Kneehill County reports positive financial position

Kneehill Logo 2019

Kneehill County held a regular meeting of council on Tuesday April 27, 2021, which was called to order at 8:30 a.m. by Reeve Jerry Wittstock.

The first item on the council’s agenda was item 3.1, a Delegation for BDO Canada LLP, 2020 Financial Statements at 8:35 am.

Kneehill County Financial Statement for 2020 shows that the ending net financial at the end of the year changed by $6.5 million, with a total net amount being $46.8 million.

Compared to the last five years, Kneehill County’s accumulated surplus is going up and not down.

Next on the council’s agenda was item 4.1, Municipal Energy Champions Program, presented by Jason Fehr, Building and Facilities Technician.

The Municipal Energy Champions program supports municipalities by providing free capacity-building support for developing, managing and implementing energy management initiatives. Kneehill County is one of nine municipalities selected to participate in this program for 2021.

Participating in this program helps municipalities understand the importance of energy use and management, better track and manage municipal energy consumption, move forward in the energy planning process, see financing options to offset the costs of energy projects, learn to identify opportunities for energy efficiency and renewable energy projects, and develop an approach for energy management initiatives.

Participating municipalities in this round include: Towns of Innisfail, Rocky Mountain House, Slave Lake, Westlock, Villages of Linden and Longview and the Municipal District of Peace No. 135.

Council accepted the Municipal Energy Champions Program participation report as information.

Item 4.2 was next on council’s agenda, the Gravel Crushing Report, presented by Mike Haugen, CAO.

In the 2021 Operating Budget, Council approved Gravel Crushing at the cost of $700,000. Administration estimated that this would allow them to stockpile 150,000 tonnes. The Tender opening was held on March 30, 2021, and there were eleven bids with the average cost of $4.11 per tonne. Kneehill County accepted the Lone Pine Crushing Ltd. bid at $2.94 per tonne. Administration accepted the bid based on the criteria of lowest cost, appropriate equipment, and adequate references.

Accepting Lone Pine Crushing Ltd. bid at $2.94 per tonne allowed Administration to crush approximately 238,000 tonnes, rather than crushing the estimated 150,000 tonnes, allowing Kneehill County to stay within budget and stockpile additional gravel.

Council received, for information, the transportation report regarding gravel crushing operations.

Next on the council’s agenda was item 4.3, Cost Sharing For The Development of Undeveloped Road Allowance Range Road Rd 22-4, presented by Brad Buchert, Sr. Manager of Transportation & Facilities.

In June 2017, Ryan Furst applied for a cost share road development agreement to upgrade Range Road 22-4, to access their subdivided parcel situated out of North West 16-28-22-W4M.

Council approved the road development with cost share to be considered at the time of Single-Family Residential development. A contractor was hired by Kneehill County to complete the road development in 2017.

At the time of the application, Kneehill County policy allowed consideration for cost sharing (50%) of a road upgrade when a development permit was applied for. Policies 5-13 and Policy 5-13a that were in effect at the time but are now replaced with Policy 13-39.

In June 2017, Ryan Furst applied for a Residential development permit and now would like to be considered for the cost sharing of the roadway. Furst paid Kneehill County a total of $13,000 to upgrade the road, therefore the County’s 50% cost share would be $6,500 with funds coming from the operating budget.

Council approved 50% cost sharing with owner/developer Ryan Furst in the amount of $6,500 for the development for the undeveloped road allowance on Range Road 22-4 to access a subdivided parcel situated out of NW-16-28-22-W4, with funds coming from the operating budget.

Next on council’s agenda was item 5.2.1, Resident Engagement Results, Three Hills East Water, presented by John McKiernan, Manager of Environmental Services.

Council directed administration to engage with the residents within the defined area east of Three Hills to gauge the interest in a municipal water supply system.

Kneehill County developed and distributed a survey consisting of 5 questions with the option of providing any additional comments. The survey was mailed to the targeted residents on March 12, 2021 and it was requested that surveys be returned by March 26, 2021. Residents were given the opportunity to return the survey by regular mail or electronically.

