V FINANCIAL REVIEW
This section reviews the financial aspects of the Harbours Section and provides a longrange
projection that incorporates the operational and financial recommendations
discussed previously. The potential financial implications of providing a number of
transient slips is also addressed.
A.REVIEW OF PREVIOUS OPERATING RESULTS
Tables 9 and 10 show actual and budget expenditures and revenues for the five-year
period from 2005 to 2009. During the last five years, expenditures increased by
approximately 46% from $935,000 to $1,368,000. A significant reason for the increase
particularly in revenues was the take-over by the Harbours Section in 2005/2006 of the
private Metro Marine facility in Bronte together with the associated storage area and
slips. Costs also rose during the period, particularly those related to debenture payments.
These costs have risen from $293,700 in 2000 to $548,100 in 2009. The bulk of the
difference relates to dredging. Prior to 2006 the Harbours Section operated without levy
support. In fact, in previous years the operations generated surpluses that were used to
improve the adjacent parks. However, since 2007, the Harbours Section has been
provided with annual levy funding which in 2009 was $54,400.
The expenditure and revenue results are a reflection of the current operating structure
and the approach to asset replacement funding. A number of changes to address longterm
sustainability and to re-align the Harbours Section operations and finances in
keeping with the recommended responsibilities are discussed below.
B. RECOMMENDED CHANGES WILL HELP ENSURE LONG-TERM
SUSTAINABILITY
As part of the review the current operations were examined with the objective of
determining:
• What additional expenditure reserves will be required in order to fully fund the
physical assets in the two harbours on a sustainable basis.
• What potential is there to generate additional revenues either from existing
operations or from the reallocation of other harbour-related revenues, especially
leases.
1.Short and Long-term Expenditures
a)Inflation and Cost Increases
In preparing the financial projections an annual rate of inflation of 3% was
assumed. This rate was applied to expenditures and revenues except for those
where other assumptions were considered more appropriate. The exceptions are
discussed below.
b)Dredging
The projection provides for periodic dredging of the two harbours. A 10-year cycle
has been assumed for Oakville with the next dredge occurring in 2010/2011. For
Bronte dredging costs are projected on a seven-year cycle. The next dredge is
anticipated in 2014/2015. Cost estimates from the Harbours Section were used as
the basis for annual debenture requirements.
As was discussed in the previous section because dredges of Bronte Harbour are
required every seven years and debentures to pay for them have ten-year terms,
there are periods when payments must be made on two debentures. To address this
in the long-term financial projection provision has been made for more stable
annual dredge requirements through the use of a combination of reserve fund
contributions and withdrawals.
c)Long-term Capital Replacement Allowance
A significant factor in the business plan compared to the current budget practice
is the requirement to provide much higher annual reserve fund contributions in
order to fund the long-term replacement of capital infrastructure and equipment
in accordance with the PSAB replacement criteria.
Moving from the current asset replacement budgeting practice to the full PSAB
requirement would be significant additional burden to the Harbours Section. This
is because a very significant catch-up contribution would be required in the first
year of the projection. Even with smoothed out contributions that fully fund the
requirements of the 10 years of the projection would put the Harbours Section into
a deficit position (after fully utilizing its operating reserve fund). However, if
contributions were limited to the level that could be funded without creating a
deficit a reserve fund shortfall of approximately $447,000 would result at the end
of ten years. This would either require delaying some future replacements or
obtaining funding from other sources.
In calculating these required replacement allowance no provision has been made
to pay for seawalls and piers. As discussed previously, it is a recommendation of this
report that because these infrastructure components would be required irrespective
of no boating operations, the Harbours Section should not be responsible for the
costs of repairing and maintaining them.
d) TOWARF
The projection includes an annual expenditure and revenue for the operations of
TOWARF in the amount of $32,500. As directed by Council, through resolution
from the 2009 Budget Committee, the costs associated with TOWARF are funded
entirely by boaters. Prior to the 2009 Budget Committee recommendation, the
harbours section had always contributed $5,000 to TOWARF. Beginning in 2010
Oakville and Bronte boaters, as well as boaters within the Bronte Outer Harbour
have been levied a $25.00 per mooring fee to cover the cost of TOWARF. Since
it is understood TOWARF provides services to all Oakville boaters, the fee was
arrived at by dividing $32,500 by the total number of moorings within Oakville
and Bronte harbours (estimated at 1,300).
e)Non-recurring Expenditures
Also incorporated into the projection are the non-recurring expenditures to pay
for staff overlaps when the Harbour Master and the administrator retire.
2.Revenues
Three potential sources of additional sustainable revenues were identified: mooring and
storage fees, boat club rental income and rent from the Marina Building.
a)Mooring and Storage Fees
Analysis of rates charged by harbours and marinas across the GTA indicates that
Oakville’s current rates are somewhat below the prevailing average. This is
particularly evident for serviced finger docks.
Table 11 shows the results of a comprehensive survey of 2010 rates. More
specifically, for the 2010 season the fee for an Oakville resident1 for a boat kept in
Oakville and Bronte Harbour is $56.50 per foot for a serviced finger dock. In
contrast, the fee for a dock at the Bronte Outer Harbour Marine is $67.00 per foot,
20.7% higher. While arguably the Outer Harbour Marina slips are of a somewhat
better quality, the differential in rates is significant. In view of these differentials
it is recommended that for three years rates should be increased at 5% (2% above
inflation) in order to bring them into line with broad market levels. After that,
increases of 3% per year are assumed. Table 12 shows the projected rates based on
these recommendations.
With the implementation of the recommended rates it will be important to
monitor performance carefully. Accordingly, should at some point the waiting list
for moorings in the two harbours become too short to ensure full occupancy annual
increases should be scaled back. In keeping with a policy of charging full market
rates, it is also recommended that the rates charged at competing marinas —
generally those between Burlington and the west end of Toronto — be surveyed
annually to ensure that the rates charged at Oakville’s harbours are in line with
broad market.
b)Rental Income
Under current arrangements the Harbours Section is only allocated with the rental
income from tenants in the Oakville harbour Marina Building. Voluntary dredging
contributions from the boat clubs are also credited to the Harbours Section but not
the rental revenues from leases.
Currently the rents paid under the existing boat club leases are quite small totalling
approximately $20,000 per year. However, they are based on leases entered into
many years ago and clearly do not reflect current market rents. The lease for the
