city of estevan...city of estevan notes to the financial statements for the year ended december 31,...

City of EstevanConsolidated Financial Statements

December 31, 2016

City of EstevanContents

For the year ended December 31, 2016

Page

Management's Responsibility

Auditors' Report

Financial Statements

Statement 1 - Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Statement 2 - Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Statement 3 - Statement of Changes of Net Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Statement 4 - Statement of Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Notes to the Financial Statements………………………………………………………….……. 6

SchedulesSchedule 1 - Schedule of Taxes and other Unconditional Revenue . . . . . . . . . . . . . . . . . . . . 16

Schedule 2 - Schedule of Operating and Capital Revenue by Function . . . . . . . . . . . . . . . . . 17

Schedule 3 - Schedule of Expenses by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Schedule 4 - Schedule of Current Year Segment Disclosure by Function . . . . . . . . . . . . . . . 24

Schedule 5 - Schedule of Prior Year Segment Disclosure by Function . . . . . . . . . . . . . . . . . 25

Schedule 6 - Schedule of Tangible Capital Assets by Object. . . . . . . . . . . . . . . . . . . . . . . . . 26

Schedule 7 - Schedule of Tangible Capital Assets by Function. . . . . . . . . . . . . . . . . . . . . . . . 27

Schedule 8 - Schedule of Accumulated Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Schedule 9 - Schedule of Mill Rates and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Schedule 10 - Schedule of Council Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Auditors' Report

To the Council of the City of Estevan:

Basis for Qualified Opinion

Opinion

Estevan, Saskatchewan

July 17, 2017 Chartered Professional Accountants

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

The City is required to accrue landfill closure and post-closure costs. Since we have been unable to verify information with respect to these costs and associated liabilities, we have not been able to determine the related effect on assets, liabilities, expenses, opening accumulated surplus and accumulated surplus for the year ended December 31, 2016.

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of the City of Estevan as at December 31, 2016 and the results of its operations, changes in net assets and cash flows for the year then ended in accordance with Canadian public sector accounting standards.

We have audited the accompanying consolidated financial statements of the City of Estevan, which comprises the consolidated statement of financial position as at December 31, 2016, and the consolidated statement of operations, change in net debt, cash flows and accompanying schedules for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

City of Estevan

Consolidated Statement of Operations

For The Year Ended December 31, 2016 Statement 2

2016 Budget 2016 Actual 2015 Actual

Revenue

Taxes and other unconditional revenue (Schedule 1) 20,468,184 20,346,948 19,072,667

Fees and charges (Schedule 4, 5) 9,159,916 9,735,943 11,307,125

Conditional grants (Schedule 4, 5) 828,500 2,446,209 3,186,096

Tangible capital asset sales - loss (Schedule 4, 5) - 1,287 (650,579)

Land sales - gain (Schedule 4, 5) - 297,169 1,528,738

Investment income and commissions (Schedule 4, 5) 5,000 17,435 134,241

Other revenue (Schedule 4, 5) 327,000 349,909 2,902,041

Total Revenue 30,788,600 33,194,900 37,480,329

Expenses

General government services (Schedule 3) 4,673,219 6,637,761 6,043,348

Protective services (Schedule 3) 5,737,891 5,263,457 5,245,476

Transportation services (Schedule 3) 3,964,613 5,836,849 6,546,722

Environmental and public health services (Schedule 3) 1,019,478 1,037,357 1,628,405

Planning and development services (Schedule 3) 407,000 431,946 455,738

Recreation and cultural services (Schedule 3) 5,131,862 6,303,289 6,162,980

Utility services (Schedule 3) 3,005,604 4,692,990 5,256,808

Total Expenses 23,939,667 30,203,649 31,339,477

Surplus of Revenues over Expenses before Other Capital Contributions 6,848,933 2,991,251 6,140,852

Provincial/Federal capital grants and contributions (Schedule 4, 5) 988,876 1,009,886 1,128,011

Annual Surplus 7,837,809 4,001,137 7,268,863

Accumulated Surplus, Beginning of Year 81,969,547 81,969,547 74,700,684

Accumulated Surplus, End of Year 89,807,356 85,970,684 81,969,547

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City of Estevan

Consolidated Statement of Change in Net Debt

For The Year Ended December 31, 2016 Statement 3


7,837,809 4,001,137 7,268,863

(Acquisition) of tangible capital assets (6,770,793) (6,669,014) (9,322,111)

Amortization of tangible capital assets - 5,403,814 5,078,588

Proceeds on disposal of tangible capital assets - 12,000 -

(Gain) loss on the disposal of tangible capital assets - (1,287) 650,579

Surplus (Deficit) of capital expenses over expenditures (6,770,793) (1,254,487) (3,592,944)

Net consumption (acquisition) of supplies inventories - 3,284 (224,215)

Net acquisition of prepayments / deferred charges - (218,198) (24,101)

Increase in patronage equity - (2,637) (6,911)

Surplus of expenses of other non-financial over expenditures - (217,551) (255,227)

Decrease in Net Debt 1,067,016 2,529,099 3,420,692

Net Debt - Beginning of Year (28,420,930) (28,420,930) (31,841,622)

Net Debt - End of Year (27,353,914) (25,891,831) (28,420,930)

Surplus

4

City of EstevanConsolidated Statement of Cash FlowFor The Year Ended December 31, 2016 Statement 4

2016 2015

Cash provided by (used for) the following activities

Operating:

Annual surplus 4,001,137 7,268,863

Amortization 5,403,814 5,078,588

Contributed assets - (2,543,315)