A total of 79 surveys were sent and a total of 37 surveys were returned either by mail or electronically. Four of the surveys returned identified additional properties to be considered.

Council received for information the Three Hills East Resident Engagement Results report as presented.

The next item on council’s agenda was item 5.2.2, Orkney Water co-op, also presented by John McKiernan.

Councillor King moved that Council direct administration to explore with the Orkney Water Co-op, a plan for Kneehill County to assume ownership and operation of the system.

The Orkney Water Co-op is a small groundwater system that serves 11 metered connections in the Southeast of the County and has approached Kneehill County to assume ownership and operation.

County Administration has met with and has drafted a proposal to the Co-op for the exploration of ownership and operation of the water system, in return, the Co-op has responded to administration with concerns and questions of the proposal.

Administration proposed that the flow be restricted to one igpm which is a recommendation from an evaluation study that was performed by MPE Engineering on the water system infrastructure in 2006.

MPE did establish a hydraulic model of the distribution system based off the available system drawings at the time and with an output pressure at the pumphouse of 40 psi. An inquiry has been sent to MPE to obtain the hydraulic model but given the amount of time that has passed since its creation it may not be supported through existing software.

The issue on flow restriction for Administration is based off recommendations provided through a prior study stating a flow restriction is necessary to maintain a positive pressure within the distribution system.

If Kneehill County were to maintain the existing operation of the water system, as requested by the Co-op, it would be prudent to undertake a new study and perform a hydraulic survey on the system which would make recommendations on any possible changes to the existing infrastructure including pumps, reservoir, piping, or if there were an alternative solution that would allow the larger flows only when pressure is available in the system. As the registration holder, it is required to maintain positive pressure at all points throughout the distribution system where water is being supplied.

Council directed administration to continue the exploration of assuming ownership and operation of the Orkney Water Co-op under the supported guidance of Council to restrict flow at all connections.

Next on council’s agenda was item 5.2.3, policy 14-1, Compensation for Crop and Land Damages, presented by John McKiernan.

Policy 14-1, Compensation for Crop and Land Damages was established to provide guidance for the compensation reimbursement to landowners for entering upon their land and disturbing the crops and land for a specific task. It was originally developed during the construction of rural water systems for the placement of waterlines within the property of a landowner.

There are currently two policies within the County that cover compensation for crop and land damage, Policy 14-1 and Policy 13-8. Administration is recommending that this redundancy is unnecessary, and that Council rescind Policy 14-1.

Council rescinded Policy 14-1, Compensation for Crop and Land Damages. Policy 13-8 shall become the guiding policy in place.

Next on Council’s agenda was item 6.1, 2020 Audited Financial Statements, presented by Bill McKennan, Director of Corporate Services.

The County is required under the Municipal Government Act (MGA) to prepare annual financial statements that follow the Canadian Generally Accepted Accounting Principles for municipal governments which are the standards approved by the Public Sector Accounting Board. These regulations are published through the Canada Public Sector Accounting Handbook, which is governed by the Chartered Professional Accountants of Canada (CPA). The financial statements also require an auditor’s report which was completed by Kneehill County’s appointed auditor, BDO of Red Deer.

The overall financial position of the County, as presented in these statements for December 31, 2020, is positive and reflects Council and Administration’s ongoing focus on prudent financial management. As noted in the external auditor’s report the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the County as at Dec. 31, 2020 and its consolidated financial performance and its cash flows for the year in accordance with Public Sector Accounting Standards.

Administration presents Council various financial reports during the year. These financial statements reflect these previous approvals and direction of Council. The formatting of these reports varies from the annual financial statements; however, the underlying information and financial impacts are consistent. The financial statements provide a full reconciliation of the municipal budget to the financial statements.

There are no direct financial implications resulting from the presentation of the annual financial statements. However, the trends noted in these statements assist Council in the annual budget deliberations to establish service levels and mechanisms to fund all activities undertaken and delivered by the County. In addition, the financial statements are used for various external reporting. Two examples are provincial reporting requirements and financial analysis, identifying trends and allows comparisons to other municipalities.

Council accepted the 2020 Audited Financial Statements as presented.

