Capital Budget Policy

(a)    Interpretation

(i)    All references in this policy to an employee, official, officer or other representative of the Library are deemed to include any designate, deputy, or anyone else properly authorized in writing by the Board or Chief Librarian to act in that person’s position.

(ii)    Where a position title or name is changed following the adoption of this policy, due to a re-organization of the Library’s functions, or for any other reason, the Chief Librarian will have the authority to amend this policy to reflect such change or re-organization.

(iii)    The Chief Librarian will have the authority (in consultation with the Director of Corporate Services and Facilities) to approve (in writing) any request from a Library Director to sub-delegate any authority granted in this policy to a Library Director.

(b)    Definitions – In this policy, the following terms have the following meanings:

Annual Budget Report is the report to Council that contains the Annual Operating Budget and Capital Budget.

Annual Capital Expenditure Budget means the aggregate Budget for all of the City’s approved Capital Expenditures (including the current year portion for those relating to all approved Multi-Year Capital Project Budgets) for a given year including those Capital Projects being undertaken for the Board and those being undertaken in the name of the City for others.

Annual Operating Budget has the meaning given in the Operating Budget Policy.

Board means the Vancouver Public Library Board.

Budget means the amount approved by Council as “the approved budget” which is referred to in the Vancouver Charter as the “adoption of estimates” in each year (Sections 200, 202, and 219).

Budget Increase means any increase to any Capital Project Budget which is not a Reallocation. This is typically only applicable where a Reallocation is not being sought and instead additional or new (previously unidentified) Capital is being sought to fund the Budget Increase.

Capital means any and all amounts received by the City as Utility Capital, Voter-Approved Capital, Community Amenity Contributions, Development Cost Levies, Grant Capital, or General Levy Capital (as those terms are defined in the City’s Capital Budget Policy).

Capital Budget means the City’s overall Budget relating to Capital, namely the Annual Capital Expenditure Budget and the Multi-Year Capital Budget.

Capital Project Budget means the Capital estimates for a single Capital Project (including the Multi-Year Capital Project Budget and the applicable portion of the Annual Capital Expenditure Budget for the related Capital Project), as determined by and approved by the Director of Finance from time to time (and then designated with a segregated project code in the City’s financial/accounting system).

Capital Expenditures are expenditures incurred directly and necessarily in relation to a Capital Project, as determined by the Director of Finance.

Capital Plan means the City’s four-year financial plan for investments in the City’s facilities and infrastructure. Capital Plans are developed in four-year terms coinciding with municipal elections held every four years (at which new voter-approved borrowing authority is usually also obtained). The Capital Plan states the implementation and funding strategies for Capital Projects and is developed through a consultative process involving Council, the public, the Board and others.

Capital Project means a project or program (including for certainty a Multi-Year Capital Project) that may span over more than one fiscal year for the planning, acquisition, construction, expansion, renovation, or replacement of City facilities, infrastructure, or other capital assets (as determined by the Director of Finance). A Capital Project may be a one-time event, as in the construction of a new community centre or library, or a recurring capital program, as in street paving or facility roof replacements.

Chief Librarian means the person appointed by the Board as the Chief Librarian pursuant to the Library Act.

City means the City of Vancouver.

City Manager means the person appointed by Council pursuant to section 162A of the Vancouver Charter as the City Manager.

Contingency means the proportion of a Capital Project Budget that ‘allows for items, conditions or events for which the state, occurrence and/or effect is uncertain and that experience shows will likely result, in the aggregate, in additional cost.’ [Source for quoted material: AACE International, Association for the Advancement of Cost Engineering]. There are two categories of contingency:

(i)    General Cost Contingency: the category of contingency for expected but unclassified expenditures;

(ii)    Contingency for Unknown Risks: the category of contingency for unexpected risks.

Council means the elected council of the City of Vancouver.

Director of Corporate Services and Facilities means the person appointed by the Chief Librarian as the Library’s chief financial officer.

Director of Finance means the person appointed by Council pursuant to section 210 of the Vancouver Charter as the Director of Finance.

