Dollars & Sense P e r s p e c ti v e
Issue #107 • June 2019
Conference Recap Strategic Plan Launch Member Profile
p r es i d e nt ’ s m es s ag e in this issue President’s Message 2 2019 Conference Recap 4 Strategic Plan Launch 5 Focus Group 7 Member Profile 10 What’s Happening 11 MFA’s Corner 12 Local Government’s Role in Ensuring Clean Drinking Water 14 Economic Outlook 16 Collectors’ Corner 19 Using Data Analytics Insights to Deliver Infrastructure Portfolios 20 From Excel to Excellence 22 Social Procurement 24 Quarterly Question 26
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This year’s conference theme was Strategy & Innovation. I’m all about strategy … how do we engage our limited resources, being time, money and staffing to ensure we deliver on our goals? Could we all take an hour per week and sit in a coffee shop by ourselves (an idea shared at the conference) and consider what went well and what needs more focus? Doesn’t seem wasteful of taxpayers’ dollars, in fact, it is quite strategic and dare I say it … could be innovative too. Our opening keynote speaker Enid Slack challenged us to match the revenue tool with the expenditure type when funding urban infrastructure and reminded us that taxpayers are less averse to paying taxes when they can see what their tax dollars are doing. This means linking our communications with our financial strategy and speaking plain language so that our stakeholders can relate. Our guest panel addressing smart city opportunities had us considering how to be open to new technology while also reminding us that government doesn’t move as fast as technology. We have the opportunity to watch and learn from others – share stories and experiences with each other so that we deliver the best outcome possible in our community. At the GFOABC AGM, Trevor, our Secretary Treasurer shared the operating statement in a storytelling format that was not only innovative but also strategic. Well done Trevor! Who knew that even a room full of accountants would appreciate hearing numbers presented in a story format rather than the traditional presentation style. Kudos to you and thanks for being innovative. The Thursday morning Focus Group on Government Relations was a success. We had a great turnout of members who are obviously “early birds” willing to be engaged at 7:00 a.m. and share their ideas, challenges, as well as identify opportunities for us to better engage and collaborate with our provincial partners. It was an honour to have Chris Morrill from GFOA US & Canada share with us the changes in the Government Financial Officers Ethics policy as well as provide a reminder of the great resources available to us through this larger association of finance professionals. The idea of setting up student chapters of GFOA is very intriguing to me as we struggle to get our younger generation engaged in what I consider one of the best job opportunities out there. Where does one get to influence such a myriad of complex corporate objectives and then also see the results in our day to day just outside our doorstep?
The Embracing Bots session and closing keynote address: Culture of Innovation: Relentless Adaptation, presented by Amber Mac, certainly got me excited about the technological opportunities to improve our service delivery as well as challenged my professional skepticism about being open to hear and consider opportunities for improvement that our stakeholders and younger generation are driving. The Economic and MPP update are always of interest because they
affect our local governments from a monetary perspective and also personally with our staffing. I enjoyed getting to know some new peers at the conference and I hope that you did too. Please do not hesitate to reach out to me or to anyone on our Board. We would love to have a conversation with you – or perhaps share a story or two. •
GFOABC President Genelle Davidson addresses the 2019 conference delegation during the panel Finance Officer Forum: Beyond Super Average: Improving Financial Services Through Strategic Planning.
Genelle Davidson, President
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2 0 1 9 c o n f e r e n c e r e ca p Thanks to the support and participation of our sponsors, exhibitors, speakers and local government practitioners, we put on an exceptional 30th anniversary conference with over 70 guest speakers, a compelling program and several networking events attended by over 230 delegates. We are grateful to our conference speakers who invested their time and resources to help us provide cutting edge professional development for local government finance officers. We are thrilled to announce that there were 23 local government practitioners presenting at this year’s conference, up from 10 in 2018. Going forward we hope to build on that number to ensure that our session content continues to be driven by the membership. Much appreciation to everyone who purchased a Trade Show Passport. We raised $431 towards the Boot Camp travel scholarship fund. Scholarships to be awarded at the 2019 BOOT CAMP. To help us build on the success of 2019, and get ready for Kamloops in 2020, please complete the CONFERENCE SURVEY. You can still rate the individual sessions and access the slides in the MOBILE APP.
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Thank you to our Local Government Participants Yogi Bhalla Village of Ashcroft Corinne Bomben City of Prince Rupert Jeannie Bradburne Nanaimo Regional District Komal Basatia City of Abbotsford Mayor Henry Braun City of Abbotsford Genelle Conn Town of Qualicum Beach Lorraine Coughlin Town of Gibsons Christine Culham Capital Regional District Rick Danyluk District of North Vancouver Genelle Davidson City of Kelowna Clive Freundlich Town of Comox Tyson Ganske City of Port Moody Isabel Gordon District of West Vancouver Kathy Humphrey City of Kamloops Adam Langenmaier City of Powell River Emily Lewis City of Abbotsford Jennifer Lockhart City of Victoria Colin McClure City of Nelson Chris Osborne City of Campbell River Chris Paine City of Colwood Richard Pucci City of Prince Rupert Arseniy Shchedrinskiy District of West Vancouver Sean Simpson City of Surrey
strategic plan launch
GFOABC Board and staff are pleased to share our new strategic plan. The focal point of our five-year plan is a new vision statement. The new vision statement is an expression of our shared purpose and what we aspire to achieve as an organization. It embodies the collaborative nature of GFOABC, its members, government stakeholders, and partners and the understanding that we are better together.
our our our vision mission values
To be the leading source for knowledge sharing that empowers BC local government financial excellence.
