FINANCIALSTATEMENTS - CivicWeb

RED DEER COUNTY

FINANCIALSTATEMENTS

DECEMBER 31, 2014

TABLEOF CONTENTS

FINANCIALSTATEMENTS

Management Report 1

Independent Auditor's Report 2

Statement of Financial Position 3

Statement of Operations 4

Statement of Change in Net Financial Assets (Debt) 5

Statement of Cash Flows 6

Schedule of Tangible Capital Assets 7

Schedule of Property and Other Taxes 8

Schedule of Government Transfers 9

Schedule of Expenses by Object 10

Schedule of Segmented Disclosure 11

Notes to Consolidated Financial Statements 12-26

MANAGEMENT REPORT

To the Members of Council of Red Deer County

Management is responsible for the preparation and presentation of the accompanying financial statements, includingresponsibility for signi?cant accounting judgments and estimates in accordance with Canadian generally acceptedaccounting principles. This responsibility includes selecting appropriate accounting principles and methods, andmaking decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the financial statements, management designs andmaintains the necessary accounting systems and related internal controls to provide reasonable assurance thattransactions are authorized, assets are safeguarded and ?nancial records are properly maintained to provide reliableinformation for the preparation of ?nancial statements.

The elected Council and the Audit Committee are composed entirely of neither management nor employees of theCounty. The Audit Committee has the responsibility of meeting with management and external auditors to discuss theinternal controls over the financialreporting process, auditing matters and ?nancial reporting issues. The Council isresponsible for recommending the appointment of the County’s external auditors.

MNP LLP,an independent firm of Chartered Accountants, is appointed by the Council to audit the financialstatementsand report directly to them; their report follows. The external auditors have full and free access to, and meetperiodically and separately with, both the Audit Committee and management to discuss their audit ?ndings.The accompanying financial statements and other informationcontained in this Financial Report are the responsibilityof the management of Red Deer County.

477/?Curtis Herzberg, County Manager

April 7, 2015

INDEPENDENTAUD|TOR’S REPORT

To the Members of Council:

Report on the Financial Statements

We have audited the accompanying ?nancial statements of Red Deer County, which comprise the statementof ?nandal position as at December 31, 2014, and the statements of operations, change in net ?nancialassets (debt), cash flows and Schedules 1 through 5 for the year then ended, and a summary ofsigni?cant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these ?nancial statements inaccordance with Canadian public sector accounting standards, and for such internal control asmanagement detennines is necessary to enable the preparation of ?nancial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these ?nancial statements based on our audit.We conductedour audit in accordance with Canadian generally accepted auditing standards. Those standards require thatwe comply withethical requirements and plan and perform meaudit to obtain reasonable assurance aboutwhether the ?nancial statements are free from material misstatement.

An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the?nancial statements. The procedures selected depend on the auditors judgment, including the assessmentof the risks of material misstatement of the ?nancial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internalcontrol relevant to the entity's preparation and fairpresentation ofthe?nancial statements in order to design audit procedures that are appropriate in thecircumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity'sinternal control. An audit also includes evaluatingthe appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the ?nancial statements.

We believe that the audit evidence we have obtained is suf?cient and appropriate to provide a basis forour audit opinion.

Opinion

In our opinion, the ?nancial statements present fairly, in all material respects, the ?nancial position ofRed Deer County as at December 31, 2014, the results of its operations, change in its net ?nancial assets(debt) and its cash ?ows for the year then ended in accordance with Canadian public sector accountingstandards.

Red Deer, Alberta MA/73LLPApril7, 2015 Chartered Accountants

MNP

Red Deer CountyStatement of Financial Position

As at December 31, 2014

ASSETS

2014 2013

FINANCIALASSETS

Cash and temporary Investments (Note 2) $ 16,802,852 $ 9,689,625Receivables

Taxes and grants in place of taxes (Note 3) 1,334,585 1,902,288Trade and other 1,242,246 1,872,972Grant receivable 964,350 4,632,722

Investments (Note 4) 15,969,401 16,318,36636,363,434 34,415,973

LIABILITIESAccounts payable and accrued liabilities 5,712,121 6,227,546Reclamation liabilities (Note 6) 9,241,611 12,698,570Employee bene?t obligation (Note 16) 587,958 557,521Deposits and deferred revenue (Note 15) 3,913,463 3,500,512Long-term debt (Note 7) 1,732,385 2,452,630

21,187,533 25,436,779

NET FINANCIALASSETS (DEBT) 15,115,896 8,979,194

NON-FINANCIALASSETS

Tangible capital assets (Schedule 1) 620,719,158 626,846,993Inventories for consumption 8,362,602 8,613,201Prepaid expenses 665,185 409,933

629,746,945 635,870,127

ACCUMULATEDSURPLUS (Note 11) 644,922,841 644,849,321

CONTINGENCIES,COMMITMENTSAND GUARANTEES- (Note 17, Note 19 8: Note 21)

The accompanying notes are an integral pan olthese ?nancial slatements

Red Deer CountyStatement of Operations

For the Year Ended December 31, 2014

REVENUENet taxes (Schedule 2)sales and user chargesGovernment uanslers (Schedule 3)Investment incomePenalties and casts of taxeswater and waste waterLlcerlses and permitsFinesGain on disposal cl tangible capital assetsOther

