GFOABC Dollars & Sense - March 2020 - Issue 110

Dollars & Sense P e r s p e c ti v e

Issue #110 • march 2020

Conference Program Announced Small Communities’ Forum BC Budget

p r es i d e nt ’ s m es s ag e in this issue President’s Message 2 Executive Director’s Message 3 Conference Update 4 Small Comunities’ Forum 5 What’s Happening 6 Spring PD Tax Time 7 Member Profile 8 BC Budget 9 MFA’s Corner 11 Collectors’ Corner 12 Economic Outlook Q4 13 Leveling the Field: How Legal Expense Coverage has Changed the Legal Landscape for Local Government 15 Quarterly Question 17

2 | GFOABC.CA

“The best way to find yourself is to lose yourself in the service of others,” Mahatma Gandhi. I’ve been thinking about how and where I might consider serving as my time as President on the GFOABC Board comes to a close in June.

This quote struck me so I share it with you hoping that it might strike you too and spur you on to lose yourself in serving others.

Yes, kudos to all of us in local government – we give back to our communities every day through our daily, and sometimes, evening and weekend work. We honour our professions by upholding ethical standards and adhering to public sector accounting standards. But what else can we do to give back and through this process find ourselves? Volunteering comes to mind, it connects us to others, helps us to develop and/or improve skills, and build experience. Not only does volunteering provide us with professional development, but it also leads to personal growth. Meeting new, likeminded people is fun, working toward a common goal as a team brings us fulfilment, we have opportunity to sharpen our skills and learn from others.

Have you considered volunteering for a GFOABC working group, committee, or Board? We are always on the lookout for new local government finance professionals who want to participate in our organization.

We are only as good as our volunteers. As I write this, I think about all the fabulous people who have come this way before me. They laid the foundation for what GFOABC is and what it can be. They recognized the importance of networking and having an association that serves our training and professional development needs. They shared their experiences, good and bad, so that we could all benefit and perhaps demonstrate the good and avoid the bad in our own workplaces. Many regions across the Province have strong legacies of committed volunteers who put up their hand to participate on the various working groups, committees and GFOABC Board. Thank you.

Why not put up your hand? You never know, you might just find yourself!

Genelle Davidson President

e x e c uti v e d i r e c t o r ’ s m es s ag e Board of Directors President Genelle Davidson Vice President Trevor Thompson Secretary-Treasurer Lorraine Coughlin Past President Rick Danyluk Directors at Large Nyla Attiana Jim Bauer Jeannie Bradburne Shelley Hahn Lenora Lee Talitha Soldera Sheila Thiessen Kala Harris, Executive Director Kisha Pellerin, Manager, Operations and Member Services Gerilee McBride, Graphic Design

Its’s been a busy start to the new year for local government finance staff across BC with budgeting, year-end audits, and preparation for property tax collection well underway. And, with Board and Council strategic priorities now firmly established heading into the second year of their four-year mandate and a newly released provincial budget, local government finance staff will continue to be busy now and throughout the year to come.

The start to the year is a busy time for your Association as well. In January we launched our annual membership renewal as well as the annual events and programming plan. This year we have added three new workshops to the programming roster: Treasury & Investment Management, Asset Retirement Obligations, and Financing Infrastructure. In February, we issued our annual call out for volunteers. There are many ways to add value to your Association while enriching your own professional development; as a volunteer you can help us develop workshops and programs, serve on one of our committees, or write an article for our newsletter, or make a presentation at the annual conference.

Speaking of which, this year the annual conference will be held in Kamloops from June 3 to 5. The theme this year is Community & Economic Development. From Fort St. John to Abbotsford and Fraser-Fort George to the Capital Regional District, economic health and strong communities are key Council and Board priorities. Local government finance departments play an increasingly important role in supporting these priorities. We hope to see you in Kamloops where we will explore community partnerships and how to measure the benefits of investments that drive economic development.