BHYC property dates from 1962 and requires only a small annual lease payment.
The rents from the OYS and the OPBC are also low again reflecting the fact that
they were entered into many years ago. However, all three leases will be
terminating between 2010 and 2015.
Assuming, as is recommended in report, the Town continues to lease facilities to
the three clubs, it is anticipated that rental revenues would increase. The scale of
the increase would, however, depend on the level of market rents and the terms of
the leases. Note should be taken of two other points in relation to the club leases.
Firstly consideration should be given to the issue of public access particularly in the
case of the OYS. Secondly, there is likely to be a need to make repairs to the
dockwalls at the OYS and the OPBC. However, in keeping with this report’s
recommendation regarding basic harbour infrastructure the cost of any required
work relating to these dockwalls should be a town-wide responsibility.
The final key recommendation concerning the club leases is that rental revenues
should in future be assigned to the Harbour Section in keeping with the principle
that they are derived from boating-related activities. Conversely, any future
expenses associated with the club properties (excluding basic harbour
infrastructure) should also be the responsibility of the Harbours Section.
For the purposes of the projections two lease rent scenarios have been used since
new lease terms are not certain. The first scenario is based on estimated future
market rents while the second assumes a continuation of the existing lease rents
(with 3% annual inflation).
c)Oakville Harbours Marina Building
In 2005, near the conclusion of the boating season, the Harbours Section took over
the Marine Building in Bronte Harbour. The building was reportedly built in the
1940’s and due to the structure of the previous lease, it has received only minimal
maintenance over the years and is in need of a full renovation. A building study
has been conducted and architectural concept plans have been developed for the
renovation. As part of the proposed renovation the pre-fab office attached to the
building that currently serves as the administrative office for the Harbours Section
would be removed. The plan anticipates the Harbours Section being
accommodated within the renovated building. Fully accessible public washroom
would also be included.
As the Marine Building was not the responsibility of the Harbours Section until
recently it is recommended that the cost of the required renovation, which is
largely required to address deferred maintenance, be funded in the same manner
as renovations of other buildings owned by the Town. However, once renovated,
the cost of future year-to-year repairs and maintenance should be the responsibility
of the Harbours Section.
As yet, no commitment has been made to carry out the work. In the financial
projection it has been assumed that the work will be undertaken in 2013 (subject
to Council approval of the capital budget). It is also assumed that no rental
revenues would be earned in 2013 but that they would resume in 2014 and would
have increased by 20%. Should the renovation be deferred, the rental income
would continue as current levels.
When the Town assumed the operations from the former tenant, staff were
directed to return within five years to report on the revenues and operational
impact generated by taking over the Marina facility, moorings, and custom hauling,
launching, and storage in Bronte Harbour. This analysis will be provided in a
separate follow-up report to Council in 2011 following five full years of operation.
C.FINANCIAL SUSTAINABILITY IS ATTAINABLE OVER THE LONG TERM
Four projections have been prepared.
Table 13: Assumes full reserve fund contribution requirements over ten years and
estimated market rents are achieved from new club leases.
Table 14: Assumes reduced reserve fund contributions and estimated market rents
from new club leases.
Table 15: Assumes full reserve fund contribution requirements over ten years and
continuation of existing club lease rents (with inflation adjustment).
Table 16: Assumes reduced reserve fund contribution and continuation of existing
club lease rents (without inflation adjustment).
For the two projections involving the full required reserve fund contributions (Tables
13 and 15) significant annual deficits are likely especially if market rents are not
achieved from the club leases. The deficits could only be partially funded from the
Harbours Section operating reserves which currently stand at $572,000. If market rents
are not achieved, annual deficits ranging from $112,000 to $337,000 are projected.
For the projections with the reduced level of reserve fund contributions (Tables 14 and
16) deficits could be avoided over the ten-year projection as long as market rents are
achieved from the club leases. However, it would be necessary to draw heavily from the
Harbours Section operating reserves. If market rents for the clubs are not achieved,
deficits would likely occur in eight of the ten years even after using the full amount of
the Harbours Section operating reserves. The annual deficits would range from
$127,000 to $310,000 (see Table 16).
As noted previously, since it is recommended that the Harbours Section no longer be
responsible for the repair and maintenance of major capital assets (e.g. piers and
seawalls), it is important to identify the financial implications that this would have for
the Town. Accordingly, on the bottom line all four tables show the projected annual
amounts that will need to be spent over the ten-year period. Most significant is an
expenditure of $4.15 million in 2011. This amount has been budgeted for in the Town’s
capital budget. The $1.5 million cost of renovating the Oakville Harbours Marina
Building in 2013 has not been approved by Council.
Appendices A to E contain a series of tables relating to the various reserve funds that
are required to deal with capital and asset contributions and expenditures that are
incorporated into Tables 13 to 16. They include tables relating to dredging funds, major
capital assets, Harbours Section assets, PSAB reserve funds (based on both full and
reduced contribution levels) and the Harbours Section operating reserve. Overall the
degree to which the Harbours Section could operate on a financially sustainable basis
will largely depend upon the level of reserve fund contributions it is required to and
amount of rental income from club leases it receives.
D.FINANCIAL IMPLICATIONS OF PROVIDING TRANSIENT MOORINGS
Neither Oakville nor Bronte Harbour currently provide moorings for short-term visitors
(transients). In the interests of improving Oakville’s tourism facilities, it has been
suggested that a few slips, be made available for this purpose in Oakville Harbour.
Transient boaters already have an option in Bronte at the Bronte Outer Harbour
Marina which provides transient dockage on a daily, weekly and monthly basis. The
BHYC also provides reciprocal mooring privileges for members of other clubs. In
Oakville, transient boaters are able to moor at the boat clubs if they are members of
clubs which have reciprocal mooring privileges.
Were the Town to provide transient slips it would result in a reduction in seasonal
revenues. The reduced revenues would not likely be made up by the short-term fees
earned from transient boats. Seasonal slip rental and winter storage fees for a 30-foot
boat generate approximately $3,000 per year for the Harbours Section. Assuming a
realistic daily charge of $1.20 per foot, a 30-foot transient boat would generate $36 per
day. At this rate each transient slip would have to be occupied 83 days (nearly 12
weeks) in order to recoup the forgone income from a seasonal user. This is not