To promote excellence in local government through the support and development of our members.
Professionalism, Leadership and Collaboration.
Our Strategic Outcomes 1
to be relevant to all of our members Provide programming that considers the full breadth of the roles and responsibilities of local government financial professionals and the diversity of experience. A. Build awareness among entire finance team about the resources and professional development opportunities B. Strengthen education and professional development opportunities
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to become a center for member, government and partner dialogue
to provide value to our members through partnerships
Leverage the experience and expertise of our members, government stakeholders, and partners in building a center for dialogue on local government finance matters of mutual interest.
Encourage cross-partnership opportunities that leverage partner resources, training and reputation within GFOABC for the benefit of all stakeholders.
A. Maintain and strengthen partnership with BC government stakeholders
A. Increase collaboration between members and partners on program participation and delivery
C. Engage members throughout their careers and beyond
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board of directors
2020 conference
President Genelle Davidson Vice President Trevor Thompson Secretary-Treasurer Lorraine Coughlin Past President Rick Danyluk
Call for Speaking Topics Suggestions for topics and speakers are being accepted until November 15, 2019. Should you have any questions regarding the conference, please do not hesitate to contact Kala Harris at execdir@gfoabc.ca. ASUBMIT YOUR TOPIC
Directors at Large Nyla Attiana Jim Bauer Jeannie Bradburne Shelley Hahn Lenora Lee Raj Sharma Talitha Soldera Sheila Thiessen Kala Harris, Executive Director Erica Christie, Manager, Operations and   Member Services
Trade Show Booth Registration is now open for the 2020 trade show being held at the Coast Kamloops Hotel & Conference Centre. Should you have any questions regarding the trade show, please do not hesitate to contact Erica Christie at office@gfoabc.ca. AREGISTER NOW Book your Hotel Do not miss your chance to stay onsite. Book your hotel now for next year. ARESERVE NOW Conference Registration coming January 2020. See you next year!
award winners INNOVATIVE IDEA AWARD PHIL TROTZUK, CHIEF FINANCIAL OFFICER from Metro Vancouver Regional District for his Financial Management Policy
OUTSTANDING CONTRIBUTION TANYA GAROST, CHIEF FINANCIAL OFFICER from District of Lake Country for her significant contribution to GFOABC
focus group
Another full house at this year’s Focus Group Breakfast! For the second year in a row, GFOABC held a Focus Group Breakfast at its annual conference. Last year the focus group provided input on GFOABC’s Education Framework. This input played an important part in the development of our new vision and strategic plan, which in keeping with our mandate is focused on providing education
and professional development opportunities for our members. GFOABC’s new vision is to be the leading source for knowledge sharing that empowers local government financial excellence. To achieve this outcome, GFOABC seeks to leverage the talent and expertise of its members, government stakeholders, and partners to become a center for dialogue on financial matters of mutual interest. To that end, GFOABC’s current government relations framework was
the focal point of this year’s focus group breakfast. Members were given the opportunity to provide their input on GFOABC’s current government relations framework. There were 23 members in attendance from across the province from the District of Tumbler Ridge to the Town of Creston, from the Bulkley Nechako Regional District to the Cowichan Valley Regional District, and from the cities of Prince Rupert to Maple Ridge to Victoria, as well as one ministry stakeholder
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representative from the Ministry of Municipal Affairs and Housing. Overall the first impressions of the framework were positive with participants in agreement that it was good and provided some consistency in terms of the current opportunities for knowledge sharing, accessibility, and responsiveness. Feedback from participants indicated that there are still lots of
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opportunities for members to better understand what each ministry does as well as increase access and frequency of interactions. Opportunities considered included creating a liaison with GFOABC and the ministries, and consideration for a municipal liaison at the ministry level. With the goal to allow for more consultation between the ministries and
members before they make changes that impact financial officers. When asked what are some quick wins about our relationship that GFOABC can do next, participants suggested that GFOABC invite ministry staff to visit the GFOABC ONLINE FORUM, to participate in semiannual webinars by and with both ministries, and to identify areas
where GFOABC can assist members as an advocacy voice. Participants did acknowledge that the relationship between members and the ministries is a two-way relationship and agreed with the ministry representative’s statement that “GFOABC members are subject matter experts and already have the ability to coordinate and advise on local government issues”.
