2010 Annual Report - City of Vernon

City of VERNON, British Columbia2010 Annual Report2010

TABLE OF CONTENTSMISSION STATEMENT ........................................................................................................ 6OPERATIONAL SECTIONMAYOR’S MESSAGE .....................................................................................................................8MESSAGE FROM THE CHIEF ADMINISTRATIVE OFFICER ........................................................................9CHIEF FINANCIAL OFFICER’S REPORT ...............................................................................................10-11CANADIAN AWARD FOR FINANCIAL REPORTING .................................................................................12VERNON CITY COUNCIL .......................................................................................................................... 13SENIOR MANAGEMENT TEAM ................................................................................................................ 14REPORT ON MUNICIPAL SERVICES AND OPERATIONS ................................................................................ 15STRATEGIC VISION GOALS .............................................................................................................16REVENUE POLICY TARGETS AND RESULTS .........................................................................................17CAPITAL ASSET DEFICIT ................................................................................................................172010 OBJECTIVES AND OUTCOMES .................................................................................................182011-2012 OBJECTIVES AND OUTCOMES ........................................................................................19COMMITTEES, BOARDS AND COMMISSIONS ......................................................................................20DIVISIONAL SUMMARIES ...............................................................................................................21-33ADMINISTRATIVE SERVICES ...................................................................................... 21-22FIRE/RESCUE SERVICES ........................................................................................... 23-24OPERATION SERVICES ............................................................................................. 25-26PLANNING AND BUILDING SERVICES ........................................................................... 27-28ENGINEERING SERVICES .......................................................................................... 29-30FINANCE SERVICES ................................................................................................. 31VERNON NORTH OKANAGAN RCMP SERVICES ............................................................. 32RECREATION SERVICES ............................................................................................ 33PERMISSIVE TAX EXEMPTIONS ........................................................................................................34-36COUNCIL EXPENSES ......................................................................................................................37EMPLOYEE REMUNERATION ...........................................................................................................38-39STATEMENT OF SEVERANCE AGREEMENTS ........................................................................................40CONSULTING FEES PAID ................................................................................................................41-42GRANT PAYMENTS .......................................................................................................................43PAYMENTS TO VENDORS IN EXCESS OF $25,000 ...............................................................................44-48

RELATIONSHIP WITH LOCAL AND REGIONAL GOVERNMENTSThe City is a member of the Regional District of North Okanagan with three of the thirteen members of the Board of Directors. The City is also amember of two regional hospital districts – the North Okanagan Regional Hospital District and the North Okanagan/Columbia Shuswap RegionalHospital District. The City is responsible for its proportionate share of all operating and capital costs of these regional agencies determined bythe City’s proportionate share of assessed values for certain services. Funds for the City’s share of these services are raised through propertytaxation via annual tax requisitions.The City has a contract with the Regional District of North Okanagan for the operation of City parks and recreation services. Agreements alsoexist between the City, the Regional District and the District of Coldstream for operation of the water system. All City costs relating to thefunctions of parks, recreation, and water are reimbursed by the Regional District. The District of Coldstream utilizes the Vernon WaterReclamation Plant for treatment and disposal of sanitary effluent. The City is reimbursed for costs associated with the proportionate share ofColdstream effluent.Public transit is provided through a partnership between the City, the Regional District, the District of Coldstream, and BC Transit. Operation ofthe transit system is provided under contract by First Canada ULC. The City is also a member of the Okanagan Regional Library.FINANCIAL MANAGEMENT AND POLICIESPreparation of the audited financial statements, schedules, supplementary financial information, and statistical information is the responsibilityof the City’s Finance Division. Although close liaison exists with the City’s auditors, management is responsible for the form and content offinancial information presented in the Annual Report.The City maintains systems of internal budgetary and accounting controls that provide assurance of safeguarding of assets and reliability ofinformation. The City annually prepares a five-year budget based on management estimates of revenues and expenses for services mandated byCouncil. Included in each five-year budget are several budgetary policy statements designed to provide added context to the budget.Determination of annual property tax rates, tax rate ratios between assessment classes, and utility rates are approved by Council based onrecommendations from management and existing policies.AUDITPursuant to provincial legislation, Council – through the City’s Audit Committee - must appoint an independent auditor to audit the accounts ofthe City as well as to examine certain internal controls implemented by management. The role of the Audit Committee is to oversee the auditfunction by reviewing the annual audit reports and management letter and by keeping abreast of emerging issues in local government financialreporting and auditing. The audit firm, BDO Canada LLP, was appointed to express an opinion on whether the consolidated financial statementspresent fairly, in all material respects, the financial position of the City of Vernon and the results of its operations. The City received a clean auditopinion for 2010. The City’s Audit Committee has reviewed and approved the 2010 audited financial statements.2010 FINANCIAL RESULTS & FUTURE OUTLOOKThe 2010 change in the City’s financial position was mixed with net debt decreasing from $14.9 million to $11.9 million. Cash and cashequivalents experienced a net decrease of $3.9 million in 2010. The City’s book value of tangible capital assets increased from $518.6 million in2009 to $522.0 million in 2010. A total of $10.8 million in tangible capital asset amortization expense was recognized. Consolidated revenue for2010 was 103.7% of budget; expenses were 106.5% of budget resulting in an overall consolidated surplus of $4.2 million. Major consolidatedvariances in 2010 were as follows:• Higher than budgeted capital contributions ( $1.0 million) from development cost charge deferred revenue due to additional capitalprojects• overage of $409,000 in sanitary sewer fee revenue• short-fall of $674,000 in senior government capital and operating grant revenue• overage of $2.6 million in tangible capital asset amortization expense and losses on disposal of infrastructure combined• short-fall of $407,000 in police service expenses• overage of $1.1 million in road transportation expenses due to additional capital projectsThe financial outlook for the next five years remains stable with continued economic recovery taking place in the region. The current majorcapital investments in our community such as the hospital expansion, the new library and Nixon Wenger buildings as well as the new VernonSenior Secondary school continue to benefit the local economy.On behalf of the Finance Division, I would like to take the opportunity to express appreciation to Council and staff for their efforts in achievingfavourable results in 2010.Kevin Bertles, CGA Finance ManagerPAGE 11CITY OF VERNON 2010 ANNUAL REPOR

PAGE 12CITY OF VERNON 2010 ANNUAL REPORCANADIAN AWARD FOR FINANCIAL REPORTINGThe Government Officers Association of the UnitedStates and Canada (GFOA) awarded a CanadianAward for Financial Reporting to the City of Vernonfor its Annual Financial Report for the fiscal yearended December 31, 2009. The Canadian Award forFinancial Reporting program was established toencourage municipal governments throughoutCanada to publish high quality financial reports andto provide peer recognition and technical guidancefor officials preparing these reports.In order to be awarded a Canadian Award forFinancial Reporting, a government unit must publishan easily readable and efficiently organized annualfinancial report, whose contents conform to programstandards. Such reports should go beyond theminimum requirements of generally acceptedaccounting principles and demonstrate an effort toclearly communicate the municipal government’sfinancial picture, enhance an understanding offinancial reporting by municipal governments, andaddress user needs.A Canadian Award for Financial Reporting is valid fora period of one year only. We believe our currentreport continues to conform to the Canadian Awardfor Financial Reporting program requirements, andwe are submitting it to GFOA.

VERNON CITY COUNCIL 2010TOP LEFT: COUNCILLOR SHAWN LEE, COUNCILLOR JACK GILROY, COUNCILLOR BOB SPIERS, COUNCILLOR PATRICK NICOLBOTTOM LEFT: COUNCILLOR BUFFY BAUMBROUGH, MAYOR WAYNE LIPPERT, COUNCILLOR MARY JO O’KEEFEMayor andCouncilChiefAdministrativeOfficerRCMPOperationsAdministrativeServicesOperationsServicesFinanceRecreationServicesFire/RescueServicesEngineeringServicesPlanning &BuildingServicesTourismCorporateServicesand OtherHumanResourcesInformationServicesBylawServicesCommunityPolicingReal EstateServices

PAGE 14CITY OF VERNON 2010 ANNUAL REPORSENIOR MANAGEMENT TEAM 2010Leon Gous Marg Bailey Kevin Bertles Patti BridalCathy Cotter Rob Dickinson Kim Flick Shirley KoenigGary McCall Jim Patenaude Doug Ross

STRATEGIC VISION GOALSImproved cycling, pedestrian,and transit network withalternative transportationoptions, enhancedstreetscapes, and multi-usetrails.Achieving an economicallydiverse community knowninternationally as a four-seasoncommunity, and locally for itsability to generate local jobsfor established and youngerresidents.Achieving effective regionalgovernance in Greater Vernonincluding enhanced communitypartnerships and easy accessto City Hall information.STRATEGICVISION GOALS2011-2015Revitalized downtown byproviding an attractive focalpoint for the community thatincludes new City facilities suchas a library and an enhancedPolson Park.Achieving a robust financialposition that enables theorderly replacement ofinfrastructure and ensurescapacity to address emergingopportunities and challenges.Recognition by residents andvisitors as a livable and safecommunity, with good sports,cultural and health facilities,numerous communityprograms, plenty of greenspace, and effective programsto protect the beauty andecosystems of the naturalenvironment.

PAGE 17CITY OF VERNON 2010 ANNUAL REPOR2010 REVENUE POLICY TARGETS & RESULTSThe Following revenue targets were adopted under the 2010-2014 Financial Plan and are shown with their actualresults:MEASURE 2010 TARGET 2010 ACTUALBusiness to Residential Property Tax Rate Ratio 3.2 to 1 2.7788 to 1Taxation as a Proportioned of Total Revenue 42% 38.9%Service Fees as a Proportion of Total Revenue 30% 27.55%Other Revenue as a Proportion of Total Revenue 26% 32.3%Specified Area Parcel Taxes as a Proportion of Total Revenue 2% 1.2%2010 CAPITAL ASSET DEFICIT(in $1,000's)ASSETCATEGORYCAPITALASSET DEFICITBEGINNINGOF YEAR2010AMORTIZATION2010DISPOSALSACCUMULATEDAMORTIZATION,END OF YEARCAPITALRESERVES,END OF YEARCAPITALASSET DEFICITEND OF YEARBuildings $ 8,340 $ 1,502 $ 29 $ 15,844 $ 6,468 $ 9,376Vehicles 1,624 614 331 4,623 2,471 2,152Misc. Equipment 810 39 - 849 - 849Information Technology 1,168 162 - 1,728 250 1,478Transportation Infrastructure 64,371 5,642 692 72,889 3,764 69,125Storm Sewer Infrastructure 15,199 938 128 16,466 209 16,257Sanitary Sewer Infrastructure 14,172 1,085 131 18,138 3,082 15,056Irrigation Water Infrastructure 2,180 106 - 2,307 21 2,286Natural Gas System Lease 4,790 723 - 5,782 271 5,511-$ 112,654 $ 10,811 $ 1,311 $ 138,626 $ 16,536 $ 122,090

2010 OBJECTIVES AND OUTCOMESSTRATEGIC DIRECTION STRATEGIC OBJECTIVE TARGET COMPLETIONDowntown Revitalization • Adopt and implement City Centre Neighbourhood Plan• Complete Polson Park upgrades• New downtown library (in conjunction with Okanaganregional Library)• Polson Greenway Corridor (30 th Street and 29 th Streetfrom Polson Park to Village Green Mall)201020112012Phased over the next 5 years-Initial Phase 2011Maintaining Financial Stability • Adopt sustainable financial Plan (include new revenue)• Implement economic development strategy2011CompletedExpanding Services • Predator Ridge fire hall plan• Finalize plan for new sports facilities• Strategically located fire halls• Replacement of Civic Arena ice surface2011201120112011Implementing OCP Projects • Maintain trail Funding and Reprioritizing• Implementing housing strategy• Waterfront neighbourhood plan completed• Implement transportation demand management• Set objectives for carbon neutralityOngoing2011CompletedOngoing with new initiatives eachyear2010Resolving Regional Governance • Building relationship with neighbours and partners ongoingPAGE 18CITY OF VERNON 2010 ANNUAL REPOR

PAGE 19CITY OF VERNON 2010 ANNUAL REPOR2011 AND 2012 OBJECTIVES AND OUTCOMESSTRATEGIC DIRECTION STRATEGIC OBJECTIVE TARGETCOMPLETIONUPDATEDowntown Revitalization • Adopt and implement City CentreNeighbourhood Plan• Complete Polson Park upgrades• New downtown library (in conjunctionwith Okanagan regional Library)• Polson Greenway Corridor (30 th Street and29 th Street from Polson Park to VillageGreen Mall)201020102011Phased over the next 5years-Initial Phase 2010Delayed to 2011Construction commenced2011 – Completion 2012Delayed. New completionof initial phase 2011.Maintaining FinancialStability• Adopt sustainable financial Plan (includenew revenue)2011Expanding Services • Predator Ridge fire hall plan• Finalize plan for new sports facilities• Strategically located fire halls• Replacement of Civic Arena ice surface2011201120112011Implementing OCPProjects• Maintain trail Funding and Reprioritizing• Implementing housing strategy• Implement transportation demandmanagement• Set objectives for carbon neutrality20102011Ongoing with newinitiatives each year2010Resolving RegionalGovernance• Building relationship with neighbours andpartnersongoing2010 outstanding objectives were reviewed and renewed as 2011 and 2012 objectives as adopted in a strategic planning session held in October2010.

COMMITTEES, BOARDS AND COMMISSIONS 2010COMMITTEE/COMMISSION STAFF LIASION COUNCIL REPRESENTATIVE ALTERNATEAdvisory Planning Board Dale Rintoul, City Planner Councillor Buffy Baumbrough Councillor Bob SpiersAffordable Housing AdvisoryCommitteeDale Rintoul, City PlannerMayor Wayne LippertCouncillor Buffy BaumbroughAthletic Commission Kevin Bertles, Manager, Finance Councillor Jack GilroyAudit Committee Kevin Bertles, Manager, Finance Councillor Jack GilroyCouncillor Mary-Jo O’KeefeCouncillor Bob SpiersBiosolids Advisory CommitteeCommunities in BloomEconomic DevelopmentEmergency MeasuresPolicy/PlanningEnvironmental AdvisoryCommitteeShirley Koenig, Mgr, OperationServicesShirley Koenig, ManagerOperationsKevin Poole, Economic Dev.OfficerBrent Watson, EP/ESSCoordinatorBrooke Marshall, EnvironmentalPlannerCouncillor Patrick NicolCouncillor Bob SpiersCouncillor Buffy BaumbroughCouncillor Mary-Jo O’keefeMayor Wayne LippertMayor Wayne LippertCouncillor Buffy BaumbroughFinance Committee Kevin Bertles, Manager Finance Mayor Wayne LippertCouncillor Patrick NicolCouncillor Bob SpiersGreater Vernon AdvisoryCommitteeMayor Wayne LippertCouncillor Patrick NicolCouncillor Buffy BaumbroughHeritage Advisory Committee Dale Rintoul, City Planner Councillor Bob SpiersNorth Okanagan Regional DistrictMayor Wayne LippertCouncillor Jack GilroyCouncillor Patrick NicolCouncillor Mary-Jo O’KeefeCouncillor Shawn LeeCouncillor Shawn LeeCouncillor Jack GilroyCouncillor Shawn LeeCouncillor Bob SpiersAll CouncillorsCouncillor Shawn LeeCouncillor Jack GilroyCouncillor Mary-Jo O’KeefeCouncillor BuffyBaumbroughCouncillor Shawn LeeCouncillor Mary-Jo O’KeefeOkanagan Basin Water Board Councillor Buffy Baumbrough Councillor Shawn LeeSister Cities Committee Maria Doyle, Ex. Asst. to Mayor Mayor Wayne LippertCouncillor Jack GilroyTax Exemption (Policy) WorkingCouncillor Bob SpiersGroupTourism Advisory Committee Michelle Jefferson, Mgr. Tourism Councillor Mary-Jo O’Keefe Councillor Shawn LeeTransportation DemandManagement CommitteeVernon Land Advisory CommitteeWendy Majewski, TDMCoordinatorCouncillor Jack GilroyCouncillor Shawn LeeCouncillor BuffyBaumbrough

ADMINISTRATIVE SERVICESOUTLOOK FOR 2011The Divisions within Administration Serviceshave a variety of projects and goals to focus onthrough 2011:HIGHLIGHTS OF 2010Tourism Services oversees the operation of the Visitor Centre and all of its activities, as well astourism development, marketing, promotion and advertising on behalf of our community. Inaddition to their basic role, in January 2010, they coordinated the Olympic Torch eventresulting in the largest crowd ever seen in Polson Park. Other major 2010 initiatives includedthe collection of the Additional Hotel Room Tax (AHRT), creation of the 2010 Visitor Guide,approval of the 5 year tourism and annual marketing plan, creation of new website and socialmedia initiatives, reopening of the North Tourism Booth, creation of an event survey project,implementation of cooking demos at the Farmer’s Market, implementation of a photo projectresulting in 250+ new photos, hosting of 82 travel writers and journalists, Tourist in Your OwnTown event and two Tourism Exchanges.• Completion of Living in Vernon project• Welcome and event signage• 2011 Visitor Guide• Support for Sparkling Hill Masters WorldCup & Summer Wine Festival• Online mapping project• Tourism benchmarking and tracking• Creation of online media kit and photogallery• Development of tourism newsletter• 2011 General Local Elections• Records management initiatives• A new Safe Communities Manager willreview the many Safe Communitiesprograms with a goal to streamlineoperations and provide better service toclients• Going live with the Bylaw NoticeAdjudication system• Completion of BC Transit site• Helicopter lease area• On-going negotiations for strategicproperty purchasesCorporate Services provides the communication link between Council, City Divisions and the general public. Responsibilities include:preparation of Council and Committee agendas and minutes; administration of bylaws; maintenance of Council policies; execution of legaldocuments; compliance with Freedom of Information and Protection of Privacy (FOIPPA) legislation and conducting legislated electorapproval processes, by-elections and referendum.2010 highlights include: electronic agendas for 17 Committees; responding to 47 FOIPPA requests; development of a RecordsManagement System (RMS) policy; implementation of a file management program for electronically created documents; and completionof a records storage facility to house approximately 14,000 property files.Information Services provides strategic planning, management and technical support for the City of Vernon’s staff and Enterprise systems.They ensure network infrastructure, communication, websites, electronic data storage and delivery, and technical service contracts arebeing provided at the best value to the tax payer.The 2010 MISA Conference brought over 350 delegates from all over the world to Vernon, generated over $600,000 for the local economyand over $10,000 for the Vernon Tower of Care Campaign. 2010 saw the installation and utilization of Virtualization to reduce the numberPAGE 21CITY OF VERNON 2010 ANNUAL REPOR

PAGE 22CITY OF VERNON 2010 ANNUAL REPORof servers and power by approximately a third, but with better redundancy and disaster recovery. The City of Vernon Website redesignused a team of City staff with emphasis on ease of use, simplicity of design and highlighting public projects, input sessions and meetings.The Safe Communities Unit continues to provide over 50 community-based, crime reduction programs and services to the City of Vernonas well as other local municipalities and the Regional District. The Community Policing Office remains the hub of the Unit’s operation withseven staff members. Last year there were 1746 walk-ins to the office and staff fielded over 2357 phone calls from the public. Currently,there are approximately 100 active volunteers associated with the Unit; their largest areas of involvement being in the Community PolicingOffice, Citizens on Patrol Speed Watch and the Restorative Justice Program.The Bylaw Enforcement Division administers and enforces approximately 40 regulatory bylaws and bylaw officers patrol Cityowned/leasedparking lots, residential permit zones and restricted parking areas as well as patrol and maintain approximately 950 parkingmeters. The officers provide security and enforcement services to the downtown core as well as City and Regional parks; respondthroughout the City investigating complaints for a variety of infractions; provide traffic control and investigative enforcement assistance tothe RCMP.2010 focused on continued community security and safety programs, as well as the implementation of the Bylaw Notice Adjudicationticketing system. The Division responded to 3107 complaint files, issued 2331 bylaw violation tickets regarding traffic safety concerns andprovided assistance to the RCMP in the detention and arrest of 45 individuals.Real Estate Services provides management of City-owned lands, including leases of spray irrigation lands, crown leases, airport propertyand tie-downs and responsibility for negotiating the acquisition and sale of property on behalf of the City.Highlights in 2010 include the sale of property to facilitate the new Nixon Wenger development, consolidation of lots and transfer ofproperty for the new Library site and lease negotiations with B.C. Transit, Rogers Communication, BC Winter Games and the Fish andGame Club.Human Resources The Human Resources Department is responsible for City-wide internal and external staff recruitment and retention,organizational training and development, payroll and benefits administration; employee and labour relations services including collectivebargaining; managing exempt and union compensation plans; maintaining awareness of and compliance with local, provincial and federallabour laws and Occupational Health and Safety.In 2010, the Human Resources Department celebrated its first complete year as a fully functioning team. Highlights included theimplementation of an electronic information system to enable HR to analyze, manage and report information and implementation of aweb-based recruitment system to streamline the job application process.The Health and Safety Unit, in conjunction with City managers, significantly reduced the incidence of workplace injuries in this last year. Inaddition, a return to work program has been introduced that has enabled injured employees to get back to work sooner, reducinginsurance costs and sick time.