Kala Harris Executive Director

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 3

c o n f e r e n c e u p d ate

early bird pricing ends march 31 register now Conference Program Announced! Schedule at-a-Glance PRE-CONFERENCE WORKSHOPS JUNE 1 • Investment & Treasury Management • Development Cost Charges JUNE 2 • Property Tax Policy & Tax Rate Setting • Regional District Day • Asset Retirement Obligations

Welcome Reception | June 2, 6:00 pm – 9:00 pm GFOABC welcomes all guests to kick-off the 2020 Annual Conference at Romeo’s Kitchen + Spirits. It’s a great opportunity to network with friends old and new!

Gala Dinner | June 4, 6:00 pm – 9:00 pm GFOABC delegates are invited to the Thursday night Gala Dinner held in the Coast Kamloops Ballroom. Live musical performance by Dave Coalmine Band, a 5-piece dance band with amazing vocals!

Additional Gall Dinner tickets are available for sale for $100 plus GST online before June 1 and in-person at the registration desk during the conference.

Accommodation | Reserve your hotel rooms today!

Coast Kamloops Hotel DIRECT RESERVATION LINK Conference Volunteers | Receive one-day pass to sessions!

GFOABC is still looking for volunteers. VOLUNTEER APPLICATION FORM

4 | GFOABC.CA

s m a l l c o m m u n iti es ’ f o r u m by sheila theissen Are you a member of a finance department in a small community (less than 15,000)? Do you regularly perform duties that are outside of the finance function? Are you often challenged to meet the reporting deadlines?

In the province of BC there are 162 incorporated municipalities, including 119 municipalities with less than 15,000 in population. Of those 119, 81 have less than 5,000 in population.

These population numbers are important in relation to policing costs, as municipalities with less than 5,000 in population don’t pay for policing costs, whereas municipalities between 5,000 and 15,000 in population pay 70% of their policing costs. This can have a significant impact on the municipality’s tax rates.

More importantly, small municipalities are required to do the same amount of financial reporting to the province and other entities as larger municipalities. The task of this reporting generally falls on the Finance Officer and their delegates in small municipalities, including reporting for items such as Climate Action Revenue Incentive Program (CARIP) etc., that are often handled by Engineering or other departments in larger municipalities.

The size of the smaller municipalities’ budgets creates many challenges. Software solutions, consultants, and, other resources can easily cost more than 1-10% of the municipality’s annual budget, leaving the Finance Officer to find other ways to perform tasks and do reporting.

A Finance Officer in a small community is required to do all aspects of the financial reporting and operations making it difficult for small municipalities to find people to fill the role.

GFOABC and MFABC recognize the challenges faced by small municipalities and are hosting a small communities’ forum at the 2020 GFOABC Conference in Kamloops. The goal of this session is for participants from small communities to be able to discuss their challenges and share their tools for achieving their goals.

Resources available to the finance staff from other agencies will also be discussed. •

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 5

W H AT ’ S H A P P E N I N G AT G F O A B C March 17 | 9:30am Quarterly Investors’ Forum Webinar REGISTER NOW

March 18 | 10:00am 12-Month Taxation and Assessment REGISTER NOW

April 22 | 9:00am Quarterly Collectors’ Forum Webinar REGISTER NOW

May 6 | 9:00am Accounting & Auditing Forum Webinar REGISTER NOW

CLICK HERE for more information on What’s Happening at GFOABC 6 | GFOABC.CA

s p r i n g p d ta x ti m e

Property Tax 101 April Various Dates & Locations Property taxes are the primary source of tax revenue for local governments. They provide the necessary funding to build and maintain roads, bike paths, trails and recreation facilities. In this informal and interactive workshop, participants will learn about the taxation process including assessments, collections, homeowner grants and tax deferment. Participants will be given the information that they need to confidently and effectively answer questions from taxpayers.

