2020 Financial Report and Community Update

MESSAGE FROM THE MAYOR Once again, the Town of Rocky Mountain House Council is proud to share this 2020 annual community report.

Our inaugural report in 2019 earned the Government Finance Officers Association Canadian Award for Financial Reporting. Citizens know we are committed to being responsible, practical, fair and consistent with the Town’s legislative and fiscal functions.

While each aspect of this report – financial statements, departmental budgets and overviews, Town initiatives and more – have always been available to the public, this report compiles all reportable aspects of Town business into a single document.

The Municipal Government Act legislates everything we do as a municipality. Many factors, such as property assessments, provincial requisitions, available grant funding and even the global COVID-19 pandemic are beyond the scope of this legislation, yet they all play a role in Town business.

For our part, we have focused on saving where we can: within our own operations and Capital plans, while maintaining reasonable reserves to support the long-term viability of our community.

Alberta Municipal Affairs’ municipal indicators show this work is paying off. Its latest report, published in the fall of 2020, shows Rocky Mountain House passed every essential indicator of municipal sustainability.

The infrastructure investment indicator is particularly important: it means we are replacing our assets and investing in new infrastructure faster than the existing roads and pipes are wearing out. It is crucially important to address the cost and inconvenience of water main breaks that seem to happen often in winter!

We were able to host Marketplace on Main, wrap up Centennial Campground engagement, hold a soft opening of the Cooperative Spray Park, solicit public feedback on our 2021 budget, congratulate our 2020 high school graduates, and honour our diverse community with the 2020 Cultural Showcase.

These were bright spots in an otherwise very, very difficult year.

We deferred property tax penalties for 2020, and suspended utility penalties for 90 days, in order to support residents and businesses where we could.

While COVID-19 overshadowed much of 2020, the Town has achievements to be proud of.

7

2020: A YEAR OF CHALLENGES AND TRIUMPHS We earned the Inclusive Community Award from Spinal Cord Injury Alberta, for barrier-free recreation.

We adopted our Waste Reduction Strategy and published our first ever Annual Community Report.

We received a clean auditor’s report, and full marks from Municipal Affairs for every essential municipal indicator. (We also score high for interest in municipal office: our citizens are passionate about our Town!)

We finalized major user agreements for the North Saskatchewan River Park. We are grateful to the many volunteers and sponsors who have supported the park through the years. We are thankful for the generous gifts of time and money that have benefited the entire community. We look forward to welcoming even more diverse events to our community.

We adopted the Seniors Needs Assessment and Social Needs Assessment – two reports that Clearwater Regional FCSS will use to better serve our region in the future.

In the fall of 2020, we launched the #RockyOnline festival and social media/digital supports for businesses. This was a direct result of Council’s Covid-19 recovery task force that identified a need to support businesses transition to online retail and services. The festival reached 42,000 people.

Our modernized Municipal Development Plan and Land Use Bylaw were adopted in January 2021. These comprehensive documents were built with significant community consultation and input in the prior 18 months.

Thank you to everyone who participated in this process.

These documents will guide future growth and development in the Town of Rocky Mountain House over the next 20 years. Regular revision will ensure the Town is staying current with regulations and community wants.

Our 2020 residential building permit values is up by over 50 percent over 2019, and we had more active business licences in 2020 than the year before.

2020 also brought cost-saving changes to solid waste services in Rocky Mountain House. Changes to billing for commercial waste took effect in November, and businesses who had been paying tonnage to Town are now able to shop around for the best waste service for their needs.

Meanwhile, Rocky Mountain House residents embraced the Eco Centre and continue to take enormous advantage of all the recycling programs there. Waste diversion is the way of the future: Extended Producer Responsibility for paper and packaging is on the Government of Alberta’s radar. We expect provincial progress on that front and evolving municipal services as a result.

Our long-range planning is paying off. Through deliberate examination of our infrastructure needs, we were able to secure a combined $20 million dollars from provincial and federal programs for a mechanical wastewater 8

Redacted under section 17 of the FOIP Act

Redacted under section 17 of the FOIP Act

Planning & • Community Development

Departmental overview & 2020 stats

The Planning and Community Development department oversees economic development, protective services and planning functions for the entire Town. The modernized Municipal Development Plan (MDP) and Land Use Bylaw {LUB) are designed to make Rocky Mountain House an attractive place to develop as a progressive and forward­ thinking municipality.

2020 marked a new step towards ensuring all structures in Rocky Mountain House are meeting Safety Code regulations. In 2020, this department became accredited in electrical, gas, plumbing and private sewage permitting.

Geographic footprint

1,294 hectares

Assessed parcels

3,323

Development permits

80

Building permits

65

7-14 day approval timeline

valued at $4.6 million 31

Gas permits Electrical permits Plumbing permits

11

Subdivision applications

2

27

45-day approval timeline

Business licenses

579

Passport to Shop Local

65 participating businesses

17

representing $1.5 million local spending

Redacted under section 17 of the FOIP Act

SIGNIFICANT LOCAL ECONOMIC EVENTS There are two major economic drivers in this region being energy and tourism throughout Clearwater County.

The last five years has seen a downturn in the oil and gas sector throughout all of Canada and in particular, Alberta. This has been challenging as it impacts many residents and businesses in this area. The Town of Rocky Mountain House recognizes the economic downturn and is focused on ensuring better value per dollar in service delivery. 2020 is the third year that Council has maintained the property tax increase at zero in an effort to recognize the financial impact of the downturn in oil and gas.

The COVID-19 pandemic also had a significant impact on all areas in 2020. The Town dealt with closed facilities and reduced services, managing the financial impact of revenue losses and at the same time followed provincial health guidelines to continue provide safety for staff members and services to the public.

PROSPECTS FOR THE FUTURE The Town of Rocky Mountain House continues to provide sound financial stewardship to the residents and business of this municipality. The last two years have laid a groundwork of strong financial practices and improved levels of budgeting and financial operations.

A 10-year financial capital plan that is fully funded has been developed and approved. This enables the Town to continue maintaining infrastructure and services while knowing that the financial base required is being preserved for the future.

Council’s strategic planning, service level review and budgeting process allows the Town to ensure its own operations are running as efficiently as possible.

When new opportunities arise, the Town is able to react quickly.

27

Redacted under section 17 of the FOIP Act

FINANCIAL STATEMENT ANALYSIS CONSOLIDATED FINANCIAL POSITION AND OPERATING RESULTS The financial information here provides a highlight of the audited financial statements. A summary of the Consolidated Financial Position or Balance Sheet is shown below. The main point in this statement is that the Town is in a solid position of assets being $12 million greater than the liabilities and increase of $2 million from the prior year. The non-financial assets consist of tangible capital assets, inventory for resale, prepaid expenses, and deposits. Overall, the Town has an accumulated surplus of $105 million which consists of the $12 million in assets with the balance of $ 94 million in tangible capital assets.

in 000s

Consolidated Financial Position

Assets Liabilities Net Financial Assets Non-Financial Assets Tangible Capital Assets (Net) Inventory, Prepaid Expenses & Deposits Total Non-Financial Assets Accumulated Surplus

2020 26,053 14,011 12,042

2019 23,307 13,238 10,069

93,708

90,229

125 93,833 105,875

491 90,720 100,789

The 2020 Consolidated Statement of Operations shows a surplus of $1,020,000 for the 2020 year.