(Gain) loss on disposal of tangible capital assets (1,287) 650,579

9,403,664 10,454,715

Change in net financial and non financial assets

Taxes Receivable - municipal (292,696) (223,059)

Other accounts receivables (11,212) (162,293)

Land for resale 249,080 105,156

Local improvement receivable 337,098 370,398

Accounts payable 192,593 (329,508)

Utility deposits 5,038 25,166

Deferred revenue (67,800) (121,500)

Stock and supplies for use 3,284 (224,215)

Patronage equity (2,637) (6,911)

Prepayments and deferred charges (218,198) (24,102)

Net cash from operations 9,598,214 9,863,847

Capital:

Acquisition of capital assets (7,218,962) (6,778,796)

Proceeds from the disposal of capital assets 12,000 -

Net cash used for capital (7,206,962) (6,778,796)

Financing:

Long-term debt issued 1,600,000 5,000,000

Long-term debt and capital lease obligations repaid (3,244,553) (4,445,393)

Other financing - bank indebtedness repaid - (1,965,005)

Net cash from financing (1,644,553) (1,410,398)

Increase in cash resources 746,699 1,674,653

Cash - Beginning of Year 1,939,954 265,301

Cash - End of Year 2,686,653 1,939,954

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City of EstevanNotes to the Financial StatementsFor The Year Ended December 31, 2016

1. Significant accounting policies

a)

Entity

Estevan Police Department

Souris Valley Aquatic & Leisure Centre

c)

d) Revenue Recognition: The City recognizes a government transfer as revenue when the transfer is authorized and all

eligibility criteria, if any, have been met. A government transfer with stipulations giving rise to an obligation that meets

the definition of a liability is recognized as a liability. In such circumstances, the City recognized revenue as the liability

is settled. Transfers of non-depreciable assets are recognized in revenue when received or receivable.

The City recognizes externally restricted inflows as revenue in the period the resources are used for the purposes specified in

accordance with an agreement or legislation. Until this time, the City records externally restricted inflows in deferred revenue.

The City recognizes taxes as assets and revenue when they meet the definition of an asset; are authorized by a legislature,

council, or legislative convention; and the taxable event has occurred. Taxes related to unreported taxable events or unidentified

economic events that would be taxable events if disclosed or known to the government are recognized when such events are

known, the related taxes are quantifiable, and amounts are collectible. Tax revenue is initially measured at management's best

estimate of the amount resulting from the original taxable event in accordance with tax legislation. The related tax receivable

is initially recognized at its realizable value at the date of the acquisition. At each financial statement date, the City evaluates

the tax receivable for collectability and records a valuation allowance to best reflect the tax receivable at its net recoverable

amount, if necessary.

e) Expenditure recognition: Expenditures are recognized in the period the goods and services are acquired and a

liability is incurred. They also include grants and contributions made when no direct goods or services were acquired.

Expenditures include amounts for interest on debt outstanding but do not include any amounts for principal repayments.

The City of Estevan ("the City") is a municipality in the Province of Saskatchewan and operates under provisions of the

Municipal Government Act. The financial statements of the City are prepared by management in accordance with the

local government accounting standards established by the Public Sector Accounting Board of the Chartered

Professional Accountants of Canada. Significant aspects of the accounting policies are as follows:

Fees and charges: Certain user charges and fees are collected for which the related services have yet to be performed.

Revenue is recognized in the period when the related expenses are incurred or services performed.

b)

Basis of accounting: The financial statements are prepared using the accrual basis of accounting. The accrual basis of

accounting recognizes revenue as they become available and measurable; expenses are recognized as they are incurred and measurable as a result of the receipt of goods and services and the creation of a legal obligation to pay.

Reporting Entity: The financial statements presents the assets, liabilities and flow of resources of the municipality.

The entity is comprised of all of the organizations that are owned or controlled by the municipality and are, therefore, accountable to the Council for the administration of their financial affairs and resources. Entities included in these

financial statements are as follows:

All inter-organizational transactions and balances have been eliminated.

Collection of Funds for Other Authorities: Collection of funds by the City for the school board, municipal hail and

conservation and development authorities are collected and remitted in accordance with relevant legislation. The amounts collected are disclosed in note 3.

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1. Significant accounting policies - continued

h)

Asset Useful Life Useful Life

General Assets Infrastructure AssetsLand IndefiniteLand Improvements 15 Yrs Water & Sewer 35 to 40 YrsBuildings 20 to 40 Yrs Road Network Assets 15 to 40 YrsVehicles & Equipment Vehicles 15 Yrs Machinery and Equipment 5 to 20 Yrs

Inventories: Inventories of materials and supplies expected to be used by the City are valued at the

lower of cost or replacement cost. Inventories of materials and supplies held for resale are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. Net realizable value is the estimated selling price in the ordinary course of business.

Land inventory, comprising land held for future development and resale, is valued at the lower of cost and net realizable value. Cost includes amounts for land acquisition and improvements to prepare for sale or servicing. Land is available for resale when approved for sale by the engineering department and when all municipal services have been completed.

g)

f) Local Improvement Charges: Local improvement projects financed by frontage taxes recognize any

prepayment charges as revenue in the period assessed.