PAGE 23CITY OF VERNON 2010 ANNUAL REPORVERNON FIRE/RESCUE SERVICESOUTLOOK FOR 2011PURPOSETo continually strive for a tradition of service excellence; we are a dynamic and progressiveorganization proudly working in partnership to protect, provide and promote a safe community• First medical response• Fire suppression, fire inspections and investigations• Road rescue, motor vehicle incident responses• Public education and community relations• Hazardous materials response• Emergency program and emergency social services management• Vernon Fire – Rescue anticipates a busy2011, with the continuation of manyprojects overlapping from 2010.• Development of improved fire protectionfor Predator Ridge and other remoteareas of concern• Review and finalization of Regional RoadRescue and Fire Training Centre sharedfunctions• Continued joint training and operationalefficiencies with volunteer firefighters inthe Downtown Hall and OK Landing Hall• New collective agreement with theVernon Professional Firefighters• New service agreement with the VernonVolunteer Firefighters Association• Full review of operational guidelines• Completion of Vernon dispatchmodernization project and hiring of aCommunications Operator• Completion of RDNO dispatch transitionto Fraser Valley• Completion of many firefighter trainingcertifications i.e. Emergency SceneManagement• Continued Regional preparation for wildland interface fire season, and other largescale emergencies• New Fire Chief hired• Municipal Election in the fallHIGHLIGHTS FOR 2010Vernon Fire – Rescue Services completed a number of projects in 2010 and continues to strive towards updating operations and othercomponents of our public safety and emergency services.• Dispatch modernization project started and hiring of 3 dedicated communications operators• Delivery of a new engine – rescue (Engine 82)• Expansion of Emergency Management and ESS to Regional partners• Mitigation of several major emergencies, impacting over 5,000 North Okanagan residents• Initiated on-line web based training program for firefighter training• Vernon Professional Firefighters raised over $32,000 in support of Muscular Dystrophy, Burn Fund and Hospice House• Renovation of the Fire Hall, and replacement of the bay doors• 22.5% reduction in over-time due to operational efficiencies• Selection of a designated Fire Department Chaplain• Specifications determined for a new water tender to be stationed at Okanagan Landing Fire Hall• Completion of several special events including public education, public relations and employee long service recognitions

PAGE 24CITY OF VERNON 2010 ANNUAL REPOR2010 EMERGENCY INCIDENTS1%0%2%FireFirst MedicalMVIBurning ComplaintsHazmat / RescueOther10%14%73%2010 NORTH OKANAGAN EMERGENCY MANAGEMENT RESPONSESEMERGENCY MANAGEMENT PROGRAM ACTIVATIONSINCIDENT TYPE NO. OF INCIDENTS EOC ACTIVATION LEVEL DURATIONMunicipal Water Contamination 1 Level /3 21 daysHazMat 4 Level .5/1 1-4 daysGas Leak 1 Level .5/1 1 dayInterface Fire 2 Level 2 1-3 daysSpecial Events 2 Level .5 3-5 days(ie Funtastic / IPE)TOTALS 10ESS RESPONSESINCIDENT TYPE NO. OF INCIDENTS ACTIVATION LEVEL NO. OF CLIENTS ASSISTED PETSHouse Fire(s) 18 Level 1 55 (incl 1 fatality) 20 (9D)Water Main Break/Flooding 5 Level 1 18Structural Collapse/Damage 2 Level 1 4Municipal Water Contamination 1 Level 2/3 5200Evacuation (Fire - major) 1 Level 3 319 30Evacuation (Fire - minor) 1 Level 2 14 3Gas Line Rupture 1 Level 2 7Totals 29 5617 53

PAGE 26CITY OF VERNON 2010 ANNUAL REPORWater OperationsWith the direction of the Water Operations Manager, Water Operations is responsible for the operation and maintenance of the supply,storage and treatment of the Kalamalka and Duteau water systems within the City of Vernon and Areas B and C (excluding Coldstream).The Manager of Utilities Operations and the Water Operations Manager share the responsibility to manage the contract service of theGreater Vernon Water (GVW) system.Fleet ServicesThis section is under the direction of the Fleet Services Manager and is responsible for the purchase and maintenance of all City ownedequipment, emergency generators and vehicles, including Fire Services and Greater Vernon Parks vehicles and equipment used by theParks Section. At present, approximately 189 licensed units are maintained.Building ServicesThis area under the direction of the Building Services Manager is responsible for the operation and maintenance of all City facilities andgrounds, including City Hall, City Yards, the Corporate Services Building, Library, Firehall, RCMP Station, Water Reclamation Centre,Parkade, Development Services Building and the Recreation Centre. In addition to overseeing the facilities maintenance and operation, theBuilding Services Manager also oversees the energy management for the City of Vernon. Given the requirements for carbon neutrality by2012 as initiated by the Province, the Building Services Manager is responsible for ensuring that the City of Vernon takes a lead role insupporting the mandate of sustainability, including educating staff, promoting energy conservation and ensuring that City facilities areoperated and maintained as efficiently as possible.HIGHLIGHTS OF 2010• Continued implementation of the Asset Management Program for Operations and other City departments, including service requests,work orders and preventative maintenance programs.• Completion of Council Chambers Addition and Phase 1 of Spirit Square• Construction and completion of front entry of City Hall• Demolition of the former Vernon Medical Clinic Building• Renovations to the Firehall and RCMP offices• Major lighting replacements to high efficiency components throughout City facilities• Initiation of energy audits for City facilities• Replacement of failing hot water heating distribution piping to an energy efficient alternative• Instrumentation, electrical, software and programming upgrades to Vernon Water Reclamation Center (VWRC)• Completion of upgrades to Regional Biosolids Composting Facility with City of Kelowna• Replacement of Willow Park Sanitary Lift Station• Replacement of Vernon Square Sanitary Lift Station• Sanitary and storm main replacements in Lane North of 27 Avenue• Sanitary and storm main replacements in Lane West of 35 Street• Road, storm, sanitary and water main upgrades in 41 Ave, east of 27 St, road, pedestrian and storm main upgrades• Road, pedestrian and storm main upgrades in Okanagan Landing Road at Grant Road• Fulton pedestrian bridge installation• Pavement overlay on 27 th Street, from 44 th Avenue to 48rd Avenue• Construction of Lake Access Site #1 (off Tronson Road)• Construction of Marshall Field Linear Trail• Pedestrian bridge improvements west of VWRC• Construction of Kosmina Trail• Road, curb and gutter and storm improvements to 41 st Avenue and South• Road and pedestrian improvements to area bordering Harwood School• Okanagan Landing Road pedestrian improvements• Playground replacements in Long Lake Estates and Sterling Estates• Tennis court resurfacing in Kalavista and Lavington areas• Polson Park bridge replacement• Vernon Regional Airport apron expansion• Implementation of Safety Management System (SMS) Phase II• Copper Mountain Park construction• Implementation of a Fleet Maintenance software program for the maintenance and servicing of the City Fleet, Vernon and OkanaganLanding Volunteer Fire Department, GVS vehicles and emergency standby generators• Commissioning of Duteau Creek Water Treatment Plant• Initiation of McMechan Reservoir water interconnect• King Edward intake improvements

PLANNING AND BUILDING SERVICESThe new public library started construction in 2010, next to a new office building.Both buildings are on the City’s main street, 30 th Avenue.PURPOSEPlanning and Building Services is responsible for the implementation of Municipal bylaws andpolicies related to the planning and sustainable growth of the community. The Division strives tofoster a positive public attitude towards planning and the City's approach to growthmanagement, and actively engages the community in the development of neighbourhood plansand other initiatives.The primary responsibilities of the Division include land use planning and related policydevelopment; building permit and inspection services; subdivision, rezoning and developmentpermit applications; environmental planning; community outreach and transportation demandmanagement initiatives. The City’s Economic Development function also works within theDivision. The Division works with all City departments and Regional partners in the delivery ofthese services.HIGHLIGHTS OF 2010Permit activity remained robust in 2010, with 363 building permits being issued compared to366 in 2009. Building permit values, however, dropped considerably from 2009, when $165million in building permit values were recorded, a slight drop from 2008’s record high of $169million, the highest in the City’s history. Building permit values in 2010 were $74 million. 2008 and 2009 were very high because of twosignificant projects in the city, Sparkling Hill Resort and the Vernon Jubilee Hospital expansion. Overall, housing starts declined from 232 in2009 to 174 in 2010, although there was a marked increase in the number of single family detached starts, which increased from 95 in2009 to 146 in 2010. Business licensing continues to be strong, with 3,192 business licenses being issued in 2010 compared to 3,117business licenses in 2009.The priority implementation items addressed in 2010 included:OUTLOOK FOR 2011• Complete the neighbourhood plan forthe City Centre, including a phasedimplementation strategy to begin in2011• Undertake a neighbourhood plan forthe Foothills Neighbourhood Centre• Implement key recommendations of theservice delivery review• Implement new development approvalprocesses• Review and update the Airport MasterPlan• Continue implementation of theBusiness Retention and ExpansionProgram, with an emphasis on retail andprofessional service sectors• Develop investment and workerattraction programs• Complete the Invest in Vernon website• Undertake development of anemployment lands inventory• Update the Tree Protection Bylaw andintroduce several new tree protectionpolicies for both public and privateproperty• Develop School Travel Plans for twolocal elementary schools• Develop a staff travel plan for the Cityof Vernon and work with localbusinesses on the development of stafftravel plans• Continued participation in thedevelopment and completion of theRegional Growth Strategy• Community consultation and preparation of the draft City Centre Neighbourhood Plan.• Completion of neighbourhood plan updates for Bella Vista West and the Waterfront Neighbourhood Centre.• Participation in the development of a master plan for Polson Park, including coordination of the new Polson Park Pavilion.• Commenced review of all development approval processes to correspond with the new growth strategy and streamline the processfor applicants.PAGE 27CITY OF VERNON 2010 ANNUAL REPOR

PAGE 28CITY OF VERNON 2010 ANNUAL REPOR• External review conducted of service delivery by the Planning Department.• Completion and adoption of the Economic Development Strategy to guide the efforts of the Economic Development function over thenext three to five years.• Established a comprehensive Business Retention and Expansion Program, and as a first component of implementation, focused onmanufacturing and technology companies in the North Okanagan.• Undertook a study to determine the feasibility of an intermodal facility in the North Okanagan, in partnership with Western EconomicDiversification and Community Futures North Okanagan.• Initiated a Public Market Feasibility Study in partnership with Community Futures North Okanagan and Vernon Tourism.• Development of a cosmetic pesticide use reduction program for City lands in cooperation with Operation Services.• Undertook a heritage tree survey (over 60 years of age) in the City Centre and East Hill neighbourhood to assist in the development ofa Heritage Tree Protection Bylaw.• Coordinated a new interdepartmental City corporate Sustainability Committee to address issues and challenges of introducingsustainability measures into City corporate operations, including reaching corporate carbon neutrality as per the BC Climate ActionCharter.• Implemented School Travel Plans for three local elementary schools, including coordination of Capital Works with Engineering toaddress key barriers to safe pedestrian and cycling travel.• Expanded community stewardship and Transportation Demand Management events in partnership with community groups, agenciesand other stakeholders, including the development and implementation of a corporate sponsorship program. The City of Vernon wonthe 2010 National Commuter Challenge for the population size category of 25,000-49,999.• Approved and disbursed more than $12,000 for Heritage Restoration Grants.• Continued participation in the development of the Regional Growth Strategy.Bike to Work Week, May 2010Bike to Work Week 2010

PAGE 29CITY OF VERNON 2010 ANNUAL REPORENGINEERING SERVICESOUTLOOK FOR 2011• To finalize the DCC Policy Manual,Latecomer Policy, and start the FlowMetering Program for the SanitarySewer Collection System• The City will complete stage I and IIof the Liquid Waste ManagementPlan in 2011 with Stage III beingcompleted early in 2012• The Engineering & GIS Division willcontinue to support the OperationsDivision with asset management asthis function evolves• Master Sanitary Sewer Servicing Planwork continues in 2010 withcompletion planned for mid 2011• Construct the local area servicesewer project for 12 properties atFleming Drive• Implement the $10 million CapitalWorks Program• Continue with acceleratedexpansion of TDM network asindicated by the OCPPURPOSEEngineering & GIS Services is responsible for the implementation of the municipal services andbylaws related to infrastructure planning for the Capital Works Program and development worksas well as provision of GIS services. The Division works closely with many of the other Divisions to provide these services in an efficientand timely manner.The mandate of the Engineering & GIS Division is to hold paramount the safety, welfare and quality of life of the public and the protectionof the environment through fiscally responsible management of public infrastructure.HIGHLIGHTS OF 2010The City continued the capital commitment of $800,000 towards transportation demand management projects as directed by the 2008Official Community Plan (OCP). This funding level accelerates construction of high priority bike lanes, multi-use paths and sidewalkconnectivity in the City and included such projects as:• Sidewalks, bike lanes, multi-use paths, shoulder widening and road crossing improvements identified by school travel plans atHarwood, Mission Hill, Fulton, Ellison and Okanagan Landing Schools• Stairs to provide a trail connection on Middleton Mountain• Marshall Fields multi-use trail connection to Cummins Road• Bike lanes on 27 th Street from 43 rd to 48 th Avenue• Transit service expansion including:o 1800 hours for an additional Route 90 UBCO buso Additional 2000 service hours for Routes 1 – 7o New bus and 1400 service hours for HandyDART• Continued 34 th Street Improvements from 24 th Avenue to 30 th Avenue including replacing the sewer, water, storm, bridge, road andsidewalk and constructing bike lanes – (Building Canada Grant)• Emergency sewer extension to service 12 properties on septic on Bella Vista Road• Worked with owners in the Delcliffe area to facilitate installation of sanitary sewer to approximately 30 homes on septic.• Reconstruction of Okanagan Avenue from 36 th to 39 th Avenue including water, storm, sanitary, road, bike lanes and sidewalk

• Commenced Phase I of the 20 Street corridor from 43 rd to 45 th Avenue including water, sanitary, storm, road, cycle and pedestrianfacilities and traffic calming measures through the school zone• Commenced Phase I of the Polson Greenway on 29 Street between 43 and 45 Avenue replacing the water, storm, sanitary and roadand constructing cycle and pedestrian facilities• Received $92,000 in grants from ICBC from their Road Improvement Program towards the road safety improvements incorporated inthe Capital Projects• Pleasant Valley Road conceptual design options were completed and presented to the public for direction• Completed a 15 year Capital Plan with support from the Operations, Finance and Planning Divisions• Commenced Stage I of the Liquid Waste Management Plan• Revised key sections of the Subdivision and Development Servicing BylawPAGE 30CITY OF VERNON 2010 ANNUAL REPOR

PAGE 31CITY OF VERNON 2010 ANNUAL REPORFINANCIAL SERVICESOUTLOOK FOR 2011A major focus for the finance division for2011 remains the redevelopment of ourchart of accounts. This project will be amajor step forward in reporting ability, andmanagerial information retrieval. Thecurrent system is based on public reportingstandards in place since the 1970’s.PURPOSEThe Finance Division is responsible for all matters of financial administration for theCity of Vernon, specifically:• Billing and revenue collection of City services and revenue sources• Payment for goods and services• Cemetery administration• Safekeeping of securities• Investments of reserved funds• Purchasing• Risk management claims administration• Grant funding• Financial planning and reporting• Debt administrationDevelopment work on our Annual Reportand Financial Plan documents will continuethrough 2011, with the benefits of the newchart of accounts commencing in 2012.• Implementation of a new electronic billingreview system to ensure consistent utilitybillings.• A review of our sanitary sewer ratestructure for 2012 implementation.HIGHLIGHTS OF 2010The effects of general declines in economic conditions in the region continued to be felt by the City in terms of low interest ratesthroughout the year and reduced service fee revenue. Partially offsetting the prevailing economic conditions was continuedgrowth in taxation from non market changes such as new construction.• A reorganization of duties, of revenue staff and accounts payable unionized staff, to obtain increased efficiency was completed..• The Finance Division continued to build on the efficiency, and detail, gained in making the transition to electronic budgeting software.Further gains in efficiency and reporting will be linked to the launch of a new chart of accounts.• 2010 saw the launch of an online customer portal, MY City, which allows customers to perform detailed inquiries on property tax,utility, and business license accounts through a secured sign-on. This is an expansion of our online services which previously allowedpayment of parking tickets, business licenses and lawyer tax searches.• 2010 built on the implementation of an electronic purchase order system in 2009, allowing for better control, and reportingfunctionality, by launching document scanning late in 2010. Document scanning will be fully operational under an accounting systemupgrade, planned for second quarter 2011, and replaces a paper based purchase order system.• The redevelopment of our chart of accounts planned for late 2010 was not possible due to external factors. Further developmentwork and refinement continues, on the new chart of accounts, with a revised launch targeted for the 2012 fiscal year.• The budget process for the financial plan continues its journey of refinement to attain the right balance of information for informeddecision making. Public participation was once again a central focus of the process with public input called for at each budget session.• The Finance division has received the Canadian Award for Financial Reporting for our 2009 Annual Report. We are very pleased withthis award and the reflection this award holds for our annual reports. Every effort has been made to ensure that the quality of ourannual reports continues to uphold the principles of the program and our goal of increasing the quality of public disclosuredocuments.

