THE CORPORATION OF THE CITY OF NELSON

REQUEST FOR DECISON

DATE: August 12, 2019 Regular
TOPIC: INFORMATION ITEMS
PROPOSAL: 2nd Quarter Financial Update
PROPOSED BY: Staff
_________________________________________________________________
ITEMS SUMMARY:
In order to provide Council with an overview of where the City is financially as
compared to budget, the 2nd Quarter Financial Update is presented. The attached
financial report presents the current actual and budgeted financial figures as of June
30, 2019 for the current year with comparative figures for the same period of the prior
year. The report presents the revenue and expenses under the same headings as the
statement of operations in the annual audited financial statements with the addition of
a capital projects section. This report is intended to give Council an idea of how the
City’s revenue and expense have been managed thus far in the year.

Schedules:
Item # Schedule Action

1. 2nd Quarter Financial Update Receive for

information

AUTHOR: REVIEWED BY:

_______________________________ ______________________________
CHIEF FINANCIAL OFFICER CITY MANAGER
CITY OF NELSON
STATEMENT OF OPERATIONS
For the Period Ended June 30, 2019

2019 2018
YTD Total Balance % YTD Total Balance %
Actual Budget Remaining Rem Actual Budget Remaining Rem
REVENUES
Taxes $ 10,359,161 $ 10,593,104 $ 233,943 2 % $ 10,262,174 $ 10,462,065 $ 199,891 2 %
Sales of Services 1,915,844 3,916,968 2,001,124 51 % 1,735,923 3,782,918 2,046,995 54 %
Other revenue 2,608,313 5,043,633 2,435,320 48 % 2,241,313 3,833,613 1,592,300 42 %
Investment income 665,206 594,600 (70,606) (12)% 237,569 480,900 243,331 51 %
Grants - unconditional 533,477 528,000 (5,477) (1)% 526,457 524,000 (2,457) - %
Grants - conditional 673,206 4,210,278 3,537,072 84 % 992,028 6,776,041 5,784,013 85 %
Water user fees 2,301,262 2,334,759 33,497 1% 3,510,496 3,558,112 47,616 1 %
Sewer user fees 4,363,298 4,414,369 51,071 1% 3,009,604 3,053,133 43,529 1 %
Transit user fees 148,455 271,751 123,296 45 % 140,088 269,060 128,972 48 %
Nelson Hydro sales 9,966,119 18,231,001 8,264,882 45 % 9,864,446 17,404,106 7,539,660 43 %
Library 231,264 364,342 133,078 37 % 86,882 357,907 271,025 76 %
Total revenue 33,765,605 50,502,805 16,737,200 33 % 32,606,980 50,501,855 17,894,875 35 %

EXPENSES
General Government 1,837,062 3,970,296 2,133,234 54 % 1,772,872 $ 3,592,808 1,819,936 51 %
Protective services 3,570,681 7,322,756 3,752,075 51 % 3,295,159 6,683,907 3,388,748 51 %
Transportation services 2,031,778 3,949,014 1,917,236 49 % 2,025,600 3,764,697 1,739,097 46 %
Environmental health services 135,876 285,093 149,217 52 % 126,625 277,188 150,563 54 %
Public health and welfare services 106,021 200,286 94,265 47 % 84,463 193,641 109,178 56 %
Recreation and cultural services 1,057,273 1,944,722 887,449 46 % 994,635 1,994,296 999,661 50 %
Interest and other debt charges 399,416 910,097 510,681 56 % 394,223 898,602 504,379 56 %
Water utility operations 597,607 1,373,895 776,288 57 % 539,166 1,340,385 801,219 60 %
Sewer utility operations 822,308 1,891,262 1,068,954 57 % 734,045 1,845,134 1,111,089 60 %
Nelson Hydro operations 5,848,455 11,862,924 6,014,469 51 % 5,587,192 11,493,794 5,906,602 51 %
Transit utility operations 867,485 1,670,587 803,102 48 % 773,390 1,639,911 866,521 53 %
Library 458,614 924,342 465,728 50 % 431,948 907,237 475,289 52 %
Total expense 17,732,576 36,305,274 18,572,698 51 % 16,759,318 34,631,600 17,872,282 52 %