FP&A Director means any City employee designated as a “Financial Planning and Analysis Director” by the Director of Finance from time to time.

Five-Year Financial Plan is based on a set of financial sustainability guiding principles and financial health targets and is used by the City to guide the allocation of resources needed to fund operating costs and capital investments.  The City’s Five-Year Financial Plan is not an approved budget; Council approves the budget for the upcoming year as part of the annual budget process.

Library Director An employee appointed by the Chief Librarian as a library director, where the Chief Librarian has expressly delegated to that employee (or employee’s position) any authority granted in this policy.

Multi-Year Capital Budget means the portion of the Capital Budget referencing and covering the aggregate of the Multi-Year Capital Project Budgets.

Multi-Year Capital Project means a Capital Project requiring the expenditure of Capital over more than one year.

Multi-Year Capital Project Budget means the Capital Project Budget for a Multi-Year Capital Project.

Operating Expense has the meaning given in the Operating Budget Policy.

Project Manager means the Library or City employee who is expressly designated by the Chief Librarian as the project manager for a Library Capital Project and is therefore responsible for managing a particular Capital Project for the Library from its initiation to completion. In the absence of any express designation, the Project Manager will be deemed to be the Chief Librarian.

Reallocation means a transfer of an amount from an approved Capital Project Budget to another approved Capital Project Budget.

1.    Requirement to set a budget:

1.1.    The City’s Capital Budget process is the primary tool by which the Library and the City seek and then obtain Council approval of Multi-Year Capital Budgets and Annual Capital Expenditure Budgets. Upon Council’s approval each year of the Capital Budget, this policy and the City’s Capital Budget Policy provide the delegated authority and framework for Library and City staff to proceed with Capital Expenditures related to the Library (subject to other applicable policies such as the Procurement Policy, the Operating Budget Policy, and Expenditure Authority and Financial Control Policy).

1.2.    The Capital Budget is important in fostering and maintaining public accountability and transparency, and provides detailed information about each Capital Project, including cost categories, funding sources, and outcomes that are clearly identifiable and measurable.

1.3.    The City’s Capital Budget process has been developed to ensure assets and investments are managed comprehensively, with rigor and transparency, in a manner that ensures the City achieves value for money, and that staff resources are used efficiently.

1.4.    Capital Projects can only be initiated once Council has approved both the Capital Project and the Capital Project Budget. An approved Capital Project Budget is required prior to any expenditure or commitment being made on any Capital Project.

1.5.    In addition to the requirements and guidance contained in this policy, all Library staff must comply with the Library’s Procurement Policy, the Operating Budget Policy and the expenditure limits and controls outlined in the Expenditure Authority and Financial Control Policy.

2.    Goals

2.1.    Assisting the City with an annual Capital Budget process that:

• Ensures Capital Projects only proceed in accordance with Capital Project Budget approvals ;
• Ensures best value in capital investments for the City and its citizens;
• Fosters and maintains public accountability and transparency;
• Applies best practices and strong financial controls.

2.2.    Ensure compliance with the Library Act, Vancouver Charter, City By-laws, and this and the Library’s and City’s other budget and expenditure policies.

2.3.    The Library acknowledges that the City includes a Five-Year Financial Plan in the Annual Budget Report to Council. The Five-Year Financial Plan is included in the Annual Budget Report for information only and is not an approved budget; Council approves the Capital Budget for the upcoming year as part of the annual budget process.

3.    References

3.1.    This policy incorporates relevant elements from the Procurement Policy, the Operating Budget Policy and the Expenditure Authority and Financial Control Policy.

4.    Authority to Commence Capital Expenditures

4.1.    All Capital Expenditures authorized under this policy require compliance with this and other applicable policies as set out in Section 4.2.