Next on Council’s agenda was item 6.2, Quarterly Financial Report, presented by Bill McKennan.

Council receives quarterly financial reports during the year. These reports are intended to inform Council of financial transactions to-date and how expenditures, revenues and other financial indicators compare to the annual operating budget and plan which Council has previously approved. The purpose of this report is to report on the operating budget performance to-date, and provide other supplementary information on key financial indicators for the municipality.

This is the report for the period ending March 31, 2021 (1st Quarter).

Overall, the first quarter has not generated any significant variances to budget. Operations and all services offered to the public are on track as planned despite ongoing Covid-19 restrictions. Additional insight into the projected year-end results will be strengthened in future quarterly reports.

Council received the Quarterly Financial Reporting for the Period ending March 31, 2021 for information.

Next on Councils agenda was item 6.3, Local Improvement Amendments, presented by Bill McKennan.

To apply the special benefitting tax levy of $562.95 per year for 15 years, a water riser bylaw was written with a schedule of roll numbers affected. When new roll numbers are assigned, due to subdivisions, these bylaws require amending to include the new roll number and to delete the old one. This is legislated in the Municipal Government Act, Section 402(1).

These bylaws only affect those parcels of land that had a riser installed when the water line was first constructed. These amendments are required in order to give Administration the authority to transfer the local improvement charge to the correct parcel for the 2021 tax year. In addition, these Bylaw amendments will repeal any previous ones that are related to Schedule B listing the affected rolls. The amendments are noted in bold red print as strikeouts on the roll if affected, on the schedule of each Bylaw.

Council gave first reading to Bylaw 1837 that being a bylaw for the Grainger-Hesketh Water Service Area Project, replacing Schedule B of Bylaw 1696 due to subdivision activity.

Second reading given to Bylaw 1837. Consideration to hold third reading be given to Bylaw 1837.

Third reading given to Bylaw 1837.

Council gave first reading to Bylaw 1838 that being a bylaw for the Sunnyslope Pressure Water Service Area Project, replacing Schedule B of Bylaw 1689 due to subdivision activity.

Second reading given to Bylaw 1838.

Consideration to hold third reading was given to Bylaw 1838.

Third reading given to Bylaw 1838.

Council gave first reading to Bylaw 1839 that being a bylaw for the Selkirk Water Service Area Project, replacing Schedule B of Bylaw 1682 due to subdivision activity.

Second reading was given to Bylaw 1839. Consideration to hold third reading be given to Bylaw 1839.

Third reading was given to Bylaw 1839.

Next on the council’s agenda was item 6.4, Water Service Area Special Tax Bylaw 1835, presented by Bill McKennan.

The Municipal Government Act states in Section 382(1) that “each council may pass a special tax bylaw to raise revenue to pay for a specific service or purpose” and Section 383(i) “the special tax bylaw authorizes the council to impose the tax in respect of property in any area of the municipality that will benefit from the specific service or purpose stated in the bylaw”.

In 2006, Council had a water service study completed to ascertain the needs of the County. A construction budget was created with revenues being covered by provincial grants, connection fees (local improvement tax) and a water service area tax. Over the years, construction continued to increase the water services to county residents. Borrowed funds were being recovered through the Special Benefitting Connection fees as well as an annual Water Service Area Tax to all non-residential, residential and farmland assessment.

In 2016 the debenture was paid in full, however Council motioned to continue the Water Service Area Tax in order to pay back reserves that were used to pay for the project in the short-term during construction as well as to pay for future enhancements and rehabilitation. The hamlets are not included in this Water Service Area Tax at this time.

Based on the 2021 assessment that this special levy is calculated on, there will be a reduction of $22,897 from the previous year, for a total of $977,330 of revenues. The decrease in industrial/linear assessment numbers is the main cause for the lower revenues. There was a loss last year and most likely, will continue to see a similar trend over the next few years. The provinces mandate to allow for three substantial increases on the non-residential side of the County assessment.

In summary, the balance received from residential assessment is $86,683 and the non-residential is $890,960.

Council gave first reading to Bylaw #1835 being a bylaw for the 2021 Water Service Area Special Tax.