TOTALREVENUE

EXPENSESFublic Wnrks:

operating repairs and maintenanceAdministrationAmortizationFire and ambulance servicesSubdivision and land developmentAgricultural service hoardPatrol servicesEngineering serviceswater and waste waterwaste managementParks Rec and Community ServicesLegislative

Disaster expensesTOTAL EXPENSES

EXCESS (SHORTFALL)OF REVENUE OVER EXPENSESBEFORE OTHER

OTHERChanges In estimated reclamation liabilitiesContributed assmsGovernment transfers tor capital (Schedule 3)Offsite levies

EXCESS (SHORTFALL)OF REVENUEOVER EXPENSES

ACCUMULATEDSURPLUS, BEGINNINGOF YEAR

ACCUMULATEDSURFLUS, END OF YEAR

Budget 2014 2013

5 42,353,021 S 42,523,592 3 40,598,7503,251,690 3,480,058 3,667,8542,503,238 2,052,487 1,045,813

755,000 1,013,028 920,371250,000 395,151 478,439

2,348,769 2,185,455 1 ,886,198151,150 361,200 260,887234,000 361,158 357,716

- 151,058 472,255- 381,613 52,958

51,906,868 52,904,830 49,731,271

18,068,381 14,307,445 15,593,4887,157,552 5,791,259 5,281,706

25,000,000 29,233,943 28,044,4442,107,330 2,145,982 1,512,6212,036,189 1,669,135 1,348,8241,431,585 1,152,284 1,281,953

905,530 798,593 818,962948,144 702,170 977,936

2,347,981 2,495,952 2,885,9712,714,973 2,653,135 2,654,7833,679,895 3,404,995 3,542,528

674,500 550,167 518,1091,867,628 1,263,715 201,869

71,941,289 66,160,775 64,963,204

(20,034,421) (13,2B3,945) (Z3,865,117)

-1,500,000 1,984,591 —8,633,1841,000,000 1,134,037 996,8239,902,210 9,783,593 11,123,103

- 435,244 923,5019,402,210 13,337,465 4,410,243

(10,E32,111) 73,520 (10,821,590)

644,849,321 544,849,321 $55,671,011

$634,217,110 S 644,922,841 3 644,549,321._j:

rne accompanying notes are an lnlegraipan olthexe ?nancial statements

Red Deer CountyStatement of Change in Net Financial Assets (Debt)


Budget 201.1 2013

EXCESS (SMORTFALL) OF REVENUE OVER EXPENSES (10,532 211) 73,520 (1o.821,s9o)

Acquisition of tangible capital assets (27,a37,55a) (22,5B6,138) (zs,3s4,577)conmbuiezi assets (1,000,000) (1,134,037) (995,323)Proceeds on disposal anangibie capital assets . 755,135 1,632,836Amoruzauon onangibie capital assets 214,000,000 20,233,943 28,044,404Gain on disposal onanginie capital assets _ (151,055) (472,255)

(457,555) 6,127,836 1,873,325

Acqulsilion (use) avsuppiies invenmnes . 250,593 (75,747)Increase in prepaid assets . (255,252) (104,245)

. (4,654) (179,992)

INCREASE (DECREASE) IN NETFINANCIALASSETS (11.os9,7s4) 6,196.702 (9,125,357)

NET FINANCIAL ASSETS, BEGINNING or YEAR 3,979,194 3,579,154 15.107551

NET FINANCIAL ASSETS (DEBT). END or YEAR (2,090,570) 15,175,396 0,979,194

The accompanying notes are an Integlalpall or?iese ?nancial statements

Red Deer CountyStatement of Cash Flows


NET INFLOW (OUTFLOW) OF CASH RELATED TOTHE FOLLOWING ACTIVITIES:

OPERATINGExcess (shortfall) of revenue over expensesNon-cash items included in excess (shortfall) ofRevenue over expenses:

Amortization

Gain on disposal of tangible capital assetsContributed assets

Decrease (increase) in operations:Decrease (increase) taxes and grants in place of taxesDecrease (increase) trade and other receivablesDecrease (increase) grants receivableDecrease (increase) prepaid expensesDecrease (increase) inventories for consumptionIncrease (decrease) accounts payable and accrued liabilitiesIncrease (decrease) deposits and deferred revenueAdjustment for payables and receivables related to capital

Cash provided by operating transactions

CAPITALAcquisition of tangible capital assets

Sale of tangible capital assetsAdjustment for payables and receivables related to capital

Cash applied to capital transactions

INVESTINGIncrease in investments

FINANCINGLong-term debt repaid

CHANGE IN CASH AND EQUIVALENTS DURING THE YEAR

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2)

2014

73,520

29,233,943(151,068)

(1,134,037)

511,703630,126

3,668,372(255,252)

250,599(3,941,946)

412,949758,382

30,063,891

(22,586,13S)165,136

(153,332)

122,579,384)

343,965

(720,245)

7,113,227

9,689,625

16,802,852 $

The accompanying notes are an integral part of these ?nancial statements

2013

(10,821,690)

28,044,444(472,255)(996,823)

160,321326,523

4,573,755(104,245)

(75,746)8,677,915

(2,533,357)502,817

27,581,660

(26,384,877)1,682,836(502,817)

