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Tlii' r.m.nlkrn Statesman. Bowmanvillc, August 12, 1987 Corporation of The Town of Newcastle Consolidated 1986 Financial Statements AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of the Corporation of the Town of Newcastle: We have examined the consolidated balance sheet of the Corporation of the Town of Newcastle Newcastle as at December 31,1986 and the consolidated statement of operations for the year then ended. Our examination was made in accordance with generally accepted auditing standards, standards, and accordingly included such tests and other procedures as we considered necessary necessary in the circumstances. In our opinion, these consolidated financial statements present fairly the financial position of the Corporation of the Town of Newcastle as at December 31,1986 and the results of its operations for the year then ended in accordance with the accounting principles disclosed in Note 1 to the financial statements, applied on a basis consistent with that of the preceding year. Deloille Haskins 4 Sells Chartered Accountants April 29,1987 Licence No. 1113 SOURCES OF FINANCING Taxation and user charges (Nota 2) Residential and farm taxation Commercial, industrial and business taxation Taxation from other governments User charges Deduct - Amounts received or receivable for region and school boards Grants Government of Canada Province of Ontario Other municipalities Other Actual 1986 Actual 1985 $16,224,454 $13,580,397 5,141,818 4,539,704 640,694 583,821 1,768,399 1,517,039 (16,259,852) (13,410,624) 37,625 32,895 3,093,652 2,873,111 17,421 111,672 Contributions from developers Investment income Sale of land and equipment Penalty and interest on taxes fines Recreational land - cash-in-lieu Donations and contributions from others MUNICIPAL FUND BALANCES, BEGINNING OF YEAR (Note 6) To be used to offset taxation or user charges 1,073,053 826,290 10,476 274,586 1,215 65,507 120,928 Unexpended capital financing TOTAL FINANCING AVAILABLE 684,356 £40 407,449 585,581 500 246,854 1,444 71,701 129,950 536,333 -652 DURING THE YEAR $13.721.262 511,808.467 APPLIED TO Current Operations General government Protection to persons and property Transportation services Environmental services Health services Recreational and cultural services Planning and development Cipital General government Protection to persons and property Transportation services Environmental services Health sendees Recreational and cultural sendees Planning and development $ 1,249,363 $ 1,202,335 951,525 878,402 3,509,418 3,095,745 328,981 259,710 90,076 82,463 2,391,276 2,341,824 396 075 369.940 8.916.714 8.230.419 702,513 28,838 43,497 152,055 1,484,596 1,620,347 360,486 . 909 18,927 542,118 484,338 7.844 4.918 3.141.963 2.309.423 NET APPROPRIATIONS TO RESERVES AND RESERVE FUNDS (Note 8) 1,014,414 583,629 MUNICIPAL FUND BALANCES, END OF YEAR (Note 6) To be used to offset taxation or user charges Unexpended capital financing TOTAL APPLICATIONS DURING THE YEAR 605,206 42.965 $13.721.262 CONSOLIDATED BALANCE SHEET DECEMBER 31.1986 , 684,356 642 $11.808.467 ASSETS UNRESTRICTED Cash Taxes receivable User charges receivable Accounts receivable Other current assets 1986 $2,771,814 1,656,406 127,915 512,129 JM 5.426.300 1985 $1,571,263 1,588,968 90,753 955,099 267.484 4.473.567 RESTRICTED Cash Accounts receivable Long-lerm receivables 4,200,223 155,846 3,442,550 94,949 12.694 4.356.069 3.550.193 CAPITAL OUTLAY FINANCED BY LONG-TERM LIABILITIES AND TO BE RECOVERED IN FUTURE YEARS ..1.291.793 $11.074.162 1.353.842 $-9.377.602 LIABILITIES ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 1,688,353 $1,203,013 OTHER CURRENT LIABILITIES 938.170 . 562.626 / 2,626,523 1,765,639 NET LONG-TERM LIABILITIES (Note 5) 1,291,793 1,353,842 FUND BALANCES, END OF YEAR To be used to offset taxation or user charges (Note 6) Unexpended capital financing (Note 6) Reserves (Note 7) Reserve funds (Note 7) 605,206 42,965 2,151,606 4.356.069 $11.074.162 684,356 640 2,194,774 .3.378,351 $9.377.602 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31.1966 1. ACCOUNTING POLICES The consolidated financial statements of the Corporation are the representation of management prepared in accordance with accounting policies prescribed for Ontario municipalities municipalities by the Ministry of Municipal Affairs. Since precise determination of many assets and liabilities is dependent upon future events, the preparation of periodic financial statements statements necessarily involves the use of estimates and approximations. These have