NET REVENUE (EXPENSE) 16,033,029 14,197,531 1,835,498 13 % 15,847,662 15,870,255 (22,593) - %

CAPITAL
General 960,568 8,103,549 7,142,981 88 % 1,817,171 10,798,256 8,981,085 83 %
Nelson Hydro 1,349,306 3,823,875 2,474,569 65 % 1,156,297 3,439,000 2,282,703 66 %
Water 230,152 1,815,000 1,584,848 87 % 407,313 3,060,215 2,652,902 87 %
Sewer 746,689 2,645,000 1,898,311 72 % 39,412 2,700,243 2,660,831 99 %
3,286,715 16,387,424 13,100,709 80 % 3,420,193 19,997,714 16,577,521 83 %

NET SURPLUS (DEFICIT) 12,746,314 (2,189,893) 14,936,207 682 % 12,427,469 (4,127,459) 16,554,928 401 %
NOTES

Revenues
 The City is on target to end the year in line with the budgeted operating revenues.
 Please note that revenues are budgeted to occur evenly through the year. This has resulted in some
favourable/unfavourable revenue variances due to timing differences. It is anticipated that these timing
differences will be resolved prior to year end.
 Taxes have been billed and collected as expected, however, there are still some Provincial grants in lieu taxes
outstanding that are normally received later in the fall.
 Sales of services revenue is ahead of last year due to a number of factors such as $65,000 in additional revenue
from parkade sales above what was generated in the prior year from the rental of the parkade. In addition, an
increase from 3 to 4 seconded Nelson Police Department (NPD) officers to the Integrated Road Safety Unit
(IRSU) has brought on a corresponding increase in funding from the RCMP to cover these costs.
 Other revenue is higher this year than in the prior year mainly due to the significant increase in building and
development in the City, which has a corresponding impact on development and connection fees. Building
permit revenue is $155,000 ahead of what was received by this time last year, while water and sewer connection
fees are $355,000 ahead of 2018. Conversely, with snow accumulation at the beginning of 2019 lower than the
first half of 2018, a reduced use of snow removal equipment this year has lead to a decrease in the equipment
charge out revenue.
 The downward pressure on interest rates from the start of the year has had a significant positive result on the
City's bond portfolio. This is the main driver as to why current investment income revenues are much higher
than in the previous year and the budget for 2019. With the US Fed decreasing the prime lending rate by a
quarter point in July and the potential for another cut coupled with the pressure on the Bank of Canada to cut
the prime lending rate this increase in revenue may continue for sometime into the future. However, as interest
rates drop, causing a paper capital gain, it also decreases the future interest revenue potential.
 Conditional grants are down from the prior year, due to several projects (Hall St Phase II and Flood Mitigation)
having wrapped up in the prior year. It is expected that the conditional grants budget will be met by the end of
the year, with several grants expected in the later half of 2019.
 Transit revenues are higher than at the same time last year and higher than what was budgeted this year. The
collaborative work of the West Kootenay Transit committee and the setting of one fair price to travel the entire
length of the system has had both a positive result on ridership and revenue. In particular, the sale of bus pass
revenue is 21% higher when compared to the prior year, however, there has been a corresponding drop in cash
fares by 13%.
 Nelson Hydro is slightly ahead of prior year revenue at this time due the annual rate increase, as well as a
slightly cooler first quarter than in 2018, which drove demand higher. When creating the budget for revenue
Nelson Hydro uses a five year average of temperatures to forecast what the expected revenue will be.
 The Library revenue is higher as compared to prior year as they received their provincial funding before June
30th, where last year it arrived in July. They also received the first installment of $67,000 from the CBT grant to
fund the capital component of the Community Technology Program.
 All other revenues appear to be in line with budget expectations and consistent with prior years.

