Appendix: 2019 Statement of Financial Information (SOFI) — City of Langford

Table of Contents

• Statement of Financial Information Approval
• Schedule of Debts
• Schedule of Guarantee and Indemnity Agreements (Unaudited)
• Schedule of Grants or Contributions (Unaudited)
• Schedule of Employee Remuneration and Expenses (Unaudited)
• Schedule of Council Remuneration and Expenses (Unaudited)
• Schedule of Payments to Suppliers for Provision of Goods and Services
• Audited Financial Statements (Includes Financial Reporting Responsibility)

Statement of Financial Information Approval

The undersigned, as authorized by the Financial Information Regulation, Schedule 1, Subsection 9(2), approves all the statements and schedules included in this Statement of Financial Information, produced under the Financial Information Act.

Michael Dillabaugh, CPA, CA
Director of Finance

Matt Sahlstronn
Councillor

Schedule of Debts

Information on all long term debts for this organization is included in Note 4 to the 2019 Audited Financial Statements.

Schedule of Guarantee and Indemnity Agreements (Unaudited)

There are no Financial Guarantee and Indemnity Agreements in place which required government approval prior to being given under the Financial Administration Act.

Schedule of Grants or Contributions (Unaudited)

The City of Langford does not consider grant-in-aid applications.

Schedule of Employee Remuneration and Expenses (Unaudited)

Remuneration and expenses for named employees for fiscal year 2019:

Totals and summary:

• Total listed remuneration: 5,457,345.85
• Total listed expenses: 116,493.47
• Total listed (those shown above): 5,573,839.32
• Remuneration under $75,000: 3,916,888.77
• Total Remuneration (all employees): 9,583,064.92

There were two severance agreements under which payment commenced between The City of Langford and it's non-unionized employees during the fiscal year 2019. Compensation was determined based on salary.

Schedule of Council Remuneration and Expenses (Unaudited)

Council indemnity, expenses and totals for 2019:

• Total Indemnity: 208,830.30
• Total Expenses: 32,645.96
• Total: 241,476.26

Schedule of Payments to Suppliers for Provision of Goods and Services

The Schedule of Payments to Suppliers has been prepared on a cash basis. The schedule includes vendor totals over $25,000 and a summary of totals.

Vendor payments (vendor — amount):

Summary totals:

• Total of vendor totals over $25,000: 106,345,212.46
• Under $25,000: 3,140,030.51
• Total: 109,485,242.97

Notes: The Schedule of Payments to Suppliers for the Provision of Goods and Services has been prepared on a cash basis and the financial statements have been prepared on an accrual basis, therefore no reconciliation of this schedule with the financial statements has been prepared. Included in the above payments are collections for other governments, capital and property purchases, refunds of deposits on hand, transfers of funds to other institutions, and transfer of funds to other Municipalities (Casino Revenue Share).

---

Audited Financial Statements

Consolidated Financial Statements for the fiscal year ending December 31, 2019.

City Officials and Advisors

• Mayor: Stewart Young
• Councillors: Denise Blackwell; Matt Sahlstrom; Lanny Seaton; Norma Stewart; Lillian Szpak; Roger Wade
• Chief Administrative Officer: Darren Kiedyk, CPA, CGA
• Director of Finance: Michael Dillabaugh, CPA, CA
• City Engineer: Michelle Mahovlich, M.Eng., P.Geo., P.Eng.
• City Planner: Matthew Baldwin, MCIP, RPP
• Fire Chief: Christopher Aubrey
• Auditors: KPMG
• Solicitors: Young Anderson
• Bankers: Bank of Montreal
• Police: RCMP - West Shore

Contents

• Management's Responsibility for the Consolidated Financial Statements
• Independent Auditors' Report
• Consolidated Statement of Financial Position
• Consolidated Statement of Operations
• Consolidated Statement of Change in Net Debt
• Consolidated Statement of Cash Flows
• Notes to Consolidated Financial Statements

Management's Responsibility 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 for local governments as recommended by the Public Sector Accounting Board. The Administration and Finance Committee meets with management and the external auditors to review and discuss the consolidated financial statements. The consolidated financial statements have been audited by KPMG LLP.