PAGE 32CITY OF VERNON 2010 ANNUAL REPORVERNON NORTH OKANAGAN RCMP SERVICESOUTLOOK FOR 2011Public consultation with our valuedstakeholders has provided the RCMP withvaluable positive feedback regarding ourthree Strategic Priorities which willremain in tact for 2011.• Crime Reduction• Communication• Road SafetyThe addition of an Operations Officer andthe reorganization of supervisorypersonnel has enabled the Detachmentto function more efficiently and providesthe highest quality service delivery andvisibility to its clients. Thesereorganizations and redeployments will PURPOSEensure our vision is attained in 2011andVernon North Okanagan Detachment provides policing services for an area thatconsists of an integration of 6 distinct policing jurisdictions encompassingArmstrong (including the Township of Spallumcheen) Enderby (including theSpallumcheen First Nations Lands), Falkland, Lumby, Vernon Rural (including Okanagan First Nations Lands) and the City of Vernon(including the Municipal contract for the District of Coldstream).The employees of the RCMP are committed to our communities through:• Unbiased and respectful treatment of all people• Accountability• Mutual problem solving• Cultural sensitivity• Enhancement of public safety• Partnerships and consultation• Open & honest communication• Effective and efficient use of resources• Quality and timely serviceVernon/North Okanagan RCMP are committed to providing World-Class Policing Services guided by our core values of honesty,integrity, professionalism, compassion, accountability & respect. Our dedication to these core values and steadfast pursuit of ourCore Policing Activities of service, prevention, protection, enforcement and intelligence is enhancing public safety and helping tobuild “A Safe and Secure Canada”.HIGHLIGHTS OF 2010• Implementation of a provincially recognized “high risk” domestic violence team. North Okanagan Integrated Case Assessment Team (ICAT)• Deployment of a uniformed Downtown Enforcement Unit• Creation of a dedicated uniformed Municipal Traffic Section• Improved reporting of policing activities to elected officials• Reduction of property crime and associated criminal activity• Increased enforcement activity of marijuana grow operations and sex trade workers and traffic.• Heightened enforcement activity targeted to prolific offenders• Completed full integration of Vernon/ North Okanagan policing operations• These combined targeted enforcement activities have reduced call for police services. This reduction allows police to participatein more pro-active community efforts.

PAGE 33CITY OF VERNON 2010 ANNUAL REPORRECREATION SERVICESOUTLOOK FOR 2011Despite the economic downturn weexperienced in 2010, RecreationServices still managed to reach its goalsboth financially and in user visits. Withsome recovery taking place, we lookforward to another busy year of offeringquality recreation experiences to thecitizens in 2011 and preparing to hostthe young athletes of the province atthe BC Winter Games in February of2012.PURPOSEThe Recreation Division is responsible for the operation of the Vernon Recreation Centre and forthe planning, promotion and operation of recreation programs and the supply of recreationservices to the public in the Greater Vernon area.The Recreation Division takes aleadership role in the promotion ofactive healthy lifestyles for thecommunity. Through the programs andservices we offer, the RecreationDivision plays an important role inimproving and maintaining the qualityHIGHLIGHTS OF 2010In an effort to promote active living the Recreation Division started Vernon Steps Out, an independent self directed walking programdesigned to get people moving and to help them make healthy living choices. Partnering with the City of Vernon Traffic DemandManagement initiative the www.vernonstepsout.ca website was launched in September coinciding with International Car Free Day. Todayover 300 participants have signed up and logged 223,973,178 steps!Phase III of renovations at the Vernon Recreation Centre Auditorium was completed with the addition of moveable conference room wallscreating two new break-out rooms. The new rooms equipped with vertical blinds, adjustable lighting, screens, projectors and full internetconnectivity have had an immediate and positive impact on the facility making it more versatile and allowing for multiple programs andmeetings to take place simultaneously. A name change to the Creekside Conference Centre may be in the facilities future in order toreflect the potential capacity of the room(s).2010 was the first full year of operating the three ice rinks which include the 3000 seat Wesbild Centre; home of the six time NationalChampion Vernon Vipers. In addition to the Vipers, the Wesbild plays host to many big events including the Holiday Stars on Ice whichincluded Olympic medalists Joannie Rochette, Jamie Sale & David Pelletier and former World Champion Kurt Browning. The Wesbildclosed out the year by playing host to some of the world’s best curlers participating in the Swiss Chalet National. Kevin Martin, RandyFerbey and Glenn Howard were just three of the eighteen teams that participated in the nationally televised event.

PAGE 34CITY OF VERNON 2010 ANNUAL REPOR2010 PERMISSIVE TAX EXEMPTIONSLAND BUILDING TAX EXEMPTIONNAME ADDRESS ASSESSMENTSCHURCHES AND HOUSES OF WORSHIPALEXIS PARK CHURCH 3906 35A ST 294,000 1,065,000 4,548.73ALL SAINTS ANGLICAN 3301-3205 27 ST 549,700 2,881,000 11,483.92ASSEMBLY OF GOD CHURCH 3606 27 ST 230,000 169,400 1,336.11CHRISTIAN REFORMED CHURCH OF V 3605 12 ST 245,800 575,000 2,746.97CHURCH OF GOD OF PROPHECY 4300 BELLA VISTA RD 92,100 243,900 1,124.53EMMANUEL FELLOWSHIP BAPTIST 3412 15 AVE 486,400 2,280,000 9,260.03ESSENTIALIST CHURCH OF CHURCH 2001 45 AVE 148,800 160,000 1,033.17FAITH BAPTIST CHURCH 3910 27A ST 515,800 1,212,000 5,782.43FIRST BAPTIST CHURCH 1406 32 AVE 338,900 518,000 2,867.37GERMAN CHURCH OF GOD 4312 25 ST 226,400 647,300 ,924.19JESUS CHRIST OF LATTER DAY SAI 1506 35 ST 212,400 1,886,000 7,024.81KNOX PRESBYTERIAN CHURCH 3701 32 AVE 292,600 1,336,000 5,451.41LIVING WORD LUTHERAN CHURCH 6525 OKANAGAN LANDING RD 291,400 406,000 2,333.57NEW APOLSTOLIC CHURCH 4203 PLEASANT VALLEY RD 115,100 64,600 601.09NO SIKH CULTURAL SOCIETY 3800 COMMONAGE CRES 57,100 761,000 2,738.88OKAN ASSEMBLY CTR FOR JEHOVAH 1424 MISSION RD 1,291,000 3,039,000 14,491.22OUR LADY OF PEACE 3016 37 ST 156,500 176,100 1,112.82PEACE LUTHERAN CONGREGATION 1204 30 AVE 407,900 794,000 4,022.15SALVATION ARMY COMMUNITY CHURC 3303 32 AVE 711,000 1,243,000 6,538.80SLAVIC CHRISTIANS OF EVANGELIC 2306 40 AVE 154,100 487,000 2,145.76ST JAMES ROMAN CATHOLIC CHURCH 2607 27 ST 442,200 787,000 4,113.38ST JOSAPHATS UKRAINIAN CATHOLI 2210 40 AVE 225,900 565,000 2,646.96TRINITY UNITED CHURCH 3300 ALEXIS PARK DR 1,160,800 3,767,000 16,493.44UKRAINIAN GREEK OTHODOX CHURCH 4105 27 ST 289,700 258,000 1,832.35VERNON ALLIANCE CHURCH 4301 27 ST 409,000 240,200 4,757.49VERNON ALLIANCE CHURCH 4305 27 ST 176,000 0 588.39VERNON ALLIANCE CHURCH 2601 43 AVE 576,300 2,215,000 9,342.94VERNON CHRISTADELPHIAN 19-2200 40 ST 148,900 170,000 1,066.99VERNON CHRISTIAN FELLOWSHIP 4506 29 ST 293,100 418,000 2,379.43VERNON CHRISTIAN FELLOWSHIP 4507 29 ST 366,000 85,700 1,510.53VERNON CHURCH OF CHRIST 4107 PLEASANT VALLEY RD 82,200 151,600 782.40VERNON FAMILY CHURCH 3508 25 AVE 808,000 362,000 3,913.32VERNON FULL GOSPEL TABERNACLE 5871 OKANAGAN LANDING RD 331,100 1,507,000 6,152.67VERNON GOSPEL CHAPEL 4106 PLEASANT VALLEY RD 216,100 393,000 2,038.30VERNON JAPANESE CULTURAL SOC 4895 BELLA VISTA RD 187,600 375,200 1,883.42

2010 PERMISSIVE TAX EXEMPTIONS CONTINUEDLAND BUILDING TAX EXEMPTIONNAME ADDRESS ASSESSMENTSEDUCATIONAL INSTITUTIONPV CHRISTIAN ACADEMY 1802A-1802 45 AVE 1,348,000 2,415,000 27,587.48PV CHRISTIAN ACADEMY 43,000 420,000 1,550.00ST JAMES SCHOOL 2700 28 AVE 984,000 3,817,000 35,205.48SOCIAL SERVICESABBEYFIELD HOUSE 3511 27 AVE 182,500 717,000 2,375.64ALL SAINTS ANGLICAN 3301-3205 27 ST 104,000 271,000 2,749.55CANADIAN MENTAL HEALTH ASSOC 3305 27 ST 148,000 222,000 976.90CANADIAN MENTAL HEALTH ASSOC 3100 28 AVE 399,000 1,218,000 11,856.63CANADIAN MENTAL HEALTH ASSOC 3605 24 AVE 146,000 271,000 1,101.08FIRST NATIONS FRIENDSHIP CTR 2902 29 AVE 208,000 113,000 2,352.30FIRST NATIONS FRIENDSHIP CTR 2904 29 AVE 208,000 152,000 2,638.37GOOD SAMARITAN CANADA 4904 20 ST 1,224,000 6,302,000 19,877.89GOOD SAMARITAN CANADA 4900 20 ST 649,000 3,718,000 11,534.49GREATER VERNON TEEN INITIATIVE 3104 37 AVE 234,000 41,100 2,015.32KINDALE - SEATON CTR 1340 POLSON DR 302,000 239,000 3,965.00KIWANIS VILLAGE 1507 35 AVE 363,000 743,000 2,920.47KIWANIS VILLAGE 1507 35 AVE 868,000 2,178,000 8,043.69N.O. COMMUNITY LIFE SOC 2400 46 AVE 161,000 600,000 5,580.32NO NEUROLOGICAL ASSOC 2802 34 ST 516,000 2,620,000 22,997.53NO YOUTH & FAMILY SERVICES 4107 27 ST 142,000 250,000 1,035.05NO YOUTH & FAMILY SERVICES 4109 27 ST 142,000 252,000 1,040.33NO YOUTH & FAMILY SERVICES 3100 32 AVE 486,000 211,000 5,107.26OK COMM - COLUMBUS COURT 3003 GATEBY PL 888,000 1,476,000 6,241.85PEOPLE PLACE 3402 27 AVE 578,000 1,858,000 17,862.19PEOPLE PLACE 3400 27 AVE 493,000 19,200 3,751.63SAL ARMY THRIFT STORE - 27 ST 4402 27 ST 402,000 358,000 5,570.31SALVATION ARMY THRIFT SHOP 3102 29 AVE 208,000 207,000 3,041.81TRINITY UNITED - CAMP HURLBURT 9657 EASTSIDE RD 1,951,000 153,000 5,550.71UPPER ROOM MISSION 3403 27 AVE 475,000 148,000 4,564.57V & D HOSPICE SOCIETY 3506 27 AVE 526,000 722,000 3,294.96VDACL - 26 ST GROUP HOME 3307 26 ST 159,000 305,000 1,225.20VDACL - 39 ST GROUP HOME 2803 39 ST 141,000 291,000 1,140.73VDACL - 4240 ALEXIS PARK DR 3601 27 AVE 203,000 708,000 2,405.94VDACL - DOROTHY ALEXANDER CTR 2711 38 ST 1,475,000 4,307,000 42,395.89VDACL - VENTURE TRAINING 4240 ALEXIS PARK DR 39,900 640,000 4,986.78VERNON RESTHOME 2808 35 ST 869,000 1,229,000 5,539.19VERNON UKRAINIAN VILLAGE 3502 27 AVE 765,000 2,663,000 9,053.30WOMEN'S TRANSITION HOUSE 2603 26 ST 330,000 801,000 2,986.65WOMEN'S TRANSITION HOUSE 3502 19 ST 224,000 474,000 1,843.14PAGE 35CITY OF VERNON 2010 ANNUAL REPOR

PAGE 36CITY OF VERNON 2010 ANNUAL REPOR2010 PERMISSIVE TAX EXEMPTIONS CONTINUEDLAND BUILDING TAX EXEMPTIONNAME ADDRESS ASSESSMENTSCULTURALPOWERHOUSE THEATRICAL SOC 2901 35 AVE 198,000 393,000 4,332.92VERNON MUSIC SCHOOL 1705 32 AVE 167,000 355,000 3,827.13VERNON MUSIC SCHOOL - COACH 1705 32 AVE 113,000 267,000 2,786.13EDUCATIONALALLAN BROOKS NATURE CTR 250 ALLAN BROOKS WAY 105,000 127,000 1,700.61ALLAN BROOKS NATURE CTR 285,000 0 952.80OKANAGAN SCIENCE CTR 2600 HWY 6 3,748,400 851,000 33,696.02SCHUBERT CENTRE SOCIETY 3505 30 AVE 1,667,000 45,400 5,725.04V & D HERITAGE SOCIETY 2704 HWY 6 56,500 88,300 1,061.51RECREATIONALOK LANDING COMMUNITY ASSOC 7813-7811 OKANAGAN LANDING RD 31,300 398,000 3,148.66OK LANDING COMMUNITY ASSOC 2,818,000 0 9,421.00MIXED AND UNIQUEHALINA / CURLING / B&G CLUBS 3700 33 ST 6,871,000 0 50,324.05NORD HERONRY 107-2200 53 AVE 117,000 0 308.63NORD HERONRY 108-2200 53 AVE 117,000 0 308.63NORD HERONRY 109-2200 53 AVE 117,000 0 308.63ST JOHNS AMBULANCE 1905-1901 47 AVE 383,000 140,000 3,832.07SCOUTS 1905-1901 47 AVE 85,100 41,700 424.12SUNNYVALE RESTHOME SOCIETY 4306 25 ST 53,400 64,100 310.21SUNNYVALE RESTHOME SOCIETY 4308 25 ST 46,200 38,400 223.32SUNNYVALE RESTHOME SOCIETY 4304 25 ST 116,000 365,000 1,270.28VERNON & AREA PRO LIFE SOCIETY 3102 31 AVE 118,000 67,700 1,360.84VERNON PENSIONERS - MCCOLLOUGH 3400 COLDSTREAM AVE 644,000 1,066,000 4,515.04VERNON PENSIONERS - MCCOLLOUGH 45,400 87,900 977.28NEW 2008JOHN HOWARD SOCIETY 2307 43 ST 575,000 649,000 3,231.36NEW 2009VDACL - 3601 36A ST GROUP HOME 3601 36A ST 107,000 120,000 599.28VERNON NATIVE HOUSING PROJECT 4305 19 AVE 594,000 2,927,000 9,299.68NEW 2010ARMY NAVY & AIRFORCE VETERANS 2500 46 AVE 109,000 4,500 379.47CDN MENTAL HEALTH ASSOCIATION 3405 OKANAGAN AVE 40,000 68,400 286.22CDN MENTAL HEALTH ASSOCIATION 3610 25 AVE 95,300 333,000 1,131.14CDN MENTAL HEALTH ASSOCIATION 4206 ALEXIS PARK DR 241,000 867,000 2,926.24CDN MENTAL HEALTH ASSOCIATION 2201 53 AVE 415,000 614,000 2,716.83TOTAL EXEMPTIONS $ 597,144.70

PAGE 37CITY OF VERNON 2010 ANNUAL REPOR2010 COUNCIL EXPENSES2010 EXPENSESNAME OFFICE REMUNERATION (NET OF G/HST) TOTALLIPPERT, Wayne Mayor $ 63,469 $ 10,566 $ 74,035GILROY, Jack Councillor 23,077 3,213 26,290O'KEEFE, Mary Jo Councillor 22,529 1,491 24,020BAUMBROUGH, Buffy Councillor 25,954 472 26,426LEE, Shawn Councillor 20,474 1,149 21,623NICOL, Patrick Councillor 20,474 - 20,474SPIERS, Robert Councillor 20,474 - 20,474TOTALS $ 196,453 $ 16,891 $ 213,344Council DisqualificationsThere were no Council disqualifications as per Section 110 of theCommunity Charter in 2010.

