Report to: General Committee Date of Meeting: November 9, 2009

SUBJECT: Status of Capital Projects as of August 31, 2009

PREPARED BY: David Milenkovski, Senior Financial Analyst

RECOMMENDATION:

That the report dated November 9, 2009 entitled “Status of Capital Projects as of August 31, 2009” be received; and,

That $1.21M from closed capital projects be transferred to the sources of funding as listed on Exhibit A; and,

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

PURPOSE:

To inform Council about the status of capital projects as of August 31, 2009, in accordance with the Capital Budget Control Policy.

BACKGROUND:

CAPITAL PROJECTS TO BE CLOSED

There are 55 capital projects ($12.17M budget) recommended for closure. Of these, 41 projects were not fully spent, resulting in a total of $1.21M to be returned to the original sources of funding as listed in Exhibit A. The details by project are listed in Exhibit B. The remaining 14 projects, as listed on page 2 of Exhibit B, were fully spent.

STATUS OF OPEN CAPITAL PROJECTS

The total capital budget for open projects at August 31, 2009 is $401.58M of which, $175.46M (or 44%) is encumbered by expenditures/commitments. The unexpended amount, for which there are no expenditures/commitments, is $226.12M ($401.58M -$175.46M). These amounts exclude the 55 capital projects recommended for closure in this report.

Staff has conducted a compliance review on all open capital projects. In accordance with the Capital Budget Control Policy Section 4.1, projects that remain inactive for a period of twenty-four months or longer are subject to closure. The non-compliant projects were discussed and reviewed by the business units, of which a majority of these inactive projects are being closed and are included in Exhibit A.

FINANCIAL CONSIDERATIONS:

A detailed listing of capital projects with unexpended funds totaling $1.21M, to be closed upon approval of this report, is outlined in the following Exhibits:

EXHIBIT A - CAPITAL PROJECTS TO BE CLOSED

Exhibit A “Summary of Closed Capital Project Funding to be Transferred” summarizes where the closed capital project balances will be transferred;

Exhibit B (Page 1) “Closed Capital Projects – With Funds to be Returned to Original Sources of Funding” provides a detailed summary by project where the closed capital project balances will be transferred;

Exhibit B (Page 2) “Closed Capital Projects – Projects to be Closed and Fully Expended” outlines projects that have been 100% spent and therefore have no balance to return to their original funding source(s).

Exhibit A summarizes the return of funds from the closed capital projects to the original sources of funding. In accordance with the Capital Budget Control Policy, the remaining funds from the closure of operating budget and life cycle replacement and capital reserve funded capital projects will be transferred to top up the capital contingency project to a maximum of $250,000. Exhibit A shows a transfer of $105,188 to top up the capital contingency project. Further closures of operating budget and life cycle reserve funded capital projects in the amount of $217,467 will be returned to the life cycle replacement and capital reserve. Therefore, the total amount being closed from projects that were originally funded by the operating budget and life cycle replacement & capital reserve fund is $322,655 ($105,188 + $217,467), as summarized on the bottom of Page 1 of Appendix B.

Similarly, there are Planning DC and Design DC capital contingencies that are funded from the closure of capital projects in the Planning department and in the Design department to a maximum of $50,000 and $100,000 respectively. The Planning DC contingency currently has a balance of $50,000, therefore no additional amounts will be allocated to this contingency.

Surplus DC funds in the amount of $19,201 from completed Design projects will be transferred to top-up the Design DC contingency which currently has a balance of $16,936. With the transfer of $19,201, the Design DC contingency will be $36,137 (current balance $16,936 + top-up $19,201).

The remaining development charge funded projects in the amount of $807,074 will be returned to the DC reserve. Therefore, the total amount being closed from projects that were originally funded by the DC reserve is $826,275 ($807,074 + $19,201), as summarized on the bottom of Page 1 of Appendix B.

In summary, the net amount $1.21M as outlined in Exhibit A to be transferred back to the original sources of funding is as follows:

Source of Funding Amount

DCA $0.81M

Reserve Funds $0.28M

Capital Contingency $0.10M

Design DC Capital Contingency $0.02M

Total $1.21M

The majority of the projects listed on Page 1 of 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. There are various reasons for the projects listed not utilizing their entire budgets and the following are the reasons for some of the projects with larger variances;

Operations - Fleet

Project # 7516 – Corporate Fleet Replacement – Annual Program – Remaining Budget of $158,331 : The amount spent was less than budgeted because of lower prices obtained through the tender process on some vehicles, as well as a condition assessment done on non-Fleet vehicles, which resulted in a reduction in the number of replacements required.

Corporate Communications

Project # 8146 – Exterior Branding at Town Facilities – Remaining Budget of $100,000 : This project has been deferred. This request was for a study to re-brand all Town facilities but it was determined that the time and expense required to re-brand the facilities would be excessive.

There are also two projects listed on Exhibit B, which had zero spending and the following are the reasons for closing these projects;

Engineering

Project # 9298 – Birchmount Road Extension – Phase 1 (EA) – Remaining Budget of $494,000 : This project will be completed by Developers.

Planning

Project # 7828 – Growth Summit – Remaining Budget of $25,000 : This budget was set up to hold a Growth Summit in Markham but the event was held by the Province in Vaughan.

Projects with over expenditures (or negative balances remaining) will be offset against other identified closed projects with the same funding source(s), as per guidelines established in the Expenditure Control Policy.

Page 2 of Exhibit B lists the projects that have been completed on budget and have no remaining funds to be transferred back to the original sources of funding.

STATUS OF OPEN CAPITAL PROJECTS

As of August 31, 2009, there are 693 open capital projects with a total budget of $401.58M. 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 $401.58M

Total Encumbered $175.46M 44%

Unencumbered/Uncommitted $226.12M 56%

This indicates that 44% of the total approved open capital project budget is encumbered.

These totals do not include the 55 capital projects recommended for closure in this report.

The total encumbered of $175.46M includes commitments of $64.22M and expenditures of $111.24M.

Commitments refer to purchase orders (PO’s) on file with the Purchasing Department as of August 31, 2009. Expenditures refer to payments issued for goods/services received as of August 31, 2009.

RECOMMENDED

BY: ________________________ ________________________

Barb Cribbett, Treasurer Andy Taylor, Commissioner

Corporate Services

ATTACHMENTS:

Exhibit A - Summary of Closed Capital Project Funding to be Transferred

Exhibit B - Closed Capital Projects – With Funds to be Returned to Original Sources of Funding & Projects to be Closed and Fully Expended