Net Debt: Net Debt at the end of an accounting period are the net amount of financial assets less

liabilities outstanding. Financial assets represent items such as cash and those other assets on hand which could provide resources to discharge existing liabilities or finance future operations. These include realizable assets which are convertible to cash and not intended for consumption in the normal course of operations.

k) Tangible Capital Assets: All tangible capital asset acquisitions or betterments made throughout the

year are recorded at their acquisition cost. Initial costs for tangible capital assets that were acquired and developed prior to 2009 were obtained via historical cost information or using current fair market values discounted by a relevant inflation factor back to the point of acquisition. Donated tangible capital assets received are recorded at their fair market value at the date of contribution. The tangible capital assets that are recognized at a nominal value are disclosed on Schedule 6. The cost of these tangible capital assets less any residual value are amortized over the asset's useful life using the straight-line method of amortization. The City's tangible capital asset useful lives are estimated as follows:

Appropriated Reserves: Reserves are established at the discretion of Council to designate surplus

for future operating and capital transactions. Amounts so designated are described on Schedule 8.

Non-Financial Assets: Tangible capital and other non-financial assets are accounted for as assets

by the government because they can be used to provide government services in future periods. These assets do not normally provide resources to discharge the liabilities of the government unless they are sold.

j)

i)

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City of Estevan

Notes to the Financial Statements

For The Year Ended December 31, 2016


The segments (functions) are as follows:

General Government: The general government segment provides for the administration of the City.

Protective Services: Protective services is comprised of expenses for Police and Fire protection.

Transportation services: The Transportation services segment is responsible for the delivery of public works services related to the development and maintenance of roadway systems and street lighting.

Planning and Development: The planning and development segment provides for neighbourhood development and sustainability.

Recreation and Culture: The recreation and culture segment provides for community services through the provision of recreation and leisure services.

Environmental and Public Health: The environmental segment provides waste disposal and other environmental services. The public health segment provides for expenses related to public health services in the City.

Government contributions: Government contributions for the acquisition of capital assets are reported as capital

revenue and do not reduce the cost of the related asset.

Landfill liability: The Saskatchewan Environmental Protection Acts sets out the regulatory requirements to

properly close and maintain all active and inactive landfill sites. Under environmental law, there is a requirement for closure and post-closure care of solid waste landfill sites. The City of Estevan maintains a waste disposal site. The City is unable to estimate closure and post-closure costs. No amount has been recorded as an asset or a liability.

Capitalization of Interest: The City does not capitalize interest incurred while a tangible capital asset is under

construction.

Leases: All leases are recorded on the consolidated financial statement as either a capital or operating lease. Any

lease that transfers the majority of benefits and risk associated with the leased asset is classified as a capital lease. At the inception of a capital lease, an asset and a payment obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset's fair market value. Assets under capital leases are amortized on a straight line basis, over their estimated useful lives (lease term). Any other lease not meeting the before mentioned criteria is classified as a operating lease and rental payments are expensed as incurred.

These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in earnings in the periods in which they become known.

n) Basis of Segmentation: Municipal services have been segmented by grouping activities that have similar service

objectives (by function). Revenues that are directly related to the costs of the function have been attributed to each segment. Interest is allocated to functions based on the purpose of specific borrowings.

l)

m)Measurement Uncertainty: The preparation of consolidated financial statements in conformity with generally

accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenditures during the period. Accounts receivable are stated after evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided where considered necessary. The measurement of materials and supplies are based on estimates of volume and quality. The 'Opening Asset costs' of tangible capital assets have been estimated where actual costs were not available. Amortization is based on the estimated useful lives of tangible capital assets.

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City of Estevan




a) an environmental standard exists;

b) contamination exceeds the environmental standard;

c) The City:

i. is directly responsible; or

ii. accepts responsibility;

d) it is expected that future economic benefit will be given up; and

e) a reasonable estimate of the amount can be made.

p) Recent accounting pronouncements

PS 3450 Financial Instruments (New and Amendment)

In June 2011, the Public Sector Accounting Board (PSAB) issued PS 3450 Financial Instruments to establishstandards for recognition, measurement, presentation and disclosure of financial assets, financial liabilities and non-financial derivatives. As a result of issuance of PS 3450, there have been numerous consequential amendments made to other 'Sections. PS 3450 is effective for fiscal years beginning on or active April 1, 2019. Earlier adoption is permitted.

PS 3450 is applied prospectively in the fiscal year of initial adoption; therefore, financial statements of prior periods,including comparative information, are not restated. The City does not expect the adoption of these new standardsto have a material impact on its financial statements.

PS 3210 Assets (New)In June 2015, new PS 3210 Assets was included in the CPA Canada Public Sector Accounting Handbook (PSA HB).The new Section provides guidance for applying the definition of assets set out in PS 1000 Financial StatementConcepts. The main features of this standard are as follows:

Assets are defined as economic resources controlled by a government as a result of past transactions or events and from which future economic benefits are expected to be obtained.

Economic resources can arise from such events as agreements, contracts, other government's legislation, thegovernment's own legislation, and voluntary contributions.

The public is often the beneficiary of goods and services provided by a public sector entity. Such assetsbenefit public sector entities as they assist in achieving the entity's primary objective of providing public goods and services.

The public sector entity's ability to regulate an economic resource does not, in and of itself, constitute controlof an asset, it the interest extends only to the regulatory use of the economic resource and des not include theability to control access to future economic benefits.

Utility Services : The Utility services segment provides for delivery of water, collecting and treating of

wastewater and providing collection and disposal of solid waste.

n) Basis of Segmentation (continued from previous page)

Liability for contaminated sites: Contaminated sites are a result of contamination being introduced into air, soil,

water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. The liability is recorded net of any expected recoveries. A liability for remediation of contaminated sites is recognised when all the following criteria are met:

o)

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City of Estevan




A public sector entity acting as a trustee on behalf of beneficiaries specified in an agreement or statute is merely

administering the assets, and does not control the assets, as future economic benefits flow to the beneficiaries.