PAGE 38CITY OF VERNON 2010 ANNUAL REPOREmployee NameDIVISION2010 EMPLOYEE REMUNERATIONGROSSEARNINGSEXPENSESALLOWANCES(net of G/HST Rebates)TOTALGOUS, Leon A Administration 153,733 14,223 4,500 172,456OWENS, Richard E Fire / Rescue 126,342 1,594 127,936CARLISLE, Jeffrey Fire / Rescue 113,269 7,497 3,937 124,703BAILEY, Margaret Administration 113,890 3,764 117,654FLICK, Kimberly S Planning / Building 109,563 2,894 2,603 115,060BERTLES, Kevin Finance 104,444 5,893 3,937 114,274DICKINSON, Robert Engineering 108,537 1,523 3,407 113,467BIEBER, Jim Fire / Rescue 111,391 1,035 112,426KOENIG, Shirley A Operations 103,518 2,679 3,975 110,172POOLE, Kevin W Planning / Building 93,009 8,063 3,375 104,447SKOLROOD, Lawrie Fire / Rescue 102,389 1,647 104,036GREEN, Keith R Fire / Rescue 96,666 7,337 104,003PSHYK, Paul Fire / Rescue 103,021 - 103,021KUHN, Doug Fire / Rescue 101,809 60 101,869BOLTON, Kim Fire / Rescue 100,587 1,082 101,669IKESAKA, Wayne Administration 92,925 869 2,812 96,606RINTOUL, Dale M Planning / Building 91,613 2,100 2,812 96,525LITTLE, Wayne Fire / Rescue 93,592 112 93,704COTTER, Catherine Administration 89,107 197 3,324 92,628WAKEFIELD, Dean Fire / Rescue 89,512 2,488 92,000ROSS, Doug Recreation 87,274 3,957 91,231WALKER, Dan Fire / Rescue 90,595 150 90,745BOND, Brent H Fire / Rescue 89,788 889 90,677GIBSON, Ronald Operations 89,585 962 90,547KULAK, Chris Fire / Rescue 89,587 697 90,284MANN, Reinhard Fire / Rescue 89,220 825 90,045KOPP, Tony Operations 86,914 2,868 89,782WATSON, Brent Fire / Rescue 76,989 10,852 1,800 89,641WYCOTT, Curtis C Operations 87,355 2,172 89,527BANDY, Brett Administration 81,629 3,959 3,375 88,963MARTENS, Cornelius Planning / Building 84,609 1,339 2,839 88,787BARKER, Cindy Finance 80,890 7,873 88,763RICE, James D Operations 87,919 421 88,340MARSHALL, Brooke Planning / Building 80,203 7,619 87,822TISHENKO, Alex Operations 83,354 389 3,407 87,150JEFFERSON, Michelle Administration 80,936 3,083 2,839 86,858STRANKS, Ed J Engineering 81,964 2,432 1,800 86,196BRIDAL, Patricia Administration 82,085 3,982 86,067IMRICH, Douglas R Fire / Rescue 84,214 1,050 85,264

PAGE 39CITY OF VERNON 2010 ANNUAL REPOREMPLOYEE NAMEDIVISIONGROSSEARNINGSEXPENSES ALLOWANCES(NET OF G/HST REBATES)TOTALCECCHINI, Darren Fire / Rescue 84,074 966 85,040KEENAN, Trevor J Fire / Rescue 83,610 - 83,610CURRIE, Ian Operations 81,139 2,252 83,391MARR, Andrew Operations 81,992 1,378 83,370CLARKE, Colin A Fire / Rescue 82,016 1,034 83,050CUCHERAN, Robert Fire / Rescue 82,151 412 82,563MCGIVERIN, Ryan E Fire / Rescue 82,290 - 82,290PARSONS, Brian G Fire / Rescue 82,074 - 82,074CONNOR, Bryce P Operations 80,876 995 81,871REICH, Allyson Fire / Rescue 81,537 238 81,775THOMAS, Jamie Operations 81,278 - 81,278ROBINSON, Chris Fire / Rescue 80,845 412 81,257GAWNE, Kevin M Operations 81,056 154 81,210MUNRO, Fran M Finance 78,401 2,662 81,063STOLL, Michael Fire / Rescue 80,642 165 80,807KLYMCHYK, Michael Engineering 78,624 1,623 80,247GRANT, James A Administration 79,391 663 80,054ROSS, Gordon Operations 79,540 223 79,763SHANNON, Shannon Finance 77,317 2,306 79,623TAYLOR, Dennis Operations 78,980 388 79,368GOBBETT, Carl Operations 78,066 922 78,988MCLUCKIE, Paula M Administration 75,237 1,118 2,271 78,626KANESTER, Clinton Administration 77,316 916 78,232PEARSON, Joel M Fire / Rescue 77,989 85 78,074ROESLER, Darren Operations 76,565 95 76,660COVER, Dave Operations 75,922 - 75,922BEALS, Gary Operations 75,207 36 75,2435,868,164 125,396 48,513 5,888,340All Other Employees 13,728,607 140,554 9,848 13,879,009Grand Total 19,596,771 265,950 58,361 19,767,349

PAGE 40CITY OF VERNON 2010 ANNUAL REPORSTATEMENT OF SEVERANCE AGREEMENTSIn accordance with the requirements of the Financial Information Act below is a schedule of Severance Agreements and equivalent’s monthrange of compensation for the year 2010 for which severance payments commenced in 2010.Number of Severance Agreements: 2Range of equivalent’s months pay: 7Approved by:________________________________ Dated: May 30, 2011Finance ManagerApproved by Council:___________________________________ Dated: May 30, 2011MayorSTATEMENT OF GUARANTEESIn accordance with the requirements of the Financial Information Act below is a summary of Guarantees in effect for the year 2010.The City of Vernon has issued an irrevocable letter of credit in favour of the Agricultural Land Commission (ALC) as aguarantee to fund works required by the ALC as a condition of a property being removed from the Agricultural LandReserve. The property is being developed by the wholly-owned subsidiary, Hesperia Development Corporation. Theamount of the guarantee is $716,000. As of December 31, 2010, no drawing on the letter of credit has occurred.Approved by:________________________________ Dated: May 30, 2011Finance ManagerApproved by Council:_________________________________________ Dated: May 30, 2011Mayor

PAGE 41CITY OF VERNON 2010 ANNUAL REPOR2010 CONSULTING FEES PAID (INCLUDING G/HST)CONSULTANT 2010 2009 2008 SERVICES PROVIDEDFocus Corporation 476,461 701,368 482,286 Engineering - various projectsKerr Wood Leidal Services 328,303 246,771 274,226 Engineering - various projectsQuantum Consulting 216,053 220,548 150,452 Engineering - various projectsSawchuk Development 185,590 - - Polson Park ProjectUrban Systems 161,080 126,949 28,421 Transportation Assessment & DCC ReviewESRI Canada Limited 140,195 - - Asset management servicesShatzko Engineering 105,095 150,551 125,897 Engineering - various projectsLandInfo Technologies 77,570 54,390 64,830 GIS consultingDavies and Associates TransporationConsulting 77,520 - - Economic DevelopmentFletcher Paine Associates 73,514 105,488 59,626 Engineering - various projectsSummit Environmental Consultants 63,440 33,108 25,577 Environmental - various projectsMMM Group Ltd - Bel-MK Engineering 42,223 131,829 5,094 Engineering - various projectsGolder Associates Ltd 37,069 42,698 131,064 Engineering - various projectsCPMJ Consulting Inc. DBA EDCD Consulting 34,605 - - Economic DevelopmentPeak Environmental Inc 28,211 - - Environmental assessmentLions Gate Consulting 27,343 10,599 - Economic Development stategySonya Forsyth 25,132 - - Engineering - various projectsStantec 22,748 8,337 62,755 Engineering - various projectsMarli Russen 22,263 60,655 22,357 H.R. ConsultingPower Concepts 17,458 2,617 1,408 Employee team buildingCygnus Management Consultants 16,350 15,784 2,625 H.R. ConsultingQuestica Inc. 15,882 56,701 - Budget software consultationOpus Consulting 15,328 - - Traffic Safety StudyOutland Design Landscape Architechture 14,367 - - Landscape Architechture servicesAtomic Crayon 13,446 - - Graphic DesignEdmund Lee 12,989 57,967 - Council Chambers addition projectVal Harrison 12,113 - - Community Policing Management servicesHobson & Associates 11,000 9,000 - Heritage RegisterDave Mitchell & Associates 5,600 - - Fire Department Technology reviewEBA Engineering 5,180 27,556 146,659 Engineering - various projectsAECOM Canada 5,053 78,377 - Lower BX Creek StudyHoward Industries 4,881 - - RCMP prisoner mealsSeven Group Network Technology Inc 3,791 30,543 -IT systems management softwareconsultationArchineers Consulting 3,360 - 9,250 McMechan ReservoirGary McCall 2,520 - - Temp Fire Chief servicesCommando Bay Consulting 1,558 8,438 9,854 Emergency Program consulting

PAGE 42CITY OF VERNON 2010 ANNUAL REPORCONSULTANT 2010 2009 2008 SERVICES PROVIDEDSNI Safety Nets Inc. $ 840 $ 8,000 $ - Airport safety consultingActon Consulting - 25,200 - Building Permit fee reviewAspen Park Consulting - 3,563 - Airport wildlife control consultingAdvisory accounting services on PSABBDO Dunwoody - 685 4,174 issuesBill DiPasquale - - 1,229 Engineering on WRP issuesBradshaw Consulting Group - - 1,963 Operations consultingCEI Architecture - - 111,086 Library/Civic BldgDayton & Knight - 12,064 10,799 Asset management planningDebra Strong & Associates Inc. - 12,883 14,347 Admin & senior mgmt teambuildingDigital Boundary Group - - 10,237 IT security penetration testingFletcher & Company Municipal Consulting - - 5,937 Engineering - various projectsGen Suttling - - 648 SILGA Convention planningGHK International - - 10,500 Airport economic impact studyLee Gabel - - 4,672 Transportation PlanLim Clark - - 4,770 Traffic volume surveysMacDougall Appraisals & Consulting - 13,801 42,784 Property appraisalsMarathon Communications - - 13,166 Staff teambuildingMCW Consultants - - 43,130 Library/Civic BldgMonaghan Engineering - 57,265 - Engineering - various projectsNancy Gomerich - 378 - Finance - Chart of Accounts redesignOsprey Strategic Management - - 8,390 Operations consulting - efficiency reviewPacific Land Services Ltd - 2,888 31,265 Real estate managementQuadra Development Solutions Inc - 5,681 26,250 Water devolution of GVSRay Foisy - - 525 Advisory services on BC Assessment issuesRead Jones Christofferson - - 5,000 Library/Civic BldgRemax - - 16,170 Land professional fees - Parkade leaseResults Management Services - - 4,413Strategic planning (Operations & FireDivisions)Ryan So - - 4,510 Traffic volume surveysS-5 Services - - 19,661 Transportation PlanSerko Property Services - - 11,801 Property negotiationsSmart Growth Advisory - - 991 OCP ReviewSpiegel Skillen & Assoc. - - 28,350 Library/Civic BldgTerracognito Consulting - - 3,200 OCP ReviewTim Dillon & Associates - - 9,728 Exempt staff reviewVisible Strategies - 62,626 - Consultant for the new "See It" website$2,306,130 $ 2,385,306 $ 2,052,077Footnotes:1. Consulting fees are defined for this purpose as fees paid to a professional person or firm for advisory contractservices where the City was not able to obtain such services from in-house sources. Legal fees are not included.2. Consulting fees for the Library/Civic Building were partially recovered from the Okanagan Regional Library. Amountsshown are gross amounts paid.

PAGE 43CITY OF VERNON 2010 ANNUAL REPOR2010 GRANT PAYMENTSPAYEE GRANT TYPE AMOUNTO'Keefe Ranch & Historical Society Operating & Capital Grants $ 238,764Downtown Vernon Association Downtown landscaping maintenance 28,469Downtown Vernon Association Mural maintenance and upgrading 18,803Schubert Centre Society Social Responsibility Grant 15,000Vernon Public Art Gallery Council Discretionary Grant 15,000Upper Room Mission Council Discretionary Grant 10,877Allan Brooks Nature Centre Society Council Discretionary Grant 10,000Vernon Winter Carnival Society Council Discretionary Grant 10,000Downtown Vernon Association Council Discretionary Grant 7,500Murray & Ryley Shaw Heritage Restoration Grant 5,000Warren Peace Bunny Sanctuary Community Grant 4,000Farwest Coach Funtastic Event - charter transit buses 2,726Go Rowing & Paddling Assoc of Canada Community Grant 2,000Enderby Jewellers Plagues for Heritage program 1,943Rotary Club of Vernon Silver Star Wings and wheels event 1,500RCMP Youth Academy Jean Minguy memorial 1,000Community Based Youth Services Team Council Discretionary Grant 1,000$ 373,582

PAGE 44CITY OF VERNON 2010 ANNUAL REPOR2010 PAYMENTS TO VENDORS IN EXCESS OF $25,0002009VENDOR NAME2010AMOUNTCOMPARATIVEAMOUNT PURPOSEREGIONAL DISTRICT OF NORTHOKANAGAN$ 22,267,209 $ 19,262,856 Long-term Debt Payments / annual regional tax requisition /transfer of water revenue / and otherMINISTER OF FINANCE 13,743,740 12,396,084 Transfer of School Taxes collectionRECEIVER GENERAL 11,105,398 11,181,153 Remittances of employee source deductions / RCMP contractpaymentsR355 ENTERPRISES LTD 2,999,946 0 Contractor for various road improvement projectsMUNICIPAL PENSION PLAN 2,711,335 2,462,351 Remittance of employer and employee portions of pensioncontributionsNORTH OKANAGAN COLUMBIA-1,652,896 1,377,621 Transfer of Regional Hospital Taxes collectionSHUSWAP REGIONALOKANAGAN REGIONAL LIBRARY 1,459,469 1,371,028 Transfer of Regional Library Taxes collectionDISTRICT OF COLDSTREAM 1,422,755 1,102,546 Reimbursement of quarterly water operating expenses / transitpaymentsBC HYDRO & POWER AUTHORITY 1,278,313 1,139,843 UtilityALDON WASTE SYSTEMS LTD 1,274,305 1,119,626 Contract residential garbage collectionBC TRANSIT 1,219,140 1,136,694 Contract transit servicesARLO CONSTRUCTION LTD. 1,135,581 0 Contractor for 34th Street road improvement projectGENERAL ASSEMBLY EXCAVATING1,064,134 0 Contractor for 20 Street upgrade projectLTDCITY OF KELOWNA 1,014,481 453,620 Cost sharing for the Regional Bio-solids FacilityBC ASSESSMENT AUTHORITY 598,850 566,025 Transfer of BC Assessment Authority Taxes collectionHUB FIRE ENGINES & EQUIP LTD 509,733 0 Purchase of fire protection equipment and fire truckFOCUS CORPORATION 476,461 701,368 Engineering servicesLANDMARK FOREST MANAGEMENT 467,207 434,548 Contractor for BX Creek drainage projectPETRO-CANADA 428,708 404,353 Fuel provider for city fleetMUNICIPAL INSURANCE ASSOC OF BC 415,329 418,492 Liability insurance - premiums and deductiblesGREAT-WEST LIFE INSURANCE401,771 384,074 Employee benefitsCOMPANYHESPERIA DEVELOPMENT CORP 400,000 500,000 Internal lending to City-owned SubsidiaryL B CHAPMAN CONSTRUCTION LTD 394,814 0 Contractor for 31st avenue revitalization projectR E POSTILL & SONS LTD 365,286 240,469 Aggregate purchasesEXECUTIVE FLIGHT CENTRE FUEL360,898 454,769 Purchase of jet and aviation fuel for resale at the AirportSERVICES LTDDOWNTOWN VERNON ASSOCIATION 360,638 343,972 Transfer of Business Improvement Area Taxes / and otherVIMAR EQUIPMENT LTD 360,443 0 Capital purchaseOKANAGAN AGGREGATES LTD 338,912 570,249 Aggregate purchasesCLEARVIEW GRINDING LTD. 331,989 0 Contract for Vernon Medical Building demolition and hazardousabatementKERR WOOD LEIDAL ASSOCIATES328,303 246,771 Engineering servicesLIMITEDMEDICAL SERVICES PLAN OF BC 317,482 277,196 Employee benefitsCAPRI INSURANCE 294,023 340,556 City facility insurancePETERS BROS CONSTRUCTION LTD 289,920 372,223 Contractor for 39 Ave - 27 St to Pleasant Valley Rd projectEDDIE'S BLACKTOP MAINTENANCE 279,079 188,784 Contract pavingFORMA CONSTRUCTION LTD 275,395 421,870 Contractor for Spirit Square projectCORIX WATER PRODUCTS LIMITED259,992 372,089 Purchase of water system materials and suppliesPARTNERSHIPJACK JOHN 252,326 0 Airport lease prepayment 2013-2018GRIZZLY CURB & CONCRETE LTD 243,589 308,021 Contract curb, gutter, and sidewalk worksSWAN LAKE FRUIT & GARDEN CENTRE 242,655 0 Landscaping Hwy 97 projectLIDSTONE & COMPANY 238,024 0 Legal fees

PAGE 45CITY OF VERNON 2010 ANNUAL REPOR2009VENDOR NAME2010AMOUNTSCOMPARATIVEAMOUNT PURPOSEO'KEEFE RANCH & HISTORICAL$ 232,805 $ 238,711 Grants in AidSOCIETYVERNON CIVIC EMPLOYEES UNION -230,087 219,844 Remittance of employee union duesLOCAL 626TERASEN GAS INC 227,955 200,254 UtilityQUANTUM CONSULTING GROUP LTD 216,053 220,548 Engineering servicesOKANAGAN LANDING FIREFIGHTERS213,282 213,282 Contract Okanagan Landing fire protectionASSOCR L WALKER CONTRACTING LTD 206,051 270,709 Contractor for Commonage Path project / contracted snowremovalECONOLITE CANADA INC 197,999 0 Purchase of traffic control/street lighting suppliesDURNING DIRECTIONS & SERVICES 197,278 136,216 Contract tourism office operationBRENNTAG CANADA INC 193,523 326,372 Purchase of chlorine productsBLUERIDGE LANDSCAPING &188,789 192,873 Contract cemetery and parks maintenanceMAINTENANCE LTDWORKERS COMPENSATION BOARD 188,631 184,291 Remittance of employee WCB benefitsSAWCHUK DEVELOPMENTS CO. LTD. 185,590 0 Contractor for Polson Park projectE B HORSMAN & SON LTD 178,393 153,286 Purchase of inventoried parts and suppliesWATKIN MOTORS LTD 176,480 0 Capital purchaseURBAN SYSTEMS LTD 161,080 126,949 Consultant for DCC bylaw projectDAVIDSON LAWYERS LLP 157,466 41,154 Refund of cash securitiesRUDNISKY KENNETH M 153,372 116,714 Tax sale participantNORTH VERNON PROPERTIES INC. 150,706 110,257 Refund of cash securitiesMETRO MOTORS LTD 149,592 171,562 Capital purchaseESRI CANADA LIMITED 140,195 65,285 Software maintenance contractTELUS COMMUNICATIONS (BC) INC 139,422 105,360 UtilityREGIONAL HOSPITAL DISTRICT - N126,623 133,469 Transfer of Regional Hospital Taxes collectionOKANAGANVERNON PAVING LTD 118,513 51,605 Contract pavingENCAN CONSTRUCTION LTD 112,184 36,663 Refund of cash securitiesBRUCE CARSCADDEN ARCHITECTS111,811 0 Contract for Polson Park project designINC.AARDVARK PAVEMENT MARKING107,785 104,913 Contract line paintingSERVICESSHATZKO ENGINEERING LTD 105,095 150,551 Engineering servicesBLACK PRESS GROUP LTD 105,050 119,354 Local newspaper advertisingLAWRENCE ENTERPRISES LTD 102,679 856,431 Contractor for downtown road upgrade projectsSALT FAMILY HOLDINGS LTD 100,000 0 Purchase of landBIOMAGIC CANADA INC 98,641 76,394 Purchase of supplies for sanitary sewer operationWATERHOUSE ENVIRONMENTAL97,269 0 Purchase of supplies for operation of the water reclamation plantSERVICES CORPORATION6-4 BUILDING MAINTENANCE LTD 95,527 0 Contract janitorial servicesDELPRO INDUSTRIAL SALES INC 93,686 68,814 Purchase of water system materials and suppliesBROWN LAWRENCE 91,325 0 Tax sale participantBDO CANADA LLP 88,631 50,531 Financial audit feesMONASHEE SURVEYING AND86,139 36,506 Contract survey servicesGEOMATICSYOUNG ANDERSON 85,344 190,099 Legal feesPRECISION CLEANERS 85,112 154,650 Contract janitorial servicesOKANAGAN COLLEGE 84,421 0 Employee training / developmentLEDGESTONE PROPERTIES LTD 84,248 81,095 Rent for Development Services BuildingSPECIAL T CLEANING 83,581 181,357 Contract storm and sanitary main flushingANDREW SHERET LIMITED 81,705 75,999 Purchase of building maintenance supplies / low-flow toilet rebatereimbursementsD & A ROAD REPAIR INC 81,166 0 Contract for road repairs

