So Much To Do, So Little Time! Tangible Capital Assets LGAA Annual Conference Red Deer, Alberta March 13, 2008

Provide tools and training Raise awareness Mitigate the cost AMAH Project Goals 2

What is required Legislative impact Implementation update Challenges Session Overview 3

angible – can be touched Definition 4 apital – lasts over time sset – has measurable value

Major Asset Classifications 5 Land Land improvements Buildings Engineered structures Machinery & equipment Vehicles Cultural & historical

Global View 6 Australia 1998 New Zealand 1990 USA 2006 Canada & Provinces Canadian Municipalities 2009

Why? 7 Budget and Reporting Requirements Long Term Decisions by Short Term Councils Not New and Exciting Aging Infrastructure Property Tax Rate Sensitivity Awareness Out of Sight / Out of Mind

Outside Contributions 8 Provincial grants Federal grants Developers Constructed assets funded from third parties require replacement

Meeting the Standard 9 CICA - PSAB 3150

Timeline 10 Planning and Policy Development Resource Identification and Acquisition Inventory Listing Valuation & Amortization Reporting & Presentation Asset Management 2009 Step 1 Step 4 Step 2 Step 3

Capital Asset Policy 11 1.Purpose & Scope 2.Asset Definitions & Classification 3.Asset Recording & Valuation 4.Amortization Methods and Rates 5.Review & Write-downs 6.Maintaining Records 7.Asset Disposal 8.Systems 9.Reporting & Budgeting

Toolkit 12

Actual Cost Estimated Cost Reproduction (discounted) Replacement (discounted) Appraisal (discounted) Residual Nominal Valuation Approaches 13

Valuation Tools 14 Linear Roads Drainage Water & Wastewater Bridges

TCA’s on Balance Sheet will be: At cost, less amortization and write downs Amortization and write-downs will be a charge against annual income PS

Brings a non-cash dimension to financial reporting and budgeting Full Accrual Accounting This change does not require a change in behavior, but it may cause you to change because there will be more information available Impact of Recording TCA’s 16

Municipalities will not be required to fund amortization Legislative Impact 17

All TCA to be recorded in 2009 Amortized over useful life Annual amortization expensed; could result in deficiencies PS 3150 does not mandate funding amortization PS 3150 Requirements 18

Operating, capital and reserve fund statements replaced with one statement Future Changes to Financial Reporting – PS

Statement of Financial Position ‘Accumulated Surplus’ is one amount; includes ‘Equity in ‘TCA Future Changes to Financial Reporting – PS Focus on net financial assets/net debt; not annual results

Statement of Operations Annual budget will replace operating and capital budgets Future Changes to Financial Reporting – PS Capital purchases, debt proceeds and debt principal retirements excluded

Summary 22 Next Steps Replacement cost reassessment Status of reserve fund levels Asset Management Benefits Awareness of problem and magnitude Better internal information for decision makers Significant step towards good asset management Resources Considerable work is required to implement this change Resources and expertise will be required Involve auditors, engineers and facility management personnel early on!

Questions? 23