Participants suggested that the focus group be invited back in 2020 to review the development of the framework. GFOABC is extremely appreciative to everyone who came out to the Focus Group Breakfast. The breakfast event is an early start to a long day. THANK YOU. We also want to extend a special note of thanks to Joshua Craig from
the Ministry of Municipal Affairs and Housing for his participation in this focus group. If you have any questions about the Government Relations Focus Group and the next steps, please do not hesitate to contact Kala Harris at execdir@gfoabc.ca. •
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MEMBER PROFILE tanya garost interviews yoginder (yogi) bhalla Many of us have had the pleasure of listening to Yogi speak on business intelligence tools or sharing his knowledge on how technology can help us in local government and recently I had a chance to chat with Yogi and dig a little deeper. We all have a story and I am going to share a little of Yogi’s with you. Yogi has been with the Village of Ashcroft for over four years after coming out of industry. This wasn’t his first experience with the public sector though as he has been an analyst in health care previously. What drew him to the opportunity in Ashcroft? Benefits that draw many to small communities – the ability to live close to work, the diversity in his day to day work and the sense of connection between his work and his community. For Yogi, there is satisfaction in actually being a part of and seeing things happen that have an impact, like the water treatment plant they are building in Ashcroft. Being with a small community also allows Yogi the opportunity to be innovative. There are fewer
organizational barriers in trying new things when your workplace is smaller. “Not many toes to step on except mine” he says jokingly when talking about his ability to innovate. The work he has done with business intelligence and GIS is evidence of this innovation. Yogi is passionate about local government and is excited to help others discover how technology can help them. “Technology is becoming increasingly important in the work we do” Yogi commented. With his bit of technical background and the success he has found integrating technology at Ashcroft, he was motivated to share his knowledge and help others that may be struggling. At GFOABC, we appreciate the time our local government finance professionals give to helping others. A huge thank you to Yogi for the time he has shared and we look forward to hearing about the new and innovative ways he is connecting technology for his organization and his community. •
Tanya Garost accepted the position Chief Financial Officer for the District of Lake Country in 2016. With fifteen years in local government finance, her past positions include GM of Finance and Corporate Services for the City of West Kelowna, Director of Finance for the Thompson Nicola Regional District and Revenue Manager for the City of Kamloops. Tanya has been involved with GFOABC since 2009, starting out by teaching courses in taxation and assessment, becoming a director at large on the Board in 2013, and accepted the position of President at the 2016 AGM. We are very fortunate to have Tanya continue as President from 2017 through 2019. Tanya enjoys spending time with her husband Richard, and daughters Alexis and Erika, and in her spare time can be found riding her horse on the trails around Kelowna. 10 | GFOABC.CA
W H AT ’ S H A P P E N I N G AT G F O A B C July 24, 2019 Collectors’ Forum Webinar REGISTER NOW August 11-15, 2019 Boot Camp REGISTER NOW University of Victoria August 21, 2019 12 Month Taxation and Assessment Webinar Series REGISTER NOW September 11, 2019 Accounting & Auditing Forum Webinar REGISTER NOW September 17, 2019 Investors’ Forum Webinar REGISTER NOW Sept. 3, 17 & Oct. 1, 2019 Annual Municipal Tax Sale – 3 Webinar Series REGISTER NOW November 19 & 20, 2019 Fall PD Workshops REGISTER NOW • Ethics & Leadership • Budgeting • Financial Reporting • Taxation and Assessment: End to End Process November 21-22, 2019 Local Government Accounting and Auditing Workshop In Vancouver at Coast Coal Harbour Hotel. Registration coming soon. JUNE 2019 • DOLLARS & SENSE PERSPECTIVE | 11
M fa ’ s c o r n e r commercial mortgages: a new asset class for bc local governments Commercial mortgage investments may not be an investment class local government finance officers have much familiarity with. This article provides some background information on this asset class ahead of the launch of MFA’s Pooled Mortgage Fund later this year. There are many different flavours of mortgages and mortgage funds – each with its own set of risk characteristics – from the highest quality CHMC-insured first home mortgages to second commercial mortgages on commercial properties. Commercial mortgages may be segmented as ‘conventional’ or ‘high yield’. Conventional mortgage funds focus on first-priority mortgages on income-producing properties such as industrial, retail, multi-residential, and office spaces in major markets. High yield funds concentrate on riskier investments that may include properties that have cash flow uncertainty, higher mortgage leverage characteristics or located in non-core markets. The objectives and mandate of a commercial mortgage fund must be understood prior to an investment decision. MFA’s new pooled mortgage fund will invest exclusively in conventional first mortgages on Canadian
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income-producing commercial properties in core markets – the lowest risk segment of the commercial mortgage market. From a credit perspective, first commercial mortgages benefit from consistent underlying property cash flows in addition to a tangible real asset as security. Many of the tenants occupying commercial properties agree to long term leases which create a steady cash flow stream for borrowers to service their mortgage obligations with. If the borrower is unable to make their mortgage payments, for example due to deteriorating cash flows, the mortgage fund enjoys a direct priority claim on the underlying asset which can be sold to repay the mortgage. Further, commercial mortgages are generally amortized, meaning that a portion of the borrower’s monthly payments pays-down the principal balance owed, therefore reducing the mortgage exposure over time to a specific property. Historically, for a well-managed first commercial mortgage fund, this has meant that credit losses are rare. PH&N estimates that the credit risk associated with its existing $4.5 billon PH&N Mortgage Pension Trust are similar to a diversified high-quality