Subsequent adjustments to remove the capital component are shown on the Consolidated Schedule of Changes in Accumulated Surplus (page 43 of this report) for a total operating surplus of $565,000.

2020 Consolidated Operating Results in 000s Revenues Expenses Surplus/(Deficit) Adjustments Reserve funds used Principle Debt Repayment Total Adjustments Final Surplus/(Deficit) 29

2020 20,567 19,547 1,020

2019 21,460 20,909 551

254 (709) (455) 565

926 (770) 156 707

REVENUES Revenues are at 97% of the budgeted total with revenues lower than planned in Municipal Services such as Recreation Sales & Fees, Franchise Fees, Return on Investments and Sponsorship revenues. The closures of recreational facilities for at least six months of the year had a large impact on the municipal service revenues.

Taxation is slightly under budget as some of the local improvements have been completed and were not removed from the budget. Investment income is low due to drop in interest rates during the year. Utilities and grants are higher than planned; utilities are higher due to consumption changes as a result of COVID and grants are higher due to additional grants for dealing with COVID.

Operating Revenues in 000s

Taxation Municipal Services Licenses & Fines Investment Income Utilities Grants Total Revenues

Budget 9,378 3,276 438 360 4,644 3,028 21,124

30

Actual 9,213 2,655 311 204 4,868 3,316 20,567

Variance 165 621 127 156 (224) (288) 557

% 98% 81% 71% 57% 105% 110% 97%

EXPENDITURES Expenditures are under budget by $1,451,000 for the year. Covid-19 again had a huge impact on operations.

All areas with the exception of Social Services were under budget. This is in response to changes in operations due to Covid-19 with reduced staffing and expenditure budgets. Protective Services is under budget as there were vacancies during the year in the RCMP staffing.

Operating Expenses in 000s

Administration Protective Services Operations Utilities Social Services Planning & Development Recreation & Culture Asset Sales Total Expenses

Budget 2,152 3,641 3,708 4,756 878 918 4,945 20,998

The loss on disposal was not a budgeted expenditure.

31

Actual 1,982 3,265 3,533 4,371 890 896 4,500 110 19,547

Variance 170 376 175 385 (12) 22 445 (110) 1,451

% 92% 90% 95% 92% 101% 98% 91% N/A 93%

EXPENDITURES

32

ROLE OF THE AUDITOR AND THE AUDIT The Municipal Government Act (MGA) requires that Council appoints an independent auditor to review the financial activity every year. Wade Noble & Partners LLP, a local firm, has been the auditor to the Town of Rocky Mountain House for many years. It was recently the successful candidate in a request for proposal for the upcoming audit term.

The role of Wade Noble & Partners LLP is to review the financial activity and present an independent audit opinion that the consolidated statement presents fairly the financial position of the Town, and that the statements are prepared in accordance with Canadian Public Sector Accounting Standards.

The audit committee contains all members of Council and it is their responsibility to appoint the auditor, review and approve the terms of engagement every year, meet with the auditor prior to the audit to discuss the scope of the audit and to review the final audited statements as well as any audit findings and to accept and approve the audited financial statements. They are also responsible to ensure that management is completing its responsibilities in managing the entire financial process including the audit.

Quarterly financial statements are presented to Council for March, June and October each year and a year-end analysis is presented once the financial statements are complete.

Audit Committee

Auditor

Roles and Responsibilities

Management

33

TOWN OF ROCKY MOUNTAIN HOUSE

CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

35

Redacted under section 17 of the FOIP Act

Redacted under section 17 of the FOIP Act

Wade Noble & Partners LLP *R. G NOBLE, B. Comm., CPA, CA *James R. WADE, B. Comm., CPA, CA, CGA *B. D. MAYER, B. MGMT., CPA, CA

P.O. BOX 100 ROCKY MOUNTAIN HOUSE ALBERTA, T4T 1A1 (403) 845-3226 fax (403) 845-5666

INDEPENDENT AUDITORS' REPORT To the Mayor and Council of the Town of Rocky Mountain House Opinion We have audited the accompanying consolidated financial statements of the Town of Rocky Mountain House (the "Town"), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statements of operations, changes in net financial assets and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects the consolidated financial position of the Town as at December 31, 2020, and the results of its consolidated operations, change in net financial assets and cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

We are independent of the Town in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of management and Council for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Town's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate or to cease operations, or has no realistic alternative but to do so.

Council is responsible for overseeing the Town's financial reporting process.

Auditors' responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

37

INDEPENDENT AUDITORS' REPORT (Continued) As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.



Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control.



Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.



Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Town's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report.

However, future events or conditions may cause the Town to cease to continue as a going concern.



Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.



Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Town to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with Council regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide Council with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable related safeguards. 

Debt Limit Regulation In accordance with Alberta Regulation 255/2000, we confirm that the municipality is in compliance with the Debt Limit Regulation. A detailed account of the Entity's debt limit can be found in note 11.



Supplementary Accounting Principles and Standards Regulation: In accordance with Alberta Regulation 313/2000, we confirm that the municipality is in compliance with the Supplementary Accounting Principles and Standards Regulation and note the information required can be found in note 15 and note 19.

Rocky Mountain House, Alberta April 27, 2021

Chartered Professional Accountants

38

Redacted under section 17 of the FOIP Act

Redacted under section 17 of the FOIP Act

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS YEAR ENDED DECEMBER 31, 2020 Budget (Unaudited) EXCESS OF REVENUES OVER EXPENDITURES

$

4,870,138

2020 $

(5,481,300) 3,106,000 (2,375,300)

Acquisition of tangible capital assets Acquisition of construction-in-progress Contributed tangible capital assets Proceeds on disposal of tangible capital assets Amortization of tangible capital assets Loss on disposal of tangible capital assets

-

Net use of supplies inventories Net acquisition of prepaid assets

DECREASE IN NET DEBT NET FINANCIAL ASSETS, BEGINNING OF YEAR

See accompanying schedules and notes to the financial statements.

