City of Vancouver Investor Presentation

September 16, 2020

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Our Investment Proposition

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3 4 5 1 High quality credit ratings

Thriving and robust economy

Stable revenue sources and property tax

base

Strong fiscal management

Commitment to regular issuance

City of Vancouver maintains the highest quality credit ratings

Aaa (Stable outlook)

July 22, 2020

“Positive operating results backed by stable revenue sources and strong economic growth underpinned by a

diverse economy”

“strong debt affordability and robust governance and financial management”

“Strong governance and fiscal management, and

supportive institutional framework”

AAA (Stable outlook)

February 13, 2020

“stable economy and prudent financial management”

“Fiscal surpluses, a large liquidity cushion, and

low debt will remain rating strengths”

“forecast Vancouver will maintain healthy operating

balances” 3

Operating Revenue Considerations • Property tax rates set by Council

• Tax revenue is main source of revenue • Public tolerance for increases, likely affected

by financial pressures due to COVID • Utility fees are based on

• Full cost recovery • Primarily driven by Metro Vancouver

• Fee based revenues • More variable • Economic cycles can impact development

driven revenue streams (eg building permits) • Use of services (civic theatres) and weather

can impact revenue.

*Source: 2020-07-08 Council Presentation 2021 – 2025 Budget Outlook

Property Taxes, 55%

Utility Fees, 20%

Other fees and

revenues, 25%

2020 Operating Revenues $1,615 Million

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Review of COVID-19 financial impact • Review of financial impacts to the City

• Lower non-tax/utility revenue • Additional costs to respond to COVID emergency (e.g.

housing for homeless; food services for SRO residents) • Additional costs to adjust services to new provincial health

requirements • Mitigation actions:

• Wage freeze and wage reductions • Hiring review and discretionary spending • Capital plan recalibration

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Review of impact to FY2020 Budget

Due to COVID, the City initially estimates $124 Million revenue shortfall. With mitigations in place, the City expects to address this gap and balance the budget for 2020.

*Source: Source: 2020-07-08 Council Presentation 2021 – 2025 Budget Outlook (assuming restrictions lifted by end of August 2020 followed by 6 months of recovery)

Budget Impact of COVID-19 to 2020 Impact ($M)

FY2020 Revenue impacts / (shortfall) (124)

Salary-related expense mitigation 64

Non-salary expense mitigation 20

Re-start costs (libraries, parks and community services) -12

Use of reserves 52

Balanced FY2020 Budget (Cash flow shortfall of -$130M for every 10% property tax and utility bill delinquency is not assumed)

0

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Strong and prudent fiscal management 2021 – 2025 Operating Budget Outlook The City will continue to exercise strong and prudent fiscal management and discipline to maintain a balanced budget for 2021 and beyond based on these 5 principles*

*Source: 2020-07-08 Council Presentation 2021-2025 Budget Outlook

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3 4 5 1 Focus on

alignment to Council Priorities

Stay flexible to adjust to expected ongoing

uncertainty

Opportunities to do things

differently in 2021

and future years

Develop options to respond to lower 2021

revenue scenarios

Prioritize resources

designated for 2020 initiatives

that were deferred

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Increases in 2021 to 2025 operating budget to cover expenditure pressures

64 57 59 57 55

21 21 18 28 33

3 3 3

3 3

2021F 2022F 2023F 2024F 2025F

Increases in Operating Revenues ($Million per year)

*Source: 2020-07-08 Council Presentation 2021 – 2025 Budget Outlook

Property tax increases initial estimates at 6% - 7%.

For 2021, Council has asked to keep property tax increase at 5%.

Utility fees increase at average 5.4%

User fees follow inflation

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Senior Government Financial Support and Fiscal Stimulus

• The Federal government is negotiating safe restart agreements with provincial and territorial counterparts to determine how $14 billion in federal funding will be allocated amongst provincial agencies, territories and their municipalities and other organizations

• Staff continue to work with the Federation of Canadian Municipalities (“FCM”) to advocate for additional, direct funding to municipalities who are facing estimated non-recoverable losses of $10 - 15 billion nationwide (as reported in April 2020 by FCM).

• The City is monitoring potential federal stimulus funding, and is partnering with other municipalities and FCM to ensure that municipal needs are represented as the government considers future stimulus packages

• The 2021 Operating and Capital budgets will consider these potential funding programs to ensure the City maximizes opportunities to access funding to support key Council priority areas.