PAGE 46CITY OF VERNON 2010 ANNUAL REPORVENDOR NAME2010 AMOUNT2009COMPARATIVEAMOUNT PURPOSELANDINFO TECHNOLOGIES INC $ 77,570 $ 54,390 Consultant for GIS servicesDAVIES & ASSOCIATES77,520 0 Consultant for economic developmentTRANSPORTATION CONSULTINGTELUS SERVICES INC 75,345 120,827 UtilitySOCIAL PLANNING COUNCIL FOR THE75,000 37,500 Contract crime preventionN.O.DIRECT ENERGY MARKETING LTD 74,211 99,267 Gas UtilityFLETCHER PAINE ASSOCIATES73,514 105,488 Engineering servicesENGINEERING LTDGUILLEVIN INTERNATIONAL CO 72,986 35,126 Purchase of inventoried parts and suppliesKLEARWATER EQUIPMENT72,958 210,365 Purchase of supplies for operation of the water reclamation plantTECHNOLOGIES CORPUNIVAR CANADA LTD 68,721 160,904 Purchase of chlorine productsEMPS ELECTRIC MOTOR & PUMP68,074 115,059 Contract pump supply and serviceSERVICE LTDCORIX UTILITIES INC 67,114 54,837 Purchase of water system materials and suppliesTELUS MOBILITY CELLULAR INC 65,971 60,507 UtilityNORTHLAND CHRYSLER JEEP DODGE 65,643 0 Capital purchaseLAFRENTZ ROAD MARKING 65,194 54,203 Contract line paintingHORIZON TREE SERVICE LTD 64,801 160,831 Contract tree maintenanceCORPORATE EXPRESS 63,606 67,555 Purchase of office suppliesSUMMIT ENVIRONMENTAL63,440 33,108 Environmental consultingCONSULTANTS LTDALLPRO TREE & LANDSCAPE SERVICES 63,355 28,765 Contract tree maintenanceTURN-KEY CONTROLS LTD 62,573 73,333 Contractor for Water Reclamation Plant maintenanceCLARK MARGARET 59,715 44,766 Contract services for restorative justice programHIGHLANDS IRRIGATION LIMITED 55,362 30,366 Contract irrigation work at the Water Reclamation PlantFLIGHT FUELS BC LTD 54,846 0 Purchase of jet and aviation fuel for resale at the AirportALDEBARAN ENTERPRISES 53,840 0 Refund of cash securitiesC G L CONTRACTING 53,813 1,981,321 Road & sidewalk upgrades / contract snow removalICBC 53,253 0 City fleet insuranceVADIM MANAGEMENT GROUP LTD 52,719 36,514 Contract software maintenanceEST ENVIRONMENTAL TECHNOLOGIES50,361 0 Purchase of supplies for sanitary sewer operationLTDCAPTAIN BAILEY WAY DEVELOPMENT50,000 100,000 Internal lending to City-owned SubsidiaryCORPEVERGREEN SPRAY SERVICES LTD 49,874 0 Contract tree maintenanceSCOTIABANK 49,859 68,112 Tax refunds for overpayments made on behalf of mortgageesVERNON FIREFIGHTERS ASSOCIATION49,729 46,391 Remittance of firefighter union duesLOCAL 1517DOOR DOCTOR 49,312 35,210 Overhead door maintenancePREDATOR RIDGE GOLF CLUB LTD 48,866 0 BC Assessment Authority supplemental property tax adjustmentVANTAGE POINT SOFTWARE CORP 48,687 0 Purchase of computer softwareKNIGHT'S VACUUM SERVICES LTD 48,603 55,232 Biosolids disposalDONALD`S MACHINE WORKS LTD 48,418 0 Contractor for Fulton Bridge projectPETROVALUE PRODUCTS CANADA INC 47,805 0 Purchase of jet and aviation fuel for resale at the AirportSOFTCHOICE CORPORATION 46,945 25,579 Purchase of computer softwareKELOWNA PACIFIC RAILWAY LTD 46,619 0 CN/CP crossingsBELL MOBILITY INC 46,613 45,472 UtilityCANADA POST CORPORATION 46,499 45,087 PostageCANACCORD WEALTH MANAGEMENT 46,146 0 Remittance of RRSP employee contributionITT FLYGT 45,477 0 Contrator for wet well replacementNUFLOORS 485509 BC LTD 43,804 0 Purchases of flooring suppliesINTERIOR INSTRUMENT TECH42,679 0 Contractor for Tronson sewer truckSERVICES LTDPATRICK ROBERT B 42,306 0 Tax sale participant

PAGE 47CITY OF VERNON 2010 ANNUAL REPORVENDOR NAME2010 AMOUNT2009COMPARATIVEAMOUNT PURPOSEMMM GROUP LTD - BEL-MK$ 42,223 $ 131,829 Engineering servicesENGINEERINGWHISPER RIDGE DEV 41,992 37,167 Refund of cash securitiesPILT MANAGEMENT & CONSULTING41,705 0 Refund Provincial grants in lieuPUBLIC WORKSLONDON DRUGS 41,638 58,781 Employee purchase planSFH SALES & CONSULTING GROUP 41,373 0 Purchase of pedestrian crosswalk controlsVALLEYVIEW CONTRACTING 41,033 39,606 Contract roadside mowingTOWNE AND COUNTRY TREE SERVICE 39,547 0 Contractor for chipping servicesDALZIEL CONTRACTING 39,102 58,043 Contractor for water main / storm sewer main maintenanceMURDY & McALLISTER BARRISTERS &38,946 0 Legal feesSOLICITORSHOME DEPOT 38,824 0 Purchase of building maintenance supplies / Low-flow toilet rebatereimbursementsDOWNUNDER PIPE INSPECTION 38,687 35,791 Contract pipe inspection servicesT C P TRAFFIC CONTROL38,532 39,513 Contract traffic control servicesPROFESSIONALSAIR TECH MECHANICAL LTD 38,511 0 Contract for Civic Complex heating systemAUGUST LANDSCAPE DESIGNS LTD. 38,047 0 Contractor for Spirit Square projectHUSKY OIL MARKETING CO 37,660 79,604 Purchase of supplies for city fleetSOURCE OFFICE FURNISHINGS LTD 37,158 71,623 Office furnitureGOLDER ASSOCIATES LTD 37,069 42,698 Engineering servicesSHERINE INDUSTIRES 35,452 0 Purchase of sign materialsSIMARK CONTROLS LTD 35,298 0 Purchase of pump station equipmentCPMJ CONSULTING INC DBA EDCD34,605 0 Consultant for economic developmentCONSULTINGSUN VALLEY MALL 34,243 31,928 Rent for downtown community policing officeWISE WILDLIFE CONTROL SERVICE 34,230 35,025 Contract wildlife control at the AirportSTERLING FLEET OUTFITTERS INC 34,047 0 Capital purchaseRICOH CANADA INC 33,959 0 Puchase of office equipmentVALKYRIE LAW GROUP 33,928 0 Legal feesIRL TRUCK CENTRE LTD 33,335 0 Purchase of supplies for city fleetACKLANDS-GRAINGER INC 33,072 0 Purchase of water system materials and suppliesLORDCO PARTS LTD 33,000 Purchase of supplies for city fleetMORFCO SUPPLIES LTD 32,994 38,486 Purchase of inventoried parts and suppliesCANADIAN INDUSTRIAL PUMPS LTD 32,732 38,303 Pump materials for Water Reclamation PlantSUPER SAVE DISPOSAL INC 32,717 30,998 Contract garbage removal at city facilitiesJOHN MEUNIER INC 32,536 0 Contractor for Water Reclamation Plant maintenancePETERS TIRE AND AUTO CENTRE 31,889 Employee purchase plan / purchase of supplies for city fleetUNION OF BC MUNICIPALITIES31,605 28,836 UBCM membership dues(UBCM)MICROSERVE V8205 31,348 85,356 Computer hardwareCIVICINFO BC 30,537 0 Civic membership dues/ training/ conferencesCARO ANALYTICAL SERVICES 30,072 33,957 Contract reclaimed water testing servicesOUCHI YOSHIO 30,000 0 Purchase road allowanceWOLSELEY WATERWORKS GROUP 29,362 49,287 Purchase of supplies for operation of the water reclamation plantOKANAGAN TRAFFIC CONTROL29,332 45,111 Contract traffic control servicesPROFESSIONALSMADDOX W E 29,264 0 Contract survey servicesPACIFIC NEWSPAPER GROUP INC 29,140 0 Regional newspaper advertisingMICROSERVE FINANCIAL SOLUTIONS 28,792 27,988 Computer hardwareMACAULAY & CO HOLDINGS 28,641 29,190 Equipment rentalsHOME BUILDING CENTRE - VERNON 28,372 118,857 Purchase of building maintenance supplies / Low-flow toilet rebatereimbursementsPEAK ENVIRONMENTAL INC 28,211 0 Contract for Vernon Medical Building demolition risk assessment

PAGE 48CITY OF VERNON 2010 ANNUAL REPORVENDOR NAME2010 AMOUNT2009COMPATATIVEAMOUNT PURPOSELEKO PRE CAST LTD $ 27,898 $ 30,192 Purchase of inventoried parts and suppliesENTERPRISE RENT-A-CAR 27,842 0 Vehicle LeasesWARKENTIN TREVOR 27,421 0 Refund of cash securitiesLIONS GATE CONSULTING INC 27,343 0 Consultant for economic developmentCONTROL MICROSYSTEMS INC 27,281 0 Contract for lift and pump station upgrades, materials and suppliesIKON OFFICE SOLUTIONS 27,274 37,375 Contract photocopier maintenancePURPLE SPRINGS NURSERY 27,091 0 Purchase landscape materials for parks1 & 2 ELECTRIC LTD 26,888 28,726 Contract building maintenanceDONALD ANTHONY COOK 26,849 0 Contractor for pathway / trail building projectTHOMPSON OKANAGAN TOURISM 26,733 0 Tourism marketingDISCOVERY DIESEL ELECTRIC 06 LTD 26,573 0 Contract for electrical service and maintenanceVANTAGEONE FINANCIAL SERVICES 26,082 0 Remittance of RRSP employee contributionMEARL'S MACHINE WORKS LTD 25,988 0 Contract for machine/repair servicesKAL TIRE LTD 25,624 0 Purchase of tires for city fleetVERNON WINTER CARNIVAL SOCIETY 25,605 0 Tourism marketing / SponsorshipANACHEMIA CANADA INC 25,452 30,553 Purchase of supplies for the water reclamation plantFORSYTH SONYA 25,132 38,565 Engineering services84,389,399 71,350,852All Others 3,987,200 12,062,990GRAND TOTAL PAYMENTS TO$ 88,376,599 $ 83,413,842VENDORS*2010 Comparative Amounts are only those amounts appearing in the 2010 vendor payment report over $25,000. Vendors showing 2010 amounts as zeromay have received payments from the City in 2010 but were below the 2010 threshold of $25,000.*2009 Comparative Amounts are only those amounts appearing in the 2009 vendor payment report over $25,000. Vendors showing 2009 amounts as zeromay have indeed received payments from the City in 2009 but were below the 2009 threshold of $25,000.

FINANCIAL SECTIONOur City, Everyone’s Future

PAGE 50CITY OF VERNON 2010 ANNUAL REPORThis page was intentionally left blank.

THE CORPORATION OF THE CITY OF VERNONFinance DivisionAUDITED FINANCIAL STATEMENTSFOR THE YEAR ENDED,DECEMBER 31, 2010

PAGE 52CITY OF VERNON 2010 ANNUAL REPOR

PAGE 53CITY OF VERNON 2010 ANNUAL REPOR

PAGE 54CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONConsolidated Statement of Financial PositionStatement ADecember 31 (in thousands of dollars) 2010 2009Financial AssetsCash and cash equivalents Note 2 $ 34,690 $ 38,631Portfolio investments Note 3 8,822 8,511Accounts receivable Note 4 17,263 14,435Municipal Finance Authority deposits Note 5 2,336 2,54163,111 64,118LiabilitiesAccounts payable and accrued liabilities Note 6 20,999 18,293Municipal Finance Authority reserves Note 5 2,336 2,541Long-term debt Note 7 38,067 40,760Deferred charges Schedule 4 13,677 17,41475,079 79,008Net Debt (11,968) (14,890)Non-financial AssetsTangible capital assets (net of accumulated amortization) Schedule 2 560,191 559,402Land under development 1,799 1,444Inventories of supplies 441 485Prepaid expenses 564 357562,995 561,688Accumulated SurplusTangible capital assets 522,124 518,642Statutory reserves Schedule 3 1,750 2,317Non-statutory reserves Schedule 3 26,328 24,848Operating surplus 825 991$ 551,027 $ 546,798The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.Approved by:__________________________Manager of Finance

THE CORPORATION OF THE CITY OF VERNONConsolidated Statement of OperationsStatement BBudget Actual ActualFor the Year Ended December 31 (in thousands of dollars) 2010 2010 2009Note 16RevenueTaxation Note 9 $ 24,733 $ 24,745 $ 23,483Services provided to other local governments 2,001 2,231 1,954Government grants 7,831 7,406 6,453Sales of services:Licences and permits 1,242 1,236 1,716Sewer fees and charges 8,519 8,928 9,095Environmental health 1,891 2,051 1,618Airport 732 842 791Public transit and parking 1,606 1,497 1,503Development fees 114 113 91Fines and rentals 805 814 856Other 1,671 1,504 1,379Fiscal services:Penalties and interest on taxes 352 405 357Interest on investments and actuarial adjustments 500 1,230 924Interest on overdue trade receivables & utilities 106 103 179Natural gas system lease and franchise agreement 2,853 2,988 2,955Capital contributions from developers 4,517 5,564 2,36959,473 61,657 55,723ExpensesGeneral government and common services 7,592 7,698 7,228Protective services:Police 9,852 9,445 9,148Fire and rescue 4,335 4,274 3,991Emergency measures 157 202 168Planning & building inspection 2,002 2,082 1,707Engineering 1,078 1,070 1,129Operations:Road transportation 6,125 7,243 6,200Airport 745 857 783Storm drainage 253 348 647Solid waste & recycling 1,716 1,817 1,622Cemetery 192 190 178Sanitary sewer 4,781 4,575 4,733Other 1,301 1,283 1,210Bylaw enforcement & parking control 1,099 976 964Fiscal services:Interest on long-term debt 2,705 2,689 2,838Other interest and bank charges 279 384 242Amortization of tangible capital assets 9,697 10,811 10,863Loss on disposal of tangible capital assets - 1,484 1,94053,909 57,428 55,591Annual Surplus / (Deficit) 5,564 4,229 132Accumulated Surplus, beginning of year 546,798 546,798 546,666Accumulated Surplus, end of year $ 552,362 $ 551,027 $ 546,798The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.PAGE 55CITY OF VERNON 2010 ANNUAL REPOR

PAGE 56CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONConsolidated Statement of Change in Net DebtStatement CBudget Actual ActualFor the Year Ended December 31 (in thousands of dollars) 2010 2010 2009Note 16Annual surplus / (deficit) $ 5,564 $ 4,229 $ 132Add: Amortization of tangible capital assets 9,697 10,811 10,863Losses on disposal of tangible capital assets - 1,484 1,940Proceeds on sale of tangible capital assets - 309 252Reclassification of tangible capital assets to land under development - - 119Consumption of supplies inventories - 780 717Use of prepaid expenses - 494 2319,697 13,878 14,122Less: Acquisition of tangible capital assets 13,144 13,393 10,748Increase in land under development - 355 597Acquisition of supplies inventories - 736 795Acquisition of prepaid expenses - 701 13913,144 15,185 12,279(Increase) / decrease in net debt 2,117 2,922 1,975Net debt, beginning of year 14,890 14,890 16,865Net debt, end of year $ 12,773 $ 11,968 $ 14,890The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.

PAGE 57CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONConsolidated Statement of Cash FlowsStatement DDecember 31 (in thousands of dollars) 2010 2009Operating Activities:Capital Activities:Annual surplus $ 4,229 $ 132Non-cash items included in annual surplus:Amortization of tangible capital assets 10,811 10,863Net losses on disposal of tangible capital assets 1,484 1,940Contributed tangible capital assets (792) (280)Actuarial adjustments on long-term debt (867) (595)Change in non-cash operating items:(Increase) / decrease in accounts receivable (2,828) (1,538)(Increase) / decrease in supplies inventories 44 (78)(Increase) / decrease in prepaid expenses (207) 92Increase in accounts payable and accrued liabilities 2,706 3,043Increase / (decrease) in deferred charges (3,737) 44110,843 14,020Proceeds on sale of tangible capital assets 309 252Acquisition of tangible capital assets (12,601) (10,468)Investing Activities:Financing Activities:(12,292) (10,216)Change in portfolio investments (MFA BondFund) (311) (584)Increase in land under development (355) (478)(666) (1,062)Principal payments on long-term debt (1,826) (2,510)Increase in cash and cash equivalents (3,941) 232Cash and cash equivalents, beginning of year 38,631 38,399Cash and cash equivalents, end of year $ 34,690 $ 38,631The accompanying summary of significant accounting policies and notes are an integral part of these financial statements.