An economic resource may meet the definition of an asset, but would not be recognized if there is no appropriate

basis for measurement and a reasonable estimate cannot be made, or if another Handbook Section prohibits its

recognition. Information about assets not recognized should be disclosed in the notes.

The standard is effective for fiscal years beginning on or after April 1, 2017. Earlier adoption is permitted. The City

does not expect the adoption of this new standard to have a material impact on its financial statements.

PS 3320 Contingent Assets (New)

In June 2015, new PS 3320 Contingent Assets was included in the (CPA Canada Public Sector Accounting Handbook (PSA

HB). The new Section establishes disclosure standards on contingent assets. The main features of this Standard are as

follows:

Contingent assets are possible assets arising from existing conditions or situations involving uncertainty. Thatuncertainty will ultimately be resolved when one or more future events not wholly within the public sector entity'scontrol occurs or fails to occur. Resolution of the uncertainty will confirm the existence or non-existence of an asset.

Passing legislation that has retroactive application after the financial statement date cannot create an existingcondition or situation at the financial statement date.

Elected or public sector entity officials announcing public sector entity intentions after the financial statement datecannot create an existing condition or situation at the financial statement date.

Disclosures should include existence, nature, and extent of contingent assets, as well as the reasons for any non-disclosure of extent, and the bases for any estimates of extent made.

When a reasonable estimate can be made, disclosure should include a best estimate and a range possible amounts(or a narrower range of more likely amounts), unless such a disclosure would have an adverse impact on the outcome.

The standard is effective for fiscal years beginning on or after April 1, 2017. Earlier adoption is permitted. The City

does not expect the adoption of this new standard to have a material impact on its financial statements.

PS 3380 Contractual Rights (New)

In June 2016, new PS 3380 Contractual Rights was included in the CPA Canada CPA Canada Public Sector AccountingHandbook (PSA HB). This new Section establishes disclosure standards on contractual rights, and does not include contractual rights to exchange assets where revenue does not arise. The main features of this standards are as follows:

Contractual rights are rights to economic resources arising from contracts or agreements that will result in bothan asset and revenue in the future.

Until a transaction or event occurs under a contract or agreement, an entity only has a contractual right to aneconomic resource. One the entity has received an asset, it no longer has a contractual right.

Contractual rights are distinct from contingent assets as there are no uncertainty related to the existence of thecontractual right.

Disclosures should include descriptions about nature, extent, and timing.

The standard is effective for fiscal years beginning on or after April 1, 2017. Earlier adoption is permitted.

p) Recent accounting pronouncements (continued from previous page)

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City of Estevan



2. Cash

$264,700 (2015 - $264,700).

3. Taxes and grants in lieu receivable2016 2015

Municipal - Current 967,996 710,853 - Arrears 221,124 185,571

1,189,120 896,424 - Less Allowance for Uncollectibles - -

Total municipal taxes receivable 1,189,120 896,424

School - Current 430,012 325,667 - Arrears 92,176 75,849

Total school taxes receivable 522,188 401,516

Other - -

Total taxes and grants in lieu receivable 1,711,308 1,297,940

Deduct taxes receivable to be collected on behalf of other organizations (522,188) (401,516)

Municipal and grants in lieu taxes receivable 1,189,120 896,424

2016 2015

4. Other accounts receivable

Federal government 192,060 207,840

Utility 1,155,217 1,103,456

Trade 1,128,584 1,153,353

Other - -

Total Other Accounts Receivable 2,475,861 2,464,649

Less Allowance for Uncollectibles - -

Net Other Accounts Receivable 2,475,861 2,464,649

The City of Estevan has restricted cash to provide upkeep of the cemetery amounting to

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City of Estevan



5. Land for resale 2016 2015

Tax Title Property - -

Allowance for market value adjustment - -

Net Tax Title Property - -

Other Land 2,713,451 2,962,531

Allowance for market value adjustment - -

Net Other Land 2,713,451 2,962,531

Total Land for Resale 2,713,451 2,962,531

6. Local improvement receivable

Local improvements that were paid in full by the city and will be repaid at the total cost plus interest at a rate of 7% (2015 - 7%) by rate payers are as follows:

Year Current Total2017 287,479 2018 204,379 2019 204,379 2020 201,936

Thereafter 446,919 Balance 1,345,092

7. Bank indebtedness

Bank indebtedness includes an operating loan with a maximum limit of $9,000,000 (2015 - $9,000,000) cumulative of both cash and bank indebtedness that is bearing interest at prime less 0.5% (2015 - prime less 0.5%) with assets are pledged as collateral.

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City of Estevan



8. Deferred revenue

2016 2015

Land sales option deposits 20,600 99,400

Security deposits 151,270 140,270

Total deferred revenue 171,870 239,670

9. Long-term debt

The debt limit of the City is $55,000,000 (2015 - $55,000,000) of which 58% (2015 - 62%) has been utilized as of

December 31, 2016.

Future principal and interest payments are as follows:

Year Principal Interest Current Total Prior Year Total

2017 4,102,896 895,796 4,998,692 4,921,168

2018 3,846,154 720,735 4,566,889 4,933,926

2019 3,978,269 608,676 4,586,945 4,429,447

2020 4,111,787 494,397 4,606,184 4,449,502

Thereafter 14,957,898 1,521,294 16,479,192 19,296,627

Balance 30,997,004 4,240,898 35,237,902 38,030,670

$428,586) or annual payments of $137,442 to $428,586 (2015 - 137,442 to $428,586), bearing interest

rates that range from prime less .5% to fixed rates of 5.5% (2015 - prime less 0.5% to fixed rates of 5.5%),

matures from March 2017 to August 2030 (2015 - matures from March 2021 to August 2030).

