by the town last week, it states the municipality “continues to move forward to address financial challenges and improve accountability to council and taxpayers.”

In addition to the 2012 financial statements that were adopted Monday night, a number of other reports will come before town council in the coming weeks.

A pair of reports are due for a special council meeting called for Aug. 26. A report to council on the town’s cumulative 2011-12 operating deficit with recommendations to address that issue is planned for that meeting. Another report is due Aug. 26 and that will be a 2013 mid-year report on financial performance and year-end projections.

Three reports are scheduled to appear before town council at the Sept. 3 regular council meeting. The first report will be a report to council on financing for completed and unfunded capital projects while the second report will be an update on the town’s financial performance to the end of July 2013.

Also at the Sept. 3 council meeting, administration plans to present council a report, with recommendations, on the Texas Road reconstruction project.

Two more reports are scheduled to come before council Oct. 7. A report to council on the status and implementation of the 2013 capital budget will be the subject of one report while the second report will be an update on the town’s performance to the end of August 2013.

A presentation to council is planned for the Oct. 21 town council meeting on a multi-year financial strategy for the town while a recommendation to council on a financial and budgetary control policy is also planned for that evening’s meeting.

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