Expenses
 Overall the City is managing the expense portion of the operating budget within the expected parameters.
 General government is underbudget at this time as a number of the budget increases in 2019 for items like the
Climate change coordinator, environmental consultant and additional communications had not incurred any
expenses as at June 30th. With the recent hiring of the coordinator, the new agreement with Thought exchange
and the City engaging an environmental firm to assist with the transfer station site it is anticipated that
expenses will be in line with budget by the end of the year.
 The main reason Protective services expenses are in line with budget but higher than the previous year relates
to the City now having 2 full time building inspectors, an additional firefighter to backfill the Fire chief in his
Emergency director role as well as the additional NPD member who is seconded to and funded by the RCMP.
Another factor in the budget being higher this year is Council's decision in 2019 to fund a full-time Emergency
management coordinator. Interviews for this position are underway with the expectation that this role will be
filled by September.
  With lower snow removal expense as compared to prior year Transportation services is in line with budget
expectations thus far. Not having to allocate as much resources to snow removal has allowed for those
resources to be directed to sidewalk, storm sewer and pot hole repair work.
 Public health and welfare services expenses are higher than last year due to a significant increase in the number
of burials as compared to prior year. In addition, staff have spent additional time trouble shooting some
challenges that have occurred with the irrigation system.
 A main factor in why water operations expenses are higher as compared to the prior year relates to staff cost
and materials as they have investigated issues regarding the treatment plant and the chlorination system.
 Sewer utility operations are higher than the prior year due to extra work being completed on City side of sewer
connections to commercial and residential properties, staffing at the STP and the additional cost incurred for
dispsolas of bio-solids as a result in a waste bylaw change by the RDCK.
 Hydro expenses are in line with budget and similar to the same period last year with power purchase costs
being the main factor of being higher this year.
 Transit is overbudget and higher than in the previous year as a result of increased maintenance on the aging
bus fleet. Staff have been working with BC Transit on this issue and working toward fleet optimization.
 Other than the items noted above, there are no significant variances to report at the end of June 30, 2019.

Capital
 The City's large pavement resurfacing program is expected to get underway in the next few weeks and while
some smaller sidewalk repair work has been undertaken the large projects are scheduled for early fall.
 Vehicle procurement has been very successful so far this year with a plow truck and flat deck truck purchased
and in-service. The City has ordered the hybrid model for the new police SUV with expectations it will be in
service in the next few months. After a lengthy search staff were able to find a grader that fits the City's needs
and requirements, it is expected to arrive in the next few weeks. The front end loader and tandem dump truck
have been awarded with the expectation the loader will be in service in the near future but the trucks arrival
date is March of 2020.
 The review and analysis for the new garbage truck continues with the expectation it will be ordered in 2019 but
arrive in 2020.
 The HVAC upgrade at the police/library building has been finished with the roof replacement expected to be
undertaken in August.
 Final touches are being done on the Emergency Operations Centre space and engineering work continues on
the upgrade to the Emergency back-up generator at City Hall.
 The Touchstones & Gas Works exterior upgrades are underway with the goal for the work to be completed by
the fall of 2019.
 Replacement of the large exterior door at the Youth Centre has been completed as well as the significant refresh
of the skatepark and construction of the bouldering wall. The Youth centre received a CBT grant and donations
from local organizations and businesses, which were key in making these projects possible. The Grand re-
opening of the indoor skatepark will be September 7, 2019, please add it to your calendar.
 Civic centre fire panel replacement is complete and is in the commissioning stage.
 Staff are awaiting approval from the Ministry of Environment on the lakeshore erosion mitigation plan. If
approval is granted and communicated in the near future work will be able done during the lower lake levels
this Fall, otherwise it will have to wait until Spring.
 The stage at Cottonwood Falls Park is scheduled to be installed in late September. The washroom is in the RFP
planning stage with the hope it will be posted at the end of August.
 Work continues on the Hall Street Lakeside park with the goal of having the washroom in place by the end of
October.
 The Cemetery irrigation upgrade is in the RFP planning stage and will be posted in the near future with the
expectation that work will commence in the early fall.
 The replacement of the Gyro park bridge has been completed.
 Replacement of the airport fuel pumps has been awarded with the plan to have the vendor install them in late
September early October after the busy flying season. The City received a $75,000 grant for this project.
 As announced to Council at the special council meeting July 22, 2019, there are some significant changes to the
original 2019 Hydro capital plan. First, there is an addition of and estimated $2 million in project costs related
to replacing about 600 poles to accommodate Telus's Fiber Project. Telus will be funding approximately $1.4
million of this work. This significant project also provided an opportunity for the utility to replace some
sections of small copper lines at the anticipated cost of $300,000. Finally, $698,000 in projects out at the power
plant have been deferred into 2020.
 Council should be familiar with the major Hydro lakeside submarine cable installation project as they took a
tour during the construction phase. This project has been completed.
 Replacement of the 4" undersized waterline on Ward Street between Gore and Hoover has been completed
with the curb to curb paving expected to be completed in August.
 The ICI water metering program is currently behind schedule with a goal for installations to begin in earnest by
mid-September.
 The remaining 2019 watermain replacement capital projects are in the planning stage with the anticipation they
will be completed in the late fall.
 Engineering work for the piping of current secondary water sources to the Mountain Station Reservoir is
continuing in 2019, with the expectation of construction to start in 2020.
 The airport lift station, grit chamber and surge tank project has been completed. The City is seeing the positive
results of this upgrade out at the Sewage treatment plant, especially, with the surge tank doing its job during
the number of heavy rain fall events that have occurred in the past couple of months.
 With a Federal election in the Fall the sense is that any announcement on the large Sewage treatment plant
infrastructure upgrade grant the City has applied for will occur in mid to late September.
 The contract for relining the sewer pipes has been awarded with the work to commence and be completed in
the Fall.
CITY OF NELSON
STATEMENT OF OPERATIONS - CAPITAL FUNDS
For the Period Ended June 30, 2019