41

$

4,589,727

(2,693,633) (4,381,433) 73,000 3,413,908 109,855 (3,478,303)

(5,482,387) (525,845) (18,552) 127,995 3,151,082 232,023 (2,515,684)

132,334 232,899 365,233

32,768 (253,508) (220,740)

2,494,838

1,973,176

1,853,303

10,069,151

10,069,151

8,215,848

12,042,327

$ 10,069,151

$ 12,563,989

NET FINANCIAL ASSETS, END OF YEAR

5,086,246

2019

$

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2020 2020

2019

NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES OPERATING Excess Of Revenues Over Expenditures Non-cash items included in excess of revenues over expenses: Amortization of tangible capital assets Loss (gain) on disposal of tangible capital assets Tangible capital assets received as contributions Non-cash charges to operations (net change): Decrease (increase) in taxes receivable Decrease (increase) in trade and other receivables Decrease (increase) in inventory for consumption Decrease (increase) in prepaid expenses Decrease (increase) in long term receivables Increase (decrease) in accounts payable and accrued liabilities Increase (decrease) in deferred revenue Increase (decrease) in security deposits

$

Cash provided by operating transactions

CAPITAL Purchase of tangible capital assets Acquisition of construction-in-progress Proceeds on sale of tangible capital assets Cash applied to capital transactions FINANCING Long-term debt issued Long-term debt repaid Cash provided by financing transactions

5,086,246

$

4,589,727

3,413,908 109,855 -

3,151,082 232,023 (18,552)

95,703 (885,813) 132,334 232,899 (1,243,968) 14,957 (337,119) 23,008

43,198 1,909,740 32,768 (253,508) 736,000 (670,822) (75,636)

6,642,010

9,676,020

(2,693,633) (4,381,433) 73,000 (7,002,066)

(5,482,387) (525,845) 127,995 (5,880,237)

1,824,000 (752,496) 1,071,504

(812,197) (812,197)

CHANGE IN CASH AND EQUIVALENTS DURING THE YEAR

711,448

2,983,586

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

17,652,576

14,668,990

CASH AND CASH EQUIVALENTS AT END OF YEAR For distribution of cash and cash equivalents, see Note 2.

See accompanying schedules and notes to the financial statements.

42

$

18,364,024

$

17,652,576

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED SCHEDULE OF CHANGES IN ACCUMULATED SURPLUS FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 1

Unrestricted Surplus BALANCE, BEGINNING OF YEAR

$

Excess Of Revenues Over Expenditures Restricted funds used for operations Unrestricted funds designated for future use Capital funding received (repaid) Funds used for tangible capital assets Disposal of tangible capital assets Annual amortization expense Capital long-term debt repaid Change in accumulated surplus

BALANCE, END OF YEAR

$

7,815,608

Restricted Surplus $

7,326,567

Equity in Tangible Capital Assets $

85,647,038

2020 TOTAL $

100,789,213

2019 TOTAL $

96,199,486

5,086,246 19,500 (11,699,140) 1,824,000 (3,183,856) 182,855 3,413,908 (708,806)

(19,500) 11,699,140 (3,891,210) -

(1,824,000) 7,075,066 (182,855) (3,413,908) 708,806

5,086,246 -

4,589,727 -

(5,065,293)

7,788,430

2,363,109

5,086,246

4,589,727

2,750,315

$

15,114,997

43

$

88,010,147

$

105,875,459

$

100,789,213

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED SCHEDULE OF TANGIBLE CAPITAL ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 2 Land Improvement

Land

Engineering structures

Buildings

Machinery and equipment

2020 TOTAL

2019 TOTAL

3,036,407

$ 148,701,211

$ 143,400,831

36,557 -

2,887,140 5,126,898

5,500,939 2,157,465

(1,167,532)

(2,358,024)

Vehicles

COST BALANCE, BEGINNING OF YEAR $

6,108,604

$

8,021,508

Acquisition of tangible capital assets Construction-in-progress

-

-

Disposal of tangible capital assets

-

-

BALANCE, END OF YEAR

$

6,108,604

$

28,414,768

$

-

97,550,809

$

278,298 5,126,898

(163,559)

5,569,115

$

2,572,285 -

(938,973)

(65,000)

-

$

8,021,508

$

28,251,209

$

102,017,032

$

8,076,400

$

3,072,964

$ 155,547,717

$ 148,701,211

$

5,483,115

$

6,981,688

$

40,545,569

$

3,593,460

$

1,868,096

$ 58,471,928

$ 55,687,230

371,900

179,114

3,413,908

3,151,082

(16,250)

-

ACCUMULATED AMORTIZATION: BALANCE, BEGINNING OF YEAR $

-

Annual Amortization

-

218,622

604,005

Accumulated amortization on disposals

-

-

(29,454)

BALANCE, END OF YEAR

-

NET BOOK VALUE OF TANGIBLE CAPITAL ASSETS

$

6,108,604

5,701,737

$

2,319,771

2,040,267

-

7,556,239

$

20,694,970

42,585,836

$

59,431,196

44

3,949,110

$

4,127,290

$

(45,704)

(366,384)

2,047,210

61,840,132

58,471,928

1,025,754

$ 93,707,585

$ 90,229,283

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED SCHEDULE OF PROPERTY AND OTHER TAXES FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 3 Budget (Unaudited) TAXATION Residential land and improvements Land and improvements (Excluding M&E) Linear property Railway Machinery and equipment Farm land Federal Government taxes in lieu Provincial Government taxes in lieu

$

REQUISITIONS Alberta School Foundation Fund Westview Lodge Other requisition transfers

8,237,675 3,546,790 306,312 2,705 770 17,500 50,000 12,161,752

2020 $

2,792,577 83,000 1,000 2,876,577 $

NET MUNICIPAL TAXES

45

9,285,175

8,121,365 3,516,122 161,994 2,740 772 18,841 115,632 11,937,466

2019 $

2,665,246 81,740 2,746,986 $

9,190,480

8,179,115 3,513,093 161,173 5,539 2,703 686 18,718 111,416 11,992,443 2,734,177 80,593 919 2,815,689

$

9,176,754

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED SCHEDULE OF GOVERNMENT TRANSFERS FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 4 Budget (Unaudited) TRANSFERS FOR OPERATING Other Local Governments Provincial Government Federal Government

$

TRANSFERS FOR CAPITAL Other Local Governments Provincial Government

2,002,270 1,019,600 6,400 3,028,270

2020 $

1,730,900 3,013,121 4,744,021 $

TOTAL GOVERNMENT TRANSFERS

46

7,772,291

1,688,754 1,614,382 12,600 3,315,736

2019 $

1,190,123 2,876,403 4,066,526 $

7,382,262

2,453,037 1,373,632 4,200 3,830,869 453,815 3,566,056 4,019,871

$

7,850,740

TOWN OF ROCKY MOUNTAIN HOUSE SCHEDULE OF CONSOLIDATED EXPENDITURES BY OBJECT FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 5 Budget (Unaudited) CONSOLIDATED EXPENSES BY OBJECT Salaries, wages and benefits Contracted and general services Materials, goods and utilities Bank charges and short term interest Interest on long-term debt Transfers to local boards and organizations Amortization of tangible capital assets Loss (gain) on disposal of tangible capital assets

47

2020

2019

$

7,765,483 5,358,863 1,794,247 17,900 192,250 2,763,738 3,106,000 -

$

6,976,436 4,514,508 1,616,982 19,259 202,940 2,693,230 3,413,908 109,855

$

7,533,990 5,173,149 2,061,066 55,440 214,265 2,488,000 3,151,082 232,023

$

20,998,481

$

19,547,118

$

20,909,015

TOWN OF ROCKY MOUNTAIN HOUSE CONSOLIDATED SCHEDULE OF SEGMENTED DISCLOSURE FOR THE YEAR ENDED DECEMBER 31, 2020 SCHEDULE 6

General Government REVENUE Net municipal taxes Government transfers User fees and sales of goods Investment Income Other

$

9,190,480 226,452

$

NET REVENUE, BEFORE AMORTIZATION Amortization Expense NET REVENUE

$

44,951 203,732 1,176,591 $ 10,842,206

EXPENSES Contracted & general services Salaries & wages Goods & supplies Transfers to local boards Interest expense & bank charges Other expenses

