HomeMy WebLinkAboutFIN 31-15 Cali 00 = Report to
Ia= ! Executive Committee
PI KERING
Report Number: FIN 31-15
Date: December 7, 2015
From: Paul Bigioni
Director, Corporate Services & City Solicitor
Subject: 2016 Temporary Borrowing By-law
Recommendation:
1. That the temporary borrowing limit of$42,000,000 be established to meet 2016
current expenditures pending receipt of taxes and other revenues for the period
January 1, 2016 to September 30, 2016 inclusive, and $20,000,000 thereafter until
December 31, 2016;
2. That the temporary borrowing limit for capital purposes for 2016 be established at
$25,000,000;
3. That the attached draft by-law providing for the temporary borrowing of monies be
enacted; and
4. That the appropriate City of Pickering officials be authorized to take the necessary
actions as indicated in this report.
Executive Summary: Staff recommend that Council approve temporary 2016
borrowing limits as set out in the above recommendations. Council approval is required
to undertake temporary borrowings, if necessary, for current operations and capital
projects in order to meet the expenses of the City for 2016, until the taxes are collected
and other revenues are received. Approval is always sought at the end of the City's
fiscal (calendar) year in order to be prepared, in the event that loans are necessary, as
we proceed into the New Year. The approval of this report and the attached By-law will
provide the City with financial flexibility to deal with unanticipated negative events. Put
another way, this report provides the City with a financial safety net.
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Report FIN 31-15 December 7, 2015
Subject: 2016 Temporary Borrowing By-law Page 2
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Financial Implications: At this time, it is difficult to estimate the interest costs as it is
uncertain how much temporary financing may be required and for how long. With
internal borrowings being limited, the City must undertake external borrowing from the
Regional Municipality of Durham (the "Region") in 2016 for approved capital
expenditures. For current purposes, the $41 million limit for January 1 to September
30, 2015 has been increased to $42 million for January 1 to September 30, 2016 and
the $20 million limit for October 1 to December 31, 2015 has been increased to $21
million for October 1 to December 31, 2016. The limit for capital purposes for 2016 has
been established at $25 million based on the second draft 2016 Capital Budget. This
may have to be adjusted once the 2016 Capital Budget has been approved by Council.
Discussion: The borrowing of funds for current and capital purposes may become
necessary in the normal course of operations during 2016. Under Section 407 of the
Municipal Act, 2001, as amended (the "Act"), Council may pass a by-law to provide for
the temporary borrowing of funds to meet current operating expenditures pending
receipt of taxes and other revenues of the City. Under the Act, the Corporation may
also undertake temporary borrowings under individual project approvals, and for capital
projects, pending permanent financing.
Current Budget Financing
The amount of such temporary borrowing outstanding at any one time is limited by the
Act, unless otherwise approved by the Ontario Municipal Board, to 50% of the estimated
annual revenues from January 1 to September 30 and to 25% thereafter.
Until the current year's estimates are adopted, the limitation may be calculated upon the
revenues set forth in the estimates adopted for the preceding year. Based upon the
2015 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under the Act is estimated at $42 million from January 1 to September 30
and $21 million thereafter.
The requested $42 million should be sufficient to meet the current expenditures of the
City until the levies for 2016 are received. It is expected that this amount will provide a
sufficient level of temporary borrowings taking into account the potential effects of
taxation legislation and its impact on cash flows.
Capital Budget Financing
Borrowing for capital purposes under the Act can only be undertaken on projects
approved by Council and will only be undertaken in the event that sufficient funds are
not available at the time they are required. Recommendation 3 provides the authority
for staff to obtain additional temporary interim financing (internal or external) for capital
Report FIN 31-15 December 7, 2015
Subject: 2016 Temporary Borrowing By-law Page 3
projects approved by Council. The $25 million capital borrowing limit should provide
sufficient funds to cover the estimated 2016 capital expenditures.
Attachments:
1. By-law to Authorize the Temporary Borrowing of Monies to Meet the Current and
Capital Expenditures of the City of Pickering for the Year 2016
Prepared By: Approved/Endorsed By:
Caryn Kong, CPA, CGA Stan Karwowski
Senior Financial Analyst— Capital & Divis'- - Head, Finance & Treasurer
Debt Management
Paul : gio''
Direc or, Corpnirate Services & City Solicitor
Recommended for the consideration
of Pickering City Council
4 do-0-s 20 20l5
Tony Prevedel, P.Eng.
Chief Administrative Officer
ATTACHMENT# I TO REPORT# ' I— lS
The Corporation of the City of Pickering
By-law No.
Being a by-law to authorize the temporary
borrowing of monies to meet the current and
capital expenditures of the City of Pickering
for the year 2016.
Whereas Section 407(1) of the Municipal Act, 2001, provides that the Council of the
City of Pickering may by by-law authorize the Mayor and Treasurer of the City to borrow
from time to time by way of promissory note such sums as the Council may deem
necessary to meet, until the taxes for the current year are collected and other revenues
are received, the current expenditures of the City for the year, including the amounts
required for principal and interest falling due within the year upon any debt of the City,
and the sums required by law to be provided by the Council for any local board of the
City;
Whereas Section 407(2) limits the total of such borrowings to not exceed 50% of the
estimated annual revenues from January 1 to September 30, 2016 and 25% thereafter;
Whereas it is deemed necessary by the said Council to borrow the sum of forty-two
million ($42,000,000) to meet, until the taxes for the current year are received, the
current expenditures of the City for the year 2016, including the amounts and sums
aforesaid;
Whereas the said sum of forty-two million ($42,000,000) plus any similar borrowings
that have not been repaid, is less than 50% of the total amount of the estimated
revenues of the City from January 1 to September 30 as set forth in the estimates
adopted by the Council for the year 2015 exclusive of revenues derivable from the sale
of assets, borrowings or issues of debentures or from a surplus including arrears of
levies, and twenty-one million dollars ($21,000,000) is less than 25% of the estimated
revenues thereafter;
Whereas the Municipal Act, 2001, provides that if a municipality has by by-law approved
an undertaking to be financed in whole or in part by incurring long-term debt, the
• Council may by by-law authorize temporary borrowing to meet expenditures made in
connection with the undertaking; and,
Whereas it is deemed necessary by the Council to borrow the sum of twenty five million
($25,000,000) to meet the capital expenditures approved by Council.
By-law No. Page 2
Now therefore the Council of the Corporation of the City of Pickering hereby enacts as
follows:
1. The Mayor and Division Head, Finance & Treasurer of the City of Pickering are
hereby authorized to borrow from time to time by way of promissory notes a sum or
sums not exceeding forty-two million ($42,000,000) to meet, until the levies for the
year 2016 are received, the current expenditures of the City for such year, including
the amounts required for principal and interest falling due within the year upon any
debt of the City for the period January 1 to September 30, 2016 inclusive and
twenty-one million dollars ($21,000,000) thereafter until December 31, 2016.
2. The Mayor and Division Head, Finance & Treasurer of the City of Pickering are
hereby authorized to borrow from time to time by way of promissory notes a sum or
sums not exceeding twenty five million ($25,000,000) to meet the capital
expenditures as approved by Council, of the City including the amounts required for
principal and interest.
3. Any promissory notes made under the authority of this by-law shall be sealed and
signed in accordance with the provisions of the Municipal Act, 2001, and may be
countersigned in writing by the Manager, Accounting Services of the Corporation in
accordance with the provisions of the said Act.
4. This By-law shall come into effect on the first day of January, 2016.
By-law passed this 14th day of December, 2015.
David Ryan, Mayor
Debbie Shields, City Clerk