CAPITAL
General 960,568 8,103,548 7,142,980 88 % 1,817,171 10,793,256 8,976,085 83 %
Nelson Hydro 1,349,306 3,823,875 2,474,569 65 % 1,156,297 3,439,000 2,282,703 66 %
Water 230,152 1,815,000 1,584,848 87 % 407,313 3,060,215 2,652,902 87 %
Sewer 746,689 2,645,000 1,898,311 72 % 39,412 2,700,243 2,660,831 99 %
3,286,715 16,387,423 13,100,708 80 % 3,420,193 19,992,714 16,572,521 83 %
CITY OF NELSON
STATEMENT OF OPERATIONS - OPERATING FUND
For the Period Ended June 30, 2019

2011 2010
YTD Total Balance % YTD Total Balance %
Actual Budget Remaining Rem Actual Budget Remaining Rem
REVENUES
Taxes $ 9,860,996 $ 9,952,104 $ 91,108 1 % $ 9,788,120 $ 9,854,327 $ 66,207 1%
Grants in lieu of taxes 498,165 641,000 142,835 22 % 474,054 612,000 137,946 23 %
Sales of Services 1,928,271 3,771,964 1,843,693 49 % 1,749,435 3,434,218 1,684,783 49 %
Other revenue 2,625,874 5,083,033 (2,457,159) (48)% 2,259,459 3,868,913 (1,609,454) 42 %
Investment income 292,846 205,000 (87,846) 43 % 97,519 130,000 32,481 25 %
Grants - unconditional 621,074 790,592 169,518 (21)% 580,533 785,557 205,024 26 %
Grants - conditional 784,122 4,245,228 3,461,106 (82)% 991,028 6,800,392 5,809,364 85 %
Gain on sale of tangible capital assets 1,019,777 - (1,019,777) IV/0 % - - - IV/0 %
Total revenue 17,631,125 24,688,921 7,057,796 (29) % 15,940,148 25,485,407 9,545,259 37 %