Protective Services

$

130,781

2,700,397

Planning & Development $

87,370

16,464 99,576

Recreation & Culture $

25,109 317,451

2,942,023

Environmental Services $

249,462 828,903

-

Other $

4,846,676 21,000

721,044

TOTAL $

9,190,480 7,382,262

30,168 69,758

5,212,830 203,732 2,644,060

$

835,757

$

2,816,437

$

429,930

$

4,020,388

$

4,867,676

$

820,970

$ 24,633,364

644,893 $ 1,409,951 (252,567) 79,064

1,804,464 750,342 48,666 555,137

$

565,612 811,546 725,994 5,500

$

280,733 559,883 56,657 60,802

$

395,252 2,200,048 532,035 410,737

$

728,479 1,004,833 488,496 1,201,960

$

95,075 239,833 17,701 380,030

$

37,122 109,855 2,028,318

3,158,609

8,813,888

(2,322,852) (105,991)

(63,647) $

704,976

Transportation Services

8,750,241

$

(2,428,843) $

24,284 2,132,936

10,344 968,419

683,501 (1,248,795) (565,294) $

47,805 3,585,877

102,644 3,526,412

732,639

222,199 109,855 16,133,210

(538,489)

434,511

1,341,264

88,331

8,500,154

(34,769)

(962,497)

(1,981)

(3,413,908)

(573,258) $

48

4,514,508 6,976,436 1,616,982 2,693,230

(527,986) $

(996,228) 345,036

$

86,350

$

5,086,246

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

The Town of Rocky Mountain House (the Town) is a municipality in the Province of Alberta, Canada and operates under the provisions of the Municipal Government Act, R.S.A., 2000, c. M-26, as amended (MGA).

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements (the financial statements) of the Town are the representations of management prepared in accordance with generally accepted accounting principles for local governments established by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. Significant aspects of the accounting policies adopted by the Town are as follows:

(a)

Reporting Entity

The financial statements reflect the assets, liabilities, revenues and expenditures, changes in fund balances and change in financial position of the reporting entity. This entity is comprised of municipal operations plus all the organizations that are owned or controlled by the Town and are, therefore, accountable to the Town Council for the administration of their financial affairs and resources.

Included in these financial statements are fifty percent of the Rocky Mountain House Municipal Airport assets, liabilities, revenues and expenditures.

The schedule of taxes levied also includes operating requisitions for education, health, social and other external organizations that are not part of the municipal reporting entity.

The statements exclude trust assets that are administered for the benefit of external parties. Interdepartmental and organizational transactions and balances are eliminated.

(b)

Basis of Accounting

The financial statements are prepared using the accrual basis of accounting. The accrual basis of accounting records revenue as it is earned and measurable. Expenses are recognized as they are incurred and measurable based upon receipt of goods or services and/or the legal obligation to pay.

Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified.

Government transfers, contributions and other amounts are received from third parties pursuant to legislation, regulation or agreement and may only be used for certain programs, in the completion of specific work, or for the purchase of tangible capital assets. In addition, certain user charges and fees are collected for which the related services have yet to be performed. Revenue is recognized in the period when the related expenses are incurred, services performed or the tangible capital assets are acquired.

(c)

Use of Estimates

The preparation of the financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and use assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Where estimation uncertainty exists, the financial statements have been prepared within reasonable limits of materiality. Actual results could differ from estimates. The amounts recorded for valuation of tangible capital assets, non-vesting employee benefit liabilities and contingent liabilities and commitments are areas where management makes significant estimates and assumptions in determining the amounts to be recorded in the financial statements.

49

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d)

Cash and temporary investments

Cash and temporary investments include items that are readily convertible to known amounts of cash, are subject to an insignificant risk of change in value, and have a maturity of three months or less at acquisition.

(e)

Investments

Investments are recorded at amortized cost. Investment premiums are amortized on the net present value basis over the term of the respective investments. When there has been a loss in value that is other than a temporary decline, the respective investment is written down to recognize the loss.

Investment income is reported as revenue in the period earned. When required by the funding government or related act, investment income earned on deferred revenue is added to the investment, and forms part of the deferred revenue balance.

(f)

Debt Charges Recoverable

Debt charges recoverable consist of amounts that are recoverable from municipal agencies or other local governments with respect to outstanding debentures or other long-term debt pursuant to annexation orders or joint capital undertakings. These recoveries are recorded at a value that equals the offsetting portion of the un-matured long-term debt, less actuarial requirements for retirement of any sinking fund debentures.

(g)

Long-term receivables

Long-term receivables are initially measured at cost with valuation allowances subsequently used to reflect loans receivable at the lower of cost and net recoverable value. Changes in valuation allowances are recognized as expenses in the statement of operations. Interest revenue is recognized when earned, to the extent the collectibility of the loan and interest is reasonably assured.

(h)

Requisition Over-levy and Under-levy

Over-levies and under-levies arise from the difference between the actual property tax levy made to cover each requisition and the actual amount requisitioned.

If the actual levy exceeds the requisition, the over-levy is accrued as a liability and property tax revenue is reduced.

Where the actual levy is less than the requisition amount, the under-levy is accrued as a receivable and as property tax revenue.

Requisition tax rates in the subsequent year are adjusted for any over-levies or under-levies of the prior year.

(i)

Land for Resale Inventory

Land held for resale is recorded at the lower of cost or net realizable value. Cost includes costs for land acquisition and improvements required to prepare the land for servicing such as clearing, stripping and leveling charges.

Related development costs incurred to provide infrastructure such as water and wastewater services, roads, sidewalks and street lighting are recorded as physical assets under the respective function.

50

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j)

Revenue

The Town follows the accrual method of accounting for revenues and expenses. Revenues are recognized in the year in which they are earned and measurable. Funds from external parties and earnings thereon restricted by agreement or legislation are accounted for as deferred revenue until used for the purpose specified.

Property tax revenue is based on market value assessments determined in accordance with the Municipal Government Act. Tax rates are established annually. Taxation revenues are recorded at the time tax billings are issued. Assessments are subject to appeal.

User fees and sales of goods are recognized in the period in which the goods are provided, or the services are rendered. Revenues from sponsorships are recognized over the terms of the sponsorship agreements. Rental revenue is recognized in the relevant tenancy period.

Government transfers and grants are recognized in the consolidated financial statements as revenues in the period that the events giving rise to the transfer occurred, providing the transfers are authorized, and eligibility criteria have been met by the Town, and reasonable estimates of the amounts can be made. Prior to that, any amounts received are recorded as deferred revenue.

Return on investments are recorded as revenue in the period earned. When required by the funding government or related act, investment income earned on deferred revenue is added to the investment and forms part of the deferred revenue balance.

Requisitions operate as a flow through and are excluded from municipal revenue.

(k)

Prepaid Local Improvement Charges

Construction and borrowing costs associated with local improvement projects are recovered through annual special property assessments during the period of the related borrowings. These levies are collectable from property owners for work performed by the municipality.

