TAMRMS#: B06
8.2
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Audited Financial Statements & Annual Report
Presented by: Kerry Hilts, Chief Administrative Officer (Interim)
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RECOMMENDATION(S)
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That the City’s 2021 Annual Report, including the audited Consolidated Financial Statements for the fiscal year ended December 31, 2021, be approved.
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PURPOSE OF REPORT
The Annual Report includes 2021 operational highlights, progress achieved towards implementing the City of St. Albert Strategic Plan, statistical information and discussion of the financial statements, as well as the 2021 audited consolidated financial statements.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
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ALIGNMENT TO LEVELS OF SERVICE DELIVERY
Public Communication and Corporate Reporting to Community:
The annual report provides progress updates on Council’s Strategic Plan, financials and key performance indicators to support transparency to the community through regular reporting of the City's achievements. The report is prepared annually to provide update on progress toward achieving established goals and to report on City’s financial position, in accordance with the below service level:
Community, Business, and Financial Reporting
H.1.2a City's Annual Report: Audited Financial Statements are provided annual by an external auditor. The City's Annual Report is published in June each year.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
As per section 276 of the MGA, a municipality must prepare annual financial statements for the immediately preceding year. Once approved the municipality must make its financial statements and the auditors report available to the public by May 1 of the current year.
BACKGROUND AND DISCUSSION
The Annual Report is an important element of the City’s transparency and communication efforts, providing residents and stakeholders with quality information on the City’s performance. The report highlights the City’s major accomplishments and it presents the City’s audited consolidated financial statements, statistics and management commentary.
Highlights from the 2021 Annual Report across the seven Council priority areas include:
Growth Policy Framework
Flourish - Growing to 100k, the City’s newest Municipal Development Plan (MDP) was approved by Council on April 19, 2021. Flourish is the City-wide plan for growth and change which wholistically considers the City’s environmental, economic, social, and cultural aspirations in the growth strategy as the City grows to 100,000 people in the coming decades. The City of St. Albert - Sturgeon County annexation also came into effect at the very end of 2021, and both the City and the County continue to work together to ensure a smooth transition of the annexed lands.
Economic Development
Focus on support for business growth and development continues. The Business Resiliency Program was launched in 2021, which is a grant to support business developing or improving their marketing presence during the COVID-19 pandemic. The City also created and continues to work on the Collaborative Economic Development initiative.
Building a Transportation Network
Phase one of the Ray Gibbon Drive Twinning Project was completed, with minor outstanding work yet to be completed. The Twinning Project will greatly improve safety and commute times of travelers, and will reduce traffic congestion. The Intelligent Transportation System (ITS) strategy continued its progress, with further roll-out of Adaptive Signals technologies to the South portion of St. Albert Trail and to Boudreau corridor. The Joint Inter-jurisdictional Transportation Network Improvement Strategy modeling update was completed in 2021, as well as the remaining Traffic Bylaw speed changes related to the Transportation Safety Plan.
Infrastructure Investment
Servicing has begun at the future community amenities site in the Cherot Lands, and work will continue on advancing the Community Amenities Needs Assessment and Concept Planning for the Lands. A purchase agreement was signed and executed in 2021 to secure land for Fire Hall #4. An additional Maturity Improvement Plan (MIP) was completed in 2021, which brought the total completed MIPs to 15. Work on the Asset Lifecycle Cost of Ownership resumed in 2021 with significant work having been conducted on the development of the Total Cost of Ownership template, which will be used to support decision-making and operational efficiency. Finally, Planning Forward - Setting the Context engagement sessions were held to identify ideas and opportunities to diversify City sources of revenue.
Housing and Social Well-being
The City’s new MDP, Flourish - Growing to 100K, identifies opportunities for new land use districts to enable mixed-use opportunities within key locations in mature neighbourhoods. Work was also started on planning for Youth Transitional Housing and general housing supports for vulnerable people, in addition to work on exploring options for a coordinated network of social services which focused on identifying gaps, barriers, and trends.
Environmental Stewardship
The Curbside Waste Education Program ran from May to August 2021, which included audits to determine the extent to which single-use items were being discarded - this program will support the development of waste reduction strategies. While the Waste to Energy and Net Zero initiatives experienced delays in 2021, the development of the Green Environment Strategy, piloting the new process to align long-range strategies with MDP goals, made considerable progress and will be completed in 2022.
Community Recovery Post COVID-19
The COVID-19 Recovery Task Force conducted stakeholder engagement regarding recovery ideas and presented the final report to Council in August 2021.
2021 Financial Highlights
Administration is pleased to present the 2021 audited consolidated financial statements. The City’s auditors, KPMG LLP have audited these statements and have provided an unqualified opinion.