considered an achievable occupancy level given that the period during which there are
significant numbers of transient boaters is limited to the 8–9 weeks during July and
August.
Operating costs for the Harbours Section would also increase if transient slips were to
be provided. At a minimum there would be a need for staff to look after slip allocations.
Providing these extra services could absorb most of the revenues earned from transient
charges.
From a tourism perspective transient boaters are unlikely to generate a substantial
amount of additional spending in Oakville. The most likely expenditure category would
be restaurant meals. However, the amount per visitor might not be as significant as for
other tourists as transient boaters often prepare their own meals.
It is recommended that since from a financial perspective each transient slip would
likely to result in a net reduction in revenues of approximately $3,000 per year and since
it will be a challenge just to achieve a financially sustainable operation under current
operating practices no slips should be made available at present.
_________________________
The following section provides a summary of the conclusions and recommendations.
VI SUMMARY OF CONCLUSIONS &
RECOMMENDATIONS
The following is a summary of the conclusions that have been drawn from the analysis
and the recommended steps that should be taken to implement the proposed business
plan.
A.CONCLUSIONS
• Oakville’s harbours are two of the most valuable assets. They represent an
important part of Oakville’s heritage and add significantly to the appeal of the
community.
• Generally, the facilities in the two harbours are adequate given their current role.
Some sections of the dockwalls are in poor repair and the Oakville Harbours
Marina Building in Bronte is in need of renovation.
• The range and quality of the facilities and services offered by the two harbours is
in keeping with prevailing market standards.
• The range of moorings available in the harbours is less than ideal given that the
average size of boats in increasing. Nevertheless, both harbours have long waiting
lists. Given a growing population there is no reason to expect that the harbours
cannot maintain full occupancy. The large majority of moorings (Town and club
operated) are occupied by Oakville boar owners.
• The current operating structure under which the Harbours Section operates the
majority of the moorings and the boat clubs the remainder is considered
appropriate. The structure is well-suited to the physical make-up of the harbours
and having a mix of public and private moorings is in keeping with current
practices in other harbours and marinas in the GTA market.
• The boat clubs have been important components of the Oakville community for
many years. They perform valuable service training young people and over the
years have fundraised substantial amounts for many local charities and initiatives.
• The organizational structure and staffing of the Harbours Section is satisfactory.
However, with the imminent retirement of the Harbour Master and the
administrator an “overlap” with their replacements is essential because of
complexity of the operation. The long-term adequacy of the staffing levels should
be monitored after the replacement staff are in place.
• Until 2006 the Harbours Section was able to operate on a self-sufficient basis.
Since then it has received an annual $54,400 contribution from the tax levy. A
major factor that has contributed to the need for support is the rising cost and
frequency for dredges.
• Revenues and expenses have risen substantially over the past five years. A major
change occurred when the Harbours Section took over the Marine Building in
Bronte together with a storage area and moorings.
• Analysis of long-term expenditures and revenues indicates that with a number of
changes in responsibilities and operating arrangements, the harbours would be able
to achieve long-term financial sustainability.
• Key among the required changes are:
•Gradual increases in fees to bring them fully into line with prevailing market levels.
•Making partial provision for the replacement of capital assets in keeping with
•PSAB requirements. With the provision of the full requirements annual deficits would arise.
•Achieving market rents from club leases and allocating them to the Harbours
•Section. In addition, formalizing the requirement for clubs to contribute
•annually to the cost of dredging. Removing the responsibility for maintenance and repair of Major Capital Assets from the Harbours Section.
• Financial sustainability will take a number of years to achieve even with the
provisions noted above. However, use of the Harbours Section’s reserve fund
should enable shortfalls to be financed without the need for additional financial
support.
• Sustainability is dependent to a significant degree upon the achievement of the
estimated market rents for the boat clubs. A large variance from these amounts
would place the plan at risk.
• Making available a number of slips for transient boaters would add a new element
to Oakville’s tourism infrastructure. However, the net revenues from transient
charges would not compensate for the elimination of seasonal fees that the slips
currently generate.
B.RECOMMENDATIONS
• Boating operations should be continued in their current form in both harbours.
• The current mix of Town and club operated facilities should be maintained.
• As and when the opportunity arises the Town should acquire the federal-owned
lands within Bronte Beach Park and the Bronte Outer Harbour Marina.
• The responsibilities of the Harbours Section should be limited to operations
relating solely to boating activities. The Harbours Section should no longer be
responsible for maintaining and repairing Major Capital Assets (i.e. seawalls and
piers) since the infrastructure would be required irrespective of boating activities.
Other Town departmental budget forecasts should be amended to reflect the shift
from harbours funding to tax levy costs.
• Dredging is a critical issue. A detailed dredging study should be undertaken. The
study should focus on ways to manage required dredges in the most efficient and
cost effective manner. The study should explore alternative approaches to dredging
including but not limited to annual mini dredges to remove localized high silt
areas, that may increase the frequency for larger full dredging operations.
• Fees and charges should be kept in line with prevailing market rates. A GTA-wide
rate survey should be undertaken on an annual basis.
• Budgets for the Harbours Section should make provision for the replacement of
capital assets in accordance with PSAB rules to the extent possible without
creating annual operating deficits.
• Rental income from boat club leases together with annual dredging cost
contributions should be allocated to the Harbours Section. Boat club leases should
be negotiated on a full market value basis with a requirement to provide dredging
contributions.
• The Oakville Harbours Marina Building should be renovated as soon as possible.
The capital cost of this initial renovation should be paid for in the same manner
as renovations to the Town’s other buildings. Once renovated, the Harbours
Section should be responsible for future maintenance and repair costs.
• Transient slips should be provided at present given the financial cost they would
create for the Harbours Section.
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V FINANCIAL REVIEW
This section reviews the financial aspects of the Harbours Section and provides a longrangeprojection that incorporates the operational and financial recommendationsdiscussed previously. The potential financial implications of providing a number oftransient slips is also addressed.
A.REVIEW OF PREVIOUS OPERATING RESULTS