Where a taxpayer has elected to prepay the outstanding local improvement charges, such amounts are recorded as deferred revenue. Deferred revenue is amortized to revenue on a straight-line basis over the remaining term of the related borrowings.

In the event that the prepaid amounts are applied against the related borrowings, the deferred revenue is amortized to revenue by an amount equal to the debt repayment.

(l)

Employment benefits liabilities

The Town recognizes liabilities for post-employment benefits and compensated absences that vest or accumulate during the period in which the employment services are rendered, assuming payment of benefits is probable and the amounts can be reasonably estimated. Accumulating, vesting benefits liabilities are measured at cost.

Accumulating, non-vesting benefits liabilities are recognized at cost to the extent they are expected to be used by employees.

(m)

Pension

The Town participates in a defined benefit pension plan. Contributions for current and past service pension benefits are recorded as expenses in the year in which they become due. See Note 16 for details of the pension plan.

51

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

(n)

Government Transfers

Government transfers are the transfer of assets from senior levels of government that are not the result of an exchange transaction, are not expected to be repaid in the future, or the result of a direct financial return.

Government transfers are recognized in the financial statements as revenue in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimate of the amounts can be determined.

52

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (o)

Non-Financial Assets

Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year and are not intended for sale in the normal course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the consolidated Change in Net Financial Assets (Debt) for the year.

(i)

Tangible Capital Assets

Tangible capital assets are recorded at cost which includes all amounts that are directly attributable to acquisition, construction, development or betterment of the asset. The cost, less residual value of the tangible capital assets is amortized on a straight-line basis over the estimated useful life as follows: Land Improvements Buildings Engineered structures Water System Wastewater System Other engineered structures Machinery and equipment Vehicles

-

15-20 years 25-50

-

35-75 35-75 15-40 5-20 10-25

One-half of the annual amortization is charged in the year of acquisition and in the year of disposal. Assets under construction are not amortized until the asset is available for productive use.

(ii)

Contributions of Tangible Capital Assets

Tangible capital assets received as contributions are recorded at fair value at the date of receipt and also are recorded as revenue.

(iii)

Leases

Leases are classified as capital or operating leases. Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as capital leases. All other leases are accounted for as operating leases and the related lease payments are charged to expenses as incurred.

(iv)

Inventories

Inventories held for consumption are recorded at the lower of cost determined on a specific identification basis and net realizable value.

(p)

Cash Flow Reporting

The Town follows the indirect method in reporting its cash flows from operating activities.

53

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

2.

CASH AND TEMPORARY INVESTMENTS 2020 $

Cash

18,364,024

2019 $

17,652,576

Cash includes amounts held in a chequing bank account earning interest at graduated rates ranging from the bank's prime rate less 1.90% to 1.55% per annum. Effective rate at year end is 0.5% - 0.90% per annum. Cash also includes amounts held in a savings account earning interest at 0.50% per annum.

3.

TAXES RECEIVABLE 2020 $

Current taxes Arrears taxes

$

4.

290,091 99,055 389,146

2019 $

$

TRADE AND OTHER RECEIVABLES 2020 $

Other trade receivables School under-levy Utilities receivable Government grants for operating costs Government grants for capital costs Other receivable for capital costs (Note 14) Allowance for doubtful accounts

$

5.

400,698 84,151 484,849

446,098 $ 3,113 534,063 335,238 2,670,531 592,100 (148,661) 4,432,482 $

2019 604,234 114,940 523,500 270,948 1,513,740 592,100 (114,839) 3,504,623

LONG TERM RECEIVABLES Long term receivables consist of amounts owed to the town for the developer's portion of costs relating to a longterm construction project. The amount is receivable with interest. Effective interest at December 31, 2020 is 3.45%. The amount is due at the later of the following dates: May 1, 2024 or four years after the issuance of a construction completion certificate.

54

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

6.

EMPLOYEE BENEFIT OBLIGATIONS Included in accounts payable and accrued liabilities are employee benefits totaling:

2020 $

Bank time Vacation and incentive time Personal time

$

9,978 225,089 174,861 409,928

2019 $

$

8,867 389,504 170,767 569,138

Vacation and incentive time The vacation and bank time liability is comprised of the vacation and overtime that employees are deferring to future years. Employees have either earned the benefits (and are vested) or are entitled to these benefits within the next budgetary year.

Personal time The personal time liability is management's estimate of the cost of sick time that has accrued to employees and will be taken in future years as paid time off. Employees can accrue and carryover up to 320 hours (2019 - 320 hours) of sick time but are not entitled to pay-in-lieu of unused sick time upon termination of their employment.

Management expects that 34% of the accrued sick hours will be used.

7.

SECURITY DEPOSITS Security deposits consist of financial deposits for private development, rental deposits and deposits on utility accounts.

Private development deposits are held by the Town to ensure that the development has been completed to the required specifications. Deposits are for items such as landscaping, fencing, paving and service connections.

Rental deposits are held by the Town to ensure that rental spaces and properties are left clean and in good repair after the rental period.

Utility account deposits are for rental properties where utility bills are in the tenant’s name. Utility deposits are for unpaid utilities.

55

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

8.

DEFERRED REVENUE Inflows and outflows of restricted resources during the year were as follows:

Balance 2019 Prepaid local improvements Overpayment of taxes Deferred projects Deferred operating revenue Deferred capital grants

$

$

52,605 34,025 106,238 275,798 3,792,274 4,260,940

Increases $

$

6,306 1,324,697 2,539,943 3,870,946

Decreases (8,767) $ (34,025) (25,487) (757,762) (3,382,024) $ (4,208,065) $

$

Balance 2020 43,838 87,057 842,733 2,950,193 3,923,821

Prepaid local improvement charges are being amortized to revenue over the useful life of the corresponding debentures with terms ranging from 1 to 7 years.

Deferred projects are funds received in advance for specific projects and will be recognized as operating revenue or capital revenue in the year the expenditure occurs.

Deferred operating revenue relates to monies received for goods or services which have not yet been delivered, and will be recognized as revenues when provision of the goods or services is completed.

Deferred capital grants relate to government and other funding received for specific capital projects that are not yet completed, and will be recognized as revenues when the projects are completed in the case of government grants, or on the same basis as the capital asset is amortized in the case of other contributions. Deferred capital grants is comprised of:

Balance 2019 Municipal Sustainability Initiative Grant Federal Gas Tax Fund Municipal Stimulus Program Grant Gruber Street Light Reserve Other Provincial Government Grants Shell Canada donation Other deferred capital revenues

$

$

9.

2,101,383 482,133 13,188 1,000,000 195,570 3,792,274

Increases $

$

1,451,084 379,533 100,000 233,406 375,920 2,539,943

Decreases $ (2,049,886) $ (572,813) (233,406) (525,919) $ (3,382,024) $

Balance 2020 1,502,581 288,853 100,000 13,188 1,000,000 45,571 2,950,193

LINE OF CREDIT At December 31, 2020 the Town has a revolving credit facility available in the amount of $2,390,000 this is usable in order to fund the 54 street expansion project. This is due on demand with interest at the bank's prime lending rate plus 1%. As of December 31, 2020 the Town has a nil line of credit balance.

56

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

10.