investment grade bond fund, such as the existing MFA Bond Fund. From a liquidity perspective, however, investing purely in commercial mortgages poses some challenges. A key consideration for investors contemplating a mortgage fund is their investment time horizon and liquidity built into the fund. The mortgage market is different than the equity or bond markets in that it’s a private market, meaning mortgages cannot be traded on a traditional market exchange. Because there is no active secondary market for commercial mortgages, once a mortgage is originated the fund would typically hold the mortgage until maturity. Therefore, if many investors were to request redemptions at once, the liquidity sleeve within the fund (liquid bonds or money market instruments) may not be enough to meet all redemptions. The MFA Mortgage Fund will have access to an additional 15% in liquid cash and bonds to meet any expected mass redemption scenario – but the possibility to not being able to redeem one’s units does exist. Beyond the liquidity sleeve, other sources of liquidity can be generated from the MFA Mortgage Fund but they can take additional time. As a result,
mortgage funds should be purchased by investors with a medium-to-long holding periods (say three years or longer). Like any investment, but particularly for less liquid investment classes, a portfolio should not be overly concentrated only in mortgage funds (10% to 15% seems to be a common limit with investors). It is this lack of liquidity inherent in the commercial mortgage market that provides a compelling reason to invest - as the expected return on mortgages is higher than bonds, for example, with similar credit characteristics. This so called “illiquidity” premium is the spread (or return) above the return an investor would anticipate from an asset of a similar maturity and credit risk profile. Even with a “drag” on the fund for the creation of the liquidity sleeve, the MFA Mortgage Fund would be expected to return about 90 to 100 bps above the expected return of the MFA Bond Fund over the long term. Availability of mortgage investments for BC local governments will add another exclusive asset class to the investment professional’s arsenal. Diversified commercial mortgage pools offer higher yields for those investors looking to take advantage of the illiquidity premium. In addition, they provide good riskadjusted return characteristics and diversification away from often heavy exposure to the Canadian banking sector and GICs. This short article is only a brief introduction to the asset class, please contact the team at MFA to discuss this or any other investment opportunities. •
Mr. Urbanc has 25 years of experience in global banking and the public sector, having worked as an investment banker, treasurer and executive officer. From 1990 to 2009, he was an investment banker with Merrill Lynch, Lehman Brothers and Barclays Capital with a specialty focus on the debt capital markets. In 2009, Peter joined the Province of Nova Scotia’s Department of Finance as Executive Director and Treasurer. Mr. Urbanc also served as a Director of the Nova Scotia Pension Services Corporation and Trustee of both the Nova Scotia Teachers’ Pension Plan and the Nova Scotia Public Service Long-Term Disability Plan Trust. In January 2016, Mr. Urbanc took on the role of Chief Administrative Officer at the Municipal Finance Authority of British Columbia. Mr. Urbanc holds a Bachelor of Commerce from McGill University and an MBA from the J.L. Kellogg School of Management.
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Local Government’s Role in Ensuring Clean Drinking Water Access to safe drinking water is essential to the well being of everyone in B.C. and how water is managed is gaining increasing attention. Our audits of local governments’ role in ensuring clean drinking water reflect this and are our most comprehensive audits to date. We looked at a range of issues, from governance, system maintenance and testing to a local government’s ability to provide water in the future. Each of these audits has effectively been three audits in one and the series of AGLG Perspectives booklets we have produced on this topic are equally comprehensive. It is difficult to convey the full value of this work in a short article, but I will highlight some of our key recommendations and encourage you to read the audit reports and the related AGLG Perspectives booklets. We found that the local governments we have audited to date are generally doing an effective job of ensuring the delivery of clean drinking water. This is perhaps not unexpected, given the seriousness of the related health concerns and the need to meet regulatory requirements. We identified some strengths as well as areas for improvement.
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Many of our recommendations and associated best practices relate to local governments’ ability to continue providing clean drinking water in the future. We have identified risks related to: • short-term planning that precludes the development of a long-term vision. • incomplete source water protection, planning and mitigation. • a lack of integration across local government departments. • gaps in the use of risk assessments. • a need for comprehensive maintenance schedules. • the use of ad-hoc conservation and demand strategies and tools. • gaps in asset management and implementation. • a lack of consideration of full cost recovery accounting and barriers to full cost pricing (an approach that could address demand management/conservation needs and also provide funding to replace ageing infrastructure). • an overall lack of business continuity planning. We provide this information to assist local governments while also acknowledging how challenging it
may be to address all of these risks. Local governments have limited resources, ageing infrastructure and must respond to changing regulations, to name just a few of these challenges. We encourage local governments to fully assess both the challenges and the benefits of addressing these risks. By doing so, they will ensure that their decisions are fully informed. The Regional District of Okanagan Similkameen. Bill Newell, Chief Administrative Officer (our first auditee on this complex topic), offered these thoughts about the work we did: “While the audit findings certainly evaluated our current operations, they also focussed on where we needed to up our game. We got a shot across our bow, in a nice way, but it came with a road map on how to improve our future and we use it continually in our Business Planning and Budget presentations to our Board of Directors. I’d recommend it to any of my colleagues that may be worried about value for time spent. It’s worth it.” •
Gordon Ruth was previously the Executive Vice President of Certification and Operations for the Chartered Professional Accountants of BC. Mr. Ruth was also the Chief Executive Officer for the Certified General Accountants of BC for almost five years. He has held several positions in the public sector, ranging from the federal government to BC Hydro. He spent 15 years with the Greater Vancouver Regional District (now Metro Vancouver) where he became the Chief Financial Officer and helped steward the financial affairs of this regional federation of municipalities.