been made using careful judgments. (a) (I) Basis of Consolidation These consolidated financial statements reflect the assets, liabilities, sources of financing and expenditures of the revenue fund, capital fund, reserve funds and reserves and include the activities of all committees of Council and the following following local boards, which are under the control of Council: - Newcastle Public Library Board - Clarke Museum and Archives - Bcwmanville Museum Board - Board of Management for the Bcwmanville Central Business District Improvement Area - Board of Management for the Newcastle Central Business District Improvement Area - Board of Management for the Orono Central Business District Improvement Area - Baseline Community Centre Board - Burketon Community Park Board - Orono Arena and Community Centre Board - Newcastle Arena Board - Selina Park Board -OronoTown Hall Board - Brownsdale Community Centre Board - Newtonville Community Hall Board - Newcastle Community Hall Board - Haydon Community Hall Board - Tyrone Community Centre Board - Zion Park Board - Solina Community Hall Board - Hampton Community Hall Board All Interfund assets and liabilities and sources of financing and expenditures have been eliminated with the exception of loans or advances between the reserve reserve funds and any other fund of the municipality and the resulting Interest income and expenditures. (Il) Non-consolidated Entity These consolidated financial statements do not Include the assets, liabilities, sources of financing and expenditures of the Newcastle Hydro Electric Commission. Commission. (Ill) Accounting for Region and School Board transactions The taxation and other revenues, expenditures, assets and liabilities with respect respect to the operations of the school boards and the Region of Durham are not reflected in the "Municipal Fund Balances" of these financial statements, Overlevies Overlevies (underievies) are reported on the "Consolidated Balance Sheet" as "other current liabilities" ("other current assets"). (Iv)Trust funds and their related operations administered by the municipality are not consolidated, but are reported separately on the Trust Funds Consolidated Consolidated Statement of Continuity and Consolidalea Balance Sheer. (b) Beale of Accounting (accrual) (I) Sources of financing and expenditures are reported on the accrual basis of accounting accounting with the exception of principal charges on long-lerm liabilities which are charged against operations in the periods in which they are paid. (II) The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable measurable as a result of receipt of goods or services and the creation of a legal obligation obligation to pay. (III) Fixed Assets The historical cost and accumulated depreciation for fixed assets are not recorded recorded for municipal purposes, fixed assets are reported as an expenditure on the "Consolidated Statement of Operations" in the year of acquisition. (hr) Capital Outlay to be Recovered In Future Yean "Capital outlay to be recovered in future years," which represents the outstanding outstanding principal portion of unmatured long-term liabilities for municipal expenditures expenditures or capital funds transferred to other organizations, is reported on the "Consolidated Balance Sheer. 2. OPERATIONS OF SCHOOL BOARDS AND THE REGION OF DURHAM Further to Note 1 (a) (iii), the taxation, grants, other revenues, expenditures and overievies (underievies) of the school boards and the Region of Durham are comprised of the following: Taxation and user charges Requisitions Overievies (Underievies) for the year Overievies (Underievies) beginning of year Overievies, end of year 3. TRUST FUNDS SthwIBwift Bate $12,380,865 $ 3,878,987 .12.395.356 3,982.604. 45,509 (3,817) (6.532) iS2l $ 38.977 $ 2.104 Trust funds administered by the municipality amounting to $214,343 (1985 - $140,229) have not been included in the "Consolidated Balance Sheet" nor have their operations been included in the "Consolidated Statement of Operations". 4. LIABILITY FOR VESTED SICK LEAVE BENEFITS Under the sick leave benefit plan, unused sick leave can accumulate and employees may become entitled to a cash payment when they leave the municipality's employment. The liability for these accumulated days, to the extent that they have vested and could be taken in cash by an employee on terminating, amounted to $449,998 (1985 - $399,091) at the end of the year. An amount of $35,637 (1985 - $44,969) has been provided for this past-service liability and is reported on the "Consolidated Balance Sheet", included in reserves. An amount of $9,334 (1985 - $12,003) was transferred from the reserve to assist in financing payments made during the current year and is reported on the "Consolidated Statement of Operations" and is included in "net'ap- propriations to reserves and reserve funds". 