NANAIMO APRIL 3 RICHMOND APRIL 17 KAMLOOPS APRIL 24 TERRACE APRIL 27 WEBINAR APRIL 7, 14, AND 21 (three part series)

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 7

MEMBER PROFILE jennifer lockhart interviews paul murray I had the pleasure of catching up with Paul Murray over a sushi lunch in Victoria. Paul has 32 years of Municipal Government experience and he was recently honored with a fellowship from CPABC. Paul is the kind of person with whom you can sit down, strike up a conversation and immediately feel like you’ve known him for years. His passion for his work is undeniable and he comes across as someone who is very practical.

Paul grew up on Guernsey in the Channel Islands located just off the coast of France. When he was 18 his parents decided they would immigrate to either Canada or Australia. He found himself in Nanaimo, BC where he began working at a Chartered Accountancy office while attending university to complete a business degree. Between his 3rd and 4th year he found himself looking for a summer job in Victoria.

He remembers visiting the Employment Insurance office and seeing an advertisement for a term position at the Capital Regional District where he would be responsible for inventorying items for insurance purposes. Although the term was for four months, Paul finished the work in half the time, and he was then asked if he wanted to assist with other finance work. Soon after he was hired to work at the CRD in their Finance department where he enjoyed his time and the variety of work the organization had to offer.

Paul’s first municipal experience was as the Treasurer for the District of Central Saanich where he would spend five years before moving to become the Director of Finance for the City of Langford. Soon after, he accepted the role of CFO and later on CAO for the District of Saanich before ultimately finding his way back home

8 | GFOABC.CA

to Central Saanich as CFO and now as their interim CAO where he is currently assisting the organization through a period of transition.

Through the course of his career, Paul has demonstrated an interest in sustainability and strategy. Recently, in July 2019, 360 solar panels were installed on the roof of Central Saanich’s Fire Station 1. It is expected that the District will recover the installation costs in just over 11 years and that net earnings will be $424,000 after 20 years. Another example was Central Saanich’s partnership with Modo last year, effectively bringing three electric car sharing vehicles which are available to residents and businesses. Paul played an integral role in both these projects.

Paul has demonstrated his passion and contributions at each of the municipalities where he has been employed. When he is not working, he volunteers with the Royal Canadian Marine Search and Rescue and Rotary.

He and his wife both enjoy cycling and travelling. •

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 7 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.

bc budget brandon ma, audit partner, kpmg On February 18, 2020, Carole James, Minister of Finance, delivered Budget 2020: A Balanced Plan to Keep BC Moving Forward. The balanced budget has an updated forecast surplus of $203 million for fiscal 2019/2020 and estimates a surplus of $227 million for fiscal 2020/2021.

Notable general budget highlights include a new tax bracket for the top 1% of income earners of 20.5% for taxable income exceeding $220,000 and PST changes to eliminate PST exemptions on sugary beverages (pop) and new PST registration requirements for software and telecommunications companies.

The budget stays within the government mandated commitments of Making Life More Affordable, Services British Columbians Count On, and Building a Strong and Sustainable Economy that Works for Everyone. These commitments and underlying investments may result in additional access to funding, grants, and development opportunities for local governments. A summary of the potentially most impactful elements of Budget 2020 for BC local governments is as follows: 1. Transportation Investment Plan • The Province will continue to make transportation investments, working alongside federal and local governments, with $9.2 billion invested over the next five years in transportation infrastructure.

• There are numerous significant investments named in the budget including Pattullo Bridge Replacement, Broadway SkyTrain line to Arbutus Street, Accelerated four-laning on Highway 1 to the Alberta Border, Highway 1 HOV lanes between 216th Street and 264th Street, and Highway 91/17 and Deltaport Way Upgrade.

• In addition, Budget 2020 discusses the launch of a South Island Transportation Plan and Fraser Valley Integrated Transportation and Land Use Plan, both assessing the multi-modal transportation strategy in these two geographies and involving engagement with local governments.

2. Housing investment and homelessness initiatives – potential funding opportunity • Housing continues to receive capital investment from the Province. The Province had previously announced an investment of $7 billion over 10 years in its 2018 budget.

who are homeless or at risk of homelessness. This new funding is incremental to previous supportive modular housing investments made.

• In total $1.1 billion is provided in capital funding to support housing and homelessness over three years.

