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RFD- 4101 Administrative Updates   Item #   9. a.    
Regular Council Meeting Agenda   
Meeting Date: 11/09/2020  
Title:    2020 Third Quarter Financial Statements - Frostad
Department: Corporate Services  
Strategic Vision Element: This topic relates to all three of the City’s strategic vision elements contained in Council’s Strategic Plan Related Goal: n/a

Request for Decision Summary

To publish quarterly financial information to allow the routine monitoring of financial activities.

Proposed Motion
That the 2020 third quarter financial statements be received as information.

The financial statements have been prepared and presented by Administration, who is responsible for their accuracy, objectivity, and completeness.  Administration is available to provide Council with an overview and answer any questions about the financial statements.

Interim financial statements are consistent with annual statements except that they are condensed, unconsolidated, and unaudited.
  • Condensed financial statements do not include the complete note disclosure, but refer readers to the annual financial statements.
  • Unconsolidated financial statements do not include the financial results of the TransAlta Tri Leisure Centre or the Library.
  • Interim financial statements are not normally audited.
The financial statements represent the financial position of the City at September 30, 2020, as well as the results of its financial operations, changes in net debt, and changes in cash flows for the nine months ended September 30, 2020. 

Quarterly financial statements include year-to-date budgets, which are helpful in comparing planned and actual results during the fiscal year.  Some budget variances are due to timing differences in the year-to-date budget.  Administration continues to work on making the year-to-date budgets as accurate as the annual budget.

Highlights from the 2020 third quarter financial statements:
  • Net Debt – the 2020 closing forecast for net debt is currently projected to be $27.1 million.  Net debt at the end of Q3-2020 was $13.2 million, which put the City $13.9 million below the annual target nine months into the year.  The City’s net debt position is $8 million lower than it was at the end of Q3-2019.
  • Financial Assets – increased $8.5 million from Q3-2019.
    • There was a change in classification of one instrument between cash and investments in the amount of $11.5 million that caused some of the variance in those account balances. 
    • Overall investments however were up, as the City began minimizing cash outflows on the onset of COVID-19.  Capital projects were deferred and staff were advised to only undertake critical spending.
    • Receivables at quarter end remain comparable to those of the prior period.  Property taxes receivable were up as a result of the deferral program, but utility receivables remained comparable to Q3-2019 balances.  The increase in property tax receivables was offset by a reduction in government transfers receivable.  Federal Gas Tax funds were still receivable at the end of Q3-2019, while we have already received the 2020 Federal Gas Tax allocation.
  • Liabilities – increased only slightly at $500k from Q3-2019.
    • The liability for contaminated sites was reduced at the end of 2019, as remediation costs for the public works site came in significantly under budget; partially the result of a downturn in the economy.  Some additional remediation work was performed early in 2020 to update the risk management plan and prepare for groundwater monitoring which further reduced the liability.
    • Long-term debt increased as a new loan was advanced from Alberta Capital Finance Authority to fund underground work associated with the Industrial Watermain and Surface Rehab project.  By the end of Q3-2020, $1.2 million was spent utilizing 55% of the funds advanced.   
    • Accounts payable and accrued liabilities decreased as the City paid off some large holdbacks associated with the RCMP and Protective Services facilities as well as some old developer commitments.  The impact of these adjustments was offset by a change in payment of invoices.  The City began repaying invoices in accordance with repayment terms and not on receipt of invoices as was done in the past.  This change was made to help manage cash flows on the onset of COVID-19.
  • Tangible Capital Assets – increased $5.6 million from Q3-2019.
    • Major capital projects completed in 2019 included the RCMP and Protective Services facilities, storm system upgrades, transit system growth and water rehabilitation.
    • Minimal capital acquisitions have taken place year-to-date in 2020 and as a result amortization expense exceeded capital acquisitions resulting in a Q3-2020 ending balance lower than that of the most recently completed year-end.
  • Operating Revenue – Under budget $1.9M:
    • Sales and user fees – COVID-19 resulted in reduced transit service and the closure of Horizon stage and other recreation facilities and programs.
    • Fines – Unpredictable revenue source that is dependent on the number of infractions.  Automated Traffic Enforcement (ATE) program was also discontinued for a portion of 2020.
    • Licenses and permits – Downturn in economic activity resulted in a decline in building and development permits.
    • Other operating – TransMountain donation for Jubilee Park will be received in 2021 now as the associated costs were deferred to that period.
  • Operating Expenses – Under budget $9.2M:
    • Contracted and general services – ATE program was discontinued for a portion of 2020. Storm work was deferred to 2021 as the implementation of the new user fee was delayed.  Economic Development, Planning, and Information Systems project work was put on hold as a result of COVID-19.
    • Salaries, wages and benefits – lower than planned due to no new hires, temporary layoff of some staff, and a delay in the payment of merit.
    • Materials, goods and supplies – To lessen the impact of COVID-19 on City operations, staff were instructed to proceed with critical project work only (i.e. reduce non-essential spending).
  • Capital Transactions – Under budget $11.8M:
    • Government transfers – capital – Westwind land sales are no longer planned for 2020.  Design and construction of the snow dump site and the Transit - Park and Ride were deferred.  Road work under the Industrial Watermain and Surface Rehab project has not yet commenced.
    • Developer contributions – Two new developer agreements were signed in 2020 but for much smaller amounts.  Development activity as a whole has been down the past couple of years.
    • Gain on disposal of total capital assets (TCA) – Westwind land sales are no longer planned for 2020.
The interim financial statements will be posted on the City website and a copy has been discussed and distributed to the City's management team.
Third Quarter 2020 Financial Statements

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