Second reading was given to Bylaw #1835.

Consideration to hold third reading was given to Bylaw #1835.

Third reading was given to Bylaw #1835.

Next on council’s agenda was item 6.5, 2021 Trochu Recreation Area Special Tax, presented by Bill McKennan.

Each year Council approves a levy to be charged against certain properties within a given area as a recreation tax. This tax is collected and forwarded to the Town of Trochu as a payment at year end pursuant to their report to fund 50% of their costs to operate the Trochu pool facility. The original Bylaw #692 was approved by Council after a vote of the people on April 14, 1972.

The special tax rate charged will net revenue of approximately $40,862 to put towards the invoice that will be received from Trochu for their expenses to operate the swimming pool in 2021.

Council gave first reading to Bylaw #1836, that being a bylaw for the 2020 Trochu Recreation Area Special Tax.

Second reading was given to Bylaw #1836.

Consideration to hold third reading was given to Bylaw #1836.

Third reading was given to Bylaw #1836.

Next item on council’s agenda was item 6.6, 2021 Tax Rate Bylaw, also presented by Bill McKennan.

At the onset of the 2021 budget process the County was facing $1,900,000 in new pressures. During the budgeting process, administration in consultation with Council, was able to manage the shortfall down to $1,354,500 by finding cost efficiencies across the organization. The remaining shortfall was presented to Council with options for mitigating the funding imbalance, options included: service level changes, drawing from reserves, increasing tax rates, or a combination of options. The Operating Budget was passed at the Feb.23, 2021 meeting.

Providing for a modest tax increase for the current tax year, will allow the County to continue to provide the services expected by the community while continuing to keep taxes reasonable and reserves moderate.

Council gave first reading to Bylaw #1834, that being a bylaw for the 2021 Tax Rates.

Council gave second reading be given to Bylaw #1834.

Council gave consideration to hold third reading be given to Bylaw #1834, but was not unanimous.

Next on council’s agenda was item 6.7, Organizational Chart, presented by Bill McKennan.

Annually, Administration brings the Organizational Chart to Council for approval as per Policy 3.16. Going forward Administration is recommending that the presentation of the organization chart be coordinated and presented at the same time as the annual budget deliberations. The Organizational Chart can also be delivered in other ways.

Reduced 1 FTE - Planning and Development Officer Reduced 1 FTE - Equipment Operator I Converted 1 FTE to PT - Planning Administration Assistant These above reductions were due to vacancies not being filled, and efficiencies being created within the departments.

Council accepted the attached Organizational Chart for information.

Council Rescind Policy 3.16.

The next item on council’s agenda was item 8.1, Community Grants to Nonprofit Organizations Policy 15-3, Round One, presented by Mike Haugen, CAO.

At the April 20, 2021 Committee of the Whole Meeting, Council discussed the 2021 Round One Community Grant Applications. Committee of the Whole recommended that Council approves the following Community Grant Application: Parkview Lodge of Carbon $6,000.00 Outside doors and storage shed for tenants.

At this meeting, Council requested that Administration confirm ownership of the Acme Golf Course prior to consideration of providing a community grant.

The Acme Golf Course land title shows that the property is owned by the Acme Golf Course and that it is not a municipally owned asset. Acme & District Golf Course $2,500.00 Upgrades to Clubhouse.

Council approved the Round One Community Grants to Non-Profit Organizations funding to the following organizations: Acme & District Golf Course of $2,500, Parkview Lodge of Carbon of $6,000.

The last item on council’s agenda was item 8.2, Road Ban Exemption Request, presented by Mike Haugen.

The County currently has road bans in place on several County roads. These roads are banned at 75% until May 14, 2021.

Larry Penner is requesting that Council grant an exemption on the enforcement of weights along 24-0. Administration understands the economic impact that weight restrictions may impose. Road Bans are placed upon roads as a method of protecting road infrastructure during times of year where it is susceptible to damage.

Council received the road ban exemption request for information.

Meeting adjourned, the next Kneehill Council Meeting will be held on May 11, 2021 at 8:30 am in the Council Chambers.