5. NET LONG-TERM LIABILITIES (a) The balance of net liabilities reported on the "Consolidated Balance Sheet" is made up of the following: 1986 1985 Total long-term liabilities incurred by the municipality including those incurred on behalf of school boards, other municipalities and the Newcastle Hydro Electric Commission and outstanding at the end of the year amount to $905,017 $996,647 In addition, the municipality has assumed responsibility for the payment of prinicipal and interest charges on certain long-term liabilities issued by other municipalities. At the end of the year, the outstanding principal amount of this liability is 1,447,850 1,657,440 Of the long-term liabilities shown above, the responsibility for payment of principal and interest : ■ charges has been assumed by school boards, the J Newcastle Hydro Electric Commission, and other j„; municipalities. At lhe 1 ehd ol theyear, the outstanding , . ! principal amount of this,liability is (765,734) (977,525) Of the tong-term liabilities shown above, the responsibility for payment of principal and interest charges for tile drainage and shoreline property assistance loans has been assumed by individuals. At the end of the year, the outstanding principal amount of this liability is (295.340) (322.720) Net long-term liabilities, end of year $1.291.793 $1.353.842 (b) Of the net long-term liabilities reported in (a) of this note, $931,088 in principal payments are payable from 1987 to 1991, $227,368 from 1992 to 1996, and $133,337 thereafter and are summarized as follows: 13fi7.la.lS21 1992101998 199710 .. thereafter Fromgeneral municipal revenues $571,764 $ - $ - From benefiting landowners 359.324 227.368 133.337 $23iflfifi 3221366 $133.337 (c) Included in "Net long-term liabilities" on the "Consolidated Balance Sheet is an amount of $491,778 (1985 - $603,990) payable in United States dollars, which was converted into Canadian dollars at tne rate of exchange prevailing when the liability liability was incurred. If the liability is converted into Canadian dollars at the exchange exchange rate prevailing at December 31,1986, the liability would be increased by $150,155 (1985 - $193,982). (d) Approval of the Ontario Municipal Board has been obtained for the long-lerm liabilities liabilities in (a) issued in the name of the municipality. (e) The municipality is contingently liable for long-term liabilities with respect to tile drainage and shoreline property assistance loans, and for those for which the responsibility responsibility for the payment of principal and interest has been assumed by other municipalities, school boards and the Newcastle Hydro Electric Commission. The total total amount outstanding as at December 31, 1986 is $1,061,074 (1985 - $1,300,245) and is not recorded on the "Consolidated Balance Sheet". (f) Included in "Net long-term liabilities" on the "Consolidated Balance Sheet" is a loan of $326,667 (1985 - $350,000) payable to Ministry of Municipal Affairs, and a loan of $140,000 payable to Ontario Hydro under the Ontario Housing Action Program. Program. These loans which relate to the Courtice Storm Water Facilities Project, are interest free and repayable over fifteen years. Payments commenced in 1986. The funds to repay these loans are to be provided from Letters of Credit held by the Town, issued by the developers, pursuant to a development agreement. (g) Included in "Net long-term liabilities" on the "Consolidated Balance Sheet" is a loan of $45,000 payable to Ontario Hydro under the Ontario Housing action Program. This loan relates to the Courtice Storm Water Facilities Project, and is repayable over four years, commencing in 1986. Funds to repay the loan are provided by the Courtice O.H.AP. Reseive Fund. 6, MUNICIPAL FUND BALANCES AT THE END OF THE YEAR The balances on the "Consolidated Statement of Operations' of municipal equity of $648,171 (1985 - $684,996) at the end of the year is comprised of the following: For general reduction of taxation $446,839 For general reduction of user charges 163,891 For benefiting landowners related to special charges and special areas (5,524) Funds available for the acquisition of fixed assets 42.965 {64Î171 1985 $552,619 139,083 (7,346) 640 $684.996 7. RESERVES AND RESERVE FUNDS i ne ipra Balances of reserves