Independent Auditors' Report (KPMG LLP)

• Audit opinion: The consolidated financial statements present fairly, in all material respects, the consolidated financial position of the City as at December 31, 2019 and its consolidated results of operations, changes in net financial debt and consolidated cash flows for the year then ended in accordance with Canadian public sector accounting standards.
• Date: May 4, 2020
• Address: KPMG LLP, St. Andrew's Square II, 800-730 View Street, Victoria BC V8W 3Y7

Consolidated Statement of Financial Position

As at December 31, 2019 (comparatives for 2018)

Consolidated Statement of Operations

Year ended December 31, 2019 (comparatives for 2018) — includes Financial Plan (note 13)

Revenue:

Expenses:

• Annual surplus: Financial Plan $30,597,292; 2019 $31,720,769; 2018 $43,210,150
• Accumulated surplus, beginning of year 2019: $472,462,818
• Accumulated surplus, end of year 2019: $504,183,587

Consolidated Statement of Changes in Net Debt

Year ended December 31, 2019 (comparatives for 2018)

Consolidated Statement of Cash Flows

Year ended December 31, 2019 (comparatives for 2018)

---

Notes to Consolidated Financial Statements

Year ended December 31, 2019

1. Significant accounting policies

The consolidated financial statements of the City are prepared by management in accordance with Canadian public sector accounting standards for local governments as recommended by the Public Sector Accounting Board ("PSAB") of the Chartered Professional Accountants of Canada. Significant accounting policies include:

(a) Reporting entity

• The consolidated financial statements include the assets, liabilities, revenues and expenses of the City and the City's proportionate interest in the West Shore Parks and Recreation Society ("West Shore"), an organization jointly controlled by the City.

(b) Basis of accounting

• The City follows the accrual method of accounting for revenues and expenses.

(c) Revenue recognition

• Government transfers recognized when events giving rise to transfer occur and eligibility criteria met. Property tax revenue recognized on an accrual basis using approved tax rates and anticipated assessment.

(d) Deferred revenue

• Includes grants, contributions and other amounts received from third parties which may only be used in certain programs or for specific work or tangible capital assets. Development cost charges are restricted amounts recognized as revenue when qualifying expenditures are incurred.

(e) Refundable deposits

• Receipts restricted by third parties are deferred and reported as refundable deposits and returned when obligations are met or recognized as revenue when qualifying expenditures are incurred.

(f) Investment income

• Reported as revenue in the period earned.

(g) Cash equivalents

• Short-term, highly liquid investments with term to maturity of 90 days or less at acquisition.

(h) Long-term debt

• Recorded net of related repayments and actuarial earnings.

(i) Non-financial assets

• Held for use in the provision of services; include tangible capital assets, which are recorded at cost and amortized on a straight-line basis over estimated useful lives. Works of art and cultural/historical assets are not recorded.

• Useful life ranges:

  • Land improvements: 10–50 years
  • Buildings: 25–70 years
  • Vehicles, machinery, equipment: 5–25 years
  • Sewer and storm infrastructure: 75–100 years
  • Road infrastructure: 10–75 years

(j) Employee benefits

• The City and employees contribute to the Municipal Pension Plan. Contributions expensed as incurred.

(k) Use of estimates

• Management makes estimates and assumptions affecting amounts reported.

2. Cash and cash equivalents

2019:

• West Shore Parks and Recreation Society: $1,444,846
• Cash: $9,024,949
• Term deposits: $7,399,853
  Total: $17,869,648

2018:

• West Shore Parks and Recreation Society: $1,632,134
• Cash: $20,338,390
• Term deposits: $23,000,000
  Total: $44,970,524

The City has an approved operating line of credit of $10,500,000.

