COVID-19 Supplementary Budget & Relief Programs Council Scott - - PowerPoint PPT Presentation

COVID-19

Supplementary Budget & Relief Programs Council

Scott Conrod Greg Barr Rob Frost CAO Director of Finance DCAO May 20, 2020

Confidentiality

The contents of this Request for Decision are based on the public portions of a Request for Decision Report. Additional information has been released privately to Council in accordance with s.22 (2) (d) (e) and (g) Municipal Government Act.

RFD Overview

• Response to the COVID-19 pandemic
• 2020/21 Supplementary Budget
• Community based and ratepayer relief

programs

• Improved municipal cash flow
• $380M Province of NS loan program

3

Background – DSE & Budget

• Maintaining sustainable cash balances

to fund essential services is a requirement of the DSE

• Supplementary budget process as

method to develop pandemic response while ensuring cash sufficiency

4

Background – Uncertainties

• Municipal cash flow projections (Table 1)
• Projected depletion of non-committed
• perating reserve by early July
• Realigning budget line item expenditures

doesn’t guarantee sufficient cash

5

Background – Uncertainties

• Potential significant cash flow decreases

in future due to assessment declines in commercial and residential properties

• Combination of possible increased

receivables and lower assessments can erode future cash position (Table 2)

6

Background – Tax Rates

• Council accepted that a general tax rate

decrease would not facilitate delivering relief to those most in need

• Counter productive in maintaining cash

flow for funding/delivery of essential services

7

Background – Capital Res.

• Municipality’s Capital Reserves should

be maintained:

• Participation in any forthcoming

infrastructure stimulus

• Investing in municipal infrastructure within

Growth Centres and Villages

8

Municipal Comparisons

• Cost Recovery Structures can vary

significantly among municipalities

• Expenditure reduction due to reduced

revenue from deed transfer taxes

• Lower revenues and cash flow due to

service reductions or waived fares

9

Municipal Comparisons

• Variations also exist with:
• Water and wastewater infrastructure
• perated
• Public space/parkland maintained
• Administrative burdens for program delivery

and municipal services

10

Municipal Comparisons

• Scale and program variations:
• Program intake volumes
• Scope of services provided
• Activities not restricted by DSE
• Almost 60% of MoK workforce directly

involved in delivery of public works and inspection services

11

Supplementary Budget

• Requirement to maintain cash balances

for essential services

• Recommendations for operationalizing

anticipated DSE requirements and relief

• bjectives

12

Expenditure Abeyance

• Reduce expenditures to protect the

Municipality’s cash position

• Transfer or “park” certain items within a

COVID-19 Reserve for possible future use and/or redeployment

13

Expenditure Abeyance

• Use of reserve or redeployment

contingent on status of DSE and known cash position post interim tax bill payment deadline (July 31st)

• Allows Municipality to be agile in its

future response and efforts

14

Expenditure Abeyance

• Funds available, at Council’s discretion,

for further relief or to reinstitute Municipal programs

15

Long Run DSE Short Run DSE Greater need for Greater need to reinstate further relief measures Municipal programs

Progression of the Declared State of Emergency Municipal Response

Expenditure Abeyance

• Appendix D – Line Item Transfers to

COVID-19 Reserve Fund

• General & Program Adjustments -

$464,008

• AVRL Discretionary Increase - $26,300
• Grant Programs - $563,670

16

Expenditure Abeyance

• Purchased Services - $122,970
• Materials, Supplies, & Utilities - $107,833
• Debt and Transfers - $1,007,148
• Total Transfer - $2,291,929

17

Community Based Programs

• Administered primarily through the not-

for-profit sector and be open to property and non-property taxpayers and community based organizations

18

Community Based Programs

• Support for Business – Business

Retention and Expansion (BRE) Officer ($100,000)

• Support for Food – Local food banks or

local organizations that provide food support ($100,000)

19

Community Based Programs

• Support for Community Groups – One

time funding to help cover fixed

• verhead costs bourn by not-for-profit

community groups ($150,000)

• Support for Community Groups – One

time increase in CGTO ($72K to $150K)

20

Community Based Programs

• Support to the Arts and Culture Sector –

Commissioning of artwork and proceeds from the auctioning of the pieces would support community initiatives ($50,000)

21

Municipal Taxation Relief

• Target relief measures to those

taxpayers most in need

• Have the programs be structured in a

manner that incentivizes taxpayers to remit payment to Municipality

22

Municipal Taxation Relief

• Impact of s.57(2) MGA
• Municipality will have to rely on s.113

MGA

• Budget cap ($825,000) has been set

23

Municipal Taxation Relief

• Roll-out relative to Provincial and

Federal programs

• Proposed staggered release dates with

Community Based Relief Programming due to several reasons

24

Municipal Taxation Relief

• Residential Taxation Incentive Rebate
• One-time incentive rebate for qualified

residents that pay residential property taxes

• Rebate amount based on participation
• Other requirements as outlined in RFD

25

Municipal Taxation Relief

• Residential Ratepayer Relief Calculation

26

Residential Taxation Incentive Rebate Projected Eligible Residential Properties 4,446 Projected Rebate Amount $ 125 Percentage of Average Residential Interim Tax Bill 21.10% Total Projected Residential Program Cost $ 556,500