(25,2o4,s53)

(736,588)

(687,401)

952,813

8,736,812

9,689,625

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Red Deer CountySchedule of Property and Other TaxesFor the Year Ended December 31, 2014

59,334,014

Schedule 2

Budget

TAXATION

Real property $Power and pipelines 11,574,701Government grants in place of taxation 418,902Well drilling 150,000Frontages -

59.04 74

REQUISITIONSSenior Housing 115,544Alberta School Foundation Fund 16,567,509

16,683,053 16,590,498

NET MUNICIPAL TAXES 5

2014

46,902,471 $ 46,838,823 $11,798,693

478,794217,704

124,43416,685,98816,810,422

The accompanying notes are an mlegral part ormess ?nancial statements

2013

45,322,10611,165,381

403,750276,951

1 1,06057,179 45

115,54416,474,954

42,363,021 S 42,523,592 $ 40,588,750

Red Deer CountySchedule of Government Transfers

For the Year Ended December 31, 2014Schedule 3

Budget 2014 2013

OPERATIONTRANSFERSProvincial shared-cost agreements and grants 5 2,503,238 8 2,052,487 $ 1,045,813

CAPITALTRANSFERSProvincial shared-cost agreements and grants 9,902,210 9,183,593 11,123,103

_TOTALGOVERNMENTTRANSFERS $ 12,405,448 5 11,836,080 $ 12,168,916

The accompanying notes are an integral part of these ?nancial statements

Red Deer CountySchedule of Expenses by Object

For the Year Ended December 31, 2014Schedule 4

Budget 2014 2013

EXPENSE BY OBJECT

Contracted and general services 29,980,095 23,783,289 24,138,672Salaries, wages and benefits 10,708,894 9,991,205 9,350,723Malerial, goods and utilities 1 ,153,339 1,139,024 1 ,152,250Transfers to local boards and other organizations 1,987,235 1309.805 2.134.004Bank charges and short-term interest 1,650 5.305 161Interest on |ong~(erm debt 110,075 106,104 142,920Amortization of tangible capital asses 28,000,000 29,233,943 23,044,444

e

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Red Deer CountyNotes In Financial Statements


1. SIGNIFICANT ACCOUNTINGPOLICIES

The ?nancial statements of Red Deer county ("The County") are the representations of managementprepared in accordance with accounting standards established hy the Public sector AccountingBoard or the chartered Professional Accountants canatla. signi?cant aspects ot the accountingpolicies adopted by Red Deer county are as follows:

3)

13)

Reporting Entity

The financial statements reflect the assets, liabilities, revenue, expenditures, and changes infinancial position of the reporting entity. This entity is comprised of the municipal operations plusall of the organizations that are owned or controlled by the county and are, therefore, accountableto the county council for the administration ortheir ?nancial affairs and resources. included withthe municipality are the following:

i) general municipalii) water and sewer utility

The schedule of taxes levied also includes operating requisitions tor education and seniorhousing organizations that are not part of the municipal reporting entity.

Basis of Accounting

The basis of accounting toilovved in the ?nancial statement presentation includes: Revenue isrecognized in the period in which the transactions or events occurred that gave rise to therevenues. Expenses are recognized in the period the goods and services are acquired and aliability is incurred or transfers are due. with the exception of pension expenditures as disclosedin Note 1 (:1).

Funds from external parties and earnings thereon restricted by agreement or legislation areaccounted for as deferred revenue until used for the purpose speci?ed.

Government transfers. contributions and other amounts are received from third parties pursuantto legislation, regulation or agreement and may only be used for certain programs, in thecompletion of speci?c work, or for the purchase of tangible capital assets. In addition, certainuser 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, services performedorthe tangible capital assets are acquired.

Tax revenues are re nized when the tax has been authorized by bylaw and the taxable eventhas occured. Requi ons operate as a flow through and are excluded from municipal revenue.

12

Red Deer CountyNotes to Financial Statements

For the Year Ended December 31. 2014

1. SIGNIFICANTACCOUNTINGPOLICIES (Continued)

0)

d)

Government Transfers

Government transfers are the transfer of assets from senior levels of government that are not theresult of an exchange transaction, are not expected to be repaid in the future. or the result of:direct financial return.

Government transfers are recognized in the financial statements as revenues in the period thatthe events giving rise to the transfer occurred, providing tne transfers are authorized, andeligibility criteria have been met by the county, and reasonable estimates of the amount can bemade.

Pension Expenditure

Red Deer county participates in a multi-employer defined bene?t pension plan. The plan isaccounted for as a de?ned cantrihution plan.

Taxes and Gran? in Place 01 Taxes

Taxes and grants in place of taxes consist of current tax levies and arrears tax levies whichremain outstanding at December 31, 1014.

Investments

Investments are carried at amortixed cost.

When there is a loss in the value of an investment that is other than a temporary decline, theinvestment is written down to recognize the lass.