Tables 9 and 10 show actual and budget expenditures and revenues for the five-yearperiod from 2005 to 2009. Picture_32During the last five years, expenditures increased byapproximately 46% from $935,000 to $1,368,000. A significant reason for the increaseparticularly in revenues was the take-over by the Harbours Section in 2005/2006 of theprivate Metro Marine facility in Bronte together with the associated storage area andslips. Costs also rose during the period, particularly those related to debenture payments.These costs have risen from $293,700 in 2000 to $548,100 in 2009. The bulk of thedifference relates to dredging. Prior to 2006 the Harbours Section operated without levysupport. In fact, in previous years the operations generated surpluses that were used toimprove the adjacent parks. However, since 2007, the Harbours Section has beenprovided with annual levy funding which in 2009 was $54,400.

The expenditure and revenue results are a reflection of the current operating structureand the approach to asset replacement funding. A number of changes to address longtermsustainability and to re-align the Harbours Section operations and finances inkeeping with the recommended responsibilities are discussed below.

B. RECOMMENDED CHANGES WILL HELP ENSURE LONG-TERMSUSTAINABILITY
As part of the review the current operations were examined with the objective ofdetermining:• What additional expenditure reserves will be required in order to fully fund thephysical assets in the two harbours on a sustainable basis.• What potential is there to generate additional revenues either from existingoperations or from the reallocation of other harbour-related revenues, especiallyleases.
1.Short and Long-term Expenditures