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e c o n o m i c o ut lo o k q 2 Provincial Outlook: Where The Cuts Fall Like most forecasters, we had to downgrade our projections for Canadian growth since the start of the year. However, in terms of where those cuts fall, they certainly are not uniform across provinces. Indeed, the impact of a still-slowing housing market in B.C., weak investment in the oil patch, and China’s canola restrictions mean that the deepest cuts have been made in Western Canada. The new CIBC Provincial Momentum Indicator, which incorporates employment, trade, and housing-related data, show that most provinces are seeing slower underlying momentum than in 2017 (Chart 1). That is no surprise, given that growth in the Canadian economy as a whole peaked that year. The only exception is Nova Scotia, where recent momentum has been helped by strong employment readings. In contrast, B.C. and Alberta have clearly seen the biggest losses of momentum since 2017. However, because these indicators measure divergences relative to prior trends, and because those prior trends were very strong, the negative readings do not necessarily signal a recession. In B.C., the momentum indicator is at its lowest level since the financial crisis. The continuing slide in housing resales, in contrast to signs of stabilization elsewhere in the country, means that housing-related elements of GDP could become a drag on growth this year (Chart 2). While the latest Statistics Canada data for 2018 showed that housing is a much smaller contributor to B.C. growth, perhaps surprisingly it has not yet become a drag. Investment and Spending Dollars Business capital spending is one element of GDP that is not tracked well by the momentum indicator. Yet, it can often have a sizeable impact on annual growth rates, particularly in smaller provinces. For this year, capital spending plans,
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as projected by organizations responding to Statistics Canada’s annual survey, could prevent a deeper slowdown in the B.C. economy. The projected rise of around 1% of provincial GDP easily eclipses any increases projected for other provinces and is not skewed by work on the new LNG facility, which we previously estimated will not see its peak impact on GDP until 2021. The B.C. budget also pointed towards a pick-up in public sector infrastructure investment. Canada Is hoping for a rebound in Canadian capital spending basically akin to being a Toronto Maple Leafs fan? It sure seems so for the Bank of Canada, with each new year bringing with it fresh prospects for growth and, of course, reasons to excuse last year’s disappointments. Far be it from a fellow forecaster to criticize the track record of others. That being said, the Bank of Canada’s habit of having too rosy an outlook for business investment and exports is of interest given its role in monetary policy. The misses on those two categories have, for years now, come consistently in the same direction—to the downside—suggesting that the analysis may be missing a key feature of the domestic or global economy (Chart 4). The central bank has in the past explicitly brushed aside concerns that the economy faces secular, rather than cyclical challenges, and its latest forecasts indicate that view has not changed. The Bank recently stated again that the current malaise is transitory, due to the temporary effects of uncertainty and trade conflicts. However, that was the story last year too, before Canada had a trade deal in principle with its largest trading partner. Prior to that miss it was weak oil sector investment blamed on lower prices and increased uncertainty. Investment in that industry has not recovered either, despite oil prices well above the troughs hit in 2016. So is the latest version of the Bank’s Monetary Policy Report a case of déjà vu? Monetary officials are again banking on a rebound in investment. In fact, the MPR is basing its forecasts of 2% GDP growth in both 2020 and 2021 on contributions from business investment well above historical averages (Chart 5).