3. Deferred revenue

Deferred revenue comprises:

• 2019: Development cost charges $19,434,367; Hotel room tax $1,114,556; Other $718,424 — Total $21,267,347
• 2018: Development cost charges $17,000,931; Hotel room tax $1,198,495; Other $653,851 — Total $18,853,277

Development cost charges activity (2019):

• Opening balance of unspent funds: $17,000,931
• Add: Development cost charges received during the year: $5,521,742; Interest earned: $325,160
• Less amount spent on projects and recorded as revenue: $(3,413,466)
• Closing balance: $19,434,367

4. Debt

(a) Debt consists of an interim financing facility from TD Bank bearing interest at Bankers Acceptance Rate plus stamping fee of 60 basis points. Current rate 2.15%.

(b) Principal payments on long term debt and budgeted repayments on short-term debt for the next five years:

• 2020: 1,471,500
• 2021: 1,496,400
• 2022: 1,491,400
• 2023: 1,490,500
• 2024: 1,498,100

5. Tangible capital assets

(a) Assets under construction: $6,417,023 (2018 - $3,621,581) — not amortized until placed in service.

(b) Contributed tangible capital assets recognized at fair market value: total contributions in 2019 $19,116,957 (2018 - $26,797,555), comprised of:

• Land: $12,717,447 (2018 - $19,927,362)
• Land improvements: $118,240 (2018 - $21,000)
• Sewer & storm infrastructure: $2,525,206 (2018 - $3,035,188)
• Roads infrastructure: $3,756,064 (2018 - $3,814,005)

(c) Works of art and historical treasures are not recorded as tangible capital assets.

(d) No write-downs of tangible capital assets in 2019 or 2018.

(e) West Shore Parks and Recreation Society assets are included proportionately.

Note 5 — Summary of tangible capital asset cost, accumulated amortization and net book value (2019 vs 2018):

(See note 5 for full cost and accumulated amortization tables.)

6. Sewer franchise agreement

• In 2004 the City entered a 21-year franchise and partnering agreement with West Shore Environmental Services Inc. ("WSES") and Terasen Utility Services Inc. for design, construction, financing, ownership and operation of sanitary sewers. Term includes single 21-year renewal.
• WSES recovers capital costs via Sewer Capital Recovery Fee (SCRF) on property owners who connect to the sewer. WSES bills and collects user fees and pays the City franchise fees estimated at $11 million over the 21-year term.
• The City records costs of sewer infrastructure constructed by WSES and corresponding remaining cost to be recovered. Remaining cost to be recovered reduced as SCRFs collected by WSES.
• During 2019 the remaining costs to be recovered were in excess of the amount owing. The City recorded an agency fee of the excess in the amount of $9,241,729 (2018 - $2,098,712).

Opening/closing balances for WSES sewer infrastructure (extract):

• WSES sewer Infrastructure Cost — Closing: $44,797,874
• Accumulated amortization — Closing: $(8,113,252)
• Net closing balance: $36,684,622

7. Accumulated surplus

Accumulated surplus consists of:

Reserve fund examples include: Federal Gas Tax ($3,607,840), West Shore Parks & Rec Society ($931,594), Capital works ($4,166,876), Affordable housing ($2,598,091), General amenity ($3,738,423), Bear Mountain fire hall ($1,400,559), etc.

8. Taxation

Taxation revenue (2019 vs 2018):

Less taxes levied for other authorities (items such as CRD, Hospital District, School Authorities, BC Assessment Authority, BC Transit) — net taxation reported: 2019 $32,920,719 (2018 $30,294,924).

9. Government transfers

Government transfers recognized when eligibility criteria and stipulations satisfied.

2019 operating and capital transfers (summary):

• Operating transfers (Federal, Provincial, Other): $813,219 (2019); $1,624,820 (2018)
• Capital transfers (Federal, Provincial, Other): $4,266,085 (2019); $1,778,782 (2018)
• Total government transfers: $5,890,905 (2019); $2,821,798 (2018)

10. Municipal pension plan

• The City and its employees contribute to the Municipal Pension Plan (multi-employer defined benefit plan).
• The most recent actuarial valuation as at December 31, 2018 indicated a $2,866 million funding surplus for basic pension benefits on a going concern basis. Next valuation as at December 31, 2021.
• The City paid $877,689 (2018 - $775,858) in employer contributions; employees contributed $740,612 (2018 - $673,497) in 2019.