4.2.    Library and City staff have the legal authority to commence Capital Expenditures only when:

a)    The Capital Project has been approved by Council,

b)    The Capital Project Budget is approved by Council, as evidenced by its approved Multi-Year Capital Project Budget (if it is a Multi-Year Capital Project) and its inclusion in the Annual Capital Expenditure Budget,

c)    Library and City staff have complied with

i.    the Library’s Procurement Policy and the City’s procurement policy, as applicable (where the Capital Project involves the procurement of goods, services (including consulting services) and construction), and  

ii.    The Expenditure Authority and Financial Controls Policy, and

iii.    All other applicable Library and City policies.

4.3.    Special rules for Multi-Year Capital Projects:

In addition to the requirements in section 4.2, it is required that

a)    Prior to bringing a proposed Multi-Year Capital Project and the related Multi-Year Capital Project Budget to Council for approval, the Library must review the associated Operating Expense implications for current and future Annual Operating Budgets to ensure that:

i.    Annual Operating Budget capacity has been examined; and

ii.    the associated Annual Operating Budget impacts have been or will be considered in the Five-Year Financial Plan.

b)    The Multi-Year Capital Project Budget for the Multi-Year Capital Project has sufficient funds and sufficient General Cost Contingency and/or Contingency for Unknown Risks to provide for the payment of any and all Capital Expenditures anticipated for the Multi-Year Capital Project.

c)    A Multi-Year Capital Project Budget related to the Library is to be recommended to Council for approval only when Capital funding for the total Multi-Year Capital Project Budget,

i.    can be obtained from available unallocated Capital funding within the current Capital Plan; or

ii.    legally eligible Capital funding has been secured and can be added to the current Capital Plan; or

iii.    legally eligible Capital can be reallocated from an another Capital Project Budget to the proposed Multi-Year Capital Project Budget; or

iv.    legally eligible Capital from Capital Project Budget closeout surpluses can be transferred to the proposed Multi-Year Capital Project Budget; and

v.    the Director of Finance has confirmed and approved (in consultation with the City Solicitor where necessary) each proposed source of the Capital can be legally utilized in the proposed manner and has directed the Chief Librarian on how each source of Capital must be spent so as to be in strict accordance with the legal requirements and rules applicable to each applicable proposed source of Capital.

5.    Contingency

5.1    All Capital Projects for which the project scope or cost estimates includes some level of uncertainty must include, as applicable, a General Cost Contingency for identified risks (e.g., expected but unclassified expenditures) and/or a Contingency for Unknown Risks for unexpected risks.

5.2    The Contingency for Unknown Risks reflects the level of uncertainty; the greater the uncertainty, the greater the Contingency for Unknown Risks relative to the total project budget. For example, a Capital Project in an early planning and design phase would be expected to have a larger Contingency for Unknown Risks than a Capital Project in the construction phase with a fixed-price contract.

5.3    Use of a General Cost Contingency requires the approval of the Project Manager.

5.4    The appropriate amount for a General Cost Contingency is to be decided by the Project Manager requesting the Capital Project Budget.

5.5    Use of a Contingency for Unknown Risks requires the approval of the Chief Librarian and the Director Corporate Services and Facilities (or their assigned delegates), in consultation with the Director of Finance.

6.    Adjustments to Capital Project Budgets

6.1    Adjustments to Capital Project Budgets are subject to two different review process under this policy, depending on the type of proposed change to an existing approved Capital Project Budget:

a)    Change which affects the Multi-Year Capital Project Budget, and

b)    Change which does not impact Multi-Year Capital Project Budget and
    impacts only the Annual Capital Expenditure Budget.

7.    Changes Which Impact a Multi-Year Capital Project Budget

7.1    This section applies to any request by the Library for a Budget Increase or Reallocation involving one or more Multi-Year Capital Project Budgets.