a)Inflation and Cost Increases
In preparing the financial projections an annual rate of inflation of 3% wasassumed. This rate was applied to expenditures and revenues except for thosewhere other assumptions were considered more appropriate. The exceptions arediscussed below.
b)Dredging
The projection provides for periodic dredging of the two harbours. A 10-year cyclehas been assumed for Oakville with the next dredge occurring in 2010/2011. ForBronte dredging costs are projected on a seven-year cycle. The next dredge isanticipated in 2014/2015. Cost estimates from the Harbours Section were used asthe basis for annual debenture requirements.As was discussed in the previous section because dredges of Bronte Harbour arerequired every seven years and debentures to pay for them have ten-year terms,there are periods when payments must be made on two debentures. To address thisin the long-term financial projection provision has been made for more stableannual dredge requirements through the use of a combination of reserve fundcontributions and withdrawals.
c)Long-term Capital Replacement Allowance

A significant factor in the business plan compared to the current budget practiceis the requirement to provide much higher annual reserve fund contributions inorder to fund the long-term replacement of capital infrastructure and equipmentin accordance with the PSAB replacement criteria.Moving from the current asset replacement budgeting practice to the full PSABrequirement would be significant additional burden to the Harbours Section. Thisis because a very significant catch-up contribution would be required in the firstyear of the projection. Even with smoothed out contributions that fully fund therequirements of the 10 years of the projection would put the Harbours Section intoa deficit position (after fully utilizing its operating reserve fund). However, ifcontributions were limited to the level that could be funded without creating adeficit a reserve fund shortfall of approximately $447,000 would result at the endof ten years. This would either require delaying some future replacements orobtaining funding from other sources.In calculating these required replacement allowance no provision has been madeto pay for seawalls and piers. As discussed previously, it is a recommendation of thisreport that because these infrastructure components would be required irrespectiveof no boating operations, the Harbours Section should not be responsible for thecosts of repairing and maintaining them.
d) TOWARFThe projection includes an annual expenditure and revenue for the operations ofTOWARF in the amount of $32,500. As directed by Council, through resolutionfrom the 2009 Budget Committee, the costs associated with TOWARF are fundedentirely by boaters. Prior to the 2009 Budget Committee recommendation, theharbours section had always contributed $5,000 to TOWARF. Beginning in 2010Oakville and Bronte boaters, as well as boaters within the Bronte Outer Harbourhave been levied a $25.00 per mooring fee to cover the cost of TOWARF. Sinceit is understood TOWARF provides services to all Oakville boaters, the fee wasarrived at by dividing $32,500 by the total number of moorings within Oakvilleand Bronte harbours (estimated at 1,300).
e)Non-recurring Expenditures

Also incorporated into the projection are the non-recurring expenditures to payfor staff overlaps when the Harbour Master and the administrator retire.
2.Revenues

