By Lexi McFarlane, Times Chronicle

A new reserve and surplus policy has been approved by Town of Oliver Council, following a presentation on the topic by Chief Financial Officer John Kurvink.

The presentation and approval of policy came at the August 5 Regular Council Meeting. The new policy will still need a corresponding bylaw to be drafted and approved by Council at a future date, but in the meantime the policy sets the framework for more optimal organization of the Town’s reserve funds.

Reserves can typically be thought of as “savings”, said Kurvink, but that’s not always the case.

“There’s weaknesses with that model, because it’s commonly seen as deferred spending, rather than a way to manage risk.”

A better way to look at reserves, alongside some being seen as savings, is as an “insurance policy” of sorts.

“You really start to look at ‘what are you trying to protect the municipality from’, in terms of risk,” Kurvink described. “Setting a reserve aside is to (help) protect the municipality from that risk; it parallels with insurance.

“We set aside money for insurance; you hope you don’t have to put a claim on it, but at least it’s there… the reserve would be there to back (the municipality), if ever needed.”

Previously, there was no framework governing the town surpluses and reserves. Some reserve funds that existed were created by individual bylaws or resolutions passed by Council as discretionary, or Non-Statutory.

Others were created by bylaws pursuant to provincial legislation and labelled as non-discretionary, or Statutory. Select reserves and surpluses were found to not be attached to any bylaws.

Audited Statutory reserves that have been deemed “appropriate”, or to fit the Statutory designation include the Downtown Parking reserve, which can be used for active transportation projects; the Cemetery Perpetual Care Fund, established in accordance with the provincial Cemeteries Act; the Development Cost Charges reserve, and the Land Sale reserve.

Town staff recommended a re-written bylaw for the Land Sale reserve given its current bylaw was written in 1965 and has become outdated, according to Kurvink. Beyond that motion, none of those four reserves will be impacted by the overhaul to the approach to municipal reserves.

Non-Statutory reserves that were deemed sufficient both in creation and function include Public Works Equipment, Local Improvement, Policing Reserve, BC Growing Communities, Housing Capacity, and the Unappropriated Surplus that has just over a full month’s worth of operating expenses as its balance.

The BC Growing Communities and Housing Capacity reserves were both created to keep provincial funding separated for accounting purposes, and the current Housing Capacity reserve funds must be spent by December 31.

Some reserves previously listed as Statutory were recommended to be designated as Non-Statutory, and required new bylaws to be written. The Sewer Capital reserve, Climate Action reserve, and Community Works were all given this recommendation.

Both the Climate Action and Community Works reserves have spending deadlines also, with Climate Action funds needing to be allocated by March 31, 2028 and any Community Works funds having a mandate of being spent within five years of receipt.

Two of the other three previously-listed Statutory reserves that, instead of re-designation, were recommended for closure include the General Capital (which was proposed to be consolidated into the General Reserve) and the COVID Restart reserve, which will be closed once funds are spent by the end of this year. The Water Capital reserve, which has a bylaw and appropriate function, was simply proposed to be re-designated as Non-Statutory.

Several Non-Statutory reserves were found to be in need of sufficient bylaws for documentation. They include the Cemetery Maintenance reserve, which collects interest on the Cemetery Perpetual Care Fund; Fire Department Joint Equipment, Snow Removal, Solid Waste, and Sister City reserves.

Remaining Non-Statutory reserves were recommended for closure and/or consolidation due to redundancy or retired debts. They are as follows:

  • Food For Thought reserve, created in 2003; funds recommended to be given to Food For Thought;
  • Library Furnishing Reserve; funds recommended to be given to the Okanagan Regional Library (ORL) with designation to be used on the ORL’s Oliver branch;
  • Payroll Payable, created in 2012; funds recommended to be consolidated into General Reserve;
  • Pump Repair, created before 1998; funds to be consolidated into Water Capital reserve;
  • Road Capital, created in 2013; funds to be consolidated into General Reserve;
  • Sawmill Road Trust and Tucelnuit Water Trust, created in 2007; debts have been retired and Trusts should be consolidated into Water Capital.

The Library Furnishing Reserve generated most of the conversation amongst Council and Town staff. Councillor David Mattes served as something of a historian on how the reserve came to be in the first place, in response to a question from Mayor Martin Johansen.

“As part of the agreement with the ORL, we are obligated to fund furnishings at the Library when they request,” Mattes explained. “When they moved into one of our locations; at the time, we didn’t have money, so we had to come up with money to buy furnishings for that location.

“At that time, we decided to set up a reserve, (for) if and when this happened again.”

Mattes went on to note that the procedures have since seemed to differ from that established standard. Through sitting on the Library board, he notes that procurement doesn’t involve the Town nearly as much anymore.

“They don’t really think about that (obligation) anymore, with the change of staff, it just fell by the wayside. We were always prepared, but… It doesn’t seem like something they’re asking the local government to do (now).”

After some discussion about whether an alternate decision with the Library Furnishings Reserve was more appropriate, such as folding it into the General Reserve, the proposal to give the funds to the ORL with the stipulation they be used for the Oliver branch was left in place.

The final motion recommended that Council approve the new policy, as well as resolve to create bylaws for the reserves currently without one, and resolve to close the reserves no longer required. This motion was carried.

Town staff will report back to Council at a future date with a proposed bylaw to accompany the new Surplus and Reserve Policy.