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Reserves Policy
Purpose
The purpose of this policy is to
1. set out consistent standards and guidelines for the establishment, management, and
accounting ofreserves and reserve funds;
2. provide for unanticipated fluctuations in operating and capital activities;
3, set aside funds for the replacement of existing equipment and facilities, as well as for
future projects;
4. provide for future operating and capital requirements, and
5. inform decisions relating to long-term financial planning in orderto minimize debt
servicing costs.
Establishment and Management of Reserves
The establishment of, contributions to, withdrawals from and closure of an operating or capital
reserve shall be approved by the Council of the Village of Fundy-St. Martins through resolution
or by-law in accordance with the Local Governance Act and/or the Community Planning Act as
follows:
General Operating Reserve Fund
a. A municipality may, by resolution, establish, manage and contribute to a general
operating reserve fund for the payment of operating expenses.
b. The amount held in a general operating reserve fund shall not exceed five percent
of the total expenditure that was budgeted for the municipality for the previous
fiscal year.
c. Money held in a general operating reserve fund shall be used for no purpose other
than the payment of operating expenses.
d. Every resolution respecting a contribution made to or a withdrawal from a general
operating reserve fund in respect of a calendar year shall be made by December
31 of that calendar year and shall specify the dollar amount to the general
operating reserve fund.
2. General Capital Reserve Fund
a. A municipality rnay by resolution establish, manage, and contribute to a general
capital reserve fund for the payment of capital expenses.
b. Money held in a general capital reserve fund shall be used for no purpose other
than the payment of capital expenses.
c. Every resolution in respect of a calendar year shall be made by December 3l of
that calendar year and shall specify the dollar amount contributed to the general
capital reserve fund.
3. Utility Operating Reserve Fund
a. This fund balance cannot exceed 5%o of the previous year's total utility operating
budget.
b. Money held in a Utility Operating Reserve can only be used towards general
operating expenses of the service or utility
c. Every resolution respecting a contribution made to or a withdrawal from a general
operating reserve fund in respect of a calendar year shall be made by December
3l of that calendar year and shall specify the dollar amount to the general
operating reserve fund.
4. Utility Capital Reserve Fund
a. Money held in a Utility Capital Reserve can solely be used for Utility Fund
capital expenses incurred by the municipality.
b. Every resolution in respect of a calendar year shall be made by December 31 of
that calendar year and shall specify the dollar amount contributed to the general
capital reserve fund.
5. Land Reserve Fund
a. Per the Community Planning Act, funds received from the sale of land held for
public purposes or cash in lieu from developers are to be paid into a special
account, and the money in that account is to be used by City Council to acquire or
develop land for public purposes.
Adequacy of Reserves
l. The adequacy of individual reserves shall be determined on a case-by-case basis and
aligned with municipality's long-term financial planning.
Funding Reserves
1. Reserve funds will generally come from:
a. The excess of revenues over expenditures and one-time revenues; and
b. Planned/budgeted amounts for reserves.
Investment of Reserve Funds
I . Any money, including interest, within an operating reserve fund or a capital reserve fund
shall be invested in accordance with the Trustees Act
2. Any investment of reserve funds shall comply with the Trustees Act.
Temporary Borrowing from Reserves
Temporary borrowing from reserves for short term cash flow management and internal
financing is permitted, however the following conditions must be met:
a. Borrowing must not adversely affect the intended purpose of the reserve;
b. A plan to repay the reserve within a reasonable timeframe is required and must be
documented; and
c. Borrowing must be approved by a Resolution of Council.
Annual Reporting
L The annual reporting of the Operating and Capital Reserve Funds shall be in accordance
with the Local Governance Reserve Fund Regulation and the Community Planning Act.
Responsibilities
l. Council shall:
a. Approve the Reserves Policy; and
b. Approve transactions to and from reserves by specific resolution
2. The CAO shall:
a. Ensure compliance with the principles and mandatory requirements contained in
this policy.
b. Develop and update this policy as necessary and present change to Council;
c. Perform the transfers to and from reserves and reserve funds as authorized by
Council;
d. Recommend strategies for the adequacy of reserve levels;
e. Report to Council, the reserve balances and forecast as part of the annual budget
process.
Resolutiqrr . ^
Date lSignature
Adopted
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Amended
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