PAGE 58CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONConsolidated Schedule of Segmented OperationsSchedule 1For the Year EndedDecember 31, 2010(in thousands of dollars)2010Revenue2010Expense2010NetRevenue /(NetExpense)2009Revenue2009Expense2009NetRevenue /(NetExpense)General Government:Legislative & Grants to Organizations $ - $ 755 $ (755) $ - $ 856 $ (856)Corporate Administration - 1,060 (1,060) - 975 (975)Tourism 402 448 (46) 90 370 (280)City Clerk's Office - 417 (417) (2) 371 (373)Finance & Purchasing 326 1,715 (1,389) 320 1,825 (1,505)Human Resources - 822 (822) - 858 (858)Information Services 7 1,293 (1,286) 13 1,364 (1,351)Civic Buildings 340 1,796 (1,456) 636 630 6Hesperia Development Corp. - 56 (56) - 168 (168)CBW Development Corp. - 33 (33) - 78 (78)1,075 8,395 (7,320) 1,057 7,495 (6,438)Protective Services:Police 975 9,550 (8,575) 677 9,313 (8,636)Fire & Rescue 267 4,388 (4,121) 390 4,102 (3,712)Emergency Measures 109 202 (93) 89 168 (79)1,351 14,140 (12,789) 1,156 13,583 (12,427)Planning & Building Inspection:Planning 113 1,479 (1,366) 91 1,112 (1,021)Building & Licence Inspection 1,219 604 615 1,700 595 1,1051,332 2,083 (751) 1,791 1,707 84Engineering Services 80 1,070 (990) 78 1,129 (1,051)Operations:Roads & Sidewalks 5,364 10,171 (4,807) 2,352 10,741 (8,389)Airport 842 878 (36) 791 802 (11)Storm Drainage 254 1,508 (1,254) 790 1,838 (1,048)Sanitary Sewer 11,712 8,184 3,528 10,914 8,211 2,703Public Transit 2,234 3,051 (817) 2,001 2,613 (612)Solid Waste & Recycling 1,916 1,817 99 1,481 1,622 (141)Cemetery 149 191 (42) 155 179 (24)Other 1,156 1,862 (706) 1,115 1,757 (642)23,627 27,662 (4,035) 19,599 27,763 (8,164)Parking & Bylaw Enforcement 1,108 1,033 75 1,048 1,028 20Non-Segmented Items (unallocated) 33,084 3,045 30,039 30,994 2,886 28,108Total $ 61,657 $ 57,428 $ 4,229 $ 55,723 $ 55,591 $ 132

THE CORPORATION OF THE CITY OF VERNONConsolidated Schedule of Tangible Capital AssetsSchedule 2Accumulated Accumulated Accumulated Net CarryingBalance Balance Amortization Amortization Amortization AmountDecember 31, 2010 Beginning Write- End Beginning Amortization Reductions End End(in thousands of dollars) of Year Additions Disposals downs of Year of Year Expense on Disposals of Year of YearPAGE 59CITY OF VERNON ANNUAL REPORTLand $ 244,342 $ 1,219 $ 25 $ - $ 245,536 $ - $ - $ - $ - $ 245,536Buildings 55,697 810 871 - 55,636 14,371 1,503 29 15,845 39,791Vehicles 9,675 1,323 415 - 10,583 4,340 614 331 4,623 5,960Misc. Equipment 1,398 - - - 1,398 810 39 - 849 549Information Technology 1,970 446 - - 2,416 1,566 162 - 1,728 688Transportation Infrastructure 188,927 4,705 1,049 - 192,583 67,939 5,642 692 72,889 119,694Storm Sewer Infrastructure 70,890 1,411 349 - 71,952 15,656 938 128 16,466 55,486Sanitary Sewer Infrastructure 82,414 3,479 395 - 85,498 17,184 1,085 131 18,138 67,360Irrigation WaterInfrastructure 7,920 - - - 7,920 2,201 105 - 2,306 5,614Natural Gas System CapitalLease 25,295 - - - 25,295 5,059 723 - 5,782 19,513TOTAL $ 688,528 $ 13,393 $ 3,104 $ - $ 698,817 $ 129,126 $ 10,811 $ 1,311 $ 138,626 $ 560,191Supplementary Information Included in Above Schedule (in thousands of dollars)Tangible capital assets under construction and not yet subject to amortization $ 5,876Contributed tangible capital assets received during the current period $ 794Tangible capital assets recognized at nominal value (land) $ -Interest capitalized during the current period $ -

THE CORPORATION OF THE CITY OF VERNONContinuity Schedule of ReservesSchedule 3BalanceBalanceFor the Year 2010 Beginning Incoming Outgoing End of(in thousands of dollars) of Year Transfers Interest Transfers YearStatutory Reserve FundsHighway Access to Water Fund $ 307 $ - $ 4 $ - $311Land Sales Reserve Fund 1,224 260 7 (843) 648Local Improvement Reserve Fund 786 - 5 - 7912,317 260 16 (843) 1,750Non-Statutory ReservesBudget Carry-Over Reserve - General 1,821 3,258 - (1,814) 3,265Budget Carry-Over Reserve - Sewer 918 1,344 - (869) 1,393Capital Reserves - General 8,910 3,873 44 (4,789) 8,038Capital Reserves - Sewer 7,562 920 16 (223) 8,275Operating Reserves - General 122 30 - (19) 133Operating Reserves - Sewer 451 - 1 - 452Tax Equalization Reserves 2,032 736 4 (990) 1,782Special Purpose Reserves 1,516 157 4 (200) 1,477Terasen Gas Lease Legacy Reserve 1,516 - 12 (15) 1,51324,848 10,318 81 (8,919) 26,328Grand Total Reserves $ 27,165 $ 10,578 $ 97 ($ 9,762) $ 28,078PAGE 60CITY OF VERNON 2010 ANNUAL REPORT

PAGE 61CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONContinuity Schedule of Deferred ChargesSchedule 4Develop. Develop. Develop. FederalCost Cost Cost Sidewalk Gas Tax /For the Year 2010 Charges Charges Charges Gifting Transit(In thousands of dollars) (Roads) (Drainage) (Sewer) Funds Funds TOTALBalance, beginning of year $ 6,272 $ 2,068 $ 7,027 $ 1,245 $ 802 $ 17,414Add: Interest 192 35 117 - 8 352Development levies 446 77 273 267 - 1,063Federal Government transfers - - - 1,018 1,018Less:Transfers to:General Fund (2,738) (245) - (1) (1,402) (4,386)Sewer Fund - - (1,784) - - (1,784)Balance, end of year $ 4,172 $ 1,935 $ 5,633 $ 1,511 $ 426 $ 13,677Represented by:Deposit accounts $ 196 $ 201 $ 479 $ - $ - $ 876Portfolio investments 5,544 734 2,544 - - 8,822Due from General Fund (1,568) 1,000 2,610 1,511 426 3,979$ 4,172 $ 1,935 $ 5,633 $ 1,511 $ 426 $ 13,677

THE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 20101. Significant Accounting Policies:a) Basis of Accounting:The consolidated financial statements of the City of Vernon are prepared by managementin accordance with local government accounting standards established by the PublicSector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants. Inline with the standards, the resources and operations of the City are segregated intovarious funds for accounting and financial reporting purposes, each being treated as aseparate entity with responsibility for the stewardship of the assets allocated to it. Theaccrual method for reporting revenues and expenses has been used unless otherwisestated.b) Basis of Consolidation:The consolidated statements include all funds of the City and the Wholly-OwnedSubsidiaries. Inter-fund revenues, expenses, assets, and liabilities have been eliminated.The following entities have been consolidated:Hesperia Development Corp. 100%CBW Development Corp. 100%c) Measurement Uncertainty:The preparation of financial statements in conformity with Canadian generally acceptedaccounting principles requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates.d) Cash and Cash Equivalents:Management considers all highly liquid investments with maturity of three months or lessat acquisition to be cash equivalents.e) Revenue Recognition:All revenue is recognized on an accrual basis. Property taxes are recognized as revenuein the year it is levied. Utility charges are recognized as revenue in the quarterly periodearned.f) Expenses:Expenses are recorded in the period in which the goods or services are acquired and aliability is incurred.g) Non-Financial Assets:Non-financial assets are not available to discharge existing liabilities and are held for usein the provision of services. They are not intended for sale in the ordinary course ofPAGE 62CITY OF VERNON 2010 ANNUAL REPORT

PAGE 63CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 2010operations. The change in non-financial assets during the year, together with the annualsurplus/deficit, provides the consolidated change in net debt for the year.h) Tangible Capital Assets and Amortization:Tangible capital assets are recorded at cost less accumulated amortization. Cost includesall costs directly attributable to acquisition or construction of the tangible capital assetincluding transportation costs, installation costs, design and engineering fees, and sitepreparation costs. Contributed tangible capital assets are recorded at fair value at thetime of the donation, with a corresponding amount recorded as revenue. Amortization isrecorded on the basis of straight-line or declining balance over the estimated useful life ofthe tangible capital asset commencing during the first full year of its productive use asfollows:Buildings Straight-line 35 to 60 yearsVehicles Straight-line 7 to 29 yearsMisc. Equipment Straight-line 10 to 30 yearsInformation Technology Declining Balance 40%Roads (surface) Straight-line 25 yearsRoads (base) Straight-line 75 yearsBridges Straight-line 50 to 75 yearsSidewalks Straight-line 25 to 50 yearsTraffic Signals Straight-line 15 yearsStreet Lighting Declining Balance 5%Parking Meters Declining Balance 10%Storm Sewers Straight-line 75 yearsSanitary Sewers Straight-line 75 yearsIrrigation Water Straight-line 75 yearsNatural Gas Lease Straight-line 35 yearsi) Land Under Development:Land under development is valued at the lower of cost and net realizable value. Costs ofinventory include the original land costs and design, engineering and other related costsassociated with holding the property.

PAGE 64CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 2010j) Debt Charges:Debt principal payments are not charged against current operating revenue pursuant tolocal government accounting standards. Interest is recorded on an accrual basis.k) Deferred Charges:Deferred charges are comprised of levied and unused Development Cost Charges;Sidewalk Gifting funds; and Gas Tax / Public Transit transfer payments. These funds arerecorded as revenue in the year they are used to fund tangible capital asset acquisitionsor eligible operating expenses.l) Reserves:Statutory reserve funds are used for future capital expenses as designated by bylaw andCity Council. Non-statutory reserves are amounts set aside from past and currentoperations and are not governed by bylaw.m) Government Transfers:Government transfers are recognized in the consolidated statements as revenue in theperiod in which the event giving rise to the transfer occurs, provided the transfers areauthorized, any eligibility criteria have been met, and reasonable estimates of the amountscan be made.n) Financial Instruments:The City’s financial instruments consist of cash and cash equivalents, portfolioinvestments, accounts receivable, Municipal Finance Authority deposits, accountspayable, Municipal Finance Authority reserves, and long-term debt. Unless otherwisenoted, it is management’s opinion that the City is not exposed to significant interest,currency, or credit risks arising from these financial instruments. The fair values of thesefinancial instruments approximate their carrying values.o) Budget Figures:The budget figures are from the annual Financial Plan Bylaw. They have been reallocatedto conform to PSAB financial statement presentation requirements where appropriate.These figures have not been subjected to the same auditing procedures applied to theactual financial statement figures and are presented for information purposes only.Subsequent amendments have been authorized by City Council to reflect changes in thebudget. Such amendments are not reflected in the financial statement budget figures.p) Comparative Figures:Some of the comparative figures have been modified to conform to the financial statementpresentation adopted in the current year.q) Segment Disclosures:

PAGE 65CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 2010In the Consolidated Statement of Segmented Operations, segmented financial informationis presented in groups of distinguishable activities in a similar approach to the City’sinternally reported cost centres. These segments are structured in a fashion to assistusers of financial statements in understanding and identifying the resources allocated tosupport commonly recognized functions of the City. Segments are identified primarily byfunction and secondarily by organizational relationship. Revenues are only allocated tosegments when there is a direct cause and effect relationship to the expenses of thosesegments. Revenues that cannot be reasonably allocated in such a manner areunallocated and are considered common to the City as a whole.2. Cash and Cash Equivalents (in thousands of dollars):2010 2009Restricted:Deferred Charges $ 13,677 $ 17,414Statutory Reserves 1,750 2,31715,427 19,731Unrestricted 19,263 18,900$ 34,690 $ 38,631The City has access to an operating line of credit not exceeding $2.0 million. Interest is accrued based onthe Bank of Montreal prime lending rate plus 0.25%. As of December 31, 2010, this line of credit was notbeing utilized (2009 - $0).3. Portfolio Investments:Portfolio investments are comprised of pooled investments in the Municipal Finance Authority Bond Fund.As of December 31, 2010, all such investments represented development cost charges.4. Accounts Receivable (in thousands of dollars):2010 2009Property taxes $ 1,776 $ 1,679Utility billings 5,116 4,829Other governments 8,778 4,163Trade & other receivables 1,593 3,764$ 17,263 $ 14,4355. Municipal Finance Authority – Deposits and Reserves (in thousands of dollars):The City issues most of its long-term debt through the Municipal Finance Authority. As a condition ofthese borrowings, a portion of the debenture proceeds are withheld by the Municipal Finance Authority asa debt reserve fund. The City also executes demand notes in connection with each debenture wherebythe City may be required to pay certain amounts to the Municipal Finance Authority. (See Note 15(b)).The details of the cash deposits withheld from debenture proceeds and demand notes at year end are asfollows:

PAGE 66CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 2010Demand CashNotes Deposits 2010 2009General $ 1,087 $ 413 $ 1,500 $ 1,715Sewer 557 279 836 826$ 1,644 $ 692 $ 2,336 $ 2,5416. Accounts Payable and Accrued Liabilities (in thousands of dollars):2010 2009Trade payables $ 12,213 $ 10,696Prepaid property taxes 2,418 2,316Salaries, wages and related costs 2,625 2,309Deposits and holdbacks 2,596 2,180Prepaid fees & charges 289 264Other accrued liabilities 858 528$ 20,999 $ 18,2937. Long -term Debt (in thousands of dollars)Debt Interest Year of 2010 2009Bylaw No. Purpose of Bylaw Rate % Maturity Balance BalanceGeneral Purposes:3602 Police Building Expansion 4.75% 2011 $ - $ 3734717 Terasen Gas Lease ** 5.25% 2019 15,446 16,7804718 Terasen Gas Lease ** 9.85% 2037 1,196 1,2054624 Downtown Revitalization 4.15% 2020 283 3064625 Downtown Revitalization 4.15% 2020 94 1014728 Downtown Revitalization 4.15% 2020 154 1664739 Various 4.15% 2020 3,409 3,68320,582 22,614Sewer Purposes:3875 Okanagan Landing 4.00% 2011 27 533066 Misc Sewer 6.10% 2012 23 341214BJ Blue Jay Specified Area 5.99% 2017 48 524889 Reclaimed Water Line 4.15% 2020 774 8364680 Treatment Plant Phase 1 6.06% 2027 4,000 4,1474680 Treatment Plant Phase 2 4.90% 2028 1,690 1,7484791 Water Reclamation Plant 4.15% 2030 10,923 11,27617,485 18,146Total Long-term Debt $ 38,067 $ 40,760* Three debt bylaws were paid out in 2009 earlier than their maturity dates in order to take advantage of anearly pay-out option offered by the Municipal Finance Authority.** See Note 12 for capital lease liabilities.

PAGE 67CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 20108. Future Principal Payments and Sinking Fund Additions on Existing Debt (in thousands ofdollars):General Sewer Total2011 $ 1,228 $ 523 $ 1,7512012 1,229 505 1,7342013 1,230 505 1,7352014 1,231 505 1,7362015 1,231 505 1,7362016 & thereafter 6,277 6,606 12,88312,426 9,149 21,575Actuarial adjustments 8,156 8,336 16,492$ 20,582 $ 17,485 $ 38,0679. Property Tax Revenue:Total tax revenue net of transfers of taxes collected for other governments and agencies were as follows(in thousands of dollars):2010 2009Specific assessments:Residential $ 14,996 $ 14,503Business 7,252 6,457Utilities 208 196Light industrial 296 294Non-profit 99 87Farm land 3 322,854 21,540Grants in lieu of taxes 1,143 1,087Specified area taxes & other 748 856$ 24,745 $ 23,48310. Cemetery Care Trust Fund:The City owns and maintains Pleasant Valley Cemetery. Pursuant to provincial legislation, a CemeteryCare Trust Fund was established to ensure continuity of cemetery maintenance. A portion of all plot salesand memorial setting fees is credited to this Fund. Although the Fund balance is not included in theconsolidated financial statements, all investment earnings during the year are transferred into generalrevenue as permitted by law.Trust Fund Continuity (in thousands of dollars) 2010 2009Balance, beginning of year $ 614 $ 594Interest earned 14 18Proceeds from plot sales & memorial settings 20 20Transfers to General Fund for maintenance (14) (18)Balance, end of year $ 634 $ 614

PAGE 68CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 201011. Expenses by Object (in thousands of dollars):2010 2009Salaries, wages & employment benefits $ 17,692 $ 16,892Contracted services 15,973 14,715Amortization of tangible capital assets 10,811 10,863Supplies, materials & other 6,369 6,286Debt servicing, bank charges & losses on disposal of assets 4,557 4,868Utilities, telephone & insurance 2,026 1,967$ 57,428 $ 55,59112. Natural Gas System Lease Agreements:The City has entered into an agreement with B.C. Gas Utility Ltd (now known as Terasen Gas Inc. andhereafter referred to as “Terasen”) which has resulted in the creation of the Natural Gas Legacy Fund.a) Capital Leases:Under the terms of the agreement, the City has entered into a 35-year capital leasecommencing December 1, 2002 for the natural gas distribution system within the Cityboundary. The City has prepaid $23,750,000 of the capital lease obligation and hasfinanced the prepayment through debenture debt. The remaining obligation, which isincluded in long-term debt, will be paid with annual lease payments of $127,884 includinginterest based on Terasen-approved pre-tax weighted average cost of capital of 9.25%.b) Operating Lease:The City has also entered into a 17-year operating lease that commenced December 1,2002 whereby the City leases back to Terasen the operation of the gas distributionsystem. Under the operating lease, Terasen is obligated to make annual lease paymentsto the City that are calculated by a formula specified in the agreement which is based onthe total annual revenue generated by the transaction. The lease revenue in 2010 was$2,376,238, ($2,327,361 in 2009). At the end of the 17-year term, Terasen has the optionof making a termination payment equal to the unamortized portion of the City’s$23,750,000 prepayment under the capital lease, which is estimated to be $12,214,000 ornegotiate a new 18-year operating lease with a continuation of the annual lease paymentswhich existed under the previous 17-year operating lease agreement.13. Long-term Agreements with the Regional District of North Okanagan and the District ofColdstream:The City has entered into a 10-year agreement with the Regional District of North Okanagan for theoperation of the entire water system owned by the Regional District. This agreement was entered intofollowing a successful alternate approval process. Subsequently, the City has entered into a 10-yearagreement with the District of Coldstream whereby the District operates that portion of the water systemthat is located within and east of the District boundary. This agreement was also subject to a successfulalternate approval process. Under these agreements, the City and the District are responsible for the dayto-dayoperation of the water system, and are wholly reimbursed by the Regional District for the operatingexpenses made to undertake these duties. The agreements expire January 31, 2013.