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Conversely, our forecast sees the recent slowdown as less a result of temporary headwinds and more a consequence of secular challenges to exports and investment, issues that are no longer being masked by strength in housing and household spending. That is one reason we see the economy advancing at a pace half-a-percentage point slower than the Bank of Canada in 2020 and having a neutral rate a full percentage point lower. • Canadian Forecast Summary
Sources: Bloomberg, Statistics Canada, Bank of Canada Alberta Treasury Board of Finance, CMHC, CREA CIBC World Markets Inc. James Hobson, CFA, PM, Investment Advisor at 403-260-0574 Charet Chahal, CIM, Investment Advisor at 403-260-0440 This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2019. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. James Hobson and Charet Chahal are Investment Advisors with CIBC Wood Gundy in Calgary The views of James Hobson and Charet Chahal do not necessarily reflect those of CIBC World Markets Inc. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. 18 | GFOABC.CA
c o l le c t o r s ’ c o r n e r victoria conference collectors’ forum The Collectors’ Forum session at the annual GFOABC Conference held in Victoria was well attended. The forum was facilitated by Doug Stein, District of Saanich (retired) and Jennifer Lockhart, City of Victoria. The guest speakers were Joe Scafe, associate lawyer, Young Anderson; Michael Spatharakis, BC Assessment; and Seven Emery, Anne Graboski, Bill Schley, Samantha Taylor, and Tara Wigen from the Ministry of Finance. Joe Scafe spoke about Permissive tax exemption legislation which generated discussion around exemption policies and partnering agreements. He referred to the case law regarding the phase “held by”. It was noted that a municipal permissive tax exemption bylaw also exempts all the other property value taxes such as school taxes, but does not exempt parcel taxes. Michael Spatharakis provided an update on BC Assessment’s on-line services, which included an introduction to their new authenticated website. Prior to 2018, a working group was formed to examine customer experiences accessing and using assessment information online. The group developed a prioritized feature list
and as a result there will be updates to website features. During 2019 we can expect to see a new user dashboard, data advice notifications, searching and filtering of files, and an organization page allowing user profile updates. In Spring 2020 we can expect to customise user dashboards, see the replacement of core Assessment LinkBC reports, as well as terms and conditions of access, use, and disclosure of assessment data. Updates following 2020 will include customizable reporting dashboard, email alerts, GIS representation of Assessment Roll, instant messaging with BCA customer support staff, and the ability to upload documents. Staff from the Ministry of Finance were in attendance to field discussion around property tax deferment forms, school tax, additional school tax, speculation tax and home owner grants. In 2018 the BC Government released a 30-Point Plan for Housing Affordability in British Columbia. The plan indicated that starting in 2019 the Province would collect Social Insurance Numbers as part of the home owner grant application process. The Province confirmed this would not be the case for 2019. During the round table, there were
discussions regarding paperless homeowner grant applications. Both the City of Vancouver and Central Saanich are now accepting only electronic home owner grant applications with Colwood to follow suit in 2020. The collectors really appreciate the Province staff attending the Collectors’ Forum. Thank you to GFOABC for sponsoring the Collectors’ Forum session at the Conference and the quarterly Collectors’ Forum webinar. •
JENNIFER LOCKHART is a CPA, CGA who has worked in both British Columbia and Alberta Local Government for over 12 years. She has been with the City of Victoria since 2017, holding the position of Revenue Manager. Prior to joining the City of Victoria, Jennifer held the position of Manager of Accounting and Financial Reporting at the District of West Vancouver. Jennifer graduated from the University of Athabasca with a degree in Business Administration prior to pursuing her accounting designation. Her background also includes seven years of IT industry experience, which has given her an advantage when it comes to improving business processes and creating efficiencies. She enjoys going the extra mile for her employees and making a difference.
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Using Data Analytics Insights to Deliver Infrastructure Portfolios Our communities rely on infrastructure to help create vibrant spaces where people live, work, and play. However, it can be daunting for municipalities to make investment decisions related to their capital plan. How do municipalities objectively decide between building a new community centre or spending budget on upgrades to roads? The use of data analytics creates opportunities for municipalities to better manage infrastructure portfolios using data points to: • Allow for evidence-based long-term planning that aligns to strategy • Optimize asset life-cycle costs • Improve project prioritization and capital allocation As a starting point, municipalities need to understand their asset base (i.e. what you have and it’s condition), their spending habits, and their strategic objectives.
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Sometimes this information is centrally stored but more often the data is imperfect and comes from disparate sources. This is where data analytics allows for aggregation and analysis of information – and most importantly – visual reporting that can be trusted and is based on empirical data. What should I consider when looking at asset portfolio prioritization and optimization? Investment options should be prioritized using financial and non-financial drivers for the community, aligned to policy / strategy / vision. This means understanding the cost for each project, preferably the lifecycle cost, the impact to the portfolio risk profile, and the impact on the overall financial health of the municipality. Equally as important is how to quantify the non-financial benefits of a project, which help articulate the overall benefits in an objective manner.
Where should I start? There are several ways to approach data analytics for asset planning and optimization. But before getting too deep one needs to recognize that data will be imperfect and different across the municipality. The focus should be on establishing what you hope to achieve as a result of implementing data analytics, and defining priorities for the asset portfolio. In doing so, it will quickly become apparent that the ability to collect data, automate data aggregation and analysis, and make use of visual reporting will reduce the administrative burden on the organization and help leaders make better decisions. Organizations often pilot the approach on one or two asset classes to get results faster and build momentum across departments.
Continuing the Conversation Peter Blahnik, Partner Capital Projects and Infrastructure at PWC spoke at the recent GFOABC conference on how Rapid technological advancements are reshaping the infrastructure industry.