LONG TERM DEBT 2020 $

Tax supported debentures Self supported debentures

$

2019

2,998,271 3,220,892 6,219,163

$

3,309,335 1,838,324 5,147,659

$

The current portion of the long-term debt amounts are $830,168 (2019 - $(1,071,504)).

Principal and interest repayments are due as follows:

PRINCIPAL 2021 2022 2023 2024 2025 Thereafter

$

$

830,168 856,977 884,737 700,281 468,086 2,478,914 6,219,163

INTEREST $

$

198,065 171,256 143,495 114,748 93,041 249,334 969,939

TOTAL $

$

1,028,233 1,028,233 1,028,232 815,029 561,127 2,728,248 7,189,102

Debenture debt is repayable to Alberta Capital Finance Authority and bears interest at rates ranging from 2.03% to 4.91% per annum and mature in periods 2024 through 2035. The average annual interest rate is 4.20% (2019 4.47%).

Debenture debt is issued on the credit and security of the Town of Rocky Mountain House at large.

11.

DEBT LIMITS Section 276(2) of the Municipal Government Act requires that debt and debt limits as defined by Alberta Regulation 255/00 for the Town of Rocky Mountain House be disclosed as follows:

2020 Total Debt Limit Total debt Amount of debt limit unused

$

Debt servicing limit Debt servicing Amount of debt servicing limit unused

$

$

$

2019

30,850,257 6,219,163 24,631,094

$

5,141,710 1,028,233 4,113,477

$

$

$

32,190,482 5,147,659 27,042,823 5,365,080 1,030,245 4,334,835

The debt limit is calculated at 1.5 times revenue of the municipality (as defined in Alberta Regulation 255/00) and the debt service limit is calculated at 0.25 times such revenue. Incurring debt beyond these limitations requires approval by the Minister of Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Affairs to identify municipalities that could be at financial risk if further debt is acquired. The calculation taken alone does not represent the financial stability of the municipality. Rather, the financial statements must be interpreted as a whole.

57

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

12.

EQUITY IN TANGIBLE CAPITAL ASSETS 2020 $

Capital Assets (Schedule 2) Accumulated amortization (Schedule 2) Long-term debt (Note 10) Long-term operating debt

$

13.

2019

155,547,717 $ 148,701,211 (61,840,132) (58,471,928) (6,219,163) (5,147,659) 521,725 565,414 88,010,147 $ 85,647,038

ACCUMULATED SURPLUS Accumulated surplus consists of restricted and unrestricted amounts and equity in tangible capital assets as follows:

2020 $

Unrestricted surplus Restricted surplus Capital Reserves Utility Reserves Offsite Levy Reserves Operating Reserves Equity in tangible capital assets (Note 12)

$

58

2,750,315 9,258,716 5,401,345 454,936 88,010,147 105,875,459

2019 $

7,815,608 2,521,601 3,293,900 449,386 1,061,679 85,647,038 $ 100,789,212

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

14.

CONTRACTUAL RIGHTS During 2015 and 2016 the Town entered into several Sponsorship Agreements with various local sponsors providing various naming rights for the local recreation centre for ten year terms. Annual payments are due in February of each year, and can be terminated at any time during the term upon sixty days written notice or immediately by the Town in event of default. No future receipts have been accrued in these financial statements.

Anticipated future receipts under these agreements are: 2021 2022 2023 2024 2025 Thereafter

$

$

126,222 126,222 125,843 124,706 108,897 12,500 624,390

In 2014 the Town entered into a financial contribution agreement with the Rocky Curling Club (the "Club") whereby the Club agreed to contribute a total of $1,500,000 toward renovations to the curling rink building. In 2018 the Town also advanced the Club $37,100 for exterior renovations. The balance receivable is measured at cost. Annual payments are due in November of each year. There are no terms regarding interest, forgiveness nor security. In 2020, the annual receipt from the curling club was deferred. Subsequent to year end, this agreement was extended to a 15 year period. The Future receipts under this agreement are detailed in the table below.

Pursuant to a cost sharing agreement, Clearwater County will pay 50% of any amounts defaulted by the Club.

2021 2022 2023 2024 2025 Thereafter

$

$

39,400 39,400 39,400 39,400 39,400 395,100 592,100

In 2015 the Town signed a Revenue Sharing Agreement with Clearwater County, committing the County to make annual revenue sharing payments to the Town of $750,000. The agreement terminated on December 31, 2019.

Subsequent to the 2020 year end a new agreement for 2021- 2025 has been signed with the Clearwater County committing to make annual revenue sharing payments to the Town of $406,644.

In 2010, the Town and County as joint landlords entered into a triple net lease agreement for the lease of a municipally owned building. The monthly payment of $9,243 is shared 50% between the Town and County. The Town's share of the monthly lease payment is $4,621. Estimated maximum future receipts under this agreement are: 2021 2022 2023 2024 2025

$

$

55,458 55,458 55,458 55,458 27,729 249,561

59

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

15.

SALARY & BENEFITS DISCLOSURE Disclosure of salaries and benefits for municipal officials, the chief administrative officer and designated officers as required by Alberta Regulation 313/2000 is as follows:

COUNCILORS Jason Alderson David Auld Randy Brown Tammy Burke Scott Collinson Merrin Fraser Michelle Narang Len Phillips

CAO - Dean Krause

HONORARIUM SALARY 1 $

33,715 25,475 30,675 56,600

2020 BENEFITS & ALLOWANCES 2 $

TOTAL

$

3,256 2,648 2,702 19,725

$

36,561 27,829 33,362 59,832 34,511 32,423 33,667 258,185

$

34,843

$

220,572

-

2,846 2,354 2,687 3,232

2019

$

-

$

31,255 29,775 30,965 238,460

$

185,729

TOTAL $

$

37,696 17,530 36,968 67,616 1,443 34,706 36,392 33,667 266,018

$

201,234

1. Salary includes regular base pay, bonuses, overtime, lump sum payments, gross honoraria, compensated absences and any other direct cash remuneration.

2. Benefits for Council include a communication benefit for cell phones, internet and CPP deductions. Benefits for the CAO includes employer's share of all employee benefits and contributions or payments made on behalf of employees including pension, health care, dental coverage, vision coverage, group life insurance, accidental disability and dismemberment insurance, long and short-term disability plans, professional memberships and tuition.

16.

LOCAL AUTHORITIES PENSION PLAN Employees of the Town of Rocky Mountain House participate in the Local Authorities Pension Plan (LAPP), which is covered by the Alberta Public Sector Plans Act. The Plan serves about 274,151 people and about 420 employers. It is financed by the employer and employee contributions and investment earnings of the LAPP Fund.

Contributions for current service are recorded as expenditures in the year in which they become due.

The Town is required to make current and past service contributions to the LAPP of 9.39% (2019 - 9.39%) of pensionable earnings up to the year's maximum pensionable earnings under the Canada Pension Plan and 13.84% (2019 - 13.84%) on pensionable earnings above this amount. Employees of the town are required to make current service contributions of 8.39% (2019 - 8.39%) of pensionable salary up to the year's maximum pensionable salary and 12.84% (2019 - 12.84%) on pensionable salary above this amount.

