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Home My WebLink AboutCS 21-08 CiuJ 0# REPORT TO EXECUTIVE COMMITTEE G Report Number: CS 21-08 Date: May 12, 2008 1 ,S ) From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2008 Annual Repayment Limit for Debt and Financial Obligations Recommendation: That Report CS 21-08 of the Director, Corporate Services & Treasurer regarding the 2008 Annual Repayment Limit for Debt and Financial Obligations be received for information. Executive Summary: Not applicable Financial Implications: Not applicable Sustainability Implications: An update to the Annual Repayment Limit is required to determine the annual repayment limit for both internal and external borrowings. This update is required to enable the City to borrow externally. Background: Recently, the Ministry of Municipal Affairs and Housing (MMAH) provided information regarding the City's 2008 Debt and Obligation Repayment Limit. Debt for these purposes includes all forms of loans, leases and other long term financial obligations and commitments. The 2008 Annual Repayment Limit (ARL) was calculated based on 25 percent of 2006 net own-source revenues as reported in City of Pickering's 2006 Financial Information Report (FIR) submitted to the Ministry of Municipal Affairs and Housing (MMAH). The FIR was prepared in conjunction with the annual financial statements. Own-source revenues represent generally the discretionary revenues of a municipality including property taxes, user fees, licenses and fines and exclude all grants, internal transfers and extraordinary items such as the one time sale of land or other fixed assets and non-discretionary items such as development charges. The calculated 2008 ARL based on 25% of net revenue fund, after taking into account net debt charges reported to MMAH is $10,185,630. This is based upon the 2006 Financial Information Return. Based on the 2008 Budget, the total annual principal and interest charges and all other financial obligations as recorded in the City's books are $3,670,300 out of which $2,599,802 for the annual charges has been reported to the Report CS 21-08 May 12, 2008 Subject: 2008 Annual Repayment Limit for Debt and Financial Obligations Page 2 '"I < /_,~ <-..1 '- MMAH as required. Taking into account the difference of $1,070,498 ($3,670,300 - $2,599,802), being the amount included in the City's books for annual charges pertaining to borrowings from 2006 to 2008 ($987,120), and the balance ($83,378) for photocopiers contracts, internal telephone financing and dealer financing of a small vehicle, the net ARL available for 2008 would have to be reduced to $9,115,132. The net ARL of $9,115,132 for 2008, as adjusted, represents the maximum additional principal and interest payment for the year that could be undertaken without Ontario Municipal Board approval. This calculation does not measure affordability nor take into account other commitments the City may have and the need to change levels of service or raise property taxes to maintain the debt repayment amount. This limit represents the maximum amount which the municipality has available for approval and certification by the Treasurer as of December 31, 2007 to commit to payments relating to debt and financial obligations. The limit is effective January 1, 2008. For illustration purposes, if the City could borrow at 7%, the rate used by MMAH in the calculation, the net ARL of $9,115,132 would allow it to undertake additional long term borrowing as follows: Terms a) 5 years b) 10 years c) 15 years d) 20 years Debt Amount ($1 37,373,840 64,020,872 83,019,838 96,565,838 Attachments: 1. Letter from the Ministry of Municipal Affairs and Housing dated February 4, 2008 Prepared By: Approved I Endorsed By: 2~~\co"-f Caryn Kong Senior Financial Analyst ( / --7 """ ""><'/P? C-"" " ~h '/ /' ~._':. c~ Gillis A. Paterson Director, Corporate Services & Treasurer // AI 'T'" cll:o(")rIT#C5 :,,111 ~ )Y,<' ~L,.\'~ii'\ _ J" ..Jt j} Ministine des Affaires municipales et du logemenl ('~ t? Ontario Ministry of Municipal Affairs and Housing Municipal Finance Policy Branch 777 Bay Street, 13th Floor Toronto ON M5G 2E5 Phone: (416) 585-6310 Fax: (416) 585-6315 ,; ~' , " 777, Rue Bay, 13' etage Toronto ON M5G 2E5 Telephone: (416) 585-6310 Telecopieur: (416) 585-6315 REC~~tlIE^' D <-~ '""" ~J .' CITY OF P~CKERING rl/i l~ R (J ') "} (1 (,I A, ; - f J !! i ~_..,.