• $118 million over three years is included for housing and homeless initiatives supporting the Homes for BC plan, with a new investment of $50 million over three years.

3. CleanBC investments and potential funding opportunities • New investment of $419 million over the fiscal plan is added to support CleanBC, which is BC’s climate action strategy, bringing the four year total to $1.3 billion.

• Electric car charging stations includes $5 million for incentives to install home and workplace charging stations and $2 million for new public fast charging stations.

4. Policing investment • $23 million in new investment towards public safety and crime prevention programs, including police services and First Nations policing for rural communities amongst other items.

• $71 million in additional budget over three years to enhance public safety and support services.

• $56 million in new capital funding is provided for fiscal 2020/2021 for the development of 200 new units of modular housing for people MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 9

5. New municipal tax rate flexibility on designated port properties • Beginning in 2020, municipalities will have flexibility under the Ports Property Tax Act (the Act) to create a new distinct municipal tax rate for designated port properties. This new tax rate will apply in situations where the municipality’s major industry tax rate is below the upper tax rate threshold specified in the Act. • Generally, the Act’s property tax rate cap will not change and will remain at a maximum of $27.50 per $1,000 of assessed value and $22.50 per $1,000 for new investment.

• This new tax rate also cannot be higher than the local government’s 2017 major industry tax rate.

6. Auditor General for Local Government (AGLG) • Estimated appropriations for the AGLG has decreased from $2.6 million forecast for fiscal 2020 to $1.8 million budget for fiscal 2021.

• Subsequent to the budget release, on February 24, 2020, Minister Selina Robinson (Municipal Affairs and Housing) announced plans to close the AGLG office within a couple of years.

7. Wildfire and emergency management • Wildfire and emergency response, management, and prevention received new annual funding of $65 million, split between $35 million for fire management and $30 million for emergency program. The total budget is $519 million over three years.

8. Home Owner Grant administration

10. Other • Due to forecast lower than budgeted spend on contingencies from the 2019 budget, excess capacity may be used for accelerated payments in fiscal 2019 to local governments for projects under the Investing in Canada Infrastructure Program. Accelerated payments made will result in corresponding reduced payments in the next two fiscal years.

• Real GDP growth is projected to increase from 1.8% in 2019 to 2.0% in 2020, and decreasing to 1.9% for both 2021 and 2022.

• Property tax revenue earned by the Province is expected to increase by 4.4% each year over the fiscal plan resulting from assumptions relating to housing starts, non-residential investment, and inflation.

• BC’s share of the federal cannabis excise tax is expected to increase to $50 million in fiscal 2021 and to $70 million for fiscal 2022 and 2023. New additional budgeted costs of $18 million have been provided for over these next three years to enable safe implementation of cannabis legalization.

• $11 million is provided to fund the public inquiry into money laundering with BC Supreme Court Justice Austin Cullen appointed as the lead commissioner.

• Estimated funding for the Ministry of Municipal Affairs and Housing has decreased from $828 million forecast for fiscal 2020 to $650 million budget for fiscal 2021. The decrease largely relates to Local Government related expenditures decreasing from $308 million to $110 million, with Housing expenditures indicating a modest 4% increase from $486 million to $506 million. •

• Currently, home owner grants are administered at the local government level.

• The budget discusses a measure to centralize the administration of the home owner grant and confirms that the Province will be working with local governments on this.

9. Employer Health Tax (EHT) • There were no changes in regards to the EHT regime and full elimination of MSP premiums effective January 1, 2020. Local governments should continue to incorporate the impact of EHT in their budgeting and financial forecasts.

10 | GFOABC.CA

BRANDON MA is an Audit Partner with over 12 years of experience providing assurance and business advisory services. He is passionate about making our clients’ businesses and organizations better. Brandon’s experience spans a broad range of industries, with a focus on all subsectors of the public sector, notfor-profit and technology industries, as well as consumer markets, food processing, and professional associations. He led implementation of the Audit Innovation agenda nationally leads deployment of Lean and Technology in the Audit for the Enterprise practice in the GVA. His diverse experience is an asset to clients in delivering high audit quality and providing valuable data-driven insights.