Long-term debt is subject to certain financial covenant with respect to annual audited statements to

be provided to the bank 120 days after year end. The City is not incompliance with this.

10. Lease obligations

Year

2017 339,829

2018 332,067

2019 220,322

2020 110,010

Thereafter 95,541

Total future minimum lease payments 1,097,769

(70,500)

Capital lease liability 1,027,269

bearing interest rates that range from 3.00% to 6.40% (2015 - 4.93% to 6.11%), and mature from May 2017

to June 2022 (2015 - March 2016 - June 2019).

Future minimum lease payments under the capital leases together with the balance of the obligation

Lease obligations are repayable in monthly installments ranging from $1,545 to $18,504 (2015 -

Bank loans are repayable in monthly installments ranging from $7,490 to $98,170 (2015 - $7,490 to

Amounts representing interest at a weighted average rate

of 5.76%

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11. Intergovernmental Transactions

2016 2015

CAPITAL GRANTSGovernment of SaskatchewanGTF (Gas Tax Program) 643,343 627,867Transit assistance 77,068 130,977Saskatchewan infrastructure Growth 219,475 797,478

Other GovernmentsRM of Estevan 70,000 70,000

Total 1,009,886 1,626,322

OPERATING GRANTS: UnconditionalMunicipal Government Revenue Sharing 2,414,046 2,360,128

OPERATING GRANTS: Conditional

Sask. JusticeFunded Police Officers 330,000 330,000

Sask. Municipal Affairs

Grants In Lieu 53,342 51,414

Sask. Corrections & Public SafetyP.D.A.P - Flooding 1,483,620 2,585,557

Sask. Urban Municipalities Association (SUMA)Recycling program - 5,365

Sask. Parks, Recreation & Culture AssociationOperating - -

1,866,962 2,972,336

Total 4,281,008 5,332,464

Intergovernmental transactions were conducted in the normal course of operations and are measured

at the exchange amount, which is the amount of consideration established and agreed to by the related

parties.

14


12. Comparative figures

Prior year comparative figures have been restated to conform to the current year's presentation.

13. Contingent Liabilities

In the ordinary course of business, various claims and lawsuits are brought against The City. It is theopinion of management that settlement of these actions will not result in any material liabilities beyondany amounts already accrued. No provision has been made for pending expropriations of land beyond payments already made to affected property owners. Any payments made by The City pursuantto expropriation settlement is charged to the surplus of revenues over expenses in the year of settlement.

14. Budget Information

On January 18, 2016, the Council approved the operating budget based on planned expenses and current year revenue.

15. Guarantees

As part of an agreement with the Estevan TS&M Woodlawn Golf Course the City has a residual valueguarantee on the mortgage of the land and buildings of the golf course. The maximum amount payableunder the guarantee is $500,000 (2015 - $500,000).

As at December 31, 2016 no liability has been recorded associated with this guarantee.

16. Subsequent Events

On February 23, 2017, a building for the new fire hall was purchased for $2,300,000. To assist in thepurchase of the building and update the building to be a fire hall, a $3,500,000 loan was obtained,bearing interest of 3.81%, repayable in annual blended payments of $327,199. The payment for 2017 is interest only. The loan matures in August 2031.

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City of Estevan

Schedule of Taxes and Other Unconditional Revenue

For The Year Ended December 31, 2016 Schedule 1


TAXES

General municipal tax levy 15,190,557 15,200,965 14,395,810

Abatements and adjustments (20,000) (23,119) (484,998)

Discount on current year taxes (50,000) (47,433) (46,430)