~ J ,,,,I CORPORATE SERVICES February 4,2008 Dear Municipal Treasurer, Clerk/Treasurer: I am pleased to enclose a report showing your municipality's 2008 Annual Repayment Limit (ARL) respecting long-term debt and financial obligations. Your 2008 ARL was calculated based on 25 percent of your 2006 net own source revenues as reported in your 2006 FIR. Note that revenues for municipal electrical utilities are not included in the calculation of the ARL, in accordance with Public Sector Accounting Board (PSAB) guidelines. If you require any further information, please contact the appropriate Municipal Services Office of the Ministry of Municipal Affairs and Housing (list enclosed). / Yours~roJY, /1'/ / / ";, '''hi,&/./, L- Frances Johnston / Director (A) Enclosures 1322(05/9\) l' ,', I ,) () Ministly of Municipal Affairs and Housing 777 Bay Street, Toronto, Ontario. M5G 2E5 Ministere des ajJaires municipales et du logement 777 rue Bay Toronto (Ontario) M5G 2E5 ANNUAL REPAYMENT LIMIT (UNDER ONTARIO REGULATION 403/02) MMA CODE: 10102 MUNID: 18001 MUNICIPALITY: Pickering C UPPER TIER: Durham R REPAYMENT LIMIT: C$10,185,630 The repayment limit has been calculated based on data contained in the 2006 Financial Information Return, as submitted to the Ministry. This limit represents the maximum amount which the municipality had available as of December 31, 2006 to commit to payments relating to debt and financial obligations. Prior to the authorization by Council of a long term debt or financial obligation, this limit must be adjusted by the Treasurer in the prescribed manner. The limit is effective January 01,2008. FOR ILLUSTRATION PURPOSES ONLY, the additional long-term borrowing which a municipality could undertake over a 5-year, a 10-year, a 15-year and a 20- year period is shown. Page: 01 of 03 Date Prepared: January 9, 2008 DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT 'I i. Ci ,) / MUNICIPALITY: Pickering C MMAH CODE: 10102 1.0 GROSS DEBT CHARGES 1.1 Principal SLC 74 3099 01 1,942,381 1.2 Interest SLC 74 3099 02 657,421 1.3 SUBTOTAL Add Lines 1.1, 1.2 2,599,8021 2.0 DEBT CHARGES ON O.C.WA PROVINCIAL PROJECT 2.1 Water Projects -- this municipality only SLC 74 28]0 03 0 2.2 Water Projects -- share of integrated projcct(s) SLC 74 2820 03 0 2.3 Sewer Projects -- this municipality only SLC 74 2830 03 0 2.4 Sewer Projects -- share of integrated project(s) SLC 74 2840 03 0 2.5 SUBTOTAL Add Lines 2. I thru 2.4 01 3.0 PAYMENT IN RESPECT OF LONG TERM COMMITMENTS A..c"lD LIABILITIES SLC42601001 0 4.0 SUBTOT AL - DEBT CHARGES Add Lines 1.3,2.5,3.0 2,599,802/ 5.0 AMOUNTS RECOVERED FROM UNCONSOLIDATED ENTITIES 5.1 Electricity (Principal) SLC 74 3030 01 0 5.2 Electricity (Interest) SLC 74 3030 02 0 5.3 Gas and Telephone (Principal) SLC 74 3040 01 + SLC 74 3050 01 0 5.4 Gas and Telephone (Interest) SLC 74 3040 02 + SLC 74 305002 0 5.5 SUBTOTAL Add Lines 5. I thru 5.4 01 6.0 PAYMENTS TO PROVINCE FOR DOWNTOWN REVITALIZATION PROGRAM LOANS SLC 42 5410 01 0 7.0 DEBT CHARGES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 40 1850 02 + SLC 40 1850 08 0 8.0 SUBTOT AL - DEBT CHARGES TO BE EXCLUDED Add Lines 5.5,6.0,7.0 01 9.0 NET DEBT CHARGES II 2,599,80211 Page: 02 of 03 Date Prepared: January 9, 2008 , . '1 4 U DETERMINATION OF ANNUAL DEBT REPAYMENT LIMIT MUNICIPALITY: Pickering C MMAH CODE: 10102 10.0 TOTAL REVENUE FUND REVENUES SLC 10991001 51,626,663 11.0 FEES FOR REPAYING THE PROVINCE FOR DOWNTOWN REVITALIZATION LOANS SLC 42 5410 01 o 12.0 FEES FOR TILE DRAINAGE AND SHORELINE ASSISTANCE SLC 12 185004 o 13.0 GRANTS FROM GOVERNMENT OF ONTARIO, GOVERNMENT OF CANADA AND OTHER MUNICIPALITIES 13.1 ]3.2 13.3 Ontario Grants Canada Grants Other Municipalities SLC 10069901 +SLC 10081001 SLC 10082001 SLC 10 109901 234,281 118,391 132,263 13.4 SUBTOTAL Add Lines 13.1 thru 13.3 484,9351 14.0 FEES AND REVENUES FOR JOINT LOCAL BOARDS FOR HOMES FOR THE AGED o 15.0 NET REVENUE FUND REVENUES Lines 10 less Lines 11,12,13.4,141 51,141,7281 12,785,4321 16.0 25% OF NET REVENUE FUND REVENUE 17.0 ANNUAL REPAYMENT LIMIT 25% of Net Revenue Fund Revenues less Net Debt Charges 10,185,630 SLC denotes Schedule, Line, Column FOR ILLUSTRA nON PURPOSES ONLY Ifthe municipality could borrow at 7.0% or 9.0% annually, the annual repayment limit shown in 17 above would allow it to undertake additional long-term borrowing as follows: 7.0% Interest Rate: (a) 20 years @ 7.0% p.a. (h) 15 years @ 7.0% p.a. (c) 10 years @ 7.0% p.a. (d) 05 years @ 7.0% p.a. 107,906,709 92,769,842 71,539,603 41,763,094 9.0% Interest Rate: (a) 20 years @ 9.0% p.a. (b) 15 years @ 9.0% p.a. (c) 10 years @ 9.0% p.a. (d) 05 years @ 9.0% p.a. 92,979,989 82,103,190 65,367,887 39,618,549 Page: 03 of 03 Date Prepared: Januarv 9.2008 .