The City of Campbell River’s debt is increasing but so are its financial assets, according to the city’s latest financial statements report.
The city recently released its 2016 Financial Statements which offer a comparison to the 2015 fiscal year and reveal where the city stands financially.
“Overall, the city’s financial position has improved from the prior year,” said Myriah Foort, the city’s finance manager, in a report to city council. “Financial assets have increased to $71 million from $65 million in 2015; this is primarily the result of an increase in cash and investments of which the city has $63 million at the end of 2016.”
Foort said overall, the city has a “healthy” financial standing.
“The city continues to invest in its capital infrastructure (and) the city debt levels continue to be low,” Foort said.
Those investments, however, mean the city’s debt levels are on the rise. The city’s total liabilities as of Dec. 31, 2016 were $36 million, up from $30 million in 2015.
Foort said the increase can be attributed to the city’s costly new $28.25 million drinking water supply project.
“The increases in accounts payable and short-term debt are the result of the significant water supply capital project the city is undertaking,” Foort said.
The trenchless water intake system, which includes construction of a new pump house and water treatment building, forced council to take on debt after construction costs put the project over budget. The city, though, has said the system will more than make up for it down the road by reducing the cost of future system upgrades by an estimated $16.5 million over the next 10 years. BC Hydro has also committed to paying 75 per cent of the project costs as the new system was necessitated by the John Hart Generating Station replacement project and Hydro’s decision to remove the three penstocks that currently deliver the city’s drinking water.
The city’s debt balance, which is made up of short and long term debt, as well as capital leases, also increased slightly in 2016 over 2015 to $4.9 million from $4 million thanks to the city getting started on some of its major infrastructure renewal projects.
“The city is starting to access the $15 million of (council) approved borrowing bylaw for water and sewer capital renewal and capacity upgrades, therefore this balance will increase in the coming years,” Foort said. “The city’s financial plan utilizes both reserves and external borrowing to fund necessary capital upgrades in order to maintain core services, in conjunction with the city’s reserves, surplus and long-term debt policies.”
The city’s investments in its infrastructure did help in increasing the city’s non-financial assets from $231 million in 2015 to $242 million last year.
“The city invested $17.8 million in capital renewal and enhancement projects in 2016,” Foort said. “In addition, $1.35 million of assets were contributed to the city through new subdivisions. These assets include sidewalks, roads, streetlights, sewer and water lines to the new residential properties.
“The accumulated surplus or net equity position of the city is $276 million for 2016 compared to $265 million in 2015. This $10.8 million accumulated surplus increase is mainly a result of the $10.3 million net increase in tangible capital assets for fiscal 2016,” Foort added.
The city also has a positive assets to liabilities ratio at 8.65 (a ratio of at least one is considered positive), which means the city has eight times the assets than it does liabilities.
“Our ratios are strong, compared to a goal of one, we’re very strong, however, I will stress these will lower in the coming years as we take on the use of debt to balance reserves for sewer and water upgrades,” Foort said.
Finally, the Financial Statements reveal that total revenues brought in by the city in 2016 were $65.6 million, compared to 2015 revenues of $62.3 million, while total expenses for 2016 were $54.8 million, compared to $51.7 million one year prior.
The city has until May 15 to file its financial statements with the province.