and reserve funds of $2,151,606 (1985 - $2,194,77- and $4,356,069 (1985 - $3,378,351), respectively, are made up of the following: Reserves set aside for specific purpose tty Council for Working capital Tax write off Inventory and prepaid expense Sick leave Other cultural Acquisition of fixed assets Building and Energy Conservation 1986 1985 $ 753,035 $ 799,335 187,297 60,006 161,680 197,658 35,637 44,969 31,428 27,635 982,113 1,065,171 ± 416 $2.151.606 $2.194.774 Council for Courtice O.H.AP. Recreation programs and facilities Debenture repayment Industrial development ' Other cultural Acquisition of fixed assets $ 578,089 $ 561,460 88,195 10,378 30,076 27,067 325,545 339,758 69,176 59,995 Z115S5 960.027 $1,804,666 $1.958.685 Reserve funds set aside for specific purpose by legislation, regulation or agreements Park purposes Lot levies Loans under Ontario Home Renewal Plan Park facilities $526,371 $427,867 1,926,882 833,176 - 79,864 . „ 96.150 78.759 2 551 403 1.419666 $4.356.069 $3-375.351 S. ONTARIO HOME RENEWAL PROGRAM Effective January 1st, 1985, amendments to regulations required that the Ontario Home Renewal Program funds be accounted for as a trust fund and no longer as a reserve reserve fund. With the approval of the Ministry of Municipal Affairs, the related transfer from Reserve Funds to Trust Funds was delayed until January 1,1986. This transfer of the fund balance has reduced the total opening reserve fund balances by $79,864, and is not reflected in the "Consolidated Statement of Operations". The 1986 transactions transactions for this Program are reflected in the financial statements for the trust funds of the municipality. The 1986 net appropriations to reserves and reserve funds on the "Consolidated Statement of Operations" will not equal the difference between the total opening and closing balances by $79,864, the amount of the transfer on January 1 si, 1986. 9. CHARGES FOR NET LONG-TERM LIABILITIES Total charges for the year for net long-term liabilities which are reported on the "Consolidated Statement of Operations" are as follows: 1986 1 985 Principal payments $248,050 $191,672 . Interest . 76.029 87.915 $324.079 $279.587 The charges for long-term liabilities assumed by the non-consolidated entities or by individuals individuals in the case of tile drainage and shoreline property assistance loans are not reflected reflected in these statements. 10, AGREEMENT CONSOLIDATED STATEMENT OF CURRENT OPERATIONS YEAR ENDED DECEMBER 31.1986 SOURCES OF FINANCING Budget 1986 Actuel 1986 Actuel 1985 Net municipal taxation $ 5,663,760 $ 5,747,114 $ 5,293,298 User charges Grants Gwernment of Canada 1,411,194 1,724,176 1,471,351 5,675 37,625 32,895 Province of Ontario Other 2,185,627 2,052,680 1,989,303 Investment income 305,764 389,765 329,654 Penalty and interest on taxes 240,000 274,586 246,854 Donations - 15,443 10,124 Other 7.500 1215 1.444 9,819,520 10,242,604 9,374,923 MUNICIPAL FUND BALANCES AT BEGINNING OF YEAR, TO BE USED TO OFFSET (TO BE RECOVERED FROM) TAXATION OR USER CHARGES Town 464,259 552,619 474,714 Library - 9,627 91 Special areas - (7,346) (23,807) Recreation, community centres and arena boards 116,717 116,717 81,503 Central business district improvement areas 16,'384 16,385 5,164 Museums (3.646) . (3.048) --112221 TOTAL FINANCING AVAILABLE DURING THE YEAR $10.413.234 $10.926.960 $9.911.256 APPLIED TO General government $ 1,455,893 $ 1,249,363 $ 1,202,335 Protection to persons and property 983,330 951,525 878,402 Transportation services 3,134,936 3,509,418 3,095,745 Environmental services * 301,256 328,981 259,710 Health sen/ices 95,124 90,076 82,463 Recreation and cultural services 2,475,918 2,391,276 2,341,824 Planning and development 458.277 396.075 365.026 Ontario Hydro 8,904,734 8,916,714 In connection with the Darlington Generating Station Project Ontario Hydro agreed to contribute approximately $3 million plus accrued interest towards the cost ot roads, water, sewer services and other expenditures incurred by the municipality during the construction period. These funds are held by Ontario Hydro in two separate accounts, one account entitled Station Account "A" relating to the construction of water mains, sanitary sewers and storm sewers and one entitled Station Account "B" relating to other financial obligations obligations under the above agreement. The residual amount, if any, in Station Account "A*at the termination of this agreement shall not be paid to the Town. The residual amount, if any, in Station "B" at the termination of this agreement shall be paid to the Town, subject subject to certain specified conditions being met ty the Town. The balance of the funds, including interest earned less payments made to the Town of Newcastle to date, amounted to approximately $2,500,000 in account "A" and $1,500,000 in account "B" at December 31,1986 (1985 - Account "A" - $2,300,000/ Account "B" - $1,600,000). 