2017 Annual Report

62 City of Chilliwack 2017 Annual Report City of Chilliwack Notes to Consolidated Financial Statements Year Ended December 31, 2017 12 Contingent liabilities: (a) The City, as a member of the Fraser Valley Regional District, is responsible for its proportion of any operating deficits or long term debt related to functions in which it participates. Any liability which may arise as a result will be accounted for in the period in which the required payment is made. (b) The City is currently engaged in certain legal actions. Of the claims the City is defending, certain claims are covered by the City's insurers and/or other parties. The City has accrued for claims for which the amounts are known or can be reasonably estimated. The outcome of other claims is undeterminable at this time, accordingly, no provision has been made in the accounts for these actions. (c) The City and its employees contribute to the Municipal Pension Plan (a jointly trusteed pension plan). The board of trustees, representing plan members and employers, is responsible for administering the plan, including investment of assets and administration of benefits. The plan is a multi-employer defined benefit pension plan. Basic pension benefits are based on a formula. As at December 31, 2016, the plan has about 193,000 active members and approximately 90,000 retired members. Active members include approximately 38,000 contributors from local governments. Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the plan. The actuary's calculated contribution rate is based on entry-age normal cost method, which produces the long-term rate of member and employer contributions sufficient to provide benefits for average future entrants to the plan. This rate is then adjusted to the extent there is amortization of any funding deficit. The most recent valuation for the Municipal Pension Plan as of December 31, 2015, indicated a $2,224 million funding surplus for basic pension benefits on a going concern basis. As a result of the 2015 basic account actuarial valuation surplus and pursuant to the joint trustee agreement, $1,927 million was trasnferred to the rate stabilization account and $297 million of the surplus ensured the required contribution rates remained unchanged. The City paid $2,386,285.60 (2016 - $2,292,300) for employer contributions to the Plan in fiscal 2017. The next valuation will be as at December 31, 2018, with results available in 2019. Employers participating in the plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the plan records accrued liabilities and accrued assets for the plan in aggregate, resulting in no consistent and reliable basis for allocating the obligation, assets and cost to individual employers participating in the plan. 13 Fair value of financial assets and financial liabilities: The fair value of the City's cash, accounts receivable, accounts payable and accrued liabilities, and refundable deposits approximate their carrying amounts due to the immediate or short term maturity of these financial instruments. The fair value of portfolio investments at December 31, 2017 was $113,939,224 (2016 - $86,420,172). Included in the fair market estimate is accrued interest of $961,078 (2016 - $1,292,214), which is recorded within accounts receivable. The fair value of the capital partnership obligation approximates the book value as the interest rate represents borrowing rates for loans under similar terms and maturities. 14 Commitment: The City is committed to the acquisition of 5 properties with purchase prices totaling approximately $5,255,000. City of Chilliwack Financial Statements