$14B Federal Funding

(subject to City’s engagement with

FCM)

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Re-calibration

ORIGINAL 2019-2022 Capital Plan ESTIMATED REDUCTION ADJUSTED CAPITAL PLAN*

$B amount

2.90 (0.25) 2.65

Re-calibrating the 2019-2022 Capital Plan

… includes priority ranking of projects from the Capital Plan and Budget

*Source: 2020-07-22 Capital Plan 2019-2022 Recalibration Council Presentation

Climate emergency

Equity

Resilience

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Indicator of financial health City of Vancouver maintains strong liquidity

339 400 424 437 471 509 637 676 761 825 844

995 1,177 1,285

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Consolidated Reserves in $M (excludes sinking fund)

13 year cumulative growth of $945M (+278%)

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5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Indicator of financial health City of Vancouver keeps debt at manageable levels

Debt Servicing as % of Operating Revenue (10% Upper Limit)

Source: 2019-2022 Capital Plan 12

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Consistent and established debenture program

140 120 110 105

90 90 85 85 100 100

2011 2012 2013 2014 2015 2016 2017 2018GreenBond

2019 2020Plan

Issuance Year & Amount ($ Millions)

• Fixed rate debenture program • Debt financing only for capital

infrastructure • City Council establishes limits for

public utilities and Electorate approves other borrowing limits

• 100% funded from Operating Budget • Repayment of the City’s debentures

are funded by the City of Vancouver’s ability to levy taxes & fees.

• Gross outstanding debentures (as at July 1, 2020) - $0.9B

• Net of sinking funds - $0.5B • 2020 plan of $100M will be a

conventional issue sometime in the fall.

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City of Vancouver New Sustainability Bond Framework (July 2020) • Part of the City’s established debenture program • Supersedes the City’s 2018 Green Bond Framework • Single framework that gives flexibility to issue Green Bonds,

Social Bonds or Sustainability Bonds • Second Party Opinion provided by Sustainalytics

• Credible, impactful and aligns with Green Bond Principles 2018, Social Bond Principles 2020, and Sustainability Bond Guidelines 2018, as administered by ICMA

• Eligible categories will lead to positive environmental or social impacts and advance the UN Sustainable Development Goals, specifically SDGs 6, 7, 10, 11, 12, 13, and 15.

• IR website https://vancouver.ca/your-government/investor-relations.aspx

Climate change continues to be the challenge of our time.

The wildfire season is starting and the flood season has not yet ended. And as we meet all of these challenges we must recommit to putting CleanBC,

our climate action plan, at the centre of our recovery

Premier Horgan

climate emergency + COVID-19

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*Source: 2019-04-16 Council Report – Climate Emergency Response (https://council.vancouver.ca/20190424/documents/cfsc1.pdf)

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waste to landfill/incinerator

ZERO WASTE

-32%

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hectares restored/enhanced

ACCESS TO NATURE

+32ha new trees planted

139,000

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per-capita potable water use

CLEAN WATER

-23%

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neighbourhood food assets

LOCAL FOOD

+51%

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green jobs

GREEN ECONOMY

+35%

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OUR CONTACTS

Patrice Impey

General Manager & Director of Finance 604 873 7610 patrice.impey@vancouver.ca

Grace Cheng

Director, Long-term Financial Planning / Deputy Treasurer 604 871 6654 grace.cheng@vancouver.ca

Tim Leung

City Treasurer 604 873 7250 tim.leung@vancouver.ca

LINKS TO SOURCES OF INFORMATION

Anthony Tia

Senior Analyst 604 873 7443 anthony.tia@vancouver.ca

Investors Relations (including Sustainability Bond Framework and Second Party Opinion) https://vancouver.ca/your-government/investor-relations.aspx

Greenest City Action Plan https://vancouver.ca/green-vancouver/greenest-city-action-plan.aspx

2019-2022 Capital Plan Recalibration (July 22, 2020) https://council.vancouver.ca/20200722/documents/pspc1presentation.pdf

2020 Debenture Council Report (July 21, 2020) https://council.vancouver.ca/20200721/documents/r4.pdf

2021 – 2025 Budget Outlook (July 8, 2020) https://council.vancouver.ca/20200708/documents/cfsc2.pdf

COVID-19 – Financial Mitigation and Restoration of City Services (May 26, 2020)

https://council.vancouver.ca/20200526/documents/p1presentation.pdf

COVID-19 – Financial update and short-term actions (Apr 14, 2020) https://council.vancouver.ca/20200414/documents/r1presentation.pdf

2020 Budget and 5 year Plan https://vancouver.ca/files/cov/2020-budget-book.PDF

Vancouver Charter https://www.bclaws.ca/civix/document/id/complete/statreg/vanch_00

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QUESTIONS