Why should this matter to municipalities? Municipalities are faced with ever more complex investment decisions, particularly as communities expand and older infrastructure is no longer adequate. It is the role of the municipalities to: • ensure money is spent on the right projects at the right time. • maximize benefits and outcomes, aligned to strategic objectives. • support decision making that maximises the right outcomes from investments. Data analytics enables financial, social, and technical data to be analyzed in an objective manner without bias. This helps provide an evidential, auditable basis for decisions to build consensus among decision makers and reduce the back and forth in trying to explain how disparate inputs fit together. The biggest benefit to using data analytics is that your teams will spend less time trying to piece together the portfolio and how projects fit into it and more time focused on advancing the outcomes from the decision-making process. Capital planning and making infrastructure investment decisions is not an easy process. Data analytics is helping municipalities optimize their asset portfolio and be more effective with resource and capital deployment, ultimately improving how municipalities invest in and grow communities. •
Peter Blahnik is a Partner in the Capital Projects & Infrastructure practice in Vancouver. He specializes in capital project governance, construction readiness, and performance reporting for complex capital projects. He advises clients on topics related to governance, innovation in projects, operating model, complex procurement, project readiness, and commercial disputes. Peter has worked on recent Canadian megaprojects in the following sectors: utilities, transportation, health care, oil & gas, and education. He brings significant experience working with provincial governments, federal governments, first nations, public entities and private sector clients. Prior to joining PwC, Peter worked for an engineering consulting firm. He holds an MSc. in International Project Leadership from SKEMA Business School, a BComm in Finance from Ryerson University, and has completed the Program on Negotiations for Senior Executives at Harvard University.
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From Excel to Excellence: Data-driven Decision Making for Municipalities Lying at the head of Burrard Inlet and the foot of Eagle Mountain is the City of Port Moody, a vibrant community of 34,000 residents. Recently, Port Moody completed an overhaul of its financial planning systems, ultimately selecting Unit4’s Prevero for corporate/enterprise performance management (CPM, or EPM). The solution has not only created a more accurate and efficient financial planning and analysis (FP&A) process for the City, but has also led to additional opportunities for continuous improvement including the facilitation of data-driven business decisions across many departments and projects. Port Moody’s journey to a new CPM solution wasn’t without bumps in the road. For many years, the City used a homegrown spreadsheet-based system to manually calculate capital and operating budgets as well as forecasts, and to plan replacement and maintenance of capital assets. This had the potential for errors and lacked the flexibility to meet the City’s varying needs. In 2017, with the spreadsheet-based budgeting solution becoming increasingly complex and difficult to manage, Port Moody searched for an enterprise level financial planning solution. The goal was to help managers make better data-informed decisions in as painless a way as possible. In 2018, Port Moody selected Unit4’s Prevero due to the solution’s streamlined interface and easy-to-use graphic dashboards for displaying financial and non-financial information. As a web-based solution, Prevero can be accessed anytime, anywhere, and the City plans to integrate it with the City’s maintenance management system and recreation software. Integration already exists with the City’s enterprise resource planning (ERP) software, Unit4 Business World. Together, the solution can automatically collect data from multiple sources and store it in a central,
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easy to access repository that provides budget details, attachments, and relevant notes all in one place. The City will be rolling out enhancements to its Prevero solution to complete the 2020–2024 Financial Plan including dynamic visualizations, inflationary modeling, and future-year predictive budgeting. The City has plans to leverage the CPM capability for further business uses around capital project management and reporting, and fleet management. The solution is used by the senior leadership team and the executive leadership team to manage budgets
Continuing the Conversation surrounding personnel, operational expense planning, capital project planning, equipment replacement provisions, utility fee calculations, and reserve analysis. With continuity across all departments, financial information can be displayed as an aggregate overview of ongoing projects and budgets and can also drill down to line items on specific projects. Using advanced data analytics, the City can more accurately predict project status and budget using historical data to spot underlying trends and forecast emerging areas of risk or growth. Implementation was highly successful and was used to complete the 2019–2023 Five-Year Financial Plan. Overall, Port Moody has found that the upfront investment has been well worth the savings. The management team can more easily access the right information when they need it and it is presented in a straightforward format. With increased access to data and forecasting tools, the team is empowered to make better-informed decisions on behalf of the Port Moody community. •
Tyson Ganske of Port Moody spoke at the recent GFOABC conference in Victoria on their experience working with Unit4 to implement a new integrated CPM solution, future-proof the back-office and make plans to incorporate business intelligence and AI capabilities in the finance office roadmap.
Tyson Ganske is the City of Port Moody’s Manager of Financial Planning. His portfolio of responsibility includes: financial planning and budgeting, property taxation and revenue collection, and internal audit and business improvements. Tyson joined the City in 2011 as a Financial Accountant and has held progressively responsible positions, moving into the Senior Accountant role in 2013, and the Manager of Financial Planning in 2016. Tyson studied Political Science at Simon Fraser University graduating with a Bachelor of Arts in 2006. In 2016 Tyson completed the requirements to become a Certified General Accountant (CGA) and is currently a Certified Professional Accountant (CPA).
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Social Procurement: Adding Value and Community Well-Being
The concept of social procurement is getting a great deal of buzz within both public and private sector organizations these days, and for good reason—federal, provincial and local governments are all looking at ways in which they can achieve additional value. Businesses are incorporating social impact and outcomes into the core of their business practices while social enterprises are looking at social and economic returns. At the same time, communities are faced with complex challenges that require many different responses‚—social procurement is one solution. But just what is social procurement? Social procurement involves leveraging a social value from existing procurement practices.