13



1, SIGNIFICANT ACCOUNTING POLICIES (Continued)

g) Nml-Financial Assets

Nun-?nancial assets are not available to discharge existing liabilities and are held for use in theprovision ofservices. They have usetul lives extending beyond the current year and are notintended for sale in the normal course of operations. The change in non-financial assets duringthe year, together with the excess of revenue over expenses. provides the change in net ?nancialassets (debt) for the year.

i. Tangible Capital Assets

Tangible capital assets are recorded at cost which includes all amounk that are directlyattributable to acquisition, construction. development or betterment of the asset. The cost of thetangible capital assets is amortized on a straight-line basis over the estimated useful life asfollows:

YEARS

Land NIALand Improvements 1U»20Buildings 25-50Engineered Structures

Water system 4575Wastewater system 45-75Storm system 45-75Other engineered structures 07-65

Machinery and Equipment 05-Z5Vehicles 05-20

Amortization is charged on the month after the Invoice date; assets under construction are notamortized until the asset is available for productive use. Included in tangible capital assets iswork in progress 07 59,4-79.577 (2013 - $7,803,027). For roads included in other engineeredstructures, amortization is estimated to commence in December of each year.

ii. Contributions of Tangible Capital Assets

Tangible capital assets received as contributions are recorded at fair value at the date of receiptand are also recorded as revenue‘

Inventories for Consumption

Inventories ormaterials and supplies are valued at the lower orcost or replacement cost with costdelermined by the weighted average cost method.

Land purchased for the purpose oracquiring reserves of gravel is recorded as inventory and aprovision or $a.23s,2o2 (2013 - s:l.149,5a7) has been included in reclamation liabilities for tuturerestoration casts. (Note 5)

vi. Prepaid expenses

Prepaid expenses include pre-payments on goods and services which will beutilized in the following tiscal year.



1. SIGNIFICANTACCOUNTINGPOLICIES (Continued)

h)

J)

k)

Equity in capital Assets

Equity in capital assets represents Red Deer county's net investment in its total tangible capitalassets, after deducting the portion tinanced by third parties through debenture, bond, mortgagedebts, long term capital borrowing, capitalized leases, and other capital liabilities which will berepaid by the County.

School Requis ons - Over-levies and Under-levies

Over-levies and uridenlevies arise from the difference between the actual levy made to cover eachrequisition and the actual amount requisitiuned.

If the actual levy exceeds the requisition, the over—ievy is accrued as a liability and property taxrevenue is reduced. where the actual levy is less than the requisition amount, the undenlevy isaccnied as a receivable and property tax revenue i hcreased.

Requisition tax ramsin the subsequent year are adjusted for any over-levies ctr under-levies ortheprior year.

Use of Estimates

The preparation of ilnancial statements in conformity with Canadian Public Sector Accountingstandards requires management to make estimates and assumptions that affect the reportedamount of assets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements. and the reported amounts of revenue and expenditures during theperiod. Accounts receivable are stated after evaluation as to their ccilectibility and an appropriateallowance for doubtful accounts is provided where considered necessary. Provisions are madefor obsolete inventory. Amortization is based on the estimated useful lives of tangible capitalassets. Reclamation liabilities are estimated based on an independent engineering contractor.Where measurement uncertainty exisw, the financial statements have been prepared withinreasonable limits of materiality. Actual results could differ from those estimates.

cash and cash Equivalents

Cash and cash equivalents consists of petty cash and cash in bank accounts.

I) Recent Accounting Pronouncements

i. Financial instruments

In June 2011. the Public Sector Accounting Board ("PSAB") issued PS 3450 Financial InstrumentsPS 3450 is effective for fiscal years beginning on or after April 1, 2016. Earlier adoption ispermitted. The county does not expect the adoption of the new section to have a material impacton its consolidated ?nancial statements.

ii. Financial smtement presentation

In June 2011, as a result at the Issuance of PS 3450 Financial Instruments, the Public SectorAccounting Board ("PSAB") issued new Section PS 1201 Financial Statement Presentation, whichrevises and replaces Section PS 1200 Financial Statement PresentationThis section is effective in the same period PS 3450 is adopted. PS 1201 and PS 3450 are to beadopted together and are effective for fiscal years beginning on or after April 1. 2016. Earlyadaption 's permitted. The County does not expect the adoption of the new section to have amaterial impact on lb consolidated financial statements.

iii. Portfolio investments

In March 2012, as a result of the issuance of PS 3450 Financial Instruments, the Public SectorAccounting Board ("PSAB") 'ssued new PS 3041 Portfolio Investments, which revises andreplaces PS 3030 Temporary Investments and PS 3040 Portfolio Investments. This Section iseffective in the same period PS 1201 Financial Statement Presentation

15

Red Deer CountyNates to Financial Statements


1. CASH AND TEMPORARYINVESTMENTS2014 2013

Cash in bank, less outstanding items S 16,802,352 $ 9,689,625

S 16,002,852 $ 9,689,625

The above includes $2,559,730 (2013 - $2,253,115) of funds designated for Municipal Reserves (Note 5).

3. TAXES AND GRANTS IN PLACE OF TAXES RECEIVABLE201 4 2013

Current taxes and grants in place of taxes $ 1,092,724 $ 1,360,767Tax arrears 317,734 530,958Tax payment deferred 123,035 95 17Allowance for doubtful accounts 149.768 84 54)

S 1,304,585 $ 1,902,283

4. INVESTMENTS

2014 2013

Portfolio investments, at cost 5 15,969,401 $ 16,318,366

5 15,969,401 $ 15,318,366

The market Value of tha portfolio investments for 2014 is $16,050,672 (2013 - 515,430,533).