Net Municipal Taxes 15,120,557 15,130,413 13,864,382

Trailer license fees 175,000 100,010 178,398

Penalties on tax arrears 120,000 272,331 172,343

Other 192,500 116,622 -

Total Taxes 15,608,057 15,619,376 14,215,123

UNCONDITIONAL GRANTS

Equalization (Revenue Sharing) 2,360,127 2,414,046 2,360,141

Total Unconditional Grants 2,360,127 2,414,046 2,360,141

GRANTS IN LIEU OF TAXES

Federal - 320 293

Provincial

S.P.C. Electrical 640,000 471,649 649,692

SaskEnergy Gas 420,000 258,689 301,502

Local/Other

Housing Authority 120,000 174,229 164,865

Other Government Transfers

S.P.C. Surcharge 1,320,000 1,408,639 1,381,051

Total Grants in Lieu of Taxes 2,500,000 2,313,526 2,497,403

TOTAL TAXES AND OTHER UNCONDITIONAL REVENUE 20,468,184 20,346,948 19,072,667

16

City of Estevan

Schedule of Operating and Capital Revenue by Function

For The Year Ended December 31, 2016 Schedule 2 - 1


GENERAL GOVERNMENT SERVICES

Operating

Other Segmented Revenue

Fees and Charges

- Custom work (76,000) 32,273 1,155,225

- Sales of supplies 40,000 44,994 54,113

- Other (Fees & permits) 99,000 238,029 237,124

Total Fees and Charges 63,000 315,296 1,446,462

- Land sales - gain - 297,169 1,528,738

- Investment income and commissions 5,000 17,435 121,419

- Other (Rentals) 103,000 121,398 139,973

Total Other Segmented Revenue 171,000 751,298 3,236,592

Conditional Grants

- Other (Building Canada Fund) - - -

- Other (PDAP funding) - 1,483,620 2,585,557

Total Conditional Grants - 1,483,620 2,585,557

Total Operating 171,000 2,234,918 5,822,149

Capital

Conditional Grants

- Gas Tax 627,000 643,343 627,867

- Other (SIGI Loan Interest Refunded) 215,000 219,475 299,167

Total Capital 842,000 862,818 927,034

Total General Government Services 1,013,000 3,097,736 6,749,183

PROTECTIVE SERVICES

Operating


Fees and Charges

- Other 306,400 435,704 494,778

Total Fees and Charges 306,400 435,704 494,778

- Investment income and commissions - - 12,822

- Other (Court, violations & enforcement) 224,000 228,511 281,476

Total Other Segmented Revenue 530,400 664,215 789,076

Conditional Grants

- Other (Special constable) 330,000 330,000 330,000

Total Conditional Grants 330,000 330,000 330,000

Total Operating 860,400 994,215 1,119,076

Total Protective Services 860,400 994,215 1,119,076

17

City of Estevan




TRANSPORTATION SERVICES

Operating

Total Fees and Charges

- Tangible capital asset sales - gain (loss) - 1,287 (650,579)

- Other (Specify) - - -

Total Operating - 1,287 (650,579)

Capital

Conditional Grants

- Other (Hwy 47) - - -

Total Transportation Services - 1,287 (650,579)

ENVIRONMENTAL AND PUBLIC HEALTH SERVICES

Operating


Fees and Charges

- Waste and Disposal Fees 894,916 977,859 842,040

- Other (Cemetery fees) 32,500 43,033 45,925

Total Fees and Charges 927,416 1,020,892 887,965

- Tangible capital asset sales - gain (loss) - - -


Total Other Segmented Revenue 927,416 1,020,892 887,965

Total Operating 927,416 1,020,892 887,965

Capital

Conditional Grants

- Transit for Disabled 76,876 77,068 130,977

Total Capital 76,876 77,068 130,977

Total Environmental and Public Health Services 1,004,292 1,097,960 1,018,942

18

City of Estevan




PLANNING AND DEVELOPMENT SERVICES

Operating


Fees and Charges

- Maintenance and Development Charges 98,500 71,407 (5,386)


Total Fees and Charges 98,500 71,407 (5,386)

- Tangible capital asset sales - gain (loss) - - -

- Other (Donations) - - 2,480,592

Total Other Segmented Revenue 98,500 71,407 2,475,206

Total Operating 98,500 71,407 2,475,206

Total Planning and Development Services 98,500 71,407 2,475,206

RECREATION AND CULTURAL SERVICES

Operating


Fees and Charges

- Other 1,064,600 1,583,785 1,728,747

Total Other Segmented Revenue 1,064,600 1,583,785 1,728,747

Conditional Grants

- Donations 352,500 335,705 64,851

- Other (Provincial agencies) 146,000 296,884 205,688

Total Conditional Grants 498,500 632,589 270,539

Total Operating 1,563,100 2,216,374 1,999,286

Capital

Conditional Grants

- Local government 70,000 70,000 70,000

Total Capital 70,000 70,000 70,000

Total Recreation and Cultural Services 1,633,100 2,286,374 2,069,286

19

City of Estevan




UTILITY SERVICES

Operating


Fees and Charges

- Water and sewer 6,700,000 6,308,859 6,754,559

Total Operating 6,700,000 6,308,859 6,754,559

Capital

Conditional Grants

- Other (Provincial water and sewer grant) - - -

Total Capital - - -

Total Utility Services 6,700,000 6,308,859 6,754,559

TOTAL OPERATING AND CAPITAL REVENUE BY FUNCTION 11,309,292 13,857,838 19,535,673

SUMMARY

Total Other Segmented Revenue 9,491,916 10,401,743 15,221,566

Total Conditional Grants 828,500 2,446,209 3,186,096

Total Capital Grants and Contributions 988,876 1,009,886 1,128,011

TOTAL OPERATING AND CAPITAL REVENUE BY FUNCTION 11,309,292 13,857,838 19,535,673

20

City of EstevanSchedule of Expenses by FunctionFor The Year Ended December 31, 2016 Schedule 3 - 1