7.2    A Budget Increase as well as a Reallocation require approval from the Director of Finance that the proposed source of Capital is available and is legally allowed to be used for the proposed purpose in accordance with Section 7.3:

7.3    In reviewing any request for a Budget Increase or Reallocation, the Director of Finance will ascertain whether or not the proposed source of Capital for the proposed Budget Increase or Reallocation can be obtained from:

i.    Available and unallocated Capital from the current Capital Plan; or

ii.    legally eligible new Capital that has been secured and can be added to the current Capital Plan; or

iii.    legally eligible Capital that can be reallocated from another Capital Project Budget to the proposed Capital Project Budget; or

iv.    legally eligible Capital from Capital Project Budget closeout surpluses that can be legally transferred to the proposed Capital Project Budget; and

v.    the Director of Finance has confirmed and approved (in consultation with the City Solicitor where necessary) that each proposed source of the Capital can be legally utilized in the proposed manner and has directed the Chief Librarian on how each source of Capital must be spent so as to be in strict accordance with the legal requirements and rules applicable to each source of Capital.

7.4    Subject always to compliance with Section 7.3, where a Budget Increase (of any amount) or a Reallocation (over $500,000) is being sought, such Budget Increase or Reallocation requires approval from the Chief Librarian, Director Corporate Services and Facilities, FP&A Director, Director of Finance, and City Manager in the sequence noted in rows 3, 4 and 5 of Table 1 (1st, 2nd, 3rd, 4th and 5th) with the final approval from Council through:

a)    The annual Capital Budget process;

b)    The quarterly Capital Budget adjustment process; or

c)    A Capital Project-specific Council authorization occurring outside of the annual and quarterly processes referred to in (a) and (b) above.

In addition, the Board will be informed of this Budget increase or Reallocation.

7.5    Subject always to compliance with Section 7.3, where a Reallocation (of more than $200,000 but no greater than $500,000) is being sought, the Reallocation requires approval from the Chief Librarian, Director Corporate Services and Facilities, FP&A Director, and Director of Finance in the sequence noted in row 2 of Table 1 (1st, 2nd, 3rd and 4th) with the final approval from the City Manager, and can only be approved if such Reallocation does not increase the Multi-Year Capital Budget.

7.6    Subject always to compliance with Section 7.3, where a Reallocation (of no more than $200,000) is being sought, the Reallocation requires approval from the Chief Librarian or Director Corporate Services and Facilities as noted in row 1 of Table 1 and can only be approved if such Reallocation does not increase the Library’s portion of the Multi-Year Capital Budget.

7.7    Subject always to compliance with Section 7.3, where a change to one or more of the sources of Capital funding associated with any Capital Project Budget is being sought, such change requires approval from the Chief Librarian, Director Corporate Services and Facilities, FP&A Director, Director of Finance, and City Manager in the sequence noted in row 6 of Table 1 (1st, 2nd, 3rd, 4th and 5th) with the final approval from Council through:

a)    The annual Capital Budget process;

b)    The quarterly Capital Budget adjustment process; or

c)    A Capital Project-specific Council authorization occurring outside of the annual and quarterly processes referred to in
d) and (e) above.
 
Table 1 - Multi-Year Capital Project Budget Adjustments Approval Thresholds [PDF Link]
 
8.    Changes Which Impact an Annual Capital Expenditure Budget

8.1    This section applies to any request by the Library for a Budget Increase or Reallocation which does not involve a change to any Multi-Year Capital Project Budgets.

8.2    Any Budget Increase (of any amount) to the Annual Capital Expenditure Budget requires approval from the Chief Librarian, Director Corporate Services and Facilities, FP&A Director, Director of Finance, and City Manager in the sequence noted in row 3 of Table 2 (1st, 2nd, 3rd, 4th and 5th) with the final approval from Council through:

a)    The annual Capital Budget process;

b)    The quarterly Capital Project Budget adjustment process; or

c)    A Capital Project-specific Council authorization occurring outside of the annual and quarterly processes referred to in (a) and (b) above.

        In addition, the Board will be informed of this Budget Increase.

8.3    A Reallocation (of more than $200,000 per Reallocation) between existing Annual Capital Expenditure Budgets requires approval from the Chief Librarian, Director Corporate Services and Facilities, FP&A Director, and Director of Finance in the sequence noted in row 2 of Table 2 (1st, 2nd, 3rd and 4th) with the final approval from the City Manager, and can only be approved if such Reallocation does not result in a net increase to the Annual Capital Expenditure Budget.