2014 201 3Portfolio investments are comprised of the following:

Cash bearing interest at 15% to 1% 5 820.747 S 942,860Short term investment funds hearing interest from 2% to 4.6% 2,044,953 767,113Bonds bear‘ nterest from 0% to 10.22% maturing from February 13,103,651 14,608,393201 510 December 2049

3 15,969,401 $ 16,318,366

Red Deer County has 2 15.1% interest (15.7% in 2013) in central Alberta Regional waste ManagementCommission with a cost ofsnii.Red Deer county also has a 50% stake (50% in 2013) in the Red Deer Regional Airport Authority byvirtue of board appointment with a cost of snil and provides an annual operating Grant.



5. RELATED PARTY TRANSACTIONS

included in the County‘: revenue was the tollowing arncune related to central Alberta Regional wasteManagement commission.

2014 201 3

CARWMC CARWMCAdministration 916 1,092

915

included In the County's expenses tor 2014 were s1so.ooa (zma — 5112.330). related to the RegionalAirport Authority.

The above transactions are in the normal course of operations and are recorded at the exchangeamount which is the amount of consideration as established and agreed to by the related parties.

5. RECLAMATION LIABILITIES2014 201 3

Land Remediation

Kevisville#1 satelite waste trst site Pan NW 21-35»3—5 » 1.560.983Kevisvllle#2 satelite waste trsf site Pan NW 21-35e:l—5 1.422.396 -

Kevisville east closed satelite waste trsf site Pan NW 2145-375 1,399,924 1,523,000

Grader parking & re-fueiing site sw 25~35~25-4 35.470 127,000

Luusarla salt storage NE 23-36-234 589.624 843.000

Old County maintenance shop (40ave) NE3&37—274 631,595 5.157.000

Pine Lake closed waste disposal site Part NE 07.315-244 1,874,400 338,000

Equity in post closure liability(note 11) 03,409 9 45 63Post Closure Reciarnation(gravei pits - includes all 7 County owned pits) 3,238,202 3.149.587

9,241,611 12,698,570

The county is legally required to remediate ground contaminants and contamination orgroundwaterwhen it exceeds environment standards. As or December 31, 2n14.the county has accrued sa.aoa,4us(2013 » $9,548,983) reflecting the liability for remediation of the contaminated sites. During the year, thecounty remediated one landfill site lKevisvillo#1) and a second site was identi?ed in the process. Inaddition, the county conducted Phase II environmental studies by an independant engineeringcompany to obtain a truer picture of cost to remediate. In zlm. we recognized a signi?cant decrease in4 of the sites.

The signi?cant assumptions used to determine the best estimate of the liability include:- approximately 56,443 cubic meters ormaterial and soil will be required to be excavated, disposed ofand replaced.

“ Additiona| cuss include environmenml assessments. excavation and geutechnical engineering andtesting.

Post closure reclamation of gravel pits is assessed as reasonable and considers the accreted costs otrestoration per hectare. the age orthe pit and the estimated usetul life left at the pit. costs wereestimated by an independent contractor and include the tollowing costs » mobilization and bonding;placinglscreening topsoil and overburden; and grass seeding and iertlllzer.



7. LONG-TERMDEBT2014 1013

Alberta Capital Flnance Autho?ty Debentures Capital 1,732,335 2,452,630Total Long-term Debt 1 731 385 5 2 452 E30

Principal and interest repayment over the next ?ve years are estimated as follows:

Principal Interest Total

2015 754,679 75542 $20,3212016 615.266 41,179 656,4452017 352,440 10,009 372,449

$1 32 S5

Debenture debt is repayahle to me Alberta capitai Finance Authority in semi-annual payments andbears interest at rates ranging trom 3.17% to 5ro5:s%, hefure Provincial subsidy. and matures in theyears 2015 through 2017.

Red Deer county's totai cash payments tar interest in 2014 were $110,075(2013-$142,919).

8. MUNICIPALTRUST FUNDSRed Deer county administers the following:

Interest&2013 Revenue Expenditures 2014

'rransportationAssisianceGrant 5 94,075 is 1,150 3 95.255Maxspn scholars p 77,095 950 2,500 75,555rotai'rrustLiabiii es $ 171,170 5 2.140 s 2500 5 170,310

in addition, two endowment tunes are being administered on behalf of Red Deer County; the county of Red Deer EducationalBursary Fund which provides bursaries in the amount of approximately 5350 per year, and the Arthur Teague Hub MemoriaiFund which provides bursaries nfapproximately $750 per year.