GENERAL GOVERNMENT SERVICES

Council remuneration and travel 180,000 154,766 174,459

Wages and benefits 1,593,905 1,553,662 1,607,424

Professional/Contractual services 959,900 938,444 925,821

Utilities 118,510 93,068 66,230

Maintenance, materials and supplies 379,782 1,349,433 796,255

Grants and contributions - operating 1,043,622 1,037,068 1,237,701

Amortization - 310,434 79,504

Interest 25,000 1,128,021 1,105,159

Other 372,500 72,865 50,795

Total Government Services 4,673,219 6,637,761 6,043,348

PROTECTIVE SERVICES

Police protection



Utilities 28,700 28,172 63,202

Maintenance, material and supplies 640,075 435,360 355,183

Fire protections

Wages and benefits 406,824 372,017 429,937


Utilities 21,600 13,425 14,675

Maintenance, material and supplies 333,900 138,372 89,333


Total Protective Services 5,737,891 5,263,457 5,245,476

TRANSPORTATION SERVICES


Professional/Contractual Services 790,359 851,542 758,032

Utilities 385,296 339,583 351,896

Maintenance, materials, and supplies 1,138,932 1,004,335 1,892,387

Amortization - 2,135,719 2,086,844

Total Transportation Services 3,964,613 5,836,849 6,546,722

21

City of Estevan

Schedule of Expenses by Function



ENVIRONMENTAL AND PUBLIC HEALTH SERVICES



Utilities 5,000 6,520 14,337

Maintenance, materials and supplies 39,000 22,538 277,146


Total Environmental and Public Health Services 1,019,478 1,037,357 1,628,405

PLANNING AND DEVELOPMENT SERVICES


Professional/Contractual Services 93,500 69,630 96,829


Other 600 1,446 505

Total Planning and Development Services 407,000 431,946 455,738

RECREATION AND CULTURAL SERVICES



Utilities 761,115 646,176 733,501

Maintenance, materials and supplies 829,351 889,075 1,050,696


Other 185,122 454,327 345,056

Total Recreation and Cultural Services 5,131,862 6,303,289 6,162,980

22

City of Estevan

Schedule of Expenses by Function



UTILITY SERVICES



Utilities 294,300 298,844 236,260

Maintenance, materials and supplies 658,500 762,068 1,396,232

Amortization - 1,781,193 1,751,807

Total Utility Services 3,005,604 4,692,990 5,256,808

TOTAL EXPENSES BY FUNCTION 23,939,667 30,203,649 31,339,477

23

City of EstevanSchedule of Segment Disclosure by FunctionFor The Year Ended December 31, 2016 Schedule 4

General

Government

Protective

Services

Transportation

Services

Environmental

& Public Health

Planning and

Development

Recreation and

Culture Utility Services Total

Revenues (Schedule 2)

Fees and Charges 315,296 435,704 - 1,020,892 71,407 1,583,785 6,308,859 9,735,943

Tangible Capital Asset Sales - Gain (loss) - - 1,287 - - - - 1,287

Land Sales - Gain 297,169 - - - - - - 297,169

Investment Income and Commissions 17,435 - - - - - - 17,435

Other Revenues 121,398 228,511 - - - - - 349,909

Grants - Conditional 1,483,620 330,000 - - - 632,589 - 2,446,209

- Capital 862,818 - - 77,068 - 70,000 - 1,009,886

Total revenues 3,097,736 994,215 1,287 1,097,960 71,407 2,286,374 6,308,859 13,857,838

Expenses (Schedule 3)

Wages & Benefits 1,708,428 4,096,136 1,505,670 162,716 292,355 3,215,202 1,359,443 12,339,950

Professional/ Contractual Services 938,444 300,120 851,542 691,125 69,630 396,886 491,442 3,739,189

Utilities 93,068 41,597 339,583 6,520 - 646,176 298,844 1,425,788

Maintenance Materials and Supplies 1,349,433 573,732 1,004,335 22,538 - 889,075 762,068 4,601,181

Grants and Contributions 1,037,068 - - - - - - 1,037,068

Amortization 310,434 251,872 2,135,719 154,458 68,515 701,623 1,781,193 5,403,814

Interest 1,128,021 - - - - - - 1,128,021

Allowance for Uncollectibles - - - - - - - -

Other 72,865 - - 1,446 454,327 - 528,638

Total expenses 6,637,761 5,263,457 5,836,849 1,037,357 431,946 6,303,289 4,692,990 30,203,649

Surplus (Deficit) by Function (3,540,025) (4,269,242) (5,835,562) 60,603 (360,539) (4,016,915) 1,615,869 (16,345,811)

Taxation and other unconditional revenue (Schedule 1) 20,346,948

Annual Surplus 4,001,137

24

City of EstevanSchedule of Segment Disclosure by FunctionFor The Year Ended December 31, 2015 Schedule 5

General

Government

Protective

Services

Transportation

Services

Environmental

& Public Health

Planning and

Development

Recreation and

Culture Utility Services Total

Revenues (Schedule 2)

Fees and Charges 1,446,462 494,778 - 887,965 (5,386) 1,728,747 6,754,559 11,307,125

Tangible Capital Asset Sales - Gain (loss) - - (650,579) - - - - (650,579)

Land Sales - Gain 1,528,738 - - - - - - 1,528,738

Investment Income and Commissions 121,419 12,822 - - - - - 134,241

Other Revenues 139,973 281,476 - - 2,480,592 - - 2,902,041

Grants - Conditional 2,585,557 330,000 - - - 270,539 - 3,186,096

- Capital 927,034 - - 130,977 - 70,000 - 1,128,011

Total revenues 6,749,183 1,119,076 (650,579) 1,018,942 2,475,206 2,069,286 6,754,559 19,535,673

Expenses (Schedule 3)

Wages & Benefits 1,781,883 4,199,774 1,457,563 365,763 289,889 3,048,280 1,259,658 12,402,810

Professional/ Contractual Services 925,821 298,533 758,032 816,701 96,829 272,763 612,851 3,781,530

Utilities 66,230 77,877 351,896 14,337 - 733,501 236,260 1,480,101

Maintenance Materials and Supplies 796,255 444,516 1,892,387 277,146 - 1,050,696 1,396,232 5,857,232

Grants and Contributions 1,237,701 - - - - - - 1,237,701

Amortization 79,504 224,776 2,086,844 154,458 68,515 712,684 1,751,807 5,078,588

Interest 1,105,159 - - - - - - 1,105,159

Allowance for Uncollectibles - - - - - - - -

Other 50,795 - - - 505 345,056 - 396,356

Total expenses 6,043,348 5,245,476 6,546,722 1,628,405 455,738 6,162,980 5,256,808 31,339,477

Surplus (Deficit) by Function 705,835 (4,126,400) (7,197,301) (609,463) 2,019,468 (4,093,694) 1,497,751 (11,803,804)

Taxation and other unconditional revenue (Schedule 1) 19,072,667

Annual Surplus 7,268,863

25

City of EstevanSchedule of Tangible Capital Assets by ObjectFor The Year Ended December 31, 2016 Schedule 6

2015

Infrastructure

Assets

Land

Land

Improvements Buildings Vehicles

Machinery &

Equipment Linear assets Total TotalAsset cost

Opening Asset costs 1,279,314 4,062,807 49,855,946 4,228,441 11,546,999 137,303,101 208,276,608 202,740,401