PAGE 69CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 201014. Land Under Development:In 2008, development activity began for both Hesperia Development Corporation and CBW DevelopmentCorporation. The accumulated value of $1,799,000 is comprised of the historical cost of the land plus alldesign, engineering, and related costs incurred to date. Such costs have not been included in tangiblecapital assets since the land and improvements are subject to resale upon completion of the development.15. Commitments:The City has entered into a lease agreement with BC Transit for 40 years with two 10 year renewaloptions. The 40 year lease is to be prepaid in the amount of $1,344,000 in full upon occupancy by BCTransit of the site.16. Budget Data:The budget data presented in these consolidated financial statements is based upon the 2010 operatingand capital budgets approved by Council on May 14, 2010. The schedule below reconciles the approvedbudget to the budget figures reported in these consolidated financial statements.BudgetAmountRevenues:Operating budget $ 85,454Capital budget 13,14498,598Less:Transfers from other funds and reserves $ 5,046Collections for other governments 34,079 39,125Total Revenue 59,473Expenses:Operating budget 95,151Capital budget 13,144108,295Less:Capital expenses $ 13,144Transfers to other funds and reserves 5,337Debt principal payments 1,826Collections for other governments 34,079 54,386Total Expenses 53,909Annual Surplus $ 5,564

PAGE 70CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 201017. Contingent Liabilities:a) Regional District of North Okanagan:The City is responsible as a member of the Regional District for its proportional share ofoperating deficits related to functions in which it participates. Under the provisions of theLocal Government Act, the Regional District’s debt is a joint and several liability of theRegional District and each of its member municipalities including the City.b) Municipal Finance Authority:Municipal Finance Authority debentures are covered by a loan agreement with theMunicipal Finance Authority which provides that, if at any time the payments provided forin the agreement are not sufficient to meet the authority’s obligations in respect of suchborrowings, the resulting deficiency becomes a proportional liability of each member localgovernment including the City.c) Municipal Insurance Association:In 1987, the City entered into a self liability insurance plan with several other localgovernments in British Columbia forming the Municipal Insurance Association of B.C. TheCity is obligated under the plan to pay a percentage of its fellow insured’s losses. The Citypays an annual premium, which is anticipated to be adequate to cover any lossesincurred.d) Legal Claims:The City has been named defendant in several uninsured legal actions. No reserve orliability has been recorded regarding any of the legal actions and any possible claimsbecause the amount of loss, if any, is not determinable. Settlement, if any, made withrespect to these actions, would be expected to be accounted for as a charge to expensesin the period in which realization is known.e) Pension Liability:The City and its employees contribute to the Municipal Pension Plan (the Plan), a jointlytrusteed pension plan. The Board of trustees, representing plan members and employers,is responsible for overseeing the management of the Plan, including investment of theassets and administration of benefits. The Plan is a multi-employer contributory pensionplan. Basic pension benefits provided are defined. The Plan has approximately 163,000active members and approximately 60,000 retired members. Active members includeapproximately 35,000 contributors from local government.Every three years an actuarial valuation is performed to assess the financial position of thePlan and the adequacy of Plan funding. The most recent valuation as at December 31,2009 indicated an unfunded liability of $1,024 million for basic pension benefits. The nextvaluation will be as at December 31, 2012 with results available in 2013. The actuarydoes not attribute portions of the unfunded liability to individual employers. The City ofVernon paid $1,529,660 for employer contributions to the Plan in 2010 ($1,341,348 in2009).

PAGE 71CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONNotes to the Consolidated Financial StatementsYear Ended December 31, 2010f) Letter of Credit – Hesperia Property:In 2007, the City issued an Irrevocable Letter of Credit in favour of the Agricultural LandCommission (ALC) of British Columbia as a guarantee to fund works required by theALC as a condition of the property being removed from the Agricultural Land Reserve.The property is being developed by the wholly-owned subsidiary, the HesperiaDevelopment Corporation. The amount of the Letter of Credit is $ 716,000. As ofDecember 31, 2009, no drawing on the Letter of Credit has occurred.g) Environmental Issues:In connection with the planned lease of a City-owned parcel of land for a future transitbus maintenance facility, the City became aware of soil contamination on the site. Anindependent environmental consultant has been retained to assess the source andextent of contamination. The results of the environmental study were inconclusive andas such no provision for this contingency has been recorded in the Statement ofFinancial Activities.

PAGE 72CITY OF VERNON 2010 ANNUAL REPORT

PAGE 73CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONSchedule of General Revenue FundOperations (unaudited)Exhibit 1Budget Actual ActualFor the Year Ended December 31 (in thousands of dollars) 2010 2010 2009General RevenueTaxation $ 24,733 $ 24,548 $ 23,213Services provided to other local governments 1,572 1,496 1,438Government grants 4,620 4,328 4,298Sale of services 8,054 8,224 7,956Fiscal services 958 811 835Natural gas system lease and franchise agreement 2,853 2,988 2,95542,790 42,395 40,695General ExpensesGeneral government and common services 7,241 7,220 6,670Protective services:Police 9,852 9,512 9,094Fire and rescue 4,336 4,240 3,969Emergency measures 157 202 176Planning & building inspection 2,002 2,108 1,733Engineering 1,078 1,096 1,162Operations:Road transportation 6,125 5,921 5,836Airport 745 857 761Storm drainage 253 232 330Solid waste & recycling 1,716 1,817 1,622Cemetery 192 190 178Other 919 913 775Bylaw enforcement & parking control 1,099 976 970Fiscal services:Interest on long-term debt 1,719 1,703 1,804Other interest and bank charges 279 384 242Losses on disposal of general tangible capital assets - 1,456 1,852Amortization of general tangible capital assets 7,367 8,452 8,51345,080 47,279 45,687General Surplus / (Deficit), before reconciling items (2,290) (4,884) (4,992)Add: Amortization of general tangible capital assets 7,367 8,452 8,513Add: Net losses on disposal of general tangible capital assets - 1,220 1,846Add: Transfers from other funds and reserves 1,175 5,156 3,503Less: Capital asset acquisitions funded by General Fund operations (978) (1,070) (790)Less: Principal payments on long-term debt (1,303) (1,303) (1,510)Less: Transfers to other funds and reserves (3,971) (7,556) (6,570)Surplus, for purposes of balanced budget and tax rate determination $ - $ 15 $ -

PAGE 74CITY OF VERNON 2010 ANNUAL REPORTHE CORPORATION OF THE CITY OF VERNONSchedule of Sewer Revenue FundOperations (unaudited)Exhibit 2Budget Actual ActualFor the Year Ended December 31 (in thousands of dollars) 2010 2010 2009Sewer RevenueTaxation $ - $ 197 $ 270Services provided to other local governments 429 735 516Government grants 185 347 83User fees & charges 8,520 8,937 9,095Fiscal services - 14 59,134 10,230 9,969Sewer ExpensesCommon services 227 239 225Operations:Collection system 898 875 812Treatment system 3,169 2,962 2,706Disposal system 715 666 638Pump stations 498 418 385Fiscal services:Interest on long-term debt 986 986 1,034Losses on disposal of sewer tangible capital assets - 264 94Amortization of sewer tangible capital assets 2,330 2,359 2,3508,823 8,769 8,244Sewer Surplus, before reconciling items 311 1,461 1,725Add: Amortization of sewer tangible capital assets 2,330 2,359 2,350Add: Net loss on disposal of sewer tangible capital assets - 264 94Add: Transfers from other funds and reserves 1,086 924 1,863Less: Capital asset acquisitions funded by Sewer Fund operations (1,838) (2,260) (1,724)Less: Principal payments on long-term debt (523) (523) (1,000)Less: Transfers to other funds and reserves (1,366) (2,264) (3,302)Surplus, for purposes of balanced budget and user rate determination $ - $ (39) $ 6

PAGE 75CITY OF VERNON 2010 ANNUAL REPORSTATISTICAL SECTIONOur City, Everyone’s Future

PAGE 76CITY OF VERNON 2010 ANNUAL REPORSUMMARY OF FINANCIAL RESULTS(In $1,000's) 2010 2009 2008FINANCIAL POSITIONFinancial Assets $ 63,111 $ 64,118 $ 61,817Liabilities 75,079 79,008 78,682Net Debt 11,968 14,890 16,865Non-financial Assets 562,995 561,688 563,531Accumulated Surplus, end of year $ 551,027 $ 546,798 $ 546,666STATEMENT OF OPERATIONSRevenue $ 61,657 $ 55,723 $ 55,894Expenses 57,428 55,591 49,247Annual Surplus 4,229 132 6,647Accumulated Surplus, beginning of year 546,798 546,666 540,019Accumulated Surplus, end of year $ 551,027 $ 546,798 $ 546,666ACCUMULATED SURPLUSTangible capital assets $ 522,124 $ 518,642 $ 517,963Statutory reserves 1,750 2,317 2,094Non-statutory reserves 26,328 24,848 25,471Operating surplus 825 991 1,138Accumulated Surplus, end of year $ 551,027 $ 546,798 $ 546,666$40,000Summary of Financial Results(in $1,000's)$30,000$20,000$10,000$-$(10,000)$(20,000)2010 2009 2008Operating surplusNon-statutory reservesStatutory reservesNet Debt

PAGE 77CITY OF VERNON 2010 ANNUAL REPORACCUMULATED SURPLUS(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006Equity in Tangible Capital Assets:General $ 435,106 $ 433,573 $ 433,746 $ 104,720 $ 91,478Sewer 87,018 85,069 84,217 62,537 58,976$ 522,124 $ 518,642 $ 517,963 $ 167,257 $ 150,454Non-Capital Accumulated Surplus:Statutory Reserves 1,750 2,317 2,094 3,517 3,584Non-Statutory Reserves:Funds Committed for Uncompleted Projects 4,658 2,739 3,902 3,026 4,582Capital Purposes 16,314 16,472 15,119 14,419 10,288Operating Purposes 586 573 80 39 40Tax & User Rate Equalization 3,257 3,548 4,792 3,020 4,607Natural Gas System Lease Arrangement 1,513 1,516 1,578 1,530 1,25426,328 24,848 25,471 22,034 20,771Operating Funds 825 991 1,138 1,007 783NON-CAPITAL ACCUMULATED SURPLUS (FINANCIAL$ 28,903 $ 28,156 $ 28,703 $ 26,558 $ 25,138EQUITY) PER CAPITA $ 743 $ 722 $ 749 $ 707 $ 681TOTAL ACCUMULATED SURPLUS $ 551,027 $ 546,798 $ 546,666 $ 193,815 $ 175,592$35,000$30,000$25,000$20,000$15,000$10,000$5,000$-Non-Capital Accumulated Surplus (Financial Equity)(in $1,000's)2010 2009 2008 2007 2006Operating FundsNon-Statutory ReservesStatutory Reserve Funds

PAGE 78CITY OF VERNON 2010 ANNUAL REPORPROPERTY TAX REVENUE(in $1,000's except for per-capita figures) 2010 2009 2008 2007 2006Residential $ 14,997 $ 14,503 $ 13,245 $ 12,208 $ 11,464Commercial 7,253 6,457 6,226 5,626 5,659Light Industrial 296 294 288 261 201Utility & Other 310 286 248 229 99$ 22,856 $ 21,540 $ 20,007 $ 18,324 $ 17,423*Excludes specified area taxation (included in Revenue by Source schedule).PROPERTY TAX REVENUE PER CAPITA - General& Fire Taxes $ 588 $ 552 $ 522 $ 488 $ 472RATIO OF TAX RATES - COMMERCIAL TORESIDENTIAL (General Taxes Only) 2.78 3.05 3.09 2.75 2.82% OF CURRENT TAXES COLLECTED 97.96% 97.48% 98.04% 98.54% 98.59%TAXES LEVIED FOR OTHER AGENCIES 2010 2009 2008 2007 2006Provincial School Taxes $ 20,349 $ 19,355 $ 18,832 $ 17,362 $ 16,178Regional District of North Okanagan 9,153 9,051 9,126 8,564 8,099Regional Hospital Districts 1,789 1,490 1,412 1,470 1,034Okanagan Regional Library 1,426 1,333 1,232 1,165 1,101Other 599 563 531 479 441$ 33,316 $ 31,792 $ 31,133 $ 29,040 $ 26,853Property Tax Revenue -General & Fire (in $1,000's)$25,000$20,000$15,000$10,000$5,000$-2010 2009 2008 2007 2006ResidentialLight IndustrialCommercialUtility & Other$40,000$30,000$20,000$10,000$-Taxes Levied ForOther Agencies(in $1,000's)2010 2009 2008 2007 2006Provincial School TaxesRegional District of North OkanaganRegional Hospital DistrictsOkanagan Regional LibraryOther

PAGE 79CITY OF VERNON 2010 ANNUAL REPORCONSOLIDATED REVENUE BY SOURCE(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006Property Taxation* $ 24,745 $ 23,483 $ 22,071 $ 20,152 $ 19,524Sale of Services & Other 8,057 7,954 10,125 7,628 11,088Sanitary Sewer Fees 8,928 9,095 8,453 8,591 8,004Government Grants 7,406 6,453 4,551 4,215 3,955Services Provided to Other Local Govts 2,231 1,954 2,145 1,526 1,341Fiscal Services 1,738 1,460 2,465 3,037 2,988Natural Gas System Revenue 2,988 2,955 2,997 3,023 3,105Contributions From Developers 5,564 2,369 3,087 3,579 3,548$ 61,657 $ 55,723 $ 55,894 $ 51,751 $ 53,553*Includes specified area taxation (not included in Property Tax Revenue schedule).Derived from the General Fund, Sewer Fund, Statutory Reserve Funds, and wholly-owned subsidiariesTOTAL REVENUE PER CAPITA $ 1,585 $ 1,428 $ 1,458 $ 1,378 $ 1,450PROPORTION OF PROPERTY TAXATION TOTOTAL REVENUE 40.1% 42.1% 39.5% 38.9% 36.5%$70,000$60,000$50,000$40,000$30,000Consolidated Revenue by Source (in $1,000's)Contributions From DevelopersNatural Gas System RevenueFiscal ServicesServices Provided to Other LocalGovtsGovernment Grants$20,000Sanitary Sewer Fees$10,000$-2010 2009 2008 2007 2006Sale of Services & OtherProperty Taxation

PAGE 80CITY OF VERNON 2010 ANNUAL REPORCONSOLIDATED EXPENSES BY FUNCTION(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006General Government $ 9,106 $ 7,973 $ 6,566 $ 5,675 $ 4,834Police 9,532 9,313 7,867 7,238 7,191Fire, Rescue & Emergency Services 4,590 4,270 3,596 3,099 2,907Bylaw Enforcement & Parking Control 1,033 1,028 1,057 981 550Planning & Building Inspection 2,082 1,707 1,425 1,299 936Engineering Services 1,070 1,129 1,027 1,252 1,156Sanitary Sewer Operations 8,185 8,211 7,052 6,787 12,361Transportation & Drainage 17,664 18,001 16,965 18,173 11,782Solid Waste, Recycling & Cemetery 2,008 1,801 1,533 1,547 1,385Natural Gas System 2,158 2,158 2,159 2,160 2,161$ 57,428 $ 55,591 $ 49,247 $ 48,211 $ 45,263Derived from the General Fund, Sewer Fund, Statutory Reserve Funds, and wholly-owned subsidiaries. For purposes of thistable, all interest, fiscal service expenses, amortization, and capital expenditures have been integrated in their respective functions.TOTAL EXPENSES PER CAPITA $ 1,476 $ 1,425 $ 1,284 $ 1,284 $ 1,226PERCENTAGE CHANGE IN PER-CAPITA EXPENSESFROM PRIOR YEAR 3.6% 10.9% 0.0% 4.7%$70,000$60,000$50,000$40,000$30,000$20,000Consolidated Expenses by Function (in $1,000's)Natural Gas SystemSolid Waste, Recycling &CemeteryTransportation & DrainageSanitary Sewer OperationsEngineering ServicesPlanning & Building Inspection$10,000$-2010 2009 2008 2007 2006Bylaw Enforcement & ParkingControlFire, Rescue & Emergency Services

PAGE 81CITY OF VERNON 2010 ANNUAL REPORCONSOLIDATED EXPENSES BY OBJECT(In $1,000's) 2010 2009 2008 2007 2006Salaries, Wages & Employment Benefits $ 17,692 $ 16,892 $ 14,068 $ 12,489 $ 11,086Supplies, Materials & Other 6,369 6,286 5,420 5,334 4,786Contracted Services 15,973 14,715 13,705 11,851 10,553Interest, Fiscal Services & Asset Losses 4,557 4,868 3,506 3,392 3,724Utilities, Telephone & Insurance 2,026 1,967 1,930 1,790 1,696Capital Expenditures - - - 13,355 13,418Amortization of Tangible Capital Assets 10,811 10,863 10,618 - -$ 57,428 $ 55,591 $ 49,247 $ 48,211 $ 45,263Derived from the General Fund, Sewer Fund, Statutory Reserve Funds, and wholly-owned subsidiaries$70,000Consolidated Expenses by Object (in $1,000's)$60,000$50,000Amortization of Tangible CapitalAssetsCapital Expenditures$40,000$30,000$20,000Utilities, Telephone & InsuranceInterest, Fiscal Services & AssetLossesContracted ServicesSupplies, Materials & Other$10,000Salaries, Wages & EmploymentBenefits$-2010 2009 2008 2007 2006

PAGE 82CITY OF VERNON 2010 ANNUAL REPORNUMBER OF EMPLOYEESNumber of Employees (Full-time Equivalents)* 2010 2009 2008 2007 2006TAXATIONAdministration & Corporate Services:General Administration 6.4 6.5 6.0 4.0 4.0City Clerk's Office 7.0 5.9 5.0 4.7 4.4Human Resources 5.9 6.2 6.4 6.2 4.8Information Services 8.9 6.9 11.2 8.0 9.5Bylaw Enforcement 12.4 12.5 11.1 10.6 7.6Community Policing Office 3.9 4.0 4.0 4.0 4.0Finance & Purchasing 16.4 17.0 17.6 16.5 13.5Engineering 12.6 12.3 9.0 13.3 11.6Planning & Building Inspection 20.4 18.9 15.2 12.7 10.7Fire & Rescue 37.9 35.8 31.9 29.7 27.5Police (civilian staff) 32.0 31.0 24.9 17.6 15.4Operations:Operations Administration 3.9 3.1 1.8 1.8 1.0Storm Sewers 1.5 1.5 1.5 1.5 1.5Public Works 24.9 21.6 20.0 20.0 15.0Fleet & Facilities 13.8 11.7 9.4 8.1 7.0Airport 1.5 1.1 1.0 1.0 -209.4 196.0 176.0 159.7 137.5UTILITIESOperations:Sanitary Sewers 16.8 14.6 13.5 13.5 14.5Vernon Water Reclamation Plant 12.3 11.6 8.0 9.8 10.029.1 26.2 21.5 23.3 24.5NET Number of City Employees 238.5 222.2 197.5 183.0 162.0REGIONAL DISTRICT & OTHER GOVERNMENTSOperations:Parks 14.1 16.1 11.0 14.0 12.0Recreation 39.7 37.3 34.6 20.4 17.7Water 21.4 21.9 23.8 23.6 21.7Community Policing 2.0 2.0 1.0 - -77.2 77.3 70.4 58.0 51.4TOTAL CITY EMPLOYEES 315.7 299.5 267.9 241.0 213.4Gross FTE Positions per 1,000 Population 8.1 7.7 7.0 6.4 5.8Net FTE Positions per 1,000 Population 6.1 5.7 5.2 4.9 4.4* Full-time equivalent is based on the total number of hours worked as a function of standard full-time hours for the position.Source: City of Vernon Human Resources260.0240.0220.0200.0180.0160.0140.0Net Number of CityEmployees (FTE)2010 2009 2008 2007 20066.56.05.55.04.54.0Net FTE Positions (per1,000 Population)2010 2009 2008 2007 2006