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9. RESERVES

Reserves cnnsist of the following:

ReservesGeneralBridges and DrainageFuture Development

Total Reserves

Restricted ReservesMunicipal Reservecommunity Services ReserveRegional Utility ReserveEnvironmentalProtective Services Reserve

Total Restricted Reserves

Total Reserves

Gasoline Alley ofisite Levies (1)Transportation Orfsite (1)C 8. E Trail Offsite LeviesSpringbrook Offsite LeviesCrossroads Offsite LeviesCentral Park Offslte LeviesBenalto Offsite Levies (1)

Galloway Road Dflsila Levies (1)Burnt Lake Offsite Levies (1)

Tubal Offsites

Total Reserves 5 Offsiies



2013 Increases Decreases 2014

25,772,971 13,314,954 5,155,230 30,901,5955,405,155 550,000 2,330,934 4,555,232

551,229 —. 591,229

32,550,255 13,994,954 10,517,154 35 235,055

2,253,115 331,515 75,000 2,559,7304,391,124 253.534 59,137 4,595,521

305,539 652,222 (345,533)(227,053) 1,505,393 305,539 972,5912,275,091 302,932 1,975,0995,595,257 2,455,271 1,394,950 9,755,559

41,555,533 15,351,225 11,912,144 45,994,514

(12,112,570) 335,599 2,301,774 (14,027,745)(15,323) (15,023)122,505 17,991 140,799232,451 113,754 395,235

37,490 37,490915,217 915,217

(1,594,132) (1,594,132)(525,401) (525,401)

(1,014,152) (1,014,152)(14,004,222) 519,474 2,301,774 (15,797,522)

27,551,311 15,559,599 14,213,913 30,207,092

For presentation purposes the reserves balances and the Offsite levies have been reported separately.

in 2014, an additional restricted reserve was added, Regional utility Reserve. The purpose orthis reserve is to iacilitate RedDeer County's eventual move to a seli-susiainin utility program. in 2013, the County paid out a debt to the city for waterinrrastructure, it was funded by the environmental reserve. However it was determined in 2014 that it would reflect moreappropriately in its own reserve.

(1)The shclr?all in these Levy funds were created as a result of initial expenditures having been incurred as the programswere initiated or expanded. These short?lls will be covered by iuture developments paying into these orlsite Levy funds.

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10. EQUITYINCAPITAL ASSETS

Equity in capital assets consists oi the tollawing: 2014 2013

capital assets (Schedule 1) s 1,090,450,301 s 1,058,283,315Accumulated amortization (Schedule 1) (4ss,141,14:s) 041,435,323)

Total capital assets 620,119,158 826,846,993Less long tenn debt [Note 1) 1,732,305) (2,452,630)

s 618,986,773 5 $24,394,363

11. ACCUMULATED SURPLUS

Accumulated surplus consists of restricted and unrestricted amounts and equity in tangible capital assets as follow:

2014 2013

Unrestricted surplus 5 1,732,335 5 2,452,630Reserves & offsites (Note 9) 30,207,051 27,551,311Equity in post closure liability (Note 5) (6,003,409) (9,548,983)Equity in tangible capital asses (Note 10) 618,936,773 624,394,353

5 644, 841 3 $44,849,321

12. DEBT LIMITS

Section 275(2) ot the Municipal Government Act requires that debt limits as deiiried by AlbertaRegulation 255/00 tor Red Deer Cnunty be disclosed as follows:

2014 2013

Total debt limit 5 80,010,111 $ 75,932,158Less long term debt (Note 7) 1,732,385 2,452,630

Amount of debt limit available 5 78,277,726 $ 73,529,525

Debt servicing limit 5 13,335,019 S 12,563,593Less debt servicing 330,321 830,321

Amount of debt servicing limit available 5 12,504,598 5 11,833,372

The debt limit is calculated at 1.5 times revenue oi the municipality (as de?ned in Alberta Regulation 255/00) and the debtservice II it is calculated at 0.25 times such revenue. lncurring debt beyond these limitations requires approval by theMinister at Municipal Affairs. These thresholds are guidelines used by Alberta Municipal Atiairs tc identity municipalitiesthat could be at financial risk iiturther debt is acquired. The calculation taken alone does not represent the financlal stabilityof the municipality. Rather, the ?nancial statements must be interpreted as a whole.

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13. SALARIES AND BENEFITS FOR ELECTED OFFICIALS AND COUNTY MANAGER

14.

Salaries, in accordance with Alberta Regulation 31312000.and benefits are as follows:

2014 2013

salary (1) aerieriis (2) Total

Mayor 5 34.432 $ - 5 34.432 $ 34.376Councillor-D 5 57.491 5 - 5 51,491 5 5s.e41

5 59.391 5 — x 59,381 3 11,3233 59.351 3 - 5 55,331 5 60.2255 59,801 5 - 5 59.801 $ 53,545

councilior—nivision5 5 53,951 s — 5 53.951 3 55,535Councillor - Division 6 5 59,501 $ - 5 59.801 5 53.335County Manager 5 228.311 5 33.064 S 261.875 5 252.538ueslgnateooiticer :4 129.593 s 24,515 5 154,209 $ 145,145Designated Officer 5 125.312 $ 23.597 5 148.909 $ 140.704

3 921.964 S 31.277 $ 1.004.241 $ 925.471

(1) Salary includes regular base pay. bonuses. overtime. lump sum payments, gross honoraria and anyother direct cash remuneration.(2) Bene?ts include the employer's share orall employenpaid benefits including pension, health care.dental coverage. group llie insurance, accidental disability and dismemberment insurance, and longterm disability plans. Reimbursement of expenses is not included. Bene?ts are not provided for theMayor and councillors.

PENSION PLANS

a) Employees or Red Deer county participate in the Local Authorities Pension Plan (LAPP). which iscovered by the Alberta Public Senor Pension Plans Act. The Plan serves about 230.534people andabout 413 empioyers. it is financed by empioyerand employee contributions and investment earning ofthe LAPP fund.