Three potential sources of additional sustainable revenues were identified: mooring andstorage fees, boat club rental income and rent from the Marina Building.
a)Mooring and Storage Fees

Analysis of rates charged by harbours and marinas across the GTA indicates thatOakville’s current rates are somewhat below the prevailing average. This isparticularly evident for serviced finger docks.Table 11 shows the results of a comprehensive survey of 2010 rates. Morespecifically, for the 2010 season the fee for an Oakville resident1 for a boat kept inOakville and Bronte Harbour is $56.50 per foot for a serviced finger dock. Incontrast, the fee for a dock at the Bronte Outer Harbour Marine is $67.00 per foot,20.7% higher. While arguably the Outer Harbour Marina slips are of a somewhatbetter quality, the differential in rates is significant. In view of these differentialsit is recommended that for three years rates should be increased at 5% (2% aboveinflation) in order to bring them into line with broad market levels. After that,increases of 3% per year are assumed. Table 12 shows the projected rates based onthese recommendations.With the implementation of the recommended rates it will be important tomonitor performance carefully. Accordingly, should at some point the waiting listfor moorings in the two harbours become too short to ensure full occupancy annualincreases should be scaled back. In keeping with a policy of charging full marketrates, it is also recommended that the rates charged at competing marinas —generally those between Burlington and the west end of Toronto — be surveyed annually to ensure that the rates charged at Oakville’s harbours are in line with broad market.Picture_33

b)Rental Income

Under current arrangements the Harbours Section is only allocated with the rental income from tenants in the Oakville harbour Marina Building. Voluntary dredging contributions from the boat clubs are also credited to the Harbours Section but not the rental revenues from leases. Currently the rents paid under the existing boat club leases are quite small totalling approximately $20,000 per year. However, they are based on leases entered into many years ago and clearly do not reflect current market rents. The lease for the BHYC property dates from 1962 and requires only a small annual lease payment. The rents from the OYS and the OPBC are also low again reflecting the fact that they were entered into many years ago. However, all three leases will be terminating between 2010 and 2015.Assuming, as is recommended in report, the Town continues to lease facilities tothe three clubs, it is anticipated that rental revenues would increase. The scale of the increase would, however, depend on the level of market rents and the terms of the leases. Note should be taken of two other points in relation to the club leases. Firstly consideration should be given to the issue of public access particularly in the case of the OYS. Secondly, there is likely to be a need to make repairs to the dockwalls at the OYS and the OPBC. However, in keeping with this report’s recommendation regarding basic harbour infrastructure the cost of any required work relating to these dockwalls should be a town-wide responsibility.The final key recommendation concerning the club leases is that rental revenues should in future be assigned to the Harbour Section in keeping with the principle that they are derived from boating-related activities. Conversely, any future expenses associated with the club properties (excluding basic harbour infrastructure) should also be the responsibility of the Harbours Section.For the purposes of the projections two lease rent scenarios have been used since new lease terms are not certain. The first scenario is based on estimated future market rents while the second assumes a continuation of the existing lease rents(with 3% annual inflation).

c)Oakville Harbours Marina Building

In 2005, near the conclusion of the boating season, the Harbours Section took overthe Marine Building in Bronte Harbour. The building was reportedly built in the1940’s and due to the structure of the previous lease, it has received only minimalmaintenance over the years and is in need of a full renovation. A building studyhas been conducted and architectural concept plans have been developed for therenovation. As part of the proposed renovation the pre-fab office attached to thebuilding that currently serves as the administrative office for the Harbours Sectionwould be removed. The plan anticipates the Harbours Section beingaccommodated within the renovated building. Fully accessible public washroomwould also be included.As the Marine Building was not the responsibility of the Harbours Section untilrecently it is recommended that the cost of the required renovation, which islargely required to address deferred maintenance, be funded in the same manneras renovations of other buildings owned by the Town. However, once renovated,the cost of future year-to-year repairs and maintenance should be the responsibilityof the Harbours Section.As yet, no commitment has been made to carry out the work. In the financialprojection it has been assumed that the work will be undertaken in 2013 (subjectto Council approval of the capital budget). It is also assumed that no rentalrevenues would be earned in 2013 but that they would resume in 2014 and wouldhave increased by 20%. Should the renovation be deferred, the rental incomewould continue as current levels.When the Town assumed the operations from the former tenant, staff weredirected to return within five years to report on the revenues and operationalimpact generated by taking over the Marina facility, moorings, and custom hauling,launching, and storage in Bronte Harbour. This analysis will be provided in aseparate follow-up report to Council in 2011 following five full years of operation.