Municipal Taxation Relief

• Commercial Taxation Incentive Rebate
• One-time incentive rebate for all

commercial property tax accounts

• Rebate amount fixed at $250
• Other requirements as outlined in RFD

27

Municipal Taxation Relief

28

Commercial Taxation Incentive Rebate Kings Commercial Properties (< $250,000) 819 Kings Commercial Properties ($250,000 to $500,000) 122 Proposed Rebate Amount $ 250 Proposed Rebate Amount $ 250 Percentage of Average Interim Tax Bill 27.60% Percentage of Average Interim Tax Bill 6.20% Commercial Subtotal Cost (< $250,000) $ 204,750 Commercial Subtotal Cost ($250,000 to $500,000) $ 30,500 Kings Commercial Properties ($500,000 to $750,000) 51 Kings Commercial Properties ($750,000 to $1,000,000) 25 Proposed Rebate Amount $ 250 Proposed Rebate Amount $ 250 Percentage of Average Interim Tax Bill 3.50% Percentage of Average Interim Tax Bill 2.50% Commercial Subtotal Cost ($500,000 to $750,000) $ 12,750 Commercial Subtotal Cost ($750,000 to $1,000,000) $ 6,250 Kings Commercial Properties ($1M to $2M) 33 Kings Commercial Properties ($2M to $4M) 11 Proposed Rebate Amount $ 250 Proposed Rebate Amount $ 250 Percentage of Average Interim Tax Bill 1.60% Percentage of Average Interim Tax Bill 0.70% Commercial Subtotal Cost ($1M to $2M) $ 8,250 Commercial Subtotal Cost ($2M to $4M) $ 2,750 Kings Commercial Properties ($4M to $10M) 12 Kings Commercial Properties ($10M+) 1 Proposed Rebate Amount $ 250 Proposed Rebate Amount $ 250 Percentage of Average Interim Tax Bill 0.30% Percentage of Average Interim Tax Bill 0.00% Commercial Subtotal Cost ($4M to $10M) $ 3,000 Commercial Subtotal Cost ($10M+) $ 250 Total Projected Commercial Program Cost $ 268,500 Total Projected Residential Program Cost (Table 5) $ 556,500 Total Projected Program Cost $ 825,000

Financial Impact- Summary

29 Funding breakdown Amount Residential Taxation Incentive Program 556,500 $ Commercial Taxation Incentive Program 268,500 Ratepayer Relief - See Section 4.2 825,000 $ Increase in Council Grant to Organization Program * 78,000 $ Valley REN BRE Officer 100,000 Local Food Program 100,000 Community Groups Program 150,000 Art Projects Program (Food Bank Support) 50,000 Community Support Contributions 478,000 $ * Brings total Council GTO to $150,000

Financial Impact- Summary

30 Community Support Contributions Ratepayer Relief Future Relief, Reinstatement of Municipal Programs

• r Return to Capital

Reserve Staffing and Program Adjustments 464,008 $

• $

193,174 $ 280,834 $ AVRL Discretionary Increase 26,300

• 26,300
• Grant Programs

563,670 478,000 53,670 32,000 Purchased Services 122,970

• 122,970
• Materials, Supplies, Utilities

107,833

• 107,833
• Debt and Transfers

1,007,148

• 321,053

686,095 2,291,929 $ 478,000 $ 825,000 $ 988,929 $ Emergency Response Reserve Line Item Transfers

Financing Program Overview

• $380M announced by Province of NS on

April 28th

• Aimed at providing assistance to

ratepayers while easing cash flow concerns for Municipalities

31

Financing Program Overview

• “Municipal Operating Loan Program”

developed by NSFM/AMANS/DMAH

• Meeting held by NSFM, AMANS, MFC,

and DMAH with CAOs and DOFs on April 29th

32

COVID-19 Property Tax Financing Model Policy

(Assembled by NSFM & AMANS) AMA and NSFM have been working on a Property Tax Financing Program and Model Policy Criteria-based to assist those that have been significantly financially impacted by COVID-19 Those that can pay their taxes should pay their taxes Tax financing program, not tax forgiveness

Program Terms

A model policy for all municipalities in Nova Scotia It is not mandatory to participate – but the more consistency across the province the better Taxpayers can start amortized installments six months after tax bill due date Taxpayers have 24 months to make payments - no option for early repayment Interest charged on financed payments would be the cost

• f capital and potential admin fee

Solution available with authority under Municipal Government Act-Sections 111-113

Model Policy Criteria

• Individuals through proof of

access to provincial or federal program

• Commercial through

documentary proof of hardship

Financial hardship through loss

• f revenue

related to the State of Emergency

• This includes accounts where

tax payment arrangements exist and are current

Account must be in good standing before and during the period

Suggested Residential Criteria

Includes

• Residents of Nova Scotia
• Registered property owners who are
• rdinary residents and have lost their jobs

due to service reductions from the State of Emergency (documentation required)