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For example, public purchasers often need to procure catering services. Social procurement opens up catering opportunities to social enterprises that may be providing employment opportunities to people who face barriers to employment. Similar pricing, similar quality, local employment and social impact translates to greater value for the communities involved. Qualicum Beach shared their experience at the most recent GFOABC conference. The Town Council implemented a social procurement policy that identified specific community needs with steps to test this policy with a request for proposal for a small capital project. Proponents were asked to include a value-added commitment to the community based on the Council’s
social procurement policy. Points were then awarded in the selection criteria based on the inclusion of a valueadded commitment. The winning RFP’s proposal was assistance to a local not-for-profit organization for the development of the Seaside Nature Park, a beautiful viewing platform and interpretive signage on the waterfront. The Council moved forward with another pilot project where a social value menu was incorporated into the tender documents of a larger capital project. This project is still under construction but preliminary results showed that Qualicum Beach did not see any reduction in number of bids received within the expected project cost. Social procurement is quickly becoming a best practice among many local governments and public sector organizations. The Coastal Communities Social Procurement Initiative (CCSPI) is a two-year initiative to support the implementation of social procurement across Vancouver Island, the Sunshine Coast and coastal communities on the West Coast. Communities large and small are making the shift.
Continuing the Conversation Kristi Fairholm spoke on behalf of the CCSPI at the recent GFOABC conference in Victoria on why social procurement is a critical approach for communities of all sizes to adopt, and gave an overview of key social procurement strategies, tools and resources available along with local examples demonstrating how to advance social procurement within local government and institutional purchasing.
“Social procurement is the transition from making good deals, to making deals that do good…” — Larry Berglund, Presentations Plus
CCSPI provides education, training, resources and consultation to local government and First Nation purchasers on the West Coast. The initiative also supports social enterprise and local goods and services suppliers and construction firms to prepare and respond to social procurement opportunities. To date, 14 member communities have joined the initiative and are committed to learning and implementing social procurement together. If you’d like to learn more about social procurement or become a CCSPI member, visit www.cspi.ca or contact the author, Kristi Fairholm Mader, at kfmader@scalecollaborative.ca •
Kristi Fairholm Mader has always worked in the non-profit sector, starting as a service provider and advocate. In 2001, Kristi returned to school for a business degree and started exploring social enterprise and enterprising approaches to social change. Kristi founded and managed several social enterprise initiatives in Vancouver, including The Cleaning Solution. Since moving to Vancouver Island in 2011, Kristi has been supporting the growth of the social enterprise sector through collaborative and cross-sector approaches, and initiatives such as seCatalyst, Social Venture Bootcamp, Thriving Non-Profits and Coastal Communities Social Procurement Initiative. Since 2014, Kristi has been co-Executive Director of Ready to Rent BC, a non-profit focused on the prevention of homelessness, scaling it from a local program to national initiative.
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CIVICINFOBC CIVICINFOBC
q u a rte r ly q u estio n
property taxes … are they in line? CivicInfo BC is proud to announce a new partnership with GFOABC to deliver new perspectives on Local Government data collected through the annual CivicInfo surveys and open source data using our Civic Stats Tool. On the graph below we explore the changes of tax rates on average for municipal governments in British Columbia. The average assessed value of a single-family dwelling and the average municipal population growth serve as the backdrop for the comparison to average tax levies over the same period. This example was created using CivicStats, a platform that allows users to visually compare local government data from Stats Canada, BC Stats, BC Assessment, Ministry of Municipal Affairs and Housing, and CivicInfo BC.
The Civic Stats project brings vast amounts of open source data, as well as CivicInfo BC’s survey data. into a centralized location. The service utilizes over six million distinct datapoints that directly apply to BC local governments. CivicStats is available to local governments across British Columbia and is a user-friendly tool with the ability to easily create graphic representations of data. This information has been used in staff reports, internal briefings, and strategic planning. The new quarterly question, inspired by GFOABC member Mark Coulter’s query on the GFOABC Online Forum, is an exploration into what services are included in property tax general levies. In the September issue of the GFOABC newsletter we will be using the data collected to compare local government tax rates, wages, assessed values, populations, and more.
Single-family dwelling Total Taxes and Charges Compared to Assessed Values
If you would like to learn more about this free service, contact CivicInfoBC at info@civicinfo.bc.ca
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quarterly question
Quarterly Question: property tax … what’s included?
ACOMPLETE SURVEY
GFOABC and CivicInfo are pleased to announce that they will be partnering on the Quarterly Question going forward. Using your suggestions or popular posts in the Online Forum, GFOABC and CivicInfo will pose a short survey to the membership. The results will be made available in the following issue of Dollars & Sense. If you have a topic for a future quarterly question please contact the office at office@gfoabc.ca or 250-382-6871.
Previous Quarterly Question Results Average Number of Employees in Local Government Finance Departments By Type
ACLICK HERE FOR THE FINAL REPORT
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