Total current and past service contributions by the Town to the Local Authorities Pension Plan in 2020 were $465,514 (2019 - $460,568). Total current and past service contributions by the employees of the Town to the Local Authorities Pension Plan in 2020 were $414,150 (2019 - $411,155).

At December 31, 2019 the LAPP disclosed an actuarial surplus of $7.9 billion (2018 - $3.5 billion surplus).

Information as at December 31, 2020 was not available at the time of preparing these financial statements.

60

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

17.

CONTINGENCIES Regional Waste Authority Effective March 31, 2020 the operating agreement establishing the Regional Solid Waste Authority was terminated. This agreement did not contemplate the equitable distribution of net surplus of the Authority in the event the relationship between the Municipal partners was terminated. Subsequent to year end, the Town signed an agreement stating that the Town is entitled to 33.13% of the net surplus of the Waste Authority. The financial effect can not be determined at this time. Once the amounts are known with certainty the Town's share of the Authority's surplus will be recorded in the year determinable, once collection is reasonably assured.

It is management's understanding that the Town will be responsible for its proportionate share of certain ongoing post closure monitoring costs. These amounts are expected to be recorded in the year incurred.

Landfill Closure and Post-Closure Liability Pursuant to the Alberta Environmental Protection and Enhancement Act, the Town is required to fund the closure of its landfill site and provide for post-closure care of the facility. Closure and post-closure activities have occurred and the town is continuing surface and ground water monitoring, leachate control, and visual inspection. No postclosure liability is accrued in these financial statements and any further costs are being recognized as they occur, as a reasonable estimate of the total future liability can not be made at this point, and is not expected to be significant.

61

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

18.

CONTAMINATED SITES LIABILITY The Town was adopted PS3260 Liability for Contaminated Sites. The Town did not identify any financial liabilities in 2020 as a result of this standard.

19.

FRANCHISE AND CONCESSIONS In compliance with Alberta Regulation 313/2000 the annual revenues received from the utility franchise agreements are as follows:

ATCO franchise fees Fortis franchise fees

$ 20.

2020

2019

589,637 586,955 1,176,592

607,211 587,025 1,194,236

$

COMMITMENTS RCMP contract On April 1, 2012 the Town entered into an agreement with the Government of Canada for the employment of the Royal Canadian Mounted Police to provide policing services during the term of the agreement which ends March 31, 2032. The policing services expenses for 2020 are $2,048,067. (In 2019 the Town recognized $2,099,114).

The Town received Provincial grants to assist with the cost sharing in the amount of $353,080. (In 2019 the Town recognized $353,080).

21.

CONTRACTUAL OBLIGATIONS The Town has entered in to an agreement to develop a parcel of land. The total project is estimated to cost $4,497,000. The Town has agreed to contribute 46% of total expenditures. As of December 31, 2020, the Town's portion of expenditures made is $1,456,736. The Town's portion of estimated future expenditures is $611,884. The project is anticipated to be completed in 2021.

22.

SEGMENTED DISCLOSURE The Town of Rocky Mountain House provides a range of services to its ratepayers. For each reported segment, revenues and expenses represent both amounts that are directly attributable to the segment and amounts that are allocated on a reasonable basis. The accounting policies used in these segments are consistent with those followed in the preparation of the financial statements as disclosed in Note 1.

Refer to the Schedule of Segmented Disclosure (schedule 6).

23.

COMPARATIVE FIGURES Certain comparative figures have been restated to conform with the current year's presentation.

62

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

24.

FINANCIAL INSTRUMENTS The Town of Rocky Mountain House's financial instruments include cash and temporary investments, taxes receivable, trade and other receivables, accounts payable and accrued liabilities, accounts payable - tangible capital assets, and long term debt. Transacting in financial instruments exposes the Town to certain financial risks and uncertainties. These risks include: Credit risk Credit risk is the risk that one party to a financial instrument will cause a loss for the other party by failing to discharge its obligations. The Town is exposed to some credit risk due to the possibility that taxpayers and entities to which the town provides services may experience financial difficulty and be unable to fulfil their obligations.

The large number and diversity of taxpayers and customers minimizes the Town's exposure to credit risk. The Town is exposed to some possible credit risk due to the concentration of credit to the extent that 75% of the amounts receivable is due from three entities (2019 - 47%; three entities).

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Town manages liquidity risk by maintaining a line of credit that is available when needed and continuously monitoring cash flows. It is management's opinion that the town is not subject to liquidity risk.

Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Town does not transact in foreign currencies.

Interest rate risk Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Town is exposed to interest rate risk to the extent that the carrying value of some cash and long-term debts are at fixed rates of interest. The Town is exposed to interest rate risk to the extent that some cash and cash equivalents, revolving operating loan and bank demand loan have floating interest rates, which if the rate changes would affect future cash flows.

Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The town does not have significant exposure to other price risk.

63

TOWN OF ROCKY MOUNTAIN HOUSE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020

25.

RELATED PARTY TRANSACTIONS The Town of Rocky Mountain House is related to the Rocky Mountain Regional Solid Waste Authority by having two of six board members in common. During the year fees for services were paid to the Rocky Mountain Regional Solid Waste Authority in the amount of $1,011,960. (In 2019 the Town recognized $983,428).

As at December 31, 2020 included in accounts payable is $1,023,089 (2019 - $43,580) due to the Rocky Mountain Regional Solid Waste Authority.

The above transactions are in the normal course of operations and are measured at the exchange amounts, which is the amount of consideration established and agreed to by the related parties.

26.

TRUST FUNDS The Town of Rocky Mountain House administers the following trust:

2020 Cemetery Perpetual Care Balance, beginning of year Sale of cemetery plots Repurchase of cemetery plots Interest Balance, end of year

27.

$

$

70,825 $ 5,400 (209) 906 76,922 $

2019 67,619 1,700 1,506 70,825

BUDGET AMOUNTS The budget amounts included in these financial statements have not been audited; accordingly no assurance is expressed thereon.

28.

APPROVAL OF FINANCIAL STATEMENTS These financial statements are approved by Council and management April 27, 2021.

64

Assessed Values for General Municipal Purposes of Land and Improvements For the Year Ended December 31, 2020 (Unaudited) 2020 2019 2018 Property Taxes Levied Restated Residential $ 8,179,115 $ 8,101,880 $ $ 8,121,365 Industrial and Commercial 3,513,093 3,320,373 3,516,122 Linear Property 161,173 159,946 161,994 Railway 5,539 6,161 Machinery and Equipment 2,703 2,618 2,740 Farm Land 686 605 772 Federal Government Taxes in Lieu 18,841 18,718 16,134 111,416 97,151 Provincial Government Taxes in Lieu 115,632 $ 11,937,466 $ 11,992,443 $ 11,704,868 $ Requis tion: Alberta School Foundation Fund $ 2,734,177 $ 2,699,465 $ $ 2,665,246 Westview Lodge 80,593 80,005 81,740 919 Other Requisition Transfers $ 2,746,986 $ 2,815,689 $ 2,779,470 $ Net Taxes Available for Municipal Purposes $ 9,190,480 $ 9,176,754 $ 8,925,398 $ 2020

