Healthy cash and investment balances, tax collection, and decreasing long-term debt have put the District of Mission in a strong financial position if it needs to borrow, said its manager of accounting services.
Council approved the draft of the District’s 2020 financial statements on May 3, following the accounting report.
“We are in a very good financial position right now, considering COVID and how we managed that for the past year,” said Coun. Danny Plecas. “There is a capacity to borrow.”
The District is reporting an annual surplus of over $16,700,000, just a slight decreased (less than 1 per cent) from 2019’s numbers; having $3.1 million remaining from the general operating fund (almost double from 2019); and adding $1.5 million to it’s reserves, which have been built up to almost $70 million.
Also of note is the positive cash flow of nearly $70 million – over $30 million more than 2019, and long-term debt obligations being reduced significantly over the last 10 years, falling from over $17 million owed in 2011 to 3.4 million today. Less than half a percent of District revenue is paying the interest on debt.
| The decrease of the District's long-term debt in the last 10 years. |
“In simple terms, the district does have very healthy cash and investment balances and can service ongoing operations, even if there were to be a few undesired surprises, ” Scott Ross, manager of accounting services.
He said the next budget cycle needs to have an “appropriate cost estimate” for replacing, upgrading and maintaining its infrastructure.
“Aging infrastructure along with development growth pressures requires significant budget funding,” Ross said. “What we presently can afford to do versus what we probably should be doing, is our funding gap. Narrowing this gap will result in better protection of the city’s infrastructure. Waterfront development, Silverdale and other growth pressures will have a significant impact on the reserves.”
Specifically mentioned by Ross was the Fraser River sewer-crossing project, which may require the municipality to borrow a large amount to complete. On April 6, council authorized the director of finance to borrow a maximum of $23.5 million if needed, but the District’s costs are currently estimated to be only $12.5 million.
Around 58 per of the total reserves build up are from the water and sewer capital works.
| Where the District of Mission's reserve funds are allocated. Water and sewer capital reserves make up around 58 per cent. |
A future unknown is when the Mission Leisure Centre will be fully operational again. Staff said it is currently running at 25 per cent capacity, all adult programming is suspended, and they are not sure when the money will be rolling in at pre-COVID levels.
While the Park Recreation and Culture Department is usually cash earner for the District, facility closures required $1.3 million to subsidize lost revenues. The nearly $5 million given by the federal and provincial governments is set to be exhausted by the end of 2021.
RELATED: Mission explores option to borrow $12.5 million to complete sewer line
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