PAGE 83CITY OF VERNON 2010 ANNUAL REPORCOST OF SALARIES, WAGES AND BENEFITS(In $1,000's) 2010 2009 2008 2007 2006Administration & Corporate Services $ 3,103 $ 2,893 $ 2,562 $ 1,965 $ 1,723Finance & Purchasing 1,159 1,184 1,142 1,005 838Engineering 930 874 766 646 620Planning & Building Inspection 1,618 1,446 1,229 1,160 966Fire, Rescue & Emergency Measures 3,459 3,309 2,759 2,324 2,252Police (civilian staff & community policing office) 2,447 2,209 1,658 1,447 1,380Operations 4,976 4,977 3,952 3,942 3,307$ 17,692 $ 16,892 $ 14,068 $ 12,489 $ 11,086Costs are shown net of recoveries received from the Regional District of North Okanagan for Parks,Recreation and Water functions.$20,000Net Cost of Salaries, Wages & Benefits (in $1,000's)$18,000$16,000$14,000$12,000$10,000$8,000$6,000OperationsPolice (civilian staff & communitypolicing office)Fire, Rescue & EmergencyMeasuresPlanning & Building InspectionEngineeringFinance & Purchasing$4,000$2,000Administration & CorporateServices$-2010 2009 2008 2007 2006

PAGE 84CITY OF VERNON 2010 ANNUAL REPORCAPITAL SPENDING(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006Roads & Drainage Infrastructure $ 6,116 $ 6,802 $ 6,923 $ 9,820 $ 4,103Sanitary Sewer Infrastructure 3,435 2,167 2,549 1,877 7,212Land Purchases 1,219 309 1,777 349 415Vehicle Fleet 496 624 897 624 400Subsidiary Corporations 355 597 766 - 548General Govt Buildings & Equipment 810 205 329 390 318Information Technology Equipment 446 370 281 158 320Protective Services Equipment 871 271 135 137 102$ 13,748 $ 11,345 $ 13,657 $ 13,355 $ 13,418TOTAL CAPITAL SPENDING PER CAPITA $ 353 $ 291 $ 356 $ 356 $ 363$16,000Capital Spending (in $1,000's)$14,000Protective Services Equipment$12,000$10,000$8,000$6,000$4,000Information TechnologyEquipmentGeneral Govt Buildings &EquipmentSubsidiary CorporationsVehicle FleetLand PurchasesSanitary Sewer Infrastructure$2,000Roads & Drainage Infrastructure$-2010 2009 2008 2007 2006

PAGE 85CITY OF VERNON 2010 ANNUAL REPORCAPITAL FUNDING BY SOURCE(In $1,000's) 2010 2009 2008 2007 2006General Taxation $ 542 $ 1,882 $ 3,535 $ 4,820 $ 2,071General Non-Statutory Reserves 4,324 4,034 2,611 2,460 1,747Sanitary Sewer Revenue 1,470 1,263 1,885 1,584 2,436Sewer Non-Statutory Reserves 204 155 391 28 1,954Statutory Reserve Funds 419 4 1,560 349 1,173Development Cost Charges 4,112 1,949 2,111 2,941 1,743Developer Contributions - - 976 638 1,805Long-Term Debt Bylaws 7 - 175 131 192Government Grants & Other 2,670 2,058 413 404 297$ 13,748 $ 11,345 $ 13,657 $ 13,355 $ 13,418PROPORTIONAL BREAKDOWN OF CAPITAL FUNDINGFUNDING 2010 2009 2008 2007 2006General Taxation 3.9% 16.6% 25.9% 36.1% 15.4%Sanitary Sewer Revenue 10.7% 11.1% 13.8% 11.9% 18.2%Reserves 36.0% 37.0% 33.4% 21.2% 36.3%Developers 29.9% 17.2% 22.6% 26.8% 26.4%Long-Term Debt Bylaws 0.1% 0.0% 1.3% 1.0% 1.4%Government Grants & Other 19.4% 18.1% 3.0% 3.0% 2.2%100.0% 100.0% 100.0% 100.0% 100.0%$16,000Capital Funding by Source (in $1,000's)$14,000$12,000$10,000$8,000$6,000$4,000$2,000Government Grants & OtherLong-Term Debt BylawsDeveloper ContributionsDevelopment Cost ChargesStatutory Reserve FundsSewer Non-Statutory ReservesSanitary Sewer RevenueGeneral Non-Statutory ReservesGeneral Taxation$-2010 2009 2008 2007 2006

PAGE 86CITY OF VERNON 2010 ANNUAL REPORLONG-TERM DEBT BY FUNCTION AND SOURCES OF FUNDINGLONG-TERM DEBT BY FUNCTION(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006Sanitary Sewer $ 17,484 $ 18,145 $ 19,274 $ 20,490 $ 21,876Natural Gas System 16,642 17,985 19,265 20,482 21,641Roads & Drainage 2,858 3,087 3,527 3,769 4,001General Government 552 597 639 680 719Downtown Beautification 531 573 614 653 691Police - 373 546 711 869$ 38,067 $ 40,760 $ 43,865 $ 46,785 $ 49,797PROPORTIONAL FUNDING SOURCES FORLONG-TERM DEBT 2010 2009 2008 2007 2006Sanitary Sewer Fees 42.9% 42.2% 40.4% 40.1% 40.1%Sanitary Sewer Specified Areas 3.1% 2.3% 3.6% 3.7% 3.8%Roads, Drainage & Beautification Specified Areas 8.9% 9.0% 9.4% 9.5% 9.4%Natural Gas System Revenue & Reserve 43.7% 44.1% 43.9% 43.8% 43.5%General Taxation 1.5% 2.4% 2.7% 3.0% 3.2%100.0% 100.0% 100.0% 100.0% 100.0%All water debt originally incurred by the City of Vernon has been transferred to and is recorded by the Regional District of NorthOkanagan when this function was assumed by the Regional District. As such, this debt is not a liability of the City of Vernon andis not recorded. No overlapping debt exists.Long-Term Debt by Function(in $1,000's)2010 Long-Term Debt Funding$60,000$50,000$40,000PoliceDowntownBeautification1.5%Sanitary SewerFeesSanitary SewerSpecified Areas$30,000$20,000$10,000$-GeneralGovernmentRoads &DrainageNatural GasSystemSanitarySewer43.7%8.9%42.9%3.1%Roads, Drainage &BeautificationSpecified AreasNatural Gas SystemRevenue & ReserveGeneral Taxation20102009200820072006

PAGE 87CITY OF VERNON 2010 ANNUAL REPORLONG-TERM DEBT CAPACITY(In $1,000's except for per-capita figures) 2010 2009 2008 2007 2006LONG-TERM DEBT PER CAPITA $ 979 $ 1,045 $ 1,144 $ 1,246 $ 1,349% OF FINANCIAL EQUITY TO LONG-TERM DEBT 75.9% 69.1% 65.4% 56.8% 52.3%ANNUAL DEBT SERVICING:Actual Debt Servicing * $ 4,515 $ 5,348 $ 5,190 $ 5,641 $ 5,932Estimated Debt Servicing for Authorized butUnissued Debt 25 25 25 270 270Estimated Debt Servicing for Loan Guarantees 716 716 716 716 -$ 5,256 $ 6,089 $ 5,931 $ 6,627 $ 6,202* Actual debt servicing increased in 2009 due to a one-time lump-sum principal payment issued in order to take advantageof an early debt retirement option granted by the Municipal Finance Authority.% OF ANNUAL DEBT SERVICING TO TOTALCONSOLID. EXPENSES & PRINCIPAL PAYMENTS 8.9% 10.5% 11.5% 13.1% 13.1%LEGAL DEBT SERVICING LIMIT $ 12,532 $ 12,442 $ 11,894 $ 10,358 $ 10,202REMAINING DEBT SERVICING LIMIT CAPACITY $ 7,276 $ 6,353 $ 5,963 $ 3,731 $ 4,000$1,600$1,400$1,200$1,000Debt per Capita$8002010 2009 2008 2007 2006$14,000$12,000$10,000$8,000$6,000$4,000$2,000$-Annual Legal Debt Servicing Capacity(in $1,000's)2010 2009 2008 2007 2006Capacity AvailableCapacity Currently Used

PAGE 88CITY OF VERNON 2010 ANNUAL REPORTAXABLE PROPERTY ASSESSMENTS(in $1,000's) 2010 2009 2008 2007 2006Residential $ 5,681,349 $ 5,769,474 $ 5,643,514 $ 4,373,911 $ 3,274,412Commercial 989,505 840,277 830,855 734,267 574,876Light Industrial 37,990 34,467 34,050 28,438 24,904Recreation & Non-Profit 29,567 25,033 27,438 20,579 15,104Utility 5,548 5,231 5,241 4,793 4,162Farm Land & Managed Forest 4,016 4,067 3,913 3,922 4,059$ 6,747,975 $ 6,678,549 $ 6,545,011 $ 5,165,910 $ 3,897,517% Change From Prior Year 1.0% 2.0% 26.7% 32.5% 23.5%AVERAGE SINGLE FAMILY RESIDENTIALASSESSED VALUES (in $1,000's) 2010 2009 2008 2007 2006Land $ 171 $ 179 $ 181 $ 142 $ 100Improvements 172 173 169 179 146$ 343 $ 352 $ 350 $ 321 $ 24624.0%% Change From Prior Year -2.6% 0.6% 9.0% 30.5%Total Property AssessmentsResidential & Commercial(in $1,000's)$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000$2,000,000$1,000,000$400$350$300$250$200$150$100$50Average Single FamilyResidential Assessed Values(in $1,000's)$-$-2010 2009 2008 2007 20062010 2009 2008 2007 2006ResidentialCommercialLandImprovements

PAGE 89CITY OF VERNON 2010 ANNUAL REPORPRINCIPAL CORPORATE TAX PAYERS(in $1,000's)General &Fire Taxes 2009Rank Category Property Owner Common Name Levied Rank1 Retail Village Green Shopping Centre Inc Village Green Mall $ 435 12 Hotel 460463 BC Ltd Sparkling Hills Resort 350 New3 Retail First Okanagan Shopping Centres Ltd Vernon Smart Centre (Including Wal-Mart) 348 24 Retail Loblaw Properties West Inc Real Canadian Superstore 206 35 Retail Realfund Investments (BC) Ltd Vernon Square (Northern Portion) 132 46 Retail Sunstone Holdings Inc Shops at Polson Park 123 67 Retail Home Depot Holdings Inc The Home Depot 102 58 Office Timber Facility Ltd Tolko Industries - Corporate Office 98 79 Retail Canadian Tire Corporation Ltd Canadian Tire 76 810 Retail 4246551 Canada Inc Rona 72 1011 Retail Fruit Union Plaza Holdings Ltd Fruit Union Plaza 71 1112 Retail Canada Safeway Ltd Vernon Square (Southern Portion) 71 913 Entertainment Simple Pursuits Inc Gateway Casino's 68 New14 Hotel R P B Holdings Ltd Best Western Vernon Lodge 56 1215 Hotel 338089 BC Ltd Village Green Hotel 56 1416 Retail Loblaw Properties West Inc Real Canadian Wholesale Club 56 1517 Industrial Protect Holdings Ltd Tekmar Controls 54 New18 Hotel 461302 B C Ltd Prestige Inn 53 1319 Retail North Vernon Properties Inc The Brick & Red Robin 53 New20 Retail D C Investments Okanagan Landing Plaza 45 19Total General & Fire Tax Revenue - Top Twenty $ 2,525Total General & Fire Tax Revenue - City Wide $ 22,856Proportion of Taxes Paid by Top Twenty 11.0%Tax Contribution from PrincipalCorporate Taxpayers - 2010Top Twenty Taxpayers,11%All Other Taxpayers,89%

PAGE 90CITY OF VERNON 2010 ANNUAL REPORCITY OF VERNON TAX BREAKDOWN2010 Total Taxes LeviedREVENUE AMOUNT PERCENTAGEProvincial Municipal Finance Authority $ 1,685 0.00%Provincial BC Assessment Authority 597,752 1.04%Provincial School Tax 20,348,588 35.30%Regional Regional Library 1,425,565 2.47%Regional Regional Hospital District 1,789,473 3.10%Regional North Okanagan Regional District 9,152,634 15.88%City BIA Taxes 304,037 0.53%City City of Vernon Taxes 24,030,175 41.68%$ 57,649,909 100.00%City of Vernon Tax BreakdownMunicipal FinanceAuthority0%BC AssessmentAuthority1%City of VernonTaxes42%School Tax35%BIA Taxes1%North OkanaganRegional District16%Regional Library2%Regional HospitalDistrict3%

PAGE 91CITY OF VERNON 2010 ANNUAL REPORREGIONAL DISTRICT TAX REQUISITION BREAKDOWN2010 TOTAL TAX REQUISITION FROM THE REGIONAL DISTRICT OFNORTH OKANAGANRevenue Amount PercentageCity of Vernon $ 9,078,945 54.80%Coldstream 2,296,804 13.86%Area B 1,329,496 8.03%Area C 1,234,886 7.45%Area F 748,794 4.52%Lumby 524,556 3.17%Area D 508,531 3.07%Enderby 317,801 1.92%Spallumcheen 209,106 1.26%Armstrong 181,279 1.09%Area E 136,534 0.82%$ 16,566,732 100.00%Source:. Regional District of the North Okanagan. 2010-2014 Financial Plan60.00%Regional District Tax Requisition Breakdown(% of Total)50.00%40.00%30.00%20.00%10.00%0.00%

PAGE 92CITY OF VERNON 2010 ANNUAL REPORBUILDING PERMITS AND BUSINESS LICENCESBuilding PermitConstruction Values (In $1,000's) 2010 2009 2008 2007 2006Residential $ 57,026 $ 46,319 $ 79,393 $ 106,149 $ 120,216Commercial 14,824 29,052 88,236 31,169 16,524Institutional 1,974 89,116 1,511 9,857 6,719Industrial 125 262 - 439 22,501$ 73,949 $ 164,749 $ 169,140 $ 147,614 $ 165,960Building Permit Fees (In $1,000's) $ 733 $ 1,223 $ 1,430 $ 1,420 $ 1,534Number of Building Permits Issued 416 365 424 505 655Business Licence Fees (In $1,000's) $ 442 $ 429 $ 431 $ 416 $ 378Number of LicencedBusinesses 3,176 3,117 2,655 2,358 2,034Number of Land Use Applications Processed * 200 136 163 160 176* Includes applications for Rezoning, OCP Amendment, Development Permit, Board of Variance, ALR, and SubdivisionSource: City of Vernon Planning & Building Division$180,000$160,000$140,000$120,000$100,000Building Permit Construction Values(in $1,000's)$80,000$60,000$40,000$20,000$-20102009200820072006IndustrialInstitutionalCommercialResidential$1,700$1,500$1,300$1,100$900$700$470$420$370$320Building Permit Fees(in $1,000's)2010 2009 2008 2007 2006Business Licence Fees(in $1,000's)2010 2009 2008 2007 2006

PAGE 93CITY OF VERNON 2010 ANNUAL REPORMUNICIPAL COMPARISON(IN $1,000'S)POPULATIONSOURCE: BCSTATSSALARIES&BENEFITSGOODS &SERVICESINTEREST& OTHERAMORTI-ZATION TOTALPenticton 33,078 $ 16,734 $ 48,298 $ 8,293 $ 10,645 $ 83,970Pitt Meadows 18,136 5,273 15,332 513 3,385 24,503Kelowna 121,306 61,718 119,446 11,003 53,236 245,403Chilliwack 77,975 24,278 45,922 497 15,969 86,666West Kelowna 27,195 11,008 19,836 25 7,763 38,632Coldstream 10,289 2,162 3,333 209 1,577 7,281Vernon 38,895 17,692 24,368 4,557 10,811 57,428Mission 37,574 16,377 23,093 1,429 7,051 47,950Cranbrook 19,123 12,099 14,551 2,239 5,010 33,899Kamloops 87,110 54,124 62,988 5,529 23,003 145,644Campbell River* 31,580 16,832 17,807 1,908 7,645 44,192White Rock 19,278 10,564 13,302 14 2,813 26,693Port Moody 33,933 25,790 12,749 4,203 6,085 48,827AVERAGE 42,729 $ 21,127 $ 32,387 $ 3,109 $ 11,923 $ 68,545Source: Individual 2010 audited financial statements* 2009 results reported, 2010 results not available10.9Municipal Comparison (% of Total Expenditures)0.80.70.60.50.40.3AmortizationInterest & OtherGoods & ServicesSalaries & Benefits0.20.10

PAGE 94CITY OF VERNON 2010 ANNUAL REPORPOPULATION DEMOGRAPHICS2010 2009 2008 2007 2006Annual Estimated Population (Source: B.C. Statistics) 38,895 39,019 38,347 37,554 36,922Population Growth Rates -0.3% 1.8% 2.1% 1.7% 1.0%Statistics Canada Census Data (for the last two census years) 2006 2001Census Population 35,944 33,494Population by Age Group 0 to 4 1,680 1,6155 to 14 3,930 4,19015 to 19 2,345 2,23520 to 24 2,010 1,86025 to 44 8,290 8,64545 to 54 5,290 4,42555 to 64 4,505 3,60565 to 74 3,650 3,39575 + 4,244 3,52439,500Annual Estimated Population39,00038,50038,00037,50037,00036,50036,00035,50035,0002010 2009 2008 2007 2006

Our City, Everyone’s FutureCity Hall~3400 Street, Vernon, BC~V1T 5E6Tel 250.545.1361~Fax250.545.7876~www.vernon.caPAGE 95CITY OF VERNON 2010 ANNUAL REPOR