• Property owned and registered as a Tourism

Operator with Tourism Nova Scotia for the 2019 tourist season

Excludes

• Vacant land
• Properties owned by non-residents of

Nova Scotia

Suggested Commercial Criteria

• A taxable commercial property used as commercial, shopping,
• ffice, industrial, farm (cumulative assessment) and has a total

taxable 2020 property assessment value equal to or under $$$

• Without limitation on assessed value, owner occupied:
• Land owned by a tourism operator registered with the Tourist

Accommodations Registration Act

• Automotive and recreational/leisure dealership
• Private and non-profit recreation facilities
• Hospitality industry – restaurants, bars, cafes, coffee shops
• Service industry – hairdressers, nail salons, gyms, tattoo

studios

• Health care providers required to reduce hours – dentists,

naturopaths, doctors, chiropractors, physiotherapists

Includes

Suggested Commercial Criteria

• Property owners who have not experienced financial hardship

through loss of revenue related to the State of Emergency

• Property owners who have received compensation from Business

Interruption Insurance towards the payment of property taxes

• Provincially-subsidized day care centres
• Properties used for landfill, pipeline, managed forest, parking and

commercial vacant land

• Properties with an active tax agreement with the

Municipality through legislation or bylaw

• Municipally-funded non-profit organizations with property taxes

already partially exempted by the municipality

• All properties managed under Payment-In-Lieu (PILT) programs

Excludes

Processes

• Policy would have to go through normal council

process to approve a policy

• AMA is hoping to develop a common online

intake process to help reduce administrative burden for those municipalities who choose to adopt the model policy.

Financing Program Overview

• Potential uptake by other municipalities

difficult to determine definitively

• HRM pursuing $188M of $380M
• Anticipate HRM funds not to be used for

loan program but rather to cover municipal cash flow shortfalls

40

Financing Program Overview

• Municipal units will likely undertake one
• f two approaches:
• Aid municipal cash flows with repayment

being made from future operating funds

• Aid municipal cash flows with repayment of

the loan being made from payments linked to loans provided to rate payers

41

Financing Program Overview

• Municipalities need to determine

revenue shortfall in order to apply for loan

• Council resolution submitted to DMAH
• Loan agreements executed and

administered by MFC

42

Financing Program Overview

• Short term projections indicate that the

Municipality may not need to borrow for cash flow purposes during interim tax billing cycle

• Exact criteria used by Province to review

loan applications remains unclear

43

Financing – General Funds

• Repayment of Loan through General Funds
• Appears that a number of municipalities

intend to use this money for liquidity purposes, rather than taxpayer relief

• Interest earned could be used to help

fund other programs

44

Financing – Ratepayer Loans

• Repayment of loan through related

Ratepayer Loans

• Involves tax payers paying their taxes

through an installment payment program

• Payments made on individual loans

under Council approved policy

45

Financing – Legal Concerns

• Assessment Threshold
• Concession or Other Form of Direct

Financial Assistance

• Loan Program – Elimination of Lien

Rights

• Publishing of Names

46

Financing – Program Risks

• Loan Security
• Favourable Rate
• Program Utilization
• Potential Impact

47

Financing – Costs and Other

• Delinquency Costs
• Human Resources Impact
• IT Impact

48

Financing – Conclusions

• Program does provide cash flow options

for municipalities and ratepayers

• Municipality currently has initiatives in

place or recommended to address cash flow and provide relief to tax payers

49

Financing – Conclusions

• Not recommended that the Municipality

participate in the NSFM/AMANS suggested policy at this time (i.e. provide loans to ratepayers)

• Continue to assess need in the future for

both interim billing and final tax billing

50

Recommendations

• That Municipal Council approve the

Supplementary Budget consisting of the transfer of $2,291,929 from the budget line items detailed within Appendix D of the May 20, 2020 Request for Decision to a COVID-19 Reserve within the Operating Reserve

51

Recommendations

That Municipal Council:

• Authorize the Director of Finance & IT to

transfer funds from the COVID-19 Reserve to the General Municipal Operating Fund as needed to

• perationalize activities affected by the

52

Recommendations

• reduction in COVID-19 restrictions, to a

maximum of the original line item amounts in the approved 2020/2021 budget; and

53

Recommendations

• Require that notification of all transfers

completed be provided to Council by email and also reported formally at subsequent Council meetings.

54

Recommendations

• That Municipal Council authorize the

release of Community-Based Relief Programming as detailed within the May 20, 2020 Request for Decision.

55

Recommendations

• That Municipal Council instruct the CAO

to submit an application for funding under the municipal loan program with the Province of Nova Scotia in an amount commensurate with the estimated loss of income and additional

56

Recommendations

• expenses associated with the COVID-19

pandemic and that the CAO be further instructed to have staff report to Council

• n or before August 15, 2020 with a

report on potential requirements of a direct ratepayer relief or loan program.

57

Alternatives

• Increased Emphasis on Community

Based Responses

• Tax Deferral Program
• Bolster Post-COVID-19 Recovery Efforts

58

Alternatives

• Proceed Earlier with Municipal Property

Tax Relief Measures

• Proceed with COVID-19 Property Tax

Financing Program

59