EXPENSES
General Government 1,837,062 3,970,298 2,133,236 54 % 1,772,872 $ 3,617,808 1,844,936 51 %
Protective services 3,570,681 7,322,759 3,752,078 51 % 3,295,159 6,683,910 3,388,751 51 %
Transportation services 2,031,778 3,949,014 1,917,236 49 % 2,025,600 3,764,697 1,739,097 46 %
Environmental health services 135,876 285,093 149,217 52 % 126,625 277,188 150,563 54 %
Public health and welfare services 106,021 200,286 94,265 47 % 84,463 193,640 109,177 56 %
Recreation and cultural services 1,057,273 1,944,723 887,450 46 % 994,635 1,969,296 974,661 49 %
Interest and other debt charges 381,239 880,659 499,420 57 % 376,046 868,567 492,521 57 %
Library 458,614 924,659 466,045 50 % 431,948 907,237 475,289 52 %
- - - IV/0 % - - - IV/0 %
- - - IV/0 % - - - IV/0 %
Total expense 9,578,544 19,477,491 9,898,947 51 % 9,107,348 18,282,343 9,174,995 50 %

NET REVENUE (EXPENSE) 8,052,581 5,211,430 2,841,151 (55)% 6,832,800 7,203,064 (370,264) (5)%
City of Nelson 
Property Tax Statistics
2017‐2019 Comparative

Diff from 
2017 2018 2019
2018
Tax notices sent 4,652 4,690 4,770  1.7%↑
Customers on pre‐authourzized payment 980 996 994  0.2%↓
Online payment 1,140 1,252 1,414 12.9%↑
Payment processed at City Hall 2,532 2,442 2,362  3.3%↓

Home owner grant applications 2,659 2,683 2,778  3.5%↑

Claimed online 834 895 1,012 13.1%↑
Claim processed at City Hall 1,825 1,788 1,766  1.2%↓

Tax accounts with unpaid balances 505 475 473  0.4%↓

Balance unpaid $960,109 $804,382 $892,622   11%↑
Penalty at 10% $96,011 $80,438 $89,262   11%↑
 Property Tax Deferments 2013‐2019
160

140

120

100

80

60

40

20

0
2013 2014 2015 2016 2017 2018 2019

2013 2014 2015 2016 2017 2018 2019

Regular Deferment* 74 83 91 97 109 118 129

Families with Children** 1 2 1 2 3 4 6
Total 75 85 92 99 112 122 135

* Regular program: must be 55 or older, or a surviving spouse. Equity requirement 25%
Interest is charged at rate not greater than 2% below the prime lending of Canada's major banks set every April 
& October. The current prime lending rate is 3.95% so the rate applied is 1.95%
** Families w/children program: dependant under 18 or student. Equity requirement of 15%
Interest is charged at the prime lending of Canada's major banks set every April & October, which currently sits 
at 3.95%
 Downtown Waterfront Reserve Page 5

Downtown/Waterfront Reserve - April 29, 2019

Proj Actuals
Proj Actuals
2017 2017 2018 2018 2019 2020 2021 2022 2023
Opening Balance $ 120,264 $ 120,264 $ 27,870 $ 27,870 $ 94,860 $ 27,360 $ 99,260 $ 172,660 $ 247,560

Contributions - Parking meter rev over $650K 80,000 80,000 110,000 80,000 110,000 90,000 90,000 90,000 90,000
Trans Canada Trail Grant 25,000

Expenditures (172,394) (160,000) (65,779) (80,000) (203,000) (20,000) (20,000) (20,000) (20,000)

Interest Income 128 800 593 600 500 1,900 3,400 4,900 6,400

Closing Bal. $ 27,998 $ 41,064 $ 72,684 $ 28,470 $ 27,360 $ 99,260 $ 172,660 $ 247,560 $ 323,960

Expenditure Summary
Public Art 18,512 20,000 19,380 20,000 20,000 20,000 20,000 20,000 20,000
Mural Festival 25,000 25,000 25,000
City Hall Mural 7,500
Baker Street, Downtown Waterfront, etc. 153,882 140,000 21,399 35,000 150,500
172,394 160,000 65,779 80,000 203,000 20,000 20,000 20,000 20,000