Red Deer county is required to make current service contributions to the Plan of 11.39% nfpensionable earnings up to the canada Pension Plan Year's Maximum Pensionable Earnings and15.94"/. for the excess. Employees 0! Red Deer county are required to make current servicecontributions or10.39“/. on the nrst $52,500 of pensionable salary and 14.94% thereafter.

Total current and past service contributions by Red Deer county to the LAFP in 2014 were $838,806(2013 - s774.113). Total current and past service contributions by the employees of Red Deer county tothe LAPF in 2014 were $775,359 12013- $710,053).

At December 31, 1013. the Plan disclclsed an actuarial shortfall of $4.86 billion (2012 - $4.98 billion).

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14. PENSION PLANS (continued)

b) The APEX supplementary pension plan, an Alberta Urban Municipality Association (AUMA)sponsored de?ned bene?t pension plan covered under the provisiuns of the Alberta EmploymentPension Plans Act. commenced in 2003 and provides supplementary pension pian bene?ts. The plansupplements the Local Authorities Pension Plan.

The Red Deer Cou nty is required to make current service contributions [D APEX of 3.0% of employmentIncome. The participating employee of the Red Deer county is require to make current servicecontributions of 2.5% of employment income.

The current service contributions by the Red Deer county to APEX in 2014 were $4,155 (2013 - $4,044).Total current service contributions by the employee of the county orRed Deer to APEX for 2014 were$3,462 (2013 - $3,370). The cost clf post retirement bene?ts earned by employees is actuariallydetermined using the projected bene?t method prorated on service and administrations best estimateof salary and benefit escalation and retirement ages of empioyees. The costs of post retirementbene?ts are iully funded.

c) In 2003, the Red Deer county joined the MuniSERP (farnlely APEX plus} supplemental employeeretirement plan, a plan sponsored by AUMA. MuniSERF and LAPF are voluntary. nomcontributoryplans that provide bene?ts to employees. The actuarial valuation of the plan for service accrued toDecember 31, 2014 is estimated to be $139,431 (2013 — $140,393).

A projected accrued bene?t cost with prorating on service method is used to determine the accruedbene?t obligation. Key actuarial assumptions used in the valuation were based on actuarial estimates.Those assumptions involve forecasts of expected future in?ation rates, discount rates, wage andsalary increases, maximum pension limit under the Income Tax Act and employee turnover andmortality. Key assumptions are as follows: expected discount rate of 5.00% (2013 - 5.00%). expectedsalary escalations 4.00% (2013 . 4.00"/.1peryear and intlation rate of 2.50% (2013 - 2.50"/.).

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DEPOSITS AND DEFERREDREVENUE

2013 Increases Decreases 2014Deposits 2,863,679 569,583 (453,140) 2,980,122Deferred Annexatian 130,575 (180,576) -

Deferred FCSS 45,178 54,000 (45,175) 54,000Deferred Land lease 33,545 49,359 (33,546) 49,853Deferred Prepaid taxlevy 95,117 123,535 (95,117; 123,335Deffered ACA 3,700 (3.700) -

Deflered Transpanation -Capital 3,755 (8,758) .Deflered ESRD -Capital 481,808 481,808Deffered ESRD -Operation 73,840 73,340Deffered MSI -Capital 269,959 l50,000 (269,959) 150.000

5 3.500512 S 1,502,925 (1,089,974) 3,913.45;

Deposits:

Various amounts retained on deposit lrom customers,

Deferred revenue:

Revenue received for various grant programs that have not yet been utilized and have been deferreduntil future periods.

EMPLOVEE BENEFIT OBLIGATION

2014 201 3

Vacation 5 587,958 $ 555,328

Posbemployment henelits - 1,193

S 537,953 3 557.521

Vacation:The vacation liability is comprised of the vacation that employees have earned and are deferring to thefuture. Employees are entitled to these benefits wltnlrl the next budgetary year.

F'Dst~employment benefits:The County Council sponsored an early retirement program that includes an allowance and alsocovers a portion of health and dental care coverage for the retiree on behalf of the retiree up to the endof the month in which helshe attains age 65. County Council rescinded the early retirement policyeffective nec31/2oos.1wa employees retired in 2003 and will bene?t from the program until the year inwhich they turn 65.

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17. CONTINGENCIES

15.

Red Deer county is a member or the Jubilee insurance Reciprocal Exchange (Genesis). under theterms of the membership, Red Deer county could become liable for its proportionate share of anyclaim losses in excess or the lunds held by the exchange. Ally liability incurred would be accountedfor as a current transaction in the year the losses are determined.

Red Deer county has a 15.7-/.. membership In the cen at Alberta Regional waste ManagementCommission (CARWMC)(with 61.2% cost sharing responsi ty). The Commission was established toprovide solid waste management services to its members. The Commission operates one land?ll(which is currently closed). CARWMC has the authority to requisition Red Deer County far normaloperating activ ies. There is a potential liability associated with landfills from future litigation.however, any liability is not determinable at this time. Any amount of future costs associated with thelandfill would be accounted for as a current transaction in the year that it occurs,

Red Deer county enters into long term contracts tor the iuture purchase of gravel to ensure anadequate supply is secured fur use during road construction and maintenance. certain paymentsunder the gravel contracts are made up front while other payments under the terms of the contract willbe made only upon removal oi the gravel over time. The iuture potential liability of gravel under thesecontracts is approximately $500,000 in current dollars.

