Report to: General Committee – Finance & Administrative Date of Meeting: 2007-05-07

SUBJECT: Status of Capital Projects as of January 31, 2007

PREPARED BY: Fuwing Wong, Manager, Financial Planning

RECOMMENDATION:

That the report titled “Status of Capital Projects as of January 31, 2007” be received;

And that $1,248,469 from closed capital projects be transferred to the sources of funding as listed on Exhibit A entitled “Summary of Closed Capital Projects by Account” with $120,818 from closure of operating budget funded capital projects to be transferred to the capital contingency project and $9,700 from closure of Development Charge (DC) funded capital projects to be transferred to the Planning DC Capital Contingency Project;

And that projects listed on Exhibit C entitled “Summary of Open Capital Projects 100% (or Greater) Encumbered at January 31, 2007” be closed upon payment of final invoices and any outstanding amount returned to/from the original sources of funding;

And that Staff be authorized and directed to do all things necessary to give effect to this resolution.

FINANCIAL CONSIDERATIONS:

A detailed listing of capital projects, with unexpended funds totaling $1,248,469, to be closed upon approval of this report is outlined in Exhibit B. It is recommended that $1,248,469 from closed capital projects be transferred to the sources of funding as per Exhibit A

Exhibit A also shows two transfers to capital contingency projects, $120,818 to the capital contingency project and $9,700 to the Planning DC Contingency project. These transfers are made in accordance with the Capital Budget Control Policy to top-up the capital contingencies to $250,000 and $50,000 respectively.

The capital contingency is funded from the closure of operating budget and Life Cycle Replacement & Capital Reserve funded capital projects. Once the capital contingency account is at the maximum $250,000, further closures of operating budget & Life Cycle Reserve funded capital projects will be returned to the Life Cycle Replacement & Capital Reserve Fund. Similarly, the Planning DC Capital Contingency is funded from the closure of capital projects in the Planning department to a maximum of $50,000.

Further, projects listed in Exhibit C ($2,760,987 budget) will be closed upon payment of final invoices, and any outstanding amount be returned to/from the original sources of funding.

As at the end of January 2007, the Town of Markham had $208.66M of open capital projects.

· $205.90M which are projects still in progress

· $ 2.76M which are projects that are substantially completed and awaiting final invoice payment or fully committed (see Exhibit C)

CAPITAL PROJECTS TO BE CLOSED

There are 74 capital projects ($8.34M budget) recommended for closure for a total of $1.25M (Exhibit B) available to be returned to the original sources of funding. As summarized on Exhibit A, $1.12M will be returned to various Reserves, Reserve Funds and the Development Charges Reserve. A portion of the Operating Budget funding from the closed capital projects, $0.12M, will be transferred to the capital contingency project. Development Charge funding from the closed capital projects in Planning, $0.01M will be transferred to the capital contingency projects for the DC portion of Planning.

STATUS OF CAPITAL WHICH IS 100% (OR GREATER) ENCUMBERED

There are 17 open capital projects ($2.76 M budget) that are completely encumbered as

listed on Exhibit C. Upon payment of final invoices, these projects will be closed and any remaining funding will be transferred to/from the original sources of funding.

STATUS OF OPEN CAPITAL PROJECTS

The total capital budget for open projects under 100% encumbered at January 31, 2007 is $205.90 M of which, $133.92M (or 65%) is encumbered by expenditures/commitments. The unexpended amount, for which there are no expenditures/commitments, is $71.98M ($205.90M-$133.92M).

Staff will conduct a compliance review on all open capital projects. In accordance to the Capital Budget Control Policy Section 4.1, projects that remain inactive for a period of twenty-four months or longer will be closed. Projects that are non-compliant with the policy are subject to closure and surplus funding from the projects will be returned to their original funding source(s).

OPTIONS/DISCUSSIONS:

Capital Projects to be Closed

Exhibits A and B provide details of the projects being recommended for closure. Exhibit A “Summary of Closed Projects by Account” summarizes where the closed capital project balances will be transferred. Exhibit B “Summary of Closed Capital Projects - Detail” provides a detailed summary by project where the closed capital project balances will be transferred.

The net amount $1.25M to be transferred back to the original source(s) of funding is as follows:

Source of Funding Amount

Reserves $0.64M

Reserve Funds $0.21M

DCA $0.27M

Capital Contingency $0.12M

Planning DC Capital Contingency $0.01M

Total $1.25M

The majority of the projects listed in Exhibit B are projects that were completed within budget. Projects that were under spent will have the balance transferred back to the original source(s) of funding. Projects with over expenditures that fall within the guidelines established in the Expenditure Control Procedures will have the necessary funds allocated from other identified closed projects.

Status of Capital which is 100% (or Greater) Encumbered:

Exhibit C, “Summary of Open Capital Projects 100% (or Greater) Encumbered at January 31, 2007” lists open capital projects with a total budget of $2.76M.

This exhibit identifies projects which are fully expended or committed. The purpose of

Exhibit C is to obtain approval at this time to close projects listed on Exhibit C, upon payment of final invoices. Obtaining pre-approval, at this time, to close fully expended/ committed projects will allow for more timely and frequent closing of capital projects in the future which will lead to more efficient use of funding.

Status of Open Capital Projects:

As of January 31, 2007, there are 447 open capital projects with total budget of $205.90M. The term “open” refers to projects which have been approved but have not started or are at various stages of completion. The following summarizes the status of open capital:

Open Capital $205.90M

Total Encumbered $133.92M 65%

Unencumbered/Uncommitted $ 71.98M 35%

This indicates that 65% of the total approved open capital project budget is encumbered. Of the 443 open capital projects, 140 projects are from 2004 and prior years with an unencumbered/uncommitted amount of $21.06M. Additional information on the status of open capital projects is included in exhibit D.

Total Encumbered:

The total encumbered of $133.92M includes commitments of $24.31M and expenditures of $109.61M.

Commitments refer to purchase orders (PO’s) on file with the Purchasing Department as of January 31, 2007, and does not include PO’s issued or in process since January 31. Expenditures refer to payments issued for goods/services received as of January 31, 2007.