Tax Levied Per Capita

Population Taxes Levied Taxes Levied Per Capita

6,635 11,937,466 1,799

$

6,635 11,992,443 1,807

$

3,056 11,937,466 3,906

$

Taxable Assessments Residential and Farmland Vacant Residential Non-Residential Commercial Improved Non-Residential Commercial Vacant Non-Residential Large business Non-Residential Large Business - Industrial & Linear Machinery & Equipment - Large Business Provincial Grant in Lieu Municipal Exempt Properties

3,055 11,992,443 3,926

$

2020

Mill Rates Residential and Farmland Vacant Residential Non-Residential Commercial Improved Non-Residential Commercial Vacant Non-Residential Large Business Non-Residential Large Business - Industrial & Linear Machinery & Equipment - Large Business Provincial Grant in Lieu

9.1870 11.2270 11.1640 14.1710 14.1710 14.1710 14.1710 11.6400

2020 665,771,450 9,054,420 145,974,890 5,636,020 64,029,070 11,304,810 192,220 10,279,470 912,242,350

$

$

2018 Restated 3,035 11,704,868 3,857

2019

9.7618 11.8018 11.7388 14.7458 14.7458 14.7458 14.7458 11.8018

$

$

2018 Restated 6,635 11,704,868 1,764

2019

2020

Tax Levied Per Dwelling Total Dwellings Taxes Levied Taxes Levied Per Dwelling

Note:

2019

2019 $

671,624,420 9,348,660 148,871,900 5,560,650 62,813,830 11,696,510 190,730 9,980,140 1,774,920 921,861,760

$

$

$

2017 Restated 7,819,130 3,155,454 148,476 4,260 1,765 8,930 92,325 11,230,340 2,624,552 74,728 2,699,280 8,531,060

$

2017 Restated 6,635 11,230,340 1,693

$

2017 Restated 3,002 11,230,340 3,741

$

$

2016 Restated 10,745,405 121,559 5,880 2,301 20,842 10,895,987

$ $ $

2,593,647 67,245 2,660,892 8,235,095

$

2016 Restated 6,635 10,895,987 1,642

$

2016 Restated 2,981 10,895,987 3,655

2018 Restated 8.9276 9.9097 9.5052 11.8815 13.7276 13.7276 -

2017 Restated 8.8832 8.8832 9.3832 9.3832 9.3832 -

2016 Restated 8.6453 8.6453 9.1453 9.1453 9.1453 -

2018 Restated 688,538,080 9,261,820 116,512,980 8,704,180 121,685,750 190,730 944,893,540

2017 Restated 683,913,970 241,072,110 188,000 925,174,080

2016 Restated 679,495,610 246,714,820 247,710 926,458,140

$

$

$

$

2016-2017 residential & non-res dential assessments are not broken into categories in the bylaw

2016 - 2020 Total Taxable Assessments $950,000,000

$944,893,540

$940,000,000

$930,000,000

$925,174,080

$926,458,140

$921,861,760 $920,000,000 $912,242,350 $910,000,000

$900,000,000

$890,000,000 2020

2019

2018

66

2017

2016

Consolidated Change in Net Financial Assets Excess of Revenues Over Expenditures Acquisition of Tangible Capital Assets Acquisition of Construction in Process Contributed Tangible Capital Assets Proceeds on Disposal of Tangible Capital Assets Amortization of Tangible Capital Assets Loss (Gain) on Disposal of Tangible Capital Assets Net use of Supplies Inventories Net Acquisition of Prepaid Assets Net Acquisition of Tangible Capital Assets in Progress

Change in Net Financial Assets 2020 2019 $

5,086,246

$

$

(2,693,633) (4,381,433) 73,000 3,413,908 109,855 (3,478,303) $

$

132,334 232,899 365,233

Decrease (Increase) in Net Debt Net Financial Assets, Beginning of Year Net Financial Assets, End of Year

$

1,973,176 10,069,151 12,042,327

4,589,724

$

2018 Restated 1,476,359

$

2017 Restated 1,335,499

$

2016 Restated 4,426,499

(5,482,385) (525,845) (18,552) 127,995 3,151,082 232,023 (2,515,682) $

(874,457) (1,582,369) (76,906) 73,875 3,244,693 35,446 820,282 $

(1,761,190) 174,842 3,472,279 (83,559) 1,802,372 $

(15,991,245) 49,780 3,166,034 (46,280) (12,821,711)

32,768 (253,508) (220,740) $

3,237 (26,003) (22,766) $

(20,959) (49,251) (70,210) $

23,982 (4,773) 19,209

1,853,302 8,215,850 10,069,152

2,273,875 5,941,975 8,215,850

3,067,661 2,874,311 5,941,972

(8,376,003) 11,250,319 2,874,316

2016 - 2020 Decrease (Increase) in Net Debt

4,000,000 2,000,000

3,067,661 1,973,176

2,273,875

1,853,302

(2,000,000) (4,000,000) (6,000,000) (8,000,000) (8,376,003)

(10,000,000) 2020

2019

2018

74

2017

2016

Long Term Debt: Tax Supported Debentures Self Supported Utility Debentures Total Long Term Debt Debt Limits: Total Debt Limit Total Debt Amount of Debt Limited Unused Percentage of Debt Limits Used Debt Service Limit: Debt Servicing Limit Debt Servicing Amount of Debt Servicing Limit Unused Percentage of Debt Service Limit Used Population Debt Per Capita Total Private Dwellings Debt Per Dwelling

Long Term Debt For the Year Ended December 31, 2020 (Unaudited) 2020 2019 2018 Restated $ 2,998,271 $ 3,309,335 $ 2,255,508 1,838,324 3,704,348 3,220,892 5,147,659 $ 5,959,856 $ 6,219,163 $

$

$

30,850,257 6,219,163 24,631,094 $ 20.16% 20% 5,141,710 1,028,233 4,113,477 $ 20.00% 6,635 937 2,954 2,105

32,190,482 5,147,659 27,042,823 $ 15.99% 16% 5,365,080 1,030,245 4,334,835 $ 19.20% 6,635 776 2,954 1,743

$ $

29,160,966 5,959,856 23,201,110 $ 20.44% 20% 4,860,161 1,030,245 3,829,916 $ 21.20% 6,635 898 2,954 2,018

2017 Restated 4,080,787 2,660,912 6,741,699

$ $

28,912,025 6,741,699 22,170,326 $ 23.32% 23% 4,818,671 1,030,245 3,788,426 $ 21.38% 6,635 1,016 2,954 2,282

2016 - 2020 Long Term Debt $9,000,000 $7,637,526

$8,000,000 $7,000,000

$6,741,699

$6,219,163

$6,000,000

$5,959,856 $5,147,659

$5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $-

2020

2019

2018

2017

2016

2016 - 2020 Percentage of Debt Service Limit Used 100.00% 90.00% 80.00% 70.00% 60.00%

47.29%

50.00% 40.00% 30.00% 20.00%

20.00%

19.20%

21.20%

21.38%

2020

2019

2018

2017

10.00% 0.00%

75

2016

2016 Restated 3,197,972 4,439,554 7,637,526 27,075,858 8,590,228 18,485,630 31.73% 32% 4,512,643 2,133,964 2,378,679 47.29% 6,635 1,151 2,954 2,585