C.FINANCIAL SUSTAINABILITY IS ATTAINABLE OVER THE LONG TERM

Four projections have been prepared.
Table 13: Assumes full reserve fund contribution requirements over ten years andestimated market rents are achieved from new club leases.
Table 14: Assumes reduced reserve fund contributions and estimated market rentsfrom new club leases.
Table 15: Assumes full reserve fund contribution requirements over ten years andcontinuation of existing club lease rents (with inflation adjustment).
Table 16: Assumes reduced reserve fund contribution and continuation of existingclub lease rents (without inflation adjustment).
For the two projections involving the full required reserve fund contributions (Tables13 and 15) significant annual deficits are likely especially if market rents are notachieved from the club leases. The deficits could only be partially funded from theHarbours Section operating reserves which currently stand at $572,000. If market rentsare not achieved, annual deficits ranging from $112,000 to $337,000 are projected.For the projections with the reduced level of reserve fund contributions (Tables 14 and16) deficits could be avoided over the ten-year projection as long as market rents areachieved from the club leases. However, it would be necessary to draw heavily from theHarbours Section operating reserves. If market rents for the clubs are not achieved,deficits would likely occur in eight of the ten years even after using the full amount ofthe Harbours Section operating reserves. The annual deficits would range from$127,000 to $310,000 (see Table 16).
As noted previously, since it is recommended that the Harbours Section no longer beresponsible for the repair and maintenance of major capital assets (e.g. piers andseawalls), it is important to identify the financial implications that this would have forthe Town. Accordingly, on the bottom line all four tables show the projected annual

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Picture_38amounts that will need to be spent over the ten-year period. Most significant is anexpenditure of $4.15 million in 2011. This amount has been budgeted for in the Town’scapital budget. The $1.5 million cost of renovating the Oakville Harbours MarinaBuilding in 2013 has not been approved by Council.Appendices A to E contain a series of tables relating to the various reserve funds thatare required to deal with capital and asset contributions and expenditures that areincorporated into Tables 13 to 16. They include tables relating to dredging funds, majorcapital assets, Harbours Section assets, PSAB reserve funds (based on both full andreduced contribution levels) and the Harbours Section operating reserve. Overall thedegree to which the Harbours Section could operate on a financially sustainable basiswill largely depend upon the level of reserve fund contributions it is required to andamount of rental income from club leases it receives.
D.FINANCIAL IMPLICATIONS OF PROVIDING TRANSIENT MOORINGS
Neither Oakville nor Bronte Harbour currently provide moorings for short-term visitors(transients). In the interests of improving Oakville’s tourism facilities, it has beensuggested that a few slips, be made available for this purpose in Oakville Harbour.Transient boaters already have an option in Bronte at the Bronte Outer HarbourMarina which provides transient dockage on a daily, weekly and monthly basis. TheBHYC also provides reciprocal mooring privileges for members of other clubs. InOakville, transient boaters are able to moor at the boat clubs if they are members ofclubs which have reciprocal mooring privileges.Were the Town to provide transient slips it would result in a reduction in seasonalrevenues. The reduced revenues would not likely be made up by the short-term feesearned from transient boats. Seasonal slip rental and winter storage fees for a 30-footboat generate approximately $3,000 per year for the Harbours Section. Assuming arealistic daily charge of $1.20 per foot, a 30-foot transient boat would generate $36 perday. At this rate each transient slip would have to be occupied 83 days (nearly 12weeks) in order to recoup the forgone income from a seasonal user. This is notconsidered an achievable occupancy level given that the period during which there aresignificant numbers of transient boaters is limited to the 8–9 weeks during July andAugust.
Operating costs for the Harbours Section would also increase if transient slips were tobe provided. At a minimum there would be a need for staff to look after slip allocations.Providing these extra services could absorb most of the revenues earned from transientcharges.From a tourism perspective transient boaters are unlikely to generate a substantialamount of additional spending in Oakville. The most likely expenditure category wouldbe restaurant meals. However, the amount per visitor might not be as significant as forother tourists as transient boaters often prepare their own meals.It is recommended that since from a financial perspective each transient slip wouldlikely to result in a net reduction in revenues of approximately $3,000 per year and sinceit will be a challenge just to achieve a financially sustainable operation under currentoperating practices no slips should be made available at present._________________________The following section provides a summary of the conclusions and recommendations.