Red Deer County owns 100% of the Big Bend airport. An airport reserve has not yet been established.The full impact oi any tuture revenue or expenditures has not yet been determined, nor has anidenti?cation of any potential luture lianility.

FINANCIALINSTRUMENTS

The County's ?nancial instruments consist of cash and temporary investments, receivables,investments, accounts payable and accrued liabilities, deposits and Il.)ng»term debt. It is Council'sopinion that the County is not exposed to signi?cant interest, currency or credit arising from these?nancial instruments. Unless otherwise noted, the fair value of these ?nancial instrumentsappraximates their carrying values.

The county is subject to credit risk with respect to trade and other receivables. credit risk arises iromthe possibility that taxpayers and entities to which the county provides services may experience?nancial difficulty and be unable to fulfill their obligations. The large number and diversity of taxpayersand customers rnirlimiles the credit risk.

At December 31, 2014 the county had a line or credit with a limit of s2ll.ooo,ooo, (2013 - $10,0DU.0?D)bearing interest at bank prime rate minus 0.50"/.. The ettective rate at year end 2014 was 3.00% (2013 -

3.00%). The line or credit is secured lay the county Burrowing Bylaw No. 2014/03. The balance atDecember 31. 2014 was shit (2013 . snil).

Red Deer County Borrowing Bylaw No. 2008127 provides authclrization to secure debt in the form ofCredit Card transactions in order to conduct daily business activities to the limit of $75,000 (2013 ~

$75,000) in total at any time. The balance at December 31, 2014 was $35,120 (2013 - $23,168).

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COMMITMENTS

The county entered into contracts with Ledcor Alberta Ltd. (Expiring - May 3151 ms) (roadmaintenance), Epcor water Services Inc. (Expiring ~ 2024) (water and sewer maintenance andmanagement) and Tagish Engineering (Expiring - 2015) (engineering services). as part or theAlternative Services Delivery Program.

BUDGET AMOUNTS

The initial 2014 budget ior Red Deer County was approved by council on December 17, 21113and hasbeen amended and approved throughout the year by Council.

GUARANTEES

The county has provided a limited guarantee to Central Alberta Regional waste Managementcommission. As at December 31, 2014. the loans outstanding that are covered by the guaranteeamounted to $139,291 l2o1a-5139.291). no liability has been recorded in these ?nancial statements asno payments are expected to be made on these guarantees.

APPROVAL OF FINANCIALSTATEMENTS

Management and council have approved these ?nancial statements.

COMPARATIVE FIGURES

certain comparative figures have been restated to conform with current year presentation.

CHANGES INACCOUNTINGPOLICIES

Liability {or contaminated Sites

Effective January 1, 2013.Red Deer County adapted the Public Sector Accounting Board‘: (FSAB) newrecommendations for the recclgnition, measurement and disclosure ofa liability associated with theremediation of contaminated sites under PS 3260 Liability for Contaminated Sites. The new standardde?nes activitie Included in a liability for remediation, establishes when to recognize and how tomeasure a Ila ty for remediation, and provides the related tinancial statement presentation anddisclosure requirements.

Previously, Red Deer county recognized liabilities for contaminated sites in accordance with P8 3200Liabilities, which requires recognition when there is an apprclpriate basis of measurement and areasonable estimate of the amount can be made. under the new recommendations, a liability forremediation oi a contamined site is recognized when certain criteria are met and at the best estimateof the amount required to remediate the site, as described in Note 5.

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Red Deer countyNotes to Financial Statements


24‘ CHANGES INACCOUNTINGPOLICIES (continued)

Tax Revenue

Effective January 1. 2013.Red Deer county prospectively adopted the Public Sector Accountingboard's (PSAB) new recommendations for the recognition. measurement, presentation and disclosureof tax revenue under PS 3510 Tax Revenue. Prior periods have not been restated. Previously, taxrevenue was recognized as it was earned and measurable, and reasonable collection was assured.Under PS 3510, Red neercounty recognizes tax revenue and the related receivable when they meetthe deiinition of an asset, they are authorized, and the taxable event occurs. Tax revenue and therelated receivable are initially recorded at managements‘ best estimate or their realizable value at theacquisition date. The related receivable is subsequently evaluated lor collectability.There was no material impact on the iinancial statements from the prospective applicatinn of the newaccounting recommendations.

Government Transfers

Erreotive January 1, zuizl, Red Deer county adopted the Public sector Accounting Board's (PSABl newrecommendations tor the recognition, presentation and disclosure oi government transiers undernewly issued l=s 3410 Gnvemment Transfers. Pursuant to these recommendations, the change wasapplied prospectively and prior periods have not been restated.

Previously, a government transfer was recognized in the period in which the events giving rise to thetransfer occurred, provided the transfer was authorized. any eligibility criteria had been met, and areasonable estimate of the amount could be made. Newly issued PS 3410 requires recognition ofgovernment translers as revenue when the transfer is authorized and all eligibility criteria, if any, havebeen met, unless the existence Di stipulations on the transfer creates a liability.

‘rhere was no material impact on the ?nancial statements «mm the prospective application of the newaccounting recommendations.

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