11. CONTRACTUAL COMMITMENT NET APPROPRIATIONS TO OTHER FUNDS 1,348,372 1,405,040 MUNICIPAL FUND BALANCES AT END OF YEAR, TO BE USED TO OFFSET TO BE RECOVERED FROM) TAXATION OR USER CHARGES Town - 446,839 Library - 3,790 Special areas - (5,524) Recreation, community centre and arena boards 143,578 143,551 Central business district improvement areas 16,207 16,207 Museums 343 343 TOTAL APPLICATIONS DURING THE YEAR $10.413.234 $10.926.960 8,225,505 1,001,395 552,619 9,627 (7,346) 116,717 16,385 (3.646) $.9,911256 Subsequent to the end of the year, the municipality signed a contract for the construction construction of a new administrative centre in the amount of $4,650,000. This project is to be financed from a combination of debenture proceeds and municipal funds. Ontario Municipal Municipal Board approval has been obtained for this project. AUDITORS' REPORT ■To the Members of Council, Inhabitants and Ratepayers of the Corporation of the Town of Newcastle: " We have examined the consolidated balance sheet of the trust funds of the Corporation of the Town of Newcastle as at December 31,1986 and the consolidated statement of continuity continuity of trust funds for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests and other procedures procedures as we considered necessary in the circumstances. In pur opinion, these consolidated financial statements present fairly the financial position of the trust funds for the Corporation of the Town of Newcastle as at December 31,1986 and the continuity of trust funds for the year then ended in accordance with accounting principles disclosed in Note 1 to the financial statements applied on a basis consistent with that of the preceding year. Deloille Haskins & Sells ./ Chartered Accountants : • April 29,1987 Licence No. 1113 TRUST FUNDS CONSOLIDATED STATEMENT OF CONTINUITY YEAR ENDED DECEMBER 31.1986 Total Bowmanvfle Cemetery Perpetual Caw Bondheed Cemetery Perpetual Caw Vanderveer LSBQf Montague Trust Ontario Renewal Program (Note 2) BALANCE, AT THE BEGINNING OF YEAR $220.093 $113.740 $10.997 $ 1.434 (Note 2) $14.1)59 $ 79.864 CAPITAL RECEIPTS Cemeteries 8,202, 7,064 1,138 INTEREST EARNED 17.780 9.595 686 219 1.585 5.695 EXPENDITURES Contributions to Cemeteries Other 25.982 10,281 21.451 16.659 9,595 L82A 686 219 L5fi5 5.695 21.451 31.732 9.595 666 21.451 BALANCE, END OF YEAR $214.343 $120.804 $12.135 L1652 $ 15.643 $ 64.108 CONSOLIDATED BALANCE SHEET DECEMBER 31.1969 Bowmanvfle Bondhead Ontario Cemetery Cemetery tow Perpetual Perpetual Vanderveer Montague Renewal Total Caw Caw leasx Trust Program (Note 2) ASSETS CASH $ 72,279 $ 7.884 $ 754 $ 653 $ 2.253 160222 ACCOUNTS RECEIVABLE 3,514 ' 3 514 LOANS RECEIVABLE 20,382 20382 INVESTMENTS AT COST 6,000 6,000 Provincial Investment Certificates 132.691 112.920 5.381 1.000 13.390 ---- 162.587 112.920 11.381 . 1.Q0Q 13.390 23.896 TOTAL ASSETS $234.863 $120.804 $12.135 $-1,653 $ 15.643 $ 84.628 LIABILITIES AND FUND BALANCES DUE TO RESERVE FUNDS $ 20.520 $ 1 L $ i - $ 20.520 FUND BALANCES Capital 213,690 120,804 12,135 1,000 15,643 64,108 Income 653 - --- - 652 . 214.343 120.804 12.135 -1652 15.643 64.108 $234.863 $120.804 $12.135 $ 1.653 $-15.643 $, 84,626 NOTES TO THE CONSOLIDATED TRUST FUNDS DECEMBER 31.1986 1. ACCOUNTING POLICY Basis of Accounting: The consolidated trust funds of the Corporation of the Town of Newcastle have been reported on the accrual basis of accounting which recognizes revenues as they become available and measurable; expenditures are recognized as they are Incurred and measurable measurable as a result of receipt of goods or services and the creation of a legal obligation to pty. 2. ONTARIO HOME RENEWAL PROGRAM • LOANS RECEIVABLE Effective January 1st, 1985, amendmonls lo regulations required that the Ontario Home Renewal Program funds be accounted for as a Trust Fund, and no longer as a reserve reserve fund. With the approval of the Ministry of Municipal Affairs the related transfer ol funds was delayed until January 1,1986. Under the Ontario Home Renewal Program, loans may be forgiven in whole or in part depending on the specific circumstances of the related loan agreement Forgiveness of the loans is earned over the term ol the respective respective loan and is recorded in tne year forgiven.