Report to: General Committee Finance & Administrative Date of Meeting: June 12, 2006

SUBJECT: Development Charges December 31, 2005 Reserve Balances and Annual Activity of the Accounts

PREPARED BY: Jennifer Nelson, extension 2640

RECOMMENDATION:

That the report titled “Development Charges December 31, 2005 Reserve Balances and Annual Activity of the Accounts” be received for information purposes.

Section 43(1) of the Development Charges Act, 1997 require the Treasurer to submit annually to Council a financial statement relating to development charge by-laws and reserve funds established under section 33 of the Development Charges Act, 1997

As part of the Development Charges Act, 1997 the Treasurer is to report annually on the funds received and dispersed.

Schedule A (attached) detail balances by individual component of the reserve fund.

Schedule B (attached) details of the funds received and dispersed by category.

Schedule C (attached) details of the capital projects funded and closed.

Schedule D (attached) details of the credits recognized.

Schedule E (attached) investment details as required under Reg. 74/97 Section 8 of the Municipal Act.

Once received by Council a copy of this report will be forwarded to the Ministry of Municipal Affairs and Housing as required by the Development Charges Act, 1997.

Enclosed are the statistics for the twelve (12) months ended December 31, 2005.

FINANCIAL CONSIDERATIONS:

The December 31, 2005 closing balance of the Development Charge reserve accounts was $76,112,984 (Schedule A). This balance represents the cash balance in the reserves, and does not include unfunded commitments. As previously communicated to Council, the majority of the reserves are dedicated to specific capital projects.

Appendix C provides the detailed funding for projects approved by Council in the Corporation’s 2005 Capital Budget and throughout 2005. The net decrease in the reserve fund in 2005 was $8,123,791 (Appendix B).

The Net Amount Transferred to Capital Projects was $38,407,945 (Schedule C). The two components of the transfer include $39,324,512 of growth related projects being funded from development charges as well as a transfer back to development charges of $916,567 resulting from the closure of capital projects.

A summary of the Development Charges activity for the year is detailed as follows:

January 1, 2005 opening balance $84,236,775

Development Charges received 28,341,161

Interest earned 1,942,994

Net amount transferred to capital projects (38,407,945)

Balance as at December 31, 2005 $76,112,984

COMPONENT CATEGORIES

The balance of the Reserve Fund is made up of the following major categories:

Town Wide Soft $ 54,707,496

Town Wide Hard 3,061,395

Area Specific 18,344,092

Total $ 76,112,984

The development charge reserves are currently being depleted at a rate quicker than revenues are being received. Staff are currently reviewing the potential need for external borrowing to fund development charge related capital projects. Schedule F (attached) provides the year end balance of each reserve for 2003 through 2005 along with the percentage change over the three year period.

The chart below summarizes the year end reserve balances by component category:

	Year End Reserve Balance			% Change
	2003	2004	2005	03-05

Town Wide Soft Services	59,033,591	58,082,499	54,707,496	-7%
Town Wide Hard Services	17,409,522	7,334,555	3,061,395	-82%
Area Specific	12,857,249	17,114,584	18,344,092	43%
Total Development Charge Reserves	89,300,363	82,531,638	76,112,984	-15%

The depletion of the Town Wide Hard Services reserves is primarily due to major road projects being constructed in advance of development.