M fa ’ s c o r n e r mfa to launch fossil fuel free pooled investment fund We are pleased to announce that we anticipate launching our first diversified fossil fuel free (FFF) pooled investment fund in late March. In 2017 and 2018, MFA opened two Pooled High Interest Savings Accounts to meet the needs of FFF investors.

With increased focus on sustainable investing practices, and increased interest in FFF investing, a fully diversified investment product to meet the unique needs of BC’s local governments was a needed complement to our existing offerings. Our Fossil Fuel Free Bond Fund (FFFBF) has a clear mandate and will provide a low-cost, diversified, and professionally managed solution.

There are many approaches to responsible investing, from Impact Investing which targets specific Environmental, Social, and Governance (ESG) factors to specific exclusionary screening approaches – to name but two. Our first sustainable diversified pooled investment fund will employ an exclusionary screen, as this is a simple and cost-effective approach that will meet the specific needs of a large number of clients. The chosen Fund Manager, Phillips, Hagar & North Investment Management (PH&N) will use two exclusionary screening methods developed by Sustainalytics and Fossil Free Indexes to screen-out firms “directly involved in the extraction, processing or transportation of coal, oil or natural gas” as well as a list of the largest 200 global publicly-traded coal, oil and gas reserves holders. The ability to clearly communicate that mandate to stakeholders makes this an agreeable initial approach for BC’s local governments who choose to participate.

The FFFBF will be benchmarked against the FTSE Short Term Overall Bond Index. Due to the common construct of the benchmark and additional direction provided by MFA, the FFFBF will be appropriate for reserves investable for 3 years or longer. MFA will restrict PH&N from purchasing bonds with maturities greater than 7.25 years and will

allow a target duration of +/- 1 year versus benchmark (estimated approximately 3 years). Targeting duration to a shortto-medium term limits interest rate risk versus longer-dated securities or longer-duration products.

We believe the FFFBF will be among the lowest-cost actively managed bond funds of its type in Canada. This is due to a combination of PH&N investing in the requisite upfront systems, the pooled structure of the fund, and relative simplicity of the “screen-out” approach. In this lowyield environment, reducing fees can have a significant impact on net return.

The impact on diversification by removing a segment of eligible benchmark securities was looked at carefully.

Although benchmark constituents evolve, we anticipate the FFF screen to remove about 4% of benchmark-qualified bonds. PH&N will determine the most advantageous assets to add to the FFFBF to account for the removed benchmark securities. Generally, the fund will consist of federal, provincial, municipal, and corporate bonds with a credit rating of BBB or higher. To control credit risk, PH&N will be required to hold at least 30% Government of Canada or provincial bonds. For comparison, MFA’s current Bond Fund, which will remain very similar in construct to the FFFBF, holds about 50% AAA and approximately 18% BBB securities. The objective of the fund will be to provide a high level of current interest income and achieve moderate capital appreciation by investing primarily in high-quality securities.

We would be delighted to discuss how the FFFBF may fit into your current investment portfolio or outline additional details of this new fund. • KYLE DERRICK is the Credit & Economic Analyst at MFABC. He is a MBA graduate from Royal Roads University. Further, he earned an undergraduate degree in Business Administration (finance) and holds a Certificate in Economics.

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 11

c o l le c t o r s ’ c o r n e r alternative tax collection scheme No, not scam – Alternative tax collection scheme.

Municipalities have various options to ultimately enforce property tax collection such as court action and tax sale. But during the current year we do all we can to offer taxpayers a variety of methods to voluntarily pay their taxes such as cash, cheque, electronic payment, monthly pre-authorized payments, etc. The home owner grant provision and property tax deferment option are also forms of payment. During the current year the Community Charter provides municipalities with two tax collection schemes - the General tax collection scheme and the Alternative municipal tax collection scheme.

The General scheme is the default option in which the municipality follows the Province’s rules per S234 and Regulation 426/2003.