VI SUMMARY OF CONCLUSIONS &RECOMMENDATIONS

The following is a summary of the conclusions that have been drawn from the analysisand the recommended steps that should be taken to implement the proposed businessplan.
A.CONCLUSIONS
• Oakville’s harbours are two of the most valuable assets. They represent animportant part of Oakville’s heritage and add significantly to the appeal of thecommunity.• Generally, the facilities in the two harbours are adequate given their current role.Some sections of the dockwalls are in poor repair and the Oakville HarboursMarina Building in Bronte is in need of renovation.• The range and quality of the facilities and services offered by the two harbours isin keeping with prevailing market standards.• The range of moorings available in the harbours is less than ideal given that theaverage size of boats in increasing. Nevertheless, both harbours have long waitinglists. Given a growing population there is no reason to expect that the harbourscannot maintain full occupancy. The large majority of moorings (Town and cluboperated) are occupied by Oakville boar owners.• The current operating structure under which the Harbours Section operates themajority of the moorings and the boat clubs the remainder is consideredappropriate. The structure is well-suited to the physical make-up of the harboursand having a mix of public and private moorings is in keeping with currentpractices in other harbours and marinas in the GTA market.• The boat clubs have been important components of the Oakville community formany years. They perform valuable service training young people and over theyears have fundraised substantial amounts for many local charities and initiatives.• The organizational structure and staffing of the Harbours Section is satisfactory.However, with the imminent retirement of the Harbour Master and theadministrator an “overlap” with their replacements is essential because ofcomplexity of the operation. The long-term adequacy of the staffing levels shouldbe monitored after the replacement staff are in place.• Until 2006 the Harbours Section was able to operate on a self-sufficient basis.Since then it has received an annual $54,400 contribution from the tax levy. Amajor factor that has contributed to the need for support is the rising cost andfrequency for dredges.• Revenues and expenses have risen substantially over the past five years. A majorchange occurred when the Harbours Section took over the Marine Building inBronte together with a storage area and moorings.• Analysis of long-term expenditures and revenues indicates that with a number ofchanges in responsibilities and operating arrangements, the harbours would be ableto achieve long-term financial sustainability.
• Key among the required changes are:•Gradual increases in fees to bring them fully into line with prevailing market levels.•Making partial provision for the replacement of capital assets in keeping with•PSAB requirements. With the provision of the full requirements annual deficits would arise.•Achieving market rents from club leases and allocating them to the Harbours•Section. In addition, formalizing the requirement for clubs to contribute•annually to the cost of dredging. Removing the responsibility for maintenance and repair of Major Capital Assets from the Harbours Section.• Financial sustainability will take a number of years to achieve even with theprovisions noted above. However, use of the Harbours Section’s reserve fundshould enable shortfalls to be financed without the need for additional financialsupport.• Sustainability is dependent to a significant degree upon the achievement of theestimated market rents for the boat clubs. A large variance from these amountswould place the plan at risk.• Making available a number of slips for transient boaters would add a new elementto Oakville’s tourism infrastructure. However, the net revenues from transientcharges would not compensate for the elimination of seasonal fees that the slipscurrently generate.
B.RECOMMENDATIONS
• Boating operations should be continued in their current form in both harbours.• The current mix of Town and club operated facilities should be maintained.• As and when the opportunity arises the Town should acquire the federal-ownedlands within Bronte Beach Park and the Bronte Outer Harbour Marina.• The responsibilities of the Harbours Section should be limited to operationsrelating solely to boating activities. The Harbours Section should no longer beresponsible for maintaining and repairing Major Capital Assets (i.e. seawalls andpiers) since the infrastructure would be required irrespective of boating activities.Other Town departmental budget forecasts should be amended to reflect the shiftfrom harbours funding to tax levy costs.• Dredging is a critical issue. A detailed dredging study should be undertaken. Thestudy should focus on ways to manage required dredges in the most efficient andcost effective manner. The study should explore alternative approaches to dredgingincluding but not limited to annual mini dredges to remove localized high siltareas, that may increase the frequency for larger full dredging operations.• Fees and charges should be kept in line with prevailing market rates. A GTA-widerate survey should be undertaken on an annual basis.• Budgets for the Harbours Section should make provision for the replacement ofcapital assets in accordance with PSAB rules to the extent possible withoutcreating annual operating deficits.• Rental income from boat club leases together with annual dredging costcontributions should be allocated to the Harbours Section. Boat club leases shouldbe negotiated on a full market value basis with a requirement to provide dredgingcontributions.• The Oakville Harbours Marina Building should be renovated as soon as possible.The capital cost of this initial renovation should be paid for in the same manneras renovations to the Town’s other buildings. Once renovated, the HarboursSection should be responsible for future maintenance and repair costs.• Transient slips should be provided at present given the financial cost they wouldcreate for the Harbours Section.
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