Courtenay Annual Report 2025 draft

The Corporation of the City of Courtenay Notes to Consolidated Financial Statements Year ended December 31, 2025

Page 9 of 12

2025

2024

Revenue Recognized

(3,117,003) $3,873,044

(3,258,988) $3,103,021

Ending Balance Deferred Revenue Other

11. MFA DEBT RESERVE FUNDS The City secures its long-term borrowing through the Municipal Finance Authority of British Columbia via the regional district. MFA provides financing for regional districts and their member municipalities and is required to establish a Debt Reserve Fund (DRF) for each debt issue. Each regional district, through its member municipalities that share in the proceeds of a debt issue, is required to contribute to the DRF in amounts set out in the debt agreements. These contributions are comprised of a cash deposit and a non-interest bearing demand note commitment. The DRF is held by MFA and is used to ensure the security of its debt obligations. Interest earned on the fund, net of administra tive costs, is allocated to the regional districts. If at any time MFA does not have sufficient funds to meet its obligations, the DRF may be utilized and the regional district may be required to restore the fund. The City is contingently liable for its share of any such deficiency through its participation in the regional district. As the demand notes are contingent in nature and the City does not currently believe that they will be required, no amount has been recorded in the financial statements. Upon maturity of a debt issue, the unused portion of the DRF established for that issue is returned to the City. As at December 31, 2025, the City’s total DRF deposits held by MFA were $341,552 and are recorded as financial assets in the financial statements. 12. EMPLOYEE RETIREMENT BENEFIT LIABILITY Employees with 10 years of continuous service retiring under the terms of the Municipal Superannuation Act are entitled to a payout of up to 72 days of their accumulated unused sick leave bank and up to a maximum of 8 additional severance days for each year of service in which the employee used no sick leave. Additionally, upon death of the employee, the bank, up to a maximum of 72 days, will be payable to the employee’s life benefit beneficiary. The value of this liability is calculated by an Actuary engaged by the City and reflects the likelihood that all eligible City employees will become entitled to this benefit. Actuarial valu ation assumptions for 2025 were based on an interest (discount) rate of 4.4% per annum (2024 – 4.3%) and an inflation rate of 2.5% (2024 – 2.5%). The estimated employee retirement benefit liability at December 31, 2025 is $1,491,800 (2024 - $1,424,300) and is included in the accounts payable balance on Statement A. Following is a breakdown of the benefit liability: 2025 2024 Accrued benefit liability at beginning of year $1,424,300 $1,343,900 Expense 142,000 140,500 Benefit Payments (74,500) (60,100) Accrued benefit liability at end of year $1,491,800 $1,424,300

13. ASSET RETIREMENT OBLIGATION The City owns and operates assets that have retirement obligations associated with them: Well Decommissioning Obligation:

The Groundwater Protection Regulation provides specific guidelines for decommissioning wells, which give rise to a retirement obligation. The City has recognized an asset retirement obligation related to three wells that will be required to be decommis sioned at the end of their useful lives.

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