Basically, property taxes are due on July 2 and a 10% penalty applies to all unpaid taxes after the due date.

However, a municipality can choose an Alternative scheme of tax collection per S235 whereby a council may, by bylaw, establish one or more dates on which all or part of the property taxes are due. So a municipality can choose multiple due dates however the sum of the penalties must not exceed the sum total of 10%. For

12 | GFOABC.CA

example, a municipality could choose a first due date of July 2 with a 5% penalty and then a second due date of August 2 with a 5% penalty.

Why would a municipality choose an Alternative tax collection scheme?

Many municipalities have had multiple due dates which were originally established under the old Municipal Act. These bylaws are still valid even though the legislation has been amended. While changing to multiple due dates reduces overall penalty revenue that would otherwise be collected, it mitigates the punitive effect on the taxpayer of a one-time 10% penalty. If the taxpayer forgot to pay by the first due date, the penalty is effectively half of what it would otherwise be. Another reason for an Alternative scheme is to provide relief to those owners, particularly seniors, who may have paid their net property taxes by the due date but forgot to claim their home owner grant. An Alternative scheme would legally provide for claiming the home

owner grant by the second due date without penalty. Interestingly, with the modernization of the property tax deferment program starting this year, an Alternative tax collection scheme may be worth considering as an option with regards to the penalty similar to and/or in conjunction with the home owner grant option.

Otherwise there could be a lot of disgruntled taxpayers attending the municipal tax office.

Yes, beware of tax scams and also be aware of the Alternative tax collection scheme. HAPPY 2020 TAX TIME!!! •

DOUG STEIN Doug Stein has worked in municipal finance for over 30 years.

In 2011 he retired from his position as Manager of Revenue Services for the District of Saanich.

Doug leads the Collectors’ Forum, is a GFOABC Life Member, and a CPA, CMA.

e c o n o m i c o ut lo o k q 4 canada—mid-cycle adjustment on the horizon After a relatively flat reading for real GDP growth in Q4 2019, we are expecting the Canadian economy to rebound later into 2020.

We are forecasting Canadian real GDP growth of 1.4% and 1.9% for 2020 and 2021, respectively.

Going into the new year, Canadian economic data was fairly positive. The labour market boasted positive numbers adding 27,300 and 34,500 jobs in December and January, respectively. Despite pipeline curtailment, exports were up by 1.9% in December largely driven by crude-by-rail. On January 15, Trump signed a “Phase-One” trade deal with China and noted a “Phase-Two” provision will be drafted in the coming months.

After leaving rates unchanged throughout Q4, the Bank of Canada is beginning to sound more dovish. The BoC is leaving the door open for another rate cut this year, which we believe will take place in Q2. While the Canadian economy is fairly robust, another mid-cycle adjustment may be appropriate.

The main reason for a rate cut would be to drive foreign investment. While the price of a loonie to a dollar may seem cheap, Canadian currency appreciation against foreign exporters to the US market caused downward pressure on Canada’s capital and current accounts.

In an ultra-low interest rate environment, the currency is the BoC’s main channel of influence.

With exports already on the rebound, driven by the easing of global trade tensions and crude-by-rail, we believe foreign investment can be further facilitated with a rate cut in Q2. While the decision relies on economic data, we are forecasting indicators to lean towards easing policy. For example, despite the recent strong

employment figures, we believe that employment growth has been a little stronger than it should have been given other economic data. As such, we expect a slight uptick in the unemployment rate, which would see investors pricing in a greater probability of a rate cut.

S ource : CIBC W orld M arkets

British Columbia - Leading the Canadian Economy Among a sluggish backdrop, British Columbia is emerging as a bright spot in the Canadian economy. We believe the BC economy, while slightly overweight in trade and manufacturing, has upheld resilience through increased diversification. We expect BC to lead Canada in 2020 and 2021 with 2.0% and 2.4% real GDP, respectively.