8.4    A Reallocation (of no more than $200,000) requires approval from Chief Librarian or Director Corporate Services and Facilities as noted in row 1 of Table 2 and can only be approved if such Reallocation does not result in a net increase to the Library’s portion of the Annual Capital Expenditure Budget.

Table 2 - Annual Capital Expenditure Budget Adjustments Approval Thresholds [PDF Link]
 
9.    Special rule for Multi-Year Capital Project Budgets for Capital Grants by the City

9.1    The Library acknowledges that Multi-Year Capital Project Budgets for capital grants by the City are managed at an overall grant program level. In the event that a grant recipient is unable to satisfy conditions or subjects attached to the grant disbursement, or for any other reason the grant is cancelled prior to disbursement or refunded due to non-compliance, the grant funding can only be allocated to another eligible organization within the grant program if the requisite approval by 2/3’s vote of Council as required by Section 206 of the Vancouver Charter is first obtained.

10.    Completed Capital Projects

10.1    The Library will comply with the requirements for completed Capital Projects set out in the City’s Capital Budget Policy.

10.2    A completed Capital Project funded by any funding source other than Voter-Approved Capital (as defined in the City’s Capital Budget Policy), with a budget surplus or deficit up to $200,000 requires the Chief Librarian or Director Corporate Services and Facilities approval to close out.

• Operating Budget
• Procurement
• Expenditure Authority and Financial Control (City Policy)

LIBRARY ACT

[RSBC 1996] CHAPTER 264

Budget and financing
10(1) On or before March 1 in each year, the library board must prepare and submit to the municipal council its annual budget for providing library service in the municipality.
(2) The municipal council must approve, with or without amendment, the budget submitted to it under subsection (1).
(3) At the request of the library board, the municipal council may approve an amendment to the approved budget.
(4) The municipal council must include in the municipality's annual budget a sum sufficient to finance the library board's approved budget.
(5) The municipality must pay to the library board the sum included in the annual budget and the payments must be made on the dates scheduled by the library board and the municipality.

Expenditures and financial statements
11 (1) The library board has, subject to the approved budget, exclusive control over the expenditure of
(a) all money provided by the municipal council for library purposes,
(b) all money given to the library board,
(c) the revenue derived from any source, including
(i) fees,
(ii) fines, and
(iii) money recovered by the library board for detention, damage or loss of library materials, and
(d) all money received by the library board under an agreement to provide library service.
(2) The library board must provide to the municipality annual financial statements that have been audited in the same manner and at the same time as the financial statements of the municipality.

Excerpt from Guidelines on the Relationship Between Vancouver City Council and Vancouver Public Library Board (2008)

Introduction

The relationship between the City of Vancouver and Vancouver Public Library is predicated upon a common understanding that:

Vancouver Public Library is a separate legal entity governed under the Library Act of BC

The Library Board has sole authority for establishing policy governing the operations of the Library

The Vancouver Public Library will, where appropriate, adhere to Council policies. Any financial policies will be within the authority limits set by Council.

City Council approves the Library’s operating and capital budgets

5. b) Finance

The Library will participate in the annual operating budget process.

The Library will adhere to City policy regarding operating and capital budget reporting and transfer authorities. The Library Board will include plans for new or revised services in its operating budget presentation to Council but also may report to Council on such items at other times of the year. Operating efficiencies will always be sought and the Library will inform Finance of the reallocation of savings to other uses.

The Library’s Director of Corporate Services will collaborate closely with City staff on financial matters including the preparation of budget submissions and improved budget controls. The City will provide a variety of financial and other services to the Library including but not limited to: cheque production, periodic audits, processing insurance claims, risk management assessment, inventory control etc.

The City’s Internal Audit department will review the Library’s financial statements annually and report their findings to the Library Board.

The Library Board’s purchasing policies will follow City policy and practice for awarding contracts.