Additions during the year - 3,450,018 220,533 465,951 1,316,757 1,215,755 6,669,014 9,322,111

Disposals and write-downs during the year - - - (17,858) - (17,858) (3,785,904)

Closing Asset Costs 1,279,314 7,512,825 50,076,479 4,676,534 12,863,756 138,518,856 214,927,764 208,276,608

Accumulated Amortization Cost

Opening Accumulated Amortization Costs - 1,614,033 15,167,205 1,984,300 8,839,120 71,741,838 99,346,496 97,403,232

Add: Amortization taken - 319,526 827,902 316,837 588,048 3,351,501 5,403,814 5,078,588

Less: Accumulated amortization on disposals - - - (7,145) - (7,145) (3,135,324)

Closing Accumulated

Amortization Costs - 1,933,559 15,995,107 2,293,992 9,427,168 75,093,339 104,743,165 99,346,496

Net Book Value 1,279,314 5,579,266 34,081,372 2,382,542 3,436,588 63,425,517 110,184,599 108,930,112

Included in capital assets are fully amortized assets with a cost of $37,257,807 (2015 - $37,225,801), accumulated amortization of $19,685,251 (2015 - $19,653,251),and residual value of $17,572,556 (2015 - $17,572,556).Included in capital assets are leased assets with a NBV of $1,585,183 (2015 - $1,241,223).Included in capital asset are contributed assets of $nil (2015 - $2,480,592).

2016

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General Assets

26

City of EstevanSchedule of Tangible Capital Assets by FunctionFor The Year Ended December 31, 2016 Schedule 7

2015

General

Government

Protective

Services

Transportation

Services

Environmental &

Public Health

Planning &

Development

Recreation &

Culture

Water &

Sewer Total Total

Asset cost

Opening Asset costs 2,055,196 4,247,832 88,773,387 2,118,160 2,630,357 41,522,714 66,928,962 208,276,608 202,740,401

Additions during the year 4,561,936 332,614 707,870 - - 530,048 536,546 6,669,014 9,322,111

Disposals and write-downs during the year - - (17,858) - - - - (17,858) (3,785,904)

Closing Asset Costs 6,617,132 4,580,446 89,463,399 2,118,160 2,630,357 42,052,762 67,465,508 214,927,764 208,276,608

Accumulated Amortization Cost

Opening Accumulated Amortization Costs 902,232 2,263,616 56,284,569 788,309 85,808 9,727,984 29,293,978 99,346,496 97,403,232

Add: Amortization taken 310,434 251,872 2,135,719 154,458 68,515 701,623 1,781,193 5,403,814 5,078,588

Less: Accumulated amortization on disposals - - (7,145) - - - - (7,145) (3,135,324)

Closing Accumulated Amortization Costs 1,212,666 2,515,488 58,413,143 942,767 154,323 10,429,607 31,075,171 104,743,165 99,346,496

Net Book Value 5,404,466 2,064,958 31,050,256 1,175,393 2,476,034 31,623,155 36,390,337 110,184,599 108,930,112

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27

City of Estevan

Schedule of Accumulated Surplus


2015 Changes 2016

UNAPPROPRIATED SURPLUS 6,970,949 - 1,502,389 5,468,560

APPROPRIATED RESERVES

Machinery and Equipment - - -

Public Reserve - - -

Capital Trust - - -

Utility 287,260 - 287,260

Total Appropriated 287,260 - 287,260

NET INVESTMENT IN TANGIBLE CAPITAL ASSETS

Tangible capital assets (Schedule 6) 108,930,112 1,254,487 110,184,599

Less: Related debt (34,218,774) 4,249,039 (29,969,735)

Net Investment in Tangible Capital Assets 74,711,338 5,503,526 80,214,864

Total Accumulated Surplus 81,969,547 4,001,137 85,970,684

28

City of Estevan

Schedule of Mill Rates and Assessments


Residential Seasonal Commercial Potash

Agriculture Residential Condominium Residential & Industrial Mine(s) Total

Taxable Assessment 524,715 686,412,340 142,843,050 - 345,522,770 1,175,302,875

Regional Park Assessment -

Total Assessment 1,175,302,875

Mill Rate Factor(s) 0.75 0.73 1.00 - 2.50 Total Base/Minimum Tax (generated for

each property class) - 42,700 - - 2,100 44,800

Total Municipal Tax Levy (include base

and/or minimum tax and special levies) 5,322 5,972,626 1,359,808 - 7,863,209 15,200,965

MILL RATES: MILLS

Average Municipal* 12.9337

Average School* 5.9621

Uniform Municipal Mill Rate 11.0000

* Average Mill Rates (multiply the total tax levy for each taxing authority by 1000

and divide by the total assessment for the taxing authority).

PROPERTY CLASS

29

City of EstevanSchedule of Council RemunerationFor The Year Ended December 31, 2016 Schedule 10

Name Remuneration

Reimbursed

Costs TotalCarr, Lori 5,317 1,732 7,049 Frank, Travis 1,200 200 1,400 Hoffort, Greg 14,318 1,471 15,789 Johnson, Brian 13,117 824 13,941 Knibbs, Trevor 14,318 724 15,042 Ludwig, Roy 42,950 2,799 45,749 Moore, Dennis 14,318 2,619 16,937 Smith, Kevin 13,117 2,796 15,913 Veroba, Shelley 1,200 200 1,400 Yanish, Lyle 1,200 680 1,880

Total 121,055 14,045 135,100

30

city of estevan...city of estevan notes to the financial statements for the year ended december 31,...

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