We would like to reiterate, from our last publication, the spillover from a slowing national and global economy continues to weigh on BC’s forestry sector, manufacturing sector and consumer spending. The unemployment rate has been trending higher since July 2019 after an

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 13

all-time low of 4.7% in 2018. We are expecting this trend to continue into 2020 with a small uptick in unemployment followed by a reversal in 2021.

On a positive note, diversification has underpinned BC’s economy. Compared to 2019, growth should pick up over the next few years without any serious downturn. In spite of the dimmer areas of BC’s economy, capital expenditures, population growth and residential real estate all outweigh the negative.

Capital expenditures on large engineering projects such as the Trans Mountain expansion, BC Hydro Site C and the Pattullo Bridge will not only increase access to resources, but create several jobs in the process.

Furthermore, continued diversification into industries such as film and television, tourism, technology, scientific and technical services are increasing net in-migration to the province. Along with increased demand and construction in residential real estate, population growth is causing a rebound in the real estate market.

As a final word, we would like to note that we expect the partial resolution of the US-China trade conflict to encourage a rebound in BC’s export sector by the end of Q1. Consistent with our Canadian growth outlook, the BC economy is poised to rebound and lead our nation’s growth in 2020 and 2021. Increases in the population, overall construction and diversified segments have upheld the economy and will continue to grow in coming years. • JAMES HOBSON, CFA, PM, First Vice-President, Portfolio Manager, Investment Advistor & Chairman’s Council Member 403-260-0574 james.hobson@cibc.ca CHARET CHAHAL, CIM, Portfolio Manager, Investment Advisor & Chairman’s Council Memeber 403-260-0440 charet.chahal@cibc.ca 14 | GFOABC.CA

`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. 2020. 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.

JAMES HOBSON, CFA With over 10 years of experience at CIBC, James focuses on identifying major market themes, analyzing equity and fixed income securities, and monitoring client portfolios to ensure investment policy compliance. Among the numerous charities he assists, James is a long-time supporter and donor for the Kids Cancer Care Foundation of Alberta.

CHARET CHAHAL, CFA Prior to joining CIBC Wood Gundy, Charet worked in the oil and gas sector, developing a wealth of experience in energy markets. Charet also managed and led a start-up business venture to be listed on the public exchange. Charet is an avid supporter of the Calgary Children’s Hospital.

Leveling the Field – How Legal Expense Coverage has Changed the Legal Landscape for Local Government

Q: What’s the difference between a lawyer and a herd of buffalo? A: The lawyer charges more.

Legal fees have long been perceived as a significant barrier to access to justice. The cost of starting a dispute in the court system can be significant, and sometimes not worth the end result. While it sometimes prevents parties from being fully compensated for their losses, it can also dissuade parties from pursuing claims that have no merit or likelihood of success. But the legal landscape has begun to change.

A few years ago, we started to see the influence of a new type of insurance emerge in the MIABC’s liability claims. Some plaintiffs were no longer hesitant to pursue their claims to trial. They no longer feared that if they were unsuccessful, they would have to pay both their own legal expenses and the local government’s legal expenses out of their own pocket. It seems that many plaintiff law firms were purchasing “After the Event Insurance” or “Adverse Costs Insurance” (“ATE” insurance) for their clients. ATE insurance is a product that plaintiffs and plaintiff firms can purchase to cover the legal expenses of a claim if the claim is unsuccessful.

The premise of ATE insurance is that

it levels the playing field for plaintiffs and defendants, thereby increasing access to justice. A plaintiff’s decision to pursue their case would no longer be influenced by their ability to pay costs if a decision didn’t go their way. In some cases, ATE Insurance has made it more difficult for us to settle claims as plaintiffs can be more reluctant to consider and accept what we think is a reasonable settlement.

The emergence of insurance coverage for legal expenses has not

been all bad news for local governments. In fact, the upside is that this coverage is also available for local governments to purchase in order to cover the costs associated with their own legal actions, not otherwise covered by their liability insurer.

Legal Expense Insurance coverage can fill coverage gaps in a local government’s commercial insurance portfolio. It also provides resources for local governments to protect themselves and in some cases,

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 15

actively pursue third parties to safeguard their financial interest.