11. Commitments and contingencies

(a) Contingent liabilities: CRD debt is a direct, joint and several liability of CRD and member municipalities. City is a shareholder/member of CREST Inc. Members share in funding operations and capital assets per Members' Agreement.

(b) Litigation liability: From time to time subject to claims; potential claims expected to be covered by insurance and not materially affect consolidated financial statements.

(c) Commitments: Long-term RCMP contract effective October 1, 1994 — City responsible for 90% of policing costs. 2020 estimated cost: $8,036,600. Purchase of service agreement with YMCA/YWCA of Greater Victoria: City agreed to pay $750,000 per year indexed by population every two years up to $950,000 per year for 25 years. Major contracts in progress as at December 31, 2019 include Operating contracts total amount $19,744,518 (Paid or accrued $11,601,240); Capital contracts in progress (amounts not fully listed here).

12. Contractual rights

Estimated contractual rights for rental revenue contracts:

In addition, agreements exist that provide payments based on a percentage earned throughout the year.

13. Financial plan

• The financial plan data is based on the 2019 operating and capital financial plans approved by Council on May 6, 2019. Amortization expense was not contemplated on development of the financial plan and has not been included. (See reconciliation in the notes.)

14. Subsequent Event

• Subsequent to December 31, 2019, the COVID-19 outbreak was declared a pandemic. This presents uncertainty over future cash flows and may have a significant impact on future operations (potential decreases in revenue, increases in expenses, impairment of receivables, investments, and delays in capital projects). An estimate of the financial effect is not practical at this time.

15. Comparative Figures

• Certain comparative figures have been reclassified to conform with the current year presentation. Prior year figures adjusted for gross up of contractual revenues and expenses which were previously netted.

16. West Shore Parks and Recreation Society

(a) Capital asset transfer and membership history: Lands and facilities comprising Juan de Fuca Recreation Centre were transferred by the CRD to municipal members effective January 2, 2002. Town of View Royal became a member effective January 1, 2007. CRD is no longer a member effective January 1, 2018.

• For 2019, the City's share of improvements purchased by the Society on its behalf: $352,050.
• The City's share change (gain/loss on opening fund balances) for 2019: $573,588 (includes reallocation of Juan de Fuca Electoral Area shares).

(b) Consolidation: Financial results and budget for the Society are consolidated proportionately. City's proportion for 2019: 52.07% (2018: 50.77%).

Condensed financial information for the Society (2019 vs 2018):

17. Segmented Information

The City provides services in the following segments: General Government Services, Protective Services, Engineering and Public Works, Community Services, and Utility and Enterprise Services. The accounting policies used in these segments are consistent with those in the consolidated financial statements. Taxation and grants in lieu of taxes are apportioned based on share of net budgeted expenditures in the Financial Plan.

Condensed segmented information (2019):

Revenue by segment (2019 totals):

• General Government Services: $14,948,669
• Protective Services: $15,850,920
• Engineering and Public Works: $24,998,601
• Community Services: $28,611,351
• Utility and Enterprise Services: $13,333,716
• Total Revenue: $97,743,257

Expenses by segment (2019 totals):

• General Government Services: $6,739,043
• Protective Services: $14,420,200
• Engineering and Public Works: $12,535,807
• Community Services: $22,370,474
• Utility and Enterprise Services: $9,956,964
• Total Expenses: $66,022,488

Annual surplus by segment (2019):

• General Government Services: $8,209,626
• Protective Services: $1,430,720
• Engineering and Public Works: $12,462,794
• Community Services: $6,240,877
• Utility and Enterprise Services: $3,376,752
• Total Annual Surplus: $31,720,769

(Comparable segmented information for 2018 is provided in the notes.)

---