HomeMy WebLinkAboutCS 02-07
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REPORT TO
EXECUTIVE COMMITTEE
Report Number: CS 02-07
Date: January 8, 2007
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
2007 Temporary Borrowing By-law
Recommendation:
1. That Report CS 02-07 from the Director, Corporate Services & Treasurer be
received;
2. That the temporary borrowing limit to meet 2007 current expenditures pending
receipt of taxes and other revenues be established at $27,700,000 for the period
January 1, 2006 to September 30, 2007 inclusive, and $13,900,000 thereafter until
December 31,2007;
3. That the temporary borrowing limit for capital purposes for 2007 be established at
$18,000,000;
4. That the attached draft by-law providing for the temporary borrowing of monies, be
enacted; and,
5. That the appropriate officials of the City of Pickering be authorized to take the
necessary actions to give effect thereto.
Executive Summary:
Not applicable
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. An
estimate will be provided at a later date in the 2007 Current Budget. With internal
borrowings being undertaken to the maximum advisable, we will be resorting to
external borrowing from the Region in 2007 for approved expenditures. For Current
purposes, the $27 million limit for 2006 has been increased to $27.7 million for 2007
and the $13.5 million has been increased to $13.9 million. The limit for Capital
purposes has been increased from $17 million for 2006 to $18 million for 2007. This
may have to be adjusted once 2007 Capital budget has been approved.
Report CS 02-07
January 8, 2007
215
Subject: 2007 Temporary Borrowing By-law
Page 2
Sustainability Implications: Council approval to undertake temporary borrowings, if
necessary, for current operations and capital projects is necessary in order to
financially sustain the City's operations. To date it has not been necessary for the City
to undertake such temporary financing measures but approval is always sought at the
beginning of the fiscal year (calendar) in order to be prepared in the event that loans
are necessary.
Background: The borrowing of funds for current and capital purposes may become
necessary during the normal course of operations during 2007. Under the provisions of
Section 407 of the Municipal Act, 2001, (the Act), the Council of the City of Pickering
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, for capital projects pending permanent financing, including the
issuance of debentures by the Region.
Current Budqet Financinq:
The amount of such temporary borrowing outstanding at anyone time is generally
limited by the Act, unless otherwise approved by the Ontario Municipal Board, to 50 per
cent of the estimated annual revenues from January 1 to September 30 and to 25 per
cent 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 next preceding year. Based
upon the 2006 estimates of the Corporation, the allowable level of temporary borrowing
outstanding under legislation is estimated at $27,700,000 from January 1 to September
30 and $13,900,000 thereafter.
The requested $27,700,000 should be sufficient to meet the current expenditures of the
City until the levies for 2007 are received. It is hoped 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 Budqet Financinq:
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 the Treasurer to obtain additional temporary interim financing (internal or external)
for capital projects approved by Council. The $18 million capital borrowing limit would
provide sufficient funds to cover the estimated 2007 capital expenditures.
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Report CS 02-07
216
Subject: 2007 Temporary Borrowing By-law
January 8, 2007
Page 3
Attachments:
1. 2007 Temporary Borrowing By-law
Prepared B~,:
Approved I Endorsed By:
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Caryn Kong
Senior Financial Analyst
<~<<~
Gillis A. Paterson
Director, Corporate Services & Treasurer
-
GAP:ck
Attachment
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering Ci>>, Council
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ATTACHMENT#L. TO REPORT#~*!)7
THE CORPORATION OF THE CITY OF PICKERING
21'7
BY-LAW NO.
Being a by-law to authorize the temporary
borrowing of moneys to meet the current and
capital expenditures of the City of Pickering
for the year 2007.
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 Municipality
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 Municipality for the year,
including the amounts required for principal and interest falling due within the year upon
any debt of the Municipality, and the sums required by-law to be provided by the
Council for any local board of the Municipality; and,
WHEREAS Section 407(2) limits the total of such borrowings to not exceed 50 per cent
of the estimated annual revenues from January 1, 2007 to September 30, 2007 and 25
per cent thereafter; and,
WHEREAS it is deemed necessary by the said Council to borrow the sum of twenty
seven million seven hundred thousand dollars ($27,700,000) to meet, until the taxes for
the current year are received, the current expenditures of the Municipality for the year
2007, including the amounts and sums aforesaid; and,
WHEREAS the said sum of twenty seven million seven hundred thousand dollars
($27,700,000) plus any similar borrowings that have not been repaid, is less than 50 per
cent of the total amount of the estimated revenues of the Municipality from January 1 to
September 30 as set forth in the estimates adopted by the said Council for the year
2006 exclusive of revenues derivable from the sale of assets, borrowings or issues of
debentures or from a surplus including arrears of levies and $13,900,000 is less than
25 per cent thereafter; and,
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 said Council to borrow the sum of eighteen
million dollars ($18,000,000) to meet the capital expenditures approved by Council.
218
NOW THEHEFORE THE COUNCil OF THE CORPORATION OF THE CITY OF
PICKERING HEREBY ENACTS AS FOllOWS:
1. The Mayor and 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
seven million seven hundred thousand dollars ($27,700,000) to meet, until the levies
for the year 2007 are received, the current expenditures of the Municipality for such
year, including the amounts required for principal and interest falling due within the
year upon any debt of the Municipality for the period January 1, 2007 to September
30,2007 inclusive and $13,900,000 thereafter until December 31, 2007.
2. The Mayor and 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 in all the
sum of eighteen million dollars ($18,000,000) to meet the capital expenditures as
approved by Council, of the Municipality including the amounts required for principal
and interE!st.
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
countersinned 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 2007.
BY-lAW read a first, second and third time and finally passed this 15th day of January,
2007.
David Ryan, Mayor
Debi Bentley, City Clerk