There are a number of products on the market. For instance, the MIABC has recently partnered with DAS Legal Protection Inc. to provide a tailor-made program for BC local governments. It includes coverage for judicial review proceedings of local government decisions, employment disputes, contract disputes and the legal costs associated with debt recovery. In addition, the policy includes unlimited access to a Legal Helpline that will provide claims handling advice and general answers to any legal question, regardless of whether it is covered by the policy.

No matter how small your local government is, you may benefit from this new coverage. It is certainly worth calling up your insurance broker to find out what is available. If you would like more information about the MIABC’s program feel free to contact Erica Shi at eshi@miabc.org. •

16 | GFOABC.CA

ERICA SHI joined the MIABC’s Insurance Department as the Insurance Programs Administrator in May 2018. In this newly created position, Erica’s role is strongly member-focused. She is the in-house subject expert for ancillary policy placements. She assesses and responds to Members’ calls for changes to insurance programs and assists Members in interpreting policy language. She also processes renewals, responds to new business opportunities, and assists in the development of the Insurance Department’s business infrastructure. With 15 years experience in insurance industry, Erica held multiple roles in insurance company and different insurance brokerages. Erica graduated with a Bachelor’s Degree in Civil Engineering from Tongji University in Shanghai and later obtained a Bachelor’s Degree in Business Administration from SFU. Erica currently holds a General Insurance Agent Level 2 License and Chartered Insurance Professional (CIP) designation.

MEGAN CHORLTON’S career path has taken a number of twists and turns over the years. She obtained a B.Ed from McGill University and a M.Ed. from the University of Alberta in the 1990’s, followed by seven years of teaching. She returned to school in 2002 to obtain a LLB from the University of Alberta, then clerked for the Alberta Court of Queen’s Bench and the Alberta Court of Appeal. Megan was called to the bar in British Columbia in 2007. After specializing in municipal and insurance defence litigation while working at a large regional law firm for seven years, Megan joined the Municipal Insurance Association of British Columbia (MIABC) as a staff lawyer in 2013. Her career veered in an interesting direction in 2014 when she was appointed as the Director of Member Services. Presently, Megan acts as both the Director of Member Services and the MIABC’s General Counsel.

CIVICINFOBC CIVICINFOBC

q u a rte r ly q u estio n

Mortgage Listings and Refunds…How Do We Recoup the Cost?

We received responses from local governments of varying populations from across the province from the City of Vancouver to the Village of Lytton. It appears that charging for folio listings requested by mortgage companies is practiced by most local governments, with more than 60% reporting the practice.

The amount local governments charge for folio listings varies significantly.

Mean when “$0.00” responses removed

$12.10

Highest fee reported

$50.00

Lowest fee reported

$5.00

Tax Credit Refunds Local governments tend to hold overpayments unless a refund is requested. The survey found that the majority, or roughly 70%, of local governments do not refund overpayments without a request. The remainder reported automatically refunding without request. Of these same local governments 44% alert the property owner when a credit exists on the property’s account, and 56% do not unless solicited. Charges exist in many instances to obtain the refund and can range from a fee of free to $100.00 for the service. 34% of local governments report charging an average fee of $28, while the remaining 66% do not charge a fee.

If you would like to learn more about this free service, contact CivicInfoBC at info@civicinfo.bc.ca

?

quarterly question

the next Quarterly Question: credit card payments…what’s your practice?

APLEASE USE THIS LINK TO BE A PART OF THE RESULTS

The survey should only take about 3 minutes to complete.

The responses to this question will be profiled in the next GFOABC Newsletter.

If you have a topic for a future quarterly question, please contact the office at office@gfoabc.ca or 250.382.6871

MARCH 2020 • DOLLARS & SENSE PERSPECTIVE | 17

Thank you sponsors

PLATNUM

GOLD

SILVER

BRONZE

Would you like to see your logo here? Become a GFOABC sponsor today. office@gfoabc.ca • 250.382.6871