These financial statements meet the requirements of Section 276 of the Municipal Government Act and are consistent with Canadian Generally Accepted Accounting Principles as recommended by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants.
These financial statements represent the consolidated operating and capital activities of the City of St. Albert, the City of St. Albert Public Library, and the Arts and Heritage Foundation of St. Albert.
Administration offers the following high-level financial analysis:
Consolidated Statement of Financial Position
The City’s financial position remains strong at $89.4 million in net assets, which is equal to the City’s financial assets of $247.4 million less liabilities of $158.0 million.
The City’s financial assets grew from 2020 by $22.0 million, as a result of an increase of investments by $24.0 million, an increase in accounts receivable of $8.5, offset by a decrease in cash and cash equivalents of 10.3 million. This increase in investments and reduction in cash is due strictly to timing of when funds are invested in higher earning investments.
On the other side of the equation the City’s liabilities increased by $35.7 million from 2020, due largely to an increase in long term debt of 27.1 million and Off site Levy Liabilities of $7.9 million. The increase in debt relates to 4 significant projects: Ray Gibbon Drive $6.0 million, North St. Albert Trail $7.5 million, Community Amenities Site & Lakeview Business District $17.0 million and Fire Hall #4 Land $2.6 million
The City’s non financial assets of $1,201 million was an increase from 2020 of $88.2 million. These non financial assets include tangible capital assets (TCA), prepaids and inventories of material and supplies. The $88.2 million increase is attributed to TCA which is made up of buildings, land, roads, machinery and equipment.
In a little more detail, engineered structures increased by $78.4 million which is made up of over $25 million in contributed assets from Developers for Jensen Lakes and Riverside Developments and $17 million for RR 260 and $6 million for North St. Albert Trail. Land improvement also increased by $15.3 million due to developments such as Kingsmeade Park $ 2 million, Fowler Track $ 3 million and Woodland Park Redevelopment $ 1.5 million to name a few.
Overall the City’s Accumulated Surplus or municipal equity increased to $1,290.7 million from $1,216.2 million. The majority of the accumulated surplus is $1,125 million in equity in TCA. This is tangible capital assets, less depreciation, less debt. The second component is Reserves of $162 million.
Consolidated Statement of Operations and Accumulated Surplus
This statement details the City’s revenues and expenses on a consolidated basis. The first section of the statement focuses on the consolidated operating revenues and expenses which resulted in an annual deficit before capital revenue of $3.7 million. As the City continues to reopen from COVID-19 pandemic, strategies to maintain a healthy financial position include balancing cost reductions and service levels.
Total operating revenues decreased only slightly by $.4 million from 2020. This was due to changes in the following areas:
- Sales and User Fees increased by $1.8 million due to easing of some COVID restrictions and partial opening of facilities.
- Franchise Fees increased by $ 1.1 million due to the FortisAlberta increase from 7.5% to 10%.
- Fines and Penalties increase by $1.3 million due to an increase in late payment fees for taxes, web/tax certificates and utilities.
These increases were offset by a decrease in Government Operating Transfers by $7.9 million due to the elimination of the MOST grant for COVID-19 relief funding provided in 2020 from the Provincial Government.
On the other side, the operating expenses increased by $6.4 million in the following functional areas:
• Public Works and Transit increase of $2.9 million due to increased cleaning costs for COVID-19 and maintenance expenses for Servus Place.
• Utility Services increased by $2.5 million due an increase in water purchases (as a result of lower precipitation) and an increase in electrical costs.
These increases were offset by an decrease in Community Services of $2.2 million, due to intermittent facility closures and reduced services levels, and a decrease in Corporate Services of $1.1 million.
Near the bottom of the page, capital revenues decreased to $78.1 million which was mainly due to an decrease in Contributed Capital Assets from Developers and Developer Contributions and Levies.
Overall, the City’s annual surplus remains financially strong at $74.5 million. This annual surplus is different than operating surplus as it includes non-cash items, such as amortization and contributed assets.
More detailed variance explanations on the functional divisions can be found in the fourth quarter report that was presented to Council on February 14, 2022.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
The Annual Report, once approved, will be posted to the City website.
IMPLICATIONS OF RECOMMENDATION(S)
Financial:
None at this time.
Legal / Risk:
As per section 276 of the MGA, a municipality must prepare annual financial statements for the immediately preceding year. Once approved the municipality must make its financial statements and the auditors report available to the public by May 1 of the current year.
Program or Service:
None at this time.
Organizational:
None at this time.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
N/A
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Report Date: April 19, 2022
Authors: Jacqueline Pelechytik/Brenda Barclay
Department: Strategic Services & Communications and Finance & Information Technology
Deputy Chief Administrative Officer (Interim): Diane McMordie
Chief Administrative Officer (Interim): Kerry Hilts